YEAR 2019 Arctia 2019
1 YEAR 2019 The year 2019 in figures ...... 04 RELIABLE SERVICES IN CEO’s review...... 05 2 ARCTIA Operating environment...... 07 CHALLENGING CONDITIONS Organisation ...... 09 Corporate social responsibility management ...... 12 Financial responsibility ...... 15 Society ...... 17 Environment ...... 21 Arctia Ltd safeguards Finland’s maritime transport in the 3 BUSINESS OPERATIONS ice winter conditions in the Baltic Sea, ensures good water Icebreaking...... 27 transport links and offers solutions for safe and efficient Fairway maintenance...... 29 Hydrographic surveying...... 31 seafaring in challenging conditions throughout the world. In addition to services in icebreaking, fairway maintenance 4 PERSONNEL AND GOVERNANCE Personnel and governance...... 34 and hydrographic surveying, Arctia’s tasks include, e.g. Competence and expertise...... 37 pipeline and cable laying, towing operations, support in 5 FINANCIAL STATEMENTS 2019 the installation and maintenance of underwater structures, Report on operations...... 41 Profit and loss account ...... 46 oil spill preparedness and response, hydraulic enginee- Balance sheet...... 47 ring, and the manufacture of plastic spar buoys and other Cash flow statement...... 49 Notes to the financial statements...... 50 buoys. Auditor’s report...... 64 Principles of CSR reporting...... 66 Stakeholders and their expectations...... 67 List of requirements for CSR reporting...... 68
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 02 01 Year 2019
Picture: Arctia/Tommy Berg
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 03 ARCTIA 2019
More than 20 offices and fairway stations in Employees Key figures Finnish waters areas
Result for the Total Turnover M€ Investments M€ financial year €M
278 80 442 268 -2,0 75 1,4 (2018) -1,4 (2017) Offshore personnel 70
243 65 237 Operating profit €M 15 223 60 10 55 Onshore personnel 0,0 5 50
32 45 2,2 (2018) 0,1 (2017) 0 31 219 19 18 17 19 18 17
12,7 50,9 Return on capital 79,1 48,9 invested % 9,5 5,7 0,1
2019 2018 2017 0,8 (2018) 0,1 (2017)
04 YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONELL AND GOVERNANCE FINANCIAL STATEMENTS CEO’s review NEW ARCTIA
Year 2019 was the first full year of operation for the better meet the needs, development and future chal- work towards better profitability by increasing the ef- merged Arctia-Meritaito. As a result of the integra- lenges of the new Arctia’s business operations. We ficiency of our internal operations, by acquiring new tion of the companies, the Group’s business ope- will also actively continue this development work with customers and by developing our services. rations now also include fairway maintenance and respect to the management and the entire personnel. In terms of the business units, the key events in hydrographic surveying in addition to the traditional Despite the efficiency measures, the results of the icebreaking in addition to the above-mentioned free- icebreaking in the Baltic Sea. The number of emplo- Group saw a loss of 2.0 million euros with a turnover of zing of offshore operations included the transfer of yees and turnover of the Group increased considerab- 79.1 million euros, which left us far behind our targets. Nordica and Fennica to Kotka. In hydrographic sur- ly as a result of the merger. In early 2020, we gave up Among the specific matters that have contributed to veying, we achieved a record turnover and expanded the brand name Meritaito and started using the Arctia this were the small number of icebreaking days due the business operations to airborne laser scanning brand in all our business operations. With its wider to the mild winter, the lower than expected project surveying. In fairway maintenance, we continued ac- shoulders, the new Arctia is capable of offering even margin in fairway maintenance and hydrographic sur- tive development of the service concept. The most ex- more extensive overall solutions to its clients. veying contracts, and the higher than predicted main- tensive project in hydraulic engineering was the parti- In addition to the integration, one of the most signi- tenance costs of the icebreaking fleet. Naturally, we cipation in the building of the Kimola canal, which was ficant changes during the year was the freezing of the will not settle for this level of performance, but we will completed in late 2019. offshore business concept and the transfer of multi- During the past autumn we were working on a new purpose icebreakers Nordica and Fennica to icebrea- group strategy, which, at the time of writing this, is still king duties in the Baltic Sea in order to gain cost sa- partly unfinished. On the basis of this work, the de- vings. Due to the quiet commercial period of several velopment areas and key projects in 2020 will focus years in the Arctic areas, offshore business available on the development of internal operations, increasing to Arctia has been very limited. We are prepared to added value for the customers, strategic partnerships, examine the concept and possibly relaunch the in- and improving profitability. Corporate responsibility is ternational operations if the markets improve in the a fixed and integrated element in Arctia’s operations future and lucrative long-term chartering contracts with the theme “responsibly together”. are put out to tender. Summer chartering of multipur- I wish to thank all Arctia employees for your excel- pose icebreakers would enable considerable increase lent work during 2019. The year involved many chan- in the utilisation rate of the fleet, which would furt- ges and challenges, which we overcame together. This her ease the pressure of cost increases in traditional is the way forward. My warmest thanks also go to all icebreaking. our clients and stakeholders for your confidence and During 2019, there were several personnel chan- good cooperation. ges in the company’s management. In addition, the management’s areas of responsibility were reviewed Maunu Visuri and the management system was developed. In addi- President and CEO tion to cost effectiveness, we want these reforms to
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 05 02 New Arctia
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS Picture: Arctia 06 Operating environment
RELIABLE SERVICES IN WATER AREAS AROUND THE YEAR
The Arctia Group offers extensive services in challenging conditions in sea areas, inland waterways, and ports.
STAKEHOLDERS with the authorities, e.g. by taking part in various In October, Arctia took part in a marine rescue task events and cooperation exercises for the authorities. at the request of the national Maritime Rescue There are many contributors to ensuring smooth In April, multipurpose icebreaker Fennica took Coordination Centre. The Pärnäinen fairway team and safe navigation in both the private and the pub- part in the POLARIS 2019 sea rescue exercise prac- in Nauvo rescued a person in a boating accident in lic sector. In Finland, in addition to our own person- tising a mass evacuation operation. The interna- the Turku archipelago. The fairway maintenance nel, we carry out stakeholder collaboration together tional exercise was part of the work of the Arctic boat was well suited for the evacuation task in the with clients, the authorities, ports, charterers, trade Coast Guard Forum, with the Finnish Border Guard shallow waters close to the shore. and industry, research organisations, training insti- acting as its chairman. In the exercise, more than In May, the international, top-level Arctic Secu- tutes, and other operators in the maritime cluster. 200 persons were rescued on board the ship, with rity Round Table event of the Munich Security Con- In addition to our clients, our overseas stakehol- further evacuation mainly taking place by helicop- ference was held on IB Sisu. The event with about ders include, e.g. the authorities, shipping opera- ters. The smooth running of the exercise proved 70 guests was hosted by Timo Soini, Minister for tors, non-governmental organisations, and research Fennica’s potential as an evacuation ship, as well Foreign Affairs. The event was part of the meeting institutes. Through stakeholder cooperation, Arctia as the personnel’s competence especially in heli- of the Arctic Council and the conclusion of Finland’s contributes to the visibility of the Finnish maritime copter operations. The exercise was subsequently two-year chairmanship. cluster both at the national and international level. presented at the conference of the international Stakeholder work is longstanding, and the expec- Arctia engages in active dialogue with its stake- Arctic Coast Guard Forum and at the closing event tations of stakeholders are taken into account in the holders. During 2019, we saw our stakeholders in of the SARC project (development project on Arctic development of services and in decision-making. In regular meetings, events and client encounters. In maritime safety cooperation taking place in three 2019, we carried out a stakeholder survey to find addition, during the year we carried on cooperation phases) of the Finnish Border Guard. out the expectations of stakeholders with regard to Arctia.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 07 CUSTOMERS Winter navigation system Close cooperation of several operators is needed Arctia’s most significant customer is the Finnish Tran- in order to safeguard winter navigation of Finland’s sport Infrastructure Agency, which maintains the industry and merchant shipping. The Finnish Tran- majority of Finland’s fairways and canals and is res- sport Infrastructure Agency and Traficom act as the ponsible for organising winter navigation. Fairway authorities for the system and supervise its func- maintenance includes, for example, fairway plan- tioning. Traficom monitors, e.g. with national port ning, fairway upkeep, and maintenance of marine inspections that vessels and their crews meet the ice safety devices. The Finnish Transport Infrastructure class and regulatory requirements. In addition, the Agency acquires the services mainly through sub- functioning of the system requires regular contacts contracts in public procurement. between pilots, ports, charterers, shipping compa- nies and other actors. Icebreaking Quality targets have been set for Arctia’s icebreaking Fairway maintenance business, e.g. with regard to the ships’ waiting times, Contract-specific targets have been set for each towing speed and the number of empty transits. In fairway maintenance contract, which include, e.g. 2019, Arctia met the quality targets for icebreaking. inspections of the location of floating safety devices in the agreed response time. The achievement of the targets is actively monitored together with the Winter traffic into Finnish ports* 2019 2018 2017 Finnish Transport Infrastructure Agency. Percentage of vessels that entered port without waiting (%) 96 95 93 Hydrographic surveying Number of vessels waiting (pcs) 296 465 295 The most important customers of hydrographic sur- veying are the national marine survey authorities. Average waiting time/vessel (h) 2,5 4,3 3,9 In 2019, hydrographic surveying tasks were car- ried out for Traficom and the British Maritime and *Total performance data for all icebreakers chartered by the Finnish Transport Infrastructure Agency Coastguard Agency. Other key customers were the Finnish Transport Infrastructure Agency; the Fin- nish Defence Forces; Metsähallitus; the Centres for Economic Development, Transport and the Environ- ment; ports; municipalities; consulting and planning firms; and companies that own hydraulic structures. Picture: Arctia
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 08 OTHER CUSTOMERS ter for Ownership Steering acted as the minister self-evaluation of its work and develops its activi- responsible for ownership steering. The Owner- ties according to the results of this evaluation. The Customers are interested in overall solutions and ship Steering Department of the Prime Minister’s Board of Directors has established a Remuneration service contracts, and therefore development work Office prepares and implements the state owner- and Nomination Committee to support its activi- to promote the sale of bundled services in the entire ship policy and steers state-owned enterprises. ties. The Committee’s duties are specified in further Arctia Group continues in 2020. The dialogue between Arctia and its owner is detail in its rules of procedure, which are updated Other customer segments important to Arctia continuous and open. State-owned companies are on an annual basis. include ports; municipalities and towns; the Cent- expected to build their competitiveness with a long- The Board of Directors appoints the CEO of Arctia res for Economic Development, Transport and the term approach and, as the owner, the State requi- and decides on the terms of his or her employment. Environment; energy companies; and other indust- res its companies to carry on responsible business The CEO manages the company’s day-to-day admi- rial plants. operations. The owner expects to obtain a return on nistration in accordance with the instructions and its capital invested in the company. It also expects orders of the Board of Directors and ensures that STATE OWNERSHIP STEERING the company to operate profitably and discharge the accounts of the company are in compliance with its duties efficiently. Furthermore, the owner requi- the law and that its financial affairs have been arran- The Prime Minister’s Office is responsible for the res the company to be able to finance its own ope- ged in a reliable manner. The CEO is responsible for ownership steering of Arctia Ltd. In 2019, the Minis- rations and investments. the achievement of the company’s targets. In addition to the CEO, the members of the ORGANISATION Group’s Management Team are the Chief Operating Officer, the Chief Financial Officer and the Senior The parent company of the Arctia Group is Arctia Vice President, Human Resources and Legal Affairs. Ltd, which is the sole owner (100%) of its subsidiaries In addition to the above, the company’s operatio- Arctia Icebreaking Ltd, Arctia Offshore Ltd, Arctia nal management team consists of the vice presi- Management Services Ltd and Meritaito Ltd, and dents, and the directors of technical services, secu- it owns 90% of Arctia Karhu Ltd. The entire share rity, sales and operational IT. The management capital of Arctia Ltd is owned by the state of Finland. teams have a meeting once a month. The Mana- Arctia’s Board of Directors consists of six ordi- gement Team is tasked with the implementation nary members. The Board of Directors constitutes of the company’s operational activities in line with a quorum when more than half of its members are the strategy and policies specified by the Board present in the meeting. of Directors and the steering of the Group’s CEO. The Board of Directors has rules of procedure Long-term business objectives and policies are that specify the duties of the Board in further detail. defined in Arctia’s strategy. Work on the strategy Picture: Arctia The rules of procedure are updated annually by the for the new Arctia started in autumn 2019, and the Board. The Board of Directors performs an annual first version will be ready in early 2020.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 9 Board of Directors 31.12.2019
Mats Rosin Hanna Masala Pertti Saarela Sinikka Mustakari Pirjo Kiiski Kari Savolainen Member of the Board Member of the Board Chairman of the Board Deputy Chairman Member of the Board Member of the Board Managing Director, Vice President, CEO, Finrail Ltd of the Board Shareholder, Member of the Board Suomen Lauttaliikenne Oy Finance and Strategy, Member of the Board Ministerial Adviser, Saari Partners Ltd since 2018 Member of the Board Fortum City Solutions since 2017 Prime Minister’s Office Member of the Board Year of birth: 1954 since 2018 Member of the Board Year of birth: 1957 Member of the Board since 2018 Education: M.A. Year of birth: 1958 since 2017 Education: LL.M. since 2018 Year of birth: 1965 Education: B.Sc. Year of birth: 1976 Year of birth: 1979 Education: BBA, MBA Education: M.Sc. (Econ.) Education: M.Sc. (Econ.)
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 10 Arctia Group’s Management Team 31.12.2019
Hannu Ylärinne Hilppa Rautpalo Maunu Visuri Sari Kankkunen Chief Operating Officer Senior Vice President, Human President and CEO Chief Financial Officer Member of the Management Resources and Legal Affairs, Member of the Management Member of the Management Team since 2019 until 31 December 2019 Team since 2019 Team since 2019 Year of birth: 1972 Year of birth: 1974 Year of birth: 1968 Year of birth: 1968 Education: Master Mariner Education: LL.M. Education: M.Sc. (Tech.) Education: M.Sc. (Econ.) with court training
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 11 Corporate social responsibility management Values
CORPORATE SOCIAL RESPONSIBILITY AS COMPETENT We want to learn new skills and sha- PART OF THE STRATEGY re our expertise with our colleagues. Competence and commitment to goals are a requirement for our suc- Responsibility will be integrated strongly in the Group’s new strategy. cess.
HELPFUL Arctia’s task is to safeguard winter navigation ser- on our own guidelines and the expectations of our ving the transport needs of the Finnish trade and stakeholders. Cooperation with our clients forms industry and to ensure safe and smooth water- The tools in the management and development the foundation of our operations. borne transport throughout the year. The high- of responsibility include the company’s policies on We aim to satisfy our customers; quality services and smart solutions produced by security, occupational safety and the environment, their needs guide our actions. We al- Arctia promote the sustainable use of waters. In good corporate governance, leadership practices, ways provide a good service for our addition, Arctia provides hydrographic surveying and the management systems. Arctia’s subsidiary clients and are proud of doing so. services related to the contingency planning and Meritaito also holds the ISO 9001 quality certificate, preparedness of the Finnish Navy. These form the the 14001 environmental certificate, and the OHSAS strong core of Arctia’s corporate social responsi- 18001 safety certificate, as well as the RALA Com- bility. petence by the Construction Quality Association EFFICIENT At Arctia, responsibility management means (Rakentamisen Laatu RALA ry). The Group’s per- excellent governance and corporate culture. The sonnel instructions also include ethical guidelines We create a good working atmosphe- Group’s Management Team is responsible for the and the equality plan. re by valuing our own work and that management and development of corporate social Arctia reports on the implementations and tar- of others. We perform our duties responsibility, and it monitors the implementation gets of corporate social responsibility each year in professionally, safely and effectively. of responsible operations on a monthly basis. In connection with the annual report. More detailed This guarantees the continuity of our addition to the principles of corporate social res- information about the reporting principles is pre- operations. ponsibility of state-owned companies issued by sented at the end of the annual report. the Prime Minister’s Office, the work is also based
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 12 We mitigate direct environmental impacts of ope- of responsible operations is emphasised by the PROCEDURES OF THE BOARD OF rations by developing the operating methods and company’s operations in sensitive sea areas. DIRECTORS AND SENIOR MANAGEMENT by carrying out technical updates on the fleet. A The challenges of Arctia’s long-term operations FOR OVERSEEING CORPORATE SOCIAL good example of this is Polaris, the most environ- and, consequently, responsibility include the natio- RESPONSIBILITY MANAGEMENT mentally friendly icebreaker in the world, which nal transport policy as well as other policies rela- uses liquefied natural gas (LNG) as fuel. LNG is cur- ted to the use of icebreakers. Arctia supports the In 2019, the operational management team dealt rently one of the world’s most eco-friendly fuels in reforming regulation of environmental issues at the with the monthly corporate responsibility review, ships. It does not contain sulphur, and during com- global, EU and national levels assuming that it takes which included Arctia’s responsibility indicators bustion it produces about 87 per cent fewer nitro- account of the limitations of winter navigation and and the feedback received from the stakeholders gen oxides and 9 per cent fewer carbon dioxide that the entire marine transport ecosystem can be over the course of the month. emissions when compared with other fuels used developed to be more eco-friendly with a long-term In autumn 2019, Arctia decided to update the in maritime transport. In addition, its particulate approach. The traditional challenge of icebreaking, materiality analysis of corporate social respon- emissions are negligible. fairway maintenance and hydrographic surveying sibility to include all services in the new Arctia In the environmental impact assessment of in the implementation of corporate social respon- Group. For this purpose, we carried out a stake- winter navigation, it is important to examine the sibility has been the seasonal nature of the work. holder survey in December. The survey responses entire ecosystem, i.e. also the emissions of assisted highlighted the functioning of icebreaking opera- ships when navigating in ice. In accordance with the new environmental standards, the emissions of merchant ships will be reduced as a result of lower engine output. This will probably lead to a growing need for assistance when navigating in ice and, further, to increased use of icebreakers. If the need for icebreaking increases, this may also in the short term mean higher emission levels in absolute terms with respect to icebreakers. Fleet renewal has a significant impact on longer-term reductions in emissions from icebreakers. However, the emissions of the logistical chain will fall overall when the majority of shipping takes place in the open sea using a more efficient fleet. The services offered by Arctia play a significant role in reducing risks related to safety and the envi- Picture: Jarmo Vehkakoski ronment in maritime transport. The importance
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 13 tions, the conformity of hydrographic surveying, • The Kotka Maritime Research Centre (Meri- and profitability of customer projects, the seaso- and the implementation of fairway maintenance in kotka) nal nature of business operations, and the ageing the agreed way. The stakeholders had paid atten- • The Apprentice Mill of the fleet. tion to keeping to schedule in projects, sufficiency • The Association of Finnish Waterways In fairway maintenance, the key risks are related of personnel, competence, commitment and flow to the operational condition and correct location of information. The results will be analysed further International: of navigational safety devices, occupational safety, as part of the updating of the materiality analysis • The European Community Shipowners’ Asso- and subcontractors. In hydrographic surveying, during spring 2020. ciations, ECSA (through the membership of the information security and the movement of ships The responsibility of the operations of Arctia’s Finnish Shipowners’ Association) in the areas to be surveyed pose the most typical subsidiary Meritaito was monitored in 2019 in • Corporate membership of IALA (the Interna- risks. Short-term risks in icebreaking are related to the operational management team using indica- tional Association of Marine Aids to Navigation damage to vessels and maintaining human capital. tors derived from the environmental and qua- and Lighthouse Authorities) Longer-term risks, on the other hand, are related lity systems. The responsibility indicators will be to, e.g. relatively rapid changes in the fleet used in combined and supplemented to include the entire RISK MANAGEMENT winter navigation, its service needs, as well as the Group using the updated materiality analysis. development of local weather conditions. The Board of Directors discusses topics related Risk management has been expanded even furt- Arctia manages risks with management systems, to corporate social responsibility regularly in its her in the new Arctia Group. Shipping company good governance, high-standard shipping company meetings. The President and CEO presents the cor- activities have already required continuous and operations, training, and active monitoring of chan- porate social responsibility issues to the Board of high-standard risk management, but the new busi- ges. The technical reliability of vessels is maintained Directors. ness areas, such as the manufacturing industry, by updating the ships’ systems in addition to nor- marine survey and hydraulic engineering, require mal seasonal maintenance. EXTERNAL INITIATIVES risk management on an even larger scale. Arctia The skills of the personnel are maintained carries out risk assessments of the projects, ensu- with training and by taking part in the education As a member of the Finnish Marine Industries, ring that they also include risk evaluations pertai- of future experts in seafaring, e.g. through the Arctia is committed to the shipping companies’ ning to corporate social responsibility. Apprentice Mill. Arctia is involved in the activities target of reducing carbon dioxide emissions in In 2019, risk management focused on the risks of the Apprentice Mill, which was established in shipping. related to the implementation of the integration of cooperation with the Finnish Shipowners’ Associa- Arctia and Meritaito, as well as their management. tion and nine schools of nautical studies. The pur- Arctia’s memberships of associations The risks of the integration were related to emplo- pose of the Apprentice Mill is to coordinate and pro- Finland: yee commitment, change management, implemen- mote the efficient use of trainee posts on vessels. • The Service Sector Employers Palta tation of the benefits of the integration, and chan- This supports Finnish maritime education through • The Finnish Shipowners’ Association The Fin- ges in customer relationships. The major financial practical training on ships. In 2019, Arctia had a nish Maritime Society risks of the Group are related to the management total of 37 trainees on its vessels.
