SIX-MONTH REPORT, NOVEMBER 1, 2004 - APRIL 30, 2005

SALES AND EARNINGS

During the period November 1, 2004 − April 30, 2005, the consolidated sales of the Viking Line Group totalled 172.17 million euro (year-earlier period: 169.95 million euro). Operating profit was EUR -13.53 M (-2.84). Consolidated profit before taxes totalled EUR -13.79 M (-3.09). Profit after taxes was EUR -13.78 M (-3.09).

The number of passengers rose by 11.6 per cent, and the Group’s sales were 1.3 per cent higher than in the same period of fiscal 2003/2004. 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). Furthermore, stiff competition led to lower ticket revenues per passenger.

Operating expenses rose due to the higher passenger volume. In addition, bunker (vessel fuel) costs were higher than in fiscal 2003/2004. Repair and maintenance costs were also higher, mainly due to measures related to the Viking Cinderella’s out-of-service period in January 2005 and the dry-docking of the Gabriella in April 2005.
 

TRAFFIC AND MARKET CONDITIONS

The Group’s vessels served the same main routes as during 2003/2004.

During the first six months of fiscal 2004/2005, the number of passengers on the Group’s vessels totalled 2,452,349. This was 11.6 per cent higher than in the year-earlier period. Total passenger volume in Viking Line’s service area rose by 5.6 per cent compared to the year-earlier period. Viking Line’s cargo volume rose by 4.9 per cent to 44,357 cargo units.

Viking Line’s share of passenger traffic in its entire service area totalled 34.8 per cent (33.0). Its market share on each route was as follows: Helsinki (Finland)-Stockholm (Sweden), 42.9 per cent (41.9); Turku (Finland)-Stockholm/Kapellskär (Sweden), 43.6 per cent (42.4); services to the Åland Islands (Finland), 51.3 per cent (49.9); and Helsinki-Baltic countries, 19.8 per cent (14.8). Viking Line’s share of the cargo market on its routes totalled 20.6 per cent (22.0). 
 

INVESTMENTS AND FINANCING

The Group’s investments during the period totalled EUR 1.70 M (2.58). On April 30, 2005, the equity/assets ratio was 50.3 per cent, compared to 50.5 per cent on the same date in 2004.

On April 30, 2005, the Group’s liquid assets amounted to EUR 19.70 M (19.89). Net cash flow from business operations amounted to EUR -7.50 M (3.47).
 

ORGANISATION AND PERSONNEL

The Board of Directors has drafted a plan for a merger of the wholly-owned subsidiary Viking Line Marketing Ab Oy with the parent company, Viking Line Abp. The merger is expected to enter into force on November 1, 2005.

The average number of Group employees was 2,790 (2,707). Of these, 1,694 (1,696) worked for the parent company. Land-based personnel totalled 705 (665) and shipboard personnel 2,085 (2,042).
 

OUTLOOK FOR THE FULL 2004/2005 FISCAL YEAR

The Group’s earnings are not generated evenly throughout the year. These earnings are highly dependent on volume and price developments during the remainder of the fiscal year.

In March 2004, Viking Line adjusted shipboard prices for those goods on which the price level was affected by the lowering of the tax level in Finland. In May 2004, sales of goods on the Helsinki-Tallinn route became subject to taxation. Due to the above-mentioned circumstances, margins shrank substantially during the first four months of fiscal 2004/2005 compared to the same period of 2003/2004.

The expansion of the Finnish government’s restitution system for vessels sailing under the Finnish flag took effect on January 1, 2005 and will lead to a reduction in manning costs compared to 2003/2004.

Competition in the market area will be increasingly stiff to increased vessel capacity and lower margins. High world market prices for crude oil are leading to increased bunker costs. The Group foresees bunker costs in 2004/2005 about EUR 4 M higher than budgeted. Given the above circumstances, the Group expects significantly lower earnings during fiscal 2004/2005 than in 2003/2004.

This Interim Report is unaudited.

The next Interim Report (November 1, 2004 − July 31, 2005) will be published on September 6, 2005.
 

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

Mariehamn, Åland, June 7, 2005
 

VIKING LINE ABP
The Board of Directors

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