THE YEAR 2015 01 • the Year 2015 • New at Arctia in 2015

THE YEAR 2015 01 • The year 2015 • New at Arctia in 2015 ...... 04 Arctia 2015 • The year 2015 in figures ...... 05 • CEO’s Review ...... 06

02 • Arctia • Operating environment...... 08 • Core messages and organisation ...... 12 • Corporate responsibility management ...... 17 • Financial responsibility ...... 20 • Society and human rights ...... 23 EXPERT IN ARCTIC • Environment ...... 26

03 • Service areas CONDITIONS • Icebreaking services...... 32 • Offshore services...... 34 Arctia’s icebreakers ensure the reliability and safety of • Oil spill prevention and response...... 36 • Harbour icebreaking...... 37 Finland’s shipping lanes in the winter. In 2015, we met • Arctia Events...... 38 all service targets set for us in the Baltic Sea. Outside 04 • Personnel and governance • Personnel and governance...... 41 Finland’s icebreaking season, we offered our customers • Competence and expertise...... 45 reliable icebreaking and offshore services in challenging • Fleet...... 48 conditions. 05 • Financial statements 2015 • Annual report...... 50 • Income statement ...... 58 • Balance sheet...... 59 • Financial statement...... 61 • Notes to the financial statements...... 62 • Auditor’s report...... 75

• Principles of CR reporting...... 76 • Stakeholders and their expectations...... 77 • List of CSR reporting requirements...... 78

02 01 The year 2015 KONTIO AND OTSO KEPT BUSY IN THE BAY OF BOTHNIA The Baltic ice winter was mild in 2014–2015. Only Kontio and Otso operated in assistance tasks in the Bay of Bothnia. Arctia’s conventional icebreakers were maintained in Helsinki and the multipurpose MODERN HARBOUR ICEBREAKING icebreakers in Rauma. The escort towing trial of harbour icebreaker Ahto was successfully completed in the open water season in 2015. The vessel performed superbly as an escort tug and THREE SHIPS ABROAD met all expectations set for it. The Baltic winter only required the services of two Finnish icebreakers, while three vessels operated elsewhere in the summer. Nordica and Fennica worked in Alaska, while Otso operated in the waters of Greenland. STEADY PERFORMANCE Arctia’s turnover improved slightly from 2014. After the elimination of non- recurring items, the company achieved the best profit in its history in terms of operating margin.

03 News in 2015

Otso turned Nordica and Fennica New Finnish Arctic coopera- into a polar navigate the icebreaker tion in Finland icebreaker Northwest Passage named Polaris and abroad

In 2015, the icebreaker Otso was out- The multipurpose icebreakers Nordica and The 2015 icebreaking season ended Arctia continued its cooperation with fitted for global duties in addition to Fennica returned from their summer ice on a festive note with the naming of various parties in the fields of ice- icebreaking in the Baltic Sea. The ves- management operation on the Chukchi Finland’s newest icebreaker in Arctech breaking and sustainable economic sel was fitted with a flume tank that Sea in October. On their return voyage, dockyard in Helsinki. The nearly 110- development in the Arctic. For exam- enables efficient operations in open- the vessels navigated the challenging metre long vessel was named Polaris, ple, Arctia is a member of the Team sea conditions. Otso’s hull was also ice conditions of the Northwest Passage. with Deputy Speaker of Parliament Arctic partnership that brings major reinforced and the vessel was fitted The Northwest Passage is a sea route con- Paula Risikko as its godmother. The Finnish companies together for the with new lifeboats and a removable necting the Pacific and Atlantic Oceans design and construction of Polaris development of solutions and joint helideck. These modifications received through Canada’s Arctic Archipelago at features advanced Finnish technology. business concepts for Arctic invest- international recognition in the form the northern tip of North America. In com- This unique vessel is capable of using ment targets. CEO Tero Vauraste is a of the ASF North America Innovation parison to the traditional route through both diesel and LNG as fuel, which member of the Board of Directors of Award. The modifications enable the the Panama Canal, the route saves time significantly reduces its carbon diox- the Arctic Society of Finland and the vessel to carry out tasks such as assist- and fuel. At the same time, taking this ide emissions. Polaris, commissioned by Vice-President of the Arctic Economic ing research vessels in all polar waters. route presented an excellent opportu- the Finnish Transport Agency, is cur- Council. In 2015, IB Urho hosted dig- By using the air-bubbling system and nity for collaboration with our Canadian rently the world’s most environmen- nitaries such as a group of MPs from adjusting the angle of its rudders, Otso partners and demonstrated the opera- tally friendly icebreaker. Arctia will be the Barents Sea region, Commissioner can also open a wider than usual chan- tional capabilities of Finnish icebreakers registered as Polaris’ owner in 2016. Jody Thomas of the Canadian Coast nel through the ice. in the most challenging conditions. On this Guard and former Prime Minister of unique passage, the vessels carried scien- Finland Paavo Lipponen, along with tists who studied the surrounding nature numerous journalists from around and ice and weather conditions. the world.

04 7 May 2015 10 July 2015 22 October 2015 The 2014–2015 icebreaking season ends in the Otso departs for Greenland. Otso arrives in Rauma. Baltic Sea with the arrival of Kontio in Helsinki.

2015 21 May 2015 16 October 2015 23 November 2015 Nordica arrives in Portland, Oregon, Nordica and Fennica start their return voyage Fennica arrives in Rauma, followed followed by Fennica four days later. from the Chukchi Sea through the Northwest by Nordica three days later. Passage.

Staff

Total Result of Turnover Profit the financial period Gross investment Return on investment, 261 MEUR MEUR MEUR MEUR % 273 267 75 25 25 25 2015 Sea personnel

70 20 20 20 230 11.8 237 236 65 15 15 15

Office personnel 60 10 10 10

31 55 5 5 5 2014 36 31 50 0 0 0 11.3 13 14 15 13 14 15 13 14 15 13 14 15 Operating days

Baltic Sea 2015 62.1 2015 18.1 2015 14.6 2015 14.8 338 2013 175 573 12.5 2014 2014 2014 2014 Offshore 61.3 16.8 12.9 15.6

78 2013 2013 2013 2013 2015 2014 2013 380 244 63.0 17.5 13.4 17.8

05 Polaris will improve icebreaking service The company’s current operating areas, reliability in the Baltic Sea. the Baltic Sea and the Arctic region, are CEO’s Review Fennica’s ground touch in Alaska in both exceptionally fragile environments. July 2015, in an area where the water In addition to environmental matters, depth was significantly lower than business operations in the Arctic must marked on the charts, presented a chal- take into account the future of the lenge for our entire organisation. The area’s inhabitants and communities. For NEW incident tested our leadership abilities this purpose, our operations in US and in a crisis situation and our responsibili- Canadian waters have included scientists ties to our customer, the environment to monitor the natural environment. In and the authorities. Thanks to the excel- the coming years, Arctia plans to expand HORIZONS lent leadership of the officers on board, its cooperation with parties engaged in damage to the environment and injury polar research even further. to the crew were avoided. Our customer The order book for 2016 looks good In line with expectations, Arctia achieved a did not suffer any losses due to the inci- and the company is expecting a posi- positive result and cash flow for 2015. The dent, which was handled responsibly in tive result. However, Arctia’s ice manage- Baltic ice winter was uncommonly mild, but cooperation with the authorities. ment contract on the coast of Alaska will we were able to increase the utilisation rate For Arctia, corporate responsibility end and the market has undergone sig- of our fleet by converting IB Otso into a polar means responsible management of the nificant changes. Considering the current icebreaker alongside Nordica and Fennica. The company’s customers, duties and assets, development of international energy Baltic winter only required the services of two along with the discharge or even exceed- production, demand for new types of icebreakers, but three vessels operated in the ing of the company’s contractual and services can be expected in polar areas. waters of Alaska and Greenland in the sum- statutory obligations. These responsi- Arctia seeks to secure a high utilisation mer. This secured a positive utilisation rate bilities and obligations apply to every rate after 2016 through research coop- and fiscal performance. employee, both individually and collec- eration, international partnerships, and The company decided on a five-year pro- tively. Our duty is to be worthy of our serving the needs of customers in new gramme to extend the life span of its fleet. customer’s trust, every day. markets such as Russia and the Far East. Our positive financial situation also enabled us Arctia has modernised its whole fleet to launch the 15-year fleet replacement and to use light fuel oil, and vessels operat- expansion programme required by the state ing in the Arctic have the option of using owner by investing in a new Baltic icebreaker even cleaner ultra-low-sulphur fuel. Pola- that will enter Arctia’s ownership in 2016. IB ris will use liquefied natural gas as fuel. Tero Vauraste, CEO

06 EXPERT IN ARCTIC CONDITIONS Arctia is a specialised shipping company owned by the state of Finland. The company offers Arctia icebreaking, ice management, oil spill prevention 02 and response and harbour towing services. The company’s turnover is slightly more than EUR 62 million, and it employs roughly 270 Finns.

UNIQUE FLEET Arctia’s fleet includes conventional icebreakers Voima (built in 1954/79), Urho (1975) and Sisu (1976). Fennica (1993) and Nordica (1994) are multipurpose icebreakers capable of operating across the globe. In 2015, Otso (1986) was converted to be able to operate in open sea conditions. Kontio (1987) is the only oil recovery icebreaker in the world, and Ahto (2014) is a next-generation harbour icebreaker.

07 Operating environment INTERNATIONAL AND NATIONAL MINISTRY OF TRANSPORT AND REGULATIONS FOR SHIPPING COMMUNICATIONS COMPANIES

RELIABLE MARITIME Finnish Transport Agency Finnish Transport Responsibility for transport Safety Agency Trafi infrastructure CONNECTIONS ALSO Regulatory supervision Management of winter navigation IN WINTER Arctia owns and operates a strong fleet of icebreakers that secures efficient winter navigation in Finland. In OTHER addition, Arctia offers icebreaking services to international MARITIME OPERATORS customers. Arctia stays in close touch with its domestic and international stakeholders at all levels of the organisation.

Arctia’s STAKEHOLDERS consist of The EXPECTATIONS and concerns of the company’s direct customers and our stakeholders are frequently such PORTS end customers in the Finnish indus- that Arctia is not solely responsible trial and commercial sectors and for them or has limited influence over maritime cluster. In a wider sense, them. Such issues include the costs the company’s stakeholders also of winter navigation and the defi- Ownership Steering Department include local actors and the state nition of service levels for icebreak- of the Prime Minister’s Office owner. Other authorities, political ers operating in the Baltic Sea. In the decision-makers, suppliers of ser- development of its operations, Arctia Arctia’s ownership vices and goods, civic society and must take a multitude of sometimes End customers and ownership steering the media are also Arctia’s stake- conflicting expectations and perspec- OTHER DOMESTIC AND PRIME MINISTER’S OFFICE holders. We engage in constant dia- tives into account. The company’s key logue with our stakeholders at vari- stakeholders and their expectations INTERNATIONAL CUSTOMERS ous levels of the organisation. are described in this section.

08 icebreaking, to the provision of which Arctia con- tem. Arctia’s vessels perform the required assistance tributes. Arctia engages in dialogue with represent- tasks as efficiently as possible. When assisting ves- atives of the industrial and commercial sectors and sels into port, for example, the icebreakers try to with the Finnish Transport Agency. Through this gather several ships into a convoy, which shortens dialogue, we maintain an up-to-date picture of the assistance and waiting times. This also saves fuel expectations and demands placed on us. consumption and costs, decreasing the vessels’ environmental impact. The party responsible for pilotage, Finnpilot Pilot- Shipping companies and merchant vessels age Ltd, has adopted an electronic feedback chan- nel, through which ships are asked about the qual- Merchant vessels sailing to Finland are entitled to ity of pilotage immediately after the service. Arctia the services of icebreakers with no extra fee. Ship- is planning to link its own services to this system. ping companies pay a shipping route fee to the state of Finland for their vessels arriving in Finnish Finnish commerce and industry ports. The amount of the fee is influenced by the State ownership steering size of the vessel and the number of annual port Finland’s commerce and industry would grind to a visits. The shipping route fee was halved in 2015, The Prime Minister’s Office is responsible for the halt without year-round marine transport. Compa- as the Finnish government wished to compensate ownership steering of state enterprises that oper- nies contract their marine transport from the ship- shipping companies for the costs incurred by the ate on market terms. In early 2015, the minister ping companies that own and operate the freight Sulphur Directive. responsible for state ownership was the Minister vessels. The price of sea transport is affected by Shipping companies and merchant vessels usually for International Development. In the administra- factors such as the market situation, length of the consider it important to avoid unnecessary delays in tion that started its term in May 2015, the Prime voyage, vessels required and travel times. Travel the transport of cargo. In winter navigation, travel Minister is responsible for state ownership steering. through ice incurs additional costs, the magnitude times can easily stretch out, which highlights the The Ownership Steering Department of the Prime of which is influenced by factors such as the ice class importance of the availability of timely icebreak- Minister’s Office prepares and implements govern- required by the ice conditions, travel time, fuel con- ing services. Customers also expect high quality and ment ownership steering policy and steers state- sumption and shipping route fees. safety from icebreaking services. owned enterprises. The uninterrupted flow of goods prevents disrup- During icebreaking duties, Arctia’s icebreakers The owner expects the company to operate prof- tions in business and is vital for trade and industry. coordinate the routes of vessels sailing in their oper- itably, discharge its duties efficiently and generate The infrastructure and maintenance of sea lanes is ating areas by setting waypoints in areas of easily a return on investment. Furthermore, the owner the responsibility of the Finnish Transport Agency. negotiated ice. An independently sailing merchant requires the company to be able to finance its own The most important factor in winter navigation is vessel is in the interests of the entire transport sys- operations and investments. The dialogue between

09 Arctia and its owner is constant and open. The com- with the Finnish Transport Agency during and after pany meets the requirements set by the owner by the icebreaking season. Targets have been set for keeping its operations profitable and cash flow pos- Arctia for indicators such as ship waiting times, and itive. Arctia is currently facing a major investment the achievement of these targets is actively mon- programme that will require external financing. In itored in cooperation with the Finnish Transport order to enable these investments, the timing of Agency during the icebreaking season. investments and maintaining a healthy balance sheet are key concerns for Arctia now and in the future. Other authorities

Finnish Transport Agency The securing of winter navigation is funded from the state budget, from the administrative branch The Finnish Transport Agency determines the tar- of the Ministry of Transport and Communications. get service level for icebreaking and the number of The funding includes the contracting of icebreaking icebreakers required to achieve this level. Tenders services. The state receives income for icebreaking management system (SMS) from the shipping com- are invited from shipping companies that provide from the shipping route fees paid by shipping company. Any non-conformities identified during Trafi’s icebreaking services. The contracted icebreakers are panies, but the principle of a direct cost correlation audits must also be corrected by the specified dead- at the customer’s disposal for the duration of the between icebreaking and shipping route fees has lines. Arctia has responded to Trafi’s observations Finnish icebreaking season. In addition, the Finn- been abandoned. The Ministry for Transport and and identified non-conformities by developing its ish Transport Agency specifies the vessels entitled Communications steers and monitors the operations SMS. A significant update of the SMS is currently in to assistance from icebreakers according to the cur- of the Finnish Transport Agency and the Finnish progress, and the current system will be completely rent ice situation. Such vessels must be of sufficient Transport Safety Agency Trafi, which is responsible replaced by a more modern system that is easier to size and ice class. The Agency also decides when to for the supervision of ship safety. use. Both shore and sea personnel are involved in dispatch individual icebreakers for assistance duties Trafi monitors compliance with national and inter- the system development project. The participation and when to recall icebreakers to port. The Finnish national rules and regulations and takes care of of sea personnel has been vital to the whole pro- Transport Agency has agreements with several ship- ship inspections. Trafi’s inspectors perform audits ject, since this has ensured that the views of the ping companies on the use of icebreakers. in accordance with the ISPS and ISM Codes drawn end-user have been taken into account at all stages From its service providers, the Finnish Transport up by the International Maritime Organization IMO. of the project. Agency expects cost-efficiency and safe, punctual ISM audits can also be conducted by classification Finnish Customs collect shipping route fees from and reliable operations. The condition of the fleet societies. shipping companies on the basis of calls at Finnish is of vital importance with regard to reliability and Trafi requires safety from the shipping compa- ports. The amount of the shipping route fee varies availability. Arctia engages in a regular dialogue ny’s vessels and an impeccably functioning safety according to the ship’s size, ice class and number

10 of port visits. The return target for shipping route fees has traditionally been determined on the basis International customers Other stakeholders of the costs incurred by coastal merchant shipping services (lane upkeep, vessel traffic service (VTS), Arctia’s multipurpose icebreakers and the refitted Other key stakeholders include ports, subcontrac- hydrographical surveying and icebreaking). Cus- IB Otso are capable of operating in demanding con- tors, service and material suppliers, the media, and toms deliver the accumulated fees to the Ministry ditions across the globe. Multipurpose icebreakers various parties in civic society. Arctia engages in of Finance. Fennica and Nordica operated in ice management constant dialogue with its other stakeholders. The Arctia was obligated to pay shipping route fees duties in the Chukchi Sea in the 2015 summer sea- presence of the media on the icebreakers’ return until 2014. The legislation amendment of 2015 freed son, while IB Otso assisted in seafloor research off voyage through the Northwest Passage in October vessels engaged in icebreaking in Finnish waters by the coast of Greenland. 2015 was one way of increasing the transparency contract with the Finnish Transport Agency or treaty In addition to international conventions, interna- of icebreaking operations. with the state of Finland from shipping route fees. tional customers expect shipping companies to com- Arctia meets regularly with its external stakehold- ply with the practices and rules defined by the cus- ers and also ensures that its own personnel and the tomer. The rules set by the customer can be stricter interest groups representing them have sufficient International regulations than the requirements of general maritime regula- information on the company’s operations and future tions. The customer may also have its own non-con- plans. Arctia listens carefully to the opinions of its Vessels operating in international waters must formance reporting procedure that subcontractors stakeholders with regard to issues such as the qual- take into account the international maritime and are required to follow. ity and safety of icebreaking services, responsibility environmental codes defining and regulating such As a service company, Arctia reviews the custom- and cooperation. operations. International regulation is based on the er’s procedures with the crew taking part in the conventions of the United Nations’ International chartering and thus prepares to satisfy the demands Maritime Organization (IMO). Key international con- of the customer. We keep in close contact with the ventions include SOLAS (International Convention customer during operations and seek to rectify any for the Safety of Life at Sea) for the regulation of deficiencies without delay. maritime safety, and MARPOL (International Con- Specific regulations stricter than general mari- vention for the Prevention of Pollution from Ships), time regulations can also apply to the operating regulating the conservation of the environment. area. In Alaska, for example, the emission limits Arctia actively keeps track of changes to inter- set for ships are stricter than in international regu- national regulations. The company evaluates the lations. Arctia’s multipurpose icebreakers required impact of such changes and implements the required extensive refitting to remain below the emission changes on board its vessels. limits before they were able to operate in the area.

11 Core messages and organisation GUARDIAN OF FINLAND’S WINTER NAVIGATION, EXPERT IN ARCTIC CONDITIONS

ARCTIA ENSURES THE SMOOTH FLOW ARCTIA CONTRIBUTES TO SUSTAINABILITY AND FINLAND’S GROWTH IN THE ARCTIC OF WINTER NAVIGATION TO AND FROM • When operating on the Baltic Sea and in other marine areas, Arctia’s FINLAND’S PORTS icebreakers contribute to the protection of fragile environments from • All Finnish ports can freeze in winter. accidents. • Finnish icebreaking has solid traditions • Arctic oil spill prevention is an area of special expertise for Arctia. reaching back 125 years • Arctia is a global leader in icebreaker operations. • Icebreaking safeguards Finland’s trade • The year-round use of multipurpose icebreakers provides cost-effectiveness for and industry and thereby Finnish the company. welfare. • Arctic operations help preserve existing jobs and create new opportunities.

12 Vision

We are the leading provider of icebreaking in the Baltic Sea and polar maritime services globally.

