INTERIM REPORT, NOVEMBER 1, 2003 - JULY 31, 2004

SALES AND EARNINGS

During the period November 1, 2003-July 31, 2004, the consolidated sales of the Viking Line Group totalled 285.34 million euro (year-earlier period: 299.21 million euro). Operating profit was EUR 12.17 M (21.68). Consolidated profit before taxes totalled EUR 11.73 M (21.12). Profit after taxes was EUR 12.20 M (14.82).

Due to lower passenger volume and somewhat lower net sales revenues per passenger, the Group’s sales fell and operating profit was lower than in the same period of fiscal 2002/2003. Net sales revenues per passenger declined due to the adjustment of shipboard prices for those goods on which the price level was affected by the lowering of the tax level in Finland and by Estonia’s accession to the European Union (EU).

Cargo revenues rose due to the increased number of sailings between Helsinki (Finland) and Tallinn (Estonia).

The Finnish Parliament’s decision to lower the corporate income tax level from 29 per cent to 26 per cent beginning on January 1, 2005 has been taken into account when calculating deferred tax liability. This tax cut, which has been credited to revenues, exceeds the tax for the report period. As a consequence, profit after taxes is higher than profit before taxes.
 

TRAFFIC AND MARKET CONDITIONS

The Group’s vessels served the same main routes as during 2002/2003. Starting in September 2003, the Cinderella was placed in cruise service on the Stockholm (Sweden)-Mariehamn (Åland Islands) route. The vessel previously provided cruises between Helsinki and Tallinn. During the peak summer season, the Cinderella made eight cruises between Stockholm and Riga (Latvia). In the summer of 2003, the vessel made nine cruises between Helsinki and Riga. Since mid-August 2003, the Rosella has operated in scheduled service between Helsinki and Tallinn. The vessel previously provided cruise service between Stockholm and Mariehamn.

During the first nine months of fiscal 2003/2004, the number of passengers on the Group’s vessels totalled 3,772,742. This was 1.2 per cent lower than in the year-earlier period. Total passenger volume in Viking Line’s service area rose by 2.6 per cent compared to the year-earlier period. Viking Line’s cargo volume rose by 6.4 per cent to 61,577 cargo units.

During the period, Viking Line increased its passenger volume and market share in Sweden-Åland Islands (Finland)-Finnish mainland services. Placing the Cinderella in cruise service from Stockholm led to a sharp rise in the number of passengers from Sweden. On the Helsinki-Tallinn route, however, passenger volume declined while cargo volume rose. Viking Line’s share of passenger traffic in its entire service area totalled 31.4 per cent (32.6). Its market share on each respective route was as follows: Helsinki-Stockholm, 42.1 per cent (42.8); Turku (Finland)-Stockholm/Kapellskär (Sweden), 42.0 per cent (43.8); services to the Åland Islands, 48.7 per cent (41.1); and Helsinki-Baltic countries 13.2 per cent (20.5). Viking Line’s share of the cargo market on its routes totalled 20.4 per cent (21.0).
 

INVESTMENTS AND FINANCING

The Group’s investments during the report period totalled EUR 5.16 M (5.25). On July 31, 2004, the equity/assets ratio was 52.5 per cent, compared to 51.7 per cent on the same date last year.

On July 31, 2004, the Group’s liquid assets amounted to EUR 36.52 M (48.30). Net cash flow from business operations amounted to EUR 22.59 M (30.98).

On May 18, 2004, Viking Line acquired a majority of the shares in Sundqvist Buss Ab, which provides scheduled service and organises bus trips using twelve buses based in Åland. The company has been included in the consolidated financial statements beginning with May 2004.
 

ORGANISATION AND PERSONNEL

On May 17, 2004, the Board of Directors decided to draft a plan for a merger of the wholly-owned subsidiary Viking Line Marketing Ab Oy with the parent company, Viking Line Abp.

The average number of Group employees during the report period was 2,806 (2,832). Of these, 1,734 (2,145) worked for the parent company. Land-based personnel totalled 694 (689) and shipboard personnel totalled 2,112 (2,143).
 

OUTLOOK FOR THE FULL 2003/2004 FISCAL YEAR

The changes in the rules on personal imports of taxed alcoholic beverages, the enlargement of the EU, the lowering of Finnish excise taxes on alcoholic beverages and the increased competition in Viking Line’s service area are expected to have an adverse impact on the Group’s earnings. The Group therefore estimates that its fiscal 2003/2004 earnings will be lower than the preceding fiscal year’s earnings.

This Interim Report is unaudited.

The Group’s press release on its results for the 2003/2004 fiscal year will be published on December 21, 2004.
 

When rounding off items to the nearest EUR 1,000,000, rounding-off differences of EUR ± 0.01 M have occurred.
 

Mariehamn, Åland, September 9, 2004
 

VIKING LINE ABP
The Board of Directors

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