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AVIAAM LEASING AB

CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2013

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CONTENTS Pages

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME 3

CONSOLIDATED INTERIM BALANCE SHEETS 4

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY 5 – 6

CONSOLIDATED STATEMENTS OF CASH FLOW 7

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION 8 – 20

CONSOLIDATED MANAGEMENT REPORT 21 – 37

(3)

3 CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

April – June January – June

2013 2012 2013 2012

Note USD LTL USD LTL USD LTL USD LTL

Revenue 3 8,904 23,519 16,275 43,633 15,482 40,729 28,674 76,294

Interest income on loans 52 138 - - 97 256 27 73 Depreciation and amortisation (2,258) (5,970) (3,482) (9,308) (4,353) (11,451) (5,111) (13,599) Costs of aircraft sold (264) (694) (7,540) (20,143) (264) (694) (10,619) (28,254) Aircraft maintenance

expenses

(1,253) (3,311) (559) (1,508) (2,328) (6,125) (1,299) (3,457) Employee-related expenses 4 (191) (505) (149) (401) (331) (872) (289) (769) Other operating expenses 5 (344) (909) (370) (988) (637) (1,675) (510) (1,357) Other gain (losses) net 547 1,434 900 2,397 189 496 912 2,426 Operating profit 5,193 13,702 5,075 13,682 7,855 20,664 11,785 31,357

Finance income 6 - - 367 990 429 1,128 986 2,622 Finance costs 6 (1,585) (4,185) (1,435) (3,858) (3,050) (8,025) (2,908) (7,738) Finance costs – net (1,585) (4,185) (1,068) (2,868) (2,621) (6,897) (1,922) (5,116)

Profit (loss) before income tax

3,608 9,517 4,007 10,814 5,234 13,767 9,863 26,241

Income tax 7 (571) (1,504) (598) (1,614) (785) (2,065) (1,479) (3,936) Profit (loss) for the period 3,037 8,013 3,409 9,200 4,449 11,702 8,384 22,305

Other comprehensive income Currency translation

differences on translation to presentation currency

- (849) - 335 - 1,368 - 690

Total other comprehensive income

- (849) - 335 - 1,368 - 690

Total comprehensive income 3,037 7,164 3,409 9,555 4,449 13,070 8,384 22,995

Basic and diluted earnings per share (USD/LTL)

(4)

CONSOLIDATED INTERIM BALANCE SHEETS

30 June 2013 31 December 2012

Note USD LTL USD LTL

ASSETS

Non-current assets

Property, plant and equipment 9 64,945 172,078 64,113 167,078 Prepayments for property, plant and equipment 10 4,200 11,128 550 1,433

Intangible assets 2 6 1 1

Investments in associates and jointly controlled entities - - 20 52 Trade and other receivables 12 3,157 8,366 2,305 6,008

72,304 191,578 66,989 174,572

Current assets

Inventory 11 1,107 2,932 2,541 6,623

Trade and other receivables 12 17,994 47,677 14,334 37,355

Prepaid income tax 42 112 15 37

Cash and cash equivalents 13 41,171 109,086 8,081 21,060

60,314 159,807 24,971 65,075

Total assets 132,618 351,385 91,960 239,647

EQUITY

Equity attributable to the Group’s equity shareholders

Share capital 14 16,804 43,306 12,232 29,448

Share premium 27,972 72,088 - -

Legal reserve 1,131 2,947 1,131 2,947

Revaluation reserve 12,195 31,779 12,195 31,779

Cumulative translation reserve - 716 - (652)

Retained earnings 1,491 7,062 (2,958) (4,640)

Total equity 59,593 157,898 22,600 58,882

LIABILITIES

Non-current liabilities

Borrowings 15 33,519 88,811 34,840 90,795

Security deposits received 17 11,302 29,944 11,520 30,020 Deferred income tax liabilities 2,230 5,910 1,467 3,823

47,051 124,665 47,827 124,638

Current liabilities

Borrowings 15 13,420 35,559 16,005 41,708

Trade and other payables 16 3,876 10,271 3,932 10,246

Advances received 7,025 18,613 - -

Current income tax liabilities 1,653 4,379 1,596 4,173 25,974 68,822 21,533 56,127

Total liabilities 73,025 193,487 69,360 180,765

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5 CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

USD Note Share

capital Share premium Legal reserve Revaluation reserve Retained earnings Total equity Balance at 1 January 2012 12,232 - - 5,771 (19,457) (1,454) Comprehensive income Revaluation of aircraft - - - 7,557 - 7,557

Deferred income tax on revaluation of aircraft - - - (1,133) - (1,133)

Other comprehensive income (loss) - - - 6,424 - 6,424

Profit for the year - - - - 19,603 19,603

Total comprehensive income - - - 6,424 19,603 26,027

Transactions with owners

Transfer to reserves - - 1,131 - (1,131) -

Dividends - - - - (1,972) (1,972)

Total transactions with owners - - 1,131 - (3,103) (1,972)

Balance at 31 December 2012/ 1 January 2013 12,232 - 1,131 12,195 (2,958) 22,600

Comprehensive income

Profit for the period - - - - 4,449 4,449

Total comprehensive income - - - - 4,449 4,449

Transactions with owners

Increase of share capital of the Company 4,572 29,463 - - - 34,035

Cost of capital increase - (1,491) - - - (1,491)

Transfer to reserves - - - -

Dividends - - - -

Total transactions with owners - 27,972 - - - 32,544

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CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (CONTINUED) LTL Note Share capital Share premium Legal reserve Revaluation reserve Cum. trans. Retained earnings Total equity Balance at 1 January 2012 29,448 - - 15,405 485 (49,220) (3,882) Comprehensive income Revaluation of aircraft - - - 19,694 - - 19,694

Deferred income tax on revaluation of aircraft - - - (2,953) - - (2,953)

Currency translation differences - - - - (1,137) - (1,137)

Other comprehensive income (loss) - - - 16,741 (1,137) - 15,604

Profit for the year - - - 52,668 52,668

Total comprehensive income - - - 16,741 (1,137) 52,668 68,272

Transactions with owners

Transfer to reserves - - 2,947 - - (2,947) -

Dividends - - - (5,140) (5,140)

Currency translation differences - - - (367) - (1) (368)

Total transactions with owners - - 2,947 (367) - (8,088) (5,508)

Balance at 31 December 2012/ 1 January 2013 29,448 - 2,947 31,779 (652) (4,640) 58,882

Comprehensive income

Currency translation differences - - - - 1,368 - 1,368

Other comprehensive income (loss) - - - - 1,368 - 1,368

Profit for the period - - - 11,702 11,702

Total comprehensive income - - - - 1,368 11,702 13,070

Transactions with owners

Increase of share capital of the Company 13,858 75,930 - - - - 89,788

Cost of capital increase - (3,842) - - - - (3,842)

Transfer to reserves - - - -

Dividends - - - -

Total transactions with owners 13,858 72,088 - - - - 85,946

(7)

