Viking Line : Half-year Financial Report, January 1–June 30, 2021

Half‐Year Financial Report

for the period January-June 2021

ANOTHER SIX MONTHS WITH THE PANDEMIC

January-June 2021 (compared to January-June 2020)

• Sales amounted to EUR 71.5 M (EUR 97.5 M).
• Other operating revenue was EUR 33.6 M (EUR 16.1 M).
• Operating income totalled EUR 4.5 M (EUR -27.4 M).
• Net financial items were EUR -2.4 M (EUR -2.1 M).
• Income before taxes amounted to EUR 2.2 M (EUR -29.5 M).
• Income after taxes totalled EUR 2.7 M (EUR -23.7 M).
• Changed earnings outlook. The outlook for the financial year 2021 is better than the outcome for 2020. Improved demand starting late in the second quarter of 2021 together with one-off items in the form of the sale of Mariella and the anticipated redemption of Viking Line's terminal buildings including fixtures and fittings with the City of Turku will boost income. There is still uncertainty about how authority requirements, State aid, the impact of vaccination programmes and related restrictions on passenger traffic as well as market demand will affect Viking Line's operations, results and financial position for the full-year 2021, but on the whole the Board of Directors believes operating income will be positive.
  On the previous reporting date, the outlook was as follows:
  The outlook for the financial year 2021 is unchanged. Uncertainty about regulatory requirements, State aid, the impact of vaccination programmes and related restrictions for passenger traffic, and market demand will affect Viking Line's operations, results and financial position. It is too soon to quantify the impact on earnings since there is great uncertainty about the trend. As a result, no earnings forecast is provided for 2021.

Second quarter 2021 (compared to second quarter 2020)

• Sales amounted to EUR 46.9 M (EUR 22.6 M).
• Operating income totalled EUR 12.2 M (EUR -5.9 M).

The COVID-19 pandemic continues to dominate the company's operations and results, but at the end of the quarter we nevertheless saw increased demand for our services between Åland, Finland and Sweden. Traffic between Finland and Estonia has been greatly affected by restrictions. The focus during the period was on the company's public service obligations and cost control. Since the end of the first quarter of 2020, the company's possibilities for running regular operations have been severely limited by the still ongoing COVID-19 pandemic.

Half-Year Financial Report January-June 2021

Comments from President and CEO Jan Hanses

"The Group's operations during the first two quarters of 2021 continued to be dominated by the effects of the COVID-19 pandemic. Continued travel restrictions and travel advisories have affected half-year results, and hopes of less stringent travel restrictions during the second quarter were dashed by the third wave of the pandemic, which had its most severe effects in April. Service has been maintained on the routes between Åland and Sweden and between Turku, Åland and Stockholm as well as between Helsinki and Tallinn. In June, cruise traffic with Gabriella and Cinderella was launched, and the number of vessels in service rose to six. Service has been maintained in part as a result of Viking Line's public service obligations for which the company has an agreement with Traficom. At the end of the second quarter, in the middle of our peak season, the restrictions still in effect were on travel between Finland and Sweden/Estonia.

"Operations have thus been characterized by low passenger volumes and therefore continued cost cuts and adjustments to the restrictions in effect. This naturally had a negative impact on demand for travel, and as a result the Group was forced to cut back on its range of services and staffing on board. Despite these restrictions on operations, we have maintained uninterrupted passenger and cargo service between our countries and thus safeguarded regularly scheduled service. An increase in demand was noted towards the end of the period, and that trend was also sustained after the period in July and August.

"During the second quarter, Mariella was sold to Corsica Ferries. The sale had a EUR 13.1 M impact on income, and liquidity was strengthened by EUR 13.5 M.

"During the second quarter, Alandia Holding Ab's purchase of 24.9% of the shares in Alandia Försäkring Abp was completed. Viking Line Abp owns 18.3% of the shares in Alandia Holding Ab and accounts for the investment as an associate company. In conjunction with the transaction, Viking Line Abp reclassified its previous holding in Alandia Försäkring Abp as an associate company.

