AVIAAM LEASING AB (Incorporated in Lithuania with Public Limited Liability, Corporate ID Code 302330793)

AVIAAM LEASING AB (incorporated in Lithuania with public limited liability, corporate ID code 302330793)

Offering of up to 14,181,716 Shares, with a nominal value of LTL 1.00 each, and admission to trading on the Warsaw Stock Exchange of up to 43,305,593 Shares of Joint Stock Company AviaAM Leasing

This document (the "Prospectus") has been prepared for the purpose of (i) the offering (the "Offering") of up to 14,181,716 ordinary registered shares in the share capital of Joint Stock Company AviaAM Leasing (the "Issuer" or the "Company"), with a nominal value of LTL 1.00 each, and (ii) the admission of up to 43,305,593 ordinary registered shares of the Issuer (the "Shares") to trading on the Warsaw Stock Exchange (in Polish: Gie³da Papierów Wartoœciowych w Warszawie S.A., the "WSE"). The Issuer will be offering for subscription up to 13,857,790 newly issued Shares (the "New Shares"). Gediminas iemelis (the "Selling Shareholder"), the Issuer's direct minority shareholder (but indirectly majority shareholder), will be offering up to 323,926 existing Shares (the "Sale Shares"). The New Shares to be issued by the Issuer and the Sale Shares offered by the Selling Shareholder are referred to, where thecontextpermits,astheOfferShares.TheIssuerwillonlyreceivethenetproceeds from the sale of the New Shares, whereas the Selling Shareholder will receive the net proceeds from the sale of its Sale Shares. The Offer Shares offered in this Offering constitute a minority interest in the Issuer. Prior to the completion of the Offering, the Selling Shareholder holds 1.1% of the issued share capital of the Issuer. The Offering consists solely of (i) a public offering to retail investors in the Republic of Poland (the "Retail Offering") and institutional investors in the Republic of Poland (the "Polish Institutional Offering" and, together with the Retail Offering, the "Public Offering"); and (ii) a private placement to institutional investors in certain jurisdictions outside of Poland and the United States (the "International Offering" and together with the Polish Institutional Offering, the "Institutional Offering"), in each case in accordance with applicable securities laws and regulations. The Offer Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or under any securities laws of any state or other jurisdiction of the United States. The Offering is made only outside the United States in offshore transactions in accordance with Regulation S under the U.S. Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, any U.S. persons (as defined in Regulation S), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act (see Section XXII Selling Restrictions). The Offer Shares are being offered, as specified in this Prospectus, subject to cancellation, suspension or modification of the Offering and subject to certain other conditions. This Prospectus constitutes a prospectus for the purposes of Article 5.3 of Directive 2003/71/EC of the European Parliament and of the Council, as amended (the "Prospectus Directive") and Article 6(4) the Law on Securities of the Republic of Lithuania (the "Law on Securities") and Commission Regulation (EC) 809/204 of 29 April 2004, as amended ("Prospectus Regulation"). The Bank of Lithuania (in Lithuanian: Lietuvos bankas, the "LB") in its capacity as the competent authority in Lithuania under the Law on Securities, has approved this document as a prospectus. Following the requirements of the applicable legal acts, the LB has provided to the competent authority in Poland, Polish Financial Supervision Authority (in Polish: Komisja Nadzoru Finansowego, the "PFSA") (i) a certificate of approval attesting that this Prospectus has been drawn up in accordance with the Prospectus Directive, (ii) a copy of the Prospectus in English, (iii) a Polish translation of the Prospectus summary, and (iv) website address of the LB, on which the electronic version of the Prospectus is published. The Issuer will be authorised to carry out the Offering to the public in Poland, once the LB has provided the PFSA with a certificate of approval of this Prospectus and after the Prospectus has been made available to the public together with a translation of the Prospectus summary into the Polish language. See Section III Risk Factors for a discussion of certain considerations to be taken into account when deciding whether to invest in the Offer Shares. Prior to the Offering, there was no public market for the Shares. Based on this Prospectus, the Issuer intends to apply for up to 43,305,593 Shares, including the Offer Shares, to be admitted and introduced to listing and trading on the main market of the WSE (the "Admission"). The Issuer expects that trading in the Shares on the WSE will commence on or about 28 June 2013 (the "Listing Date"). Settlement of the Offering is expected to occur on or about 25 June 2013 (the "Settlement Date"). Prospective investors may subscribe for or purchase the Offer Shares during a period which is expected to commence on or about 7 June 2013 and is expected to end on or about 13 June 2013 (in case of Retail Investors) and is expected to commence on or about 14 June 2013 and is expected to end on or about 18 June 2013 (in case of Institutional Investors) (the "Subscription Period"). The final offer price per one Offer Share denominated in PLN (the "Offer Price") will be determined by the Issuer and the Selling Shareholder, acting jointly, upon recommendation of the Offering Agent after completion of book-building process for Institutional Investors and after the Subscription Period in the Retail Offering not later than on or about 14 June 2013, based on the interest from investors. The final number of the Offer Shares and the final number of Offer Shares allocated to each category of Investors will be determined by the Issuer and the Selling Shareholder, acting jointly, upon recommendation of the Offering Agent on or about 18 June 2013. The Offer Price will not be higher than PLN 16 (the "Maximum Price"). All the Shares are ordinary registered shares and are registered with the Central Securities Depository of Lithuania (in Lithuanian: Lietuvos centrinis vertybiniu² popieriu² depozitoriumas, the "CSDL") under ISIN code LT0000128555. The delivery of the Offer Shares will be made through the book-entry facilities by transferring them from the CSDL to the Polish clearing and settlement institution – the National Depository for Securities (in Polish: Krajowy Depozyt Papierów Wartoœciowych S.A., the "NDS"), acting as a secondary depository for the Shares. Offer Price: To be determined in PLN and announced no later than on or about 14 June 2013 Rubicon Partners Corporate Finance S.A. is the financial adviser (the "Adviser") and ING Securities S.A. is the offering agent (the "Offering Agent") in Poland for the purposes of the Offering and Admission of the Shares on the WSE.

Lead Manager and Offering Agent Financial Adviser

The date of this Prospectus 4 June 2013 AviaAM Leasing AB

TABLE OF CONTENTS

I IMPORTANTINFORMATION...... 4 1.1 Responsibility for this Prospectus ...... 4 1.2 NoticetoProspectiveInvestors...... 5 1.3 Presentation of Financial and Other Information ...... 5 1.4 Forward Looking Statements ...... 6 1.5 Information Incorporated by Reference ...... 6 1.6 DefinitionsandAbbreviations...... 7 1.7 UseofthisProspectus...... 10

II SUMMARY...... 11

III RISKFACTORS...... 27 3.1 RisksRelatedtoGroup'sFinancialConditionandFinancing...... 27 3.2 RisksRelatedtoLessees...... 28 3.3 RisksRelatedtoGlobal,PoliticalandEconomicalEnvironment...... 32 3.4 RisksRelatedtoAircraftLeasingMarket...... 38 3.5 Risks Related to the Offering ...... 39 3.6 RisksRelatedtoListingandMarket...... 40 3.7 LegalandTaxationRisks...... 43

IV USEOFPROCEEDS...... 46

V DIVIDEND POLICY ...... 48

VI CURRENCY PRESENTATION AND EXCHANGE RATE DATA ...... 50

VII CAPITALISATION AND INDEBTEDNESS ...... 51

VIII STATUTORYAUDITORS...... 52

IX SELECTEDFINANCIALINFORMATION...... 53

X BUSINESSOVERVIEW...... 58 10.1 Introduction...... 58 10.2 Formation of the Group and History of Business Development ...... 58 10.3 GroupStructure...... 60 10.4 AircraftFleet...... 63 10.5 CustomersandMarkets...... 65 10.6 CompetitiveEnvironment...... 70 10.7 CompetitiveStrengths...... 70 10.8 RelationshipwithAviaSolutionsGroupanditssubsidiaries...... 71 10.9 BusinessandGrowthStrategies...... 72 10.10 FinancingStrategy...... 73 10.11 BusinessModelofAircraftLeasing...... 73 10.12 ResearchandDevelopment,PatentsandLicenses...... 76 10.13 Regulatory Matters ...... 76 10.14 Environmental Matters ...... 76 10.15 InsuranceCoverage...... 76 10.16 MaterialContracts...... 76

XI MARKETANDINDUSTRYOVERVIEW...... 82 11.1 AirTransportIndustry...... 82 11.2 AircraftDemand...... 83 11.3 AircraftLeasingIndustry...... 85 11.4 RussiaandCISAviationMarketOverview...... 90 11.5 AircraftEconomicLife...... 92 11.6 AircraftValuesandLeaseRates...... 93

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XII OPERATINGANDFINANCIALREVIEW...... 95 12.1 Critical Accounting Policies and Estimates ...... 95 12.2 ChangesintheAccountingPolicy...... 96 12.3 Factors Having an Effect to the Results of Operations ...... 96 12.4 Analysis of Results of Operations for the Years Ended 31 December 2012, 2011 and 2010 ...... 96 12.5 Analysis of Results of Operations for the Three Months Ended 31 March 2013 and 2012 ...... 103 12.6 Analysis of Capital Resources, Borrowing Requirements and Funding Structure as at 31 December 2012, 2011 and 2010 ...... 108 12.7 Analysis of Capital Resources, Borrowing Requirements and Funding Structure as at 31 March 2013 ...... 110 12.8 Analysis of Cash Flows for the Years Ended 31 December 2012, 2011 and 2010 ...... 113 12.9 Analysis of Cash Flows for the Three Months Ended 31 March 2013 and 2012 ...... 113 12.10 Analysis of Investments for the Years Ended 31 December 2012, 2011 and 2010 ...... 114 12.11 Analysis of Investments for the Three Months Ended 31 March 2013 ...... 114 12.12 KeyForecastsofOperatingandFinancialData...... 115

XIII ADMINISTRATIVE AND MANAGEMENT BODIES AND SENIOR MANAGEMENT ...... 117 13.1 ManagementStructure...... 117 13.2 MembersoftheSupervisoryCouncil,theManagementBoard,KeyExecutives...... 117 13.3 PrincipalActivitiesOutsidetheCompanyofMembersoftheManagementandSupervisoryBodies...... 120 13.4 Declarations...... 122 13.5 ConflictsofInterest...... 122 13.6 RemunerationandBenefits...... 123 13.7 BoardPractices...... 123

XIV EMPLOYEES...... 126 14.1 NumberofEmployees...... 126 14.2 CollectiveBargaining...... 126 14.3 ShareholdingsandStockOptions...... 126 14.4 ArrangementsforInvolvingtheEmployeesintheCapitaloftheIssuer...... 126

XV SHAREHOLDERSANDSHARES...... 127 15.1 Shareholders of the Issuer prior and after the Offering ...... 127 15.2 ShareCapitaloftheCompany...... 128

XVI RELATEDPARTYTRANSACTIONS...... 129 16.1 Related Party Transactions for the Years Ended 31 December 2012, 2011 and 2010 ...... 130 16.2 Related Party Transactions for the Three Months Ended 31 March 2013 and 2012 ...... 132

XVIILEGALPROCEEDINGS...... 135

XVIII DESCRIPTION OF ISSUER'S SHARES, CORPORATE RIGHTS & OBLIGATIONS ...... 136 18.1 DescriptionoftheShares...... 136 18.2 RightsandObligationsGrantedbytheShares...... 136

XIX CERTAIN LITHUANIAN AND POLISH SECURITIES MARKET REGULATIONS ...... 140 19.1 EUTakeoverBidsRegulations...... 140 19.2 RegulationofthePolishSecuritiesMarket...... 140 19.3 TheWarsawStockExchange...... 141 19.4 RegulationoftheLithuanianSecuritiesMarket...... 141

XX THE OFFERING AND THE PLAN OF DISTRIBUTION ...... 143 20.1 General Information ...... 143 20.2 Timetable of the Offering ...... 143 20.3 Purchase by the Current Shareholders of the Issuer, the Members of the Management Board andSupervisoryCouncil...... 144 20.4 Supplements to the Prospectus ...... 144 20.5 Cancellation, Suspension or Modification of the Offering ...... 144 20.6 Maximum Price, Offer Price and Final Number of Offer Shares ...... 145

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20.7 PlacementofSubscriptionOrders...... 145 20.8 Payment for the Offer Shares ...... 146 20.9 Allotment of the Offer Shares ...... 146 20.10 RegistrationandSettlement...... 147 20.11 ListingoftheShares...... 147 20.12 Offering Agent ...... 148 20.13 Public Announcement of the Offering Results ...... 148 20.14 Overallotment...... 148

XXI PLACING...... 149

XXII SELLING RESTRICTIONS ...... 151

XXIII TAXATION OF THE ISSUER'S SHARES ...... 154 23.1 TaxationinLithuania...... 154 23.2 TaxationinPoland...... 155

XXIV ARTICLES OF ASSOCIATION ...... 159

XXVHISTORICALFINANCIALINFORMATION(ANNEX)...... 164

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I IMPORTANT INFORMATION

Governing Law. The Offering and the subsequent listing and trading of the Shares is conducted in accordance with and governed by the Polish law. The Company is organised and exists under the Lithuanian law. Also the Lithuanian law will be applicable with regards to the procedure of approval of this Prospectus and its supplements (if applicable) and certain other issues, related to the Offering. Prospectus. This Prospectus has been prepared by the Company in connection with the Offering and the Admission, solely for the purpose of enabling any prospective investor to consider an investment in the Offer Shares. The information contained in the Prospectus has been provided by the Issuer and other sources identified herein. This Prospectus is a prospectus in the form of a single document within the meaning of the Prospectus Directive and the Prospectus Regulation. This Prospectus has been prepared in accordance with Annex I (Minimum Disclosure Requirements for the Share Registration Document) and Annex III (Minimum Disclosure Requirements for the Share Securities Note) of the Prospectus Regulation. A summary of the Prospectus contains the key information items set out in Annex XXII (Disclosure Requirements in Summaries) of the Prospectus Regulation. In accordance with Article 47.1 of the Public Offering Act the Prospectus is published on the LB's website (www.lb.lt), Company's website (www.aviaam.com) and the Offering Broker's website (www.ingsecurities.pl).

1.1 Responsibility for this Prospectus Persons Responsible. The persons responsible for the information provided in this Prospectus are AviaAM Leasing AB, corporate ID code 302330793, with the registered office at Smolensko str. 10, Vilnius, Lithuania, and the Selling Shareholder. The Company and the Selling Shareholder accept responsibility for the information contained in this Prospectus. To the best of the knowledge and belief of the Company and members of its Management Board – Mr Gediminas iemelis (who is also the Selling Shareholder), Mr Aurimas Sanikovas, Mr Linas Dovydenas,ÿ Mr Justinas Gilys and Mr Gediminas Šiaudvytis having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect its import.

Gediminas iemelis Aurimas Sanikovas Linas Dovydenasÿ Justinas Gilys Chairman of the Management Member of the Management Member of the Management Member of the Management Board and the Selling Board Board Board Shareholder

Gediminas Šiaudvytis Member of the Management Board

Limitations of Liability. Without prejudice to the above, no responsibility is accepted by the persons responsible for the information given in this Prospectus solely on the basis of the summary of this Prospectus, unless such summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. Furthermore, the Lead Manager, the Adviser (as defined below) and the legal advisors to the Company, the Selling Shareholder, the Lead Manager or the Adviser expressly disclaim any liability based on the information contained in this Prospectus, the summary of this Prospectus or individual parts thereof and will not accept any responsibility for the correctness, completeness or import of such information. No information contained in this Prospectus or disseminated by the Company in connection with the Offering may be construed to constitute a warranty or representation, whether express or implied, made by the Lead Manager, the Adviser or the legal advisors to any third parties. Neither the Company nor the Selling Shareholder, Lead Manager, the Adviser or the legal advisors will accept any responsibility for the information pertaining to the Offering, the listing of the Shares on the WSE, the Group or its operations, where such information is disseminated or otherwise made public by third parties either in connection with this Offering or otherwise. By participating in the Offering, investors agree that they are relying on their own examination and analysis of this Prospectus (including the financial statements of the Group which form an indispensable part of this Prospectus) and any information on the Company that is available in the public domain. Investors should also acknowledge the risk factors that may affect the outcome of such investment decision (as presented in Section III Risk Factors). Investors should not assume that the information in this Prospectus is accurate as of any other date than the date of this Prospectus. The delivery of this Prospectus at any time after the conclusion of it will not, under any circumstances, create any implication that there has been no change in the Company's (its Group's) affairs since the date hereof or that the information set forth in this Prospectus is correct as of any time since its date.

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In the case of a dispute related to this Prospectus or the Offering, the plaintiff may have to resort to the jurisdiction of the Lithuanian courts and consequently a need may arise for the plaintiff to cover relevant state fees and translation costs in respect of this Prospectus or other relevant documents.

1.2 Notice to Prospective Investors The distribution of this Prospectus and the Offering of the Offer Shares in certain jurisdictions may be restricted by law. This Prospectus may not be used for, or in connection with, and does not constitute, any offer to sell, or an invitation to purchase, any of the Offer Shares offered hereby in any jurisdiction in which such offer, solicitation or invitation would be unlawful. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions, including those set out under Section XXII Selling Restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. As a condition for the purchase of any Offer Shares in the Offering, each purchaser will be deemed to have made, or in some cases be required to make, certain representations and warranties and will be required to take certain actions described in particular in Section XX The Offering and The Plan of Distribution, which will be relied upon by the Company, the Lead Manager and others. Each of the Company and the Selling Shareholder, reserve the right, at their sole and absolute discretion, to reject any purchase of Offer Shares that the Company, the Selling Shareholder, the Lead Manager or any agents believe may give rise to a breach or a violation of any law, rule or regulation. Please see, in particular, Section XXII Selling Restrictions. The Offer Shares have not been approved or disapproved by the United States Securities and Exchange Commission, any State securities commission in the United States or any other United States regulatory authority, nor have any of the foregoing passed upon or endorsed the merits of the Offering or the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offence in the United States.

1.3 Presentation of Financial and Other Information Financial Information. This Prospectus contains financial statements of, and financial information relating to the Company and its Subsidiaries (the "Group"). The Prospectus contains consolidated financial statements of the Group for the three years ended 31 December 2012 (the "IFRS Financial Statements") that have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The presentation of financial information in accordance with IFRS requires Management to make various estimates and assumptions which may impact the values shown in the financial statements and notes thereto. The actual values may differ from such assumptions. The IFRS Financial Statements were audited by PricewaterhouseCoopers UAB, with its registered office at J. Jasinskio str. 16B, Vilnius, Lithuania (see Section VIII Statutory Auditors). Also, the Prospectus contains unaudited consolidated condensed interim financial information of the Group for the three month period ended 31 March 2013, prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" (the "Consolidated Interim Financial Information"). The Consolidated Interim Financial Information was neither audited nor subject to review by the auditor. As described in Note 5 to the IFRS Financial Statements, in 2012 the accounting policy for aircraft was changed from historical cost to revalued amounts. In previously published statutory consolidated financial statements of the Group for the year ended 31 December 2010 and for the year ended 31 December 2011 (not included in this Prospectus) the Group has accounted for aircraft at their historical cost less accumulated depreciation and any accumulated impairment loss. Historical cost included expenditure that is directly attributable to the acquisition of the items. In 2012 the Company has changed its accounting policy on aircraft and started accounting it at revaluated amounts. In the IFRS Financial Statements included in this Prospectus, this change in accounting policy was adopted on a retrospective basis from 1 January 2010 (see Section 12.1 Critical Accounting Policies and Estimates). Approximation of Numbers. Numerical and quantitative values in this Prospectus (e.g. monetary values, percentage values, etc.) are presented with such precision which the Company deems sufficient in order to convey adequate and appropriate information on the relevant matter. From time to time, quantitative values have been rounded up to the nearest reasonable decimal or whole value in order to avoid excessive level of detail. As a result, certain values presented as percentages do not necessarily add up to 100% due to the effects of approximation. Exact numbers may be derived from the financial statements of the Group, to the extent that the relevant information is reflected therein. Dating of Information. This Prospectus is drawn up based on information which was valid on 31 March 2013. Where not expressly indicated otherwise, all information presented in this Prospectus (including the consolidated financial information of the Group, the facts concerning its operations and any information on the markets in which it operates) must be understood to refer to the state of affairs as of the aforementioned date. Where information is presented as of a date other than 31 March 2013, this is identified by either specifying the relevant date or by the use of expressions as "the date of this Prospectus", "to date", "until the date hereof" and other similar expressions, which must all be construed to mean the date of this Prospectus (4 June 2013). Currencies. In this Prospectus, financial information is presented in U.S. Dollars (USD), i.e. the official currency of the United States of America, which is the functional currency of the Company and all its Subsidiaries and Joint Venture. The information in the IFRS Financial

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Statements and Conolidated Interim Financial Information is presented in U.S. Dollars and in Lithuanian Litas (LTL), i.e. the official currency of the Republic of Lithuania, following the requirements of the applicable Lithuanian laws. Amounts originally available in other currencies have been converted to U.S. Dollars or Lithuanian Litas as of the date for which such information is expressed to be valid. With respect to the state fees, taxes and similar country specific values, information may occasionally be presented in currencies other than LTL or U.S. Dollars. The exchange rates between such currencies (also between the Lithuanian Litas) and U.S. Dollars may change from time to time. Documents on Display. Throughout the lifetime of this Prospectus, the Articles of Association of the Company (the "Articles of Association"), the IFRS Financial Statements, the Consolidated Interim Financial Information as well as the Prospective Financial Information accompanied by the Independent Assurance Report issued by PricewaterhouseCoopers UAB, preceding the date of this Prospectus where applicable, may be inspected at the head offices of the Company located at Smolensko str. 10, Vilnius, Lithuania, of the Lead Manager in Poland located at Plac Trzech Krzy¿y 10/14 00-499 Warsaw, Poland, of the Adviser located at Warsaw Financial Center, 53 Emilii Plater Street, 26th Floor, P.C. 00-113 Warsaw, Poland, and on the Company's website (www.aviaam.com). Any interested party may obtain a copy of these documents from the Company without charge. To the extent that documents other than mentioned above (i.e. reports, letters, valuations, statements) are not reflected in this Prospectus with reasonable fullness and do not at the sole discretion of the Company constitute business secrets of the Company, physical inspection of such documents will be arranged at the offices of the Company or via electronic mail at the request of any interested party and subject to an agreement between the Company and such interested party regarding the means of inspection of the relevant documents. Reference to the Company's website in this Prospectus should not be deemed to incorporate the information on the Company's website by reference. Updates. The Company will update the information contained in this Prospectus only to such extent, at such intervals and by such means as required by applicable law or considered necessary and appropriate by the Company. The Company is under no obligation to update or modify forward-looking statements included in this Prospectus. Third Party Information and Market Information. With respect to certain portions of this Prospectus, some information may have been sourced from third parties. Such information has been accurately reproduced as far as the Company is aware and is able to ascertain from the information published by such other third parties that no facts have been omitted, which would render the reproduced information inaccurate or misleading. Certain information with respect to the markets, on which the Company and its Subsidiaries are operating, is based on the best assessment made by the Management Board. With respect to the industry, in which the Group is active, and certain jurisdictions, in which its operations are being conducted, reliable market information might be unavailable or incomplete. While every reasonable care was taken to provide the best possible estimate of the relevant market situation and the information on the relevant industry, such information may not be relied upon as final and conclusive. Investors are encouraged to conduct their own investigation into the relevant market or seek professional advice. Information on market shares represents the Management Board's views, unless specifically indicated otherwise.

1.4 Forward Looking Statements This Prospectus includes forward-looking statements. Such forward-looking statements are based on current expectations and projections about future events, which are in turn made on the basis of the best judgment of the Management. Certain statements are based on the belief of the Management as well as assumptions made by and information currently available to the Management. Any forward-looking statements included in this Prospectus are subject to risks, uncertainties and assumptions about the future operations of the Group, the macro-economic environment and other similar factors.

In particular, such forward-looking statements may be identified by use of words such as strategy, expect, forecast, plan, anticipate, believe, will, continue, estimate, intend, project, goals, targets and other words and expressions of similar meaning. Forward-looking statements can also be identified by the fact that they do not relate strictly to historical or current facts. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements contained in this Prospectus whether as a result of such changes, new information, subsequent events or otherwise. The validity and accuracy of any forward-looking statements is affected by the fact that the Group operates in a competitive business. This business is affected by changes in domestic and foreign laws and regulations, taxes, developments in competition, economic, strategic, political and social conditions and other factors. The Group's actual results may differ materially from the Management's expectations because of the changes in such factors. Other factors and risks could adversely affect the operations, business or financial results of the Group (please see Section III Risk Factors for a discussion of the risks which are identifiable and deemed material at the date hereof).

1.5 Information Incorporated by Reference No documents or content of any website are incorporated by reference in this Prospectus in accordance with Article 28 of the Prospectus Regulation, except for the currently valid wording of Articles of Association of the Company (the "Articles of Association"), which is available on the website of the Company at www.aviaam.com and of the Offering Agent at www.ingsecurities.pl.

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1.6 Definitions and Abbreviations In this Prospectus, the definitions in capital letters will have the meaning indicated below unless the context of the Prospectus requires otherwise. Definitions are listed in alphabetical order and the list is limited to the definitions which are considered to be of more importance. Other definitions may be defined elsewhere in the Prospectus.

AAL Capital Aircraft Holdings AAL Capital Aircraft Holdings Limited, a private limited liability company established and existing under the laws of the Republic of Cyprus, corporate ID code HE 294651, with its registered address at Demetriou Karatasou, 15, Anastasio Building, Strovolos, 2024 Nicosia, the Republic of Cyprus

Admission Admission of the Shares to trading on the WSE

Adviser Rubicon Partners Corporate Finance S.A.

Allotment Date The date on which the final number of the Offer Shares and the allotment between the Retail Investors and the Institutional Investors is announced

Articles of Association Articles of Association of the Company

ASG Avia Solutions Group and all its subsidiaries

AviaAM B01 AviaAM B01 UAB, a private limited liability company established and existing under the laws of the Republic of Lithuania, corporate ID code 125808161, with its registered address at Smolensko str. 10, Vilnius, the Republic of Lithuania

AviaAM B02 AviaAM B02 UAB, a private limited liability company established and existing under the laws of the Republic of Lithuania, corporate ID code 300618156, with its registered address at Smolensko str. 10, Vilnius, the Republic of Lithuania

AviaAM B03 AviaAM B03 UAB, a private limited liability company established and existing under the laws of the Republic of Lithuania, corporate ID code 300887740, with its registered address at Smolensko str. 10, Vilnius, the Republic of Lithuania

AviaAM B04 AviaAM B04 UAB, a private limited liability company established and existing under the laws of the Republic of Lithuania, corporate ID code 300651619, with its registered address at Smolensko str. 10, Vilnius, the Republic of Lithuania

AviaAM B05 AviaAM B05 UAB, a private limited liability company established and existing under the laws of the Republic of Lithuania, corporate ID code 302642412, with its registered address at Smolensko str. 10, Vilnius, the Republic of Lithuania

AviaAM B06 AviaAM B06 UAB, a private limited liability company established and existing under the laws of the Republic of Lithuania, corporate ID code 302647509, with its registered address at Smolensko str. 10, Vilnius, the Republic of Lithuania

AviaAM B07 AviaAM B07 UAB, a private limited liability company established and existing under the laws of the Republic of Lithuania, corporate ID code 302671887, with its registered address at Smolensko str. 10, Vilnius, the Republic of Lithuania

AviaAM B08 AviaAM B08 Limited, an exempted company incorporated with limited liability established and existing under the laws Bermuda, corporate ID code 47627, with its registered address at Crawford House, 50 Cedar Avenue, Hamilton HM 11, Bermuda

AviaAM Leasing, AviaAM Leasing AB, a public limited liability company established and existing under the laws of Company or Issuer the Republic of Lithuania, corporate ID code 302330793, with its registered address at Smolensko str. 10, Vilnius, the Republic of Lithuania, the Shares of which are offered for the public sale in Poland under the terms and conditions of this Prospectus

AviaAM Leasing Bermuda AviaAM Leasing Bermuda Limited, an exempted company incorporated with limited liability established and existing under the laws of Bermuda, corporate ID code 45778, with its registered address at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda

Avia Solutions Group Avia Solutions Group AB, a public limited liability company established and existing under the laws of the Republic of Lithuania, corporate ID code 302541648, with its registered address at Smolensko str. 10, Vilnius, the Republic of Lithuania

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CIS Commonwealth of Independent States (in Russian: ), a regional organization whose participating countries are certain former Soviet Republics

CIT Polish Act of February 15, 1992 on Corporate Income Tax, as amended

Consolidated Interim Unaudited consolidated condensed interim financial information of the Group for the three month Financial Information period ended 31 March 2013, prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"

CSDL The Lithuanian Central Securities Depository (in Lithuanian: Lietuvos Centrinis Vertybiniu²Popieriu² Depozitoriumas), the clearing and settlement institution in Lithuania

EASA European Aviation Safety Agency

EEA European Economic Area

ESPI Elektroniczny System Przekazywania Informacji, electronic system for transmission of information operated by the PFSA

EU European Union

EUR, €, Euro The lawful currency of the European Union Member States that adopted the single currency

Forecasts or Prospective Group's forecast of revenue, profit and EBITDA for the year ended 31 December 2013 Financial Information

Foreign Currency Act The Polish Act of July 27, 2002 on Foreign Currency Exchange Rules, as amended

FSMA The United Kingdom Financial Services and Markets Act 2000, as amended

GDP Gross domestic product

General Meeting General Meeting of Shareholders of the Company

Group Company and all its Subsidiaries

Group Companies Any direct or indirect subsidiary of the Company

IFRS International Financial Reporting Standards as adopted by the European Union

IFRS Financial Statements Consolidated financial statements of the Group for the three years ended 31 December 2012 prepared in accordance with IFRS

IATA International Air Transport Association

Institutional Investors Investors that receive an invitation from the Offering Agent to participate in the book-building process and subscribe for the Offer Shares, i.e. (i) legal persons and organisational units without legal personality that are Polish residents within the meaning of the Foreign Currency Act, (ii) entities managing securities portfolios on a discretionary basis, acting on behalf of persons whose accounts they manage and for whom they intend to acquire the Offer Shares, (iii) legal persons and organisational units without legal personality with a registered office outside the Republic of Poland (except in the United States of America) who are non-U.S. persons within the meaning of Regulation S

Investors Institutional Investors collectively with the Retail Investors

Key Executives General Manager, Executive Director and Deputy General Manager of the Company collectively

Law on Aviation Law on Aviation of the Republic of Lithuania, as amended

Law on Companies Law on Companies of the Republic of Lithuania, as amended

Law on Securities Law on Securities of the Republic of Lithuania, as amended

LCAA Civil Aviation Administration of the Republic of Lithuania

LCC Low-cost carriers

Lead Manager ING Securities S.A. or Offering Agent

8 AviaAM Leasing AB

Listing Date First day of trading in the Shares on the WSE

LB The Bank of Lithuania (in Lithuanian: Lietuvos bankas)

LTL, Lt or Lithuanian Litas Litas, the lawful currency of the Republic of Lithuania

Major Shareholders The Company's major shareholders ZIA Valda Cyprus Leasing Ltd., Mesotania Holdings Limited, as indicated in Section XV Shareholders and Shares

Management The Management Board and Key Executives of the Company

Management Board Management Board of the Company

Maximum Price The maximum price per each Offer Share established by the Management Board at PLN 16, at which Retail Investors will place their subscriptions

Member State A Member State of the European Economic Area

MiFID Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC

Minority Shareholders Linas Dovydenas,ÿ Gediminas iemelis, Aurimas Sanikovas, Virginija Svilainyte,ÿ Tadas Goberis, IA Valda AB and Indeco: Investment and Development UAB collectively

N/A 'not applicable'

NDS Krajowy Depozyt Papierów Wartoœciowych S.A. (KDPW S.A), the National Depository for Securities – the clearing and settlement institution in Poland

New Shares Up to 13,857,790 new Shares to be issued by the Company based on a decision of the Extraordinary General Meeting of the Company of 10 May 2013

Offering The offering of the Offer Shares based on this Prospectus

Offer Price The offer price per each Offer Share which will be determined in accordance with the terms and conditions of the Offering

Offer Shares The New Shares and the Sale Shares offered jointly

PFSA Polish Financial Supervision Authority (in Polish: Komisja Nadzoru Finansowego), the capital market regulatory authority in Poland

PIT Polish Act of July 26, 1991 on Personal Income Tax, as amended

Placement Agreement The agreement to be concluded between inter alia the Company, the Selling Shareholder, the Adviser and the Lead Manager related to the Offering prior to the Allotment Date

PLN, Polish zloty The lawful currency of the Republic of Poland

Prospectus This document, prepared for the purpose of the Offering and the Admission, its annex and all the supplements (if any)

Prospectus Directive Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC and any relevant implementation measures, as amended

Prospectus Regulation Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements, as amended

Public Offering Act The Polish Act of July 29, 2005 on Public Offerings and Conditions governing the Admission of Financial Instruments to Trading on Organized Markets, and on Listed Companies, as amended

9 AviaAM Leasing AB

Regional Charter Capital Regional Charter Capital Limited, a private limited liability company established and existing under or the Joint Venture the laws of Bermuda, corporate ID code 47039, with its registered address at Crawford House, 50 Cedar Avenue, Hamilton HM11, Bermuda

Regulation S Regulation S under the U.S. Securities Act

Related Parties As defined in International Accounting Standard 24 Related Party Disclosures

Retail Investors (i) natural persons, (ii) legal persons and organisational units without legal personality; both residents and non-residents within the meaning of the Foreign Currency Act, except U.S. persons within the meaning of Regulation S, holding, at the time of subscription for the Offer Shares, an investment account or being a beneficiary of an omnibus account with an investment firm licensed to provide such services within the territoryoftheRepublicofPoland

Sale Shares Up to 323,926 existing Shares of the Company, offered by the Selling Shareholder during the Offering

Section A section of this Prospectus

Selling Shareholder Gediminas iemelis

Senior Management In the opinion of the Company, apart from the Management Board and Supervisory Council members, the most important persons for the Group

Settlement Date The date of delivery of the Offer Shares to Investors and closing of the Offering

Shares Any ordinary registered shares of the Company with the nominal value of LTL 1 each issued and outstanding at any time

Subscription Periods The periods during which the Investors may submit orders for the purchase of the Offer Shares in accordance with the terms and conditions of this Prospectus

Subsidiaries AviaAM B01, AviaAM B02, AviaAM B03, AviaAM B04, AviaAM B05, AviaAM B06, AviaAM B07, AviaAM B08, AAL Capital Aircraft Holdings and AviaAM Leasing Bermuda collectively

Summary The summary of this Prospectus

Supervisory Council Supervisory Council of the Company

Takeover Directive Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids, as amended

TCLT Polish Act of September 9, 2000 on Transfer Tax A, as amended

Trading in Financial Polish Act of 29 July 2005, on Trading in Financial Instruments, as amended Instruments Act

USD, $, US$ or U.S. Dollars The lawful currency of the United States of America

VAT The value added tax applicable in the Republic of Lithuania

WSE Warsaw Stock Exchange (in Polish: Gie³da Papierów Wartoœciowych w Warszawie S.A.), a regulated market in Poland

WSE Corporate Governance Code of Best Practice for WSE Listed Companies Code

1.7 Use of this Prospectus This Prospectus is prepared solely for the purposes of the Offering and the Admission; it may not be construed as a warranty or a representation to any person not participating or not eligible to participate in the Offering or trade in the Shares. No public offering of theSharesisconductedinanyjurisdictionother than Poland and consequently the dissemination of this Prospectus in other countries may be restricted or prohibited by law. The Prospectus cannot be used for any purpose other than for informational. Prior to making a decision to participate or refrain from participating in the Offering or to conduct any trading activities with the Shares on the WSE the prospective investors should read this document. In making an investment decision, prospective investors must rely upon their own examination of the Company and the terms of this document, including the risks involved. It is forbidden to copy, reproduce (other than for private and non-commercial use) or disseminate this Prospectus without express written permission from the Company.

10 AviaAM Leasing AB

II SUMMARY

This Summary is made up of disclosure requirements known as "Elements" in accordance with the Annex XXII (Disclosure Requirements in Summaries) of the Prospectus Regulation. These elements are numbered in Sections A – E (A.1 – E.7) below. This Summary contains all the Elements required to be included in a summary for this type of securities and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the Summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the Summary with the mention of 'not applicable'.

Section A – Introduction and warnings

Element Title Disclosure

A.1 Introduction and warnings This Summary is not the prospectus for the public Offering and the listing of the Company's Shares and should be read merely as an introduction to the same. This Summary presents the facts and circumstances that the Company considers important with respect to the Company's business and the public Offering of the Company's Shares and is a summary of certain information appearing in more detail elsewhere in the Prospectus. Any decision to participate in the Offering and invest in the Company's shares should be based by each investor on the Prospectus (including any amendments or supplements thereto) as a whole and not merely on this Summary. Prospective investors are cautioned that where a claim relating to the information contained in the Prospectus (or this Summary) is brought before a court, the plaintiff investor might, under the national legislation of the relevant state, have to bear the costs of translating the entire Prospectus before court proceedings are initiated. The Company accepts civil liability in respect of this Summary (including any translation hereof) solely in the case where this Summary is found to be misleading, inaccurate or inconsistent when read together with the Prospectus as a whole or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities.

A.2 Not applicable.

Section B – Issuer

Element Title Disclosure

B.1 Legal and commercial AviaAM Leasing AB. name

B.2 Domicile / legal form / AviaAM Leasing AB is a public limited liability company established and existing under legislation / country of the laws of the Republic of Lithuania, corporate ID code 302330793, with its registered address incorporation at Smolensko str. 10, Vilnius, the Republic of Lithuania.

