1. INTRODUCTION

1.1. Our task1.2. Pilotage glossary1.3. Corporate social responsibility

management and materiality

1.1. Our task

Finnpilot Pilotage Ltd is an entirely state-owned special assignment company that operates in the mannerprescribed by the Limited Liability Companies Act. The Pilotage Act stipulates that the primary objective of pilotageactivities is the promotion of vessel traffic safety and prevention of environmental impacts.

We provide consistent and cost-effective services in all fairways requiring pilotage within the Finnish waterways and theSaimaa region. We enhance the efficiency of maritime traffic, which translates into a significant financial value for ourshipping company customers as well as for the entire national economy. The use of a pilot significantly reduces the risk ofserious environmental accidents. Thus, our operations provide a benefit in terms of financial well-being and theprotection of the natural environs of the archipelago region. Pilotage services are an important link within the chain oflogistics required for Finland’s foreign trade. We help vessels to traverse the fairways of our archipelago safely and toreach their port destinations according to schedule.

Navigation is currently experiencing a period of technological change. A system for autonomous maritime traffic is beingconsidered for the Baltic Sea region. Finnpilot is an active contributor to the change and endeavours to find viablesolutions, particularly for the development of a functional electronic pilotage concept. ePilotage refers to measuresundertaken to digitalise and develop the different phases of pilotage services in order to make them even safer and moreefficient. The development work will facilitate the provision of entirely new types of services in the future. We are meetingthe challenges of the future as part of a broad network of navigational operators and experts.

Our three most important values are: safety, renewal and co-operative approach.

1.2. Pilotage glossaryEvery field has its own professional lexicon and pilotage is no exception. Here is a short introduction to the everydayvocabulary used by pilots and pilotage employees.

PILOTAGE ACTThe purpose of the Pilotage Act

(Luotsauslaki 940/2003) is to enhance thesafety of vessel traffic and prevent

environmental damage generated byvessel traffic. The Pilotage Act regulates,

among other things, compulsory pilotageand defines the qualification

requirements for pilots.

DISTRICT CHIEF PILOTA District Chief Pilot heads the operational

activities and manages the supervisoryteam in a specific pilotage area, thereby

ensuring the exchange of informationbetween the management and field

personnel. Jukka Ketonen (picture) is theDistrict Chief Pilot of Helsinki Area.

PILOT ONLINEA browser-based pilot order system

utilised by shipbrokers and shippersonnel, which enables customers to

order a pilot and track the progress of theorder process step by step.

DEVIATION OBSERVATIONA deviation in the activities might be a

general safety observation, anoccupational accident, a dangeroussituation or an accident. Deviation

observations help to determine anyfactors that cause or may cause accidentsand dangerous situations and provide ameans of disseminating information and

learning from field-related incidents.

ONE SEAAn autonomous maritime developmentecosystem through which internationalactors in their fields, e.g., ABB, Wärtsilä,

Rolls-Royce, Finferries and Finnpilot,endeavour to achieve their goals for

autonomous marine navigation. The OneSea ecosystem is managed by DIMECC.

PILOT BOARDING POSITIONA pilot boarding position is an areamarked on a map at the open-sea

entrance of or along a fairway requiringpilotage in which a pilot embarks or

disembarks a vessel or pilots are changed.

FINNPILOT ACADEMYIn accordance with Finnpilot's strategy,

Finnpilot Academy takes advantage of thewide range of Finnpilot’s in-house

competence to build and develop itsinternal training network. The objective is

also to prepare for the changes in thework environment brought on by newtechnologies. The first Academy trials

include the ice module, initiated duringthe winter 2018–2019, for the purpose of

training personnel to operate in icyconditions.

HYDROCOPTERA hydrocopter is a fairly lightweight,propeller-driven vehicle with frame

steering that can be used to travel onland, ice and water. Hydrocopters are

used along Finland’s coastline during thewinter and thawing season. Hydrocopters

rest on four pontoons that enable thevehicle to float or act as skis on ice.

E-PILOTAGEePilotage refers to measures undertaken

to digitalise and develop the differentphases of pilotage services in order to

make them even safer and more efficient.The key areas of development include thecollection, production and processing ofinformation related to pilotage services.The development work will facilitate the

provision of entirely new types of servicesin the future.

1.3. Corporate social responsibility management and materiality

Corporate responsibility is a vital part of Finnpilot’s strategy and business activities. As we have the exclusivestatutory right to carry out pilotage activities, our stakeholders expect us to be particularly open and transparent ineverything we do. Our goal is to meet and exceed these expectations.

CSR management at FinnpilotFor us, corporate social responsibility refers to our obligation to bear responsibility for the impacts of our activities on thesociety, the environment and our stakeholders.

The Executive Committee and Board of Finnpilot are committed to corporate social responsibility, which is an integralpart of our operational culture. We endeavour to influence society as a responsible actor and active participant indiscourse within our field. We implement our social responsibility by ensuring the financial result of the company, but alsoin many other ways. We comply with the relevant laws and regulations related to our activities, and we actively developour environmental objectives and related indicators, while also monitoring the realisation of our responsibility goals. Oursafety work is carried out in a systematic manner. We plan our activities for the long term and assess them critically.Quality management and ongoing development are integral parts of our work rhythm and methods.

Key themes for responsibilityAs a part of its annual report, Finnpilot reports on the essential aspects of its corporate responsibility under five keythemes:

Finnpilot’s primary task is pilotage for the purpose of safeguarding the safety, efficiency and security of supply related tonavigation.

Safety for challenging fairways >>

The competence of the personnel determines the quality of the service. Well-being at work and occupational health andsafety are the foundations upon which our demanding service tasks are realised. Finnpilot endeavours to be a goodemployer.

An employer that supports development >>

The company’s key stakeholders include shipping companies, vessel agents/representatives and ports, that all call for theongoing development of our services and active collaboration. Other significant stakeholders include our personnel, theowner, customers, the authorities, decision-makers, local communities, subcontractors, the media and the public at large.

Responsible service provider >>

Pilotage proactively prevents environmental accidents and protects the ecosystems of the archipelago. Efforts are madeto minimize the environmental impacts of the company’s own activities.

Work for the benefit of the environment >>

Society expects the reporting of a state-owned company to be open and transparent. The company should operate in acost-efficient manner and make responsible acquisitions. Pricing should be unambiguous and correspond to actual costs.

Social responsibility >>

MaterialityDuring 2018, we identified the key aspects of responsibility with the help of a materiality analysis. Materiality wasassessed both in terms of Finnpilot’s own business activities and from the perspective of the company’s stakeholders.

The work to update the materiality analysis began by surveying the essential aspects for Finnpilot in a workshop led by anindependent CSR expert company, Mitopro Ltd, which was attended by Finnpilot’s management.

Within the updated materiality analysis, the key aspects of responsibility were defined as the following:

Safety through pilotageCustomer-focused operational approachPrevention of environmental hazards.

The factors identified as part of the materiality analysis were included for assessment in the 2018 customer andstakeholder survey. Read more about the assessments of the stakeholders >>

2. THE YEAR 2018

2.1. The review of the CEO2.2. The year we learned how to learn2.3. Objectives and their implementation2.4. Key themes for 20182.5. Principles of reporting

2.1. The review of the CEOWatch CEO Kari Kosonen’s review of 2018 from the video above or read it below.

The year 2018 was one of strong development and change for Finnpilot. The majority of the year was still largely affectedby the investigation of the pilot boat accident that took place in December 2017. Together with the authorities, weinvestigated the incident and the causes that led to it, and we implemented improvements whenever the need fordevelopment was detected. All upgrades to the equipment and activities were carried out in close collaboration with ourpersonnel, and for this, I extend my gratitude to all of Finnpilot’s employees.

The close co-operation carried out within Finnpilot for the purpose of improving safety also led to the development of ouroperational culture. The work to develop our culture began in spring 2017, and a joint development session, held duringwinter 2018, taught us how to effectively discuss difficult matters in a constructive and goal-oriented manner. The culturalchange has been facilitated by an increase in mutual trust. The increase in trust has grown out of situations in whichsolutions to common problems have been sought through the joint efforts of the management, supervisors andpersonnel in the field.

The advances in our discussion culture were concretely demonstrated during the winter’s collective agreementnegotiations and were reflected as high figures in work satisfaction at the end of the year. Negotiations concerningcollective agreements are traditionally characterised by strong opposition. This time, even though both parties came tothe table naturally driven by their own interests, they managed to focus on working together to find solutions to thecommon issues. The agreements were reached in due time and followed the general policy for increases, and wemanaged to iron out many textual issues that had long been problematic.

From a financial standpoint, the year 2018 was the most successful year we have had during our time as a limited liabilitycompany. We were able to meet the expectations of the owner, while also implementing numerous projects concerningsafety and digitalisation. We achieved a service level of 99.9% and launched a new service channel, PilotOnline, for theuse of our customers. We also recruited new pilots in response to the increase in traffic.

During the autumn, we conducted our customer and stakeholder survey, which has traditionally been sent out every twoyears. The survey supplements the viewpoints and feedback collected from shipmasters via iPads during the pilotageprocess. Satisfaction with the pilotage services remained at a high level, and the number of respondents to the surveyincreased significantly.

In many ways, the year 2019 will be an important year for innovations. New types of vessels will be added to our fleet.During 2019, the first self-righting fast pilot boat will be ready for use, and we will start the building of a hybrid pilot boatthat runs on both electricity and diesel fuel as well as a remote-controlled pilot boat. All this innovative development isnecessary in order for us to do our work safely, preserve our environment and integrate new technologies. Our nationaloperations ensure a sufficient volume that enables us to renew our activities in a way that will continue to keep us at thecutting edge internationally.

We will undertake to renew the pilotage process itself during 2019. The amended Pilotage Act now makes it possible totest remote pilotage, and this spring will see the launch of the broad Sea for Value research project through which we arecontributing to the development of remote pilotage. The project has mainly been put together with our partners withinthe One Sea autonomous maritime ecosystem, and it will last two years. Once the research has been completed, we willhave a realistic opportunity to assess how remote pilotage can be implemented in Finland.

Our customers will be pleased, of course, to know that the year 2019 will mark the third consecutive year in which ourprices remain the same. Our price level is extremely reasonable, also when considered in an international comparison ofpilotage prices between Finland, Sweden, Estonia, Denmark, Norway, Germany and Holland. In that comparison, Finlandtriumphed as the least expensive country, which is definite proof of the efficiency of our operational model. This topposition was not an obvious outcome from the start, considering our expansive coastline and difficult ice conditions.Overcoming these challenges requires more and different types of equipment and infrastructure than what is generallynecessary in the comparison countries. Furthermore, one must master one’s own equipment as well as that of thecustomers in both open water and winter conditions and, thus, our expertise in all aspects of the pilotage process is a verysignificant contributor to our success.