7 CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW

6 months ended 30 June

2013 2012

Note USD LTL USD LTL

Operating activities

Profit (loss) before income tax 5,234 13,767 9,863 26,241 Adjustments for:

Depreciation and amortisation 4,353 11,451 5,111 13,599

Discounting effect 132 347 (58) (155)

Finance costs – net 3,021 7,947 1,791 4,766

Profit / Loss from sale of fixed assets 344 906 - - Changes in working capital:

Trade and other receivables (4,747) (12,491) (5,545) (14,754) Trade and other payables 262 690 (2,048) (5,449) Security deposits and advances received 7,025 18,481 (5,573) (14,829)

Inventory (268) (705) 3,529 9,390

Cash generated from operations 15,356 40,393 7,070 18,809

Interest paid (1,733) (4,558) (1,760) (4,682)

Income tax paid - - (39) (105)

Net cash generated from (used in) operating activities 13,623 35,835 5,271 14,022

Investing activities

Purchase of property, plant and equipment and intangible assets (583) (1,533) (3,187) (8,481) Prepayments for property plant and equipment (3,650) (9,602) - - Sale of property, plant and equipment and intangible assets 91 239 - -

Loans granted (127) (334) (752) (2,002)

Loans repaid 184 485 53 141

Net cash used in investing activities (4,085) (10,745) (3,886) (10,342)

Financing activities

Proceeds from issuance of ordinary shares 32,702 86,029 - -

Dividends paid (2,007) (5,280) - -

Repayment of borrowings (5,745) (15,113) (3,425) (9,107) Lease (finance lease) payments (1,398) (3,678) (3,324) (8,843) Net cash generated from (used in) financing activities 23,552 61,958 (6,749) (17,950)

Increase in cash and cash equivalents 33,090 87,048 (5,364) (14,270)

Movement in cash and cash equivalents

At the beginning of the period 8,081 21,060 13,646 36,426 Increase in cash and cash equivalents 33,090 87,048 (5,364) (14,270)

Foreign translation differences - 978 - 723

(8)

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION

1 General information

AviaAM Leasing AB (referred to as the Company) is a public limited liability company incorporated at State Enterprise Centre of the Republic of Lithuania as at 6 April 2009 (Company code – 302330793). The Company is domiciled in Vilnius, the capital of Lithuania. The address of its registered office is at Smolensko g. 10, LT-03201 Vilnius, Lithuania.

The shareholders’ structure of the Company as at 30 June 2013 was as follows:

Number of shares %

ZIA Valda Cyprus Leasing Limited 17,078,622 39.44

Mesotania Holdings Limited 10,899,858 25.17

Linas Dovydėnas 441,717 1.02

Aurimas Sanikovas 294,478 0.68

Gediminas Žiemelis 162,962 0.38

Tadas Goberis 147,239 0.34

ING Otwarty Fundusz Emerytalny (Open pension fund) 5,000,000 11.54

Other shareholders 9,280,717 21.43

Total 43,305,593 100.00

The shareholders’ structure of the Company as at 31 December 2012 was as follows:

Number of shares %

ZIA Valda Cyprus Leasing Ltd. 17,608,682 59.80

Mesotania Holdings Ltd. 11,739,121 39.86

ŽIA Valda AB 60,000 0.20

Indeco: Investment and Development UAB 40,000 0.14

Total 29,447,803 100.00

In March 2013 shareholders ZIA Valda Cyprus Ltd. and Mesotania Holdings Ltd. sold respectively 530,060 and 839,263 shares in the Company, which were acquired by Linas Dovydėnas, Gediminas Žiemelis, Aurimas Sanikovas, Virginija Svilainytė and Tadas Goberis.

On 28 June 2013 the Company completed an Initial Public Offering (the “IPO”) in Warsaw Stock Exchange by issuing 13,857,790 new shares and selling 160,964 existing shares owned by Mr. Gediminas Ziemelis.

The Company and its subsidiaries (together, the Group) are engaged in the business of aircraft leasing and management. The principal activity of the Group is operating leasing, management and trading of mid-life narrow body and regional jet aircraft. As of 30 June 2013 the Group owned 19 aircraft: 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 8 Bombardier CRJ200 aircraft. 18 aircraft were leased out under operating lease contracts and 1 aircraft was under preparation for lease.

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9 1 General information (continued)

The subsidiaries, which are included in the Group’s consolidated financial statements are indicated below: Share of equity, % The Group’s companies Country of establishment As at 30 June 2013 As at 31 December 2012

Date of acquiring (establishment) / activity / address of establishment

AviaAM B01 UAB Lithuania 100 100 Date of acquiring: 4 January 2010 / Aircraft leasing /

Smolensko g. 10, Vilnius

AviaAM B02 UAB Lithuania 100 100 Date of acquiring: 4 January 2010 / Aircraft leasing /

Smolensko g. 10, Vilnius

AviaAM B03 UAB Lithuania 100 100 Date of acquiring: 22 January 2010 / Aircraft leasing /

Smolensko g. 10, Vilnius

AviaAM B04 UAB Lithuania 100 100 Date of establishment: 22 February 2007 / Aircraft leasing /

Smolensko g. 10, Vilnius

AviaAM B05 UAB Lithuania 100 100 Date of establishment: 28 June 2011 / Aircraft leasing /

Smolensko g. 10, Vilnius

AviaAM B06 UAB Lithuania 100 100 Date of establishment: 15 July 2011 / Aircraft leasing /

Smolensko g. 10, Vilnius

AviaAM B07 UAB Lithuania 100 100 Date of establishment: 30 September 2011 / Aircraft leasing /

Smolensko g. 10, Vilnius AAL Capital Aircraft

Holdings Ltd

Cyprus 100 100 Date of establishment: 29 September 2011 / Aircraft leasing /

Dimitriou Karatasou 15, Anastasio Building, 6th floor, Flat/office 601, Strovolos, 2024, Nicosia, Cyprus AviaAM Leasing

Bermuda Ltd

Bermuda 100* 100* Date of establishment: 16 September 2011 / Aircraft leasing /

Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda

AviaAM B08 Ltd. Bermuda 100* 100* Date of establishment: 26 April 2013 / Aircraft leasing /

Crawford House, 50 Cedar Avenue, Hamilton HM11, BERMUDA AviaAM B09 Ltd. Bermuda 100* 100* Date of establishment: 27 June 2013 /

Aircraft leasing /

(10)

2 Accounting policies

The consolidated interim financial information for the six month period ended 30 June 2013 (hereinafter, the Consolidated Interim Financial Information) is prepared in accordance with the International Financial Accounting Standards, as adopted by the European Union, includes IAS 34 “Interim financial reporting”. In all material respects, the same accounting principles have been followed as in the preparation of financial statements for 2012.

The financial statements have been prepared on a going concern basis and under the historical cost convention. The consolidated financial statements are presented in US Dollars (USD) and Lithuanian Litas (LTL) and all values are rounded to the nearest thousand (USD’000 and LTL ´000) except when otherwise indicated.