Mission

Securing winter navigation The parent company provides administrative ser- in Finland effectively. We Organisation vices for its subsidiaries. The subsidiaries work with customers and sign chartering agreements with offer reliable and safe polar Arctia is a group whose parent company is Arctia Ltd external customers. If required, subsidiaries may maritime services globally. (formerly Arctia Shipping Ltd). Arctia Ltd is the sole also charter vessels from each other when there owner (100%) of its subsidiaries Arctia Icebreaking is free capacity. The subsidiaries own the fleet and Ltd and Arctia Offshore Ltd and owns 90% of Arc- employ Arctia’s sea personnel. tia Karhu Ltd. The management shipping company Arctia has a Board of Directors that is respon- Arctia Management Services Ltd was established in sible for company administration and for arrang- 2016. The entire share capital of the parent coming company operations in an appropriate manner. pany Arctia Ltd is owned by the state of Finland, and According to the Articles of Association, the Board the Ownership Steering Department of the Prime consists of a minimum of three (3) and maximum Minister’s Office is responsible for the company’s of seven (7) actual members. A personal deputy can ownership steering. be appointed for each Board member. The chairper- son of the Board of Directors and other members

13 of the Board are appointed by the Annual General results. The Board of Directors has established a The company has a Management Team that Meeting. The Board may appoint a vice chairper- Remuneration and Nomination Committee to sup- includes the CEO, CFO and other Senior Vice Presi- son from its membership. The term of a member port its activities. The Committee’s duties are speci- dents, as well as the Managers of Communications of the Board of Directors ends at the end of the fied in more detail in its rules of procedure, which and Security. The Management Team meets on a following Annual General Meeting. The Board of are updated on an annual basis. weekly basis. The Management Team is tasked with Directors has a quorum when half of its members The Board of Directors appoints the Chief Execu- the implementation of the company’s operations in are in attendance. tive Officer of Arctia and decides on the terms of his line with the strategy and policies specified by the The duties of the Board are specified in more or her employment. The CEO manages the compa- Board of Directors. The Team performs its duties detail in its rules of procedure. The rules of proce- ny’s day-to-day administration in accordance with under the steering of the CEO. The duties of the dure are updated annually by the Board. The Board the instructions and orders of the Board of Direc- Management Team are specified in more detail in of Directors performs an annual self-evaluation of tors and ensures that the accounts of the company its rules of procedure. The rules of procedure are its work and develops its activities according to the are in compliance with the law and that its finan- updated annually. cial affairs have been arranged in a reliable man- Long-term business objectives and policies are ner. The CEO is responsible for the achievement of defined in Arctia’s strategy. The strategy is reviewed the company’s targets. and updated on an annual basis. The company specifies the measures required to achieve the targets set out in the strategy and the indicators for monitoring the achievement of these targets. Each business and administrative unit is issued its own targets and indicators in accordance with those outlined in the strategy. The Board of Directors and Management Team regularly monitor the achievement of strategic targets, the progress of defined measures and indicator trends.

14 Board of Directors

Christer Granskog Ilpo Nuutinen Antti Pankakoski Maire Laitinen Päivi Söderholm Chairman of the Board Vice-Chairman of the Board Board member since 2012 Senior Legal Counsel, Fondia Ltd Senior Planning Officer, CEO, Oy Piceum Ab Senior Government Adviser, Year of birth: 1954 Board member since 2010 Centre for Maritime Studies Board member since 2014 Prime Minister’s Office Education: LLM Year of birth: 1953 Board member since 2010 Year of birth: 1947 Board member since 2013 Education: LLM Year of birth: 1958 Education: MSc (Tech.) Year of birth: 1964 Education: Master Mariner Education: LLM with court training, Licentiate of Laws, MSc (Econ.)

15 Management Team

Tero Vauraste Tom Ekegren Hannu Ylärinne Kari Patrakka Eero Hokkanen David Lindström Markus Aarnio Heli Lehtonen President and CEO Senior Vice President, Senior Vice Senior Vice Presi- Communications Senior Vice Senior Vice CFO, Senior Vice Icebreaking President, Offshore dent, Technology Manager President, Human President, Security President Member of the Resources & HSSE Management Team Member of the Member of the Member of the Member of the Member of the since 2010 Management Team Management Team Management Team Management Team Member of the Member of the Management Team Year of birth: 1967 since 2016 since 2015 since 2010 since 2015 Management Team Management Team since 2013 Education: Naval Year of birth: 1971 Year of birth: 1972 Year of birth: 1967 Year of birth: 1985 since 2012 since 2016 Year of birth: 1963 officer, MSc Education: Sea Education: Sea Education: MSc Education: MSc Year of birth: 1968 Year of birth: 1959 Education: MSc. Captain Captain, MBA (Tech.) (Pol.) Education: MSc. Education: (Econ.) (Econ.) Commodore (retired)

16 Values Corporate responsibility management

COMPETENT

CORPORATE RESPONSIBILITY We want to learn new things and share our expertise with our col- leagues. Competence and commit- MANAGEMENT IS BASED ON VALUES ment to goals are a requirement for our success. Arctia has defined company values that are implemented in the HELPFUL company’s management and operations. The company values have become an established part of the shipping company’s Cooperation with our clients forms the foundation of our operations. culture, having remained unchanged since 2009. We aim to satisfy our customers; their needs guide our actions. We In addition to its values, Arctia’s operations are The Arctia Group began reporting on corpo- always provide good service to our founded on the company’s statutory safety policy rate responsibility after its incorporation in 2011. clients and are proud of doing so. and environmental policy. The responsibility of Arc- From the earlier reporting of environmental perfor- tia’s operations is further guaranteed by the Group’s mance indicators and publication of human resource ethical guidelines and sustainability policy. accounts, Arctia’s responsibility reporting has grown EFFICIENT Together with the CEO, Arctia’s Board of Directors into a more extensive report encompassing the full is responsible for the implementation of corporate spectrum of corporate responsibility, implemented We create a good working atmos- responsibility in the Group’s management system in accordance with the Prime Minister’s Office’s phere by valuing our own work and, as a consequence, in the daily operations of guidelines for state-owned, unlisted companies. and that of others. We perform the Group companies. In 2015, the Board of Direc- In 2014, the responsibility report was integrated our duties professionally, safely tors highlighted some development needs regard- with the annual report for the first time. To illustrate and effectively. This guarantees the ing reporting. Reporting on corporate responsibil- the extent of Arctia’s responsibility reporting, a list continuity of our operations. ity in the annual report is a step forward in this drawn up according to the framework outlined by development. the Prime Minister’s Office has been appended to

17 the end of this report. Additional information on tions nevertheless remains a challenge. Operations reporting and reporting principles is provided at in fragile marine areas and the related direct and the end of this annual report. indirect environmental risks also raise questions with The material aspects of Arctia’s CORPORATE regard to responsibility. This brings Arctia’s strengths RESPONSIBILITY are primarily related to the Group’s to the fore: the technical capabilities of Polar-class business operations. Icebreaking is necessary for Fin- vessels and the expertise of Arctia’s competent and land’s economy, as it is the only guarantee of year- constantly improving personnel. round maritime transport. Arctia also contributes At the end of 2015, the Management Team con- to the management of the risks posed by marine vened for a corporate responsibility workshop focus- traffic through the company’s oil recovery readiness. ing on the key question’s related to Arctia’s respon- We seek to mitigate the environmental impact of sibility and the concerns of its stakeholders. The Arctia’s operations by improving the safety of our topics discussed in the workshop included corporate vessels and operations, as well as through the tech- responsibility in the wide sense, along with respon- The most significant risks applying to the offshore nical modernisation of our ships. Extending our busi- sibility reporting and topical issues. The most signifi- market consist of chartering prices and the utilisa- ness operations to cover the whole year has entailed cant concerns raised by our stakeholders were also tion rate of the vessels. Arctia seeks to manage these both financial and social benefits. discussed and targets set for them, along with indi- risks through appropriate contract structures and The risks related to Arctia’s long-term operations cators for following the achievement of the targets. cost management. The operational risks of Arctia and, consequently, responsibility, include the chang- The purpose of the workshop was to support the Offshore Ltd relate to the ageing of the fleet. The ing of transport policy with regard to winter navi- realisation of corporate responsibility by giving it technical reliability of Arctia’s vessels is maintained gation, the political nature of the Arctic operating centre stage as the only theme of the workshop. As through servicing and maintenance in accordance area, and the national and international restrictions a result of the workshop, the Management Team with a long-term service plan and through new tech- imposed on operations in the Arctic. Rapidly chang- decided to increase regular reporting on corporate nological solutions. Arctia has also initiated a fleet ing environmental regulations also pose their own responsibility and to include the issues identified in replacement programme. challenges to the company’s long-term operations, the materiality analysis in the strategy work. The The development of the Polar market as a whole applying equally to Arctia’s vessels and the ships achievement of targets will initially be reviewed on presents both risks and opportunities to the com- assisted by them. a quarterly basis, and the Management Team will pany. The progress of Arctic energy projects is The traditional problem with the social responsi- continue to report on their progress to the Board highly dependent on the global market price of bility aspect of icebreaking has been the seasonal of Directors. oil. Research in the Arctic region and in Antarctica is nature of the work. However, we have been able RISK MANAGEMENT was discussed in the work- active and of increasing importance in understand- to mitigate this issue through the development of shop as part of corporate responsibility, with the ing climate change and other global challenges. business operations. Fruitful cooperation with our Management Team deciding to update the com- Market risks are managed through charting alter- personnel in this rapidly changing field of opera- pany’s risk management policy. native customers and service forms.

18 The following aspects were Arctia Karhu Ltd is still a young company. The Seven fields with significant strategic importance business risks that can impact the company’s finan- were defined on the basis of the data, the material- identified as material in the cial situation consist of the fluctuation of demand ity analysis and the work of the Management Team. corporate responsibility workshop: due to varying winter conditions and the variation The Management Team also decided to update Arc- in towing needs, particularly in the summer season. tia’s environmental targets. ICEBREAKER/FLEET AVAILABILITY AND ITS These risks are managed through appropriate con- In many respects, the issues identified in the mate- SAFEGUARDING tract structures and cost management. riality analysis are central to Arctia’s daily operations. As a completely new subject, the workshop dis- However, we will make an effort to consolidate the More information Icebreaking services in section: cussed the WWF’s Blue Growth initiative, which the role of these elements in our strategy and, above all, participants considered commendable, deciding to to discuss them more actively with our stakeholders. FOCUS AND RESPONSIBILITY OF OPERATIONS investigate the potential for its adoption at Arctia. More information in section: Service areas The 2015 workshop considered the CONCERNS RAISED BY STAKEHOLDERS through a materiality EXPANSION OF OUR CUSTOMER PORTFOLIO AND analysis. Arctia constantly receives direct customer CUSTOMER SATISFACTION feedback, since its customer service is focused on a More information limited number of major customers and their rep- in section: CEO’s review resentatives. In 2015, feedback was also collected from other stakeholders – with a corporate image COMPETITIVENESS/COST-EFFICIENCY survey for external stakeholders and a personnel More information in section: Service areas survey for the company’s personnel. The Ownership Steering Department also gave us feedback on cor- TRUST AND COOPERATION WITH STAKEHOLDERS porate responsibility and reporting on it. We performed a materiality analysis of this data to iden- More information Operating environment in section: tify the factors most significant for Arctia and its strategy, which Arctia also has a realistic chance of LEADERSHIP influencing. More information in section: Personnel and governance

RISK MANAGEMENT

More information in section: Occupational health and safety

19 operations, and the ship was chartered to Green- land for the summer. Chartering during the sum- Financial responsibility mer has significantly improved the utilisation rate of Arctia’s vessels and correspondingly the company’s productivity and profitability. At the same time, the agreements have ensured that sea personnel have GROWING INVESTMENTS, accumulated the amount of annual working days specified in their employment contracts. Arctia achieved its financial targets in 2015. The STEADY CASH FLOWS company’s profitability and performance were solid and cash flow remained positive. Arctia is Arctia’s task is the efficient and profitable provision of icebreaking services in constantly maintaining its profitability and performance through active measures in order to fulfil accordance with the going concern principle. Arctia’s icebreakers safeguard the duties assigned to it by its customers. We are Finnish exports and imports in the winter season and guarantee the economic constantly monitoring costs through regular performance reviews and profit forecasts. viability of northern ports and business. Performance reviews must be reliable and kept up to date so that the company can make the required The Arctia Group’s primary FINANCIAL TARGETS are The company’s entire fleet capacity was utilised business decisions based on its results. Both the the profitability of business operations, a positive in accordance with the agreements valid for 2015. accounting and cost accounting systems of Arctia operational cash flow, and increasing maintenance Until May, Arctia’s conventional icebreakers were were updated in the 2015 fiscal period. The update investments with the company’s own cash flow. chartered for icebreaking in accordance with the of the cost accounting system in particular facili- Increasing the utilisation rate of Arctia’s fleet is also icebreaking agreement. Due to the mild winter, the tated budgeting and forecasting significantly and one of the company’s most important goals with icebreaking season began late towards the end of laid the foundations for rolling forecasts. regard to long-term profitability. Financial targets the year, and only a single vessel was engaged in The company must have sufficient solvency to are set separately for each business unit and their icebreaking duties at the end of 2015. The multi- enable investments in the fleet. The average age of realisation is monitored on a monthly basis. The purpose icebreakers were on stand-by in early 2015, Arctia’s fleet is roughly 35 years, and in the future most important financial indicators are turnover, but did not engage in actual icebreaking operations the monetary amounts of investments required to operating profit, operating margin and cash flow, due to the mild winter. maintain the fleet in good condition will grow. Gross along with the return on equity, return on invest- For the summer, the multipurpose icebreakers investment in 2015 totalled approximately EUR 15 ment and solvency. The realised figures for these operated in Alaska under their chartering agree- million, and investment will probably remain at this indicators are presented in the financial statement. ment. IB Otso was also converted for international level for the next few years.

20 Arctia does not receive financial subsidies from CASH FLOWS TO STAKEHOLDERS, MEUR the government. The state owner requires future 2015 2014 2013 investments to be financed with equity and loan CUSTOMERS capital obtained by the company itself. Operating income 68.5 61.7 63.7 Arctia’s most significant financial impact, particu- Turnover 62.1 61.3 63.0 larly in the northern regions of Finland, is secur- Other operating income 6.4 0.4 0.7 ing the continuity of business by keeping the sea lanes open and safe during the winter season. A GOODS AND SERVICE SUPPLIERS 19.3 16.5 15.9 major part of Finland’s imports and exports are Material and service acquisitions 9.2 8.3 7.8 Other operating costs 10.1 8.2 8.1 transported by sea, which makes safeguarding the smooth flow of marine traffic round the year vital STAFF 20.5 18.9 21.3 to the continuity of commerce. Personnel expenses 20.5 18.9 21.3

PUBLIC SECTOR 2.0 1.8 1.8 Charity and sponsorship Taxes (income tax) 2.0 1.8 1.8

A decision in principle made in 2013 specifies that NON-PROFIT CORPORATIONS 0.0 0.0 0.0 Arctia does not support or sponsor sports or sign co- Sponsorship and donations 0.01 0.01 0.01 operation agreements related to sports. Arctia does not support religious organisations or political parties. SHAREHOLDERS 7.9 0.0 0.0 In 2015, Arctia donated its Christmas present Dividends paid to owners 7.9 0.0 0.0 funds (EUR 900) to the Clean Baltic Sea projects of the John Nurminen Foundation. FINANCERS 0.8 0.7 0.8 Financing costs (net) 0.8 0.7 0.8

CHARITY AND SPONSORSHIP, 2015 2014 2013 EUR FUNDS RETAINED FOR THE DEVELOPMENT OF THE COMPANY’S OPERATIONS 18.0 23.8 23.9 Children and youth 200 1,000 0 Science, research and INVESTMENTS 14.8 15.6 17.7 education 11,044 8,240 8,520 Culture 0 0 0 The figures are reported according to the company’s accrual accounting in millions of euros. Sports and exercise 0 0 2,500 Political subsidies 0 0 0 Civic and environmental organisations 1,100 200 200

21 2013 Tax footprint in 2015 Withholding tax, Finland

2014 5.5 The tax footprint refers to the taxes and equivalent Real estate tax 4.7 fees received by society from a company’s opera- 2015 tions. Arctia’s tax footprint was EUR 14.0 million in 4.8 2015. The greatest part, EUR 8.0 million, resulted 0.2 Withholding tax, Greenland from withholding tax and employer’s contributions. 0.01 0.2 The appropriate and timely management matters 0.01 related to taxation is of key importance to Arctia. Employer’s 2015 As a rule, tax planning is carried out and the dec- contributions VAT, sales 1.1 1.7 3.0 MEUR 14.0 1.4 1.3 1.2 larations and reports related to taxes are drawn up by the company’s financial unit. External taxation specialists are consulted when necessary. Arctia engages in tax planning within the limits permitted 1.9 2.7 by the Business Tax Act. The planning related to the depreciation of fixed assets, with the aim of bal- 3.1 2.8 ancing taxable income over different fiscal periods. 0.1 2.9 All Arctia Group companies are incorporated in 2.3 Finland and pay their taxes primarily to Finland. VAT, purchases 0.1 The company sold its services to the United States Income tax and Greenland in 2015. Potential tax liabilities were Other taxes, shipping route fees investigated for both countries. The taxes withheld from the salaries of personnel operating in Greenland were paid to Greenland, since persons working in Greenland’s economic area sulted on this matter. We drew the conclusion that nal Revenue Service). The report did not result in are subject to local withholding tax legislation. a fixed place of business was not established by Arc- any further action with regard to the Arctia Group. In the United States, we determined whether or tia in the United States in 2015, and the company A report on 2015 will also be delivered to the IRS. not Arctia could potentially be considered to have was therefore not liable to pay taxes in the USA. A established a permanent place of business in the report on Arctia’s operations in US waters in 2012– USA. Both Finnish and US tax specialists were con- 2014 was delivered at the request of the IRS (Inter-

22 Society and human rights

BREAKING ICE FOR THE FUTURE Through research and training partnerships, Arctia both consolidates its own expertise and contributes to building a sustainable future for the Nordic region and Finnish winter navigation.

LOCAL COMMUNITIES have a noticeable part in Arc- breaker base in Katajanokka. Arctia Karhu Ltd is In 2015, the Federation of Finnish Special-Purpose tia’s daily operations. In 2015, CEO Tero Vauraste domiciled in Kemi, and the company cooperates par- Ship Employers (SET), of which Arctia is a member, and Liisa Holmberg, Rector of the Sámi Education ticularly closely with the Rescue Services of Lapland. jointly established the Harjoittelumylly Association Institute, were appointed Ambassadors for Lapland, Arctia participates in training new seafarers by with eight maritime institutes operating in Mainland i.e. partners of the region’s joint marketing and taking trainees from Finnish maritime institutes on Finland and an institute based in the Åland Islands. communications body, the House of Lapland, in rais- board its vessels, and through academic coopera- The purpose of Harjoittelumylly is to coordinate and ing awareness and gaining news coverage for sub- tion, such as the annual icebreaking course organ- promote the efficient use of trainee posts on vessels. jects important to Lapland, both in the traditional ised for MSc (Tech.) students each year. Arctia also This supports Finnish maritime education through and social media. As a company, Arctia seeks to contributes to the improvement of Finnish naviga- practical training on ships. Arctia’s staffing manager highlight Finland’s Arctic expertise and questions tion expertise by taking part in research cooperation represents SET on the Board of Harjoittelumylly. related to the North. with universities of applied sciences, universities, Arctia is also locally active in Helsinki in the form and other research institutes. We cooperate with of cooperation with the Katajanokka Society and regional authorities in the form of various rescue local maritime rescue associations near the ice- and other drills.