Along with all these developments and changes, it is important to remember that our goal, also during 2019, remains thesame: to realise our pilotage tasks safely and in a timely manner. We anticipate moderate growth for 2019, which means ahigher number of skilled Finnpilot personnel in the field than was the case in 2018. I strongly believe that our motivatedemployees, who have expressed satisfaction with their working environment, will continue to have the ability to offer thebest service around the clock, every day of the year, in all conditions. Let Finnpilot guide you in 2019 as well, as wecontinue to set the course for all our partners.

13 March 2019Kari Kosonen, CEO

2.2. The year we learned how to learn

The year 2018 was one of learning and development for Finnpilot. Transport Director Aki Marjasvaara describes howwe succeeded, in a short period of time, in harnessing the expertise of the organisation to create an efficient andgoal-oriented shared learning approach to our activities.

An organisation’s ability to reach its potential is largely determined by its ability to learn. Individuals must be able to bringtheir own ideas, which are often still on an intuitive level, to others without fear. Those ideas then need to be interpretedand refined by a suitable and well-informed group. If the ideas have potential, it must be possible to test them in practicewithin the organisation. Once practices that prove to be functional have been expanded to the use of the entireorganisation, the individual organisation’s learning process has been completed – and often, new processes are alreadyunderway.

The pilot boat accident that occurred in December 2017 and led to the death of two of our employees completelystopped our organisation in its tracks and made us question our occupational safety, all the way down to thefundamental foundations of our activities. In that moment, there was an immediate need to understand what hadhappened and to create a new foundation for safety. Each one of our over 300 navigation professionals endeavoured, intheir own way, to analyse the event and provide their viewpoints as a means of advancing the investigation. The numberof issues and perspectives that needed to be considered seemed to be endless, since the background of the accidentrevealed a chain reaction comprised of multiple contributing factors. At the same time, the process of recovery wasespecially tough on our community. The resulting dialogue, collaborative analyses and implementation of consequentialcorrective measures were all carried out with high intensity and strong commitment.

During 2018, our work community learned, in a short period of time, more than it ever had before. We carried out manychanges to our vessels, risk assessments, work guidelines and safety training for personnel. At the same time, we wereable to see what we can accomplish when we learn in an efficient and goal-oriented way. The event set in motion a trendof development that has the potential to raise the safety of professional boats and pilotage in general to a new level. Forexample, we worked together with Meriturva Maritime Safety Training Centre to develop a rescue course that involves thesimulated capsizing of a vessel. We installed emergency exits on all our fast pilot boats, and, during 2019, we will also beadding them to all our pilot cutters that are used in icy conditions. At the end of 2018, we ordered what we believe to bethe market’s first self-righting pilot boat that is being developed together with Kewatec. On the vessel in development,pilots and boat crew will work within safety railings on deck and along the different pilot bridges.

The learning that took place at Finnpilot during 2018 was not limited to occupational safety. Our company plays a strongrole in developing the future of navigation and fairway manoeuvring as part of a broader network and ecosystem. We arecontinuously harnessing more information to serve the developmental needs of pilotage and our other activities. Visualrepresentations of data confirm the intuition of individuals and help interpret events that have occurred.

The field of navigation is currently undergoing a phase of transformation where traditional operational methods arechanging and organisations that effectively take advantage of new possibilities will have a strong position. Our company’snavigation professionals – among whom there are 150 master mariners, thousands of years of combined navigationalexperience and nearly half a million nautical miles piloted each year along our fairways have created an extremely solidfoundation for the introduction, interpretation, limited testing and practical implementation of new ideas. We havewitnessed the potential that our learning organisation has and we want to continue to take advantage of that as a meansof increasing the value that we bring to our customers.

Aki Marjasvaara, Transport Director

In honour of the victims lost in the pilot boat accident at Emäsalo in 2017, a Finnpilot pilot boat led the annual All Saints’Day parade of vessels arranged by SAR volunteers. A!er the parade, the public had the opportunity to get acquainted

with the vessels in Helsinki’s South Harbour. The pilot boat also drew the interest of the youngest visitors. Photo: SamiRaanti

2.3. Objectives and their implementation

PERSPECTIVE OBJECTIVE INDICATOR TARGET 2018 ACHIEVED 2018Customer Prompt service Realisation of service

terms and conditions≥ 99 99.9

Customer satisfaction Vessels (1-7) > 6.0 6.8 Stakeholders (1-7) > 5.8 5.9 Shipping companies (1-

7)> 6.0 6.0

International pilotagefee comparison

< 0.71 0.72

Internal Effective use of resources Piloted nautical milesper person-workday

> 21.8 21.9

Cost/pilotage (€) < 1,450 1,430 Transport cost/pilotage

(€)< 635 616

Occupational health andsafety

Occupationalaccidents/year

< 12 14

Accident frequency/onemillion working hours(all)

< 22 24

Accident frequency/onemillion working hours(resulting in absences)

10

Finances Good profitability Operating income % > 8 9.1 Return on investment % > 25 26.5 Equity ratio % > 50 66.1

Good solvency Quick ratio > 1.0 1.0Learning and growth Satisfied personnel Result of work

satisfaction survey (1-6)> 5.0 4.7

Minimal absences Absences as % of totalworking hous

< 5.0 4.8

Promotion of competence Training days,person/year (exclsimulation runs)

1.0> 1.26

The company’s objectives are determined by the Executive Committee and approved by the Board of Directors. We monitor compliance with theservice terms and conditions regarding the waiting time for pilotage services, which is no more than three hours in coastal waters and six hours inthe Saimaa region. Customer satisfaction is expressed via mPilot while on board the vessel in question. A stakeholder survey is conducted every twoyears.

2.4. Key themes for 2018In 2018, we piloted more nautical miles per person-day than ever before, while also maintaining the same pilotageprices. We developed our safety culture through shared learning and we invested heavily in digital services. Thechanges taking place in navigation also serve to foster the evolution of Finnpilot’s internal culture, in whichdialogue and information exchange play a significant role in terms of the development of the organisation.

Watch the above video clips of the most important themes from 2018.

A year of growthThe year 2018 proved to be a year of strong growth for Finnpilot. The number of pilotage assignments increased incomparison to the previous year by more than 5% and the number of piloted nautical miles per labour day continued togrow. We provided pilotage services 24/7, every day of the year, in nearly all weather conditions. Even though recruitmentwas active and we gained new additions to our personnel, the year demanded a lot from Finnpilot’s employees. Despitethe hectic pace of the year, we were able to maintain our excellent service level and keep our prices at the same level asthe previous year. Every top navigational professional working for our company deserves a share of the gratitude for thissuccessful year.

SafetyWe work in an extremely safety-critical field and, therefore, safety is one of our three key values. We ensure safety forpeople, the environment and navigation. The year 2018 was a year of learning for us in terms of our safety culture. Ouralready strict safety practices were once again examined following the pilot boat accident in December 2017. We carriedout many changes to our vessels, risk assessments, work guidelines and safety training for personnel. We also recruited aTraining and Safety Manager to coordinate the safety work. The new information we have gained will serve to benefitFinnpilot as well as other professional vessel users in the future.

DigitalisationThe trend of digitalisation in navigation is very apparent in Finnpilot’s strategy. We want to be a trendsetter indevelopment: a pilotage organisation that is capable of reinventing itself as well as developing and utilising innovativetechnologies. For our customers, this translates into the provision of even more diverse services. During 2018, westrengthened our expertise and resources by recruiting a Development Manager for Digital Services. We produce andutilise an increasing amount of data in our operations and participate as an active contributor in different co-operativedigitalisation networks.

Cultural change and professional developmentThis period of change within the field of navigation requires an internal change in our own work culture. Finnpilotcontains Finland’s strongest navigational expertise; a resource that will be harnessed for the Finnpilot Academy trainingsystem, which is currently in development. By working together, we create a platform that enables us to learn a lot fromone another. A culture of discourse that encourages dialogue, new work tools and an active exchange of informationforms a promising foundation for the future of pilotage.

The Saimaa Canal drone material in the videos: Aku Kaikkonen

2.5. Principles of reporting

Finnpilot Pilotage Ltd carries out the reporting of its corporate responsibility in compliance with the reporting modeldrafted for the ownership steering of State-owned companies, which was published in 2011 in connection with thedecision in principle issued by the Government. The guidelines for non-listed State-owned companies weresupplemented with the recommendation issued in 2016.

Our key figures reflect the shared mandatory key figures for all State-owned companies that are obligated to report.Supplementary and optional key figures and descriptions have been appended to the extent that such information ismaterial in terms of the company’s activities.

We have been reporting on our corporate responsibility since 2012. To this date, we have published the report each yearin PDF format , which also provides access to the reports from earlier years. The report for 2018 is our firstpublication implemented entirely online.

on our website

Our annual report is primarily intended for our key stakeholders, which include, e.g., our customers and our personnel.From their perspective, the fundamental aspects include the company’s financial situation and the descriptions and keyfigures related to the development of the personnel’s well-being at work. In terms of our other stakeholders, the reportprovides an overview of the impact of our pilotage services and their significance in modern society as well as of theongoing development of the company’s activities. We also hope that our annual report is useful for decision-makers andordinary citizens. We have endeavoured to demonstrate the positive impacts that pilotage has on financial well-being andenvironmental protection.

Boundaries and scope of accountingThis report concerns the year 2018 and Finnpilot Pilotage Ltd. The figures for Ice Advisors Ltd, the subsidiary owned jointlyby Finnpilot and Arctia Ltd, are not included in this report.

The report includes comparative information from earlier years, if such figures were available via accounting.

Measurement and calculation principlesThe key financial figures have been calculated in the manner specified by the Finnish Accounting Act (1336/1997).

The key personnel figures have been calculated in the manner specified by the Accounting Act and in compliance with theGlobal Reporting Initiative (GRI) to the extent required by the decision-in-principle issued by the Finnish Government.

The reporting on the tax footprint complies with the country-specific tax reporting guidelines for companies in which theState is a majority shareholder.

