PASSENGER SERVICES, PAGE 15

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1 ANNUAL REPORT 2016

2 CONTENT Finnlines in Years of Experience in Shipping 3 CEO s Review 4 CFO s Review 6 Business Concept, Values and Strategic Goals 9 Business Environment 10 Shipping and Sea Transport Services 12 Passenger Services 15 Port Operations 16 Safety and Environment 19 Human Resources 21 Financial Statements Board of Directors Report 24 Consolidated Statement of Comprehensive Income 28 Consolidated Statement of Financial Position 29 Consolidated Statement of Changes in Equity 30 Consolidated Statement of Cash Flows 31 Profit and Loss Account, Parent Company 32 Balance Sheet, Parent Company 33 Cash Flow Statement, Parent Company 34 Five-Year Key Figures 35 Calculation of Key Ratios 36 Quarterly Data 37 Board s Proposal 38 Auditor s Report 39 Corporate Governance Statement 40 Board of Directors 46 Executive Committee and Board of Management 47 Finnlines Fleet 48 Operating Areas 50 Contact Information 52 The Grimaldi Group 53 SHIPPING AND SEA TRANSPORT SERVICES, PAGE 12 PASSENGER SERVICES, PAGE 15 PORT OPERATIONS, PAGE 16

3 With one of the largest ro-ro and ro-pax fleets, Finnlines is the leading operator in the ro-ro and passenger transport in the Baltic and the North Sea, offering an extensive network of Motorways of the Sea between Belgium, Denmark, Estonia, Finland, Germany, Spain, Sweden, the Netherlands, Poland, Great Britain and Russia. In synergy with the Grimaldi Group, the Finnish Company s services are connected to the entire Grimaldi network and to the US East Coast via Atlantic Container Line. Finnlines passenger-freight vessels offer services from Finland to Germany and via the Åland Islands to Sweden as well as from Sweden to Germany. The Company has subsidiaries or sales offices in Germany, Belgium, Great Britain, Sweden, Denmark and Poland. In addition to sea transportation, the Company provides port services in Finland in Helsinki and Turku, which are the most important seaports in Finland. 4

4 FINNLINES IN 2016 Finnlines Group s result before taxes (EBT) improved by EUR 13.8 million and was EUR 67.0 million. Interest-bearing debt decreased by EUR 42.6 million and amounted to EUR (533.7) million. The equity ratio calculated from the balance sheet improved to 48.9 (45.7) per cent and gearing dropped to 83.8 (97.1) per cent. In January 2016, Finnlines improved its weekly liner services between West Finland and Germany by offering two direct sailings from Turku to Travemünde and back and increasing the frequency of the Poland service. Also in January, Finnlines acquired two ro-ro vessels, MS Finnmaster and MS Finncarrier, in accordance with the purchase agreement signed earlier. The vessels were put into Finnlines liner services in February The Annual General Meeting held in Helsinki on 12 April 2016, decided that the number of Board Members be seven: Mr Christer Backman, Ms Tiina Bäckman, Mr Emanuele Grimaldi, Mr Gianluca Grimaldi, Mr Diego Pacella, Mr Olav K. Rakkenes, and Mr Jon- Aksel Torgersen were all re-elected. The Annual General Meeting elected KPMG Oy Ab as the Company s auditor for the fiscal year During spring 2016, Finnlines initiated an extensive refurbishment programme of the passenger areas on six of its ro-pax vessels. The vessels deployed on the FinnLink route were all upgraded before the summer season. On the HansaLink vessels, the renovations were completed by November During 2016, four ships were fitted with exhaust gas scrubbers and two were also rebladed. The Company has implemented a vast range of improvement measures and investment programmes, such as vessel optimisation, scrubber retrofits, hull silicone paint, new propulsion systems, cost reduction programmes and tonnage adjustments. Through these, Finnlines is both operationally and financially in a very advantageous position and can offer more environmentally friendly and sustainable services. As a recognition of Finnlines commitment, the Company was selected as Ruban d Honneur recipient in the 2016 European Business Awards and participated as a finalist in the Environmental & Corporate Sustainability category. To improve its operations further, Finnlines signed a loan from EIB with guarantees from Nordea and Finnvera to finance part of the EUR 100 million Environmental Technology Investment Programme in June On 25 August 2016, Grimaldi Group S.p.A. gained title to all the shares in Finnlines Plc and the shares were thus delisted from the official list of Nasdaq Helsinki. The redemption price and interest accrued was paid on 17 November Grimaldi Group increased its controlling share in Finnlines determinedly, and completed an acquisition process which started back in Revenue EUR million Result before interest and taxes (EBIT) EUR million Breakdown of revenue % 95.8% Shipping and sea transport Port operations IFRS IFRS EUR million Revenue Result before interest, taxes, depreciation and amortisation (EBITDA) Result before interest and taxes (EBIT) Result for the reporting period Equity ratio, % Interest bearing debt, MEUR Gearing, %

5 70 YEARS OF EXPERIENCE IN SHIPPING Finnlines has maintained a vital bridge to Continental Europe for Finnish exporters and importers for 70 years. During the past ten years, the Company has focused on developing business operations, renewed the fleet and invested in new efficient technology. Finnlines stands now as a frontrunner in the Baltic Sea. Oy Finnlines Ltd was founded in 1947 for the purpose of managing the vessels and traffic of Merivienti Oy, a company owned by the Finnish forest industry and trade sector. Finnlines became an international shipping company, operating throughout the Baltic Sea, the North Sea and the Bay of Biscay. For decades, Finnlines also sailed routes to the United States up until Finnlines started to provide passenger services in 1962, when MS Hansa Express began sailing between Hanko, Gotland and Travemünde. The first year clearly demonstrated the need for this kind of new service direct passenger and car ferry connection to Continental Europe. In those days, passenger traffic was almost completely confined to the summer season. Nowadays Finnlines passenger-freight vessels provide services from Finland to Germany and via the Åland Islands to Sweden as well as from Sweden to Germany. Over the years, the Company has introduced several next generation innovations, such as a new kind of gas turbine vessel Finnjet in the mid-1970s, the jumbo ro-ro vessel Arcturus in 1982, the new ro-pax vessels Finnstar, Finnmaid, Finnlady and Nordlink in , and last but not least the state-of-the-art ro-ro vessels Finnbreeze, Finnsea, Finnsky, Finnsun, Finntide and Finnwave in In recent years, Finnlines has invested considerably in environmental technology and the fleet has undergone a large number of improvements: exhaust gas scrubber installations, propulsion upgrades and rebladings and silicone anti-fouling. All these measures improve ship efficiency and have a positive, long-lasting impact on the environment. In 2016, Finnlines ro-pax vessels underwent a thorough refurbishment in the public areas and now even better satisfy the passengers needs. The new era began in 2005, when the Italian Grimaldi Group set foot in Finnlines. The Grimaldi Group has accumulated its shares and voting rights to 30.5 per cent by July 2006 and decisively increased its holding in the coming years. In August 2016, the Grimaldi Group completed the acquisition of Finnlines thus gaining control of 100 per cent of the Company and is now the sole owner. As a result, trading in Finnlines shares on Nasdaq Helsinki Ltd was terminated. With more than 170 weekly freight departures and 80 passenger departures, Finnlines today provides efficient shipping services stronger than ever. FINNLINES

6 CEO S REVIEW FINNLINES EXCELLED IN THE RESET GOALS UNPRECEDENTED PERFORMANCE The Finnlines Group once again delivered a record financial performance. For the fourth year in a row, we recorded an improvement in operating profit to date. Finnlines performed extremely well in an operating environment that can be described as both demanding and challenging. Europe s economic growth has not yet picked up but remained subdued. In addition, the prevailing sanctions and counter sanctions in Russian trade continued to impact negatively on commercial activities across the Baltic Sea region. Over the years, Finnlines has diligently focused on improving its operational and financial position. Despite the slow growth in Europe, the Company has succeeded in improving its result year after year. In 2016, the result for the period was EUR 68.1 million, representing a 20 per cent increase over the 2015 financial year, which was then the best ever result in Finnlines history. This superb result development and yearly result improvement has been achieved partly due to the successful implementation of the EUR 1 billion Capex Programme in targeted towards fleet renewal, and partly due to our ability to react quickly to changes in the market in order to optimise the use of vessels and routes and prudently control our costs. We are running the biggest shipping line of the Baltic Sea, and we have made sure that each route gets exactly the type and number of ships it requires, with the right capacity, the right cargo flexibility and right speed. 4

7 Finnlines performed extremely well in an operating environment that can be described as both demanding and challenging. In addition, we have utilised modern IT and other technological innovations and added good-quality, modern features into our vessels, not to mention that also passengers on HansaLink, NordöLink and FinnLink vessels will now enjoy beautifully refurbished ships and upgraded services. Thanks to our EUR 1 billion Capex Programme, we now have a modern fleet, with an average age of less than 12 years and consisting of 22 owned vessels, almost all equipped with scrubbers, i.e. sulphur emission abatement technology. It is important to bear in mind that the global shipping industry plays a tremendously important role in ensuring the steady flow of both goods and people. The best companies within the industry have always been geared towards sustainability in order to maintain long-term competitive industry prospects. The global shipping industry s carbon emissions account for a relatively small part of the world s carbon emissions. Even though the shipping sector represents about 90 per cent of global trade, its carbon emissions are approximately 2.2 per cent of global emissions. For example, while the volume of cargo, in tonnes, increased by over 14 per cent, during a period of high economic growth between 2007 and 2012, the total CO 2 emissions produced by the shipping industry dropped by 15 per cent. These figures show how shipping is today rather a solution than a problem in terms of climate change. Our EUR 100 million Environmental Technology Investment Programme, apart from installing scrubbers, also included new propulsion systems and silicone anti-fouling all are measures that also improve vessel efficiency and reduce emissions. As a result of a successful scrubber strategy, 20 out of 22 ro-ro and ro-pax vessels are equipped with scrubbers, 9 have been rebladed and 2 repainted with silicone anti-fouling. Scrubbers, new propellers and the reduced hull friction have improved fuel efficiency further, which in turn has also reduced overall fuel consumption over the years, leading to a reduction in the CO 2, NO X and SO 2 emissions. Since 2008, the Finnlines fleet s fuel consumption has decreased by almost 35 per cent, which has reduced emissions and thus contributed to sustainable operations. During 2016, Finnlines installed, for the first time, a pair of flexible hybrid open/closed loop scrubbers from the world top producers onboard two of its Sweden Finland vessels, marking a step toward leadership in the domain of environmental friendly shipping. The programme is continuing in 2017 onboard a further vessel. To improve efficiency further and thus to contribute more to global sustainability, we are currently planning to lengthen six of the ships built in Jinling yard. This process, called jumboisation, will increase vessel capacity by around 1,000 lane metres which will enable us to generate profitable growth and improve shipping efficiency through use of bigger transport units. The technical specification (i.e. concept study) was prepared during autumn 2016 and the work is scheduled to begin in The Grimaldi Group has had a long-lasting and strong sense of responsibility for the preservation of the environment. In addition to complying with regulatory requirements, the Group has invested and will continuously invest in environmentally sustainable technology. Therefore, in Finnlines, we put a lot of emphasis on environmental issues and safety matters. Finnlines prides itself on being a responsible and reliable partner and a shipping industry operator providing high-quality, environmentally sound and sustainable sea transport services. The Company s work for sustainability has also been recognised internationally: last year Finnlines was awarded a Ruban d Honneur by the European Business Awards. Competition for sustainability is fierce, and being ranked among the most sustainable companies in Europe is a significant achievement. We have continued our hard work over the years and are committed towards the new even more stringent regulatory requirements on ballast water treatment and continuously improve our energy savings and environmental impact. During 2016, the parent company Grimaldi Group, concluded the redemption of the remaining Finnlines shares and Grimaldi Group Companies became a 100 per cent shareholder of Finnlines Plc. This led to a logical decision to delist the Company from the Helsinki Stock Exchange in August, bringing one historical chapter to an end. Finnlines became an integral part of the world s premier roll-on roll-off specialist the Grimaldi Group. In my role as the CEO, I have always sought to be as transparent as possible. This will not change now even though Finnlines Plc is no longer a Stock Exchange listed company. Transparency in our operations generates trust among our stakeholders, and the trust of our customers, our employees, our financial institutions and investors, and other stakeholders, has always been a key tenet of the Grimaldi Group s business philosophy. Finnlines celebrates an important milestone in years has passed since its foundation. We must, however, look forward to the next chapter in Finnlines future. Again, with your support, I will ensure that we will remain a very strong competitor in the market and continue to provide you all with safe, reliable, efficient and environmentally sound services with an eye to further improvements. I thank all our customers, our stakeholders and our employees for their long-term support. Through our seamless co-operation, once again, Finnlines was able to excel in an unprecedented way in both operational and financial performance. Emanuele Grimaldi FINNLINES