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 14 Financial responsibility
TOWARDS BETTER PROFITABILITY
The Arctia Group’s primary financial targets are the profitability of business operations, a positive opera- ting cash flow, and covering the cost of maintenance investments with the company’s own cash flow.
Arctia achieved its financial targets only in part in The company must have sufficient solvency and pro- remitted primarily in Finland. Arctia has no bran- 2019. Turnover grew compared with the previous fitability to enable investments in the fleet. Arctia ches in any other countries. year due to the integration of Meritaito Ltd in the does not receive financial subsidies from the govern- Group in December 2018. The Group’s profitability ment. The state owner requires future investments declined, which was attributed to by, e.g. the main- to be financed with equity and loan capital obtained Tax footprint in 2019 (M€) tenance costs of the ageing fleet, increased depre- by the company itself. During 2019, substantial main- ciations, a fall in the number of operating days in tenance and refurbishment investments were made Income tax Employer’s 0,01 icebreaking, and the inflexibility of the fixed cost on the vessels. The Group’s investments totalled EUR contributions 0,24 Real estate tax structure. 9.5 million (EUR 13.2 million). 0,04 The Group’s cash flow was positive and liquidity Value added tax, remained at a good level. The Group’s cash assets TAX FOOTPRINT IN 2019 purchases at end of year totalled EUR 22.7 million (EUR 26.2 5,78 million). The most significant areas of spending the The tax footprint refers to the taxes and equiva- Withholding tax cash assets were investments, the repayment of lent fees paid to society of the company’s opera- 8,04 loans, and the payment of dividends. tions. Arctia’s tax footprint was EUR 10.47 million in The equity ratio remained at a healthy 50 per cent. 2019. The greatest part, EUR 8.28 million, consisted 10,47 During the period under review, the Arctia Group of withholding tax and employer’s contributions. did not raise new bank loan, and it repaid EUR 6.7 Arctia complies with the effective legislation in million (EUR 3.3 million) of an existing loan. the payment, collection, remitting and reporting of A dividend of EUR 1.6 million (EUR 1.5 million) taxes and payments. All Arctia Group companies Value added tax, was paid for the financial year 2019. are incorporated in Finland. All taxes are paid and sales 7,92
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 15 CHARITY AND SPONSORSHIP CASH FLOWS TO STAKEHOLDERS, M€ 2019 2018 2017 Arctia does not support or sponsor sports or the arts, and CUSTOMERS it does not sign cooperation agreements related to them. Operating income 79,4 52,1 49,0 Arctia does not support political parties or religious orga- Turnover 79,1 50,9 48,9 nisations. In 2019, Arctia donated Christmas gift funds to Other operating income 0,4 1,2 0,1 the John Nurminen Foundation. GOODS AND SERVICE SUPPLIERS 30,4 15,6 16,1 Material and service acquisitions 18,2 7,8 8,2 Charity and sponsorship, € 2019 2018 2017 Other operating costs 12,2 7,8 7,9 Children and youth 0 0 550 EMPLOYEES 33,0 21,7 20,8 Science, research and Personnel expenses 33,0 21,7 20,8 education 7 500 7 500 7 500 PUBLIC SECTOR 0,0 -0,5 0,3 Arts 0 0 0 Taxes (direct taxes) 0,0 -0,5 0,3 Sports and exercise 0 0 0 NON-PROFIT ORGANISATIONS 0,02 0,02 0,01 Political subsidies 0 0 0 Sponsorship and donations 0,02 0,02 0,01 Civic and environmental SHAREHOLDERS 1,6 1,5 4,6 organisations 1 000 1 500 1 700 Dividends paid to owners 1,6 1,5 4,6 FINANCERS 1,4 1,3 1,2 Financing costs (net) 1,4 1,3 1,2 PAID AND REMITTED TAXES, M€ FUNDS RETAINED FOR THE DEVELOPMENT OF THE COMPANY’S OPERATIONS 3,5 1,6 -1,5
INVESTMENT 9,5 12,6 5,6 TAXES PAID, M€ 2019 2018 2017 Employer’s contributions 0,24 0,16 0,20 Income tax 0.01 1,15 0,04 Real estate tax 0,04 0,01 0,01 Taxes paid in total 0,29 1,33 0,25 TAXES REMITTED, M€ Withholding tax 8,04 5,19 5,24 Value added tax, sales 7,92 2,54 1,82 Value added tax, purchases 5,78 3,45 3,12 Taxes remitted in total 10,47 4,27 3,94
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 16 Society
RESPONSIBILITY IS AN IMPORTANT PART OF WATERBORNE TRANSPORT
Arctia is involved in building a sustainable future of waterborne transport in cooperation with ports and other local operators. Picture: Vastavalo
Arctia serves its customers locally along the coast owner, and the Emergency Service of Lapland. The and in inland waterways in more than 20 places transfer of multipurpose icebreakers Fennica and all employees in order to prevent bribery and cor- of business. Nordica to Kotka attracted plenty of positive atten- ruption. Safe waterborne transport is a sum of many fac- tion locally. The visibility of the vessels in the citys- Arctia complies with national and international tors. Fairway safety starts already in fairway plan- cape of Kotka is significant. Maintained by Arctia, regulations on competition. Arctia’s ethical guideli- ning, continues in the construction of the fairway, the Saimaa Canal is an important waterway from nes define procedures for matters such as the han- channel markings and fairway maintenance, also the Gulf of Finland to Lake Saimaa and, as the EU dling of confidential information. requiring icebreaking in places. Functioning logistics is investing in inland waterborne transport, its sig- Compliance with legislation and regulations is ensure continuing competitiveness in the region, nificance may increase even further. monitored by the effective management, supervi- and low-emission waterborne transport contributes Arctia also contributes to the future of the Finnish sors and ships’ masters, and other managers. The to resolving the environmental impacts of logistics. maritime industry through research cooperation Group’s auditors monitor its compliance with legis- Regional presence and especially the personnel’s with universities of applied sciences, universities, lation related to financial administration, such as local knowledge of water areas are among Arctia’s and other organisations. the Accounting Act and Ordinance and the Limited strengths. Arctia’s head office, the Helsinki fairway Human rights are taken into account in Arctia’s Liability Companies Act. The authorities and clas- station, and the base for conventional icebreakers ethical guidelines. The Group does not tolerate bri- sification societies perform an audit on Arctia as are located in Katajanokka. Arctia Karhu Ltd is domi- bery or corruption, and the Group’s ethical guide- an enterprise and shipping company each year. In ciled in Kemi. The company carries on cooperation lines specify the operating principles concerning 2019, Arctia started applying a separate service for with local industry, Kemin Satama Oy which is part monitoring legislation.
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 17 COMPLIANCE CUSTOMER SATISFACTION AND THE SAFETY OF SERVICES AND PRODUCTS Arctia achieved its compliance targets in 2019 and kept environmental costs at a reasonable level. Customer satisfaction is impacted by the success Arctia did not cause any material environmen- of projects and service provision, implementa- tal damage in 2019. A thin nylon rope that had tion of the standard of services, and keeping to wound itself around the axis of the bow thruster the schedule. The commitment of competent per- of IB Voima caused lubricant oil to seep into the sea sonnel and, in the long term, the renewal of fleet between the seals of the damaged thruster. The and keeping its maintenance and utilisation rate amount of the spillage was not significant. at a good level will improve customer satisfaction and the customers’ confidence in the availability PURCHASE of services. Customer satisfaction is assessed with customer In 2019, Arctia launched the task of harmonising meetings and surveys. The customer satisfaction the procurement policy and the related processes of Arctia’s subsidiary Meritaito is based on project- in the Group. specific success. The average score of the custo- Both companies purchase the services they need mer satisfaction of projects was 4.3, which is at the from subcontractors. As a rule, Arctia purchases same level as in the previous year. The assessment ship maintenance services and aims to use audited is based on a five-step scale in which 1 represents suppliers. Meritaito also provides part of the ser- a low quality of work performance and 5 means vices it offers through subcontracting. Both com- an excellent one. panies instruct their subcontractors, e.g. in opera- Arctia’s performance in its icebreaking service tions that meet the safe and ethical principles as provision is monitored in cooperation with the Fin- part of the subcontracting guidelines. In addition, nish Transport Infrastructure Agency, which orga- Meritaito uses separate ethical guidelines, which nises an annual stakeholder survey to assess the cover the subcontractors. smooth operation of the winter navigation system. Arctia’s service provision is also monitored for every assistance, towing and transit task at a time on a monthly basis with respect to each vessel in ope- ration. In terms of the most important customers, the waiting times for icebreakers are among the Picture: Arctia
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 18 key indicators at Arctia. In 2019, Arctia met all of International Convention for the Prevention of Pol- its service level requirements. lution from Ships (MARPOL Convention), along with the national guidelines and regulations. Safety of services The safety of seafaring and waterborne transport Environmental impacts of the services is an important individual area of responsibility to Like other shipping companies, Arctia has joined Arctia. The safety of services is administered as part the International Maritime Organisation IMO, which of the management systems. Arctia maintains and operates under the United Nations, in the effort develops the safety management system of its ves- towards low-emission shipping. In accordance sels and shipping companies. Arctia’s subsidiary with the IMO regulation, which entered into force Meritaito also uses the ISO 9001 quality manage- in 2018, the reporting of ships’ fuel consumption ment system, the 14001 environmental manage- was launched in 2019. Arctia reports fuel consump- ment system, and the OHSAS 18001 safety manage- tion with respect to vessels that are larger than IB ment system. The functioning of the management Voima (SEEMP II). systems is assessed with audits on vessels and sys- Efforts are made to reduce unnecessary tran- tems. Training related to the systems is provided sport. The spare part situation of vessels is moni- for the ships’ and office personnel. tored continuously, and the ships aim to carry a The Finnish Transport and Communications sufficient number of spare parts on board. Travel Agency Traficom, which is responsible for vessel resulting from the rotation of sea personnel and at safety, has audited the safety management sys- the start of off-duty periods contributes to other tems of Arctia’s shipping companies and granted carbon dioxide emissions caused by Arctia’s ope- them five-year certificates of compliance. Traficom rations. The number and length of rotation trips Picture: Arctia, Teemu Laine also inspects Arctia’s vessels each year. Action and depend on the vessels’ operating areas and the repair plans have been drawn up on the basis of the number of annual operating days. observations made in the audits and inspections, The materials used by Arctia in the provision of Air travel 2019 2018 2017 and the plans have been implemented in accor- its services are primarily related to the maintenance All flights (kg CO2) 738 350* 186 793 433 130 dance with the requirements. No serious non-con- of vessels and the services in fairway maintenance *Includes Meritaito formities were identified in audits or inspections and hydraulic engineering. Arctia uses, for example, in 2019. Arctia considers the environment in all its construction materials, paints, solvents, detergents operations and complies with the regulations of the and cleaning agents each year. Safety devices with International Maritime Organisation’s (IMO) Inter- lighting also use batteries and accumulators. The nal Safety Management Code (ISM Code) and the weights and chains of buoys are replaced to a cer-
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 19 with continuous product development, also enab- les tailored solutions for the individual needs of our customers. The navigational aids are a significant part of the digitalisation of the maritime industry. Remo- tely monitored and managed navigational aids and buoys increase fairway safety and reduce the environmental load. The development work of the Sniffer buoy that monitors sulphur emissions in shipping is advancing well, and the equipment developed by Arctia’s partner is currently being tested. The Sniffer buoy is part of an EU-funded project, which also includes investigation of alter- native energy sources and battery solutions for the buoys. In 2019, the use of wave power to recharge the buoy batteries was studied in a thesis.