3. CORPORATE RESPONSIBILITY

3.1. SAFETY FORCHALLENGING FAIRWAYS

3.2. SUPPORTING EMPLOYEEDEVELOPMENT

3.3. RESPONSIBLE SERVICEPROVIDER

3.4. WORK FOR THE BENEFITOF THE ENVIRONMENT

3.5. SOCIAL RESPONSIBILITY

3.1. Safety for challenging fairways SAFETY FORCHALLENGING FAIRWAYS

3.1.1. Task and impact of pilotage3.1.2. Pilotage areas3.1.3. Digital development projects3.1.4. Key figures

3.1.1. Task and impact of pilotage SAFETY FORCHALLENGING FAIRWAYS

Pilotage is a means of ensuring navigational safety and efficiency within Finland’s rocky fairways. As maritime trafficinternationalises, the local expertise of pilots becomes even more essential. Deviation observations and relatedreporting hold a key role in advancing the safety of pilotage activities.

The internationalising trend of maritime traffic calls for the best local expertisePilotage is an essential link within Finland’s chain of logistics. Finnpilot’s pilotage services are used by approximatelyevery third vessel visiting Finland’s ports. In accordance with the Pilotage Act (940/2003), the services are provided inpublic fairways within Finnish waters and the part of the Saimaa Canal leased by Finland that are designated as fairwaysrequiring pilotage. The Finnish Transport and Communications Agency, Traficom, determines the fairways requiringpilotage and the pilot boarding positions.

The operational activities are divided into and a District Chief Pilot is assigned to each area to supervisethe organisation of the activities on a practical level. Finnpilot’s Pilot Order Centre receives orders 24 hours a day, 7 days aweek, for the three pilotage zones: Eastern (Saimaa and Kotka), Southern (Helsinki, Hanko, Emäsalo and Porkkala) andWestern (Archipelago Sea, Bothnian Sea and Bay of Bothnia).

six pilotage areas

The largest customer base for the pilotage services provided by Finnpilot is comprised of foreign shipping companies,whose vessels carry foreign officers and crews. These ships are accustomed to the open sea and flowing waters, notnarrow and rocky fairways and pack ice. They also may have a high turnover rate among their personnel. A pilot boardingone of these ships brings a certain level of expertise to the bridge that ensures that the ship will travel smoothly and safelyinto port or from port out to the open sea. Armed with master mariner training, extensive navigational experience and apilot licence, a pilot serves as the shipmaster’s right hand and advisor. Along with fairway navigation he/she is alsonowadays more often responsible for steering the ship to the quay. As maritime traffic increasingly internationalises, therole of the pilot has become more essential from year to year.

Different roles and cooperationNavigational efficiency is the result of collaboration between multiple parties. Finnpilot works closely with differentactors, such as ports, shipping companies, industry, charterers and icebreakers as well as with VTS Finland’s VTS (VesselTraffic Service) Centres. VTS and Finnpilot play their own different roles in the assurance of navigational efficiency andsafety. VTS guides the traffic flows and vessel traffic within Finland’s waterways from on-land sites. Finnpilot pilots operateaboard ship bridges to guide them, to navigate challenging fairways and, by the request of the shipmaster, often also toensure the safe manoeuvring of the ship into the port and at the quay.

Moderate growth in pilotage assignments, no change in pricesThe number of pilotage assignments continued to see moderate growth during 2018. A 5.6 per cent growth in pilotageassignments was reported, which amounted to a total of 25,616 individual assignments. In terms of nautical miles, thisequated to 484,959 miles, which is a 5.5 per cent increase from the previous year. Finnpilot succeeded in meeting its targetservice level in terms of pilot waiting times, which is a maximum of three hours in coastal waters and six hours in theSaimaa region. A total of 99.9 per cent of all pilotage assignments during the year had waiting times that were shorterthan the maximum hourly limits. In Finland, pilotage services are priced at a very reasonable level when comparedinternationally. The prices were not increased in 2018 and they will remain the same in 2019 as well.

A new attachment for the service conditions concerning pilot ladder safetyThe safety of our employees is the highest priority in all aspects of our work. Proper pilot ladder arrangements becametopical once again in connection with several serious near miss situations that occurred when pilots were embarking ordisembarking vessels during the year. The safety of the ladders has long been problematic and, after last year’s incidents,it became obvious that there was a need for new guidelines regarding pilot ladder safety. In June, the company issued anew attachment to the service conditions that specified the safety guidelines for pilot ladders.

Information from observed deviations improve safetyThe added safety that pilotage provides within Finland’s narrow archipelago fairways is pivotal in terms of preventingaccidents. Finnpilot has been systematically compiling information about deviations observed by pilots and the impactof pilotage since 2011. On the basis of deviation analyses, the majority of prevented accidents and damage is related totechnical problems with onboard systems and equipment or the lack of competence among the vessel’s personnel. Thedeviations can also be caused by the activities of other operators handling, for example, the opening of bridges ordocking of vessels.

The reports of the pilots facilitate nearly real time notifications of observed deviations and risk factors, such as technicalfaults in vessels. Additional observations provided by the system also make it possible to gain an overall picture, in realtime, of the safety development among maritime traffic within Finland’s fairways. Deviation reporting has broughttransparency to the safety observations that, earlier, remained primarily the pilots’ own knowledge and upon which theyoften base the predictions and pilotage risk management that is essential to their actions.

During 2018, Finnpilot invested heavily in the development and transparency of its safety culture. The activities ofFinnpilot’s Safety group were reactivated, and a Training and Safety Manager was recruited to head the group. During theyear, new methods were developed to take advantage of the information provided by the deviation reports and focus wasplaced on specifying the needs revealed by the reports.

The work of the Safety group will be supported in 2019 by the acquisition of a new technical system that will facilitate,among other things, the clearer classification of deviations. The classification will help us to better understand howdifferent factors affect the occurrence of deviations. At the same time, the tracking of changes and trends will be easier asa result of the statistical monitoring and systematisation of safety observations.

To learn more about the provision of Safety for Challenging Fairways, click the link below or select from the menu on the le!. You can move on to thenext aspect of responsibility from the menu at the top of the screen view.

3.1.2. Pilotage areas SAFETY FORCHALLENGING FAIRWAYS

3.1.3. Digital development projects SAFETY FORCHALLENGING FAIRWAYS

The trend of digitalisation in navigation is apparent in Finnpilot’s strategy. We want to be a trendsetter indevelopment: a pilotage organisation that is capable of reinventing of itself as well as developing and utilisinginnovative technologies. Our digital development projects will enable us, in the future, to offer our customers moreefficient and diversified pilotage services.

Remote pilotage as a part of ePilotage developmentIn November 2018, the Government proposed that the Pilotage Act be amended to enable for remote pilotage in Finland’swaterways and the part of the Saimaa Canal leased by Finland that are designated as fairways requiring pilotage. The Actentered into force on 1 February 2019.

In remote pilotage situations, the pilot would manage the relevant tasks from a location other than on the vessel beingpiloted, for example, from a control centre situated on land. The long-term objective is to improve the safety andefficiency of pilotage activities as well as promote the testing of new technologies and more extensive utilisation ofinformation in pilotage.

The remote pilotage authorisation defines the routes and parts of routes where remote pilotage is allowed. It alsodetermines the vessels involved and the origin and destination of the remote pilotage. The authorisation will be grantedby the Transportation and Communications Agency upon application for a maximum of five years.

In accordance with its strategy, Finnpilot has continued its intense development of the ePilotage service concept. As partof this development, we aim to implement the testing phase of remote pilotage during 2020. The realisation of newservices, such as remote pilotage, requires new, broader operational models for the services offered within Finnishfairways, and the implementation of the testing phase calls for collaboration between navigational actors. We carry outco-operation as part of the One Sea ecosystem, in which we operate actively in co-operation with the entire navigationalfield.

Data collection and utilisation play an even greater roleThe ongoing development of Finnpilot’s AISLab system continued in 2018. The system provides an easier and moregraphic means of visualising the simultaneous movement and changes in movement of numerous different vessels. Thesystem provides the possibility to observe and process, in retrospect, the way in which different situations related topilotage developed. AISLab also facilitates more effective organisational learning and the utilisation of collectedinformation for training purposes. Automated analysis functions are also being developed for the system.

Wärtsilä Pilot Pro (formerly Transas Pilot Pro) was completed, and the application was launched for the use of pilots in2018. Additionally, the testing of GPS receivers that provide Pilot Pro with new, more precise and more extensiveinformation was initiated as well as a project intended to facilitate the transfer of new information, such as faults in safetydevices, directly to the Pilot Pro navigation application. The intention is also to increase the amount of data that is madeavailable to customers. The result of the current project is that customers will be able, in the future, to upload a route plandevised by Finnpilot into their own navigation system, enabling the shipmaster and pilot to literally work “with the samemap”. The plan is for the system to be taken into use in 2019.

Pilot Online was launched for customer useWith the help of the electronic pilot order system, Pilot Online, customers can provide advance information, order a pilot,change initially-submitted information and track their own order. Pilot Online provides customers with the possibility toaccess the same situational information regarding their customer vessels as is available to the Pilot Order Centre. Betatesting was initiated in spring 2018 and the service was launched for customer use in the autumn. The aim for 2019 is toguide the customer to utilise the application to a greater degree, rather than relying on the use of phones and email.

Boatweb facilitates the reporting of pilot boat operators’ working hoursIn 2018, we also invested in the development of Boatweb, a system for the logging of the working hours and rest periodsof pilot boat operators. The monitoring of working hours is required by law and, until now, pilot boat operations havelogged the information in the Pilotweb system at the pilot station. A drawback of that system was that notifications couldnot be made from anywhere other than the pilot station. The monitoring of actual and accurate rest periods has alsobeen problematic under the current system. As part of the previous round of collective bargaining negotiations, theagreement was made to develop a mobile application that would also enable a more accurate process for logginginformation.

As a new, web-based mobile application, Boatweb will further simplify the process of logging periods of work and restand, above all, will enable the process from any location. The group comprised of six pilot boat operators, which wasestablished during the negotiations, has been involved in the development work for Boatweb from the beginning and hasbeen testing the system since mid-November. Boatweb will be launched for the use of all pilot boat operators in March2019.

3.1.4. Key figures SAFETY FORCHALLENGING FAIRWAYS

No. of pilotage assignments 2014 2015 2016 2017 2018Kotka 4,496 4,203 4,157 4,498 5,031Helsinki 5,100 5,124 5,111 5,309 5,452Saaristomeri 3,273 3,385 3,151 3,342 3,769Selkämeri 3,295 3,212 3,170 3,246 3,198Perämeri 4,877 4,727 4,903 4,920 5,069Saimaa 3,827 3,345 2,969 2,946 3,097Total 24,868 23,996 23,461 24,261 25,616

Piloted nautical miles 2014 2015 2016 2017 2018Kotka 101,149 95,375 96,205 103,458 114,494Helsinki 62,258 62,522 65,524 67,148 68,619Saaristomeri 98,616 97,095 84,524 97,104 111,714Selkämeri 23,255 23,146 22,470 22,790 22,585Perämeri 73,712 77,386 81,626 81,122 78,826Saimaa 111,755 104,127 89,170 88,049 88,721Total 470,745 459,651 439,519 459,671 484,959

Both the number of pilotage assignments as well as the number of piloted nautical miles kept growing during 2018.