8 CFO S REVIEW THE GROUP DELIVERED OUTSTANDING FINANCIAL RESULTS FINANCIAL PERFORMANCE In terms of financial performance, Finnlines posted record results during the financial year The Finnlines Group s result for the reporting period, EUR 68.1 million, was approximately 20 per cent better than in the previous year. Despite the challenging market environment, the Company s earnings before interest, taxes, depreciation and amortisation, EBITDA, were EUR million, representing a 29 per cent EBITDA margin of the turnover. Finnlines EUR 100 million Environmental Technology Investment Programme was initiated in The aim of the Programme was to improve the ships fuel economy and to reduce emissions by installing exhaust gas scrubbers, by reblading the vessels propulsion systems, and by treating the vessels with silicone antifouling for reducing hull friction. The successful implementation has led to a reduction in fuel consumption. Also, the share of inexpensive heavy fuel oil in Finnlines traffic is now greater than in 2015, which has considerably improved fuel economy. By finding new ways to even further increase fuel efficiency, we can further reduce bunker consumption and save costs. The lower operative costs in several other areas than in bunker costs also contributed positively to the overall result. The continued improvement in our profitability is a result of putting constant downward pressure on costs and implementing innovative energy-saving technologies. TURNAROUND PROGRAMME One of the key objectives of Finnlines Turnaround Programme, which was launched in 2013, was to implement cost savings in all main cost components, thereby ensuring Finnlines improved financial performance regardless of development in the European economy or its business environment. The Finnlines Group s costs decreased from EUR million to EUR million. We have, indeed, faced a very tough task in this Programme, but with an experienced team of hard workers, we have turned challenges into opportunities one by one, with hard and diligent work combined with technological know-how. The quality of our staff, their cohesion, professionalism and enthusiasm, at all organisational levels, has been the secret of Finnlines success. In the future, we will continue to focus on our opportunities for profitable growth, on cost reductions, and on further optimising our operations CAPITAL STRUCTURE The Group s capital structure strengthened further. The extraordinary result together with lower capital expenditure led to an improved cash flow compared to the previous year, which enabled us to markedly reduce the Group s debt. The interest-bearing debt decreased by EUR 42.6 million and amounted to EUR (533.7) million. Cash flow generated from operating activities was EUR (105.8) million. In 2016, capital expenditure totalled about EUR 46.3 million, compared with EUR 64.1 million in the previous year. The gearing improved to 83.8 (97.1) per cent and the Group s equity ratio stands now at the solid 48.9 per cent level. Finnlines solvency and liquidity remained, as in previous years, at an excellent level, which enabled us to implement the significant capital expenditure programme. Cash and deposits together with unused committed credit facilities amounted to EUR (114.5) million and net debt to EBITDA dropped to 3.5 at year-end, from the previous year s 4.2 level. NEW SHAREHOLDER STRUCTURE On 25 August 2016, the Grimaldi Group lodged a security approved by the Arbitral Tribunal in connection with the redemption of the minority shares in Finnlines Plc and thus acquired title to all the outstanding shares in Finnlines. This completed the Grimaldi Group s acquisition of Finnlines Plc, and led to a subsequent decision to de-list the Company from the Helsinki Stock Exchange on the same date. The redemption price of a Finnlines share was EUR per share. This brought the capitalisation of the Company to approximately EUR 927 million. The new shareholder structure reinforces Finnlines existing strategy enabling us to be the most efficient shipping company in the Baltic Sea as part of the Group with proven track record in highly profitable operations the Grimaldi Group, Europe s number one shipping company in the combined ro-ro/ ro-pax segment. Tom Pippingsköld 6

9 EBITDA and Equity Ratio Interest-bearing Debt and Shareholders Equity Net Debt/ EBITDA Development Gearing EUR million % EUR million EUR million % % , EBITDA Equity Ratio Interest-bearing debt, excluding leasing liabilities Shareholders equity Net debt Net debt/ebitda FINNLINES

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11 BUSINESS CONCEPT, VALUES AND STRATEGIC GOALS BUSINESS CONCEPT Finnlines promotes international commerce by providing efficient, high-quality sea transport and port services, mainly to meet the requirements of the European industrial, commercial and transport sectors and private passengers. FINANCIAL GOALS Finnlines objective is to guarantee long-term profitability through high-quality operations, to generate added value for its shareholders and to maintain a healthy capital structure. The Board of Directors bases its annual dividend proposal on the Company s capital structure, future outlook, and investment and development needs. VALUES CUSTOMER FOCUS Our customers choose us thanks to our competence, expertise and reliability. Satisfied customers are the basis for Finnlines enduring success. By identifying its cargo customers and passengers needs, the Company can continuously develop its service products and generate concrete added value for its customers. RESPONSIBILITY We adhere to the principles of sustainable development. Environmental responsibility forms part of our Company s everyday operations. We take safety issues into consideration in all our operations. PROFITABILITY We achieve our objectives. Through the quality of our business operations, we are able to guarantee long-term profitability and generate added value. STRATEGIC GOALS A stronger position in the Baltic Sea and the North Sea cargo traffic We invest in the operational efficiency of our current transport areas. We will open new routes according to market opportunities. We are actively involved in the growing consolidation of the sector. We increase Group-wide network synergies beyond the core of today. A stronger position in the Baltic Sea passenger traffic We offer quick and effortless travel between Finland, Sweden and Germany to our passengers on our large and efficient ro-pax vessels. A stronger position in Russian freight traffic We are the leading shipping company in transit traffic. We actively develop and market direct transport routes between Central Europe and Russian Baltic ports. Growing profitability We strive to improve our productivity. One of the main ways of doing this is to focus on routes where the vessels capacity utilisation is as high as possible in both directions. We will increase the efficiency of our operational systems and information management. We take proper care of environmental and safety issues. We invest in staff competence. EMPLOYEE SATISFACTION Finnlines is a reliable and motivating employer, which treats its employees with fairness and equality, rewarding the merit. FINNLINES

12 BUSINESS ENVIRONMENT FLEET The last two vessels that were bought in 2015 were delivered in January Scrubbers to remove excess sulphur were installed on both of them. The heavy investment programme in environmental technology that was undertaken in 2014 was completed in It included rebladings and sulphur scrubber installations and also re-painting hulls with silicone paint. All this enabled the fleet to be operated in a more environmentally friendly manner, both in terms of saving fuel and decreasing sulphur dioxide emissions. The average age of the Group s vessels was about 12 years. ROUTE NETWORK During 2016, Finnlines retained its position as a leading ro-ro shipping company in the Baltic Sea area. Finnlines ro-ro services in the Baltic and North Sea areas provide a backbone to Finnish industries and trade s transportation needs. The services covered the Finnish ports of Rauma, Uusikaupunki, Turku, Helsinki and Kotka, offering connections with Russian, Estonian, Polish, German, Danish, British, Dutch, Belgian and Spanish ports. The route network also enabled cargo flows between Continental and British ports and Russia, as well as offered the wide Grimaldi network for Finnlines customers use. The high frequency ro-pax lines cover the services between Finland and Sweden (FinnLink), Finland and Germany (HansaLink) and Sweden and Germany (NordöLink). TransRussiaExpress had a weekly sailing from St. Petersburg to Lübeck and vice versa. 10

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14 SHIPPING AND SEA TRANSPORT SERVICES Finnlines is one of the industry s leading players in the Baltic Sea, the North Sea and the Bay of Biscay. The strong position derives from the outstanding service which is based on the needs of our customers. High frequency, cargo capacity and information services offered by Finnlines contribute to flexibility, reliability and predictability to customers. Customers today need digitalised and individualised solutions and now they are able to pick the most suitable channel for them mobile application, extranet, or phone. In the autumn of 2016, Finnlines launched its first mobile application, Finnlines Cargo, to provide an ever more flexible and state-of-theart service to its freight customers. The Shipping and Sea Transport Services segment s revenues totalled EUR (492.9 in 2015) million, and it employed 1,372 (1,317) people on average. During January December, the transports totalled about 629 (624) thousand cargo units, 119 (156) thousand cars (not including passengers cars) and 1,611 (2,032) thousand tons of nonunitised freight. In addition, some 602 (575) thousand private and commercial passengers were transported. The Finnish consumer market was still fairly slow, but the industrial investments made and decided on show encouraging signs although their effect is not yet reflected in traffic flows. THE BALTIC SEA AND NORTH SEA SERVICES Ro-ro services routes are ideally located for servicing freight customers in the Baltic Sea and North Sea areas. Traffic was operated with some ten modern ro-ro vessels catering for lorries, trailers, other mobile cargo, containers and break bulk. HANSALINK HansaLink consisted of three Star-class ro-pax vessels plying between Helsinki and Travemünde. HansaLink retained its strong position as the largest carrier for unitised cargo volumes between Germany and Finland. For passengers it was the only direct connection by sea between Finland and Continental Europe. The traffic was operated with six weekly departures in both directions with a fast sailing time of less than 30 hours. NORDÖLINK NordöLink runs a ro-pax service between Malmö and Travemünde. The three vessels, MS Finnpartner, MS Finntrader and MS Nordlink, made 19 weekly departures in both directions with an average intake capacity of about 110,000 lane metres per week. The non-freight passenger traffic s turnover continued its positive trend and improved by 6 per cent. FINNLINK FinnLink between Naantali and Kapellskär operated mainly with two Clipper-class ro-pax vessels. These vessels served unitised cargo traffic with a total of 14 weekly departures in each direction. The fast eight-hour voyage and the service s schedule, tailored to the needs of freight customers, have maintained the competitiveness of the route. The calls at the port of Långnäs in the Åland Islands were continued throughout the year, and were even increased during the summer high season, with duty-free shopping onboard. The line s number of passengers was 10 per cent higher than the year before. TRANSRUSSIAEXPRESS TransRussiaExpress (TRE) runs a regular direct liner service between Germany and Russia (Lübeck St. Petersburg), offering one weekly departure in each direction. Throughout the year, the line operated with pure ro-ro vessels. The calls at the port of Kotka on the westbound leg continued throughout the year on a weekly basis. As from October 2015, a slot charter agreement was agreed with DFDS, thus increasing the utilisation of the ship for the whole roundtrip. INTERCARRIERS Intercarriers, in which Finnlines holds a 78.5 per cent stake, offered small-tonnage traffic services from ports in Lake Saimaa and some Russian inland ports to various parts of Europe. 12

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17 PASSENGER SERVICES With its nine ro-pax vessels, operating between six ports in three countries, Finnlines has established its position as an important provider of passenger services in the Baltic Sea. The total number of passengers transported on all routes (private and commercial) grew by 5 per cent to 602 (575 in 2015) thousand passengers. The number of private passengers increased on all routes, the strongest growth being on the Finland Sweden route with 10 per cent, followed by the Finland Germany route with 6 per cent. Even the route from Germany to Sweden had a slight increase of 3 per cent despite the fact that the end of 2015 was boosted by a large number of asylum seekers. A number of development projects were successfully brought to an end. All passenger vessels underwent major refurbishment in the public areas and now even better satisfy passengers needs. The new website including a newly developed booking engine (web and mobile) was launched. Further focus was put on web marketing and web channels were developed to respond to worldwide demand online. The share of web bookings grew 12 per cent compared to the previous year. The onboard passenger concept on all lines is continuously being improved in close collaboration with the personnel onboard in order to maintain high customer satisfaction levels and experience. FINNLINES

18 PORT OPERATIONS The Group s Port Operations are handled by Finnsteve companies (Finnsteve, Containersteve and FS-Terminals). Finnsteve companies are a major port operator focused on unitised cargo services required by regular liner traffic in the ports of Helsinki, Turku and Naantali. Helsinki is Finland s most important export and import port for unitised goods, while Turku and Naantali have the fastest sea connections to Sweden. In 2016, Finnlines Port Operations generated revenues of EUR 38.4 (35.9 in 2015) million and employed 281 (280) people on average. The Port Operations unit suffered from low volumes and keen competition. PORT OPERATIONS IN HELSINKI The Vuosaari Harbour, which was opened at the end of 2008, has proved to be an efficient world-class port with its modern and advanced infrastructure. The Company s four post-panamax container gantry cranes have sufficient capacity and power to cope easily with future growth in container volumes. The export terminals allow cargo handling in all weather conditions, while the import terminal in the logistics area has capacity for diversifying and increasing the provision of supplementary services. HELSINKI VOLUME DEVELOPMENT The overall cargo volumes handled by Finnsteve companies in the Vuosaari Harbour increased from the previous year. Container volumes increased significantly because a new container customer started to use Finnsteve s terminal from the beginning of June In 2016, the total cargo throughput in the port of Helsinki increased 1.9 per cent to a volume of 11.6 million tons, compared to the 2015 volumes. Unitised export traffic decreased by 0.3 per cent to 5.5 million tons while import traffic increased by 3.8 per cent to 5.0 million tons. The volume of trailers and lorries increased by 2.6 per cent to 525,337 units. Container traffic increased by 4.8 per cent to 451,263 TEUs. PORT OPERATIONS IN TURKU AND NAANTALI The Company s operations covered the West Harbour, the Pansio Harbour, the Base Harbour and the port of Naantali. In 2016, the total cargo throughput in the port of Turku increased 4.9 per cent to 2.5 million tons in comparison to the volumes in Container export and import traffic increased by 72.6 per cent to 2,299 TEUs, thus representing only a small part of the total cargo throughput. The volume of trailers and lorries increased by 8.3 per cent to 106,550 units in The Company s Naantali operations provided services to the Group s FinnLink traffic between Naantali, Långnäs and Kapellskär. 16