Picture: Arctia Environmental impacts of Viittatehdas products The materials used for the navigational aids and tain extent each year. In 2019, Arctia launched a pilot 27,000 navigational aids manufactured by Arctia in buoys manufactured by Arctia’s Viittatehdas are project to implement the recycling of buoys. The the Finnish fairways. Arctia produces about 1,500 HD and MD polyethylene and polystyrene. The volumes of materials used have been monitored navigational aids and buoys each year. accessories of the navigational aids include steel only per each cost pool, however, waste reporting The production of navigational aids has always been weights and connectors, lifting lugs, reflectors, alu- and procurement will provide further indications. based on an easy-to-care, low-cost structure that minium radar reflectors, as well as lights and bat- The ships’ service and maintenance programme also withstands winter conditions. We carry on teries with their casings. The navigational aids and used on the vessels will offer extra tools for the constant development work to enable the mana- buoys have CE marking and they are manufactu- monitoring of materials consumption. geability and safe use of navigational aids. red from IALA-specified types. Arctia’s Viittatehdas is the only company in the The waste management of Viittatehdas has been Safety of Viittatehdas products world that manufactures plastic spar buoys for ice developed, and a separate dust collector has been Arctia’s products include maritime safety devices, conditions. The products have been exported to installed in the plant’s CNC machine, enabling reco- plastic spar buoys and navigational aids, which have more than twenty countries, especially to areas nee- very of plastic produced in machining. In addition, been manufactured in Viittatehdas in Joensuu for ding ice-proof qualities. Arctia designs and manufac- the length of navigational aids and buoys has been over 40 years. Even at the moment, there are about tures the navigational aids in-house which, together optimised in order to reduce waste material.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 20 Environment
SUSTAINABLE SERVICES FOR THE PROTECTION OF SEAS AND INLAND WATERS
We produce high-quality services and smart solutions to
promote the sustainable use of water areas. Kuva: Timo Heikkala
Arctia’s services contribute to ensuring safety in even stricter in places. The EU has launched goal- achieved only by increasing energy efficiency, but waterborne transport and sustainable use of water oriented measures to mitigate emissions. there must also be changes to the fuels and power areas. Marine transport is the most eco-friendly As a result of the new international emissions technology. Arctia has already started this work means of transport, and by safeguarding it under all reduction targets, the efficiency requirements for with the development of reporting and monitoring. circumstances we enable environmentally friendly the transport capacity of cargo ships in relation The latest vessel in the fleet, icebreaker Polaris, supply chains. In the transit voyages of our own to emissions are becoming stricter at a fast pace. is capable of using both liquefied natural gas (LNG) ships, we reduce fuel consumption to the lowest For this reason, the hull forms and engine power and low-sulphur diesel fuel oil as fuel. In February possible level. of merchant ships operating to and from Finnish 2019 in connection with assisting tasks, Polaris The International Maritime Organisation IMO, ports will inevitably change and, as a result, there refuelled natural gas for the first time in Tornio at which is a UN agency, adopted new environmental will probably be significant changes to icebreaking the largest liquefied natural gas terminal in the Nor- commitments for shipping in April 2018. The objec- and the icebreaking fleet suitable for the conditions dic countries. tive is to cut carbon dioxide emissions in shipping in the Baltic Sea. A combination where the emissi- Arctia has promoted switching to increasingly by 40 per cent compared with the 2008 level by ons of icebreakers must be reduced while, on the cleaner fuels in shipping by being one of the first 2030. From then onwards, efforts will be made to other hand, the assisted ships’ performance in ice shipping companies in the world to introduce LNG reduce emissions even further. The planned natio- will presumably be diminished, may prove to be ext- as fuel. LNG as fuel also supports the option of nal targets for transport and maritime transport are remely challenging. The emission targets will not be introducing, e.g. ammonia at a later stage. The most
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 21 important environmental impact of icebreaking is sumption in 2019 with respect to seven icebreakers. ficant environmental load of fairway maintenance enabling winter navigation. The efficiency require- The first annual consumption report will be delive- comes from the batteries and accumulators requi- ments for merchant vessels will have a wide impact red to the Finnish Transport and Communications red by the safety devices. Arctia is working on the on Arctia’s operating environment because, for Agency Traficom in early 2020. The EU’s MRV (Moni- development of improved buoy batteries. example, the increased size of vessels will affect the toring, Reporting, Verification) reporting obligation, Arctia did not cause any material environmen- dimensioning of channels and the reduced machine which entered into force previously, is not applied tal damage in 2019. However, there was a minor power will have an impact on the need to use har- to icebreakers or offshore vessels. However, Arctia instance of environmental damage when a thin bour tugs. has published a report of its fuel consumption in nylon rope wound itself around the bow thruster Correctly maintained fairways, timely and suffi- its annual report for a number of years. of icebreaker Voima, damaging the thruster seal. cient icebreaking assistance, and coordination of When the icebreakers are at berth in the icebre- Due to the damage, lubricant oil seeped into the traffic are requirements for safe seafaring. Prepa- aker base in Katajanokka, they are connected to sea from the bow thruster before the damage was ring for environmental risks is an important part of municipal utilities. During such periods, the icebre- the responsibility of all maritime operators. Tigh- akers obtain their water, district heat and electri- tening environmental requirements increase the city from the shore and discharge their sewage into needs of customers. Arctia’s expertise contributes the municipal network. Icebreaker Polaris also uses to safeguarding sustainable development and use the overflow of its LNG system for heating. When of areas with sensitive ecology. Arctia’s services, at berth, the fairway vessels, harbour icebreaker such as oil spill preparedness and response ser- Ahto and the other tugs are connected to shore vices on vessels and oil spill remediation services, power and their waste water is discharged into a contribute to reducing the environmental impacts collection vehicle. of maritime transport. Our product range also inclu- The emissions generated by fuel consumption des buoys designed for the monitoring of emissions during the operational period are the most signifi- into the environment, for example, sulphur emis- cant environmental impacts of Arctia’s operations. sions or oil spills. By safeguarding smooth and disturbance-free navi- In 2019, Arctia continued its work on the reo- gation in the sea areas and in inland waterways, the rientation of fuel and energy consumption in order indirect, positive environmental impacts enabled to keep it to the minimum in the summer season. by Arctia with its activities are more significant than Life span extensions also improved the fuel effi- the direct impacts. ciency of vessels; the new solution, reactive power The shipping industry in Finland corresponds to compensation, reduced the electrical power requi- about 90 per cent of all transportation, but only red by Sisu by almost one auxiliary engine. 2.6 per cent of all emissions. This helps to illustrate Reporting in compliance with the IMO fuel repor- Arctia’s positive net impacts on the environment. In Picture: Arctia ting obligation SEEMP part II applies to fuel con- addition to consumption by vessels, the most signi-
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 22 Environmental targets in the vessel used as central kitchen. No progress Use of electricity* and 2019 2018 2017 was made with respect to biodegradable oils. The shore power (MWh) reason for this was mainly the equipment manu- Katajanokka facturers’ critical attitude towards the oil proper- icebreaker pier 3,993.9 3,928.5 3,734.3 The environmental targets applying to the ties and the fact that various oil grades must not Kotka** entire Group are updated for 2020: icebreaker pier 2,931.0 be mixed in the systems. One of the environmental Other ships*** 335.4 1. Arctia commits itself to pursuing the targets of Meritaito was achieved, i.e. the installa- Other places of business 3,353.2 IMO’s emissions targets and will start tion of a water heat pump in the Oili class vessel. the first stage of the work to achieve The study on the introduction of LED lighting, the Weather-adjusted surveys required by the energy certificates of pro- energy consumption the target: a 40 per cent reduction in (MWh) carbon dioxide emissions compared perties and the qualifications to draw up energy Energy consumption (MWh) to the 2008 level by 2030. Solutions certificates were not realised. Katajanokka 5,109 4,292 5,151 are sought for the larger vessels of the * directly purchased electricity Electricity consumption ** annual consumption measured of the ships Group. *** MPV Pohjanmeri, MSV Seili, HIB Ahto During the maintenance period in the summer, 2. Recycling of polyethylene navigational the conventional icebreakers were connected to Fuel oil consumption, 2019 2018 2017 aids will be launched during 2020. the electricity network of the City of Helsinki and tonnes their engines were stopped to avoid emissions and Ultra-light 777.7 2,540.0 5,384.4 noise. In Kotka, Nordica and Fennica correspon- Light, icebreakers 9,143.0 11,532.3 7,822.8 dingly relied on shore-side electricity, as did the Light, other ships* 1,258.0 detected and the thruster was stopped. The vessel tugs in Kemi and Tornio and the fairway vessels LNG 1,206.0 494.8 718.0 moved to the dock with the aid of stern thrusters. along the coast. Naturally, the annual consump- Light, boats 616.6 The waste management criteria for vessels and tion of the icebreaker base is also impacted by the * Harbour icebreaker Ahto, hydrographic survey vessel Pohjanmeri, places of business are developed in cooperation severity of winter conditions, i.e. how many vessels fairway vessel Seili with ports. Waste management and recycling skills are at berth during the winter months. of the personnel are developed through training. 2019 2018 2017 District heat Carbon dioxide Achievement of environmental targets in 2019 District heat is used in buildings and on icebreakers. emissions from fuel The concrete environmental targets for 2019 were When the icebreakers are berthed at the icebreaker combustion, tonnes* 31,130.7 46,476,.6 36,498.6 achieved in part. Work on reducing carbon dioxide pier in Katajanokka, they are heated from the City *calculated according to IMO MEPC/Circ.471, LNG is calculated emissions of vessels was started by drawing up of Helsinki’s district heating network. When icebre- with a coefficient in accordance with MEPC 63/23, Annex 8 with icebreaker-specific instructions on CO2 measure- akers arrive in port, they are connected to district respect to consumed fuel. Does not include the fleet of boats. ments (SEEMP2). Arctia stopped using bottled water heating and their boilers are shut down.
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 23
AIRBORNE EMISSIONS with the municipal waste management regulations. the operations produce them) the following waste Other aerial emissions There is a large number of recycling points in Kata- types: paper, metal, plastic, biowaste, fluorescent (tonnes)* 2019 2018 2017 janokka, and skips are ordered for larger volumes tubes and energy-saving light bulbs, SER, coolants CO 33.6 56.9 59.6 of waste. Other places of business of the company and hydraulic fluids, and other chemicals, fuels and HC 13.5 22.8 23.8 also aim to recycle waste as efficiently as possible, pressure-treated wood. NOx 470.9 796.5 834.2 taking the local reception possibilities into account. Particulates 10.1 17.1 17.9 During the operating period, waste is delivered into When ships are at sea, solid waste is sorted into CH4 1.7 2.8 3.0 the collection receptacles provided by ports, and separate receptacles located on board as follows N2O 0.6 1.0 1.0 the port then collects the waste for recycling or deli- • electronic waste (e-waste)
*excluding LNG and emissions of the fleet of boats vers it to the landfill. In order to maintain the target • energy waste level for waste sorting, Arctia has commissioned, e.g. • biowaste Attention is paid to moderate consumption of fresh the collection of bio-waste when necessary. Hazar- • paper and cardboard water in the Group. The quality of tank water is dous waste is always sorted and delivered into the • mixed waste improved on vessels. We completely phased out appropriate collection receptacles or points. • glass the use of bottled water in the summer on Sisu, • metal which is used as the central kitchen for all icebre- Refrigerants • hazardous waste (tins of paint, fluorescent akers in Katajanokka. The results presented in the The refrigerants most commonly used in the refri- tubes, oily waste, etc.) enclosed table are based on the ships’ own con- geration equipment on vessels are potent green- • PVC sumption monitoring, which does not give a fully house gases that are harmful to the ozone layer. • batteries and accumulators. comprehensive report on water use while berthed Arctia has given up the use of such gases and swit- in Katajanokka. ched to alternative refrigerants. Authorised service companies carry out the servicing of Arctia’s refri- Water consumption (m3) 2019 2018 2017 geration equipment. Icebreakers 7,337.6 8,346.5 10,898.9 Other ships* 182.0 Waste management training and plans * Harbour icebreaker Ahto, hydrographic survey vessel Pohjanmeri, New employees are introduced to the shipping fairway vessel Seili company’s waste management system during their general orientation. Extra training is avai- Waste lable when necessary. At fixed places of business, Waste is collected and sorted at Arctia’s places of waste is sorted separately with regard to combus- business and on vessels. The places of business tible waste, oils and oily waste, bilge water, accu- are equipped with waste sorting points complying mulators and batteries, pyrotechnic articles and (if
YEAR 2019 ARCTIAARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 24 WASTE * Ships’ waste*(m3) 2019 2018 2017 Waste from the places of business (tonnes) 2019 Biowaste 35.2 38.8 70.6 Hazardous waste 60.0 Plastic 57.6 72.3 72.8 Mixed waste 29.0 Glass 2.4 5.2 4.1 Impregnated wood 2.0 Cardboard 84.6 45.1 50.2 Construction waste 11.0 Metal 20.6 30.0 29.1 Mixed wood 10.4 Paper 78.3 91.1 92.6 Energy waste 6.9 Other 11.5 7.0 12.1 Biowaste 3.6 Mixed waste 706.3 257.8 446.3 Cardboard 1.3 Hazardous waste Recycled paper 1.9 Oily waste (m3) 9.0 1.,6 5.6 Board 0.2 Accumulators, batteries (pcs) 1,286 1,495 829 Metal packaging 0.6 Light bulbs, etc. (pcs) 760 1,000 950 Scrap steel 15.2 Other (pcs) 170 31 105 Data protection materials 1.4 Electrical and electronic waste 3.6 Hazardous waste, liquid Tyres 0.3 Oils (m3) 34.4 16.1 2.0 Sludge 3.8 Paints (m3, kg, kg) 2.8 0.1 2.4 Coolants (m3, kg, kg) 0.7 0.3 0.3 Refrigerants (m3, kg, kg) 9.5 22.0 101.0 Other (m3, kg, kg) 0.0 0.1 65.0
Liquid waste (m3) Processed bilge water 406.2 145.0 517.7 Other oily water 301.0 0.0 0.0 Toilet waste water (into the municipal sewage system) 1,897.5 2,392,2 1,441.1 Toilet waste water (suction disposal) 2,102.4 0.0 0.0 Other 29.0 73.8 0.0
*Ships: icebreakers, Ahto, Pohjanmeri and Seili
Picture: Arctia/Sanna Viitanen
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 25 Business operations
Arctia is a specialised shipping and service company that provi- des a wide range of services in water areas. The company’s main tasks in Finland are to safeguard winter navigation and to provide services in hydrographic surveying in all conditions. On a global scale, we offer our specialist expertise in challenging conditions in water- borne transport.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 26 Icebreaking Icebreaking CHALLENGING ICE WINTER IN THE BAY OF BOTHNIA
Due to high winds and moving ice, the ice winter in the Bay of Both- nia proved to be a challenging one. Otso, Kontio, Polaris and Sisu assisted merchant shipping in the Bay of Bothnia.
The icebreaking season of 2018–2019 in the Baltic Operational challenges during the icebreaking sea- Operating days in total Sea was relatively mild as far as ice winters are con- son were mainly brief and were mostly caused by cerned. Although the winter was classed as mild, local conditions. The rope that entangled with the 662 conditions in the Bay of Bothnia were quite challen- bow thruster of icebreaker Voima broke the vessel’s 547 447 ging and variable due to high winds and moving ice. thruster seals, resulting in the docking of the ves- Merchant vessels battled against ridged ice, brash sel. The docking was implemented at the RMC ice barriers and high pressure of ice in often windy (Rauma Marine Construction) dock in Rauma. Due Assistance in total conditions. Moving ice fields, ice ridges and brash to its docking during the icebreaking season, the 2 027 ice barriers that are difficult to pass are factors that vessel’s chartering was interrupted for a good 18 1709 1 200 are also likely to have an impact on future icebrea- days, for which reason the vessel’s operating days king and fleet of vessels. totalled only 17, assisting in the Eastern part of the 2019 2018 2017 During the winter, all vessels in Arctia’s fleet of Gulf of Finland. icebreakers were in operation with the exception Arctia’s icebreakers did not operate in the Both- Offhire days, a total of 18.9 days due to the docking of Fennica and Nordica, which were on standby in nian Sea area in the season 2018–2019. of Voima, have been deducted from the number of the Rauma region. The number of operating days operating days. in icebreaking totalled 547.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 27 MULTIPURPOSE ICEBREAKERS FENNICA AND ESCORT TUG AND HARBOUR ICEBREAKING was continued with the RIB boat in the same way NORDICA MOVED TO KOTKA SERVICES IN THE BALTIC SEA as in the previous year.
Icebreaking An LNG tanker visited the Tornio LNG terminal The home port of multipurpose icebreakers Fen- Arctia Karhu Ltd is an enterprise jointly owned regularly throughout the year. In connection with nica and Nordica was moved from the RMC dock by Arctia (90%) and the Port of Kemi (10%). The the visits, the vessel is escorted in with two tugs in Rauma to the pier of Kotka Marine Oy in Pikku- company’s fields of operation include harbour and out with one ASD tug. In addition, during the Hietanen in Kotka. The vessels berthed in Kotka icebreaking, towing and assisting ships, cargo tran- vessel’s discharge, a tug is manned so that it can in July 2019, and Pikku-Hietanen in Kotka became sport and other functions in support of waterborne assist the vessel within a few minutes, if necessary. Arctia’s new base in addition to the icebreaker base transport in Finland and abroad. Arctia Karhu Ltd A five-year docking was carried out on the in Katajanokka. offers harbour icebreaking services over the wide company’s Ahto harbour icebreaker as planned in expanse of the Bothnian Arc and in the entire area August 2019. of the Baltic Sea. In 2019, Arctia Karhu’s harbour The company carried out two oil spill prepa- icebreaker Ahto assisted ships in the Port of Röyttä redness and response exercises together with the in Tornio and the harbour icebreaker Jääsalo pro- Emergency Service of Kemi off the coast of Tornio. vided assistance to ships in Ajos in Kemi. Harbour One of the exercises took place in the winter and the icebreaker Ulla served as a backup vessel for the other in the open water season. The first three-year open water season. option contract in the oil spill preparedness and The winter of the 2019 season in the Bay of Both- response contract between the company and the nia was normal, and therefore harbour icebreaking Emergency Service of Lapland entered into force. and assistance in the ports were carried out at the same pace as in the previous years. The sale of the company’s services was successful also in the open water season. In 2019, Arctia did not manage to sign a similar chartering contract in Southern Finland as in the previous year, due to which the turnover and result remained below the 2018 figures. During the year, the new-generation harbour icebreaker Ahto carried out four escort tug assis- tances in Luleå in accordance with the contract sig- ned with the port in 2016. In summer 2019, a new ASD harbour icebreaker was completed in Luleå, as a result of which Ahto’s contract with the port was Picture: Arctia terminated. Transport of crew in the Port of Ajos
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 28 Fairway maintenance Fairway maintenance
DIGITALISATION WILL SHAPE FUTURE FAIRWAY MAINTENANCE
For fairway maintenance, year 2019 was eventful with several major successes, but also some challenges. Picture: Arctia
Arctia manages all the fairway maintenance cont- vessel miles in fairway maintenance, thus reducing nish Environment Institute was transferred from the ract areas put out to tender by the Finnish Transport the environmental load. Ministry of the Environment to the Ministry of the Infrastructure Agency along the coast of Finland Last year, all unlighted navigational aids in the Interior and further to be managed together with and, in the inland waterways, the Lappeenranta, Kemiönsaari area in the Archipelago Sea were repla- the Finnish Border Guard until the end of 2019. The Joensuu and Kuopio fairway maintenance areas, of ced with remotely monitored navigational aids that agreement was not continued upon its termination which the Kuopio area was awarded in 2019. The signal their location. The project was carried out in at the end of the year. As a result of the disconti- number of employees engaged in fairway mainte- cooperation between Arctia and the Finnish Tran- nuation of oil spill preparedness and response, the nance on the coast, in inland waterways and on sport Infrastructure Agency. In addition to the remo- company suffered a considerable loss of earnings. fairway maintenance vessels totals about 60. tely monitored navigational aids in the Kemiönsaari The chartering contract of fairway vessel Sektori The expansion of remote monitoring and mana- area, Arctia improved the safety device technology to the Estonian Maritime Administration continues. gement of navigational aids is a significant improve- in the Förby channel and the Tahkoluoto-Mänty- In accordance with the fairway maintenance stra- ment in terms of the users of the fairway, the custo- luoto channel. In the inland waterways, navigatio- tegy, Arctia focused on the development of opera- mer and the company. Currently, 1,152 lighted and nal safety devices were installed in the Laitaatsalmi tions in the port and water areas sector in comp- 360 unlighted navigational aids are monitored and channel, which was completed in 2019. liance with the service contract model. At the end of managed remotely. Real-time information about Arctia’s heavy fairway vessels have been part of 2019, Arctia had various types of service contracts the status of navigational aids increases fairway Finland’s fleet of oil spill preparedness and response with several ports and companies operating in the safety and improves predictability in the mainte- vessels since 1991. In connection with the amend- area. These contracts are, for example, the service nance of the fairway infrastructure. The predicta- ment to the Rescue Act in early 2019, the oil spill pre- contract with Kalajoen Satama Oy, which includes bility of maintenance visits reduces the number of paredness and response agreement with the Fin- new safety devices equipped with modern techno-
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 29
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Fairway maintenance Hydrographic surveying Hydrographic surveying TURNOVER OF HYDROGRAPHIC SURVEYING GREW TO RECORD LEVELS
Year 2019 was a year of growth in hydrographic surveying. The amount of work increased in hydrographic surveying in both Finland and over- seas. The level of turnover in hydrographic surveying was the highest since Meritaito was established, i.e. since 2010.