3.2. Supporting employee development SUPPORTING EMPLOYEEDEVELOPMENT

3.2.1. Our employees3.2.2. Safety at work3.2.3. Occupational health and well-

being at work3.2.4. Balance between work and rest3.2.5. Personnel survey3.2.6. Internal training and Finnpilot

Academy3.2.7. Key figures

3.2.1. Our employees SUPPORTING EMPLOYEEDEVELOPMENT

We work on the waters, in the pilot stations, in the Pilot Order Centre and in administration. Meet a few of Finnpilot’s 340employees.

DEVELOPMENT MANAGER,DIGITAL SERVICESVesa-Matti Kantala

I started in the position of Development Manager forDigital Services at Finnpilot in summer 2018. My work is

diverse and includes, among other tasks, stayinginformed about technical developments, planning and

managing projects and software development andseeking out new co-operative partners. There is a lot

happening within the field of navigation and, therefore,I’m constantly learning something new. At the moment,the majority of my tasks involve, in one way or another,

the testing of remotely piloted and controlled pilotboats.

CHIEF PILOT BOAT OPERATOR,UTÖ

Krister HenrikssonI began working as a pilot boat operator in the

Archipelago Sea region in 2007. I have been stationed inLillmälö, Hanko and, since 2010, in Utö. I serve as theshift supervisor for the Utö station under the title of

Chief Pilot Boat Operator. My tasks include themaintenance of our equipment and facilities and the

transporting of pilots by land and sea.

TRAINING AND SAFETY MANAGERPasi Paldanius

I stepped into the position of Finnpilot’s Training andSafety Manager in autumn 2018. I was already very

much at home at Finnpilot since I had worked as a pilotfrom 2006 in the Bay of Bothnia and Saimaa region,

where I also served as Saimaa’s District Chief PIlot. Theinitial work for this new job title has focused primarilyon safety matters, but progress has also been made in

the training area. The competent personnel at Finnpilotserve as a vital resource for my work, and we work

together to actively develop our operations.

PILOT COORDINATORJohn Lindholm

I have a decade of experience working as a pilotcoordinator. It keeps me busy working at all times ofthe day throughout the entire year. The job is carried

out in three shifts every day, with three pilotcoordinators working each shift. The work of a pilot

coordinator calls for good problem-solving skills and anaptitude for languages. Good communication skills are

also a major plus.

PILOTMikko Myyrä

I have been working at Finnpilot since May 2018 in theSaimaa Canal, Saimaa region and now, during the

winter, in the Rauma area. As a pilot, I serve as the localadviser to shipmasters to ensure the safe passage of

their ships. My work is diverse and pragmatic in nature,and I really enjoy my job. The induction training I

received as a new employee was exceptionally good.For that I am very grateful to my colleagues!

PILOTAGE DIRECTORSanna Sonninen

My job as Finnpilot’s Pilotage Director involves variedtasks from daily matters related to pilotage to the

broader development of our operations. Networks playa vital role in my everyday work, since the changes

taking place in navigation call for active collaborationwith other actors in the field. The significance of local

expertise in Finland’s waterways is crucial. Ourcompetent and experienced personnel ensure that

vessels, even those arriving from distant ports, are ableto traverse our challenging fairways safely. It’s a rare

workplace that can be as proud of its people as we are!

To learn more about how Finnpilot is Supporting employee development, click the link below or select from the menu on the le!. You can move on tothe next aspect of responsibility from the menu at the top of the screen view.

3.2.2. Safety at work SUPPORTING EMPLOYEEDEVELOPMENT

Safety plays a vital role in pilotage work and is one of our three key values. The ability to identify risks and preparefor them is essential within our challenging operational environment. We invested a great deal in the developmentof occupational safety during 2018.

A great deal was learned from the Emäsalo accidentOn 8 December 2017, the worst possible scenario played out, when a pilot boat accident took place in the waters nearEmäsalo, resulting in the loss of two of our experienced employees. The accident left a permanent scar on Finnpilot; it willalways remain with us and will serve to guide our safety work now and in the future. As a result of the accident, we gaineda lot of new information, which led to a number of immediate changes. We implemented many improvements to ourboats, guidelines and personnel safety training. All of this will help to prevent accidents like this from ever taking placeagain. Finnpilot has truly taken its safety culture to a new level.

Additional resources for the development of occupational safety and trainingIn 2018, Finnpilot established the position of Training and Safety Manager. The Training and Safety Manager is responsiblefor supporting the field supervisors in the development of regional safety management and for participating in thedevelopment of the company’s overall safety management system as well as the deviation process. He also coordinatesthe internal training system in accordance with the aims specified by the Finnpilot Academy working group.

The activities of Finnpilot’s Safety group were initiated under the leadership of the Training and Safety Manager. The workof the Safety group aims to improve safety within our daily activities and, therefore, the most important aim for the initialphase is to compile experiences and viewpoints related to the daily work. The form of the Safety group activities and toolsto be utilised will be specified further during the winter of 2018–2019.

New testing cabin facilitates evacuation exercisesWater rescue exercises are carried out annually at all pilot stations. Every three years, the exercises are conducted and ledby Meriturva Maritime Safety Training Centre and any identified shortcomings are corrected. Meriturva has a rescuetraining unit in Lohja, Finland, where pilots and pilot boat operators receive rescue and survival training for newemployees, and where they return for refresher courses every five years. During 2018, a rescue training cabin designed andcommissioned by Finnpilot was taken into use at Meriturva’s facility in Lohja for the purpose of practicing and testing thepossibilities for evacuation from a capsized pilot vessel cabin.

Prevention of occupational accidentsPilotage-related accidents are generally minor, such as injuries caused by slipping or strain caused by lifting heavyequipment or materials. During 2018, Finnpilot employees experienced a total of 14 occupational accidents at work orduring the work commute. Moving around a boat or ship deck in slippery conditions and in the dark is a clear safetyhazard that can be diminished, for example, with the use of the right type of footwear. When we are better able to identifyand understand the factors that cause accidents, it is easier for us to take measures to eliminate them. If we are to preventand learn from occupational accidents, it is essential to realise open communications and the exchange of informationbetween field supervisors and occupational health and safety representatives. Through the development of the deviationobservation process, we endeavour to fortify our capabilities to process and share information more effectively.

On the anniversary of the pilot boat accident, lumberjack’s candles were lit at pilot stations around Finland as a way forthe pilot boat operators, pilots, pilot coordinators, housekeeper/cleaners and administrative personnel at Finnpilot toremember their colleagues who were lost in the accident. Candles were also lit outside of Finnpilot’s Pilot Order Centre,located on Kansakoulukuja in Helsinki and open 24/7/365. Photos: Sami Raanti, Katariina Engblom

3.2.3. Occupational health and well-being atwork

SUPPORTING EMPLOYEEDEVELOPMENT

Comprehensive occupational health care provided by the employer helps the employees cope better both at workas well as outside of work.

We actively support the well-being of our personnelFinnpilot has a comprehensive occupational health service that supports the personnel in the prevention and treatmentof illnesses. The aim of our occupational health service is to offer all employees a healthy and safe work environment andto ensure the well-being of the work community. The goal is to prevent work-related illnesses and occupational accidents,and to maintain the work ability and functional capacity of our employees as well as their ability to cope at work.

The medical certificate required for ship personnel is our means of ensuring that the health status of the individual inquestion is suitable for work on vessels. One cannot work as a pilot or pilot boat operator without a valid medicalcertificate or an exceptional permit granted by the Finnish Transport and Communications Agency, Traficom. In recentyears, the terms for receiving an approved certificate have become more stringent. Already for this reason, it is importantto deal immediately with any issues that threaten work ability. In connection with the medical examination, employeesalso have the possibility to undergo testing to measure their physical performance level.

The average age of our personnel is more than 50, a fact that emphasises the importance of maintaining well-being atwork and work ability. Finnpilot actively supports well-being at work and exercise by paying the participation fees for itspersonnel to take part in different sporting events and by providing an annual recreational benefit to help encourage thephysical activity of the personnel.

Appreciation for the handling of the Emäsalo accidentThe recovery process of our personnel following the pilot boat accident near Emäsalo in December 2017 was particularlytough. At the same time, the personnel expressed their appreciation for the way that the accident was handled withinFinnpilot, and the general consensus was that the provision of crisis counselling was successful. The comprehensivesupport arranged through the occupational health service was visible immediately following the accident and during themonths to follow in the form of general gatherings for personnel at the pilot stations and personal support for individualemployees. The personnel also felt that the manner in which the crisis was handled publicly was appropriate, and theywere particularly grateful for the company’s open communications.

3.2.4. Balance between work and rest SUPPORTING EMPLOYEEDEVELOPMENT

In irregular shift work, the predictability of the work tasks plays a fundamental role in maintaining one’s ability tocope at work. Our new digital systems make it easier to plan periods of work and rest.

Irregular shift work requires regular periods of restPilotage work takes place during irregular shifts, thereby placing a physical and mental strain on the employees. In orderto cope with the work, it is vital to take the time to recover and rest. The work at the pilot stations is carried out using aweek on/week off system. To ensure regular periods of rest and recovery during the work week, Finnpilot hasendeavoured to assure quality conditions in the pilot stations by acquiring supportive beds and quality linens, installingblackout curtains and paying special attention to air circulation and sound insulation. It isn’t possible, however, to forcesomeone to rest, so everyone must take personal responsibility to ensure that they can sustain the level of alertnessrequired by their own duties.

One way to fundamentally improve the ability to cope at work is through a better predictability of the work tasks. This isexpected to be realised as a result of the development and expanded use of the . The aimof Pilot Online is to simplify the pilot order process, to improve the reliability of timetable information and to facilitatecommunications in real time. During 2018, the development of Pilot Online continued and feedback was collected fromcustomers who had used the system.

Pilot Online pilot order system

The issue of rest periods was discussed during the collective bargaining round in spring 2018. The aim was to realise amore balanced distribution, among the personnel, of daytime and night-time rest periods during work shifts. Theobjective was to avoid shifts that run too long without night-time rest periods. for pilotboat operators to log working hours and rest periods was developed and tested. The application will be available to allpilot boat operators during spring 2019.

