Advent Air Limited Skywest Airlines Pty Ltd Limited Air Advent 510 Thomson Road Domestic Terminal, Annual Report 2007 #12-04 SLF Building Western Australia 6105 Singapore 298135 Ph: 61 8 9478 9999 Ph: 65 6252 2077 Fax: 61 8 9478 9928

Fax: 65 6252 5158 Bookings: 1300 66 00 88 2007 Report Annual www.advent.com.sg www.skywest.com.au | ANNUAL REPORT 2007

Sand dunes at Wylie Bay, east of Esperance Corporate Directory Cover: Near the Cockburn Range, on El Questro Station

Directors Robert Jeffries Chatfield (Executive Chairman) Seah Kian Peng (Non-executive Director) John Leonard Jost (Non-executive Director) Ron Aitkenhead (Non-executive Director)

Business Address Stockbroker UK Registrars 510 Thomson Road W H Ireland Ltd Computershare Investor Services PLC #12-04 SLF Building Attn Philip Haydn-Slater PO Box 82, The Pavilions Singapore 298 135 5th Floor Bristol BS99 7NH 24 Martin Lane London EC4R 0DR United Kingdom Company Secretaries United Kingdom Siobhan Mary Cool Singapore Registrars Han Kee Fong Australian Solicitors Compact Administrative Services Pte Ltd Loh Chuen Thim Herbert Geer & Rundle 3 Anson Road Registered Office 385 Bourke Street #27-01 Springleaf Tower VIC 3000 Singapore 079909 510 Thomson Road Australia #12-04 SLF Building Bankers Singapore 298 135 UK Solicitors Citibank N.A National Corporate Group Nominated Adviser Trowers & Hamlins 3 Temasek Avenue WH Ireland Limited Sceptre Court #17-00 Centennial Tower Corporate Broking 40 Tower Hill Singapore 039190 24 Martin Lane London EC4R 0DR London EC3N 4DX United Kingdom United Kingdom Auditors Jasmine Chua & Associates 371 Beach Road #05-01 Keypoint Singapore 199597 Contents

Report from Chairman 2

Highlights 4

Group Structure 5

Directors 7

Share Price Performance 8

Dividends Global Payments Service 8

Senior Management 10

Skywest Operations 12

Western Australian Mining industry 20

2007 Financial Statements 22

 | ANNUAL REPORT 2007

Skywest fleet at Perth airport

Chairman’s Statement 2006 – 2007 Financial Year

group after a successful mop-up Change of Name takeover offer with all remaining minority The takeover of the remaining shares in shareholders bought out. As at the date Skywest Ltd by the Group is considered of this announcement, the Group owns to be successful with all companies now 7 aircraft, with 12 in operation in total. 100% owned. In view of the growth of The Company estimates that the aircraft contribution in terms of profits for the operated and owned within the group group booked by Skywest Airlines and have a useful life which will amount to pursuant to the approval granted by 11 to 14 years of use. Safety is a major shareholders on the 15th of May 2006 The Company announces the completion priority and Skywest has been managing a the directors have taken steps to change of a satisfactory year in which we managed Change Management Program. the name of the Company to “Skywest to achieve continuing improvements in Airlines Ltd”. The Company results were negatively operating performance along with an impacted by certain issues including increased profit margin. Group revenues Pursuant to this process the name increased corporation tax and fuel price for the year increased to S$130 million of the Company has been changed increases. The Company has utilized the compared to S$98 million in the last year. to “Skywest Airlines Ltd” with effect majority of the carry forward historical EBITDAR increased to S$26.6 million. from 20th November 2007. tax losses from the years before Skywest Profit before tax increased to S$12.6 Effective the 20th of November 2007, was under Company control. The taxes million, net group profit attributable to the the new trading symbol for the payable have increased to $4.77 million, shareholders of the Company was S$7.1 Company will be SKYW. this is a dramatic increase as in the prior million, an increase over the S$4 million in year the taxes were $1.078m. Fuel costs Capital Management the prior year. The Company is proposing have continued to increase and remain a The Company has enjoyed a strong balance further capital management initiatives concern. The experience of the Company sheet, with net cash and ownership of 7 including share buybacks and other indicates that hedging of fuel purchases aircraft along with low borrowings. With a measures to better utilize the strength of has some mitigating influence in delaying view to capital management and increasing its currently under-leveraged balance sheet. increases as does the Fuel Levy imposed shareholder value the Company has been Consolidated earnings per share increased on ticket sales. Another area of concern buying back shares for cancellation. The to 3.61 cents per share. is that the airline employees entitlements Company repurchased and cancelled The Company intends to declare a second including various vacation and leave approximately 6.8 million shares during and final dividend for FY2007 representing provisions continue to increase faster than the year. The Company will seek at the a final payment of 1.8 cents per share, the the employees appear able to utilize them, AGM shareholder approval to continue this payment of this final dividend is subject a parameter which is becoming a concern process. to shareholder approval at the AGM. to Directors and one which shall receive Avation PLC Spin Off The payment timing will be announced appropriate attention in the current period. pursuant to the AGM notice. Skywest has in place Enterprise Bargaining The Company paid as a dividend all of the ordinary shares in Avation PLC to its Results for this financial year improved Agreements with its Engineers and Pilots shareholders in a 1: 10 distribution. Avation across several measures including yield, which have lead in recent years to a stable PLC was listed on Plus Markets in London revenue and profit increases, passenger workforce. The Company and subsidiaries during the financial year. number increases and revenue seat is undergoing an on-going recruitment passenger kilometers. The Group now program for more pilots, engineers and Existing shareholders were rewarded with a includes 100% of the Skywest Airlines flight attendants. quoted share as a further dividend.

 As at the date of this report the shares Core Market Outlook This strategy has increased the scheduled in Avation PLC were quoted at 71 pence charter revenue from a low base in 2003 The Company’s airline revenues are per share. The result of the creation of to approximately $45 million in FY07. The expected to continue to grow on the Avation PLC included that Skywest has an Company seeks to service its clients with Skywest traditional routes including accommodating leasing company related to a reliable, on time and safe air services. Albany, Esperance, Geraldton, Carnarvon, it which seeks to service Skywest ongoing The Company has been successful in and Exmouth. Skywest continues to seek needs. This arrangement may be useful as providing services to Argyle Diamonds, opportunities for growth and in particular and when Skywest Airlines expands. It is BHP Billiton, Rio Tinto, Fortescue Metals is focusing on securing additional charter the directors’ opinion that airlines prefer Group, Macmahon, Portman Iron Ore, business as result of opportunities to lease some or all of their fleet for two Barminco and Newmont. To facilitate this presenting from the robust mining and main reasons: leasing provides operational strategy the Company has leased more resource industry in Western Australia. leverage so as to give an airline flexible F100 jets and made certain improvements The Company believes that activity within access to more aircraft and also that there in scheduling and operations so as to the mining and resource sectors remain is a lowering of the ownership risk to improve its on time performance. Bidding the key driver for increased passenger shareholders. This ownership risk relates for more scheduled charters, on time numbers. Skywest is in the process of to the concept that the valuations of performance and the safety management announcing new routes and additional airlines are correlated strongly to the resale systems will remain key areas of frequencies including routes such as values of the planes themselves. Airlines management attention in the coming year. Kalgoorlie – Melbourne. Skywest recently are a cyclical industry and spinning off Skywest is pleased that it recently achieved was entered into the Western Australian the ownership risk associated with some a 3 year roll-over of its Air Operators Tourism Hall of Fame after winning a of the aircraft fleet lowers the overall risk Certificate, prior to this year 2 years was major Tourism Award in 3 consecutive to the shareholders of the airline in any the typical extension granted by the years. Tourism remains a key interest to future downturn in airline or aircraft market Aviation Regulator CASA. the Company and we seek to expand conditions. our tourism related services. Skywest The Company shortly will have Skywest’s Exclusive Sole has joined the VirginBlue Velocity loyalty available a set of accounts audited Operating Rights program so as to seek to improve its under IFRS. Interested persons can view these on the Company website Skywest is the operator of services on appeal to travelers and tourists. The group or may request a hard copy by the coastal network of Western Australia has increasing focus on ancillary revenue contacting the Company. Copies of the under an exclusive right granted by the sources such as that which result from annual report will be available on the Government of Western Australia for partnerships with Avis, Wotif and Mondial company website at www.advent.com. a term of 3 years commencing January Insurance. Other recent initiatives include 2006, with an option for a further 2- a carbon offset program in the form of sg, and at the offices of the Company. year extension. This exclusive right now the SkyGreen initiative. The Company is represents approximately 50% of the continuing with its A320 project. Company’s passenger numbers. The Western Australian economy is strong Fuel which is being lead by an expanding R J (Jeff) Chatfield resources sector. A strategy of the Executive Chairman, Fuel continues to be a concern. Skywest Company is that we seek to obtain long London this 14th of November 2007 maintains a fuel levy on its ticket sales, term scheduled charter contracts with the which is reviewed and adjusted from time major mining companies operating in the to time by the management. Northern Territory and Western Australia.

 | ANNUAL REPORT 2007

2007 Highlights

• Revenues increased to $130m up from $98m the prior year; • Group EBITDAR increased to $26.6m up from $17.85m the prior year with the pre-tax profits increasing to $12.7m up from $5.7m in the prior year; • Group Net Profit after Tax increased to $7.966m up from $3.9m the prior year notwithstanding tax charges of $4.77m; • Final Dividend payment for the year of 1.8 cents per share; • Company considers further share buybacks and other capital management initiatives; • Improvements in operating performance and profit margin; and • Company to be renamed Skywest Airlines Ltd effective 20th November 2007 with new code on AIM to be SKYW.

The results for the full year ended 30 June 2007 based on the Audited Financial Statements (as audited under Singapore Financial Reporting Standards) as reported are as follows along with an equivalent in Pounds Sterling: Consolidated Audited GBP Equivalent* 12 months ended 30 June 2007 In Singapore dollars In GBP Revenue from ordinary activities 130,485,459 43,639,557 EBITDAR 26,656,540 8,915,013 (earnings before interest, tax, depreciation and aircraft rental) Net Profit after income tax 7,966,082 2,664,176 Profit attributable to shareholders 7,178,222 2,664,176 Earnings Per Share 3.61 cents 1.21 pence Second and Final Dividend per share 1.8 cents 0.602 pence Dividend Payout Ratio 1.33 1.33

Notes:

(i) As at the date of this report Skywest Ltd (since renamed A.C.N. 098 904 262 Pty Ltd) is now a 100% wholly owned subsidiary. The Company results are audited under Singapore Financial Reporting Standards (‘SFRS’) and are required to be reported to shareholders. The Company’s principal operating subsidiary Skywest Ltd and Skywest Airlines Pty Ltd are audited by KPMG under Australian International Financial Reporting Standards. Under the AIM Rules, the Company is required to publish by 31 December 2007 Annual Audited Accounts prepared in accordance with certain specified Accounting Standards, which in the Company’s case will be International Accounting Standards (‘IFRS’). The Company will therefore be preparing Accounts audited to IFRS shortly. Shareholders should note that the Accounts under SFRS state ‘that the adoption of IFRS did not result in substantial changes to the Group’s accounting policies’ and these accounts are in accordance with Singapore company law being sent to shareholders and will also be available from the Company’s registered office: 510 Thomson Road, #12-04 SLF Building, Singapore 298 135 and on the Company’s website: www.advent.com.sg. Any material changes in the Audited Accounts under IFRS will be announced on RNS in due course.

(ii) In this announcement the applicable exchange rate between GBP and SGD at the average exchange rate of 0.33444 which was used in the presentation of the accounts. This exchange rate will be used for the payment of the proposed final dividend.