Arctia’s strategic task is to provide hydrographic sur- HYDROGRAPHIC SURVEYING WITH are performed by aircraft at a flight level of some veying services related to the contingency planning ADVANCED TECHNOLOGY FOR THE FINNISH 500 metres, which achieves about three times the and preparedness of the Finnish Navy under all con- HYDROGRAPHIC SURVEYING AUTHORITIES visibility depth of water. The method is well suited ditions. Arctia has one of the largest hydrographic for full covering surveys of shallow areas. Combi- survey fleets in Northern Europe. Each year, Arctia In 2019, surveys of the Oulu, Kemi and Tornio chan- ning the laser method with multibeam surveying surveys thousands of square kilometres of seabed nels and the channels in the Saimaa waterway were carried out on boats and vessels produces a full- in Finland and in the European waters in accordance carried out for the Finnish Transport and Commu- coverage surface model of forms both above and with international quality standards. nications Agency Traficom, and high-security area below the surface. surveys in the Helsinki-Porkkala area (HEPO) were In summer 2019, Arctia won a major LiDAR2019 continued. project to survey about 4,200 square kilometres The new laser surveying method (Bathymetric of areas in the Gulf of Finland and in the Archipe- LiDAR) invested in by Arctia in the summer was uti- lago Sea with the laser method. The project client is lised in the area surveys. With the method, surveys the Finnish Transport and Communications Agency
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 31 Hydrographic surveying Traficom. Surveys of the project were started in DATA MODELS AND UTILISATION OF DATA autumn 2019 and they continue in 2020. Measured data and plans are presented as diffe- SURVEYING FOR THE UK HYDROGRAPHIC rent 3D point clouds, data models and plans based OFFICE on data models. These enable electronic proces- sing and updating of data, for example, in different In 2019, Arctia carried out hydrographic surveying stages of construction. In 2019, Arctia presented under the Civil Hydrography Programme for the the new INSEA comprehensive service concept UK Hydrographic Office. The survey areas were where regular surveys combined with data ser- located on the coasts of England, Scotland and vices are produced for customers. Wales. Surveys were carried out with the Poh- jameri and Kaiku vessels. Furthermore, surveys KATAKRI AUDITING were performed under a subcontracting arrange- ment with several remote-controlled unmanned In accordance with the Territorial Surveillance Act, survey vessels (USV). hydrographic surveys in the Finnish territorial waters are subject to a permit. These permits are SURVEYS, PLANNING AND CONSULTING granted by the Defence Command. Meritaito and RELATED TO HYDRAULIC ENGINEERING the Finnish Defence Forces have signed a security agreement committing to high-security processes In 2019, Arctia implemented several seabed sur- and operating models. In 2019, a security audit veys related to hydraulic engineering. The sur- in accordance with the new Katakri criteria was veys were in aid of, e.g. building the Baltic Con- carried out in connection with the moving of the nector gas pipeline, the construction of channels hydrographic survey offices. The processes and and ports, e.g. in Kemi, Oulu, Pori and Turku, and premises were audited to the highest classifica- urban development in Helsinki. Underwater struc- tion level at the civilian level (STII). The audited tures, piers, canals and dams were modelled for methods and the security agreement enable flu- numerous customers. ent permit processes for high-security level hyd- Fairway planning, and expert and consultancy rographic surveying. services were produced in a total of some 40 pro- jects. Four persons were also leased to the hyd- rographic surveying authority for expert tasks. Picture: Arctia
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 32 Personnel and 04 governance
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 33 Personnel and governance
COMPETENT AND THRIVING EMPLOYEES ENSURE SAFE OPERATIONS
GENDER DISTRIBUTION The integration of Arctia and Meritaito and the Board of Directors’ gender distribution* changes in the Group’s management have also Offshore personnel had an impact on the company’s human resource management. The Group’s human resource policy Women Men will be updated during 2020. 11.1% 3 3 10.5 % 11.4 % 3 5 EQUALITY 2 3 88.9 % In its operations, Arctia follows an equality plan 89.5 % 88.6 % approved by the Ombudsman for Equality. No Gender distribution in senior issues have been detected by the Ombudsman management (Management Team) that would suggest unjustified differences in wages Onshore personnel and salaries between men and women. The equa- lity plan includes the non-discrimination plan. The Women Men 40.6 % equality plan is updated at regular intervals. 2 2 19.9 % 45.2 % 2 5 2 4 *Members at the turn of the year 59.4 % The years are not comparable as 2019 includes the merged 80.1 % 2019 2018 2017 Arctia-Meritaito. 54.8 %
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 34 REORGANISATION AND DISMISSALS with the trade unions representing offshore per- maintenance and hydrographic surveying. The mee- sonnel. tings dealt with topical issues in addition to matters The employee cooperation negotiations launched related to cooperation. Members of the Manage- during autumn 2018 were completed in spring 2019. THE FOLLOWING COLLECTIVE AGREEMENTS ment Team and experts took part in the meetings to As a result of the employee cooperation negotia- WERE IN FORCE IN 2019 represent the employer. Shop stewards and mem- tions, the business activities of Arctia Offshore were bers of the occupational safety and health organi- discontinued until further notice and the offshore 1. The collective agreement applying to the deck, sation took part in the meetings as employee rep- personnel of the business unit were transferred to engine and catering personnel of the Arctia resentatives. the collective agreement of Arctia Icebreaking. As Group a result of the employee cooperation negotiations, 2. The collective agreement applying to the engin- 65 people moved to icebreaking tasks, 14 retired eering officers of the Arctia Group’s icebreakers by the end of 2019 and the employment relation- 3. The collective agreement applying to the deck ship of nine people was terminated. officers of the Arctia Group’s icebreakers Employee cooperation negotiations with the 4. The collective agreement applying to the crews administrative personnel for production-related of harbour icebreakers and financial reasons and for reasons attributable 5. The collective agreement applying to the person- to the reorganisation of the administration of Arctia nel of fairway maintenance and Meritaito and overlap in the administrative 6. The collective agreement between Meritaito Ltd operations were also conducted in the Group. The and the Public and Welfare Services Union app- impacts of the negotiations were smaller than pre- lying to blue-collar workers dicted. 7. The collective agreement between Meritaito, the All personnel, with the exception of management Public and Welfare Services Union, the Confede- and some of the salaried employees, are covered ration of State Employees’ Unions Pardia and the by collective agreements. Federation of Professional and Managerial Staff Arctia applies the Seafarers’ Employment Cont- YTM applying to salaried employees racts Act, based on the International Labour Orga- 8. The collective agreement applying to merchant nisation ILO’s convention on maritime work, to its vessels in overseas transport offshore personnel and the Employment Contracts 9. The collective agreement applying to ships’ crew Act to its onshore personnel. In collective bargaining, serving on Meritaito’s fairway vessels Arctia is represented by the Service Sector Emplo- yers Palta and the Finnish Shipowners’ Association, During 2019, seven co-operation committee mee- which has company-specific collective agreements tings were held in icebreaking and four in fairway Picture: Arctia
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 35 NUMBER AND STRUCTURE OF PERSONNEL REMUNERATION SYSTEM AND PERFORMANCE BONUSES 2019 2018 2017 2016 2015 Number of personnel (31.12.) The objective of the performance bonus system is to Onshore personnel 219 32 31 32 36 commit the company’s key personnel to increasing the Offshore personnel 223 243 237 233 237 company’s value. The objective of the company’s remu- neration model is to be at the same level as those app- Employment contract distribution lied in reference companies. (31.12) Arctia complies with the guidelines for remuneration Onshore personnel, permanent 203 31 29 29 33 in state-owned companies (statement by the Cabinet Offshore personnel, permanent 223 220 217 209 213 Temporary 16 24 22 27 27 Committee on Economic Policy 12 May 2016). Due to Share of full-time and part-time the integration of Arctia and Meritaito and the diffe- employment contracts (%) rent remuneration schemes used in the companies, the Onshore personnel, part-time 2,6 3,1 3,2 8,7 2,8 change of the president and CEO and several changes Offshore personnel, part-time in the management, the remuneration scheme for 2019 0 0 0 0 0,4 has been based on the total performance of key per- Leaving rate, total personnel / leaving and part-time employees (%) sons assessed separately by the Board of Directors. The Onshore personnel 15,6 3,4 28,1 13,9 9,7 Group’s remuneration system will be renewed for 2020. Offshore personnel 48,1 39,6 27,4 11,8 14,5 Key personnel remuneration Average length of employment contract system 2019*) 2018 2017 / years (31.12.) Performance bonuses paid Koko henkilöstö 13,3 11,5 12,5 13,5 13,8 (EUR) Henkilöstön keski-ikä/vuotta (31.12.) President and CEO 0 0 22 433 All employees 48,5 47,5 48,1 49,0 48,3 rest of the Management Team 96 840 24 400 23 304 Offshore personnel, men 50,3 48,0 48,4 49,3 49,0 other 90 912 18 540 15 777 Offshore personnel, women 48,0 44,3 44,3 47,5 46,4 Performance bonuses Onshore personnel 48,1 48,0 48,0 46,0 45,2 including indirect costs 227 912 51 528 75 057 Retired employees 22 12 11 12 14 *The years are not comparable as 2019 includes the merged Arctia-Meri- Average age of retirement 62,1 62 60,3 61,6 60,6 taito. The bonuses paid are based on the 2018 performance.
Performance bonus is paid in the year following the accu- The years are not comparable as 2019 includes the merged Arctia-Meritaito. The inc- mulation year with the exception of spot-type rewarding, rease in the leaving rate of offshore personnel is explained by the reorganisation of which is paid for exceptional performance. The entire Offshore operations. All members of personnel employed by Arctia in 2019 were Fin- personnel of Meritaito received a performance bonus nish nationals. in 2019 on the basis of performance in 2018.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 36 Competence and expertise
ARCTIA HAS A TEAM OF HIGHLY SKILLED PROFESSIONALS
The demanding tasks in icebreaking, fairway maintenan- ce and hydrographic surveying are not learnt as soon as you leave school.
Picture Jaakko Jaskari
Task-specific orientation is given to supervisors and required for qualifications and other professional members of staff at the start of their employment requirements. 2019 2018 2017 contract and when they take on new tasks. This Changes in the Offshore operations contri- Training ensures harmonised and safe working methods and buted to the reduced number of training days as Outside training days 496 620 812 awareness of the operations and requirements of the refresher training related to the sector is not EUR/person spent on training 638 886 1 205 each work environment. Competence in everyday included in the training plan for the time being. work is also developed by working on different ves- Training related to the maintenance plan of Pola- sels and projects and by planning and assessing ris continued, and recent recruits among the deck Educational background of personnel in percentage the performance of tasks in accordance with the officers took part in training on icebreaking com- terms 2019 2018 2017 requirements of the safety management system. petence implemented under the guidance of the Vocational studies or similar 64 55 57 Development of competence is a continuous pro- Finnish Transport Infrastructure Agency. One of Bachelor’s degree 31 40 38 cess, in which regular training also plays a key role. Arctia’s masters acted as trainer on the course. Master’s degree 5 5 5 The personnel of the Arctia Group had a total of 496 training days in 2019. As in the previous years, occupational skills and expertise were strengt- * The statistics for 2019 include the key figures for the entire Arctia Group. . hened primarily with refresher training, which is
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 37 Number of accidents 2019*) 2018 2017 PERFORMANCE REVIEWS quency rate of 9.9 for the Group. In 2019, the num- Accidents resulting in absence ber of occupational accidents resulting in absence from work 13 5 5 Due to the integration of Arctia and Meritaito, per- from work was 13 in the entire Group. Other accidents 14 17 9 formance reviews were implemented only in part. Improved results in occupational safety have Accident frequency / million Updating of the Group’s performance management been achieved through training, working group working hours 15,38 9,76 9,90 was started at the end of 2019, and it was introdu- meetings and risk assessments carried out in con- ced in 2020. nection with tasks. In November 2019, the Arctia Sick leave 2019’) 2018 2017 Group launched a two-year Kompassi project with Absence rate due to illness, all PERSONNEL SATISFACTION the objective of activating all employees in the personnel 5,1 5,4 6,0 development of occupational safety and the cre- Number of suspected cases of occupational illness 1 1 1 Due to the integration of Meritaito and Arctia, the ation of a clear direction for it. Another objective personnel survey was postponed to May 2020. is to achieve a harmonised and predictive way of The first joint employee event of the new Arctia thinking in occupational safety both at work and *The figures applying to 2019 are not comparable with the previous year because the statistics for previous years do Group, the Shipping Company Day, was held in in leisure time. not include the personnel of Meritaito. November 2019. A total of 137 people from Arctia In addition to statutory preventative occupatio- took part in the event. The themes of the day inclu- nal health care, Arctia offers its employees gene- ded, e.g. teamwork and the meaning of team spi- ral practitioner-level medical care, which includes rit at work. treatment by occupational physicians and nurses, the required laboratory tests and imaging exami- OCCUPATIONAL HEALTH AND SAFETY nations, and consultation by occupational health- care experts and specialists. The health insurance The integration of the operations of Arctia and Meri- policy taken out by the company for its employees taito has been significant also from the viewpoint of complements the occupational health care services. safety, as differences in the safety culture between During 2019, measures related to the monitoring the companies were observed already at the early and management of work ability risks were conti- stage of the work. The accident frequency rate in nued systematically, however, despite this, the trend the companies is very different. In 2019, the rate in the number of absences due to sickness was on was 1.98 in Arctia and 35.36 in Meritaito. The joint the increase especially in the latter part of the year. accident frequency rate of the new Arctia Group is The Arctia Group supported its employees’ spor- therefore 15.38. The target is to reduce the rate for ting and cultural activities with sports and arts the entire Group to close to zero through long-term vouchers. work – the next step is to achieve an accident fre-
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 38 Fleet 31 December 2019
STRONG AND VERSATILE FLEET OF SPECIAL VESSELS
Arctia’s vessels include the conventional icebreakers We also operate seven hydrographic survey vessels, The fairway vessels are equipped for oil spill res- Voima (commissioned in 1954, refurbished in 1979 which are suitable for survey areas in the open sea, ponse. Our fleet of vessels also includes several and 2016), Urho (1975) and Sisu (1976, refurbished in on the coast and in inland waterways, four fairway Meri1000, Meri2000 and Meri4000 class fairway 2019), Otso (1986) and Kontio (1987), multipurpose vessels suitable for heavy maritime tasks, and four maintenance boats and a versatile hydraulic engi- icebreakers Fennica (1993) and Nordica (1994), har- Oili class vessels suitable for medium-heavy tasks. neering fleet. bour icebreaker Ahto (2014), as well as Polaris (2016).