The Boatweb mobile application

3.2.5. Personnel survey SUPPORTING EMPLOYEEDEVELOPMENT

Time must be set aside during the daily routines for the purpose of assessing the operational methods,communications and activities of the management and supervisors. The personnel survey seeks to clarify theoverall state of well-being and coping at work within the different areas of Finnpilot’s corporate, regional and localoperations.

An all-time record for responses to the personnel surveyThe annual personnel survey seeks to clarify the overall status of well-being at work and coping at work on Finnpilot’scorporate, regional and local level. The results indicate aspects of work that, if developed, would lead to higher rates ofjob satisfaction, and they also show whether the measures that have already been implemented are developing in theright direction.

In 2018, more personnel responded to the personnel survey than ever before. The response rate increased dramaticallyfrom 62 per cent during the previous year to 74 per cent. Of the Finnpilot employees who responded to the personnelsurvey, a total of 94 per cent were very or quite satisfied with their workplace. Altogether 51 per cent of the respondentsfelt that the work atmosphere had improved during the past year. Also, 32 per cent of the respondents had recommendedFinnpilot as an employer, and nearly the same number stated that they would gladly recommend Finnpilot when asked.

Critical observations were made concerning, for example, the usefulness of the development discussions as well as thesystematic further handling of areas for development that arise through the personnel survey and the developmentdiscussions. There is no intention to do away with the development discussions, because they are an important means ofensuring that key issues, such as training, coping at work, the work atmosphere and equipment, are discussed with eachemployee every year. We simply need to find a more meaningful approach to the discussions from both the personnel’sand the supervisors’ standpoint. Development work will continue to this end.

Supervisors were trained to analyse the results of the personnel survey. The survey results were discussed with thepersonnel during local and regional meetings. Even though the results of the personnel survey were encouraging withregard to the corporate level, there were notable differences in the unit-specific results, as was the case during theprevious year as well. When the results were analysed on the local level, we were able to better determine the areas fordevelopment at the specific pilot stations.

3.2.6. Internal training and Finnpilot Academy SUPPORTING EMPLOYEEDEVELOPMENT

One of the cornerstones of Finnpilot’s new strategy is the reform of the internal training programme throughcollaboration between the management and the personnel.

The personnel hold a key role in the development of our internal training programmeThe digitalisation of maritime traffic signifies an inevitable change for pilotage as well. Routine work tasks will beautomated to a large extent in the future. Upon the amendment of the Pilotage Act, we are aiming to initiate the trial ofthe remote pilotage system within two years.

All of this calls for us to engage in further learning and the unbiased development of our own competencies. Inaccordance with our vision, our customer-focused services and top expertise make us the most desired partner within thefield of navigation. In order to achieve our goals, we must assume our role as a learning organisation. The ability torecognise, understand and apply new innovations and approaches in the midst of an age of technological change is evermore essential.

Finnpilot is rich in specialised navigational expertise, which affords us a solid foundation from which to respond to thechallenges of the future. We need to learn how to integrate this available expertise more efficiently in our training. Wehave gained encouraging experience in learning new things through projects in which our field personnel have played asignificant role. Finnpilot’s experienced personnel have the capabilities and motivation to lead educational projects. Atthe same time we want to offer our own instructors the opportunity to enhance their own expertise at the besteducational institutes in the field.

In Finnpilot Academy training system we take advantage of the wide range of Finnpilot’s in-house competence to buildand develop our internal training network. The objective is also to prepare for the changes in the work environment asgenerated by new technologies. The first Academy trials include the ice module, initiated during the winter 2018–2019, forthe purpose of training personnel to operate in icy conditions.

In terms of Finnpilot’s training, we also actively discussed the development of safety management, for example, ways inwhich we might make use of the deviation reports in the planning of our internal training. The reactivation of the Safetygroup holds a crucial role in ensuring that the deviation observations are exploited thoroughly to enhance competencedevelopment.

3.2.7. Key figures SUPPORTING EMPLOYEEDEVELOPMENT

No. of personnel by function 2014 2015 2016 2017 2018Pilots 148 149 143 143 148Pilot boat operators 145 140 140 141 145Pilot Order Centre 18 18 18 19 20Hostesses and housekeepers 6 9 7 8 6Administration 19 19 19 19 21Total 336 335 327 330 340Mean person-workyears during the year inreview

320 320 317 315 324

No. of operational personnel by area 2014 2015 2016 2017 2018Bay of Bothnia 60 61 63 65 64Bothnian Sea 42 39 38 42 40Archipelago Sea 53 52 53 53 53Helsinki 59 58 54 54 56Kotka 32 37 33 32 37Saimaa 53 51 49 46 49Total 299 298 290 292 299

Type of employment, permanent/fixed-term 2014 2015 2016 2017 2018Permanent 308 307 306 303 310Fixed-term 28 28 21 27 30Total 336 335 327 330 340

Nature of employment, full-time/part-time 2014 2015 2016 2017 2018Full-time 324 324 318 316 325Part-time 12 11 9 14 15Total 336 335 327 330 340

Work satisfaction of personnel and surveyresponse rate 2014 2015 2016 2017 2018Response rate 60% 60% 56% 62% 74%Mean value for all criteria (scale 1-6) 4.0 4.1 4.3 4.4 4.5Overall rating for the employer (1-6) 4.1 4.3 4.4 4.7 4.7

Personnel distribution, male/female 2014 2015 2016 2017 2018Male 308 305 298 299 310Female 28 30 29 31 30Total 336 335 327 330 340

Board of Directors 2014 2015 2016 2017 2018Male 5 5 5 4 4Female 3 3 3 3 3Total 8 8 8 7 7

Incl. personnel representative and deputy personnel representative

Executive Committee 2014 2015 2016 2017 2018Male 4 4 4 3 3Female 1 1 1 2 2Total 5 5 5 5 5

Number of accidents and absences 2014 2015 2016 2017 2018No. of accidents 15 14 18 21 14Absences due to accidents, days of work 66 171 271 82 204Accident frequency (occurring at work) 21 23 29 24 17

Absences 2014 2015 2016 2017 2018Days of work 3101 3911 3379 4032 3697

Days/employee 10 12 10 12 11Share of full-time working hours, % 4.0 4.9 4.3 5.0 4.8Health percentage, % (of personnel who werehealthy for the entire year)

45 42 45 42 44

Reasons for termination of employment andretirement age 2014 2015 2016 2017 2018Total 10 10 12 14 21Terminated employments (cancelledemployment contract)

0 0 1 0 1

Resigned 1 1 3 3 5Retired 9 8 8 9 14Deceased 0 1 0 2 1Average retirement age, in years 63 64 62 62 62

Occupational health care costs, % 2014 2015 2016 2017 2018Medical care 48.8 50.7 46.6 43.6 37.8Preventive care 51.2 49.3 53.4 56.4 62.2Total 100 100 100 100 100

Average age of personnel by function at theend of the year 2014 2015 2016 2017 2018All personnel 50 50 51 51 51Pilots 51 52 52 52 52Pilot boat operators 50 50 51 52 51Pilot Order Centre 41 40 41 43 42Hostesses and housekeepers 59 59 59 60 60Administration 46 47 48 48 48

Finnpilot has some 340 employees working along the Finnish coast and Saimaa region. Altogether 9% of our employees are women. The numberrepresents the gender division in navigation in general: there are less women than men working in the field. Women only seldom apply for the openpositions.

3.3. Responsible service provider RESPONSIBLE SERVICEPROVIDER

3.3.1. Stakeholders and theirexpectations

3.3.2. Customer and stakeholder survey3.3.3. Networks and digitalisation3.3.4. Active dialogue with personnel

3.3.1. Stakeholders and their expectations RESPONSIBLE SERVICEPROVIDER

We must be able to meet the expectations of our customers, the owner and co-operative partners now and in thefuture. The needs of our key stakeholders are made clear through active dialogue. As part of the effective customerrelationship management, we have drafted specific plans for each stakeholder group, and the implementation ofthe plans is monitored regularly.

Our key stakeholdersFinnpilot’s key stakeholders include the personnel, customers, owner, the authorities, decision-makers, localcommunities, subcontractors, the media and the public at large. Our activities also indirectly impact, for example, theresidents of the archipelago and recreational boaters at sea. Our stakeholder groups call for the ongoing development ofFinnpilot’s services, active collaboration and a consideration for aspects of responsibility in all our activities.

Shipping companies and ports as customers, the State as ownerOur direct customers are primarily foreign shipping companies that benefit from the smooth and safe traffic our servicesguarantee both in the fairways and ports. Shipbrokers are representatives of the shipping companies who work in Finlandand manage the pilot orders and financial transactions.

During 2018, we continued the use and development of our electronic pilot order system, Pilot Online, with theshipbrokers. The aim is to encourage more customers to make their orders through the new system. With the help of PilotOnline, we are able to simplify the pilot order process, to improve the reliability of timetable information and to facilitatecommunications in real time.

The ports are among our indirect customers and vital co-operative partners. Cargo must reach ports and depart fromports reliably and without delays. Our endeavour is to ensure that the ports and Finnpilot have a shared vision of thedevelopment needs of pilotage services. Easily attainable and cost-efficient pilotage services are of primary importance toFinland’s industry and foreign trade, both of which we serve. Our pilotage services help to safeguard a smooth and cost-effective transport chain. International price comparisons show that our pilotage fees are among the most reasonable inthe Baltic Sea region.

The Finnish Government owns 100 per cent of our company, but it is also one of our key stakeholders. It must be able totrust that we will carry out our special assignment responsibly from a financial and environmental perspective, as well asin terms of service dependability. By preventing maritime traffic accidents, pilotage generates safety and well-being forthe environment and society as a whole.

Finnpilot’s strategy is updated each year. One part of the strategy is to survey the stakeholders and review their expectations.

The year’s most watched commute: The video “Talviliikenne pelaa pohjoisessa” (Winter tra"ic functions well in the North), which was commissionedby Finnpilot during spring 2018, took on a life of its own on the Internet. The Video was uploaded on the YouTube account of the ViralHog site andreceived more than one million views under the title “Pilot Steps onto Moving Ship”. The video was also published as a news item on the website ofone of Great Britain’s largest daily newspapers, Daily Mail, which has a readership of millions all around the world.

To learn more about Finnpilot as a Responsible service provider, click the link below or select from the menu on the le!. You can move on to the nextaspect of responsibility from the menu at the top of the screen view.

3.3.2. Customer and stakeholder survey RESPONSIBLE SERVICEPROVIDER

During 2018, Finnpilot conducted its biennial customer and stakeholder survey. The survey was conducted in theform of an online questionnaire during August and September. The objective was to determine how satisfied thestakeholders and customers are with our operations and to uncover areas that are in need of further development.