The Consolidated Interim Financial Information for the six month period ended 30 June 2013 is not audited. Financial Statements for the year ended 31 December 2012 were audited by external auditor PricewaterhouseCoopers UAB.

3 Revenue

6 months ended 30 June

2013 2012

USD LTL USD LTL

Lease revenue 10,947 28,797 10,286 27,368

Supplemental maintenance rent 3,033 7,978 4,588 12,208

Sales of aircraft 1,411 3,713 13,800 36,718

Other income 91 241 - -

15,482 40,729 28,674 76,294

The chief operating decision maker of the Group has been identified as the General Manager, which is responsible for allocating resources and assessing performance of the Group. The General Manager has determined that the activities of the Company form a single operating segment – aircraft leasing and trading. The internal reporting provided to the General Manager has been prepared using the accounting policies and presentation consistent with those used in preparation of the financial statements. The General Manager monitors net profit and operating profit as a measure of profit.

The segment’s sales to external customers are derived from the following single customers (the customers whose sales revenue exceed 10 per cent of total sales revenue of that segment in any of the years):

6 months ended 30 June

2013 2012

Lease and sale customers USD LTL USD LTL

(11)

11 3 Revenue (continued)

The segment’s aircraft lease and sales revenue according to geographical location (based on the residence of customers):

6 months ended 30 June

2013 2012

Country USD LTL USD LTL

Kazakhstan 6,194 16,296 16,357 43,518

Russia 5,446 14,326 4,339 11,544

Tajikistan 1,788 4,704 1,788 4,757

Lithuania 1,373 3,610 2,258 6,008

Italy 590 1,552 - -

British Virgin Islands - - 3,800 10,113

Estonia - - 132 354

15,391 40,488 28,674 76,294

4 Employee related expenses

6 months ended 30 June

2013 2012

USD LTL USD LTL

Salaries 237 622 220 586

Social insurance expenses 94 250 69 183

331 872 289 769

5 Other operating expenses

6 months ended 30 June

2013 2012

USD LTL USD LTL

Management services 110 290 51 135

Legal and translation expenses 131 345 80 212

Insurance expenses 53 140 11 29

Marketing expenses 78 205 101 269

Travelling expenses 76 200 30 81

Representation expenses 55 145 22 58

Audit and accounting expenses 13 34 12 32

Other administrative expenses 121 316 203 541

(12)

6 Finance costs – net

6 months ended 30 June

2013 2012

USD LTL USD LTL

Interest income on cash and cash equivalents - - 3 7 Discounting of security deposits received 160 420 604 1,608 Unwinding of discount of non-current receivables and loans

from related parties

35 91 59 157

Other finance income 102 268 2 6

Foreign exchange gain on financing activities 132 349 318 844

Finance income 429 1,128 986 2,622

Interest expenses (1,733) (4,558) (1,760) (4,682) Foreign exchange loss on financing activities (976) (2,567) (518) (1,378) Unwinding of discount of security deposits received (325) (856) (617) (1,642)

Other finance costs (16) (44) (13) (36)

Finance costs (3,050) (8,025) (2,908) (7,738)

Finance costs – net (2,621) (6,897) (1,922) (5,116)

7 Income tax

The tax expenses for the period comprise current and deferred tax. Income tax is calculated at 15 per cent of the annual profit for the year.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when deferred income taxes relate to the same fiscal authority. Deferred income tax asset and liability are calculated at 15% rate (2012: 15% rate).

8 Earnings (loss) per share

Earnings (loss) per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of ordinary shares issued during the year.

April - June January – June

2013 2012 2013 2012

USD LTL USD LTL USD LTL USD LTL

Net profit (loss) attributable to

shareholders 3,037 8,013 3,409 9,200 4,449 11,702 8,384 22,305 Weighted average number of

ordinary shares issued 43,306 29,448 43,306 29,448 Basic earnings (loss) per share

(USD/LTL) 0.07 0.19 0.12 0.31 0.10 0.27 0.28 0.76

(13)

13 9 Property, plant and equipment

USD Aircraft Aircraft under preparation for use Other tangible fixed assets Total

Opening net book amount as at 1 January 2012 47,926 - 5 47,931

Additions 19,889 2,950 7 22,846 Disposals (3,848) - - (3,848) Reclassifications (1,000) - - (1,000) Depreciation charge (7,591) - (3) (7,594) Revaluation surplus 8,828 1,563 - 10,391 Revaluation loss (4,177) (436) - (4,613)

Closing net book amount as at 31 December 2012 60,027 4,077 9 64,113

At 31 December 2012

Cost or valuation 60,027 4,077 17 64,121

Accumulated depreciation - - (8) (8)

Net book amount 60,027 4,077 9 64,113

Opening net book amount as at 1 January 2013 60,027 4,077 9 64,113

Additions 4,722 - 82 4,804

Disposals (618) (264) - (882)

Reclassifications 3,715 (2,448) - 1,267

Depreciation charge (4,353) - (4) (4,357)

Closing net book amount as at 30 June 2013 63,493 1,365 87 64,945

At 30 June 2013

Cost or valuation 63,493 1,365 98 64,956

Accumulated depreciation - - (11) (11)

(14)

9 Property, plant and equipment (continued) LTL Aircraft Aircraft under preparation for use Other tangible fixed assets Total

Opening net book amount as at 1 January 2012 127,935 - 15 127,950

Additions 54,036 7,926 18 61,980 Disposals (10,330) - - (10,330) Reclassifications (2,688) - - (2,688) Depreciation charge (20,395) - (8) (20,403) Revaluation surplus 22,998 4,200 - 27,198 Revaluation loss (11,113) (1,171) - (12,284) Exchange differences (4,015) (329) (1) (4,345) Closing net book amount as at 31 December 2012 156,428 10,626 24 167,078

At 31 December 2012

Cost or valuation 156,429 10,626 45 167,100

Accumulated depreciation - - (21) (21)

Net book amount 156,429 10,626 24 167,078

Opening net book amount as at 1 January 2013 156,429 10,626 24 167,078

Additions 12,423 - 217 12,640

Disposals (1,625) (694) - (2,319)

Reclassifications 9,772 (6,441) - 3,331

Depreciation charge (11,451) - (11) (11,462)

Exchange differences 2,682 126 1 2,809

Closing net book amount as at 30 June 2013 168,230 3,617 231 172,078

At 30 June 2013

Cost or valuation 168,230 3,617 261 172,108

Accumulated depreciation - - (30) (30)

Net book amount 168,230 3,617 231 172,078

Aircraft were pledged to the banks as collateral for borrowings. Carrying amounts of pledged aircraft as at 30 June 2013 and 31 December 2012:

30 June 2013 31 December 2012

USD LTL USD LTL

Aircraft 18,147 48,082 21,944 58,578

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15 10 Prepayments for property, plant and equipment

