Annual Report • Mar 12, 2015
Annual Report
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| Information to shareholders _________2 | |
|---|---|
| Statement of the President and CEO ________4 | |
| Viking Line's operations | |
| Mission statement____________6 | |
| Connecting services and sales offices _______7 The Viking Line fleet _________8 |
|
| Passenger Services _________ 10 | |
| Cargo Services _____________14 | |
| Other fields of operations _________ 15 | |
| 20 years on the Estonia route ______ 16 | |
| Viking Line – a powerful brand in Estonia ______ 18 | |
| A day on board the Viking XPRS ________ 20 | |
| The environment, safety and security | |
| The environment __________ 22 | |
| Safety and security _________ 28 | |
| Personnel | |
| Personnel ___________ 30 | |
| Corporate Governance | |
| Corporate Governance ___________ 32 | |
| The Board of Directors ___________ 36 | |
| Group Management________ 37 | |
| Financial Statements | |
| Report of the Directors ___________ 40 | |
| Consolidated statement of comprehensive income ______ 46 | |
| Consolidated balance sheet________ 47 | |
| Consolidated cash flow statement ________ 48 | |
| Statement of changes in consolidated equity _____ 49 | |
| Notes to the consolidated financial statements _________ 50 | |
| Five-year financial review _________ 69 | |
| Quarterly consolidated statement of comprehensive income____ 70 | |
| Share data __________ 71 | |
| Definitions of financial ratios _______74 | |
| Parent company income statement_________75 | |
| Parent company balance sheet ___________ 76 | |
| Parent company cash flow statement______ 78 | |
| Notes to the parent company's financial statements _____ 79 | |
| Signatures of the Board of Directors and the President and CEO _____ 85 | |
| Auditors' note _____________ 85 | |
| Auditors' Report___________ 86 | |
| Addresses Addresses___________ 88 |
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PRODUCTION Viking Line Abp. PHOTOS Blick, Therese Andersson, Hanne-Marie Ahonen, Patrik Edman, Daniel Eriksson, Triin Raa, Matton and Viking Line's Image archive. TRANSLATION Victor Kayfetz.
The Annual General Meeting of Viking Line Abp will be held at 12 noon on Wednesday, April 22, 2015 at the Alandica Kultur och Kongress auditorium, Strandgatan 33, Mariehamn, Åland, Finland.
Shareholders who wish to participate in the meeting must notify the Company's Head Office in Mariehamn to this effect no later than 12 noon on Monday, April 20, 2015. Notification may be provided
• by e-mail to [email protected]
• by telephone to the Company's Secretariat at +358 18 270 00
• by fax to +358 18 169 77
• or by letter to Viking Line Abp, Pb 166, AX-22101 Mariehamn, Åland, Finland.
Shareholders whose shares have not been transferred to the Finnish book-entry securities account system are also entitled to participate in the shareholders' meeting, provided that the shareholder was recorded in the Company's share register before March 12, 1999. In this case, the shareholder shall present at the shareholders' meeting his share certificates or another explanation as to why the ownership right to the shares has not been reported as a book-entry securities account.
During the financial year 2015, Viking Line Abp's interim reports will be published for the periods January 1 to March 31, 2015; January 1 to June 30, 2015 and January 1 to September 30, 2015. These interim reports will be published on May 13, August 20 and November 12, 2015, respectively. The Year-end Report for the financial year 2015 will be published on February 18, 2016. The Annual Report for the financial year 2015 will be published during the week of March 28, 2016. The official versions of the Annual Report, the Year-end Report and interim reports are published in Swedish. These reports are translated into Finnish and English. The reports will be available on Viking Line's websites at approximately 9.00 a.m. on each respective date. The Annual Report will also be available at the Head Office of Viking Line Abp and can be ordered by telephone at +358 18 277 67 or by e-mail at [email protected].
The financial year 2014 was eventful for Viking Line on a number of fronts. The year began with vessel reflaggings in January, when the Viking XPRS was recorded in the Estonian ship register and the Rosella in the Finnish register. The motive behind registration in Estonia is that shipping operations should take place at a cost level that is comparable to that of competitors. None of the regular employees on the Viking XPRS lost their jobs. Instead they were able to move to the Company's other vessels. After this, Viking Line has five vessels in the Finnish ship register, one in the Swedish register and one in the Estonian register.
I n January, the Viking Cinderella underwent an extensive upgrade at a shipyard in Landskrona, Sweden. This remodelling gave the vessel − which has provided cruise service between Stockholm and Mariehamn for more than 10 years − several new restaurant concepts, an updated and reconfigured night club and upgraded cabins. The transformation has been highly appreciated among our customers.
Viking Line's expanded Tallinn service, with extra departures during the summer, was successful. The extra sailings by the Gabriella and the Mariella between Helsinki and Tallinn provided a major boost in passenger volume. The number of travellers on the Tallinn route rose by more than 176,000 to 775,000 during the three summer months. This was an upturn of nearly 30 per cent compared to the corresponding period of 2013. The Company has decided to continue with the same concept next summer.
The prevailing pressure on prices in the market, combined with falling volume early in 2014 and adverse economic conditions in Finland, had an unfavourable impact on sales. Consumer behaviour was characterized by caution, which led to lower net sales revenue per passenger.
The Viking Line Group's bunker (vessel fuel) costs decreased during the year. This was explained by lower average bunker prices as well as by the Group's continued intensive efforts to optimize the bunker consumption of its vessels. The European Union's new maximum levels of bunker sulphur content, which went into effect on January 1, 2015, have led to increased cost pressure on the Group. Six of the seven Viking Line vessels are affected by the new standards.
On March 20, I was appointed President and Chief Executive Officer of the Company. I accepted this task with confidence and great respect. With more than 25 years of experience in the Company, I have had the opportunity to live through many different phases in our operations and am familiar with our industry.
Aside from the change of President and CEO,
several other changes in Group Management occurred during the financial year. On the same day as the change in President and CEO, the Board of Directors appointed Anders Remmer, Chief Financial Officer (CFO), as Executive Vice President and Deputy CEO. In April, Peter Hellgren was appointed Executive Vice President with overall responsibility for the Group's sales and marketing. In September, Wilhelm Hård af Segerstad was also appointed as the new Vice President and Head of Shipboard Commercial Operations.
According to our renewed strategy, we shall be the leading brand within our service area and the preferred choice of everyone seeking sea transport services and experiences. It is important that we preserve and enhance our position as a profitable company. We must also take steps to ensure that our employees feel motivated. Our operations should be characterized by stability and take advantage of our employees' knowledge in the best possible way. During 2014, Group Management carried out two tours of all vessels and most offices. Meeting our employees was highly valuable.
To enable us to remain in the forefront and improve our profitability, we must adapt our operations to the realities prevailing today and in the future. Our success will be highly dependent on our ability to focus on our customer groups. Looking ahead, the Viking Line brand must continue to stand for high-quality, attractive travel experiences, and the northern Baltic Sea will remain our area of operations.
There are many reasons to say "Thank you" for the contributions made during 2014. I would like to express my appreciation to our customers, our business partners and especially our employees.
I am optimistic about the future and believe that we Vikings together will meet the challenges that Viking Line faces as we begin the financial year 2015.
Jan Hanses President and Chief Executive Officer
During 2015, Viking Line is partnering with Åland-based master chef Michael Björklund, shown here together with Viking Line's Tuula Drude, Merja Maksimainen and Terhi Rosendahl.
− our fundamental task
We link together the countries around the northern Baltic Sea by providing sustainable and regular ferry service for everyone. Our three basic services are cruises, passenger and cargo transport. Our unique expertise in combining these services generates customer and business benefits.
− our ambition and what we want to achieve
We are the leading brand in our service area and the preferred choice of all those seeking sea transport services and experiences. We shall preserve and enhance our position as a profitable company.
Viking Line is for everyone.
Our customers are our foremost priority and we aim to exceed their expectations, especially with regard to good service.
We respect our co-workers and value initiative, innovation, teamwork, openness, honesty, loyalty and acceptance of responsibility.
We stand for humility and cost-consciousness.
We take advantage of all good business opportunities.
Our vessels are safe and well-maintained. We conduct our operations in compliance with applicable environmental standards and legislation. We strive to continuously improve our environmental and sustainability work.
We offer the market's best value for money by providing good quality at affordable prices.
Our selective quality factors are friendly service, fully functional and clean facilities, good food, enjoyable entertainment and attractive shopping.
We aim at large travel volume and high capacity utilization.
We shall have modern distribution and sales systems.
Our sources of income are ticket, cargo and on-board sales – we optimize their total outcome.
We motivate and train our employees in order to achieve improved quality, service level and productivity.
We continuously optimize our energy consumption in all our operations.
Viking Line provides scheduled passenger and cargo services using seven vessels on the northern Baltic Sea. All vessels are certified in compliance with ISO 14001 environmental management standards. Having safe, well-maintained vessels is a part of the Company's fundamental values.
During the 2014 financial year, Viking Line transported a total of 6,610,146 passengers in its service area, encompassing Finland–Sweden and Finland/Sweden–Baltic countries. Of these passengers, 54.8 per cent were residents of Finland and 31.4 per cent residents of Sweden, while residents of other countries accounted for 13.8 per cent.
The Viking Grace and Amorella provide service on the Turku– Mariehamn/Långnäs–Stockholm route.
On the Turku route, it is possible to take either an overnight cruise or a shorter day trip with a change of vessel in Mariehamn. In today's society, where time is often in short supply, an increased interest in shorter voyages and conferences is discernible. The chance of experiencing two vessels on a one day cruise makes this travel alternative especially
attractive.
Aside from cruise travellers, a large proportion of passengers on the route are regular travellers, who often bring along a car. Many families with children travel from Sweden to Turku, attracted during the warmer half of the year by such destinations as Moomin World, the JukuPark water park and the Sokos Hotel Caribia adventure spa.
During 2014 Viking Line continued its "Hyvä Suomi" ("Go Finland") campaign in partnership with the Swedish weekly magazine Icakuriren. The campaign highlights various tourist sites in Finland, including Helsinki and Turku. Its purpose is to market Finland as a holiday destination and increase awareness of Viking Line's travel packages, including travel, accommodations and activities.
In 2014 there was continued
heavy interest in the Viking Grace, which began service on the Turku route in January 2013. The vessel offers new concepts of design, operation and on-board activities. Its many-facetted dining and entertainment options as well as its first-rate cabins have represented a boost for the entire travel and entertainment industry. In October the vessel received the 2014 Skål International Sustainable Tourism Award. In November, Finland's first Victoria's Secret Beauty & Accessories shop opened on board the Viking Grace.
In October the Viking Grace received the 2014 Skål International Sustainable Tourism Award.
| VIKING LINE'S OPERATIONS | |
|---|---|
| PASSENGER VOLUME | 2014 | 2013 |
|---|---|---|
| Turku–Åland Islands–Stockholm | 1,935,958 | 2,092,897 |
| Stockholm–Mariehamn | 860,243 | 840,089 |
| Helsinki–Mariehamn–Stockholm | 1,063,027 | 1,068,537 |
| Finland/Sweden–Baltic countries | 2,044,340 | 1,872,850 |
| Mariehamn–Kapellskär | 706,578 | 659,277 |
| TOTAL | 6,610,146 | 6,533,650 |
During 2014 Viking Line offered a variety of themes on its vessels. Throughout January, the Viking Grace celebrated its first anniversary of service with a champagne theme on board the vessel. The Viking Grace also provided jazz cruises and other specialized cruises, for example focusing on handwork and hunting. The Amorella offered theme cruises that included bingo, karaoke, styling and opera music. During the spring there were Beauty & Wellness weeks on the Turku route, including healthy menus, zumba and relaxation exercises. Out on the deck of the Viking Grace, Graceloppet ("the Grace Race") was organized.
In the autumn, the Amorella launched its new "Golden 50s" entertainment concept, featuring musical quizzes, live music and retro disco from the 50s, 60s and 70s on Mondays to Thursdays. On Fridays and Saturdays during the autumn, the vessel's cruise passengers were entertained by Sweden's best dance bands.
The Viking Cinderella makes overnight cruises between Stockholm and Mariehamn, offering a highly entertainment-oriented product with a focus on the guest experience. The heart of the vessel is its lively three-storey nightclub. In addition to such facilities as a duty- and tax-free shop, a conference department and various restaurants, the vessel has a spa department where guests are offered a wide range of therapeutic treatments along with spa rituals, sauna baths and relaxation in nap rooms. The typical guest on board the Viking Cinderella is a resident of Sweden and takes a cruise to enjoy the food, beverages and entertainment, sometimes also in combination with a conference.
Starting on December 14, 2013 the Viking Cinderella brought its unique presence to the Finnish market, offering cruises between Helsinki and Tallinn until January 7, 2014. This service was interrupted just before New Year when the vessel made Viking Line's first-ever cruise in the Russian market, in the form of a four-day chartered voyage originating in St. Petersburg. On January 7, the Viking Cinderella was taken out of service for dry-docking and returned to scheduled cruise service on January 25.
During dry-docking the Viking Cinderella's nightclub underwent a total transformation, including an appealing new interior, a larger dance floor and a remodelled stage. Now featuring a high-resolution LED wall, the stage was expanded to accommodate larger shows and more artists. The vessel now also features two new restaurants and twice as many double-bedded cabins. The spa department introduced a Russian spa treatment, Banya.
During 2014 the Viking Cinderella continued to provide
On December 10, 2014, Viking Line's 200 millionth passenger boarded the Gabriella in Helsinki.
During the 2014 Guldklaven ("Golden Clef") gala, the Viking Cinderella received the special jury prize. The jury described the vessel as "one of the very largest dance organizers in the country, providing jobs to numerous dance bands and giving thousands of people an opportunity to dance."
different entertainment concepts for each day of the week. On Mondays the theme was Cinderella Big Band, enabling passengers to experience Sweden's best big bands and guest artists. On Tuesdays, Wednesdays and Sundays, Sweden's best dance bands performed under the Cinderella Danzband concept. Cinderella Live on Thursdays presented concert evenings featuring top artists. On Fridays and Saturdays, the vessel threw the best parties on the Baltic Sea under its Cinderella goes Party theme.
During the 2014 Guldklaven ("Golden Clef") gala, organized by the magazine Får Jag Lov, Sveriges Radio (Swedish Radio) and the Swedish Dance Band Week in Malung, the Viking Cinderella received the special jury prize. The jury described the vessel as "one of the very largest dance organizers in the country, providing jobs to numerous dance bands and giving thousands of people an opportunity to dance."
The Gabriella and the Mariella provide service on the Helsinki– Mariehamn–Stockholm route, which links two of the Nordic capitals. More than half of the passengers on this route are cruise travellers. A large proportion of passengers on the route come from Finland.
A cruise on this route includes two nights on board and a full day on land, with sightseeing and other attractions that can be booked at the same time as the voyage. During their stop-over, most passengers want to go shopping and choose to experience the destination city on their own. Visiting various sights and museums is also popular, along with visits to ABBA The Museum and the Gröna Lunds Tivoli amusement park in Stockholm or the Linnanmäki amusement park, the Sea Life Centre and the Flamingo Spa water park in Helsinki. In both capitals, Viking Line offers a variety of hospitality packages in collaboration with the most popular hotels.
During a voyage on the Gabriella or the Mariella, there is plenty of time both for shopping in the vessel's well-stocked shops and for enjoying a meal in one of the vessel's restaurants. Both vessels offer a Travel Spa with relaxing treatment such as massage, facials and manicures. The on-board entertainment in the nightclub is international in character, with several shows and orchestras each evening. In the pub or bar areas, the sounds of a troubadour or a pianist can usually be heard.
During the autumn, Viking Line launched the Bright Lights, Big Cities concept on the Gabriella and the Mariella, where passengers could experience big city atmosphere when an international show group took over these vessels. As soon as the vessels left port, entertainment began with versatile song and dance performances as well as circus acts in the night club, lobbies and bars.
On June 12 the Gabriella and
On June 12 the Gabriella and the Mariella began providing an extra sailing between Helsinki and Tallinn, instead of docking in Helsinki for the day. Their Tallinn service continued until September 2.
the Mariella began providing an extra sailing between Helsinki and Tallinn, instead of docking in Helsinki for the day. Their Tallinn service continued until September 2. A similar service schedule is planned for 2015.
In preparation for the Mariella's dry-docking in April 2015, Viking Line is planning new restaurants and food concepts, upgraded cabins and new cabin categories. The nightclub will be renovated and an exclusive new conference room with a sea view will be built.
The Viking XPRS provides service between Helsinki and Tallinn, with four departures per day. The vessel, which was built in 2008, offers a rapid crossing between the two capitals. The restaurants on board have many seats and cashiers, making it possible to accommodate a large number of guests and provide good service during the short sea voyage. Store operations offer passengers the Pre Order service concept as well as Drive-In service on the car deck.
For those travellers who disembark in Tallinn, Viking Line offers overnight stays via a wide range of cooperating hotels in various Estonian cities.
The dance restaurant provides live music both during the daytime and the evening. Cruises with various themes such as health, fashion and music are organized on a continuous basis.
Nearly half of the passengers on the Viking XPRS are individual customers who travel regularly, and nearly a third are individual cruise travellers. More than half of the vessel's passengers come from Finland.
For those travellers who disembark in Tallinn, Viking Line offers overnight stays via a wide range of cooperating hotels in various Estonian cities. Spa treatments, sightseeing and shopping are popular on-shore activities.
The Viking XPRS was taken out of service for dry-docking on January 12, 2014 and returned to the route on January 24. During dry-docking, the number of seats was expanded and the vessel changed from a Swedish to an Estonian flag.
Viking Line's service between
Helsinki and Tallinn expanded temporarily between December 14, 2013 and January 7, 2014 when the Viking Cinderella was placed in cruise service on the route.
On June 12 the Gabriella and the Mariella began providing an extra sailing between Helsinki and Tallinn, instead of docking in Helsinki for the day. Their Tallinn service continued until September 2. This expanded schedule enabled Viking Line to offer its customers six daily departures and more car spaces on the Helsinki – Tallinn route during the summer. This provided new travel opportunities for travellers from Stockholm as well as Helsinki and Tallinn. The response from customers was very positive, and a similar schedule is planned for the summer of 2015.
| Mariehamn | |
|---|---|
| Kapellskär |
The Rosella, which serves the Mariehamn–Kapellskär route across the Sea of Åland, offers a fast, smooth and affordable voyage between Sweden and Åland. With a travel time of 2-2.5 hours, the Rosella is also an excellent day cruise alternative for both groups
and individual travellers who take connecting buses from a number of Swedish cities to the Kapellskär harbour.
In addition to shopping on board the Rosella, entertainment of various kinds is available every day. Besides the vessel's own cruise hosts, passengers are entertained several days a month by popular musical hosts and dance bands, often with a local connection to Uppland (the Swedish province where Kapellskär is located) or Åland.
About 60 per cent of the Rosella's passengers are customers who travel regularly, while the remaining 40 per cent consist of day cruisers, group travellers and conference guests. More than half of the passengers come from Sweden, and most of the remaining passengers come from Åland.
The Rosella took a break beginning on January 13, 2014 and was back in service on January 24. During its break from service, the vessel changed from a Swedish to a Finnish flag.
The Rosella offers a fast, smooth and affordable voyage between Sweden and Åland. With a travel time of 2-2.5 hours, the Rosella is also an excellent day cruise alternative.
Viking Line offers its cargo customers sea transport, stevedoring and freight forwarding services on Finland–Åland–Sweden and Finland–Estonia routes. Regular and frequent departures, modern vessels and knowledgeable staff, both land-based and shipboard, help meet the needs of transport companies.
The Viking Line cargo organization consists of more than 20 employees who handle tasks related to cargo service marketing, sales and booking as well as check-in and vehicle deck optimization. The cargo organization works closely together with other departments in the Group, both land-based and shipboard. This enables the creation of the long-term customer relationships for which Viking Line Cargo is well-known. Geographically, the cargo organization works actively with its main markets – Finland, Sweden and Estonia – but also with other countries in the Baltic Sea region.