B.3 Key factors regarding Key information regarding the Group's operations and principal markets current operations, AviaAM Leasing is an integrated global aviation Group of Companies established to acquire, principal activities, lease and trade commercial aircraft. The Group's primary focus is on the market for used categories of products aircraft, primarily on aircraft ten years of age or older. The Group is principally engaged sold and services in purchasing commercial aircraft which the Group, in turn, leases to airlines around the world performed. to generate attractive returns on equity. The Group leases its aircraft to airlines pursuant to net Principal markets operating ("dry") leases that require the lessee to pay for maintenance, insurance, taxes and all other aircraft operating expenses during the lease term. In addition to aircraft operating lease activities, the Group is actively engaged in aircraft trading business through acquiring, refurbishing and subsequent sale of aviation assets. The Group concentrates its leasing business in emerging markets – with high growth potential in terms of aircraft leasing market size and rapid process of development of infrastructure

11 AviaAM Leasing AB

within the aviation industry – such as Russia and CIS, while also seeking opportunities on a global scale. In general, these emerging markets are experiencing increased demand for passenger airline travel and have lower market saturation than more mature markets such as North America and Western Europe. In addition, airlines in some of these emerging markets have fewer financing alternatives, enabling the Group to command relatively higher lease rates compared to lease rates in more mature markets. The Group is focusing on the niche market for used aircraft. Specifically, the Group is active in the market for used mainline narrowbody jet aircraft such as Boeing 737, Boeing 757, Airbus A320s and high-potential regional jets such as Bombardier CRJs and Embraer ERJs. As of 31 December 2012 the Group owned 18 aircraft: 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 7 Bombardier CRJ200. 15 aircraft were leased out under operating lease contracts, 2 aircraft were under preparation for use and one aircraft was off lease. In addition to the total of 18 aircraft, as of 31 December 2012, 1 aircraft (owned by the Joint venture, in which the Group holds a stake of 50%) was undergoing the conversion into a business jet. As of 31 March 2013 the Group owned 19 aircraft: 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 8 Bombardier CRJ200. 17 aircraft were leased out under operating lease contracts and 2 aircraft were under preparation for lease. Breakdown of aircraft on lease is presented in the table below:

As at 31 March As at 31 December Aircraft type 2013 2012 2012 2011 2010 Boeing 737-300 44344 Boeing 737-500 44444 Boeing 757-200 11111 BombardierCRJ200 8573– Total 171415129

Source: the Company

The following tables set forth information regarding the aircraft transactions the Group together with its Joint Venture has executed between 1 January 2010 and 31 December 2012, as well as during three months ended 31 March 2013 and three months ended 31 March 2012, i.e. the number of initial (new) leases, the number of aircraft the Group purchased and the number of aircraft it sold.

Year ended 31 December Activity Total 2012 2011 2010 Aircraft purchases 13 5 – 18 Boeing 737-300 1 – – 1 Boeing 737-500 2 – – 2 Bombardier CRJ200 10 5 – 15 Aircraftsales 71–8 Boeing 737-300 1 – – 1 Bombardier CRJ200 6 1 – 7 Newleases 5319 Boeing 737-300 1 – 1 2 Bombardier CRJ200 4 3 – 7

Source: the Company

The revenue from aircraft leases (i.e. lease revenue, supplemental rent and other income), as described in more detail in Section B.7 below, accounted for 52.0% of total revenue in 2012, 80.0% in 2011 and 100.0% in 2010. The share of revenue from the sales of aircraft increased from 20.0% in 2011 to 48.0% in 2012 as the Group became actively engaged in aircraft trading activities.

12 AviaAM Leasing AB

3monthsended31March Activity 2013 2012 Aircraft purchases 1 3 Boeing 737-300 – – Boeing 737-500 – – Bombardier CRJ200 1 3 Aircraft sales 1 1 Boeing 737-300 1 – Bombardier CRJ200 – 1 New leases 2 2 Boeing 737-300 1 – Bombardier CRJ200 1 2 Source: the Company

The revenue from aircraft leases (i.e. lease revenue and supplemental rent), as described in more detail in Section B.7 below, accounted for 100.0% of total revenue for the three months ended 31 March 2013 and 55.6% for the same period of 2012. There have been no aircraft trading transactions in the three month period ended 31 March 2013.

Competitive Strengths and Advantages The Group has several distinctive advantages over its competitors, which have ensured its dynamic growth and position in the aviation industry. The Group will capitalize further on these advantages as the Management believes they are critical to the Group's success: • Direct access to high growth markets The Group is the only aircraft lessor in Central and Eastern Europe engaged in leasing of mainline narrowbody and regional jets. Group's proximity to the eastern market allowed it to establish a foothold and to build strong relationships with its customers. This partnership enables the Group to gather extensive knowledge of the market, find attractive opportunities and secure adequate returns for its shareholders. • Focusonanichemarketofmid-lifenarrowbodyandregionaljets Major lessors in the market tend to focus on leasing brand new aircraft, which require significant capital and leverage. Used aircraft do not require nearly such funds while revenues (in the form of leases) generated by used aircraft are higher in relation to the aircraft value than those generated by new aircraft. There are no significant operational and design differences, if at all, between older and newer aircraft of the same type. Focusing on used aircraft provides the Group with higher returns on investment and therefore, higher value for its shareholders. In addition, lower investments and leverage per aircraft minimize the exposure to capital market volatility giving the Group an advantage over high debt and equity investments into brand new aircraft. • Knowledge, experience and personal relationships Both aircraft offerings as well as potential lease opportunities that are available on the market do not necessarily reflect all available information about an asset, such as when some individuals get certain information before others, or when some individuals do not properly analyse the available information. Aviation industry is a relatively closed community; hence relationships are one of the critical aspects of success. Group's expertises, knowledge, experience as well as its longstanding relationships allow the Group to effectively identify potential transactions by verifying sources and communicating with other market players. As a result the Group is able to find attractive investment opportunities and seek out beneficial lease arrangements. In addition, many of Group's employees and business partners have long lasting personal relationships with key players in the aviation industry. These relationships have allowed the Group to benefit from sound investments and contributed to its rapid growth.

13 AviaAM Leasing AB

• Ability to source transactions at attractive prices Through extensive network of contacts the Group's managers are able to locate aircraft in more restricted, inefficient selling situations, which the Group expects will enable it to buy assets at competitive prices. The Group intends to follow a disciplined investment strategy and in many cases source aircraft through its long-standing relationships. Sellers may include financial institutions that have acquired aircraft as a result of foreclosure and lessors and brokers that are sensitive to closing risk and only deal with relationship buyers. • Flexibility and open approach to client needs Large aircraft leasing market players such as GECAS or ILFC focus on large airline operators that tend to make larger orders for aircraft and have standardized requirements in terms of technical specifications, lease terms and transaction structure. Smaller operators that have specific requirements that do not meet these standardized requirements provide an ideal target market, where flexibility and high customizability is a highly sought feature. The Group due to its open approach and customized offering is able to serve this market for smaller operators effectively. Such focus on specific client needs removes the threat of competing with larger aircraft lessors and therefore allows for establishment of a solid foundation for long term relationship with the client. • Business partnership with Avia Solutions Group Cooperation with Avia Solutions Group AB and its subsidiaries ("ASG") gives the Group invaluable access to a strong sales network as well as technical, legal and commercial support through ASG. Moreover, the relationship with ASG related MRO organization (i.e. FL Technics AB) provides the Group with a powerful tool for minimizing risks related to aircraft residual value, i.e. the channel to sell the off-lease aircraft for tear-down through subsequent spare part sales activity. The Management believes that such cooperation leverages the Group's ability to manage aircraft in a most profitable way and with least amount of risk through the product lifecycle. In addition, cooperation with FL Technics AB enables the Group to perform maintenance and repairs on purchased aircraft in a most efficient way, effectively increasing its options in regards to acquiring aircraft as well as increasing yields on existing aircraft through conversion from regular commercial aircraft to business jet or to cargo aircraft. • Fully integrated offering Although the Group positions itself primarily as a leasing group of companies, its cooperation with ASG allows the Group to provide its clients with a fully integrated offering for the purchase, management, refurbishment, repair, leasing, saleofaircraftaswellascrewandpilottraining. Such inclusive approach to clients gives the Group a competitive advantage over strict aircraft lessors as the Group can combine offers and provide more attractive and complete solutions to its clients.

Business and Growth Strategies The Management believes the following strategies will enable the Group to continue to serve its customers, grow its customer base, manage and grow its aircraft portfolio to optimize revenues and profitability and strengthen its position in the marketplace: • focus on high growth markets; • expand Group's aircraft portfolio; • generate highest returns on investments by focusing on mid-life commercial aircraft; • be flexible during market shifts and economic cycles; • leverage management's experience and personal relationships.

B.4a Significant recent trends The long-term outlook for an increasing number of aircraft remains robust primarily due to affecting the industry increased passenger traffic. According to Boeing Current Market Outlook 2012–2031, continuing recovery of global economy should bring the aviation industry back to the long-term growth rate of 5 percent per year. The size of the global commercial aircraft fleet is expected to double over the next two decades. Key elements that are currently driving demand growth for both new and used aircraft include:

14 AviaAM Leasing AB

• high rates of economic growth and increasing propensity to travel in emerging markets; • liberalization of air service between and within countries; • stimulation of traffic from growing LCCs offering lower fares. The requirement to replace older aircraft that are retired or converted to freighter configuration represents a significant driver of aircraft demand, particularly in large mature regions. Replacement demand is driven by a number of factors including: • relative operating economics, reliability, and environmental considerations; • technological advancement, including the introduction of new aircraft and engines; • aircraft reaching their economic useful lives, driving retirement demand; • freighter conversion demand, driving replacement demand of passenger aircraft. Airline operators will further pursue aircraft leasing as opposed to ownership. According to Visiongain Commercial Aircraft Leasing Market 2011–2021, the market share of leased aircraft of the total active commercial fleet is expected to increase from 32% in 2011, to reach 39% in 2021. The outlook for aviation demand in the CIS region remains promising and continues to grow. Significant driver of increased number and size of orders for new aircraft is the strong push for replacement of older generation aircraft still operating in CIS.

B.5 Group description. The current structural chart of the Groupisprovidedinthefigurebelow: Position of the Company within the Group AviaAM Leasing AB (Lithuania)

100%

AviaAM B01 UAB (Lithuania)

100%

AviaAM B02 UAB (Lithuania) 100%

AviaAM B03 UAB (Lithuania)

100%

AviaAM B04 UAB (Lithuania)

100%

AviaAM B05 UAB (Lithuania)

100%

AviaAM B06 UAB (Lithuania) 100%

AviaAM B07 UAB (Lithuania) (Bermuda) 100%

AAL Capital Aircraft AviaAM Leasing 100% Holdings Ltd. Bermuda Ltd. (Cyprus)

100% 50%

Regional Charter Capital AviaAM B08 Ltd. Ltd.

(Bermuda) (Bermuda)

As of the date of this Prospectus the Group is comprised of 12 entities. The Company has 10 Subsidiaries and1JointVenture.

15 AviaAM Leasing AB

B.6 Persons, directly The list of the Company's shareholders as of the date of the Prospectus: or indirectly, having interest in the Company's Number of Percentage Role in the Company's shares of shares No Shareholder capital or voting rights Management and votes and votes notifiable under Lithuanian owned owned law and the amount of 1. ZIA Valda Cyprus Leasing Ltd. 17,078,622 58.00 such interest. 2. Mesotania Holdings Ltd. 10,899,858 37.01 Voting rights of major 3. Linas Dovydÿenas Member of the Management Board 441,717 1.50 shareholders. 4. Gediminas iemelis Chairman of the Management Board 323,926 1.10 Direct or indirect control 5. Aurimas Sanikovas Member of the Management Board 294,478 1.00 of the Company 6. Virginija Svilainytÿe 161,963 0.55 7. Tadas Goberis General Manager 147,239 0.50 8. IA Valda AB 60,000 0.20 9. Indeco: Investment and Development UAB 40,000 0.14 Total 29,447,803 100.00 Source: the Company

There are 9 shareholders in the Company at the date of the Prospectus. Two Major Shareholders own 95.01% of the Shares of the Company. Mr Gediminas iemelis owns directly 1.1% of Shares of the Company and is also an indirect shareholder of the Company and has an indirect control thereof through ZIA Valda Cyprus Leasing Ltd. ZIA Valda Cyprus Leasing Ltd., as indicated above, has 58% shareholding in the Company and the sole shareholder of ZIA Valda Cyprus Leasing Ltd. is IA Valda AB, 80% shareholding in which is owned by Mr Gediminas iemelis.

B.7 Selected historical key SELECTED INFORMATION FROM Year ended 31 December financial information. THE STATEMENTS OF COMPREHENSIVE Narrative description of INCOME (USD'000) 2012 2011 2010 significant change to Revenue 60,242 27,528 20,785 the Company's financial Operating profit 27,057 21,675 (5,871) condition and operating Finance costs – net (3,981) (4,173) 373 results subsequent to Profit (loss) before income tax 23,076 17,502 (5,498) the period covered Profit (loss) for the year 19,603 15,069 (5,486) by selected historical key Total other comprehensive income 6,424 5,771 – financial information. Total comprehensive income 26,027 20,840 (5,486)

SELECTED INFORMATION FROM As at 31 December THE BALANCE SHEETS (USD'000) 2012 2011 2010 Non-current assets 66,989 53,154 38,981 Current assets 24,971 21,542 5,083 Total assets 91,960 74,696 44,064 Total Equity 22,600 (1,454) (34,430) Non-current liabilities 47,827 54,687 61,625 Current liabilities 21,533 21,463 16,869 Total equity and liabilities 91,960 74,696 44,064

SELECTED INFORMATION FROM Year ended 31 December THE CASH FLOW STATEMENTS (USD'000) 2012 2011 2010 Net cash generated from (used in) operating activities 17,512 24,301 10,479 Net cash generated from (used in) investing activities (9,222) (1,369) (1,539) Net cash generated from (used in) financing activities (13,854) (10,178) (10,110) Net increase (decrease) in cash and cash equivalents (5,564) 12,754 (1,170)

16 AviaAM Leasing AB

SELECTED INFORMATION FROM 3monthsended31March THE INTERIM STATEMENTS OF COMPREHENSIVE 2013 2012 INCOME (USD'000) (unaudited) (unaudited) Revenue 6,578 12,399 Operating profit 2,662 6,710 Finance costs – net (1,036) (854) Profit (loss) before income tax 1,626 5,856 Profit (loss) for the year 1,412 4,975 Total other comprehensive income – – Total comprehensive income 1,412 4,975

As at SELECTED INFORMATION FROM THE INTERIM BALANCE SHEETS (USD'000) 31 March 2013 31 December (unaudited) 2012 Non-current assets 70,180 66,989 Current assets 20,737 24,971 Total assets 90,917 91,960 Total Equity 24,011 22,600 Non-current liabilities 48,905 47,827 Current liabilities 18,001 21,533 Total equity and liabilities 90,917 91,960

3monthsended31March SELECTED INFORMATION FROM THE INTERIM CASH FLOW STATEMENTS (USD'000) 2013 2012 (unaudited) (unaudited) Net cash generated from (used in) operating activities 3,727 405 Net cash generated from (used in) investing activities 103 (3,134) Net cash generated from (used in) financing activities (5,501) (3,563) Net increase (decrease) in cash and cash equivalents (1,671) (6,292)

Source: IFRS Financial Statements, Consolidated Interim Financial Information

Significant changes to the revenue of the Group For the financial year ended 31 December 2012, the Group revenue was USD 60.2 million and increased by 118.8% as compared to the USD 27.5 million in 2011. The increase was attributable to an increase in aircraft trading transactions and increase in the number of aircraft on lease. For the financial year ended 31 December 2011 the Group's revenue was USD 27.5 million and increased by 32.4% as compared to the same period in 2010. The increase was primarily due to new aircraft on lease. For the three months ended 31 March 2013 the Group's revenue was USD 6.6 million, and decreased by 46.9% as compared to USD 12.4 million in the same period in 2012. The decrease was primarily due to no aircraft trading transactions being performed by the Group in the period under review in 2013.

Significant changes to the financial position of the Group The Group did not encounter any significant out of the ordinary business events that had effect on its financial position. All changes to the financial position of the Group result from the customary leasing and trading activities. Information regarding the trading and leasing activities are listed in the tables describing the aircraft transactions of the Group together with its Joint Venture executed between 1 January 2010 and 31 December 2012, as well as during three months ended 31 March 2013 and three months ended 31 March 2012 in section B.3 of the Summary.

17 AviaAM Leasing AB

The total assets of the Group as of 31 December 2012 were USD 92.0 million (an increase by 23.1% compared to 31 December 2011). In turn, the total assets of the Group as of 31 December 2011 were USD 74.7 million (an increase by 69.5% compared to 31 December 2010). Equity and financial liabilities financed 24.6% and 75.4% respectively of the Group's total assets as at 31 December 2012. The total assets of the Group as of 31 March 2013 were USD 90.9 million (a decrease by 1.1% compared to 31 December 2012). Equity and total liabilities financed 26.4% and 73.6% respectively of the Group's total assets as at 31 March 2013.

B.8 Selected key pro forma Not applicable. The Prospectus does not contain pro forma financial information. financial information

B.9 Profit forecast The Prospective Financial Information for the year ended 31 December 2013 (USD'000):

Year ended Year ended 31 December 2012 31 December 2013 – Actual –Forecast Revenue 60,242 57,049 Profit for the year 19,603 19,605 EBITDA 36,430 38,343

The Prospective Financial Information is accompanied by the Independent Assurance Report issued by PricewaterhouseCoopers UAB.

B.10 Qualifications in the audit Not applicable. The audit report on the historical financial information does not contain report on the historical qualifications. financial information

B.11 Workingcapital In the opinion of the Company, the working capital of the Group, understood as the Group's ability to raise funds and other liquid resources necessary for timely repayment of liabilities, is sufficient to cover the Group's needs in the 12 months from the date of the Prospectus.

Section C – Securities

Element Title Disclosure C.1 Type and class of The Shares (including Offer Shares) are ordinary registered shares with a nominal value of securities and security LTL 1 each. The security identification number (ISIN code) of the Shares is: LT0000128555. identification number All the Shares, including the Offer Shares, are pari passu (at an equal pace without preference) with regard to property and non-propertyrightstheygranttoshareholders.

C.2 Currency of the issue The Currency of the Share issue is LTL. However, all the monetary amounts used in the Offering shall be executed in PLN.

C.3 Number of shares issued As of the date of this Prospectus, the Company's share capital is LTL 29,447,803 and is divided and fully paid / issued but into 29,447,803 registered Shares with a nominal value of LTL 1 each. not fully paid. Par value As of the date of this Prospectus, all of the issued and outstanding Shares are fully paid up. per share

C.4 Rights attached to Pursuant to items 5.1 and 5.2 of the Articles of Association, rights conferred by the Shares of the securities the Company are as follows: – to receive a part of the Company's profit (dividend); – to receive the Company's funds when the share capital of the Company is reduced in order to pay out the Company's funds to its shareholders; – to receive shares gratis in the event the share capital is increased from the Company's own funds, except cases indicated in the Law on Companies; – the pre-emptive right over each new issue of the Company's shares or convertible bonds, except when pursuant to the procedure laiddownintheLawonCompaniestheGeneral Meeting has made a decision to withdraw the said right for all shareholders (this decision 3 has to be adopted by a /4 majority vote of shareholders present at the General Meeting);

18 AviaAM Leasing AB

– to lend the funds to the Company under the procedure prescribed by the applicable Lithuanian law; – to receive a part of the residual assets of the Company in liquidation; – to attend the General Meetings; – to give questions to the Company in advance relating to the items on the agenda of the General Meetings; – to vote at the General Meetings in accordance with the rights attached to shares; – to receive information about the Company following the procedure prescribed by the Law on Companies; – to apply to the court for the compensation of damages caused by the Management Board members or the General Manager of the Company by non-performance or improper performance of their duties prescribed by the laws of the Republic of Lithuania and the Articles of Association, as well as in other cases provided by laws; – other property and non-property rights, indicated in the applicable Lithuanian laws. All the Shares confer equal rights to all the shareholders.

C.5 Restrictions on free Not applicable. There are no restrictions on transfer of the Shares (including the Offer Shares), transferability of securities as they are described in applicable laws.

C.6 Admission to trading / As of the date of the Prospectus there are no Shares admitted to trading on any regulated market. Name of the regulated The Company is applying for the admission of up to 43,305,593 ordinary registered shares market (including up to 13,857,790 newly issued Shares) to trading on the Warsaw Stock Exchange.

C.7 Dividend policy The Company does not have an approved policy on dividend distributions and any restrictions thereon. Decision on distribution of dividends to shareholders is adopted by the General Meeting, with a right to propose a draft decision with this regard generally vested with the Management Board, the Supervisory Council and the shareholders, holding not less than 1/20 of all the shares and votes in the General Meeting. The Management of the Company does not rule out proposing to pay dividends to the shareholders in the future. The initial proposal of the draft decision as to declaration and payment of dividends to shareholders will be at the discretion of the Management Board and will depend on the Group's financial condition, capital requirements and other factors the Management Board deems relevant.

Section D – Risks

Element Title Disclosure D.1 Key risks specific Risks related to Aircraft Leasing Market are as follows: to the Company • Competition from other aircraft lessors with greater resources or a lower cost of capital or the industry than the Group's could adversely affect its financial results and growth prospects. • A significant discounting of prices on new aircraft by manufacturers or increase in new aircraft production may indirectly affect demand for used aircraft the Group purchases for leasing and its financial condition. • The Group will depend on aircraft and engine manufacturers' success in remaining financially stable and producing aircraft. Risks related to Group's Financial Condition and Financing are as follows: • Substantial level of the Group's indebtedness could adversely affect the Group's ability to fund future needs of its business and to react to changes affecting the Group's business and industry. The Group had USD 50.6 million in borrowings outstanding as of 31 March 2013. The total amount of borrowings constituted 75.4% of Group's property, plant and equipment as of 31 March 2013. Moreover, 30.2% of aircraft in terms of carrying amounts were pledged as collateral for bank loans. • Changes in interest rates may adversely affect the Group's financial results.

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• The recent global sovereign debt crisis could result in higher borrowing costs and more limited availability of credit, as well as impact the overall airline industry and the financial health of the Group's lessees. • Liquidity risk could limit the Group's ability to engage in desired activities and growth of its business. • The Group's access to sources of financing may be limited. • Depreciation expenses and impairment charges could have a material adverse effect on the Group's financial condition and results of operations. Risks related to Lessees are as follows: • Increases in fuel costs could materially adversely affect the Group's lessees and, by extension, the demand for the Group's aircraft. • In addition to increased fuel costs, other risks adversely impacting the airline industry in general could adversely impact the Group's business because they increase the likelihood of lessees non-performance of their obligations and an inability to lease the Group's aircraft. • If the lessees of the Group encounter financial difficulties and the Group decides to restructure its leases, the restructuring would likely result in less favorable leases which could adversely affect the Group's financial results and growth prospects. • Incurring significant costs resulting from lease defaults could adversely affect the Group's financial results and growth prospects. • If the Group's lessees fail to discharge aircraft liens, it may be obligated to pay the aircraft liens, which could adversely affect the Group's financial results and growth prospects. • The Group's aircraft may not at all times be adequately insured either as a result of lessees failing to maintain sufficient insuranceduringthecourseofaleaseorinsurers not being willing to cover certain risks. • If the Group or its lessees fail to maintain the Group's aircraft, their value may decline and the Group may not be able to lease or re-lease its aircraft and engines at favorable rates, if at all, which would adversely affect the Group's financial results and growth prospects. • The Group or its lessees may be exposed to other governmental regulations that could have an adverse effect on the Group's business, operating results or financial condition. • Three of the largest customers (lessees) of the Group had overdue payments to the Group amounting to USD 5.0 million as at 31 March 2013. Risks related to Global, Political and Economical Environment are as follows: • The Group may be indirectly subject to many of the economic and political risks associated with emerging markets, which could adversely affect its financial results and growth prospects. • The Group is subject to risk in certain countries resulting from changes in regulations governing the customs procedures and import tax duties that could directly affect the possibility of placement of certain types of aircraft in those countries. • The Group's business and earnings are affected by general business, financial market and economic conditions throughout the world, which could have a material adverse effect on the Group's cash flow and results of operations. • Deterioration in the financial condition of the airline industry would have an adverse impact on the Group's ability to lease its aircraft and sustain its revenues. • The effects of terrorist attacks and geopolitical conditions may adversely affect the financial condition of the airlines. This may cause the Group's lessees to default their lease payment obligations, which would adversely affect the Group's financial results and growth prospects. • Natural disasters and other natural phenomena may disrupt air travel.

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• The effects of various environmental regulations may negatively affect the airline industry. This may cause lessees to default on their lease payment obligations to the Group. Risks related to Group's business operations are as follows: • The Group generally will need to re-lease or sell aircraft as current leases expire to continue to generate sufficient funds to meet the Group's debt obligations and to finance its growth and the Group may not be able to re-lease or sell such aircraft on favorable terms, or at all. • The continued success of the Group's business will depend, in part, on its ability to acquire in-demand aircraft and enter into profitable leases upon the acquisition of such aircraft. If the Group is unable to successfully execute on its acquisition strategy, the Group's financial results and growth prospects could be materially and adversely affected. • Theadventofsuperioraircrafttechnologyortheintroductionofanewlineofaircraft could cause the aircraft that the Group possesses or acquires to become outdated or obsolete and therefore less desirable, which could adversely affect the Group's financial results and growth prospects. • The advanced age of some of the Group's aircraft may cause it to incur higher than anticipated maintenance expenses, which could adversely affect the Group's financial results and growth prospects. • Concentration of Group's activities with a small number of clients can pose a financial risk to the Group in case of loss of a particular client. • The value of the aircraft the Group's acquires and the market rates for leases could decline and this could have a material adverse effect on financial results and growth prospects of aircraft lessors. • The demand for aircraft and leases for aircraft has historically been cyclical, and the timing of when the Group purchases, sells or leases aircraft or the term of the Group's aircraft leases can have an adverse effect on its business, operating results and financial condition. • The Group's strategy of acquiring used aircraft can expose it to higher costs than anticipated, which could have a negative impact on the Group's financial results. • There are risks and uncertainties associated with buying midlife to end-of-life aircraft in an industry that is continually experiencing technological advances. • Certain countries have or are introducing age limits for used aircraft, which may affect the marketability of Group's aircraft. • Dependence on Group's Subsidiaries may cause the Group to encounter limitations on free and unlimited fund transfers. In addition, the Group is dependent on the compliance of its Subsidiaries to certain legal regulations. As of 31 December 2012 four Subsidiaries of the Group have not complied with certain legal requirements regarding the maintaining of certain ratio of equity capital to the authorised capital. Following the requirements of the applicable laws, the Company as the sole shareholder of these Subsidiaries shall take the necessary actions in order to remedy the situation, however this is not expected to have any significant implications for the Group. • The Group is dependent on cooperation and performance of key management personnel. • Relationships with Avia Solutions Group may cause the Group to be at risk of losing its access the shared resources from ASG, which could diminish its level of competitiveness on the market and could adversely affect the Group's financial results and growth prospects.

D.3 Key risks that are specific Risks related to the Offering are as follows: to the Shares • The Offering may be postponed, suspended or cancelled. • The Offering may be delayed or aborted.

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Risks related to Listing and Market are as follows: • The price of the Shares may fluctuate significantly. • Turmoil in emerging markets could cause the value of the Shares to suffer. • The market value of Shares may be adversely affected by future sales or issues of substantial amounts of Shares. • There can be no assurance regarding the future development of the market for the Shares and its liquidity. • The marketability of the Company's Shares may decline and the market price of the Company's Shares may fluctuate disproportionately in response to adverse developments that are unrelated to the Company's operating performance and decline below the Offer Price. • Impact of securities analysts, who may downgrade their recommended price of the Shares at any time, issue opinions, which are not in line with the Management's view, or may drop the coverage of the Company altogether can adverse on trading volume and price of the Shares. • There is no guarantee that the Company will pay dividends in the future. • The Company may be unable to list the Company's Shares on the WSE or the Company may be delisted from the WSE. • Trading in the Company's Shares on the WSE may be suspended. • The Company will have a limited free float, which may have a negative effect on the liquidity, marketability or value of its Shares. • The Issuer has been, and will continue to be, influenced by two major shareholders. • The Company has no experience in complying with requirements for publicly-listed companies. Legal and Taxation risks are as follows: • The rights of Lithuanian company shareholders may differ from the rights of shareholders of a Polish company and the legislation, interpretation and application of legal acts may be different in Lithuania from that in Poland. • Judgments of Polish courts against the Company and the Group may be more difficult to enforce than if the Company and its management were located in Poland. • Failure to obtain certain required licenses and approvals could negatively affect the Group's ability to re-lease or sell aircraft, which would negatively affect the Group's financial condition and results of operations. • The Group may become subject to income or other taxes in the jurisdictions in which its aircraft operate, where the Group's lessees are located or where it performs certain services which would adversely affect the Group's business and result in decreased cash available for distributions to shareholders. • Tax treatment for non-Lithuanian investors in a Lithuanian company may vary. • There is a number of transactions with related parties within the Group. According to the applicable tax laws, transactions between related parties must be concluded at arm's length. There is a theoretical risk of potential tax implications if it were determined that certain transactions deviate from the arm's length standard. • Lithuanian tax legislation which was enacted or substantively enacted at the end of the reporting period may be subject to varying interpretations. Consequently, tax positions taken by Management and the formal documentation supporting the tax positions may be successfully challenged by relevant authorities. Management is not aware of any circumstances that could lead to significant tax charges and penalties in the future that have not been provided for or disclosed in IFRS Financial Statements.

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Section E – Offer

Element Title Disclosure E.1 Total net proceeds. Assuming that the Offer Shares will be subscribed at the Maximum Price, the Company expects Estimate of total expenses the gross proceeds from the Offering to be approximately PLN 221.7 million. The net proceeds of the Offering that the Issuer will receive from the issue of the New Shares in the Offering, after deducting (including estimated estimated commissions, costs and expenses associated with the Offering, are estimated to be expenses charged to approximately PLN 214.2 million. the investor) Assuming that the Offer Shares will be subscribed at the Maximum Price, the Selling Shareholder expects the gross proceeds from the Offering of Sale Shares to be approximately PLN 5.2 million. The net proceeds that the Selling Shareholder will receive from the sale of the Sale Shares in the Offering, after deducting estimated commissions, costs and expenses associated with the Offering, are estimated to be approximately PLN 5.2 million. The Issuer and the Selling Shareholder estimate that the fixed expenses for the Offering and costs related to introduction of the Shares to trading on the WSE will amount to approximately USD 280 thousand. Neither the Issuer nor the Selling Shareholder intends to charge any expenses to the investors.

E.2a Reasons for the Offering / The purpose of the Offering is to attract additional capital and ensure the successful Use of proceeds / implementation of development strategies of the Group. The proceeds resulting from Estimated net amount of the Offering will provide the opportunity to continue the policy of sustainable growth proceeds and geographical expansion which the Group has so far pursued. The amount of the gross proceeds raised from issue of the New Shares depends on the number of the New Shares actually placed and the set Offer Price. The net proceeds raised from issue of the New Shares depend on final costs and expenses associated with issue of the New Shares. The Company is planning to utilize the proceeds from the Offering to develop and strengthen its position in the following core business segments: • Aircraft leasing The Company expects to use approx. 65% of the net proceeds of the Offering to develop its main aircraft leasing business by augmenting the Group's current lease operations of older generation aircraft (such as Boeing 737 "Classics" and Airbus A320 family) and entering the lease market for newer generation more expensive mid-life (10 years and younger) narrowbody jet aircraft (such as Boeing 737 NG and Airbus A319/320/321). In addition to mainline commercial aircraft the Group also intends to further develop the leasing activities of regional jet aircraft (such as Bombardier CRJ and Embraer ERJ). • Aircraft trading The Company expects to utilize approx. 25% of the net proceeds along from the cash generated from the operating activities of the Group to finance its trading activities and short-term brokerage operations. The net proceeds of this Offering will provide for an increase in the working capital to fund higher value trading activities (e.g. Boeing 737 NG and Airbus A320) that are not currently covered by the Group. In addition this will allow the Group to execute multiple lower value trading transactions simultaneously. • Engine leasing and management The Company expects to utilize approx. 10% of the net proceeds of the Offering for acquisition and leasing of aircraft engines. The Company intends to develop the business of high-value engine leasing by acquiring and leasing engines demanded by the clients in order to assure the continuous aircraft operations during their engine maintenance activities and to address client demand to have spare engines on lease for their AOG situations.

E.3 Terms and conditions of On the basis of this Prospectus, the Issuer is offering up to 13,857,790 New Shares and the Offering the Selling Shareholder is offering up to 323,926 Sale Shares. In total, up to 14,181,716 Offer Shares are being offered in the Offering. The New Shares and the Sale Shares are offered jointly, so to the investors subscribing for Offer Shares can be allocated only with the New Shares, only with the Sale Shares or with the New Shares and the Sale Shares.

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The Offering consists solely of (i) a public offering to retail investors in the Republic of Poland (the "Retail Offering") and institutional investors in the Republic of Poland (the "Polish Institutional Offering" and, together with the Retail Offering, the "Public Offering"); and (ii) a private placement to institutional investors in certain jurisdictions outside of Poland and the United States in accordance with Regulation S under the U.S. Securities Act (the "International Offering" and together with the Polish Institutional Offering, the "Institutional Offering"). The Maximum Price per each Offer Share established by the Management Board, at which Retail Investors will place their subscriptions, amounts to PLN 16. The Offer Price will be determined by the Issuer and the Selling Shareholder in agreement with the Lead Manager and will not be higher than the Maximum Price. The Offer Price will be determined based on: (i) the volume and price sensitivity of the demand estimated in the book-building process; (ii) the current and forecast situation in the capital markets; and (iii) development outlook, risk factors and other information concerning the Issuer's business. The Offer Price will be the same for both Retail Investors and Institutional Investors. The Offer Shares are being offered at the Offer Price, which will be determined through a book-building process and expressed in PLN. The final number of the Offer Shares allotted to the investors will be set by the Issuer and the Selling Shareholder in agreement with the Lead Manager after the Offer Price is determined, but will not be higher than 14,181,716 Shares. The Management Board and the Selling Shareholder, upon agreement with the Offering Agent, will determine (i) the final number of Offer Shares offered to each category of investors and, (ii) the Offer Price. Upon the decision hereon, the Issuer will issue the New Shares. The timetable below lists key dates related to the Offering. All times and dates referred to in this timetable are based on Warsaw local time:

7 June to 13 June 2013 Subscription Period for Retail Investors (until 5 p.m. Warsaw-time)

6 June to 13 June 2013 Roadshow

12 June to 13 June 2013 Book-building (until 6 p.m. Warsaw-time)

Notlaterthanonorabout Determination and announcement of the Offer Price and the 14 June 2013 preliminary allotment of the Offer Shares

14 June to 18 June 2013 Subscription Period and payment for the Offer Shares by Institutional Investors

18 June 2013 Determination and announcement of the final number of the Offer Shares and the allotment between the Retail Investors and the Institutional Investors (the "Allotment Date")

On or about 25 June 2013 Delivery of the Offer Shares to investors and closing of the Offering ("Settlement Date")

On or about 28 June 2013 Start of trading on the WSE ("Listing Date")

After consultation with the Lead Manager and Adviser, the Issuer, together with the Selling Shareholder, may decide to amend the above dates.

Placement of Subscription Orders The subscription order placed by an investor must be given with respect to at least one Offer Share. Orders may be withdrawn (and new orders placed) at any time until the end of the Subscription Period for particular category of investors. All investors have the right to place multiple subscription orders. Subscription orders for a number of Offer Shares greater than the total number of Offer Shares shall be considered to be orders for all Offer Shares.

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Subscriptions and payment by Retail Investors Retail Investors will place their subscriptions at the Maximum Price, indicating the number of Offer Shares they are willing to buy. Subscription orders must be paid in full on the day when the subscription order is placed, or their order will be deemed null and void, unless regulations of the investment firm accepting such an order provide otherwise, in which case the subscription must be paid in full not later than at the end of the Subscription Period for Retail Investors. The amount of the payment should be equal to the multiple of the number of Offer Shares for which the investor is placing the subscription order at the Maximum Price. The investment firm, accepting the purchase orders may also charge brokerage commission, if any, for execution of this action. Subscription orders for the Offer Shares must be placed by Retail Investors using the subscription order forms made available by the investment firms accepting subscription orders for the Offer Shares, unless an investment firm accepting subscription orders specify otherwise. For information on detailed rules governing the placing of subscription orders, Retail Investors should contact a customer service centre at an investment firm accepting orders for the Offer Shares from Retail Investors at which they intend to place their subscription order. Contact details for investment firms accepting subscription orders from Retail Investors will be published on the Issuer's website www.aviaam.lt) and on the websites of the Offering Agent (www.ingsecurities.pl) no later than at the beginning of the subscription period.

Subscriptions by Institutional Investors The Lead Manager will invite Institutional Investors to participate in the book-building process and, at the same time, to submit subscription orders. Subscription orders from Institutional Investors will be accepted only by the Offering Agent. The Institutional Investors should pay for the Offer Shares preliminary allotted to them in a manner agreed with the Offering Agent. If an investor does not pay-up in full for the Offer Shares preliminary allotted to such investor, its subscription shall be valid for the number of Shares corresponding to the amount paid by the investor, ignoring fractional entitlements. Payments may be done in PLN and should be transferred to such accounts as indicated by the Offering Agent.

Allotment of the Offer Shares The total number of the Offer Shares allotted to the Retail Investors and the Institutional Investors will be determined by the Issuer and the Selling Shareholder upon agreement with the Lead Manager and at their discretion. The allotment of the Offer Shares to Retail Investors will be made by the Lead Manager. In the event of an oversubscription, the Offer Shares shall be allotted to the Retail Investors participating in the Offering pro rata to the size of each order placed. Fractional allocations (after the proportional reduction, if any) will be rounded down to the nearest integer value, and the remaining Offer Shares will be allocated to the Retail Investors who subscribed for the largest number of the Offer Shares. Offer Shares shall be allotted, subject to payment and in accordance with the provisions set forth in this Prospectus, to those Institutional Investors who have been invited by the Offering Agent to participate in the book-building and have submitted subscription orders, have been included in the preliminary allotment list prepared by the Issuer and the Selling Shareholder based upon the recommendation and with the agreement of the Offering Agent, and have paid-up in full for the Offer Shares preliminary allotted to them. The allocation of the Offer Shares to particular Institutional Investors participating in the Offering will be determined by the Offering Agent, at its discretion, subject to the consent of the Issuer and the Selling Shareholder. The Institutional Investors participating in the Offering will be notified of their allocations of Offer Shares by the Offering Agent.

Settlement All Shares will be in book-entry form and, therefore, shareholders may only hold them through their respective investment accounts opened with and maintained by investment firms and custodians that are NDS or CSDL participants.

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In order to deliver Offer Shares, the Orion Securities UAB on behalf of the Issuer and the Selling Shareholder will give instruction to the CSDL to deliver a respective amount of shares to the NDS. The delivery of the Offer Shares will be made in accordance with instructions made by the investors in the subscription orders, through the facilities of CSDL, and onward through the facilities of the NDS in accordance with standard NDS procedures applicable to the settlement of public offerings of shares. Delivery of the Offer Shares is expected to take place on or around 25 June 2013, barring unforeseen circumstances. The exact delivery dates will depend on the timing of the share transfer from the CSDL to NDS system.

E.4 Interests material The Offering Agent has a contractual relationship with the Issuer and the Major Shareholders to the Offering / in connection with the Offering and the Admission, and has been mandated to act as Conflicting interests the Offering Agent for the Offering and listing of the Issuer's Shares on the WSE. If the transaction is successfully executed, the Offering Agent and the Adviser will receive a combined commission which depends on the actual value of the sold Offer Shares. The Offering Agent and its affiliates could have been engaged and the Adviser and its affiliates have engaged in and may in the future engage in, investment banking, advisory services and other commercial dealings in the ordinary course of business with the Company and the Major Shareholders and any of its affiliates. The Offering Agent and the Adviser and their affiliates have received and may receive in the future customary fees and commissions for these transactions and services.