30 June 2013 31 December 2012

USD LTL USD LTL

Prepayments for aircraft 4,200 11,128 550 1,433

4,200 11,128 550 1,433 11 Inventories 30 June 2013 31 December 2012 USD LTL USD LTL Aircraft components 1,107 2,932 2,541 6,623 1,107 2,932 2,541 6,623

12 Trade and other receivables

30 June 2013 31 December 2012

USD LTL USD LTL

Trade receivables from third parties 17,319 45,889 10,083 26,277 Less: provision for impairment of trade receivables - - - - Trade receivables from third parties – net 17,319 45,889 10,083 26,277 Receivables from related parties 1,051 2,529 3,294 8,374 Less: provision for impairment of trade receivables from

related parties (1,048) (2,522) (1,048) (2,522)

Receivables from related parties - net 3 7 2,246 5,852

Loans granted to related parties 3,013 7,983 3,034 7,907

Loans granted to third parties 16 43 - -

Other receivables 180 479 183 479

Less: provision for impairment of other receivables (28) (76) (29) (76)

Other receivables - net 152 403 154 403

Prepayments 45 119 94 246

VAT receivables 603 1,599 1,028 2,678

21,151 56,043 16,639 43,363

Non-current portion : (3,157) (8,366) (2,305) (6,008)

(16)

13 Cash and cash equivalents

Cash and cash equivalents are dominated in following currencies:

30 June 2013 31 December 2012 USD LTL USD LTL USD 7,325 19,409 6,687 17,427 EUR 959 2,541 1,183 3,083 LTL 185 490 211 550 PLN 32,702 86,646 - -

Total cash and cash equivalents 41,171 109,086 8,081 21,060

14 Share capital

Share capital

As at 30 June 2013 the share capital of the Company and the Group amounted to LTL 43,305,593 (USD 29,448 thousand) and consisted of 43,305,593 ordinary registered shares with a nominal value of LTL 1 each.

Dividends

In 2012 declared dividends were paid on 31 January 2013. 15 Borrowings

30 June 2013 31 December 2012

USD LTL USD LTL

Non-current

Bank borrowings 18,651 49,418 21,427 55,838 Finance lease liabilities 14,868 39,393 13,413 34,957 33,519 88,811 34,840 90,795 Current

Bank borrowings 10,838 28,717 13,807 35,980 Finance lease liabilities 2,582 6,842 2,198 5,728 13,420 35,559 16,005 41,708

Total borrowings 46,939 124,370 50,845 132,503

(17)

17 15 Borrowings (continued)

The weighted average interest rates at the balance sheet date were as follows:

30 June 2013 31 December 2012

Bank borrowings 6,30% 5,67%

Finance lease liabilities 7,80% 8,08%

According to loan agreements with one bank signed in 2012, the Group should maintain certain Debt / EBITDA ratio and the Company should maintain certain Capital ratio (Equity / Assets).

16 Trade and other payables and advances received

30 June 2013 31 December 2012

USD LTL USD LTL

Trade and other payables – financial liabilities

Trade payables 2,680 7,103 198 515

Trade payables to related parties 1,041 2,759 1,033 2,661 Salaries and social security payable, including vacation

accrual 134 354 103 270

Accruals 21 55 26 98

Dividends payable - - 1,972 5,140

3,876 10,271 3,332 8,684

Trade and other payables – non-financial liabilities

Other payables - - 600 1,562

- - 600 1,562

Total trade and other payables 3,876 10,271 3,932 10,246

Advance payments received – non-financial liabilities Advance payments from customers related to acquisition of aircraft

7,025 18,613 - -

7,025 18,613 - -

17 Security deposits received

30 June 2013 31 December 2012

USD LTL USD LTL

Security deposits at nominal value 12,800 33,914 13,150 34,269 Less: discounting effect (1,498) (3,970) (1,630) (4,249)

Security deposits 11,302 29,944 11,520 30,020

(18)

17 Security deposits received (continued)

Security deposits serve as a security by a lessee for the performance of its obligations under the aircraft lease agreements and upon termination of lease lessor is obliged return it to lessee. All of the Group’s security deposits are denominated in USD. Security deposits are not interest-bearing

18 Commitments and contingencies

Capital commitments

Capital expenditure contracted for at the balance sheet date is as follows:

30 June 2013 31 December 2012

USD LTL USD LTL

Aircraft 1,000 2,650 3,188 8,307

1,000 2,650 11,520 30,020

As at 30 June 2013 non cancellable commitments of the Group related to acquisition of aircraft. 19 Related party transactions

The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions.

Related parties included as follows:

 Ultimate parent– ŽIA Valda AB;

 Parent – ŽIA Valda Cyprus Leasing Ltd.;

 Other related parties – other shareholders of the Company, subsidiaries and other related parties of ŽIA Valda AB, associates and jointly controlled entities of the Group; key management of the Group and entities controlled or jointly controlled by key management personnel or their close relatives.

All major transactions and outstanding balances with other related parties relate to associate group of companies of ŽIA Valda AB.

Transactions with related parties:

6 months ended 30 June

2013 2012

USD LTL USD LTL

Sales of services to:

Other related parties 61 160 4,265 11,349

Purchases of assets from:

Other related parties 860 2,262 - -

Purchases of services from:

Other related parties 598 1,573 243 647

(19)

19 19 Related party transactions (continued)

Period-end balances arising from sales/purchase of assets/services:

Trade and other receivables from related parties

30 June 2013 31 December 2012

USD LTL USD LTL

Other related parties 1,051 2,529 3,294 8,374 Trade and other receivables at nominal value 1,051 2,529 3,294 8,374 Less: provision for impairment of receivables from other

related parties (1,048) (2,522) (1,048) (2,522)

3 7 2,246 5,852

Individually impaired receivable relates to the customer that is in bankruptcy proceedings.

Sales of services for the six months ended 30 June 2013 and trade receivables as at 30 June 2013 do not include receivables from Small Planet Airlines UAB and Small Planet Airlines Sp. zo.o., as the companies were sold to their management and as at 30 June 2013 were not related parties to the Company and the Group.

Payables to and prepayments from related parties

30 June 2013 31 December 2012

USD LTL USD LTL

Ultimate parent - - 4 10

Parent - - 1,179 3,072

Other related parties 1,041 2,759 1,822 4,719 Total payables to and prepayments from related parties 1,041 2,759 3,005 7,801

Payables as at 31 June 2013 consist of payables for services and assets purchased. As at 31 December 2012, payables consist of dividends payable for the amount of USD 1,972 thousand (LTL 5,140 thousand) to shareholders. Dividends were paid on 31 January 2013.