During the first half of the financial year, Viking Line carried out a reorganization of its cargo
services. Among the factors behind these changes was the need to boost efficiency, since the market situation does not allow for price hikes to compensate for cost increases. Cargo Services also had an ambition to further improve its customer service by offering one-stop shopping. Cargo booking services and the task of vehicle deck optimization were centralized to the cargo office in Turku, with a focus on the Finnish and Scandinavian market. The cargo office in Tallinn took on the task of dealing with the growing Eastern European market, with special emphasis on the three Baltic countries and Russia. The sales organization was also restructured, with the aim of achieving a clearer allocation of responsibility between the main markets for cargo services.
Early in April, Cargo Services began using a new invoicing system that was developed in close cooperation with cargo market players. The new system is more modern and flexible, for example enabling e-invoicing as well as improved internal and external statistical reporting.
During 2014, Viking Line transported a total of 129,255 cargo units (119,704), thereby achieving an estimated total market share of 21.9 (20.9) per cent.
In the Finland−Sweden market, Viking Line managed to boost its cargo volume by 10.5 per cent, while total volume in this market decreased by about 1.4 per cent. Viking Line's market share thus amounted to about 29.0 (25.9) per
cent. The number of empty vehicles stabilized at the same level both from Sweden and from Finland, which led to a better traffic balance on board Viking Line's vessels between Finland and Sweden.
On the Helsinki−Tallinn route, Viking Line's cargo volume increased by 5.1 per cent, and total volume in this market by 8.9 per cent. Viking Line thus achieved a market share of 19.3 (20.0) per cent. The number of empty units from Tallinn was unchanged, but in the opposite direction empty units decreased noticeably, although they remained at a relatively high level. This resulted in a somewhat less favourable traffic balance on board Viking Line's vessels on this route.
I n addition to its passenger and cargo operations, the Viking Line Group runs the Park Alandia Hotell in Mariehamn. The hotel is wholly owned by Viking Line and had an average of 13 full-time-equivalent employees in 2014. The hotel has 79 double rooms as well as conference facilities for up to 100 people. In addition, it offers a sauna and swimming pool facility as well as a pub and a restaurant seating 56 people, operated by an outside restaurateur.
The Group also includes the subsidiary Viking Line Buss Ab, which provides scheduled service in Åland as well as chartered service in Åland and elsewhere on 12 buses and coaches. The company had an average of 24 full-time-equivalent employees in 2014.
Viking Line's scheduled service on the Helsinki– Tallinn route celebrated its 20th anniversary in 2014. The Company has invested extensively in its Estonia service in recent years. This is entirely consistent with its mission to link together the countries around the northern Baltic Sea by providing sustainable and regular ferry service.
Viking Line made a large, not entirely risk-free decision just over two decades ago. Finland's sister nation Estonia − liberated from the Soviet Union a few years earlier and with a great hunger for a market economy – was nevertheless perceived as a destination with potential. Scheduled service to Tallinn began on Friday, June 17, 1994 when the Viking Express cast off from Helsinki.
The Company's chartered Express catamarans showed impressive passenger figures during the three summer seasons from 1994 to 1996, although this initial effort to provide scheduled service to Estonia was no gold mine.
"It can certainly be described as an experimental operation. But it was a valuable experience, which we took advantage of when we
planned and resumed our scheduled service," says Boris Ekman, Managing Director of Viking Line's marketing company at that time.
Viking Line actually began steering its course towards Estonia as long ago as the late 1980s, but not in the form of scheduled service. In 1989, the Company thus began its popular 20-hour cruises, although initially the Isabella and the Cinderella did not even make a port call in Estonia. Between 1995 and 2003, these vessels docked in Estonia during their cruises, at first in Muuga and later in Tallinn, but no Estonian passengers came on board.
During the pause in Viking Line's scheduled service to Estonia
HSC Viking Express 11 M/S Cinderella M/S Rosella
from 1996 to 2003, the Company refined its plans for a more permanent alternative to replace catamarans, which are sensitive to weather and wind. Late in the summer of 2003, with an eye on Estonia's accession to the European Union less than one year later, the Rosella was placed in year-round service between Helsinki and Tallinn.
The Rosella fulfilled expectations until 2008, but its limitations gradually became apparent – especially with regard to capacity and travel time. The response to this challenge was the new Viking XPRS, built by Aker Yards in Helsinki and placed in service on the Tallinn route on April 28, 2008. Viking Line could now begin competing on this route in earnest, with a modern, high-speed, environmentally
adapted vessel featuring twice the passenger capacity of the Rosella.
Traffic on the Helsinki–Tallinn route has grown enormously. During 2014 a total of 8.2 million people travelled by sea between Helsinki and Tallinn. New Estonian destinations such as Otepää and Rakvere are attracting visitors, while many people are choosing to travel onward by car to other European countries through the Baltic countries. In addition, more and more Estonians are travelling between Finland and Estonia for business purposes.
Viking Line responded to the increased demand for departures to Tallinn by adding an extra daytime return voyage during the summer of 2014. The Mariella and the Gabriella took turns making a
side trip to Tallinn instead of remaining docked in Helsinki during the day. The extra voyage proved to be a successful move, although the Company's additional capacity was still not always sufficient. On many departures, for example, car spaces were sold out. The number of travellers between Helsinki and Tallinn during June-August rose by nearly 30 per cent to 775,000, helping Viking Line set a new record for all its routes during the summer, when the total number of passengers exceeded 2.3 million.
"We are very pleased with the passenger growth that the extra return trip to Tallinn contributed to. We will largely follow the same concept in the summer of 2015," notes Jan Hanses, President and CEO of Viking Line.
Viking Line's office at Hobujaama 4 in Tallinn is as central as one can wish. The area bubbles with activity, and a stone's throw away are the big hotels and shopping malls on the main street Narva Maantee. The office employs about 50 people and has a positive, relaxed atmosphere.
Viking Line moved into its modern office space in the spring of 2010. By choosing this address, the Company increased its visibility and accessibility. At street level there is now a passenger office, which is easy to visit.
"It is important for us to have a visible street presence. Many people still want face-to-face service, even though a growing number book their voyage by telephone and internet," says Inno Borodenko, General Manager of Viking Line's Estonian subsidiary.
Viking Line is perceived as a reliable and strong Nordic brand. The Company is also an attractive employer, as evidenced by the number of long-term employees.
"I started working at Viking Line 20 years ago, that is, when catamaran service to Helsinki began," says webmaster Triin Pajupuu.
Most of the 40 or so people at the Tallinn office work with telephone sales and advisory service, while most others are mainly involved in marketing. The Tallinn unit fields telephone customers mainly from Estonia and Finland, but also from such countries as Germany and Russia. Among those selling travel services are two Finns, Edi Kiviniemi and Osmo Minkkinen.
"Estonians are very friendly and professional, but maybe a little more serious than Finns, for example," say Edi and Osmo, adding that they are very happy working at the Tallinn office.
Viking Line has about 100 land-based employees in Estonia. In addition to the Hobujaama office staff, about 50 Viking Line employees work in the harbour, including check-in service, the warehouse and the cargo organization.
It was Triin Pajupuu who launched the Viking Club in Estonia in 2007. The number of members has now grown dramatically, from about 2,600 in the first year to more than 123,000 by the autumn of 2014. This means that nearly one out of 10 Estonians has a Viking Club membership card today.
"For Estonians, the main goal
of their voyage is to visit Finland. We can often offer route price discounts to our club members," say Triin Pajupuu and Cristel Kiilstrom, who are responsible for Viking Club Estonia today.
Cristel believes in growing the Company's business through market segmentation, that is, more targeted marketing.
"It is important that we keep track of what products our customers use and what they are interested in. This enables us to offer them exactly what they want. We have gone in for segmented newsletters and promotions, but also active campaigns to enrol
more members," says Cristel. During her 10 years with the Company, her assignments have included working at the Viking Line call centre and dressing up as the mascot cat Ville Viking.
The Viking Clubs in various countries coordinate some of their activities, but they are also free to organize campaigns for their own respective markets and customer groups.
The extra return voyages between Tallinn and Helsinki in June-August 2014 were instrumental in enabling Viking Line to set a passenger record for the three summer months. The extra daytime voyage was also popular among Estonians, since it enabled them to continue to Stockholm on the same vessel.
Employees are eagerly awaiting the new website, which will include an updated online booking system and is scheduled to be launched during 2015.
Osmo Minkkinen and Edi Kiviniemi, two Finns who enjoy working at the Tallinn office.
Inno Borodenko is pleased with Viking Line's modern premises.
Cristel Kiilstrom and Triin Pajupuu have made Viking Club Estonia flourish.
The Viking XPRS casts off from Katajanokka terminal in Helsinki at 11.30 a.m. on a grey Thursday, November 25. During the two and a half hour voyage to Tallinn, we will meet both passengers and crew. We will also become acquainted with port employees while the Viking XPRS is moored in the Estonian capital.
The Viking XPRS is one of the Company's newer vessels. It was specially designed for the Helsinki–Tallinn route. With a capacity of 2,500 passengers, it can meet demand even during high season. Today the vessel is departing with a total of 1,284 passengers.
11.35 Jan Löfgren, Passenger Service Director on the vessel, knows a lot about life on board the Viking XPRS. Having worked for many years on the Estonia route, he sees a clear change in travel behaviour.
"Pure leisure cruises are no longer dominant. Today more and more people are travelling to Tallinn to get various types of care, from beauty treatments to medical and dental care," Löfgren says.
He belongs to the "red" group: the handful of Viking Line employees who stayed on the Viking XPRS after its reflagging in January 2014. A majority of the 125 people who work on board during each shift are Estonians. The aim is to gradually hand over
the entire vessel to Estonian crews.
12.05 The duty- and tax-free shop has just opened. Satu Salmitie and Katja Nirkkonen are trying out cosmetics.
"We always buy mascara on board. It's far cheaper here than on land. In Tallinn we'll do Christmas shopping and eat well. The city's restaurants maintain a high standard nowadays and there are also good alternatives for vegetarians," Satu and Katja emphasize.
12.19 Shopping Host Riina Ojastu, who has worked on the Viking XPRS from the start, arranges Victoria's Secret fragrances on the shelves. Her job includes presenting products and special offers, while generally ensuring that customers enjoy their visit.
According to Riina, today's passengers are considerably more price-conscious than before, since it is so easy to compare prices on the internet. Among other things, this means that attractive special offers sell quite well. In the shop, almost the only language being
Jan Löfgren, Passenger Service Director
Master Risto Pajanen worked for Viking Line back when its cruise vessels docked at Muuga, Estonia.
spoken is Finnish.
"But there are exceptions. Estonians buy fragrances, which are generally cheaper on board than in Estonia," says Riina, adding that she very much enjoys working on the Viking XPRS.
stands on the bridge and carefully monitors a tanker vessel located straight ahead. The First Mate contacts the tanker to announce that the Viking XPRS will change course.
"Although traffic in the Gulf of Finland has increased, especially because of the oil port in Primorsk (Russia), this is nothing compared to traffic in the English Channel, for example," says Pajanen, a veteran on the Estonia route.
Pajanen was already working for Viking Line as long ago as its 20-hour Gulf of Finland cruises in the 1990s. He became Master of the Rosella when that vessel began serving the Tallinn route in 2003. On the Viking XPRS, he has been Master from the start in 2008.
"Some people may think that
Katja Nirkkonen and Satu Salmitie recommend the restaurants of Tallinn.
During the summer, the warehouse sometimes handles up to a hundred orders per departure, says warehouse manager Heino Mustsaar.
Pei-Jou Shih, Yu-Ching Liao, Pei-Chen Liao and Li-Han Lin will be visiting Santa Claus in Rovaniemi, northern Finland.
that it's boring to sail the same short route. On the contrary. Much more happens here than on the Sweden route, for example. We cast off and dock several times per day," says Pajanen, who always stands on the bridge for half an hour after departure and half an hour before arrival.
Maasikas, who mans the check-in counter, has been working at the terminal since 6.30, well before the vessel's morning departure. In the afternoon, many customers queue up as soon as the XPRS arrives and after check-in begins at 15.30.
"Of course, summer seasons are the most hectic of all. This was especially true last summer because of the extra daily return voyage from Helsinki. It was a successful experiment that attracted many new passengers," says Urmas, who has worked at Viking Line for 11 years.
15.46 Heino Mustsaar, manager of Viking Line's Tallinn harbour
Victoria's Secret products are popular, according to Riina Ojastu.
warehouse, has packed an order of the Finns' favourite beer. The warehouse is overloaded with various kinds of goods that are sold on board. There is also a small clothing warehouse, which serves the Viking Line outlet shop in Tallinn.
Warehouse workers are busily putting together orders for the Viking XPRS and unloading goods that have arrived.
17.28 Passengers pour on board the Viking XPRS before its departure for Helsinki. They include four young people from Taiwan who have travelled from London to Tallinn via Copenhagen. Their destination in Finland is Santa Claus's headquarters in Rovaniemi, located on the Arctic Circle. They will travel there by train.
"This vessel feels much more modern than the ones we took between England and Ireland," says Li-Han Lin.
Half an hour later, the Viking XPRS leaves Tallinn harbour. By the end of 2014, it will have made a total of 1,404 departures.
Urmas Maasikas puts in long 12-hour days at the check-in counter.
Viking Line endeavours to provide seagoing passenger services in an environmentally sound way. Thanks to its long-term, active commitment to this task, the Company has developed environmental work that extends beyond what the regulations in force require.
The Group's Head Office, the subsidiary Viking Line Buss Ab and all vessels are certified in compliance with ISO 14001 environmental management standards. In addition, the Viking Line organization and all vessels are certified according to the International Safety Management (ISM) Code, which stipulates organizational rules for safe vessel operation and for preventing pollution.
National legislation and international agreements are the basis for the Company's environmental work. The most extensive set of environmental protection regulations is the International Convention for the Prevention of Pollution from Ships (MARPOL 73/78), which was devised by the International Maritime Organization (IMO), a United Nations agency.
The Company's environmental work concentrates on its vessels, where the biggest environmental benefits can be achieved.
At the end of 2014 all of Viking Line's vessels, except for the Viking Grace, switched to diesel oil with a sulphur content of less than 0.1 per cent by weight in order to meet the requirements of the European
Union's new sulphur directive, which went into effect on January 1, 2015. Until then, the vessels in question operated on low-sulphur oil with 0.5 per cent content by weight in order to reduce sulphur oxide (SOx) emissions. The Viking Grace runs on liquefied natural gas (LNG), which is free of sulphur.
To decrease nitrogen oxide emissions, reduction technology is used on two of the Company's vessels – catalytic converters on one vessel and Humid Air Motor (HAM) technology on the other. HAM is a globally unique method that reduces nitrogen oxide emissions by lowering the combustion temperature of vessel engines. This temperature reduction is achieved by adding vaporized sea water to the combustion process. The Viking Grace has about 85 per cent lower nitrogen oxide emissions than vessels that use heavy fuel oil (HFO).
Two of the Company's vessels operate using a land-based electricity supply while they are docked during the daytime in Helsinki and in Stockholm. Using land-based electricity decreases emissions of air pollution and engine noise in ports and their vicinity.
The Viking Grace has about 85 per cent lower nitrogen oxide emissions than vessels that use heavy fuel oil.
The Company runs an internal energy efficiency programme to reduce exhaust gas emissions. In this programme, vessel operating staff and the Company's technical department are working to introduce fuelefficient operating methods, install new and more energy-efficient technology, reduce the hydrodynamic resistance of vessels and recover energy.
In late November, Viking Line signed an agreement with the Swedish innovation company Climeon related to the new Ocean Marine energy recovery system, which the Viking Grace will be the first vessel to use. Climeon's patented technology allows economically profitable recovery of heat, which is converted to electricity through a unique vacuum process. The system will convert waste heat from the vessel's engines into 700,000 kWh of clean, emission-free electricity per year.
A vessel generates three main types of wastewater: grey water from showers and other washing activity, black water from toilets and bilge water that is separated from water in engine rooms that contains oil.
Viking Line vessels discharge no wastewater into the sea. All wastewater is pumped ashore to municipal wastewater treatment plants, thereby easing the burden on the Baltic Sea. According to the MARPOL convention, however, discharging black water and bilge water into the sea is still permitted if the water meets certain stated criteria. Discharges of grey water are not regulated by legislation at all.
Over the past two decades, Viking Line has chosen to let land-based treatment plants handle all its wastewater because these treatment plants are significantly more efficient than the treatment systems available for use on vessels.
Instead of using environmentally hazardous paints on the bottoms of vessels, their hulls are brushed by divers several times each year. The diving company that Viking Line works with uses a patented, environmentally sound brushing method that it developed in-house. This method involves collecting all growths loosened from the bottoms of vessels during brushing into a separate container, which is then brought ashore for further treatment.
To ensure that Viking Line meets environmental certification standards, continuous internal audits of its operations are conducted. In addition, DNV GL – an independent certification body – performs yearly external audits of the environmental management system in order to verify compliance with the established objectives. In addition, the Finnish, Swedish and Estonian regulatory authorities perform continuous ISM Code-related audits connected to both safety and environmental work.
Viking Line participates actively in the task of saving the Baltic Sea by aiding and collaborating with the Baltic Sea Action Group (BSAG). During 2014, Viking Line supported BSAG's projects to ensure a cleaner Baltic Sea.
The plastic carrier bags that are sold in the dutyand tax-free shops on board Viking Line vessels now have a new design, with an environmental message on one side of each bag. Part of the revenue from these carrier bags is being donated to Finland's Keep the Archipelago Tidy Association and the Keep Sweden Tidy Foundation – two organizations that work towards a cleaner environment on their respective sides of the Baltic Sea.
In October the Viking Grace received the 2014 Skål International Sustainable Tourism Award.
The Viking Grace received the 2014 Skål International Sustainable Tourism Award. The jury emphasized that the Viking Grace is the most environmentally friendly cruise ship in the world, setting the standard for the whole industry.
The Viking Grace is the world's first passenger vessel of its type and size class that runs on liquefied natural gas (LNG). As a fuel, natural gas creates substantially less hazardous emissions than heavy fuel oil. Nitrogen emissions and particulates are reduced by about 85 per cent and greenhouse gases by some 15 per cent. Sulphur emissions are virtually zero.
The vessel's hydrodynamically optimized hull design and highly efficient drive technology result in major energy savings. Efficient ventilation units, whose air flow varies in response to prevailing external and internal circumstances, lead to further savings. Other factors that result in high energy efficiency are the heat recovered from the engine exhaust gases and cooling water as well as the air conditioning system, the advanced galley energy management system, the high insulation category of the windows and the vessel's light structures. The lifts in the Viking Grace are 30 per cent powered by their own braking energy, and on-board lighting largely consists of LED technology. This technology is used in all entertainment venues and in 90 per cent of the vessel's public areas.
The engines have sound frequency-adapted mufflers, which lower the noise level of the vessel. The hull design minimizes swells and is the result of a lengthy development process.
| KEY FIGURES | 2014 | 2013 |
|---|---|---|
| Passengers | 6,610,146 | 6,533,650 |
| Cars | 634,433 | 603,696 |
| Cargo units | 129,255 | 119,704 |
| Total distance (000 km) | 1,141 | 1,126 |
| Resource consumption | ||
| Fuel oil (m3 ) |
87,060 | 92,886 |
| Lubricating oil (m3 ) |
744 | 700 |
| Urea (m3 ) |
211 | 509 |
| Fresh water (m3 ) |
335,185 | 337,668 |
| LNG (tonnes) | 15,951 | 12,588 |
| Emissions (tonnes) | ||
| Nitrogen oxides (NOx) | 3,684 | 3,559 |
| Sulphur oxides (SOx) | 433 | 439 |
| Carbon dioxide (CO2 ) |
307,853 | 316,225 |
| Residual products (tonnes) | ||
| Solid waste for combustion | 3,025 | 2,667 |
| Waste sent to landfills | 210 | 587 |
| Waste for recycling | 1,321 | 1,345 |
| Biowaste | 958 | 722 |
| Hazardous waste | 70 | 95 |
| Wastewater pumped ashore (m3) | ||
| Grey and black water | 298,066 | 300,488 |
| Bilge water | 7,468 | 8,631 |
| Waste oil (m3) | 2,314 | 2,531 |
Environmental thinking is also visible in Viking Line's shipboard customer services, including organically grown coffee and water in a personal glass bottle.
Viking Line chooses organically grown coffee as one element of its efforts to practice environmentally conscious procurement. When purchasing the seafood that is served on board its vessels, Viking Line follows the Swedish Environmental Management Council's list of sustainable fish and shellfish stocks.