POLARIS
IB POLARIS 110 / 24 / 8,0 / 22 000 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
MTM FENNICA 116,0 / 26,0 / 8,4 / 15 000 MTM NORDICA 116,0 / 26,0 / 8,4 / 15 000 HIB AHTO 40,0 / 12,8 / 5,5 / 3 600
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS Length, m / Beam, m / Draught, m / Power, kW 39 05 Financial statements 2019
Kuva: Arctia/Sanna Viitanen
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 40 Arctia Ltd REPORT ON OPERATIONS FOR THE PERIOD 1 JAN. – 31 DEC. 2019
OPERATING ENVIRONMENT Especially for energy and climate policy reasons, On the international scale, the market for hydro- the Arctic areas have experienced a quiet commer- graphic surveying is estimated to grow, and there As a result of the Arctia-Meritaito integration imple- cial period for several years. We have not signed is plenty to survey in the Finnish sea areas for seve- mented in December 2018, the services of the Arctia any profitable international chartering contracts for ral years to come. The Group has sought growth Group now include fairway maintenance and hyd- 2019 or 2020. Due to this situation, the company in international projects especially in hydrographic rographic surveying in addition to icebreaking. will not continue its offshore business with the pre- surveying and the sale of navigational aids. In hyd- The number of icebreaking assistances in the Bal- vious business concept. Multipurpose icebreakers rographic surveying, Arctia continued an impor- tic Sea area is estimated to increase as a result of operate in icebreaking together with conventional tant multi-annual international project carrying out the growing volume of maritime transport, bigger icebreakers. surveys along the coasts of England, Scotland and vessel sizes, and especially the vessels’ diminished The company is monitoring the development of Wales for the UK Hydrographic Office. performance in ice. The longer-term impact of cli- the international operating environment and the mate change on the ice situation of future winters is offshore market. GROUP’S FINANCIAL DEVELOPMENT studied and analysed, but it is challenging to obtain In fairway maintenance, in addition to the normal an accurate estimate. The maintenance of sufficient maintenance of safety devices, digitalisation was The Arctia Group’s turnover for the period under icebreaking capacity is essential in order to safe- utilised to a higher degree. Expansion of remote review exceeded the previous year’s level, standing guard year-round navigation to the Finnish ports. monitoring and management of safety devices in at EUR 79.1 million (EUR 50.9 million in 2018). The Arctia’s icebreaking fleet is subject to pressure for new shipping lanes continued, which is a signifi- growth in turnover is explained by the fact that renewal in the form of either life span extensions cant improvement with respect to the users of the Meritaito Ltd joined the Group in December 2018. or new builds due to the ageing of current fleet and fairways, the customer and the company. Further Operating profit stood at EUR 0.0 million (EUR 2.2 the changing operational needs. development of smart safety devices and systems million) and the loss for the financial year was EUR is carried on actively. -2.0 million (EUR 1.4 million). Factors that contri-
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 41 buted to the decline in performance included, e.g. FINANCIAL KEY FIGURES DESCRIBING THE OPERATIONS OF THE ARCTIA GROUP: the maintenance costs of ageing fleet, increased
depreciations, a fall in the number of operating days 2019 2018 2017 2016 in icebreaking, and the inflexibility of the fixed cost Turnover, MEUR 79,1 50,9 48,9 60,7 structure. Operating profit/loss, MEUR 0,0 2,2 0,1 12,9 The Group’s balance sheet total stood at EUR % of turnover 0,0 4,4 0,3 21,2 288.0 million (EUR 300.1 million). The equity ratio Profit/loss for the fiscal period, MEUR -2,0 1,4 -1,4 9,1 was 49.1 per cent (49.2%). The Group’s interest-bea- % of turnover -2,5 2,7 -2,1 15,1 Equity, MEUR 141,2 147,3 137,2 143,2 ring debt at the end of the year amounted to EUR Equity ratio, % 49,1 49,2 50,1 49,9 125.3 million (EUR 130.0 million). The interest rates Gearing, % 72,6 70,4 70,4 62,5 of the loans are linked to market rates. Of the debt, Interest-bearing liabilities, MEUR 125,3 130,0 121,4 124,2 EUR 42.8 million is hedged with interest rate swaps. Return on capital invested, % 0,1 0,8 0,1 5,7 Cash flow from operating activities fell compared Return on equity (ROE), % -1,4 1,0 -1,0 6,4 with the previous years, standing at EUR 12.1 mil- Investments (MEUR) 9,5 12,7 5,7 131,6 % of turnover 12,0 25,9 11,6 216,9 lion (EUR 17.5 million). Cash flow from investments Balance sheet total, MEUR 288,0 300,1 274,5 287,4 amounted to EUR -9.5 million (EUR -12.7 million). The most significant investments were related to The figures for 2019 are not comparable with the previous years due to the fact that Meritaito joined the Group on 13 vessels. Cash flow from financing activities stood December 2018. at EUR -6.2 million (EUR -3.3 million). The Group’s cash assets at end of year totalled EUR 22.7 million were challenging due to high winds and moving were carried out during the open water season. Har- (EUR 26.2 million). The majority of cash assets were ice. The number of operating days in icebreaking bour icebreaker Ahto was docked in summer 2019. invested in low-risk bond funds. Cash assets are totalled 547 (662) in 2019. Conventional icebreakers In addition to fairway maintenance tasks, the ser- reserved for the maintenance and refurbishment totalled 547 days (589). Multipurpose icebreakers vices of the fairway maintenance business unit investments in an ageing fleet. did not operate in the period under review. Offhire include the operation and maintenance of chan- days totalled 19 (4) due to damage to the seal of the nels, hydraulic engineering services, and the manu- BUSINESS UNITS bow thruster in IB Voima, which was caused by a facture of buoys. The business unit managed the rope that had attached itself to the seal in the sea. fairway maintenance contract areas along the coast The Group has three business areas: icebreaking, The home port of IB Fennica and IB Nordica chan- of Finland and in inland waterways in the Lappeen- fairway maintenance, and hydrographic surveying. ged from Rauma to Kotka in August 2019. ranta, Joensuu and the Kuopio fairway maintenance In the Icebreaking business, services are provi- Harbour icebreaking services in the Group are areas, of which the Kuopio area was awarded in ded with eight icebreakers and with smaller harbour produced by Arctia Karhu Oy. In harbour icebrea- 2019. In the inland waterways, in addition to the icebreakers used in harbour icebreaking operations. king, the winter was normal in the operating area operation and maintenance of the Saimaa Canal, The icebreaking season 2018–2019 was mild in the of the Bay of Bothnia in the ports of Tornio and Arctia managed the canals of Heinävesi and Tahko, Baltic Sea, but in the Bay of Bothnia the conditions Kemi. Harbour towing and escort tug operations the River Kokemäenjoki and Rautalampi-Iisalmi, as
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 42 well as the canal along the Varistaival-Taivallahti Agency where areas of the Gulf of Finland and the were recruited to ensure professional competence route, which was awarded to Arctia in 2019. Archipelago Sea were surveyed with the laser met- and to prepare for future retirements. Competence The expansion of the remote monitoring and mana- hod. Surveys under the project continue in 2020. was maintained with refresher training required for gement of navigational aids and the development Surveys of the Oulu, Kemi and Tornio channels and qualifications and other professional requirements. of digitalisation continued in 2019. In addition to the Saimaa waterway were also carried out for the Arctia’s personnel had a total of 496 training days the remotely monitored safety devices in the Kemi- Finnish Transport Safety Agency, and high-security in 2019. The first joint employee event of the new önsaari area, Arctia improved the safety device area surveys in the Helsinki-Porkkala area were con- Arctia Group, the Shipping Company Day, was held technology in the Förby channel and the Tahko- tinued. The new laser surveying method (Bathyme- in November 2019. luoto-Mäntyluoto channel. tric LiDAR) invested in by Arctia in 2019 was utilised In spring 2019, we renewed the collective agree- Arctia’s heavy fairway vessels have been part of in the area surveys. ments of the Finnish Engineers’ Association and the Finland’s fleet of oil spill response vessels. In con- Finnish Seamen’s Union at the proposal put forward nection with the amendment to the Rescue Act on INVESTMENT by the National Conciliator. 1 January 2019, the oil spill preparedness and res- With the lack of long-term international charte- ponse agreement with the Finnish Environment In 2019, the Group’s investments totalled EUR 9.5 mil- ring projects, the employee cooperation negotia- Institute was transferred to the Ministry of the Inte- lion (EUR 12.7 million). No major dockings were car- tions for production-related and financial reasons rior and for a fixed period to be managed with the ried out on the vessels in 2019. Investments mainly and for reasons attributable to the group restruc- Finnish Border Guard until the end of 2019. The included vessel maintenance and life span invest- turing, launched in 2018, were completed in March agreement was not continued over to 2020, which ments. Life span extension work on icebreaker Sisu 2019. As a result of the negotiations, the employment means a significant loss of earnings for Arctia. continued, including the renewal of the ship’s machi- relationships of nine employees were terminated. During the year, the business unit focused on nery equipment and accommodation areas. The life The employee cooperation negotiations launched the development of operations according to the span extension of Sisu was part of the WINMOS II in May 2019 in order to eliminate overlap in admi- service contract model especially in the port and project, supported by the EU, to promote the deve- nistrative personnel and to clarify the organisational water areas. At the end of 2019, Arctia had various lopment of winter navigation. The docking of har- structure were completed in September 2019. As a forms of service contracts with several ports and bour icebreaker Ahto and the Pohjanmeri and Seili result of the negotiations, the employment relation- companies operating in the port areas. vessels was carried out in 2019. ships of three employees were terminated. Since the The largest individual project in the hydraulic Investments in 2019 included the purchase of the end of the negotiations, the organisational structure engineering services in 2019 was the building of Lidar equipment for expanding the hydrographic sur- of management has been updated and responsibili- the channels of the Kimola Canal. veying business into airborne laser scanning sur- ties and job descriptions have been clarified. Hydrographic surveying carried out surveys veying. Further information related to the employees is under the Civil Hydrography Program for the UK available in the annual report. Hydrographic Office along the coasts of England, EMPLOYEES Scotland and Wales in 2019. Another key hydro- graphic surveying project won by Arctia was the The average number of employees in the Group LiDAR2019 project of the Finnish Transport Safety in 2019 was 482 (503). During the year, employees
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 43 SAFETY Ships (MARPOL Convention), along with the natio- (LNG) in IB Polaris and by improving the icebrea- nal guidelines and regulations. Meritaito also uses a king efficiency of vessels with life span extensions. Safety includes the internal safety management certified OHSAS-18001 safety management system, In May, fairway vessel Seili took part in the inter- system, its compliance, reporting and the impro- and in hydrographic surveying the company also national Clean Sea oil spill response exercise in Esto- vements and audits carried out on their basis. In complies with the regulations of the Katakri audit nia. The oil spill preparedness and response agree- the Group, safety is divided into ship, occupational guidelines of the Finnish Defence Forces. ment of fairway vessels expired at the end of 2019. and corporate safety. In the Bay of Bothnia, the oil spill preparedness and Ship safety is monitored by the Group through DEVELOPMENT WORK AND RESEARCH response agreement with the Emergency Service regular internal and external audits. The Finnish of Lapland continues; the agreement concerns the Transport and Communications Agency Traficom The Intelligent Sea project coordinated by Arctia was harbour icebreakers Ahto and Jääsalo. carries out an inspection on the vessels each year. launched in 2019. The Intelligent Sea is a three-year In 2019, a minor environmental damage took Action and repair plans have been drawn up on the project looking into the future of maritime fairways place when a rope wound itself around the bow basis of the observations made during the audits from the viewpoint of sustainable development by thruster of IB Voima, causing damage to the thruster and inspections, and the plans have been carried creating smart digital solutions for the sea, ports and seal. Due to the damage, a small amount of lubrica- through. No serious non-conformities were iden- the users of fairways. The project develops a digital ting oil from the bow thruster seeped into the sea. tified in the audits or inspections during the fiscal network of smart buoys and navigational aids, and Year 2019 was the first year when IMO collected period. tests alternative energy sources for buoys and new emission data from all larger vessels operating in The lost time incident frequency rate in the Arctia solutions for monitoring sulphur emissions from international shipping in order to establish the actual Group is 15.4. The Group aims for zero serious occu- ships. The European Commission has granted CEF carbon dioxide emissions of maritime transport. pational accidents and a reduction of the lost time funding of EUR 1.5 million for the project. Arctia complies with the SEEMP2 reporting obliga- incident frequency rate towards zero. During 2019, Other significant development projects in 2019 tion with respect to vessels covered by it. there were a total of 13 occupational accidents included the completion of the life span extension All of the Group’s manned places of business have resulting in absence from work over the course of docking of icebreaker Sisu under WINMOS II, as well oil spill prevention materials to combat emissions the year. At the end of 2019, Arctia launched the as the implementation of WINMOS-related repor- taking place on land and in water areas. During two-year Kompassi project to improve occupatio- ting obligations at the end of the project. 2019, the places of business invested in appropriate nal safety in the Group. In the project, results are management and recycling of wastes, as a result of sought through interviews, questionnaires, safety ENVIRONMENTAL IMPACTS which they have successfully disposed of unneces- rounds and working groups. sary minor equipment and other materials. The Group takes account of occupational, ship The emissions generated by fuel consumption Further information about environmental issues and corporate safety in all its operations and comp- during the operational icebreaking period consti- is available in the Group’s annual report. lies with the regulations of the International Mari- tute the most significant environmental impacts of time Organisation’s (IMO) International Safety Arctia’s operations. We have aimed to reduce emis- Management Code (ISM Code) and the Internatio- sions, for example, by using liquefied natural gas nal Convention for the Prevention of Pollution from
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 44 COMPANY ORGANISATION, MANAGEMENT CFO Kim Höijer was acting President and CEO of SHARES AND AUDITORS Arctia Ltd until 19 May 2019. As of 20 May 2019, the Group’s Chief Operating Officer Hannu Ylärinne The entire share capital of Arctia Ltd is owned by In 2019, Meritaito was integrated with the Arctia was acting President and CEO of the Group until the Finnish State. The company’s share capital con- Group, which had a significant impact on the Maunu Visuri was appointed President and CEO sists of 748,000 equal shares. The amount of share Group’s organisation. Arctia Ltd continues as the on 1 August 2019. capital is EUR 18.7 million. Group’s parent company. The subsidiary Arctia In addition to the President and CEO, the mem- Management Services Ltd produces services rela- bers of the Group’s Management Team were Hannu BUSINESS-RELATED RISKS ted to financial and human resources management, Ylärinne, Chief Operating Officer; Hilppa Rautpalo, communications, safety, technology, and manning. Senior Vice President, Human Resources and Legal Technical reliability of the fleet plays a significant The Group’s operational activities are divided Affairs; and as of 16 August 2019, Sari Kankkunen, role when operating in challenging conditions. The between the three subsidiaries. Meritaito Ltd pro- CFO. Until 15 August 2019, the members of the ageing of the fleet increases the risk of technical duces fairway maintenance and hydrographic sur- Management Team were Kim Höijer, Senior Vice problems. Ageing also means growing maintenance veying services, Arctia Icebreaking Ltd provides con- President, CFO; Petri Mikola, Senior Vice President, costs and system replacement due to the diminis- ventional icebreaking services in the Baltic Sea, and Technical Services; Tom Ekegren, Senior Vice Pre- hed availability of spare parts for old vessels. Arctia Arctia Karhu Ltd offers harbour icebreaking servi- sident; Petri Aho, Senior Vice President, Sales; and seeks to manage risk and the increasing mainte- ces in the Baltic Sea. The Group also includes Arctia Pia Broumand, Chief Security Officer; and until 20 nance costs through life span planning for the fleet, Offshore Ltd, which has no active business, and March 2019 Eero Hokkanen, Communications Mana- long-term maintenance programmes and annual other subsidiaries and associated companies, the ger. maintenance plans. operation of which has not been significant. To replace Hilppa Rautpalo who resigned on 31 The management and profitability of client pro- The Annual General Meeting of Arctia Ltd on 22 December 2019, Janne Lahtinen was appointed for jects especially in international projects involve a March 2019 appointed Pertti Saarela as Chairman the post on 16 December 2019 and took over the significant operational risk. In the management of of the Board of Directors, and Pirjo Kiiski, Hanna task in February 2020. risk, key factors include efficient processes and a Masala, Sinikka Mustakari, Mats Rosin and Kari The members of the company’s operational competent project personnel. Savolainen as members of the Board of Directors. management team in addition to the actual mana- The Arctia Group will experience a large turno- The Board of Directors elected Sinikka Mustakari gement team are Jukka Suonvieri, Senior Vice Presi- ver in personnel in the next few years due to retire- as Vice-Chairman. The Board of Directors convened dent; Otto Vuorinen, Senior Vice President, Techni- ment among the offshore personnel. This turnover 16 times in 2019. The remuneration of the Board of cal Services; Pia Broumand, Chief Security Officer; increases the risk of a fall in the level of professio- Directors remained unchanged. Sales Directors Caius Grann and Tom Ekegren; and nal competence. Arctia seeks to mitigate this risk In the Annual General Meeting, certified public Tero Tuominen, Director, Operative IT. through pre-emptive staff planning and training. accountants KPMG Oy was appointed as auditor of The sector is also traditionally prone to labour dis- the Arctia Group, with Ari Eskelinen, KHT auditor, putes and strike action. We aim to diminish this as the auditor with main responsibility. risk through active cooperation and by tackling any problem areas promptly.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 45 The Group’s financial risks are managed with EVENTS AFTER THE FINANCIAL PERIOD insurance policies, action in compliance with the financing policy and key financial reporting, the reli- In January 2020, a deeply regrettable occupatio- ability of which is ensured with control methods. nal accident took place during fairway maintenance work, resulting in the death of an employee. Offi- OUTLOOK FOR 2020 cial investigation of the accident is now underway.