23 Arctia pays attention to the PREVENTION OF BRIB- ers in icebreaking and Arctia take turns in organ- required to confirm their compliance with winter ERY AND CORRUPTION. The Arctia Group’s Ethical izing these events. navigation rules over the radio. The rules include Guidelines define the anti-bribery and anti-corrup- As a whole, Arctia communicates with its custom- a detailed description of the responsibilities of the tion principles applying to all Group personnel. ers on a daily basis and implements the principle of recipient and provider of the service. constant improvement in its operations. With regard Arctia complies with national and international to Arctia’s most important customers, the main indi- Arctia respects HUMAN RIGHTS and takes them into REGULATIONS ON COMPETITION. Arctia’s Ethical cators are the waiting times for icebreakers. Any consideration in its operations. Arctia has a sustain- Guidelines define procedures for matters such as non-conformities in the operation of Arctia’s ves- ability policy in place, which clearly indicates the the handling of confidential information. sels are immediately apparent in these indicators. company’s commitment to human rights. Arctia also Arctia’s icebreakers suffered some chartering inter- has Ethical Guidelines in which human rights are COMPLIANCE WITH LEGISLATION AND REGULA- ruptions in 2015, but the mild ice winter mitigated addressed. Arctia seeks to take the rights of children TIONS is monitored by the operative manage- the effects felt by customers. into account, for example by supporting family leave ment, ships’ masters and other supervisors. The also among personnel in ship rotation. Group’s auditors monitor its compliance with leg- WINTER TRAFFIC IN FINNISH PORTS* 2015 2014 2013 islation related to financial administration, such as FAMILY LEAVE Percentage of vessels that the Accounting Act and Ordinance and the Limited entered port without waiting 2015 2014 2013 Liability Companies Act. As shipping companies, (%) 97.0 96.6 94.2 persons days persons days persons days Arctia and its subsidiaries are audited annually by Vessels waiting (pcs) 111 254 783 Men 10 235 7 262 8 211 the authorities. Average waiting time/vessel (h) 4.97 3.16 3.70 Women 3 642 3 698 3 533

*Shared performance data for all icebreakers chartered by the CUSTOMER SATISFACTION is important to Arctia, Finnish Transport Agency with regard to both direct customers and the end SUPPLY CHAIN MANAGEMENT AND PROCUREMENT customers of icebreaking, i.e. commerce and indus- SERVICE SAFETY is of first importance to Arctia. The PRINCIPLES were greatly improved at Arctia in 2015. try. Arctia monitors the scores given to it by end cus- safety of services is monitored as part of the safety The company hired a purchasing manager whose tomers on an annual basis, and the company has management system, and the root causes of and cor- field of responsibility includes procurement, sup- committed to a separately defined good level of rective measures required by any non-conformities plier audits and drawing up guidelines for suppli- service in its agreement with the Finnish Transport are investigated thoroughly. More information on ers. Arctia does not outsource the implementation Agency. Arctia receives feedback from its customers ship safety is available in the annual report’s sec- of its services and performs the majority of work and stakeholders through daily communication, but tion on safety. itself. Suppliers are used for tasks requiring special also at various events organised for customers, such From 2014, the users of icebreaking services pro- expertise. Arctia has a procurement policy in place, as icebreaking feedback briefings. The stakehold- vided by the states of Finland and Sweden have been specifying aspects such as procurement thresholds.

24 The development of cooperation and the commu- resent 70 per cent of Arctia’s total procurement vol- nication of Arctia’s requirements to subcontractors ume. continued in 2015. Specific written guidelines in the Arctia presented its operating methods and tar- form of the Subcontractor Management Plan were gets for subcontractors at an event organised for drawn up to facilitate this development. At the same journalists in the spring of 2015. The event was also time, these guidelines meet the demands of Arc- used to collect feedback on Arctia’s operations, tia’s customers and demonstrate how a high-qual- while emphasising the fact that quality and conti- ity result can only be reached by working together nuity can only be guaranteed when both parties are with a functional, competent and reliable network willing to improve. Arctia will continue to organise of subcontractors. such media events in the future as well. The company reviewed its subcontractors in 2015 Our subcontractors have responded commendably and confirmed that they had registered with the to our clarification requests and the development tilaajavastuu.fi service or supplied the documenta- needs identified during audits. Their responses to tion required by the service. The subcontractors criti- shortcomings and development will be monitored cal to Arctia’s operations were also audited using a in connection with re-audits. shared questionnaire. The audited companies rep-

25 Environment EFFICIENTLY AT SEA AND AT BERTH From an environmental perspective, maritime transport is a good way to transport goods. Arctia enables it round the year.

Arctia takes the environment into account in all of icant ENVIRONMENTAL IMPACT of Arctia’s opera- When the icebreakers are docked at the ice- its operations. We comply with the regulations of tions. When the indirect positive environmental breaker base in Katajanokka, they are connected the International Safety Management Code (ISM impact of icebreaking – securing environmentally to municipal utilities. During such periods, the ice- Code) and the International Maritime Organisation’s friendly maritime transport also in winter – is taken breakers obtain their water, district heating and (IMO) International Convention for the Prevention into account, however, its benefits can be consid- electricity from shore and discharge their sewage of Pollution from Ships (MARPOL Convention), ered to outweigh the direct negative environmen- into the city network. When the harbour icebreaker along with national guidelines and regulations. tal impact. Ahto is at pier, it is connected to shore power and its The operating profile of icebreakers roughly con- Arctia always strives to operate in the most eco- waste water is discharged into a collection vehicle. sists of two highly different aspects: actual oper- nomical and fuel-efficient manner possible. A sep- In 2015, the Arctia Group carried out an energy- ations, such as icebreaking, ice management and arate energy-saving project was launched in 2013 efficiency review, which was extended beyond the transfer voyages, and periods spent docked or in to improve the energy-efficiency of Arctia’s vessels. requirements of legislation. An on-site inspection maintenance, mostly during the season of open The project is still in progress. The energy review was carried out on board IB Urho, with particular water. required by the project was carried out in 2015 as emphasis on the guidelines and automation related The emissions generated by fuel consumption well. The switch to lighter fuel is particularly appar- to ventilation and its adjustment. The energy review during the operational period are the most signif- ent in the particle emissions of Arctia’s vessels. complements the energy-saving project extending over several years.

26 Operations in 2015 were particularly affected by SHORE POWER USE 2015 2014 2013 Environmental targets (MWh) the late onset of winter in both 2014–2015 and

for 2016: 2015–2016 and the consequent low demand for ice- Katajanokka 2,700.36 2,602.64 2,482.00 breaking. Due to the mild winter, the start of the harbour icebreaker Ahto’s operations in 2015 did District heat not have much impact on the fuel consumption of When the ships are moored to the icebreaker dock 1. A minimum of one ship will be harbour tugs. On the other hand, the transfer voy- in Katajanokka, they are heated from the City of equipped with energy-consumption meters for measuring the current ages of the multipurpose icebreakers and IB Otso Helsinki’s district heating network. When ships arrive level of consumption and changes to Alaska and Greenland increased consumption in port, they are connected to district heating and in it. The objective is to improve fuel in the summer. their boilers are shut down. and electricity economy in a target- Arctia first set ENVIRONMENTAL TARGETS for oriented manner over the long term. 2013. The targets were updated in 2015 and are 2015 2014 2013 now focused on the measurement of energy con- WEATHER-ADJUSTED ENERGY 2. The use of tank water for drinking sumption and thereby on saving energy, upgrading CONSUMPTION (MWh) 5,808 5,430 3,852 (tank water quality) will be promoted deck engines to use biodegradable oil and reduc- with the objective of giving up the use ing the use of bottled water on board vessels. The In 2015, The SEEMP (Ship Energy Efficiency Man- of bottled water altogether. targets are monitored and their realisation will be agement Plan) plans for controlling the consump- reported in the 2016 annual report. tion of FUEL were in use for the third year at Arctia. 3. In connection with the regular vessel The energy-saving project launched in 2013 with a maintenance programme, the oil Electricity focus on saving fuel continued. The multipurpose of equipment that may leak oil During their maintenance period in the summer icebreakers Fennica and Nordica operated on a into the water will be switched to months, Arctia’s conventional icebreakers are con- highly environmentally friendly ultra-light fuel. IB biodegradable oils recommended by nected to the electricity network of the City of Ahto started harbour icebreaking operations in 2015, the device manufacturer. Helsinki and their engines are stopped to avoid and Arctia Karhu Ltd is now operating with a fleet emissions and noise. In order to reduce electric- of three vessels. Two of the vessels are chartered ity consumption and improve energy efficiency, from the Port of Kemi. In 2014, the Arctia Group’s we are preparing to update the electrical systems icebreakers stopped using heavy fuel oil altogether, and procedures on our conventional icebreakers. A which decreased the company’s sulphur emissions reduction in electricity consumption on board ships by a considerable degree. has a direct impact on fuel consumption and thus decreases aerial emissions.

27 FUEL OIL CONSUMPTION 2015 2014 2013 in the following table are based on the ships’ own The ships’ waste-management plans and the recep- (tonnes) consumption tracking, which does not give a fully tion capabilities of the Katajanokka base will be Ultra-light 8,722.90 5,738.10 9,424.26 comprehensive report on water use while moored updated to correspond to the requirements in the Light 4,194.24 178,662.20 6,423.78 in Katajanokka. updated guidelines. Heavy - 1,652.06 6,124.00

3 WATER CONSUMPTION (m ) 2015 2014 2013 Refrigerants Multipurpose icebreakers 6,787.20 5,500.70 6,553.00 The refrigerants most commonly used in on-board 2015 2014 2013 CARBON DIOXIDE Conventional icebreakers 4,660.00 5,688.00 6,947.00 refrigeration equipment are potent greenhouse EMISSIONS CREATED BY FUEL COMBUSTION gases that are harmful to the ozone layer. Arctia (tonnes) 42,044.25 27,127.64 69,878.95 WASTE is collected and sorted on board Arctia’s has given up the use of such gases and switched vessels and recycled at the waste-collection points to alternative refrigerants. Arctia’s refrigeration provided by ports. When vessels are operating out- equipment is maintained by authorised mainte- AERIAL EMISSIONS side specially protected areas, solid waste can be nance companies. OTHER AERIAL EMISSIONS 2015 2014 2013 incinerated in the on-board incinerator. This is only (tonnes) possible when permitted by environmental legisla- Waste management training and plans CO 59.6 45.4 94 tion, however. New employees are introduced to the shipping com- HC 23.8 18.1 37 When ships arrive in port, they dispose of their pany’s waste management system during their ori- NOx 662.7 635.0 1,312 waste in the collection containers provided by ports, entation. Particles 16.6 13.6 28 from which the port then delivers the waste for

CH4 3.0 2.3 5 recycling or to the landfill. In order to maintain When ships are at sea, they sort solid waste into the

N2O 1.0 0.8 2 the target level for sorting waste, Arctia’s vessels following dedicated receptacles: have commissioned the collection of organic waste • Organic The effects of catalytic converters and the oxycat have been when necessary. Arctia Icebreaking Ltd is responsible • Waste-to-energy taken into account in the emission figures. for waste management at the base in Katajanokka, • Paper and cardboard and has arranged sorting for waste-to-energy and • Mixed waste organic waste. The cooking oil used by the ships’ • Glass catering departments, for example, is recycled for • Metal FRESH WATER CONSUMPTION is not a major factor energy recovery. • Hazardous waste (paint pots, fluorescent in Arctia’s service provision. However, the Group In 2015, Arctia updated its waste-processing lights, oily waste, etc.) seeks to keep it at a reasonable level. The envi- guidelines to comply with current requirements • PVC ronmental targets set in 2015 addressed the use of and to take the processing degree of waste into • Batteries drinking water in particular. The results presented consideration when choosing the disposal method.

28 WASTE 2015 2014 2013 Arctia achieved its COMPLIANCE targets in 2015 AIR TRAVEL 2015 2014 2013 Sorted solid waste m3* t t and kept ENVIRONMENTAL COSTS at a reasonable All flights (kg CO2) 862,360 256,878 820,726 Organic 11.49 7.50 7.42 level. Arctia did not cause any environmental dam- Plastic 5.52 3.28 2.755 age in 2015. The MATERIALS used by Arctia for service provision Glass 1.36 1.88 2.12 Arctia has set itself a target of zero emissions. Due are primarily related to ship maintenance, servicing Cardboard 3.20 3.39 4.33 to the moderate development of fuel prices, the use and repairs, which require paint, solvents, deter- Metal 60.06 15.80 8.5 of fuel compliant with the emission limits for the gents and cleaning agents each year. Material con- Paper 5.60 5.10 4.7 Baltic Sea did not result in significant changes. The sumption has only been monitored at the cost cen- Other 17.58 0.90 0.35 most significant change in environmental legisla- tre level. Mixed waste 41.67 80.8 27.7 tion and operations with regard to the Arctia Group The environmental targets updated at the end of will be the upcoming legislation on ballast water. 2015 include the objective of replacing the oil used Hazardous waste Of existing regulations, both the Sulphur Directive by deck machinery, subject to the device supplier’s Oily waste (t) 2.73 3.31 2.123 (2005/33/EC) and the Energy Efficiency Design Index approval, with biodegradable oil where there is a Batteries (pcs) 2,432 1,950 2,442 (EEDI) applied to the design of new ships will have risk of discharge into the sea. Light bulbs, etc. (pcs) 1,275 1,745 1,430 major effects on customer needs. PREPARING FOR ENVIRONMENTAL RISKS is an Other (pcs) 550 181 111 The environmental impact of the TRANSPORT AND increasingly important factor in all responsible oper- TRAVEL required by Arctia’s operations is minor in ations, particularly in the maritime sector. The Baltic Hazardous waste, liquid comparison to, for example, the carbon dioxide Sea and Arctic areas are fragile ecosystems. Arctia’s Oils (l) 277,000 328,441 311,700 emissions released from the ships’ fuel. Arctia will expertise contributes to ensuring the sustainable Paint (kg) 284 387 244 nevertheless seek to avoid unnecessary transport development and exploitation of these fragile areas. Coolants (kg) - 0.60 0 of its personnel. The spare part situation of Arctia’s The safety management system of every Arctia Refrigerants (kg) - 26.60 (-) vessels is monitored continuously, and the ships seek vessel includes an environmental section. The envi- Other (kg) 270.50 64.60 38 to carry a sufficient number of spare parts on board. ronmental section defines the most significant risks The travel resulting from the rotation of sea per- to the environment and includes instructions for the Liquid waste (m3) sonnel contributes to the other carbon dioxide emis- eventuality of environmental damage. The risk man- Processed bilge water, other sions caused by Arctia’s operations. The number and agement frameworks of the safety management oily water 1,107.85 764.70 460.15 length of rotation trips depend on the vessel’s oper- system also make sure that environmental risks are Lavatory water 1,961.45 865.60 733 ating area and the number of annual operating days. taken into account in the planning and execution Other 4,107.75 900.60 820 of work. Arctia has secured its operations with con-

tractual arrangements based on risk assessments and with comprehensive insurance cover. *NB. The unit will be changed to cubic metres in 2015.

29 Arctia’s icebreaker Kontio was the European Mar- for recovering oil from ice. The harbour tug Jääsalo itime Safety Agency’s (EMSA) on-duty oil recov- chartered by Arctia Karhu Ltd was also fitted for ery vessel for the northern Baltic Sea in 2015. The oil recovery with open-water collection equipment. agreement stipulated quarterly exercises, and one The functioning of the equipment was tested in oil of these was held in the sea ice off Oulu. For the recovery drills. Ahto’s equipment and readiness is icebreaking season, Kontio’s oil recovery equipment being developed further by a joint project with the was stored in Oulu, from where it could be easily device supplier. The project is funded by Tekes, the mobilised. Open-water exercises were carried out Finnish Funding Agency for Innovation. together with maritime rescue associations based in the Capital Region and with the Border Guard. The participants of the European Coast Guard Func- tions Forum hosted by the Finnish Border Guard were also shown around the Kontio. The agreement between the Rescue Services of Lapland and Arctia Karhu Ltd for oil recovery in the Bay of Bothnia entered into force in 2015. The harbour icebreaker Ahto was outfitted with equipment

30 Service areas OIL RECOVERY SERVICES Icebreaker Kontio has been fitted out as an oil recovery ship with a number of recovery systems and a large tank for recovered oil. Kontio is an on-duty ship of the European ICEBREAKING IN THE BALTIC SEA Maritime Safety Agency. Arctia is also The conditions and the extent of ice cover interested in upgrading its other icebreakers in the Baltic Sea vary from year to year. Fin- into oil-recovery vessels. land’s industry and business require regular and reliable shipping also in winter. Arctia’s icebreakers assist merchant vessels in diverse manners, ensuring the smooth flow of HARBOUR ICEBREAKING winter navigation in every respect. Arctia offers harbour icebreaking services in the Bothnian Arc. The company’s vessels operating in this area consist of the state-of-the-art icebreaker OFFSHORE SERVICES Ahto and harbour tugs Ulla and Jääsalo. The operations of this business unit Ahto is also fitted with modern oil are based on the use of multipurpose recovery equipment. icebreakers outside the Finnish icebreaking season. Fennica and Nordica are suitable for a multitude of demanding maritime operations, in both icy and open waters.

31 Maintenance and long-term agreements ensure Icebreaking services Icebreaking services vessel availability

Regular maintenance ensures that Arctia’s icebreakers remain operational for as long as possible. In the KONTIO AND OTSO KEPT BUSY IN summer, the Urho underwent classification docking and the related maintenance in Naantali. The Sisu’s main electric drives were updated in the autumn in THE BAY OF BOTHNIA Katajanokka as part of the ship’s life span extension. The scheduled servicing and maintenance work of The winter in 2015 was very mild, but increased the waiting times of merchant vessels. Arctia’s conventional icebreakers were performed areas of compacted slush and strong Traffic nevertheless remained reasonably smooth in the Katajanokka base, while the multipurpose due to the mild winter, and the situation did not icebreakers underwent maintenance in Rauma. winds made assistance operations cause significant disruptions to the area’s industry. Safeguarding the availability of icebreaking more challenging. The Group lost EUR 4.2 million in turnover and EUR services is a crucial goal for Arctia. Multi-year 1.3 million in operating profit due to the strike. chartering agreements and close cooperation Due to the mild weather, only Kontio and Otso were During the icebreaking season, 96 per cent of with the Finnish Transport Agency guarantee the engaged in assistance operations in the Bay of Both- vessels did not have to wait for assistance as speci- availability of vessels for securing Finland’s win- nia in 2015. The remaining conventional icebreak- fied in the quality target, and the average waiting ter navigation. ers were on stand-by in Katajanokka and the multi- time target of less than four hours was met for those purpose icebreakers Fennica and Nordica in Rauma. that did have to wait. The average waiting time for The icebreaking season began on 25 December Arctia’s icebreakers was 3.65 hours. 2014 and ended at the beginning of May when the In mid-April, Arctia Icebreaking Ltd signed an last icebreaker arrived in Helsinki on 7 May 2015. A agreement with the Finnish Transport Agency for total of 182 (350) operating days were accumulated the purchase of an icebreaker currently under con- during the winter season. There were no off-hire struction. The vessel will be transferred to Arctia’s days due to technical reasons, but a strike of Arc- ownership once it has been completed. The new tia’s sea personnel caused 46 off-hire days during vessel is the first LNG icebreaker in the world the icebreaking season. and is also capable of oil-recovery and emer- The strike began in March and interrupted the gency-towing operations. The purchase price operations of the fleets of Arctia Icebreaking Ltd of the new environmentally friendly ship, and Arctia Karhu Ltd in the Bay of Bothnia, which named Polaris, is EUR 128 million.