The Food Garden restaurants on Viking Line vessels no longer offer table water in plastic bottles. Instead they serve specially purified water poured directly from the tap into an environmentally themed reusable glass bottle. This has a number of environmental advantages − it reduces the need to transport bottles of water as well as the quantity of single-use bottles in shipboard solid waste.
Reduced water consumption
Shipboard cleaning staff members also employ various environmentally friendly practices. On board
they use a special dosage device that mixes concentrated washing fluid with water according to predetermined norms. Because of careful dosage, they achieve optimal water and washing fluid consumption when cleaning the cabins and galleys on Viking Line vessels.
Cleaning equipment made of micro-fibres is used, which minimizes detergent and water use on board.
To reduce water consumption, Viking Line has installed watersaving mouthpieces on faucets and showers, which reduce water flow without affecting passenger comfort. The vacuum toilets and waterless urinals aboard the vessels also help to reduce water use.
Purchasing and use of chemicals are governed by internal environmental standards. A list of products approved for use at Viking Line is being compiled at Group level. Environmentally friendly alternatives are used as far as possible.
All solid wastes generated aboard Viking Line vessels are brought ashore for subsequent recycling, re-use, combustion, depositing in landfills, composting or other waste management by an approved recipient. On the Viking XPRS and Viking Grace, equipment has been installed to make efficient sorting and collection of biowaste possible. On the Mariella, all biowaste is collected in receptacles. The biowaste is then transported to a digestion plant for production of biogas.
During 2014 Viking Line brought the following ashore from its vessels for recycling:
16 tonnes of plastic, which is equivalent to a 28 tonne reduction in CO2 emissions – comparable to driving a car 148,960 km on a motorway.
4 tonnes of aluminium, equivalent to a 40 tonne reduction in CO2 emissions – comparable to driving a car 212,800 km on a motorway.
2,279 tonnes of used oils, equivalent to a 3,988 tonne reduction in CO2 emissions – comparable to driving a car 21,216,160 km on a motorway.
ENVIRONMENT, SAFETY AND SECURITY
...Viking Line brought ashore from the Viking XPRS, the Viking Grace and the Mariella a total of 958 tonnes of food waste for biogas production. This yielded 71,000 cubic metres of biogas, equivalent to 80,000 litres of petrol. Biogas production neither increases atmospheric carbon dioxide levels nor contributes to the greenhouse effect. Biogas is thus usually described as carbon dioxide-neutral.
…Viking Line served 5,830,091 cups of organically grown coffee on board its vessels. Organic cultivation means that the beans are grown amid rich biological diversity and without artificial fertilizers, chemical pesticides or genetic manipulation.
...Through recycling, Viking Line spared our environment from emissions comparable to driving a car more than 21,577,920 km on a motorway.
recycling of materials is very beneficial to the environment − greater recycling reduces our climate impact. It requires much less energy to recycle materials than to extract new ones from nature. Eco-cycles benefit the climate.
446 tonnes of glass packaging. When recycled glass is melted down to make new glass, the process consumes 20 per cent less energy than starting from sand, soda ash and limestone as raw materials. Glass packaging can be recycled any number of times without deteriorating in quality.
78 tonnes of scrap metal. Recycling of steel, for example from food tins, consumes 75 per cent less energy than production from iron ore. 635 tonnes of paper and cardboard packaging.
Because of recycling, we do not need to cut down as many new trees. A tonne of recycled paper is equivalent to about 14 trees. Paper can be recycled around seven times.
In order to ensure sustainable business operations, safety and security must always come first. Since the start of service in 1959, Viking Line has transported 200 million passengers without anyone being seriously injured or killed in a maritime accident. It has achieved these good accident statistics by having a well-established safety and security culture. Safety and security work is a high priority.
S afety work is based on operating vessels in compliance with the prevailing laws, rules, regulations, recommendations and standards issued by the International Maritime Organization (IMO), the European Union (EU), national maritime authorities, classification societies and other authorities, as well as internal monitoring and regulatory oversight.
Safety and security efforts are administered and operated mainly through the International Safety Management (ISM) Code and the International Ship & Port Facility Security (ISPS) Code. These two quality management systems were designed on the basis of the safety and security aspects of operations, with risk identification, risk management and divergence reporting playing significant roles.
Aside from ensuring that vessels and their equipment are well maintained, Viking Line's shipboard and land-based employees play a vital role in safety and security work; each regular crew member has a specific safety and security assignment. Vessel crews and the land-based safety and security organization receive continuously instruction in operational safety and are also trained to respond to emergency situations related to safety and security as well as environmental matters.
Viking Line maintains continuous cooperation with maritime rescue authorities; fire brigades; police; customs and border control authorities and national emergency response forces. This cooperation is very important in order to quickly and efficiently obtain adequate information during any emergency situations, but also to increase understanding between authorities and vessels. Recurrent joint exercises maintain prepared-
Viking Line maintains continuous cooperation with maritime rescue authorities; fire brigades; police; customs and border control authorities and national emergency response forces.
ness for collaboration in case of major or minor emergency scenarios.
During 2014, two of the Company's vessels participated in a major exercise together with the Finnish police, Border Guard and defence forces, with units from Estonia also participating. This was one of the largest safety and security exercises carried out in the Gulf of Finland. It included training in boarding from both vessels and helicopters.
During the year, Viking Line started a project aimed at improving efficiency and assuring quality in its on-board safety drills. The purpose was to further ensure uniform drill procedures, so that on-board training and drills fulfil the established requirements and norms.
In 2014, Viking Line participated in a major rescue drill at sea, which simulated the evacuation of a large number of passengers. The exercise was organized by the International Maritime Rescue Federation (IMRF) in Gothenburg, Sweden.
Viikinki, a dog jointly owned by Viking Line and the Finnish Boarder Guard, with his master and handler, Pekka Aho.
The Company's vessels and border control authorities expanded their cooperation in order to ensure that they can suitably coordinate their efforts in the event of an emergency at sea. As part of this collaboration, vessels will take part in annual training exercises together with border control authorities, using both vessels and helicopters.
Viking Line expanded its cooperation with the Maritime Incident Response Groups (MIRGs) of national rescue authorities, including operational drills and on-board lectures. MIRGs are specially trained rescue groups, whose most important task is to assist passengers and crew members in case of incidents and accidents at sea.
Viking Lines is participating in a project together with border control and transport safety
authorities aimed at devising an analytical and risk evaluation tool for vessels in distress at sea.
During this autumn's service days, Viking Line carried out an expanded training programme for crew members on the Viking Grace and the Amorella, culminating in full-scale safety drills in which the Company's central emergency organization also participated.
To make both individual and group drills possible on board, interactive drill programmes were developed.
The bridge officer teams on the Company's vessels underwent refresher training related to new stabilization standards and calculation of leak damage stability.
During 2014 Viking Line continued its efforts to ensure orderly
| IMO | International Maritime Organization |
|---|---|
| IMRF | International Maritime Rescue Federation |
| ISM | International Safety Management |
| ISPS | International Ship and Port Facility Security Code |
| MIRG | Maritime Incident Response Group |
conduct and avoid disruptions both in the public areas and in the cabin departments of its vessels.
Maintaining order is largely based on proactive measures, with security staff having a visible presence among guests and continuously patrolling the various departments on each vessel. Security staff members are in constant contact with customers and their occupational role requires them to resolve problem situations, which is often both demanding and challenging. For this reason, they receive regular support in their work through training and dialogue with supervisors.
To enhance the role of its on-board medical orderly, the Viking Grace has introduced a new "paramedic" position. The vessel's paramedic, who holds a management position, supervises the vessel's security staff and provides first aid for passengers and crew members in case of accidents or acute illness. The introduction of this new position represents a higher level of preparedness for emergency medical care on board and provides stimulating leadership for security staff members.
During 2014 the average number of employees in the Viking Line Group was 2,797 (3,104). Of the total number of employees, 2,220 (2,460) resided in Finland. The number residing in Sweden was 471 (534). There were 104 (108) employees residing in Estonia and 2 (2) in Germany. In addition to the Group's own employees, the Viking XPRS was crewed by an average of 235 people employed by a staffing company.
TOTAL Women 46.9% Men 53.1%
SHIPBOARD Women 41.1% Men 58.9%
LAND-BASED Women 65.9% Men 34.1%
Most of Viking Line's employees work on board its vessels. Shipboard personnel totalled 2,142 (2,407) and land-based personnel 655 (697). Of the Group's landbased personnel, 65.9 per cent were women and 34.1 per cent were men, while women accounted for 41.1 per cent and men 58.9 per cent of shipboard personnel.
To enable Viking Line to hire, retain and inspire a skilled workforce, it is important to maintain a transparent corporate culture in which employees actively contribute to strengthening the Company's brand. Viking Line's HR strategy supports its business strategy and is based on the Company's vision, mission and basic values. It is about giving employees opportunities for professional development so that they will enjoy their jobs, have a sense of commitment and feel that they are contributing to the Company's performance and earnings. Viking Line's success is facilitated by ensuring knowledgeable, proficient and motivated employees and well-dimensioned staffing at all levels of the organization. Viking
Line endeavours to be an attractive employer, amid increasingly tough competition for skilled labour.
Human resource planning is a key element of HR strategy. This planning takes into account external factors such as shipping industry trends and the competitive situation, as well as internal factors such as the Company's growth targets, employee age structure and need for professional know-how and skills. The Company maintains good relations with employee representatives and the various trade unions through continuous dialogue.
Key areas of human resource strategy are leadership, human resource development, crewing, recruitment and job introduction, motivation and commitment and job satisfaction and well-being.
We respect our employees and value initiative, responsibility, honesty, innovation, loyalty, teamwork and openness. We expect our employees to treat our customers with warmth, kindness and humility and aim at exceeding their expectations. Employees must also show respect for each other, be prepared for continuous learning and professional development and
help ensure that our vessels are safe, secure and well-managed. We continuously endeavour to improve our environmental and sustainability work.
Viking Line believes that people with different experiences and perspectives are a crucial factor in creating the innovative climate required for long-term business success. As a passenger and cargo shipping company with operations in several countries, and with a customer base representing many different nationalities, we know that our success depends on the diversity and proficiency of our employees. By diversity, we at Viking Line mean the variations that make us all unique. This includes such differences as age, gender, sexual orientation, ethnicity, religion as well as such differences in physical abilities and ways of thinking and behaving.
At Viking Line, we shall treat all people with respect, humanity and dignity in accordance with our business principles.
The parent company Viking Line Abp has been listed on NASDAQ Helsinki since July 5, 1995. The wholly owned subsidiaries Viking Line Skandinavien AB and its subsidiary; Viking Rederi AB; OÜ Viking Line Eesti; Viking Line Finnlandverkehr GmbH and Viking Line Buss Ab belong to the Viking Line Group. Viking Line Abp applies the Finnish Corporate Governance Code issued by the Securities Market Association on June 15, 2010.
On its website www.vikingline.com, Viking Line has published a Corporate Governance Statement, in compliance with Recommendation 54 of the Finnish Corporate Governance Code, pursuant to Chapter 7, Section 7 of the Finnish Securities Market Act.
Viking Line Abp is a public limited company domiciled in Finland, which is governed by the Finnish Companies Act and the Company's Articles of Association. In compliance with the Companies Act, the Annual General Meeting (AGM) is the highest decision-making body of the Company, where the owners exercise their influence.
All Viking Line Abp shares constitute one series, in which all shares are of equal value. Each share is represented by one vote when voting on motions and candidates at shareholders' meetings. However, no shareholder may vote on behalf of more than 1/4 of the shares represented at a shareholders' meeting. On December 31, 2014 Viking Line Abp had 3,183 registered shareholders.
The AGM decides on such matters as the adoption of the
financial statements for the preceding financial year, the distribution of the Company's profit or loss and discharge of the Board of Directors as well as the President and Chief Executive Officer from liability for that year. The meeting also elects Board members and auditors, as well as deciding on their fees.
In accordance with the Articles of Association, the AGM is held in Mariehamn before the end of June. The latest such meeting took place on April 16, 2014. Information from this meeting is available on the Company's websites. The next AGM will be held on April 22, 2015.
The invitation to the AGM occurs through an announcement that appears in a newspaper published in the Company's place of domicile. This invitation is also published on the Company's websites. The invitation shall be issued no earlier than three months before the AGM record date and no later than three weeks before the AGM.
In addition to disclosing the items of business that will be discussed at the meeting, the invitation shall contain the names of candidates for service on the Board of Directors that have been communicated to the Board, provided that these candidates have been nominated by the Board or by shareholders representing at least 10 per cent of the shares and that they have agreed to serve on the Board. The invitation shall also state the name of any proposed auditor.
The President and CEO, the
The next AGM will be held on April 22, 2015.
Chairman of the Board, a majority of Board members as well as any individuals who are first-time candidates for service as members of the Board shall be present at the AGM.
Further information about the AGM, as well as the Company's Articles of Association, are available on the Company's websites.
The Company is headed by the Board of Directors and by the President and Chief Executive Officer. In his absence, the Deputy CEO substitutes for the President and CEO. The President and CEO works with a Group Management team appointed by the Board of Directors.
The Board of Directors consists of the Chairman and six members as well as three deputy members. The Chairman, members and deputy members are elected by the AGM for the period until the end of the next AGM. In case the Chairman or a member of the Board will be absent, he or she has the primary responsibility for nominating the deputy who will be summoned in his/her place. The Articles of Association have not established any special system for the appointment of Board members. The Board has not appointed any committees.
The Board has not appointed an audit committee. Instead, all information related to audits is dealt with directly by the Board.
The Board of Directors is in charge of the administration of the Company's affairs. It leads and oversees the Company's operative management, appoints and dismisses the President and CEO and the other members of Group Management, approves the Company's strategic goals and risk management principles and ensures that the management system is functioning. The Board establishes the Company's vision and values, which shall be observed in its operations.
At its statutory meeting after the AGM, the Board of Directors adopts rules of procedure for the financial year. These rules of procedure shall contain information about and indicative dates for:
In addition, as appropriate, the Board deals with:
• other items of business which are incumbent on the Board according to the Companies Act, the Articles of Association and other rules and regulations
• significant investments and
divestments • other items of business submitted by the operational management or
by individual Board members.
At each Board meeting, the President and CEO provides information about the Company's operations. In addition, the Board continuously receives information in the form of regular reports and the minutes of Group Management meetings. The Company's Deputy CEO serves as secretary of the Board.
The Board meets regularly a number of times per year. A notice of each meeting and supporting documents for the decisions to be made are provided to the Board members well in advance, at least four days beforehand unless there are important reasons for doing otherwise. During the financial year 2014, the Board held 11 meetings. Board members' average attendance at meetings was 96.1 per cent.
The President and CEO is appointed and dismissed by the Board of Directors. The terms of his employment relationship are established in a written contract that is approved by the Board. The President and CEO may be elected to the Board, but not as its Chairman. Jan Hanses has been the President and CEO of the Company since March 20, 2014, when he succeeded Mikael Backman in this position.
In addition to the President and CEO, the Board also appoints the Deputy CEO and the other members of Group Management. Under the leadership of the President and CEO, Group Management is responsible for directing the Company's operating activities as well as strategic and financial planning. Group Management meets regularly once a month.
Fees adopted by the Annual General Meeting are paid as compensation for the work of the Board. Reasonable travel expenses are paid as invoiced. The following fees were paid in compliance with the decision of the Annual General Meeting:
has a termination notice period of 8 months. The Company's Board is entitled to terminate his contract, but the President and CEO will enjoy 8 months of salary after the termination date. As agreed, Mikael Backman received 8 months of salary totalling EUR 154,888 after the date of his termination.
Other Group Management members receive a monthly salary that is discussed by the Board yearly. In case of termination by the Company, the other members of Group Management receive 6 months of salary. During 2013, the Group applied an incentive and bonus system that included the Company's President and CEO as well as its Executive Vice Presidents. The size of the bonus was affected both by the results of the financial period and personal job performance. The maximum bonus was 35 per cent of annual salary. The Company has no share-based incentive systems. After the financial statements for the financial year 2013 were approved, the Board of Directors decided to disburse individual bonuses
| EUR | 2014 | 2013 |
|---|---|---|
| Annual fee, Chairman of the Board | 25,000 | 20,000 |
| Annual fee, other regular Board members | 20,000 | 17,000 |
| Fee per meeting attended, Board and deputy members |
1,000 | 1,000 |
For the financial year 2014, a total of EUR 229,000 in Board fees (2013: 214,000) was disbursed.
As compensation for his work, the President and CEO is paid a monthly salary that is set by the Board yearly. During the financial year 2014, Jan Hanses, President and CEO received a total of EUR 215,100 and Mikael Backman, President and CEO, received a total of EUR 242,700 (2013: EUR 246,200) in salary and benefits in kind, in the form of telephone benefits and group life insurance coverage, including insurance for medical expenses.
The President and CEO is subject to the terms of the Finnish public pension system. The retirement age of the President and CEO is 63-68. The President and CEO
totalling EUR 9,951.
Further information about compensation to the Group's key individuals in leading positions can be found in the consolidated financial statements, Note 25 and on the Company's websites.
The Company has two Auditors and one Deputy Auditor. They are elected at the Annual General Meeting for a term expiring at the end of the next Annual General Meeting. The Auditors examine the Company's accounts, financial statements, Report of the Directors and administration. After completion of this examination, the Board receives a review report and an Auditors' Report is submitted to the Annual General Meeting.
The Company's Auditors are:
Johan Kronberg, Authorized Public Accountant (CGR) PricewaterhouseCoopers Oy The Company's Auditor since 2010
Martin Grandell, Authorized Public Accountant (CGR) PricewaterhouseCoopers Oy The Company's Auditor since 2010
The firm of Pricewaterhouse Coopers Oy, Authorized Public Accountants (CGR), serves as the Company's Deputy Auditor.
Auditors' fees are adopted by the Annual General Meeting. According to the decision in force, fees are paid according to regular invoices. The Group's auditing expenses amounted to EUR 125,400 during 2014 (2013: 88,200), of which EUR 94,100 (2013: 56,300) was related to the parent company. The expenses of other consulting services by the Group's Auditors as well as their auditing firms were EUR 43,600 during 2014 (2013: 55,000).
The objective of the internal oversight for which the Board of Directors and the operative management are responsible is to ensure efficient, profitable operations, reliable information and compliance with regulations
and business principles. Risk management is an integral element of the Group's controls and oversight of operations. Risks in operating activities are discussed in the Report of the Directors, and management of financial risks is dealt with in the consolidated financial statements, Note 26.
The Board of Directors continuously monitors the Group's trend of earnings and its financial position by means of the internal reporting system. The internal control system consists of detailed internal accounts, which are reconciled with the business accounts. The Group's financing and liquidity situation is assessed continuously.
The outside Auditors continuously evaluate the internal control system in their review reports to the Board.
Viking Line applies the provisions of the Securities Market Act on insider information as well as the insider regulations of NASDAQ Helsinki. Responsibility for this rests with the Company's legal affairs department. Among Viking Line insiders, according to Chapter 12, Section 3 of the Securities Market Act, are the Board of Directors, the President and CEO as well as his deputy, the Company's auditors, plus individuals in top management who regularly receive insider information and who are entitled to make decisions concerning the Company's future development and organization of operating activities.
In addition to the public register of insiders who are obligated to declare their holdings, Viking Line also maintains an internal company insider register, which includes all individuals in the service of the Company who, due to their position or their tasks, regularly receive insider information.
Viking Line's websites provide links to the Company's public insider register, which shows the individuals who are listed in the register as well as their current holdings in Viking Line shares and those of their related parties.
More information on the Company's corporate governance is available on the Company's websites.
NILS-ERIK EKLUND President and CEO, Viking Line Abp 1990-2010 Born in 1946 Board member since 1997
AGNETA KARLSSON Dr.Econ. Associate Professor Born in 1954 Board member since 2006
BEN LUNDQVIST Managing Director, Ångfartygs Ab Alfa, Rederi Ab Hildegaard and Lundqvist Rederierna Ab Born in 1943 Chairman of the Board since 1995 Board member since 1978
TRYGVE ERIKSSON Managing Director, Eriksson Capital Ab Born in 1947 Board Member since 2012
DICK LUNDQVIST Chairman of the Board, Lundqvist Rederierna Ab and Rederi Ab Hildegaard Born in 1946 Board member since 2000
ERIK GRÖNBERG Chairman of the Board, Ge-Te Media AB Born in 1943 Board member since 2004
LARS G NORDSTRÖM Chairman of the Board, Vattenfall AB Board member, Nordea Bank AB Born in 1943 Board member since 2006
The deputy members of the Board are Ulrica Danielsson, Stefan Lundqvist and Johnny Rosenholm.