 Group Structure

ADVENT AIR LTD

to be renamed Skywest Airlines Ltd

all subsidiaries 100% owned

Address: 510 Thomson Road #12-04 SLF Building Singapore 298135

Date of Incorporation: Singapore, 19 Dec 1997

CAPTIVEVISION CAPITAL LTD

Address: 510 Thomson Road #12-04 SLF Building Singapore 298135

Date of Incorporation: 30 March 2001

A.C. N. 098 904 262 PTY LTD

name changed effective 13 April 2007 (formerly known as Skywest Pty Ltd) (formerly known as Skywest Ltd)

Date of Incorporation: Western Australia, 12 December 2001

SKYWEST AIRLINES PTY LTD SKYWEST AIRLINES (S) PTE LTD 200503045K

Address: Address: Level 1, Domestic Terminal, Miller Road, 510 Thomson Road, #12-04 SLF Building Perth Airport Western Australia Singapore 298135

Date of Incorporation: Date of Incorporation: Western Australia, 21 Sept 1981 8 March 2005

 | ANNUAL REPORT 2007 Advent Air Limited Board of Directors

Seah Kian Peng John Jost Non Executive Director NON Executive Director Mr Seah Kian Peng is the Managing Mr Jost worked as a journalist after Director (Singapore) of NTUC Fairprice graduating from the University of Co-operative Limited and the Chairman Melbourne Law School. During his media of NTUC Media Co-operative. NTUC career he was chief political correspondent Fairprice is a leading retailer in Singapore of The Age, publications and new projects - it has a chain of over 200 supermarkets manager for David Syme Ltd, and later Jeff Chatfield and convenience stores with a combined a founding presenter of ABC-TV’s 7.30 EXECUTIVE CHAIRMAN OF THE GROUP turnover of about $1.5 billion and a staff Report. In 1994, Mr Jost formed Bass Mr Chatfield is the Executive Chairman strength of over 5,000 staff. He sits on Media which established an AM-FM of Advent Air Ltd and the Managing various boards of the NTUC group as well radio network that is now part of the Director of CaptiveVision Capital Ltd (an as some public companies. He is also Macquarie Bank Radio Trust. He was a investment company wholly owned by the the Chairman of Singapore National Co- founder investor of the Company. Company) which is the sole shareholder of operatives Federation [SNCF] and a board Ron Aitkenhead the Skywest Airlines subsidiaries. He has member of the International Co-operative Non Executive Director held director level and senior management Alliance. He also holds the position of Mr Aitkenhead is a member of the responsibilities for companies in various Vice President of the Singapore Compact Company’s Audit Committee and for Corporate Social Responsibility and is industries with locations as diverse as Nomination Committee. He has significant a board member of Centre for Fathering. New York, Amsterdam, Sao Paulo Brazil, public sector experience as Chairman of Mr Seah has worked in both the public Singapore, Perth and Melbourne. Mr the Fremantle Port and as Chairman of the and private sectors and also serves in Chatfield’s past experience includes Board of the Central Wheatbelt Business many public and community organisations. the foundation of a global television Enterprise Centre. Mr Aitkenhead’s He completed his tertiary education in qualifications include membership as a advertising service, and the making of Sydney, Australia and has also attended Graduate and Fellow of the Institute of substantial investments on behalf of the Advanced Management Programme in the Company Directors (Australia) and public companies. He has managed and Harvard Business School. In May 2006, Mr he is registered as a Justice of the Peace closed a variety of capital raisings, an IPO, Seah was elected and became a Member with the Western Australian Department strategic advisory, public equity issues and of Parliament of the Republic of Singapore. of Justice. He has also held committee secondary offerings. Mr Chatfield holds positions with several community and a BE and MESc from the University of sporting organizations in Western Western Australia. Australia.

 | ANNUAL REPORT 2007

Advent Air Share Price Performance (November 2006 - November 2007)

AAIR Source: London Stock Exchange

15p

14p

13p

12p

Dec 2006 Mar 2007 Jun 2007 Sep 2007

Capital Management Program The company maintains a capital management program with a purpose of increasing the asset value per share and a high return on equity. The company may from time to time, subject to shareholder approvals, buy back its own shares or issue new shares.

Dividends Global Payments Service

Through its UK share registry, Computershare, the company’s shareholders who are already registered with Computershare may wish to use the Global Payments Service to receive dividends direct to their nominated bank account in the local currency of their country.

Shareholders registered with Computershare wishing to use the new service will be able to register and request a foreign payment online by visiting the Computershare Investor Centre at:

www-uk.computershare.com/Investor

or alternatively shareholders can contact Computershare to request a paper registration form to be sent to them.

 DARwIN

BALI

kUNUNURRA

ARGYLE

BROOME

PORT HEDLAND

GRANITES

EXMOUTH F0 Routes NEwMAN F00 Routes

CARNARVON

MONkEY MIA (Shark Bay)

w E S T E R N kALBARRI AUSTRALIA GERALDTON kALGOORLIE/ BOULDER MELBOURNE*

PERTH

ESPERANCE

ALBANY 

*commencing November 2007 | ANNUAL REPORT 2007

Skywest Senior Management Team

Hugh Davin Paul Daff Karen Haynes ManagING DIRECTOR Chief Executive Officer Chief FINANCIAL Officer Hugh joined Skywest in January 2007 as Paul joined Skywest in February 2007 as Karen joined Skywest Airlines in June 2007 Head of Business Development, prior to acting Chief Financial Officer, and was as Chief Financial Officer. being appointed Managing Director in appointed Chief Executive Officer in April With over 13 years experience in April of this year. Hugh holds ultimate of this year. Prior to moving to Perth he accounting and business services, Karen responsibility for all aspects of the was Head of Commercial for Asia started her career in the mining industry company’s activities including maintenance Airways & Valuair, based in Singapore. working for WesTrac Equipment before of the Air Operators Certificate (AOC). With over 12 years experience in both the moving to Schlumberger Oilfields Australia With a career in aviation that spans 37 low cost and full service airline industry, he where she held the position of Finance years, he has held senior management has worked in various commercial roles for Centre Manager for the Australia/New positions with National Jet Systems and both and Ansett International. He Zealand region. Most recently she held Skywest previously. Hugh was previously was also a key figure in the establishment a senior finance position at Murdoch a Director for both Skywest and National of the regional online travel portal, Zuji, University. Jet Systems. based in Singapore. Karen holds a Bachelor of Business Paul holds a Bachelor of Economics from majoring in Accounting from Curtin Monash University (Melbourne) and a University and is a member of CPA Masters in Business Administration from Australia. Macquarie University (Sydney). In addition,

Paul is a member of the Institute of Chartered Accountants in Australia.

10 Mike Hoar Andrew Rostron Eric Rose GROUP CHIEF OPERATING OFFICER GENERAL MANAGER SAFETY, Chief Pilot Mike joined Skywest Airlines in October COMPLIANCE AND QUALITY Eric joined Skywest in 1974, when it was 2003 as Manager, Business Development, ASSURANCE known as Trans West Airlines. He currently prior to assuming the role of Chief Andrew joined Skywest Airlines in 1999, holds the position of Chief Pilot. Commercial Officer in July 2005. He and is currently Head of Airworthiness and Eric’s aviation career commenced in the was then appointed General Manager Maintenance Control, responsible under Civil UK in 1967 when he joined the Royal Air – Commercial in August 2006, and then Aviation Regulation 42ZV for all airworthiness Force as a pilot. On migrating to Australia Group Chief Operating Officer in April matters relating to Skywest’s aircraft. In this in 1973, he joined Trans West Airlines 2007. His career in aviation spans more role, he is also the accountable manager and (now Skywest Airlines). than 25 years and he has held senior interfaces with the Civil Aviation Safety In his time at Skywest he has been a management positions with Pearl Aviation, Authority (CASA) on all regulatory matters, Check and Training Captain, Simulator and Skywest previously. which have a direct effect on the engineering Check Captain, F50 Fleet Manager, Most recently he held the position of Sales business within the airline. Head of Training and Checking, and was and Marketing Manager for Australia and With over 30 years experience in the aviation appointed to the Chief Pilot position in South East Asia with Pearl Aviation. industry, Andrew has extensive experience early 2005. Eric has over 18,200 flying in Airworthiness, Quality and Safety. hours experience. In May 2003, Andrew was appointed to Eric has a National Medal for Fire Fighting the Aviation Safety Forum Board (3 year and was a finalist for Western Australian term). This Board provides regulatory Citizen of the Year 2000. advice to the Federal Minister for Transport and liaises with the Senior Executive of the Civil Aviation Safety Authority on a variety of issues, which have an affect on the safety of Australian aviation in general.

11 | ANNUAL REPORT 2007

The Skywest jet fleet, expanding to 5 in Nov 2007

Skywest Operations

Passenger Services As part of its regular passenger service, Skywest flies to 14 destinations right across Western Australia and the Northern Territory, with over 220 flights every week. In conjunction with Island Bound Holidays, Skywest also flies from Broome and Port Hedland to a Bali once a week. With the view of consolidation and future growth, Skywest is continually examining opportunities to expand our destination Background Skywest Airlines was originally formed as network. The award winning Skywest Airlines has Carnarvon Air Taxi’s in 1964. The journey been meeting the transport needs of over the past four decades has seen it Western Australians for more than 44 develop from humble beginnings, through years. It is one of Australia’s largest, oldest to incorporation as part of Ansett, to and most successful regional airlines. It is a ultimately becoming a subsidiary of Advent Western Australian institution. Air Ltd, which trades on the London Stock Exchange’s AIM. Each year, Skywest flies more than 350,000 passengers across Western Skywest Business Australia and the Northern Territory, Skywest’s core business is to provide covering 14 destinations and providing an scheduled passenger services within essential link for regional communities, regional Western Australia and Darwin, tourists and businesses. The airline in the Northern Territory. The airline also caters for regional Western Australians, provides both regular and ad hoc charters international and domestic tourists; for customers, with a focus on providing corporate travellers and fly-in-fly-out value added services not available to miners. regular charter operators. The company also operates in the air freight market.

12 Charter Services The resources boom in Western Australia has lead to significant opportunities for Skywest has significant capacity to provide Skywest to grow its fly-in-fly-out contract regular and ad hoc charter services work. There are over $80 billion in for organisations with ‘fly-in, fly-out’ resource projects planned or underway in requirements. With a fleet of Fokker 50’s the state of Western Australia. Many of (holding 46 passengers) and Fokker 100 Jets these projects will involve contract charter (holding 100 passengers), Skywest can cater flying to supply the mines/projects with for the needs of its corporate customers. human resources. Destinations and flight scheduling can be In addition to new charter contracts, tailored to suit, with operations into un- expansion of existing contracts continues, sealed runways possible with Fokker 50 as many of the resource projects move aircraft. Skywest Website from planning/exploration to construction The Skywest Website offers extensive Air Freight to eventual production phases. information on travelling with Skywest, Skywest operates an air freight solution Skywest is continuing to grow its existing live flight information, along with 24- to all destinations in conjunction with our routes through additional frequencies. In 7 booking engine access. Currently freight partner, Australian Air Express. 2007, Skywest added significant capacity approximately 20% of direct airline Freight needs for pathology, hospitals, and frequency to Exmouth, Geraldton, bookings are made through the Skywest vehicle and boat repair, perishables and Esperance and Albany. In addition, website. live seafood are all possible, providing a Skywest has a long term objective to Skywest Holidays valuable service to regional communities. replace all Fokker 50 services on Exmouth Skywest Holidays is the packaged and Kalgoorlie with jets. This in turn will Growth Opportunities holiday division of Skywest. Day to day The key growth opportunities for the free up additional Fokker 50 time to be operations are outsourced through a business continue to be: further used to expand services on the commercial agreement between Skywest Coastal Network. Additional frequencies • increased resource charter contracts; and major tourism provider Great are also planned for Bali, Broome and Port • increased services and frequency to Aussie Holidays. Skywest Holidays offers Hedland in 2008. existing routes; competitive holiday packages anywhere • increased load factors and yield on Continual focus on optimization of in Western Australia and the Northern existing routes; revenue through load factors and yield Territory. Skywest Holidays packages • growth of existing routes into larger jet remains a priority for Skywest. Increased offer airfare, accommodation and car hire operations; asset utilization is also critically important combinations. With a sales distribution • new routes (eg: Kalgoorlie to for ongoing success of the business. of 30,000 annually, Skywest Holidays Melbourne); and New routes are being considered, showcases these packages, providing a • working our assets harder. including the launch of Kalgoorlie to unique exposure opportunity for many Melbourne services in November 2007. local tourism operators.