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21 SAFETY AND ENVIRONMENT Operating in ecologically sensitive areas, the objective of Finnlines safety and environmental policy is to provide safe, top-quality services while making efforts to minimise the environmental impacts in every aspect of operations. In 2016, Finnlines continued to implement its Environmental Technology Investment Programme, which will amount to EUR 100 million. The programme has included the installation of exhaust gas scrubbers, investments in propulsion and reblading, and silicone anti-fouling. SAFETY AND SECURITY Safety is one of the most important environmental aspects in shipping. The land-based ship management organisation and all the ships are certified in accordance with the ISM Code (International Management Code for the Safe Operation of Ships and for Pollution Prevention). All ships and port facilities also comply with the requirements of the ISPS Code (International Ship and Port Facility Security Code). The ships are regularly inspected and audited by the maritime administration, classification societies and by in-house auditors. To be prepared for safety and environmental risks, regular drills are held both internally and with authorities, such as the coast guard, border guard and local city rescue departments. Occupational safety and health, which entails maintenance of health, prevention of injuries and illnesses, and riskless use of work equipment, is an important part of Finnlines operations. In 2016, inspections under the Maritime Labour Convention focused on psychosocial stress among the crew onboard the ships. The purpose of the Convention is to safeguard that seafarers are provided with decent working and living conditions. In ports, stevedoring companies have safety systems, including communication and contingency plans in case of an accident. Ports are equipped to respond to fires and oil and chemical spills. ENVIRONMENTAL CERTIFICATION Finnlines environmental work focuses on vessels as they have a substantial effect on the environment. A certified environmental system under the ISO Code provides a tool to monitor and measure the impact of all environment-related operations and services. The system will also guarantee that the environmental performance unconditionally complies with relevant legislation and regulations. The ISO certificate was renewed and will be valid until September STAKEHOLDERS In environmental and safety matters, Finnlines most important stakeholders are the flag, port and host state administration, owners, customers, port operators and contractors, as well as the inhabitants of harbour and fairway areas. Finnlines is represented at the technical and environmental committees under the Swedish and Finnish Shipowners Associations. The Baltic Sea Research Institute (IOW) has installed a device on two of Finnlines ships. The devices measure greenhouse gases in the Baltic Sea and in the Gulf of Finland. LEGISLATION The International Maritime Organisation (IMO) manages international legislation on safety and environmental matters. The MARPOL 73/78 Convention contains regulations on the disposal of waste and sewage into the sea, and on the prevention of air emissions. The SOLAS Convention regulates maritime safety matters, including ship construction, life-saving arrangements and navigation. The Company s port operations comply with national legislation. ENERGY CONSUMPTION AND ATMOSPHERE EMISSIONS Finnlines operates mainly in the Emission Control Areas, i.e. the Baltic Sea, the North Sea and the English Channel, where the sulphur content limit for ship fuel oil is 0.10 per cent in accordance with the MARPOL Convention. The global sulphur fuel limit continues to be 3.5 per cent, but it will decrease to 0.5 per cent in To comply with the MARPOL Convention Finnlines has fitted a total of 20 ships with exhaust gas scrubbers since the end of Scrubbers also remove most of the particles. Ships which are not equipped with scrubbers run on ultra low sulphur fuel oil. During the past few years, several measures have been taken to reduce fuel consumption, including optimisation of schedules. Nine ships have been rebladed and six ships fitted with rudder bulbs. As organisms attached to the ship s hull slow the ship down, increasing fuel consumption and air emissions, the latest generation of silicone hull paints has been applied on two ro-ro/ passenger ships. On the other ships, the bottom is brushed and cleaned at regular intervals. To reduce the carbon footprint from shipping and to create a benchmark system in Europe, the EU regulation on the monitoring, reporting and verification of CO 2 -emissions (MRV) will be- >> FINNLINES

22 SAFETY AND ENVIRONMENT (CONTINUED) come fully effective in Ship owners and operators will be required to report on vessels larger than 5,000 GT. Moreover, a monitoring plan must be prepared and submitted to a verifier by the end of August In 2016, Finnlines vessel traffic consumed 310,662 tons of heavy fuel oil and diesel oil, representing an increase of around 2.9 per cent compared with WASTE AND SEWAGE Efforts have been made to minimise the amount of waste that is deposited in landfills. The main recyclable waste types generated on board include energy waste, bio waste, glass, paper, cardboard, wood, and metal. Hazardous waste, including oil waste, oily filters, paint, and electronic scrap, is separated and taken to a designated container in the port. MARPOL contains restrictions concerning black water, i.e. toilet water. Finnlines ro-pax vessels land black water to onshore municipal sewage systems whenever they are accessible. Tank vehicles are used where reception facilities are not provided. There are no restrictions on the discharge of grey water, i.e. water from kitchens and showers, but Finnlines pumps grey water to the shore-based sewage systems. Cargo ships are equipped with sewage treatment plants approved by the flag-state administration. OTHER ENVIRONMENTAL ASPECTS Oily waste water, bilge water, is generated in engine rooms. Bilge water is separated in separators and the remaining sludge is always taken ashore. The limit for the oil content of water that may be discharged into the sea is 15 ppm but many of our ships have more efficient separators. Some bilge water is also pumped ashore. Ballast water is used to stabilise ships when not fully loaded. Taken on in one ecological zone and released into another may introduce aquatic invasive species, which may disrupt fragile marine ecosystems with disastrous ecological and economical effects. The IMO Ballast Water Management Convention was introduced as early as However, the entry into force criteria of 35 per cent of global tonnage was not met until 8 September The Convention will enter into force one year later and this means that ships must be fitted with treatment equipment by the first renewal survey. Thus a transitional period of a maximum of 5 years will apply. Furthermore, exchange of ballast water will be mandatory after the entry-into-force date with the exception of the Baltic Sea, which does not meet the requirement of distance from shore or depth of water. Finnlines has investigated different technologies and contacted equipment suppliers for quotations. Low salinity, ice and high turbidity create extra challenges for the equipment in the Baltic Sea. ENVIRONMENTAL ASPECTS IN PORT OPERATIONS Being aware of their environmental impacts and responsibilities, Finnsteve companies follow the principles of sustainable development. The focus is on enhancing energy savings and on reducing air emissions and waste generation in processes, in storage operations and maintenance of machines and properties. Finnsteve companies hold a valid ISO environmental certificate and an ISO 9001 quality certificate. To ensure maritime safety and reduce risks to cargo, the IMO amended the SOLAS Convention with the requirement to verify the gross weight of a packed container by weighing it before loading. As from July 2016, this requirement has applied to all vessels operating on a route, which is over 600 nautical miles. Finnsteve offers weighing services for its customers in Vuosaari harbour. In 2016, the fuel consumption of the port operations totalled some 810 tons, which includes the operations in Helsinki, Turku and Naantali, an increase of nearly 8 per cent compared with

23 HUMAN RESOURCES SEA PERSONNEL The focus in 2016 was, as expected, on upgrading the skills of our sea personnel. Skills were upgraded to meet the requirements of the Manila amendments to the STCW regulations, which entered into force on 1 January We also provided training in occupational health and safety as well as vocational training. Furthermore, we introduced a new extensive video training tool on our vessels. The importance of wellbeing of sea personnel and leadership and management skills was emphasised. Our employees have been very interested in self-development. The co-operation and communication between shore and sea personnel was maintained by means of frequent contacts and ship visits. Senior officers were invited to participate in in-house training events and meetings. After the entry into force of the EU Sulphur Directive, the dockings related to the Company s Environmental Technology Investment Programme continued in This included the installation of exhaust gas scrubbers and rebladings. The programme caused temporary changes in vessels operating areas and some layoffs. The refurbishment project of the passenger facilities on ro-pax ships required flexibility from our sea personnel and the rest of our organisation, but the outcome was very successful. STEVEDORE PERSONNEL During 2016, our main focus was on our stevedores wellbeing, including both training courses and workshop activities. These efforts are a continuation of many years successful cooperation between the employees and their representatives and the Company. As a result, our employees sick leaves have decreased considerably. In 2016, Finnsteve managed to reach the finals in Etera Mutual Pension Insurance Company s wellbeing at work award competition and was granted a diploma for its efforts in job wellbeing and early retirement prevention. In 2016, training also focused on improving our personnel s skills and courses in first aid and safety were provided. The training for Finnsteve companies management team focused on developing leadership skills, for example, through the 360 feedback survey and a related workshop. The communication between foremen and stevedores was also further improved through development discussions. In addition, HR reporting was improved to better serve the foremen s needs. Production and resource management IT systems will be renewed in 2017, and related projects are already in full swing. SHORE PERSONNEL As for the shore personnel, the year s focus was on development of competence and leadership skills, as well as on job wellbeing. For the shore personnel in Finland, the two-year Vire project on job wellbeing was completed at the end of It included promoting physical and mental health in areas such as self management and overall wellbeing, circuit classes and various measurements. Job rotation, new projects (refurbishment on passenger ships, scrubber projects and dockings) and various training programmes relating to systems, safety, occupational health and safety and job wellbeing, all contributed to the competence development of our employees. PERFORMANCE MANAGEMENT Group HR reporting was further improved and harmonised with the Grimaldi Group s systems and responsibility report. A new recruiting system was introduced which also streamlines our internal processes. In addition, we we put emphasis on leadership and performance development and ameliorated communication. Our Group s revenue/average number of employees in 2016 was EUR 287 (320 in 2015) thousand. EBIT/average number of employees was EUR 49 (44) thousand. PERSONNEL CHANGES The Group employed an average of 1,653 (1,597) persons during the reporting period, consisting of 957 (899) persons at sea and 696 (698) persons on shore. The number of persons employed at the end of the period was 1,627 (1,588) in total, of which 934 (889) at sea and 693 (699) on shore. The number of sea personnel increased due to the acquisition of the new vessels MS Finnmaster and MS Finncarrier, which joined the Group s fleet at the beginning of The personnel expenses (including social costs) for the reporting period were EUR 89.8 (84.2) million. >> FINNLINES

24 HUMAN RESOURCES (CONTINUED) Key figures Average number of employees 1,653 1,597 Revenue/employee, EUR 286, ,060 Personnel expenses/employee, EUR 54,290 52,712 Result before taxes/employee, EUR 40,504 33,281 Employee turnover, % Average absence of personnel, day/employee Training days, total 2,464 1,551 The average age of Finnlines personnel, years The average duration of employment, years 7 5 Average number of employees per business area Shore-based personnel Shipping and Sea Transport Services Port Operations Sea personnel Group, total 1,653 1,597 On 31 December 2016, the shore-based personnel amounted to 693 and sea personnel to 934, in total 1,627. On 31 December 2016, the shore-based personnel amounted to 699 and sea personnel to 889, in total 1,588. Employee categories Shore-based personnel excl. Stevedores 30% 30% Sea personnel 57% 56% Stevedores 13% 14% Gender distribution Shipping Port personnel Sea operations Shipping Port personnel Sea operations Female 49% 6% 19% 49% 6% 21% Male 51% 94% 81% 51% 94% 79% Personnel by country Finland 70% 68% Sweden 22% 23% Germany 6% 6% Other 2% 3% Quarterly figures, Average number of employees Continuing operations I/2016 II/2016 I/2015 II/2015 1,621 1,631 1,595 1,595 III/2016 IV/2016 III/2015 IV/2015 1,664 1,653 1,612 1,597 22