Loans granted to other related parties

30 June 2013 31 December 2012

USD LTL USD LTL

Beginning of the period 3,034 7,907 435 1,162

Loans advanced during the period as monetary transactions 127 334 1,887 5,070 Loans advanced during the period by transferring trade

receivables to loans

- - 1,248 3,354 Loan repayments received as monetary transactions (132) (347) (581) (1,561)

Interest charged 36 96 66 178

Interest received (52) (137) (18) (48)

Exchange rate differences - 130 (3) (248)

End of the period 3,013 7,983 3,034 7,907

(20)

19 Related party transactions (continued)

Guarantees from related parties

As at 30 June 2013 Dangiruva AB had guarantees granted in the amount of USD 13,263 (LTL 34,563) to the bank on behalf of the Group for the credits granted to the Group which expire in 2014 - 2015.

20 Events after the balance sheet date

In July 2013 the Group entered into the purchase agreement in respect to acquisition of two Airbus A321 aircraft. The Group entered into the subsequent sale agreement of these aircraft in the same month. The expected delivery of these aircraft is scheduled to occur in October/November 2013.

In July 2013 the Group entered into the Letter of Intent in respect to sale of one Boeing 737-800 aircraft. The expected delivery of the aircraft is scheduled to occur in December 2013.

In July 2013 the Group entered into the purchase agreement in respect to acquisition of one Bombardier CRJ200 aircraft. The expected delivery of the aircraft is scheduled to occur by the end of August 2013.

On 26July 2013 the Group acquired one Boeing 737-500 aircraft.

On 31July 2013 lease of one Boeing 737-300 aircraft expired and the aircraft was redelivered to the possession of the Group.

(21)

21 CONSOLIDATED MANAGEMENT REPORT

I. GENERAL INFORMATION

Reporting period Six month period ended 30 June 2013

Company and its contact details

Name of the Company AviaAM Leasing AB

(hereinafter – “AviaAM Leasing” or “the Company”) Legal form Public company (joint-stock company)

Date of registration 6 April 2009

Name of Register of Legal Entities State Enterprise Centre of Registers Code of enterprise 302330793

Registered office Smolensko St 10, LT-03201 Vilnius, Lithuania Telephone number +370 5 252 55 25

Fax number +370 5 252 55 24

E-mail info@aviaam.com

Web address www.aviaam.com

Main activities

AviaAM Leasing AB is a holding company together with its subsidiaries (referred to as “the Group”) established to acquire, lease and trade commercial aircraft. The Group’s primary focus is on the market for used aircraft, primarily on aircraft ten years of age or older. The Group is principally engaged in purchasing commercial aircraft which the Group, in turn, lease to airlines around the world to generate attractive returns on equity. The Group leases its aircraft to airlines pursuant to net operating (“dry”) leases that require the lessee to pay for maintenance, insurance, taxes and all other aircraft operating expenses during the lease term.

In addition to aircraft operating lease activities, the Group is actively engaged in aircraft trading business through acquiring, refurbishing and subsequent sale of aviation assets. Through long-standing relationships and extensive market knowledge, the Group acquires aircraft from airline operators, other lessors, trading entities, financial institutions and directly from the manufacturers. These acquisitions are made with the intent of subsequent sale of the aircraft either in “as-is” condition or after performing certain technical modifications in order to meet the client’s requirements.

(22)

As at 30 June 2013, the Group consisted of a parent company, AviaAM Leasing AB (registered on 6 April 2009, code 302330793, name of the Register of Legal Entities: State Enterprise Center of Registers; address: Smolensko St 10, LT-03201 Vilnius tel.: +370 5 252 55 25; fax. +370 5 252 55 24; internet address: www.aviaam.com) and its effective subsidiaries:

Name of the company

Date of registration, code, name of Register

of Legal Entities Contact details

Effective holding of the Company (%) AviaAM B01 UAB

Date of acquiring: 4 January 2010 / Company code: 125808161 / Register of Legal Persons

Smolensko str. 10, LT-03201 Vilnius, LITHUANIA, Telephone: +370 5 252 5525 100.00 AviaAM B02 UAB

Date of acquiring: 4 January 2010 / Company code: 300618156 / Register of Legal Persons

Smolensko str. 10, LT-03201 Vilnius, LITHUANIA, Telephone: +370 5 252 5525 100.00 AviaAM B03 UAB

Date of acquiring: 22 January 2010 / Company code: 300887740 / Register of Legal Persons

Smolensko str. 10, LT-03201 Vilnius, LITHUANIA, Telephone: +370 5 252 5525 100.00 AviaAM B04 UAB

Date of establishment: 22 February 2007 / Company code: 300651619 /

Register of Legal Persons

Smolensko str. 10, LT-03201 Vilnius, LITHUANIA, Telephone: +370 5 252 5525 100.00 AviaAM B05 UAB

Date of establishment: 28 June 2011 / Company code: 302642412 /

Register of Legal Persons

Smolensko str. 10, LT-03201 Vilnius, LITHUANIA, Telephone: +370 5 252 5525 100.00 AviaAM B06 UAB

Date of establishment: 15 July 2011 / Company code: 302647509 / Register of Legal Persons

Smolensko str. 10, LT-03201 Vilnius, LITHUANIA, Telephone: +370 5 252 5525 100.00 AviaAM B07 UAB

Date of establishment: 30 September 2011 / Company code: 302671887 /

Register of Legal Persons

Smolensko str. 10, LT-03201 Vilnius, LITHUANIA, Telephone: +370 5 252 5525 100.00 AAL Capital Aircraft Holdings Ltd.

Date of establishment: 29 September 2011 / Company code: HE294651 /

Cyprus Registrar of Companies

Demetriou Karatasou, 15, Anastasio Building, Strovolos, 2024 Nicosia, CYPRUS 100.00 AviaAM Leasing Bermuda Ltd.

Date of establishment: 16 September 2011 / Company code: 45778 /

Registrar of Companies of Bermuda

Clarendon House, 2 Church Street, Hamilton HM 11, BERMUDA

100.00*

AviaAM B08 Ltd.

Date of establishment: 26 April 2013 / Company code: 47627 /

Registrar of Companies of Bermuda

Crawford House, 50 Cedar Avenue, Hamilton HM11, BERMUDA

100.00*

AviaAM B09 Ltd.

Date of establishment: 27 June 2013 / Company code: 47868 /

Registrar of Companies of Bermuda

Crawford House, 50 Cedar Avenue, Hamilton HM 11, BERMUDA

100.00*

* Shareholding through AAL Capital Aircraft Holdings Ltd which owns 100 per cent of the company.

As at 30 June 2013 the Company had no branches

(23)

23 Agreements with intermediaries of public trading in securities

Since 1 August 2011 the Company and Orion Securities UAB FMĮ (code 122033915), A. Tumėno St. 4, LT-01109 Vilnius, have an agreement on accounting of the Company’s securities and services related to the accounting of securities.

II. FINANCIAL AND OPERATIONAL INFORMATION

In six month period ended 30 June 2013 the Group earned net profit of USD 4.4 million (LTL 11.7 million). Comparing with the same period in 2012 the net profit has decreased by USD 3.9 million (LTL 10.6 million) or 46.9%. The decrease in net income is primarily attributable to lower proceeds from sales of aircraft. The revenues from sale of aircraft decreased by 89.8% for the six month period ended 30 June 2013 as compared to the same period in 2012 due to lesser number of aircraft being traded.