E.5 Name of the person Gediminas iemelis will be offering up to 323,926 existing Shares in the Offering. or entity offering to sell The Company, Minority Shareholders and Major Shareholders entered into lock up agreement the security. for the period of 12 months from the first day of listing of the Shares on the WSE. Lock-up could Lock-up agreements: be taken off with consent of the Lead Manager. parties involved; period of lock- up In addition to the lock-up agreement entered with the Lead Manager, Minority Shareholders Linas Dovydenas,ÿ Aurimas Sanikovas, Virginija Svilainyteÿ and Tadas Goberis have further lock-up on their shares towards some of the Majority Shareholders resulting from the share purchase agreements for the period of 1 year after the date of the Offering and in case of Tadas Goberisthistermis2years.

E.6 Immediate dilution. Assuming that all the Offer Shares are subscribed in the Offering, the free float, meaning Amount and percentage of the percentage of shareholders each holding less than 5% of all Shares in the Company, could immediate dilution be no more than up to 36% of the Issuer's share capital. if Existing Shareholder In case following the Offering all the Offer Shares are acquired by the investors, the holdings of not Subscribing during the existing shareholders of the Company will be diluted from the amount of Shares, held by Offering them prior to the Offering by 32%.

E.7 Estimated Expenses Not applicable. The Issuer or the Selling Shareholder does not intend to charge any expenses to charged to the Investor the investors. by the Company

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III RISK FACTORS

Prospective investors should consider all of the information in this Prospectus, including the following risk factors, before deciding to invest in the Offer Shares. If any of the events described below actually occur, the Group's business, financial condition or results of operations could be materially adversely affected, and the value and trading price of the Offer Shares may decline, resulting in a loss of all or a part of any investment in the Offer Shares. Furthermore, the risks described below are not the only risks the Group faces. The order of the risk factors described below is not an indication of their relative importance for the Group, the probability of their occurrence or their potential influence on the Group's activity. Additional risks not currently known or which are currently believed to be immaterial may also have a material adverse effect on its business, financial condition and results of operations of the Group.

3.1 Risks Related to Group's Financial Condition and Financing

Substantial level of the Group's indebtedness could adversely affect the Group's ability to fund future needs of its business and to react to changes affecting the Group's business and industry. Aircraft leasing business is a capital intensive business that requires significant investments into assets. Such investments often require a substantial amount of indebtedness, which in turn requires interest and principal payments. The Group had USD 50.6 million in borrowings outstanding as of 31 March 2013. The total amount of borrowings constituted 75.4% of Group's property, plant and equipment as of 31 March 2013. Moreover, 30.2% of aircraft in terms of carrying amounts were pledged as collateral for bank loans. The potential consequences of high level of indebtedness can be as follows: • requiring the Group to dedicate a substantial portion of its cash flow from operations to payments on the Group's indebtedness, thereby reducing funds available for other purposes, including acquiring new aircraft and exploring business opportunities; • increasing the Group's vulnerability to adverse economic and industry conditions; • limiting the Group's flexibility in planning for, or reacting to, changes in its business and industry; • limiting the Group's ability to borrow additional funds or refinance its existing indebtedness.

Changes in interest rates may adversely affect the Group's financial results. Changes, both increases and decreases, in the Group's cost of borrowing, as reflected in its composite interest rate, directly impact the Group's net income. The Group's lease rental stream is generally fixed over the life of its leases, whereas the Group has used floating-rate debt to finance a significant portion of the Group's aircraft acquisitions. As of 31 December 2012, the Group had USD 50.2 million in floating-rate debt. If interest rates increase, the Group would be obligated to make higher interest payments to its lenders. If the Group's composite rate were to increase by 1.0% it would expect to incur additional interest expenseontheGroup'sexistingborrowingsasof 31 December 2012, of USD 0.8 million, which would put downward pressure on its reported results. The Group currently is not involved in any interest rate hedging activities, however, its Management is constantly evaluating the possibilities of engaging in hedging activities in the future. Any such hedging activities will require the Group to incur additional costs, and there can be no assurance that it will be able to successfully protect the Group from any or all adverse interest rate fluctuations at a reasonable cost.

The recent global sovereign debt crisis could result in higher borrowing costs and more limited availability of credit, as well as impact the overall airline industry and the financial health of the Group's lessees. Due to on-going recession and financial disturbance in Europe the availability of capital can be limited and therefore the cost of borrowing can increase. Poor economic situation in Greece, Spain, Ireland, Cyprus and other EU member states might further negatively affect the commercial situation of many banks operating in Europe. In addition, the risk of lower consumer confidence can have an adverse impact on financial markets and economic conditions in the EU and throughout the world and, in turn, the market's anticipation or reflection of these impacts could have a material adverse effect on the Group's business in a variety of ways: • difficulty or inability to acquire capital for further acquisitions for aircraft and to cover financial obligations of current debt; • increased risk of weak financial condition of the Group's lessees resulting from current economic situation; • exposure to increased bank risk, if banks issue letters of credit or other forms of guarantees to the Group in lieu of cash security deposit from its lessees, such banks may fail to pay when the Group seeks to draw on these letters of credit.

Liquidity risk could limit the Group's ability to engage in desired activities and growth of its business. The Group's trading and leasing activities employ significant amounts of working capital to fund purchases of aircraft and engines. Continued funding of and access to working capital is critical for the Group to expand its trading and leasing activities and to increase their levels in the future. Therefore, liquidity, or ready access to funds, is essential to the Group's business. Liquidity risk is the risk that the Group is unable to meet its payment obligations when due, or that it is unable, on an ongoing basis, to borrow funds in the market on an unsecured or secured basis at an acceptable price to fund actual or proposed commitments. A lack of liquidity may mean that the Group will not have

27 AviaAM Leasing AB funds available to maintain or increase its trading activities or take advantage of other opportunities that may arise during its business activities. Prudent liquidity risk management requires the Group to maintain sufficient cash and cash equivalents through the accumulation of retained earnings and to have ready sources of committed funding available to meet anticipated and unanticipated funding needs. While the Group adjusts its minimum internal liquidity targets in response to changes in market conditions, its liquidity may be impaired due to circumstances it is unable to control, such as general market disruptions, increases in the prices of aircraft or engines or an operational problem that affects its suppliers, customers or the Group itself. As a consequence, any of the factors presented above may have an adverse material impact on the Group's operations, prospects and financial results.

The Group's access to sources of financing may be limited. The Group is continually seeking capital in forms of debt such as bank loans or bond offerings to finance its growth. These financings, in addition to being secured by the Group's aircraft and generally on a non-recourse basis, may be full recourse to it, and as a result, if the Group default on any of its obligations under these financings, the Group's operations may be impaired. The Group's access to sources of financing, whether public or private, will depend upon a number of factors including the following: • general global financial market conditions; • the market's perception of the quality of the Group's assets; • the market's view of the Group's growth potential; • the market's evaluation of the Group's business strategy. Potential financing entities may be unwilling or unable to provide the Group financing. This also refers to currently cooperating financing facilities, which may have limits in terms of their exposure to risk and hence either refuse to lend further or decide to increase the cost of financing. As a result the Group may have to rely more on capital injections from equity issuances, which may be dilutive to its shareholders. The Group can also revert to less efficient forms of debt financing that may require greater portions of its cash flow from operations, hence reducing funds available for the Group's operations, future business opportunities, cash distributions to its shareholders and other purposes.

Depreciation expenses and impairment charges could have a material adverse effect on the Group's financial condition and results of operations. The Group's aircraft have finite economic lives, their values depreciate in the ordinary course over time and their ability to generate earnings and cash flow for the Group's business declines over time. For accounting purposes the Group depreciates its aircraft using the component-based approach by writing off the cost of assets to their residual values based on their expected use or over their estimated useful life. If proceeds from a sale of an aircraft are less than its carrying value the loss on sale is recognized in profit or loss and reduces net profit for the year and shareholders' equity.

3.2 Risks Related to Lessees

Increases in fuel costs could materially adversely affect the Group's lessees and, by extension, the demand for the Group's aircraft. Fuel costs represent a major expense to airlines, and fuel prices fluctuate widely depending primarily on international market conditions, geopolitical and environmental events, regulatory changes and currency exchange rates. The on-going unrest in North Africa and the Middle East has generated uncertainty regarding the predictability of the world's future oil supply, which has led to significant near-term increases in fuel costs. Other events can also significantly affect fuel availability and prices, including natural disasters, decisions by the Organization of the Petroleum Exporting Countries regarding its members' oil output, and the increase in global demand for fuel from countries such as China. Higher cost of fuel will likely have a material adverse impact on airline profitability. Due to the competitive nature of the airline industry, airlines may not be able to pass on increases in fuel prices to their passengers by increasing fares. If airlines do increase fares, demand for air travel may be adversely affected. In addition, airlines may not be able to manage fuel cost risk by appropriately hedging their exposure to fuel price fluctuations. If fuel prices increase further, they are likely to cause the Group's lessees to incur higher costs or experience reduced revenues. Consequently, these conditions may: • affect the ability of the lessees' of the Group to make rental and other lease payments; • result in lease restructurings and aircraft repossessions; • increase the Group's costs of maintaining and marketing aircraft; • impair the Group's ability to re-lease aircraft and other aviation assets or re-lease or otherwise sell its assets on a timely basis at favourable rates; or • reduce the sale proceeds received for aircraft or other aviation assets upon any disposition. Such effects could have a material adverse effect on the Group's business, financial condition and results of operations.

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In addition to increased fuel costs, other risks adversely impacting the airline industry in general could adversely impact the Group's business because they increase the likelihood of lessees non-performance of their obligations and an inability to lease the Group's aircraft. The Group's business depends on the financial strength of its airline customers and their ability to meet their payment obligations to the Group and if their ability materially decreases, it may negatively affect the Group's business, financial condition, results of operations and cash flows. The risks affecting the Group's airline customers are generally out of its control and impact the Group's customers to varying degrees. As a result, the Group is indirectly impacted by all the risks facing airlines today. Their ability to compete effectively in the marketplace and manage these risks has a direct impact on the Group. In addition to increased fuel prices and availability discussed above, these risks include: • demand for air travel; • competition between carriers; • geopolitical events; • labour costs and stoppages; • equity and borrowing capacity; • maintenance costs; • environmental concerns; • government regulation; • air traffic control infrastructure constraints; • interest rates; • airport access; • airline capacity; • insurance costs and coverage; • natural disasters; • security, terrorism and war, including increased passenger screening as a result thereof; • worldwide health concerns, such as outbreaks of H1N1, SARS and avian influenza. To the extent that the Group's customers are affected by these or other risks, the Group may experience: • lower demand for the aircraft in the Group's fleet and an inability to immediately place new aircraft when they become available, resulting in lower market lease rates and lease margins, and payments for storage and maintenance; • a higher incidence of lessee defaults and repossessions affecting net income due to maintenance, consulting and legal costs associated with the repossessions, as well as lost revenue for the time the aircraft are off lease and possibly lower lease rates from the new lessees; • a higher incidence of lease restructurings for the Group's troubled customers which reduces overall lease revenue.

If the lessees of the Group encounter financial difficulties and the Group decides to restructure its leases, the restructuring would likely result in less favourable leases which could adversely affect the Group's financial results and growth prospects. If a lessee is late in making payments, fails to make payments in full or in part under a lease or has advised the Group that it will fail to make payments in full or in part under a lease in the future, the Group may elect or be required to restructure the lease, which could result in less favourable terms or termination of a lease without receiving all or any of the past due amounts. The Group may be unable to agree upon acceptable terms for some or all of the requested restructurings and as a result may be forced to exercise its remedies under those leases. If the Group, in the exercise of its remedies, repossesses an aircraft, the Group may not be able to re-lease the aircraft promptly at favourable rates, if at all. The terms and conditions of possible lease restructurings may result in a significant reduction of lease revenue, which may adversely affect the Group's financial results and growth prospects. The Group receives cash security deposits from lessees on inception of the majority of its leases which secure the performance of lessee's obligations throughout the leases term. However, in some cases the amount of security deposits received could not be sufficient to cover the costs incurred by the Group following the lessee's breach of its obligations stipulated in the lease.

Incurring significant costs resulting from lease defaults could adversely affect the Group's financial results and growth prospects. If the Group is required to repossess an aircraft after a lessee default, it may be required to incur significant costs. Those costs would likely include legal and other expenses of court or other governmental proceedings, particularly if the lessee is contesting the proceedings

29 AviaAM Leasing AB or is in bankruptcy. In addition, during these proceedings the relevant aircraft would likely not be generating revenue. The Group could also incur substantial maintenance, refurbishment or repair costs if a defaulting lessee fails to pay such costs and where such maintenance, refurbishment or repairs are necessary to put the aircraft in suitable condition for re-lease or sale. The Group may also incur storage costs associated with any aircraft that it repossesses and is unable immediately to place with another lessee. It may also be necessary to pay off liens, taxes and other governmental charges on the aircraft to obtain clear possession and to remarket the aircraft effectively, including, in some cases, liens that the lessor might have incurred in connection with the operation of its other aircraft. The Group could also incur other costs in connection with the physical possession of the aircraft. The Group may also suffer other adverse consequences as a result of a lessee default and the related termination of the lease and the repossession of the related aircraft. It is likely that the Group's rights upon a lessee default will vary significantly depending upon the jurisdiction and the applicable law, including the need to obtain a court order for repossession of the aircraft and/or consents for deregistration or re-export of the aircraft. The Group anticipates that when a defaulting lessee is in bankruptcy, protective administration, insolvency or similar proceedings, additional limitations may apply. Certain jurisdictions give rights to the trustee in bankruptcy or a similar officer to assume or reject the lease or to assign it to a third party, or entitle the lessee or another third party to retain possession of the aircraft without paying lease rentals or performing all or some of the obligations under the relevant lease. In addition, certain of the Group's lessees are owned in whole, or in part, by government-related entities, which could complicate the Group's efforts to repossess its aircraft in that lessee's domicile. Accordingly, the Group may be delayed in, or prevented from, enforcing certain of its rights under a lease and in re-leasing the affected aircraft. If the Group repossess an aircraft, it may not necessarily be able to export or deregister and profitably redeploy the aircraft. For instance, where a lessee or other operator flies only domestic routes in the jurisdiction in which the aircraft is registered, repossession may be more difficult, especially if the jurisdiction permits the lessee or the other operator to resist deregistration. The Group may also incur significant costs in retrieving or recreating aircraft records required for registration of the aircraft, and in obtaining the Certificate of Airworthiness for an aircraft. If, upon a lessee default, the Group incurs significant costs in connection with repossessing its aircraft, the repossessing of its aircraft is delayed or the Group is unable to obtain possession of its aircraft as a result of lessee defaults, the Group's financial results and growth prospects may be materially adversely affected.

If the Group's lessees fail to discharge aircraft liens, it may be obligated to pay the aircraft liens, which could adversely affect the Group's financial results and growth prospects. In the normal course of their business, the Group's lessees are likely to incur aircraft liens that secure the payment of airport fees and taxes, customs duties, air navigation charges, including charges imposed by Eurocontrol, the European Organization for the Safety of Air Navigation, landing charges, salvage or other liens that may attach to the Group's aircraft. These liens may secure substantial sums that may, in certain jurisdictions or for certain types of liens, particularly liens on entire fleets of aircraft, exceed the value of the particular aircraft to which the liens have been attached. Aircraft may also be subject to mechanics' liens as a result of routine maintenance performed by third parties on behalf of the Group's lessees. Although the Group anticipates that the financial obligations relating to these liens will be the responsibility of its lessees, if they fail to fulfil such obligations, the liens may attach to the aircraft of the Group and ultimately become the Group's responsibility. In some jurisdictions, aircraft liens may give the holder thereof the right to detain or, in limited cases, sell or cause the forfeiture of the aircraft. Until they are discharged, these liens could impair the Group's ability to repossess, re-lease or sell its aircraft. The Group's lessees may not comply with the anticipated obligations under their leases to discharge aircraft liens arising during the terms of the leases. If they do not, the Group may find it necessary to pay the claims secured by such aircraft liens in order to repossess the aircraft. Such payments could materially adversely affect the Group's financial results and growth prospects.

The Group's aircraft may not at all times be adequately insured either as a result of lessees failing to maintain sufficient insurance during the course of a lease or insurers not being willing to cover certain risks. The Group does not manage actively or control the operations of its aircraft other than making them available to its lessees. However, since the Group is the sole owner of the aircraft it can be directly or indirectly liable for any losses resulting from misuse of aircraft or be subject to other legal consequences in jurisdictions in which the Group or its lessees are present. Although highly unlikely, if such events should take place the Group would have to expand resources in its defence. The Group requires its lessees to obtain specified levels of insurance and indemnify it for, and insure against, liabilities arising out of their use and operation of the aircraft. Some lessees may fail to maintain adequate insurance coverage during a lease term, which, although in contravention of the lease terms, would necessitate theGroup'stakingsomecorrectiveactionsuchasterminating the lease or securing insurance for the aircraft, either of which could adversely affect the Group's financial results.

If the Group or its lessees fail to maintain the Group's aircraft, their value may decline and the Group may not be able to lease or re-lease its aircraft and engines at favourable rates, if at all, which would adversely affect the Group's financial results and growth prospects. The Group may be exposed to increased maintenance costs for its leased aircraft associated with a lessee's failure to properly maintain the aircraft or pay supplemental maintenance rent. If an aircraft is not properly maintained, its market value may decline which would

30 AviaAM Leasing AB result in lower revenues from its lease or sale. Under the Group's leases, the lessees are primarily responsible for maintaining the aircraft and complying with all governmental requirements applicable to the lessee and the aircraft, including operational, maintenance, government agency oversight, registration requirements and airworthiness directives. Although the Group requires many of its lessees to pay it a supplemental maintenance rent, failure of a lessee to perform required maintenance during the term of a lease could result in a decrease in value of an aircraft, an inability to re-lease an aircraft at favourable rates, if at all, or a potential grounding of an aircraft. Maintenance failures by a lessee would also likely require the Group to incur maintenance and modification costs upon the termination of the applicable lease, which could be substantial, to restore the aircraft to an acceptable condition prior to sale or re-leasing. Supplemental maintenance rent paid by the Group's lessees may be not sufficient to fund its maintenance costs. Failure of the lessees of the Group to meet their obligations to pay supplemental maintenance rent or perform required scheduled maintenance or the Group's inability to maintain its aircraft may materially and adversely affect the Group's financial results and growth prospects.

The Group or its lessees may be exposed to other governmental regulations that could have an adverse effect on the Group's business, operating results or financial condition. In addition to the general aviation authority regulations and requirements regarding maintenance of the aircraft, they may be subject to further maintenance or modification requirements imposed by airworthiness directives issued by aviation authorities. Airworthiness directives and similar requirements typically set forth particular special maintenance actions or modifications to certain aircraft types or models that the owners or operators of aircraft must implement within a specific time frame or aircraft hours or cycles. The costs of compliance with unexpected airworthiness directives and other maintenance or modification requirements of aviation authorities could have a material adverse effect on the operations of a lessee, including causing such lessee to incur higher costs and to generate lower net revenues in connection with its efforts to comply with such unexpected requirements of the airworthiness directives or other requirements, resulting in an adverse effect on the lessee's financial position. For example, in the spring of 2008, the U.S. Federal Aviation Authority directed inspectors to confirm that U.S. airlines had fully complied with previous safety orders. In response, several U.S. airlines grounded aircraft over several days, cancelling in the aggregate thousands of flights, in an effort to determine or remedy their compliance status in relation to the safety orders. The costs of compliance and cooperation with the unexpected requirements of the airworthiness directives, other requirements or compliance audits may affect a lessee's ability to make rental and other lease payments. Lessees are generally responsible for complying with all or a substantial portion of requirements of the airworthiness directives applicable to their leased aircraft and are required to maintain the aircraft's airworthiness. If a lessee fails to satisfy its obligations, or if the Group has obligations to contribute towards the cost of compliance with the requirements of airworthiness directives (or similar requirements) under a lease that is attached to an aircraft the Group acquires or if the aircraft is not subject to a lease, then the Group may be forced to bear (or, to the extent required under the relevant lease, to share) the costs of any compliance with the requirements of the airworthiness directives.

One of the buyers of the aircraft is entitled not pay lease rentals for a single aircraft leased from the Group for the period from 1 December 2012 until the purchase of the subject aircraft, furthermore, this buyer had unsecured amounts payable to the Group as at 31 March 2012. On 29 October 2012 the Group and one of its clients have entered into a side letter to the Aircraft Lease Agreement in respect to lease of one Boeing 737-300 aircraft pursuant to which the parties agreed that no lease rentals would be applicable from 1 December 2012 until the sale of the subject aircraft. The parties entered into a Letter of Intent regarding the sale of this aircraft however the sale has not occurred as at the date of this Prospectus. The Management expects to close this sale deal in the upcoming months. Furthermore, as of 31 March 2013 the above mentioned client had USD 2.7 million in amounts payable to the Group in relation to sale agreement of another Boeing 737-300 aircraft which are payable in 7 equal instalments of USD 450 thousand. The first instalment is due in May 2013 and the last in November 2013. The receivables under this sale agreement are also pledged to DNB bank. However, the payment obligation is not secured by the client. In the event of failure to regulate its obligations in timely manner by the client or its bankruptcy the Group may have difficulties in recovering the indicated receivables.

Some of the largest clients of the Group companies have substantial overdue payments. Three of the largest customers (lessees) of the Group had overdue payments to the Group amounting to USD 5.1 million as at 31 December 2012 of which USD 1.8 million were overdue by Customer A, USD 1.9 million by Customer C and USD 1.4 million by Customer D. The amount of overdue payments from aforementioned customers as of 31 March 2013 was USD 5.0 million. Based on the market analysis and history of the relations with the indicated customers, the Management believes that these debts are in accordance with typical practices performed by other airline operators in the airline industry due to seasonal income changes and should be covered by the counterparties over the summer season. However, there may be no guarantees that this will occur and that the Group will not face the risks as indicated above (please see the description of risk factors If the lessees of the Group encounter financial difficulties and the Group decides to restructure its leases, the restructuring would likely result in less favourable leases which

31 AviaAM Leasing AB could adversely affect the Group's financial results and growth prospects and Incurring significant costs resulting from lease defaults could adversely affect the Group's financial results and growth prospects).

3.3 Risks Related to Global, Political and Economical Environment

The Group may be indirectly subject to many of the economic and political risks associated with emerging markets, which could adversely affect its financial results and growth prospects. The Group's business strategy emphasizes leasing aircraft to lessees in emerging market countries with high growth potential in terms of aircraft leasing market size and rapid process of development of infrastructure within the aviation industry – such as Russia and CIS (also seeking opportunities on a global scale). Emerging market countries have less developed economies and infrastructure and are often more vulnerable to economic and geopolitical challenges and may experience significant fluctuations in gross domestic product, interest rates and currency exchange rates, as well as civil disturbances, government instability, nationalization and expropriation of private assets and the imposition of taxes or other charges by government authorities. The occurrence of any of these events in markets served by the Group's lessees and the resulting economic instability that may arise, particularly if combined with high fuel prices, could adversely affect the value of the Group's aircraft subject to lease in such countries, or the ability of the Group's lessees, which operate in these markets, to meet their lease obligations. As a result, lessees that operate in emerging market countries may be more likely to default than lessees that operate in developed countries. In addition, legal systems in emerging market countries may be less developed, which could make it more difficult for the Group to enforce its legal rights in such countries. Further, demand for aircraft is dependent on passenger and cargo traffic, which in turn is dependent on general business and economic conditions. As a result, weak or negative economic growth in emerging markets may have an indirect effect on the value of the assets that the Group acquires if airlines and other potential lessees are adversely affected. For this and other reasons, the Group's financial results and growth prospects may be negatively impacted by adverse economic and political developments in emerging market countries.

The Group is subject to risk in certain countries resulting from changes in regulations governing the customs procedures and import tax duties that could directly affect the possibility of placement of certain types of aircraft in those countries. Certain countries impose restrictive policies with regards to aircraft import and operation. Such countries establish certain import duties on particular types of aircraft as well as a VAT. For example, creation of the Customs Union between Russia, Kazakhstan and Belarus in 2010 led to significant changes in the regulations of customs procedures used in relation to importing of leased foreign aircraft into these countries. Regardless of whether the passenger aircraft is imported under the procedure for domestic use or under the temporary import procedure, the Unified Customs Tariff of the Customs Union provides for a full exemption from customs duty (but not from the import VAT) in respect of civil passenger aircraft with up to 50 seat capacity and manufacturers empty weight ("MEW") between 2,000 kg and 20,000 kg and with more than 300 seat capacity and MEW between 20,000 kg and 120,000 kg. In addition, customs duty (but not the import VAT) is set at zero rate in respect of aircraft with MEW between 90,000 kg and 120,000 kg and with a seat capacity from 51 to 300 (inclusive). Moreover, the exemption also applies to civil passenger aircraft with MEW over 120,000 kg. There are also specific temporary exemptions for leased aircraft currently in place in the Customs Union. Under these exemptions, full conditional exemption from customs duty and import VAT is granted in respect of the leased aircraft with MEW of between 20,000 kg and 120,000 kg and with seat capacity from 111 to 170 (inclusive) or from 219 to 300 (inclusive). To fall under the exemption the aircraft must be imported before 31 December 2013 in Russia and before 30 June 2014 in Kazakhstan and Belarus. Changes in the import duties and applicable customs procedures as well as the expected termination of certain exemptions can indirectly affect the Group's ability to provide aircraft at reasonable prices to operators and reduce the demand for Group's aircraft by the potential clients.

The Group's business and earnings are affected by general business, financial market and economic conditions throughout the world, which could have a material adverse effect on the Group's cash flow and results of operations. The Group's business and earnings are affected by general business, financial market and economic conditions throughout the world. As an aircraft leasing business focused on emerging markets, the Group is particularly exposed to downturns in these emerging markets. A recession or worsening of economic conditions, particularly if combined with high fuel prices, may have a material adverse effect on the ability of the Group's lessees to meet their financial and other obligations under the Group's operating leases, which, if the lessees default on their obligations to the Group, could have a material adverse effect on cash flow and results of operations of the Group. General business and economic conditions that could affect the Group include the level and volatility of short-term and long-term interest rates, inflation, employment levels, bankruptcies, demand for passenger and cargo air travel, volatility in both debt and equity capital markets, liquidity of the global financial markets, the availability and cost of credit, investor confidence and the strength of the global economy and the local economies in which the Group operates.

32 AviaAM Leasing AB

A deterioration in the financial condition of the airline industry would have an adverse impact on the Group's ability to lease its aircraft and sustain its revenues. The financial condition of the airline industry is of particular importance to the Group because it plans to lease most of its aircraft to passenger airlines. The Group's ability to achieve its primary business objectives will depend on the financial condition and growth of the airline industry. The risks affecting airlines are generally out of control of the Group, however, as these risks have a significant impact on the Group's intended airline customers, they will affect the Group as well. The Group may experience: • downward pressure on demand for the Group's aircraft and reduced market lease rates and lease margins; • a higher incidence of lessee defaults, lease restructurings, repossessions and airline bankruptcies and restructurings, resulting in lower lease margins due to maintenance and legal costs associated with the repossession, as well as lost revenue for the time the Group's aircraft are off lease and possibly lower lease rates from the Group's new lessees; and • inability to lease aircraft on commercially acceptable terms, resulting in lower lease margins due to aircraft not earning revenue and resulting in storage, insurance and maintenance costs.

The effects of terrorist attacks and geopolitical conditions may adversely affect the financial condition of the airlines. This may cause the Group's lessees to default their lease payment obligations, which would adversely affect the Group's financial results and growth prospects. As a result of the 11 September, 2001 terrorist attacks in the United States and subsequent terrorist attacks abroad, notably in the Middle East, Southeast Asia and Europe, increased security restrictions were implemented on air travel, costs for aircraft insurance and security measures have increased, passenger and cargo demand for air travel decreased and operators have faced increased difficulties in acquiring war risk and other insurance at reasonable costs. In addition, war or armed hostilities, or the fear of such events could further exacerbate many of the problems experienced as a result of terrorist attacks. Uncertainty regarding the situation in Iraq and tension over Iran's and North Korea's nuclear programs, may lead to further instability in the Middle East and Southeast Asia. Future terrorist attacks, war or armed hostilities, or the fear of such events, could further adversely affect the aviation industry and may have an adverse effect on the financial condition and liquidity of the Group's lessees, aircraft and engine values and rental rates, and may lead to lease restructurings or repossessions, all of which could adversely affect the Group's financial results and growth prospects. Terrorist attacks and adverse geopolitical conditions have adversely affected the aviation industry and concerns about such events could also result in: • higher costs to the airlines due to the increased security measures; • decreased passenger demand and revenue due to the inconvenience of additional security measures; • uncertainty of the price and availability of jet fuel and the cost and practicability of obtaining fuel hedges under current market conditions; • higher financing costs and difficulty in raising the desired amount of proceeds on favorable terms, if at all; • significantly higher costs of aviation insurance coverage for future claims caused by acts of war, terrorism, sabotage, hijacking and other similar perils, and the extent to which such insurance has been or will continue to be available; • inability of airlines to reduce their operating costs and conserve financial resources, taking into account the increased costs incurred as a consequence of terrorist attacks and geopolitical conditions, including those referred to above; and • special charges recognized by some operators, such as those related to the impairment of aircraft and engines and other long lived assets stemming from the grounding of aircraft as a result of terrorist attacks, the economic slowdown and airline reorganizations. Future terrorist attacks, acts of war or armed hostilities may cause certain aviation insurance to become available only at significantly increased premiums, which may be for reduced amounts of coverage that are insufficient to comply with the levels of insurance coverage currently required by aircraft and engine lenders and lessors or by applicable government regulations, or to be not available at all. Future terrorist attacks, acts of war or armed hostilities are likely to cause the Group's lessees to incur higher costs and to generate lower revenues, which could result in an adverse effect on their financial condition and liquidity. Consequently, these conditions may affect their ability to make rental and other lease payments to the Group or obtain the types and amounts of insurance required by the applicable leases, which may in turn lead to aircraft groundings, may result in additional lease restructurings and repossessions, may increase the Group's cost of re-leasing or selling the aircraft and may impair its ability to re-lease or otherwise dispose of them on a timely basis at favorable rates or on favorable terms, if at all, and may reduce the proceeds received for the Group's aircraft and engines upon any disposition. These results could adversely affect the Group's financial results and growth prospects.

Natural disasters and other natural phenomena may disrupt air travel. Air travel can be disrupted, sometimes severely, by the occurrence of natural disasters and other natural phenomena. For example, in April 2010, the Eyjafjallajökull volcano in Iceland erupted, releasing a massive amount of ash and glass particles into the air. The volcanic

33 AviaAM Leasing AB ash travelled across Europe, causing the closure of airports and grounding of air traffic in, and cancelling of flights through, affected areas. The airline industry incurred substantial losses from the disruption to air travel caused by this volcanic eruption, negatively affecting the financial condition of certain major airlines and the aviation industry as a whole.

The effects of various environmental regulations may negatively affect the airline industry. This may cause lessees to default on their lease payment obligations to the Group. Governmental regulations regarding aircraft and engine noise and emissions levels apply based on where the relevant aircraft is registered and operated. For example, jurisdictions throughout the world have adopted noise regulations which require all aircraft to comply with noise level standards. In addition to the current requirements, the United States and the International Civil Aviation Organization (the "ICAO"), have adopted a new, more stringent set of standards for noise levels which applies to engines manufactured or certified on or after 1 January 2006. Currently, U.S. regulations would not require any phase-out of aircraft that qualify with the older standards applicable to engines manufactured or certified prior to 1 January 2006, however, the EU has established a framework for the imposition of operating limitations on aircraft that do not comply with the new standards and incorporated aviation-related emissions into the EU's Emission Trading Scheme beginning in 2012. These regulations could limit the economic life of the aircraft and engines, reduce their value, limit the Group's ability to lease or sell the non-compliant aircraft and engines or, if engine modifications are permitted, require the Group to make significant additional investments in the aircraft and engines to make them compliant with the indicated regulations. In addition to more stringent noise restrictions, the United States and other jurisdictions are beginning to impose more stringent limits on nitrogen oxide, carbon monoxide and carbon dioxide emissions from engines, consistent with current ICAO standards. These limits generally apply only to engines manufactured after 1999. As aircraft engines are replaced from time to time in the usual course, it is likely that the number of such engines would increase over time. Concerns over global warming could result in more stringent limitations on the operation of aircraft powered by older, noncompliant engines, as well as newer engines. European countries generally have relatively strict environmental regulations that can restrict operational flexibility and decrease aircraft productivity. Aviation was included in the EU's Emissions Trading Scheme starting from 2012. This inclusion would possibly distort the European air transport market, leading to higher ticket prices and ultimately a reduction in the number of airline passengers. In response to these concerns, European airlines have established the Committee for Environmentally Friendly Aviation to promote the positive environmental performance of airlines. The United Kingdom has doubled its air passenger duties, effective as from 1 February 2007, in recognition of the environmental costs of air travel. Similar measures may be implemented in other jurisdictions as a result of environmental concerns. Compliance with current or future regulations, taxes or duties imposed to deal with environmental concerns could cause lessees to incur higher costs and to generate lower net revenues, resulting in an adverse impact on their financial conditions. Consequently, such compliance may affect lessees' ability to make rental and other lease payments and reduce the value the Group receives for the aircraft upon any disposition, which could have an adverse effect on the Group's financial results and growth prospects.

The Group generally will need to re-lease or sell aircraft as current leases expire to continue to generate sufficient funds to meet the Group's debt obligations and to finance its growth and the Group may not be able to re-lease or sell such aircraft on favourable terms, or at all. The Group's business model depends on the continual leasing and re-leasing of the aircraft in its fleet in order to generate sufficient revenues to finance the Group's growth and operations, pay its debt service obligations and generate positive cash flows from operations. As the Group's leases are predominantly operating leases, only a portion of the aircraft's value is covered by revenues generated from the initial lease and the Group may be not able to realize the aircraft's residual value after expiration of the initial lease. The Group bears the risk of re-leasing or selling the aircraft in its fleet when the operating leases expire. The Group's ability to lease, re-lease or sell its aircraft will depend on general market and economic conditions at the time the initial leases expire and it could be adversely affected by depressed conditions in the airline and aircraft industries, airline bankruptcies, the effects of terrorism and war, the sale of other aircraft by financial institutions, and various other general market and economic conditions and factors which are outside of control of the Group. In addition to factors linked to the aviation industry in general, other factors that may affect the market value and lease rates of the Group's aircraft include (i) maintenance and operating history of the airframe and engines; (ii) the number of operators using the particular type of aircraft; and (iii) aircraft age. As of 31 March 2013 leases of 4 Boeing 737-300 aircraft are set to expire by the end of 2013 and leases of 4 Boeing 737-500 are set to expire by the end of 2014. The Management expects to sell the majority of aircraft following the expiration of the leases as the subject aircraft are reaching the end of their economical life and the remaining aircraft are scheduled to be re-leased. The Management is putting best efforts to ensure the continuity of leases of these aircraft after the expiry of the aforementioned lease contracts. However, there may be no guarantee, that the Group will be able to ensure prompt re-leasing of the aircraft.

The continued success of the Group's business will depend, in part, on its ability to acquire in-demand aircraft and enter into profitable leases upon the acquisition of such aircraft. If the Group is unable to successfully execute on its acquisition strategy, the Group's financial results and growth prospects could be materially and adversely affected. The success of the Group's business depends, in part, on its ability to identify high-quality commercial aircraft to acquire. There is currently high market demand for certain narrowbody and regional jet aircraft, consequently competition may reduce the Group's opportunities to

34 AviaAM Leasing AB complete the acquisition of aircraft it is seeking on favourable terms. An acquisition of one or more aircraft or other aviation assets may not be profitable to the Group after the acquisition and may not generate sufficient cash flow to justify its completion of those acquisitions. In addition, the Group's acquisition strategy exposes it to risks that may harm its business, financial condition, results of operations and cash flows, including risks that the Group may: • impair its liquidity by using a significant portion of its available cash or borrowing capacity to finance the acquisition of aircraft; • significantly increase its interest expense and financial leverage to the extent it incurs additional debt to finance the acquisition of aircraft; or • incur or assume unanticipated liabilities, losses or costs associated with the aircraft or other aviation assets that the Group acquires. In addition, aircraft are long-lived assets, requiring long lead times to develop and manufacture, with particular types and models becoming obsolete and less in demand over time when newer, more advanced aircraft are manufactured. By acquiring existing aircraft, the Group has greater exposure to more rapid obsolescence of its fleet, particularly if there are unanticipated events shortening the life cycle of such aircraft, such as government regulation or changes in the Group's airline customers' preferences. This may result in a shorter life cycle for the Group's fleet and, accordingly, declining lease rates, impairment charges, increased depreciation expense or losses related to aircraft asset value guarantees, if the Group was to provide such guarantees. Any of these expenses or costs will have a negative impact on the Group's financial results. If the Group acquires a high concentration of a particular model of aircraft in its fleet, the Group's business and financial results could be adversely affected if the market demand for that model of aircraft declines, if it is redesigned or replaced by its manufacturer or if this type of aircraft experiences design or technical problems. If the Group acquires a high concentration of a particular aircraft model in its fleet and such model encounters technical or other problems, the value and lease rates of such aircraft will likely decline, and the Group may be unable to lease such aircraft on favorable terms, if at all. A significant technical problem with a specific type of aircraft could result in the grounding of the aircraft. Any decrease in the value and lease rates of the Group's aircraft may have a material adverse effect on its financial results and growth prospects.

The advent of superior aircraft technology or the introduction of a new line of aircraft could cause the aircraft that the Group possesses or acquires to become outdated or obsolete and therefore less desirable, which could adversely affect the Group's financial results and growth prospects. As manufacturers introduce technological innovations and new types of aircraft, some of the aircraft in the Group's fleet could become less desirable to potential lessees. Such technological innovations may increase the obsolescence of existing aircraft at a rate faster than currently anticipated by the Group's management or accounted for in the Group's accounting procedures. New aircraft manufacturers, such as Mitsubishi Aircraft Corporation in Japan and Sukhoi Company (JSC) in Russia, could someday produce aircraft that compete with current offerings from Airbus, ATR, Boeing, Bombardier and Embraer. • Mitsubishi Aircraft Corporation in Japan, Sukhoi Company (JSC) in Russia, Aviation Industries of China and Commercial Aircraft Corporation of China Ltd. will most likely be producing regional jets in the future that compete with existing equipment from Bombardier and Embraer, and it is unclear as to how these offerings could adversely impact the demand and liquidity for the current offerings. • Additionally, manufacturers in China may develop a narrowbody aircraft that compete with mainstream offerings from Boeing and Airbus, and the new Chinese products could put downward price pressure on and decrease the liquidity for equipment from Boeing and Airbus. • New aircraft types that are introduced into the market could be more attractive for the target lessees of the Group's aircraft. In addition, the imposition of increased regulation regarding stringent noise or emissions restrictions may make some of the Group's aircraft less desirable and less valuable in the marketplace. Any of these risks may adversely affect the Group's ability to lease or sell its aircraft on favourable terms, if at all, which could have a material adverse effect on the Group's financial results and growth prospects. The advent of new technologies or introduction of a new line of aircraft may materially adversely affect the value of the aircraft in the Group's fleet.