25 FINANCIAL STATEMENTS 2016 FINNLINES

26 BOARD OF DIRECTORS REPORT FINNLINES BUSINESS Finnlines is the largest shipping company in the Baltic Sea based on both ro-ro and ro-pax volumes (source: Baltic Transportation Journal). The Company's passenger-freight vessels offer services from Finland to Germany and via the Åland Islands to Sweden, as well as from Sweden to Germany. Finnlines ro-ro vessels operate in the Baltic Sea and the North Sea. The Company has subsidiaries in Germany, Belgium, Great Britain, Sweden, Denmark and Poland, which all are also sales offices. In addition to sea transportation, the Company provides port services in Helsinki and Turku. GROUP STRUCTURE Finnlines Plc is a Finnish public limited company, which operates under Finnish jurisdiction and legislation. At the end of the reporting period, the Group consisted of the parent company and 21 subsidiaries. Finnlines is part of the Italian Grimaldi Group, which is a global logistics group specialising in maritime transport of cars, rolling cargo, containers and passengers. The Grimaldi Group comprises seven shipping companies, including Finnlines, Atlantic Container Line (ACL), Malta Motorways of the Sea (MMS) and Minoan Lines. With an owned fleet of about 120 vessels, the Group provides maritime transport services for rolling cargo and containers between Northern Europe, the Mediterranean, the Baltic Sea, West Africa, North and South America. It also offers passenger services within the Mediterranean and the Baltic Sea. On 25 August 2016, Grimaldi Group S.p.A. gained title to all the shares in Finnlines Plc and the shares were thus delisted. GENERAL MARKET DEVELOPMENT Based on the statistics by the Finnish Transport Agency for January December, the Finnish seaborne imports carried in container, lorry and trailer units increased by 4 per cent, whereas exports increased by 4 per cent (measured in tons) compared to the same period in Private and commercial passenger traffic between Finland and Sweden remained on the same level as in The corresponding traffic between Finland and Germany increased by 4 per cent (Finnish Transport Agency). FINNLINES TRAFFIC At the beginning of 2016, the frequency of the Poland service increased and Hanko became at new port of call in Finland. Finnlines also made a major improvement in its weekly liner services between West Finland and Germany, and offered two direct sailings from Turku to Travemünde and back. The line was operated by Finnlines' newest ro-ro vessels with a capacity of 3,260 lane metres. In January 2016, the charter agreement of MS Misida expired and the vessel was redelivered in Tilbury on 4 January Finnlines also acquired two ro-ro vessels in accordance with the purchase agreement signed earlier. The vessels were put into Finnlines liner services in February Starting from July 2016, MS Finneagle was transferred from the FinnLink service and chartered out to the Grimaldi Group. The vessel returned to the Finnlink service in October, and at the same time, MS Finnfellow was docked for the installation of the exhaust gas cleaning system. During the reporting period, Finnlines operated on average 21 (22) vessels in its own traffic. The cargo volumes transported during January December totalled approximately 629 (624 in 2015) thousand cargo units, 119 (156) thousand cars (not including passengers cars) and 1,611 (2,032) thousand tons of freight not possible to measure in units. In addition, some 602 (575) thousand private and commercial passengers were transported. FINANCIAL RESULTS The Finnlines Group recorded revenue totalling EUR (511.2) million in 2016, a decrease of 7.3 per cent compared to the same period in the previous year. Shipping and Sea Transport Services generated revenue amounting to EUR (492.9) million and Port Operations EUR 38.4 (35.9) million. The Shipping and Sea Transport Services segment s revenue decreased mainly due to the lower bunker surcharge as compensation passed to our clients. In Port Operations the revenue grew due to increased external and internal cargo handling activities. The internal revenue between the segments was EUR 18.2 (17.6) million. Result before interest, taxes, depreciation and amortisation (EBITDA) was EUR (126.9) million, an increase of 9.6 per cent. Result before interest and taxes (EBIT) was EUR 81.5 (70.3) million. In 2016, most of the vessels were operated using less expensive fuel oil, which had a positive impact on the result even though bunker prices started to increase globally during the fourth quarter. The result includes a gain on sale of EUR 4.4 million for MS Finnsailor. As a result of the improved financial position, net financial expenses decreased and were EUR (-17.1) million. Financial income was EUR 0.4 (0.9) million and financial expenses EUR (-18.1) million. Result before taxes (EBT) improved by EUR 13.8 million and was EUR 67.0 (53.2) million. The result for the reporting period was EUR 68.1 (56.8) million). The most important business and share related key indicators are presented in the Five-Year Key Figures on page

27 STATEMENT OF FINANCIAL POSITION, FINANCING AND CASH-FLOW Even though the Company has an ongoing Environmental Technology Investment Programme and paid dividends of EUR 41.3 million, interest-bearing debt decreased by EUR 42.6 million and amounted to EUR (533.7) million excluding leasing liabilities of EUR 3.7 (17.9) million. The equity ratio calculated from the balance sheet improved to 48.9 (45.7) per cent and gearing dropped to 83.8 (97.1) per cent. Due to the expired charter agreements and redelivery of the remaining chartered tonnage in the first quarter 2016, vessel lease commitments decreased by EUR 0.1 million to EUR 0.0 million compared to the end of December The Group s liquidity position is strong and at the end of the period, cash and cash equivalents together with unused committed credit facilities amounted to EUR (114.5) million. Net cash generated from operating activities improved considerably and was EUR (105.8) million. CAPITAL EXPENDITURE The Finnlines Group s gross capital expenditure in the reporting period totalled EUR 46.3 (64.1) million, including tangible and intangible assets. Total depreciation and amortisation amounted to EUR 57.6 (56.6) million. The investments consist of the final payments related to the purchase and delivery of MS Finncarrier and MS Finnmaster, normal replacement expenditure of fixed assets, scrubber and reblading projects, improvement of passenger areas and dry-dockings of ships. In 2015, Finnlines launched the second phase of the EUR 100 million Environmental Technology Investment Programme which covered scrubber orders for its remaining ro-ro vessels and a further three of its ro-pax vessels. Moreover, additional energy efficiency investment was initiated by extending the propulsion upgrading programme. The first of three ro-pax vessels to be rebladed and equipped with scrubbers, MS Finnclipper, received her new IAPP Certificate on 18 August 2016 upon completion of scrubber system commissioning. The second ro-pax vessel to be rebladed and equipped with scrubbers, MS Finnfellow, was under retrofit during the fourth quarter The last of the three ro-pax vessels to undergo the same environmental upgrade, MS Finneagle, will receive her scrubbers and new blades onboard in the first quarter After this, the whole Programme will be completed. As part of the Connecting Europe Facility (CEF), the European Union awarded Finnlines a funding of EUR 14.5 million for environmental technology investments on vessels in liner services. The funding is recognised as adjustment of investment costs. Interim payments of EUR 12.5 million had been received until the end of Furthermore in June 2016, Finnlines signed a loan from EIB with guarantees from Nordea and Finnvera to finance part of the EUR 100 million Environmental Technology Investment Programme. During spring 2016, Finnlines initiated an extensive refurbishment programme of the passenger areas on six of its ro-pax vessels. The vessels deployed on the FinnLink route were all upgraded before the summer season. On the HansaLink vessels, the programme was divided into two phases. The first phase was completed by midsummer and the second, more extensive phase, which included refurbishment of shops, cafeterias and restaurants, started in September All passenger service area improvements were completed during the fourth quarter PERSONNEL The Group employed an average of 1,653 (1,597) persons during the reporting period, consisting of 957 (899) persons at sea and 696 (698) persons on shore. The number of persons employed at the end of the period was 1,627 (1,588) in total, of which 934 (889) at sea and 693 (699) on shore. The number of sea personnel increased due to the acquisition of the new vessels MS Finnmaster and MS Finncarrier, which joined the Group s fleet at the beginning of The personnel expenses (including social costs) for the reporting period were EUR 89.8 (84.2) million. RESEARCH AND DEVELOPMENT The aim of Finnlines research and development work is to find and introduce new practical models and operating methods, which enable the Company to meet customer requirements in a more sustainable and cost-efficient way. In 2016, the focus continued to be on environmental investments and energy efficiency of the vessels. In 2016, the project for installation of scrubbers on vessels was continued. Further, improvements for enabling a lower resistance were made to some of the vessels. These measures will considerably reduce energy consumption and impacts on the environment. The Company has initiated a study on lengthening a ro-ro vessel series by approximately 30 metres each. The technical specification (i.e. concept study) was prepared during autumn The objective is to enable profitable growth by increasing vessel capacity and improving transporting efficiency by utilising bigger transport units. During 2016, the harmonisation of the systems within the Finnlines Group and in the framework of the entire Grimaldi Group network were continued. Over the year, the new operative IT system for the cargo traffic, which was implemented in 2015, was developed further by adding new functionalities and improving the usability of the system. For instance, a new mobile user interface for cargo booking enables a more flexible and faster interaction with customers. >> FINNLINES

28 BOARD OF DIRECTORS REPORT (CONTINUED) In 2016, the design of the new operative systems in the ports was continued. The development and implementation of the new systems will still continue in 2017 and THE FINNLINES SHARE The Company s paid-up and registered share capital on 31 December 2016 totalled EUR 103,006,282. The capital stock consisted of 51,503,141 shares. On 25 August 2016, Grimaldi Group S.p.A. gained title to all the shares in Finnlines Plc and the shares were thus delisted from the official list of Nasdaq Helsinki Oy. The shares and shareholders are dealt with in more detail in the Notes to the Consolidated Financial Statements, in Note 37. Shares and shareholders. DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING Finnlines Plc s Annual General Meeting was held in Helsinki on 12 April The Annual General Meeting of Finnlines Plc approved the Financial Statements, the Board of Directors Report and the Auditor s Report, and discharged the members of the Board of Directors and the President and CEO from liability for the financial year It was decided to accept the proposal of the Board of Directors that no dividend be paid for The meeting decided that the number of Board Members be seven. All of the current Board Members were re-elected; Mr Christer Backman, Ms Tiina Bäckman, Mr Emanuele Grimaldi, Mr Gianluca Grimaldi, Mr Diego Pacella, Mr Olav K. Rakkenes and Mr Jon-Aksel Torgersen. It was decided to pay annual compensation to the members of the Board as follows: EUR 50,000 for the Chairman, EUR 40,000 for the Vice Chairman, and EUR 30,000 for each of the other members of the Board. The Annual General Meeting elected APA KPMG Oy Ab as the Company s auditor for the fiscal year It was decided that the external auditors be reimbursed according to invoice. It was decided to authorise the Board of Directors to resolve on the issuance of shares in one or several tranches. The Board of Directors may, on the basis of the authorisation, resolve on the issuance of shares in one or several tranches, so that the aggregate number of shares to be issued shall not exceed 10,000,000 shares. The Board of Directors decides on all the conditions of the issuance of shares. The issuance of shares may be carried out in deviation from the shareholders pre-emptive rights (directed issue). The authorisation is valid until the next Annual General Meeting. The authorisation replaces the Annual General Meeting s authorisation to decide on a share issue of 14 April DECISIONS TAKEN BY THE EXTRAORDINARY GENERAL MEETING Finnlines Plc s Extraordinary General Meeting was held on 20 December The Extraordinary General Meeting decided, in accordance with the proposal of the Board of Directors, to distribute a dividend of EUR 0.80 per share. The dividend was paid to shareholders on 30 December RISKS AND RISK MANAGEMENT Finnlines is exposed to business risks that arise from the capacity of the fleet existing in the market, counterparties, prospects for export and import of goods, and changes in the operating environment. The risk of overcapacity is reduced through scrapping of aging vessels, on the one hand, and the more stringent Sulphur Directive requirements, on the other. Finnlines operates mainly in the Emissions Control Areas where the emission limits are stricter than globally. The sulphur content limit for heavy fuel oil was reduced to 0.10 per cent as from 1 January 2015 in accordance with the MARPOL Convention. This has increased costs of sea transportation. However, with one of the youngest and largest fleets in Northern Europe and with investments in engine systems and energy efficiency, Finnlines is in a strong position to greatly mitigate this risk. The effect of fluctuations in the foreign trade is reduced by the fact that the Company operates in several geographical areas. This means that slow growth in one country is compensated by faster recovery in another. Finnlines continuously monitors the solidity and payment schedules of its customers and suppliers. Currently, there are no indications of imminent risks related to counterparties but the Company continues to monitor the financial position of its counterparties. Finnlines holds adequate credit lines to maintain liquidity in the current business environment. More detailed information on Finnlines financial risks and risk management can be found in the Notes to the Consolidated Financial Statements, in Note 33. Financial Risk Management. The risk management procedures of the Company are presented in more detail on the Company s website under Corporate Governance. LEGAL PROCEEDINGS The District Court of Helsinki rendered in February 2015 its decision on the dispute between Finnlines Plc and the State of Finland. According to Finnlines Plc, the Finnish Act on Fairway Dues in force until 1 January 2006 contained provisions which, according to EU law, were discriminatory. The Company has been charged excessive fairway dues during In its 26