With respect to fairway maintenance and hyd- BOARD OF DIRECTORS’ PROPOSAL FOR THE rographic surveying, the three collective labour USE OF RETAINED EARNINGS agreements of the so-called EPA sector expire on 31 January 2020 and they will be negotiated during The parent company’s distributable assets on 31 spring 2020. December 2019 totalled EUR 99,326,918.28, of Due to the mild winter, the number of operating which loss for the financial year amounted to EUR days of icebreakers is reduced, which will diminish 216,303.30. The Board of Directors proposes to the the turnover of icebreaking in 2020. The termination ordinary general meeting that no dividend be distri- of the oil spill preparedness and response agree- buted and that the loss for the financial year, EUR ment at the end of 2019 has a significant negative 216,303.30, be recognised in equity. impact on the 2020 turnover and results. The level of profit is also reduced by depreciation that will increase as a result of investments. The strategy update, which began in autumn 2019, was to be completed in the spring. Targets for 2020 have been drawn from the work, focusing largely on internal efficiency improvement, integ- ration work, development of operations, and the creation of strategic partnerships. Another target is to develop the company’s provision of service sales and to expand it to new clients. In spring 2020, the focus areas of corporate social responsibility will also be specified further on the basis of the stake- holder survey conducted in late 2019. The Group estimates that the 2020 results will improve on the previous year.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 46 PROFIT AND LOSS ACCOUNT (EUR) GROUP PARENT COMPANY Appendix 2019 2018 2019 2018 TURNOVER 1 79,065,552.98 50,899,959.40 2,776,615.40 2,789,753.96 Stocks of finished and unfinished goods, increase (-) or decrease (+) -146,129.10 4,875.55 0.00 0.00 OTHER OPERATING INCOME 2 361,254.69 1,238,326.91 0.00 17,740.00 Materials and services Raw materials, consumables and supplies Purchases -7,214,953.21 -3,118,412.53 0.00 0.00 Inventories, increase (-) or decrease (+) -59,821.94 396,462.94 0.00 0.00 External services -10,952,651.69 -5,054,074.84 0.00 0.00 Materials and services, total -18,227,426.84 -7,776,024.43 0.00 0.00 Personnel expenses 3 Wages and salaries -28,424,281.14 -18,465,548.22 -883,492.25 -1,020,068.81 Social security expenses Pension costs -3,848,407.77 -2,531,714.79 -191,601.93 -76,322.67 Other indirect employee costs -756,268.70 -702,860.70 1,278.88 -21,042.83 Personnel expenses, total -33,028,957.61 -21,700,123.71 -1,073,815.30 -1,117,434.31 Depreciation and reduction in value Depreciation according to plan -15,818,195.58 -12,596,403.52 -338,131.32 -338,772.43 Depreciation and reduction in value, total -15,818,195.58 -12,596,403.52 -338,131.32 -338,772.43
Other operating expenses -12,211,716.20 -7,832,322.05 -1,500,691.22 -1,432,342.90
OPERATING PROFIT (LOSS) -5,617.66 2,238,288.15 -136,022.44 -81,055.68
Financial income and expenses 5 Income from other investments of fixed assets 38,400.00 990.00 0.00 990.00 Other interest and financial income From group companies 0.00 0.00 1,006,162.73 1,063,254.13 Short-term, from other sources 171,427.75 19,918.19 167,589.71 18,781.68 Interest and other financial expenses To others -1,570,395.12 -1,343,481.67 -1,253,519.80 -1,183,634.71 Financial income and expenses, total -1,360,567.37 -1,322,573.48 -79,767.36 -100,608.90
PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES -1,366,185.03 915,714.67 -215,789.80 -181,664.58
Appropriations Group contribution 0.00 0.00 0.00 100,000.00 Appropriations, total 0.00 0.00 0.00 100,000.00 Income tax Taxes during the fiscal period -35,854.46 -5,496.45 -513.50 -3,258.32 Deferred taxes -560,000.00 499,404.46 0.00 0.00 Income taxes, total -595,854.46 493,908.01 -513.50 -3,258.32 Minority interest -1,096.61 -42,427.27 0.00 0.00
PROFIT (LOSS) FOR THE FINANCIAL PERIOD - 1,963,136.10 1,367,195.41 -216,303.30 -84,922.90
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 47 BALANCE SHEET (EUR) GROUP PARENT COMPANY
Appendix 31.12.2019 31.12.2018 31.12.2019 31.12.2018 ASSETS NON-CURRENT ASSETS 7 Intangible assets Development expenses 183,223.93 316,828.33 0.00 0.00 Intangible rights 211,441.27 326,342.04 21,182.46 79,332.78 Other capitalised long-term expenditure 277,705.65 232,489.08 0.00 0.00 Intangible assets, total 672,370.85 875,659.45 21,182.46 79,332.78 Tangible assets Land and waters 1,096,216.60 1,096,216.60 169,480.95 169,480.95 Buildings 6,303,031.23 6,892,401.00 3,377,078.37 3,586,998.09 Vessels 226,874,465.75 233,393,464.39 0.00 0.00 Other plants and machinery 4,733,274.65 1,846,098.58 263,507.92 333,569.20 Other tangible assets 86,386.67 86,386.67 86,386.67 86,386.67 Advance payments and construction in progress 5,527,781.42 7,415,656.86 0.00 0.00 Total tangible assets 244,621,156.32 250,730,224.10 3,896,453.91 4,176,434.91 Investments Shares in group companies 0,00 0.00 92,304,364.40 92,304,364.40 Other unquoted shares 156,382.32 156,382.32 0.00 0.00 Shares in associated companies 100,000.00 100,000.00 0.00 0.00 Total investments 256,382.32 256,382.32 92,340,364.40 92,340,364.40 TOTAL NON-CURRENT ASSETS 245,549,909.49 251,862,265.87 96,222,000.77 96,560,132.09
CURRENT ASSETS Stocks Raw materials and consumables 4,033,497.29 4,281,757.22 0.00 0.00 Unfinished products and services 8,737.48 0.00 Finished products / goods 78,803.03 45,231.62 0.00 0.00 Inventories, total 4,121,037.80 4,326,988.84 0.00 0.00 Long-term receivables Receivables from group companies 0.00 0.00 104,802,000.00 105,050,000.00 Deferred tax assets 0.00 560,000.00 0.00 0.00 Other receivables 15,174.94 15,174.94 0.00 0.00 Prepayments and accrued income 200,000.00 350,000.00 0.00 0.00 Long-term receivables, total 215,174.94 925,174.94 104,802,000.00 105,050,000.00 Short-term receivables Sales receivables 8,894,421.28 9,272,577.75 5,210.00 2,925.70 Receivables from group companies 8 0.00 0.00 8,577,686.52 8,845,463.98 Other receivables 578,842.71 2,628,113.77 5,871.94 0.00 Prepayments and accrued income 9 5,922,514.83 4,918,081.12 640,775.92 733,297.59 Short-term receivables, total 15,395,778.82 16,818,772.64 9,229,544.38 9,581,687.27 Financial securities 10 Other securities 20,000,000.00 19,866,314.42 20,000,000.00 19,866,314.42 Financial securities, total 20,000,000.00 19,866,314.42 20,000,000.00 19,866,314.42 Cash in hand and at banks 2,692,334.56 6,287,890.51 1,971,680.90 4,289,749.57 TOTAL CURRENT ASSETS 42,424,326.12 48,225,141.35 136,003,225.28 138,787,751.26 TOTAL ASSETS 287,974,235.61 300,087,407.22 232,225,226.05 235,347,883.35
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 48 BALANCE SHEET (EUR) GROUP PARENT COMPANY
Appendix 31.12.2019 31.12.2018 31.12.2019 31.12.2018 EQUITY AND LIABILITIES
CAPITAL AND RESERVES 7 Share capital 18,700,000.00 18,700,000.00 18,700,000.00 18,700,000.00 Other reserves 77,014,336.91 77,014,336.91 77,014,336.91 77,014,336.91 Retained earnings from previous years 47,429,688.41 50,233,582.59 22,528,884.67 24,214,527.57 Profit (loss) for the fiscal period -1,963,136.10 1,367,195.41 -216,303.30 -84,922.90 TOTAL CAPITAL AND RESERVES 141,180,889.23 147,315,114.91 118,026,918.28 119,843,941.58
MINORITY INTEREST 223,326.34 222,229.74 0.00 0.00
APPROPRIATIONS
Depreciation difference 0.00 0.00 240,966.30 240,966.30 Voluntary provisions 0.00 833,000.00 0.00 0.00 TOTAL APPROPRIATIONS 0.00 833,000.00 240,966.30 240,966.30
LIABILITIES Long-term liabilities Loans from financial institutions 119,487,250.35 121,077,605.34 102,505,402.22 105,000,000.00 Deferred tax liabilities 10,464,733.37 7,061,363.78 0.00 0.00 Other liabilities 5,130.00 5,130.00 0.00 0.00 Long-term liabilities, total 129,957,113.72 128,144,099.12 102,505,404.22 105,000,000.00
Short-term liabilities Loans from financial institutions 5,856,695.35 8,913,390.70 2,500,000.00 2,500,000.00 Advance payments received 249,383.44 33,250.54 0.00 0.00 Payables 8 2,838,635.32 4,166,358.57 94,911.50 185,880.32 Liabilities to group companies 0.00 0.00 8,743,197.84 7,065,808.14 Other liabilities 1,605,168.06 2,118,845.78 87,900.45 242,007.43 Accruals 9 6,063,024.15 8,341,117.86 25,929.46 269,279.58 Short-term liabilities, total 16,612,906.32 23,572,963.45 11,451,939.25 10,262,975.47
TOTAL LIABILITIES 146,570,020.44 151,717,062.57 113,957,341.47 115,262,975.47
TOTAL EQUITY AND LIABILITIES 287,974,235.61 300,087,407.22 232,225,226.05 235,347,883.35
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 49 CASH FLOW STATEMENT (EUR) GROUP PARENT COMPANY 2019 2018 2019 2018 CASH FLOW FROM OPERATING ACTIVITIES Profit/loss for the fiscal period -1,963,136.10 1,367,195.41 -216,303.30 -84,922.90 Adjustments Depreciation according to plan 15,818,195.58 12,596,403.52 338,131.32 338,722.43 Capital gains (-) and losses (+) on fixed assets -167,508.87 -30,059.35 0.00 -17,740.00 Financial income and expenses 1,360,567.37 1,322,573.48 79,767.36 100,608.90 Group contributions 0.00 0.00 0.00 -100,000.00 Income tax 595,854.46 -493,908.01 513.50 3,258.32 Minority share 1,096.61 42,427.27 0.00 0.00 Cash flow before change in working capital 15,645,069.05 14,804,632.32 202,108.88 239,976.75
Change in working capital Increase (-) / decrease (+) in inventories 205,951.04 -474,594.54 0.00 0.00 Increase (-) / decrease (+) in non-interest-bearing receivables 1,570,349.47 4,913,752.81 352,142.88 508,409.45 Increase (+) / decrease (-) in non-interest-bearing loans -3,925,211.10 735,575.98 -316,296.28 296,773.57 Operational cash flow before financial items and taxes 13,496,158.46 19,979,366.57 237,955.48 1,045,159.77
Interest paid and payments for other financial expenses -1,530,852.73 -1,189,357.01 -1,247,217.58 -1,041,254.82 Dividends received 38,400.00 990.00 0.00 990.00 Interest received 9,200.27 4,632.34 1,011,062.13 1,066,838.16 Other financial income 122,685.09 -128,689.11 156,388.09 -127,182.24 Direct taxes paid -11,360,79 - 1,152,406.63 -3,696.53 - 1,194,932.04 Loans granted 0.00 0.00 -2,352,000.00 0.00 Repayments of loan receivables 0.00 0.00 2,500,000.00 10,680,000.00 CASH FLOW FROM OPERATING ACTIVITIES 12,124,230.30 17,514,536.16 302,491.59 10,429,618.83
Cash flow from investments Investments in material and immaterial goods -9,505,839.20 -12,687,053.80 0.00 0.00 Proceeds from sale of tangible and intangible assets 167,508.87 30,059.35 0.00 17,740.00 CASH FLOW FROM INVESTMENTS -9 338,330.33 -12,656,994.45 0.00 17,740.00
Cash flow from financing activities Repayments of short - term loans -506,695.35 0.00 -12,688,938.09 Increase (+) / decrease (-) in short-term loans 0.00 0.00 1,508,443.10 0.00 Withdrawals of long-term loans, bank account limit 2,016,340.36 0.00 5,402.22 0.00 Repayments of long-term loans -6,156,695.35 -3,301,023.98 -2,500,000.00 -2,500,000.00 Dividends paid -1,600,720.00 - 1,503,480.00 -1,600,720.00 -1,503,480.00 Group contributions received and paid 0.00 0.00 100,000.00 5,800,000.00 Change in cash and cash equivalents in consolidation 0.00 1,500,043.80 0.00 0.00 CASH FLOW FROM FINANCING ACTIVITIES -6,247,770.34 -3,304,460.18 -2,486,874.68 -10,892,418.09
CHANGE IN CASH AND CASH EQUIVALENTS -3,461,870.37 1,553,081.53 -2,184,383.09 -445,059.26 Available assets at the beginning of the fiscal period 26,154,204.93 24,601,123.40 24,156,063.99 24,601,123.25 Available assets at end of the fiscal period 22,692,334.56 26,154,204.93 21,971,680.90 24,156,063.99
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 50 Accounting principles
1. ACCOUNTING PRINCIPLES and maintenance expenses with effect of less than three years 1.5. ASSETS and up to EUR 25,000 are entered as annual expenses, and in The statutory pension schemes for personnel are managed 1.1 VALUATION PRINCIPLES Arctia Icebreaking Ltd, repair and maintenance expenses of less by external insurance companies. Pension costs are entered ITEMS IN FOREIGN CURRENCIES than three years and up to EUR 50,000 are entered. as expenses for the year during which they were incurred. Receivables and debts in foreign currencies have been converted into euros using the currency rate on the date of the drawing up RECOGNITION PRINCIPLES AND METHODS 1.6. ACCOUNTING POLICIES OF THE CONSOLIDATED of the financial statements. Meritaito Ltd recognised revenue from contracts with a long pro- FINANCIAL STATEMENTS duction or construction period on the basis of the percentage of The consolidated financial statements have been drawn up INVENTORIES completion. using the acquisition cost method. The subsidiaries have been Inventories are valued at the acquisition cost or in accordance Projects whose anticipated duration is at least a year or whose founded independently with the exception of Meritaito Oy. Busi- with the probable selling value, if lower. Arctia Group’s invento- effect on the turnover of the fiscal period was remarkable were ness transactions within the Group and internal receivables and ries include the fuel and lubricant stocks of vessels. The invento- considered contracts with a long production or construction debts have been eliminated. Minority shares have been separa- ries of Meritaito Oy include materials, supplies and finished pro- period. The percentage of completion of long-term projects was ted from group equity and the profit for the fiscal period, and ducts. The acquisition cost of materials and supplies includes the determined as the ratio of expenditure incurred to the projects’ are presented as their own item. The Group has a consolidated direct costs incurred by the acquisition. The acquisition cost of estimated total expenditure, or, if separately agreed upon in the account system in place. Changes to the consolidated account finished products includes the share of fixed costs of acquisition project contract, it was determined based on the completed parts are presented in the financing cash flow items of the individual and manufacturing in addition to variable costs. of the project entity. companies’ cash flow statements. Arctia Icebreaking Ltd owns 40% of the share capital of Ice Advi- NON-CURRENT ASSETS 1.2. DEFERRED TAXES sors Ltd. In 2019, the financial statements of Ice Advisors Ltd were Intangible and tangible assets are marked as acquisition expenses The imputed tax liability and receivable have been calculated for not merged with Arctia Icebreaking Ltd’s consolidated financial on the balance sheet with depreciation according to plan. Dep- the temporary differences between taxation and the financial statements as they did not have a material impact. reciations according to plan are calculated as straight line depre- statements, using the tax rate valid at the time of drawing up the Meritaito Ltd owns 50% of New Port Imatra Ltd’s share capi- ciations based on the target’s economic duration. Depreciations financial statements. The entire imputed tax liability and receiva- tal, 40% of Insta Airhow Ltd’s share capital and 24% of Saariston are calculated from the month of the asset’s application. Deve- ble are included in the balance. Deferred tax liabilities are related Merikuljetus Ltd’s share capital. In 2019, the financial statements lopment costs consist of developing a marine data model to meet to the depreciation differences recorded for subsidiaries. These of these companies were not merged with the Arctia Icebreaking customer needs. All development costs are presented in deve- differences have been divided into equity and imputed tax liabi- Ltd’s consolidated financial statements as they did not have a lopment costs included in intangible assets in the balance sheet. lity in the consolidated financial statements. material impact.
Depreciation times: Years 1.3. PENSIONS 1.7. MEASUREMENT OF FINANCIAL INSTRUMENTS AND DERIVA- Development expenses 5 The statutory pension schemes for personnel are managed by TIVES Intangible assets 3–10 external insurance companies. Pension costs are entered as Measurement in accordance with Chapter 5, Section 2 of the Buildings 10–30 expenses for the year during which they were incurred. Accounting Act shall be applied in the accounting of financial Vessel stock instruments. Icebreakers 30–50 1.4. COMPARABILITY WITH THE DATA OF THE PREVIOUS Securities held as financial assets and other similar financing reserves are valued at the acquisition expense or, if their probable Other vessels 5–30 FISCAL PERIOD In 2019, the profit and loss account, balance sheet and cash flow fair market price is lower on the balance sheet date, at that value. Docking of vessels 5 statement of Meritaito Ltd were merged with the Arctia Group’s The company has protected itself against loan-related interest Communications and navigation equipment 3–5 figures in their entirety. In 2018, the profit and loss account and risks with interest rate derivatives, with which variable interest Computers and related devices 3 cash flow statement of Meritaito Ltd were merged with the Arctia cash flows are converted into fixed interest rate cash flows using Other plants and machinery 5–10 Group’s figures as of 13 December 2018. In addition, Meritaito’s derivatives. Information concerning the interest rate derivatives is balance sheet and cash flow were merged with Arctia’s figures presented in the notes to the financial statements based on their Expenses from repair and maintenance during vessel docking are per 31 December 2018. The years 2019 and 2018 are not compa- protectiveness and the consistency of the loan and the deriva- capitalised and entered as expenses according to the economic rable with each other. tive. New interest rate swap contracts were concluded in 2017, working life of the docking (5 years). Residual value has been taken and they entered into force on 2 January 2019. into account in the fleet depreciation plan. In Meritaito Ltd, repair The current values of the interest rate derivatives are presented in Section 6 of the notes to the financial statements.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 51 2. NOTES ON THE PROFIT AND LOSS ACCOUNT (EUR) Appendix GROUP PARENT COMPANY 2.1. TURNOVER BY MARKET AREA AND LINE OF BUSINESS 1 2019 2018 2019 2018
BY MARKET AREA Finland 75,384,670.94 49,594,850.94 2,776,615.40 2,789,753.96 EU countries 3,625,746.04 1,263,369.56 0.00 0.00 Countries outside the EU 55,136.00 41,738.90 0.00 0.00 79,065,552.98 50,899,959.40 2,776,615.40 2,789,753.96 BY LINE OF BUSINESS Icebreaking 46,450,688.75 48,269,094.31 0.00 0.00 Fairway maintenance and Marine surveys services 32,614,864.23 2,530,865.09 0.00 0.00 Offshore 0.00 100,000.00 0.00 0.00 Internal administration services 0.00 0.00 2,776,615.40 2,789,753.96 79,065,552.98 50,899,959.40 2,776,615.40 2,789,753.96
2.2. OTHER INCOME FROM BUSINESS OPERATIONS 2 Profit from sale of fixed assets 167,508.87 30,059.35 0.00 17,740.00 Grants received 126,815.48 0.00 0.00 0.00 Group reserve recognised as income 0.00 165,961.78 0.00 0.00 Insurance indemnities 2,925.00 991,970.68 0.00 0.00 Other 64,005.34 50,335.10 0.00 0.00 Total 361,254.69 1,238,326.91 0.00 17,740.00
2.3. NOTES ON PERSONNEL 3
AVERAGE NUMBER OF PERSONNEL DURING FISCAL PERIOD Clerical employees 219.6 211.9 8.2 10.0 Offshore personnel 262.1 291.2 0.0 0.0 Total 481.7 503.1 8.2 10.0
MANAGEMENT SALARIES AND REMUNERATIONS President and CEO 493,213.62 252,600.56 460,573.62 252,600.56 Board members 128,572.54 106,227.42 128,572.54 106,227.42 Rest of the Group management team 875,108.11 685,986.47 0.00 0.00 1,496,894.27 1,044,814.45 589,146.16 358,827.98
The salaries of the President and CEO and the Group Management Team represent total remuneration including company car and telephone benefits. The salaries paid to the Group Management Team in 2019 include EUR 96,840.00 of performance bonuses. The performance bonuses are linked to the result of the fiscal year 2018 (EUR 46 287.01 in 2018). Numerous changes occurred in the company management in 2019: the company CEO was replaced, the management teams of Arctia and Meritaito were merged, and other changes to personnel took place. Thus, the year is not comparable to the previous year in these respects. The CEO’s salary includes the previous CEO’s payment in lieu of notice. In addition, the salaries of the Group Management Team include payments in lieu of notice.