Deputy CEO since 2014 Executive Vice President since 2014 CFO since 2013 Head of Finance and IT Born in 1974 Joined the Company in 2013
Vice President since 2014 Head of Shipboard Commercial Operations Born in 1964 Joined the Company in 1984
PETER HELLGREN Executive Vice President since 2014 Head of Sales and Marketing Born in 1967 Joined the Company in 1994
JAN HANSES President and CEO since 2014 Born in 1961 Joined the Company in 1988
TONY ÖHMAN Vice President since 2007 Head of Marine Operations and Real Estate Born in 1953 Joined the Company in 1989
Further information about the members of the Board and Group Management is available on the Company's websites.
Consolidated sales of the Viking Line Group during the report period, January 1 – December 31, 2014, decreased by 4.0 per cent to 527.4 million euros (EUR 549.4 M during January 1 – December 31, 2013). Other operating revenue amounted to EUR 0.7 M (23.5). Operating income amounted to EUR 13.7 M (34.7). Net financial items totalled EUR 18.6 M (-7.1). Consolidated income before taxes totalled EUR 32.3 M (27.7). Income after taxes amounted to EUR 30.6 M (27.5).
During the report period, passenger-related revenue decreased by 4.9 per cent to EUR 483.8 M (508.8), while cargo revenue increased by 8.5 per cent to EUR 39.6 M (36.5). Net sales revenue decreased by 4.9 per cent to EUR 379.3 M (398.8). The Group's operating expenses decreased by 5.0 per cent to EUR 334.4 M (351.9).
The decrease in consolidated sales is primarily explained by the prevailing pressure on prices in today's tough competitive situation, combined with falling volume early in 2014 and an economic downturn in Finland that affects the pattern of consumption. Overall, this has had a negative impact on net sales revenue per passenger.
The Group's bunker (vessel fuel) expenses decreased during the period by EUR 5.1 M, equivalent to 8.1 per cent. The decrease is explained by lower average bunker prices and the Group's continued efforts to optimize the bunker consumption of its vessels.
The Board of Directors believes that the Group's action programme aimed at improving operational efficiency and boosting sales is continuing to have a positive impact on earnings.
The section "Five-year financial review" presents information about the Group's financial position and earnings over a five-year period.
During the financial year 2014, the Group received shares in the Åland-based insurance company Alandia Försäkring Ab and divested some of these, which resulted in a nonrecurring item affecting comparability of EUR 27.7 M. During the financial year 2013, the sale of the Isabella constituted an item affecting comparability of EUR 22.8 M. Without these items, the Group's operating income totalled EUR 13.7 M during the financial year 2014 (11.9 during the financial year 2013). Without these items, consolidated net financial items were EUR -9.1 M (-7.1) and consolidated income before taxes amounted to EUR 4.6 M (4.9).
During 2014, the Viking Line Group provided passenger and cargo carrier services using seven vessels on the northern Baltic Sea. The Group's vessels served the same routes as during 2013. During the period June 12 – September 2, 2014 the Gabriella and the Mariella served the Helsinki (Finland)–Tallinn (Estonia) route, while continuing to sail on their regular Helsinki–Mariehamn (Åland Islands, Finland)–Stockholm (Sweden) route.
In January 2014 the Viking XPRS changed from a Swedish to an Estonian flag and the Rosella from a Swedish to a Finnish flag. In connection with the reflagging of the Viking XPRS, Viking Line Abp sold 51 per cent of the vessel to the subsidiary Viking Rederi AB.
The number of passengers on Viking Line's vessels during the financial year increased by 76,496 to 6,610,146 (6,533,650). During the report period, Viking Line reduced its market share on the Turku (Finland)–Mariehamn/Långnäs (Åland Islands, Finland)–Stockholm route by 1.0 percentage points to 56.3 per cent. On the Helsinki– Mariehamn–Stockholm route, market share increased by 0.6 percentage points to 46.7 per cent. In cruise services between Stockholm and Mariehamn, market share increased by 1.4 percentage points to 54.2 per cent. On the Helsinki–Tallinn route, market share increased by approximately 1.2 percentage points to 24.8 per cent. On the short route across the Sea of Åland between Mariehamn and Kapellskär (Sweden), market share increased by 1.6 percentage points to 43.6 per cent. This gave the Group a total market share in its service area of approximately 35.0 per cent (34.6).
Viking Line's cargo volume was 129,255 cargo units (119,704). Viking Line achieved a cargo market share of approximately 21.9 per cent (20.9).
The Group's investments amounted to EUR 7.2 M (172.3, of which 164.0 was for investments in the Viking Grace).
On December 31, 2014 the Group's non-current interest-bearing liabilities amounted to EUR 197.5 M (221.2). The equity/assets ratio was 40.0 per cent, compared to 35.6 per cent a year earlier.
At the end of December 2014, the Group's cash and cash equivalents amounted to EUR 101.1 M (96.1). Net cash flow from operating activities amounted to EUR 30.7 M (38.4).
The Åland-based shipowners' mutual insurance company Redarnas Ömsesidiga Försäkringsbolag was re-organized into a limited liability insurance company and merged with its wholly owned insurance subsidiary Försäkringsaktiebolaget Alandia to form Alandia Försäkring Ab as of December 31, 2014. The merged company changed its name to Försäkringsaktiebolaget Alandia as of January 1, 2015. The shares in the
company were allocated in proportion to the premiums paid during the years 2011– 2013 among those companies that, on the merger date, had an uninterrupted co-owner relationship with Redarnas Ömsesidiga Försäkringsbolag that had lasted at least one year.
Upon allocation, the Group received shares in Alandia Försäkring Ab and sold some of them as of December 31, 2014. After that, Viking Line's shareholding amounted to 19.9 per cent of the total.
The market for cruises and ferry services in the Baltic Sea is stable but subject to tough competition. Political decisions may change Viking Line's operating conditions, with potentially adverse consequences to its business operations. Åland's special tax status, which makes duty- and tax-free sales possible on services to and from Åland, is nevertheless permanent. The European Commission's guidelines for the promotion of seafaring, which makes the net salary system for shipboard employees possible, are in effect until further notice. There is no indication that the guidelines will be changed.
The Group's business operations are dependent on functioning logistics and computer systems. Disruptions in traffic or data communications may have an adverse impact on the Group's earnings. Viking Line endeavours to minimize the risk of lengthy unplanned service interruptions by means of continuous vessel maintenance, a welldeveloped safety and security system, training and regular drills. Risks in information management are minimized by developing appropriate security systems and alternative working methods as well as efforts to ensure the reliability of computer systems.
The Group's vessels are recognized in the balance sheet at a carrying amount of EUR 340.1 M (365.2). The vessels have hull and machinery and increased value insurance totalling EUR 598.0 M (598.0). In addition, all vessels have strike insurance and protection and indemnity (P&I) insurance.
Fluctuations in bunker (vessel fuel) prices have a direct impact on the Group's earnings. The European Union's new sulphur directive entered into force on January 1, 2015 and will lead to higher expenses for the Group. The directive affects all of the Group's vessels except the Viking Grace, which operates on liquefied natural gas (LNG).
The Group is also exposed to various financial risks, among them fluctuations in currency exchange rates. Revenue is generated in euros and Swedish kronor. Most operational influx of cash and cash equivalents consists of euros. Prices of goods for sale and bunker are affected by foreign currencies, especially the US dollar. The Group endeavours to maintain good liquidity in order to be prepared to deal with adverse
changes in operational cash flow.
The Group is exposed to price risk related to shares that are classified as "Investments available for sale". The value of the Group's shareholding in the insurance company Försäkringsaktiebolaget Alandia is established on the basis of the present value of future cash flows. The cash flow projection is based on a number of estimates and judgements that have a substantial impact on present value.
Further information about financial risk management can be found in Note 26 to the consolidated financial statements.
Viking Line endeavours to provide safe and secure seagoing passenger services in an environmentally sound way. National legislation and international agreements are the basis for the Company's environmental work. Through a long-term, active commitment to the environment, the Company has developed environmental activities that extend beyond what is stipulated by the rules in force for passenger services on the Baltic Sea. During 2014 the Company's new LNG-powered vessel the Viking Grace received the Skål International Sustainable Tourism Award, an international environmental prize. Viking Line's environmental work focuses on its vessel operations, where the largest positive environmental effect can be achieved.
The Group's Head Office, its subsidiary Viking Line Buss Ab and all its vessels are certified in compliance with ISO 14001 environmental management standards. In addition, the Viking Line organization and all vessels are certified according to the International Safety Management (ISM) Code, which stipulates organizational rules for safe vessel operation and for preventing pollution.
The Company is responsible for ensuring that its vessels, their crews and the landbased organization fulfil all the provisions of the rules that apply to passenger and cargo services. National maritime authorities oversee the safety and security equipment, fire protection systems, communications equipment, stability and safety organization of Viking Line's vessels. Emergency preparedness on board is maintained by a safety organization that carries out continuous training and drills related to its duties. Viking Line also has a special safety and crisis management plan, which is constantly being updated and redeveloped. The plan is continuously tested by means of realistic drills, both on board and on land.
During 2014 the average number of employees in the Viking Line Group was 2,797 (3,104), of whom 2,068 (1,947) worked for the parent company. Of the total number of
employees, 2,220 (2,460) resided in Finland. The number residing in Sweden was 471 (534). There were 104 (108) employees residing in Estonia and 2 (2) in Germany.
Most of Viking Line's employees work on board its vessels. Shipboard personnel totalled 2,142 (2,407) and land-based personnel 655 (697).
In addition to the Group's own employees, the Viking XPRS was crewed by an average of 235 people employed by a staffing company.
The Board of Directors consists of Ben Lundqvist, Chairman; Nils-Erik Eklund, Trygve Eriksson, Erik Grönberg, Agneta Karlsson, Dick Lundqvist and Lars G Nordström. The deputies to the members of the Board are Ulrica Danielsson, Stefan Lundqvist and Johnny Rosenholm.
On March 20, 2014 the Board of Directors terminated the employment relationship of Mikael Backman, President and Chief Executive Officer. The Board selected Jan Hanses, Deputy CEO, as the new President and CEO. At the same time it appointed Andreas Remmer, Chief Financial Officer, as Executive Vice President and Deputy CEO. On April 17, 2014, Peter Hellgren, Head of Sales and Marketing for Viking Line's Swedish market area, was appointed as Executive Vice President with overall responsibility for the Group's sales and marketing. On September 1, 2014, Viking Line's former Hotel Manager, Wilhelm Hård af Segerstad, was appointed as the new Vice President and Head of Shipboard Commercial Operations, and as a member of the Group Management team.
Johan Kronberg, Authorized Public Accountant (CGR) and Martin Grandell, Authorized Public Accountant (CGR), are regular Auditors. The firm of PricewaterhouseCoopers Oy, Authorized Public Accountants (CGR), serves as the Company's Deputy Auditor.
The Group has no loan arrangements, guarantees, contingent liabilities provided/ received or other liabilities associated with related parties. Additional information about related party transactions can be found in Note 25 to the consolidated financial statements. Information about the Company's corporate governance is available on the Company's web sites.
All of Viking Line Abp's 10,800,000 shares constitute one series, in which all shares are of equal value. Each share is equivalent to one vote on motions and candidates at shareholders' meetings. The Company has not issued any warrants or bonds. The
Board of Directors has not requested authorization from a shareholders' meeting to change the share capital, to issue warrants or bonds or to acquire the Company's own shares. The Company and its subsidiaries do not own any of their own shares. More information about Viking Line shares can be found in the section "Share data".
During 2015 the Gabriella and the Mariella will again provide expanded summer service to Tallinn according to a concept similar to the preceding year. These vessels will thus – in addition to serving their regular Helsinki–Stockholm routes – also temporarily serve the Helsinki–Tallinn route. Competition in Viking Line's service area implies continued pressure on both prices and volume. The economic downturn in Finland is another uncertainty factor, but recent bunker price developments are currently having a favourable effect on earnings. The overall assessment of the Board of Directors is that in 2015, operating income will improve compared to operating income in 2014, but future bunker price developments represent a significant uncertainty factor.
According to the balance sheet of Viking Line Abp on December 31, 2014 unrestricted equity totalled EUR 88,737,247.40.
The Board of Directors proposes to the annual shareholders' meeting that:
| A dividend of EUR 0.70 per share shall be paid, totalling | EUR 7,560,000.00 |
|---|---|
| Remaining unrestricted equity | EUR 81,177,247.40 |
No material changes in the Company's financial position have occurred after the end of the financial year. In the assessment of the Board of Directors, the dividend is justifiable in light of the demands with respect to the size of the equity which are imposed by the nature, scope, financing and risks associated with the business.
EUR M
| EUR M | Note | Jan 1, 2014– Dec 31, 2014 |
Jan 1, 2013– Dec 31, 2013 |
|---|---|---|---|
| SALES | 2 | 527.4 | 549.4 |
| Other operating revenue | 3 | 0.7 | 23.5 |
| Expenses | |||
| Goods and services | 4 | 148.1 | 150.6 |
| Salary and other employment benefit expenses | 5 | 120.8 | 130.1 |
| Depreciation and impairment losses | 6 | 31.8 | 35.7 |
| Other operating expenses | 7 | 213.6 | 221.9 |
| 514.3 | 538.2 | ||
| OPERATING INCOME | 13.7 | 34.7 | |
| Financial income | 8 | 29.0 | 1.2 |
| Financial expenses | 8 | -10.4 | -8.3 |
| INCOME BEFORE TAXES | 32.3 | 27.7 | |
| Income taxes | 9 | -1.8 | -0.2 |
| INCOME FOR THE PERIOD | 30.6 | 27.5 | |
| Other comprehensive income | |||
| Items that may be transferred to the income statement | |||
| Translation differences | -0.9 | -0.4 | |
| Investments available for sale | 0.0 | 0.0 | |
| -0.9 | -0.4 | ||
| COMPREHENSIVE INCOME FOR THE PERIOD | 29.7 | 27.1 | |
| Income attributable to: | |||
| Parent company shareholders | 30.6 | 27.5 | |
| Comprehensive income attributable to: | |||
| Parent company shareholders | 29.7 | 27.1 | |
| Earnings per share before and after dilution, EUR | 10 | 2.83 | 2.54 |
| EUR M | Note | Dec 31, 2014 | Dec 31, 2013 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 11 | 0.6 | 0.8 |
| Land | 12 | 1.1 | 1.1 |
| Buildings and structures | 12 | 10.8 | 11.7 |
| Renovation costs for rented properties | 12 | 0.6 | 0.7 |
| Vessels | 12 | 340.1 | 365.2 |
| Machinery and equipment | 12 | 6.7 | 8.0 |
| Investments available for sale | 13, 22 | 26.1 | 0.0 |
| Receivables | 14, 22 | 0.3 | 0.5 |
| Total non-current assets | 386.3 | 388.1 | |
| Current assets | |||
| Inventories | 15 | 16.1 | 15.0 |
| Income tax assets | 0.3 | 0.2 | |
| Trade and other receivables | 16, 22 | 29.3 | 31.0 |
| Cash and cash equivalents | 17, 22 | 101.1 | 96.1 |
| Total current assets | 146.8 | 142.2 | |
| TOTAL ASSETS | 533.1 | 530.3 | |
| EQUITY AND LIABILITIES | |||
| Equity | 18 | ||
| Share capital | 1.8 | 1.8 | |
| Reserves | 0.0 | 0.0 | |
| Translation differences | -0.8 | -0.3 | |
| Retained earnings | 212.3 | 187.5 | |
| Equity attributable to parent company shareholders | 213.3 | 189.0 | |
| Total equity | 213.3 | 189.0 | |
| Non-current liabilities | |||
| Deferred tax liabilities | 19 | 31.4 | 29.7 |
| Non-current interest-bearing liabilities | 20, 22 | 197.5 | 221.2 |
| Total non-current liabilities | 228.9 | 250.8 | |
| Current liabilities | |||
| Current interest-bearing liabilities | 20, 22 | 23.5 | 15.1 |
| Income tax liabilities | 0.0 | - | |
| Trade and other payables | 21, 22 | 67.4 | 75.4 |
| Total current liabilities | 91.0 | 90.4 | |
| Total liabilities | 319.8 | 341.3 | |
| TOTAL EQUITY AND LIABILITIES | 533.1 | 530.3 |
| EUR M | Jan 1, 2014– Dec 31, 2014 |
Jan 1, 2013– Dec 31, 2013 |
|---|---|---|
| OPERATING ACTIVITIES | ||
| Income for the period | 30.6 | 27.5 |
| Adjustments | ||
| Depreciation and impairment losses | 31.8 | 35.7 |
| Capital gains from non-current assets | -0.2 | -22.8 |
| Other items not included in cash flow | 2.1 | -0.4 |
| Interest expenses and other financial expenses | 6.8 | 7.1 |
| Financial income, Alandia Försäkring Ab | -27.9 | - |
| Interest income and other financial income | -0.2 | -0.1 |
| Dividend income | 0.0 | 0.0 |
| Income taxes | 1.8 | 0.2 |
| Change in working capital | ||
| Change in trade and other receivables | 1.7 | -1.9 |
| Change in inventories | -1.1 | 0.3 |
| Change in trade and other payables | -7.7 | -4.1 |
| Interest paid | -6.1 | -3.7 |
| Financial expenses paid | -0.8 | -0.8 |
| Interest received | 0.1 | 0.1 |
| Financial income received | 0.1 | 0.1 |
| Taxes paid | -0.2 | 1.4 |
| NET CASH FLOW FROM OPERATING ACTIVITIES | 30.7 | 38.4 |
| INVESTING ACTIVITIES | ||
| Investments in vessels | -6.2 | -168.6 |
| Investments in other intangible and tangible assets | -1.1 | -3.7 |
| Divestments of vessels | - | 29.9 |
| Divestments of other intangible and tangible assets | 0.3 | 0.2 |
| Divestments of investments available for sale | 1.6 | - |
| Payments received for non-current receivables | 0.2 | 0.2 |
| Dividends received | 0.0 | 0.0 |
| NET CASH FLOW FROM INVESTING ACTIVITIES | -5.1 | -142.0 |
| FINANCING ACTIVITIES | ||
| Increase in non-current liabilities | - | 179.1 |
| Amortization of non-current liabilities | -15.2 | -24.6 |
| Dividends paid | -5.4 | - |
| NET CASH FLOW FROM FINANCING ACTIVITIES | -20.6 | 154.4 |
| CHANGE IN CASH AND CASH EQUIVALENTS | 5.0 | 50.8 |
| Cash and cash equivalents at beginning of period | 96.1 | 45.3 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 101.1 | 96.1 |
| EUR M | Share capital |
Reserves | Translation differences |
Retained earnings |
Total equity |
|---|---|---|---|---|---|
| Equity, Jan 1, 2013 | 1.8 | 0.0 | 0.1 | 160.0 | 162.0 |
| Income for the period | 27.5 | 27.5 | |||
| Translation differences | 0.0 | -0.4 | 0.0 | -0.4 | |
| Remeasurement of investments available for sale | 0.0 | 0.0 | |||
| Comprehensive income for the period | - | 0.0 | -0.4 | 27.5 | 27.1 |
| Dividend to shareholders | - | ||||
| Equity, Dec 31, 2013 | 1.8 | 0.0 | -0.3 | 187.5 | 189.0 |
| Income for the period | 30.6 | 30.6 | |||
| Translation differences | 0.0 | -0.5 | -0.4 | -0.9 | |
| Remeasurement of investments available for sale | 0.0 | 0.0 | |||
| Comprehensive income for the period | - | 0.0 | -0.5 | 30.2 | 29.7 |
| Dividend to shareholders | -5.4 | -5.4 | |||
| Equity, Dec 31, 2014 | 1.8 | 0.0 | -0.8 | 212.3 | 213.3 |
The Viking Line Group provides passenger and cargo carrier operations in the northern Baltic Sea service area, with the Finnish mainland, Sweden, the Åland Islands (a Swedishspeaking province of Finland) and the three Baltic countries as its main markets. The Group's profit centres also include the Park Alandia Hotell and Viking Line Buss Ab. The parent company of the Group is Viking Line Abp, domiciled in Mariehamn, Åland. The shares of the parent company are listed on the NASDAQ Helsinki. The registered address of the Head Office is Norragatan 4, AX-22100 Mariehamn, Åland, Finland. The financial statements are available on www.vikingline.com and at the Group's Head Office.