29 decision, the District Court of Helsinki ordered the State of Finland to refund to Finnlines Plc, as plaintiffs, the fairway dues, charged in excessive extent in totalling about EUR 17.0 million, including interest. The Finnish State appealed to the Helsinki Court of Appeal. The Court of Appeal rendered its decision in August 2016 by dismissing the judgment rendered by the District Court of Helsinki. The Court of Appeal considers that the claims of Finnlines have expired. The Company has submitted the leave to appeal at the Supreme Court. The case is pending. The Company has summoned OMB Ostsee Mineralöl-Bunker GmbH ( OMB ) Rostock, Germany, to the District Court and demanded compensation for the damage that has occurred to the Company for the price difference between the paid amount for the supplied fuel and the market price. The Company's basis for the demand is that OMB has abused its dominant position in the relevant market and the Company was forced to buy fuel from OMB, OMB being the sole supplier. The total claimed amount is EUR 2.76 million. In its decision the District Court of Rostock dismissed the Company's claims in full. The Company has decided to appeal the District Court's decision to the Court of Appeal. The case is pending. The Company s port operations subsidiaries have received a summons from 18 former employees. All employees claim compensation based on groundless termination of their employment contracts and compensation according to the Non-Discrimination Act. The total amount of the claims is EUR 2.2 million. The subsidiaries consider the basis of the claims to be groundless. The case is pending. TONNAGE TAXATION Finnlines Plc entered into the Finnish tonnage taxation regime as from 1 January In tonnage taxation, the shipping operations transferred from taxation of business income to tonnagebased taxation. Finnlines Deutschland GmbH exited from the German tonnage tax scheme and transferred to business taxation on 1 February ENVIRONMENT AND SAFETY Operating in ecologically sensitive areas, the objective of Finnlines safety and environmental policy is to provide safe, topquality services while making efforts to minimise the environmental impacts in every aspect of operations. In 2016, Finnlines continued to implement its Environmental Technology Investment Programme, which will amount to EUR 100 million. The programme includes the installation of exhaust gas scrubbers, investments in propulsion and reblading, and silicone anti-fouling. The IMO Ballast Water Management Convention will become effective on 8 September 2017, which means that ships must be fitted with treatment equipment by the first renewal survey. Furthermore, exchange of ballast water will be mandatory after the entry-into-force date. Finnlines has investigated different technologies and contacted equipment suppliers. In 2016, Finnlines vessel traffic consumed 310,662 tons of heavy fuel oil and diesel oil, representing an increase of 2.9 per cent compared with In 2015, fuel consumption of vessels was exceptionally low due to a large number of dockings. In 2016, the fuel consumption of the port operations totalled some 810 tons, which includes the operations in Helsinki, Turku and Naantali, an increase of nearly 8 per cent compared with CORPORATE GOVERNANCE The Corporate Governance Statement can be reviewed on the corporate website: EVENTS AFTER THE REPORTING PERIOD There are no significant events to report. OUTLOOK AND OPERATING ENVIRONMENT Finnlines is starting a new capital expenditure project on its fleet. We are in the process of lengthening several of our vessels for greater efficiency and better fuel economy. Finnlines Group s result before taxes is expected to improve over the previous year s high level. DIVIDEND DISTRIBUTION PROPOSAL The parent company Finnlines Plc s result for the reporting period was EUR 56.0 million. The Board of Directors proposes to the General Meeting that the General Meeting authorise the Board of Directors to decide, at its discretion, on the payment of dividend up to Finnlines Plc s result for the reporting period in According to the consolidated statement of financial position, the equity attributable to parent company shareholders equals EUR (561.1) million at the end of the reporting period. Naples, 23 February 2017 Finnlines Plc, The Board of Directors FINNLINES

30 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME, IFRS EUR 1,000 1 Jan 31 Dec Jan 31 Dec 2015 Revenue 473, ,167 Other income from operations 6,652 1,810 Materials and services -126, ,264 Personnel expenses -89,753-84,186 Depreciation, amortisation and impairment losses -57,587-56,590 Other operating expenses -125, ,654 Total operating expenses -398, ,694 Result before interest and taxes (EBIT) 81,528 70,284 Financial income Financial expense -14,978-18,064 Result before taxes (EBT) 66,961 53,153 Income taxes 1,162 3,675 Result for the reporting period 68,124 56,829 Other comprehensive income: Other comprehensive income to be reclassified to profit and loss in subsequent periods: Exchange differences on translating foreign operations Tax effect, net 0 0 Other comprehensive income to be reclassified to profit and loss in subsequent periods, total Other comprehensive income to be reclassified to profit and loss in subsequent periods, total Remeasurement of defined benefit plans Tax effect, net Other comprehensive income not being reclassified to profit and loss in subsequent periods, total Total comprehensive income for the reporting period 68,041 57,457 Result for the reporting period attributable to: Parent company shareholders 68,133 56,841 Non-controlling interests ,124 56,829 Total comprehensive income for the reporting period attributable to: Parent company shareholders 68,051 57,469 Non-controlling interests ,041 57,457 Result for the reporting period attributable to parent company shareholders calculated as earnings per share (EUR/share) Undiluted / diluted earnings per share Most of the items recognised in the Consolidated Statement of Comprehensive Income fall under the tonnage tax scheme. This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. 28

31 CONSOLIDATED STATEMENT OF FINANCIAL POSITION, IFRS EUR 1, Dec Dec 2015 ASSETS Non-current assets Property, plant and equipment 982, ,619 Goodwill 105, ,644 Other intangible assets 3,529 3,758 Other financial assets 4,580 4,576 Receivables 1,720 1,258 Deferred tax assets 5,646 5,792 1,103,747 1,118,645 Current assets Inventories 6,700 4,333 Accounts receivable and other receivables 77,749 86,019 Income tax receivables Cash and cash equivalents 1,943 6,468 86,551 97,359 Non-current assets held for sale 15,121 15,121 Total assets 1,205,419 1,231,125 EQUITY Equity attributable to parent company shareholders Share capital 103, ,006 Share premium account 24,525 24,525 Translation differences Fund for invested unrestricted equity 40,016 40,016 Retained earnings 420, , , ,070 Non-controlling interests Total equity 588, ,363 LIABILITIES Long-term liabilities Deferred tax liabilities 51,425 52,712 Other long-term liabilities Pension liabilities 3,817 3,919 Provisions 1,757 1,810 Loans from financial institutions 322, , , ,999 Current liabilities Accounts payable and other liabilities 65,174 59,191 Current tax liabilities 9 14 Provisions Loans from financial institutions 171, , , ,287 Total liabilities 617, ,286 Liabilities related to long-term assets held for sale 241 7,476 Total shareholders equity and liabilities 1,205,419 1,231,125 This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. FINNLINES

32 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY, IFRS EUR 1,000 Share capital Equity attributable to parent company shareholders Share issue premium Translation differences Fund for invested unrestricted equity Retained earnings Total Noncontrolling interests Reported equity 1 January ,006 24, , , , ,907 Comprehensive income for the year: Result for the reporting period 56,841 56, ,829 Exchange differences on translating foreign operations Remeasurement of defined benefit plans Tax effect, net Total comprehensive income for the year 32 57,437 57, ,457 Dividend Equity 31 December ,006 24, , , , ,363 Total equity EUR 1,000 Share capital Equity attributable to parent company shareholders Share issue premium Translation differences Fund for invested unrestricted equity Retained earnings Total Noncontrolling interests Reported equity 1 January ,006 24, , , , ,363 Comprehensive income for the year: Result for the reporting period 68,133 68, ,124 Exchange differences on translating foreign operations Remeasurement of defined benefit plans Tax effect, net Total comprehensive income for the year ,129 68, ,046 Dividend -41,203-41, ,309 Equity 31 December ,006 24, , , , ,100 Total equity This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. 30

33 CONSOLIDATED STATEMENT OF CASH FLOWS, IFRS EUR 1,000 1 Jan 31 Dec Jan 31 Dec 2015 Cash flows from operating activities Result for reporting period 68,124 56,829 Adjustments: Non-cash transactions 52,461 56,192 Unrealised foreign exchange gains (-) / losses (+) Financial income and expenses 14,577 17,187 Taxes -1,162-3,675 Changes in working capital: Change in accounts receivable and other receivables 1,565-2,009 Change in inventories -2,367 1,592 Change in accounts payable and other liabilities 6,471-2,515 Change in provisions Interest paid -11,394-14,240 Interest received Taxes paid Other financing items -3,842-3,632 Net cash generated from operating activities 124, ,794 Cash flows from investing activities Investments in tangible and intangible assets * -38,450-78,897 Sale of tangible assets ** 8, Proceeds from sale of investments -5 Dividends received Net cash used in investing activities -29,632-78,085 Cash flows from financing activities Loan withdrawals 205, ,000 Net increase (+) / decrease (-) in current interest-bearing liabilities 8,035 32,447 Repayment of loans -271, ,550 Loans granted Increase / decrease in non-current receivables Dividends paid -41,309 Net cash used in financing activities -99,736-23,922 Change in cash and cash equivalents -4,523 3,787 Cash and cash equivalents 1 January 6,468 2,680 Effect of foreign exchange rate changes -3 1 Cash and cash equivalents 31 December 1,943 6,468 * Investments include environmental aid granted by the European Union, of which the Group has received EUR 6.7 (5.8) million during the reporting period ** Includes sale of one vessel. This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. FINNLINES

34 PROFIT AND LOSS ACCOUNT, PARENT COMPANY, FAS EUR 1 Jan 31 Dec Jan 31 Dec 2015 Revenue 365,578, ,551, Other income from operations 3,975, ,725, Materials and services -119,963, ,434, Personnel expenses -45,630, ,143, Depreciation, amortisation and other write-offs -30,971, ,459, Other operating expenses -110,190, ,048, Operating profit 62,798, ,190, Financial income and expenses -9,231, ,159, Result before appropriations and taxes 53,566, ,031, Appropriations Group contributions -2,410, , Profit before tax 51,156, ,231, Other income taxes Tonnagetax -82, , Deferred taxes 4,943, ,658, Result for the reporting period 56,017, ,798, This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. 32

35 BALANCE SHEET, PARENT COMPANY, FAS EUR 31 Dec Dec 2015 ASSETS Non-current assets Intangible assets 2,560, ,819, Tangible assets 660,143, ,686, Investments Shares in group companies 159,480, ,480, Other investments 4,611, ,606, Total non-current assets 826,794, ,592, Current assets Inventories 5,629, ,552, Long-term receivables 163,424, ,954, Short-term receivables 84,367, ,869, Bank and cash 604, ,969, Total current assets 254,025, ,345, Total assets 1,080,820, ,176,938, SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity Share capital 103,006, ,006, Share premium account 24,525, ,525, Unrestricted equity reserve 40,882, ,882, Retained earnings 270,675, ,079, Result for the reporting period 56,017, ,798, Total shareholders equity 495,107, ,292, Statutory provisions Pension obligation 719, , Liabilities Long-term liabilities Deferred tax liability 27,480, ,424, Interest-bearing 304,525, ,935, ,006, ,360, Current liabilities Interest-bearing 203,539, ,621, Interest-free 49,448, ,047, ,987, ,669, Total liabilities 584,994, ,029, Total shareholders equity and liabilities 1,080,820, ,176,938, This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. FINNLINES

36 CASH FLOW STATEMENT, PARENT COMPANY, FAS EUR 1 Jan 31 Dec Jan 31 Dec 2015 Cash flows from operating activities Result for the reporting period 56,017, ,798, Adjustments for: Depreciation, amortisation & impairment loss 30,971, ,459, Gains (-) and Losses (+) of disposals of fixed assets and other non-current assets -624, , Financial income and expenses 9,231, ,159, Income taxes -4,861, ,567, Other adjustments 2,410, , ,145, ,437, Changes in working capital: Change in inventories, addition (-) and decrease (+) -2,076, ,362, Change in accounts receivable, addition (-) and decrease (+) 4,185, ,337, Change in accounts payable, addition (+) and decrease (-) 6,340, ,874, Change in provisions 102, , ,696, ,068, Interest paid -10,493, ,062, Dividends received 90,387, Interest received 4,076, ,704, Other financing items -3,321, ,867, Income taxes paid -89, , ,558, ,306, Net cash generated from operating activities 182,255, ,762, Cash flows from investing activities Investments in tangible and intangible assets -27,339, ,993, Proceeds from sale of tangible and intangible assets 559, , Investment in subsidiary -6,685, Investments in other shares -231, Change in internal loans (net) -4,502, ,210, Net cash used in investing activities -31,514, ,159, Net cash before financing activities 150,740, ,602, Cash flows from financing activities Proceeds from short-term borrowings 33,717, Repayment of short-term borrowings -1,243, Proceeds of long-term borrowings 195,000, ,400, Repayment of long-term borrowings -340,210, ,815, Dividends paid -41,202, Group contributions -2,410, , Net cash used in financing activities -155,105, ,458, Change in cash and cash equivalents -4,365, ,143, Cash and cash equivalents on 1 January 4,969, , Cash and cash equivalents on 31 December 604, ,969, This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. 34

