• The increase in the average price of fuel oil which in the course of the period ending 30th September, 2005, was 33% higher for the heavy fuel oil (380 Cst) for bunkering at the port of Piraeus compared to the same period in 2005. This negative development affected all companies in the sector.
• The recent (May 2006) liberalization of fares in the majority of the Greek domestic routes. This decision of the Greek government is a step closer towards the harmonization of the Greek regulatory framework with European Regulation 3577/92 on maritime transport within Member States, although there are still many issues to be resolved until a fully liberalized environment of operation is in place. As a result of this decision, companies in the sector are now able to apply a flexible pricing policy based on demand and supply aiming at the expansion of their customer base.
• The recent (July 2006) abolition of the age limit applying to vessels employed in the Greek domestic market on condition that they conform to high safety standards. This decision is one more step closer to the harmonization of the Greek regulatory framework regarding maritime transport with the international shipping standards.

Traffic volumes Total volumes for the Group, in the period ending 30th September, 2006, stood at 2,859,129 passengers, 364,251 private vehicles and 106,105 freight units. Compared to the same period of last year, total volumes carried decreased by 5.4% in passengers, by 0.3% in private vehicles and grew by 13.7% in freight units. It should be noted that the above volumes were attained against 16.8% fewer sailings compared to the nine months ending 30th September, 2005 mainly due to the sale of Seajet 2.

Recent developments in the Group In July 2006, the Group’s parent company, Blue Star Maritime S.A., in the course of strengthening its presence in the Greek domestic market, acquired through an auction, the total assets of DANE Sea Line. Specifically, it acquired car-passenger ferries Diagoras, Patmos and Rodos and certain items of real estate in the town of Rhodes. The total acquisition cost stood at Euro 19.9 mln. Car-passenger ferry Diagoras, following the completion of the necessary maintenance and repair works, was deployed on 12th August to the Dodecanese Islands’ routes, where our Group now offers daily sailings with vessels Blue Star 2 and Diagoras.

In September 2006, Blue Star Maritime S.A. sold vessels Patmos and Rodos to foreign buyers. The vessels had been acquired as part of the total assets of DANE Sea Line and their operation was not deemed commercially viable due to their old age. The total sale price stood at USD 3.03 mln (Euro 2.36 mln) and the profit booked from the sale was approximately Euro 300 thousand.

In October 2006, following a decision of the Board of the Athens Exchange, the share of Blue Star Maritime S.A. was included in the composition of the FTSE/ASE Mid 40 Index of the Athens Exchange.

Following the positive developments presented hereabove, in terms both of financial results as well as regarding developments on the regulatory front, especially the partial liberalization of the Greek domestic market, and the slight decrease in the price of fuel oil witnessed recently, the Group’s management, judging from the high load factors of the vessels and the timely deployment of Diagoras on the Dodecanese route, expects an improvement in the financial results of the current year compared to 2005.

It should be noted that the Group’s management is constantly following the developments in the Greek domestic market and studies the development of new routes, through the acquisition or building of modern conventional vessels of the highest standards, provided that suitable market conditions develop.