32 Gulf of Finland, and the first icebreaker set off for the extraordinarily mild. As an exceptional feature of Bay of Bothnia. At the turn of the year, the northern the 2014–2015 ice winter, the Bay of Bothnia never Icebreaking services Ice winter 2014–2015 in part of the Bay of Bothnia was covered by fast ice to froze completely. This is probably only the second a thickness of 10–20 cm, and the Vaasa archipelago such occurrence in a hundred years. the Baltic Sea was frozen over by an even sheet of thin ice. March was also very mild. On the coast of Ostro- January was milder than usual in Finland’s waters, bothnia and in the northern parts of Finland, the with the deviation from the average temperature average temperature for the month deviated by The 2014–2015 ice winter was mild varying between 2 and 3.5 degrees. The month was more than four degrees from the long-term average. and shorter than average, with very also characterised by large fluctuations in temper- As a rule, such mild weather is experienced in March ature, with alternating mild and cold spells. On 23 only once or twice a century in these areas. The little ice on the Baltic Sea. The winter January, towards the end of the cold spell, the fro- weather was also mild in the sea areas surrounding also ended unprecedentedly early. zen area expanded to 51,000 km², which remained Finland, being from 3.5 to 5 degrees warmer than the greatest extent of ice cover for that winter. Once the average. At the end of March, only the northern- The ice winter peaked uncommonly the weather turned, south-westerly winds pushed most parts of the Bay of Bothnia remained frozen, early, on 23 January, when an area of the ice into packs, and only an area of 30,000 km² with some isolated pockets of ice at the bottom of remained frozen at the beginning of February. the Gulf of Finland off Primorsk and in Vyborg Bay. 51,000 km² was frozen. As in January, the temperature fluctuated con- The extent of the ice cover was approximately siderably in early February, and the frosts at the 13,000 km² at the beginning of April and 5,000 km² The Baltic Sea began to freeze in mid-November beginning of the month again caused the ice cover at the end of the month. In comparison to the long- 2014, starting with the coastal areas of the bottom to expand, with an area of 50,000 km² frozen over term average, April was warmer than usual in the of the Bay of Bothnia and proceeding slowly to other on 5 February. The end of the month was uniformly entire country, with the deviation being approxi- areas. At the beginning of December, the sea water mild, and February ended up being almost a repeat mately one degree in the southern and central parts was between 0.5 and 1.5 degrees warmer than aver- of the previous year, when it was also extraordinar- of Finland and 2–3 degrees further north. age. At that time, only the coves at the bottom of ily warm. Strong south-westerly winds packed the The ice cover shrank rapidly in early May, retreat- the Bay of Bothnia and the shoreline of St. Peters- ice into the north-east corners of the Bay of Both- ing by nearly a thousand square kilometres each burg had frozen. Early December saw exceptionally nia and Gulf of Finland in February, and ice only day. Ice services were terminated on 7 May, setting clement weather, and the ice did not spread. As a occurred over an area of 21,000 km² at the end of a new record. At that time, only an area of 68 km² whole, December was warmer than usual. The air the month. The average extent of the ice cover in at the bottom of the Bay of Bothnia remained fro- temperature was approximately two degrees higher February over the past 10 winters is 117,000 km². zen. A few days later, on 10 May, the last of the ice than the average in Finnish waters, and up to four The average temperature for the winter months, had melted on the Baltic Sea. degrees warmer in the Bay of Bothnia. i.e. December–February, was higher than usual in A cold spell occurred in December, creating new the whole country and exceptionally high in South- Jouni Vainio ice on the Bay of Bothnia and at the bottom of the ern and Central Finland. As a whole, the winter was Ice Expert, Finnish Meteorological Institute

33 Offshore services Offshore services

CONQUERING THE NORTHWEST PASSAGE Otso converted into an Arctic icebreaker, Fennica and Nordica traverse the Northwest Passage

In 2015, Arctia’s most significant investment in international icebreaking services was the conversion of Otso into a polar icebreaker alongside Fennica and Nordica. The conversion work began in April and was finished in July. Otso was fitted with a flume tank in the Rauma dockyard, its safety equipment was updated to correspond to the standards required in international traffic, and the ship’s ice class was improved by reinforcing its hull. A new, removable helideck was also installed on Otso, and a classification docking was performed for the vessel. After the conversion work, Otso operated in the waters of Greenland in July and August, chartered by TGS, a Norwegian company specialising in seafloor research.

34 In late 2014, the Finnish Transport Safety Agency After the icebreaking season, the ships departed

Offshore services Trafi ruled that multipurpose icebreakers Fennica for the Chukchi Sea to protect oil drilling platforms and Nordica can be classified as SPS vessels (Spe- from the effects of ice. The operation also entailed cial-Purpose Ship) after having the required con- various measures related to monitoring of environ- version work performed. The technical conversion mental impacts. The ships were also prepared to work required by the new classification was per- provide assistance in possible oil recovery missions. formed, and the ships passed their SPS inspections Arctia’s ships were chartered to Alaska from April and were designated as SPS vessels according to the to October and to Greenland from July to October. new official requirements in the spring. The fleet accumulated a total of 380 operating days From January to April, both multipurpose ice- (78). Taking the icebreaking stand-by period into breakers were chartered for icebreaking in the Bal- account, Fennica’s utilisation rate was 85 per cent tic Sea in accordance with the agreement signed and Nordica’s 89 per cent. with the Finnish Transport Agency. The ships accu- Multipurpose icebreaker Fennica was grounded mulated no operating days in icebreaking during in July and sustained minor damage. After repairs, 2014 and 2015. the ship was once more ready for operations at

the end of July. The incident had no impact on the customer’s project and did not cause injury or Turnover Profit environmental damage. Arctia incurred a loss of MEUR MEUR approximately EUR 0.7 million due to the incident. At the end of the third quarter, Shell announced 50 15 that it would terminate oil prospecting in Alaska for the time being. This announcement will have 40 2015 12 2015 39.9 12.6 no impact on Arctia’s result for 2015. Arctia Off- 30 9 shore’s agreement will remain valid for 2016. 2014 2014 Fennica and Nordica returned to Northern 20 35.8 6 11.8 Europe via the Northwest Passage, traversing Can- 10 3 2013 37.3 2013 13.0 ada’s Arctic Archipelago. Scientists, media repre- 0 0 sentatives and ship builders joined the ships for 15 14 13 15 14 13 the voyage.

35 Major oil accidents require efficient oil-recovery departure protocols was tested with desk exer- operations and resources surpassing those of indi- cises. In 2015, the annual oil-recovery seminar Oil recovery services Oil recovery services vidual nation-states. In the eventuality of a major focused on the oil recovery depot of the Rescue oil spill, the European Maritime Safety Agency Services of the City of Helsinki. (EMSA) offers its member states additional capac- Arctia’s own research project focusing on oil ity in the form of large oil-recovery vessels. The recovery from ice, IMOR (Ice Management in EMSA has chartered Arctia’s IB Kontio as its on- Oil Recovery), was launched in 2015, but field PREPARED FOR OIL duty ship in the northern Baltic Sea. Kontio is at tests were postponed until 2016 due to the 24-hour readiness to depart for oil recovery duties mild ice winter. The goal of the IMOR project round the year. The ship is equipped with two sys- is to improve the ice management procedures RECOVERY tems for oil recovery from open water and with required by oil recovery in winter. Major oil spills require large vessels a skimmer for operations in ice. In 2015, Arctia Karhu Ltd signed an oil-recov- Arctia maintains the crew’s oil-recovery capa- ery readiness agreement with the Rescue Ser- with oil recovery capabilities. Arctia bilities with continuous training. Kontio’s quar- vices of Lapland and entered oil-recovery read- stands ready to support the oil recovery terly exercises were carried out normally in 2015, iness in the Bay of Bothnia. The framework of the first in ice off Oulu and the remaining three the agreement is built around the harbour ice- operations of Baltic Sea countries with the in open water off Helsinki. The open-water exer- breaker Ahto and its state-of-the-art equipment hundred-metre Kontio and its 2,000 cubic cises were implemented in cooperation with the for recovering oil from ice. Open-water oil recov- Finnish Coast Guard and Finnish Lifeboat Institu- ery equipment was also acquired for the harbour metres of oil recovery capacity. tion. In addition, the functioning of alarm and icebreaker Jääsalo chartered by Arctia Karhu. The usage trials and acceptance drills for the equipment were held in 2015. Arctia’s other icebreakers can also be outfitted for oil recovery duties if required. In winter, icebreakers work at hubs of merchant vessel traffic, and equipping them to operate as oil recovery vessels would significantly enhance current oil spill response readiness. The icebreaker pier in Katajanokka, Helsinki, is situated close to the most significant Baltic oil transport lanes.

36 Harbour icebreaking services Harbour icebreaking

The winter was mild in 2015, but Arctia Karhu RELIABLE LOCAL SERVICES Ltd’s harbour icebreaker Ahto and the tug Jääsalo chartered by the company nevertheless operated in the ports of Tornio and Kemi. The harbour ice- FOR PORTS breaker Ulla served as a backup vessel. The harbour icebreaking season ended in early April. During the Arctia’s harbour icebreaker Ahto Arctia Karhu Ltd is a company jointly owned by Arc- open-water season, the vessels of Arctia Karhu Ltd tia and Port of Kemi Ltd. The company’s field of assisted merchant vessels in port and operated in started a new era in service provision business is harbour icebreaking, towing and assist- other duties in Finland and its neighbouring areas. for Finland’s northern ports. The ing ships, cargo transport and other functions in The escort towing trial of the harbour icebreaker support of navigation in Finland and abroad. Arc- Ahto delivered in 2014 was successfully completed safety of the region is also improved tia Karhu Ltd offers harbour icebreaking services in in the open water season in 2015. The vessel per- by the ship’s oil-recovery capabilities. the ports of Kemi and Tornio, along with towing formed superbly as an escort tug and met all expec- and escort towing services over a wide expanse of tations set for it. the Bay of Bothnia and in the Baltic. An oil-recovery development project funded by the Finnish Funding Agency for Innovation Tekes was launched in the summer of 2014. The project seeks to improve the procedures for recovering oil from ice. The three-year project places particular emphasis on ice management in oil recovery scenarios.

37 Events services Events services UNIQUE EXPERIENCES ON ICEBREAKERS

Icebreakers Urho and Sisu can be converted into unique venues for IB Urho celebrated its 40th anniversary in March meetings or functions in Katajanokka 2015. To celebrate the occasion, a collector coin in the heart of Helsinki. Arctia Events was minted from old five-mark pieces featuring the Urho. The coin will also honour the Sisu, which offers nearly year-round conference will turn 40 in 2016. and banqueting services on board

icebreakers and icebreaker tours with Flexible venues for a variety of purposes catering for groups of more than 15 In addition to the interior of the icebreaker, events persons. can be organised in tents erected by the quayside or on the Urho’s helideck, depending on the season. IB Urho is a unique setting and a highly popular Covered outdoor spaces provide increased flexibil- venue for meetings. Two to five events were held ity in arranging events of different types. on board the Urho each week in 2015. Each event In June 2015, for example, a tent in the quay includes a tour of the ship, during which the visi- area hosted 350 guests during the concluding fes- tors are introduced to icebreaking and the special tivities of an urban orienteering event held in Hel- characteristics of Arctic regions. sinki. In September, a performance for an audience

38 of approximately one hundred was organised on

Events services the helideck of the Urho.

Gourmet experiences on board PR vessel for the

In 2014, Arctia Events was awarded the right to state of Finland use the shield of the Chaîne des Rôtisseurs, testi- fying to the high quality of the food served. The The menus served on board Arctia’s icebreakers When completed in 1975, Urho was company received further accolades in 2015, when are updated on a regular basis. In December 2015, Finland’s largest and most powerful Event Coordinator Pia Broumand was awarded the the Events staff and ships’ chefs designed a new icebreaker. It was named after its god- honorary title and ribbons of Chef de Table for run- menu under the direction of Master Chef judge father, President of the Republic Urho ning the Events services. Risto Mikkola in honour of the Polaris, Finland’s lat- Kekkonen. At meetings and parties, our ships’ chefs serve est icebreaker. The Polaris menu was first served to In addition to icebreaking, Urho was meticulously planned feasts from the world’s frozen the guests of the freshly completed vessel’s chris- designed as a PR ship for the state of seas from the Gulf of Bothnia to the Arctic – any- tening celebrations on board IB Urho in December. Finland. By way of deviation from earlier where Arctia’s ships have sailed. As in previous years, icebreakers, its cabins were placed above the Urho’s galley staff also took care of catering for the deck so that the engine noise would Arctia’s office and the personnel of ships moored in Family Day introduces families to the shipping not disturb guests as much. The interior Katajanokka in addition to serving the conference company surfaces of the Urho were panelled with and banquet guests. oak and pine, the cabins were spacious One of the most popular events on board the Urho and common areas diverse: the ship fea- is Arctia’s Family Day, held in December, for Arctia’s tured a restaurant, gym, swimming pool, Training and renewal entire staff and their families. In 2015, the event two saunas and a library. was held for the fourth time, with well over 100 Urho first served in high-level PR Training is a vital component of Events services. The participants. duties in 1975, when President Gerald galley staffs of all Arctia vessels participate in the During Family Day, employees get to show the Ford and Secretary of State Henry Kiss- training organised by Events, putting their lessons workings of their place of employment to their inger of the United States visited the ship to use on board their own ships. This secures the loved ones. This year, the company also served during the Conference on Security and availability of tasty and nutritious food also for the Christmas dinner at the event. The smaller visitors Co-operation in Europe (CSCE). The visit crews of vessels that make long voyages, such as the were entertained by Santa Claus and a visiting magi- was hosted by President of the Republic Nordica and Fennica. cian. Urho Kekkonen.

39 04 Personnel and governance

40 Personnel and governance COMPETENCE IS THE FOUNDATION OF OUR SUCCESS

Arctia invests in the professional development and well-being of its personnel. Arctia’s operations rely on competent, responsible and motivated personnel who are committed to the company’s values. As an employer, Arctia offers a safe and innovative work environment.

with an opportunity to improve their own com- requirements set down in the Act on Co-operation HR management petence. The members of the Group Management within Undertakings by holding meetings for dis- Team and ships’ management groups. The Arctia cussing current issues in addition to the matters pro- Safeguarding the competence of its personnel over Academy training programme will be implemented vided for in the Act, such as the company’s budget the long term is a strategic objective of primary in 2016–2017, with the objective of coaching current and result. Two such personnel events, titled Ship- importance for Arctia. A multi-year supervisor and personnel to take up key positions in the organisa- ping Company Days, were held in 2015 in order to leadership training programme is currently under- tion in the future. provide Arctia’s entire personnel with an opportu- way at Arctia. The programme was initiated in At Arctia, we take care of communication nity to participate. Arctia’s HR manual was updated 2013 and will extend to 2017. The purpose of the between the company’s management and employ- at the end of 2015. training is to support Arctia’s business operations ees, both through official structures and more infor- In 2015, sea personnel recruitment focused on by increasing cooperation and improving compe- mally, such as by organising events for personnel. deck and electrical officers. The recruitment of tencies. The training also provides the participants Furthermore, Arctia goes beyond the minimum administrative personnel did not have a particular

41 focus and was mostly performed to replace person- GENDER DISTRIBUTION nel who left Arctia. Arctia prepared for the retirement of person- Sea personnel Board of Directors gender nel by implementing a wider recruitment process distribution in early 2015, with an emphasis on deck and elec- 14.8% trical officers. The Arctia Academy training pro- 13.5% 14.8% Women Men gramme also coaches current personnel to take 2 3 up key positions left vacant by retiring personnel. 2 3 85.2% Arctia maintains a detailed plan for reacting to the 86.5% 2 2 retirement of personnel through recruitment and 85.2% internal transfers. Gender distribution in senior The indicators on NUMBER AND STRUCTURE OF management (Management Team) PERSONNEL are presented in the annual report (pg. Office personnel 53). All personnel employed by Arctia in 2015 were Finnish nationals. Women Men 45.1% 1 6 47.2% 45.4% 1 5 Equality 1 5

Arctia has an equality plan in place. The plan moni- 54.9% 52.8% 54.6 % tors indicators such as personnel structure and sala- 2015 2014 2013 ries in the organisation. A total of 47.2 per cent of office personnel (36 persons in total) are women, while the corresponding figure in sea personnel (237 persons in total) is 13.5 per cent. The ratio between the genders has remained at roughly the same level for the past few years. Arctia’s equality plan has among Arctia’s sea personnel. An analysis of the been approved by the Ombudsman for Equality. salaries of office personnel is hindered by the small The salaries of sea personnel are based on collec- number of employees. No wage equality issues have tive bargaining agreements and the job title and been detected that would suggest unjustified dif- salary categories defined in the agreements. Wage ferences between the wages of women and men. equality between women and men is thus realised Arctia’s equality plan is currently being updated.

42 5. The collective agreement applying to the deck Structure of the performance bonus system Reorganisation and dismissals officers of the Arctia Group’s multipurpose ice- In the 2015 fiscal period, the remuneration bonus breakers programme applied to the CEO, Management Team A total of 48 employment contracts ended at Arctia 6. The collective agreement applying to the officers and key personnel reporting to the CEO or Manage- in 2015. The number of new employment contracts of harbour icebreakers ment Team as follows: signed was 32. All personnel with the exception of 7. The collective agreement applying to the crews management are covered by collective bargaining of harbour icebreakers ‘GOOD PERFORMANCE’ IN ACCORDANCE WITH THE Maximum Number of agreements. Arctia applies the Seafarers’ Employ- REMUNERATION GUIDELINES bonus personnel ment Contracts Act, based on ILO’s convention on CEO 3.6 months 1 maritime work, to sea personnel and the Employ- Remuneration system and performance bonuses Management group member 2 months 5 ment Contracts Act to office personnel. Arctia’s Other key personnel reporting interest group, the Federation of Finnish Special- Objective and principles to the CEO 1–2 months 1–5 Purpose Ship Employers, has company-specific col- The objective of the performance bonus system is lective agreements with the trade unions represent- to commit the company’s key personnel to improv- ‘EXCEPTIONAL PERFORMANCE’ IN ACCORDANCE WITH THE Maximum Number of ing sea personnel. ing Arctia’s profitability and to keep the compa- REMUNERATION GUIDELINES bonus personnel ny’s remuneration model competitive with those Bonus in addition to the ‘good The following collective agreements were in applied to comparable management personnel in performance’ bonus force in 2015: other companies. CEO 2.4 months 1 1. The collective agreement applying to the deck, According to the remuneration guidelines for Management group member 1 months 5 engine and catering personnel employed on spe- state-owned enterprises (Statement of the Cabinet Other key personnel reporting 0.5-1 to the CEO months 1-5 cial-purpose ships operated by the Arctia Group Committee on Economic Policy issued on 13 August and other member companies of the Federation 2012), ‘performance bonuses normally consist of of Finnish Special-Purpose Ship Employers one-year bonus programmes and long-term incen- The performance bonus is tied to business targets 2. The collective agreement applying to the engi- tive programmes with a duration of no less than defined on the basis of the strategy and budget neering officers of the Arctia Group’s conven- three years.’ Arctia’s model consists of the one-year (weighting 50%) and personal key targets derived tional icebreakers bonus programme specified in the guidelines. Based from these (weighting 50%). In the 2015 fiscal 3. The collective agreement applying to the engi- on experiences of this model, Arctia may consider period, the business targets were linked separately neering officers of the Arctia Group’s multipur- expanding its remuneration systems and adopting a to the operating profits achieved by Arctia Ice- pose icebreakers more long-term remuneration system in the future. breaking (weighting 20%) and Offshore (weighting 4. The collective agreement applying to the deck 30%), excluding non-recurring items such as busi- officers of the Arctia Group’s conventional ice- ness acquisitions or divestments, or profits or losses breakers from the sale of ships.