13 | ANNUAL REPORT 2007

Fokker F-100 cockpit

Interline Agreements The service also links Exmouth directly with Ad Hoc Charter Skywest has interline agreements in place Broome and Darwin. The aircraft charter market is a thriving

with Hahn Air, Air New Zealand, Qantas In January 2006, Skywest commenced segment within the aviation industry that and Singapore Airlines. services into Monkey Mia and Kalbarri, presents a significant growth opportunity for Skywest Airlines. Skywest Airlines is able These agreements allow international increasing the seat capacity into both ports. to utilise resources that exist in support of travellers to book their intrastate travel In the first seven months of operation the airline’s RPT network to compete in with Skywest through their international Skywest increased visitation by 36.6% in this sector. The charter work supplements carrier or overseas agent. This also means Monkey Mia and 156% in Kalbarri. Skywest Airlines core RPT operation. that Skywest’s international airline partners can streamline the booking process for Charter Markets This segment is particularly relevant in the traveller by providing one point of Regular Charter Western Australia where the mining and booking. The result is an easier reservation Skywest Airlines commenced jet operations resource sector represents approximately system for the traveller, which in itself between Perth and Argyle in November of 60% of the State’s total exports. encourages further regional dispersal for 2002. In the face of intense competition, Future opportunities exist within Western international tourists visiting WA. Skywest Airlines secured a three year Australia in support of the mining industry, charter contract with Rio Tinto to provide which typically employs a fly-in, fly- air transport for the Argyle Diamond out workforce. Significant fly-in-fly-out Mine fly in, fly out work force. The contracts are tendered on a regular basis, Argyle contract utilises the Fokker 100. providing Skywest the opportunity at The charter market in Western Australia renewal to submit to the tender process is relatively large with over 3,300 seats and the potential to secure additional offered per week on regular charter regular charter contract business. operations. In early 2002, Skywest Airlines had 3% of this market, with National Jet The Skywest Airlines fleet offers attractive Systems, Skippers Aviation and QantasLink charter options for aircraft with 46 to 100 the major players who held collectively 67% seats. Operations into un-sealed runways of the market. With the commencement are possible with the Fokker 50 aircraft. Infrastructure Development of the Argyle Diamond Mine service, This is often a requirement in Western Skywest recognises the potential for Skywest Airlines share grew to around Australia where operations to unsealed growth in the total Western Australian 11%, however, the Company believes strips are common. there is substantial potential for growth tourism market, and particularly the Additional to the mining resources in this sector, utilising both the Fokker 100 Ningaloo Reef area. Skywest now flies sector, charter opportunities arise from and Fokker 50 aircraft. jet services to Exmouth, upgrading from government, conventions, sporting and the 46 seat turbo-prop. The launch of jet Other major charter clients include FMG, corporate events. services has increased capacity into the Barminco, Macmahon, BHP, region and reduced flying time from Perth. Newmont and Portman.

14 Air Operators Certificate staff at all levels to work cooperatively The voluntary offset contributions are towards common goals. based on Skywest’s estimate of carbon Skywest Airlines holds a high capacity emissions based on the length of the Air Operators Certificate that allows Flexible staff agreements allow for sector flown, average fuel burn and the Company to operate regular public the introduction of change, through passenger loads. transport services domestically and negotiation, for variation of working International charter operations through conditions. The consultative mechanism The program enables travellers the option out the world. The certificate is valid for includes management, staff, union of offsetting carbon emissions without Fokker 50 and Fokker 100 operations delegates and representatives. imposing a compulsory environmental tax. and covers the complete operation and maintenance of the fleets.

Velocity Rewards Program Hall of Fame Award On 1st November 2007, Skywest Airlines On Saturday the third of November 2007 joined Virgin Blues loyalty program Skywest Airlines was inducted into the Velocity. Western Australia Tourism industry Hall Skywest passengers now have the of Fame. This award reflects the value opportunity to earn Velocity Points for and recognizes the excellent service every mile flown on qualifying Skywest Skywest provides to the people of Western flights. Velocity has over 1 million Australia. The prestigious Hall of Fame was Employee Relations members in Australia and New Zealand. awarded after Skywest won the ‘Major Tour and Transport Operator’ category Skywest Airlines has dedicated, three years running from 2004 to 2006. professional staff who are focused on SkyGreen providing a strong return to shareholders while maintaining a safe, reliable operation SkyGreen and outstanding service to our customers. On 17th October 2007, Skywest launched its voluntary carbon offset program called As at the end of June 2007, the SkyGreen. This allows Skywest customers Company had a total of 279 full time to make their own financial contribution equivalent employees as well as 14 to offsetting the environmental impact part time and 19 casual staff. of their flight. SkyGreen is supported by The Company maintains a philosophy Carbon Neutral. of open and inclusive discussion with

15 | ANNUAL REPORT 2007

Fleet Structure Skywest Airlines fleet includes seven Fokker 50 turbo-prop aircraft and five Fokker 100 jets. A further Fokker 100 will be utilised by the end of March 2008. The Company continually reviews its utilisation of aircraft and explores opportunities for expansion of its fleet.

Utilisation of the fleet and total flying hours is forecast to grow over the current year. The in-flight services provided on the Fokker 50 Dimensions Fokker 50 Aircraft Fokker 50’s are of a standard comparable & Specifications: The Fokker 50 aircraft is configured with to that of much larger jet aircraft. Overall Length 25.19m 46 seats for Skywest Airlines operations, Span 29.0m The aircraft are ideally suited to WA ensuring a high level of comfort including Maximum Takeoff Weight 20,820kg operating conditions offering a fast, air-conditioning, ample cabin baggage Basic Operating Weight 13,650kg efficient and comfortable service, with the space, extended seat pitch (extra leg-room) Maximum Payload 4,950kg best payload/range characteristics in its and full in-flight catering facilities. class. Maximum Usable Fuel 4,050 kg The Company estimates the unit cost (cents Cargo Compartment Capacity (Total) 1,315kg The high-winged design is also well suited per ASK – “Available Seat Kilometre”) at Maximum Cruise Speed 260 kts (468kph) to gravel runways in the more remote 19.7 c/ASK for the Fokker 50 fleet. Maximum Range 2750 Kms locations. The Fokker 50 fleet has recently been Skywest is undertaking an extensive re-equipped with the latest operational interior refurbishment of the entire F-50 and safety related technology. Enhanced fleet, which will enhance the customer Ground Proximity Warning Systems experience and service already offered and have been installed in all aircraft and maximise the current asset value. Global Positioning System Non-Precision

General Characteristics: Approach (GPS-NPA) capability has been developed. The Company is also planning Two Pratt & Whitney PW 125B turboprop to equip all aircraft with the latest air engines delivering 2500 SHP each. traffic management systems once the Dowty Rotol six bladed propellers, Government establishes the ADS-B featuring auto feathering, reversible pitch Skywest aircraft maintenance network. and constant speed type.

16 Fokker F-100 VH-FNR departing Broome WA

Fokker 100 Aircraft The Fokker 100 is a modern jet aircraft that has all the features expected in an aircraft of this class. Maximum economical cruise speed is 760 km/h, and with an unrestricted climb its maximum cruise altitude is 35,000 feet. The Fokker 100 also has the smallest noise footprint of any jet aircraft in its class and can operate to most sealed airports without the need for major modifications to the local infrastructure. General Characteristics The Fokker 100 fleet is programmed The Company estimates the unit cost of its • Two Rolls-Royce Tay engines, 6,849kg for an enhancement of air traffic Fokker 100 aircraft at 9.5 cents/ASK, when thrust each with thrust reversal. management equipment once the the costs of the third aircraft are excluded. • Dual Channel Automatic Flight Control Government introduces the ADS-B Adding extra seats and reducing seat pitch and Augmentation System (AFCAS). network and all aircraft will be equipped to that equivalent of other Australian • Electronic Flight Instrument System (EFIS). with cargo hold fire suppression systems. airlines would further reduce this unit cost. • Multi Function Display System (MFDS). Work is also being undertaken with The low unit cost of Skywest’s Fokker • Flight Management System (FMS). the manufacturer to develop GPS-NPA 100’s make them an ideal aircraft to • Flight Warning System (FWS). capability for the fleet. The cargo hold fire • Fail Operative Cat.IIIB auto-land with operate on regional WA routes. suppression system upgrade is funded via rollout guidance. the lease structure and the other systems Fokker 100 Dimensions will be funded as part of the normal & Specifications: capital works program. Overall Length 35.53m Span 28.08m Maximum Takeoff Weight 45,813kg Maximum Zero Fuel Weight 36,741kg Basic Operating Weight 26,143kg Maximum Payload 10,598kg Maximum Usable Fuel 13,405ltr Maximum Operating Altitude 10,667m (35,000ft) Maximum Cruising Speed 462kts (856km/hr) Maximum Range 3500 Kms

17 | ANNUAL REPORT 2007

The accreditation has helped enormously with the compliance toward system based audits used by the Civil Aviation Safety Authority (CASA) in checking High Capacity operations.

The elements of the standard are based on having a Certificate of Approval and around Civil Aviation Regulation 30.

Along with having a good quality system, it is important that there is a very robust internal review process that supports the system. Skywest has audit programs set up in the Engineering, Flight Operations It is planned in the future to roll out this and the Ground Operations departments accreditation to all operational parts of to provide the Skywest Board and our business and with the new CASA management with regular reviews on legislation soon to be introduced to the the compliance of each department to Fokker 100 plane tail. industry, the quality and safety systems policy and procedures. These audits have are seen as focal points in the future extended to encompass major suppliers Engineering and Maintenance growth of the business. Sound Safety who provide repair and overhaul services Skywest’s Engineering department carries Management is now what drives the for aircraft components and ground out all maintenance on the Fokker 50 and business to stay ahead of the minimum handling contracting staff to maintain Fokker 100 fleet with the exception of legislation requirements. the standard of the quality system away components overhaul and certain heavy The Skywest Board has a dedicated safety, from the main facility. In this way risk is (“C”) maintenance checks. “C” checks security and environment committee that mitigated as far as possible by constantly are contracted externally using Skywest’s oversees the direction of safety and quality doing a “health check” on the operational own system of maintenance. within the organisation and realises that parts of the business. adequate resources must be provided Quality Assurance Systems in these areas in order for the company Skywest’s Engineering department is quality to maintain the very high reputation for accredited to AS/NZS ISO9001:2000. This safety which it currently enjoys. occurred in November 2003 when the previous standard AS/NZS ISO9002:1994 was superseded. This accreditation was awarded to the Engineering Department as far back as November 1999.

18 19 | ANNUAL REPORT 2007

Western Australian Mining Industry

The company is also aggressively targeting new opportunities as they arise and the beginning of the Kalgoolie-Melbourne service in late November will also develop a further opportunity.

In addition to new charter contracts, expansion of existing contracts continues, as many of the resource projects move from planning/exploration to construction to eventual production phases.

The Western Australian mining resource The North West Shelf natural gas venture sector is the largest and most diversified is Australia’s largest resource project resource industry in Australia and is with investment in onshore and offshore estimated to be worth over $80 billion oil and gas facilities totalling more than in trade for Australia. Continuing rapid A$20 billion. The venture accounts for industrial growth in the developing more than 40% of Australia’s oil and gas economies of China and India is ensuring production and is a major producer of strong and continued demand for Western liquefied natural gas (LNG), natural gas, Australia’s raw materials. The state is well liquid petroleum gas (LPG), condensate placed geographically and resource rich and crude oil. to continue to supply this demand for The current resources boom in generations to come. Western Australia has led to significant Western Australia extracts up to 75% of opportunities for Skywest to grow its Australia’s 240 tonnes of gold per annum. fly-in-fly-out contract work. There are over $80 billion in resource projects still 95% of Australia’s iron ore occurs in planned or underway in the state. Many of Western Australia, and Australia is the these projects will involve contract charter world’s largest exporter of the mineral. flying to supply the mines/projects with About 99% of Australia’s nickel is human resources. produced in Western Australia which Skywest presently conducts regular supplies about 13% of the world’s nickel contracted charter services on behalf of production. The state produces 140,000 Rio Tinto, Argyle Diamonds, BHP Billiton, tonnes per annum which is valued at Newmont, McMahon, Avoca Resources, A$1.0 billion. Barminco and Portman Iron Ore.

20

| ANNUAL REPORT 2007

Annual Financial Report

ADVENT AIR LIMITED COMPANY REGISTRATION NO.: 1997-08548-K Annual Financial Report For the year ended 30 June 2007

Aerial view of Lake Argyle, near Kununurra 22 Contents

Page No.

Report of the Directors 24

Statement by Directors 27

Auditors’ Report 28

Balance Sheets 30

Income Statements 31

Statement of Changes in Equity 32

Consolidated Cash Flow Statement 34

Notes to the Financial Statements 36

23 | AND ITS SUBSIDIARIES

Report of the Directors

The directors are pleased to present their report to the members together with the audited consolidated financial statements of the Group for the financial year ended 30 June 2007 and the balance sheet, income statement and statement of changes in equity of the Company as at 30 June 2007.

