Annual Report 2019

ANNUAL REPORT 2019 Hurtigruten Group AS c/o Hurtigruten AS, Storgata 70, P.O. Box 6144 Langnes, 9291 Tromsø, Norway Booking: +47 810 30 000, Switchboard: +47 970 57 030 Business register number: NO 914 148 324 VAT Hurtigruten Group AS – Group Directors’ Report 2019 Hurtigruten – Leading premium expedition travel company The Hurtigruten Group, through its brand Hurtigruten, is the leading expedition travel company focusing on sustainable expedition cruising. With a fleet of 16 custom-built expedition cruise vessels including the world’s two first hybrid-powered expedition cruise ships delivered in 2019, Hurtigruten is the world’s largest expedition cruise company. It offers a unique gateway to experiences in the Alaska, South America, Arctic, Antarctica, along the Norwegian coast and to other unique destinations to travellers from all over the world. Hurtigruten’s operation builds on a rich and proud Norwegian Expedition Cruises heritage offering the first voyages to Svalbard as early as 1896 and having offered cruises along the Norwegian coast for 126 years. Today, Hurtigruten combines a deeply-rooted desire to offer genuine experiences with world leading experts and the best local food and beverages while leaving a smaller footprint as it shapes the future of the growing adventure travel and expedition cruise market. Along the Norwegian coast, Hurtigruten offers the classic Hurtigruten round trip between Bergen and Kirkenes, often referred to as “The world’s most beautiful voyage”. During the 11-day voyage, guests enjoy the spectacular scenery and highlights such as the Northern Lights or the Midnight Sun. Including Bergen and Kirkenes, the ships call at 34 ports, allowing guests to experience local sights, culture and a large number of active and immersive excursions. Hurtigruten has introduced the culinary concept of “Norway’s Coastal Kitchen”, offering authentic Norwegian cuisine with locally sourced ingredients delivered fresh to the ships throughout the journey, reflecting both the seasons and local specialties. Hurtigruten is the only cruise operator offering year-round cruises out of the port of Bergen to these 34 ports and holds a unique competitive position on the Norwegian Coast. Travel industry trends continue to show growth in demand for unique destinations and an increasing interest in adventure travel and expedition cruising. With its strong history and clear positioning, Hurtigruten is the leading company in this segment. With its strong focus on sustainability and the environment, Hurtigruten introduced in 2019 the world’s first hybrid expedition cruise ship, MS Roald Amundsen, powered by hybrid battery technology. Her sister ship, MS Fridtjof Nansen, was delivered in Q4 2019. These two vessels will fortify Hurtigruten’s position in the expedition cruise segment. MS Nordlys underwent a complete refurbishment in 2019, increasing the number of suites, improving the cabins and the indoor decks and improving the general service offering on the vessels. The existing fleet has provided Hurtigruten with greater flexibility and an opportunity to tailor offerings, attracting more guests and new segments. In 2019, we completed the refurbishments of our hotels on Svalbard. The upgraded hotels now offer enhanced facilities for the guests and employees and will further strengthen the company’s position in the market. Hurtigruten Svalbard offers a wide range of excursions including dogsledding under the Northern Lights, ice-caving and snowmobile trips. Business and location Hurtigruten is the leading expedition cruise-based travel company based on APCNs, offering adventures that provide customers with the feel of authentic exploration into polar waters. Its offering is differentiated from that of most other cruise operators, including itineraries with a wide range of distinctive excursions and activities that allow customers to connect with exotic and remote places. The Group views its ships as safe and comfortable platforms from which to offer its customers unique engagement with the surrounding nature, culture and activities and therefore, unlike traditional cruise operators, the ship itself is not the main attraction. It also provides local transport and cargo shipment on the Norwegian coast pursuant to the Coastal Service Contract. The Group has a fleet of 16 ships and has 126 years of experience operating ships in polar waters, having provided services along the Norwegian coast since 1893. As a result of its long-established presence, public service origins and association with a long and naturally distinct coast line, Hurtigruten is one of Norway’s most recognized international travel brands. 