Management’s pension commitments The CEO’s retirement age conforms to the TyEL pension insurance. Pension benefits are provided by the statutory TyEL pension insurance. The company’s President and CEO and members of the Management Team and the Board of Directors do not have discretionary pension benefits paid by the company.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 52 Appendix GROUP PARENT COMPANY 2.4. OTHER OPERATING COSTS 4 2019 2018 2019 2018 Voluntary personnel costs 1,963,729.31 1,653,622.14 148,563.10 50,200.17 Rents 600,053.24 19,294.10 1,307.82 0.00 Costs for vessels 1,249,163.20 0.00 0.00 0.00 Telephone, IT, vehicle and office expenses 3,789,290.48 1,477,827.48 405,217.37 564,092.71 Marketing costs 83,590.47 128,787.97 2,841.81 62,041.45 Other research and product development costs 2,071.13 -22,159.00 0.00 -24,159.00 Travel expenses 750,806.18 684,274.40 24,508.86 58,668.93 Administrative expenses 3,705,260.36 3,475,658.66 563,326.00 515,896.91 Other operating costs, intra-group 0.00 0.00 347,506.11 193,522.40 Other operating costs 67,751.83 415,016.30 7,420.15 12,076.33 Other operating costs, total 12,211,716.20 7,832,322.50 1,500,691.22 1,432,342.90
AUDITORS’ FEES Audit 83,175.04 87,719.31 38,461.36 28,730.00 Taxation advice 23,917.00 9,718.00 0.00 0.00
2.5. FINANCIAL INCOME AND EXPENSES 5 Income from other fixed assets investments 38,400.00 990.00 0.00 990.00 Interest income From companies in the same group 0.00 0.00 1,006,162.73 1,063,254.13 From other sources 9,200.27 4,720.54 4,899.40 3,584.03 Interest income, total 9,200.27 4,720.54 1,011,062.13 1,066,838.16 Other financial income From other sources 162,227.48 15,197.65 162,690.31 15,197.65 Other financial income, total 162,227.48 15,197.65 162,690.31 15,197.65
Financial income, total 209,827.75 20,908.19 1,173,752.44 1,083,025.81
Interest expenses To others 1,530,852.73 1,199,594.91 1,247,217.58 1,041,254.82 Interest expenses, total 1 530,852.73 1,199,594.91 1,247,217.58 1,041,254.82 Other financial expenses To others 39,542.39 143,886.76 6,302.22 142,379.89 Other financial expenses, total 39,542.39 143,886.76 6,302.22 142,379.89
Financial expenses, total 1,570,395.12 1,343,481.67 1,253,519.80 1,183,634.71
Financial income and expenses, total - 1,360,567.37 -1,322,573.48 -79,767.36 -100,608.90
2.6. APPROPRIATIONS 6 Group contribution 0.00 0.00 0.00 100,000.00 0.00 0.00 0.00 100,000.00
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 53 3. NOTES ON BALANCE SHEET ASSETS (EUR) Appendix 3.1. FIXED ASSET, GROUP 7 Product GROUP development Intellectual Other INTANGIBLE ASSETS 2019 expenses property rights intangible assets Total Acquisition costs 1 Jan 695,844.09 998,226.63 549,653.86 2,243,724.58 Increases 0.00 0.00 134,644.00 134,644.00 Decrease 0.00 0.00 0.00 0.00 Acquisition costs 31 Dec 695,844.09 998,226.63 684,297.86 2,378,368.58
Accumulated depreciations 1 Jan -379,015.76 -671,884.59 -317,164.78 -1,368,065.13 Accumulated depreciation on decreases 0.00 0.00 0.00 0.00 Depreciations for the fiscal period -133,604.40 -144,900.77 -89,427.43 -337,932.60 Accumulated depreciations 31 Dec. -512,620.16 -786,785.36 -406,592.21 -1,705,997.73
Book value 31 Dec. 183,223.93 211,441.27 277,705.65 672,370.85
Advance payments and Land and Buildings and Other plants Other acquisitions in TANGIBLE ASSETS 2019 water areas structures Vessels and machinery tangible assets progress Total Acquisition costs 1 Jan. 1,096,216.60 12,433,396.15 385,588,856.04 13,421,331.20 86,386.67 7,415,656.86 420,041,843.52 Increases 0.00 59,705.66 9,401,047.23 1,798,317.75 0.00 0.00 11,259,070.64 Transfers between item 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 -1,887,875.44 -1,887,875.44 Acquisition costs 31 Dec 1,096,216.00 12,493,101.81 394,989,903.27 15,219,648.95 86,386.67 5,527,781.42 429,413,038.72
Accumulated depreciations 1 Jan 0.00 -5,540,995.15 -154,257,150.20 -9,513,474.07 0.00 0.00 -169,311,619.42 Accumulated depreciation on decreases 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Depreciations for the fiscal period 0.00 -649,075.43 -13,858,287.32 -972,900.23 0.00 0.00 -15,480,262.98 Accumulated depreciations 31 Dec. 0.00 -6,190,070.59 -168,115,437.52 -10,486,374.30 0.00 0.00 -184,791,882.40
Book value 31 Dec. 1,096,216.60 6,303,031.23 226,874,465.75 4,733,274.65 86,386.67 5,527,781.42 244,621,156.32
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 54 3.1. FIXED ASSETS, ARCTIA LTD. Product development Intellectual Other INTANGIBLE ASSETS 2018 expenses property rights intangible assets Total Acquisition costs 1 Jan 964,146.47 762,458.69 549,653.86 2,276,259.02 Increases 0.00 249,241.23 0.00 249,241.23 Decreases -268,302.38 -13,473.29 0.00 -281,775.67 Acquisition costs 31 Dec 695,844.09 998,226.63 549,653.86 2,243,724.58
Accumulated depreciations 1 Jan. -447,468.37 -600,119.24 -178,648.08 -1,226,235.69 Depreciations for the fiscal period 223,876.84 13,473.29 0.00 237,350.13 Depreciation for the financial year -155,424.23 -85,238.64 -138,516.70 -379,179.57 Accumulated depreciations 31 Dec. -379,015.76 -671,884.59 -317,164.78 -1,368,065.13
Book value 31 Dec. 316,828.33 326,342.04 232,489.08 875,659.45
Advance payments and Land and Buildings and Other plants Other acquisitions in TANGIBLE ASSETS 2018 water areas structures Vessels and machinery tangible assets progress Total Acquisition costs 1 Jan. 1,432,677.70 12,508,886.61 377,204,690.67 13,421,331.20 86,386.67 4,196,120.47 408,850,093.32 Increases 0.00 0.00 9,191,046.73 0.00 0.00 3,239,862.69 12,430,909.42 Transfers between items 0.00 0.00 20,326.30 0.00 0.00 -20,326.30 0.00 Decreases -15,065.04 -75,490.46 -827,207.66 0.00 0.00 0.00 -917,763.16 Acquisition costs 31 Dec. 1,417,612.66 12,433,396.15 385,588,856.04 13,421,331.20 86,386.67 7,415,656.86 420,363,239.58
Accumulated depreciations 1 Jan 0.00 -4,889,920.93 -132,269,309.59 -4,462,645.02 0.00 0.00 -141,621,875.54 Depreciations for the fiscal period 0.00 68,231.49 690,291.24 0.00 0.00 0.00 758,522.73 Depreciation for the financial year -321,396.06 -719,305.71 -22,678,131.85 -5,050,829.05 0.00 0.00 -28,769,662.67 Accumulated depreciations 31 Dec. -321,396.06 -5,540,995.15 -154,257,150.20 -9,513,474.07 0.00 0.00 -169,633,015.48
Book value 31 Dec. 1,096,216.60 6,892,401.00 231,331,705.84 3,907,857.13 86,386.67 7,415,656.86 250,730,224.10
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 55 3.1. FIXED ASSETS, ARCTIA LTD Intellectual INTANGIBLE ASSETS 2019 property rights Total Acquisition costs 1 Jan 505,862.92 505,862.92 Increases 0.00 0.00 Acquisition costs 31 Dec 505,862.92 505,862.92
Accumulated depreciations 1 Jan. -426,530.14 -426,530.14 Depreciations for the fiscal period -58,150.32 -58,150.32 Accumulated depreciations 31 Dec -484,680.46 -484,680.46
Book value 31 Dec 21,182.46 21,182.46
Advance payments and Book value 31 Buildings and Other plants Other acquisitions in TANGIBLE ASSETS 2019 Dec. structures and machinery tangible assets progress Total Acquisition costs 1 Jan. 169,480.95 4,658,714.57 933,683.83 86,386.67 0.00 5,848,266.02 Increases 0.00 0.00 0.00 0.00 0.00 0.00 Decreases 0.00 0.00 0.00 0.00 0.00 0.00 Acquisition costs 31 Dec 169,480.95 4,658,714.57 933,683.83 86,386.67 0.00 5,848,266.02
Accumulated depreciations 1 Jan. 0.00 -1,071,716.48 -600,114.63 0.00 0.00 -1,671,831.11 Depreciations for the fiscal period 0.00 -209,919.72 -70,061.28 0.00 0.00 -279,981.00 Accumulated depreciations 31 Dec. 0.00 -1,281,636.20 -670,175.91 0.00 0.00 -1,951,812.11
Book value 31 Dec. 169,480.95 3,377,078.37 263,507.92 86,386.67 0.00 3,896,453.91
Shares in group INVESTMENTS 2019 companies Total Acquisition costs 1 Jan. 92,304,364.40 92,304,364.40 Increases 0.00 0.00 Decreases 0.00 0.00 Revaluation (net) 0.00 0.00 Acquisition costs 31 Dec 92,304,364.40 92,340,364.40
Book value 31 Dec. 92,304,364.40 92,304,364.40
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 56 3.1. FIXED ASSETS Intellectual INTANGIBLE ASSETS 2018 property rights Total Acquisition costs 1 Jan. 505,862.92 505,862.92 Increases 0.00 0.00 Acquisition costs 31 Dec. 505,862.92 505,862.92
Accumulated depreciations 1 Jan. -368,379.82 -368,379.82 Depreciations for the fiscal period -58,150.32 -58,150.32 Accumulated depreciations 31 Dec. -426,530.14 -426,530.14
Book value 31 Dec. 79,332.78 79,332.78
Advance payments and Land and Buildings and Other plants Other acquisitions in TANGIBLE ASSETS 2018 water areas structures and machinery tangible assets progress Total Acquisition costs 1 Jan. 169,480.95 4,658,714.57 933,683.83 86,386.67 0.00 5,848,266.02 Increases 0.00 0.00 0.00 0.00 0.00 0.00 Decreases 0.00 0.00 0.00 0.00 0.00 0.00 Acquisition costs 31 Dec. 169,480.95 4,658,714.57 933,683.83 86,386.67 0.00 5,848,266.02
Accumulated depreciations 1 Jan. 0.00 -861,796.76 -529,412.24 0.00 0.00 -1,391,209.00 Depreciations for the fiscal period 0.00 -209,919.72 -70,702.39 0.00 0.00 -280,622.11 Accumulated depreciations 31 Dec. 0.00 -1,071,716.48 -600,114.63 0.00 0.00 -1,671,831.11
Book value 31 Dec. 169,480.95 3,586,998.09 333,569.20 86,386.67 0.00 4,176,434.91
Shares in group INVESTMENTS 2018 companies Total Acquisition costs 1 Jan. 81,897,048.40 81,897,048.40 Increases 10,407,316.00 10,407,316.00 Decreases 0.00 0.00 Revaluation (net) 0.00 0.00 Acquisition costs 31 Dec 92,304,364.40 92,304,364.40
Book value 31 Dec. 92,304,364.40 92,304,364.40
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 57 3. NOTES ON BALANCE SHEET ASSETS (EUR) Appendix GROUP PARENT COMPANY 2019 2018 2019 2018 3.1.1 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% 100% Arctia Icebreaking Investment Ltd 100% 100% Arctia Offshore Investment Ltd 100% 100% Meritaito Ltd 100% 100%
3.1.3 ASSOCIATED COMPANIES Ice Advisors Ltd, Helsinki Share of ownership 40% 40% Equity 33,883.83 39,554.29 Profit for the fiscal period -5,670.46 -16,357.83 Saariston Merikuljetus Ltd Meripojat, Raisio Share of ownership 24% 24% New Port Imatra Ltd, Helsinki Share of ownership 50% 50% Insta Airhow Ltd, Tampere Share of ownership 40% 40%
3.2. INVENTORIES Raw materials and consumables Opening balance 1.1. 4,281,757.22 3,474,854.37 Variation in stocks -248,259.93 806,902.85 Closing balance 31.12. 4,033,497.29 4,281,757.22
Unfinished products Opening balance 1.1. 0.00 0.00 Variation in stocks 8,737.48 0.00 Closing balance 31.12. 8,737.48 0.00
Finished products Opening balance 1.1. 45,231.62 161,652.14 Variation in stocks 33,571.41 -166,420.52 Closing balance31.12. 78,803.03 45,231.62
Advance payments 0.00 0.00 Current assets 31.12. 4,121,037.80 4,326,988.84
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 58 3. NOTES ON BALANCE SHEET ASSETS (EUR) Appendix GROUP PARENT COMPANY 2019 2018 2019 2018 3.3 SHORT-TERM RECEIVABLES 3.3.1 RECEIVABLES FROM GROUP COMPANIES Loan receivables 2,600,000.00 2,500,000.00 Group account receivables 5,977,686.52 6,245,463.98 Group contribution receivables 0.00 100,000.00 8,577,686.52 8,845,463.98
3.3.2 RELEVANT ITEMS IN DEFERRED RECEIVABLES Tax receivable 0.00 2,644.35 0.00 0.00 Personnel expenditure 775,969.47 1,157,212.90 622,932.09 675,369.31 Other deferred receivables, from sales 2,978,892.07 1,693,193.07 0.00 0.00 Other deferred receivables, from expenses 2,167,653.29 2,065,030.80 17,843.83 57,928.28 5,922,514.83 4,918,081.12 640,775.92 733,297.59
3.4 FINANCIAL SECURITIES Book value 20,000,000.00 19,866,413.42 20,000,000.00 19,866,413.42 Market value 20,195,482.13 19,866,413.42 20,195,482.13 19,866,413.42
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 59 4. NOTES ON BALANCE SHEET LIABILITIES (EUR) Appendix GROUP EMOYHTIÖ 4.1. EQUITY INCREASE AND DECREASE 11 2019 2018 2019 2018 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. 77,014,336.91 66,780,736.91 77,014,336.91 66,780,736.91 Increase as capital contribution 0.00 10,233,600.00 0.00 10,233,600.00 Reserve for invested unrestricted equity 31 Dec. 77,014,336.91 77,014,336.91 77,014,336.91 77,014,336.91
Profit from previous fiscal periods 1 Jan. 51,600,778.00 51,737,062.59 24,129,604.67 25,718,007.57 Payment of dividends -1,600,720.00 -1,503,480.00 -1,600,720.00 Adjustment to the result of the previous financial year 833,000.00 0.00 0.00 0.00 Adjustment to the result of the previous financial years -3,403,369.59 0.00 0.00 0.00 Profit from previous fiscal periods 31 Dec. 47,429,688.41 50,233,582.59 22,528,884.67 24,214,527.57
Profit for fiscal period -1,963,136.10 1,367,195.41 -216,303.30 -84,922.90
Unrestricted equity, total 122,480,889.22 128,615,114.91 99,326,918.29 101,143,941.58
Equity, total 141,180,889.22 147,315,114.91 118,026,918.28 119,843,941.58
Distributable assets Total unlimited equity 122,480,889.22 128,615,114.91 99,326,918.29 101,143,941.58 Unrecognized part of product development costs -183,223.93 -316,828.33 0.00 0.00 Distributable assets, total 122,297,665.29 128,298,286.58 99,326,918.28 191,143,941.58
In 2019, the equity of the opening balance sheet was corrected by liberating the replacement reserve of EUR 833,000.00 entered erroneously in Meritaito Ltd’s 2018 fiscal period. In the fiscal period 2019, an adjustment entry was made to the financial statements of the subsidiary Arctia Offshore Ltd concerning an erroneous processing of the sale of fixed assets. The error concerned the sale of a vessel. The adjustment was entered in the opening balance sheet. In the consolidated financial statements, an adjustment of EUR 3,403,369.59 was entered into the retained earnings of previous fiscal periods, and EUR 3,403,369.59 was entered into imputed tax liability.
4.2. IMPUTED TAX LIABILITIES AND RECEIVABLES 13 Imputed tax receivables For confirmed losses 0.00 560,000.00 0.00 0.00 Imputed tax liabilities For depreciation differences 7,061,363.78 7,061,363.78 0.00 0.00 For correction entry 3,403,369.59 0.00 0.00 0.00
In the consolidated financial statements, the depreciation difference of EUR 35,306,818.90 has been divided into a part comparable to equity EUR 28,245,455.12 and an imputed tax liability of EUR 7,061,363.78. An adjustment of EUR 3,403,369.59 was entered to the opening balance sheet of Arctia Offshore Ltd into the equity and imputed tax liability. The total confirmed loss of the Arctia Group was EUR 12,523,309.78. Imputed tax receivable was not entered for the confirmed loss. In 2019, EUR 560,000.00 of the imputed tax receivable entered for Arctia Offshore Ltd’s confirmed loss were liberated.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 60 GROUP PARENT COMPANY 2019 2018 2019 2018
4.3. LONG-TERM LIABILITIES 14 Loans from financial institutions 116,287,250.35 121,077,605.34 102,505,402.22 105,000,000.00 Loans become due after more than 5 years 3,200,000.00 0.00 0.00 0.00 119,487,250.35 121,077,605.34 102,505,402.22 105,000,000.00
4.4. SHORT-TERM LIABILITIES 15 Loans from financial institutions 5,856,695.35 8,913,390.70 2,500,000.00 2,500,000.00 5,856,695.35 8,913,390.70 2,500,000.00 2,500,000.00
4.4.1. LIABILITIES TO GROUP COMPANIES 16 Accounts payable 168,946.60 0.00 Group account liabilities 8,574,251.24 7,065,808.14 8,743,197.84 7,065,808.14
4.4.2. RELEVANT ITEMS INCLUDED IN DEFERRED LIABILITIES 17 Personnel expenditure 5,450,333.61 6,493,435.78 25,681.07 265,848.16 Income tax 26,115.01 4,265.69 0.00 3,183.03 Interest liabilities 100,238.95 823,841.32 0.00 0.00 Other deferred liabilities 486,336.58 1,019,575.07 248.39 248.39 6,063,024.15 8,341,117.86 25,929.46 269,279.58
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 61 5. NOTES ON SECURITIES AND CONTINGENT LIABILITIES GROUP PARENT COMPANY
RENT/LEASING AGREEMENTS 2019 2018 2019 2018 To be paid during subsequent fiscal period Leasing agreements 370,451.92 340,902.78 0.00 9,393.00 Rent liabilities 571,492.13 599,745.04 0.00 0.00 941,944.05 940,647.82 0.00 9,393.00 Due at a later date Leasingsopimukset 606,347.91 734,738.52 0.00 13,828.58 Rent liabilities 1,605,441.09 1,906,055.50 0.00 0.00 2,211,789.00 2,640,794.12 0.00 13,828.58 Total 3,153,733.05 3,581,441.93 0.00 23,221.58 The sums are presented with VAT included.