37 FIVE-YEAR KEY FIGURES EUR million IFRS IFRS IFRS IFRS IFRS Revenue Other income from operations Result before interest, taxes, depreciation and amortisation (EBITDA) % of revenue Result before interest and taxes (EBIT) % of revenue Associated companies Result before taxes (EBT) % of revenue Result for reporting period, continuing operations % of revenue Result for reporting period, discontinuing operations Result for reporting period % of revenue Total investments * % of revenue Return on equity (ROE), % Return on investment (ROI), % Assets total 1, , , , ,479.9 Equity ratio, % Gearing, % Average no. of employees 1,653 1,597 1,701 1,861 2, IFRS IFRS IFRS IFRS IFRS Earnings per share (EPS), EUR Earnings per share (EPS) less warrant dilution, EUR Shareholders equity per share, EUR Payout ratio, % n/a Effective dividend yield, % n/a Price/earnings ratio (P/E) n/a n/a Adjusted average number of outstanding shares (1,000) 51,503 51,503 51,503 49,782 47,344 Adjusted number of outstanding shares 31 Dec (1,000) 51,503 51,503 51,503 51,503 47,344 Number of outstanding shares at year-end (1,000) 51,503 51,503 51,503 51,503 46,821 * Includes continuing and discontinuing operations. Calculation of key ratios is presented on page 36. This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. FINNLINES

38 CALCULATION OF KEY RATIOS, IFRS Earnings per share (EPS), EUR = Result attributable to parent company shareholders Weighted average number of outstanding shares Shareholders equity per share, EUR = Shareholders equity attributable to parent company shareholders Undiluted number of shares at the end of period Payout ratio, % = Dividend paid for the year Result before tax +/ non-controlling interests of Group result +/ change in deferred tax liabilities taxes for the period x 100 Effective dividend yield, % = Dividend per share Share price on stock exchange at the end of period x 100 P/E ratio = Share price on stock exchange at the end of period Earnings per share Return on equity (ROE), % = Result for the reporting period Total equity (average) x 100 Return on investment (ROI), % = Result before tax + interest expense + other liability expenses Assets total interest-free liabilities (average) x 100 Gearing, % = Interest-bearing liabilities cash and bank equivalents Total equity x 100 Equity ratio, % = Total equity Assets total received advances x 100 The recognised income taxes are based on the year s estimated average income tax rate which is expected to realise during the entire reporting period. Finnlines Plc s Shipping and Sea Transport Services transferred to tonnage-based taxation in January This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. 36

39 QUARTERLY DATA, IFRS EUR million Q1/2016 Q1/2015 Q2/2016 Q2/2015 Q3/2016 Q3/2015 Q4/2016 Q4/2015 Revenue by segment Shipping and Sea Transport Services total Sales to third parties Sales to Port Operations Port Operations total Sales to third parties Sales to Port Operations Group internal revenue Revenue total Result before interest and taxes per segment Shipping and Sea Transport Services Port Operations Result before interest and taxes (EBIT) total Financial income and expenses Result before tax (EBT) Income taxes Result for the reporting period Quarterly consolidated key figures Result before interest and taxes, (% of revenue) Earnings per share, EUR Average number of outstanding shares (1,000) 51,503 51,503 51,503 51,503 51,503 51,503 51,503 51,503 This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. FINNLINES

40 BOARD S PROPOSAL FOR THE USE OF THE DISTRIBUTABLE FUNDS AND SIGNATURES TO THE BOARD OF DIRECTORS REPORT AND TO THE FINANCIAL STATEMENTS Distributable funds included in the parent company s shareholders equity on 31 December 2016: Retained earnings EUR 270,675, Unrestricted equity reserve EUR 40,882, Result for the reporting period EUR 56,017, Distributable funds total EUR 367,575, The Board of Directors proposes to the General Meeting that the General Meeting authorise the Board of Directors to decide, at its discretion, on the payment of dividend up to Finnlines Plc s result for the reporting period in Naples, 23 February 2017 Jon-Aksel Torgersen Chairman of the Board Christer Backman Tiina Bäckman Gianluca Grimaldi Diego Pacella Olav K. Rakkenes Emanuele Grimaldi President and CEO THE AUDITOR S NOTE Our auditor s report has been issued today. Helsinki, 23 February 2017 KPMG Oy Ab Kimmo Antonen Authorized Public Accountant This page is an extract of the audited Financial Statements. The complete audited Financial Statements of the Group and the parent company are available at The extracts of the audited Financial Statements presented in the Annual Report should be viewed together with the complete and audited Financial Statements. 38

41 AUDITOR S REPORT This document is an English translation of the Finnish auditor s report. Only the Finnish version of the report is legally binding. TO THE ANNUAL GENERAL MEETING OF FINNLINES OYJ REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OPINION We have audited the financial statements of Finnlines Oyj (business identity code ) for the year ended 31 December, The financial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies, as well as the parent company s balance sheet, income statement, statement of cash flows and notes. In our opinion - the consolidated financial statements give a true and fair view of the group s financial performance, financial position and cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU - the financial statements give a true and fair view of the parent company s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. BASIS FOR OPINION We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THE MANAGING DIRECTOR FOR THE FINANCIAL STATEMENTS The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company s and the group s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so. AUDITOR S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company s or the group s internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. - Conclude on the appropriateness of the Board of Directors and the Managing Director s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company s or the group s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. - We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. OTHER REPORTING REQUIREMENTS OTHER INFORMATION The Board of Directors and the Managing Director are responsible for the other information. The other information comprises information included in the report of the Board of Directors. Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the information included in the report of the Board of Directors and, in doing so, consider whether the information included in the report of the Board of Directors is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. If, based on the work we have performed, we conclude that there is a material misstatement in the information included in the report of the Board of Directors, we are required to report this fact. We have nothing to report in this regard. OTHER OPINIONS We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of the profit shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the Members of the Board of Directors and the Managing Director should be discharged from liability for the financial period audited by us. Helsinki, 23 February 2017 KPMG Oy Ab Kimmo Antonen Authorized Public Accountant Auditors report issued for the Board of Directors report and Financial Statements for the year ended on 31 December 2016 is available at FINNLINES

42 FINNLINES PLC CORPORATE GOVERNANCE STATEMENT Finnlines Plc applies the guidelines and provisions of the Finnish Limited Liability Companies Act and its own Articles of Association. Finnlines also applies the Finnish Corporate Governance Code for listed companies entered into force on 1 January 2016 with regard to Finnlines Corporate Governance Statement for the financial period ended on 31 December The Code is publicly available on This Corporate Governance Statement has been approved by Finnlines Board. TASKS AND RESPONSIBILITIES OF GOVERNING BODIES Management of the Finnlines Group is the responsibility of the Board of Directors elected by the General Meeting as well as of the President and CEO. Their duties are for the most part defined by the Finnish Limited Liability Companies Act. Day-to-day operational responsibility lies with the members of the Extended Board of Management supported by relevant staff and service functions. GENERAL MEETING OF SHAREHOLDERS The ultimate decision-making body in the Company is the General Meeting of Shareholders. It resolves issues as defined for the General Meeting in the Finnish Limited Liability Companies Act and the Company s Articles of Association. These include approving the financial statements, deciding on the distribution of dividends, discharging the Company s Board of Directors and CEO from the liability for the financial year, appointing the Company s Board of Directors and auditors and deciding on their remuneration. A General Meeting of Finnlines Plc is held at least once a year. The Annual General Meeting (AGM) must be held no later than the end of June. The notice to the Shareholders Meeting shall be given no earlier than three (3) months before the Shareholders Meeting and no later than one (1) week before the Shareholders Meeting. ANNUAL GENERAL MEETING 2016 The Annual General Meeting of Finnlines Plc approved the Financial Statements and discharged the members of the Board of Directors and the Company's President and CEO and the Company's officers from liability for the financial year The Meeting approved the Board of Directors proposal not to pay any dividend. AGM decided that the Board of Directors shall have seven members. The following were re-elected to the Board: Mr Christer Backman, Ms Tiina Bäckman, Mr Emanuele Grimaldi, Mr Gianluca Grimaldi, Mr Diego Pacella, Mr Olav K. Rakkenes and Mr Jon-Aksel Torgersen. The Board elected Mr Jon-Aksel Torgersen Chairman and Mr Diego Pacella Vice Chairman. The firm of authorised public accountants KPMG Oy Ab was appointed as the Company s auditors for AGM decided to authorise the Board of Directors to resolve on the issuance of shares in one or several tranches. The Board of Directors may, on the basis of the authorisation, resolve on the issuance of shares in one or several tranches, so that the aggregate number of shares to be issued shall not exceed 10,000,000 shares. The Board of Directors decides on all the conditions of the issuance of shares. The issuance of shares may be carried out in deviation from the shareholders' pre-emptive rights (directed issue). The authorisation is valid until the next Annual General Meeting. The authorisation replaces the Annual General Meeting s authorisation to decide on a share issue of 14 April All related documents can be found on Finnlines website: > About us > Corporate Governance > General Meeting DECISIONS TAKEN BY THE EXTRAORDINARY GENERAL MEETING Finnlines Plc s Extraordinary General Meeting was held on 20 December The Extraordinary General Meeting decided, in accordance with the proposal of the Board of Directors, to distribute a dividend of EUR 0.80 per share. The dividend was paid to shareholders on 30 December

43 BOARD OF DIRECTORS Responsibility for the management of the Company and proper organisation of its operations lies with the Company s Board of Directors, which has at least five (5) and at most eleven (11) members. The members of the Board are appointed by AGM for one year at a time. The majority of the directors shall be independent of the Company and at least two of the directors representing this majority shall be independent from significant shareholders of the Company. Information on the Board composition, Board members and their independence can be found on Finnlines website. The President and CEO is a member of the Board. The proposal for the Board composition shall be included in the notice of AGM. The names of candidates for membership of the Board of Directors, put forward by the Board of Directors or by shareholders with a minimum holding of 10 per cent of the Company s voting rights, are published in the notice of the AGM, provided that the candidates have given their consent to the election. The candidates proposed thereafter shall be disclosed separately. The Board elects a chairman and a deputy chairman from among its members. The Board steers and supervises the Company s operations, and decides on policies, goals and strategies of major importance. The principles applied by the Board in its regular work are set out in the Rules of Procedure approved by the Board. The Board handles all issues in the presence of the entire Board. The Board does not have any separate committees. The Board considers all the matters stipulated to be the responsibility of a board of directors by legislation, other provisions and the Company s Articles of Association. Due to the limited extent of the Company s business, it is considered effective that the entire Board also handles the duties of the audit committee, the nomination committee as well as those of the remuneration committee. THE MAIN DUTIES AND WORKING PRINCIPLES DRAWN UP BY THE BOARD ARE: the annual and interim financial statements the matters to be put before General Meetings of Shareholders the appointment and dismissal of the President and CEO, the Deputy CEO, if any, and the members of the Executive Committee approval of internal supervision and organisation of the Company s financial supervision other matters related to the duties of the audit committee mentioned in the Finnish Corporate Governance Code approval of the Group s strategic plan and long-term goals approval of the Group s annual business plan and budget decisions concerning investments, acquisitions, or divestments that are significant or that deviate from the Group s strategy decisions on raising long-term loans and the granting of security or similar collateral commitments risk management principles the Group s organisational structure approval of the remuneration and pension benefits of the President and CEO, the Deputy CEO, if any, and the members of the Executive Committee monitoring and assessment of the performance of the President and CEO. In addition to matters requiring decisions, Board meetings are given updates on the Group s operations, financial position and risks. The Board of Directors reviews its operations and working methods annually. The Board convenes 6 8 times a year following a predetermined schedule. In addition to these meetings, the Board convenes as necessary. BOARD OF DIRECTORS 2016 In 2016, the Board consisted of 7 members: Mr Jon-Aksel Torgersen, Chairman of the Board, born 1952, MBA, CEO of Astrup Fearnley AS, attended meetings: 12/12 Mr Diego Pacella, Vice Chairman of the Board, born 1960, Degree with honours in Mech. Eng., Managing Director of Grimaldi Deep Sea S.p.A., attended meetings: 12/12 Mr Christer Backman, born 1945, M.Pol.Sc., attended meetings: 12/12 Ms Tiina Bäckman, born 1959, Master of Laws, Chairman of the Board of Pension Foundation of Rautaruukki, attended meetings: 12/12 Mr Emanuele Grimaldi, born 1956, Degree in Economics and Commerce, Managing Director of Grimaldi Group S.p.A., President and CEO of Finnlines Plc, attended meetings: 12/12 Mr Gianluca Grimaldi, born 1955, Degree in Economics and Commerce, Managing Director of Grimaldi Euromed S.p.A., attended meetings: 12/12 Mr Olav K. Rakkenes, born 1945, Master s License, former CEO of Atlantic Container Line AB, attended meetings: 11/12 >> FINNLINES