Satisfaction with Finnpilot remains at a good levelAltogether 97 participants responded to the customer and stakeholder survey (in 2016: 82). The respondents representedthe most important stakeholder groups of the company.

The most active participants were the shipbrokers (35.1 per cent of all respondents) and ports (21.6%). Next came thoseunder the category “partners” (12.4%), officials (9.3%) and shipping companies (8.2%).

On a scale of 1–7, the overall rating for Finnpilot’s operations was 5.9 (6.0 in 2016). The most successful aspects of ouroperations were as follows:

Skills and professionalism (rating of 6.3)Enhanced safety through pilotage (rating of 6.2)Customer communications (rating of 6.2)Service reliability (rating of 6.1)

In terms of satisfaction with Finnpilot as a partner, altogether 52% were very satisfied and 46% fairly satisfied. Norespondents stated that they were very dissatisfied. Of those respondents who utilise the pilotage services of multiplecountries, a total of 54% rated Finnpilot’s services as being better than those of other European service providers. Norespondents rated Finnpilot’s services as being worse than those of other countries.

In addition to conducting a customer and stakeholder survey, we continuously monitor customer satisfaction via themPilot system used on board the vessels. The ratings for our activities have remained at an excellent level.

The piloted vessels expressed that they felt that pilotage had considerably improved their safety.

Factors identified as part of the materiality analysis were assessed by stakeholdersThe corporate responsibility factors identified as part of the by the management team of Finnpilotwere included for assessment in the 2018 customer and stakeholder survey.

materiality analysis

On a scale of 1–7, stakeholders rated as important of the company’s corporate responsibilities:the most

providing enhanced safety (6.7)customer-driven operational approach (6.4) andprevention of environmental harm (6.4).

According to the survey, Finnpilot has been (6.2) at providing enhanced safety. Finnpilot’s success inpreventing environmental harm was given a rating of 6.0. The materiality analysis showed that, in terms of importance,our customer-driven operational approach was the aspect that was most in need of development, with a success rating of5.7. The gap between the importance and success of this aspect was the most significant. In 2019, we will be working onimproving the customer experience as part of our strategy.

most successful

The results confirmed that we are on the right path with regard to aspects of responsibility, but there are still areas thatpresent challenges in terms of meeting the expectations of the stakeholders. The results of the materiality analysisprovide essential support for our future responsibility work.

The survey was conducted by Innolink.

3.3.3. Networks and digitalisation RESPONSIBLE SERVICEPROVIDER

Finnpilot actively contributes to the digitalisation of navigation and development of ePilotage. For our customers,this translates into even better pilotage services.

Active development through networksWithin the ecosystem, global market leaders in their own fields are working together to achieve an autonomousmaritime ecosystem for the Baltic Sea. Pilotage will play a vital role in the management of the system. Finnpilot is able toenhance the development work by contributing vessel manoeuvring and fairway expertise that cannot be provided byany other organisation in Finland. We will do our part to ensure that Finland remains among those at the forefront ofdigital maritime traffic innovation by lending our expertise to the entire transition process. By utilising the possibilitiesprovided by digitalisation, we will be able to offer our customers new and better pilotage services.

One Sea

As a member of (Intelligent Transport System), we are committed to promoting the implementation ofintelligent transport services. More than one hundred member organisations belong to the network.

ITS Finland

In 2018 the Government proposed that the Pilotage Act be amended so as to facilitate the possibility to test remotepilotage, which would enable pilots to carry out their tasks from locations other than aboard the ships being piloted. TheAct entered into force on 1 February 2019. Our aim is to be able to test remote pilotage along certain Finnish fairways fromthe beginning of 2020. We firmly believe that the best results from the remote pilotage trials will be gained through closeco-operation with the navigational actors within our co-operative networks who are also intent on advancingdigitalisation.

3.3.4. Active dialogue with personnel RESPONSIBLE SERVICEPROVIDER

Open dialogue with personnel and an operational culture that encourages the exchange of information are vitalaspects of our strategy. Our intention is for the management and personnel to work together in an atmosphere ofmutual trust.

Enhancing dialogue and mutual learningOur personnel, comprised of the best navigational experts, represent one of the company’s key stakeholders and itsgreatest resource. A top-down management approach would only enable us to accomplish a fraction of the developmentideas provided by field personnel. If we are to genuinely develop our activities in a comprehensive manner, the personnelmust be provided with more tools to drive issues to fruition.

We have boldly set about to renew our operational culture. All interested parties are given the opportunity to contributeto our development. The process of establishing a new culture is achieved by working together. This has enabled us tobegin to transform our approach towards one that favours dialogue. An atmosphere of mutual trust and collaborativeculture will support us as we face the upcoming changes in our work.

We want to incorporate new ways of thinking and the development resources available among our field personnel in, forexample, personnel training, different development tasks and the practical implementation of new innovations andknow-how. With these measures, the competencies within Finnpilot will accumulate to a degree that is many timesbeyond what could be gained by acquisitions from external sources. Discussions and planning related to the collaborativedevelopment work of the management and field personnel will be conducted under the direction of ,which aims at maintaining and advancing of professional competence.

Finnpilot Academy

3.4. Work for the benefit of the environment WORK FOR THE BENEFITOF THE ENVIRONMENT

3.4.1. Protecting the fragile environment3.4.2. Environmental impacts of our own

activities3.4.3. Vessels and equipment3.4.4. Key figures

3.4.1. Protecting the fragile environment WORK FOR THE BENEFITOF THE ENVIRONMENT

The conditions of the Finnish archipelago are among the most challenging to navigate in the world. A pilot who isfamiliar with local conditions provides a shipmaster with invaluable assistance to guarantee safe fairwaynavigation.

When a large ship enters the fairway from the open sea, it finds itself in a highly formidable environment: the fairways arenarrow and the waters are shallow and rocky. Maritime traffic accidents that lead to oil or chemical spills can havedisastrous impacts on the fragile nature of the archipelago and its ecosystem. Pilotage is utilised in fairway navigation toavoid exceptional situations that might cause ships to run aground or collide. When vessels move through the fairways ina planned and controlled manner, however, the risk of serious environmental accidents decreases considerably.

The deviation observations of the pilots further define and supplement the risk factors involved in maritime traffic.Recognising threats makes it possible to react with corrective measures.

To learn more about our Work for the benefit of the environment, click the link below or select from the menu on the le!. You can move on to the nextaspect of responsibility from the menu at the top of the screen view.

3.4.2. Environmental impacts of our ownactivities

WORK FOR THE BENEFITOF THE ENVIRONMENT

The direct environmental impacts of pilotage activities are caused primarily by the use of properties and transportequipment. A survey and assessment of environmental considerations and energy efficiency was conducted atFinnpilot in 2018 for the purpose of identifying different environmental considerations and examining the relatedimpacts and management methods.

Cleaner facilities and equipmentEnergy is necessary to heat the pilot stations and fuel is necessary for vessel and vehicle transportation. The increase inthe number of pilotage assignments and piloted nautical miles (5.6 and 5.5%, respectively) in 2018 was also visible in theincreased consumption and emission figures, even though the average consumption and emissions decreased from 2017(change of -0.8%). Along with the increase in pilotage, the utilisation rate of our properties also increased.

Finnpilot runs 26 pilot stations and substations. The heating of its own properties is largely provided by renewable energythat is produced using geothermal and heat pump technologies. The majority of the stations have their own waste watertreatment facility. One will be built at the Isokari substation in the Archipelago Sea during 2019. After that point, all ourarchipelago locations will be covered by our highly comprehensive waste water treatment programme.

The systematic renewal and maintenance of the transport equipment reduces the environmental load caused by theiruse. An economic driving behaviour, use of the engines in accordance with the instructions of the manufacturer and thereservation of sufficient time for pilot transports are basic ways to minimise fuel consumption and carbon dioxideemissions. Proper use of the engines also helps to prevent unnecessary wear and other negative impacts. At Finnpilot, thetargets for equipment use are defined within the workplace-specific system, which compiles engine and locationdata to automatically generate usage reports.

Fleet IoT

We endeavour to take full advantage of the potential service life of our vessels and equipment without compromising onsafety. Investments in new vessels are made regularly and systematically. We strive to recycle our old equipment as far aspossible from the standpoint of environmental aspects and economic efficiency. During 2018, two pilot cutters and twofast pilot boats were sold to new owners.

Reduced electricity and increased work safetyOur lighting project was continued from the previous year. The lighting in the yards of the ports and stations has beenchanged to smart LED lights. The work has been carried out, thus far, in its entirety at Ajos, Raahe, Kokkola, Orrengrund,Harmaja and Emäsalo. The immediate result of the new lighting is an improvement in work safety. In the long term, theselights will also significantly reduce the electricity consumption at the stations.

Smart LED lights light up Orrengrund pilot station at dawn. Photo: Tapio Tuomisto

The solar energy trial exceeded its goalsFinnpilot closely tracks developments in solar and wind energy. Experience was gained from the solar plant built atEmäsalo pilot station in 2017. Largely due to the sunny weather, the Emäsalo solar power pilot project produced nearly 15MWh during 2018, which exceeded the expectations set for the plant by one MWh. With the help of the gained information,Finnpilot will be assessing the possibilities to expand the use of solar power.

Assessments of environmental considerations and energy efficiencyIn 2018, a survey and assessment of environmental considerations and energy efficiency was conducted at Finnpilot. Thesurvey process involved the identification of different environmental considerations and examination of the relatedimpacts and management methods. The goal was to scrutinise all aspects of our activities that have impacts onenvironmental performance and energy efficiency. The survey was conducted as part of the building of our environmentalperformance and energy efficiency system (ISO 14001 ETJ+). The system will be certified in 2019.

The table below shows the most significant environmental impacts of our activities.

The most significant environmental impacts of Finnpilot’s activities according to the 2018 survey and assessment of environmental considerationsand energy e"iciency.

3.4.3. Vessels and equipment WORK FOR THE BENEFITOF THE ENVIRONMENT

PILOT CUTTERIn 2018, Finnpilot had 31 steel-framed pilot cutters for icy conditions with anaverage age of 15.6. years. The oldest pilot cutters were maufactured in 1985.The lifecycle of a cutter can be extended by overhauling the main engine andcabin. Usually, the main engine of one cutter is overhauled each year, and this

was the case in 2018 as well. Our cutters and other pilot vessels use low sulphurfuel to minimise exhaust emissions.