1 Hurtigruten Group AS – Group Hurtigruten’s global headquarter is located in Tromsø, one of the key ports of call on the Norwegian coastal route in addition to a large office in Oslo holding key functions. Hurtigruten has also sales offices in Hamburg, London, Paris, Seattle, Melbourne, Tallinn, Hong Kong and Kirkenes (which also functions as Hurtigruten’s crew centre) form a global organisation serving Hurtigruten’s most important and emerging markets. Hurtigruten’s wholly-owned subsidiary Hurtigruten Svalbard AS, is headquartered in Longyearbyen. The group’s business segments are divided into the following product areas: Hurtigruten Norwegian Coast, Expedition Cruises and Landbased. Hurtigruten Norwegian Coast represents Hurtigruten’s longest-running and largest business area and comprises a fleet of 11 ships providing a scheduled service between Bergen and Kirkenes. Calling at 34 ports northbound and 33 southbound, Hurtigruten’s legendary voyage ranks as one of Norway’s most renowned and iconic attractions. In recent years, Hurtigruten has developed the voyages significantly to offer a wide range of activities and excursions to guests along the coast. In this process, Hurtigruten Expedition Teams have been added to most of the ships, providing lectures, organising excursions and adding to the onboard experience. Each port on the voyage receives a daily northbound and southbound call from Hurtigruten throughout the year, except Vadsø (only northbound). The Norwegian state purchases local transport and freight shipment services along the Norwegian coast. In the period 2012-2020 Hurtigruten will operate 11 ships under the “Coastal Route Agreement”. In 2018 there was a tender for a new contract for the period 2021-2031. In the new tender the agreement was divided into 3 packages of 3,4 and 4 ships where potential interested parties could bid for one, two or three packages. Hurtigruten was awarded 2 packages of a total of 7 ships and will receive an annual payment NOK 546m (2018 value) for 7 ships (NOK 78m per vessel) which is a 20% increase in annual compensation per vessel compared to the compensation in 2019 of NOK 65m per vessel and will be KPI adjusted over the life time of the contract. This is a very positive outcome for Hurtigruten as we will be able to deploy our 3 largest ships into the fast-growing Expedition Cruise segment from 2021. Expedition Cruises products include Hurtigruten’s expedition cruise operations outside of the Norwegian coastal route. Voyages include visits to the Antarctic and Arctic, Alaska, Iceland, Greenland, South America and a variety of other destinations. In 2019, three vessels operated year-round in this segment, MS Fram, MS Midnatsol (September– April) and MS Spitsbergen (May–August). In July 2019, MS Roald Amundsen was delivered from the Kleven yard and started its operation. In December 2019 the sister ship, MS Fridtjof Nansen, was delivered. From 2020 we will have 5 ships operating in the Expedition segment MS Fram, MS Midnatsol (January–April) and MS Spitsbergen (May– December), MS Roald Amundsen, MS Fridtjof Nansen (March-December). From 2021 our 3 largest ships in the Coastal segment will join this segment after offering a unique Expedition product on the Norwegian Coast. The Landbased product area comprises year-round hotel and restaurant activities, as well as Arctic adventure tourism in Svalbard and in Kirkenes region. From a base in Longyearbyen, Hurtigruten Svalbard AS offers active Arctic experiences on snow-covered and snow-free terrain with an extensive portfolio of activities and excursions. These include day trips on skis, dog sledding, snowmobile trips, boat or hiking excursions and longer expeditions in the archipelago. Hurtigruten’s operations – originating back in 1896 – are the largest and most diversified in Svalbard. Hurtigruten Barents with location in Kirkenes, delivers dog-sled trips, king crab experience and excursions to Russian boarders as well as hotel outside of Kirkenes. Business concept, objective and strategy Objective and vision Hurtigruten’s vision is to be the leading expedition travel company by offering authentic and accessible experienced around the world to travellers who wish to explore and travel in a sustainable way. Hurtigruten will be a frontrunner in adventure tourism and expedition cruising, a niche with substantial global growth potential. With a fleet of 16 custom-built expedition ships, Hurtigruten is already the world’s largest expedition cruise operator. Two-thirds of the Bergen–Kirkenes route lies north of the Arctic Circle. Accordingly, Hurtigruten has, at any given time, more than half its fleet in Arctic waters throughout the year. Hurtigruten’s goal is to reinforce its global position, differentiated from the rest of the cruise industry by authentic and active experiences on both land and sea. 2 Hurtigruten Group AS – Group New

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