Investor Report 1 July 2012 – 30 June 2013

1 Angel Trains Investor Report – 1 July 2011 to 30 June 2012

1 GENERAL OVERVIEW

In the 12 months ending 30 June 2013 Angel Trains (the “Group”) secured an increase in EBITDA of £19.6m over the previous corresponding period, £111.4m of debt was repaid and Standard & Poor’s affirmed the Group’s credit rating as BBB/Stable.

The rail industry’s franchise renewal process began during 2012 with the tendering of the West Coast Mainline franchise, but, following the initial award of the franchise by the Department for Transport (“DfT”) to First Group and a subsequent legal challenge by the losing incumbent, , the competition was cancelled. After an investigation into the failings of the process, the DfT entered into a new short-term franchise agreement with Virgin Trains until 9 November 2014, although there is a provision to reduce this term after 1 May 2014. The entire Angel Trains Class 390 fleet on lease to Virgin Trains was extended at the existing rentals until the end of this short-term franchise (this fleet is also covered by a Section 54 agreement until 31 March 2022).

The problems with the West Coast franchise led to three other refranchising competitions (Essex Thameside, Greater Western and Thameslink/Southern/Great Northern) being put on hold while an investigation into the suitability of the franchise process itself was carried out. These franchises subsequently became subject to short-term interim franchise arrangements prior to the long-term franchises being let. More detail on the investigations launched by the Secretary of State for Transport and the revised refranchising timetable can be found in section 3.1.

The above will lead to a protracted period of intense re-franchising activity (including both short-term extensions and new franchises) until 2019, during which most of the Group’s assets (91.3%) will be due for re-lease. However, a significant proportion (c.35%) of the Group’s capital rent is protected by Section 54 agreements until 2019, with a further proportion continuing beyond that up to 2024.

The percentage of assets on lease at the end of the period remained at a significantly high level, with 98.8% of the fleet on lease.

The Long Term Rolling Stock Strategy for the rail industry was published in February 2013. The report was produced by a group comprising Angel Trains and the other ROSCOs, the Association of Train Operating Companies (“ATOC”) and . The 30-year strategy anticipates considerable growth in the national fleet size from 12,692 to 21,624 vehicles, with an increase in the proportion of electric trains. It assumes that the national fleet will be made up of a combination of new and existing trains, which will need to be life extended. This view supports a significant new build pipeline whilst also endorsing the value for money associated with Continuous Service. For Angel Trains, this strategy provides confidence in the underlying demand for rolling stock and the long-term sustainability of the ROSCO market.

2 Angel Trains Investor Report – 1 July 2012 to 30 June 2013

2 SIGNIFICANT BUSINESS DEVELOPMENTS

2.1 New significant business developments for the 12 months ending 30 June 2013

New Trains

The new build project for 106 additional Class 390s Pendolino vehicles (built by Alstom) was completed on budget and ahead of schedule. In total, 42 new vehicles were delivered during the 12 month period and placed on lease with a Section 54 agreement until 2022.

The build phase of the project for 80 new Siemens Class 350 vehicles for Midland and TransPennine Express (“TPE”), (signed in February 2012 with a capital value of £133m), is progressing as planned and remains on target for the first vehicles to be delivered at the beginning of 2014.

Oracle systems implementation

New group-wide systems were implemented successfully in March 2013. An Oracle system was installed and, at the same time, the Group’s existing asset management system was modified, updated and integrated.

2.2 Re-leasing activity and current fleet utilization

As at 30 June 2013 Angel Trains owned 4,536 rolling stock vehicles, with a fleet utilisation of 98.8%.

There was no distinct re-leasing activity during the period but the following leases were extended on existing or improved terms as the result of short-term franchise awards;

• 574 Class 390 vehicles with Virgin Rail extended with the franchise for 23 months until November 2014. This fleet has a section 54 undertaking until March 2022 • 112 Class 357/2 vehicles with Rail extended with the franchise for 16 months until 14 September 2014

New build assets delivered during the 12 months ending 30 June 2013 were as follows;

• 42 Class 390 vehicles on lease to Virgin Rail (with a section 54 agreement until March 2022)

During the period 24 Class 508 vehicles, which were beyond the end of their useful economic life and were in poor condition having been off-lease for some time, were disposed of.