FAST PILOT BOATIn 2018, Finnpilot had 27 fast, aluminium-framed pilot boats for use on openwaters with an average age of 13.1 years. The oldest fast pilot boat in use was

built in 1995. The acquisition of boats and overhaul of existing vessels isdecided each year on the basis of long-term plans. Equipment investments are

made at a constant rate so that the aging of the vessels that are in heavy use willnot result in a cumulative need for repairs.

HYDROCOPTERDuring hard winters, there is also a need for equipment that can travel on theice: for this reason, Finnpilot has 11 hydrocopters, mostly for use around the

pilot stations located in the Bay of Bothnia.

VEHICLESCars are also used to transport pilots, particularly in the Saimaa and Bay of

Bothnia areas, where the majority of the movement between the pilot stationsand ports is carried out by car. Finnpilot owns 43 cars that are used to travel a

total of approximately 1,200,000 km each year. Older cars are typically replacedwhen they have been driven about 300,000 km or are more than ten years old.

3.4.4. Key figures WORK FOR THE BENEFITOF THE ENVIRONMENT

Pilot cutters 2014 2015 2016 2017 2018Number 33 34 33 33 31Average age 14 14.6 15.1 15.2 15.6

Fast pilot boats 2014 2015 2016 2017 2018Number 29 30 28 29 27Average age 11.7 12.2 12.3 12.7 13.1

Fuel consumption and CO2 emissions 2014 2015 2016 2017 2018Consumption (litres/pilotage) 73.45 70.17 72.56 72.51 71.96Change in consumption % per pilotage -0.1% -4.5% 3.4% -0.1% -0.8%CO2 emissions/pilotage (tCO2) 0.18 0.17 0.18 0.18 0.18Consumed fuel (in millions of litres) 1.82 1.68 1.70 1.76 1.84Total CO2 emissions (tCO2) 4,463 4,114 4,159 4,298 4,503

Source (emission coe"icients): Statistics Finland, Fuel Classification 2014 and Energy Statistics. The figures include the fuel consumed by vessels,properties and vehicles. The fuel consumption of vessels and properties is calculated on basis of changes in the annual fuel deliveries and depots.The consumption of vehicles is calculated on the basis of the actual distance driven.

3.5. Social responsibility SOCIAL RESPONSIBILITY

3.5.1. Special assignment3.5.2. Comparison of pilotage fees3.5.3. Corporate governance3.5.4. The Board of Directors3.5.5. Executive Committee3.5.6. Tax footprint3.5.7. Responsible acquisitions and

ethical guidelines3.5.8. Key figures

3.5.1. Special assignment SOCIAL RESPONSIBILITY

Finnpilot Pilotage Ltd is a special assignment company entirely owned by the State of Finland. The company hasthe exclusive statutory right to carry out pilotage activities. For this reason, the company’s activities are governedby the demand for openness, transparency and cost-efficiency.

Pilotage secures navigational efficiencyThe significance of navigation to Finland’s national economy is significant; the majority of our import and export goodsare transported on ships. Pilotage promotes smooth and safe navigation. Pilotage services facilitate the transport of thesegoods without any unnecessary and expensive delays. Additionally, pilotage prevents many serious accidents each yearthat could result in a loss of tens of millions of euro. Through its activities, Finnpilot serves the entire Finnish society.

Special arrangements for the pilotage activities in the Saimaa regionThe provision of pilotage activities in the Saimaa region is governed by an obligation to provide financially unprofitableservices. The State grants a subsidy for the implementation of this task, whereby the difference between the coastalpilotage fee and the fee in the Saimaa region is compensated for by a maximum of the amount of the deficit in theSaimaa region.

During 2018, the repair of the sluice gates along the Saimaa Canal continued had a significant impact on the worksituation for our Saimaa personnel, as the canal closure period was extended from the normal 13–14 weeks to nearly 20weeks. As part of the co-operation negotiations concerning the canal closure, the decision was made to offer all pilotswho have a pilotage licence for the coastal areas work along the coastline during the closure period. All pilot boatoperators who wanted to shift to transport tasks along the coast also found work for the closure period. Additionally,many people were offered work other than pilotage or transport tasks. As earlier, annual holidays and other periods ofleave were scheduled to coincide with the closure period.

To learn more about Finnpilot’s Social Responsibility, click the link below or select from the menu on the le!. You can move on to other aspects ofresponsibility from the menu at the top of the screen view.

3.5.2. Comparison of pilotage fees SOCIAL RESPONSIBILITY

A cost-efficient operational model and the positive development in the number of pilotage assignments have madeit possible to retain the same pilotage prices already for several years.

Equal and cost-efficient provision of servicesFinnpilot provides its customers with consistent and reliable pilotage services in all pilotage areas. In accordance with thePilotage Act, pilotage fees shall be reasonable considering the costs incurred and a reasonable return. The pilotage fee isbased on a fixed unit price and is determined on the based on the tonnage of the vessel in question and the distance tobe piloted. In accordance with the company’s service level objectives, the waiting time for pilotage service is no more thanthree hours in coastal waters and six hours in the Saimaa region. Altogether 99.9% of all pilotage assignments werecarried out within the limits set for our service level objectives.

Pilotage activities in the Saimaa region are governed by the obligation to provide financially unprofitable services, so thepilotage fees in these areas are based on a reduced unit price.

Changes in the fees are notified no later than three months prior to their taking effect, which, in practice, means by theend of September. The decision regarding pilotage fees is made by Finnpilot’s Board of Directors. The fees did not need tobe increased for 2018 and 2019 due to the positive development in the cost-efficiency of the activities and the increasednumber of pilotage assignments.

Strong position in international price comparisonFinnpilot has been tracking the international pricing of pilotage services since 2005. Our price level is extremelyreasonable, also when considered in an international comparison of pilotage prices between Finland, Sweden, Estonia,Denmark, Norway, Germany and Holland. Despite Finland’s difficult ice conditions and expansive coastline, we werefound to be the second least expensive country, which is definite proof of the efficiency of our operational model. Withour confirmed pilotage prices for 2019 we are now the most inexpensive country of the international comparison.

International comparison of pilotage fees over a five year period. The pilotage fee is calculated based on a piloted distance of seven nautical milesfrom the sea into port. The comparison is only indicative, since pilotage fee practices di"er from one country to the next.

3.5.3. Corporate governance SOCIAL RESPONSIBILITY

The governance of State-owned companies is regulated by the State Holdings and Ownership Steering Act. Thegovernance of Finnpilot is based on the Limited Liability Companies Act, and the company’s operations areregulated by the Pilotage Act and Pilotage Decree.

Finnpilot Pilotage Ltd is a State-owned limited liability company. Additionally, Finnpilot owns 60% of Ice Advisors Ltd,which provides maritime operators with ice navigation services.

The Prime Minister’s Office is responsible for Finnpilot’s ownership steering. The owner exercises its power of decision atannual general meetings. The annual general meeting decides on issues that are relevant by virtue of the Limited LiabilityCompanies Act and elects the chair and other members of the Board of Directors. The members of the Board shall haveexpertise in Finnpilot’s field of activities, leadership or business economy, and they shall be independent in the mannerrequired with regards to competition.

The Board of Directors oversees the administration of the company and the appropriate arrangement of the company’sactivities. In addition, the Board of Directors guides and advises the company’s activities, elects the CEO and topmanagement, supervises the management and issues decisions on key matters in terms of the company’s businessactivities. The Board of Directors has established personnel and audit committees to support its activities. The membersof the committees are listed in the annual review of the Board of Directors. The Chair of the Board of Directors is theimmediate supervisor of the CEO. The CEO reports on the activities of the company to the Board of Directors and isresponsible for achieving the objectives set for the business activities. Finnpilot’s Executive Committee is a body thatassists the CEO. The members of the Executive Committee are the directors of the individual units within Finnpilot. Thecompany’s Head of Communications participates in the work of the Executive Committee.

The related parties of Finnpilot include its subsidiary, the company’s Board of Directors, the CEO and the ExecutiveCommittee. Finnpilot does not conduct business activities that depart from normal commercial conditions with any of itsrelated parties.

3.5.4. The Board of Directors SOCIAL RESPONSIBILITY

SEIJA TURUNENChair

b. 1953 M.Sc. (Economics and BusinessAdministration), Professional Board

Member

Board member since 2015Finnlines Plc, Deputy CEO, CFO 2007–2013Finnsteve Companies (part of the FinnlinesGroup), Managing Director 2010–2013Finnlines Plc, Chief Financial Officer 1992–2007Elisa Plc, Board memberPihlajalinna Plc, Board memberTraffic Management Finland Ltd, Boardmember

JOHANNA KARPPIMember of the Board

b. 1968, LL.M. trained on the bench

Board member since 2014Terveystalo Plc, Senior Vice President,Human Resources 2007–Rautaruukki Corporation, Director,Corporate HR 2004–2007Orion Corporation, HR Manager 2001–2004Confederation of Finnish ConstructionIndustries, Lawyer

MARKUS KATARAMember of the Boardb. 1982, M.Sc. (Econ.), LL.M.

Board member since 2018Government Ownership SteeringDepartment, Chief Specialist 2018–Castrén & Snellman Attorneys Ltd, AssociateLawyer, 2014–2015, 2016–2018Ministry of Economic Affairs andEmployment, Senior Specialist, 2015–2016Outokumpu Plc, specialist andadministrative duties 2008–2014Gasonia Ltd, Board member

TUULA-RIITTA MARKKANENMember of the Board

b. 1958, Ph.D., International Business andStrategy

Board member since 2017Aalto University Executive Education,Director Aalto PUBLIC 2018–Muutosjohdon akatemia (‘Changemanagement academy’) (Ministry of SocialAffairs and Health, Ministry of Finance, HAUSFinnish Institute of Public Management Ltd),Project DirectorKrita Corporate Identity Oy, Senior partner;Change management and strategiccommunication consulting for, amongothers, the following clients: SanomaCorporation, Nokia Solutions, MetsoCorporation, Kemira Plc, AhlströmCorporation, Ministry of Social Affairs andHealthTapio Group, Board member

PETRI PELTONENMember of the Board

B. 1962, Lic. Tech.

Board member since 2018Ministry of Economic Affairs andEmployment, Under-Secretary of State,2016–Ministry of Economic Affairs andEmployment, Director General, 2008–2016Ministry of Trade and Industry, DirectorGeneral, 2007Tekes, Executive Director, 1999–2006Business Finland, Board of Directors, Vice-Chair

JOUNI RÄTYPersonnel representativeB. 1970, Pilot, Bachelor of Marine

Technology (Master Mariner)