These financial statements were approved for publication and signed by the Board of Directors on February 18, 2015 and will be submitted to the Annual General Meeting for adoption.
These financial statements have been prepared in compliance with International Financial Reporting Standards (IFRSs). In drafting them, the International Accounting Standards (IASs) and IFRSs as well as the interpretations of the Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) that were in force on December 31, 2014 have been applied. In the Finnish Accounting Act and in the regulations issued on the basis of this Act, "IFRSs" refers to standards that have been adopted for application in the Community in compliance with the acts of the European Parliament and the European Council.
Changes in IAS and IFRS standards as well as IFRIC interpretations that went into effect during the financial year did not have any substantial impact on the Group's financial statements.
The consolidated financial statements have been prepared on the basis of original costs unless otherwise stated in the accounting principles or notes below.
In preparing the consolidated financial statements in compliance with IFRSs, the Management of the Company must make judgements and estimates about the future that affect the reported amounts for assets and liabilities, revenue and expenses as well as other information. The judgements and estimates contained in the financial statements are based on the best assessment of Management on the date of the financial statements. The actual outcome may deviate from the estimates and judgements that have been made. Future events may change the basis for estimates and judgements.
The most important area involving judgements is the valuation of the Group's vessels. See Note 12. If the Group's estimates of the residual value or useful life of its vessels change, this affects the size of depreciation, which in turn affects earnings.
The value of the Group's shareholding in the insurance company Försäkringsaktiebolaget Alandia is established on the basis of the present value of future cash flows. The cash flow projection is based on a number of estimates and judgements that have a substantial impact on present value. The shareholding is reported under "Investments available for sale". See Note 13.
The consolidated financial statements encompass the parent company, Viking Line Abp, and those subsidiaries which the Parent Company controls. All subsidiaries are wholly owned. See Note 25. The financial statements of Group companies encompass the period January 1 – December 31, 2014.
Subsidiaries are reported according to the purchase method of accounting. This means that all assets that have been acquired, liabilities that have been taken over and contingent liabilities are recognized at fair values on the date the business was acquired. All subsidiaries were acquired before the transition to IFRS reporting. These acquisitions have been reported as previously in compliance with Finnish generally accepted accounting principles (GAAP).
The Group's internal business transactions as well as receivables and liabilities have been eliminated.
The consolidated financial statements have been prepared in euros, which is the parent company's functional currency and financial reporting currency. Business transactions in foreign currencies are recognized in the functional currency of the respective company according to the exchange rate on the transaction date.
When rounding off items to the nearest EUR 1,000,000, rounding-off differences of EUR ±0.1 M may occur.
Monetary items in foreign currencies have been translated into euros according to the exchange rates prevailing on the balance sheet date, while non-monetary items have been translated according to the exchange rate on the transaction date. Exchange rate differences that have arisen from translation are recognized in the income statement.
The income statements of foreign subsidiaries have been translated into euros according to monthly middle rates, while their balance sheets have been translated at the exchange rates on the balance sheet date. Exchange rate differences that have arisen from translation are recognized in equity and in other comprehensive income. Translation differences that arose after the transition to IFRS are recognized as a separate balance sheet item under equity.
The Group has no recognized goodwill as of the balance sheet date.
Other intangible assets mainly comprise computer software programmes. These are recognized at their original cost and are amortized on a straight-line basis during their estimated useful economic life of 5-10 years.
Research and development concerning vessel technology are mainly carried out by manufacturers. The Group has no actual research and development expenditures.
Property, plant and equipment are recognized at historical cost less accumulated depreciation and any impairment loss. The residual values and estimated useful life of the assets are examined yearly and are adjusted if they deviate substantially from previous values.
The Group's vessels comprise most of its property, plant and equipment. For vessels, an estimated residual value at the end of their useful life is taken into account in calculating depreciation. The vessels are divided into component parts. Depreciation occurs mainly on a straight-line basis over the expected useful life of the parts. For vessels acquired in 2008 or later the hull, engine and other long-term component parts are depreciated on a straightline basis over 25 years, while short-term component parts are depreciated on a straightline basis over 15 years. The above component parts related to vessels acquired prior to 2008 are depreciated on a straight-line basis over either 20 or 25 years.
Viking Line's vessels are dry-docked at 2-3 year intervals. Dry-docking expenses are capitalized for each respective vessel and depreciated until the next planned dry-docking.
Normal expenditures for repairs and maintenance are expensed on a current basis. Expenditures for large-scale renovation projects are capitalized in the balance sheet if it is likely that the future economic benefits associated with the project will flow to the Group. These renovation projects are depreciated together with the asset to which the work is attributable, over its remaining useful life. Renovation projects for vessels whose remaining useful life is less than five years are depreciated over five years.
Capitalized renovation costs for rented properties are depreciated on a straight-line basis. Other property, plant and equipment are depreciated on a declining balance basis. Land is not depreciated.
Depreciation for property, plant and equipment is calculated according to the following principles:
| Vessels ______ 20–25 years, straight-line | |
|---|---|
| Vessels, short-term component parts ________15 years, straight-line | |
| Vessel dry-docking__________ 2–3 years, straight-line | |
| Vessels, machinery and equipment __25% of remaining expenditure | |
| Buildings __________ 4–7% of remaining expenditure | |
| Structures _______ 20–25% of remaining expenditure | |
| Renovation costs for rented properties ____ 5–10 years, straight-line | |
| Machinery and equipment ___25% of remaining expenditure |
Gains or losses on the sale or transfer of property, plant and equipment are recognized in the income statement.
Advance payments are related to vessels under construction. These consist of advance payments in compliance with vessel construction (newbuilding) contracts, planning and monitoring expenses and capitalized borrowing expenses. Planning and monitoring expenses consist of architect fees plus salary and travel expenses for planning and technical monitoring of vessel construction. Interest expenses for loans related to advance payments attributable to vessels that have not yet been delivered are capitalized.
The recognized values of asset items are tested regularly to discover any external or internal indications of impairment. If such indications are observed for any asset item, its recoverable amount is estimated.
The recoverable amount of assets refers to their fair value minus costs to sell or value in use, whichever is higher. When estimating value in use, future cash flows are discounted to their present value on the basis of the discount rates that describe the average pre-tax capital costs of the asset in question. Discount rates shall reflect the time value of money and the risks that the specific asset is subjected to and that have not been taken into account in future cash flows.
An impairment loss is recognized in the income statement if the carrying amount of the asset item exceeds its recoverable amount.
An impairment loss attributable to assets, except for goodwill, is reversed if a change has occurred in the values used in determining the recoverable amount of the asset item. The impairment loss is reversed to the extent that the carrying amount of the asset after reversal does not exceed the carrying amount that the asset would have had if no impairment loss had been recognized, taking into account the depreciation that would then have been carried out.
During the financial year 2014, no impairment losses were recognized.
According to IAS 39, financial assets are classified in the following categories:
Bank deposits whose maturity is 3-12 months are classified as held-to-maturity investments and are accounted for among current receivables. The Group's other financial investments are classified as financial assets available for sale. Acquisitions and divestments of financial assets are recognized on the payment date.
According to IAS 39, financial liabilities are classified either as
1) financial liabilities recognized at fair value via the income statement, or as 2) other financial liabilities.
The Group's financial liabilities are classified as other financial liabilities.
Non-current liabilities have an expected maturity longer than one year, while current liabilities have a maturity less than one year.
The Group applies the following hierarchy to determine the fair value of financial assets and liabilities according to various measurement methods:
Level 1: Listed (unadjusted) prices in active markets for identical assets and liabilities.
Level 2: Other measurement methods in which all data that have a significant impact on fair value can be observed either directly or indirectly. Level 3: Those measurement methods that require judgements by Group Management.
Investments available for sale consist of unlisted shares and participations.
The Åland-based shipowners' mutual insurance company Redarnas Ömsesidiga Försäkringsbolag was re-organized into a limited liability insurance company and merged with its wholly owned insurance subsidiary Försäkringsaktiebolaget Alandia to form Alandia Försäkring Ab as of December 31, 2014. The company changed its name to Försäkringsaktiebolaget Alandia as of January 1, 2015. The shares in the company were allocated in proportion to the premiums paid during the years 2011–2013 among those companies that, on the merger date, had an uninterrupted co-owner relationship with Redarnas Ömsesidiga Försäkringsbolag that had lasted at least one year.
Upon allocation, the Group received shares in Alandia Försäkring Ab and sold some of them as of December 31, 2014. After that, Viking Line's shareholding amounted to 19.9 per cent of the total. The first appraisal of the shareholding is recognized under "Financial income" in the consolidated statement of comprehensive income. Viking Line does not have significant influence on Försäkringsaktiebolaget Alandia. The value of the Group's shareholding is established on the basis of the present value of future cash flows and is reported under "Investments available for sale". In subsequent appraisals, changes in the fair value of the shares will be recognized in "Other comprehensive income" and in the fair value reserve under equity. Changes in fair value will be transferred from equity to the income statement when the investment is sold or in case of any impairment loss.
The fair value of "Other investments available for sale" is determined via disclosures about recently completed transactions, prices of similar instruments, outside appraisals or estimates of expected cash flows. When fair value cannot be reliably determined, the acquisition cost of the asset is used.
Changes in fair value are recognized in "Other comprehensive income" and in the fair value reserve under equity. Changes in fair value are transferred from equity to the income statement when the investment is sold or in case of any impairment loss.
Consolidated non-current receivables consist of a receivable related to settlement compensation.
Viking Line reached a settlement with the City of Mariehamn concerning disputed port fees from the 1990s. The settlement is being paid annually for seven years, beginning on December 31, 2011. The carrying amount of the settlement compensation has been calculated according to the effective interest method. A present value estimate is made by discounting future compensation amounts using an interest rate that is equivalent to government bonds with the same maturity as the receivable.
The maximum credit risk for non-current receivables is equivalent to their carrying amount. Any credit losses or other reductions in the value of receivables are recognized as a cost in the income statement.
Bank deposits whose maturity is 3-12 months are classified as held-to-maturity investments and are accounted for among other receivables.
The carrying amount of trade and other receivables are recognized as fair value.
Credit risk in the Group's trade and other receivables is regarded as low, since these are dispersed among a large number of customers. The Group had no substantial credit losses during the financial year. The balance sheet carrying amount of the Group's trade and other receivables is equivalent to its maximum credit exposure. Any credit losses or other reductions in the value of receivables are recognized as a cost in the income statement.
Cash and cash equivalents consist of pledged deposits, cash and bank accounts and highly liquid short-term investments whose maturity from the acquisition date is no more than three months. For cash and cash equivalents with a short maturity, the carrying amount is regarded as being equivalent to fair value.
The Group has both current and non-current interest-bearing liabilities. All liabilities are denominated in euros. Some of these liabilities have fixed interest rates and some have floating interest rates. The total floating interest rate consists of the market interest rate and a company-specific margin.
Interest-bearing liabilities are initially recognized at fair value based on the amount received. Transaction costs are included in the original carrying amount of financial liabilities. After the acquisition date, the liabilities are carried at accrued cost according to the effective interest method.
The carrying amount of trade and other payables is equivalent to fair falue.
Inventories have been recognized at a weighted average purchase price or at a probable lower net selling price.
Group Management has established operating segments based on the information that is dealt with by the Management. Viking Line applies a matrix organization in which operational responsibility is divided into Passenger Services and Cargo Services. Operations, financial earnings forecasts and plans are followed up in these areas for all vessels and are assessed from a comprehensive perspective. The vessels also fulfil all aggregation criteria. The Group's operations have thus been divided into two operating segments: Vessels and Unallocated. The Vessels operating segment comprises direct revenue and expenses including depreciation and amortization that is attributable to vessel operations. The Unallocated operating segment mainly comprises unallocated marketing and administrative expenses. Unallocated also includes the Park Alandia Hotell profit centre and Viking Line Buss Ab, which are support units for vessel operations and account for less than 10 per cent of the Group's sales, operating income and assets. Information on revenue from external customers allocated by geographic area is not available. Assets and liabilities by operating segment are not reported to Group Management.
Sales are calculated on the basis of sales revenue minus discounts and indirect taxes, adjusted for exchange rate differences. Sales are recognized after goods or services have been received by the customer and benefits associated with ownership of goods or performance of services have been transferred to the purchaser and the Group has thus performed what the customer has paid for. Advance payments are carried in the balance sheet under "Other current liabilities". Any credit losses or other decreases in the value of receivables are recognized as expenses in the income statement. The Group has no actual customer loyalty programme. Future free or discounted voyages of a bonus nature are recognized as corrective items under sales.
Viking Line has different pension arrangements in the countries where the Group operates. Outside pension companies are responsible for the legally mandated pension liability in Group companies. All of the Group's pension plans are classified as defined-contribution. Pension premiums are recognized as expenses in the income statement for the accounting period to which they are attributable.
Compensation related to dismissals is accounted for among "Salary and other employment benefit expenses" and outstanding compensation is accounted for among "Current liabilities" in the balance sheet. The President and CEO enjoys 8 months of salary and other members of the Group Management team 6 months of salary in case of termination by the Company. Otherwise the Group has no defined-benefit pension arrangements or
other benefits after employment has ceased. During 2013, the Group applied an incentive and bonus system that included the Company's President and CEO as well as its Executive Vice Presidents. The size of the bonus was affected both by the results of the financial period and personal job performance. The maximum possible bonus was 35 per cent of annual salary. The expenses for the incentive and bonus system are included in the income statement under "Salary and other employment benefit expenses" for the financial period whose earnings entitle Management to bonuses. The Group has no share-based incentive systems. No specific pension agreement has been made for Group Management.
The Group receives government restitution from Finland and Sweden related to the taxes and social security contributions for shipboard employees, in keeping with European Union guidelines. The restitution received is recognized in the income statement among salary and other employment benefit expenses for the period when the basis for restitution has arisen. See Note 5 to the consolidated financial statements.
The Group's leases and rental agreements are classified as operating leases, which means that rental income and expenses are recognized in the income statement on a straight-line basis over the period of the lease. See Note 23 to the consolidated financial statements.
Income taxes in the income statement consist of taxes based on the taxable income for the period, adjustment of taxes for previous periods and deferred taxes.
Taxes based on the taxable income for the period are calculated according to the applicable tax rate in each respective country. Income taxes are recognized in the income statement except when underlying transactions have been recognized directly in equity and in other comprehensive income, in which case the related tax effects are recognized in equity and in other comprehensive income.
Deferred taxes are calculated for all temporary differences between carrying amount and tax base. The largest temporary differences are attributable to accumulated depreciation differences. Deferred taxes are estimated according to the tax rates that were established before the balance sheet date. When estimating deferred taxes on December 31, 2013, the 2014 tax rate of 20.0 per cent has been used in the Group's Finnish companies. No deferred tax liabilities have been recognized for the Estonian subsidiary's undistributed earnings. The Group has not recognized any deferred tax assets.
The Group begins to apply each respective standard and interpretation from the date when it enters into force or from the beginning of the following accounting period, if the date when application begins is a date other than the first day of the accounting period.
Future changes in IASs, IFRSs and IFRIC interpretations that the EU has approved are not expected to have any substantial impact on the consolidated financial statements.
| EUR M | Jan 1, 2014– Dec 31, 2014 |
Jan 1, 2013– Dec 31, 2013 |
|---|---|---|
| 2. OPERATING SEGMENTS |
||
| Sales | ||
| Vessels Unallocated |
521.7 5.8 |
544.7 4.9 |
| Total, operating segments | 527.6 | 549.6 |
| Eliminations | -0.2 | -0.2 |
| Total sales of the Group | 527.4 | 549.4 |
| Operating income | ||
| Vessels | 58.3 | 81.2 |
| Unallocated | -44.6 | -46.4 |
| Total operating income of the Group | 13.7 | 34.7 |
| SALES | ||
| Passenger-related revenue | 483.8 | 508.8 |
| Cargo revenue | 39.6 | 36.5 |
| Miscellaneous sales revenue | 3.9 | 4.0 |
| Total | 527.4 | 549.4 |
| 3. OTHER OPERATING REVENUE Capital gain, vessels Rents received on properties Miscellaneous other operating revenue |
- 0.4 0.3 |
22.8 0.4 0.4 |
| Total 4. GOODS AND SERVICES |
0.7 | 23.5 |
| Goods | 125.9 | 128.8 |
| Externally purchased services | 22.2 | 21.9 |
| Total | 148.1 | 150.6 |
| 5. SALARY AND OTHER EMPLOYMENT BENEFIT EXPENSES |
||
| Salaries | 125.6 | 135.5 |
| Expenses of defined-contribution pensions | 14.6 | 14.9 |
| Other payroll overhead | 16.8 | 22.0 |
| 157.1 | 172.4 | |
| Government restitution | -36.3 | -42.4 |
| Total | 120.8 | 130.1 |
| AVERAGE NUMBER OF EMPLOYEES | ||
| Shipboard employees | 2,142 | 2,407 |
| Land-based employees | 655 | 697 |
| Total | 2,797 | 3,104 |
In addition to the Group's own employees, the Viking XPRS was crewed by an average of 235 people employed by a staffing company. The expenses for them are recognized among "Other operating expenses".