"The staff have continued to shoulder a heavy burden as a result of furloughs carried out in all of the Group's operating countries. The furloughs have been in the form of part-time furloughs and to a large extent full-time furloughs. The engagement of staff has been admirable as arrangements for these jobs were made. I really appreciate their great efforts in these difficult times.

"More stringent regulations from the EU and IMO will require maritime transport to reduce its emissions in the future. In July, the European Commission published a Fit for 55 climate package with a target to reduce CO2 emissions by at least 55% before 2030 compared to 1990. Maritime

Half-Year Financial Report January-June 2021

transport will be included in the EU Emissions Trading System, and this will entail changes for the industry. As an Åland-based company, we are genuinely concerned about the state of the Baltic Sea. Significant investments have been made to increase energy efficiency, and an important focus area in our sustainability work has been optimizing fuel consumption. Through various fuel optimization measures, from 2008 to 2020 Viking Line managed to achieve a fuel saving of 30% per nautical mile. In the period 2015-2020, the company invested over EUR 4 M in different fuel optimization projects on our vessels. We made the choice early on to play an active role in developing sustainable travel - an area where we have long been at the cutting edge, in part through new technological innovations. Our new vessel, Viking Glory, is a good manifestation of this. The vessel will be one of the world's most climate-smart ships and represents a brand-new generation of vessels. We look forward to being able to introduce Viking Glory to our passengers in 2022."

Sales and earnings

Consolidated sales decreased 26.7% to EUR 71.5 M during the period January 1-June 30, 2021 (EUR 97.5 M January 1-June 30, 2020). Operating income totalled EUR 4.5 M (EUR -27.4 M).

Passenger-related revenue decreased 34.1% to EUR 50.1 M (EUR 76.0 M), while cargo revenue was EUR 20.4 M (EUR 20.7 M). The sales contribution was EUR 55.2 M (EUR 73.5 M). Operating costs decreased 29.3% to EUR 74.1 M (EUR 104.9 M).

Results for the second quarter were dominated by Viking Line's public service obligations and cargo transports, but an increase in demand in the passenger sector was also discernible at the end of the period.

Sales increased 107.7% to EUR 46.9 M during the period (EUR 22.6 M April 1-June 30, 2020). Operating income totalled EUR 12.2 M (EUR -5.9 M).

During the first two quarters of the year, the Group received aid for its public service obligations from Traficom for the Group's vessels on the Turku-Mariehamn/Långnäs- Stockholm, Mariehamn-Kapellskär and Helsinki-Tallinn routes. We also received aid from the Development and Management Centre of Finland's Centres for Economic Development, Transport and the Environment (known as ELY centres) and from Finland's Local Employment and Economic Development Offices. The aid is recognized as State aid under other operating revenue.

Service and market

The Viking Line Group provides passenger and cargo carrier services using six vessels on the northern Baltic Sea and in the Gulf of Finland. During the second quarter, a bareboat hire/purchase agreement was entered into for M/S Mariella. The Group's remaining vessels served the same routes as in 2020, although the vessels that normally sail between Helsinki

Half-Year Financial Report January-June 2021

and Stockholm and between Stockholm and Mariehamn have been taken out of service to some extent due to the COVID-19 pandemic. On June 12, Gabriella resumed service on the Helsinki-Stockholm route and was also used for special cruises.

The total number of passengers on Viking Line's vessels during the report period was 538,348 (998,483). The Group had a total market share in its service area of approximately 32.1% (27.0%).

Viking Line's cargo volume was 65,214 cargo units (62,409). Viking Line's share of the cargo market was approximately 16.8% (17.1%). The market share for passenger cars was approximately 31.4% (24.1%).

Due to the ongoing pandemic, travel has been limited. In late June, digital Covid certificates adopted by the European Commission began to be made available to the general public. Their implementation in every EU country is now under way. The Covid certificates provide countries in Viking Line's service area with a framework for phasing out the national regulations established during the pandemic. As vaccination programmes against Covid-19 progress, it is expected that demand for travel, especially local travel, could increase compared to earlier.