DIRECTORS The directors of the Company in office at the date of this report are:

• Robert Jeffries Chatfield

• Seah Kian Peng

• John Leonard Jost

• Ronald Lewis Aitkenhead (Appointed on 23 April 2007)

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES Except as described in paragraph 5 below, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose object is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

DIRECTORS’ INTERESTS IN SHARES AND DEBEBTURES The directors of the Company holding office at the end of the financial year and their interests in the share capital of the Company and in related corporations (other than wholly-owned subsidiaries) as recorded in the register of directors’ shareholdings kept under Section 164 of the Singapore Companies Act, Chapter 50 were as follows: Shareholdings registered Shareholdings in which Directors in the name of Directors are deemed to have an interest

At beginning At beginning Name of Directors and corporation of year / date of of year / date of in which interests are held appointment At end of year appointment At end of year

The Company Number of ordinary shares

Robert Jeffries Chatfield - - 25,600,000 26,700,000

Seah Kian Peng 986,377 1,186,377 - -

John Leonard Jost 27,250 27,250 3,473,743 3,475,412

Ronald Lewis Aitkenhead - - - - (Appointed on 23 April 2007)

24 Report of the Directors (ctd.)

DIRECTORS’ INTERESTS IN SHARES AND DEBEBTURES (ctd.) Shareholdings registered Shareholdings in which Directors in the name of Directors are deemed to have an interest

At beginning At beginning Name of Directors and corporation of year / date of of year / date of in which interests are held appointment At end of year appointment At end of year

The Company Number of warrants to subscribe for ordinary shares

Robert Jeffries Chatfield 6,601,475 10,601,475 - -

Seah Kian Peng 200,000 400,000 - -

John Leonard Jost - 800,000 - -

Ronald Lewis Aitkenhead - - - - (Appointed in 23 April 2007)

By virtue of Section 7 of the Singapore Companies Act, Cap 50, Robert Jeffries Chatfield is deemed to have an interest in the shares held by the Company in its subsidiaries.

Directors’ contractual benefits Except as disclosed in the financial statements, since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, Chapter 50, by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a Company in which he has a substantial financial interest. Certain directors received remuneration from related corporations in their capacity as directors and/or executives of those related corporations.

Share options The Company has two share options schemes as follows: (a) The Employees’ Share Option scheme was approved by the members of the Company on 8 June 2000 and is administrated by the Board of Directors at the following terms and conditions: The exercise price for the option ranges between S$0.20 to S$0.50 per share. The expiry dates of the options ranges from 3 months to 4 years after the admission to the Alternate Investment Market of London Stock Exchange (“AIM”). (b) The current Warrant Scheme was authorized by the members of the Company on 15 May 2006 and is administrated by the Remuneration Committee at the following terms and conditions set out in the warrants: (i) the subscription price per share is the average of the closing mid-price as announced by the AIM of the London Stock Exchange on the first 10 business days after 22 November 2006 which is priced at GBP0.11625; and (ii) the warrant shall be exercisable in whole or in part at any time till 21 November 2007 subject to extension if the expiry date falls within a market black-out period. At the expiry of the warrant, all unexercised warrants shall lapse, null and void.

25 | AND ITS SUBSIDIARIES

Report of the Directors (ctd.)

Share options (ctd.) Under both schemes, options to subscribe for 16,521,475 unissued shares in the Company were outstanding as at 30 June 2007:

Number of shares covered by the options Balance at beginning of year or later Balance at Date of grant date of grant Expired Exercised end of year Exercise price Expiry date 20/4/2004 250,000 250,000 - - Min S$0.30 20/4/2007 29/3/2004 400,000 - 400,000 - Min S$0.30 29/3/2007 29/3/2004 3,500,000 3,500,000 - - Min S$0.30 12/9/2006 29/3/2004 250,000 250,000 - - Min S$0.30 30/11/2006 29/3/2004 250,000 250,000 - - Min S$0.30 1/12/2006 12/12/2005 2,000,000 - - 2,000,000 GBP0.20 29/11/2007 12/12/2005 6,601,475 - - 6,601,475 S$0.20 29/11/2009 12/12/2005 125,000 125,000 - - GBP0.20 29/11/2006 15/5/2006 2,000,000 - - 2,000,000 GBP0.0969 16/9/2007 6/6/2006 500,000 500,000 - - GBP0.11 to 0.20 31/12/2006 22/11/2006 5,920,000 - - 5,920,000 GBP0.11625 21/11/2007

Details of warrants granted to the Directors of the Company have been disclosed in the Directors’ interests in shares and debentures.

With the exception of the options referred to above, during the financial year, there were: (a) no options granted by the Company or its subsidiary companies to any person to take up unissued shares of the Company and its subsidiaries; (b) no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries; (c) no unissued shares of the Company or its subsidiaries under option.

Auditors Messrs Jasmine Chua & Associates have expressed their willingness to accept re-appointment as auditors.

on behalf of the board of directors,

ROBERT JEFFRIES CHATFIELD Director

John leonard jost Director Singapore, 14 November 2007

26 Statement by Directors

The directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

In the opinion of the directors:

(i) the accompanying balance sheets, income statements, statement of changes in equity and consolidated cash flow statements together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2007, and of the results of the Group and of the Company and changes in equity of the Group and of the Company and cash flow of the Group for the financial year ended on that date, and (ii) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised the financial statements for issue. on behalf of the board of directors,

ROBERT JEFFRIES CHATFIELD Director

John leonard jost Director Singapore, 14 November 2007

27 | AND ITS SUBSIDIARIES

Auditors’ Report

We have audited the accompanying financial statements of the Advent Air Ltd. (the Company) and its subsidiaries (the Group), which comprise the balance sheets of the Group and of the Company as at 30 June 2007, and the income statements, statement of changes in equity of the Group and of the Company and cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory notes. Directors’ Responsibility for the Financial Statements The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

28 Opinion In our opinion, (a) the consolidated financial statements of the Group and the balance sheets, income statement and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company as at 30 June 2007 and of the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the financial year ended on that date; and (b) the accounting and other records required by the Act to be kept by the Company and by those subsidiary companies incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

JASMINE CHUA & ASSOCIATES Certified Public Accountants

Singapore, 14 November 2007 | AND ITS SUBSIDIARIES

Balance Sheets as at 30 June 2007

Note Group Company 2007 2006 2007 2006 S$ S$ S$ S$ ASSETS Non-current assets Property, plant & equipment 3 42,616,763 29,981,443 11,940 12,744 Subsidiary 4 - - 13,054,799 13,054,799 Intangible assets 5 17,278,267 9,710,276 - - 59,895,030 39,691,719 13,066,739 13,067,543 Current assets Available-for-sale financial assets 6 1,144,071 26,598 - - Inventories 7 1,213,360 1,023,708 - - Trade receivables 8 12,321,944 5,373,692 - - Other receivables 9 3,485,581 3,474,172 29,139,101 15,124,749 Cash & cash equivalents 14,528,864 24,543,185 5,473,141 14,518,593 32,693,820 34,441,355 34,612,242 29,643,342 TOTAL ASSETS 92,588,850 74,133,074 47,678,981 42,710,885 EQUITY AND LIABILITIES Equity Share capital 10 43,049,248 41,167,116 43,049,248 41,167,116 Assets revaluation reserve 625 625 625 625 Currency translation reserve 2,439,541 42,027 - - Accumulated profits 2,028,860 (3,433,132) 4,295,294 1,088,862 47,518,274 37,776,636 47,345,167 42,256,603 Minority interest - 7,786,026 - - 47,518,274 45,562,662 47,345,167 42,256,603 Non-current liabilities Borrowings 11 5,295,481 - - - Deferred tax liabilities 12 3,607,110 984,629 - - Provisions 13 86,653 169,221 - - 8,989,244 1,153,850 - - Current liabilities Trade payables 14 6,528,429 10,733,074 - - Other payables 15 21,704,558 12,517,815 333,814 454,282 Borrowings 11 - 86,517 - - Provisions 13 5,327,552 3,803,701 - - Income tax payable 2,520,793 275,455 - - 36,081,332 27,416,562 333,814 454,282 TOTAL EQUITY AND LIABILITIES 92,588,850 74,133,074 47,678,981 42,710,885

The annexed notes form an integral part of and should be read in conjunction with these financial statements.

30 Income Statements for the Financial Year ended 30 June 2007

Note Group Company 2007 2006 2007 2006 S$ S$ S$ S$ Revenue 16 130,485,459 98,948,644 6,491,390 6,338,579

Cost of sales (63,492,515) (51,333,293) - (271,204)

Gross profit 66,992,944 47,615,351 6,491,390 6,067,375

Other income 17 1,160,884 4,730,458 289,840 484,252

Administrative expenses (41,271,278) (33,926,136) (1,850,891) (821,395)

Other expenses (13,913,146) (12,165,975) (7,677) (11,828)

Finance costs 18 (273,095) (456,701) - (15,144)

Profit before income tax 19 12,696,309 5,796,997 4,922,662 5,703,260

Income tax expense 20 (4,730,227) (1,078,288) - -

Profit for the financial year 7,966,082 4,718,709 4,922,662 5,703,260

Attributable to:

Equity holders of the Parent/Company 7,178,222 3,968,687 4,922,662 5,703,260

Minority interests 787,860 750,022 - -

7,966,082 4,718,709 4,922,662 5,703,260

The annexed notes form an integral part of and should be read in conjunction with these financial statements.

31 | AND ITS SUBSIDIARIES

Statement of Changes in Equity for the Financial Year ended 30 June 2007

Total Foreign attributable Assets currency to equity Share Share revaluation translation Accumulated holders of Minority capital premium reserve reserve Profits parent interest Total equity S$ S$ S$ S$ S$ S$ S$ S$ Group

Balance at 30 June 2005 14,320,414 15,654,105 625 705,336 (16,722,786) 13,957,694 8,955,988 22,913,682

Changes in equity Effect of Companies Amendment Act 2005 3,890,413 (3,890,413) ------

Foreign currency translation adjustments - - - (663,309) - (663,309) (619,042) (1,282,351) Offset against losses (1) - (13,746,551) - - 13,746,551 - - - Net income recognized directly to equity 3,890,413 (17,636,964) - (663,309) 13,746,551 (663,309) (619,042) (1,282,351) Profit for the year - - - - 3,968,687 3,968,687 750,022 4,718,709

Total recognized income and expenses for the year - - - - 3,968,687 3,968,687 750,022 4,718,709 Interim dividends paid (Note 24) - - - - (4,425,584) (4,425,584) (533,824) (4,959,408) Issue of share capital 22,956,289 1,982,859 - - - 24,939,148 - 24,939,148 Share buy back ------(767,118) (767,118)

Balance at 30 June 2006 41,167,116 - 625 42,027 (3,433,132) 37,776,636 7,786,026 45,562,662

Foreign currency translation adjustments - - - 2,397,514 - 2,397,514 - 2,397,514 Net income recognized directly to equity - - - 2,397,514 - 2,397,514 - 2,397,514 Profit for the year - - - - 7,178,222 7,178,222 787,860 7,966,082

Total recognized income and expenses for the year - - - - 7,178,222 7,178,222 787,860 7,966,082

Dividends paid (Note 24) - - - - (1,716,230) (1,716,230) - (1,716,230)

Share buy back (2) (2,915,000) - - - - (2,915,000) - (2,915,000)

Equity share option issued 120,000 - - - - 120,000 - 120,000

Issue of share capital 4,677,132 - - - - 4,677,132 - 4,677,132

Decrease in interest ------(8,573,886) (8,573,886)

Balance at 30 June 2007 43,049,248 - 625 2,439,541 2,028,860 47,518,274 - 47,518,274

The annexed notes form an integral part of and should be read in conjunction with these financial statements.