The advanced age of some of the Group's aircraft may cause it to incur higher than anticipated maintenance expenses, which could adversely affect the Group's financial results and growth prospects. As of 31 December 2012 the average age of the Group's aircraft portfolio calculated from the year of manufacture, and weighted by net book value, was 14.8 years. In general, the costs of operating an aircraft, including maintenance expenditures, increase as they age. In a depressed market, the value of older aircraft may decline more rapidly than the values of newer aircraft and the Group's operating results may be adversely affected. Increased variable expenses like fuel, maintenance and increased governmental regulation could make the operation of older aircraft or engines less profitable and may result in increased lessee defaults. Incurring higher than anticipated maintenance expenses associated with the advanced age of some of the Group's aircraft or its inability to sell or re-lease such older aircraft would materially and adversely affect the Group's financial results and growth prospects.

35 AviaAM Leasing AB

Concentration of Group's activities with a small number of clients can pose a financial risk to the Group in case of loss of a particular client. Currently the Group's revenue is generated in majority by a limited number of clients. Potential loss of any of these clients could have significant impact on the financial performance of the Group. Although the nature of these relationshipsislong-termandsecuredbylease agreements, the Group recognizes the risk of not prolonging the business relationships with its clients. In an event of termination of business relationships with its current clients the Group would be exposed to risk of limited revenue stream.

The value of the aircraft the Group's acquires and the market rates for leases could decline and this could have a material adverse effect on financial results and growth prospects of aircraft lessors. Aircraft values and market rates for leases have from time to time experienced sharp decreases due to a number of factors including, but not limited to, decreases in passenger and air cargo demand, increases in fuel costs, government regulation and increases in interest rates. Operating leases place a greater risk of realizations of residual values on aircraft lessors, because only a portion of the equipment's value is covered by contractual cash flows at lease inception. In addition to factors linked to the aviation industry generally, many other factors may affect the value of the aircraft that the Group acquires and market rates for leases, including: • the particular maintenance, operating history and documentary records of the aircraft; • the number of operators using that type of aircraft; • aircraft age; • the regulatory authority under which the aircraft is operated; • any renegotiation of an existing lease on less favorable terms; • the negotiability of clear title free from mechanics' liens and encumbrances; • any regulatory and legal requirements that must be satisfied before the aircraft can be purchased, sold or re-leased; • compatibility of aircraft configurations or specifications with other aircraft owned by operators of that type; • comparative value based on newly manufactured competitive aircraft; and • the availability of spare parts. Any decrease in the value of aircraft that the Group acquires and market rates for leases, which may result from the above factors or other unanticipated factors, may have a material adverse effect on the Group's financial results and growth prospects.

The demand for aircraft and leases for aircraft has historically been cyclical, and the timing of when the Group purchases, sells or leases aircraft or the term of the Group's aircraft leases can have an adverse effect on its business, operating results and financial condition. The demand for aircraft has historically been cyclical. This is in part because of the length of time it takes to bring new aircraft to market, which often causes production to lag behind the actual market demand, thereby creating an oversupply after peaks and an undersupply after troughs. Because it is impossible to accurately predict the peaks and troughs, there are risks that the value of aircraft the Group purchases or aircraft leases the Group enters into may decrease in value. Further, even if the Group does not intend to sell purchased aircraft in the short term, certain aircraft which it acquires may be subject to cyclical downturns in value that will be reflected in the Group's operating results and financial condition becauseoffuturelowerleaserates.Additionally,the length of aircraft leases can vary widely. Depending on the time at which the Group enters into leases and the duration of leases, such leases may have a material effect on shareholders returns. For example, although the Group will seek to have a broad range of lease expiration dates, with some lease terms asshortasoneyearandsomeaslongas12years,ifitentersintoalong term aircraft lease at or near the bottom of a market cycle, that lease may be less valuable than market value lease rates as the demand for aircraft leases increases. As a result, market cyclicality may have an adverse effect on the Group's business, operating results and financial condition.

The Group's strategy of acquiring used aircraft can expose it to higher costs than anticipated, which could have a negative impact on the Group's financial results. The Group anticipates that the aircraft it purchases will be used rather than new equipment. In general, maintenance and operating expenses of aircraft increase with age. Also, older aircraft are generally less fuel-efficient than newer models and may become obsolete more quickly than new aircraft, and, as a result, it may be more difficult to re-lease or sell them. Variable expenses like fuel or aging aircraft corrosion control or mandatory modification programs and related airworthiness directives could make the operation of older aircraft less economically feasible and may result in increased lessee defaults or opportunities to re-lease aircraft. The Group may also incur some of these increased maintenance expenses and regulatory costs upon re-leasing of its aircraft, and aircraft that it purchases with the intention of refurbishing may require expenditures on improvements or modifications that exceed the amounts that the Group initially anticipates. In addition, although the Group may inspect an existing aircraft and its documented maintenance, usage, lease and other records prior to acquisition, such an inspection normally would not provide it with as much knowledge of an aircraft's condition as the Group would have if it had been

36 AviaAM Leasing AB built for the Group. Unlike new aircraft, existing aircraft typically do not carry warranties as to their conditions. As a result, the Group may not be able to claim any expense related to the aircraft from a warrantor.

There are risks and uncertainties associated with buying midlife to end-of-life aircraft in an industry that is continually experiencing technological advances. The airline industry is continually making technological advances. These are generally minor through a particular product's life cycle, but approximately every ten to fifteen years, there is a "step change" in technology, such as the Boeing 787 or the Pratt & Whitney PW1524G engine. Certain step changes may accelerate the obsolescence of existing aircraft beyond that currently anticipated by the Group's management or accounted for in the Group's accounting procedures, and limitations on the maximum acceptable age for aircraft serving in fleets that are imposed by airlines may limit the marketability of the Group's aircraft assets. Further, there may be new legislation passed increasing the imposition of stringent noise, emissions, navigation controls or safety regulations as a result of those technological advances. As a result, technological advances or legislation passed as a result of technological advances may cause a decrease in the value of any assets the Group acquires, particularly because it plans to purchase the used aircraft, including previous generation aircraft and in-production aircraft types.

Certain countries have or are introducing age limits for used aircraft. Some countries, primarily in the developing world, have or are considering age limits for used aircraft. For the most part, these age limits relate to the introduction of used aircraft into the relevant jurisdiction and do not apply to aircraft once they are in operation in the country in question. For instance, Russia, Indonesia, China and India all have prohibitions on the introduction of aircraft ranging from 10 years for passenger aircraft in the case of Russia and China to the earlier of 20 years or 50,000 takeoff and landing cycles in the case of Indonesia. These age limitations may reduce the marketability of the Group's aircraft, which may have a material adverse effect on its results of operations or its financial condition.

Dependence on cooperation and performance of key management personnel. Much of the success of the Group depends to a significant degree on the continuity of the management and of other highly trained and experienced personnel dedicating a substantial part of their professional career to the Group. In case of the Group certain members of the Management Board also perform executive functions in other companies such as Avia Solutions Group (see Section 13.3 Principal Activities Outside the Company of Members of the Management and Supervisory Bodies for details). Despite non-competition agreements concluded with key personnel and acceptance of key management personnel into share holding, certain situations could arise where the Management could act to the benefit of entities other then the Group. In addition, should the Group be unable to retain, attract and motivate its key persons, the Group may suffer material adverse impact on its business and financial condition as hiring of personnel equivalent by knowledge and experience might entail inevitable additional costs and may not be immediately possible.

Dependence on Subsidiaries. The Company does not own operating assets and is to a large extent dependable on the cash flows generated by its Subsidiaries. These cash flows are supposed to finance the Company's expenses and dividend payments to shareholders. The Company may encounter limitations on free and unlimited fund transfers from the Subsidiaries as may be imposed by legal regulations of incorporation countries or restricted by covenants in bank loans. In addition, the Company is dependent on the compliance of its Subsidiaries to certain legal regulations. Pursuant to the Law on Companies the authorised capital of a public limited liability company and private limited liability company must be not less than LTL 150,000 and LTL 10,000 respectively and the equity capital of a company may not be less than 1/2 of the authorised capital indicated in the Articles of Association. As of 31 December 2012 four Subsidiaries of the Group have not complied with this requirement. Following the requirements of the applicable laws, the Company as the sole shareholder of these Subsidiaries shall take the necessary actions in order to remedy the situation, however this is not expected to have any significant implications for the Group.

Relationships with Avia Solutions Group. The Group utilizes certain resources that formally belong to its strategic partner and related party Avia Solutions Group (the Group is a related party to ASG as IA Valda AB (the Ultimate parent of the Group) has a significant influence over both the Group and ASG). These resources include IT services, office space, back office services such as accounting and legal, management services and sales network. In an event that Avia Solutions Group changes its ownership and ceases to be a related party, or decides not to collaborate with the Group as indicated above for any other reason, the Group would be at risk of losing its access the shared resources from Avia Solutions Group, which could further diminish its level of competitiveness on the market and could adversely affect the Group's financial results and growth prospects. The specific outcome of such an event would include decrease in interactions with clients and necessity of purchasing services such as legal or IT from the market.

37 AviaAM Leasing AB

3.4 Risks Related to Aircraft Leasing Market

Competition from other aircraft lessors with greater resources or a lower cost of capital than the Group's could adversely affect its financial results and growth prospects. The aircraft leasing industry is highly competitive, and although it is comprised of over 100 aircraft lessors, the top five lessors in terms of the number of aircraft owned control more than 50% of the total number of aircraft that are currently on lease. Initially, the Group believes most of its primary competitors in these niche areas will be significantly larger, have a longer operating history and may have greater resources or lower cost of capital than of the Group; accordingly, they may be able to compete more effectively in one or more of the markets the Group attempts to enter. In addition, the Group may encounter competition from other entities in the acquisition of aircraft such as: • airlines; • aircraft manufacturers; • financial institutions; • aircraft brokers; • special purpose vehicles formed for the purpose of acquiring, leasing and selling aircraft; • public and private partnerships, investors and funds, including private equity and hedge funds; • newly-formed smaller aircraft leasing companies that may be entering such sector; and • other aircraft leasing companies that the Group does not currently consider its major competitors. Competition for a leasing transaction is based principally upon lease rates, delivery dates, lease terms, reputation, management expertise, aircraft condition, specifications and configuration and the availability of the types of aircraft necessary to meet the needs of the client. Some of the Group's potential competitors may have significantly greater operating and financial resources and access to lower capital costs than the Group. In addition, some competing aircraft lessors may have a lower overall cost of capital and may provide inducements to potential lessees that the Group cannot provide. Likely the Group will not always be able to compete successfully with such competitors and other entities, which could materially and adversely affect its financial results and growth prospects. Given the financial condition of the airline industry, many airlines have reduced their capacity by eliminating select types of aircraft from their fleets, affecting the prices both of the aircraft types they eliminate and the types they continue to use. This elimination of certain aircraft from their fleets has resulted in an increase in the availability of such aircraft in the market, a decrease in rental rates for such aircraft and a decrease in market values of such aircraft. There can be no assurance that airlines will continue to eliminate or acquire the same types of aircraft, or that the Group will not acquire aircraft that cease to be in use by its potential lessees. Competition in the purchase and sale of used aircraft is based principally on the availability of used aircraft, price, the terms of the lease to which an aircraft is subject, condition of the aircraft and the creditworthiness of the lessee, if any. When the Group decides to acquire or dispose of an aircraft, it will compete with other aircraft leasing companies and other investors.

A significant discounting of prices on new aircraft by manufacturers or increase in new aircraft production may indirectly affect demand for used aircraft the Group purchases for leasing and its financial condition. The recent financial crisis has had a significant impact on the values of new aircraft as some buyers had lost some or all of the funding for orders they have placed. As a result, some orders for new aircraft were cancelled or deferred. The Export-Import Bank of the United States and European export credit agencies had become the principal source of debt financing for many new deliveries during the recent financial crisis but equity was still needed for these financings, which limited buyers' access to these agencies. Consequently, to secure sales of new aircraft and maintain revenues, manufacturers sold many of these aircraft at significant discounts. If there is another downturn in the financial markets or economy and manufacturers again drive down the price of new aircraft, this may have an adverse effect on the value of any aircraft the Group owns and its ability to lease them at attractive rates. The Group intends that used aircraft will constitute its target assets and its ability to extend leases or create new leases may be adversely affected by a surplus in the availability of new aircraft. Further, if manufacturers discount the prices of new aircraft, it may require the Group to mark down the value of aircraft it carries on its balance sheet or depreciate the Group's aircraft portfolio faster than it intends. Thus, a significant decrease in the prices of new aircraft could adversely affect the Group's results of operations and financial condition.

The Group will depend on aircraft and engine manufacturers' success in remaining financially stable and producing aircraft. The supply of aircraft, which the Group may purchase and lease, is dominated by a few airframe manufacturers and a limited number of engine manufacturers. The Group therefore will depend on these manufacturers' success in remaining financially stable, producing aircraft and related components which meet airlines' demands and providing customer support. Further, competition between the manufacturers for market share is escalating and may cause instances of deep discounting for certain aircraft types and may have a negative impact on the Group's competitive pricing when it sells or leases aircraft. Should the manufacturers fail to respond appropriately to changes in the market environment or fail to fulfil their contractual obligations, the Group may experience any of the following:

38 AviaAM Leasing AB

• inability to acquire aircraft on terms that will allow it to lease those aircraft to lessees at the Group's anticipated levels, resulting in lower growth rates or a contraction in its fleet; • poor customer support from the manufacturers of aircraft, resulting in reduced demand for a particular manufacturer's product, creating downward pressure on demand for those aircraft in the Group's fleet and reduced market lease rates for those aircraft; and • reduction in the Group's competitiveness due to deep discounting by the manufacturers, which may lead to reduced market lease rates and may adversely affect the value of the Group's portfolio and its ability to remarket or sell some of the aircraft in its fleet.

3.5 Risks Related to the Offering

The Offering may be postponed, suspended or cancelled. Public offerings are subject to various circumstances independent from the Company. In particular, the demand for the Offer Shares is shaped by, among others, investors' sentiment toward sector, legal and financial conditions of the Offering. In case such circumstances would have adverse impact on the results of the Offering, the Issuer may decide to suspend or cancel the Offering (for further details please see Section XX The Offering and the Plan of Distribution – Cancellation, Suspension or Modification of the Offering). Consequently, the investors may be unable to successfully subscribe for the Offer Shares and payments made by investors during the Offering, if any, may be returned without any compensation. Furthermore, the LB, when performing its functions has the right (i) to suspend the public offering of the securities and their admission on the regulated market for the term of up to 10 business days, when it has reasonable suspicions, that the indicated actions are executed not in conformity with the applicable legal requirements or the terms and conditions, foreseen in the prospectus or (ii) to require to suspend or terminate the trading in specific securities on a regulated market or (iii) has a right to suspend the promotional activities and to establish the term of up to 10 business days for removal of the breaches and for execution of other relevant actions (if these breaches are not removed or other actions not executed within the indicated term, the LB has a right to prohibit the promotional activities).

The Offering may be delayed or aborted. According to the article 19 of the Public Offering Act, if the issuer, or an entity participating in the public offering, subscription or sale carried out pursuant to the offering, admission or introduction of securities to trading on a regulated market or promotional activities on behalf or upon orders of the issuer, breaches legislation in force in connection with the public offering, subscription or sale carried out pursuant to the offering, or admission or introduction of securities to trading on a regulated market or conducting promotional activities on the territory of Poland, the PFSA should notify the LB about that. If, despite notification by the PFSA, the LB does not immediately take measures to prevent further violation of the legislation in force, or if such measures prove ineffective, the PFSA may, with a view to protecting the interests of investors and having first notified the LB, apply measures provided for in article 16, 17 or article 53.12 of the Public Offering Act. The PFSA should also promptly notify the European Commission that it has taken such measures. Pursuant to article 16 of the Public Offering Act, in the event that the issuer, the selling shareholder or any other entity participating in the offering, subscription or sale carried out pursuant to the offering on behalf of or upon the instructions of the issuer or the selling shareholder is in breach or there is a reasonable suspicion of such parties being in breach of the law in connection with the public offer, subscription of securities in Poland or that such breach may occur, the PFSA may: (a) order that the commencement of the public offer be withheld or the offering, subscription be interrupted for up to 10 business days; or (b) prohibit the commencement of the public offering, subscription or their further conduct; or (c) publish at the issuer's or the selling shareholder's expense, information with respect to the breach in connection with the public offering, subscription. With respect to any public offering, subscription, or sale the PFSA may apply the measures provided in items (b) and (c) above more than once. If the grounds for the decision provided in (a) and (b) above cease to exist,thePFSAmay,upontherequestoftheissuer,oronitsown initiative, repeal such decision. Pursuant to article 17 of the Public Offering Act, in the event that the issuer or other entities acting on behalf or upon instructions from the issuer are in breach, or there is a reasonable suspicion of such entities being in breach, of the law in connection with applying for admission of securities to trading or admission to trading of securities on the regulated market in Poland, or there is a reasonable suspicion that such breach may occur, the PFSA may: (a) order that the application for the admission or introduction of the securities to trading on the regulated market be suspended for up to 10 business days; (b) prohibit the application for admission or introduction of the securities to trading on the regulated market; or

39 AviaAM Leasing AB

(c) publish, at the issuer's expense, information with respect to the breach when the issuer seeks to have the securities admitted or introduced to trading on the regulated market. If the grounds for the decision provided in (a) and (b) above cease to exist,thePFSAmay,upontherequestoftheissuer,oronitsown initiative, repeal such decision. Pursuant to article 53.12 of the Public Offering Act if a violation of the obligations regarding the promotion activities is found to have occurred, the PFSA may: (a) order that the commencement of the promotional activities be withheld or that the promotional activities already underway be discontinued, in each case for a period not exceeding 10 business days for the purpose of rectifying the identified irregularities, or (b) proscribe the promotional activities, in particular when the issuer or the selling shareholder evade rectifying the irregularities identified by the PFSA within the deadline set in point a above, or the contents of the promotional or advertising materials violate statutory provisions, or (c) publish, at the expense of the issuer or of the selling shareholder, information concerning illegality of the promotional activities, specifying the identified violations. In cases where the issuer, the selling shareholder or other parties participating in the public offering, subscription or sale on behalf of or upon issuer's or selling shareholder's order do not perform or improperly perform obligation referred in provisions of the Public Offering Act indicated above, the PFSA may impose a penalty of up to five million PLN. If the issuer or selling shareholder leads a promotional campaign in violation of the Public Offering Act, the PFSA may impose a penalty of up to one million PLN. In the case of gross violation of the provisions referred to in above, the PFSA may impose a penalty of up to one million PLN per person acting on behalf or upon issuer's or selling shareholder's order when making activities related to the public offering or promotional campaign, particularly as a member of the management board.

3.6 Risks Related to Listing and Market

The price of the Shares may fluctuate significantly. The trading prices of the Shares may be subject to significant price and volume fluctuations in response to many factors including, but not limited to: • variations in the Group's operating results and those of other companies operating in the leasing and aviation sector; • negative research reports or adverse broker comments; • future sales of Shares owned by the Issuer's significant shareholders, or the perception that such sales will occur; • general economic, political or regulatory conditions in Lithuania or in the leasing and aviation sector generally; and • extreme price and volume fluctuations on the WSE or other stock exchanges, including those in other emerging markets. Fluctuations in the price and volume of the Shares may not be correlated in a predictable way to the Group's performance or operating results. The Offer Price may not be indicative of prices that will subsequently prevail in the market and an investor may not be able to resell its Shares at or above the Offer Price. Moreover, the value of investment in the Shares may be affected by prevailing rates of exchange between the LTL, USD and PLN, as the Issuer's capital is denominated in LTL and the Group's functional and reporting currency is USD, while the Shares will be subscribed andtradedontheWSEinPLN.

Turmoil in emerging markets could cause the value of the Shares to suffer. Financial or other turmoil in emerging markets has in the recent past adversely affected market prices in the world's securities markets for companies operating in the affected developing economies. There can be no assurance that renewed volatility stemming from future financial turmoil, or other factors, such as political unrests, that may arise in other emerging markets or otherwise, will not adversely affect the value of the Shares even if the Lithuanian economy remains relatively stable.

The market value of Shares may be adversely affected by future sales or issues of substantial amounts of Shares. In connection with the Offering, certain "lock-up" agreements will be (are) executed in respect of the issue and sale of Shares by the Company and the Lead Manager as well as among the shareholders of the Company (see Section XXI Placing – Lock-up Agreements). After these lock-ups expire or are terminated, the respective Shares will be available for sale without any restrictions and there can be no assurance as to whether or not they will be sold on the market. The Company cannot predict what effect such future sales or offerings of Shares, if any, may have on the market price of the Shares. However, such transactions may have a material adverse effect, even if temporary, on the market price of the Shares.

40 AviaAM Leasing AB

Therefore, there can be no assurance that the market price of the Shares will not decrease due to subsequent sales of the Shares held by the existing shareholders of the Company or a new Share issue by the Company.

There has been no prior public trading market for the Shares and therefore liquidity as well as trading price of the Shares could be materially and adversely affected. Prior to the Offering, there has been no public trading market for the Shares. Although the Company will apply for the Shares to be admitted to trading on the WSE, there is no guarantee that an active trading market for the Shares will develop or, if developed, can be sustained following the closing of the Offering. If an active trading market is not developed or maintained, the liquidity and trading price of the Shares could be materially and adversely affected. Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. If an actual liquid trading market for the Shares does not develop, the price of the Shares may be more volatile and it may be difficult to complete a buy or sell order for the Shares.

The marketability of the Shares may decline and the market price of the Shares may fluctuate disproportionately and decline below the Offer Price in response to adverse developments that are unrelated to the Company's operating performance. The Company cannot assure that the marketability of the Shares will improve or remain consistent. The Offer Price in the Offering may not be indicative of the market price for the Shares after the Offering has been completed. Shares listed on regulated markets, such as the WSE, have from time to time experienced, and may experience in the future, significant price fluctuations in response to developments that are unrelated to the operating performance of particular companies. The market price of the Shares may fluctuate widely, depending on many factors beyond the Company's control. These factors include, amongst other things, actual or anticipated variations in operating results and earnings by the Group companies and/or its competitors, changes in financial estimates by securities analysts, market conditions in the industry and in general the status of the securities market, governmental legislation and regulations, as well as general economic and market conditions, such as recession. These and other factors may cause the market price and demand for the Shares to fluctuate substantially and any such development, if adverse, may have an adverse effect on the market price of the Shares which may decline disproportionately to the Group companies' operating performance. The market price of the Shares is also subject to fluctuations in response to further issuance of shares by the Company, sales of Shares by the Major Shareholders, the liquidity of trading in the Shares and capital reductionorpurchasesoftheSharesbytheCompanyaswellasinvestor perception. As a result of these or other factors, there can be no assurance that the market price of the Shares will not decline below the Offer Price.

Impact of securities analysts. Trading volumes and price of the Shares may depend on opinions of securities analysts who regularly monitor operations of the Company, and publish their research reports regarding the future performance of the Company. The Company has no control over these analysts who may downgrade their recommended price of the Shares at any time, issue opinions, which are not in line with the Management's view, or may drop the coverage of the Company altogether. All these events may have an adverse impact on trading volume and price of the Shares.

There is no guarantee that the Company will pay dividends in the future. The Company is under no lasting and definite obligation to pay regular dividends to its shareholders and no representation can be made with respect to the payment and amount of future dividends, if any. The Management's recommendations for the distribution of profit will be based on financial performance, working capital requirements, reinvestment needs and strategic considerations which may not necessarily coincide with the short-term interests of all shareholders. The payment of dividends and the amount thereof will be subject to the ultimate discretion of the majority of the Company's shareholders. Accordingly, investors cannot rely on dividend income from the Offer Shares and any returns on an investment in the Offer Shares will likely depend entirely upon any future appreciation in the price of the Shares.

The Company may be unable to list the Shares on the WSE or the Company may be delisted from the WSE. The admission of the Shares to trading on the WSE requires, inter alia, that (i) the Shares are registered with the clearing and settlement system of the NDS and (ii) the management board of the WSE approves the listing and trading of the Shares on the WSE. In order to obtain the WSE management board's approval the Company has to meet certain requirements provided for in the respective regulations of the WSE and other applicable laws. Such requirements include, but are not limited to: (i) the appropriate free float of the Shares; (ii) the appropriate market value of the Shares or the equity of the Issuer; (iii) no restriction on transferability of the Shares; (iv) the approval of this Prospectus by the LB and its notification to the PFSA; and (v) no bankruptcy or liquidation proceedings pending with respect to the Issuer. Furthermore, while examining the Company's application for admission of the Shares to trading on the WSE, the management board of the WSE will take into consideration: (i) the Company's current and projected financial standing, in particular profitability, liquidity and ability to service debt, as well as other factors affecting the financial performance of the Issuer, (ii) the Issuer's development perspectives, in particular, assessment of investments objectives taking into account its financial sources, (iii) experience and qualifications of the members of the Company's Management Board and Supervisory Council, (iv) the terms on which the securities were issued and the compliance of these terms with the principles of the public nature laid out in the WSE Rules; and (v) security of public trading on the WSE and interests of trading

41 AviaAM Leasing AB participants. Some of the conditions mentioned above are of discretional nature and, therefore, the Company cannot assure that the management board of the WSE will conclude that the Company meets all of them. The rules of the WSE require the Company to file an application for introduction of Shares to trading on the WSE within a period of six months from the date on which the Shares have been admitted to such trading. If the Company fails to comply with this obligation, the decision of the management board on the admission of the Shares to trading on the WSE could be annulled. The Company intends to take all the necessary steps to ensure that its Shares are admitted to trading on the WSE as soon as possible after the closing of the Offering. However, there is no guarantee that all of the aforementioned conditions will be met and that the Shares will be admitted to trading on the WSE on the Listing Date as expected or at all. Moreover, if the Company fails to fulfil certain requirements or obligations under the applicable provisions of securities laws, including in particular the requirements and obligations provided for under the Public Offering Act and the Trading in Financial Instruments Act, the PFSA could impose a fine on the Company or delist its Shares from trading on the WSE. The WSE management board will delist the Shares from trading upon the request of the PFSA, if the PFSA concludes that trading in the Shares imposes a significant threat to the proper functioning of the WSE or the safety of trading on that exchange, or infringes investors' interests. The mandatory delisting will also be effected by the WSE management board where: (i) transferability of Shares has become restricted, (ii) Shares are no longer in book entry form, (iii) the PFSA has requested so in accordance with the Trading in Finance Instruments Act, (iv) the Shares have been delisted from regulated market by LB or another competent supervisory authority over such market. The WSE management board may also delist the Shares where, (i) the Shares cease meeting all requirements for admission to trading on the WSE; (ii) the Company persistently violates the regulations of the WSE; (iii) the Company has requested so; (iv) the Company has been declared bankrupt or a petition for bankruptcy has been dismissed by the court because the Company's assets do not suffice to cover the costs of the bankruptcy proceedings; (v) the WSE considers it necessary in order to protect the interests of the market participants; (vi) following a decision on a merger, split or transformation of the Company; (vii) no trading was effected in the Shares within a period of three previous months; (viii) the Company has become involved in a business that is illegal under the applicable provisions of laws; and (ix) the Company is in liquidation proceedings. The Company believes that as at the date hereof there are no circumstances which could give grounds for delisting of the Shares from the WSE in the foreseeable future. However, there can be no assurance that any of such circumstances will not arise in relation to the Shares in the future. Delisting of the Shares from the WSE could have an adverse effect on the liquidity of the Shares and, consequently, on investors' ability to sell the Shares at a satisfactory price.

Trading in the Shares on the WSE may be suspended. The WSE management board has the right to suspend trading in the Shares for up to three months (i) at the request of the Company, (ii) if the Company fails to comply with the respective regulations of the WSE (such as specific disclosure requirements), or (iii) if it concludes that such a suspension is necessary to protect the interests and safety of market participants. Furthermore, the WSE management board will suspend trading in Shares for up to one month upon the request of the PFSA, if the PFSA concludes that trading in the Shares is carried out in circumstances which may pose a possible threat to the proper functioning of the WSE or the safety of trading on that exchange, or may harm investors' interests. The Company will make all endeavours to comply with all applicable regulations in this respect. However, there can be no assurance that trading in the Shares will not be suspended. Any suspension of trading could adversely affect the Share price.

The Company will have a limited free float, which may have a negative effect on the liquidity, marketability or value of its Shares. Prior to the Offering, the Major Shareholders and Minority Shareholders own 100% of the Company's outstanding Shares and immediately after the Offering the Major Shareholders and Minority Shareholders will own 67.3%, provided that all the Offer Shares are placed with investors. Consequently, the free float of Shares held by the public will be limited. In addition, the WSE requires that the share capital of a company to be listed on the main market of the WSE to be adequately diluted, i.e. a part of the capital must be held by minority shareholders holding individually less than 5% of that company's share capital. If the Offer Shares are acquired by a limited number of large investors, there is a risk that the share capital would not be adequately diluted and as a result the WSE would not approve the Shares for listing on the main market of the WSE and, consequently, the Shares would be listed on the parallel market of the WSE.

The Issuer has been, and will continue to be, influenced by two major shareholders. As of the date of the Prospectus the Major Shareholders own 95.0% of the Issuer's share capital. Following the Offering the Major Shareholders will continue to own 64.6% of the Issuer's Shares, assuming all of the Offer Shares are placed with investors. Although, the Major Shareholders should not be deemed as acting in concert, they have the ability to influence most actions requiring shareholder approval, including electing the majority of the Supervisory Council and determining the outcome of most corporate matters, without recourse to the Issuer's minority shareholders. As a result, the Major Shareholders could, for example, cause the Group to pursue transactions, which may involve higher risk for the Group. Moreover, the interests of the Major Shareholders may, in some circumstances,

42 AviaAM Leasing AB conflict with the interests of other holders of the Shares. If circumstances were to arise where the interests of the Major Shareholders conflicted with the interests of other holders of the Shares, they could take actions materially adverse to the interests of holders of the Shares.

The Company has no experience in complying with requirements for publicly-listed companies. A public company is subject to a number of obligations mostly relating to disclosure of respective information, in particular, current and periodic reports as well as making public of notifications on large shareholdings made by investors. The Company has never been subject to such obligations and may fail to fulfil such obligations. As a consequence, the investors may not be provided on time or at all with price-sensitive information or at all or the content of materials made public may be of unsatisfactory quality. In addition, in case of the Company's non-compliance with relevant rules and regulations relating to a public company, the Company may be fined or have other sanctions imposed on it, which may have an adverse impact on the Company's financial results, Share price and demand for the Shares. Furthermore, the Company has no experience in complying, and may not comply, with certain corporate governance requirements for publicly-listed companies. As a consequence, image of the Company and perception of the Company by the investors may be negative, what may have an adverse impact on price and demand for Shares. In addition, in the event of its non-compliance resulting from a breach of relevant rules and regulations related to a public company, the Issuer may be fined or have other sanctions imposed on it, which may have an adverse impact on the Issuer's financial results, share price and demand for the Shares.

3.7 Legal and Taxation Risks

The rights of Lithuanian company shareholders may differ from the rights of shareholders of a Polish company and the legislation, interpretation and application of legal acts may be different in Lithuania from that in Poland. The Company is organized and exists under the laws of Lithuania. Accordingly, the Company's corporate structure as well as rights and obligations of the shareholders may be different from the rights and obligations of shareholders in Polish companies listed on the WSE. The exercise of certain shareholders' rights for non-Lithuanian investors in a Lithuanian company may be more difficult and costly than theexerciseofrightsinaPolishcompany.Forexample,anactionwithviewofdeclaringaresolution invalid must be filed with, and will be reviewed by the Lithuanian court, in accordance with the Lithuanian law. In addition, Lithuanian regulations may provide shareholders with particular rights and privileges which could not exist in Poland and, vice versa, certain rights and privileges that shareholders may benefit from in Polish companies may not be guaranteed. Even though Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of certain rights of shareholders in listed companies should be transposed into the national law of Poland and Lithuania, there still might be differences in regulation of the shareholder rights and exercise thereof across the countries. In addition, even where the regulation is comparable, there might still be differences in its interpretation and application. Furthermore, the conflicts regarding the applicable laws (Lithuanian or Polish) with regards to disclosures of information in connection with this Offering and other relevant issues on this Offering may arise. After the successful Offering and Admission Lithuania will be the home Member State of the Issuer for the purpose of the European Union securities regulations, and Poland will be its host Member State. The EU directives provide different competencies for the home Member State and host Member State with respect to rights and obligations of the investors in public companies, depending on the subject of regulations. In addition, the directives are not always implemented in the proper manner at a national level. Consequently, investors in the Offer Shares may be forced to seek complex legal advice in order to comply with all regulations when exercising their rights or when fulfilling their obligations. In case an investor fails to fulfil its obligations or violates law when exercising rights from or regarding the Offer Shares, he or she may be fined or sentenced for such non-compliance or be unable to exercise rights from the Offer Shares. Also 2 thresholds applicable with regard to the voting rights of the Issuer should be considered if it comes to the takeover bid, i.e. 33% 1 and 33 /3%. According to the applicable Polish laws a shareholder that wishes to cross the 33% voting rights threshold in the company is obliged to launch a public tender for shares that will entitle it to hold 66% of votes. It should be noted that the Polish law explicitly excludes application of the Polish regulations concerning thresholds only with respect to the 66% threshold as the mandatory threshold 1 under the Takeover Directive. In such a case, the Lithuanian threshold of 33 /3% should apply. On the other hand, the additional threshold of 33% stipulated in the Polish law is a separate obligation imposed by Poland irrespective of the Takeover Directive. Therefore, 1 the announcement of a take-over bid when exceeding 33 /3% of votes to satisfy the obligations imposed by the Takeover Directive should be deemed a different obligation from the obligation to announce a bid for 66% of votes when exceeding 33% of votes to satisfy additional Polish requirements. For more information on this issue please see Section XIX Certain Lithuanian and Polish Securities Market Regulations. In addition, the exercise of pre-emption and certain other shareholder rights for Polish or non-Lithuanian investors in a Lithuanian company may be more difficult and costly than the exercise of rights in a Polish company listed on the WSE. Resolutions of the General Meeting may be taken with majorities different from the majorities required for adoption of equivalent resolutions in Polish companies. Action

43 AviaAM Leasing AB with a view to declaring a resolution invalid must be filed with, and will be reviewed by a Lithuanian court in accordance with Lithuanian law. Moreover, certain protections such as anti-takeover measures may not be available to holders of the Offer Shares or their application may be uncertain.

Judgments of Polish courts against the Company and the Group may be more difficult to enforce than if the Company and its management were located in Poland. The Company and the Group were formed in accordance with the Lithuanian law and their registered offices are in Lithuania (two Subsidiaries of the Company were formed in accordance with the Cyprian and Bermudian law and their registered offices are registered in these countries respectively). The majority of the assets of the Company are located in markets outside Poland and the majority of the management personnel working for the Company reside in countries other than Poland. For this reason Polish investors may encounter difficulties in serving summons and other documents relating to court proceedings on any of the entities within the Group and/or the management personnel working for the Group. For the same reason it may be more difficult for Polish investors to enforce a judgment of the Polish courts issued against any entities within the Group and/or the management personnel working for the Group than if those entities and/or the management personnel were located in Poland.

Failure to obtain certain required licenses and approvals could negatively affect the Group's ability to re-lease or sell aircraft, which would negatively affect the Group's financial condition and results of operations. Lessees are subject to extensive regulation under the laws of the jurisdictions in which they are registered and in which they operate. As a result, the Group expects that certain aspects of its leases will require licenses, consents or approvals, including consents from governmental or regulatory authorities for certain payments under its leases and for the import, export or deregistration of the aircraft. Subsequent changes in applicable law or administrative practice may increase such requirements and governmental consent, once given, could be withdrawn. Furthermore, consents needed in connection with the future re-leasing or sale of an aircraft may not be forthcoming. Any of these events could adversely affect the Group's ability to re-lease or sell aircraft, which would negatively affect its financial condition and results of operations.

The Group may become subject to income or other taxes in the jurisdictions in which its aircraft operate, where the Group's lessees are located or where it performs certain services which would adversely affect the Group's business and result in decreased cash available for distributions to shareholders. As the Company is resident for tax purposes in Lithuania, it expects to be subject to the income tax laws of Lithuania and it may be eligible for the benefits of the various bilateral tax treaties between Lithuania and a number of other countries. In addition, the Company may be subject to income or other taxes in other jurisdictions by reason of its activities and operations or those of its service providers, where its aircraft operate or where the lessees of its aircraft (or others in possession of its aircraft) are located. The imposition of such taxes would adversely affect the Company's business and would result in decreased earnings available for distribution to its shareholders. In addition, as Lithuania does not have tax treaties with all jurisdictions, the Company may find it necessary to establish subsidiaries in other jurisdictions to lease or sublease aircraft to customers in those jurisdictions. Such subsidiaries may be subject to taxation in the jurisdictions in which they are organized, which would reduce the Company's net income and have an adverse impact on its cash flow available for distribution to its shareholders. The inability to claim benefits under one or more bilateral tax treaties could reduce cash flows available to make distributions to Company's shareholders.

Tax treatment for non-Lithuanian investors in a Lithuanian company may vary. The Company is organised and existing under the laws of Lithuania and, as such, the Lithuanian tax regime applies to the distribution of profit and other payments from the Company to its investors. The taxation of income from such payments as well as other income, for instance, from the sale of the Shares, may vary depending on the tax residence of particular investors as well as the existence and the provisions of double tax treaties between an investor's country of residence and Lithuania. Tax provisions applying to particular investors may be unfavourable and/or may change in the future in a way which has an adverse effect on the tax treatment of an investor's holding of the Shares.

Transactions with related parties. There is a number of transactions with related parties within the Group. For more details, see Section XVI Related Party Transactions. According to the applicable tax laws, transactions between related parties must be concluded at arm's length. Even though the Management of the Company puts its best efforts to ensure the compliance with the arm's length standard, there still remains a theoretical risk of potential tax implications if it were determined that certain transactions deviate from the arm's length standard. This, if challenged by the tax authorities, may result in adjustment to cost or revenues which may impact results or financial position of the Group.

Tax contingencies and uncertain tax positions. Lithuanian tax legislation which was enacted or substantively enacted at the end of the reporting period may be subject to varying interpretations. Consequently, tax positions taken by management and the formal documentation supporting the tax positions may be

44 AviaAM Leasing AB successfully challenged by relevant authorities. Fiscal periods remain open to review by the authorities in respect of taxes for calendar years preceding the year of review. Management is not aware of any circumstances that could lead to significant tax charges and penalties in the future that have not been provided for or disclosed in these financial statements. The Group's uncertain tax positions are reassessed by management at the end of each reporting period. Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted by the end of the reporting period, and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes other than on income are recognized based on management's best estimate of the expenditure required to settle the obligations at the end of the reporting period.