Board member since 2014Finnpilot Pilotage Ltd, Pilot 2011–Finnish State Pilotage Enterprise Finnpilot,Pilot 2005–2010Neste Oy/Fortum Oil and Gas Oy, on-boardand shipping company office service 1995–2005

AKI SAARTIADeputy personnel representative

b. 1975, Pilot boat operator

Board member since 2017

Board member since 2017Finnpilot Pilotage Ltd, Pilot boat operator2011–Finnish State Pilotage Enterprise Finnpilot,Pilot boat operator 2006–2010

3.5.5. Executive Committee SOCIAL RESPONSIBILITY

The Executive Committee of Finnpilot Pilotage Ltd, from le! to right: Timo Siren, Sanna Sonninen, Kari Kosonen, Kati Virtanen ja AkiMarjasvaara

TIMO SIRENUnit Director, economy

b. 1966 M.Sc. (Economics and BusinessAdministration)

Executive Committee member since 2012Finnpilot Pilotage Ltd, Unit Director,Economy 2011–Finnish State Pilotage Enterprise Finnpilot,Business Controller 2010Tyco Electronics Finland Ltd, Nordic FinanceManager 1996–2010Haka Autorent Ltd, Head of Administration1993–1994Ice Advisors Ltd, Board member

SANNA SONNINENUnit Director, pilotage

b. 1970, M.Sc. (Technology), MasterMariner

Executive Committee member since 2017Finnpilot Pilotage Ltd, Unit Director, Pilotage2017–Finnish Transport Safety Agency (Trafi), Headof Department, Director 2010–2017Finnish Maritime Administration, Director,Development Manager, Senior Officer 2007–2009VTT, Research Scientist 2001–2007VTS Centre, Operator 2001Neste Shipping, Finnlines, different duties atsea (primarily deck officers) 1990–2000Ice Advisors Ltd, CEO 2017–

KARI KOSONENCEO

b. 1965, M.Sc. (Technology), MasterMariner

Executive Committee member since 2010Finnpilot Pilotage Ltd, CEO 2017–Finnpilot Pilotage Ltd, Pilotage Director2011–2017Finnish State Pilotage Enterprise Finnpilot,Pilotage Director 2010Finnish Maritime Administration, Manager ofVTS Centre, Senior Inspector, DivisionManager, Deputy Director 1996–2010Various duties at sea (primarily deck officers)1987–1996Ice Advisors Ltd, CEO 2014–2017Ice Advisors Ltd, Chairman of the Board2017–

KATI VIRTANENUnit Director, personnel and

legal affairsb. 1967, LL.M. trained on the bench, L.L.Lic

Executive Committee member since 2012Finnpilot Pilotage Ltd, Unit Director,Personnel and Legal Affairs 2016–, PersonnelDirector 2012–2015Association of Finnish Lawyers, Lawyer,Negotiation Manager 2003–2012Academic Engineers and Architects inFinland TEK, Ombudsman 2000–2003Trade union KTV (merged into the TradeUnion for the Public and Welfare SectorsJHL), Lawyer 1998–2000District Court of Lappeenranta, Notary 1997

AKI MARJASVAARAUnit director, transportation

b. 1978, Master of Engineering (IndustrialManagement), Master Mariner

Executive Committee member since 2014Finnpilot Pilotage Ltd, Unit Director,Transportation 2014–Port of Loviisa, Managing Director 2008–2014Port of HaminaKotka Ltd, Safety Inspector2004–2005Third, Second and First mate at sea 2003and 2005–2007

3.5.6. Tax footprint SOCIAL RESPONSIBILITY

The tax footprint refers to the tax revenue and tax-like charges accrued by society as a result of the company’s activities. In its tax reporting, Finnpilot Pilotage Ltd. complies with the country-specific tax reportingguidelines for companies in which the State is a majority shareholder.

Taxes and tax-like charges related to Finnpilot’s activitiesThe tax footprint refers to the tax revenue and tax-like charges accrued by society as a result of the company’s activities. Inits tax reporting, Finnpilot Pilotage Ltd. complies with the country-specific tax reporting guidelines for companies in whichthe State is a majority shareholder.

The company has no operations in any countries classified as tax havens, nor does the company utilise any internationaldimensions in its tax planning for the purpose of minimising its taxation. The company’s taxes are paid in their entirety toFinland. Finnpilot also does not pay any profits, dividends or interest outside of Finland. The company has no pendingappeal processes related to taxation. The company’s turnover in 2018 was 40.3 MEUR with an operating profit, beforetaxes, of 3.6 MEUR. The turnover for 2018 includes a 3.5 MEUR subsidy for pilotage in the Saimaa region.

Over the past four years, Finnpilot has invested a total of 9.1 MEUR in machinery, vessels and equipment and properties.The share of investments in 2018 totalled 2.3 MEUR.

The calculation of the company’s footprint takes into account those taxes and tax-like charges in which Finnpilot has astatutory obligation to pay or collect the tax or charge in question. Finnpilot’s tax footprint was a total of 13.2 million euroin 2018. Of this figure, the share of taxation was 0.4 MEUR, tax-like charges related to the personnel totalled 6.4 MEUR, andthe employees’ withholding tax amounted to 6.4 MEUR. The company’s share of statutory pension insurancecontributions was 3.6 MEUR and other social security expenses amounted to 0.8 MEUR. In addition to direct and indirecttaxation, the reporting of Finnpilot’s tax footprint also includes tax-like charges related to the personnel and the taxwithheld from salaries paid to the employees. The reported taxes are based on information gathered in the company’saccounting and the report includes any taxes from the past five years that totalled a minimum of five thousand euro peryear.

The amount of the energy tax included in the price of electricity has been calculated on the basis of the value ofacquisitions in accordance with the average price and share of the price represented by the electricity tax as statisticallyreported by the Energy Authority. The excise tax on fuel is not reported in the calculations, because the company receives,upon application, a refund of the excise tax. The calculated income tax is based on the appropriations in accordance withthe valid corporate income tax rate.

Finnpilot’s tax burden totalled -0.7 MEUR in 2018.

Payable taxes (1,000€) 2014 2015 2016 2017 2018 Employer’s contributions 4,660 4,760 4,834 4,470 4,472Income tax, computational 918 1,062 1,134 1,114 1,122Income tax 245 190 226 530 639Energy taxes 34 50 54 48 50Real estate taxes 28 27 26 27 29Vehicle tax 15 14 14 15 14Insurance premium taxes 12 0 0 0 0Asset transfer tax 11 10 10 14 14

Total payable taxes 5,922 6,113 6,299 6,218 6,340

Reported taxes (1,000€) 2014 2015 2016 2017 2018 Value added tax, net 2,085 -434 -1,151 -1,232 -1,455Withheld tax from salaries 6,481 6,476 6,355 6,159 6,367Employee’s social security contributions 1,376 1,458 1,568 1,739 1,934

Total reported taxes 9,943 7,500 6,771 6,666 6,846

Tax footprint (1,000€) 2014 2015 2016 2017 2018Share of taxes 3,348 920 313 515 413Personnel-related 6,036 6,218 6,402 6,209 6,406Withheld taxes 6,481 6,476 6,355 6,159 6,367

Total tax footprint 15,865 13,613 13,070 12,884 13,186Tax burden 2,429 -142 -821 -599 -709

3.5.7. Responsible acquisitions and ethicalguidelines

SOCIAL RESPONSIBILITY

We endeavour to reach our set objectives in a manner that is in keeping with our values and ethics, ourinterpretation of what’s right. The manner in which we operate tells what type of organisation we are. The rightsand responsibilities that guide our operations are specified in Finnpilot’s ethical guidelines.

All aspects of our activities respect and comply with the laws, agreements and regulations valid in Finland that determinethe framework for our activities. Our accounting and financial reporting comply with the valid accounting principles andnorms. We ensure that our financial reports are accurate, and are reported in a way that is unambiguous and transparent.

We are honest and open about our acquisitions. We exercise competitive bidding for acquisitions in compliance withFinland’s public procurement legislation. We also reject the abuse of a dominant market position. We require ourcontractual partners to act according to the same values and principles. If the subcontracting carries significantenvironmental impacts or a risk thereof, the subcontractor in question must be aware of these and report them toFinnpilot.

The company or any persons in its service are forbidden from accepting illegal benefits or bribes. Finnpilot is not affiliatedwith any political party nor does it prevent its employees from participating in societal activities, with consideration forthe provisions on disqualification.

3.5.8. Key figures SOCIAL RESPONSIBILITY

Key financial figures (1,000€) 2014 2015 2016 2017 2018Turnover 36,815 36,808 36,497 38,083 40,292Operating profit 2,003 1,661 1,517 2,634 3,649Profit/loss for the financial year 943 775 931 2,201 2,971Operating profit, % of turnover 5.4% 4.5% 4.2% 6.9% 9.1%Return on investment, % 11.4% 9.9% 9.0% 16.7% 26.5%Solvency ratio % 65.4% 70.1% 70.7% 69.4% 66.1%Quick ratio 1.3 1.3 1.4 1.2 1.0

Cash flow to stakeholders (1,000€) 2014 2015 2016 2017 2018Customers– turnover 36,815 36,808 36,497 38,083 40,292– other income from operations 109 13 79 108 160– income in affiliated companies 0 0 0 0 0 Goods suppliers– material and service acquisitions -2,447 -2,005 -1,905 -2,353 -2,433– other operating costs -4,734 -4,767 -4,769 -4,832 -5,332 Personnel– salaries and fees -20,694 -20,962 -20,836 -20,729 -22,095– pension costs -3,715 -3,868 -3,720 -3,565 -3,732– social security expenses -1,086 -1,151 -1,330 -885 -810 Total -25,494 -25,981 -25,885 -25,180 -26,637Public sector– taxes (income tax) -245 -190 -226 -530 -639Support and donations -5 0 -2 0 -8Dividends to shareholders -239 -236 -310 -4,000 -4,700Financing costs -24 -13 -8 -6 -2Funds set aside for the development ofactivities

3,736 3,629 3,471 1,289 702

Investments 1,744 2,715 2,462 2,147 2,312

Pilotage subsidy for Saimaa 2014 2015 2016 2017 2018State subsidy (MEUR) 3,915 3,878 3,824 3,446 3,478

Cost-efficiency of activities 2014 2015 2016 2017 2018Yield/pilotage assignment 1,480 1,534 1,556 1,570 1,573Yield/piloted mile 78 80 83 83 83Cost/pilotage assignment -1,400 -1,465 -1,491 -1,450 -1,430Cost/piloted mile -74 -76 -80 -77 -76Profit/pilotage assignment 80 69 65 120 143Profit/piloted mile 4 4 3 6 7