FINANCIAL STATEMENTS 2010 - Finnlines

with the Helsinki Court of Appeal against the judgement by the Helsinki District Court in April 2010 and the case is under process.
Taxation of internal vessel sales carried out in 2007 by Finnlines’ Swedish subsidiary includes uncertainties. The decision of the tax
authorities was that a SEK 97.2 million (EUR 9.5) tax debt should be paid. The Company appealed against this decision and requested
postponement of the payment of the tax debt, which was granted. The Appeal Court rendered its decision on 10 January 2011 in favour
of the tax authorities and the tax debt became payable. The Company submitted on 8 February 2011 the leave for appeal at the Adminis-
trative High Court and extension of the postponement of the payment of the tax debt. Both submissions are under process. As the Com-
pany recorded a deferred tax liability due to the temporary timing difference in the tax year in question, this matter does not have any sig-
nificant effect on the Company’s result.
At the end of March 2009, there was an oil spill on MS Finneagle on the way from Kapellskär to Naantali. As a result, approximately
4 m 3 of light fuel oil leaked from the vessel into the sea between the Åland Sea and the Port of Naantali. The Company immediately start-
ed its own investigations and was working in cooperation with the authorities in order to clarify the matter. The Finnish authorities final-
ised their investigations late autumn. The district prosecutor of the District Court of Turku decided in December on the non-prosecution
of the Captain of the vessel for spoiling of environment. The vessel or the Company has not received any notice or information on any en-
vironmental damage.
The former management of Finnlines’ port operations subsidiary had been summoned to the Helsinki District Court to answer for in-
fringing the Occupational Safety and Health Act and Working Hours Act in the port of Helsinki. The Helsinki District Court rendered its
decision on 3 March 2010 sentencing the former management to pay fines. Finnlines port operations subsidiary has taken rectifying
measures in the follow-up system of the working hours in order to avoid any infringements in the future.
Finnlines addressed material appeals to the Finnish Customs and the Port of Helsinki for rectification of the paid fairway and port
dues based on incorrect tonnage certificates of the Star-class vessels issued by the Swedish and Finnish maritime authorities. The Port
of Helsinki has refunded the excess paid harbour dues entirely totalling EUR 2.7 million and Finnish Customs EUR 3.1 million.
Two former and 37 current employees of the Company, represented by the Union of Salaried Employees, have brought an action
against the Company at the District Court of Helsinki. They claim that the Company is to adhere to the general increases of the collective
agreement and to pay the increases accordingly retroactively and in the future. The Company considers the claims groundless. The pro-
cess is under way.
Finnlines’ port operations subsidiaries received summons on 2 February 2011 from 16 employees on weekly resting times and com-
pensation thereof. The claims derive from years 2008 and 2009. The claims might be amended with claims arising from 2010 but this is
yet uncertain. The claimants also claim penalty interest and legal expenses. The Company considers the claims groundless. The process
is under way.
Finnlines received information on the last day of January 2010 that the Finnish Transport Workers' Union (“Union”) has filed legal ac-
tions against Finnlines’ port operations subsidiary for compensation of weekend work. The legal actions are handled in three District
Courts in Finland and concern 393 employees of the port subsidiary represented by the Union. The claim is based on weekly resting
times and compensation thereof. The employees claim that they have not received sufficient weekly rest/ compensation from 2008-2009.
The case raised in the District Court of Kotka resulted in a judgement by default in favour of the defendant company. The total amount of
all the claims is not firmly specified by the Union but could now be estimated to be about EUR 0.5 million in maximum. The Company con-
siders the basis of the actions groundless.
Sub-chartering of MS Birka Transporter and MS Birka Exporter to Scandinavian Shipping Investment A/S (’SSI’) caused Finnlines
a loss of time charter hires and expenses in total EUR 326,211, as SSI terminated the charters in summer 2009. Since the parties could
not reach an agreement, Finnlines started arbitration proceedings against SSI for payment of the outstanding time charter hires and ex-
penses. Finnlines has received SSI’s counter claim in the amount of EUR 1,182,298. Finnlines considers the basis of the counter claim
groundless. The charters are subject to Finnish law and the place of arbitration is Helsinki. The arbitration panel has not yet decided the
time for the main hearing of the arbitration proceedings.
In 2008, the Administrative Court of Helsinki rendered decisions based on which it can be argued that the Finnish Act on Fairway
Dues in force until 1 January 2006 has contained provisions which according to EU law were discriminatory. The Company has been
charged excessive fairway dues during 2001-2005. The Company has been refunded the fairway dues only for 2005, amounting to EUR
2.8 million by the Finnish Customs. The Company is preparing the claim for damages and restitution against the Finnish State for the
years 2001-2004 at the District Court of Helsinki. The amount of the claim is approximately EUR 8.5 million and has not been recognised
as revenue. The Company has also filed applications for reversals in the Supreme Administrative Court concerning the fairway dues de-
cisions of the Finnish Customs. Any amounts received as a result of a successful application to the Supreme Administrative Court would
be deducted from the claim for damages or restitution.
Finnlines’ German subsidiary has been taken to the City Court of Lübeck in December 2009 by its former Managing Director regard-
ing the termination of his Service Agreement. The Company considers the legal grounds for the termination to be valid. The process is
under way.
(figures in EUR thousand, if not stated otherwise)
FINNLINES PLC Financial Statements 2010
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