43 The calculation basis for personal bonuses con- personal targets reviewed with the person’s imme- Any changes in the Group’s structure during the sists of the total value of the person’s monthly sal- diate superior and his or her superior, and the Arc- review period will be taken into consideration in ary and taxable perquisites during the fiscal period. tia Group has authorised the payment of the bonus. the definition of performance bonus criteria. Such If these earnings change during the fiscal period, Depending on the approval date of the financial changes can include the sale or termination of a the monthly salary will be calculated by dividing statements and unless otherwise decided by the business area, mergers or other organisational the total annual salary income by 12. Board of Directors, the bonus will be paid in con- arrangements. The achievement of personal key targets is deter- nection with the salary of March or April. It is a con- In addition to the system described above, the mined according to the on/off principle. The bonus dition for the payment of the performance bonus Board of Directors may, at the proposal of the CEO, will be paid if the operating profits (EBIT) of Arc- that the person be in an employment relationship decide on a separate performance bonus for an tia Offshore and/or Arctia Icebreaking exceed the with Arctia and not have resigned or be on a period exceptional work performance. The amount of the budgeted figures. If the realised operating profit of notice at the time of payment. bonus may not exceed the amount of the person’s exceeds the budget by at least EUR 1 million, the If a person within the scope of the system has his bonus under this system. part of the bonus tied to the operating profit will or her employment terminated or is dismissed due The Board of Directors of the Arctia Group has be paid in full. If the operating profit exceeds the to negligence, misdemeanours or other compara- approved these guidelines on 11 February 2015. The budget by at least EUR 2 million, the additional ble reasons before the payment of the bonus, the Board of Directors is free to make changes to these bonus will be paid in full. If these operating profit payment will be cancelled. guidelines or discontinue the system at any time. levels are not achieved, bonuses will only be paid If a person within the scope of the system retires, according to the indicators tied to personal targets. dies, becomes incapable to work or is dismissed (or KEY PERSONNEL REMUNERATION SYSTEM 2015 2014 2013 If the Group makes a loss, no bonuses will be paid. his or her executive employment contract is ter- Personnel may become eligible for bonuses in the minated) due to reasons other than those stated Performance bonuses paid* Key personnel subject to middle of a fiscal period, such as when a new per- above, his or her bonus will be paid in proportion the remuneration system / son is hired or a member of Arctia’s organisation is to actual working time, provided that his or her percentage of total personnel 5.2% 4.7% 4% transferred to a position covered by the system, pro- employment lasted a minimum of four (4) months Performance bonuses paid, CEO 36,634 100,585 64,200 vided that a minimum of four (4) months remain in during the fiscal period. Performance bonuses paid, the fiscal period. In such cases, the amount of bonus If a person changes duties in the middle of a fis- rest of the Management Team paid will correspond to the ratio of the person’s eli- cal period, his or her performance bonus will be (EUR) 40,117 97,318 59,914 gibility to the duration of the fiscal period. Bonuses calculated for either or both positions in propor- Performance bonuses paid, others (EUR) 22,575 73,363 56,322 will not be paid for time spent on parental leave. tion to the time of employment in each. In such Performance bonuses The achievement of targets is reviewed during cases, the person must have served for a minimum including indirect costs 123,116 332,653 221,495 the first quarter of the following year. The right to of four (4) months in a position eligible for a per- a performance bonus is created once the financial formance bonus. statements have been approved, achievement of *Performance bonuses are paid in the year following the accu- mulation year

44 Competence and expertise

DAY-TO-DAY ORIENTATION AND QUALIFICATIONS

Arctia maintains the competence and expertise of its personnel through continuous training. The Group employs a training officer who is responsible the new legislation will enter into force in full. The employer filed a joint application for qualifications for the training of sea personnel in accordance with statutory and other for all sea personnel. This also ensured the possibil- requirements, and for other plans and processes related to the development of ity to prepare for potential further training requirements in time. personnel. Employees may also propose appropriate training for themselves. Towards the end of the year, the implementation of STCW refresher training also began with catering personnel. The refresher training will continue The Arctia Group’s training and orientation system A part of the changes required by the interna- with other personnel groups in 2016, as the tran- is compliant with the requirements specified in the tional STCW Code (International Convention on sitional period related to the changes required by safety management code. Both ship and office per- Standards of Training, Certification and Watchkeep- the STCW Code will expire at the end of the year. sonnel receive comprehensive orientation in according for Seafarers) governing the qualifications and In particular, the further training of electrical ance with regulations. Arctia’s personnel accumu- training of seafarers were implemented in 2015. engineers and crew involved in joint operations lated a total of 1,138 training days in 2015 (779 in For example, Arctia arranged the further training entails more extensive individual training require- 2014). A major part of the year’s training related to required by electrical engineers to obtain their qual- ments that must be met within the transitional the training requirements of Arctia’s customer, but ifications. period. For this reason, the training requirements training also ensured the fulfilment of the require- The qualifications of all sea personnel will be of these occupational groups were carefully charted ments set by authorities and other statutory and renewed in accordance with the requirements of in 2015, and the implementation of training has occupational training requirements. each occupational group by the end of 2016, when begun in accordance with personal study plans.

45 Arctia’s catering personnel received Basic Safety Performance reviews and the competence assess- TRAINING 2015 2014 2013 Training refresher training at the end of the year. ment system enable managers to form a compre- Outside training days 1,133 779 861 Other occupational groups will be trained in accord- hensive picture of competence, task distribution EUR/person spent on training 1,194 1,649 1,568 ance with STCW requirements in 2016. Further train- and possible needs for change or development in Educational background of ing packages that specifically meet Arctia’s require- their units. Employees, for their part, are given the personnel (estimate) ments are designed in cooperation with educational opportunity to influence the development of their Vocational studies 54 58 58 institutes. For example, simulator training is being unit and their own tasks. Bachelor’s degree 43 39 39 planned in cooperation with educational institutes. Through performance reviews and competence Master’s degree 4 3 3 Supervisory work and leadership was developed assessment, managers also acquire information on Educational backgrounds have been estimated based on the with the continuation of the Tosisuunta training the competence, tasks, personal goals and aspira- positions occupied by employees. initiated in 2013. In 2015, this training focused on tions, as well as the capacity and ability to work of the improvement of ships’ management groups at individual employees. At the same time, an employ- Educational backgrounds have been estimated both individual and collective levels. ee’s performance is evaluated against the targets based on the positions occupied by employees. In set for him or her, and the capacity of achieving 2015, the average number of training days per per- new targets is assessed. son was 4.3. Performance reviews The employee’s career development and job rotation are also discussed during the performance Arctia has drawn up instructions for performance review and competence assessment. Employees are Personnel satisfaction reviews and an evaluation form to provide a basis also given the chance to give feedback to their man- for discussion. The performance reviews of office ager on the functioning of the cooperation between Arctia carries out a personnel survey every other personnel are conducted by their supervisors and manager and subordinate. year. The last such survey was conducted in the those of ships’ masters by the vice presidents of A personal training and development plan is early autumn of 2015. The survey carried out in business units. The reviews are conducted at least drawn up on the basis of the performance review 2013 recorded the highest response rate (75 per once per year. and competence assessment, taking the employee’s cent) in the company’s history. In 2015, the response The implementation of a competence assessment training and orientation needs into account. Man- rate was 61 per cent. system for sea personnel is being stepped up. At agers are responsible for the implementation of the Based on the results of the 2013 survey, Arctia’s the end of 2015, the system covered 84 per cent plans drawn up. key development areas in recent years have included of all sea personnel. The realisation of the compe- leadership, well-being and the fairness of remuner- tence assessment system is monitored via a dedi- ation. In the 2015 survey, personnel gave positive cated email address. feedback on aspects such as the availability of appropriate tools and cooperation between departments.

46 On the other hand, trust in the Group’s manage- A new two-year project in safety communications company has taken out a Hoitoturva-Extra health ment was weak and personnel felt remuneration was launched to encourage thinking about occu- insurance policy to complement occupational health at Arctia to be unfair. Arctia has made significant pational safety. The main focus of the project is the care. Arctia’s national occupational health care part- investments in the improvement of leadership in deepening of the safety management competencies ner is Suomen Terveystalo Ltd. previous years, and this development work will con- of supervisors. Arctia also continued the handing tinue. The measures taken to improve and support out of safety awards and active communications on NUMBER OF ACCIDENTS 2015 2014 2013 leadership include the implementation of multi-year matters of safety. Accidents resulting in absence supervisor and leadership training. The safety management system software update from work 12 13 3 A well-being group was instituted in 2014 to sup- continued in 2015. Before the turn of the year, Trafi Other accidents 16 10 12 Accident frequency/million 23.54 38.02 10.08 port the overall well-being of Arctia’s personnel. The audited the updated safety management documen- working hours group includes representatives of the employer and tation and issued Arctia with a temporary safety employees. The group convenes on a regular basis management system certificate valid until the end of and has implemented Terveystori (Health Market) November 2016. The software update will continue ABSENCE DUE TO SICKNESS 2015 2014 2013 events and well-being programmes for personnel in 2016 with the sections on technology, reporting Absence rate due to illness, in cooperation with outside experts. and purchasing. all personnel In addition to statutory preventative occupa- Short-term (%) 7.5 7.5 7.4 tional health care, Arctia offers its employees GP- Including long-term absences (%) 10.4 10.9 11.0 Occupational health and safety level medical care, including treatment by occupa- Number of suspected cases of 0 1 2 tional physicians and nurses, the required laboratory occupational illness A total of 12 occupational accidents resulting in tests and imaging examinations, and consultation by absence from work occurred in 2015 (13 in 2014). occupational health care experts and specialists. The

47 Fleet, 31 December 2015 ICEBREAKERS AND MULTIPURPOSE ICEBREAKERS

Length, m / Beam, m / Draught, m / Power, kW IB KONTIO 98.6 / 24.2 / 8.0 / 15,000 IB OTSO 98.6 / 24.2 / 8.0 / 15,000

IB SISU 106.6 / 23.8 / 8.3 / 16,200 IB URHO 106.6 / 23.8 / 8.3 / 16,200 IB VOIMA 83.5 / 19.4 / 7.0 / 10,200

MSV FENNICA 116.0 / 26.0 / 8.4 / 15,000 MSV NORDICA 116.0 / 26.0 / 8.4 / 15,000 HIB AHTO 40.0 / 12.8 / 5.5 / 3,600

48 05 Financial statement 2015

49 Arctia Shipping Ltd level due to the sanctions. Economic growth in Asia slowed down, but there was still demand for Polar services in 2015. The need for icebreaking and ice management ANNUAL REPORT for various projects, research, tourism and national icebreaking services is forecast to keep growing. Many states will soon be faced with the replace- FOR THE PERIOD ment of obsolete icebreakers. The Baltic Sea market is expected to keep growing despite Finland’s weak economic development. The logistics network will develop to meet the needs 1 JAN – 31 DEC 2015 of industry. The engine power of new customer vessels will be reduced due to new environmental regulations. These factors are expected to increase the demand for icebreaking assistance in the Baltic Sea out of Alaska for the time being. After this, the in the future. Furthermore, the icebreaking treaty Market development US government announced that it would not con- signed between Finland and Russia is anticipated tinue leasing periods in Alaskan oil and gas pros- to improve the opportunities for icebreaking coop- The poor development of Finnish foreign trade and pecting areas and that no auctions for new areas eration in the Baltic. Finland’s economy continued in 2015. The winter will be held for the time being. The energy policy was additionally very mild, resulting in extremely of the new Canadian administration is estimated to low demand for icebreaking services. favour non-Arctic offshore production. As a result, Major events during the fiscal period The global situation remained insecure in 2015. the North-American offshore markets died down The prices of oil, gas and raw materials dropped and prospects declined towards the end of the year. A strike of Arctia’s sea personnel began at the end by several dozen per cent, reducing demand for Research in the Antarctic region continued. The of the first quarter, interrupting assistance opera- maritime support services in the Polar regions. Sea- major countries engaged in research in Antarctica tions for two weeks. The strike increased the wait- floor research continued in the waters of Greenland, are Chile, Argentina, South Africa, Australia, New ing times of merchant vessels, but the flow of traf- securing demand for maritime support services. Zealand and the United Kingdom. fic remained at a reasonable level due to the mild The development of the North-American market The sanctions imposed on Russia remain in force ice winter and Finland’s industry did not experience slowed down. In the second half of the year, the and trade with Russia was quiet. Operations in Rus- major disruptions. The Group incurred a loss of EUR Polar market experienced a setback as Shell pulled sia’s Arctic areas continued, albeit at a diminished 1.3 million in profits due to the strike.

50 FINANCIAL KEY FIGURES DESCRIBING THE OPERATIONS OF THE ARCTIA GROUP Group performance and financial key figures

2015 2014 2013 2012 2011 Turnover, MEUR 62.1 61.3 63.0 75.3 59.5 Arctia’s turnover for the period under review Operating profit/loss, MEUR 18.1 16.8 17.5 44.6 -1.7 improved slightly on 2014, being EUR 62.1 million % of turnover 29.1 27.4 27.8 59.2 -2.9 (61.3 MEUR). The Group accumulated an operating Profit/loss for the fiscal period, MEUR 14.6 12.9 13.4 39.9 -4.7 profit of EUR 18.1 million (16.8 MEUR). Profit for % of turnover 23.6 21.0 21.3 53.0 -7.9 the fiscal period was EUR 14.6 million (12.9 MEUR). Equity, MEUR 141.6 134.8 121.4 108.0 68.1 Equity ratio, % 73.4 72.7 70.7 69.2 40.8 After the elimination of non-recurring items, the Gearing, % -16.9 -15.6 -12.0 -0.9 107.9 company achieved the best profits in its history in Interest-bearing liabilities, MEUR 36.1 34.7 33.2 27.6 82.7 terms of operating margin. Return on investment, % 11.8 11.3 12.5 32.3 -1.1 Return on equity, % 10.6 10.0 11.7 44.6 -6.7 Gross investment, MEUR 14.8 15.6 17.8 16.0 6.2 % of turnover 23.9 25.5 28.2 21.3 10.3 Icebreaking Balance sheet total, MEUR 193.9 185.7 175.6 157.0 167.0 The winter of 2015 was extremely mild, and only the The sale of fixed assets increased other operating income in 2012. In addition, through a sale decided upon on 31 May 2012, Arctia icebreakers Kontio and Otso assisted merchant ves- sold all of its holdings in Arctia Saaristovarustamo Ltd to Suomen Lauttaliikenne Ltd. Excluding the Saaristovarustamo, the Group’s sels. Arctia’s remaining vessels remained on stand-by 2012 turnover amounted to EUR 71.9 million. Operating profit in 2012 amounted to EUR 19.7 million after profits from the sale of fixed assets and Saaristovarustamo’s contribution were deducted. for icebreaking duties. A total of 175 (338) icebreaking days were accumulated in 2015 during the periods 1 January – 7 May and 29–31 December. This is the lowest figure experienced in the 21st century. At the beginning of April, Arctia Offshore Ltd million once the vessel is completed. The ownership A total of 3,349 (6,367) port visits were made to and a multi-national company signed a long-term of the vessel will be transferred to Arctia once the traffic-restricted ports in 2015. chartering agreement for ice management duties, ship has been accepted by the Finnish Transport The 2014–2015 icebreaking season began on 25 mainly in the area of Greenland. IB Otso underwent Agency. The vessel will be financed by the compa- December 2014 and ended on 7 May 2015 with the major conversion work for the operations and oper- ny’s cash assets and external financing. arrival of the Kontio in Helsinki. A total of 182 (350) ated in the area from July to October. This agree- In the beginning of October, Shell announced operating days were accumulated during the winter ment improved the utilisation rate of the Group that it would cease drilling in Alaska for the time season. There were no off hire days due to techni- fleet. being. This decision did not have an impact on the cal reasons, but 45 off hire days accumulated due In April, Arctia Icebreaking Ltd signed an agree- profits for the fiscal period. The framework agree- to strikes in the icebreaking season of 25 Decem- ment for the purchase of an icebreaker commis- ment related to the project will remain valid until ber 2014 – 7 May 2015. A total of 3,402 (6,518) port sioned by the Finnish Transport Agency for EUR 128 the end of 2016. visits were made when traffic restrictions were in force during the icebreaking season.

51 Otso underwent major conversion work for the announcement will have no impact on Arctia’s result summer chartering in Greenland. The vessel was for 2015. Arctia Offshore’s agreement with Shell will Harbour icebreaking converted for international traffic and outfitted for remain valid for 2016. its future operations. In July, the Fennica was grounded in the waters of Arctia Karhu Ltd is responsible for the Group’s har- The turnover of Icebreaking totalled EUR 24.3 Alaska, sustaining minor damage. The water depth bour icebreaking services. The year 2015 was the million (24.3 MEUR) with an operating profit of at the site of the accident was significantly shal- first full year of operations for the harbour ice- EUR 6.0 million (5.0 MEUR). lower than marked on the chart. After undergoing breaker Ahto since its completion. Even though repairs, the ship returned to operations at the end of the winter of 2015 was mild as in 2014, the Ahto July. The incident had no impact on the customer’s performed harbour icebreaking operations in the Offshore project and did not cause injury or environmental ports of Tornio and Kemi. The harbour icebreakers damage. The incident’s effect on Arctia’s operating Jääsalo and Ulla served as the Ahto’s backup ves- From January to April, the multipurpose icebreakers profit was approximately -0.7 MEUR after indemni- sels. The Jääsalo and Ulla were chartered from Port Fennica and Nordica were chartered for icebreaking ties. The company has prepared itself for interrup- of Kemi Ltd. in the Baltic Sea in accordance with the agreement tions in operations and material damage through The Ahto passed its escort towing trials in the signed with the Finnish Transport Agency. the ships extensive insurance cover. open water season of 2015. The vessel performed accumulated no operating days in icebreaking dur- In late 2014, the Finnish Transport Safety Agency superbly as an escort tug and met all of the tar- ing 2015 and 2014. Trafi ruled that the multipurpose icebreakers Nor- gets set for it. After the icebreaking season, the vessels moved dica and Fennica would be classified and inspected Arctia Karhu Ltd participated in an oil spill pre- to offshore season chartering. As the vessels were as SPS vessels (Special-Purpose Ship) from the spring vention and response project, started in 2014. The not needed on the Baltic Sea due to the mild winter, of 2015 onwards. The technical conversion work purpose of the project is to improve oil recovery pro- their icebreaking readiness was terminated excep- required by the new classification was performed cedures from ice. In particular, the project focuses on tionally early, and the vessels were transferred to and the ships passed their SPS inspections in the the use of vessels for ice management in oil recovery the duties required by their offshore customers. spring of 2015. scenarios. The project has a duration of three years. Operations in Alaska began as early as April and Offshore signed a major contract for ice manage- In the open water season, the fleet of Arctia were finished in October. In Greenland, the oper- ment services with the Norwegian company TGS- Karhu Ltd carried out several harbour-towing operations started in July and ended in October. The Nopec. The operating area subject to the contract ations and some longer chartering operations in fleet accumulated a total of 380 operating days was mainly located in the area of Greenland, where Finland and abroad. (78). Shell’s Alaskan functions were on hold in 2014, Arctia assisted the company with seismic research. The turnover of harbour icebreaking totalled EUR which left the number of operating days in the ref- Arctia Offshore converted the Otso and chartered 1.9 million (EUR 1.2 million) with an operating profit erence year low. it for a fixed term for the operation. of EUR 0.2 million (EUR -0.1 million). At the end of the third quarter, Shell announced The turnover of Offshore totalled EUR 39.9 mil- that it would terminate oil prospecting on the lion (35.8 MEUR) with an operating profit of EUR Chukchi Sea in Alaska for the time being. This 12.6 million (11.8 MEUR).