3 Angel Trains Investor Report – 1 July 2012 to 30 June 2013

The following table summarises the Angel Trains’ fleet by lease counterparty:

Fleet by Lease Counterparties FRANCHISE FRANCHISE TOTAL REMAINING VEHICLES (F) / OPEN TOC OWNER VEHICLES LEASE TERM LEASED ACCESS (OA) plc1 4.87% Arriva Trains Wales/Trenau Arriva Cymru Ltd 153 Oct-18 3.37% F Grand Central Railway Company Limited 49 Dec-16 1.08% OA XC Trains Limited 19 Mar-16 0.42% F Central Government 2.62% East Coast Mainline Company Limited 119 Nov-13 2.62% F DB Schenker 1 8.33% Chiltern Railway Co. 97 Dec-21 2.14% F DB Schenker Rail (UK) 281 Oct-15 6.19% F First Group plc 18.87% First Capital Connect Limited 48 Sep-13 1.06% F Hull Trains Company Limited 20 Dec-14 0.44% OA First Greater Western Limited 628 Mar-13 13.84% F First ScotRail Limited 160 Nov-14 3.53% F Govia (Go-Ahead plc 65% / Keolis 35%) 11.74% London & Birmingham Railway Limited 126 Nov-13 2.78% F London & South Eastern Limited 286 Apr-14 6.31% F Southern Railway Limited 120 Jul-14 2.65% F MTR / DB Schenker 1 0.35% London Overground Rail Operations 16 Nov-14 0.35% F Group 2.47% C2C Rail Limited 112 Sept-14 2.47% F Serco / Abellio 19.69% Northern Rail Limited 428 Mar-14 9.44% F Merseyside Passenger Transport Services Ltd 177 Mar-15 3.90% F Abellio Greater Anglia Ltd 288 Jul-14 6.35% F 17.18% Limited 46 Mar-15 1.01% F Western Trains Ltd 733 Jan-14 16.17% F (Virgin 51% / Stagecoach 49%) 12.65% Virgin West Coast Trains 574 Nov-14 12.65% F Off lease 1.23% Off Lease 56 1.23% Grand Total 4,536 100.00%

2.3 Significant Board/Management changes for the 12 months ending 30 June 2013

Dame Professor Julia King, who is a Fellow of the Royal Academy of Engineering and a leading academic with substantial cross-industry experience, became a non-executive director of Angel Trains Group Limited on 1 July 2012. Dame Julia replaced Allan Sefton, who retired at the end of June 2012, having held the position since January 2006.

1 Subsidiaries of Deutsche Bahn AG

4 Angel Trains Investor Report – 1 July 2012 to 30 June 2013

The Group is also pleased to report that Sir David Rowlands, who became non-executive Chairman of Angel Trains Group Limited in January 2010, agreed to extend his appointment for a further three years until December 2015.

In addition, the following changes occurred amongst the shareholder representative directors within the Group companies:

• Adam Petrie replaced Dylan Foo (13 November 2012) • Stephen Burns replaced Kieren Boesenberg (30 June 2013)

3 REGULATORY / GOVERNMENTAL DEVELOPMENTS

3.1 Significant announcements/publications by any regulator or relevant government department for the 12 months ending 30 June 2013

The Secretary of State for Transport (“SoS”) initiated two investigations following the failed West Coast refranchising process (see section 1). The first (the Laidlaw Inquiry) examined the failed West Coast franchise competition specifically and the second (the Brown Review) considered any lessons to be learned for the future franchising programme. The Laidlaw Inquiry findings, published in December 2012, found process and structural failings within the DfT. The Brown Review was published in January 2013. Angel Trains, having been asked to do so, contributed to the Brown Review.

Following the publication of the above reports, a revised refranchising programme covering the next eight years was published by the SoS on 26 March 2013. This timetable includes a series of franchise extensions and/or directly awarded franchises (i.e. without a competitive tendering process) with existing operators until new long term franchises can be put in place. The table below summarises these extensions and direct awards:

Franchise Original Expiry New Expiry Date Duration of short- Date term arrangement Essex Thameside May 2013 September 2014 16 months East Coast February 2015 February 2015 N/A Northern April 2014 February 2016 22 months Trans-Pennine Express April 2015 February 2016 10 months Great Western October 2013 July 2016 33 months (management contract) Greater Anglia July 2014 October 2016 27 months West Coast November 2014* April 2017 29 months London Midland September 2015 June 2017 21 months East Midlands April 2015 October 2017 30 months South Eastern April 2014 June 2018 50 months February 2017 April 2019 26 months Cross Country April 2016 November 2019 43 months *West Coast franchise already extended, see 2.2

The impact of the above announcements on Angel Trains is broadly beneficial, particularly for the DMU portfolio, which will now have later lease expiry dates.

5 Angel Trains Investor Report – 1 July 2012 to 30 June 2013

The term of each of the new long term franchises is yet to be announced and will be determined by the circumstances and size of each franchise. It is expected that the majority will have an initial term of seven to ten years, with a pre-contracted continuation term of between three and five years, subject to agreed criteria being met by the operator.

4 CAPITAL EXPENDITURE

4.1 Material matters of capital expenditure including future commitments made during the relevant period

During the period the Group made capital expenditure payments of £48.1m, all of which were funded using internal cash resources:

• Stage payments of £32.2m were made, comprising payments totalling £32.0m for 42 Class 390 vehicles delivered during the period, and a small down-payment of £0.2m towards the 80 new Class 350 vehicles.

• The remaining £15.9m relates to several enhancement and refurbishment projects including: modification of top speed on 120 Class 350 vehicles with London Midland; pre-series trial re-traction and interior refurbishment of an off-lease Class 317/7; and Hydraulic Bush and Global System for mobile communications modifications for Class 450/444 vehicles with South West Trains.

