FINANCIAL STATEMENTS 2010 - Finnlines

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, Finn-
lines 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 arbitra-
tion 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 deci-
sions based on which it can be argued that the Finnish Act on
Fairway Dues in force until 1 January 2006 has contained provi-
sions which according to EU law were discriminatory. The Com-
pany 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 Com-
pany has also filed applications for reversals in the Supreme Ad-
ministrative Court concerning the fairway dues decisions of the
Finnish Customs. Any amounts received as a result of a success-
ful application to the Supreme Administrative Court would be de-
ducted 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 Di-
rector regarding the termination of his Service Agreement. The
Company considers the legal grounds for the termination to be
valid. The process is under way.
ENVIRONMENT AND SAFETY
The objectives of Finnlines' environmental policy are to provide
safe, top-quality services while taking into account the environ-
mental impacts in every aspect of operations.
Transports and routes are regularly optimised to achieve the
highest possible utilisation rate on both southbound and north-
bound voyages, which minimises environmental stress per trans-
ported cargo unit. Finnlines is in the process of looking at effec-
tive and technically feasible solutions for reduction of emissions.
The six new ships to be delivered from China in 2011-2012 will be
equipped with a rudder/propeller combination technology that is
designed to achieve a significant decrease in fuel consumption.
Sulphur content of marine fuel has reduced step by step. As
of 1 January 2010, there has been a maximum 0.1 per cent sul-
phur limit on all marine fuel used in EU ports while the ship is at
berth for at least two hours. Finnlines’ ships have complied with
this regulation for many years. In the Emissions Control Areas,
i.e. the Baltic Sea, North Sea and English Channel, the sulphur
content limit for heavy fuel oil was reduced from 1.5 per cent to
1.0 percent on 1 July 2010. Finnlines’ ships run on low-sulphur
fuel also when operating outside the Emissions Control Areas.
In 2010, all Finnlines-owned ro-pax and ro-ro ships were in-
6 FINNLINES PLC Financial Statements 2010 (figures in EUR thousand, if not stated otherwise)
corporated into the environmental certificate issued by LRQA
(Lloyd's Register Quality Assurance). Finnsteve has also started
to build up an environmental system in accordance with the ISO
14 001 standard.
All vessels have been certified in accordance with the Interna-
tional Safety Management Code (ISM code). All ships and port
facilities also comply with the requirements of the International
Ship and Port Facility Security Code (ISPS).
In its annual report Finnlines publishes a report of environ-
mental and safety issues.
CORPORATE GOVERNANCE
Finnlines applies the Finnish Corporate Governance Code for
listed companies updated in autumn 2010. The Corporate Gov-
ernance Statement can be reviewed at the corporate website
(www.finnlines.com).
EVENTS AFTER THE REPORTING PERIOD
Finnsteve-companies (Finnsteve Oy Ab, Containersteve Oy Ab
and FS-Terminals Oy Ab) started co-operation negotiations in the
ports of Kotka, Turku and Helsinki with all personnel groups dur-
ing the last quarter of 2010. These negotiations have resulted in
the termination of about 160 employments in total.
OUTLOOK FOR 2011
In 2010 import and export volumes started to recover which influ-
enced positively the performance of the Company. For 2011 the
Company expects that this positive trend will continue.
The tough competition in the port of Helsinki has negatively in-
fluenced the volumes and the price levels of port operations ser-
vices. The Port Operations segment has made significant losses
since the opening of the new Vuosaari Harbour in autumn 2008.
The port operation companies have been compelled to cut the
number of personnel, of which considerable savings are expect-
ed. However, substantial part of them will realise in 2012 due to
long notice periods.
During 2011 the Company will take the delivery of major part
of its newbuildings and will during the year have a modern opti-
mized fleet to meet future demand and challenges. The Company
has during 2009 and 2010 been reshaped and optimized both
with respect to efficiency and cost. Based upon the expected
market development and the state of the Company the Board of
Directors expects improved result in 2011.
DIVIDEND DISTRIBUTION PROPOSAL
The Board of Directors will propose to the Annual Shareholders’
Meeting that no dividend be paid out for 2010 due to the still un-
certain financial business environment and the ongoing invest-
ment programme. However, the Board expects dividends to be
paid from the financial year 2011 onwards on the condition that
there are no negative surprises in the Company’s business envi-
ronment.