52 KEY FIGURES, GROUP PERSONNEL

2015 2014 2013 2012 2011 2015 2014 2013 2012 2011 AVERAGE NUMBER OF PERSONNEL AVERAGE LENGTH OF EMPLOYMENT DURING THE FISCAL PERIOD 270 273 278 323 380 CONTRACTS, YEARS (31 DEC) Icebreaking 138 141 147 134 154 All employees 13.9 15.3 16.4 17 18 Offshore 90 94 98 155 141 Saaristovarustamo 52 AVERAGE AGE OF PERSONNEL, YEARS Harbour icebreaking 9 8 2 0 0 (31 DEC) Office personnel 33 30 32 33 33 All employees 48.3 47.5 48.5 48.6 49 Sea personnel, men 49 48.5 48.2 49.2 50 NUMBER OF PERSONNEL (31 DEC) Sea personnel, women 46.4 48.5 47.7 46.1 46.5 Office personnel 36 31 31 32 38 Office personnel 45.2 46 46.7 45.7 45 Sea personnel 237 230 236 254 324 GENDER DISTRIBUTION OF PERSONNEL EMPLOYMENT CONTRACT DISTRIBUTION (31 DEC) ALL EMPLOYMENT CONTRACTS (31 DEC) (%) Office personnel, permanent 33 31 31 33 38 Women, sea personnel 13.5 14.8 14.8 14.2 13.2 Sea personnel, permanent 213 204 220 250 314 Women, office personnel 47.2 45.1 45.4 39.4 39.5 Temporary 27 26 16 22 10 BOARD OF DIRECTORS GENDER SHARE OF FULL-TIME AND PART-TIME DISTRIBUTION EMPLOYMENT CONTRACTS (%) Women 2 2 2 3 3 Office personnel, part time 2.8 6.5 6.5 0 5.2 Men 3 3 2 3 4 Sea personnel, part time 0.4 0.4 0.4 0.7 2.9 GENDER DISTRIBUTION IN SENIOR LEAVING RATE (31 DEC) MANAGEMENT (MANAGEMENT TEAM) Total personnel / leaving and part-time employees (%) Women 1 1 1 0 0 Office personnel 9.7 6.5 18 9.3 12 Men 6 5 5 6 8 Sea personnel 14.5 23.3 35 34 10 SALARIES AND REMUNERATIONS 17.1 15.8 17.9 21.0 23.3

53 year docking of Urho, and the technical conver- Staff Financing sion work required by the multipurpose icebreakers before registration as special-purpose ships. The Group has invested heavily in supervisory work The Group’s cash assets at end of year totalled EUR The electrical system of Sisu was also updated. The and leadership. 60.0 million (55.7 MEUR). The majority of cash assets remaining servicing and maintenance work required Arctia continued the multi-year programme in were invested in low-risk bond funds. Cash assets are by the conventional icebreakers did not require supervisory and management training begun in maintained in preparation for the maintenance of docking. 2013. The members of the management groups Arctia’s ageing fleet, renovation investments, and of the company’s ships participated in the training for extensive future replacement investments across under their masters, as did several administrative the entire fleet. Safety managers from the shore organisation. The training At the end of the year, the Group had EUR 11.2 emphasised the skills needed by immediate supe- million of long-term debt (34.1 MEUR) from exter- Ship safety is monitored by the Group through reg- riors. The next phase will focus on securing the nal financial institutions. The Group had EUR 24.8 ular internal audits. The Finnish Transport Safety Group’s management potential over the long term. million of short-term debt from financial institutions Agency Trafi inspects Arctia’s vessels each year. The Group consolidated its cooperation with staff (0.0 MEUR). The interest rates of the Group’s loans Action and repair plans have been drawn up on representatives. Informative cooperation meetings are tied to market rates and are fixed using inter- the basis of the observations made during the audits between staff representatives and the Group’s Man- est rate derivatives. The loan terms do not include and inspections, and the plans have been imple- agement Team were held on a regular monthly covenants relating to profitability or solvency. mented as far as possible. No serious non-conform- basis. In addition to these meetings, the compa- Towards the end of the fiscal period, the Group ities were identified in audits or inspections during ny’s representatives met regularly with the chief made preparations for obtaining financing for the the fiscal period. shop stewards. purchase of IB Polaris from the Finnish Transport For its summer chartering, IB Otso was converted The Group carried out a personnel survey in the Agency. Both external financing and the company’s for international traffic. This entailed changes to autumn. The first measures in response to the results own cash assets will be used for financing the vessel. the vessel’s safety and rescue equipment required were carried out in late 2015, with the improvement by the change in the vessel’s operating area. of leadership chosen as a Group-level focus area. A total of 12 (13) occupational accidents occurred Lengthy collective bargaining negotiations were Investment in the Group in 2015. A new two-year project in held in the first quarter of 2015. As a result of the safety communications was launched to encourage negotiations, the collective agreements applied in The Group’s gross investment in 2015 totalled EUR thinking on occupational safety. The main focus of the Group were extended until the end of 2017. 14.7 million (15.6 MEUR), with maintenance invest- the project is the deepening of the safety manage- Arctia joined the Finnish Shipowners’ Association ments representing EUR 9.1 million of the total (15.6 ment competencies of supervisors. Arctia also con- and resigned from the Service Sector Employers’ MEUR). tinued the handing out of safety awards and active Union PALTA. The most significant investments consisted of communications on matters of safety. Otso’s conversion for international traffic, the five-

54 The update of the Group’s safety management extend stays in port and reduce the number of free Supplier Day in its history. Arctia received positive system software continued during the reporting berths, which may increase the need for merchant feedback on the Supplier Day from its device and year. Trafi audited the updated safety management vessels to wait for free berths. This may increase ice- service suppliers and intends to continue organis- documentation before the end of 2015. Trafi issued breaking assistance needs somewhat in the future if ing such events in the future. During the audits, Arctia with a temporary safety management system the vessels are unable to set out again under their the suppliers were encouraged to register on the certificate valid until the end of November 2016. own power. tilaajavastuu.fi web site that facilitates the man- The Arctia Group always considers the environ- The oil recovery readiness agreement signed by agement of basic requirements. ment in its operations and complies with the regu- Arctia Karhu Ltd with the Rescue Services of Lapland Arctia participated in five new research projects lations of the International Maritime Organization’s progressed to the implementation phase, and the in 2015. The Arctic Seas programme of the Finnish (IMO) Internal Safety Management Code (ISM Code) company began oil recovery stand-by duties. In addi- Funding Agency for Innovation Tekes has done a and the International Convention for the Preven- tion to a state-of the-art winter collector, dedicated great deal to increase the significance and appeal tion of Pollution from Ships (MARPOL Convention), summer oil recovery equipment was purchased for of the Arctic area in the Finnish scientific field. Part along with national guidelines and regulations. the harbour icebreaker Jääsalo chartered by Arctia of the research projects under the programme are Karhu. The summer equipment is specially designed further studies based on prior work, but the projects for use in open water. The usage trials and accept- also include completely new subjects. Arctia’s own Environment ance drills for the equipment were held in 2015. research project, Ice Management in Oil Recovery The energy consumption and site reviews required (IMOR), was launched in 2015, but field tests were In 2015, Arctia maintained oil recovery readiness by the currently valid Energy-Efficiency Act were car- postponed until 2016 due to the mild ice winter. on the northern Baltic Sea for the European Mari- ried out by the Group in the autumn. The review The goal of the IMOR project is to improve the ice time Safety Agency (EMSA) with IB Kontio. A total was held on board IB Urho, focusing on the Urho’s management procedures required in oil recovery. of four oil recovery exercises were carried out in general ventilation system, since this was thought Arctia’s research expenses equalled EUR 0.1 million 2015 in cooperation with the Finnish Coast Guard to have the greatest potential for saving energy. in 2015. The Group did not incur research expenses and Finnish Lifeboat Association. Arctia also car- In late 2015, the Group updated its environmen- in 2014. ried out desk exercises for testing the functioning tal targets for 2016, which include the reduction of of the alarm and mobilisation chain. The annual oil- fuel consumption. recovery seminar focused on the oil recovery depot Company organisation, management and of Helsinki. auditors The International Convention for the Control Quality and research and Management of Ships’ Ballast Water and Sedi- Arctia Shipping Ltd established three new subsidiar- ments did not enter into force in 2015, and no meas- Supplier management was developed further in ies in November: Arctia Management Services Ltd, ures related to the convention were carried out. In 2015. Arctia continued its supplier audits with Arctia Offshore Investment Ltd and Arctia Icebreak- practice, the ballast water convention is thought to updated impact analyses and organised the second ing Investment Ltd. These companies are entirely

55 owned by Arctia Shipping Ltd. The companies were The auditor of the Arctia Group is Ernst & Young The entire share capital of the parent company is established with a share capital of EUR 2,500.00. Ltd, Corporation of Certified Public Accountants, owned by the state of Finland. The actual operations of Arctia Management Ser- with Mikko Rytilahti, Authorised Public Accountant, vices Ltd started on 1 January 2016, when the com- Chartered Public Finance Auditor, as chief auditor. pany began providing management shipping com- The CEO of Arctia Shipping Ltd in 2014 was Tero Estimate of key risks and uncertainties pany services. Arctia Shipping Ltd sold the Group’s Vauraste. In addition to the CEO, the following per- HR administration, safety unit, technical unit and sons were part of the Group Management Team The ageing of the company’s fleet increases the risk crewing functions to Arctia Management Services during the fiscal period: of technical problems and increased maintenance Ltd. The parent company continues to take care of costs. The risk of not finding spare parts for old the Group’s financial administration, ICT functions • Markus Karjalainen, Senior Vice President, vessels is also growing. Technical reliability plays and communications. Icebreaking a significant role during operations in demanding At the additional General Meeting of 11 Decem- • Heli Lehtonen, Chief Financial Officer, Sen- conditions. Arctia seeks to manage this risk through ber 2015, it was decided to change the name of the ior Vice President long-term maintenance programmes and annual parent company from Arctia Shipping Ltd to Arctia • David Lindström, Senior Vice President, HR maintenance plans. Ltd. The new name was entered in the trade regis- • Kari Patrakka, Senior Vice President, Tech- In order to ensure undisturbed operations when ter on 18 January 2016. nology operating in distant areas, particular attention is The General Meeting of 23 March 2015 appointed • Hannu Ylärinne, Senior Vice President, Off- paid to the serviceability, spare parts needs and crew Christer Granskog as Chairman of the Board of Direc- shore, from 1 February 2015 rotation of vessels, along with the availability of tors of Arctia Shipping Ltd and Maire Laitinen, Ilpo • Markku Tuhkanen, Communications Direc- maintenance. Nuutinen, Antti Pankakoski and Päivi Söderholm tor, until 31 August 2015 Increasing requirements are being set for oper- as members. The Board of Directors elected Ilpo • Eero Hokkanen, Communications Manager, ating in Arctic regions, particularly with regard to Nuutinen as its Vice-Chairman in accordance with from 1 November 2015 conservation of the environment. Arctia’s vessels the proposal of the General Meeting. The Board ensure the safety of operations for their part. Spe- of Directors convened 22 times in 2015, with an cial expertise in the field and region is required of attendance rate of 92.7 per cent. Shares personnel operating in the Arctic, and suitable fleets At its meeting on 26/03/2015, the Board of Direc- are required of operators. The principal criteria for tors elected Christer Granskog as the Chairman of vessels are environmental friendliness and a suffi- the Remuneration and Nomination Committee and 2015 2014 cient polar ice class. Maire Laitinen, Antti Pankakoski and Ilpo Nuutinen Equity capital, EUR 18,700,000.00 18,700,000.00 If companies operating in the Arctic suffer major as members of the Committee. The Committee met Share nominal value, EUR 25.00 25.00 accidents, this could retard the growth of the mar- four times in 2015, with an attendance rate of 93.8 Number of shares, pcs. 748,000 748,000 ket. Environmental regulation also increases the per cent.

56 growth risk of operating costs. Arctia hedges rate changes. The Group also had interest rate swap against these risks through insurance and contrac- agreements in place at the turn of the year, con- Significant events after the financial period and tual arrangements. verting variable interest rates into fixed rates. More the outlook for future development The development of the Arctic market constitutes detailed information on derivatives is provided in a business environment risk to Arctia. The progress the notes to the financial statements. The year 2015 is operationally secure, since the com- of Arctic projects largely depends on developments Credit-loss risks involved in chartering are man- pany’s entire fleet capacity will be utilised in accord- in environmental legislation and other official reg- aged by determining the credit ratings of custom- ance with existing agreements. ulations and on the market price of oil. ers and use of payment terms based on the custom- The exploitation of Arctic and Sub-Arctic natural er’s credit rating and, possibly, sufficient securities. resources and the charting of unexploited reserves is Risks related to personnel Arctia has protected itself against property dam- expected to decline from previous years. Research in Arctia Group will experience a large turnover in age and disruptions of business through extensive Polar areas is expected to increase. The replacement personnel in the next few years due to ageing. insurance cover. of national icebreakers and the need for additional This turnover increases the risk of not being able capacity will create demand in North America. Arc- to maintain the current level of professional compe- tia believes that the demand for ice management tence. Arctia is seeking to mitigate this risk through Board of Directors’ proposal on the use of and other ship services will create new opportuni- pre-emptive HR planning. retained earnings ties for chartering agreements. The company’s fleet and capacity will be developed in accordance with Financing and accident risks The company’s distributable assets total EUR the policies outlined by the owner. The risks related to the Group’s chartering and 95,867,484.15, of which EUR 8,758,946.97 consists The purchase of the new ship will have a material financing are mitigated through contractual of the operating profit for the fiscal period. The impact on the Group’s financing position and bal- arrangements and, if necessary, currency and inter- Board of Directors proposes the payment of a divi- ance sheet, which will greatly increase the signifi- est rate derivatives. At the turn of the year, the dend of EUR 10.00 per share, EUR 7,480,000.00 in cance of both cost and cash management. Group had an active currency swap agreement to total. The dividends will not jeopardise the com- hedge the Group’s currency loans against exchange pany’s solvency.

57 INCOME STATEMENT (EUR) GROUP PARENT COMPANY Appendix 2015 2014 2015 2014 TURNOVER 1 62,119,167.06 61,314,666.39 4,298,084.36 4,524,158.62 OTHER OPERATING INCOME 2 6,380,648.74 389,143.06 22,584.22 8,558.33 Materials and services Raw materials, consumables and supplies Purchases 3,325,678.34 4,249,997.24 2,298.99 1,131.40 Inventories, increase (-) or decrease (+) -69,878.51 48,331.01 0.00 0.00 Purchased services 6,750,564.98 5,222,562.98 0.00 0.00 Materials and services, total 10,006,364.81 9,520,891.23 2,298.99 1,131.40 Personnel expenses 3 Wages and salaries 17,148,278.22 15,848,189.46 1,759,810.85 1,701,181.68 Personnel-related expenses Pension costs 2,247,316.48 2,051,907.97 349,340.61 297,370.95 Other personnel-related expenses 1,068,948.32 1,004,036.53 60,664.31 54,878.73 Personnel costs, total 20,464,543.02 18,904,133.96 2,169,815.77 2,053,431.36 Depreciation and reduction in value Depreciation and reduction in value according to plan 10,628,176.04 9,407,912.15 347,042.00 285,062.45 Other operating costs 4 9,315,268.63 7,051,486.54 2,961,549.39 2,449,326.61

OPERATING PROFIT/LOSS 18,085,463.30 16,819,385.57 -1,160,037.57 -256,234.87

Financial income and expenses 5 Other interest and financial income From group companies 0.00 0.00 361,500.00 415,277.01 Short-term, from other sources 2,407,361.44 1,472,290.52 2,406,824.79 1,500,412.10 Financial income, total 2,407,361.44 1,472,290.52 2,768,324.79 1,915,689.11 Other interest and financial expenses From other sources 2,262,925.63 2,196,667.28 2,016,790.31 2,118,383.71 Financial expenses, total 2,262,925.63 2,196,667.28 2,016,790.31 2,118,383.71 Financial income and expenses, total 144,435.81 -724,376.76 751,534.48 -202,694.60

PROFIT (LOSS) BEFORE EXTRAORDINARY ITEMS 18,229,899.11 16,095,008.81 -408,503.09 -458,929.47

Extraordinary items 6 Extraordinary income 0.00 0.00 11,400,000.00 9,303,000.00 Extraordinary items, total 0.00 0.00 11,400,000.00 9,303,000.00 Appropriations Increase (-) / decrease (+) in depreciation difference 0.00 0.00 -26,300.00 -70,666.30 Appropriations, total 0.00 0.00 -26,300.00 -70,666.30 Income taxes Taxes from the financial year 2,228,807.08 1,768,542.08 2,206,249.94 1,749,868.14 Other direct taxes 0.00 -1,190.30 0.00 -998.85 Deferred income taxes 1,370,826.81 1,473,533.26 0.00 0.00 Income tax, total 3,599,633.89 3,240,885.04 2,206,249.94 1,748,869.29 Minority interest -1,182.89 -18,011.68 0.00 0.00

NET PROFIT FOR THE FINANCIAL YEAR 14,631,448.11 12,872,135.45 8,758,946.97 7,024,534.94

58 BALANCE SHEET (EUR) GROUP PARENT COMPANY Appendix 31/12/2015 31/12/2014 31/12/2015 31/12/2014 ASSETS

NON-CURRENT ASSETS 7 Intangible assets Intellectual property rights 267,232.84 36,810.24 266,161.94 35,739.34 Intangible assets, total 267,232.84 36,810.24 266,161.94 35,739.34 Property, plant and equipment Land and water 175,535.71 175,535.71 175,535.71 175,535.71 Buildings and constructions 4,040,769.84 4,233,351.24 4,040,769.84 4,233,351.24 Vessels 112,774,541.21 104,521,329.15 0.00 0.00 Other machinery and equipment 2,888,066.24 2,975,583.25 565,581.01 645,869.84 Other tangible assets 86,386.67 86,386.67 86,386.67 86,386.67 Construction in progress 815,835.80 4,806,530.53 180,734.21 93,611.55 Property, plant and equipment, total 120,781,135.47 116,798,716.55 5,049,007.44 5,234,755.01 Investments Shares in group companies 7,500.00 0.00 81,897,048.40 81,889,548.40 Other unquoted shares 5,000.00 5,000.00 0.00 0.00 Shares in associated companies 3,200.00 3,200.00 0.00 0.00 Investments, total 15,700.00 8,200.00 81,897,048.40 81,889,548.40

NON-CURRENT ASSETS, TOTAL 121,064,068.31 116,843,726.79 87,212,217.78 87,160,042.75

CURRENT ASSETS Inventories Raw materials and consumables 1,872,401.72 1,802,523.21 0.00 0.00 Long-term receivables Receivables from group companies 0.00 0.00 8,050,000.00 8,050,000.00 Imputed tax receivables 36,403.71 0.00 0.00 0.00 Long-term receivables, total 36,403.71 0.00 8,050,000.00 8,050,000.00 Short-term receivables Receivables 4,321,714.69 4,909,339.28 4,476.40 24,587.86 Receivables from group companies 8 0.00 0.00 11,507,822.30 9,571,064.02 Other receivables 1,312,859.19 2,609,315.12 0.00 120,359.63 Accruals 9 5,237,604.37 3,796,742.82 4,684,921.60 3,317,551.71 Short-term receivables, total 10,872,178.25 11,315,397.22 16,197,220.30 13,033,563.22 Financial securities 10 Other securities 43,025,103.32 42,005,299.99 43,025,103.32 42,005,299.99 Cash and cash equivalents 17,024,022.60 13,684,578.85 17,024,022.54 13,684,578.79

CURRENT ASSETS, TOTAL 72,830,109.60 68,807,799.27 84,296,346.16 76,773,442.00

ASSETS, TOTAL 193,894,177.91 185,651,526.06 171,508,563.94 163,933,484.75

59 BALANCE SHEET (EUR) GROUP PARENT COMPANY Appendix 31/12/2015 31/12/2014 31/12/2015 31/12/2014 EQUITY AND LIABILITIES

EQUITY 11 Share capital 18,700,000.00 18,700,000.00 18,700,000.00 18,700,000.00 Invested unrestricted equity fund 66,780,736.91 66,780,736.91 66,780,736.91 66,780,736.91 Retained earnings from previous years 41,458,492.45 36,477,756.99 20,327,800.27 21,194,665.33 Net profit for the financial year 14,631,448.11 12,872,135.45 8,758,946.97 7,024,534.94 EQUITY TOTAL 141,570,677.47 134,830,629.35 114,567,484.15 113,699,937.18

MINORITY INTEREST 189,563.44 190,746.33 0.00 0.00

APPROPRIATIONS Depreciation difference 0.00 0.00 290,966.30 264,666.30

PROVISIONS 12 Other provisions 293,401.20 474,720.96 0.00 0.00

LIABILITIES Long-term liabilities Loans from financial institutions 14 11,250,000.00 34,057,836.96 0.00 22,647,324.00 Deferred tax liabilities 13 6,615,363.78 5,208,133.26 0.00 0.00 Long-term liabilities, total 17,865,363.78 39,265,970.23 0.00 22,647,324.00