45 AviaAM Leasing AB

IV USE OF PROCEEDS

Historically the Group has financed its development through cash flows from business, bank borrowings (including finance lease liabilities) and capital contributions. The purpose of the Offering is to attract additional capital and ensure the successful implementation of development strategies of the Group.

Use of proceeds received by the Company from the subscription and payment of the New Shares The proceeds resulting from the Offering will provide the opportunity to continue the policy of sustainable growth and geographical expansion which the Group has so far pursued. Taking into account the aforementioned, the Offering is an important step towards the overall strategicobjectiveoftheGroup. The amount of the gross proceeds raised from issue of the New Shares depends on the number of the New Shares actually placed and the set Offer Price. The Company expects the gross proceeds from the issue of the New Shares, provided that all of the New Shares are subscribed at the Maximum Price, paid and allotted, to be approximately PLN 221.7 million. The net proceeds depend on final costs and expenses associated with issue of the New Shares. The Issuer will receive the net proceeds from the issuance of the New Shares, whereas the Selling Shareholder will receive the net proceeds from the sale of Sale Shares. The Company is planning to utilize the proceeds from the Offering to develop and strengthen its position in the following core business segments: – aircraft leasing; – aircraft trading; – engine leasing and management.

Aircraft leasing The Company expects to use approx. 65% of the net proceeds of the Offering to develop its main aircraft leasing business by augmenting the Group's current lease operations of older generation aircraft (such as Boeing 737 "Classics" and Airbus A320 family) and entering the lease market for newer generation more expensive mid-life (10 years and younger) narrowbody jet aircraft (such as Boeing 737 NG and Airbus A319/320/321). In addition to mainline commercial aircraft the Group also intends to further develop the leasing activities of regional jet aircraft (such as Bombardier CRJ and Embraer ERJ).

Aircraft trading The Company expects to utilize approx. 25% of the net proceeds along from the cash generated from the operating activities of the Group to finance its trading activities and short-term brokerage operations. The net proceeds of this Offering will provide for an increase in the working capital to fund higher value trading activities (e.g. Boeing 737 NG and Airbus A320) that are not currently covered by the Group. In addition this will allow the Group to execute multiple lower value trading transactions simultaneously.

Engine leasing and management The Company expects to utilize approx. 10% of the net proceeds of the Offering for acquisition and leasing of aircraft engines. The Company intends to develop the business of high-value engine leasing by acquiring and leasing engines demanded by the clients in order to assure the continuous aircraft operations during their engine maintenance activities and to address client demand to have spare engines on lease for their Aircraft on Ground (AOG) situations. Moreover, the Offering and the Admission are expected to provide a number of benefits to the Group, such as: • developing and strengthening of ancillary business lines such as aircraft asset management; • enabling the Group to raise additional funds with a view to implementing the Group's strategy and achieving its strategic goals; • facilitating the Group's access to the capital markets and improving opportunities for further growth, expansion and development of the Group's business and, thus increasing the share value of the Company; • increasing the international awareness of the Group, especially among professional investors; • increasing the Group's transparency, which may provide new opportunities for development of Group's business; • strengthening the Group's reputation as one of the leading Central and Eastern European aircraft lessors, which may have an influence on extension of the customers base and create better conditions for long-term relationships with customers and suppliers.

Use of proceeds received by the Selling Shareholder from the sale of Sale Shares As it is indicated in Section 13.6 Remuneration and Benefits, on 25 April 2012 the Selling Shareholder was granted a loan in the amount of USD 700 thousand by AAL Capital Aircraft Holdings. This subsidiary of the Company assigned its claim to the outstanding loan

46 AviaAM Leasing AB and accrued interest payable as at 15 March 2013 to Mr Vaidas Barakauskas (the sole shareholder of Indeco: Investment and Development UAB) who took over the debt so assigned against the payment of Mr Gediminas iemelis. Following the successful Offering the Selling Shareholder shall use part of the received proceeds to repay the loan and accrued interest to Mr Vaidas Barakauskas, who in turn has an obligation to pay to AAL Capital Aircraft Holdings the price for transfer of claim rights not later than within 30 days following the sale of Sale Shares during the Offering, owned by the Selling Shareholder in accordance with the respective Agreement on Assignment of Claim Rights (for more information on this agreement please see Section 13.6 Remuneration and Benefits).

47 AviaAM Leasing AB

V DIVIDEND POLICY

The Company does not have an approved policy on dividend distributions and any restrictions thereon. Decision on distribution of dividends to shareholders is adopted by the General Meeting, with a right to propose a draft decision with this regard generally vested with the Management Board, the Supervisory Council and the shareholders, holding not less than 1/20 of all the shares and votes in the General Meeting. As from the year 2010 the Company has paid to its shareholders the following amounts of dividends:

Table 1. Distributed amounts of dividends

Distributed dividends Distributed dividends Dividend for the year in total, per share, USD'000 USD 2010 –– 2011 –– 2012(*) 2,007 0.0682

Source: the Company

(*) The dividends were paid out on 31 January 2013 and the amount indicated in the table above reflects the amount of dividends actually paid. The indicated amount was distributed as dividends for the shorter period than a financial year, as allowed under the applicable Lithuanian laws. For more information on distribution of such dividends please see Section 18.2 Rights and Obligations Granted by the Shares.

The Management of the Company does not rule out proposing to pay dividends to the shareholders in the future. The initial proposal of the draft decision as to declaration and payment of dividends to shareholders will be at the discretion of the Management Board and will depend on the Group's financial condition, capital requirements and other factors the Management Board deems relevant. The payout of the dividend by the Group will be based on the investment opportunities available in the commercial aircraft sector, the capital intensive nature of aircraft leasing, the need to maintain a prudent level of liquidity as the Group intends to reinvest cash flow generated by operations to finance the future development and expansion of the Group's business. The strategy of the Group is to reinvest amounts in excess of non-cash depreciation expense, seek to maintain the asset base, grow revenues and earnings. In addition, in the future the Group may enter into credit agreements or other borrowing arrangements that impose restrictions on the declaration or payment of dividends. The Group does not intend to borrow in order to pay dividends and will use only available cash. The following general rules apply with respect to any dividends declared by the Company. Shares give rights to dividends declared by the General Meeting. Dividends are paid to persons who at the end of the rights record date (i.e. the tenth business day following the day on which the decision to distribute dividends was adopted by the General Meeting) were shareholders of the Company or were otherwise entitled to receive dividends. The Company must pay out the declared dividends within one month from the date when the General Meeting decides to declare dividends. The same rules for paying dividends are applied both to residents and non-residents of Lithuania with the exception of taxation requirements (see Section XXIII Taxation of the Issuer's Shares). Dividends are paid to the shareholders in proportion to the aggregate sum of the nominal value of the shares held by the shareholder. Dividends can be paid only in cash. The dividends attributable to the Shares are non-cumulative. The Law on Companies foresees that the annual dividends as well as the dividends for a shorter period than a financial year may be distributed to the shareholders of the Company. The Company may only distribute annual dividends out of its distributable profits that consist of net profit for each financial year, as increased or reduced by any profit or loss carried forward from the previous year and/or profit or loss of the current financial year not realised in the profit and loss account, plus any amounts held in its reserves that the shareholders decide to make available for distribution (other than those reserves that are specifically required by the Lithuanian laws) and shareholders' contributions to cover loss, less any distributions for any other purposes decided by the General Meeting. Dividends may not be declared or paid out if at least one of the following conditions is met: (i) the Company has outstanding obligations which became due before the decision of the General Meeting; (ii) the Company's distributable result of the financial year is negative (i.e. losses were incurred); (iii) the equity capital of the Company is lower or after the payment of dividends would become lower than the aggregate amount of the share capital, the legal reserve, the revaluation reserve and the reserve for acquisition of own shares of the Company. Dividends for a shorter period than the financial year may be declared if all following conditions are met: (a) an audited set of interim financial statements has been approved; (b) the profit (loss) amount for a period shorter than a financial year is positive (there is no loss); (c) the amount distributed for payment of dividend does not exceed the profit (loss) for the period shorter than a financial year, the amount of the retained earnings (loss) for the previous financial years as at the end of the previous financial year, upon deduction of the share of profit earned during the period shorter than a financial year, which must be appropriated to reserves according to the law or according to

48 AviaAM Leasing AB the Articles of Association; (d) the company does not have outstanding obligations, which matured before taking of the decision, and upon payment of dividend it would be capable of fulfilling its obligations for the current financial year. Upon distribution of interim dividend, it is allowed to allocate dividend for another period shorter than a financial year no earlier than 3 months later.

49 AviaAM Leasing AB

VI CURRENCY PRESENTATION AND EXCHANGE RATE DATA

The functional currency of the Company and all its Subsidiaries, as well as the Joint Venture is U.S. Dollar (USD) as a significant proportion of their business is conducted in U.S. Dollars and management uses USD to manage business risks and exposures and to measure performance of the business. For this reason financial information in this Prospectus is presented in U.S. Dollars (USD), i.e. the official currency of the United States of America. However, the information in the IFRS Financial Statements and in the Consolidated Interim Financial Information is presented in U.S. Dollars and, due to the requirements of the laws of the Republic of Lithuania, also in Lithuanian Litas (LTL) which is the Group's alternative presentation currency. Solely for the convenience of the reader of this Prospectus and except otherwise stated, in the table below relevant foreign currency exchange rates are set out as they are used in this Prospectus, referring to the dates relevant for the financial information of the Company, announced by the Bank of Lithuania or the National Bank of Poland respectively.

Table 2. Exchange rate data

As at 31 March As at 31 December Currency 2013 2012 2012 2011 2010 LTL per EUR(*) 3.4528 3.4528 3.4528 3.4528 3.4528 LTL per USD(**) 2.6984 2.5896 2.6060 2.6694 2.6099 PLN per LTL(***) 1.2099 1.2053 1.1840 1.2792 1.1469 PLN per EUR(***) 4.1774 4.1616 4.0882 4.4168 3.9603 PLN per USD(***) 3.2590 3.1191 3.0996 3.4174 2.9641

(*) Fixed exchange rate (**) Source: Bank of Lithuania (***) Source: National Bank of Poland

50 AviaAM Leasing AB

VII CAPITALISATION AND INDEBTEDNESS

The tables below present the information on capitalisation and indebtedness of the Group as at 31 March 2013. The tables below should be read in conjunction with the IFRS Financial Statements and Consolidated Interim Financial Information, and other financial data and information contained in Section IX Selected Financial Information and Section XII Operating and Financial Review.

Table 3. Capitalisation and indebtedness (USD'000)

Item As at 31 March 2013 Total current debt 14,780 Guaranteed – Secured(*) 4,080 Guaranteed and secured(**) 8,124 Unguaranteed / unsecured(***) 2,576 Total non-current debt (excluding current portion of long-term debt) 35,808 Guaranteed – Secured(*) 13,166 Guaranteed and secured(**) 7,165 Unguaranteed / unsecured(***) 15,477 Shareholder's equity 24,011 Share capital 12,232 Revaluation reserve 12,195 Legal reserve 1,131 Retained earnings (1,547) Total capitalisation and indebtedness 74,599

Source: the Company, unaudited

(*) Secured debt relates to bank loan amounting to USD 17.2 million that is secured by aircraft. (**) Guaranteed and secured liabilities relate to bank loans amounting to USD 15.3 million that are guaranteed by Dangiruva AB and secured by aircraft. (***) Unguaranteed / unsecured liabilities relate to finance lease liabilities.

Table 4. Net indebtedness (USD'000)

Item As at 31 March 2013 A. Cash and cash equivalents 6,410 B. Short-term bank deposits – C. Liquidity (A + B) 6,410 D. Current financial receivables 32 E. Current bank loans 6,144 F. Current portion of non-current debt 6,060 G. Finance lease liabilities 2,576 H. Current financial debt (E + F + G) 14,780 I. Net current financial indebtedness (H – D – C) 8,338 J. Non-current financial receivables 2,927 K. Security deposits received – net 11,505 L. Non-current bank loans and borrowings 20,331 M. Finance lease liabilities 15,477 N. Net non-current financial indebtedness (J + K + L + M) 50,240 O. Net financial indebtedness (I + N) 58,578

Source: the Company, unaudited

There was no indirect or conditional indebtedness as at 31 March 2013.

Working capital statement In the opinion of the Company, the working capital available to the Group, understood as the Group's ability to raise funds and other liquid resources necessary for timely repayment of liabilities, is sufficient to meet the Group's needs for at least the next 12 months from the date of the Prospectus.

51 AviaAM Leasing AB

VIII STATUTORY AUDITORS

PricewaterhouseCoopers UAB, Audit Company's licence No. 001273, register code 111473315, with its registered office at J. Jasinskio str. 16B, Vilnius, Lithuania, was elected by the General Meeting, dated 15 October 2012 as the statutory auditors of the Company and appointed on 18 October 2012. PricewaterhouseCoopers UAB audited the IFRS Financial Statements and issued an unmodified auditor's report on the aforementioned financial statements. Also, PricewaterhouseCoopers UAB issued an independent assurance report on Prospective Financial Information for the year ended 31 December 2013 (the "Report on Prospective Financial Information") set out in Section 12.12 Key Forecasts of Operating and Financial Data. On behalf of PricewaterhouseCoopers UAB, the auditor's report on the IFRS Financial Statements and the Report on Prospective Financial Information were signed by partner Rimvydas Jogelaÿ (auditor's certificate No. 000457).

52 AviaAM Leasing AB

IX SELECTED FINANCIAL INFORMATION

The tables below present certain selected financial information of the Group for the years ended 31 December 2012, 31 December 2011 and 31 December 2010, and for the three months ended 31 March 2013 and 31 March 2012 that is extracted without material adjustments from IFRS Financial Statements and from the Consolidated Interim Financial Information presented in Section XXV Historical Financial Information, as well as key ratios and indicators. The ratios and indicators set forth in the tables below are provided to illustrate certain aspects of the business of the Group and its financial position, financial performance and cash flows. Some of these ratios and indicators are used by the Management to evaluate the performance of the Group, while others are provided for the benefit of investors considering an investment in the Offer Shares. These ratios and indicators are not calculated in accordance with the IFRS, but they are calculated from the data extracted from IFRS Financial Statements and from the Consolidated Interim Financial Information. The Management believes that the ratios and indicators set forth below are customary and often used by public companies to illustrate their business and financial performance.

Table 5. Selected information from the IFRS Financial Statements and key ratios and indicators (USD'000)

SELECTED INFORMATION FROM THE CONSOLIDATED STATEMENTS OF Year ended 31 December COMPREHENSIVE INCOME 2012 2011 2010

Revenue 60,242 27,528 20,785 Interest income on loans 72 172 341 Depreciation and amortisation (7,594) (4,153) (6,771) Costs of aircraft sold (21,399) (3,566) – Revaluation of aircraft (1,779) 3,678 (17,890) Aircraft maintenance expenses (3,083) (828) (468) Employee-related expenses (598) (461) (374) Impairment of receivables and prepayments – – (128) Other operating expenses (1,022) (695) (1,366) Other gain (losses) net 2,218 – – Operating profit 27,057 21,675 (5,871)

Finance costs – net (3,981) (4,173) 373

Profit (loss) before income tax 23,076 17,502 (5,498) Income tax (3,473) (2,433) 12 Profit (loss) for the year 19,603 15,069 (5,486)

Other comprehensive income 6,424 5,771 –

Total comprehensive income 26,027 20,840 (5,486)

Basic and diluted earnings (loss) per share (USD) 0,67 1,30 (324,54)

Source: IFRS Financial Statements

As at 31 December SELECTED INFORMATION FROM THE CONSOLIDATED BALANCE SHEETS 2012 2011 2010 ASSETS Non-current assets Property, plant and equipment 64,113 47,931 28,596 Prepayments for property, plant and equipment 550 3,402 – Intangible assets 111 Investments in associates and jointly controlled entities 20 – – Trade and other receivables 2,305 498 5,829 Deferred income tax assets – 1,322 4,555 66,989 53,154 38,981

53 AviaAM Leasing AB

As at 31 December SELECTED INFORMATION FROM THE CONSOLIDATED BALANCE SHEETS 2012 2011 2010 Current assets Inventory 2,541 3,583 – Trade and other receivables 14,334 4,220 4,171 Prepaid income tax 15 93 20 Cash and cash equivalents 8,081 13,646 892 24,971 21,542 5,083 Total assets 91,960 74,696 44,064 EQUITY Share capital 12,232 12,232 38 Legal reserve 1,131 – – Revaluation reserve 12,195 5,771 – Retained earnings (2,958) (19,457) (34,468) Total equity 22,600 (1,454) (34,430)

LIABILITIES Non-current liabilities Borrowings 34,840 43,145 56,432 Security deposits received 11,520 11,542 5,193 Deferred income tax liabilities 1,467 – – 47,827 54,687 61,625 Current liabilities Borrowings 16,005 12,650 14,248 Trade and other payables 3,932 3,021 2,158 Advances received – 5,574 140 Current income tax liabilities 1,596 218 323 21,533 21,463 16,869 Total liabilities 69,360 76,150 78,494 Total equity and liabilities 91,960 74,696 44,064 Source: IFRS Financial Statements

Year ended 31 December SELECTED INFORMATION FROM THE CONSOLIDATED CASH FLOW STATEMENTS 2012 2011 2010 Net cash generated from (used in) operating activities 17,512 24,301 10,479 Net cash generated from (used in) investing activities (9,222) (1,369) (1,539) Net cash generated from (used in) financing activities (13,854) (10,178) (10,110) Net increase (decrease) in cash and cash equivalents (5,564) 12,754 (1,170)

Source: IFRS Financial Statements

Year ended / As at 31 December KEY RATIOS AND INDICATORS 2012 2011 2010 Weighted average number of ordinary shares issued ('000) 29,448 11,598 17 Earnings per share (EPS), USD 0.67 1.30 (324.54) EBITDA(*) 36,430 22,150 18,790 EBITDA margin, %(*) 60.5% 80.5% 90.4% Operating profit margin, %(*) 44.9% 78.7% (28.2%) Equity ratio, %(*) 24.6% (1.9%) (78.1%)

Source: the Company, IFRS Financial Statements

(*) unaudited

54 AviaAM Leasing AB

Table 6. Selected information from the Consolidated Interim Financial Information and key ratios and indicators (USD'000)

3monthsended31March SELECTED INFORMATION FROM THE CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME 2013 2012 (unaudited) (unaudited) Revenue 6,578 12,399 Interest income on loans 45 39 Depreciation and amortisation (2,095) (1,629) Costs of aircraft sold – (3,079) Aircraft maintenance expenses (1,075) (740) Employee-related expenses (140) (140) Other operating expenses (293) (140) Other gain (losses) net (358) – Operating profit 2,662 6,710

Finance income 453 619 Finance costs (1,489) (1,473) Finance costs – net (1,036) (854)

Profit (loss) before income tax 1,626 5,856 Income tax (214) (881) Profit (loss) for the period 1,412 4,975

Other comprehensive income ––

Total comprehensive income 1,412 4,975

Basic and diluted earnings (loss) per share (USD) 0.05 0.17

Source: Consolidated Interim Financial Information

As at SELECTED INFORMATION FROM THE CONSOLIDATED INTERIM BALANCE SHEETS 31 March 2013 31 December 2012 (unaudited) ASSETS Non-current assets Property, plant and equipment 67,102 64,113 Prepayments for property, plant and equipment – 550 Intangible assets 11 Investments in associates and jointly controlled entities – 20 Trade and other receivables 3,077 2,305 70,180 66,989 Current assets Inventory 1,247 2,541 Trade and other receivables 13,080 14,334 Prepaid income tax –15 Cash and cash equivalents 6,410 8,081 20,737 24,971 Total assets 90,917 91,960 EQUITY Share capital 12,232 12,232 Legal reserve 1,131 1,131 Revaluation reserve 12,195 12,195 Retained earnings (1,547) (2,958) Total equity 24,011 22,600

55 AviaAM Leasing AB

As at SELECTED INFORMATION FROM THE CONSOLIDATED INTERIM BALANCE SHEETS 31 March 2013 31 December 2012 (unaudited) LIABILITIES Non-current liabilities Borrowings 35,808 34,840 Security deposits received 11,505 11,520 Deferred income tax liabilities 1,592 1,467 48,905 47,827 Current liabilities Borrowings 14,780 16,005 Trade and other payables 1,498 3,932 Current income tax liabilities 1,723 1,596 18,001 21,533 Total liabilities 66,906 69,360 Total equity and liabilities 90,917 91,960

Source: Consolidated Interim Financial Information, IFRS Financial Statements

3monthsended31March SELECTED INFORMATION FROM THE CONSOLIDATED INTERIM CASH FLOW STATEMENTS 2013 2012 (unaudited) (unaudited) Net cash generated from (used in) operating activities 3,727 405 Net cash generated from (used in) investing activities 103 (3,134) Net cash generated from (used in) financing activities (5,501) (3,563) Net increase (decrease) in cash and cash equivalents (1,671) (6,292)

Source: Consolidated Interim Financial Information

3monthsended/Asat31March KEY RATIOS AND INDICATORS 2013 2012 Weighted average number of ordinary shares issued ('000) 29,448 29,448 Earnings per share (EPS), USD(*) 0.05 0.17 EBITDA(*) 4,757 8,339 EBITDA margin, %(*) 72.3% 67.3% Operating profit margin, %(*) 40.5% 54.1% Equity ratio, %(*) 26.4% N/A

Source: the Company, Consolidated Interim Financial Information

(*) unaudited

EBITDA = Earnings before interest, taxes, depreciation and amortization. EBITDA is included as a supplemental item, since the Management believes that EBITDA, when considered in conjunction with cash flow from operating, investing and financing activities, may provide useful information. EBITDA is not an indicator of operating performance calculated in accordance with the IFRS and should not be considered as a substitute for operating profit, net income, cash flow from operations or other profit/loss or cash flow data determined in accordance with the IFRS. It should be noted that EBITDA is not a uniform or standardized measure and the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself provides no grounds for comparison with other companies. EBITDA is calculated by the Company as operating profit excluding depreciation and amortization and revaluation of aircraft recognized in net profit. EBITDA margin = EBITDA / Revenue. The EBITDA margin measures the relation of EBITDA to sales revenue, providing information about the Group's profitability from the operations of its business and is independent of the Group's financing and tax items as well as depreciation-related and aircraft revaluation-related estimates. Operating profit margin = Operating profit / Revenue. The operating profit margin measures the relation of operating profit to sales revenue, providing information about the Group's profitability from the operations of its business and is independent both of the Group's financing and tax items. Equity ratio = Equity / Total assets. Equity ratio is a measure of financial leverage which highlights the ratio of shareholders' equity to total assets. The analysis of the Group's financial leverage (or capital structure) is essential to evaluate its long-term risk and return prospects.

56 AviaAM Leasing AB

The following table shows the reconciliation of operating profit to EBITDA.

Table 7. EBITDA Reconciliation (USD'000)

Year ended 31 December EBITDA RECONCILIATION 2012 2011 2010 Operating profit 27,057 21,675 (5,871) Depreciation and amortization 7,594 4,153 6,771 Revaluation of aircraft 1,779 (3,678) 17,890) EBITDA 36,430 22,150 18,790

Source: the Company, unaudited

3monthsended31March EBITDA RECONCILIATION 2013 2012 Operating profit 2,662 6,710 Depreciation and amortization 2,095 1,629 Revaluation of aircraft –– EBITDA 4,757 8,339

Source: the Company, unaudited

57 AviaAM Leasing AB

X BUSINESS OVERVIEW

10.1 Introduction AviaAM Leasing is an integrated global aviation Group of Companies established to acquire, lease and trade commercial aircraft. The Group's primary focus is on the market for used aircraft, primarily on aircraft ten years of age or older. The Group is principally engaged in purchasing commercial aircraft which the Group, in turn, lease to airlines around the world to generate attractive returns on equity. The Group leases its aircraft to airlines pursuant to net operating ("dry") leases that require the lessee to pay for maintenance, insurance, taxes and all other aircraft operating expenses during the lease term. In addition to aircraft operating lease activities, the Group is actively engaged in aircraft trading business through acquiring, refurbishing and subsequent sale of aviation assets. Through long-standing relationships and extensive market knowledge, the Group acquires aircraft from airline operators, other lessors, trading entities, financial institutions and directly from the manufacturers. These acquisitions are made with the intent of subsequent sale of the aircraft either in "as-is" condition or after performing certain technical modifications in order to meet the client's requirements. While Group's primary business is to own, lease and trade aircraft, the Group also provides consulting, fleet management and remarketing services to third parties for a fee. These services are similar to those the Group performs for its fleet, including leasing, re-leasing, lease management and sales services. Thanks to Group's extensive market intelligence gathered from its daily contacts with other market participants, the Group is well positioned to advise its clients on the best terms and conditions available in the market, and to provide assistance and know-how to its clients in the field of structuring and maintaining their aircraft portfolios. Group's corporate objective is to create value for its shareholders by focusing on the niche market for used aircraft. Specifically, the Group is active in the market for used mainline narrowbody jet aircraft such as Boeing 737, Boeing 757, Airbus A320s and high-potential regional jets such as Bombardier CRJs and Embraer ERJs. The Group concentrates its leasing business in emerging markets – with high growth potential in terms of aircraft leasing market size and rapid process of development of infrastructure within the aviation industry – such as Russia and CIS, while also seeking opportunities on a global scale. In general, these emerging markets are experiencing increased demand for passenger airline travel and have lower market saturation than more mature markets such as North America and Western Europe. In addition, airlines in some of these emerging markets have fewer financing alternatives, enabling the Group to command relatively higher lease rates compared to lease rates in more mature markets. The Management believes that the Group's focus on widely-used narrowbody and regional jet aircraft provides it with a highly-scalable platform, and that the Group is be able to exploit the niche markets for used commercial aircraft as a result of the relationships, market information and specific expertise the Group has in these sectors of the leasing market.

10.2 Formation of the Group and History of Business Development The Group commenced its operations on 22 February 2007 when Aviation Assets Management AB (current name – AviaAM B04) was established by Ridota AB, a subsidiary of IA Valda AB (the "Ultimate Parent") and entered the business of mid-life narrowbody jet aircraft leasing. In 2007 AviaAM B04 acquired its first 4 aircraft – 3 Boeing 737-300 and 1 Boeing 737-500. In January 2008 AviaAM B04 was transferred to Dangiruva AB, a subsidiary of the Ultimate Parent. Throughout 2008 AviaAM B04 expanded its fleet by acquiring additional 4 aircraft – 3 Boeing 737-500 and 1 Boeing 757-200. As at 31 December 2008 the fleet of this company consisted of 8 aircraft – 3 Boeing 737-300, 4 Boeing 737-500 and 1 Boeing 757-200. In April 2009 another entity of the current Group – AviaAM Leasing – was established by Dangiruva AB, which entered the business of aircraft leasing by acquiring 1 Boeing 737-300 aircraft. As at 31 December 2009 the fleet of the Group consisted of 9 (nine) aircraft – 4 Boeing 737-300, 4 Boeing 737-500 and 1 Boeing 757-200. In January 2010 shell companies AviaAM B01, AviaAM B02 and AviaAM B03 were acquired by the Company for the purpose of further development of aircraft leasing activities. AviaAM B01, AviaAM B02 and AviaAM B03 were under the legal control of the Company and comprised a separate legal group (together referred as the "AviaAM Leasing group") at the time. AviaAM Leasing group and AviaAM B04 comprised jointly managed mid-life narrow body aircraft leasing business under the control of the Ultimate Parent. In 2010 business restructuring commenced with the aim of establishing the group structure in its current form under control of AviaAM Leasing. In April 2010 and November 2010 AviaAM B04 transferred 3 Boeing 737-300 and 4 Boeing 737-500 aircraft to AviaAM B01 and AviaAM B03 respectively together with the related bank loans attributable for financing of specific aircraft for the purpose of matching the assets with their respective financing sources and consolidating the aircraft leasing business under control of AviaAM Leasing. In December 2010 AviaAM Leasing group was transferred from Dangiruva AB to its ultimate shareholders IA Valda AB (60%) and Indeco: Investment and Development UAB (40%) (the "Ultimate Shareholders"). As at 31 December 2010 AviaAM B04 was directly controlled by Dangiruva AB and was ultimately controlled by the same shareholders as the Company – i.e. IA Valda AB (60%) and Indeco: Investment and Development UAB (40%).

58 AviaAM Leasing AB

In 2011 AviaAM Leasing established 5 new Subsidiaries – AviaAM B05, AviaAM B06, AviaAM B07, AAL Capital Aircraft Holdings and AviaAM Leasing Bermuda, which was established through AAL Capital Aircraft Holdings. On 10 August 2011 the share capital of the Company was increased from LTL 100,000 to LTL 29,447,803 by issuing 29,347,803 Shares with par value of LTL 1 each which were acquired by ZIA Valda Cyprus Leasing Ltd., a subsidiary of the Ultimate Parent and Mesotania Holdings Ltd., a subsidiary of Indeco: Investment and Development UAB. As a result the shareholders' structure of the Company became as follows:

Number of shares % ZIA Valda Cyprus Leasing Ltd. 17,608,682 59.8 Mesotania Holdings Ltd. 11,739,121 39.9 IA Valda AB 60,000 0.2 Indeco: Investment and Development UAB 40,000 0.1 Total 29,447,803 100.0

Moreover, in 2011 with the aim to fully transfer all aircraft leasing business under the control of the Company the share capital of AviaAM B04 was increased from LTL 150,000 to LTL 5,000,000 by issuing 4,850,000 new shares which have been acquired by the Company by way of capitalising amounts receivable from AviaAM B04 of the same amount. As a result the Company became the majority shareholder of AviaAM B04. The remainder of the shares of AviaAM B04 were acquired from Dangiruva AB by the Company at the par value of LTL 1 each. As a result of the aforementioned restructuring which was completed on 28 September 2011 the Company became the sole shareholder of AviaAM B04. In terms of aircraft ownership in 2011 the Group acquired its first regional jet aircraft and entered the business of aircraft trading. In total 5 Bombardier CRJ200 aircraft were acquired, of which 3 were leased out and 1 was refurbished and subsequently sold. The remaining 1 Bombardier CRJ200 aircraft was kept for sale (it was subsequently sold in 2012). As a result at 31 December 2011 the operating fleet of the Group consisted of 12 aircraft (not including the aforementioned aircraft held for sale): 4 Boeing 737-300, 4 Boeing 737-500, 1 Boeing 757-200 and 3 Bombardier CRJ200. In 2012 two joint ventures were established by AviaAM Leasing Bermuda and its business partners – AviaIM Jet Trading Ltd. and Regional Charter Capital. AviaIM Jet Trading Ltd. was later sold to its second founder in 2013 before commencing any business activities. In the same year the Group further expanded its activities in the field of aircraft trading by acquiring and subsequently reselling 5 more Bombardier CRJ200 regional jets. 1 CRJ200 aircraft was acquired by the Joint Venture – Regional Charter Capital – for further conversion into a business jet. As for its leasing activities the Group acquired 4 more Bombardier CRJ200 aircraft which were leased out and purchased additional 2 Boeing 737-500 aircraft which are under preparation for lease as of the date of this Prospectus. In addition, 1 Boeing 737-300 aircraft was purchased with the lease attached and 1 Boeing 737-300 aircraft was sold from the Group's then-existing fleet. As at 31 December 2012 the fleet of the Group consisted of 18 aircraft (not including 1 Bombardier CRJ200 aircraft owned by the Joint Venture): 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 7 Bombardier CRJ200.

In March 2013, ZIA Valda Cyprus Ltd. and Mesotania Holdings Ltd. sold respectively 530,060 and 839,263 shares in the Company which were acquired by Linas Dovydenas,ÿ Gediminas iemelis, Aurimas Sanikovas, Virginija Svilainyteÿ and Tadas Goberis. As a result the shareholders' structure of the Company following this acquisition and as at the date of this Prospectus is as follows:

Number of shares % ZIA Valda Cyprus Leasing Ltd. 17,078,622 58.0 Mesotania Holdings Ltd. 10,899,858 37.0 Linas Dovydÿenas 441,717 1.5 Gediminas iemelis 323,926 1.1 Aurimas Sanikovas 294,478 1.0 Virginija Svilainytÿe 161,963 0.6 Tadas Goberis 147,239 0.5 IA Valda AB 60,000 0.2 Indeco: Investment and Development UAB 40,000 0.1 Total 29,447,803 100.0

In 2013, by the date of this Prospectus, the Group acquired 1 Bombardier CRJ200 aircraft which was leased out, sold 1 Boeing 737-300 aircraft for part-out and reclassified 1 Boeing 737-300 from the inventory to the aircraft group by installing engines on the airframe which was acquired in 2012 and subsequently leased this aircraft out. Moreover, in May 2013 the Group leased out 2 Boeing 737-300 aircraft which were acquired in 2012 and were under preparation for lease. This brings the fleet of the Group to 19 aircraft as of the date of this

59 AviaAM Leasing AB

Prospectus (not including 1 Bombardier CRJ200 aircraft owned by the Joint Venture): 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 8 Bombardier CRJ200.

10.3 Group Structure The current structural chart of the Groupisprovidedinthefigurebelow:

Figure 1. Group Structure

AviaAM Leasing AB (Lithuania)

100%

AviaAM B01 UAB (Lithuania)

100%

AviaAM B02 UAB (Lithuania) 100%

AviaAM B03 UAB (Lithuania)

100%

AviaAM B04 UAB (Lithuania)

100%

AviaAM B05 UAB (Lithuania)

100%

AviaAM B06 UAB (Lithuania) 100%

AviaAM B07 UAB (Lithuania) (Bermuda) 100%

AAL Capital Aircraft AviaAM Leasing 100% Holdings Ltd. Bermuda Ltd. (Cyprus)

100% 50%

Regional Charter Capital AviaAM B08 Ltd. Ltd.

(Bermuda) (Bermuda)

As of the date of this Prospectus the Group is comprised of 12 entities. A complete list of such entities in which shares are held by the Company either directly and indirectly is presented in the tables below. The Company has 10 Subsidiaries and 1 Joint Venture.

Table 8. Ownership of Subsidiaries and Joint Venture

Country Effective share Company Status of incorporation of the Group AviaAM B01 Subsidiary Lithuania 100% AviaAM B02 Subsidiary Lithuania 100% AviaAM B03 Subsidiary Lithuania 100% AviaAM B04 Subsidiary Lithuania 100% AviaAM B05 Subsidiary Lithuania 100% AviaAM B06 Subsidiary Lithuania 100% AviaAM B07 Subsidiary Lithuania 100% AviaAM B08 Subsidiary Bermuda 100% AAL Capital Aircraft Holdings Subsidiary Cyprus 100% AviaAM Leasing Bermuda Subsidiary Bermuda 100% Regional Charter Capital Joint Venture Bermuda 50%

Source: the Company

60 AviaAM Leasing AB

Table 9. Effective shares of stock held by the Company within the Group

Shareholders Effective share of Company AviaAM AAL Capital AviaAM Leasing the Group Leasing Aircraft Holdings Bermuda AviaAM B01 100% – – 100% AviaAM B02 100% – – 100% AviaAM B03 100% – – 100% AviaAM B04 100% – – 100% AviaAM B05 100% – – 100% AviaAM B06 100% – – 100% AviaAM B07 100% – – 100% AviaAM B08 – 100% – 100% AAL Capital Aircraft Holdings 100% – – 100% AviaAM Leasing Bermuda – 100% 100% Regional Charter Capital – – 50% 50%

Source: the Company

Information on the current share capital of the Group Companies is presented in the table below.

Table 10. Share capital of the Group entities

Company Share Capital Shares Par Value AviaAM Leasing LTL 29,447,803 29,447,803 LTL 1 AviaAM B01 LTL 10,000 10,000 LTL 1 AviaAM B02 LTL 10,000 10,000 LTL 1 AviaAM B03 LTL 10,000 10,000 LTL 1 AviaAM B04 LTL 5,000,000 5,000,000 LTL 1 AviaAM B05 LTL 10,000 10,000 LTL 1 AviaAM B06 LTL 10,000 10,000 LTL 1 AviaAM B07 LTL 10,000 10,000 LTL 1 AviaAM B08 USD 10,000 10,000 USD 1 AAL Capital Aircraft Holdings EUR 5,000 5,000 EUR 1 AviaAM Leasing Bermuda USD 10,000 10,000 USD 1 Regional Charter Capital USD 10,000 10,000 USD 1

Source: the Company

The main registration data of the Company, its Subsidiaries and the Joint Venture is given below:

Table 11. Registration information about the Company and its Subsidiaries

Legalandcommercialname AviaAM Leasing AB Legal form Public Limited Liability Company (in Lithuanian: akcinÿebendrovÿe) Country of registration Republic of Lithuania Registration authority Register of Legal Persons Legislation under which the company operates The laws of the Republic of Lithuania Country of incorporation of the company Republic of Lithuania Corporate ID code 302330793 Date of incorporation 17 April 2009 Registration address and telephone number Smolensko str. 10, LT-03201 Vilnius, LITHUANIA, Telephone: +370 5 252 5525

Legal name AviaAM B01 UAB Legal form Private Limited Liability Company (in Lithuanian: udaroji akcinÿebendrovÿe) Country of registration Republic of Lithuania Registration authority Register of Legal Persons Legislation under which the company operates The laws of the Republic of Lithuania

61 AviaAM Leasing AB

Corporate ID code 125808161 Date of incorporation 30 November 2001 Registration address Smolensko str. 10, LT-03201 Vilnius, LITHUANIA

Legal name AviaAM B02 UAB Legal form Private Limited Liability Company (in Lithuanian: udaroji akcinÿebendrovÿe) Country of registration Republic of Lithuania Registration authority Register of Legal Persons Legislation under which the company operates The laws of the Republic of Lithuania Corporate ID code 300618156 Date of incorporation 22 November 2006 Registration address Smolensko str. 10, LT-03201 Vilnius, LITHUANIA

Legal name AviaAM B03 UAB Legal form Private Limited Liability Company (in Lithuanian: udaroji akcinÿebendrovÿe) Country of registration Republic of Lithuania Registration authority Register of Legal Persons Legislation under which the company operates The laws of the Republic of Lithuania Corporate ID code 300887740 Date of incorporation 22 June 2007 Registration address Smolensko str. 10, LT-03201 Vilnius, LITHUANIA

Legal name AviaAM B04 UAB Legal form Private Limited Liability Company (in Lithuanian: udaroji akcinÿebendrovÿe) Country of registration Republic of Lithuania Registration authority Register of Legal Persons Legislation under which the company operates The laws of the Republic of Lithuania Corporate ID code 300651619 Date of incorporation 22 February 2007 Registration address Smolensko str. 10, LT-03201 Vilnius, LITHUANIA

Legal name AviaAM B05 UAB Legal form Private Limited Liability Company (in Lithuanian: udaroji akcinÿebendrovÿe) Country of registration Republic of Lithuania Registration authority Register of Legal Persons Legislation under which the company operates The laws of the Republic of Lithuania Corporate ID code 302642412 Date of incorporation 28 June 2011 Registration address Smolensko str. 10, LT-03201 Vilnius, LITHUANIA

Legal name AviaAM B06 UAB Legal form Private Limited Liability Company (in Lithuanian: udaroji akcinÿebendrovÿe) Country of registration Republic of Lithuania Registration authority Register of Legal Persons Legislation under which the company operates The laws of the Republic of Lithuania Company ID code 302647509 Date of incorporation 15 July 2011 Registration address Smolensko str. 10, LT-03201 Vilnius, LITHUANIA

62 AviaAM Leasing AB

Legal name AviaAM B07 UAB Legal form Private Limited Liability Company (in Lithuanian: udaroji akcinÿebendrovÿe) Country of registration Republic of Lithuania Registration authority Register of Legal Persons Legislation under which the company operates The laws of the Republic of Lithuania Corporate ID code 302671887 Date of incorporation 30 September 2011 Registration address Smolensko str. 10, LT-03201 Vilnius, LITHUANIA

Legal name AviaAM B08 Ltd. Legal form An exempted company incorporated with limited liability Country of registration Bermuda Registration authority Registrar of Companies of Bermuda Legislation under which the company operates The laws of Bermuda Corporate ID code 47627 Date of incorporation 26 April 2013 Registration address Crawford House, 50 Cedar Avenue, Hamilton HM 11, BERMUDA

Legal name AAL Capital Aircraft Holdings Ltd. Legal form Private Limited Liability Company Country of registration Republic of Cyprus Registration authority Cyprus Registrar of Companies Legislation under which the company operates The laws of the Republic of Cyprus Corporate ID code HE 294651 Date of incorporation 29 September 2011 Registration address Demetriou Karatasou, 15, Anastasio Building, Strovolos, 2024 Nicosia, CYPRUS

Legal name AviaAM Leasing Bermuda Ltd. Legal form An exempted company incorporated with limited liability Country of registration Bermuda Registration authority Registrar of Companies of Bermuda Legislation under which the company operates The laws of Bermuda Corporate ID code 45778 Date of incorporation 16 September 2011 Registration address Clarendon House, 2 Church Street, Hamilton HM 11, BERMUDA

Legal name Regional Charter Capital Ltd. Legal form An exempted company incorporated with limited liability Country of registration Bermuda Registration authority Registrar of Companies of Bermuda Legislation under which the company operates The laws of Bermuda Corporate ID code 47039 Date of incorporation 31 October 2012 Registration address Crawford House, 50 Cedar Avenue, Hamilton HM 11, BERMUDA

10.4 Aircraft Fleet As of 31 December 2012 the Group owned 18 aircraft and 1 aircraft was owned by the Joint Venture. The Group's portfolio of aircraft on lease consisted of 15 aircraft, 2 aircraft were under preparation for lease, 1 aircraft was off-lease and 1 aircraft (owned by the Joint venture) was undergoing the conversion into a business jet.