Disclosures on compensation to the Group's key individuals in leading positions are found in Note 25.
| EUR M | Jan 1, 2014– Dec 31, 2014 |
Jan 1, 2013– Dec 31, 2013 |
|
|---|---|---|---|
| 6. | DEPRECIATION AND IMPAIRMENT LOSSES | ||
| Depreciation | |||
| Intangible assets | 0.3 | 0.3 | |
| Buildings and structures | 0.9 | 1.0 | |
| Renovation costs for rented properties | 0.1 | 0.1 | |
| Vessels | 28.3 | 31.7 | |
| Machinery and equipment | 2.2 | 2.5 | |
| Total | 31.8 | 35.7 | |
| Total depreciation and impairment losses | 31.8 | 35.7 | |
| 7. | OTHER OPERATING EXPENSES | ||
| Sales and marketing expenses | 28.5 | 32.3 | |
| Washing and cleaning expenses | 19.9 | 21.5 | |
| Repairs and maintenance | 13.0 | 16.7 | |
| Public port expenses and vessel charges | 42.6 | 41.7 | |
| Fuel expenses | 57.4 | 62.4 | |
| Miscellaneous expenses | 52.2 | 47.2 | |
| Total | 213.6 | 221.9 | |
| Auditors' fees | |||
| Auditing | 0.1 | 0.1 | |
| Miscellaneous consulting | 0.0 | 0.1 | |
| Total | 0.2 | 0.1 | |
| 8. | FINANCIAL INCOME AND EXPENSES | ||
| Dividend income from investments available for sale | 0.0 | 0.0 | |
| Interest income from cash, cash equivalents and non-current receivables | 0.1 | 0.1 | |
| Investments received that are available for sale, Alandia Försäkring Ab | 27.9 | - | |
| Exchange gains | 0.9 | 1.1 | |
| Other financial income | 0.1 | 0.0 | |
| Total financial income | 29.0 | 1.2 | |
| Interest expenses on financial liabilities recognized at accrued cost | 5.9 | 6.3 | |
| Exchange losses | 3.6 | 1.1 | |
| Other financial expenses | 1.0 | 0.8 | |
| Total financial expenses | 10.4 | 8.3 |
| EUR M | Jan 1, 2014– Dec 31, 2014 |
Jan 1, 2013– Dec 31, 2013 |
|
|---|---|---|---|
| 9. | INCOME TAXES | ||
| Tax for the financial year | 0.0 | 0.3 | |
| Tax attributable to previous financial years | 0.0 | 0.0 | |
| Deferred tax, change in temporary differences | 1.7 | 6.6 | |
| Deferred tax, change in tax rate | - | -6.7 | |
| Total | 1.8 | 0.2 | |
| Reconciliation of tax expense in the income statement and taxes | |||
| estimated according to tax rate in the Group's home country | |||
| Income before taxes | 32.3 | 27.7 | |
| Taxes estimated according to Finnish tax rate (20.0% / 24.5%) | 6.5 | 6.8 | |
| Tax attributable to previous financial years | 0.0 | 0.0 | |
| Tax effect of | |||
| divergent tax rates in foreign subsidiaries | 0.0 | 0.1 | |
| tax-exempt revenue and non-deductible expenses | -5.0 | 0.1 | |
| deferred tax, change in tax rate | - | -6.7 | |
| deferred tax, other changes | 0.3 | 0.0 | |
| previously established tax loss carry-forwards | 0.0 | - | |
| unrecognized tax asset related to loss in subsidiary | - | 0.0 | |
| other | 0.0 | -0.1 | |
| Taxes in the income statement | 1.8 | 0.2 |
Earnings per share are calculated on the basis of 10,800,000 shares of equal value. Viking Line has no share option, convertible debenture or share-based incentive programmes, so no dilution can occur.
| 11. | INTANGIBLE ASSETS | 2014 | 2013 |
|---|---|---|---|
| Cost, Jan 1 | 3.5 | 3.4 | |
| Translation differences | 0.0 | 0.0 | |
| Increases | 0.1 | 0.3 | |
| Decreases | - | -0.1 | |
| Cost, Dec 31 | 3.6 | 3.5 | |
| Accumulated amortization, Jan 1 | -2.7 | -2.5 | |
| Translation differences | 0.0 | 0.0 | |
| Accumulated amortization on decreases | - | 0.1 | |
| Amortization for the financial year | -0.3 | -0.3 | |
| Accumulated amortization, Dec 31 | -3.0 | -2.7 | |
| Carrying amount, Jan 1 | 0.8 | 0.9 | |
| Carrying amount, Dec 31 | 0.6 | 0.8 |
Intangible assets consist mainly of computer software programmes.
| 12. PROPERTY, PLANT AND EQUIPMENT |
Land | Buildings and structures |
Renovation costs for rented properties |
Vessels | Machinery and equipment |
Advance payments |
Total |
|---|---|---|---|---|---|---|---|
| Cost, Jan 1, 2014 | 1.1 | 26.2 | 10.3 | 776.3 | 38.7 | - | 852.6 |
| Translation differences | 0.0 | 0.0 | -3.9 | 0.0 | -3.9 | ||
| Increases | 0.0 | 0.0 | 6.2 | 0.9 | 7.1 | ||
| Decreases | 0.0 | -0.1 | -1.6 | -0.5 | -2.2 | ||
| Cost, Dec 31, 2014 | 1.1 | 26.2 | 10.4 | 777.0 | 39.0 | - | 853.7 |
| Accumulated depreciation, Jan 1, 2014 | - | -14.5 | -9.7 | -411.1 | -30.6 | - | -465.9 |
| Translation differences | 0.0 | 0.9 | 0.0 | 1.0 | |||
| Accumulated depreciation on decreases | 0.0 | 1.6 | 0.4 | 2.1 | |||
| Depreciation for the financial year | -0.9 | -0.1 | -28.3 | -2.2 | -31.5 | ||
| Accumulated depreciation, Dec 31, 2014 | - | -15.3 | -9.8 | -436.9 | -32.3 | - | -494.4 |
| Carrying amount, Jan 1, 2014 | 1.1 | 11.7 | 0.7 | 365.2 | 8.0 | - | 386.7 |
| Carrying amount, Dec 31, 2014 | 1.1 | 10.8 | 0.6 | 340.1 | 6.7 | - | 359.3 |
| Cost, Jan 1, 2013 | 1.1 | 25.8 | 10.1 | 621.4 | 36.7 | 61.1 | 756.2 |
| Translation differences | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Transfer | 61.1 | -61.1 | - | ||||
| Increases | 0.4 | 0.3 | 168.6 | 2.7 | 172.0 | ||
| Decreases | -74.8 | -0.7 | -75.6 | ||||
| Cost, Dec 31, 2013 | 1.1 | 26.2 | 10.3 | 776.3 | 38.7 | - | 852.6 |
| Accumulated depreciation, Jan 1, 2013 | - | -13.5 | -9.6 | -447.2 | -28.6 | - | -498.8 |
| Translation differences | 0.0 | 0.0 | 0.0 | ||||
| Accumulated depreciation on decreases | 67.8 | 0.5 | 68.3 | ||||
| Depreciation for the financial year | -1.0 | -0.1 | -31.7 | -2.5 | -35.3 | ||
| Accumulated depreciation, Dec 31, 2013 | - | -14.5 | -9.7 | -411.1 | -30.6 | - | -465.9 |
| Carrying amount, Jan 1, 2013 | 1.1 | 12.3 | 0.5 | 174.2 | 8.1 | 61.1 | 257.3 |
| Carrying amount, Dec 31, 2013 | 1.1 | 11.7 | 0.7 | 365.2 | 8.0 | - | 386.7 |
Advance payments are related to vessels under construction.
Viking Line has no financial leases related to property, plant and equipment.
| 13. | INVESTMENTS AVAILABLE FOR SALE | Dec 31, 2014 | Dec 31, 2013 |
|---|---|---|---|
| Unlisted shares and participations | 26.1 | 0.0 | |
| Investments available for sale | 26.1 | 0.0 | |
| 2014 | 2013 | ||
| Investments available for sale, Jan 1 | 0.0 | 0.0 | |
| Increases | 27.9 | 0.0 | |
| Decreases | -1.8 | 0.0 | |
| Change in fair value | 0.0 | 0.0 | |
| Investments available for sale, Dec 31 | 26.1 | 0.0 |
For a description of the appraisal of investments available for sale and the accompanying sensitivity analysis, see Note 26.
| EUR M | ||
|---|---|---|
| 14. RECEIVABLES | Dec 31, 2014 | Dec 31, 2013 |
| Receivable, settlement compensation | 0.3 | 0.5 |
| Total | 0.3 | 0.5 |
| 2014 | 2013 | |
| Receivables, Jan 1 | 0.5 | 0.7 |
| Decreases | -0.2 | -0.2 |
| Receivables, Dec 31 | 0.3 | 0.5 |
| 15. INVENTORIES | Dec 31, 2014 | Dec 31, 2013 |
| Inventories of goods for sale | 14.9 | 13.3 |
| Supplies | 0.3 | 0.2 |
| Stocks of vessel fuel | 1.0 | 1.5 |
| Total | 16.1 | 15.0 |
| 16. TRADE AND OTHER RECEIVABLES | Dec 31, 2014 | Dec 31, 2013 |
| Trade receivables | 10.6 | 11.0 |
| Accrued income and prepaid expenses | 17.9 | 19.0 |
| Other receivables | 0.9 | 0.9 |
| Total | 29.3 | 31.0 |
| Accrued income and prepaid expenses | ||
| Employee-related items | 16.4 | 16.9 |
| Other accrued income and prepaid expenses | 1.4 | 2.1 |
| Total | 17.9 | 19.0 |
| Age analysis, trade receivables | ||
| Not overdue | 5.0 | 5.5 |
| Overdue 1-30 days | 5.5 | 5.3 |
| Overdue more than 30 days | 0.1 | 0.2 |
| Total | 10.6 | 11.0 |
| Trade and other receivables by currency | ||
| EUR | 24.6 | 24.1 |
| SEK | 4.4 | 6.6 |
| CHF | 0.1 | 0.1 |
| DKK | 0.0 | 0.0 |
| GBP | 0.2 | 0.1 |
| USD | - | 0.1 |
| Total | 29.3 | 31.0 |
| EUR M | |||
|---|---|---|---|
| 17. | CASH AND CASH EQUIVALENTS | Dec 31, 2014 Dec 31, 2013 | |
| Cash and bank accounts | 93.1 | 73.2 | |
| Short-term investments | 8.0 | 22.9 | |
| Total | 101.1 | 96.1 |
The maturity of short-term investments is from 36 to 79 days.
The minimum share capital of Viking Line Abp is EUR 720,000.00 and the maximum share capital is EUR 2,880,000.00. Within these limits, share capital may be increased or decreased without amending the Articles of Association. The minimum number of shares is 3,600,000 and the maximum number is 14,400,000. Since April 12, 1995, the share capital of Viking Line Abp has been EUR 1,816,429.61 and the number of shares 10,800,000. All shares constitute one series, in which all shares are of equal value. Each share is equivalent to one vote on motions and candidates at shareholders' meetings. However, no shareholder may vote on behalf of more than 1/4 of the shares represented at a shareholders' meeting. The Company has not issued any warrants or bonds. The Board of Directors has not requested authorization from a shareholders' meeting to change the share capital or to issue warrants or bonds or to acquire the Company's own shares. The Company and its subsidiaries do not own any of their own shares.
| Reserves | Dec 31, 2014 Dec 31, 2013 | |
|---|---|---|
| Legal reserve | 0.0 | 0.0 |
| Share premium reserve | 0.0 | 0.0 |
| Fair value reserve | 0.0 | 0.0 |
| Total | 0.0 | 0.0 |
Translation differences consist of differences that have arisen when consolidating the financial statements of foreign subsidiaries. These differences are recognized in other comprehensive income.
A dividend of EUR 0.50 per share, totalling EUR 5.4 M, was distributed for the financial year 2013 (no dividend was distributed for the financial year 2012). After the balance sheet date, the Board of Directors proposed that a dividend of EUR 0.70 per share will be paid for the financial year 2014. The dividend distribution is recognized as a liability in the balance sheet when the shareholders' meeting has approved it.
| Accumulated depreciation |
Other temporary |
||
|---|---|---|---|
| Deferred tax liabilities | differences | differences | Total |
| Jan 1, 2014 | 29.7 | 0.0 | 29.7 |
| Translation differences | 0.0 | - | 0.0 |
| Recognized in income statement | 1.7 | 0.0 | 1.7 |
| Recognized directly in equity | - | 0.0 | 0.0 |
| Dec 31, 2014 | 31.4 | 0.0 | 31.4 |
| Jan 1, 2013 | 29.7 | 0.0 | 29.7 |
| Translation differences | - | 0.0 | 0.0 |
| Recognized in income statement | 0.0 | -0.1 | -0.1 |
| Recognized directly in equity | - | 0.0 | 0.0 |
| Dec 31, 2013 | 29.7 | 0.0 | 29.7 |
On December 31, 2014, the Group had unutilized accumulated tax-loss carry-fowards in subsidiaries totalling 0 euros (Dec 31, 2013 EUR 0.0 M). No deferred tax liabilities have been recognized for the undistributed earnings of the Estonian subsidiary. The Group has not recognized any deferred tax assets related to losses in subsidiaries.
| EUR M | ||
|---|---|---|
| 20. INTEREST-BEARING LIABILITIES | Dec 31, 2014 | Dec 31, 2013 |
| Non-current interest-bearing liabilities | ||
| Loans from credit institutions | 197.5 | 221.2 |
| Current interest-bearing liabilities | ||
| Loans from credit institutions, principal payments | 23.5 | 15.1 |
| Interest-bearing financial liabilities fall due for payment as follows: | ||
| < 1 year | 23.5 | 15.1 |
| 1–2 years | 23.5 | 23.6 |
| 2–3 years | 23.5 | 23.6 |
| 3–4 years | 23.5 | 23.5 |
| 4–5 years | 23.5 | 23.5 |
| > 5 years | 103.5 | 127.0 |
| Total | 221.0 | 236.2 |
| 2014 | 2013 | |
| Interest-bearing liabilities, Jan 1 | 236.2 | 81.8 |
| Increases | - | 179.1 |
| Decreases | -15.2 | -24.6 |
| Interest-bearing liabilities, Dec 31 | 221.0 | 236.2 |
| 21. TRADE AND OTHER PAYABLES | Dec 31, 2014 | Dec 31, 2013 |
| Trade payables | 23.9 | 28.1 |
| Accrued expenses and prepaid income | 32.5 | 35.8 |
| Other payables | 11.1 | 11.5 |
| Total | 67.4 | 75.4 |
| Accrued expenses and prepaid income | ||
| Employee-related expenses | 23.3 | 26.3 |
| Other accrued expenses and prepaid income Total |
9.2 32.5 |
9.5 35.8 |
| Trade and other payables by currency | ||
| EUR | 50.3 | 53.8 |
| SEK | 14.3 | 20.9 |
| DKK | 0.0 | 0.0 |
| NOK | 0.0 | 0.1 |
| RUB | - | 0.0 |
| USD | 2.8 | 0.6 |
| Total | 67.4 | 75.4 |
Most other payables consist of employee-related items.
| EUR M | ||
|---|---|---|
| 22. CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES | ||
| Classification of fair value, investments available for sale | Dec 31, 2014 | Dec 31, 2013 |
| Level 1 | - | - |
| Level 2 | - | - |
| Level 3 | 26.1 | 0.0 |
| Financial assets and liabilities by category | Loan | Financial |
| Financial assets Dec 31, 2014 | receivables and trade receivables |
assets available for sale |
| Investments available for sale | - | 26.1 |
| Receivables | 0.3 | - |
| Trade and other receivables | 29.3 | - |
| Cash and cash equivalents | 101.1 | - |
| Total | 130.8 | 26.1 |
| Other | ||
| financial | ||
| Financial liabilities Dec 31, 2014 | liabilities | |
| Non-current interest-bearing liabilities | 197.5 | |
| Current interest-bearing liabilities | 23.5 | |
| Trade and other payables | 67.4 | |
| Total | 288.5 | |
| Financial assets and liabilities by category | Loan receivables and trade |
Financial assets available |
| Financial assets Dec 31, 2013 | receivables | for sale |
| Investments available for sale | - | 0.0 |
| Receivables | 0.5 | - |
| Trade and other receivables | 31.0 | - |
| Cash and cash equivalents | 96.1 | - |
| Total | 127.6 | 0.0 |
| Other | ||
| financial liabilities |
||
| Financial liabilities Dec 31, 2013 | ||
| Non-current interest-bearing liabilities | 221.2 | |
| Current interest-bearing liabilities | 15.1 | |
| Trade and other payables | 75.4 |
Total 311.6
The Group rents out premises in portions of its properties to various business owners. Most of these agreements are cancellable. Of non-cancellable agreements, the most important is the granting of a lease for operation of the meal service business at the Park Alandia Hotell.
| Future rental income related to non-cancellable rental agreements | Dec 31, 2014 | Dec 31, 2013 |
|---|---|---|
| Due within one year | 0.2 | 0.2 |
| Due in later than one year but within five years | 0.0 | 0.2 |
| Due in later than five years | - | - |
| Total | 0.2 | 0.4 |
The Group has no agreements that are classified as financial leases. The Group rents a number of premises for sales and administrative purposes. In addition, there are various operating leases related to machinery and equipment. The agreements vary in length between 1 and 7 years. The agreements normally include options for renewal after the expiration of the agreement. The agreements vary with regard to indexing, renewal and other terms and conditions.
In addition, the Group leases a harbour area whose remaining lease period totals 11 years. One condition for occupying the property is that it be used for passenger, cargo and car ferry services. In the lease, the Company has also undertaken to pay port fees for all its vessels that use the harbour in question. These port fees should total a certain minimum level. Minimum levels are also specified for volumes and net registered tonnage. Viking Line is entitled to transfer the agreement to a third party.
| Future minimum lease payments and rents related to non-cancellable operating leases |
Dec 31, 2014 | Dec 31, 2013 |
|---|---|---|
| Due within one year | 1.4 | 1.5 |
| Due in later than one year but within five years | 3.4 | 1.3 |
| Due in later than five years | 0.2 | 0.1 |
| Total | 5.1 | 2.9 |
| PLEDGED ASSETS AND CONTINGENT LIABILITIES | Dec 31, 2014 | Dec 31, 2013 |
|---|---|---|
| Contingent liabilities | ||
| Loans and credit lines for which vessel, vehicle and chattel mortgages were provided as collateral |
221.0 | 236.2 |
| Other contingent liabilities not included in the balance sheet | ||
| Covered by vessel mortgages | 0.0 | 0.6 |
| Covered by site leasehold and chattel mortgages | 0.0 | 0.0 |
| Total | 221.1 | 236.9 |
| Assets pledged for own debt | ||
| Vessel mortgages | 314.7 | 314.7 |
| Vehicle mortgages | 0.1 | 0.1 |
| Chattel mortgages | 0.5 | 0.5 |
| Site leasehold mortgages | 0.4 | 0.4 |
| Total | 315.7 | 315.7 |
| Group companies | Domicile | Holding | Share of voting power |
|---|---|---|---|
| Owned by the parent company, Viking Line Abp | Mariehamn, Finland | ||
| Viking Rederi AB | Norrtälje, Sweden | 100% | 100% |
| OÜ Viking Line Eesti | Tallinn, Estonia | 100% | 100% |
| Viking Line Buss Ab | Mariehamn, Finland | 100% | 100% |
| Viking Line Skandinavien AB | Stockholm, Sweden | 100% | 100% |
| Viking Line Finnlandverkehr GmbH | Lübeck, Germany | 100% | 100% |
| Oy Viking Tours Ruotsinmatkat - Sverigecenter Ab | Mariehamn, Finland | 100% | 100% |
| Oy Ruotsinsatama - Sverigehamnen Ab | Naantali, Finland | 100% | 100% |
| Owned by subsidiaries | |||
| Finlandshamnen Stuveri AB | Stockholm, Sweden | 100% | 100% |
| Transactions with companies that are under significant influence of the Group's key individuals in leading positions |
Jan 1, 2014– Dec 31, 2014 |
Jan 1, 2013– Dec 31, 2013 |
|
| Sales of services | 0.0 | 0.0 | |
| Purchases of services | 0.6 | 0.7 | |
| Dec 31, 2014 | Dec 31, 2013 | ||
| Receivables outstanding | 0.0 | - | |
| Liabilities outstanding | 0.0 | 0.0 |
Transactions with related parties are carried out on market terms.
The Group has no loan arrangements, guarantees, contingent liabilities provided/received or other liabilities associated with related parties.
| Compensation to the Group's key individuals in leading positions, | Jan 1, 2014– | Jan 1, 2013– |
|---|---|---|
| EUR | Dec 31, 2014 | Dec 31, 2013 |
| Salaries and other short-term compensation | 1,225,830 | 1,239,360 |
| Total | 1,225,830 | 1,239,360 |
| Compensation and other benefits, 2014, EUR | Base salary/ Board fee |
Other benefits |
Pension expenses |
Total |
|---|---|---|---|---|
| Ben Lundqvist, Chairman of the Board | 37,000 | 37,000 | ||
| Nils-Erik Eklund, Board member | 32,000 | 32,000 | ||
| Trygve Eriksson, Board member | 32,000 | 32,000 | ||
| Erik Grönberg, Board member | 31,000 | 31,000 | ||
| Agneta Karlsson, Board member | 31,000 | 31,000 | ||
| Dick Lundqvist, Board member | 32,000 | 32,000 | ||
| Lars G Nordström, Board member | 30,000 | 30,000 | ||
| Ulrica Danielsson, deputy member of the Board | 1,000 | 1,000 | ||
| Stefan Lundqvist, deputy member of the Board | 1,000 | 1,000 | ||
| Johnny Rosenholm, deputy member of the Board | 2,000 | 2,000 | ||
| 229,000 | - | - | 229,000 | |
| President and CEO Jan Hanses from March 20, 2014 | 214,775 | 360 | 35,411 | 250,546 |
| President and CEO Mikael Backman until March 20, 2014 | 87,512 | 155,219 | 39,953 | 282,684 |
| Deputy CEO | 186,730 | 10,432 | 32,453 | 229,614 |
| Other key individuals in leading positions | 556,911 | 13,892 | 103,277 | 674,081 |
| 1,045,927 | 179,903 | 211,095 | 1,436,925 | |
| Total | 1,274,927 | 179,903 | 211,095 | 1,665,925 |
| Compensation and other benefits, 2013, EUR | Base salary/ | Other | Pension | |
|---|---|---|---|---|
| Board fee | benefits | expenses | Total | |
| Ben Lundqvist, Chairman of the Board | 33,000 | 33,000 | ||
| Nils-Erik Eklund, Board member | 29,000 | 29,000 | ||
| Trygve Eriksson, Board member | 29,000 | 29,000 | ||
| Erik Grönberg, Board member | 30,000 | 30,000 | ||
| Agneta Karlsson, Board member | 30,000 | 30,000 | ||
| Dick Lundqvist, Board member | 29,000 | 29,000 | ||
| Lars G Nordström, Board member | 29,000 | 29,000 | ||
| Åsa Ceder, deputy member of the Board until April 19, 2013 | 1,000 | 1,000 | ||
| Ulrica Danielsson, deputy member of the Board from | ||||
| April 19, 2013 | 2,000 | 2,000 | ||
| Stefan Lundqvist, deputy member of the Board | 1,000 | 1,000 | ||
| Johnny Rosenholm, deputy member of the Board | 1,000 | 1,000 | ||
| 214,000 | - | - | 214,000 | |
| President and CEO | 245,550 | 689 | 38,315 | 284,553 |
| Deputy CEO | 199,025 | 1,956 | 31,273 | 232,254 |
| Other key individuals in leading positions | 771,735 | 20,405 | 129,010 | 921,150 |
| 1,216,310 | 23,050 | 198,597 1,437,957 | ||
| Total | 1,430,310 | 23,050 | 198,597 1,651,957 | |
Fees adopted by the Annual General Meeting are paid as compensation for the work of the Board. Reasonable travel expenses are paid as invoiced.