44 CORPORATE GOVERNANCE STATEMENT (CONTINUED) During 2016, Finnlines Plc s Board of Directors held 12 meetings. The present Board of Directors can be found on Finnlines website: > About us > Corporate Governance > Board of Directors INDEPENDENCE OF THE BOARD OF DIRECTORS Four Members, Mr Christer Backman, Ms Tiina Bäckman, Mr Olav K. Rakkenes and Mr Jon-Aksel Torgersen, are independent of the Company and of the major shareholders. Mr Gianluca Grimaldi and Mr Diego Pacella are independent of the Company. Mr Emanuele Grimaldi is dependent of the Company and the shareholders. The Company has an Extended Board of Management, headed by the President and CEO, which comprises, in addition to the Board of Management, heads of other agencies, the Company's internal auditor, as well as Junior Managers. The Extended Board of Management convenes regularly to discuss operative issues related to the Group business and service products. The retirement age of the members of the Extended Board of Management is based on local laws and there are no special pension schemes in place. Information on the members of the Executive Committee, the Board of Management, and the Extended Board of Management, including their areas of responsibility, is given on Finnlines' website: > About us > Corporate Governance > Management PRESIDENT AND CEO AND DEPUTY CEO The Board of Directors appoints a President for the Group who is also its Chief Executive Officer. The President and CEO is in charge of the day-to-day management of the Company and its administration in accordance with the Company s Articles of Association, the Finnish Limited Liability Companies Act and the instructions of the Board of Directors. He is assisted in this work by the Executive Committee. The current President and CEO of the Company is Mr Emanuele Grimaldi (born 1956, Degree in Economics and Commerce, University of Naples, Italy). He does not receive any compensation or other benefit in the form of salary, bonus or pension benefit from the Company. The Board of Directors appoints, if necessary, a Deputy CEO. The Company has no Deputy CEO at present. EXECUTIVE COMMITTEE AND BOARD OF MANAGEMENT The members of the Executive Committee are appointed by the Board of Directors. The Executive Committee convenes regularly, and is chaired by the President and CEO. The Executive Committee supports the President and CEO in his duties in implementing Group-level strategies and guidelines, in coordinating the Group s management, in finding practical solutions for reaching the targets determined by the Board, and in supervising the Company s operations. The Company has a Board of Management, headed by the President and CEO, which consists of the members of the Executive Committee and the heads of functions and Line Managers as well as heads of the main agencies. The heads of functions are responsible for the sales volumes and profitability of their respective units. The Board of Management supports the Executive Committee in their work upon request. COMPENSATION The remunerations paid to the members of the Board of Management, and the principles underlying it, are determined by the Board of Directors. The members of the Extended Board of Management are included in a bonus scheme which is decided by the Board of Directors on a yearly basis. The Board of Directors also decides on any separate performance-based compensation schemes for the management. The bonuses are paid in cash. There are no other bonus schemes. REMUNERATION IN 2016 The annual remuneration for the Board of Directors in 2016 was EUR 50,000 for the Chairman, EUR 40,000 for the Vice Chairman and EUR 30,000 for the other Board members. The remuneration of the Board of Directors has remained the same as from A detailed specification of the management contracts, salaries, remuneration and benefits paid in 2016 is given in the Financial Statements of 2016, Transactions with Related Parties, and in Finnlines Remuneration Statement 2016 on Finnlines website: > About us > Corporate Governance > Compensation 42

45 INTERNAL AUDIT The Group s internal audit is handled by the Company s Internal Audit unit, which reports to the Chairman and the President and CEO. The purpose of the Internal Audit is to analyse the Company s operations and processes and the effectiveness and quality of its supervision mechanisms. The unit assists Finnlines to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the internal control and governance processes. The Internal Audit unit carries out its task by determining whether the Company s risk management, internal control and governance processes, as designed and represented by the management, are adequate and functioning in a manner to ensure that: Risks are appropriately identified and managed. Interaction with the various governance groups occurs as needed. Significant financial, managerial and operating information is accurate, reliable and timely. Employees actions are in compliance with policies, standards, procedures and applicable laws and regulations. Resources are acquired economically, used efficiently and adequately protected. Programs and plans are properly implemented and objectives are achieved. Quality and continuous improvement are fostered in the Company s internal control processes. Significant legislative or regulatory issues impacting the Company s internal controls are recognised and addressed appropriately. The head of the Internal Audit unit prepares an annual plan using an appropriate risk-based methodology and taking into consideration potential risks or control concerns identified by the management. The scope of the audits within a fiscal year is planned so that it is representative and the focus is set on the business areas with the biggest risk potentials. The plan is approved by the President and CEO. The internal auditor also carries out special tasks assigned by the Chairman, the President and CEO or the Board of Directors. The internal auditor conducts the internal audits independently from operational units. In his auditing work the auditor complies with the corporate governance, ethical principles, policies and other guidelines of the Company as well as generally accepted standards for the professional practice of Internal Auditing. The audit reports are sent to the President and CEO, the CFO and also to the Chairman. The President and CEO and the CFO have at least once a year a closed session with the head of Internal Audit unit about the results of the conducted audits and the plans for the next period. Relevant issues are also brought to the attention of the Board of Directors. RISK MANAGEMENT Internal control in Finnlines is designed to support the Company in achieving its targets. The risks related to the achievement of the targets need to be identified and evaluated in order to be able to manage them. Thus, identification and assessment of risks is a prerequisite for internal control in Finnlines. Internal control mechanisms and procedures provide management assurance that the risk management actions are carried out as planned. Conscious and carefully evaluated risks are taken in selecting strategies, e.g. in expanding business operations, in enhancing market position and in creating new business. Financial, operational and damage/loss risks are avoided or reduced. The continuity of operations is ensured by safeguarding critical functions and essential resources. Crisis management, continuity and disaster recovery plans are prepared. The costs and resources involved in risk management are in proportion to the obtainable benefits. The Board of Directors of Finnlines is responsible for defining the Group s overall level of risk tolerance and for ensuring that Finnlines has adequate tools and resources for managing risks. The President and CEO, with the assistance of the Executive Committee, is responsible for organising and ensuring risk management in all Finnlines operations. Responsibilities for the Group s working capital, investments, financing, finances, human resources, communications, information management and procurement are centralised to the head office of the Company. The Group s payment transactions, external and internal accounting are managed centrally by the Financial Department, which reports to the CFO. The Group s foreign exchange and interest exposure is reviewed by the Board of Directors in each budgeting period. External long-term loan arrangements are submitted to the Board of Directors for approval. The Corporate Legal Affairs and Insurance unit is responsible for risks associated with the Company s noncurrent assets and any interruptions in operations, as well as for the management and coordination of the Group s insurance policies. The majority of the Group s non-current assets consist of its fleet. The fleet is >> FINNLINES

46 CORPORATE GOVERNANCE STATEMENT (CONTINUED) always insured to its full value. The financial position and creditworthiness of the Group s customers are monitored continuously in order to minimise the risk of customer credit losses. Each business unit has a responsible controller who reports to the head of the relevant business unit and to the Group CFO. The heads of Finnlines business units are responsible for the profit and working capital of their units. They set the operational targets for their units and ensure that resources are used efficiently and that operations are evaluated and improved. Finnlines most important strategic, operative and financial risks are described in the Financial Statements 2016, Financial Risk Management. INTERNAL CONTROL OVER THE FINANCIAL REPORTING Monitoring is a process that assesses the quality of Finnlines system of internal control and its performance over time. Monitoring is performed both on an ongoing basis, and through separate evaluations including internal, external and quality audits. The business unit is responsible for ensuring that relevant laws and regulations are complied with in their respective responsibility areas. The Internal Audit function assists the President and CEO and the Board of Directors in assessing and assuring the adequacy and effectiveness of internal controls and risk management by performing regular audits in the Group s legal entities and support functions according to its annual plan. Finnlines external auditor and other assurance providers such as quality auditors conduct evaluations of the Company s internal controls. The Company s financial performance is reviewed at each Board meeting. The Board reviews all interim and annual financial reports before they are released. The effectiveness of the process for assessing risks and the execution of control activities are monitored continuously at various levels. This involves reviews of results in comparison with budgets and plans. Responsibility for maintaining an effective control environment and operating the system for risk management and internal control of financial reporting is delegated to the President and CEO. The internal control in the Company is based on the Group s structure, whereby the Group s operations are organised into two segments and various business areas and support functions. Group functions issue corporate guidelines that stipulate responsibilities and authority, and constitute the control environment for specific areas, such as finance, accounting, and investments, purchasing and sales. The Company has a compliance program. Standard requirements have been defined for internal control over financial reporting. The management expects all employees to maintain high moral and ethical standards and those expectations are communicated to the employees through internal channels. The Group Finance & Control unit monitors that the financial reporting processes and controls are being followed. It also monitors the correctness of external and internal financial reporting. The external auditor verifies the correctness of external annual financial reports. The Board monitors the statutory audit of the financial statements and consolidated financial statements, evaluates the independence of the statutory auditor or audit firm, particularly the provision of related services to the Company and prepares the proposal for resolution on the election of the auditor. The Board reviews annually the description of the main features of the internal control and risk management systems in relation to the financial reporting process, which is included in this Corporate Governance Statement. INFORMATION MANAGEMENT An effective internal control system needs sufficient, timely and reliable information to enable the management to follow up the achievement of the Company s objectives. Both financial and non-financial information is needed, relating to both internal and external events and activities. Information management plays a key role in Finnlines internal control system. Information systems are critical for effective internal control as many of the control activities are programmed controls. 44

47 The controls embedded in Finnlines business processes have a key role in ensuring effective internal control in Finnlines. Controls in the business processes help ensure the achievement of all the objectives of internal control in Finnlines, especially those related to the efficiency of operations and safeguarding Finnlines profitability and reputation. Business units and IT management are responsible for ensuring that in their area of responsibility the defined Group level processes and controls are implemented and complied with. Where no Group level processes and controls exist, business units and IT management are responsible for ensuring that efficient business level processes with adequate controls have been described and implemented. The proper functioning of Finnlines information systems is guaranteed through extensive and thorough security programs and emergency systems. EXTERNAL AUDIT The Company has one auditor which shall be an auditing firm authorised by the Central Chamber of Commerce. The auditor is elected by the Annual General Meeting to audit the accounts for the ongoing financial year and its duties cease at the close of the subsequent Annual General Meeting. The auditor is responsible for auditing the consolidated and parent company s financial statements and accounting records, and the administration of the parent company. On closing of the annual accounts, the external auditor submits the statutory auditor s report to the Company s shareholders, and also regularly reports the findings to the Board of Directors. An auditor, in addition to fulfilling general competency requirements, must also comply with certain legal independence requirements guaranteeing the execution of an independent and reliable audit. INSIDER MANAGEMENT Finnlines shares or other securities are not listed. Therefore, Finnlines does not apply MAR or other regulations applicable to inside information relating to listed issuers. RELATED PARTY TRANSACTIONS The Company will assess and monitor transactions carried out with related parties and ensure that any conflicts of interests will be appropriately considered in the Company s decision-making. The Company maintains a list of related parties in its Group administration. The Company provides information on related party transactions according to the Limited Liability Companies Act and regulations governing the preparation of the financial statements in the review by the Board of Directors and notes to the financial statements. AUDITOR IN 2016 In 2016, the Annual General Meeting elected KPMG Oy Ab as the Company s auditor for the fiscal year Mr Kimmo Antonen, APA, has been appointed the head auditor. It was decided that the external auditors will be reimbursed according to invoice. In 2016, EUR 150 thousand was paid to the auditors in remuneration for the audit of the consolidated, parent company and subsidiary financial statements. During the same year, EUR 58 thousand was paid for consulting services not related to auditing. COMMUNICATIONS The principal information on Finnlines administration and management is published on the Company s website. All press releases are published on the Company s website as soon as they are made public. FINNLINES

