First half-year results of the 2008/2009 financial year

The weak global macroeconomics had continuous influence on the first half-year operations of AS Tallink Grupp and its subsidiaries (hereinafter also referred to as the Group).

Despite changed environment the Group revenues in the first half of the 2008/2009 financial year reached the previous year level of EUR 361 million (EEK 5 650 million). A positive effect to the first half-year revenues came from the passenger operations where sales increased by nearly EUR 18 million (EEK 282 million) supported by higher passenger volumes. To the contray, the cargo revenues decreased by almost 23 million EUR (EEK 357 million) as an effect of the recent weakening in the world economies.

It is typical to the Group operations that the second quarter is low season in the passenger business segment. The impact of weaker cargo volumes to the Group result is clearly noticeable in the second quarter when the share of the ro-ro cargo operations in the total Group revenues has been historically higher.

The Group's passenger business related revenues were also impacted by fallen exchange rate of Swedish krona. SEK has weakened against Euro by nearly 17% during the first half-year period which had negative impact to the sales by about EUR 7 million (EEK 109 million).

1st HALF-YEAR KEY FIGURES

Net profit margin - net profit / net sales;
EBITDA - Earnings before net financial items, share of profit of associates,
taxes, depreciation and amortization, income from negative goodwill;
EBITDA margin - EBITDA / net sales;
Gross margin - gross profit / net sales
Equity ratio - total equity / total assets;
Earnings per share - net profit / weighted average number of shares outstanding;
Shareholder's equity per share - shareholder's equity / number of shares outstanding.
* Share numbers exclude own shares.

The largest changes in the operational items in the first half-year were: passenger segment revenues increased by EUR 18 million (EEK 282 million); ro-ro cargo revenues decreased by EUR 23 million (EEK 357 million); fuel costs decreased by EUR 15 million (EEK 234 million); increase in cost of goods by EUR 11 million (EEK 172 million) driven by the inflation from the recent past and also higher restaurant, bars and shop sales; increase in personnel costs by EUR 4.6 million (EEK 72 million) which is a 8.5% year on year increase mainly due to the previously agreed salaries increase;

Restructuring of the Germany route and reduced number of vessels have been influential to many of the changes in operational items. Largest part in the Group's fuel cost decrease is attributable to Germany route. As the cargo has represented majority in the Finland-Germany segment revenues the route has been most exposed to the changes in world economy. The fallen demand in ro-ro cargo transportation between Finland and Germany and decreased frequency in departures
have resulted the route revenues to decrease by EUR 19 million (EEK 304 million) in the first half-year compared to the same period in the previous financial year. It is worth to note that the decline in the segment result was softened thanks to the earlier restructuring and thereby lower cost base.

Given the fact that the fuel prices were significantly higher on the second half of the previous financial year and assuming the current fuel price level will not change considerably, the reduction on the fuel cost will be more visible towards the end of the current financial year.
The administrative costs have been decreased by EUR 6.4 million (EEK 100 million) or by 21.3% in the first half-year. The management is working intensively to seek further cost reduction possibilities in addition to current and to adjust the operations according to the today's changing environment. Along several operational costs high focus is put also to the personnel costs in order to find additional savings.

The Group EBITDA for the first half of 2008/2009 financial year amounted to EUR 45.2 million (EEK 707 million) which is 9.5% less than in the first half of the last financial year.

The depreciation and amortisation of the Group assets in the first half-year period increased by EUR 3.5 million (EEK 55 million) mainly due to the two new vessels MS Superstar and MS Baltic Princess.
The net financial costs increased by EUR 7.5 million (EEK 117 million) during the first half-year of the 2008/2009 financial year, largely due to the higher interest expense by 14.7% or EUR 4.4 million (EEK 69 million). The increase in interest expenses is resulted from 18% higher outstanding interest bearing liabilities during the first half-year period compared to the same period in the previous financial year, and also from higher interest rates during the first quarter.

Due to the lower operational performance, increased depreciation and higher financial items the net loss for the first half-year of 2008/2009 financial year was EUR 22.6 million (EEK 354 million) compared to net loss of EUR 7 million (EEK 109 million) in the first half of the previous financial year.

The Group's second quarter results have not met the management expectations. Despite the passenger volume has shown strong growth the positive effect is zeroed already on the revenue level by significant cargo decrease, Swedish krona weakness on retail sales and change in the customers' behaviour. Although the second half-year is high season in the passenger operations and usually the development in the cargo operations has smaller influence in the group results the management carefully reviews the Group's targets for the current financial year. Considering the development so far and high volatility on external factors
which add uncertainties on the future the Group will not meet the set targets for the financial year. However, the management believes that the current financial year will be in profit.               

CONSOLIDATED CONDENSED BALANCE SHEET

CONSOLIDATED CONDENSED BALANCE SHEET

CONSOLIDATED CONDENSED CASH FLOW STATEMENT