32 Statement of Changes in Equity for the Financial Year ended 30 June 2007 (ctd.)

Assets Share Share revaluation Accumulated capital premium reserve profits Total S$ S$ S$ S$ S$ Company

Balance at 30 June 2005 14,320,414 15,654,105 625 (13,935,365) 16,039,779

Changes in equity

Effect of Companies (Amendment) Act 2005 3,890,413 (3,890,413) - - -

Offset against losses (1) - (13,746,551) - 13,746,551 -

Net income recognized directly to equity 3,890,413 (17,636,964) - 13,746,551 -

Profit for the year - - - 5,703,260 5,703,260

Total recognized income and expenses for the year - - - 5,703,260 5,703,260

Interim dividends paid - - - (4,425,584) (4,425,584)

Issue of share capital 22,956,289 1,982,859 - - 24,939,148

Balance at 30 June 2006 41,167,116 - 625 1,088,862 42,256,603

Profit for the year - - - 4,922,662 4,922,662

Total recognized income and expenses for the year - - - 4,922,662 4,922,662

Dividends paid (Note 24) - - - (1,716,230) (1,716,230)

Share buy back (2) (2,915,000) - - - (2,915,000)

Exercise of equity share options 120,000 - - - 120,000

Issue of share capital 4,677,132 - - - 4,677,132

Balance at 30 June 2007 43,049,248 - 625 4,295,294 47,345,167

(1) The Company has via an Extraordinary General Meeting held on 15 May 2006 and in compliance with the relevant provisions of the Singapore Companies Act, Cap. 50 reduces its share capital by cancelling pursuant to the provisions of Section 62B(1)(3)(b)(i) of the Companies Act, Cap. 50 debited S$13,746,551 standing to the credit of its share premium account in order to write off preliminary expenses of the Company incurred prior to 30 January 2007. (2) During the financial year, the shareholders have approved a share buy back of no more than 20,322,940 Ordinary shares of the Company at the Annual General Meeting held on 21 December 2006 for the last financial year.

The annexed notes form an integral part of and should be read in conjunction with these financial statements.

33 | AND ITS SUBSIDIARIES

Consolidated Cash Flow Statement for the Financial Year ended 30 June 2007 Note 2007 2006 S$ S$ Cash flows from operating activities Profit before income tax 12,696,309 5,796,997 Adjustments for: Allowance for doubtful debts 258,353 66,690 Allowance for doubtful debts - release (258,353) (176,173) Allowance for stock obsolescence 76,310 100,083 Assets written off 1,382,448 57,945 Deemed gain on disposal of subsidiary - 118,439 Depreciation charges 3 7,951,259 5,495,449 (Gain)/loss on disposal of assets (15,964) 56,519 Interest paid 273,095 456,701 Interest received (835,086) (471,544) Provision for aircraft handback 466,997 (16,293) Operating profit before working capital changes 21,995,368 11,484,813 Inventories (265,962) (189,076) Trade & other receivables (6,959,661) 1,891,747 Trade & other payables 5,956,384 (3,616,890)

Cash generated from operations 20,726,129 9,570,594 Interest paid (273,095) (456,701) Interest received 835,086 471,544 Income tax paid (136,172) (199,610)

Net cash generated from operating activities 21,151,948 9,385,827

Investing activities Acquisition of additional interest in subsidiary (16,156,796) - Acquisition of available-for-sale financial assets (1,117,473) (80,404) Acquisition of property, plant & equipment (19,453,463) (8,539,642) Proceeds from sales of property, plant & equipment 21,907 64,939

Net cash (used in) investing activities (36,705,825) (8,555,107)

Financing activities Dividends paid on ordinary shares (1,716,230) (4,425,584) Proceeds from borrowings 5,295,481 - Proceeds from shares issued 1,882,132 24,939,148 Repayment of borrowings (86,517) (6,662,644) Net cash generated from financing activities 5,374,866 13,850,920 Net changes in cash and cash equivalents (10,179,011) 14,681,640 Net effect of exchange difference in consolidation of foreign subsidiaries 164,690 (341,724) Cash and cash equivalents at beginning of year A 24,543,185 10,203,269

Cash and cash equivalents at end of year A 14,528,864 24,543,185

The annexed notes form an integral part of and should be read in conjunction with these financial statements.

34 Consolidated Cash Flow Statement for the Financial Year ended 30 June 2007 (ctd.) Note A – Cash and cash equivalents Cash and cash equivalents in the consolidated cash flow statement comprises the following balance sheet amounts:

2007 2006 S$ S$

Bank balances 13,557,917 21,546,680 Call deposits 970,073 2,996,505 Petty cash 874 - 14,528,864 24,543,185

The above are denominated in the following currencies:

Australian Dollars 13,847,524 10,030,551 Singapore Dollars 622,629 81,023 Sterling pounds 25,651 14,427,158 US Dollars 33,060 4,453 14,528,864 24,543,185

The annexed notes form an integral part of and should be read in conjunction with these financial statements.

35 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007

These notes form an integral part of and should be read in conjunction with the financial statements. The Balance Sheet of Advent Air Ltd. (the “Company”) and the consolidated financial statements of the Group for the financial year ended 30 June 2007 were authorized for issue in accordance with a resolution of the Directors dated 14 November 2007.

1. GENERAL CORPORATE INFORMATION The Company, Advent Air Ltd. (Company Registration No.: 1997-08548-K) is incorporated and domiciled in the Republic of Singapore with its registered office and principal place of business at 510, Thomson Road, #12-04, SLF Building, Singapore 298135. The principal activities of the Company are those of investment holding. The principle activities of the subsidiaries are set out in Note 4 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. The consolidated financial statements for the financial year ended 30 June 2007 relate to the Company and its subsidiaries (referred to as “Group”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of preparation and presentation of financial statements The financial statements prepared in accordance with Singapore Financial Reporting Standards (“FRSs”) as required by the Singapore Companies Act, Chapter 50 and are prepared under the historical cost convention except as disclosed in the accounting policies below. During the financial year, the Group and the Company adopted all the new and revised FRSs and Interpretations of FRSs (“INT FRSs”) that are relevant to its operations and effective for the current financial year. Changes to the Group’s and the Company’s accounting policies have been made as required in accordance with the relevant transitional provision in the respective FRSs and INT FRSs did not result in any substantial changes to the Group’s and the Company’s accounting policies. Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Singapore dollars, which is the Company’s functional and presentation currency unless otherwise stated. The preparation of financial statements in conformity with FRSs requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. Critical accounting estimates and assumptions used that are significant to the financial statements, and areas involving a higher degree of judgement or complexity, are disclosed in Note 2.2. 2.2 Significant accounting estimates and judgements Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

36 2.2 Significant accounting estimates and judgements (ctd.) (a) Impairment of intangible assets The Group determines whether intangible asset is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which intangible is allocated. In estimating the value in use, the Group makes an estimate of the expected future cash flows from the cash-generating units and also to select the suitable discount rates in order to calculate the present value of those cash flows. These estimates are by nature subjective. Actual results could differ significantly from these estimates. The carrying amounts of the Group’s intangible assets as at 30 June 2007 are disclosed in Note 5 to the financial statements. (b) Income tax The Group is exposed to income tax in the jurisdiction in which it operates its activities. Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision made for income tax. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for expected tax issues based on estimates of whether additional taxes will be due when the final tax outcome of these matters is different from the amounts that were initially recognized. Such differences will impact the income tax and deferred tax provision in the period in which such determination is made. The carrying amounts of the Group’s current income tax payable and deferred tax liabilities as at 30 June 2007 are disclosed in Note 12 and 20 to the financial statements respectively. (c) Impairment of investments The Group follows the guidance of FRS 39 in determining when an investment is other-than-temporary impaired. This assessment requires significant judgement. The Group evaluates, among other factors, the duration, and extent to which the fair value of an investment or financial asset is less than its cost; and the financial health of and near-term business outlook for the investment or financial asset, including factors such as industry, and sector performance, changes in technology and operational and financing cash flow. The carrying amounts of the Group’s investments as at 30 June 2007 are disclosed in Note 6 to the financial statements. (d) Impairment of subsidiaries The carrying values of investments in subsidiaries are reviewed for impairment indicators in accordance with FRS 36 – Impairment of Assets. As at 30 June 2007, the carrying amounts of investments in subsidiaries are disclosed in Note 4 to the financial statements. When impairment indicators are present, the recoverable value of the investments in subsidiaries is determined with reference to the net assets value of the respective companies/corporation and the value in use of the investments in the subsidiaries. In the determination of value in use, the Company is required to estimate the expected cash flows from the investments and also to choose a suitable discount rate in order to calculate the present value of those cash flows. (e) Impairment of intangible assets The Group determines whether goodwill is impairment on an annual basis in accordance with the policy stated in Note 2.10. The carrying amounts of the Group’s investments as at 30 June 2007 are disclosed in Note 5 to the financial statements. (f) Depreciation of property, plant & equipment The cost of property, plant & equipment is depreciated on a straight-line basis over the asset’s useful lives. Management estimates the useful lives of these property, plant & equipment are disclosed in Note 2.8 whereas the carrying amounts of as at 30 June 2007 are disclosed in Note 3 for the financial statements. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual value of these assets, if any, therefore future depreciation charges could be revised.

37 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (ctd.) 2.2 Significant accounting estimates and judgements (ctd.) (g) Impairment of property, plant & equipment The Group assesses annually whether the assets have any indication of impairment in accordance with the accounting policy. The recoverable amounts of assets have been determined based on the management’s judgements and estimates. (h) Impairment for inventories and valuation method Inventories are valued at the lower of the actual cost of market price. Cost is determined using the first-in-first-out method. The Group reviews the carrying value of its inventories to ensure that they are stated at the lower of cost and net realizable value. In assessing the net realizable value and making appropriate allowance, the management identifies inventories that are slow moving and obsolete considering their physical conditions, market conditions and market price for similar items. The carrying amounts of the Group’s inventories as at 30 June 2007 are disclosed in Note 7 to the financial statements. (i) Impairment of bad and doubtful receivables The Group makes allowances for bad and doubtful debts based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of bad and doubtful debts requires the use of judgement and estimates. Where the expected outcome is different from the original estimate, such difference will impact the carrying value of trade and other receivables and doubtful debt expenses in the period in which such estimate has been changed. 2.3 Principles of consolidation The consolidation financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of subsidiaries are prepared for the same reporting date as the holding company. Consistent accounting policies are applied for like transactions and events in similar circumstances. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated in full. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Acquisitions of subsidiaries are accounted for using the purchase method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. Any excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. The goodwill is accounted for in accordance with the accounting policy for goodwill stated in Note 2.10. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognized in the income statements on the date of acquisition. 2.3 Principles of consolidation (ctd.) Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. They are presented in the consolidated balance sheet within equity, separately from the parent shareholders’ equity, and are separately disclosed in the consolidated income statements.

38 2.4 Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. The Group generally has such power when it directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors. In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less any impairment losses. 2.5 Associates An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. This generally coincides with the Group having 20% or more of the voting power, or has representation on the board of directors. The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate. The Group’s share of the profit and loss of the associate is recognized in the consolidated income statement. Where there has been a change recognized directly in the equity of the associate, the Group recognizes its share of such changes. After application of the equity method, the Group determines whether it is necessary to recognize any additional impairment loss with respect to the Group’s net investment in the associate. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate. Goodwill relating to an associate is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss in the period in which the investment is acquired. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. The most recent available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not co-terminous with those of the Group, the share of results is arrived at from the last audited financial statements available and unaudited management financial statements to the end of the accounting period. Consistent accounting policies are applied for like transactions and events in similar circumstances. 2.6 Affiliated companies An affiliated company is a company, not being a subsidiary or an associated company, in which one or more of the directors or shareholders of the Company have a significant equity interest or exercise significant influence. 2.7 Intangible assets (a) Goodwill Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value of identifiable net assets acquired and liabilities and contingent liabilities assumed of the acquiree. Goodwill is measured at cost less accumulated impairment losses. Goodwill arising from the acquisition of subsidiaries is presented as intangible assets. Goodwill arising from the acquisition of associates is presented together with interest in associates. Goodwill is tested for impairment as described in Note 2.10.

39 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (ctd.) 2.7 Intangible assets (ctd.) (b) Acquisition of minority interest Goodwill arising on the acquisition of minority interest in subsidiary represents the excess of cost of the additional investment over the net fair value of the identifiable net assets acquired and liabilities and contingent liabilities assumed at the date of exchange. 2.8 Property, plant & equipment (a) Measurement (i) Rotable assets Rotables held for use in supply of services, are stated in the balance sheet at their revalued amounts being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment loss. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. Any revaluation increase arising on the revaluation of such rotables is credited to the assets revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in the profit and loss statement in which case, the increase is credited to the profit and loss statement to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such rotables is charged to profit and loss statement to the extent that it exceeds the balance, if any, held in the assets revaluation reserve relating to a previous revaluation of those assets. (ii) Other property, plant & equipment All other assets are stated at cost less accumulated depreciation and impairment in value, if any. (iii) Component of costs & subsequent expenditure The cost of an asset comprises its purchase price and any directly attributable cost of bringing the asset to working condition for its intended use. Expenditure incurred after the assets are put into operation, such as repairs and maintenance is normally charged to the income statement in the period in which the costs are incurred. In situations when it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an asset beyond its originally assessed standard of performance, the expenditure is capitalized as an additional cost of assets. (b) Depreciation Depreciation is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:

Aircraft & rotables 6 years

Other fixed assets 3 to 15 years

Leasehold improvement Over the lease terms

Motor vehicle 5 years

The residual values, useful lives and depreciation method of property, plant & equipment are reviewed at each balance sheet date to ensure that the residual values, period of depreciation and deprecation method are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant & equipment, and adjusted as appropriate, at each balance sheet date. Fully depreciated property, plant & equipment are retained in the financial statements until they are no longer in use.