Key events during the six month period ended 30 June 2013 are summarized below:

Date Category Event

January 2013 Aircraft acquisition The Group acquired one Bombardier CRJ 200 aircraft.

February 2013 Aircraft lease The Group leased the aforementioned Bombardier CRJ 200 aircraft under long-term operating lease contract.

February 2013 Aircraft lease The Group leased one Boeing 737-300 aircraft after installing engines on the airframe, which was acquired in December 2012. February 2013 Aircraft sale The Group completed the sale of one Boeing B737-300 airframe,

the lease of which expired in November 2012.

March 2013 Aircraft sale The Group entered into the agreement to sell one CFM56-3B2 engine, which was acquired in December 2012 together with Boeing 737-500 aircraft.

May 2013 Aircraft lease The Group leased one Boeing 737-500 aircraft, which was acquired in December 2012.

June 2013 Initial Public Offering The Company completed an Initial Public Offering in Warsaw Stock Exchange on 28 June 2013.

June 2013 Aircraft acquisition The Group entered into the agreement in respect to purchase of one Boeing 737-500 aircraft

June 2013 Aircraft sale The Group entered into the agreement with one of the leading Russian financial institutions in respect to sale of two Bombardier CRJ200 aircraft.

June 2013 Aircraft management The Group entered into servicing agreement with one of the leading Russian financial institutions in relation to providing consultancy and deal structuring services for a sale/lease-back transaction of five Airbus A321 aircraft.

June 2013 Aircraft sale The Group completed the sale of one CFM56-3B2 engine, pursuant to agreement entered in March 2013.

June 2013 Aircraft acquisition The Group entered into the Letter of Intent in respect to purchase of one Boeing 737-800 aircraft.

(24)

Key figures of the Group

Financial figures

6 months ended 30 June

2013 2012

USD LTL USD LTL

Revenue 15,482 40,729 28,674 76,294

Operating profit 7,855 20,664 11,785 31,357

Operating profit margin (%) 50.7% 50.7% 41.1% 41.1%

Profit before income tax 5,234 13,767 9,863 26,241 Net profit for the period 4,449 11,702 8,384 22,305

Net profit for the period margin (%) 28.7% 28.7% 29.2% 29.2%

Earnings per share 0.10 0.27 0.28 0.76

Weighted number of shares 43,306 29,448

Financial ratios

30 June 2013

31 December 2012

Return on equity (ROE)* (%) 7.5% 86.7%

Gearing ratio** (%) 8.8% 65.4%

Equity to total assets ratio*** (%) 44.9% 24.6%

Liquidity ratio**** 2.3 1.2

Number of full-time employees at the end of the period of the Group 14 13 * - Return on equity (ROE) = Net profit for the period / Total equity

** - Gearing ratio = Net debt / (Net debt + Total equity), Net debt = Borrowings – Cash and cash equivalents *** - Equity ratio = Total equity / Total assets

**** - Liquidity ratio = Current assets /Current liabilities

Revenue

6 months ended 30 June

2013 2012

USD LTL USD LTL

Lease revenue 10,947 28,797 10,286 27,368

Supplemental maintenance rent 3,033 7,978 4,588 12,208

Sales of aircraft 1,411 3,713 13,800 36,718

Other income 91 241 - -

15,482 40,729 28,674 76,294

The revenue from aircraft leases (i.e. lease revenue, supplemental rent and other income) accounted for 91% of total revenue in six month period ended 30 June 2013, as for the same period in 2012 the revenue from aircraft leases accounted for 52%.

Increase in lease revenue by 6.4% in the six month period ended 30 June 2013 to USD 10.9 million (LTL 28.8 million) as compared to USD 10.3 million (LTL 27.4 million) in the same period in 2012 mainly resulted from increase in lease rentals due to increase in number of aircraft on lease.

(25)

25 Operating expenses

6 months ended 30 June

2013 2012

USD LTL USD LTL

Depreciation and amortization 4,353 11,451 5,111 13,599

Costs of aircraft sold 264 694 10,619 28,254

Aircraft maintenance expenses 2,328 6,125 1,299 3,457

Employee-related expenses 331 872 289 769

Other operating expenses 637 1,675 510 1,357

7,913 20,817 17,828 47,436

Depreciation and amortization expense decreased by 14.8% in the six month period ended 30 June 2013 to the amount of USD 4.4 million (LTL 11.5 million) as compared to USD 5.1 million (LTL 13.6 million) for the same period in 2012.

Apart from sale of CFM56-3B2 engine, the Group did not execute any significant transactions related to the sales of aircraft in the six month period ended 30 June 2013 as compared to the same period in 2012, which resulted in USD 10.4 million (LTL 27.6 million) or 97.5% decrease in the costs of aircraft sold.

Aircraft maintenance expenses recognized in the statements of comprehensive income represent costs incurred for the maintenance of aircraft off lease and costs expensed in relation to aircraft technical evaluation and inspections prior to purchase. These costs recorded in the six month period ended 30 June 2013 amounted to USD 2.3 million (LTL 6.1 million) in comparison to USD 1.3 million (LTL 3.5 million) in the same period in 2012. Employee related expenses consist of salaries and social insurance expenses. For the six month period ended 30 June these expenses grew from USD 289 thousand (LTL 769 thousand) in 2012 to USD 331 thousand (LTL 872 thousand) in 2013 due to an increase in number of employees in the Group.

The Group categorizes its employees into two groups:

- Management (General Manager, Executive Director and Chief Financier) - Specialists

The Group does not employ unqualified employees due to the specific nature of the business.

The remuneration (Salaries and social insurance expenses) for the management category was USD 191 thousand (LTL 501 thousand) in the six month period ended 30 June 2013 and USD 210 thousand (LTL 558 thousand) in the same period in 2012. The specialist category salaries were USD 140 thousand (LTL 371 thousand) in the six month period ended 30 June 2013 and USD 79 thousand (LTL 211 thousand) in corresponding period in 2012.

(26)

Other operating expenses

6 months ended 30 June

2013 2012

USD LTL USD LTL

Management services 110 290 51 135

Legal and translation expenses 131 345 80 212

Insurance expenses 53 140 11 29

Marketing expenses 78 205 101 269

Travelling expenses 76 200 30 81

Representation expenses 55 145 22 58

Audit and accounting expenses 13 34 12 32

Other administrative expenses 121 316 203 541

637 1,675 510 1,357

The Group outsources some of administrative services if it considers the required competences or scale of services are better provided by contractual arrangements referred to as servicing agreements. The Group has such servicing agreements in place for consulting, sales, utilization of resources, software usage and IT administration with Avia Solutions Group AB. Pricing of such agreements that are driven by hourly rates are subject to transfer pricing documentation scrutiny. The increase of management services from USD 51thousand (LTL 135 thousand) in the six month period ended 30 June 2012 to USD 110 thousand (LTL 290 thousand) in the same period in 2013 resulted from higher reliance on outsourced services.