Short-term liabilities Loans from financial institutions 15 24,825,654.14 600,000.00 24,034,334.00 0.00 Payables 1,734,264.37 3,569,417.80 237,451.72 97,446.92 Liabilities to group companies 16 0.00 0.00 30,725,756.82 25,953,746.82 Other liabilities 960,341.45 813,550.92 151,745.82 134,643.61 Accruals, liabilities 17 6,454,912.06 5,906,490.47 1,500,825.13 1,135,719.92 Short-term liabilities, total 33,975,172.02 10,889,459.19 56,650,113.49 27,321,557.27

LIABILITIES, TOTAL 51,840,535.80 50,155,429.42 56,650,113.49 49,968,881.27

EQUITY AND LIABILITIES, TOTAL 193,894,177.91 185,651,526.06 171,508,563.94 163,933,484.75

60 FINANCIAL STATEMENT (EUR) GROUP PARENT COMPANY 2015 2014 2015 2014 OPERATIONAL CASH FLOW Profit / Loss for fiscal period 14,631,448.11 12,872,135.45 8,758,946.97 7,024,534.94 Adjustments Depreciation according to plan 10,628,176.04 9,407,912.15 347,042.00 285,062.45 Other items not involving payments (net) 19,050.00 0.00 19,050.00 0.00 Financial income and financing costs 875,367.52 724,376.76 268,268.85 202,694.60 Group contributions 0.00 0.00 -11,400,000.00 -9,303,000.00 Income tax 3,599,633.89 3,240,885.04 2,206,249.94 1,748,869.29 Appropriations 0.00 0.00 26,300.00 70,666.30 Change in provisions -181,319.76 -181,319.76 0.00 0.00 Minority share -1,182.89 -18,011.68 0.00 0.00 Other adjustments -19,050.00 0.00 -19,050.00 0.00 Cash ﬂow before change in working capital 29,552,122.91 26,045,977.96 206,807.76 28,827.58

Change in working capital Increase (-) / decrease (+) in inventories -69,878.51 48,331.01 0.00 0.00 Increase (-) / decrease (+) in non-interest-bearing receivables 406,815.26 1,556,297.40 -1,066,657.08 -2,004,635.19 Increase (+) / decrease (-) in non-interest-bearing loans 2,249,118.47 -5,752,530.19 1,818,524.75 -896,983.41 Operational cash flow before financial items and taxes 32,138,178.13 21,898,076.18 958,675.43 -2,872,791.02

Interest paid for business operations -879,326.74 -848,243.36 -633,191.42 -612,694.00 Interest received for business operations 548.11 1,472,290.52 361,511.46 1,915,689.11 Direct taxes paid -2,054,242.04 -3,084,524.20 -2,096,238.48 -3,121,060.45 OPERATIONAL CASH FLOW 29,205,157.46 19,437,599.14 -1,409,243.01 -4,690,856.36

Investment cash flow Investments in material and immaterial goods -16,985,317.56 -11,671,473.25 -391,717.03 -2,184,947.67 Purchased shares in subsidiaries 0.00 0.00 -7,500.00 0.00 Repayment of loan receivables 0.00 0.00 0.00 2,276,222.00 INVESTMENT CASH FLOW -16,985,317.56 -11,671,473.25 -399,217.03 91,274.33

Cash flow from financing activities Minority capital investment 0.00 199,750.00 0.00 0.00 Short-term loans 191,320.14 0.00 4,756,107.12 9,054,082.69 Long-term loans 0.00 -7,487.04 0.00 0.00 Repayment of long-term loans -160,512.96 0.00 0.00 0.00 Paid dividends -7,891,400.00 0.00 -7,891,400.00 0.00 Group contributions paid and received 0.00 0.00 9,303,000.00 8,000,000.00 CASH FLOW FINANCING -7,860,592.82 192,262.96 6,167,707.12 17,054,082.69

CHANGE IN AVAILABLE ASSETS 4,359,247.08 7,958,388.85 4,359,247.08 12,454,500.66 Available assets at the beginning of the ﬁscal period 55,689,878.84 47,731,489.99 55,689,878.78 43,235,378.12 Available assets at the end of the ﬁscal period 60,049,125.92 55,689,878.84 60,049,125.86 55,689,878.78

61 Notes to the financial statements

1. ACCOUNTING POLICIES OF THE FINANCIAL STATEMENTS

1.1. VALUATION PRINCIPLES 1.2. DEFERRED INCOME TAX companies use different fiscal periods and did not engage in The imputed tax liability and receivable have been calculated business operations in 2015 and therefore did not have a mate- ITEMS IN FOREIGN CURRENCIES for the temporary differences between taxation and the finan- rial impact on the consolidated financial statements. Receivables and debts in foreign currencies have been converted cial statements, using the tax rate valid at the time of drawing The consolidated financial statements have been drawn up into euros using the currency rate on the date of the drawing up the financial statements. The entire imputed tax liability and using the acquisition cost method. All subsidiary companies have up of the financial statements. receivable are included in the balance. Imputed tax liability is been founded independently. Business transactions, receivables related to the depreciation differences recorded for subsidiaries. and debts between group companies have been eliminated. INVENTORIES These differences have been divided into equity and imputed tax Minority shares have been separated from group equity and Inventories include the fuel and lubricant stocks of vessels. Inven- liability in the consolidated financial statements. The imputed the profit for the fiscal period, and are presented as their own tories are valued at acquisition expenses or at lower net real- tax receivable is connected to the confirmed loss of a subsidiary. item. isable value. The Group has a consolidated account system in place. 1.3. PENSIONS Changes to the consolidated account are presented in the financ- FIXED ASSETS The statutory pension schemes for personnel are managed by ing cash flow items of the individual companies’ financial state- Intangible and tangible assets are marked as acquisition expenses external insurance companies. Pension costs are entered as ments. on the balance sheet with depreciation according to plan. Depre- expenses for the year during which they were incurred. ciations according to plan are calculated as straight line depre- 1.7. DERIVATIVES ciations based on the target’s economic duration. Depreciations 1.4. COMPARABILITY OF INFORMATION FROM PREVIOUS The company’s derivatives include an interest rate swap and cur- are calculated from the month of the asset’s application. FISCAL PERIODS rency swap. The interest rate swap was used to convert a varia- Turnover has been presented by line of business in the notes, ble-rate loan taken from a financial institution into a fixed-rate Depreciation times Years with the domestic icebreaking performed by Arctia Offshore Ltd loan. The interest rate swap has been defined until the maturity included in icebreaking turnover. Intangible assets 5 of the loan in 2016. The interest rate is defined on a bi-annual basis. The entire loan capital will be repaid at the end of the Buildings 10-20 1.5. ASSETS loan period. Vessel stock Cash assets invested in low-risk bond funds have been included The currency swap was used to change the capital of a loan Icebreakers 30-40 in the assets. The bond fund investments can be realised at short denominated in GBP to EUR at a rate agreed upon at the time of notice. Docking 5 taking out the loan. The rate will be valid for the entire contract Communications and navigation equipment 3-5 period. When it expires, the currency swap will not incur real- 1.6. ACCOUNTING POLICIES OF THE CONSOLIDATED Computers and related devices 3 FINANCIAL STATEMENTS ised profits or losses that would affect the Group’s result. Other plants and machinery 5-15 The consolidated financial statements include all Group compa- The capital of the currency loan has been valued at the nies and partnership companies, with the exception of partner- exchange rate of the closing date. The difference in exchange Expenses from repair and maintenance during vessel docking are ship company Ice Advisors Ltd and the Group companies Arctia rates has been entered in exchange profits and losses in the capitalised and entered as expenses according to the economic Management Services Ltd, Arctia Icebreaking Investment Ltd and income statement. In the balance sheet, the difference has been working life of the docking (5 years). Residual value has been Arctia Offshore Investment Ltd. Ice Advisors Ltd has not been entered in interest rate receivables and financing loans. taken into account in the fleet depreciation plan. Repair and consolidated, since the company does not have a material impact The current values of the interest rate and currency deriva- maintenance expenses with effects of less than three years and a on the Group’s result. The information for 2014 has been used tives are presented in section 6 of the notes to the financial maximum sum of EUR 50,000 of are entered as annual expenses. in drawing up these notes. The other non-consolidated Group statements.

62 2. NOTES TO THE INCOME STATEMENT (EUR) Appendix GROUP PARENT COMPANY 2.1. TURNOVER BY MARKET AREA AND LINE OF BUSINESS 1 2015 2014 2015 2014

BY MARKET AREA Finland 27,727,866.17 34,735,518.60 4,298,084.36 4,524,158.62 EU countries 759,733.48 710,631.72 0.00 0.00 Countries outside the EU 33,631,567.41 25,868,516.07 0.00 0.00 62,119,167.06 61,314,666.39 4,298,084.36 4,524,158.62 BY LINE OF BUSINESS Icebreaking 27,870,619.67 34,701,776.25 0.00 0.00 Offshore 33,631,567.41 25,953,556.42 0.00 0.00 Oil spill response 616,979.98 659,333.72 0.00 0.00 Internal administration services 0.00 0.00 4,298,084.36 4,524,158.62 62,119,167.06 61,314,666.39 4,298,084.36 4,524,158.62

2.2. OTHER OPERATING INCOME 2 Insurance indemnities received Strike insurance 3,234,525.00 0.00 0.00 0.00 Ship insurance 841,884.87 0.00 0.00 0.00 Other insurance 9,559.35 0.00 859.35 0.00 Income from charges made to other Group companies 2,266,823.35 353,752.54 2222.54 1,591.23 Other 27,856.17 35,390.52 19,502.33 6,967.10 Total 6,380,648.74 389,143.06 22,584.22 8,558.33

2.3. NOTES ON PERSONNEL 3

AVERAGE NUMBER OF PERSONNEL DURING FISCAL PERIOD Clerical employees 33 31 24 22 Maritime personnel 237 230 0 0 Total 270 261 24 22

MANAGEMENT SALARIES AND REMUNERATIONS Chief Executive Officer (CEO) 263,641.13 328,027.71 263,641.16 328,027.71 Board members 108,300.00 89,313.24 108,300.00 89,313.24 Managing Directors of subsidiaries 120,905.84 123,118.40 0.00 0.00 492,846.97 540,459.35 371,941.16 417,340.95 The CEO’s salary is a total salary that includes car and telephone benefits. The CEO’s retirement age is 63. Pension benefits are provided by the statutory TyEL pension insurance.

63 Appendix GROUP PARENT COMPANY 2.4. OTHER OPERATING COSTS 4 2015 2014 2015 2014

OTHER OPERATING COSTS Voluntary personnel costs 2,397,299.03 1,922,860.03 409,556.72 345,813.86 Rents 8,118.82 31,826.78 0.00 1,800.03 Telephone, IT, vehicle and office expenses 1,878,442.72 1,265,362.70 874,139.52 729,461.23 Marketing costs 153,377.64 124,777.19 85,612.84 53,745.44 Other R&D costs 142,139.93 0.00 142,139.93 0.00 Travel expenses 1,719,861.58 754,061.98 150,039.15 157,207.40 Administrative expenses 2,924,377.53 2,831,165.92 1,214,486.22 1,090,314.72 Credit losses and recovery 19,050.00 49,335.05 19,050.00 0.00 Other operating costs, intra-group 0.00 0.00 45,699.34 26,919.78 Other operating costs 72,601.38 72,096.89 20,825.67 44,064.15 Other operating costs Total 9,315,268.63 7,051,486.54 2,961,549.39 2,449,326.61

AUDITORS’ FEES Audit 35,341.00 37,746.00 17,385.00 17,662.00 Taxation advice 15,073.00 10,575.00 11,823.00 10,575.00

2.5. FINANCIAL INCOME AND EXPENSES 5 Other interest income From other Group companies 0.00 0.00 361,500.00 415,277.01 From other sources 548.11 13,264.47 11.46 11,778.10 Total interest income 548.11 13,264.47 361,511.46 427,055.11 Other financial income From other sources 2,406,813.33 1,459,026.05 2,406,813.33 1,488,634.00 Other financial income Total 2,406,813.33 1,459,026.05 2,406,813.33 1,488,634.00

Financial income Total 2,407,361.44 1,472,290.52 2,768,324.79 1,915,689.11

Interest costs From other sources 875,574.08 710,408.39 629,635.42 629,400.95 Interest expenses Total 875,574.08 710,408.39 629,635.42 629,400.95 Other financial expenses From other sources 1,387,351.55 1,486,258.89 1,387,154.89 1,488,982.76 Other financial expenses Total 1,387,351.55 1,486,258.89 1,387,154.89 1,488,982.76

Financial expenses Total 2,262,925.63 2,196,667.28 2,016,790.31 2,118,383.71

Financial income and expenses Total 144,435.81 -724,376.76 751,534.48 -202,694.60

2.6. EXTRAORDINARY ITEMS 6 Extraordinary income / group contribution 0.00 0.00 11,400,000.00 9,303,000.00 0.00 0.00 11,400,000.00 9,303,000.00

64 3. NOTES ON BALANCE SHEET ASSETS (EUR) Appendix 3.1. FIXED ASSETS, GROUP 7 Intellectual INTANGIBLE ASSETS 2015 property rights Total Acquisition costs 1 January 222,727.75 222,727.75 Increases 290,667.17 290,667.17 Decreases 0.00 0.00 Transfers between items 0.00 0.00 Acquisition costs 31 December 513,394.92 513,394.92

Accumulated depreciations 1 January -185,917.51 -185,917.51 Transfers between items 0.00 0.00 Depreciations for the fiscal period -60,244.57 -60,244.57 Accumulated depreciations 31 December -246,162.08 -246,162.08

Book value 31 December 267,232.84 267,232.84

Advance payments and Land and water Buildings and Other machinery Other tangible acquisitions in TANGIBLE ASSETS 2015 areas structures Vessels and tools assets progress Total Acquisition costs 1 January 175,535.71 4,485,673.90 203,866,852.02 6,325,444.39 86,386.67 4,806,530.53 219,746,423.22 Increases 0.00 0.00 18,246,374.63 294,670.49 0.00 87,122.66 18,628,167.78 Increases (interest and management fees) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Sale of subsidiaries 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Decreases 0.00 0.00 0.00 0.00 0.00 -4,077,817.39 -4,077,817.39 Reduction in value 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Transfers between items 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Acquisition costs 31 December 175,535.71 4,485,673.90 222,113,226.65 6,620,114.88 86,386.67 815,835.80 234,296,773.61

Accumulated depreciations 1 January 0.00 -252,322.66 -99,345,522.87 -3,349,861.14 0.00 0.00 -102,947,706.67 Accumulated depreciations for divestments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Accumulated depreciations for deductions and transfers 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Depreciations for the fiscal period 0.00 -192,581.40 -9,993,162.57 -382,187.50 0.00 0.00 -10,567,931.47 Reductions in value 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Accumulated depreciations 31 December 0.00 -444,904.06 -109,338,685.44 -3,732,048.64 0.00 0.00 -113,515,638.14

Book value 31 December 175,535.71 4,040,769.84 112,774,541.21 2,888,066.24 86,386.67 815,835.80 120,781,135.47

65 Intellectual INTANGIBLE ASSETS 2014 property rights Total Acquisition costs 1 January 222,727.75 222,727.75 Increases 0.00 0.00 Transfers between items 0.00 0.00 Acquisition costs 31 December 222,727.75 222,727.75

Accumulated depreciations 1 January -157,447.03 -157,447.03 Depreciations for the fiscal period -28,470.48 -28,470.48 Accumulated depreciations 31 December -185,917.51 -185,917.51

Book value 31 December 36,810.24 36,810.24

Advance payments and Land and water Buildings and Other plants and Other tangible acquisitions in TANGIBLE ASSETS 2014 areas structures machinery assets progress Total Acquisition costs 1 January 175,535.71 4,150,592.61 183,266,606.95 5,765,041.50 85,886.87 14,631,286.53 208,074,950.17 Increases 0.00 335,081.29 20,600,245.07 560,402.89 500.00 15,473,701.58 36,969,930.83 Increases (interest and management fees) 0.00 0.00 0.00 0.00 0.00 160,493.33 160,493.33 Decreases 0.00 0.00 0.00 0.00 0.00 -3,963,221.66 -3,963,221.66 Transfers between items 0.00 0.00 0.00 0.00 0.00 -21,495,729.25 -21,495,729.25 Acquisition costs 31 December 175,535.71 4,485,673.90 203,866,852.02 6,325,444.39 86,386.87 4,806,530.53 219,746,423.42

Accumulated depreciations 1 January 0.00 -79,536.65 -90,483,281.37 -3,005,446.98 0.00 0.00 -93,568,265.00 Depreciations for the fiscal period 0.00 -172,786.01 -8,862,241.50 -344,414.16 0.00 0.00 -9,379,441.67 Reductions in value 0.00 0.00 0.00 0.00 0.00 0.00 -0.20 Accumulated depreciations 31 December 0.00 -252,322.66 -99,345,522.87 -3,349,861.14 0.00 0.00 -102,947,706.87

Book value 31 December 175,535.71 4,233,351.24 104,521,329.15 2,975,583.25 86,386.87 4,806,530.53 116,798,716.55

66 3.1. FIXED ASSETS, PARENT COMPANY Intellectual INTANGIBLE ASSETS 2015 property rights Total Acquisition costs 1 January 215,195.75 215,195.75 Increases 290,667.17 290,667.17 Transfers between items 0.00 0.00 Acquisition costs 31 December 505,862.92 505,862.92

Accumulated depreciations 1 January -179,456.41 -179,456.41 Depreciations for the fiscal period -60,244.57 -60,244.57 Accumulated depreciations 31 December -239,700.98 -239,700.98

Book value 31 December 266,161.94 266,161.94

Advance payments and Land and water Buildings and Other machinery Other tangible acquisitions in TANGIBLE ASSETS 2015 areas structures and tools assets progress Total Acquisition costs 1 January 175,535.71 4,485,673.90 927,256.63 86,386.67 93,611.55 5,768,464.46 Increases 0.00 0.00 13,927.20 87,122.66 101,049.86 Transfers between items 0.00 0.00 0.00 0.00 0.00 0.00 Acquisition costs 31 December 175,535.71 4,485,673.90 941,183.83 86,386.67 180,734.21 5,869,514.32

Accumulated depreciations 1 January 0.00 -252,322.66 -281,386.79 0.00 0.00 -533,709.45 Depreciations for the fiscal period 0.00 -192,581.40 -94,216.03 0.00 0.00 -286,797.43 Accumulated depreciations 31 December 0.00 -444,904.06 -375,602.82 0.00 0.00 -820,506.88

Book value 31 December 175,535.71 4,040,769.84 565,581.01 86,386.67 180,734.21 5,049,007.44

Shares in group INVESTMENT IN 2015 companies Total Acquisition costs 1 January 81,889,548.40 81,889,548.40 Increases 7,500.00 7,500.00 Decreases 0.00 0.00 Revaluation (net) 0.00 0.00 Transfers between items 0.00 0.00 Acquisition costs 31 December 81,897,048.40 81,897,048.40

Book value 31 December 81,897,048.40 81,897,048.40

67 Intellectual INTANGIBLE ASSETS 2014 property rights Total Acquisition costs 1 January 215,195.75 215,195.75 Increases 0.00 0.00 Transfers between items 0.00 0.00 Acquisition costs 31 December 215,195.75 215,195.75

Accumulated depreciations 1 January -150,985.93 -150,985.93 Depreciations for the fiscal period -28,470.48 -28,470.48 Accumulated depreciations 31 December -179,456.41 -179,456.41

Book value 31 December 35,739.34 35,739.34

Advance payments and Land and water Buildings and Other machinery Other tangible acquisitions in TANGIBLE ASSETS 2014 areas structures and tools assets progress Total Acquisition costs 1 January 175,535.71 4,150,592.61 717,580.03 85,886.67 251,671.77 5,381,266.79 Increases 0.00 335,081.29 209,676.60 500.00 387,197.67 932,455.56 Transfers between items 0.00 0.00 0.00 0.00 -545,257.89 -545,257.89 Acquisition costs 31 December 175,535.71 4,485,673.90 927,256.63 86,386.67 93,611.55 5,768,464.46