40 2.8 Property, plant & equipment (ctd.) Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. (c) Disposal On disposal of an item of the assets, the difference between the net disposal proceeds and its carrying amount is taken to income statement. Any amount in revaluation reserve relating to that asset is transferred to retained earnings. 2.9 Inventories Inventories are stated at the lower of cost or net realizable value. Costs comprise direct materials and where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is determined using first-in-first-out basis. Net realizable value represents the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. 2.10 Impairment – non-financial assets The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, recoverable amount is estimated at each reporting date, and as and when indicators of impairment are identified. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable Group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognized in the income statement unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. Impairment losses recognized in respect of cash-generating units. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. 2.11 Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

41 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (ctd.) 2.11 Impairment of tangible and intangible assets excluding goodwill (ctd.) Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 2.12 Leases (a) Finance leases Leases of assets where the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance cost is taken to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. (b) Operating leases Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to the income statement on a straight- line basis over the lease term. When an operating lease is terminated before the expiry of the lease period, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. 2.13 Foreign currency translation and transactions (a) Functional currency Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group and financial statements of the Company are presented in Singapore dollars, which are the functional currency of the Group and of the Company and also the presentation currency for the consolidated financial statements and the financial statements of the Company. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Foreign currency monetary assets and liabilities are translated into Singapore dollars at the rates of exchange prevailing at the balance sheet date or at contracted rates (for effective hedges) where they are covered by forward exchange contracts. Exchange differences arising are taken to the income statement. (c) Group companies The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet date; (ii) Income and expenses for each income statement are translated at average monthly exchange rate

42 2.13 Foreign currency translation and transactions (ctd.) The exchange differences arising on translation of foreign subsidiaries, the Group’s share of exchange differences arising from the translation of foreign associated companies, and borrowings and other currency instruments designated as hedges of investments in such foreign entities, are taken directly to the foreign currency translation reserve. On disposal, accumulated translation differences are recognized in the consolidated income statement as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on acquisition of a foreign entity are treated as assets and liabilities of the foreign operation and translated at the closing rates. 2.14 Financial instruments Financial assets and financial liabilities are recognized on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument. (a) Loan and receivables Loan and receivables are measured at initial recognition at fair value, and are subsequently measured at amortized cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognized in income statement when there is objective evidence that the asset is impaired. The allowance recognized is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. (b) Investments Investments are recognized and derecognized on a trade date basis where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus directly attributable transaction costs. An impairment loss is recognized in income statement when there is objective evidence that the asset is impaired, and is measured as the difference between the investment’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognized, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortized cost would have been had the impairment not been recognized. Investments other than held-to-maturity investments are classified as either investments held for trading or as available for-sale, and are measured at subsequent reporting dates at fair value. Where securities are held for trading purposes, gains and losses arising from changes in fair value are included in profit or loss for the period. For available-for-sale investments, gains and losses arising from changes in fair value are recognized directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is included in the profit or loss for the period. Impairment losses recognized in profit or loss for equity investments classified as available-for-sale are not subsequently reversed through profit or loss. (c) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, bank overdrafts, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. (d) Financial liabilities Financial liabilities are recognized when and only when the Group becomes a party to the contractual provision of the financial instrument. Financial liabilities are initially recognized at fair value of consideration received less directly attributable transaction costs and subsequently measured at amortized cost using the effective interest method. Gains and losses are recognized in the income statement and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

43 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (ctd.) 2.14 Financial instruments (ctd.) (e) Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is taken to the profit and loss account over the period of the borrowings using the effective interest method. Borrowings which are due to be settled within twelve months after the balance sheet date are included in current borrowings in the balance sheet even though the original term was for a period longer than twelve months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the financial statements are authorized for issue. Other borrowings due to be settled more than twelve months after the balance sheet date are included in non- current borrowings in the balance sheet. (f) Share capital Ordinary share capital is recognized at the fair value of the consideration received by the Company. Incremental costs directly attributable to the issuance of new equity instruments are shown in the equity as a deduction from the proceeds. (g) Derivative financial instruments and hedge accounting The Group’s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rates. The Group uses derivative financial instruments (primarily foreign currency forward contracts) to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The significant interest rate risk arises from bank borrowings and fixed deposits placed with financial institutions. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provide written principles on the use of financial derivatives consistent with the Group’s risk management strategy. The Group does not use derivative financial instruments for speculative purposes. Derivative financial instruments are initially measured at fair value on the contract date, and are re-measured to fair value at subsequent reporting dates. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognized in the profit or loss as they arise. 2.15 Derecognition of financial assets and liabilities A financial asset is derecognized where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset, the difference between the carrying amount and the sum of (a) the consideration received (including any new asset obtained less any new liability assumed) and (b) any cumulative gain or loss that has been recognized directly in equity is recognized in the income statements. A financial liability is derecognized from the balance sheet when the obligation under the liability is discharged, cancelled or expired. 2.16 Provisions Provisions are recognized when the Group has a legal or constructive obligation (legal or constructive) where, as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

44 2.17 Borrowing costs Borrowing costs are generally expensed in the period in which they are incurred. 2.18 Dividends Interim dividends are recorded in the Group’s financial statements in the period in which they are declared by the Company’s directors. Final dividends are recorded in the Group’s financial statements in the period in which they are approved by the Company’s shareholders. 2.19 Convertible bonds Convertible bonds that can be converted to share capital where the number of shares issued does not vary with changes in the fair value of the bonds are accounted for as compound financial instruments. The gross proceeds from the bond issue are allocated separately between the liability component which represents the fair value of the financial liability and equity component which represents the implied fair value of the conversion rights. 2.20 Related parties For the purposes of these financial statements, parties are considered to be related if the Group has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. 2.21 Employee benefits (a) Defined contribution plans The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. Contributions to national pension schemes are recognized as an expense in the period in which the related service is performed. Such state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan. (b) Employee leave entitlement Employee entitlements to annual leave are recognized when they accrue to employees. An accrual is made for the estimated liability for leave as a result of services rendered by employees up to the balance sheet date. 2.22 Income tax (a) Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the balance sheet date. (b) Deferred tax Deferred income tax is provided using the liability method temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences, except: • Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • In respect of taxable temporary differences associated with investments in subsidiary companies, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

45 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (ctd.) 2.22 Income tax (ctd.) (b) Deferred tax (ctd.) Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilized except: • Where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • In respect of deductible temporary differences associated with investments in subsidiary companies, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Income tax relating to items recognized directly in equity is recognized in equity. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. 2.23 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and sales related taxes, and after eliminating sales as follows: Passenger, charter and freight revenue is at the fair value of the consideration received net of passenger taxes and goods and sales tax. Sales of goods are recognized upon the transfer of significant risk and rewards of ownership of the goods to the customers, which generally coincides with delivery and acceptance of the goods sold. Revenue from services rendered is recognized upon the performance of services to the customers, which generally coincides with their acceptance. Interest income is recognized on a time-proportion basis using the effective interest method. Dividend income is recognized when the right to receive payment is established. Revenue from technical consultancy and management income is recognized over the period in which the management services are rendered. Profit on sales of investments is recognized on trade date basis. License fee received is recognized over the life of the license agreement. Ongoing royalties/commissions pursuant to the license agreement are recognized when earned and the amount can be reliably measured on an accrual basis. All other miscellaneous income is recognized when earned and the amount of income can be reliably measured on an accrual basis.

46 3. pROPERTY, PLANT & EQUIPMENT

Aircraft collision Plant & Leasehold Motor Rotables system equipment improvements vehicle Total S$ S$ S$ S$ S$ S$ Group 2007 Cost/Valuation Balance at beginning of year Cost - 31,939,887 3,669,846 217,357 43,918 35,871,008 Valuation 10,309,870 - - - - 10,309,870 Additions 3,136,608 14,743,321 1,550,027 23,507 - 19,453,463 Disposal/written off (1,152,163) (265,167) (16,119) - - (1,433,449) Currency realignment 1,038,180 3,216,276 367,950 21,719 - 4,644,125

Balance at end of year 13,332,495 49,634,317 5,571,704 262,583 43,918 68,845,017

Representing: Cost - 49,634,317 5,571,704 262,583 43,918 55,512,522 Valuation 13,332,495 - - - - 13,332,495

13,332,495 49,634,317 5,571,704 262,583 43,918 68,845,017

Accumulated depreciation Balance at beginning of year 2,955,972 10,227,658 2,781,229 190,658 43,918 16,199,435 Charge for the year 699,358 6,669,398 554,881 27,622 - 7,951,259 Disposal/written off - - (13,130) - - (13,130) Currency realignment 341,544 1,448,405 279,881 20,860 - 2,090,690

Balance at end of year 3,996,874 18,345,461 3,602,861 239,140 43,918 26,228,254

Net book value Balance at end of year 9,335,621 31,288,856 1,968,843 23,443 - 42,616,763

47 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

3. PROPERTY, PLANT & EQUIPMENT (ctd.)

Aircraft collision Plant & Leasehold Motor Rotables system equipment improvements vehicle Total S$ S$ S$ S$ S$ S$ Group 2006 Cost/Valuation Balance at beginning of year Cost - 28,212,748 3,976,349 196,760 43,918 32,429,775 Valuation 9,011,104 - - - - 9,011,104 Additions 2,248,443 6,181,906 70,308 38,984 - 8,539,641 Disposal/written off (149,175) - (67,113) (1,559) - (217,847) Reclassification (29,824) (41,864) 29,824 - - (41,864) Currency realignment (770,678) (2,412,903) (339,522) (16,828) - (3,539,931)

Balance at end of year 10,309,870 31,939,887 3,669,846 217,357 43,918 46,180,878

Representing: Cost - 31,939,887 3,669,846 217,357 43,918 35,871,008 Valuation 10,309,870 - - - - 10,309,870

10,309,870 31,939,887 3,669,846 217,357 43,918 46,180,878

Accumulated depreciation Balance at beginning of year 2,660,161 6,146,153 3,037,525 173,271 36,599 12,053,709 Charge for the year 578,663 4,270,192 605,239 34,035 7,319 5,495,448 Disposal/written off/ reclassification (29,828) 525,237 (575,356) (360) - (80,307) Currency realignment (253,024) (713,924) (286,179) (16,288) - (1,269,415)

Balance at end of year 2,955,972 10,227,658 2,781,229 190,658 43,918 16,199,435

Net book value Balance at end of year 7,353,898 21,712,229 888,617 26,699 - 29,981,443

48 3. pROPERTY, PLANT & EQUIPMENT (ctd.)

Leasehold Plant & Motor improvements equipment vehicle Total S$ S$ S$ S$ Company 2007 Cost Balance at beginning of year 1,672 15,855 43,918 61,445 Additions - 6,873 - 6,873 Balance at end of year 1,672 22,728 43,918 68,318

Accumulated depreciation Balance at beginning of year 372 4,411 43,918 48,701 Charge for the year 557 7,120 - 7,677 Balance at end of year 929 11,531 43,918 56,378

Net book value Balance at end of year 743 11,197 - 11,940

2006 Cost Balance at beginning of year - 6,536 43,918 50,454 Additions 1,672 9,319 - 10,991 Balance at end of year 1,672 15,855 43,918 61,445

Accumulated depreciation Balance at beginning of year - 274 36,599 36,873 Charge for the year 372 4,137 7,319 11,828 Balance at end of year 372 4,411 43,918 48,701

Net book value Balance at end of year 1,300 11,444 - 12,744

The motor vehicle of the Group with a net book value of S$Nil (2006: S$Nil) is registered in the name of a Director of the Company who is holding the motor vehicle in trust for the Group. Subsequent to the balance sheet date, the motor vehicle has been sold.