63 AviaAM Leasing AB

The following table provides details on the Group's operating lease portfolio by aircraft type, including the scheduled lease expirations (for the minimum non-cancellable period) by aircraft type, as of 31 December 2012:

Table 12. Breakdown of aircraft on operating leases as at 31 December 2012

Lease expiration year Aircraft type Total 2013 2014 2015 2016 2017 Boeing 737-300 3 – – – – 3 Boeing 737-500 – 4 – – – 4 Boeing 757-200 – – 1 – – 1 BombardierCRJ200 –––347 Total 3413415

Source: the Company

As of 31 March 2013 the Group owned 19 aircraft and 1 aircraft was owned by the Joint Venture. The Group's portfolio of aircraft on lease consisted of 17 aircraft, 2 aircraft were under preparation form lease and 1 aircraft (owned by the Joint venture) was undergoing the conversion into a business jet.

Table 13. Breakdown of aircraft on operating leases as at 31 March 2013

Lease expiration year Aircraft type Total 2013 2014 2015 2016 2017 2018 Boeing 737-300 4 – – – – – 4 Boeing 737-500 – 4 – – – – 4 Boeing 757-200 – – 1 – – – 1 Bombardier CRJ200 – – – 3 4 1 8 Total 44134117

Source: the Company

A brief description of aircraft types is provided below. Boeing 737 is the best-selling commercial jet in history. The 737-300, 400, 500 are named with a general term of 737 "Classic". They are the much improved successors of the earlier 737-200. The three Classic versions seat from 100 up to 171 passengers and although they are out of production since the year 2000, they still form the backbone of the short- and medium-range fleets of many airlines. Produced from 1984 to 2000, 1,988 Boeing 737 "Classic" aircraft were delivered throughout the world. Boeing 757 is a twin-engine short-to-medium-range jetliner incorporating advanced technology for exceptional fuel efficiency, low noise levels, increased passenger comfort and top operating performance. The 757 offers other virtues as well, including great versatility by reducing airport congestion. It can fly both long- and short-range routes and its broad use effectively lends itself to "hub-and-spoke" planning. In 2005, Boeing concluded the remarkable 23-year run of the 757 passenger airplane by delivering the final one to Shanghai Airlines. The airplane is the 1,050th Boeing 757. The 757 is one of seven commercial models that have sold more than 1,000 airplanes, and more than 1,030 of the 757s are still in service. Bombardier CRJ200 was designed to provide superior performance and operating efficiencies in the fast-growing regional airline industry. Against the closest competition it flies faster and further while burning less fuel and having lower operating costs. With over 1,000 units in commercial service it has become the most successful regional airliner program the world has ever known. Designed specifically to provide superior operating efficiencies to regional and major airlines, the twin-turbofan Bombardier CRJ200 has also established itself as the world's quietest and most environmentally friendly commercial jet aircraft. Exceptional operating economics and the benefits of commonality within the CRJ family give customers unmatched operational flexibility and tremendous cost savings potential. The following table set forth information regarding the aircraft transactions the Group together with its Joint Venture has executed between 1 January 2010 and 31 December 2012, i.e. the number of initial (new) leases, the number of aircraft the Group purchased and the number of aircraft it sold.

Table 14. Aircraft transactions

Year ended 31 December Activity Total 2012 2011 2010 Aircraft purchases 13 5 – 18 Boeing 737-300 1 – – 1 Boeing 737-500 2 – – 2 Bombardier CRJ200 10 5 – 15

64 AviaAM Leasing AB

Year ended 31 December Activity Total 2012 2011 2010 Aircraftsales 71–8 Boeing 737-300 1 – – 1 Bombardier CRJ200 6 1 – 7 Newleases 5319 Boeing 737-300 1 – 1 2 Bombardier CRJ200 4 3 – 7

Source: the Company

The following table set forth information regarding the aircraft transactions the Group together with its Joint Venture has executed during three months ended 31 March 2013 and three months ended 31 March 2012.

Table 15. Aircraft transactions

3monthsended31March Activity 2013 2012 Aircraft purchases 13 Boeing 737-300 –– Boeing 737-500 –– Bombardier CRJ200 13 Aircraft sales 11 Boeing 737-300 1– Bombardier CRJ200 –1 New leases 22 Boeing 737-300 1– Bombardier CRJ200 12

Source: the Company

10.5 Customers and Markets The Group has long-standing, collaborative and strategic relationships with customers located in its focus region. As of the date of this Prospectus the Group leases aircraft to 5 airlines domiciled in Russia, Kazakhstan, Lithuania, Tajikistan and Italy.

10.5.1 Overview of Customers and Markets for the Years ended 31 December 2012, 2011 and 2010 The following table shows the number of the Group's leased aircraft by domicile country of its actual lessees as at 31 December 2012, 2011 and 2010.

Table 16. Breakdown of aircraft on operating leases by country

Number of aircraft on operating leases Country As at 31 December 2012 2011 2010 Russia 73– Kazakhstan 455 Lithuania 11– Tajikistan 222 Poland ––1 Estonia –11 Italy 1–– Total 15 12 9

Source: the Company

As at 31 December 2012 almost 50% of all aircraft on leases were operated in Russia, up from 25.0% in 2011 and none in 2010. This is attributed to the lease of Bombardier CRJ200 aircraft to the Russian operator in 2011 and 2012 (3 aircraft were leased in 2011 and additional 4 in 2012). Roughly 26.7% of all leased aircraft were leased to Kazakhstan as at 31 December 2012, a decrease from 41.7% in 2011 and from 55.6% in 2010. Aircraft leased to other countries did not account to a significant percentage of leased fleet as at 31 December 2012.

65 AviaAM Leasing AB

The tables below indicate the breakdown of revenue from aircraft leases by countries of client residence.

Table 17. Breakdown of revenue from aircraft leases by country (USD'000)

Revenue from aircraft leases Country Year ended 31 December 2012 2011 2010 Kazakhstan 12,539 12,981 12,865 Russia 9,605 627 – Lithuania 4,504 167 537 Tajikistan 3,576 3,576 3,576 Poland – 2,336 1,521 Italy 988 – – Estonia 133 2,341 2,286 Total 31,345 22,028 20,785

As % of total revenue from aircraft leases Country Year ended 31 December 2012 2011 2010 Kazakhstan 40.0% 58.9% 61.9% Russia 30.6% 2.8% – Lithuania 14.4% 0.8% 2.6% Tajikistan 11.4% 16.2% 17.2% Poland – 10.6% 7.3% Italy 3.2% – – Estonia 0.4% 10.6% 11.0% Total 100% 100% 100%

Source: the Company, unaudited

The majority of revenue from aircraft leases was generated by lease rentals received from the Group's customer in Kazakhstan – 40.0% in 2012, 58.9% in 2011 and 61.8% in 2010. The total amount of lease rentals generated in Kazakhstan was relatively stable with USD 12.9 million in 2010, USD 13.0 million in 2011 and USD 12.5 million in 2012. Second largest generator of lease revenue is Russia, accounting to 30.6% of all lease revenue in 2012, up from 2.8% in 2011 and 0% in 2010. This is attributed to the lease of Bombardier CRJ200 aircraft to the Russian operator in 2011 and 2012 (3 aircraft were leased in 2011 and additional 4 in 2012). Cumulative lease revenue in Tajikistan, Lithuania, Italy and Estonia accounted to 29.4% of all lease revenue in 2012 with lease revenue generated in Tajikistan being stable in the amount of USD 3.6 million for each of the years ended 2012, 2011 and 2010. Discontinued lease revenue from Poland in 2012 resulted from expiry of the lease agreements in 2011. Similar case is with Estonia as the lease agreement with the Estonian operator expired early in 2012. The aforementioned expired lease agreements were immediately renewed with Lithuanian operator resulting in a significant increase of share of lease revenue generated in Lithuania for the year ended 31 December 2012 (14.4% in 2012 as compared to 0.8% in 2011 and 2.6% in 2010). The table below indicates breakdown of revenue from aircraft sales by countries of client residence.

Table 18. Breakdown of revenue from aircraft sales by country (USD'000)

Revenue from aircraft sales Country Year ended 31 December 2012 2011 2010 Kazakhstan 22,597 5,500 – British Virgin Islands 3,800 – – Bermuda 2,500 – – Total 28,897 5,500 –

Source: the Company, unaudited

The majority of revenue from aircraft sales was generated by sales of aircraft to operator in Kazakhstan – 78.2% of all sales in 2012 and 100.0% in 2011. Sales to operators in other countries were roughly 21.8% of total sales in 2012. The tables below indicate the breakdown of revenue from aircraft leases by customers.

66 AviaAM Leasing AB

Table 19. Breakdown of lease revenue by customers (USD'000)

Revenue from aircraft leases Customers Year ended 31 December 2012 2011 2010 Customer A 12,539 12,981 12,865 Customer B 9,243 377 – Customer C 5,612 4,763 4,344 Customer D 3,576 3,576 3,576 Other customers 375 331 – Total 31,345 22,028 20,785

As % of total revenue from aircraft leases Customers 2012 2011 2010 Customer A 40.0% 58.9% 61.9% Customer B 29.5% 1.7% – Customer C 17.9% 21.6% 20.9% Customer D 11.4% 16.2% 17.2% Other customers 1.2% 1.5% – Total 100% 100% 100%

Source: the Company, unaudited

The division of revenue from aircraft leases generated by specific customers closely mirrors the division of lease revenue generated by country of aircraft operations as the Group has one customer in each country. The exception is Customer C which refers to one client's charter operations business performed through 4 legal entities holding air operator's certificates in different countries (Lithuania, Poland, Estonia and Italy). As such, there were 2 major customers who both accounted for 69.5% of total lease revenue generated in 2012 – 40.0% and 29.5% respectively per each customer. The third largest customer accounted for 17.9% of total lease revenue in 2012, down from 21.6% in 2011 and 20.9% in 2010. Lease revenue from the fourth largest customer accounted for 11.4%, 16.2% and 17.2% of the total lease revenue in 2012, 2011 and 2010 respectively. The table below indicates breakdown of revenue from aircraft sales by customers.

Table 20. Breakdown of revenue from aircraft sales by customers (USD'000)

Revenue from aircraft sales Customers Year ended 31 December 2012 2011 2010 Customer A 22,597 5,500 – Customer E 3,800 – – Other customers 2,500 – – Total 28,897 5,500 –

Source: the Company, unaudited

Aircraft sales per customer are an exact reflection of aircraft sales division by country as discussed above.

10.5.2 Overview of Customers and Markets for the Three Months Ended 31 March 2013 and 2012 The following table shows the number of the Group's leased aircraft by domicile country of its actual lessees as at 31 March 2013 and 2012.

Table 21. Breakdown of aircraft on operating leases by country

Number of aircraft on operating leases Country As at 31 March 2013 2012 Russia 85 Kazakhstan 45 Lithuania 22

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Number of aircraft on operating leases Country As at 31 March 2013 2012 Tajikistan 22 Italy 1– Total 17 14

Source: the Company

As at 31 March 2013 almost half of all aircraft on leases were operated in Russia. This is attributed to the delivery of Bombardier CRJ200 aircraft to the Russian operator in the years ended 2011 and 2012 and 3 months ended 31 March 2013 (3 aircraft were leased in 2011, additional 4 in 2012 and 1 more in the three month period ended 31 March 2013). 4 aircraft (23.5% of total aircraft on lease) were leased to Kazakhstan as at 31 March 2013, a decrease from 5 aircraft on lease (33.4% of total fleet) as at 31 March 2012. Aircraft leased to other countries did not account to any significant percentage of leased fleet as at 31 March 2013. The tables below indicate the breakdown of revenue from aircraft leases by countries of client residence.

Table 22. Breakdown of revenue from aircraft leases by country (USD'000)

Revenue from aircraft leases Country 3monthsended31March 2013 2012 Russia 2,544 1,707 Kazakhstan 2,393 3,193 Lithuania 376 754 Tajikistan 894 894 Poland –– Estonia – 133 Italy 188 – Total 6,494 6,682

As % of total revenue from aircraft leases Country 3monthsended31March 2013 2012 Russia 39.2% 25.5% Kazakhstan 38.4% 47.8% Lithuania 5.8% 11.3% Tajikistan 13.8% 13.4% Poland 0.0% 0.0% Estonia 0.0% 2.0% Italy 2.9% 0.0% Total 100% 100%

Source: the Company, unaudited

For the three months ended 31 March 2013 the majority of revenue from aircraft leases was generated by lease rentals received from the Group's customer in Russia – 39.2% in the three months ended 31 March 2013 as compared to 25.5% in the three months ended 31 March 2012. The total amount of lease rentals generated in Russia increased to the amount USD 2.5 million in the three month period ended 31 March 2013 from USD 1.7 million in the same period of 2012. This increase resulted from the addition of Bombardier CRJ200s to the fleet on lease with that client as shown in the breakdown of aircraft on operating lease. Second largest generator of lease revenue was Kazakhstan, accounting to 38.4% of all lease revenue in the three month period ended 31 March 2013, down from 47.8% in the same period in 2012. Cumulative lease revenue in Tajikistan, Lithuania, Italy and Estonia accounted to 22.4% of all lease revenue in the period under review for 2013. Discontinued lease revenue from Estonia in the 3 months ended 31 March 2013 resulted from expiry of the lease agreements in 2012. The table below indicates breakdown of revenue from aircraft sales by countries of client residence.

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Table 23. Breakdown of revenue from aircraft sales by country (USD'000)

Revenue from aircraft sales Country 3monthsended31March 2013 2012 Kazakhstan – 5,500 Total – 5,500

Source: the Company, unaudited

The revenue from aircraft sales was generated by sales of aircraft to operator in Kazakhstan – 100% of all sales in the three months period ended 31 March 2012. There have been no aircraft sales transactions in under review for 2013. The tables below indicate the breakdown of revenue from aircraft leases by customers.

Table 24. Breakdown of lease revenue by customers (USD'000)

Revenue from aircraft leases Customers 3monthsended31March 2013 2012 Customer B 2,544 1,524 Customer A 2,493 3,193 Customer C 563 887 Customer D 894 894 Other customers – 183 Total 6,494 6,682

As % of total revenue from aircraft leases Customers 3monthsended31March 2013 2012 Customer B 39.2% 22.8% Customer A 38.4% 47.8% Customer C 8.7% 13.3% Customer D 13.8% 13.4% Other customers 0.0% 2.7% Total 100% 100%

Source: the Company, unaudited

The division of revenue from aircraft leases generated by specific customers closely mirrors the division of lease revenue generated by country of aircraft operations as the Group has one customer in each country. The exception is Customer C which refers to one client's charter operations business performed through 4 legal entities holding air operator's certificates in different countries (Lithuania, Poland, Estonia and Italy). As such, there were 2 major customers who both accounted for 77.6% of total lease revenue generated in the three month period of 2013 (39.2% and 38.4% respectively per each customer). The third largest customer accounted for 13.8% of total lease revenue in the period under review in 2013. Lease revenue from the fourth largest customer accounted for 8.7% in three months ended 2013, down from 13.3% in the same period of 2012. The table below indicates breakdown of revenue from aircraft sales by customers.

Table 25. Breakdown of revenue from aircraft sales by customers (USD'000)

Revenue from aircraft sales Customers 3monthsended31March 2013 2012 Customer A – 5,500 Total – 5,500

Source: the Company, unaudited

Aircraft sales per customer are an exact reflection of aircraft sales division by country as discussed above.

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10.6 Competitive Environment The current competitive landscape for operating lessors shows a large, but fragmented industry. There are over 100 aircraft lessors today but the top 50 lessors control the majority of the aircraft that are currently on lease, with the top five controlling more than 50% of the total number of aircraft on lease and more than 60% of current aircraft value. The two largest aircraft leasing companies are GE Capital Aviation Services (GECAS) and International Lease Finance Corporation (ILFC). The fragmented nature of the industry has created niches for lessors to focus within the aircraft leasing industry, including:

– a focus on specific geographic regions; – a focus on a diversified fleet structure (narrowbody or widebody aircraft); – a focus on a diversified age structure (new or used aircraft); – different financial structures, i.e., private or public company funding. The Management believes that the Group's focus on high-growth CIS and Russian markets and mid-life narrowbody and regional jet aircraft, the combination of which are underserved by other lessors, gives the Group a prominent niche in this competitive environment and allows it to secure a strong position in the marketplace. The list of 20 largest lessors ranked by total fleet value is presented in the table below.

Table 26. Top 20 lessors by fleet value

Rank Total Fleet Value, Average Aircraft Value, Number of Lessor 2012 USD million USD million aircraft 1 GECAS 34,096 19.6 1,742 2 ILFC 26,123 25.3 1,033 3 BBAM 8,622 26.0 332 4 AerCap 7,707 25.9 297 5 BOC Aviation 7,276 36.7 198 6 CIT Aerospace 7,179 26.8 268 7 AWAS 6,131 25.1 244 8 SMBC Aviation Capital 5,913 25.5 232 9 Air Lease Corporation 5,618 37.2 151 10 Aviation Capital Group 5,582 20.7 270 11 Doric 4,046 115.6 35 12 CDB Leasing 3,795 41.7 91 13 Aircastle Advisor 3,769 23.9 158 14 MC Aviation Partners 3,529 32.1 110 15 Avolon Aerospace Leasing 3,414 38.4 89 16 Pembroke Group 3,395 35.0 97 17 Macquarie Airfinance 3,179 21.3 149 18 ICBC Leasing Co 3,174 38.7 82 19 Jackson Square Aviation 2,762 42.5 65 20 Sumisho Aircraft Asset Management 2,621 30.5 86

Source: Flightglobal Insight / Aircraft Finance 2013

The near future of the leasing market will mainly depend upon the strength and structure of overall airline market. Consequently, the changing market situation may alter the competitor landscape and entail the consolidation of existing players. Within such landscape, new leasing companies may also arise as funding and the capital markets are recovering.

10.7 Competitive Strengths The Group has several distinctive advantages over its competitors, which have ensured its dynamic growth and position in the aviation industry. The Group will capitalize further on these advantages as the Management believes they are critical to the Group's success:

Direct access to high growth markets The Group is the only aircraft lessor in Central and Eastern Europe engaged in leasing of mainline narrowbody and regional jets. Group's proximity to the eastern market allowed it to establish a foothold and to build strong relationships with its customers. This partnership enables the Group to gather extensive knowledge of the market, find attractive opportunities and secure adequate returns to its shareholders.

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Focusonanichemarketofmid-lifenarrowbodyandregionaljets Major lessors in the market tend to focus on leasing brand new aircraft, which require significant capital and leverage. Used aircraft do not require nearly such funds while revenues (in the form of leases) generated by used aircraft are higher in relation to the aircraft value than those generated by new aircraft. There are no significant operational and design differences, if at all, between older and newer aircraft of the same type. Focusing on used aircraft provides the Group with higher returns on investment and therefore, higher value for its shareholders. In addition, lower investments and leverage per aircraft minimize the exposure to capital market volatility giving the Group an advantage over high debt and equity investments into brand new aircraft.

Knowledge, experience and personal relationships Both aircraft offerings as well as potential lease opportunities that are available on the market do not necessarily reflect all available information about an asset, such as when some individuals get certain information before others, or when some individuals do not properly analyse the available information. Aviation industry is a relatively closed community; hence relationships are one of the critical aspects of success. Group's expertises, knowledge, experience as well as its longstanding relationships allow the Group to effectively identify potential transactions by verifying sources and communicating with other market players. As a result the Group is able to find attractive investment opportunities and seek out beneficial lease arrangements. In addition, many of Group's employees and business partners have long lasting personal relationships with key players in the aviation industry. These relationships have allowed the Group to benefit from sound investments and contributed to its rapid growth.

Ability to source transactions at attractive prices Through extensive network of contacts the Group's managers are able to locate aircraft in more restricted, inefficient selling situations, which the Group expects will enable it to buy assets at competitive prices. The Group intends to follow a disciplined investment strategy and in many cases source aircraft through its long-standing relationships. Sellers may include financial institutions that have acquired aircraft as a result of foreclosure and lessors and brokers that are sensitive to closing risk and only deal with relationship buyers.

Flexibility and open approach to client needs Large aircraft leasing market players such as GECAS or ILFC focus on large airline operators that tend to make larger orders for aircraft and have standardized requirements in terms of technical specifications, lease terms and transaction structure. Smaller operators that have specific requirements that do not meet these standardized requirements provide an ideal target market, where flexibility and high customizability is a highly sought feature. The Group due to its open approach and customized offering is able to serve this market for smaller operators effectively. Such focus on specific client needs removes the threat of competing with larger aircraft lessors and therefore allows for establishment of a solid foundation for long term relationship with the client.

Business partnership with Avia Solutions Group Cooperation with Avia Solutions Group AB and its subsidiaries ("ASG") gives the Group invaluable access to a strong sales network as well as technical, legal and commercial support through ASG. Moreover, the relationship with ASG related MRO organization (i.e. FL Technics AB) provides the Group with a powerful tool for minimizing risks related to aircraft residual value, i.e. the channel to sell the off-lease aircraft for tear-down through subsequent spare part sales activity. The Management believes that such cooperation leverages the Group's ability to manage aircraft in a most profitable way and with least amount of risk through the product lifecycle. In addition, cooperation with FL Technics AB enables the Group to perform maintenance and repairs on purchased aircraft in a most efficient way, effectively increasing its options in regards to acquiring aircraft as well as increasing yields on existing aircraft through conversion from regular commercial aircraft to business jet or to cargo aircraft.

Fully integrated offering Although the Group positions itself primarily as an operating leasing corporation, its cooperation with ASG allows the Group to provide its clients with a fully integrated offering for the purchase, management, refurbishment, repair, leasing, sale of aircraft as well as crew and pilot training. Such inclusive approach to clients gives the Group a competitive advantage over strict aircraft lessors as the Group can combine offers and provide more attractive and complete solutions to its clients.

10.8 Relationship with Avia Solutions Group and its subsidiaries The Group is a related party to ASG as IA Valda AB (the Ultimate parent of the Group) has a significant influence over both the Group and ASG. For more information on the transactions of the Group with the related parties (including ASG) see Section XVI Related Party Transactions. In order to avoid situation of conflict of interests and to prevent leaks of sensitive business information and know-how, on 15 April 2013 the Company (acting also on behalf of its Subsidiaries and affiliated companies), concluded the General Terms Agreement for Cooperation with Avia Solutions Group (acting also on behalf of its subsidiaries defined in the agreement). The agreement sets up the general terms and conditions and establishes common principles for cooperation between the parties. The main principles of cooperation include:

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Distinction of the operating markets between the groups based on objective criteria: taking into consideration that the Company and its subsidiaries act in asset management market, and Avia Solutions Group and its subsidiaries (mainly FL Technics AB) operate in the maintenance, repair and overhaul (MRO) services market, the parties set objective criteria which enable to define the respective markets. Following this principle the Company does not compete with Avia Solutions Group in the markets of aircraft and/ or components acquisition the value of which does not exceed the amount of USD 500,000 and the "Green Life" of such aircraft and/ or component does not extend beyond 18 months. The "Green Life" is understood as the maximum available lease period for which the asset may be leased to operator without major investments. Cooperation in asset acquisition market: Avia Solutions Group is entitled to a special commission fee which is payable by the Company or its subsidiaries in case Avia Solutions Group tenders for the acquisition by the Company such certain assets or attracts an investor to such assets currently owned or contractually signed for acquisition by the Company or its Subsidiaries which satisfy the criteria of the market the Company operates in (as defined above). Cooperation in MRO services market: the Company is entitled to a special commission fee which is payable by Avia Solutions Group or its subsidiaries in case maintenance, repair and overhaul (MRO) services are provided by FL Technics AB on the asset previously owned, currently owned or contractually signed for acquisition by the Company or its subsidiaries. "Arms length" principle: the parties declared that all the agreements between the groups shall be entered on an "arms length" basis, ensuring that both parties are acting in their own interest and are not subject to any pressure or duress from the other party and the agreed-upon price does not differ from the actual fair market value. "Chinese wall" principle: the parties undertook to keep all information about the clients, consultations and the contemplated transactions by each of the group strictly confidential. Termination of the agreement: the agreement may be terminated by either party, if a material breach of any provision thereof has been committed by the other party or by mutual written consent of both parties.

10.9 Business and Growth Strategies The Management believes the following strategies will enable the Group to continue to serve its customers, grow its customer base, manage and grow its aircraft portfolio to optimize revenues and profitability and strengthen its position in the marketplace:

Focusonhighgrowthmarkets The Group's strategy is to take advantage of the high growth of aviation industry in its primary markets to expand its aircraft portfolio and presence in the market. The Group is primarily focused on the Eastern European, Russian and CIS markets; however, it is constantly seeking to expand into other markets such as Western Europe and Middle East in order to diversify its clients' base.

Expand Group's aircraft portfolio The Group intends to grow its portfolio of aircraft and other aviation assets,suchasengines,throughportfolio purchases, airline refleetings and other opportunistic aircraft purchases. The Group will rely on its experienced team of aircraft market professionals to identify and purchase assets the Group believes are being sold at attractive prices or that the Group believes will increase in demand and value. In addition, the Group will continue to rebalance its aviation asset portfolio through acquisitions, sales and selective disassemblies to maintain the appropriate mix of aviation assets to meet its customers' needs.

Generate highest returns on investments by focusing on mid-life commercial aircraft The Group intends to keep its focus on used commercial jet aircraft as the Management believes that used mid-life aircraft have typically higher lease rates in relation to their purchase price (i.e. lease rate factor) than newer aircraft. This allows the Group to generate attractive yields while minimizing its capital exposure.

Be flexible during market shifts and economic cycles While the Group is an active lessor throughout the entire market cycle, the Group will constantly seek to take advantage of the cyclicality in the aviation industry by acquiring aircraft during market downturns.Inaddition,theGroupwillemploy a flexible divestment strategy – outright sale of aircraft or part-out – in order to sell assets when market cycles make such sale beneficial for the Group.

Leverage management's experience and personal relationships Through the Management's relationships with aircraft lessors, financial investors and brokers, the Group was able to dynamically grow its business. The Group intends to continue leveraging its direct access to key decision makers at major airline operators in its target markets allowing the Group to make quick acquisitions of attractively priced aircraft, enter into new leases, and anticipate trends to make its offers more attractive. Simultaneously, the Group will utilize its contacts with financial institutions to negotiate preferred financing conditions and access to capital for further acquisitions and growth of business.

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10.10 Financing Strategy Group's financing strategy is dependent upon a combination of equity and leverage. The Group evaluates and uses leverage on a case-by-case basis to the extent bank or other debt financing for its target assets is available at a reasonable cost. Depending on the state of global economy, financing sources for used aircraft have periodically been limited. However, the Group has established relationships with a number of banks in Central Eastern Europe, which provided the Group with financing for acquisitions in the past and the Group is constantly monitoring the potential financing opportunities and will apply to banks or other debt financing organizations if Management deems it appropriate in order to provide capital for additional acquisitions and increase return on equity.

10.11 Business Model of Aircraft Leasing Group's business model emphasizes a relationship-based approach to identify potential aircraft acquisitions, perform technical reviews of the relevant maintenance records, carefully pair aircraft with appropriate lessees, structure leases to address airline customers' needs, and monitor aircraft and lessees throughout the lease terms. The Management believes the Group can execute this business model at each critical juncture along the aircraft lifecycle of acquiring, inspecting, leasing, monitoring and re-leasing or disposing of an aircraft in a competitively advantageous manner that will enable the Group to execute its business strategy and drive profitability.

10.11.1 Aircraft Acquisition Deal flow sources. Management team has extensive relationships with aircraft lessors, financial investors, airline advisers and brokers. The Group pursues the acquisition of aircraft through its team's relationships with these counterparties. The Group may acquire aircraft for lease in secondary market transactions, sale-leaseback transactions and, although it is not currently anticipated, from manufacturers. Preliminary analysis. The screening process for potential transactions is based on an assessment of the risk profile of the potential opportunity. Analysis of risk includes the following: • the age and condition of the aircraft; • the status of the source and registry documentation in relation to the aircraft; • the quality of the maintenance of the aircraft, the adequacy of the aircraft records, including the status of engine and airframe maintenance, where the aircraft is in its maintenance cycle; • the risk in relation to repossession and deregistration; and • thecreditofthepotentiallessee. Due diligence, structuring and pricing. The Group is negotiating each investment to ensure that it is properly structured and appropriately priced. Following negotiation of a term sheet, the Group conducts further due diligence. The Group performs a thorough documentary due diligence of the aircraft, including a review of all ownership documentation and "back to birth" records, all maintenance records and all flight data records. In addition, the Group performs a physical inspection of the aircraft. Based on the analysis provided by Group's technical experts, the Group projects the aircraft's future maintenance events. To the extent necessary, the Group is able to utilize third-party specialists, including attorneys, appraisers, aircraft engineers and other professionals to determine if a particular investment is suitable. After completing this process, the Management works to negotiate definitive agreements. The Group also performs thorough due diligence on the potential lessee, which includes: • analysis of its credit history and financial condition; • evaluation of its home country contract enforcement risks; • analysis of its routes and fleet composition; • evaluation of its access to liquidity and its competitive position. In addition to the financial and operational information provided by potential lessees the Group gathers all related information from third-party sources, including but not limited to public domains and databases, managers of its clients and partners, account executives and any other available sources. The aggregation and analysis of all available data and information allows the Group to build a complete risk profile of each potential lessee. Legal documentation and closing. After approval by the Management the relevant Group company executes a term sheet for an investment and will then work together with its advisers to finalize documentation in relation to the acquisition and, to the extent applicable, the relevant lease.

10.11.2 Leasing Process The Management identifies all prospective lessees based upon industry knowledge and long-standing industry relationships. The Group seeks to meet the specific needs of its airline customers by working closely with potential lessees and, where appropriate, developing

73 AviaAM Leasing AB innovative lease structures specifically tailored to address those needs. While the Group structures aircraft leases with airline customers' needs in mind, yet all of leases share a number of common characteristics that are a typical industry practice: • leases are for fixed terms, although, where mutually beneficial, the relevant Group company may provide for purchase options or extension rights; • leases provide that the lease cannot be early terminated by lessees; • leases provide an extensive list of events of default when the relevant Group company would be able to exercise rights to protect the value of the asset; • leases require monthly payment of lease rentals in advance; • leases generally require payment of maintenance reserves based on actual aircraft utilization; • leases generally provide that the lessee's payment obligations are absolute and unconditional; • all lessees are typically required to make payment without deduction on account of any amounts that the relevant Group company may owe to the lessee or any claims that the lessee may have against the such Group company; • leases also require lessees to gross up lease payments to cover tax withholdings or other tax obligations, other than withholdings that arise out of transfers of the aircraft to or by the relevant Group company or due to such company's corporate structure; and • all leases also generally require that lessees indemnify the relevant Group company for certain other tax liabilities relating to the leases and the aircraft, including, in most cases, value-added tax and stamp duties. The lessee is responsible for compliance with applicable laws and regulations with respect to the aircraft. The Group requires its lessees to comply with the standards of either the European Air Safety Association ("EASA") or its equivalent in foreign jurisdictions. Generally, the relevant Group company receives a cash deposit as security for the lessee's performance of obligations under the lease and the condition of the aircraft upon return. In addition, most leases contain extensive provisions regarding remedies and rights in the event of a default by a lessee. The lessee generally is required to continue to make lease payments under all circumstances, including periods during which the aircraft is not in operation due to maintenance or grounding. The lessee is also responsible for registering the aircraft in the applicable register of civil aircraft which in most cases is the register of the habitual base of the lessee. However, in some cases where the particular aircraft register does not provide the sufficient protection of title to the aircraft the aircraft could be registered in the register governed byothercountry.Insuchcaseinorderforanaircrafttoberegistered in one state to operate in another state, both countries must adhere to the ICAO 83-bis article of the Chicago Convention. Article 83-bis provides that by mutual agreement, the state of registry may transfer some or all of its responsibilities in certain areas to the state of operation. It also requires other (third party) states who are signatories to the amendment, to recognize such agreements in respect of aircraft operating in their airspace. Any agreements for the transfer of regulatory responsibilities under Article 83-bis must be deposited with ICAO in order for the agreement to come into effect and to ensure that all member states have access to information on which regulatory authority is responsible for the oversight of which aircraft. Some foreign countries have currency and exchange laws regulating the international transfer of currencies. When necessary, the relevant Group company requires, as a condition to any foreign transaction, that the lessee or purchaser in a foreign country obtains the necessary approvals of the appropriate government agency, finance ministry or central bank for the remittance of all funds contractually owed in U.S. Dollars. The Group attempts to minimize its currency and exchange risks by negotiating all of aircraft leases in U.S. Dollars.

10.11.3 Monitoring During the term of a lease, the Group monitors both the maintenance of the aircraft and the operating performance and the financial health of the lessee. Net operating leases generally require the lessee to pay for maintenance, insurance, taxes and all other aircraft operating expenses during the lease term. The Group closely monitors each leased aircraft to ensure all routine maintenance requirements are timely performed. Where an aircraft requires major, non-routine maintenance, the Group often is closely involved in overseeing the maintenance and partnering with the lessee while the work is performed to ensure all governmental and/or manufacturer standards are met. The Group also closely follows the operating and financial performance of its lessees so that the Group can identify early on those lessees that may be experiencing operating and financial difficulties. This assists the Group in assessing the lessee's ability to fulfil its obligations under the lease for the remainder of the term and, where appropriate, restructure the lease prior to the lessee's insolvency or the initiation of bankruptcy or similar proceedings, at which time the Group would have less control over, and would most likely incur greater costs in connection with, the restructuring of the lease or the repossession of the aircraft. To accomplish this objective, the Group maintains a high level of communication with the lessee and closely and frequently evaluate the state of the market in which the lessee operates, including the impact of changes in passenger air travel and preferences, new government regulations, regional catastrophes and other unforeseen shocks to the relevant market. In summary, the monitoring of the lease is conducted through lease monitoring program which includes but is not limited to: • Technical monitoring: – regular and on-demand audits and inspections;

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– regular aircraft reliability reports by lessees; – analysis of aircraft utilization data; – on-site inspection of aircraft; – on-site monitoring of large maintenance works. • Operating monitoring: – regular and on-demand financial reporting from lessees; – communication management; – regular on-site visits; – market analysis; – analysis of all publicly available data and information.

10.11.4 Redelivery If no purchase or lease extension options are stipulated, the lease will automatically expire at the end of the lease term, and the lessee will be required to return the aircraft pursuant to the conditions in the lease. Group's leases contain detailed provisions regarding the required condition of the aircraft and its components upon redelivery at the end of the lease term. Redelivery conditions regulate the technical state in which the aircraft is to be returned as well as the time and place of redelivery. Failure to adhere to these conditions will result in financial liability solely on the lessee side.

10.11.5 Remarketing, Sale and Part-out of Aircraft After the termination of the lease agreement the Group has a number of options in regards to the future of the aircraft. Depending on technical state, available resources and general demand the Group will engage in remarketing of the aircraft in order to further lease it out. The remarketing process begins months prior to the termination of the lease agreement unless the current lessee expresses the will to extend the lease agreement. Should the aircraft be considered by the Management as an unattractive asset or for some reason it may be difficult to find another lessee – for example due to lack of demand or technical condition of the aircraft – the Group will engage in divestment process of selling the aircraft or parting it out. The part-out process is performed with the cooperation of MRO companies which specialize in these types of services. The parts recovered from the aircraft are then sold on the market at fair market value and the proceeds are transferred to the Group.