Investments and financing

The Group's investments amounted to EUR 8.3 M (EUR 9.3 M), of which EUR 3.8 M (EUR 3.9 M) is related to the capitalization of costs and advance payments for vessels under construction. The Group's total investments constitute 11.6% of revenue (9.5%).

Construction of the vessel Viking Glory is progressing in China. The vessel is expected to be delivered at the end of the year. Delivery will thus be later than the agreed delivery time.

On June 30, 2021, the Group's non-currentinterest-bearing liabilities totalled EUR 99.3 M (EUR 88.3 M). The equity/assets ratio was 46.3% compared to 49.3% a year earlier.

At the end of June, the Group's cash and cash equivalents amounted to EUR 41.8 M (EUR 30.7 M). Unutilized credit lines in the Group totalled EUR 15.1 M on June 30, 2021 (EUR 10.4 M). Net cash flow from operating activities amounted to EUR 5.1 M (EUR -20.2 M). Net cash flow from investing activities was EUR 9.8 M (EUR -8.8 M) and net cash flow from financing activities amounted to EUR -2.9 M (EUR -3.0 M).

In 2020, the Finnish Government approved State guarantees on Viking Line's liquidity loans of up to EUR 38.7 M. With the liquidity loans, the company's liquidity position improved and thus ensured continued financially stable operations in the situation that had arisen as a result of the Covid crisis. In addition to the Finnish State guarantees, commercial banks have guaranteed EUR 4.3 M. The Group had drawn EUR 43.0 M of the liquidity loans on June 30,

Half-Year Financial Report January-June 2021

2021. Viking Line undertakes not to pay a dividend or pay out any funds until its obligations related to the guarantees and loans have been repaid in full.

Most of the Group's loan agreements include loan covenants according to market terms. The covenant terms entail minimum requirements for liquidity and solvency and a maximum net financial debt-to-EBITDA ratio. The Group has been granted a time-limited exemption from the covenant terms that were breached during the first two quarters of 2021 for those loans already drawn.

For loans of EUR 15.0 M, the company has been granted a waiver from one of the financial covenants until December 31, 2021. The company has conducted negotiations to extend the waiver in a positive spirit. A decision is expected in September 2021. Since the waiver was not in effect for the next 12 months at the end of the report period, the loan is classified in this financial report as a current liability in the balance sheet. The loan will be reclassified as a non- current liability once the company has received a waiver decision.

Viking Line Abp entered an agreement to sell Mariella to Corsica Ferries SAS, and the vessel was delivered in May 2021. The sale of Mariella is a move to strengthen the company's financial position but is also justified by the age of the vessel. The sale is being carried out as a bareboat hire/purchase arrangement. The total sale price is EUR 19.6 M. The vessel's book value was EUR 5.6 M. The sale had a EUR 13.1 M effect on income, and liquidity was strengthened by EUR

13.5 M. The remainder of the purchase price is to be paid on a monthly basis over four years beginning June 1, 2022. The present value is calculated by discounting future payments at a 3% interest rate.

Viking Line Abp has entered into a preliminary agreement with the City of Turku on the redemption of Viking Line's terminal buildings including fixtures and fittings at the Port of Turku for about EUR 17.8 M. The reason for the redemption is that the land lease will expire in 2025. A final purchase agreement is expected to be entered into on August 31, and at the same time a lease on Viking Line's terminal facilities at the Port of Turku will be entered into.

Liquidity can also be strengthened by a shareholder contribution.

Organization and personnel

The average number of full-time employees in the Group was 1,265 (1,802), of whom 830 (1,249) worked for the parent company. Land-based personnel totalled 344 (444) and shipboard personnel totalled 921 (1,358).

In addition to the Group's own employees, Viking XPRS was crewed by an average of 140 (158) people employed by a staffing company.