49 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

3. PROPERTY, PLANT & EQUIPMENT (ctd.) As at the balance sheet date, if the rotables stated at valuation had been included in the financial statements at cost less depreciation, the net book value would have been as follows: Group 2007 2006 S$ S$

Rotables 7,085,538 5,169,589 4. SUBSIDIARy Company 2007 2006 S$ S$

Unquoted shares in corporation, at cost 13,054,799 13,054,799

Country of Group’s Name of Company/ incorporation Company’s Percentage Corporation Principal activities /operations Cost of investment of equity held 2007 2006 2007 2006 S$ S$ % % Held by the Company

CaptiveVision Capital Ltd (1) Investment holding Singapore 13,054,799 13,054,799 100.00 100.00

Held by subsidiary company - CaptiveVision Capital Ltd

A.C.N 098 904 262 Pty Ltd* Investment holding Australia - - 100.00 65.13

Held by sub-subsidiary company - A.C.N 098 904 262 Pty Ltd

Skywest Airline Pty Ltd (2) Airline operator Australia - - 100.00 65.13

Skywest Airlines (S) Pte. Ltd. (1) Passenger air transportation/ Singapore - - 100.00 100.00 provision of management services to holding company

13,054,799 13,054,799

(1) Audited by Jasmine Chua & Associates. (2) Audited by KPMG Australia using Australian Accounting Standards - AIFRS.

* Formerly known as Skywest Limited and was delisted on 8 September 2006 from the Australian Stock Exchange and changed its name to A.C.N. 098 904 262 Pty Ltd with effect from 13 April 2007.

50 5. INTANGIBLE ASSETS This represents goodwill arising on acquisition of business as follows: Group 2007 2006 S$ S$

Balance at beginning of year 9,710,276 9,925,959 Acquisition/(disposal) of subsidiary 7,567,991 (215,683) Balance at end of year 17,278,267 9,710,276

Goodwill is allocated to the Group’s cash generating unit (“CGU”) identified by the management. In the current financial year, the CGU identified as the Air operator of its subsidiary, Skywest Airlines Pty Ltd. In the opinion of the management, the carrying amount approximates its fair value.

6. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Group Company 2007 2006 2007 2006 S$ S$ S$ S$

Quoted equity shares, at market value 1,144,071 26,598 - -

An impairment loss of S$14,688 (2006: (S$4,983)) was recognized during the financial year so that the investments are recorded at fair value and a total gain of S$105,186 (2006: S$Nil) is recognized in the income statement for the financial year. The above balances are denominated in Australian Dollars. 7. INVENTORIES

Group 2007 2006 S$ S$

Consumable spare parts 1,213,360 1,023,708

Carrying amount of inventories subject to retention of title clause 487,328 431,292

The inventory subject to retention of title clauses relate to inventory, which has been received by the Group, but title does not pass until payment is made. Inventories are stated after deducting allowance for stock obsolescence of S$947,441 (2006: S$871,131). The cost of inventories included in “cost of sale” amounted to S$2,294,455 (2006: S$1,242,189).

51 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

8. TRADE RECEIVABLES Group Company 2007 2006 2007 2006 S$ S$ S$ S$

Trade receivables from third parties 12,321,944 5,373,692 - -

Trade receivables are stated after deducting allowance for doubtful debts of S$212,686 (2006: S$212,686). Trade receivables are denominated in Australian Dollars.

9. OTHER RECEIVABLES Group Company 2007 2006 2007 2006 S$ S$ S$ S$

A related corporation (1) 154,285 1,716 154,285 1,716 Convertible bond (2) - - 3,148,427 3,148,427 Deposits & prepayments (3) 2,688,828 3,472,456 81,117 76,159 Dividend receivables - - 3,250,000 - Outside parties 642,468 - - - Subsidiaries (1) - - 22,505,272 11,898,447 3,485,581 3,474,172 29,139,101 15,124,749

Amount due from outside parties are non-interest bearing, non-trade in nature, unsecured and repayable on demand. (1) The non-trade balances are unsecured, interest free and repayable on demand (2006: without fixed repayment terms). (2) This represents convertible bond receivables in a related corporation which expires on 30 June 2008 (2006: expired on 31 July 2007). (3) Refundable deposits are refundable at the expiry of the terms or on termination of the contract which ever is earlier. Other receivables are denominated in the following currencies: Group Company 2007 2006 2007 2006 S$ S$ S$ S$

Australian Dollars 3,250,179 3,396,297 - - US Dollars 154,285 1,716 154,285 1,716 Singapore Dollars 81,117 76,159 28,984,816 15,123,033 3,485,581 3,474,172 29,139,101 15,124,749

52 10. SHARE CAPITAL Number of shares Company 2007 2006 2007 2006 S$ S$ Issued and fully paid ordinary shares Balance at beginning of year 186,383,517 71,602,070 41,167,116 14,320,414 Transfer of share premium to share capital - 3,890,413 Issue of shares 17,112,561 101,403,138 4,677,132 20,280,626 Issue under share option scheme 400,000 1,349,998 120,000 270,000 Issue of shares under bond conversion - 5,431,878 - 1,086,376 Issue of shares under conversion of short term loan - 6,596,433 - 1,319,287 Repurchase of shares (6,896,073) - (2,915,000) -

Balance at end of year 197,000,005 186,383,517 43,049,248 41,167,116

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The Company has share option scheme under which options to subscribe for the Company’s ordinary shares have been granted to the Directors and third parties. As at the balance sheet date, the Company does not has any employee share option plan under which options to subscribe for the Company’s ordinary shares have been granted to employees.

11. BORROWINGS Group 2007 2006 S$ S$ Secured loan 2,708,621 23,868 Secured bank loan 2,586,860 62,649 5,295,481 86,517 Less: Non-current portion of borrowings ( 5,295,481) - Current portion of borrowings - 86,517

Present value using effective borrowing rate on non-current portion of borrowings 4,897,369 -

53 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

11. BORROWINGS (ctd.) Secured loan The secured loan is between Skywest Airlines Pty Ltd and Capital Finance Australia Ltd. The repayment date is 60 months from the initial drawing of the facility which commenced on 31 December 2006 and bears an effective interest rate of 6.73%. The loan is secured by a first registered equitable mortgage over all the assets and undertakings of the Company. In the last financial year, the secured loan represented a three years loan and was secured by a second priority fixed and floating charge over the subsidiary and its subsidiary subordinated to Commonwealth Bank of Australia and bore an effective interest rate of 9.5%. Secured bank loan The secured bank loan is a business credit facility to the value of S$2,586,860 (equivalent to AUD$2,000,000). The repayment date is 24 months from the initial drawing of the facility commencing 28 August 2006 and bears an effective interest rate of 10%. In the last financial year, secured bank loan originally of AUD$6,500,000 for a three years and was secured by a first registered equitable mortgage over all assets and undertaking of the subsidiary and its subsidiary under the terms of finance facility with Commonwealth Bank of Australia whereby the subsidiary was required to maintain a debt service coverage ratio. Borrowings are denominated in Australian Dollars.

12. DEFERRED TAX LIABILITIES Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown in the balance sheets as follows: Group 2007 2006 S$ S$ Deferred tax assets arises as result of: Accruals & provision 2,079,979 1,535,776 Deferred income 163,940 6,663 Property, plant & equipment 231,230 5,783,939 Tax losses carry-forward - 2,282,933 Trade & other receivables 143,592 63,808 Others 594,785 362,300

3,213,526 10,035,419

54 12. DEFERRED TAX LIABILITIES (ctd.) Group 2007 2006 S$ S$ Deferred tax liabilities arises as result of: Asset revaluation 635,168 655,292 Intangible assets - 31,104 Inventories 633,689 566,144 Lease liability - 5,610,704 Property, plant & equipment 5,030,938 4,073,095 Trade & other receivables 118,114 83,709 Others 402,727 - 6,820,636 11,020,048

Net deferred tax liabilities 3,607,110 984,629

The Group and the Company have tax losses carry forwards available for offsetting against future taxable income as follows: Group Company 2007 2006 2007 2006 S$ S$ S$ S$ Balance at beginning of year 20,331,000 14,771,000 1,412,431 2,556,000 Adjustments (5,228,472) - 492,622 - Change in tax rate (406,620) - (28,249) - Amount arising/(utilized) in current year (945,459) 5,560,000 (310,804) (1,143,569) Balance at end of year 13,750,449 20,331,000 1,566,000 1,412,431 Comprises: Tax losses 2,705,000 9,666,360 1,566,000 1,412,431 Capital allowances 11,045,449 10,664,640 - - 13,750,449 20,331,000 1,566,000 1,412,431

Deferred tax benefit on above not recorded 2,475,081 4,066,200 281,880 282,486

The above deferred tax asset has not been recognized due to the unpredictability of future profit streams. The realization of the future income tax benefits from tax loss carry forwards is available for an unlimited future period subject to the conditions imposed by law including the retention of majority shareholders as defined.

55 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

13. provisions Group 2007 2006 S$ S$ Aircraft handback 680,119 213,122 Employee’s benefits 4,734,086 3,759,800 5,414,205 3,972,922 Less: Non-current portion (86,653) (169,221)

Current portion 5,327,552 3,803,701

Provision for maintenance for hand back of aircraft is made in accordance with the operating lease agreement.

Included in provision for employee’s benefits, liabilities are made for long service leave, annual leave and other entitlements.

In the opinion of the directors, the carrying value of the non-current portion of provisions is approximate its fair value.

Provisions are denominated in Australian Dollars.

14. TRADE PAYABLES Group Company 2007 2006 2007 2006 S$ S$ S$ S$ Outside parties 6,528,429 10,733,074 - -

Trade payables are denominated in Australian Dollars.

15. OTHER PAYABLES Group Company 2007 2006 2007 2006 S$ S$ S$ S$

Accrued director’s remuneration 206,210 - 206,210 - Accrued expenses 10,062,632 3,921,724 126,395 88,972 Directors’ fee - 23,472 - - Dividends declared yet to paid - 365,310 - 365,310 A related corporation 1,209 - 1,209 - Unearned income 11,434,507 8,207,309 - - 21,704,558 12,517,815 333,814 454,282

Amount due from a related corporation is non-interest bearing, non-trade in nature, unsecured and repayable on demand.

56 15. OTHER PAYABLES (ctd.) Other payables are denominated in the following currencies: Group Company 2007 2006 2007 2006 S$ S$ S$ S$ Sterling pounds - 23,472 - - Australian Dollars 21,319,961 12,040,061 - - Singapore Dollars 384,597 454,282 333,814 454,282

21,704,558 12,517,815 333,814 454,282

16. REVENUE Group Company 2007 2006 2007 2006 S$ S$ S$ S$ Dividend income - gross - - 3,250,000 - Fair value adjustments for financial assets - 4,983 - - Finance income - - - 5,520,086 Interest income - - 2,261,390 - Management fee - - 980,000 447,481 Passenger, charter and freight income 130,374,747 96,268,325 - - Rendering of services - - - 371,012 Right income 5,526 - - - Sales of finished goods - 2,675,336 - - Sales of quoted securities 105,186 - - -

Total revenue 130,485,459 98,948,644 6,491,390 6,338,579

17. OTHER INCOME Group Company 2007 2006 2007 2006 S$ S$ S$ S$ Disposal of subsidiary - 4,060,274 - - Foreign currency exchange adjustment gain 322,227 190,614 148,534 387,622 Interest income from non-related companies 835,086 471,544 141,306 62,352 Others 3,571 8,026 - 34,278 1,160,884 4,730,458 289,840 484,252

57 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

18. finance costs Group Company 2007 2006 2007 2006 S$ S$ S$ S$

Interest paid to outside parties 273,095 456,701 - 15,144 19. profit before income tax In addition to charges and credits disclosed elsewhere in the notes to the income statement is arrived at: Group Company 2007 2006 2007 2006 S$ S$ S$ S$

After charging/(crediting): (Gain)/loss on disposal of assets (15,964) 56,519 - - Aircraft rental 5,735,877 6,103,590 - - Allowances for doubtful debts 258,353 66,690 - - Allowances for doubtful debts - release (258,353) (176,173) - - Allowances for stock obsolescence 76,310 100,083 - - Amortization of intangible assets 23,862 - - - Assets written off 1,382,448 57,945 - - Bad debts written off - trade 258,353 176,173 - - Depreciation charges 7,951,259 5,495,449 7,677 11,828 Directors’ fee 196,002 113,472 153,000 90,000 Directors’ remuneration 727,548 440,590 660,882 189,580 Impairment loss on fair value adjustment to investment 14,688 (4,983) - - Office rental 40,141 29,177 40,141 29,177 Provision for aircraft handback 466,997 (16,293) - - 20. INCOME tax

Tax Expenses Group Company 2007 2006 2007 2006 S$ S$ S$ S$ Current tax expense 2,375,404 433,713 - - Underprovision in prior years 6,106 - - - Deferred tax 2,348,717 644,575 - - Income tax expenses 4,730,227 1,078,288 - -

58 20. INCOME tax (ctd.)