The President and CEO and other Group Management members are paid monthly salaries that are reviewed by the Board yearly. The President and CEO also receives the following benefits in kind: telephone benefits and group life insurance coverage, including insurance for medical expenses.
The Group applied an incentive and bonus system that included the Company's President and CEO as well as its Executive Vice Presidents during 2013. The size of the bonus was affected both by the results of the financial period and personal job performance. The maximum bonus was 35 per cent of annual salary. Effective from 2014 no incentive and bonus system is being applied. The Group has no share-based incentive systems.
Compensation to key individuals in leading positions for 2014 includes individual bonuses of EUR 9,951 related to the financial year 2013, since the Board of Directors made its decisions on this disbursement after the financial statements for 2013 had been adopted.
The Group has only defined-contribution pension plans. Pension expenses refer to the expense that have affected the year's income. There is no specific agreement on Group Management pensions, so public pension terms apply. The retirement age of the President and CEO is 63-68.
The President and CEO has a termination notice period of 8 months. The Company's Board is entitled to terminate the President and CEO's contract, but the President and CEO will receive 8 months of salary after the termination date. Other Group Management members receive 6 months of salary in case of termination by the Company. Otherwise the Group has made no individual agreements on termination-related benefits.
Mikael Backman served as President and CEO and Jan Hanses as Deputy CEO until March 20, 2014. Since March 20, 2014 Jan Hanses has served as President and CEO and Andreas Remmer as Deputy CEO.
No benefits other than salaries and short-term compensation were paid to key individuals in leading positions. As agreed, Mikael Backman received 8 months of salary after the date of his termination. Compensation of EUR 154,888 was included in the item "Other benefits".
In its normal operating activities, the Group is exposed to various financial risks. The main financial risks are foreign exchange risk, interest rate risk, liquidity risk, credit and counterparty risk and bunker price risk. The Group's financing and management of financial risks have been concentrated in the Finance unit of the parent company. The Group's foreign exchange holdings and investments are reported regularly to the Board of Directors.
The Group had no derivative contracts during 2013 and 2014.
The Group's foreign exchange risk consists of sales and purchases as well as balance sheet items in foreign currencies and net investments in foreign subsidiaries. The impact of changes in currency exchange rates on net investments in foreign subsidiaries is reflected as translation differences in Group equity and in other comprehensive income.
The most important foreign currencies for the Group are Swedish kronor (SEK) and American dollars (USD). During 2014 SEK-denominated sales accounted for about 30 per cent of total consolidated sales. Salary and other employment benefit expenses and purchases denominated in SEK accounted for about 24 per cent of the Group's total salary and other employment benefit expenses and purchases. The USD exchange rate affects the Group's earnings mainly through bunker (vessel fuel) purchases.
The Group's trade and other receivables and its trade and other payables per currency are shown in Notes 16 and 21. In addition, the Group has cash and cash equivalents in various currencies. The Group's loans are entirely denominated in euros. The currency position is monitored continuously and the Group endeavours to achieve a matching of the currency flows. When an imbalance between the Group's inflows and outflows of SEK arises, this is managed primarily by a continuous sale of SEK. The Group has no form of currency hedging.
A 5 per cent change in the exchange rate of the euro against the Swedish krona on December 31, 2014 would have an estimated effect of EUR ±0.7 M (EUR ±0.1 M on December 31, 2013) on consolidated income after taxes and equity.
Fluctuations in interest rates affect the Group's interest expenses and interest income. Of the Group's interest-bearing liabilities, 71 per cent have fixed interest rates and 29 per cent have floating interest rates. The total floating interest rate consists of the market interest rate and a company-specific margin. There are no interest rate derivatives.
A one percentage point change in the market interest rates on the Group's interest-bearing liabilities with floating interest rates on December 31, 2014 would have an estimated effect of EUR +0.0 M / EUR -0.5 M (EUR +0.1 M / EUR -0.5 M on December 31, 2013) on consolidated income after taxes and equity.
Viking Line evaluates and continuously monitors the financing that is required in its operating activities in order to always have sufficient funds for day-to-day activities, principal payments and investments. Liquidity risk is also managed through efficient cash management, by ensuring reasonably priced financing sources and by dispersing a sufficient portion of financial investments among liquid financial instruments. Vessel investments are financed with long-term credit agreements.
The loan agreement related to the financing of the M/S Viking Grace includes loan covenants according to market terms.
The Group's non-current interest-bearing liabilities amounted to EUR 197.5 M on December 31, 2014 (EUR 221.2 M on December 31, 2013). Information on the dates when interest-bearing liabilities fall due for payment is found in the consolidated financial statements, Note 20. The Group's cash and cash equivalents amounted to EUR 101.1 M on December 31, 2014 (EUR 96.1 M on December 31, 2013).
Trade and other receivables are a credit risk for the Group. Credit risk in operational activities is continuously followed up. Credit risk in the Group's trade and other receivables is regarded as low, since these are dispersed among a large number of customers. The Group had no substantial credit losses during the financial year. The balance sheet carrying amount of the Group's trade and other receivables plus investments available for sale is equivalent to its maximum credit exposure. An age analysis of unimpaired trade receivables can be found in the consolidated financial statements, Note 16.
Cash is invested in financial instruments that are liquid and exposed to low risk. Investments in financial instruments are made only with counterparties deemed to have good solvency and creditworthiness.
Bunker (vessel fuel) costs are a substantial risk for the Group. Most of the price of the Group's bunker purchases is determined by world market prices for bunker oil and natural gas. The floating component in the bunker oil price comprises the average price of the oil quality in question during the week of purchase. Bunker oil purchases are made in USD. The liquefied natural gas (LNG) price is determined by unit costs for the natural gas element, condensation and bunker vessel logistics. The Group has not hedged against fluctuations in bunker prices.
Vessel bunker costs amounted to EUR 57.1 M during the financial year 2014 (EUR 62.2 M during 2013), which is equivalent to 10.8 per cent (11.3) of Group sales. Bunker consumption totalled about 87,500 m3 oil and about 16,000 tonnes LNG during 2014 (about 91,900 m3 oil and 12,600 tonnes LNG during 2013).
A 10 per cent change in the bunker price on December 31, 2014 of LNG and the bunker oil quality that will be used, based on projected bunker consumption in 2015, would have an estimated effect of EUR ±3.7 M on consolidated income after taxes and equity.
The Group is exposed to price risk related to shares that are classified as "Investments available for sale". The value of the Group's shareholding in the insurance company Försäkringsaktiebolaget Alandia is established on the basis of the present value of forecasted future cash flows during the period 2015-2019. For subsequent periods, annual growth of 2 per cent has been forecasted. Required return of 9.4 per cent on equity has been used in the calculation.
| Increase in | Decrease in | ||
|---|---|---|---|
| Change in | present value, | present value, | |
| Sensitivity analysis, EUR M | assumptions | EUR M | EUR M |
| Divergence in forecasted cash flows | + 5% | 1.3 | |
| Divergence in forecasted cash flows | - 5% | 1.3 | |
| Required return on equity | + 1 perc.point | 3.1 | |
| Required return on equity | - 1 perc.point | 4.1 |
The purpose of the Group's asset management is a capital structure that ensures normal operating conditions. The Company's Board of Directors assesses the capital structure of the Group regularly by monitoring the equity/assets ratio. On December 31, 2014, the equity/assets ratio amounted to 40.0 per cent, compared to 35.6 per cent on December 31, 2013.
Viking Line is involved in a few legal actions and other cases whose outcome cannot be predicted, but taking into account the information that is available at present, their outcome is not expected to have any substantial impact on consolidated earnings.
The Management of the Company is not aware of any major events after the balance sheet date that might influence the financial statements.
| THE GROUP | 2009/2010 14 months |
2011 | 2012 | 2013 | 2014 |
|---|---|---|---|---|---|
| Sales, EUR M | 569.9 | 504.3 | 516.1 | 549.4 | 527.4 |
| Operating income EUR M | 16.1 | 9.8 | 2.4 | 34.7 | 13.7 |
| – as % of sales | 2.8% | 1.9% | 0.5% | 6.3% | 2.6% |
| Income before taxes, EUR M | 14.4 | 7.9 | 1.6 | 27.7 | 32.3 |
| – as % of sales | 2.5% | 1.6% | 0.3% | 5.0% | 6.1% |
| Return on equity (ROE) | 6.4% | 4.6% | 0.6% | 15.6% | 15.2% |
| Return on investments (ROI) | 6.0% | 3.9% | 1.3% | 10.4% | 9.1% |
| Equity/assets ratio | 44.8% | 46.5% | 46.2% | 35.6% | 40.0% |
| Debt/equity ratio (gearing) | 24.6% | 20.7% | 22.5% | 74.1% | 56.2% |
| Gross capital spending, EUR M | 8.7 | 36.9 | 49.7 | 172.3 | 7.2 |
| – as % of sales | 1.5% | 7.3% | 9.6% | 31.4% | 1.4% |
| Average number of employees | 3,087 | 3,060 | 3,014 | 3,104 | 2,797 |
| – of whom, shipboard employees | 2,319 | 2,305 | 2,299 | 2,407 | 2,142 |
| – of whom, landbased employees | 768 | 755 | 715 | 697 | 655 |
| Salaries etc, EUR M | 141.6 | 124.9 | 128.2 | 135,5 | 125.6 |
| EUR M | 2014 Q4 |
2014 Q3 |
2014 Q2 |
2014 Q1 |
|---|---|---|---|---|
| SALES | 126.3 | 160.1 | 137.5 | 103.4 |
| Other operating revenue | 0.2 | 0.1 | 0.3 | 0.1 |
| Expenses | ||||
| Goods and services | 36.2 | 44.3 | 39.1 | 28.4 |
| Salary and other employment benefit expenses | 28.9 | 30.1 | 30.3 | 31.6 |
| Depreciation and impairment losses | 7.2 | 8.0 | 8.0 | 8.5 |
| Other operating expenses | 50.0 | 55.8 | 55.8 | 52.1 |
| 122.3 | 138.1 | 133.3 | 120.6 | |
| OPERATING INCOME | 4.2 | 22.0 | 4.5 | -17.1 |
| Financial income | 28.1 | 0.7 | 0.1 | 0.1 |
| Financial expenses | -3.2 | -2.0 | -3.1 | -2.2 |
| INCOME BEFORE TAXES | 29.1 | 20.7 | 1.6 | -19.1 |
| Income taxes | -1.1 | -4.0 | -0.2 | 3.5 |
| INCOME FOR THE PERIOD | 28.1 | 16.7 | 1.4 | -15.6 |
| Other comprehensive income | ||||
| Items that may be transferred to the income statement | ||||
| Translation differences | -0.4 | 0.0 | -0.4 | -0.1 |
| Investments available for sale | 0.0 | - | - | - |
| -0.4 | 0.0 | -0.4 | -0.1 | |
| COMPREHENSIVE INCOME FOR THE PERIOD | 27.7 | 16.7 | 1.0 | -15.8 |
| Income attributable to: | ||||
| Parent company shareholders | 28.1 | 16.7 | 1.4 | -15.6 |
| Comprehensive income attributable to: | ||||
| Parent company shareholders | 27.7 | 16.7 | 1.0 | -15.8 |
| Earnings per share before and after dilution, EUR | 2.60 | 1.55 | 0.13 | -1.45 |
The minimum share capital of Viking Line Abp is EUR 720,000.00 and the maximum share capital is EUR 2,880,000.00. Within these limits, share capital may be increased or decreased without amending the Articles of Association. The minimum number of shares is 3,600,000 and the maximum number is 14,400,000. Since April 12, 1995, the share capital of Viking Line Abp has been EUR 1,816,429.61. Since July 5, 1995, the shares of Viking Line Abp have been listed on the NASDAQ Helsinki.
The changeover of Viking Line Abp shares took place during the period February 15 – March 12, 1999.
The Company has not issued warrants or bonds.
All shares constitute one series, in which all shares are of equal value. Each share is equivalent to one vote when voting on motions and candidates at shareholders' meetings. However, no shareholder may vote on behalf of more than 1/4 of the shares represented at a shareholders' meeting.
The Articles of Association stipulate lower and upper limits for the Company's share capital. The Board of Directors has not requested authorization from a shareholders' meeting to change the share capital or to issue warrants or bonds or acquire the Company's own shares.
At the end of the 2014 financial year, the Company had 3,183 registered shareholders.
The members and deputy members of the Board of Directors, the President and Chief Executive Officer, and the Deputy Chief Executive Officer own or control, in the manner described in Chapter 2, Section 4 of the Finnish Securities Market Act, 1,004,191 shares in the Company, equivalent to a voting power of 9.3 per cent. Viking Line applies the provisions of the Securities Market Act on insider information as well as the insider regulations of the NASDAQ Helsinki.
During the financial year 2014, trading in Viking Line on the NASDAQ Helsinki totalled 240,667 shares. This meant that 2.2 per cent of all shares changed hands. The year's highest share price was EUR 18.88, the lowest EUR 13.50. On December 31, 2014, the quoted share price was EUR 15.82. The Company's market capitalization on that date was EUR 170.86 M.
January–December 2014
January–December 2014
| LARGEST SHAREHOLDERS, DECEMBER 31, 2014 | Number of shares | Percentage of total |
|---|---|---|
| 1. Ångfartygs Ab Alfa | 1,656,500 | 15.3% |
| 2. Ab Rafael | 1,476,944 | 13.7% |
| 3. Rederi Ab Hildegaard | 1,110,803 | 10.3% |
| 4. Lundqvist Ben | 384,729 | 3.6% |
| 5. Eklund Nils-Erik | 346,645 | 3.2% |
| 6. Sviberg Marie-Louise | 315,245 | 2.9% |
| 7. Sundman Airi | 158,740 | 1.5% |
| 8. Lundqvist Dick | 125,000 | 1.2% |
| 9. Blomsterlund Carita | 117,703 | 1.1% |
| 10. Eriksson Carola | 114,103 | 1.1% |
| VIKING LINE ABP'S SHAREHOLDERS, BY SECTOR |
Number of shareholders |
Percentage of total |
Number of shares |
Percentage of total |
|---|---|---|---|---|
| Companies | 147 | 4.6% | 4,827,025 | 44.7% |
| Credit institutions and insurance companies | 9 | 0.3% | 217,540 | 2.0% |
| Public sector entities | 4 | 0.1% | 177,919 | 1.6% |
| Households | 2,857 | 89.8% | 5,017,032 | 46.5% |
| Non-profit entities | 17 | 0.5% | 65,254 | 0.6% |
| Foreign shareholders | 140 | 4.4% | 426,679 | 4.0% |
| Nominee-registered shares | 9 | 0.3% | 68,355 | 0.6% |
| Not transferred to book-entry securities account system |
196 | 0.0% | ||
| Total | 3,183 | 100.0% | 10,800,000 | 100.0% |
| DISTRIBUTION OF SHARE CAPITAL | Number of shareholders |
Percentage of total |
Number of shares |
Percentage of total |
|---|---|---|---|---|
| 1–99 | 1,409 | 44.3% | 42,437 | 0.4% |
| 100–999 | 1,033 | 32.4% | 235,920 | 2.2% |
| 1,000–9,999 | 613 | 19.3% | 1,525,280 | 14.1% |
| 10,000–99,999 | 115 | 3.6% | 2,860,988 | 26.5% |
| 100,000–999,999 | 10 | 0.3% | 1,890,932 | 17.5% |
| 1,000,000– | 3 | 0.1% | 4,244,247 | 39.3% |
| SHARE-RELATED FINANCIAL RATIOS |
2009/2010 14 months |
2011 | 2012 | 2013 | 2014 |
|---|---|---|---|---|---|
| Earnings per share, EUR | 0.97 | 0.70 | 0.09 | 2.54 | 2.83 |
| Equity per share, EUR | 15.35 | 15.40 | 15.00 | 17.50 | 19.75 |
| Dividend per share, EUR* | 0.65 | 0.50 | 0.00 | 0.50 | 0.70 |
| Dividend/earnings | 67.1% | 71.2% | 0.0% | 19.7% | 24.7% |
| Dividend/share price | 2.0% | 2.3% | 0.0% | 2.8% | 4.4% |
| Price/earnings (P/E) ratio | 33 | 31 | 200 | 7 | 6 |
| Share price on December 31, EUR | 32.15 | 22.10 | 17.10 | 17.82 | 15.82 |
| Highest share price, EUR | 39.50 | 32.15 | 22.50 | 22.04 | 18.88 |
| Lowest share price, EUR | 29.81 | 20.55 | 16.40 | 17.01 | 13.50 |
| Average share price, EUR | 34.57 | 27.40 | 18.31 | 18.39 | 16.15 |
| Market capitalization, EUR M | 347.22 | 238.68 | 184.68 | 192.46 | 170.86 |
| Number of shares traded | 116,279 | 218,515 | 143,492 | 209,006 | 240,667 |
| Percentage of shares traded | 1.1% | 2.0% | 1.3% | 1.9% | 2.2% |
| Dividend paid for fiscal year, EUR M* | 7.02 | 5.40 | 0.00 | 5.40 | 7.56 |
| Average number of shares | 10,800,000 | 10,800,000 | 10,800,000 | 10,800,000 | 10,800,000 |
| Number of shares on December 31 | 10,800,000 | 10,800,000 | 10,800,000 | 10,800,000 | 10,800,000 |
* For the financial year 2014, proposed by the Board of Directors for approval by the Annual General Meeting.