The Group had total capital commitments of £108.6m as at 30 June 2013:

• £83.2m represents the remaining payments for the new Class 350 Desiro vehicles, to be fully delivered by September 2014.

• The remaining £25.4 relates to various enhancement and refurbishment projects, including £15.0m for PRM (Persons of Reduced Mobility) modifications for Class 165 and 166 units with First Great Western and Chiltern.

6 Angel Trains Investor Report – 1 July 2012 to 30 June 2013

5 FINANCING

5.1 Total debt outstanding at 30 June 2013

Total Debt Outstanding £ Facility Balance Maturity Debt Facility Group Entity Outstanding* Limit Date Facility A The Great Rolling Stock Company PLC 292,500,000 292,500,000 Apr-16 Facility B The Great Rolling Stock Company PLC 390,000,000 390,000,000 Apr-18 Facility C The Great Rolling Stock Company PLC 0 146,250,000 Apr-16 EDC Loan Locomotive Operating Leasing Partnership 29,703,482 29,703,482 Oct-15 Junior Debt Willow Holdco 1 Limited 200,000,000 200,000,000 Jun-16 10-yr Bullet Bond The Great Rolling Stock Company PLC 300,000,000 300,000,000 Jul-20 25-yr Amortising Bond The Great Rolling Stock Company PLC 500,000,000 500,000,000 Jul-35 20-yr Amortising Bond The Great Rolling Stock Company PLC 400,000,000 400,000,000 Apr-31 Grand Total 2,112,203,482 2,258,453,482 * Gross of capitalised fees

5.2 Debt structure: June 2012 v June 2013

June 2012 Debt Structure June 2013 Debt Structure Total Debt = £2,224m Total Debt = £2,112m

Junior Junior EDC Loan £200m EDC Loan £200m

£49m Facility C £75m £30m Facility B Facility B £390m £400m

Facility A Facility A £292m £300m

2031 6.500% 2031 6.500% Amortising Bond Amortising Bond £400m £400m

2020 6.250% Bullet 2020 6.250% Bullet Bond Bond £300m £300m

2035 6.875% 2035 6.875% Amortising Bond Amortising Bond £500m £500m

7 Angel Trains Investor Report – 1 July 2012 to 30 June 2013

6 HISTORICAL FINANCIAL PERFORMANCE AND RATIOS

6.1 Update on financial performance for the period including ratios

EBITDA for the period, the Group’s key measure, was £370.9m. This was below the budget target2 by £0.3m but was a 5.6% increase on the previous 12 months’ results. Turnover for the period was £474.4m (2012: £446.6m). Staff and overhead costs continued to be tightly managed and were £0.6m below budget at £20.1m (2012: £19.0m).

The Group’s debt at 30 June 2013 was £2,112m, compared to £2,224m at 30 June 2012. The reduction included scheduled debt repayments of £36.4m. The remaining repayments relate to voluntary repayments to the revolving credit facility (Facility C) which is used to manage internal cash balances. All senior floating rate debt and foreign exchange exposures were hedged.

The Senior Interest Cover ratio for the 12 months ending 30 June 2013 was 2.3, compared to the financial covenant requirement of at least 1.5:1.

The Leverage ratio for the 12 months ending 30 June 2013 was 5.1, compared to the financial covenant requirement of no greater than 8.5:1.

6.2 Credit ratings

Standard & Poor’s (“S&P”) issued two credit reports on Willow Bidco Limited, the Group’s holding company for senior debt purposes, during the period on 21 September 2012 and 26 March 2013. Both reports affirmed the Group’s credit rating as BBB/Stable. S&P made reference to the Group’s “excellent business risk profile” and “strong and stable profitability that comes from long-term leasing arrangements”.

7 OTHER MATTERS

7.1 Other financial and business matters

In the second half of 2012 Angel Trains embarked on a corporate restructuring exercise to streamline the number of entities in the Group. Six dormant/non-trading companies were dissolved and the ownership of Angel Leasing Company Limited and Angel Trains Consulting Limited was moved within the Group. In advance of their strike-off and dissolution, Train Finance 1 Limited, Angel Finance Holding Limited and West Coast Train Finance Limited were released as Guarantors under the Note Trust Deed, as notified to Noteholders on 25 September 2012.

2 The budget target refers to the relevant six month periods as set out in the 2012 and 2013 budgets (which were distributed in January 2012 and January 2013 respectively). 8 Angel Trains Investor Report – 1 July 2012 to 30 June 2013

The Group undertook its annual employee survey in October 2012, returning a fantastic 97.3% response rate. The survey results were again favourable, with an overall “engagement rating” of 81.3% (2011: 83%) compared to the national benchmark of 63% (2011: 69%).

An update to the Offering Circular was published on 12 June 2013.

Angel Trains, 28 August 2013

9 Angel Trains Investor Report – 1 July 2012 to 30 June 2013