10.11.6 Risk Mitigation In every phase of the leasing process the Group employs strict risk mitigation measures. As a lessor the Group does not engage in speculator acquisitions meaning it does not purchase aircraft without significant chance of leasing or reselling it. All acquisition targets are thoroughly inspected in terms of technical condition and legal status. The Group does not engage in binding purchase declarations unless it has sufficient level of comfort from lessees or other buyers. Prior to singing lease agreements the potential lessee is evaluated in all aspects of operations. In addition to all other documentation and information, the Group requires its lessees to provide the following documents: • financial statements for the last 3 years; • business plan for the usage of the aircraft; • declared utilization of the aircraft during lease term. Based on these documents the Group evaluates the credit risk of the lessee and incorporates this risk into the lease agreement in the form of the amount of the Security Deposit, level of lease rentals or other forms of guarantees from the lessee. In addition, the Group requires the lessee to make binding declarations in terms of aircraft lease backed by non-refundable deposit. In terms of lease agreements the Group engages in strict legal analysis of every lease agreement even though lease agreement structures are considered to be relatively standardized across the industry. Every critical aspect of the lease agreement that could cause financial or legal liability on the Group is identified and evaluated. During the lease term, as per the conditions set in the lease agreement, the Group has accesses to the lessee's financial statements, technical documentation of the aircraft and other documents that confirm that the aircraft is free of any charges and is used in accordance with the lease agreement. These standard practices ensure early detection of any possible issues in terms of lease payments, technical or other forms of negligence and allow for prompt action from the Group side to intervene either by repossessing the aircraft or restructuring the lease agreement.

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10.12 Research and Development, Patents and Licenses The application to register the trademark AviaAM Leasing is filed with the State Patent Bureau of the Republic of Lithuania in the name of the Company. The Group has no registered patents or industrial designs. Currently, the Group does not carry out any significant research and development activities. Furthermore, they do not have and did not apply research and development policies. The Group does not hold any licenses as the activities it performs are not subject to licensing.

10.13 Regulatory Matters The air transportation industry is highly regulated. However, since the Group does not operate aircraft, it generally is not directly subject to these regulations. The Group's lessees are subject to extensive regulation under the laws of the jurisdiction in which they are registered and in which they operate. These regulations, among other things, govern the registration, operation and maintenance of the Group's aircraft. These aircraft are subject to the airworthiness and other standards imposed by the Group's lessees' jurisdictions of operation. Laws affecting the airworthiness of aviation assets are generally designed to ensure that all aircraft, engines and related equipment are continuously maintained in proper condition to enable safe operation of the aircraft. Most countries' aviation laws require aircraft to be maintained under an approved maintenance program having defined procedures and intervals for inspection, maintenance and repair.

10.14 Environmental Matters As of the date of this Prospectus no specific obligations or duties are imposed on the Group in regard to environmental matters. Thus, there are no environmental issues that may affect the Issuer's utilisation of the tangible fixed assets.

10.15 Insurance Coverage The Group requires its lessees to carry those types of insurance that are customary in the air transportation industry, including comprehensive liability insurance, aircraft all-risk hull insurance and war-risk insurance covering risks such as hijacking, terrorism (but excluding coverage for weapons of mass destruction and nuclear events), confiscation, expropriation, seizure and nationalization. The Group generally requires a certificate of insurance from the lessee's insurance broker prior to delivery of an aircraft. Generally, all certificates of insurance contain a breach of warranty endorsement so that Group's interests are not prejudiced by any act or omission of the lessee. Lease agreements generally require hull and liability limits to be in U.S. dollars, which are shown on the certificate of insurance. Insurance premiums are to be paid by the lessee, with coverage acknowledged by the broker or carrier. The territorial coverage, in each case, should be suitable for the lessee's area of operations. The Group generally requires that the certificates of insurance contain, among other provisions, a provision prohibiting cancellation or material change without at least 30 days' advance written notice to the insurance broker (who would be obligated to give the Group a prompt notice), except in the case of hull war insurance policies, which customarily only provide seven days' advance written notice for cancellation and may be subject to shorter notice under certain market conditions. Furthermore, the insurance is primary and not contributory, and the Group requires that all insurance carriers be required to waive rights of subrogation against the Group. The stipulated loss value schedule under aircraft hull insurance policies is on an agreed-value basis acceptable to the Group and exceeds the book value of the aircraft. Aircraft hull policies generally contain standard clauses covering aircraft engines. The lessee is required to pay all deductibles. Furthermore, the hull war policies generally contain full war risk endorsements, including, but not limited to, confiscation (where available), seizure, hijacking and similar forms of retention or terrorist acts. The policies include customary exclusions such as physical damage to aircraft hulls caused by dirty bombs, bio-hazardous materials and electromagnetic pulsing. The comprehensive liability insurance listed on certificates of insurance includes provisions for bodily injury, property damage, passenger liability, cargo liability and such other provisions reasonably necessary in commercial passenger and cargo airline operations. Such certificates of insurance list combined comprehensive single liability limits of not less than USD 500 million for narrowbody jet aircraft and not less than USD 250 million for regional jet aircraft. As a result of the terrorist attacks on 11 September 2001, the insurance market unilaterally imposed a sublimit on each operator's policy for third party war risk liability in the amount of USD 50 million. The Group requires each lessee to purchase higher limits of third party war risk liability or obtain an indemnity from their government. Separately, the Group purchases contingent liability insurance and contingent hull insurance on all aircraft in Group's fleet which provides it with coverage when aircraft or engines are not subject to a lease orwherealessee'spolicylapsesfor any reason. The Management believes the Group's insurance is adequate both as to coverages and amounts.

10.16 Material Contracts For 2 years preceding the date of this Prospectus neither the Company nor any Subsidiary has entered into material contract, other than contracts entered into in theordinarycourseofbusiness.

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Furthermore, there are no other agreements entered by any of the Group companies (except being entered into in the ordinary course of business), which contains any provision under which any Group company has any obligation or entitlement which is material to the Group as at the date of the Prospectus. However, taking into account that the Group is mainly engaged in aircraft leasing business, in this Section the general terms of the aircraft operating lease agreements shall be indicated. The Group leases its aircraft under the aircraft operating lease agreements with separate agreement concluded for each leased aircraft. All operating leases are concluded on a "net" basis with lessees being responsible for all operating expenses, which customarily include fuel, crews, airport and navigation charges, taxes, licenses, registration and insurance. In addition, the lessee is responsible for normal maintenance and repairs, airframe and engine overhauls, and compliance with return conditions of flight equipment on lease. As of the date of this Prospectus the Group has 19 operating lease agreements in force (one agreement for each leased aircraft). The expiration dates of the lease agreements per aircraft type are outlined in the table below.

Table 27. Breakdown of aircraft lease agreements by aircraft type and lease expiration year as of the date of this Prospectus

Lease expiration year Aircraft type Total 2013 2014 2015 2016 2017 2018 Boeing 737-300 4 – – – – 4 Boeing 737-500 2 4 – – – 6 Boeing 757-200 – – 1 – – 1 Bombardier CRJ200 – – – 3 4 1 8 Total 64134119

Source: the Company

The information regarding to the lease revenue generated from aircraft leases is provided in Section 12.5 Analysis of Results of Operations for the Three Months Ended 31 March 2013 and 2012 – Revenue from aircraft leases. The information regarding the counterparties to aircraft lease agreements (being aircraft lease customers) is provided in Section 10.5 Customers and Markets. All aircraft operating lease agreements include the following customary terms and conditions:

Letting of aircraft The first provision of the lease agreement is usually the letting or hiring of the aircraft by the lessor to the lessee. This provision specifies that the aircraft is being leased for the applicable lease term. The aircraft that is being leased is defined. The definition usually includes a manufacturer's serial number, the registration mark, the typeofaircraft,thetypeofenginesandengineserialnumbers.

Conditions precedent There is generally a list of conditions precedent which have to be satisfied before the lessor obligations arise. The content of the conditions precedent is very much a subjective matter for each transaction but usually includes the following: • certified copies of the constitutional documents of the lessee; • certified copy of a board resolution of the lessee approving the transaction together with a list of authorised signatories; • lessee's financial statements and/or the audited accounts for the previous year/s together with confirmation that there has been no material adverse change in the financial condition of the lessee since the date of the last published accounts; • the accuracy of the representations and warranties given by the lessee and, if appropriate, any other parties; • that no event of default or an event which with the giving of notice or lapse of time would constitute such an event of default shall have occurred and continuing; • that all necessary governmental, regulatory or other relevant approvals and authorisations shall have been obtained; • that insurance cover in the form required by the terms of the lease shall have been effected; • that all required legal opinions shall have been delivered in a form acceptable to the lessor; and • that all taxes, fees and duties payable in connection with the execution, delivery, registration and filing of the lease documentation shall have been paid in full. Other conditions precedent could include a payment of a Security Deposit in cash or as a letter of credit, and the first installment of Rent by the lessee, the delivery to the lessor by the lessee of a lessee's parent guarantee, completion of the acceptance flight and other test procedures with regard to the aircraft etc.

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Rent and reserves The basic provisions with regards to payment of rent stipulated in aircraft lease agreements are the following: a) Rent: lessee is obliged to pay monthly rent to the lessor in the agreed amounts; rent is paid before the agreed day every month, for the coming month. b) Reserves: in most leases lessees must pay to the lessor a supplemental rent the amount of which is calculated with reference to the utilization of airframes, engines, and other major life-limited components. c) Payment currency: unless otherwise agreed by the parties, the rent, including supplemental rent, reserves, including increase of the reserves, the security deposit, and any other payment due under the lease are payable in U.S. Dollars. d) Value Added Taxes: the rent and other amounts payable by lessee under the leases are exclusive of any value added tax, turnover tax or similar tax or duty. Next is the "hell or high water" provision, so called because it requires payments to be made regardless of whether: • the aircraft is defective; • title of the aircraft does not reside in the lessor; • the aircraft has been confiscated or appropriated; • the aircraft has ceased to function or is not fit for the purpose for which it was acquired; • a change has occurred in the status of the lessor or lessee; • the enforceability of the document is constrained by an illegality, invalidity or any other constraint; or • there is any other reason whatsoever for not doing so. Further incentive to the lessee to make payments on the due date is contained in the default interest provision. Any payments whether of rent or otherwise will bear interest at the default rate higher than the implicit lease rate for the period during which the payment is overdue.

Lessee selection of aircraft Lessee covenants to the lessor that lessee has used its own judgment in selecting the aircraft and has done so based on its size, design and type. Lessee acknowledges that the lessor is not a manufacturer, repairer or servicing agent of the aircraft.

Indemnification The lessor and lender enter into the transaction on the basis of the lease being a totally net lease, thus the lessee must retain responsibility for all liabilities that may arise as a result of the possession and use of the aircraft. This is consistent with the concept of a cross-border lease as a financing vehicle with operational and economic control remaining with the lessee. Just as the lessee must provide and pay for the property and liability insurance relating to the aircraft, the lessee must protect the lessor and lender against claims brought by the third parties, which result from the possession and use of the aircraft. The purpose of the general indemnity clauses is to insulate the lessor and lender from claims that are not likely to have been brought if the lease has been structured as a traditional loan. Generally, indemnities are phrased extremely widely and cover: "...any and all liabilities, obligations, losses, damages, penalties, claims, suits, costs, expenses, fees and disbursements of whatever kind and nature which in any way relate to or arise out of manufacture, design, financing, construction, purchase, acceptance, rejection, ownership, acquisition, delivery, non-delivery lease, sublease, preparation, installation, storage, maintenance, repair, transportation, transfer of title, abandonment, possession, rental, use, operation, condition, sale, return, importation, exportation or other disposition of all or any part of the aircraft."

Protection of title Under the operating lease transaction the title resides with the lessor all the time. A lease agreement provides certain covenants directed towards the protection of the lessor's title to the aircraft. This extends from a primary requirement to ensure so far as is possible that the lessor's interest as lessor and/or owner are registered in the aircraft register (or any other applicable register) in the lessee's jurisdiction and/or where applicable, that the place in which the aircraft is to be habitually based, a requirement that name plates specifying the lessor as owner and noting the holders of any security interest be affixed to the airframe and the engines of the aircraft thereby putting third parties on notice and reducing the risk of conversion. Another facet of the protection of the lessor's title built into the lease agreement is the restriction on what the lessee can do with the aircraft. The lessee might be required to covenant that it shall not without the consent of the lessor sublease the aircraft or otherwise part with possession of it. The leases also seek to restrict the area of operation to ensure that it does not go into either areas of high political or physical risk or areas where, for legal or other reasons, recovery of the aircraft is extremely difficult or impossible. There is a restriction upon the lessee creating

78 AviaAM Leasing AB liens upon the aircraft other than certain permitted liens. The restrictions on creation of the liens extend to statutory liens whether for taxes or, for example, unpaid landing charges at airports. The agreements also provide that during the term of the lease the lessor is entitled to go and inspect the aircraft periodically, not just to check that it is in place, but also to investigate its state and condition.

Operation of aircraft The operating lease agreements include the following standard provisions in respect to operating of aircraft by lessee: a) Cost of operation: the lessee must pay all costs incurred in the operation of the aircraft during the lease term and until the termination date, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly orindirectly,inconnectionwithorrelatedtothe use, movement and operation of the aircraft. b) Training: the lessee is not allowed to use the aircraft for testing or for training of flight crew members other than lessee crew members, save as otherwise may be agreed between the lessor and the lessee. c) Flight charges: the lessee must promptly pay when due all airport or en route navigation charges (including but not limited to Eurocontrol charges), navigation service charges, landing fees and all other charges payable by the lessee for the use of or for services provided at any airport, whether in respect of the aircraft or any other aircraft of the lessee, and will indemnify and hold the lessor harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the lease term for any reason or the return of the aircraft.

Maintenance of aircraft During the lease term and until the termination date, lessee alone has the obligation, at its expense, to maintain and repair the aircraft, engines and all of the parts: a) in accordance with the maintenance program; b) in accordance with the rules and regulations of the relevant aviation authority; c) in accordance with manufacturer's type design; d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the aircraft and meet the requirements at all times during the lease term and upon return of the aircraft to the lessor; and e) in the same manner and with the same care as used by lessee with respect to similar aircraft and engines operated by the lessee and without in any way discriminating against the aircraft. In addition maintenance program for most aircraft will provide that certain parts are from time to time likely to be removed or replaced. In this respect leases contain complex replacement provisions, the substance of which is that until a part has been replaced wherever it is located it remains in the ownership of the lessor. Moreover, it ensures that replacement parts are of at least a specified quality, utility and value compared to the parts removed.

Use of reserves In case under terms of the lease agreement the lessee is obliged to pay reserves (supplemental maintenance rent) based on actual utilisation of the aircraft, then the lessor is obliged to reimburse the lessee for cost incurred up to related hourly maintenance rentals ("supplemental maintenance rent") paid by the lessee. At lease expiration to the extent that a lessee has paid to lessor a higher supplemental rent than it was reimbursed, the excess maintenance rent is to be retained within the lessor.

Taxes The lessee agrees to pay promptly when due, and to indemnify and hold harmless the lessor on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges, deductions or withholdings of any nature (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, excise, turnover, personal property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon the lessee, the lessor, on all or part of the aircraft, the engines or otherwise), by any government entity or taxing authority in the Republic of Lithuania or any foreign country or by any international tax authority, upon or with respect to, based upon or measured by any of the following (collectively, "Taxes"). The lessee does not pay only as set forth: a) taxes imposed by countries jurisdiction to which the lessor moves its principal place of business, on the net income, gross receipts, capital or net worth of lessor; b) taxes attributable to the period prior to delivery or after the termination date; c) taxes attributable to the lessor negligence, wilful misconduct or breach of this lease;

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d) taxes which would not have been imposed but for a connection between the lessor and the jurisdiction which imposed such taxes (i.e., the lessor is deemed to be carrying on business in, having a branch agency or permanent establishment in or being or becoming resident in such jurisdiction).

Insurance Throughout the lease term and until the termination date lessee must, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles). The lessee shall maintain or procure that aircraft third party, property damage, passenger, baggage, cargo and mail and airline general third party (including products) legal liability for a combined single limit (bodily injury/property damage) of an amount not less than defined in the lease agreement for the time being for any one occurrence (but in respect of products and personal injury liability, this limit may be an aggregate limit for any and all losses occurring during the currency of the policy) is maintained in respect of the aircraft with the additional assureds each named as additional assured for two years after the delivery date.

Representations and warranties Representations and warranties are found in all aircraft lease agreements. They have a number or different purposes but in particular they require the lessee to confirm the truth and accuracy of certain information provided by the lessee to the lessor on the basis of which the lessor has been induced into enter to the transaction. Inaccuracy in that information will entitle to lessor to sue for breach of representation and recover damages and, incidentally, may entitle it to call an event of default. A second purpose is simply to inform and to uncover potential problems at an early stage. The representations and warranties usually address the issues below: • the due incorporation and valid existence of the lessee together with confirmation of the authority of the lessee to enter into and perform the lease agreement and ancillary agreements; • the execution, delivery and performance of the lease has received all necessary corporate authorisations of the lessee and will not contravene any applicable law or agreements to which the lessee is a party or by which its assets are bound or affected; • no consents or registrations are required in connection with execution, delivery and performance of the lease agreement; or, to the extent that such consents or registrations are required, they are identified, expressed to be complete, obtained or made to be in full force and effect; • the lease and ancillary documents are legal, valid and binding obligations of the lessee; • there is no litigation, arbitration or administrative proceedings being contested or conducted which would have an adverse effect or material and adverse effect on the financial condition, business or operations of the lessee, or on the ability of the lessee to perform its obligations under the related lease agreement; • the financial information provided to the lessor has been prepared on a consistent basis and in accordance with generally accepted accounting principles; • the absence of taxes or duties upon the lease agreement by virtue of its execution, delivery and performance including the imposition of withholding tax on the rentals; • the ranking of the transaction in terms of priority with the lessee's other unsecured indebtedness; • confirmation that no event of default as defined or any event which with the giving of notice, lapse of time or relevant determination, would constitute an event of default, has occurred. • confirmation that immediately before delivery of the aircraft, there has been no adverse change in the business or financial condition of the lessee. In addition there may be other representations and warranties peculiar to the transaction.

Other covenants The lessee has an obligation to obtain and maintain in force and effect all necessary licences, permits and authorisations relating to the use and operation of the aircraft. The lessee is also required to covenant that it will pay all outgoings relating to the aircraft, whether they be taxes, fees, duties, fuel and lubrication expenses, insurance premiums and any other outgoings whatsoever arising out of, or in connection with, the use and operation of the aircraft. The leases also include notification requirements for example the lease should provide that the lessee will notify the insurers of any loss or damage which is covered by the policy in accordance with the terms of that policy. There is also a notification requirement about any circumstances which constitute an event of default, or which would or could constitute an event of default with a lapse of time, or the relevant notice or determination.

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There is a general covenant relating to the provision of information to the lessor concerning the location of the aircraft from time to time and its use. For example, technical records with regard to the aircraft have to be maintained to retain the certificate of airworthiness and information concerning the hours of use are necessary in keeping a lessor informed of the position of the residual value of its aircraft.

Return of aircraft Another covenant relates to the return of the aircraft on the expiration of the lease term. The basic obligation imposed upon the lessee is that the aircraft must be returned in the state and condition in which it would have been had the maintenance obligations specified in the lease been complied with. An operating lease where the lessor receives the aircraft back during its useful life has very detailed technical requirements to ensure that the expected market value of the aircraft is preserved. In addition, the aircraft will have to be free of any liens or encumbrances whatsoever so that the lessor is able to dispose freely of the aircraft. Any technical records or service records should be returned with the aircraft.

Events of default The events of default provisions are extremely important provisions in a lease. Generally, they apply only to the lessee and are intended primarily to protect the lessor and its asset, the aircraft. Typical events of default would include the following:

Payment default The fundamental basis of the leasing transaction is that the lessee receives payment on specified dates and in specified amounts. The most important default is therefore payment default.

Breach of insurance obligations This is another vital event of default because a failure by lessee to effect or maintain insurance puts at very serious risk the lessor's asset.

Representations and warranties Another important event of default is if any of the representations and warranties, which were discussed earlier, prove to be incorrect in any respect if, for example, a representation that the lessee has all necessary approvals and consents required to operate the aircraft is incorrect the lessor could not want to continue with the lease and would want to recover the aircraft.

Breach of any other obligation This event of default is intended to "sweep up" any other breaches by the lessee of the terms of the lease.

Insolvency The next and again, a very important, event of default deals with insolvency. Where the lessee becomes insolvent, or, if possible, in the steps leading up to, but before any declaration of insolvency, the lessor would be able to recover possession of the aircraft as soon as possible since once insolvency occurs.

Remedies Having established what the events of default are, the consequences of the occurrence of such an event or events are determined in the lease agreements. Usually the occurrence of an event of default entitles the lessor at any time thereafter, whilst the event of default is continuing, to treat the lessee as in default and ultimately to terminate the leasing of the aircraft. The lease identifies a number of remedies which are available to a lessor following declaration of default. A typical lease provides as one of the options to the lessor that, in addition to demanding all other amounts outstanding or claiming damages, it can demand a liquidated sum which will invariably be some form of specified stipulated loss or termination value. As part of the default procedure the lessor becomes entitled to recover possession of the aircraft and at that point the lessee's obligations relating to redelivery, storage etc. come into play. The lessor will in addition to the right to demand payment of the liquidated sum also reserve either expressly or by implication the right to sell, release, hold, let and otherwise exploit the aircraft.

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XI MARKET AND INDUSTRY OVERVIEW

11.1 Air Transport Industry Demand for air travel has consistently grown in terms of both the number of aircraft and passenger traffic over the last 40 years. The industry has remained resilient over time, while enduring the effects of both business cycle downturns and external events. Today air travel has penetrated most world regions, with the highest growth now coming from emerging markets and economies. The long-term outlook for an increasing number of aircraft remains robust due primarily to increased passenger traffic. AVITAS forecasts that there will be more than 24,000 aircraft in service by 2015, an increase of approximately 5,000 over today's level. Global passenger traffic, measured by Revenue Passenger Kilometres (the "RPK"), a measure of passenger demand representing each kilometre each paying passenger is carried, although cyclical, has been consequently growing for the last 40 years at a rate of roughly 1.5 times higher than the global GDP. In the entire history of airline industry there has been only a small number of periods when the market slowed down or shrunk. In 1990–1992 the first Gulf War, in 2001–2003 the aftermath of terrorist attack on the World Trade Center and the most recent global recession that negatively affected the industry during 2008–2010. There have been a number of other events such as military conflict in the Middle East, natural disasters such as volcanic eruption in Iceland in 2010 and epidemic of SARS in 2003, however their impact was brief and had no mid-to long term consequences. Even due to recent global recession the health of airline industry is currently satisfying and forecasts are promising. According to The Airline Monitor's July 2011 report the demand for travel or global passenger traffic increased almost 140% from 1990–2010, at an average rate of 4.5% per year while the supply of seats or traffic capacity measured by Available Seat Miles, grew at an average rate of 3.7% per year for the same period. The Airbus 2012 Global Market Forecast predicts that global passenger traffic will continue to grow at an average of 4.7% per year, while Boeing 2012 Commercial Market Outlook projects a more optimistic 5% average annual RPK growth for the next 20 years. Key growth indicators for the industry also present a positive outlook for the future. As the chart below shows, historically, there has been a strong positive correlation between changes in the GDP, measured in U.S. Dollars, and changes in passenger traffic (as indicated by RPK) and this illustrates that air travel can be forecast by using GDP as a predictor of passenger travel.

Figure 2. GDP vs RPKs Indexes relation, 1971–2011

Source: ICAO; International Monetary Fund ("IMF"), Boeing Current Market Outlook 2012–2031

Continuing recovery of global economy should bring the aviation industry back to the long-term growth rate of 5 percent per year. In conjunction to the economic revival, the passenger traffic should be sustained by increasing demand in developing markets, continuing trend of urbanization and strengthened by expansion of Low-cost carriers (the "LCC"). In addition, growing world trade and as a result increasing demand for transport of various commodities will drive the requirement for more air transport capacity. The tables below outline the economics and passenger traffic forecasts compiled by International Civil Aviation Organization ("ICAO").

Table 28. Economic Growth (GDP) by region (real average annual growth rates, per cent)

Average annual growth Forecast Region 2001–2011 2012 2013 2014 (%) (%) (%) (%) Europe 2.1 0.6 1.8 2.4 Africa 4.8 4.7 5.6 5.4

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Average annual growth Forecast Region 2001–2011 2012 2013 2014 (%) (%) (%) (%) Middle East 5.0 3.3 3.8 4.4 Asia/Pacific 6.3 5.8 6.3 6.7 North America 1.6 2.2 2.4 3.3 Latin America/Caribbean 3.7 3.8 4.1 4.7 World 3.7 3.4 4.0 4.6

Source: ICAO estimates based on IHS Global Insight

Table 29. Global and Regional Scheduled Passenger Traffic

Revenue Average annual Forecast Passenger-Kilometres growth Region of airline registration 2001 2011 2001–2011 2012 2013 2014 (billion) (billion) (%) (%) (%) (%) Europe 774 1 385 6.0 4.9 4.4 4.8 Africa 66 118 6.0 6.7 6.2 6.0 Middle East 100 383 14.4 16.8 10.2 11.0 Asia/Pacific 806 1 496 6.4 6.9 8.6 8.8 North America 1 110 1 434 2.6 1.2 3.1 3.5 Latin America/Caribbean 156 246 4.7 8.4 7.7 8.2 World 3 011 5 062 5.3 5.5 6.0 6.4

Source: ICAO estimates

11.2 Aircraft Demand Demand for new and used aircraft is derived from traffic growth and replacement needs. Historically, demand has been driven by economic growth and market development, market liberalization and the adoption of new business models. Aircraft replacement is connected to the relative operating economics of old versus new aircraft, technological improvements and the demand for conversions of passenger aircraft to freighters. Based on Airbus and Boeing estimates, the size of the global commercial aircraft fleet is expected to double over the next two decades. According to Airbus, by 2031 the fleet of passenger and freighter aircraft, ³100 seats and ³10 tonnes, will be 35,490 aircraft more than doubling from the 17,170 aircraft in service today. Single-aisle passenger aircraft represent the largest segment of the new deliveries with 19,500 new deliveries over the next 20 years. To satisfy demand for twin-aisle aircraft will require 6,500 new passenger aircraft and nearly 500 freight aircraft. Boeing predicts that in-service commercial fleet will grow an average 3.5 percent per year to double in size from 19,890 airplanes today to 39,780 by 2031. Over the next 20 years, the airline industry will need 34,000 new airplanes, of which 41 percent will replace older, less efficient airplanes; 59 percent of the new deliveries will reflect growth in emerging markets and evolving business models.

Figure 3. Airbus vs Boeing Future Market Forecasts for 2012–2031

Source: Airbus (Single Aisle, Twin Aisle Aircraft and Freighter), Boeing (All Commercial and Regional Jets)

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11.2.1 Drivers of Aircraft Demand for Growth and Replacement

Growth Drivers The world fleet is expected to grow steadily as airlines continue to develop service offerings to accommodate the world's rapidly growing demand for air travel. Key elements that are currently driving demand growth for both new and used aircraft include: • high rates of economic growth and increasing propensity to travel in emerging markets; • liberalization of air service between and within countries; • stimulation of traffic from growing LCCs offering lower fares.

Economic Growth As noted the growth of airline industry is tied to the GDP growth. Each region has its distinctive features resulting from various factors such as maturity of the market, number of competitors or the geographical and urban landscape. In general for emerging markets such as CIS, South America or Asia-Pacific high traffic growth tied to a developing economy, generates high demand for new aircraft and forces existing airline operators to switch to more modern aircraft for competitive reasons. Mature markets such as Europe, although with limited economic growth potential should benefit from an extensive development of LCC's.

Figure 4. Boeing Forecast of Regional Traffic and GDP Growth Rates 2012–2031

Source: Boeing

Market Liberalization Based on research by InterVISTAS, from 2006 the traffic growth subsequent to liberalization of air services agreements between countries typically averaged between 12 percent and 35 percent, and was significantly greater than during the years preceding liberalization. In a number of cases, growth exceeded 50 percent, and in some reached almost 100 percent of the pre-liberalization rates. According to the researchers the creation of the Single Aviation Market in Europe in 1993 has been one of the single most prominent success stories in aviation deregulation. Traffic post 1994 ultimately grew at average rates that were double those of pre-1994 years. Currently many growing emerging markets with large populations, such as Russia, Brazil, India, Indonesia and South Africa, are in the process of deregulating domestic markets and liberalizing air transport agreements with other nations. Many countries are entering into new "Open Skies" air service agreements that will further liberalize international air travel and continue to create opportunities for new flights, new routes, and new operators. In addition to international liberalization, domestic deregulation in many countries has created a substantial boom in demand for narrowbody equipment.

Expansion of LCCs An increasing presence of LCCs across the world has and will continue to drive aircraft demand by creating new markets and stimulating traffic demand with low fares. The business concept of the LCCs originated in North America with Southwest Airlines in 1971 proving that airlines can be profitable offering low fares and no frills service. Some 40 years later the airline industry has experienced an increasing presence of LCCs across the world. According to Airline Business, financial results for low-cost carriers over the last year show that the sector still maintains its profitability levels. Coming out of the recent recession mostly unaffected as compared to regular airlines,

84 AviaAM Leasing AB nearly all LCCs improved their financials as demand rose. Revenues across 36 low cost carriers surveyed by Airline Business increased by 19% to USD 58.7 billion in 2010 as compared to 2009, while operating profits of nearly 30 of them more than doubled reaching USD 4.2 billion.

Replacement Drivers The requirement to replace older aircraft that are retired or converted to freighter configuration represents a significant driver of aircraft demand, particularly in large mature regions. Replacement demand is driven by a number of factors including: • relative operating economics, reliability, and environmental considerations; • technological advancement, including the introduction of new aircraft and engines; • aircraft reaching their economic useful lives, driving retirement demand; • freighter conversion demand, driving replacement demand of passenger aircraft.

Relative Operating Economics Growing fuel prices widen the operating cost differential between new-generation and old-generation aircraft. Expectations that fuel prices will remain elevated or further grow have spurred plans for accelerated fleet replacement, particularly for the oldest aircraft. The use of new technology aircraft can make a significant difference in total fuel consumption. Also an additional economic consideration that is increasingly factored into aircraft selection decisions is limitations on greenhouse gas emissions. Such regulations should accelerate the retirement of older, less fuel-efficient aircraft.

Technological Advancement While incremental upgrades to existing technology can lengthen aircraft production runs, aircraft replacement is also driven by technological advancement. At the present time, incumbent manufacturers have engaged on an unprecedented plan to bring to market improved narrowbody and widebody aircraft.

Retirement Demand Airlines make fleet decisions based on a variety of economic and strategic factors. If carriers are able to execute on their fleet replacement plans, and if there is no demand for additional use of a surplus aircraft by another operator, the aircraft is retired. According to Flightglobal's fleet database, the annual share of the global fleet that has been retired has fluctuated between 1.5% and 2.2% over the past decade.

Freighter Conversion Demand Another source of replacement demand is the conversion of existing passenger aircraft to freighter configurations. Most aircraft entering the freighter market do so by conversion as mid-generation aircraft, rather than new production. Because freighters typically fly fewer hours per day and operate on more flexible schedules than passenger aircraft, older aircraft that cannot be utilized profitably for passenger service can continue to provide value as freighters. Airbus and Boeing expect that freighter conversion will generate the demand for 105 and 100 aircraft per year, respectively over the next two decades.

11.3 Aircraft Leasing Industry

11.3.1 Overview Due to the cost of aircraft acquisitions, aircraft financing complexities and the airlines' need for fleet flexibility, the role of operating lessors has expanded significantly over the last 20 years. In the late 1960s and early 1970s, airlines generally owned all of their aircraft. Aircraft acquisitions were financed through loans that were collateralized by the aircraft themselves. Airline fleets at that time were generally small and limited to a few aircraft types, with the overall size of the airline industry being geographically confined. As airline fleets expanded and fixed costs for maintenance and ownership grew rapidly, airlines outsourced ownership of many of their airplanes through the adoption of aircraft leases. Aircraft leasing and the operating lease model have grown over the past three decades also because of the advantages of splitting the risks and rewards of aircraft ownership from the risks and rewards of aircraft operation. The operating lease model's development has been based on aircraft lessors' access to comparatively cheap capital. According to Visiongain, in 2011 the total commercial aircraft leasing fleet held by leasing companies accounted for 32% of the world's active fleet. The aircraft fleet of all leasing companies grew 5.6% percent from 6,501 aircraft in 2010, to 6,864 aircraft in 2011. At a compound annual growth rate (CAGR) of 5%, the total commercial aircraft leasing portfolio is expected to increase from 6,864 aircraft in 2011 to reach 11,234 aircraft in 2021. The market share of leased aircraft of the total active commercial fleet is expected to increase from 32% in 2011, to reach 39% in 2021.

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Figure 5. Global Commercial Aircraft Leasing Market Forecast 2011–2021 (Units, Growth rate %)

Source: Visiongain 2011

In 2011 the global commercial aircraft leasing market was forecasted by Visiongain to be worth USD 233 billion. The value of the global commercial aircraft leasing market is forecasted to grow with a 5.6% CAGR during 2011–2021, making the global commercial aircraft leasing market worth USD 405 billion in 2021. Due to the demand for narrow-body fuel-efficient aircraft, Visiongain forecast new orders by commercial aircraft lessor customers over the next decade will reflect a 65% order rate for narrow-body aircraft, totalling 3,076 aircraft over 2011–2021. The order rate for wide-body aircraft is forecast to be 25% at 1,183 aircraft. The remaining 10% is forecast to be orders for regional/commuter aircraft totalling 474 commercial aircraft.

Figure 6. Commercial Aircraft Leasing Orders by Aircraft (Units, %)

Source: Visiongain 2011

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Figure 7. Commercial Aircraft Leased/Procured Market Share Forecast 2011–2021 (%)

Source: Visiongain 2011

11.3.2 Regional Growth Forecasts The regional market share of the commercial aircraft leasing market should witness a marginal change during the period 2011–2021. The major development will rely on the North American market losing its share in the global aircraft leasing market and being surpassed by the Asia Pacific.

Figure 8. Regional Commercial Aircraft Leasing Market Growth Forecast

Source: Visiongain 2011

Figure 9. Regional Commercial Aircraft Leasing Market Share Forecast 2021 (Units %)

Source: Visiongain 2011

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North America. Commercial aircraft leasing portfolio for 2011 totalled 1,730 units, a figure which is expected to rise with a CAGR of 3.1%, between 2011–2021, to reach 2,343 aircraft. In terms of value, Visiongain forecasted the North American commercial aircraft leasing market to be worth USD 59.8bn in 2011. This figure is predicted to rise with a CAGR of 3.7% during 2011–2021, to reach a figure of USD 86.5bn in 2021. The North American commercial aircraft leasing market is displaying mature growth rates, reflective of the reduced penetration in North America of commercial aircraft lessors in comparison to leasing in Europe or Asia Pacific. Europe. In 2011 the European commercial aircraft leasing portfolio numbered 2,294 aircraft, a 33% market share of the total global commercial aircraft leasing portfolio. Visiongain forecasted this figure to rise with a CAGR of 5.5%, increasing the European commercial aircraft leasing fleet to 3,907 aircraft, and rising to a 34% market share of the global commercial aircraft leasing portfolio by 2021. The commercial aviation market in Europe has remained fairly resilient despite the adverse affects of the economic crisis in the region. European airlines continue to expand their fleets and the total commercial airplane fleet in the region is predicted to increase over the next decade with the delivery of over 3,000 new airplanes valued at approximately USD 400bn. Asia Pacific. In 2011 the Asia Pacific commercial aircraft leasing portfolio numbered 1,514 aircraft. Visiongain forecasted a 7.3% CAGR during 2011–2021, resulting in 3,057 commercial aircraft for lease in the region by 2021. Visiongain forecasted the Asia Pacific commercial aircraft leasing market to be worth USD 47.4bn in 2011. This figure is forecasted to rise with a strong CAGR of 8.7% during 2011–2021, providing the forecast figure of USD 118.7bn in 2021. The commercial aviation industry is witnessing strong, progressive growth in the Asia Pacific region with lenient regulations, emergence of low-cost carriers, and a general boom in the economy led by off shoring of services and manufacturing industries to the region. Middle East. The Middle Eastern commercial aircraft leasing market will grow with a 5.2% CAGR, during the period of 2011–2021. Visiongain forecasted the commercial aircraft leasing portfolio in the Middle-East in 2011 to be 302 aircraft, a figure which is expected to reach 499 in 2021. Visiongain predicted that the CAGR from 2011–2016 will be 5.2%, and that the corresponding figure from 2016–2021 will be 5.1%. In terms of value, the Middle Eastern commercial aircraft leasing market was to be worth USD 9.6bn in 2011. This figure will rise with a strong CAGR of 8% during 2011–2021, to reach USD 22bn in 2021. In a regional aviation market that was previously disorganized and fragmented, sustained heavy investment is expected to provide strong growth rates that will transform the region's role in the global aviation industry. South America. In 2011 the South American commercial aircraft leasing portfolio numbered 623 aircraft, 9% market share of the total global commercial aircraft leasing fleet. Visiongain forecasted this figure to rise with a CAGR of 3.6%, increasing the South American commercial aircraft leasing fleet to 891 aircraft, however, losing marginal market share at 8% in 2021. Visiongain forecasted the South American commercial aircraft leasing market value of USD 20.3bn in 2011. Recording a CAGR of 4.7% during 2011–2021, Visiongain forecasts this market value to rise to USD 33.5bn in 2021. In South America, firm investment in aviation infrastructure reflects the strong economic growth being witnessed in the region. Air travel in the region is recording growth figures slightly higher than the global average. Low-cost airlines are proving affordable for many new passengers and enabled air travel to gain market share from long-distance rail and bus services. Africa. The African commercial aircraft leasing portfolio numbered 234 aircraft in 2011. This figure is expected to rise with a CAGR of 3.2% during 2011–2021, expanding fleet size to 321 aircraft in 2021. Visiongain predicts that the CAGR from 2011–2016 will be 3.4%, and that the corresponding figure from 2016–2021 will be lower at 3%. Visiongain forecasted that the African commercial aircraft leasing market was worth USD 7.9bn in 2011. Recording a modest CAGR of just 3.8% during 2011–2021, Visiongain forecasts this figure to rise to USD 11.5bn in 2021. In terms of the current standing of the region's commercial aviation fleet, significant investment is needed to reverse the trend of an aging fleet by the introduction of new aircraft. The majority of the African fleet are narrow-body aircraft well versed in flights between North Africa and Europe. As trade with the East continues to grow, African carriers will need a modernized fleet to grow the economy. Australasia. The Australasian commercial aircraft leasing market is forecasted by Visiongain to record the slowest growth rate at just 2.6% during 2011–2021. In 2011 the Australasian commercial aircraft portfolio included 167 aircraft, this figure will rise to 217 aircraft in 2021. Visiongain forecasted the Australasian commercial aircraft leasing market to be worth USD 5.7bn in 2011. By 2021 the Australasian commercial aircraft leasing market is forecasted by Visiongain to reach a value of USD 8.4bn, recording a 4.1% CAGR during 2011–2021. The Australasian aviation industry is characterized by the evolution of established airline business models. Airlines such as Qantas have had to adapt due to the affect of low-cost carriers and evolve their business model. An example of this is the expansion of JetStar, a subsidiary, and further progression into the South-East Asian market.