| Return on equity (ROE), % = | (Income before taxes – income taxes) / Equity including minority interest (average for the year) |
|---|---|
| Return on investment (ROI), % = | (Income before taxes + interest and other financial expenses) / (Total assets – interest-free liabilities [average for the year]) |
| Equity/assets ratio, % = | Equity including minority interest / (Total assets – advances received) |
| Debt/equity ratio (gearing), % = | (Interest-bearing liabilities – cash and cash equivalents) / Equity including minority interest |
| Earnings per share = | (Income before taxes – income taxes +/– minority interest) / Average number of shares |
| Equity per share = | Equity attributable to parent company shareholders / Number of shares on December 31 |
| Dividend/earnings, % = | Dividend per share / Earnings per share |
| Dividend/share price, % = | Dividend per share / Share price on December 31 |
| Price/earnings (P/E) ratio = | Share price on December 31 / Earnings per share |
| SALES 533.8 560.3 Other operating revenue 2 2.4 23.6 Operating expenses Goods and services 3 147.8 150.0 Employee expenses 4 90.2 83.2 Depreciation/amortization 5 28.7 35.2 Other operating expenses 6 257.0 281.6 523.8 550.0 OPERATING INCOME 12.4 33.9 Financial income and expenses 7 -6.0 -6.6 INCOME BEFORE EXTRAORDINARY ITEMS 6.4 27.3 Extraordinary items 8 27.2 - INCOME BEFORE ALLOCATIONS AND TAXES 33.6 27.3 Appropriations 9 -8.2 -26.9 Income taxes 10 0.0 - |
EUR M | Note | Jan 1, 2014– Dec 31, 2014 |
Jan 1, 2013– Dec 31, 2013 |
|---|---|---|---|---|
| INCOME FOR THE FINANCIAL YEAR | 25.4 | 0.4 |
| EUR M | Note | Dec 31, 2014 | Dec 31, 2013 |
|---|---|---|---|
| ASSETS | |||
| FIXED ASSETS | |||
| Intangible assets | 11 | 1.2 | 1.5 |
| Tangible assets | 12 | ||
| Land | 1.9 | 1.9 | |
| Buildings and structures | 10.5 | 11.3 | |
| Vessels | 291.8 | 365.2 | |
| Machinery and equipment | 5.4 | 6.4 | |
| 309.6 | 384.9 | ||
| Shares and participations | 13 | ||
| Shares in Group companies | 1.1 | 1.1 | |
| Capital contribution to Group companies | 17.6 | 0.6 | |
| Other shares and participations | 26.1 | 0.0 | |
| 44.8 | 1.7 | ||
| TOTAL FIXED ASSETS | 355.5 | 388.0 | |
| CURRENT AND FINANCIAL ASSETS | |||
| Inventories | 14 | 16.0 | 14.9 |
| Long-term receivables | |||
| Group receivables | 28.3 | 0.2 | |
| Receivable, settlement payment | 0.3 | 0.5 | |
| 28.7 | 0.7 | ||
| Current receivables | |||
| Trade receivables | 10.0 | 10.5 | |
| Group receivables | 4.5 | 0.1 | |
| Other current receivables | 0.4 | 0.7 | |
| Accrued income and prepaid expenses | 15 | 15.6 | 14.4 |
| 30.5 | 25.7 | ||
| Cash and cash equivalents | 100.1 | 95.5 | |
| TOTAL CURRENT AND FINANCIAL ASSETS | 175.2 | 136.7 | |
| TOTAL ASSETS | 530.8 | 524.7 |
| EUR M | Note | Dec 31, 2014 | Dec 31, 2013 |
|---|---|---|---|
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| SHAREHOLDERS' EQUITY | 16 | ||
| Share capital | 1.8 | 1.8 | |
| Retained earnings | 63.4 | 68.4 | |
| Income for the period | 25.4 | 0.4 | |
| TOTAL SHAREHOLDERS' EQUITY | 90.6 | 70.6 | |
| ACCUMULATED APPROPRIATIONS | |||
| Accumulated depreciation differences | 156.1 | 147.9 | |
| LIABILITIES | |||
| Long-term liabilities | 17 | ||
| Liabilities to credit institutions | 197.1 | 220.5 | |
| Current liabilities | |||
| Repayment portion of liabilities to credit institutions | 23.4 | 14.9 | |
| Accounts payable | 22.9 | 27.5 | |
| Group liabilities | 3.6 | 7.1 | |
| Other current liabilities | 9.5 | 8.8 | |
| Accrued expenses and prepaid income | 18 | 27.5 | 27.3 |
| 87.0 | 85.7 | ||
| TOTAL LIABILITIES | 284.1 | 306.2 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 530.8 | 524.7 |
| EUR M | Jan 1, 2014– Dec 31, 2014 |
Jan 1, 2013– Dec 31, 2013 |
|---|---|---|
| OPERATING ACTIVITIES | ||
| Income for the period | 25.4 | 0.4 |
| Adjustments | ||
| Depreciation/amortization | 28.7 | 35.2 |
| Capital gains from tangible assets | -1.8 | -22.8 |
| Other items not included in cash flow | 8.2 | 26.9 |
| Interest expenses and other financial expenses | 6.7 | 7.2 |
| Interest income and other financial income | -1.5 | -0.1 |
| Dividend income | 0.0 | -0.5 |
| Extraordinary items | -27.2 | - |
| Income taxes | 0.0 | - |
| Change in working capital | ||
| Change in current receivables | -4.5 | -2.2 |
| Change in inventories | -1.1 | -0.3 |
| Change in non-interest-bearing liabilities | -6.9 | -3.3 |
| Interest paid | -6.1 | -3.7 |
| Financial expenses paid | -0.8 | -0.9 |
| Interest received | 0.1 | 0.1 |
| Financial income received | 1.1 | 0.0 |
| Taxes paid | 0.0 | 1.8 |
| NET CASH FLOW FROM OPERATING ACTIVITIES | 20.4 | 37.7 |
| INVESTING ACTIVITIES | ||
| Investments in vessels | -5.5 | -168.6 |
| Investments in other intangible and tangible assets | -1.0 | -3.1 |
| Divestments of vessels | 55.1 | 29.9 |
| Divestments of other intangible and tangible assets | 0.0 | 0.0 |
| Capital contribution to Group companies | -17.0 | -0.3 |
| Divestments of shares and participations | 0.9 | - |
| Change in non-current receivables | -28.0 | 0.2 |
| Dividends received | 0.0 | 0.5 |
| NET CASH FLOW FROM INVESTING ACTIVITIES | 4.5 | -141.4 |
| FINANCING ACTIVITIES | ||
| Increase in long-term liabilities | - | 179.0 |
| Amortization of long-term liabilities | -14.9 | -24.5 |
| Dividends paid | -5.4 | - |
| Group contribution received | 0.1 | - |
| NET CASH FLOW FROM FINANCING ACTIVITIES | -20.2 | 154.5 |
| CHANGE IN CASH AND CASH EQUIVALENTS | 4.7 | 50.8 |
| Cash and cash equivalents at beginning of period | 95.5 | 44.7 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 100.1 | 95.5 |
Viking Line Abp, domiciled in Mariehamn, Åland, is the parent company of the Viking Line Group. The Company's Business Identity Code is 0144983-8.
The financial statements of Viking Line Abp have been prepared in compliance with Finnish accounting legislation as well as other national rules and regulations concerning financial statements.
The financial statements of the Company encompass the period January 1 – December 31, 2014.
Tangible and intangible assets are recognized at historical cost less accumulated scheduled depreciation, which has been calculated on the basis of the probable economic life of the assets. Carrying amounts in the balance sheet also include revaluations on parcels of land, based on appraisals made by outside appraisers.
Vessels, which comprise the largest asset item in the balance sheet, are depreciated on a straight-line basis. For vessels, an estimated residual value at the end of their economic life has been taken into account in calculating depreciation. Additional capital expenditures for vessels are depreciated over the remaining scheduled economic life of the vessels. Renovation projects for vessels whose remaining useful life is less than five years are depreciated over five years. For vessels acquired in 2008 or later the hull, engine and other long-term component parts will be depreciated on a straight-line basis over 25 years, while short-term component parts will be depreciated on a straight-line basis over 15 years. The above component parts related to vessels acquired prior to 2008 are depreciated on a straight-line basis over either 20 or 25 years.
Viking Line's vessels are dry-docked at 2-3 year intervals. Dry-docking expenses are capitalized for each respective vessel and depreciated until the next planned dry-docking.
Normal expenditures for repairs and maintenance are expensed on a current basis. Other tangible assets are depreciated on a declining balance basis. Land is not depreciated.
Intangible assets mainly comprise computer software programmes and capitalized renovation expenses for leased properties and are amortized on a straight-line basis.
Depreciation for fixed assets is calculated according to the following principles:
| Vessels __________ 20–25 years, straight-line | |
|---|---|
| Vessels, short-term component parts _____ 15 years, straight-line | |
| Vessel dry-docking________ 2–3 years, straight-line | |
| Vessels, machinery and equipment _____ 25% of remaining expenditure | |
| Buildings ________ 4–7% of remaining expenditure | |
| Structures _____ 20–25% of remaining expenditure | |
| Machinery and equipment ______ 25% of remaining expenditure | |
| Intangible assets (amortization)________ 5–10 years, straight-line |
The Åland-based shipowners' mutual insurance company Redarnas Ömsesidiga Försäkringsbolag was re-organized into a limited liability insurance company and merged with its wholly owned insurance subsidiary Försäkringsaktiebolaget Alandia to form Alandia Försäkring Ab as of December 31, 2014. The company changed its name to Försäkringsaktiebolaget Alandia as of January 1, 2015. The shares in the company were allocated in proportion to the premiums paid during the years 2011–2013 among those companies that, on the merger date, had an uninterrupted co-owner relationship with Redarnas Ömsesidiga Försäkringsbolag that had lasted at least one year.
Upon allocation, Viking Line Abp received shares in Alandia Försäkring Ab and sold some of them as of December 31, 2014. After that, Viking Line Abp's shareholding amounted to 19.9 per cent of the total. The acquisition value of the shares was established on the basis of the present value of future cash flows as of December 31, 2014 and is recognized among shares and participations in the Company's balance sheet and as an extraordinary item in the income statement. If the value of the shares decreases substantially and in the long term, an impairment loss is recognized among financial expenses.
The proceeds on the shares that were divested were recognized in "Financial income" in the Company's income statement.
Other financial assets and liabilities are recognized at acquisition cost.
Income taxes recognized in the income statement are attributable to income for the year as well as to earlier accounting periods.
| EUR M | Jan 1, 2014 – Dec 31, 2014 |
Jan 1, 2013 – Dec 31, 2013 |
|
|---|---|---|---|
| 2. | OTHER OPERATING REVENUE | ||
| Capital gain, vessels | 1.8 | 22.8 | |
| Rents received on properties | 0.5 | 0.5 | |
| Miscellaneous operating revenue | 0.1 | 0.3 | |
| Total | 2.4 | 23.6 | |
| 3. | GOODS AND SERVICES | ||
| Purchases during the financial year | 126.9 | 127.6 | |
| Change in inventories | -1.5 | -0.3 | |
| Externally purchased services | 22.5 | 22.7 | |
| Total | 147.8 | 150.0 | |
| 4. | EMPLOYEE EXPENSES | ||
| Salaries etc | 96.4 | 88.9 | |
| Pension expenses | 12.5 | 11.3 | |
| Other employee expenses | 7.1 | 6.4 | |
| 115.9 | 106.6 | ||
| Government restitution | -25.7 | -23.5 | |
| Total | 90.2 | 83.2 | |
| AVERAGE NUMBER OF EMPLOYEES | |||
| Shipboard employees | 1,649 | 1,502 | |
| Land-based employees | 419 | 445 | |
| Total | 2,068 | 1,947 | |
| 5. | DEPRECIATION/AMORTIZATION | ||
| Intangible assets | 0.4 | 0.4 | |
| Buildings and structures | 0.9 | 1.0 | |
| Vessels | 25.7 | 31.7 | |
| Machinery and equipment | 1.8 | 2.1 | |
| Total | 28.7 | 35.2 | |
| 6. | AUDITORS' FEES | ||
| Auditing | 0.1 | 0.1 | |
| Miscellaneous consulting | 0.0 | 0.0 | |
| Total | 0.1 | 0.1 |
| EUR M | Jan 1, 2013 – Dec 31, 2013 |
|
|---|---|---|
| 7. FINANCIAL INCOME AND EXPENSES | ||
| Dividend income from Group companies | - | 0.5 |
| Dividend income from others | 0.0 | 0.0 |
| Interest income from Group companies | 1.3 | 0.0 |
| Interest income from others | 0.1 | 0.1 |
| Exchange gains | 0.6 | 1.0 |
| Other financial income | 0.1 | 0.0 |
| Total financial income | 2.1 | 1.7 |
| Interest expenses to Group companies | 0.0 | 0.1 |
| Interest expenses to others | 5.8 | 6.3 |
| Exchange losses | 1.4 | 1.1 |
| Other financial expenses | 0.9 | 0.8 |
| Total financial expenses | 8.1 | 8.3 |
| Total financial income and expenses | -6.0 | -6.6 |
| 8. EXTRAORDINARY ITEMS | ||
| Shares and participations received, Alandia Försäkring Ab | 27.1 | - |
| Group contribution received | 0.1 | - |
| Total extraordinary items | 27.2 | - |
| 9. APPROPRIATIONS | ||
| Difference between scheduled depreciation and depreciation for tax purposes | -8.2 | -26.9 |
| 10. INCOME TAXES | ||
| Income tax on actual operations | 0.0 | - |
| Other | |||
|---|---|---|---|
| Intangible | longterm | ||
| rights | assets | Total | |
| Acquisition cost, Jan 1, 2014 | 3.4 | 10.3 | 13.7 |
| Increases | 0.1 | 0.0 | 0.1 |
| Decreases | - | - | - |
| Acquisition cost, Dec 31, 2014 | 3.5 | 10.4 | 13.9 |
| Accumulated amortization, Jan 1, 2014 | -2.6 | -9.7 | -12.3 |
| Accumulated amortization on decreases | - | - | - |
| Amortization for the period | -0.3 | -0.1 | -0.4 |
| Accumulated amortization, Dec 31, 2014 | -2.9 | -9.8 | -12.7 |
| Book value, Dec 31, 2014 | 0.6 | 0.6 | 1.2 |
| Buildings | Machinery | ||||
|---|---|---|---|---|---|
| Land | and structures |
Vessels | and equipment |
Total | |
| Acquisition cost, Jan 1, 2014 | 1.1 | 25.5 | 776.3 | 35.7 | 838.6 |
| Increases | 0.0 | 5.5 | 0.9 | 6.4 | |
| Decreases | -69.9 | -0.2 | -70.1 | ||
| Acquisition cost, Dec 31, 2014 | 1.1 | 25.5 | 711.9 | 36.4 | 774.9 |
| Accumulated depreciation, Jan 1, 2014 | - | -14.1 | -411.1 | -29.3 | -454.5 |
| Accumulated depreciation on decreases | 16.6 | 0.1 | 16.7 | ||
| Depreciation for the period | -0.9 | -25.7 | -1.8 | -28.3 | |
| Accumulated depreciation, Dec 31, 2014 | - | -15.0 | -420.2 | -31.0 | -466.2 |
| Revaluations | 0.8 | 0.8 | |||
| Book value, Dec 31, 2014 | 1.9 | 10.5 | 291.8 | 5.4 | 309.6 |
| 13. SHARES AND PARTICIPATIONS | Shares in Group companies |
Capital contribution to Group companies |
Other shares and partici pations |
Total |
|---|---|---|---|---|
| Acquisition cost, Jan 1, 2014 | 1.1 | 0.6 | 0.0 | 1.7 |
| Increases | - | 17.0 | 27.1 | 44.1 |
| Decreases | - | - | -1.0 | -1.0 |
| Acquisition cost, Dec 31, 2014 | 1.1 | 17.6 | 26.1 | 44.8 |
| 14. INVENTORIES | Dec 31, 2014 | Dec 31, 2013 |
|---|---|---|
| Stocks of goods for sale | 14.8 | 13.2 |
| Supplies | 0.3 | 0.2 |
| Stocks of vessel fuel | 1.0 | 1.5 |
| Total | 16.0 | 14.9 |
| 15. ACCRUED INCOME AND PREPAID EXPENSES | Dec 31, 2014 | Dec 31, 2013 |
|---|---|---|
| Employee-related items | 14.1 | 12.6 |
| Other accrued income and prepaid expenses | 1.5 | 1.8 |
| Total | 15.6 | 14.4 |
| EUR M | |||
|---|---|---|---|
| 16. SHAREHOLDERS' EQUITY | 2014 | 2013 | |
| Share capital, Jan 1 | 1.8 | 1.8 | |
| Share capital, Dec 31 | 1.8 | 1.8 | |
| Retained earnings, Jan 1 | 68.4 | 61.9 | |
| Income for the previous financial year | 0.4 | 6.5 | |
| Dividend paid to shareholders | -5.4 | - | |
| Retained earnings, Dec 31 | 63.4 | 68.4 | |
| Income for the period | 25.4 | 0.4 | |
| Total shareholders' equity | 90.6 | 70.6 | |
| 17 | LOANS THAT FALL DUE LATER THAN AFTER 5 YEARS | Dec 31, 2014 | Dec 31, 2013 |
| Liabilities to credit institutions | 103.3 | 126.8 | |
| 18. ACCRUED EXPENSES AND PREPAID INCOME | Dec 31, 2014 | Dec 31, 2013 | |
| Employee-related items | 18.4 | 17.9 | |
| Other accrued expenses and prepaid income | 9.1 | 9.4 | |
| Total | 27.5 | 27.3 | |
| 19. PLEDGED ASSETS AND OTHER CONTINGENT LIABILITIES | |||
| Contingent liabilities | Dec 31, 2014 | Dec 31, 2013 | |
| Loans and credit lines for which vessel mortgages were provided as collateral Other contingent liabilities not included in the balance sheet |
220.5 | 235.4 | |
| Covered by vessel mortages | 0.0 | 0.6 | |
| Loan guarantee on behalf of subsidiary | - | 0.1 | |
| Total | 220.6 | 236.1 | |
| Assets pledged for own debt | |||
| Vessel mortgages | 314.7 | 314.7 | |
| Total | 314.7 | 314.7 | |
| Leasing liabilities | |||
| Amounts that fall due during the following period | 0.7 | 0.7 | |
| Amounts that fall due later | 2.1 | 0.3 | |
| Total | 2.7 | 1.1 |
Mariehamn, February 18, 2015
Ben Lundqvist, Chairman of the Board Nils-Erik Eklund Trygve Eriksson Erik Grönberg Agneta Karlsson Dick Lundqvist Lars G Nordström
Jan Hanses, President and CEO
Our auditors' report was issued today.
Mariehamn, February 18, 2015
Johan Kronberg, Authorized Public Accountant Martin Grandell, Authorized Public Accountant
We have audited the accounting records, the financial statements, the report of the Board of Directors and the administration of Viking Line Abp for the year ended December 31, 2014. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.
The Board of Directors and the President and CEO are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the President and CEO shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the President and CEO are guilty of an act or negligence which may result in liability in damages towards the company or whether they have violated the Limited Liability Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view 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 company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the Group in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.
In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.
Mariehamn, February 18, 2015
Johan Kronberg Martin Grandell Authorized Public Accountant Authorized Public Accountant
Street address: Norragatan 4 Postal address: PB 166 AX-22101 Mariehamn Åland, Finland Tel: +358 18 270 00
Street address: Storagatan 3 Postal address: PB 166 AX-22101 Mariehamn Åland, Finland
VIKING LINE SKANDINAVIEN AB Box 4154 SE-131 04 Nacka, Sweden Tel: +46 8 452 41 00
VIKING REDERI AB c/o Viking Line Skandinavien AB Box 4154 SE-131 04 Nacka, Sweden Tel: +46 8 452 41 00
OÜ VIKING LINE EESTI Hobujaama 4 EE-10151 Tallinn, Estonia Tel: +372 666 3966
VIKING LINE FINNLANDVERKEHR GMBH Große Altefähre 20-22 DE-23552 Lübeck, Germany Tel: +49 451 38 46 30
VIKING LINE BUSS AB Storagatan 3 AX-22100 Mariehamn Åland, Finland Tel: +358 18 263 11
Street address: Mastokatu 1 Postal address: PB 119 FI-00161 Helsinki, Finland Tel: +358 9 123 51
Street address: Linnansatama Postal address: PB 265 FI-20101 Turku, Finland Tel: +358 2 333 11
TURKU Hansa-Thalia Aurakatu 10 FI-20100 Turku, Finland Tel: +358 2 333 11
TAMPERE Hämeenkatu 14 FI-33100 Tampere, Finland Tel: +358 2 333 11
TALLINN Hobujaama 4 EE-10151 Tallinn, Estonia Tel: +372 666 3966
Storagatan 3 AX-22100 Mariehamn Åland, Finland Tel: +358 18 262 11
PARK ALANDIA HOTELL Norra Esplanadgatan 3 AX-22100 Mariehamn Åland, Finland Tel: +358 18 141 30
Danvik Center Hästholmsvägen 28 SE-131 30 Nacka, Sweden Tel: +46 8 452 41 00
STOCKHOLM City Terminal Klarabergsviadukten 72 SE-111 64 Stockholm, Sweden Tel: +46 8 452 40 00
LÜBECK Große Altefähre 20-22 DE-23552 Lübeck, Germany Tel: +49 451 38 46 30
Street adress: Mastokatu 1 Postal address: PB 119 FI-00161 Helsinki, Finland Tel: +358 9 123 51
TURKU Postal address: PB 265 FI-20101 Turku, Finland Tel: +358 2 333 1446
TALLINN Sadama 25 A-Terminal EE-15051 Tallinn, Estonia Tel: +372 666 3985
• www.vikingline.com
• www.vikingline.se
• www.vikingline.de
• www.vikingline.dk • www.vikingline.no
• www.vikingline.fi • www.vikingline.ax
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