48 BOARD OF DIRECTORS 31 DECEMBER 2016 JON-AKSEL TORGERSEN Chairman of the Board Member of Finnlines Board since 2007 Independent of the Company and major shareholders Born 1952 Master in Business Administration, University of St. Gallen, Switzerland Astrup Fearnley AS, CEO Current positions: Atlantic Container Line AB, Chairman Awilco LNG ASA, Board Member I.M. Skaugen ASA, Board Member Chairman and Board Member of a number of private companies DIEGO PACELLA Vice Chairman of the Board Member of Finnlines Board since 2007 Independent of the Company Born 1960 Degree in Mechanics Engineering, University of Naples, Italy Grimaldi Group S.p.A., Managing Director Grimaldi Deep Sea S.p.A., Managing Director Grimaldi Euromed S.p.A., Managing Director Grimaldi Group, Finance Director Current positions: Minoan Lines, Greece, Board Member Malta Motorways of the Sea Ltd, Board Member Atlantic Container Line AB, Board Member Finance Committee of Confitarma, Member CHRISTER BACKMAN Member of Finnlines Board since 2012 Independent of the Company and major shareholders Born 1945 M.Pol.Sc., Åbo Akademi University TIINA BÄCKMAN Member of Finnlines Board since 2012 Independent of the Company and major shareholders Born 1959 Master of Laws LL.M., University of Lapland Pension Foundation of Rautaruukki, Chairman to the Board Current positions: Oulun Puhelin Oyj Pension foundation, Chairman to the Board Legal Committee of Finnish Central Chamber of Commerce, Member, Vice Chairman Redemption Committee of Finnish Central Chamber of Commerce, Member Board Partners (Pohjois-Suomen Hallituspartnerit ry), Vice Chairman Finnish Company Law Association, Board Member EMANUELE GRIMALDI Member of Finnlines Board since 2006 President and CEO of Finnlines Plc Born 1956 Degree in Economics and Commerce, University of Naples, Italy General Certificate of Education (scientific), Military School Nunziatella, Naples, Italy Grimaldi Group S.p.A., Managing Director Grimaldi Deep Sea S.p.A., Managing Director Grimaldi Euromed S.p.A., President Current positions: Minoan Lines, Greece, President Malta Motorways of the Sea Ltd, President Atlantic Container Line AB, Board Member European Community Shipowners Associations, Past President and Board Member Interferry Inc, Board Member President of Italian Shipowner Association GIANLUCA GRIMALDI Member of Finnlines Board since 2007 Independent of the Company Born 1955 Degree in Economics and Commerce, University of Naples, Italy Honored as Cavaliere del Lavoro since 2014 Grimaldi Group S.p.A., President Grimaldi Deep Sea S.p.A., President Grimaldi Euromed S.p.A., Managing Director Current positions: Minoan Lines, Greece, Board Member Malta Motorways of the Sea, Board Member Atlantic Container Line AB, Board Member Antwerp Euro Terminal n.v. Antwerp (Belgium), President OLAV K. RAKKENES Member of Finnlines Board since 2007 Independent of the Company and major shareholders Born 1945 Master s Licence, Maritime College of Tromsø, Norway Current positions: Atlantic Container Line AB, Board Member Through Transport Mutual Club, Board Member More information on the members of the Board at 46

49 EXECUTIVE COMMITTEE 31 DECEMBER 2016 EMANUELE GRIMALDI President and CEO Member of Finnlines Board since 2006 Born 1956 Degree in Economics and Commerce General Certificate of Education (scientific), Military School Nunziatella, Naples, Italy THOMAS DOEPEL Head of Group Purchasing Born 1974 M.Sc. (Econ.), Master Mariner STAFFAN HERLIN Head of Group Marketing, Sales and Customer Service Line Manager Germany, North Sea ro-ro Born 1958 M.Sc. (Econ.) MIKAEL LINDHOLM Head of Ship Management Born 1958 Master Mariner, Business management education ANTONIO RAIMO Line Manager FinnLink, NordöLink & Russia Born 1975 M.Sc. (Banking and Economics), Master in Business Administration KIELO VESIKKO Head of Passenger Services Line Manager HansaLink & Hanko Rostock Born 1957 Diploma in Translation TOM PIPPINGSKÖLD CFO Born 1960 B.Sc., MBA TAPANI VOIONMAA Group General Counsel Born 1951 Master Mariner, LL M, Pg Dipl BOARD OF MANAGMENT 31 DECEMBER 2016 (IN ADDITION TO THE EXECUTIVE COMMITTEE) UWE BAKOSCH, Managing Director, Finnlines Deutschland GmbH DOMENICO FERRAIUOLO, Head of Port Operations CLAUS HØGH, Line Manager, Scandinavia ro-ro AGNIESZKA WALENCIAK, Line Manager, Hanko Gdynia line* KIMMO KOSTIA, Head of Group IT, Hardware SANTERI LAAKSO, Head of Financial Department SANNA SIMPANEN-MÄENPÄÄ, Group Business Controller KRISTIINA UPPALA, Head of Customer Service, Passenger Services VESA VÄHÄMAA, Head of Group IT, Software EXTENDED BOARD OF MANAGEMENT 31 DECEMBER 2016 (IN ADDITION TO THE BOARD OF MANAGEMENT) LUC HENS, Managing Director, Finnlines Belgium N.V. MERJA KALLIO-MANNILA, Head of Sales, Finland REIJO KROOK, Internal Auditor and Quality Manager BLASCO MAJORANA, Traffic Manager, North Sea TORSTI MUURI, Traffic Manager, Baltic Sea BRIAN ROLFE, Managing Director, Finnlines UK Limited TORKEL SAARNIO, Head of Truck and Trailer Segment * Member as from 1 January More information on the members of the Management at FINNLINES

50 YOUNGEST, LARGEST AND STRONGEST FLEET FINNLINES FLEET 31 DECEMBER 2016 RO-PAX VESSELS FINNMAID * (2006) FINNSTAR * (2006) FINNLADY * (2007) NORDLINK * (2007) Length, o.a. (m) Breadth, moulded (m) 30.5 DWT metric tons 8,964 / 8,982 / 8,761 / 8,846 GT 45,923 Total lane length (m) 4,215 Passengers 554 Speed (knots) 22 Ice Class 1A Super FINNCLIPPER * (1999) FINNEAGLE (1999) FINNFELLOW * (2000) Length, o.a. (m) Breadth, moulded (m) 29.5 DWT metric tons 7,209 / 8,073 / 7,267 GT 33,958 / 29,841 / 33,724 Total lane length (m) 3,079 / 2,459 / 2,918 Passengers 440 Speed (knots) 22 Ice Class 1A FINNPARTNER (1995 / 2007) FINNTRADER (1995 / 2007) Length, o.a. (m) Breadth, moulded (m) 28.7 DWT metric tons 9,017 / 9,061 GT 33,313 Total lane length (m) 3,050 Passengers 270 Speed (knots) 21 Ice Class 1A Super 48

51 RO-RO VESSELS FINNBREEZE * (2011) FINNSEA * (2011) FINNSKY * (2012) FINNSUN * (2012) FINNTIDE * (2012) FINNWAVE * (2012) Length, o.a. (m) Breadth, moulded (m) 26.5 DWT metric tons ~10,800 GT 28,002 Total lane length (m) 3,291 Speed (knots) 21 Ice Class 1A FINNMERCHANT * (2003) Length, o.a. (m) Breadth, moulded (m) 26.0 DWT metric tons 13,106 GT 23,235 Total lane length (m) 2,606 Speed (knots) 18 Ice Class 1A FINNMILL * (2002 / 2009) FINNPULP * (2002 / 2009) Length, o.a. (m) Breadth, moulded (m) 26.5 DWT metric tons 11,744 / 11,682 GT 25,732 Total lane length (m) 3,259 Speed (knots) 20 Ice Class 1A FINNKRAFT * (2000) FINNHAWK * (2001) Length, o.a. (m) Breadth, moulded (m) 20.6 DWT metric tons 9,041 / 9,035 GT 11,671 Total lane length (m) 1,853 Speed (knots) 20 Ice Class 1A Super FINNCARRIER * (1998) FINNMASTER * (1998) Lenght, o.a. (m) Breadth, moulded (m) 22.7 DWT, metric tons 8,689 / 8,647 GT 12,433 Total lane length (m) 1,775 Speed (knots) 20 Ice Class 1A Super * Exhaust gas scrubbers installed. DWT: Deadweight Tonnage GT: Gross Tonnage FINNLINES

52 OPERATING AREAS Finnlines main operating areas are the Baltic Sea and the North Sea. With more than 170 weekly freight departures and 80 passenger departures, Finnlines today provides efficient shipping services. Hull Tilbury Amsterdam Antwerp Zeebrugge El Ferrol Santander Bilbao 50

53 Kapellskär Långnäs Rauma Uusikaupunki Naantali Turku Hanko Helsinki Kotka Paldiski Ust-Luga St. Petersburg Aarhus Malmö Travemünde Lübeck Rostock Gdynia LINER TRAFFIC AREA 31 DECEMBER 2016 FINNLINES

54 CONTACT INFORMATION FINNLINES PLC Komentosilta Helsinki, Finland P.O. Box Helsinki, Finland tel +358 (0) FINNLINES DEUTSCHLAND GMBH Einsiedelstraße Lübeck, Germany P.O. Box Lübeck, Germany tel FINNLINES BELGIUM N.V. Blikken Haven Verrebroek, Belgium tel FINNLINES DANMARK A/S Multivej Aarhus C, Denmark tel FINNLINES POLSKA CO. LTD. ul. Aleja Solidarnosci 1C Gdynia, Poland tel FINNLINES UK LTD. Finhumber House Queen Elizabeth Dock Hedon Road Hull HU9 5PB, Great Britain tel REDERI AB NORDÖ-LINK Lappögatan 3B Malmö, Sweden P.O. Box Malmö, Sweden tel FINNSTEVE OY AB Komentosilta Helsinki, Finland P.O. Box Helsinki, Finland tel FIND US ONLINE 52

55 THE GRIMALDI GROUP With long experience dating back to 1947, the Grimaldi Group specialises in the operation of roll-on/roll-off vessels, car carriers and ferries. It is a dedicated supplier of integrated logistics services based on maritime transport for the world s major vehicle manufacturers. Through its maritime services, the Naples-based Group also transports containers, palletised/unitised cargo and passengers with a modern fleet of more than 120 owned ro-ro multipurpose vessels, pure car carriers and ferries, 35 of which were built in the last 5 years. The Group s presence in the maritime transport of vehicles started in 1969 when it introduced a regular service between Italy and England. The Group rapidly gained the trust of other major car manufacturers who chose Grimaldi s vessels to transport their production from Northern Europe to various Mediterranean countries. Throughout the years the Group rapidly developed and now serves over 130 ports in 50 countries in the Mediterranean Sea, Northern Europe, West Africa, North and South America. The shore personnel and crew consist of nearly 13,000 people. The Grimaldi Group comprises seven main shipping companies, including Atlantic Container Line (ACL), Malta Motorways of the Sea (MMS), Finnlines and Minoan Lines. The Finnish company Finnlines runs a fleet of ro-pax and ro-ro vessels in the Baltic Sea and Northern Europe, while the Greek ferry company Minoan Lines operates ro-pax service between Piraeus (the port of Athens) and Crete. Recently, the Grimaldi Group has also evolved to become a multimodal transport operator offering door to door logistics services. For this purpose, it currently operates, together with strategic partners, car and container terminals (totalling over 5.4 million sq. metres) in the Mediterranean, Northern Europe and West Africa as well as trucking companies for the transport of cars and containers. In recent years, the Group has also invested in development of the Motorways of the Sea in the Mediterranean Sea by introducing new and modern ro-pax ferries. Currently, its network covers Italy, Spain, Malta, Tunisia, Morocco, Libya, Montenegro and Greece for the transport of trailers, cars and passengers. The high-quality services offered by the Grimaldi Group are being regularly awarded by its international clientele such as General Motors, Fiat Auto, Ford, Renault-Nissan, Honda and Land Rover. Finally, the Grimaldi Group is the first Italian shipping company to have obtained the SMS, ISO 9001 and ISO certifications for Safety, Quality and Environment. Moreover, the Grimaldi Group is also the first shipping company in Italy to be awarded the status of Authorized Economic Operator Complete (AEO-F). Photos: Petri Artturi Asikainen, Nils Bergmann, Tasha Doremus, Horst-Dieter Foerster, Aki Havukainen, Hans Christian Jacobsen, Soile Kallio, Rami Lappalainen, Pär-Henrik Sjöström, Jarmo Teinilä, Timo Virojärvi, Finnlines archive.

56 Finnlines Plc Komentosilta Helsinki, Finland P.O.Box 197, HELSINKI, Finland Phone