Legal and translation expenses mainly relate to expenses incurred in preparation and execution of aircraft lease and sale contracts. These expenses increased from the level of USD 80 thousand (LTL 212 thousand) in the six month period ended 30 June 2012 to USD 131 thousand (LTL 345 thousand) in the same period in 2013. The increase in these expenses relates to the expansion of the Group operations.

As the Group leases the aircraft under net operating leases where lessees are responsible for insuring the Group’s fleet the insurance costs incurred by the Company are nominal and mainly relate to contingent insurance coverage purchased by the Group. These insurance expenses have increased in the six month period ended 30 June 2013 to the amount of USD 53 thousand (LTL 140 thousand) in comparison to the same period in 2012 due to higher liability limits being purchased by the Group on a contingent basis.

Marketing expenses have decreased in the six month period ended 30 June 2013 to USD 78 thousand (LTL 205 thousand) as compared to the same period in 2012 USD 101 thousand (LTL 269 thousand) as the Group did not undertake any significant marketing campaigns during the period under review.

Increase in travelling expenses by 153.3% in the six month period ended 30 June 2013 as compared to the same period in 2012 is mainly attributed to stronger sales activities, active client relationship management and exploration of potential markets such as Africa and Asia.

Representation expenses relate to client relationship management. These expenses have increased by USD 33 thousand (LTL 87 thousand) in the six month period ended 30 June 2013 as compared to the same period in 2012. In the six month period ended 30 June 2013 other administrative expenses accounted for 19.0% of all other operating expenses as compared to 39.8% in the same period in 2012.

Balance sheet and cash flow

(27)

27 During the six month period ended 30 June 2013 total liabilities increased by USD 3.7 million (LTL 12.7 million) or 5.3% to USD 73 million (LTL 193.5 million) as compared to USD 69.4 million (LTL 180.8 million) in 2012. A meaningful impact to this change was an increase in advances received by USD 7 million (LTL 18.6 million). In the six month period ended 30 June 2013 net cash flow generated from operating activities was higher by USD 8.4 million (LTL 21.8 million) as compared to the same period in 2012.

Major changes in net cash used in investing activities resulted from prepayments for property plant and equipment which amounted to USD 3.7 million (LTL 9.6 million) for the six month period ended 30 June 2013. In the six month period ended 30 June 2013 net cash flow generated from financing activities was positive and amounted to USD 23.6 million (LTL 61.9 million).

Information about related party transactions

The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions.

Related parties include the following:

 Ultimate parent– ŽIA Valda AB;

 Parent – ZIA Valda Cyprus Leasing Ltd.;

 Other related parties – other shareholders of the Company, subsidiaries and other related parties of ŽIA Valda AB, associates and jointly controlled entities of the Group; key management of the Group and entities controlled or jointly controlled by key management personnel or their close relatives.

All major transactions and outstanding balances with other related parties relate to associate group of companies of ŽIA Valda AB.

Transactions with related parties

6 months ended 30 June

2013 2012

USD LTL USD LTL

Sales of services to:

Other related parties 61 160 4,265 11,349

In the six month period ended 30 June 2012 most material sales of services were performed to subsidiaries of Avia Solutions Group AB operating in charter operations business and where related to aircraft leasing. Avia Solutions Group sold its stakes in these subsidiaries to the management of these companies in March 2013. Following the sale these companies ceased to be a related party to the Company and the Group.

6 months ended 30 June

2013 2012

USD LTL USD LTL

Purchases of assets from:

Other related parties 860 2,262 - -

Purchases of services from:

Other related parties 598 1,573 243 647

(28)

Investments related to continuing operations

The Group has not made any significant investments related to continuing operations in the six month period ended 30 June 2013.

Research and development activities

There were no major research and development projects undertaken during the six month period ended 30 June 2013.

Environmental protection

In its activities, the Company uses all available means and the modern technological processes that meet all ecological standards and help reduce the negative impact on the environment.

Risk management

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk), credit risk, liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group.

Risk management is carried out by the General Manager. The General Manager identifies and evaluates financial risks in close co-operation with the Chief Financier. The General Manager provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investing excess liquidity.

The Group operates internationally and is exposed to foreign exchange risk arising from the Group’s exposure to different currencies other than its functional currency (primarily to LTL and EUR). Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the Group’s functional currency.

Foreign exchange risk is controlled by entering into most contracts in the functional currency (USD) and monitoring exposures to other currencies.

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and loans granted.

Credit risks are controlled by the application of credit terms and monitoring procedures. Group procedures are in force to ensure that services are sold only to customers with an appropriate credit history and do not exceed acceptable credit exposure limit. Cash transactions are limited to high credit quality financial institutions.

Risk of credit concentration is determined by the Group in relation to industry in which Group debtors operate. Concentration of credit risk of the Group arises from loans granted and receivables from related parties, trade receivables. Only material credit risk concentration is with debtors operating in aviation business.

Liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Liquidity risk is managed by the General Manager, who is required to maintain a minimum required liquidity position.

(29)

29 The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the

Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt.

Significant post balance sheet events

In July 2013 the Group entered into the purchase agreement in respect to acquisition of two Airbus A321 aircraft. The Group entered into the subsequent sale agreement of these aircraft in the same month. The expected delivery of these aircraft is scheduled to occur in October/November 2013.

In July 2013 the Group entered into the Letter of Intent in respect to sale of one Boeing 737-800 aircraft. The expected delivery of the aircraft is scheduled to occur in December 2013.

In July 2013 the Group entered into the purchase agreement in respect to acquisition of one Bombardier CRJ200 aircraft. The expected delivery of the aircraft is scheduled to occur by the end of August 2013.

On 26July 2013 the Group acquired one Boeing 737-500 aircraft.

On 31July 2013 lease of one Boeing 737-300 aircraft expired and the aircraft was redelivered to the possession of the Group.

On 9 August 2013 the Group acquired one Bombardier CRJ200 aircraft. Plans and forecasts

The Management of the Company intends to follow a disciplined approach to future aircraft acquisitions, seeking to create a portfolio of aircraft in the niche markets for used, midlife to end-of-life (generally, ten years of age or older) narrowbody jet and regional aircraft . To execute this strategy, the Group will focus on the following:

- Generating higher yields: the Management of the Company believes the aforementioned target assets typically have higher lease rates relative to their purchase price (i.e. as the lease rate factor) than newer aircraft, thus allowing the Company and the Group to generate attractive, cash-on-cash yields;

- Identifying transactions that are not widely marketed: through the management’s relationships with aircraft lessors, financial investors and brokers, the Group expects to have access to transactions that are not widely marketed;

- Strategically acquiring attractive assets during market weakness: while the Group intends to be active in the aircraft leasing market throughout market cycles, the Group will seek to take advantage of the cyclicality in the aviation industry by opportunistically acquiring selected aircraft (such as narrowbody jet aircraft that currently are trading near cyclical lows) during market downturns;

- Providing for flexible resales and part-out: the Group expects to employ a flexible divestment strategy to allow to sell assets when the market cycle makes asset sales most advantageous;

(30)

Acquisitions of additional aircraft will be pursued through the co-operation with aircraft operators, manufacturers, financial institutions, private investors and third party lessors.