CONTINGENT LIABILITIES GUARANTEES For group companies 10,650,000.00 10,800,000.00 10,650,000.00 10,800,000.00
Together with Port of Kemi Ltd, the parent company has issued an absolute joint and several guarantee of EUR 10,650,000.00 to Nordea Bank AB, Finnish branch, for the bank loan of Arctia Karhu Ltd. On 31 December 2019, the loan capital was EUR 10,650,000.
Issued on behalf of the parent company 105,000,000.00 107,500,000.00 105,000,000.00 107,500,000.00
Meritaito Ltd has a guarantee limit of EUR 5,000,000.00 granted by a bank. Of this sum, EUR 1,864,710.99 was used on 31 December 2019 (EUR 1,597,996.39 on 31 December 2018).
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. The shareholders of Insta Airhow Oy shall undertake to grant to the company the maximum sum of two hundred thousand (200,000) euros in total as extra funding in relation to the shareholding if the company’s Board of Directors so proposes in order to finance the growth stage of the business operations. The extra funding is either equity or debt financing, or both, as the company’s Board of Directors defines the required financial instruments in the way it considers most appropriate in terms of the company’s interests. The share of Meritaito Ltd of this is EUR 80,000, of which EUR 40,000 had not been taken up on 31 December 2019.
INVESTMENT COMMITMENTS In the next fiscal period 0.00 2,426,397.00 0.00 0.00
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 62 6. DERIVATIVES (EUR) GROUP PARENT COMPANY Interest rate swaps Total loan capital 48,150,000.00 48,450,000.00 37,500,000.00 37,500,000.00 Value of underlying commodities 42,825,000.00 42,975,000.00 37,500,000.00 37,500,000.00 Market value of agreements -877,160.00 -682,383.00 -794,221.00 -610,176.00 The interest rate swaps have been made to hedge a long-term parent company and subsidiary loan.
Current account facilities Total amount of the facility 14,250,000.00 9,250,000.00 0.00 0.00 In use 3,437,250.35 1,420,909.99 0.00 0.00
Responsibilities for corporate cards 16,646.83 15,030.51 0.00 0.00
VAT refund liabilities The VAT refund liability on real estates in 2019 totalled EUR 457,086.08 (EUR 599,399.44 in 2018). The short-term debts include EUR 2,250,000 of Meritaito Ltd’s loan. On 31 December 2019, the loan’s covenant term was breached.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 63 SIGNATURES TO THE FINANCIAL STATEMENTS AND ANNUAL REPORT Helsinki, 28 February 2020
Pertti Saarela Pirjo Kiiski Chairman of the Board of Directors
Hanna Masala Sinikka Mustakari Vice Chairman
Mats Rosin Kari Savolainen
Maunu Visuri President and CEO
LIST OF ACCOUNTING BOOKS, RECORD TYPES AND STORAGE MEDIA
Balance sheet book Bound separately AUDITORS’ REPORT Daybook and general ledger on CD A report on the audit of accounts has been issued today. Purchase invoices In electronic format Payment receipts In electronic format Helsinki 28 February 2020 Sales invoices In electronic format Transaction receipts In electronic format Bank receipts In electronic format KPMG Ltd Memo receipts In electronic format Payroll accounting receipts In electronic format Intangible asset transactions In electronic format Cash vouchers In electronic format Ari Eskelinen Travel expense receipts In electronic format KHT Notes vouchers In electronic format
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 64 Auditor’s Report To the Annual General Meeting of Arctia Ltd
REPORT ON THE AUDIT OF THE FINANCIAL sufficient and appropriate to provide a basis for our AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF STATEMENTS opinion. THE FINANCIAL STATEMENTS
OPINION RESPONSIBILITIES OF THE BOARD OF DIRECTORS Our objectives are to obtain reasonable assurance AND THE MANAGING DIRECTOR FOR THE about whether the financial statements as a whole We have audited the financial statements of Arctia FINANCIAL STATEMENTS are free from material misstatement, whether due Oy (business identity code 2302573-7) for the year to fraud or error, and to issue an auditor’s report ended 31 December, 2019. The financial statements The Board of Directors and the Managing Director that includes our opinion. Reasonable assurance is comprise the balance sheets, the income statements, are responsible for the preparation of financial sta- a high level of assurance but is not a guarantee that cash flow statements and notes for the group as well tements that give a true and fair view in accordance an audit conducted in accordance with good auditing as for the parent company. with the laws and regulations governing the prepa- practice will always detect a material misstatement ration of financial statements in Finland and comply when it exists. Misstatements can arise from fraud or In our opinion, the financial statements give a true with statutory requirements. The Board of Directors error and are considered material if, individually or and fair view of the group’s and the company’s finan- and the Managing Director are also responsible for in the aggregate, they could reasonably be expected cial performance and financial position in accordance such internal control as they determine is necessary to influence the economic decisions of users taken with the laws and regulations governing the prepa- to enable the preparation of financial statements that on the basis of the financial statements. ration of financial statements in Finland and comply are free from material misstatement, whether due with statutory requirements. to fraud or error. As part of an audit in accordance with good audi- ting practice, we exercise professional judgment BASIS FOR OPINION In preparing the financial statements, the Board of and maintain professional skepticism throughout Directors and the Managing Director are responsible the audit. We also: We conducted our audit in accordance with good for assessing the parent company’s and the group’s • Identify and assess the risks of material misstate- auditing practice in Finland. Our responsibilities ability to continue as a going concern, disclosing, as ment of the financial statements, whether due to under good auditing practice are further described applicable, matters relating to going concern and fraud or error, design and perform audit procedu- in the Auditor’s Responsibilities for the Audit of Finan- using the going concern basis of accounting. The res responsive to those risks, and obtain audit evi- cial Statements section of our report. We are indepen- financial statements are prepared using the going dence that is sufficient and appropriate to provide dent of the parent company and of the group com- concern basis of accounting unless there is an inten- a basis for our opinion. The risk of not detecting panies in accordance with the ethical requirements tion to liquidate the parent company or the group a material misstatement resulting from fraud is that are applicable in Finland and are relevant to our or cease operations, or there is no realistic alterna- higher than for one resulting from error, as fraud audit, and we have fulfilled our other ethical respon- tive but to do so. may involve collusion, forgery, intentional omissi- sibilities in accordance with these requirements. We ons, misrepresentations, or the override of inter- believe that the audit evidence we have obtained is nal control.
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 65 • Obtain an understanding of internal control rele- opinion on the consolidated financial statements. the Board of Directors has been prepared in accor- vant to the audit in order to design audit procedu- We are responsible for the direction, supervision dance with the applicable laws and regulations. res that are appropriate in the circumstances, but and performance of the group audit. We remain If, based on the work we have performed, we con- not for the purpose of expressing an opinion on solely responsible for our audit opinion. clude that there is a material misstatement of the the effectiveness of the parent company’s or the report of the Board of Directors, we are required group’s internal control. We communicate with those charged with gover- to report that fact. We have nothing to report in • Evaluate the appropriateness of accounting poli- nance regarding, among other matters, the plan- this regard. cies used and the reasonableness of accounting ned scope and timing of the audit and significant estimates and related disclosures made by mana- audit findings, including any significant deficiencies OTHER OPINIONS gement. in internal control that we identify during our audit. • Conclude on the appropriateness of the Board We support that the financial statements should of Directors’ and the Managing Director’s use of OTHER REPORTING REQUIREMENTS be adopted. The proposal by the Board of Direc- the going concern basis of accounting and based tors regarding the use of the profit shown in the on the audit evidence obtained, whether a mate- OTHER INFORMATION balance sheet (and the distribution of other unrest- rial uncertainty exists related to events or con- ricted equity) is in compliance with the Limited Lia- ditions that may cast significant doubt on the The Board of Directors and the Managing Director bility Companies Act. We support that the Members parent company’s or the group’s ability to con- are responsible for the other information. The other of the Board of Directors of the parent company tinue as a going concern. If we conclude that a information comprises the report of the Board of and the Managing Director should be discharged material uncertainty exists, we are required to Directors. Our opinion on the financial statements from liability for the financial period audited by us. draw attention in our auditor’s report to the rela- does not cover the other information. ted disclosures in the financial statements or, if Helsinki 28th February 2020 such disclosures are inadequate, to modify our In connection with our audit of the financial state- opinion. Our conclusions are based on the audit ments, our responsibility is to read the other infor- KPMG OY AB evidence obtained up to the date of our auditor’s mation and, in doing so, consider whether the other report. However, future events or conditions may information is materially inconsistent with the finan- Ari Eskelinen cause the company to cease to continue as a going cial statements or our knowledge obtained in the Authorised Public Accountant, KHT concern. audit, or otherwise appears to be materially mis- • Evaluate the overall presentation, structure and stated. Our responsibility also includes considering content of the financial statements, including the whether the report of the Board of Directors has disclosures, and whether the financial statements been prepared in accordance with the applicable represent the underlying transactions and events laws and regulations. so that the financial statements give a true and fair view. In our opinion, the information in the report of the • Obtain sufficient appropriate audit evidence regar- Board of Directors is consistent with the informa- ding the financial information of the entities or tion in the financial statements and the report of business activities within the group to express an
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 66 Principles of CSR reporting
The corporate social responsibility report incor- tainability manager is responsible for the compila- meetings of Arctia’s Management Team and the porated in this annual report is based on issues tion and coordination of the sections on corporate Board of Directors. The annual report is published that Arctia has identified as essential (Government social responsibility. on Arctia’s website. Resolution on State Ownership Policy VNK/2016/29). The compiling of data for corporate social res- The previous instructions for the reporting of cor- ponsibility reporting took place in each part of the PERSONNEL INDICATORS porate social responsibility by state-owned com- Group so that the monitored indicator data was deli- The reported figures represent the situation on the panies have also been taken into account in repor- vered to Arctia’s sustainability manager who then indicated date (31 December 2019). The total num- ting, where applicable, in order to ensure sufficient compiled the reports. In practice, this means that ber of personnel also includes part-time employees coverage and to enable continuation of reporting. In the ships mostly monitor and report on environ- and fixed-term employees with a valid employment order to avoid interruptions in reporting, the annual mental aspects such as consumption and waste contract on the day in question. report also includes in full the sections of the Cli- amounts, and report to the sustainability manager mate Policy Report (ILPO) previously required by the in the form of annual reports. Aerial emissions are ACCIDENT FREQUENCY Ministry of Transport and Communications. The con- calculated from the fuel consumption of vessels by All accidents resulting in a minimum of one day of tents of the human resources accounts are also dis- the technology and maintenance management of inability to work have been included in the number cussed in the corporate social responsibility report. the shore organisation. of workplace accidents. The accident frequency was This annual report includes and replaces these ear- Financial figures are reported by financial mana- calculated by dividing the above-mentioned number lier reports, where applicable. gement and are generated in the same process as of Lost-Time Injuries (LTI) by the working hours and In this annual report, Meritaito has been included the annual report and financial statement informa- multiplying the result by one million. A daily wor- in the Group figures in the extent where statistics tion. The HR department constantly monitors the king time of eight hours was used in the formula. have been kept. Meritaito has not kept statistics with personnel situation and work-related travel. The Accidents sustained by both onshore and offshore all respects in the same way as Arctia has, however, data in the report represents the situation on a cer- personnel are included in occupational accidents, Meritaito has brought with it some new functions tain day (31 December 2019). The safety manager and the total number of working hours in the orga- and areas to be reported, such as the manufacture produces the information related to occupational nisation was used as the basis of division. The inter- of navigational aids. Arctia’s Communications Mana- safety and environmental damage. Senior mana- national term for this accident frequency calculation ger is responsible for compiling the annual report, gement supplements the report where required. principle is lost-time injury frequency (LTIF). and the Chief Financial Officer is responsible for the The corporate social responsibility report incor- financial statements and annual report. Arctia’s sus- porated in this annual report is discussed in the
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 67 Principles of CSR reporting
CARBON DIOXIDE EMISSIONS WASTE AMOUNTS The carbon dioxide emissions of the vessels have The vessels monitor waste amounts by volume, whe- been calculated according to the formula presented reas the recipients of waste charge for the servi- in the IMO publication MEPC/Circ.471, 29 July 2005; ces by weight. By way of departure from the statu- ‘INTERIM GUIDELINES FOR VOLUNTARY SHIP CO2 tory monitoring of waste generated by ships (waste EMISSION INDEXING FOR USE IN TRIALS.’ The car- and oil logs), waste amounts have been reported bon dioxide emissions of air traffic have been cal- by weight in earlier reports. In connection with the culated on the basis of flight kilometres, using the development of reporting, Arctia decided to stan- following coefficients: dardise the reporting of waste amounts. In earlier • less than 950 km 0.15 kg CO2/km years, the amounts reported by ships had to be con- • more than 950 km 0.11 kg CO2/km. verted to weights using coefficients such as those provided in the Waste Tax Act (495/1996). PARTICULATE EMISSIONS The particulate emissions of icebreakers were cal- culated using the emission coefficients presented in VTT’s research report (VTT-R-08702-09) Calculation system for Finnish waterway traffic emissions MEERI 2008. However, the research report has defined the engines of icebreakers as slow two-stroke engines [sic] instead of four-stroke engines (p. 11 of the report).
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 68 Key stakeholders and their expectations
STAKEHOLDER EXPECTATIONS STAKEHOLDER EXPECTATIONS
OWNER Government Ownership Investment capacity, meeting TOWING Port of Kemi Information flow, Steering Department qualitative icebreaking targets OPERATORS cooperation, development
DIRECT Finnish Transport Agency / High-quality services OIL SPILL RESPONSE Ministry of the Environment Information flow, CUSTOMERS Ministry of Transport and corresponding to service AND THE Finnish Environment Institute cooperation, Communications descriptions and agree- ENVIRONMENT SYKE development Oil and energy industry operators ments, responsible opera- Lamor Offshore construction companies tions, costeffective pricing European Maritime Safety MARITIME Finnish Transport Safety Agency Responsibility, Agency (EMSA) AUTHORITIES, IMO information flow, Towing and marine rescue INTERNATIONAL IMCA cooperation, customers ORGANISATIONS HELCOM development The Port of Oulu EMSA Ice Advisors customers Police of Finland Events customers Finnish Border Guard The Ports of Kemi, Tornio and Luleå Finnish Shipowners’ Association Cruise and passenger ship companies The European Community Research communities and companies Shipowners’ Associations, ECSA
END Finland’s export and import trades Quick, reliable and ARCTIC Ministry for Foreign Affairs Solvency, CUSTOMERS Industry high-quality service STAKEHOLDERS Arctic Council responsibility, Shipping companies Finnish Meteorological Institute information flow, Arctic Economic Council cooperation, OWN Office personnel Solvency, long-term and development PERSONNEL Sea personnel high-quality HR policy
OTHER Winter navigation operators Information flow, OTHER Journalists, teachers, Solvency, STAKEHOLDERS Veeteede Amet (EMA) cooperation, maintenance of STAKEHOLDERS scientists responsibility, Sjöfartsverket own service level Dockyards information flow, Rosmorport Suppliers and service cooperation, Ministry of Transport of the providers development Russian Federation Trade unions and other labour Finnpilot market organisations VTS Maritime colleges Regional operators Maritime research institutes Ports Understanding of regional Classification societies Local authorities operations, cooperation, Insurance companies maintenance of own service Financers, banks level, development
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 69 List of requirements for CSR reporting
PAGE PAGE 1. DESCRIPTION OF THE ORGANISATION, ADMINISTRATION AND OPERATING PRINCIPLES 8 4. ENVIRONMENT 21 1.1 Basic details of the organisation 8 4.1 Environmental targets 21 1.2 Corporate responsibility management and operating principles 12 4.2 Environmental indicators 24 1.3 Stakeholders and interaction with them 7 4.2.1 Energy 24 4.2.2 Aerial emissions 25 2. FINANCIAL RESPONSIBILITY 15 4.2.3 Water 25 2.1 Management of financial responsibility 15 4.2.4 Waste 25 2.1.1 Financial goals 15 4.2.5 Compliance and environmental costs 18 2.2 Key financial figures 16 4.2.6 Products and services 18, 19 2.2.1 Cash flows to stakeholders 16 4.2.7 Transport and travel 19 2.2.2 Charity and sponsorship 15 4.2.8 Materials 19
3. PERSONNEL 34 5. SOCIETY 3.1 HR management 34 5.1 Local communities 17 3.2 Number and structure of personnel 36 5.2 Prevention of bribery and corruption 17 3.3 Personnel impact of reorganization 35 5.3 Political advocacy and subsidies 17-18 Cooperation in the workplace 34-38 5.4 Limitations of competition 17-18 3.4 Equality 34 5.5 Compliance 18 3.5 Remuneration system and performance bonuses 36 6. PRODUCT AND SERVICE LIABILITY 17-18 3.6 Competence development and training 37 6.1 Customer satisfaction 18 3.7 Personnel satisfaction 38 6.2 Service safety 17-18 3.8 Occupational health and safety 38 7. HUMAN RIGHTS 17
8. SUPPLY CHAIN MANAGEMENT AND PROCUREMENT PRINCIPLES AND POLICIES 17-19
9. REPORTING AND CALCULATION PRINCIPLES 49
YEAR 2019 ARCTIA BUSINESS OPERATIONS PERSONNEL AND GOVERNANCE FINANCIAL STATEMENTS 70 Arctia Ltd Laivastokatu 9, FI-00160 Helsinki, Finland Tel. +358 30 620 7000 arctia.fi