Accumulated depreciations 1 January 0.00 -79,536.65 -197,580.83 0.00 0.00 -277,117.48 Depreciations for the fiscal period 0.00 -172,786.01 -83,805.96 0.00 0.00 -256,591.97 Accumulated depreciations 31 December 0.00 -252,322.66 -281,386.79 0.00 0.00 -533,709.45

Book value 31 December 175,535.71 4,233,351.24 645,869.84 86,386.67 93,611.55 5,234,755.01

Shares in group INVESTMENT IN 2014 companies Total Acquisition costs 1 January 80,091,798.40 80,091,798.40 Increases 1,797,750.00 1,797,750.00 Decreases 0.00 0.00 Revaluation (net) 0.00 0.00 Transfers between items 0.00 0.00 Acquisition costs 31 December 81,889,548.40 81,889,548.40

Book value 31 December 81,889,548.40 81,889,548.40

68 Appendix GROUP PARENT COMPANY 2015 2014 2015 2014 3.1.2 GROUP SUBSIDIARIES Share of ownership Share of ownership Arctia Icebreaking Ltd 100% 100% JM Voima Ltd 100% 100% Arctia Offshore Ltd 100% 100% Arctia Karhu Ltd 90 % 90 % Arctia Management Services Ltd 100% Arctia Icebreaking Investment Ltd 100% Arctia Offshore Investment Ltd 100%

3.1.3 ASSOCIATED COMPANIES Ice Advisors Ltd, Helsinki Share of ownership 40 % 40 % Equity 70,397.98 70,397.98 Profit for the fiscal period -349.51 -349.51

3.2. SHORT-TERM ASSETS 3.2.1. ASSETS FROM GROUP COMPANIES 8 Accounts receivable 2,198.10 0.00 Group account receivables 105,624.20 268,064.02 Group contribution assets 11,400,000.00 9,303,000.00 11,507,822.30 9,571,064.02 3.2.2. RELEVANT ITEMS IN DEFERRED RECEIVABLES 9 Interest receivables 4,034,334.00 2,647,324.00 4,034,334.00 2,647,324.00 Tax receivable 21,885.00 81,373.81 0.00 0.00 Personnel expenditures 751,248.99 674,042.23 643,721.99 670,227.71 Other deferred receivables, from expenses 430,136.38 394,002.78 6,865.61 0.00 5,237,604.37 3,796,742.82 4,684,921.60 3,317,551.71

3.2.3. LIQUID SECURITIES 10 Book value 43,025,103.32 42,005,299.99 43,025,103.32 42,005,299.99 Market value 43,164,914.00 43,001,149.43 43,164,914.00 43,001,149.43

69 4. NOTES ON BALANCE SHEET LIABILITIES (EUR) Appendix GROUP PARENT COMPANY 4.1. EQUITY INCREASE AND DECREASE 11 2015 2014 2015 2014 Restricted equity Share capital 1 Jan 18,700,000.00 18,700,000.00 18,700,000.00 18,700,000.00 Share capital 31 Dec 18,700,000.00 18,700,000.00 18,700,000.00 18,700,000.00

Unrestricted equity Reserve for invested unrestricted equity Reserve for invested unrestricted equity 1 Jan 66,780,736.91 66,780,736.91 66,780,736.91 66,780,736.91 Reserve for invested unrestricted equity 31 Dec 66,780,736.91 66,780,736.91 66,780,736.91 66,780,736.91

Profit from previous fiscal periods 1 Jan 49,349,892.44 35,971,877.33 28,219,200.27 20,688,785.67 Payment of dividends -7,891,400.00 0.00 -7,891,400.00 0.00 Adjustment of the profit/loss from previous fiscal periods 0.00 505,879.66 0.00 505,879.66 Profit from previous fiscal periods 31 Dec 41,458,492.44 36,477,756.99 20,327,800.27 21,194,665.33

Profit for fiscal period 14,631,448.11 12,872,135.45 8,758,946.97 7,024,534.94

Unrestricted equity Total 122,870,677.46 116,130,629.35 95,867,484.15 94,999,937.18

Equity total 141,570,677.46 134,830,629.35 114,567,484.15 113,699,937.18

Distributable assets 122,870,677.46 116,130,629.35 95,867,484.15 94,999,937.18

4.2. OTHER PROVISIONS 12 Crane leasing 293,401.20 474,720.96 0.00 0.00

The group’s and subsidiary’s expense and decrease in provisions for 2015 was recorded as EUR 181,319.76.

4.3. IMPUTED TAX LIABILITIES AND RECEIVABLES 13 Imputed tax receivables For confirmed losses 36,403.71 0.00 0.00 0.00 Imputed tax liabilities For depreciation differences 6,615,363.78 5,208,133.26 0.00 0.00

In the consolidated financial statements, the depreciation difference has been divided into a part comparable to equity and imputed tax liability.

70 GROUP PARENT COMPANY 2015 2014 2015 2014

4.4. LONG-TERM LIABILITIES 14 Loans from financial institutions 11,250,000.00 34,057,836.96 0.00 22,647,324.00 11,250,000.00 34,057,836.96 0.00 22,647,324.00

4.5. SHORT-TERM LIABILITIES 15 Loans from financial institutions 24,825,654.14 600,000.00 24,034,334.00 0.00 24,825,654.14 600,000.00 24,034,334.00 0.00

4.5.1. LIABILITIES TO GROUP COMPANIES 16 Accounts payable 15,902.88 0.00 Group account liabilities 30,709,853.94 25,953,746.82 30,725,756.82 25,953,746.82

4.5.2. RELEVANT ITEMS INCLUDED IN DEFERRED LIABILITIES 17 Personnel expenditures 5,354,584.15 5,113,759.98 407,487.62 352,943.43 Income tax 794,813.39 475,776.49 789,748.62 475,776.49 Interest liabilities 305,514.52 309,036.00 303,588.89 307,000.00 Other deferred liabilities 0.00 7,918.00 0.00 0.00 6,454,912.06 5,906,490.47 1,500,825.13 1,135,719.92

71 5. NOTES ON SECURITIES AND CONTINGENT LIABILITIES (EUR) GROUP PARENT COMPANY RENT/LEASING AGREEMENTS 2015 2014 2015 2014 To be paid during subsequent fiscal period Leasing agreements 69,622.78 72,861.38 53,229.93 50,454.17 Rent liabilities 302,064.00 302,064.00 0.00 0.00 371,686.78 374,925.38 53,229.93 50,454.17 To be paid later Leasing agreements 69,955.91 45,682.67 62,710.91 22,044.82 Rent liabilities within 1–5 years 981,708.00 1,283,772.00 0.00 0.00 1,051,663.91 1,329,454.67 62,710.91 22,044.82 The sums are presented with VAT included.

CONTINGENT LIABILITIES GUARANTEES For group companies 10,800,000.00 10,800,000.00 10,800,000.00 10,800,000.00

Together with Port of Kemi Ltd, the parent company has issued an absolute joint and several guarantee of EUR 10,800,000.00 to Nordea Pankki Plc for the bank loan taken out by Arctia Karhu Ltd. On 31 Dec 2015, the loan capital was EUR 11,850,000.

Issued on behalf of the parent company 20,000,000.00 20,000,000.00 20,000,000.00 20,000,000.00

The amount of the parent company’s loan for which it has issued an absolute guarantee was EUR 20,000,000.00. The loan amount was EUR 20,000,000.00 in both 2014 and 2015.

OTHER CONTINGENT LIABILITIES The group account receivables act as a general guarantee to the bank for all loan balances, interest, penal interest, costs and remunerations on valid group accounts linked to the Group Accounts Agreement, as well as for the bank’s debt-collection costs.

CUSTOMS GUARANTEE 8,400.00 8,400.00 0.00 0.00

INVESTMENT COMMITMENTS To be paid during subsequent fiscal period 128,223,700.00 2,629,442.00 147,700.00 0.00

RESIDUAL VALUE LIABILITIES (INCL. REPURCHASE COMMITMENT) To be paid during subsequent fiscal period 348,489.88 348,489.88 348,489.88 348,489.88

72 6. DERIVATIVES (EUR) GROUP PARENT COMPANY OPEN Currency swap Value of underlying commodities 20,000,000.00 20,000,000.00 20,000,000.00 20,000,000.00 Market value of agreements 3,731,537.00 2,112,173.00 3,731,537.00 2,112,173.00

Interest rate swap Value of underlying commodities 21,400,000.00 21,400,000.00 10,000,000.00 10,000,000.00 Market value of agreements -455,343.00 -680,411.00 -232,233.00 -425,807.00

The interest rate and currency swap agreements have been made to hedge foreign currency loans. The market value of derivatives and forward agreements is based on generally used pricing models. The currency loan will fall due and the hedging agreements expire in 2016.

Current account facilities Total amount of the facility 250,000.00 250,000.00 0.00 0.00 In use 191,320.14 10,512.96 0.00 0.00

73 Signatures to the ﬁnancial statements and annual report Helsinki, 16 February 2016

Christer Granskog Tero Vauraste Chairman of the Executive Board CEO

Maire Laitinen Ilpo Nuutinen

Antti Pankakoski Päivi Söderholm

Auditors’ report A report on the audit of accounts has been issued today.

Helsinki, 16 February 2016

Ernst & Young Ltd Corporation of Authorised Public Accountants

Mikko Rytilahti Authorised Public Accountant, Chartered Public Finance Auditor

74 Auditor’s report

have conducted our audit in accordance with good To the Annual General Meeting of Arctia Ltd auditing practice followed in Finland. Good auditing Audit opinion (previously Arctia Shipping Ltd) practice requires that we plan and perform the audit to obtain reasonable assurance about whether the In our opinion, the financial statements and annual We have audited the accounts, financial statements, financial statements and the report of the Board of report give a true and fair view of the financial per- annual report and governance of Arctia Ltd (previ- Directors are free from material misstatement, and formance and financial position of the company ously Arctia Shipping Ltd) for the fiscal period 1 Jan- whether the members of the Board of Directors or in accordance with the regulations governing the uary – 31 December 2015. The financial statements CEO are guilty of any act or negligence which may preparation of financial statements and annual include the balance sheet, income statement, finan- result in liability for damages against the company reports in force in Finland. The information in the cial statement and notes to the financial statements. or have violated the Limited Liability Companies annual report is consistent with the information in Act or the Articles of Association of the company. the financial statements. An audit involves procedures to obtain audit evi- Responsibility of the Board of Directors and CEO dence about the amounts and disclosures in the financial statements and annual report. The choice Other opinions The Board of Directors and CEO are responsible of procedures depends on the auditor’s judgment, for the preparation of financial statements and including the assessment of the risks of material mis- We are in favour of adopting the financial state- an annual report that give a true and fair view in statement, whether due to fraud or error. In making ments. The Board of Directors’ proposal regarding accordance with the regulations governing the prep- such risk assessments, the auditor considers internal the application of profits shown on the balance aration of financial statements and annual reports control where relevant to the entity’s preparation of sheet is in compliance with the Finnish Limited Lia- in force in Finland. The Board of Directors is respon- financial statements and an annual report that give bility Companies Act. We are in favour of discharg- sible for the appropriate arrangement of the con- a true and fair view. The auditor evaluates internal ing the members of the Board and the CEO from trol of the company’s accounts and finances, and control in order to design audit procedures that are liability for the financial period we have audited. the CEO ensures that the accounts of the company appropriate to the circumstances, but not for the are in compliance with the law and that its finan- purpose of expressing an opinion on the effective- Helsinki, 16/02/2016 cial affairs have been arranged in a reliable manner. ness of the company’s internal control procedures. An audit also includes evaluating the appropriate- Ernst & Young Ltd ness of the accounting policies used and reasona- Corporation of Authorised Public Accountants Duties of the auditor bleness of accounting estimates made by management, as well as evaluating the overall presentation Mikko Rytilahti Our duty is to express an opinion on the financial of the financial statements and annual report. Authorised Public Accountant, Chartered Public statements and annual report on the basis of our We believe that the audit evidence we have Finance Auditor audit. The Auditing Act requires that we comply obtained is sufficient and appropriate to provide with the requirements of professional ethics. We a basis for the audit opinion.

75 Principles of CR reporting

Financial figures are reported by financial manage- quency calculation principle is LTIF (Lost-Time Injury Reporting and calculation principles ment and are generated in the same process as the Frequency). annual report and financial statement information. This corporate responsibility report included in the The HR department constantly monitors the person- Carbon dioxide emissions annual report has been drawn up in accordance with nel situation and work-related travel. The data in The carbon dioxide emissions of Arctia’s vessels have the applicable guidelines provided in Appendix 3 the report represent the situation on 31 December been calculated according to the formula presented ‘Corporate responsibility reporting model for state- 2015. The safety department produces the informa- in the IMO publication MEPC/Circ.471, 29 July 2005; owned enterprises’ to the Government decision- tion related to occupational safety and environmen- ‘INTERIM GUIDELINES FOR VOLUNTARY SHIP CO2 EMIS- in-principle (3 November 2011) on state ownership tal damage. Senior management then supplements SION INDEXING FOR USE IN TRIALS.’ The carbon dioxide policy. In order to avoid interruptions in reporting, the report where required. emissions of air traffic have been calculated on the basis this corporate responsibility report also includes all The corporate responsibility report integrated into of flight kilometres, using the following coefficients: sections of the Climate Policy Report (ILPO) previ- the annual report is discussed by Arctia’s Management • less than 950 km 0.15 kg CO2 / km ously required by the Ministry of Transport and Com- Team and Board of Directors. The report is published • more than 950 km 0.11 kg CO2 / km munications. The contents of the human resources on Arctia’s website. accounts are also discussed quite comprehensively Particle emissions in this corporate responsibility report. This corpo- Personnel indicators The particle emissions of icebreakers were calculated rate responsibility report includes and replaces these The reported figures represent the situation on the using the emission coefficients presented in VTT’s earlier reports. indicated date (31 December 2015). The total number research report (VTT-R- 08702-09) Calculation system Arctia’s communications manager was responsi- of personnel also includes part-time employees and for Finnish waterway traffic emissions MEERI 2008. How- ble for compiling the annual report, and the finan- fixed-term employees with valid employment con- ever, the research report has defined the engines of cial director for the financial statements and annual tracts on the date in question. icebreakers as slow two-stroke engines [sic] instead of report. Arctia’s development manager was responsi- four-stroke engines (pg. 11 of the report). ble for the compilation and coordination of the sec- Accident frequency tions on corporate responsibility. All accidents resulting in a minimum of one day of Waste amounts Each part of the Group delivered the monitored inability to work have been included in the number of The vessels monitor waste amounts by volume, whereas indicator data to Arctia’s development manager, who workplace accidents. The accident frequency was cal- the receivers of waste charge by weight. By way of then compiled and edited the sections of the report. culated by dividing the above-mentioned number of departure from the statutory monitoring of the waste In practice, this means that the ships mostly mon- Lost-Time Incidents (LTI) by working hours and multi- generated by ships (waste and oil logs), waste amounts itor and report on environmental aspects such as plying the result by one million. A daily working time have been reported by weight in earlier reports. In consumption and waste amounts. Annual reports of eight hours was used in the formula. Accidents sus- connection with the development of reporting, Arctia of these figures are delivered to the development tained by both shore and sea personnel are included decided to standardise the reporting of waste amounts. manager. Aerial emissions are calculated from the in occupational accidents, and the total number of In earlier years, the amounts reported by ships had to fuel consumption of vessels by the technology and working hours in the organisation was used as the be converted to weights using coefficients such as those maintenance management of the shore organisation. divisor. The international term for this accident fre- provided in the Waste Tax Act (495/1996).

76 Stakeholders and their expectations

STAKEHOLDER EXPECTATIONS STAKEHOLDER EXPECTATIONS

OWNER Investment capacity, meeting TOWING Port of Kemi Information flow, qualitative icebreaking targets OPERATORS cooperation, development DIRECT Finnish Transport Agency / High-quality services CUSTOMERS Ministry of Transport and corresponding to service OIL SPILL RE- Ministry of the Environment Information flow, Communications descriptions and agreements, SPONSE AND THE Finnish Environment Institute cooperation, Oil and energy industry operators responsible operations, cost- ENVIRONMENT SYKE development Offshore construction companies effective pricing Lamor European Maritime Safety Agency (EMSA) MARITIME Finnish Transport Responsibility, Towing and marine rescue AUTHORITIES, Safety Agency information flow, customers INTERNATIONAL IMO cooperation, The Port of Oulu ORGANISA- IMCA development Ice Advisors customers TIONS HELCOM Events customers

END Finland’s export and import trades Quick, reliable and high- ARCTIC Ministry for Foreign Affairs Solvency, CUSTOMERS Industry quality service OPERATORS Arctic Council responsibility, Shipping companies Finnish Meteorological Institute information flow, OWN Office personnel Solvency, long-term and Non-commercial usage of the cooperation, PERSONNEL Sea personnel high-quality HR policy northern sea route passage development Arctic Society of Finland OTHER STAKE- Winter navigation operators Information flow, HOLDERS Veeteede Amet (EMA) cooperation, maintenance of OTHER STAKE- Journalists, teachers, Solvency, Sjöfartsverket own service level HOLDERS scientists responsibility, Rosmorport Dockyards information flow, Ministry of Transport of the Suppliers and service cooperation, Russian Federation providers development Finnpilot Trade unions VTS Maritime colleges Regional operators Understanding of regional Maritime research institutes Ports operations, cooperation, Classification societies Local authorities maintenance of own service Insurance companies level, development Financers, banks

77 List of requirements for CR reporting

PAGE PAGE 1. DESCRIPTION OF THE ORGANISATION, ADMINISTRATION AND OPERATING 4. ENVIRONMENT 10 PRINCIPLES 3 4.1 Environmental targets 10 1.1 Basic details of the organisation 3 4.2 Environmental indicators 10 1.2 Corporate responsibility management and operating principles 3 4.2.1 Energy 10 1.2.1 Material aspects, risks and opportunities of corporate responsibility 4 4.2.2 Aerial emissions 11 1.3 Stakeholders and interaction with them 4 4.2.3 Water 12 4.2.4 Waste 12 2. FINANCIAL RESPONSIBILITY 6 4.2.5 Compliance and environmental costs 13 2.1 Financial key figures 6 4.2.6 Products and services 13 2.1.2 Charity and sponsorship 6 4.2.7 Transport and travel 13 4.2.8 Materials 13 3. PERSONNEL 6 4.2.9 Preparation for environmental risks 13 3.2.1 Number of personnel 7 3.2.2 Employment contracts 7 5. SOCIETY 14 3.2.3 Personnel turnover 7 5.1 Local communities 14 3.2.4 Duration of employment contracts 7 5.2 Prevention of bribery and corruption 14 3.2.5 Age structure and average age of personnel 8 5.3 Political advocacy and subsidies 14 3.3 Personnel impact of reorganisation 5.4 Limitations of competition 14 3.4 Gender distribution of personnel 8 5.4.1 Compliance with competition regulations 14 3.5 Remuneration system and performance bonuses 8 5.5 Compliance 14 3.5.1 Objective and principles 3.5.2 Structure of the performance bonus system 6. PRODUCT LIABILITY 14 3.6 Competence development and training 9 6.1 Customer satisfaction 14 3.6.1 Performance reviews 9 6.2 Service safety 15 3.6.2 Training and competence development 9 3.8 Occupational health and safety 9 7. HUMAN RIGHTS 15 3.8.1 Accidents 9 8. SUPPLY CHAIN MANAGEMENT AND PROCUREMENT PRINCIPLES AND POLICIES 15 3.8.2 Absences due to illness 9 9. REPORTING AND CALCULATION PRINCIPLES 15

78 Images in the publication: Arctia’s image bank and Jarmo Vehkakoski Images in the publication: Arctia’s

Arctia Ltd Laivastokatu 9, 00160 Helsinki, Finland Tel. +358 30 620 7000 www.arctia.fi