The income tax varied from the amount of income tax determined by applying the Singapore income tax rate of 18% (2006: 20%) to profit before income tax as a result of the following differences:

Group Company 2007 2006 2007 2006 S$ S$ S$ S$ Profit before income tax 12,696,309 5,796,997 4,922,662 5,703,260 Statutory tax rate 18% 20% 18% 20% Taxation at statutory tax rate 2,285,336 1,159,399 886,079 1,140,652 Non-deductible items 20,510 3,579,474 9,257 2,917 Income not subjected to tax (585,000) - (585,000) - Underpovision in prior year 6,106 - - - Deferred tax 834,705 (9,378,578) 468 - Revaluation of assets taken to equity 43,522 - - - Capital raising costs taken to equity (69,145) - - - Unrecorded deferred tax benefits arising (utilized) in current year (945,459) 5,560,000 (310,804) (1,143,569) Others 250,287 - - - Overseas tax 2,889,365 157,993 - - Income tax expenses 4,730,227 1,078,288 - -

21. SALARIES AND EMPLOYEE BENEFITS Group Company 2007 2006 2007 2006 S$ S$ S$ S$

Directors’ fee 196,002 113,472 153,000 90,000 Staff costs 20,708,978 17,175,113 660,882 189,580 20,904,980 17,288,585 813,882 279,580

Cost of defined contribution plans included in staff costs 1,757,742 1,917,326 12,735 5,631

Key management personnel of the Company are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group. The directors are considered as key management personnel of the Company and payments made to the Directors included in the staff cost was as follows:

59 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

21. SALARIES AND EMPLOYEE BENEFITS (ctd.) Group Company 2007 2006 2007 2006 S$ S$ S$ S$

Directors’ fee 196,002 113,472 153,000 90,000 Salaries, benefits & defined contribution 727,548 440,590 660,882 189,580 923,550 554,062 813,882 279,580

22. RELATED PARTY TRANSACTIONS An entity or individual is considered a related party of the Group for the purposes of the financial statements if (i) it possesses the ability (directly or indirectly) to control or exercise significant influence over the operating and financing decisions of the Group or vice versa; or (ii) it is subject to common control or common significant influence. During the financial year, in addition to related party information disclosed elsewhere in the financial statements, the following significant transactions with related, were as follows: Group Company 2007 2006 2007 2006 S$ S$ S$ S$ Transactions with subsidiaries Revenue Dividend income - gross - - 3,250,000 - Finance costs - - - 5,520,086 Interest income - - 2,261,390 - Management fee - - 980,000 447,481 Reimbursement of expenses billed - - - 371,012

Transactions with related parties Purchases 1,197,036 - - - Lease expenditure 3,115,541 - - -

Transactions with Directors Directors’ fee 196,002 113,472 153,000 90,000 Directors of the Company Included in staff costs 727,548 440,590 660,882 160,781 Capitalized against share premium - 151,320 - 151,320 Directors & executives of subsidiaries - 751,310 - -

60 23. LEASE COMMITMENTS Commitments in relation to non-cancellable operating lease contracted for but not recognized as liabilities, are payable as follows: Group Company 2007 2006 2007 2006 S$ S$ S$ S$ In respect of operating lease for office premise Not later than 1 year 107,475 - 107,475 - Later than 1 but not later than 5 years 49,191 - 49,191 - 156,666 - 156,666 - In respect of operating lease for aircraft Not later than 1 year 5,600,479 4,992,668 - - Later than 1 but not later than 5 years 19,895,772 2,513,165 - - After 5 years 12,546,271 - - - 38,042,522 7,505,833 - -

24. DIVIDENDS Company 2007 2006 S$ S$ Ordinary dividends paid In respect of the previous financial year Final dividend - S$0.0053 per share under one tier 1,077,116 - In respect of the current financial year Interim dividends - S$0.03 per share under one tier 639,114 4,425,584 1,716,230 4,425,584

Subsequent to the balance sheet date, the directors propose a final dividend of S$0.018 per ordinary share (one tier) amounting to S$3,564,000.09 based on 198,000,005 equity shares on 14 November 2007 to be paid for the financial year ended 30 June 2007. These financial statements do not reflect this dividend payable, which if approved at the Annual General Meeting of the Company, will be accounted for in the shareholders’ equity as an appropriation of accumulated profits in the financial year ending 30 June 2008. The Company is not required to withhold any tax on payment of dividends to its shareholders. The dividends will be paid at the gross amount. Dividends received by shareholders may or may not be taxable in their hands depending on their tax profile and on the jurisdiction they are in. Shareholders must meet their own tax obligations in respect of dividends.

61 | AND ITS SUBSIDIARIES

Notes to Financial Statements financial year ended 30 June 2007 (ctd.)

25. EARNINGS PER SHARE Basic earnings per share (“EPS”) is calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issued during the financial year. Diluted earnings per share (“EPS”) is calculated by dividing the profit for the financial year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilution potential shares into ordinary shares. The following table reflects the income statement and share date used in the computation of basis and diluted earnings per share for the financial year ended 30 June: Group 2007 2006 S$ S$ Profit for the year attributable to ordinary equity holders of the Company 7,178,222 3,968,687 Number of ordinary shares Weighted average number of ordinary shares issued during the year 198,697,625 128,992,792 Effects of dilutive share options 16,521,475 7,001,475 Weighted average number of ordinary shares outstanding used in the calculation of diluted EPS 215,219,100 135,994,267 Cents Basic EPS 0.04 0.03 Diluted EPS 0.03 0.03

26. financial instruments Financial risk management objective and policies: The main risks arising from the Group’s financial instruments are interest rate risk, credit risk, foreign currency exchange rate risk and liquidity risk. The Group’s policies in managing these risks are summarized below: Credit risk – Credit risk refers to the risk that debtors will default on their obligations to repay the amounts owing to the Group, resulting in a loss to the Group. The Group has no significant concentrations of credit risk. The Group has adopted relevant credit policy in extending credit terms to customers and in monitoring its credit terms. The credit policy spelt out clearly the guidelines on extending credit terms to customers, including monitoring the process. This includes assessing customers’ credit standing and periodic review of their financial status to determine the credit limits to be granted. Credit evaluation of the customers’ financial condition is performed on an on-going basis and no collateral is required. The carrying amount of cash and cash equivalents, trade and other receivables represent the Group’s maximum exposure to credit risk in relation to financial assets. No other financial assets carry a significant exposure to credit risk.

Cash is placed with established financial institutions. Liquidity and cash flow risk – The Group’s financial activities are managed centrally by maintaining an adequate level of cash and cash equivalents to finance the Group’s operations. The Group ensures the availability of bank credit lines to address any short term funding requirements.

62 26. financial instruments (ctd.) Foreign exchange risk – The Group transacts business in various foreign currencies, including Australian Dollar, US Dollar, Euro Dollars, and Sterling Pound and therefore is exposed to foreign exchange risk. These exposures are managed primarily by using natural hedges that arise from offsetting assets and liabilities. The Group does not engage in trading of or speculation in foreign currencies. The Group has a number of investments in foreign subsidiaries whose net assets are exposed to currency translation risk. Interest rate risk - The Group is exposed to interest rate risk through the impact of rate changes on interest bearing liabilities and assets. Those exposures are managed partly by using natural hedges that arise from offsetting interest rate sensitive assets and liabilities. The interest rate and terms of repayment of financial assets and financial liabilities are disclosed in the respective notes to the financial statements. Investment Risk Management - The Group has in place processes and procedures to consider and approve all capital investment proposals. All capital investment proposals are subject to thorough review to ensure that they meet the internal investment criteria and all the relevant risk factors are considered comprehensively before submitting to the Management Executive Committee or Board for approval. Fair value - The fair values of financial assets and financial liabilities reported in the balance sheet approximates the carrying amount of those assets and liabilities as the Group do not anticipate the carrying amounts recorded at balance sheet would be significantly difference from the values that would eventually be received or settled.

27. SUBSEQUENT events Subsequent to the balance sheet date, the followings occurred:

Subsidiary and its controlling entities (a) Skywest Airlines Pty Ltd has committed to lease another 3 F100 jets with its first plane due for delivery in early October 2007.

(b) Skywest Airlines Pty Ltd has committed to purchase an additional engine from Rolls Royce for US$1.8 million to be financed through a 5 years facility from Commonwealth Bank of Australia.

The Company (a) 2,040,000 ordinary shares were issued under the share option scheme.

(b) 1,040,000 ordinary shares were bought back from its equity holders.

(c) Subject to filing with the relevant authority, the Company has obtained principal approval from Accounting and Corporate Regulatory Authority to change its name from Advent Air Ltd. to Skywest Airlines Ltd.

63 | ANNUAL REPORT 2006

Shareholding Information

Register of Top 20 Ordinary Shareholders

Name of Holder Number of Shares

APOLLO NOMINEES LTD 24,312,560

HSBC GLOBAL CUSTODY NOMINEE (UK) LIMITED 21,600,000

MELLON NOMINEES (UK) LIMITED 15,269,290

HARGREAVE HALE NOMINEES LIMITED 11,317,560

CREDIT SUISSE SECURITIES (EUROPE) LIMITED 10,738,720

FITEL NOMINEES LIMITED 9,110,030

FITEL NOMINEES LIMITED 8,182,440

HSBC GLOBAL CUSTODY NOMINEE (UK) LIMITED 7,272,720

BBHISL NOMINEES LIMITED 6,337,110

CHASE NOMINEES LIMITED 4,136,360

THE BANK OF NEW YORK (NOMINEES) LIMITED 3,030,300

BARCLAYSHARE NOMINEES LIMITED 2,524,240

VIDACOS NOMINEES LIMITED 2,405,300

PERSHING KEEN NOMINEES LIMITED 2,091,000

L R NOMINEES LIMITED 2,044,900

PERSHING KEEN NOMINEES LIMITED 1,856,930

FITEL NOMINEES LIMITED 1,800,000

FITEL NOMINEES LIMITED 1,491,170

FITEL NOMINEES LIMITED 1,400,000

TD WATERHOUSE NOMINEES (EUROPE) LIMITED 1,276,780

64 | ANNUAL REPORT 2007

Sand dunes at Wylie Bay, east of Esperance Corporate Directory Cover: Near the Cockburn Range, on El Questro Station

Directors Robert Jeffries Chatfield (Executive Chairman) Seah Kian Peng (Non-executive Director) John Leonard Jost (Non-executive Director) Ron Aitkenhead (Non-executive Director)

Business Address Stockbroker UK Registrars 510 Thomson Road W H Ireland Ltd Computershare Investor Services PLC #12-04 SLF Building Attn Philip Haydn-Slater PO Box 82, The Pavilions Singapore 298 135 5th Floor Bristol BS99 7NH 24 Martin Lane London EC4R 0DR United Kingdom Company Secretaries United Kingdom Siobhan Mary Cool Singapore Registrars Han Kee Fong Australian Solicitors Compact Administrative Services Pte Ltd Loh Chuen Thim Herbert Geer & Rundle 3 Anson Road Registered Office 385 Bourke Street #27-01 Springleaf Tower Melbourne VIC 3000 Singapore 079909 510 Thomson Road Australia #12-04 SLF Building Bankers Singapore 298 135 UK Solicitors Citibank N.A National Corporate Group Nominated Adviser Trowers & Hamlins 3 Temasek Avenue WH Ireland Limited Sceptre Court #17-00 Centennial Tower Corporate Broking 40 Tower Hill Singapore 039190 24 Martin Lane London EC4R 0DR London EC3N 4DX United Kingdom United Kingdom Auditors Jasmine Chua & Associates 371 Beach Road #05-01 Keypoint Singapore 199597 Advent Air Limited Skywest Airlines Pty Ltd Limited Air Advent 510 Thomson Road Domestic Terminal, Perth Airport Annual Report 2007 #12-04 SLF Building Western Australia 6105 Singapore 298135 Ph: 61 8 9478 9999 Ph: 65 6252 2077 Fax: 61 8 9478 9928

Fax: 65 6252 5158 Bookings: 1300 66 00 88 2007 Report Annual www.advent.com.sg www.skywest.com.au