III. INFORMATION ABOUT SHARE CAPITAL AND SHAREHOLDERS

Share capital

As at 30 June 2013 the share capital of the Company amounted to LTL 43,305,593 and consisted of 43,305,593 ordinary registered shares with a nominal value of LTL 1 each. The Company completed an Initial Public Offering (the “IPO”) in Warsaw Stock Exchange on 28 June 2013 by issuing 13,857,790 new shares in addition to existing 29,447,803 shares and selling 160,964 existing shares owned by Mr. Gediminas Ziemelis.

Data about securities traded on regulated market

On 28th June 2013 shares of the Company were introduced to trading at Warsaw Stock Exchange code (AAL) Type of shares Number of shares Nominal value

in LTL

Total nominal value in LTL

ISIN

Ordinary registered shares 43,305,593 1 43,305,593 LT0000128555 Securities of the Company’s subsidiaries are not traded publicly.

Shareholders

The shareholders’ structure of the Company as at 30 June 2013 was as follows::

Name Company code and address Number

of shares

%

ZIA Valda Cyprus Leasing Limited Company code: HE 284966

Address: Avlonos 1, Maria House 5th fl, CY1075 Nicosia, Cyprus

17,078,622 39.44

Mesotania Holdings Limited Company code: HE 280922

Address: Avlonos 1, Maria House 5th fl, CY1075 Nicosia, Cyprus 10,899,858 25.17 Linas Dovydėnas - 441,717 1.02 Aurimas Sanikovas - 294,478 0.68 Gediminas Žiemelis - 162,962 0.38 Tadas Goberis - 147,239 0.34

ING Otwarty Fundusz Emerytalny (Open pension fund)

Company code: NIP 526-22-41-523

Address: ul. Topiel 12; 00-342 Warsaw, Poland

5,000,000 11.54

Other shareholders - 9,280,717 21.43

(31)

31 Shares owned by the Management of the Company

The number of shares owned by the Management of the Company, members of the Management Board and Supervisory council is listed in the table below:

Name Role in the Company’s Management Number of shares %

Linas Dovydėnas Member of the Management Board 441,717 1.02 Aurimas Sanikovas Member of the Management Board 294,478 0.68 Gediminas Žiemelis Chairman of the Management Board 162,962 0.38 Tadas Goberis General Manager of the Company 147,239 0.34

Total 1,046,396 2.42

Treasury stocks

Neither the Company nor its subsidiaries have had any treasury stocks.

Till the balance sheet date neither the Company nor its subsidiaries have ever acquired any shares from the Management of the Company.

Shareholders’ rights

None of the shareholders of the Company have any special controlling rights. Rights of all shareholders are equal. The Company is aware of the following agreements between the shareholders that could limit transfer of securities and/or their ability to exercise their voting rights which are described in detail below.

Pursuant to the Lock Up Agreement concluded with inter alia the Company and all the shareholders of the Company as of effective day 16 May 2013, except Gediminas Žiemelis, the shareholders agreed for the period of 12 months from the first day of listing of the shares on the WSE not to dispose of the shares of the Company or conclude any transaction whose economic effect would be similar to the effect of selling the Company’s stock without a prior written consent of the ING Securities S.A. In addition the shareholders, except Gediminas Žiemelis, undertook with the ING Securities S.A. that, within the period of 12 months from the first day of listing of the shares on the WSE, they will not propose, vote in favour of or otherwise support, without the prior written consent of ING Securities S.A., any increase of the Company's share capital and/or the conclusion of any transaction of which the economic effect would be similar to the effect of causing the Company to issue such instruments.

Furthermore, according to the Share Sale-Purchase Agreements, whereby the minority shareholders Linas Dovydėnas, Aurimas Sanikovas, Virginija Svilainytė and Tadas Goberis acquired shares of the Company from Mesotania Holdings Ltd. and from Zia Valda Cyprus Leasing Ltd. the following major arrangements with respect to lock-up and transfer of shares of the Company are established: during the non-trading period, which lasts for a term of 1 year as from entering into the respective agreement or for a term of 1 year after the date of the offering, whichever occurs later (in case of Tadas Goberis the respective term is 2 years), the indicated minority shareholders undertook (i) not to transfer, sell or otherwise dispose all or any part of the shares to any third parties (save for, respectively, Mesotania Holdings Ltd. and ZIA Valda Cyprus Leasing Ltd. repurchase rights), (ii) not to assign or pledge any rights, title or interest to the shares to anyone than, respectively, Mesotania Holdings Ltd. and ZIA Valda Cyprus Leasing Ltd., as well as (iii) not to create or cause permit to be created any encumbrance on the shares or any part thereof.

Dividends

(32)

IV. PERSONNEL

The breakdown of the number of employees of the Group and average salaries (including social insurance expenses) by categories in 30 June 2013:

Number of employees Average monthly salary USD LTL Management 5 6.4 16.7 Specialists 9 2.6 6.9

Number of employees at the end of the period and weighted average monthly salary

14 3.9 10.4

V. MANAGING BODIES OF THE COMPANY

The Company has a three-tier management system, i.e. the Supervisory Council, the Management Board and the Manager of the Company (the General Manager).

The Supervisory Council is a collegial supervisory body, which is responsible for supervising the activities of the Company and its management bodies, the appointment and removal of the members of the Management Board, submitting its comments and proposals to the General Meeting on the Company’s operating strategy, sets of financial statements, drafts of profit/loss appropriation, the reports of the Company, the activities of the Management Board and the General Manager, submitting proposals to revoke decisions of the Management Board or the General Manager, etc.

The Management Board is a collegial management body, which is responsible for the strategic management of the Company, the appointment and removal of the Manager of the Company (the General Manager), calling the General Meetings, adoption of other corporate decisions which are economically feasible for the Company, etc. The General Manager is responsible for the day-to-day management of the Company and enjoys the exclusive right of representing the Company vis-à-vis third parties.

In addition, the Company employs several Key Executives: the Deputy General Manager and the Executive Director. As the Company is a holding entity with no extensive business operations, there are no other key executives apart from the General Manager and the ones named herein. All the employees of the Company are directly subordinated and report to the General Manager.

Procedure for amending the Company's Articles of Association

AviaAM Leasing AB Articles of Association provides that present Articles of Association of the Company may be amended in the manner prescribed by the Lithuanian Company Law.

The Supervisory Council activities

According to the Articles of Association the Supervisory Council is comprised of three members elected for the tenure of four years.

References

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