11.3.3 Engine Leasing Market In the past, airlines owned their own spare engines, but over the last two decades, operators have increasingly turned to leasing as the most cost-effective way of accessing spare engines, and as the business has grown, so have the variety and scope of programs available to them. Some 20 years ago, only around 1 per cent of spare engines were leased, but by the turn of the century, that number had grown to 10 per cent and currently stands at close to 25 per cent of all spare engines. Current estimates suggest there are between 1,100 and 1,300 leased spare engines in the market, with a total combined value of around USD 8 billion – although with no central database tracking when engines are installed, removed or decommissioned, it is difficult to track them with high degree of certainty. With the number

88 AviaAM Leasing AB of leased spare engines to double in the next 15 years to over 40 per cent (some estimates even go as high as 60 per cent) of all spares, its overall value, boosted by the addition of new generation engines, could break through the USD 20 billion barrier.

Figure 10. Narrowbody aircraft (A320 & 737NG) Engine Growth Forecast (Units)

Source: Ascend, June 2011

Engine values have superior performance to out-of-production aircraft, which is due to the annual increases in new engine prices, overhaul costs, as well as life limited parts. Combined with the continuous demand for spare engines from the growing aircraft fleets, this will translate into increases in value. To illustrate this effect Ascend has compared the average values of two types of A320 engines – CFM56-5A1 and CFM56-5B4/P versus the value of the out-of-production aircraft A320.

Figure 11. Value Retention: Airframe vs. Engines – A320 (%)

Source: Ascend, June 2011

In case of regional jet aircraft the value of the engine submarket will increase steadily with CAGR of 3.6% until 2018 and CAGR of 3.9% until 2023 when the growth is expected to slow down. Although roughly 9% of the entire engine market, the regional jet aircraft engines will be one of the drivers of market growth for all engines including narrowbody and widebody aircraft.

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Figure 12. Regional Jet Commercial Aircraft Gas Turbine Engine Submarket Forecast 2013–2023 (USD billion, AGR %)

Source: Visiongain 2013

11.4 Russia and CIS Aviation Market Overview The outlook for aviation demand in the region remains promising and continues to grow. Boeing estimates that region is forecasted to take delivery of total of 1,140 new airplanes over the next 20 years, valued at USD 130 billion. CIS airplane orders were strong in 2011, both for models from western manufacturers and for new Russian models, such as the Sukhoi Superjet 100 that entered service in 2011 and the developmental Irkut MS-21. The current CIS order backlog accounts for 41 percent of the forecasted deliveries. Boeing states that the economies of the CIS region grew moderately in 2011. GDP expanded at a rate of 4.9 percent in 2011, in line with GDP growth of 4.5 percent in 2010. Overall, regional growth is expected to continue, with GDP growing 3.4 percent annually over the next 20 years. Russia's economy continues to be the region's largest, accounting for more than 70 percent of the region's GDP in 2011. The economies of Ukraine and Kazakhstan follow Russia in size. The Russian Transport Ministry's Federal Air Transport Agency reported that Russian airports serviced 112.4 million passengers in 2011, an increase of 12.9 percent compared to 2010. Over the next 20 years, Boeing forecasts that air traffic to and from the CIS region will grow at a rate of 4.7 percent annually. According to the Federal Agency of Air Transport the number of passengers carried by the Russian carriers (as outlined in the table below) was 59.9 million in 2011 and grew by 21% to reach 72.8 million in 2012.

Table 30. Transportation of Passengers by Russian Carriers in 2011–2012

Number of passengers Rank Airline operator 2012 2011 Growth 1 Aeroflot 17,656,152 14,173,777 24.6% 2 Transaero 10,327,560 8,453,371 22.2% 3 UTair 7,769,881 5,802,323 33.9% 4 Sibir 6,351,010 5,128,319 23.8% 5 Rossiya 4,208,906 3,537,459 19.0% 6 Ural Airlines 3,525,066 2,513,371 40.3% 7 Orenburg Airlines 3,193,474 2,507,202 27.4% 8 Nordwind Airlines 2,167,267 1,721,639 25.9% 9 Globus 1,942,782 1,472,135 32.0% 10 VIM Airlines 1,511,682 1,612,531 -6.3% 11 Vladivostok Air 1,162,174 1,213,933 -4.3% 12 Taimyr Air Company 1,161,101 771,686 50.5% 13 Yakutia Airlines 1,145,630 1,018,999 12.4% 14 Donavia 985,682 864,050 14.1% 15 Kuban Airlines 955,896 900,364 6.2% 16 Yamal Airlines 912,944 565,311 61.5% 17 Red Wings Airlines 817,452 781,357 4.6%

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Number of passengers Rank Airline operator 2012 2011 Growth 18 Nordavia 814,492 1,468,344 -44.5% 19 Metrojet 733,773 348,285 110.7% 20 I-Fly 632,792 410,403 54.2% 21 RusLine 600,299 405,467 48.1% 22 Air Bashkortostan 494,795 430,038 15.1% 23 Tatarstan Airlines 473,791 592,861 -20.1% 24 Gazpromavia 389,652 373,941 4.2% 25 Ak Bars Aero 371,784 254,785 45.9% 26 Polet Airlines 338,123 270,130 25.2% 27 UTair Express 331,499 691,894 -52.1% 28 Saratov Airlines 322,338 376,651 -14.4% 29 Alrosa Mirny Air Enterprise 271,007 257,793 5.1% 30 SAT Airlines 265,271 298,442 -11.1% 31 Moskovia Airlines 257,357 247,844 3.8% 32 Tulpar Air 227,773 27,303 734.2% 33 IrAero 198,844 165,695 20.0% 34 Izhavia 174,566 168,177 3.8% 35 Groznyavia 116,266 108,566 7.1% TOTAL 72,809,081 59,934,446 21.5%

Source: The Federal Air Transport Agency of Russia

Long-haul international traffic is expected to grow at an annual rate of 4.8 percent through 2031. The Russian Transport Ministry's Federal Air Transport Agency reported nearly 47 million passengers on international routes in 2011, a 14.9 percent increase compared to 2010. Driven by increasing international traffic, twin-aisle service will remain an important component of the region's market, creating demand for 250 new fuel-efficient twin-aisle airplanes and 30 large twin-aisle aircraft. The region's geographical size and diverse terrain make airline travel an attractive transportation option. Air travel will increase over the coming 20 years as personal incomes rise and liberalization of air transport regulations makes aviation services more available and affordable. The real GDP annual growth rate for the whole CIS region for the period 1998–2011, was 5.6% and is expected to grow at 0.2% faster than the world average, at 3.4% from 2011–2031. Over the same period, 1998–2011, domestic and intra-CIS passenger Available Seat Kilometres (ASK) traffic increased at an annual average growth rate of 9.1%. However, demand in domestic and intra-CIS, outside of Russia, has been slower and opportunity still exists for the greater regional integration of air traffic. Reflecting trade flows, booming intercontinental traffic from and to CIS has been dominated by Europe and Asia-Pacific. With this growth, CIS airlines' have succeeded in keeping a high market share on these intercontinental flows, this remaining fairly stable at 60%. Traffic to Africa and the Middle East has developed quickly from 2009. Middle East low-cost carriers have opened more than 20 routes to the CIS, stimulating demand for religious tourism. In 2011 low-cost market share on the CIS-Middle East flow reached 8% of total ASKs. Huge productivity improvements have resulted in the number of aircraft operated by CIS airlines to actually decrease, whilst traffic has increased. This phenomenon was common to all aircraft types, but was more noticeable for regional aircraft. Airbus Global Market Forecast predicts a 5.7% average annual RPK growth rate for traffic from/to/within CIS for the next twenty years. Inter-regional traffic is expected to grow at 5.9%, with domestic and intra-regional growing at 5.5% over the forecast period. The highest traffic growth for the CIS region is expected to be in connection with the People's Republic of China, where growth is projected to be 7.6% annually over the next 20 years. This traffic growth will translate into a demand for 1,229 aircraft with over 100 seats by 2031. 962 aircraft are projected to come from growth in the region, while only 267 aircraft will be for replacement. The great majority of this demand, 83% in units, will come from the Single-Aisle market with a large part of this demand servicing intra-regional and traffic to and from Europe. Overall, the fleet in service will more than double over the forecast period growing at 4.1% per annum. Significant driver of increased number and size of orders for new aircraft is the strong push for replacement of older generation aircraft still operating in CIS. Over the past two decades the number of western built aircraft operating in CIS has greatly increased. In 1990 100% of the fleet in the CIS were Russian or Ukrainian built aircraft. Today western-built aircraft represent more than 80% of the fleet in service in CIS. The generation of the aircraft being flown in the CIS is also leading to greater efficiency. In 2006 more than 60% of the fleet were older generation types. Today these aircraft represent less than 15% of the fleet. That being said, efficiency improvements can still be realized, as at the end of 2011, new generation aircraft only accounted for 40% of the fleet-in-service. The establishment of the Customs Union between Russia, Kazakhstan and Belarus in 2010 led to significant changes in the regulations of customs procedures used in relation to importing of leased foreign aircraft. Regardless of whether passenger aircraft is imported under theprocedurefordomesticuseorunderthetemporary import procedure, the Unified Customs Tariff of the Customs Union provides for a full

91 AviaAM Leasing AB exemption from customs duty (but not from the import VAT) in respect of civil passenger aircraft with up to 50 seat capacity and empty operating weight ("EOW") between 2,000 kg and 20,000 kg and with more than 300 seat capacity and BOW between 20,000 kg and 120,000 kg. In addition, customs duty (but not the import VAT) is set at zero rate in respect of aircraft with BOW between 90,000 kg and 120,000 kg and with a seat capacity from 51 to 300 (inclusive). Moreover, the exemption also applies to civil passenger aircraft with EOW over 120,000 kg. There are also specific temporary exemptions for leased aircraft currently in place in the Customs Union. Under these exemptions, full conditional exemption from customs duty and import VAT is granted in respect of the leased aircraft with BOW of between 20,000 kg and 120,000 kg and with seat capacity from 111 to 170 (inclusive) or from 219 to 300 (inclusive). To fall under the exemption the aircraft must be imported before 31 December 2013 in Russia and before 30 June 2014 in Kazakhstan and Belarus. In order to promote the purchase of domestic aircraft, on June 26, 2002 the Russian Government enacted Resolution No. 466 ("Resolution 466"). Under this Resolution, Russian airlines may apply for state support in the form of partial compensation of lease and loan payments spent on the purchase of Russian-manufactured aircraft. Only Russian manufactured aircraft purchased by Russian leasing companies and financed by Russian banks qualified under this support program. WTO members argued that Resolution 466 constitutes a prohibited subsidy under the WTO Agreement on Subsidies and Countervailing Measures, as it encourages the purchase and lease of Russian manufactured aircraft by lowering the leasing costs of such aircraft to Russian airlines. Russia agreed to amend Resolution 466 prior to accession to the WTO and on 12 December 2011 the Russian Government enacted Resolution No. 1212, which provides application of subsidies to aircraft manufactured abroad. However, in order to qualify, a foreign produced aircraft may not be more than 10 years old and has to have seat capacity of not more than 72 seats for turboprop aircraft or not more than 55 seats for regional jet aircraft.

11.5 Aircraft Economic Life A commercial aircraft's economic life is likely to be between 20 and 30 years, although this can vary significantly depending on the type of aircraft. Widebody (dual-aisle) jet aircraft and regional jets tend to have shorter economic lives (around 20 to 25 years) than narrowbody (single-aisle) jet types partly due to more rapid technological obsolescence, whereas for narrowbody jet types, the technology replacement horizon is longer, resulting in a economic life of approximately 25 to 30 years. Freighter conversion can extend a passenger aircraft's economic life to 35 years. Turboprops can have even longer lives, for example, some Fokker F.27s are still flying after 35 to 40 years. Within its economic life horizon, an aircraft may have several different owners and operators, starting service with largest operators in terms of fleet size such as Ryanair or Lufthansa before changing hands to smaller operators, including some low-cost carriers or new entrants, located in emerging markets. Aircraft may eventually become candidates for freighter conversion or may be parted out, particularly if 'run out' and due for major maintenance. Larger, better-capitalized airlines are more likely to roll-over their fleets before 15 years of age and tend to be major customers for new aircraft. The average age of the in-service airline fleet (seating 50 or more passengers) has remained relatively stable over the past twenty years, at between 10 and 11 years.

Figure 13. Airline Average Fleet Age

Source: Ascend Online database. *2013 data as of March 31st.

The reasons for this relatively stable average time that an aircraft remains in-service have changed with time. In the late 1990s, there was a large influx of new deliveries including the Boeing 737 Next-Generation and Airbus A320 families and 50-seat regional jets, all of which

92 AviaAM Leasing AB were growing in popularity. Older "Classic" aircraft such as the Boeing 737 Classics and the McDonnell Douglas MD-80 family were also still in production for most of the 1990s. In the subsequent decade from 2000 to 2009, the industry experienced two major economic downturns coupled with higher fuel prices. Consequently, the manufacturers did not create new models or launch any new replacement types in the largest narrowbody jet market. The weak financial state of many large airlines, especially in the United States, led to subdued demand for re-fleeting, especially with uncertainty over the timing of a new replacement for the Airbus A320 and Boeing 737 Next Generation families. Delays in the scheduled delivery of Airbus A380 and Boeing 787 widebody jet aircraft also prolonged the in-service life of some of the aircraft they were meant to replace. Consequently, while record new deliveries were made in 2005 to 2009, the lower capital costs of some of the older aircraft were able to counteract the rising fuel prices, which led todecisionsbyairlinestokeepmanynowout-of-production "Classic" aircraft in service. The average age of the overall fleet in 2009 therefore remained relatively stable compared to the previous ten years.

11.6 Aircraft Values and Lease Rates

11.6.1 Aircraft Values Aircraft values are determined by market demand and market supply. Market demand is predicted based on traffic forecasts, which is driven in turn by economic cycles, together with productivity, utilization assumptions and load factor analysis. Market supply is projected by a retirement forecast based on aircraft economic life assumptions and fluctuations in the parked aircraft fleet, and the delivery forecast driven by the order/delivery pattern. The change in aircraft values is the outcome of these movements in the demand and supply of aircraft. Although fundamentally a value of the aircraft should be equal to the net present value of the operating profit that the asset can generate over its economic life, in practice, the value of an aircraft to the operator is influenced by many factors, including: • number of aircraft in service today; • number of airlines which operate the aircraft; • production status; • size, capacity, and capability; • number of aircraft that are currently parked or in storage (a result of either market conditions or an operator decision to park the aircraft, either temporarily or permanently); and • life cycle duration, i.e. potential of the aircraft type to be replaced by a newer model. Performance against these criteria demonstrates market "liquidity" of the asset and thus the ease (or difficulty) in placing an aircraft with another operator. Various market participants take differing views as to the future economics of given aircraft types, and market values do not always behave rationally. Secondary factors that impact aircraft value include fleet commonality for flight crews, tooling and spare parts, aircraft liquidity and acceptance by operating lessors, support from the manufacturer, and the environmental efficiency of the aircraft.

11.6.2 Aircraft Lease Rates Many factors can affect the marketability and therefore revenue-earning potential and residual values of any given aircraft type. The operating lease rate of an aircraft is a function of its residual value expectations (the anticipated value that could be realized in a sale of the asset at a future date) together with other variables such as the credit rating of the lessee, the lease term, the lessor's desired margin, costs of ownership and overhead level, the current value of the asset, the yield curve, the rates attainable by competing assets and the general supply of and demand for the particular asset. With the underlying cyclicality of economic growth, aircraft residual values and lease rates tend to follow a pattern: in times of economic growth, aircraft tend to hold their value better than normal depreciation would dictate; conversely, in the downcycle, values and lease rate movements tend to accelerate. Throughout the industry cycle, aircraft market values rise above and drop below aircraft Base Values (the appraiser's opinion of the underlying economic value of an asset in an open, unrestricted and stable market environment with a reasonable balance of supply and demand, assuming full considerations of its highest and best use). Given the relatively more liquid market of operating leasing (compared to aircraft trading), aircraft operating lease rates generally represent market-clearing prices that reflect current supply and demand. Lease rates depend on the aircraft type, aircraft age, aircraft specification, type of lease, interest rates, tax liabilities, lease term, value of the aircraft at lease inception, the forecasted residual value of the aircraft at lease termination, and the credit quality of the lessee. Although lease rates are closely correlated to global economic conditions, rates for a particular aircraft generally hold relatively steady in nominal terms for an extended period. Once replacement technology aircraft are firmly established in the market, some five to ten years after entry into service, values and lease rates of the replaced aircraft decline. External shocks and industry downturns also accelerate

93 AviaAM Leasing AB the decline in values and lease rates of the replaced aircraft. However, because aircraft operating leases are usually contractual at fixed monthly lease rates for many years, aircraft lessors are frequently insulated from short-term swings in market lease rates throughout the industry cycle. Lease rate factors (defined as the ratio between an aircraft's monthly lease rate and its market value) are generally higher for older aircraft than for new aircraft. The relative age-spread for market values is larger than the age-spread for lease rates, and so, as with asset values, there are opportunities for lessors of older aircraft to generate higher margins, subject to ease of placement and sensitivity to market dynamics. Older aircraft have also recently tended to attract less interest from the highest credit quality lessees who had focused on new aircraft during the recent era of easily available funding.

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XII OPERATING AND FINANCIAL REVIEW

This Section accommodates the discussion on the results of the operation of the Group for the years ended 31 December 2012, 31 December 2011 and 31 December 2010, and for the three months ended 31 March 2013 and 31 March 2012. This Section should be read in conjunction with the IFRS Financial Statements and Consolidated Interim Financial Information, and in conjunction with other parts of the Prospectus which include important information on the operations and financial condition of the Group.

12.1 Critical Accounting Policies and Estimates

Lease revenue recognition As a lessor, the Group principally leases aircraft under net operating leases and reports rental income on a linear basis over the life of the lease as it is earned. In addition to lease revenue the Group receives supplemental maintenance rent from the majority of aircraft leases which is based on the utilization of airframes, engines and other major life-limited components and such supplemental maintenance rent is also recognised into income over the lease term based on a measure of utilization of the leased aircraft.

Aircraft Aircraft is the largest asset class of the Group and it is a part of property, plant and equipment which comprise aircraft, aircraft under preparation for use and other tangible fixed assets. Aircraft are carried at a revalued amount, being its fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are made at the end of each reporting period. The market value of the aircraft is obtained from reports prepared by external appraisers holding a recognised and appropriate professional qualification in valuation of similar category assets. The fair value measurement of aircraft is performed at each reporting date, and changes in the fair value are accounted as follows. If an asset's carrying amount is increased as a result of a revaluation, the increase is recognised in other comprehensive income and accumulated in equity under the heading of revaluation surplus. However, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. If an asset's carrying amount is decreased as a result of a revaluation, the decrease is recognised in profit or loss. However, the decrease is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus. The revaluation surplus included in equity in respect of an aircraft is transferred directly to retained earnings when the asset is derecognised. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Fair value Aircraft are carried at revalued amounts being fair value at the end of each reporting period. Fair value measurements as at 31 December 2009, 31 December 2010, 31 December 2011, 31 December 2012 were performed by an independent appraiser Ascend: A Flightglobal Advisory Service. The valuation was performed in line with the requirements of the International Valuation Standards. The retrospective market value of the aircraft (being fair value at the end of each reporting period) represents that which the aircraft could have best achieved at the given junctions. It therefore takes into account, as part of Ascend's current market valuation procedure, a thorough review of market activity and known transaction data involving the subject aircraft types, covering 'open' market and financial sales. It additionally considers the perceived demand for each type, its availability on the market, and further takes account of the expressed views of informed industry sources. Each value determined by Ascend is intended to reflect what might have been expected from the result of an 'arms’-length, single sale transaction' conducted in an orderly manner between a 'willing buyer and willing seller', with the aircraft free of any lease or charge. Basis of fair value is comparable sales transactions in the aircraft sales market. In order to obtain fair values of the aircraft possessed by the Group the valuation was performed using two step approach. Firstly, Ascend has obtained market transactions data related to the same types of aircraft as the Group have and using the data on the conditions of the subject aircraft produced "Half-Life" values for each one at each valuation date. The term "Half-Life" refers to the airframe, engines, landing gear, APU and all major components being half way between major overhauls, inspections or performance restorations as appropriate; with engine LLPs having 50% of their certified lives remaining.

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Depreciation Depreciation of aircraft is calculated using the component-based approach by writing off the cost of assets to their residual values based on their expected use or over their estimated useful life as follows: – D-Check (Airframe Heavy Maintenance Visit) 24,000 flight hours – Engines Shop Visits based on Engine Life Limited Parts 23,000 cycles 24,000 cycles (Bombardier CRJ200) – Airframe 7 years

Maintenance expenses and reimbursements from supplemental rent Under operating leases, lessees are generally responsible for aircraft maintenance and repairs, including major maintenance (overhauls) over the term of the lease. For certain airframe and engine overhauls the Group reimburses the lessees for costs incurred up to, but not exceeding related supplemental maintenance rent that the lessees have paid to the Group. However, under provisions of certain leases the Group is contractually obliged to make additional payments to lessees in excess to supplemental rent collected from them to cover the full cost of the first qualifying maintenance (overhaul) events. Such payments and reimbursements from supplemental rent are capitalised into the value of the aircraft. In turn, maintenance expenses incurred by the Group on off-lease aircraft that do not extend theusefullifeofflightequipmentareexpensedasincurred.

12.2 Changes in the Accounting Policy In 2012 the accounting policy for aircraft was changed from historical cost to revalued amounts. In previously published statutory consolidated financial statements of the Group for the year ended 31 December 2010 and for the year ended 31 December 2011 (not included in this Prospectus) the Group has accounted for aircraft at their historical cost less accumulated depreciation and any accumulated impairment loss. Historical cost included expenditure that is directly attributable to the acquisition of the items. In 2012 the Company has changed its accounting policy on aircraft and started accounting it at revaluated amounts. This change in accounting policy was adopted on a retrospective basis from 1 January 2010. Change in the accounting policy resulted in decrease in the book value of the aircraft in all the previous periods due to the reason that market value of the aircraft was below its value in use under cost model. For information about the effect of changes in accounting policy on the comparative financial information as at 31 December 2011, 31 December 2010 and 31 December 2009 please refer to Note 5 of the IFRS Financial Statements (see Section XXV Historical Financial Information).

12.3 Factors Having an Effect to the Results of Operations The results of operations are affected by a variety of factors, primarily: • the number, type, age and condition of the aircraft the Group owns; • aviation industry market conditions, including events affecting air travel; • the demand for the Group's aircraft and the resulting lease rates the Group is able to obtain for its aircraft; • the purchase price the Group pays for its aircraft; • the number, types and sale prices of aircraft the Group sells in a period; • the ability of the Group's lessee customers to meet their lease obligations and maintain aircraft in airworthy and marketable condition; • the utilization rate of the Group's aircraft; • the availability of credit and equity funds; • changes in interest rates, which may affect the interest rate on borrowings. The factors described in the bullet points above are influenced by airline industry conditions, global and regional economic trends, airline market conditions, the supply and demand balance for the type of flight equipment the Group owns and the ability of the Group to remarket flight equipment subject to expiring lease contracts under favorable economic terms.

12.4 Analysis of Results of Operations for the Years Ended 31 December 2012, 2011 and 2010 Selected financial information on results of operations of the Group is provided in the table below. For the purpose of analysis the Company has grouped certain income and expenses items under separate headings that are different from presentation used in the IFRS Financial Statements.

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Table 31. Selected financial data from the consolidated statements of comprehensive income (USD'000) Year ended 31 December 2012 2011 2010 Revenue 60,242 27,528 20,785 Lease revenue 21,360 15,195 14,658 Supplemental maintenance rent 9,985 6,752 6,102 Sales of aircraft 28,897 5,500 – Other income –8125

Operating expenses (33,696) (9,703) (8,979) Depreciation and amortization (7,594) (4,153) (6,771) Costs of aircraft sold (21,399) (3,566) – Aircraft maintenance expenses (3,083) (828) (468) Employee-related expenses (598) (461) (374) Other operating expenses (1,022) (695) (1,366)

Interest income on loans, other expenses and other gain (losses) net 511 3,850 (17,677) Interest income on loans 72 172 341 Revaluation of aircraft (1,779) 3,678 (17,890) Impairment of receivables and prepayments – – (128) Other gain (losses) net 2,218 – –

Operating profit 27,057 21,675 (5,871)

Finance income 1,157 765 5,123 Finance costs (5,138) (4,938) (4,750) Finance costs – net (3,981) (4,173) 373

Profit (loss) before income tax 23,076 17,502 (5,498) Income tax (3,473) (2,433) 12 Profit (loss) for the year 19,603 15,069 (5,486)

Other comprehensive income 6,424 5,771 –

Total comprehensive income 26,027 20,840 (5,486) Source: the Company, IFRS Financial Statements

12.4.1 Revenue The revenue structure of the Group for the years ended 31 December 2012, 31 December 2011 and 31 December 2010 is presented in the table below:

Table 32. Revenue structure of the Group (USD'000) Year ended 31 December Item Type 2012 2011 2010 Revenue from aircraft leases Lease revenue 21,360 15,195 14,658 Supplemental maintenance rent 9,985 6,752 6,102 Other income 81 25 Total 31,345 22,028 20,785 Revenue from aircraft sales Sales of aircraft 28,897 5,500 – Total 28,897 5,500 – Total revenue 60,242 27,528 20,785 Source: the Company, IFRS Financial Statements

Revenue from aircraft leases The revenue from aircraft leases (i.e. lease revenue, supplemental rent and other income) accounted for 52.0% of total revenue in 2012, 80.0% in 2011 and 100.0% in 2010. The share of revenue from the sales of aircraft increased from 20.0% in 2011 to 48.0% in 2012 as the Group became actively engaged in aircraft trading activities.

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Increase in lease revenue by 40.6% in 2012 mainly results from new leases of Bombardier CRJ200 aircraft. As at 31 December 2011 only 3 Bombardier CRJ200 were leased and the leases began in the last two months of the year. As at 31 December 2012 total 7 Bombardier CRJ200 aircraft were on lease. The number of aircraft on lease as at 31 December 2012, 2011 and 2010 is provided in the table below.

Table 33. Number of aircraft on lease

As at 31 December Aircraft type 2012 2011 2010 Boeing 737-300 344 Boeing 737-500 444 Boeing 757-200 111 Bombardier CRJ200 73– Total 15 12 9

Source: the Company

As of 31 December 2012 the Group owned 18 aircraft: 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 7 Bombardier CRJ200. 15 aircraft were leased out under operating lease contracts, 2 aircraft were under preparation for use and one aircraft was off lease. As of 31 December 2011 the Group owned 13 aircraft: 4 Boeing 737-300, 4 Boeing 737-500, 1 Boeing 757-200 and 4 Bombardier CRJ200. 12 aircraft were leased out under operating lease contracts and 1 Bombardier CRJ200 aircraft was held for sale. As of 31 December 2010 the Group owned 9 aircraft: 4 Boeing 737-300, 4 Boeing 737-500, 1 Boeing 757-200. All aircraft were leased out under operating lease contracts. The table below provides the breakdown supplemental rent collected for each type of aircraft and accumulated flight hours (FH) and flight cycles (CYC) for the years ended 31 December 2012, 31 December 2011 and 31 December 2010:

Table 34. Breakdown of supplemental rent per each type of aircraft

Year ended 31 December 2012 2011 2010 Supplemental rent (USD'000) 9,985 6,752 6,102 Boeing 737-300 4,023 3,821 2,908 Boeing 737-500 1,466 1,589 1,685 Boeing 757-200 1,705 1,250 1,509 Bombardier CRJ200 2,791 92 – Flight hours flown (FH) 24,274 16,460 14,598 Boeing 737-300 9,921 9,337 7,425 Boeing 737-500 3,733 4,201 4,508 Boeing 757-200 2,660 2,778 2,665 Bombardier CRJ200 7,960 144 – Flight cycles accumulated (CYC) 11,101 6,593 5,485 Boeing 737-300 4,050 3,730 2,704 Boeing 737-500 2,152 2,182 2,264 Boeing 757-200 560 559 517 Bombardier CRJ200 4,339 122 – Supplemental rent expressed per FH (USD) 411 410 418 Boeing 737-300 406 409 392 Boeing 737-500 393 378 374 Boeing 757-200 641 450 566 Bombardier CRJ200 351 639 – Supplemental rent expressed per CYC (USD) 899 1,024 1,112 Boeing 737-300 993 1,024 1,075 Boeing 737-500 681 728 744 Boeing 757-200 3,045 2,236 2,919 Bombardier CRJ200 643 754 –

Source: the Company, unaudited

98 AviaAM Leasing AB

The significant increase of 47.5% in total amount of flight hours flown in 2012 as compared to 2011 is a direct result of beginning of operation of Bombardier CRJ200 aircraft. The 68.4% increase in accumulated flight cycles is related to both the beginning of operation of above mentioned CRJ200s as well as the deployment of these aircraft on shorter distance routes, hence resulting in lower amount of flight hours per cycle. The table below provides the lease rate factors and weighted average age of the Group's aircraft fleet on lease per each aircraft type.

Table 35. Aircraft lease factors and weighted average fleet age of the Group

As at 31 December 2012 2011 2010 Lease rate factors (%)(*) 2.7% 3.2% 4.3% Boeing 737-300 3.7% 4.8% 5.4% Boeing 737-500 5.9% 5.2% 5.6% Boeing 757-200 3.6% 2.5% 2.1% Bombardier CRJ200 1.7% 1.4% – Weighted average aircraft age (years)(**) 14.8 15.4 17.6 Boeing 737-300 21.8 21.2 19.9 Boeing 737-500 19.4 18.1 17.2 Boeing 757-200 18.0 17.0 16.0 Bombardier CRJ200 10.4 10.0 –

Source: the Company, unaudited

(*) The lease rate factor is calculated as the average monthly lease rent (not including supplemental rent) divided by the aircraft book value at 31 December of the applicable year. (**) The weighted average aircraft age is calculated as the age of aircraft at the particular year and weighted by the aircraft book value at 31 December of the applicable year.

Steady decrease of lease rate factor for Boeing 737-300 from 5.4% in 2010, to 4.8% in 2011 and 3.7% in 2012 directly resulted from increase in book value (which in turn is a fair value) of the existing fleet. Steady increase in lease rate factor for Boeing 757-200 by 0.4 percentage points in 2011 as compared to 2010 and 1.1 percentage point in 2012 as compared to 2011 resulted from the aging of the aircraft and subsequent decrease of value in relation to the lease rate. The lease rate factor for Boeing 737-500 and Bombardier CRJ200 aircraft remained relatively stable during the 3 year period. Relatively lower lease rate factors for Bombardier CRJ200 aircraft as compared to other aircraft types directly relate to relatively higher fair values of the subject aircraft (due to younger age of these aircraft) and also to the fact that regional aircraft generally command comparatively lower lease rentals as opposed to narrowbody commercial jets.

Revenue from aircraft sales Proceeds from aircraft sales were significant in 2011 and 2012 amounting to USD 5.5 million and USD 28.9 million respectively. These proceeds resulted from the sale of one aircraft in 2011 – Bombardier CRJ200 and 7 aircraft in 2012 – all Bombardier CRJ200.

12.4.2 Operating Expenses The table below provides the breakdown of operating expenses of the Group.

Table 36. Operating expenses of the Group (USD'000)

Year ended 31 December Item Type 2012 2011 2010 Operating expenses Depreciation and amortisation (7,594) (4,153) (6,771) Costs of aircraft sold (21,399) (3,566) – Aircraft maintenance expenses (3,083) (828) (468) Employee-related expenses (598) (461) (374) Other operating expenses (1,022) (695) (1,366) Total (33,696) (9,703) (8,979)

Source: the Company, IFRS Financial Statements

Depreciation and amortisation The increase in depreciation in the year ended 31 December 2012 as compared to the year ended 31 December 2011 was directly related to increase in the Group's aircraft fleet and an increase in aircraft fair values after revaluating them as at 31 December 2011.

99 AviaAM Leasing AB

Costs of aircraft sold Costs of aircraft sold increased to USD 21.4 million in 2012 from USD 3.6 million in 2011 which was primarily attributable to an increase in the number of aircraft sold in 2012 (see Section Revenue from aircraft sales above). In 2011 and 2012 costs of aircraft sold in relation to revenue from aircraft sales stood at a level of 64.8% and 74.1% respectively. The increase in cost of aircraft sold relative to sale revenue was mainly caused by larger maintenance expenses incurred to prepare the aircraft for sale and relatively lower average aircraft purchase and subsequent sale prices. The details on composition of the Group's aircraft fleet and aircraft transactions executed during the years 2012, 2011 and 2010 are presented in Section 10.4 Aircraft Fleet.

Aircraft maintenance expenses Aircraft maintenance expenses recognized in the consolidated statements of comprehensive income represent costs incurred for the maintenance of aircraft off lease. The significant increase in these costs recorded in 2012 in comparison to previous year (USD 3.1 million in 2012 vs. USD 0.8 million in 2011) was mainly due to maintenance expenses not eligible for capitalization incurred for the newly acquired Bombardier CRJ200 aircraft with the purpose to prepare them for lease pursuant to the requirements of the lessees.

Employee-related expenses The table below provides the breakdown of employee-related expenses of the Group.

Table 37. Employee related expenses of the Group (USD'000)

Year ended 31 December Item Type 2012 2011 2010 Employee related expenses Salaries (436) (330) (281) Social insurance expenses (162) (131) (93) Total (598) (461) (374)

Source: IFRS Financial Statements

Employee related expenses consist of salaries and social insurance expenses. Over the last three years these expenses grew from USD 374 thousand to USD 598 thousand in line with an increase in number of employees (number of full time employees increased from 9 as at 31 December 2010 to 13 as at 31 December 2012) and in line with increase in employees' remuneration.

Other operating expenses The table below provides the breakdown of other operating expenses of the Group.

Table 38. Other operating expenses of the Group (USD'000)

Year ended 31 December Item Type 2012 2011 2010 Other operating expenses Management services (102) (100) (561) Legal and translation expenses (188) (273) (340) Insurance expenses (250) (1) (204) Travelling expenses (86) (40) (21) Representation expenses (56) (9) (19) Other operating expenses* (340) (272) (221) Total (1,022) (695) (1,366)

Source: IFRS Financial Statements

* Includes Marketing expenses, Audit and accounting expenses and Other administrative expenses

100 AviaAM Leasing AB

Legal and translation expenses mainly relate to expenses incurred in preparation and execution of aircraft lease and sale contracts. These expenses diminished steadily from the level of USD 340 thousand in 2010 to USD 273 thousand in 2011 and USD 188 thousand in 2012 mainly due to transferring more legal duties to in-house lawyers instead of third-party law firms. As the Group leases the aircraft under net operating leases where lessees are responsible for insuring the Group's fleet the insurance costs incurred by the Group are nominal and mainly relate to contingent insurance coverage purchased by the Group. Roughly 100% increase year-over-year in travelling expenses is mainly attributed to stronger sales activities and active client relationship management. The growth of representation and other operating expenses is directly related to the overall growth of business activities of the Group.

12.4.3 Interest income on loans, other expenses and other gain (losses) – net The table below provides the breakdown of interest income on loans, other expenses and other gain (losses) of the Group.

Table 39. Interest income on loans, other expenses and other gain (losses) of the Group (USD'000)

Year ended 31 December Item Type 2012 2011 2010 Interest income on loans, Interest income on loans 72 172 341 other expenses and other gain (losses) Revaluation of aircraft (1,779) 3,678 (17,890) –net Impairment of receivables and prepayments – – (128) Other gain (losses) – net 2,218 – – Total 511 3,850 (17,677) Source: the Company, IFRS Financial Statements

Interest income on loans refers to interest received on loans to related parties. As loans granted to related parties decreased significantly during the year 2011 as compared to 2010 interest from the loans decreased respectively in line with the decrease of loan portfolio to related parties. Revaluation of aircraft expenses are attributable to the fact that pursuant to the accounting policy of the Group aircraft are carried at revalued amounts being fair value at the end of each reporting period. In 2010 the value of aircraft decreased significantly as aircraft market values were affected by the global economical downturn and full negative revaluation impact of USD 17.9 million was recognized in profit and loss. As aircraft market values increased in 2011, the increase of the aircraft value of USD 3.7 million in 2011 was recognised in profit or loss to the extent that it reversed a revaluation loss of the same asset previously recognised in profit or loss. During 2012 the additional decrease by USD 1.8 million in values of particular aircraft in the Group's portfolio was recognised in profit and loss. In addition, accumulated revaluation reserve recognized in the balance sheet (net of deferred tax) amounted to USD 12.2 million as at 31 December 2012 (2011: USD 5.8 million; 2010: 0). Other gains (losses) – net encompass gain on sale of assets (namely aircraft components and engines) in the amount of USD 1 million and other one-off items including the compensation in an amount of USD 0.7 million received from the breach of aircraft sale agreement on behalf of a potential buyer.

12.4.4 Financing Activities The breakdown of finance income and costs of the Group is provided in the table below.

Table 40. Consolidated financing activities of the Group (USD'000)

Year ended 31 December Item Type 2012 2011 2010 Finance income Interest income on cash and cash equivalents 5513 Discounting of security deposits received 546 305 – Unwinding of discount of non-current receivables and loans from related parties 328 435 1,017 Foreignexchangegainonfinancingactivities 278 20 4,093 Total 1,157 765 5,123 Finance costs Interest expenses (3,671) (3,548) (3,765) Foreignexchangelossonfinancingactivities (411) (1,053) (646) Unwinding of discount of security deposits received (1,052) (318) (320) Other finance costs (4) (19) (19) Total (5,138) (4,938) (4,750) Finance costs – net (3,981) (4,173) 373 Source: IFRS Financial Statements

101 AviaAM Leasing AB

A significant part of finance income is attributable to discounting of security deposits received and unwinding of discount of non-current receivables and loans from related parties that are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method. Over the last three years interest income on cash and cash equivalents changed from USD 13 thousand in 2010 to USD 5 thousand in 2011 and 2012. The nominal amount of interest earned on cash and cash equivalents is a direct consequence of interest level offered on deposits by the banks. Foreign exchange gain or loss on financing activities occur as foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Foreign exchange gain on financing activities in 2010 was mostly influenced by the foreign exchange impact of changes in the share capital which was originally denominated in Lithuanian Litas. Foreign exchange loss on financing activities in 2011 was mainly influenced by the revaluation of borrowings denominated in Lithuanian Litas. ItshouldbenotedthatfromtheoperationalpointofviewtheGrouphas a natural hedge of foreign currency risk as all revenue of the Group and the vast majority of its monetary assets and liabilities are denominated in the same currency, i.e. U.S. Dollars. Interest expenses on financing provided by financial institutions constitute the majority of finance costs. Over the last three years the interest expenses stayed at a relatively stable level of USD 3.8 million in 2010, USD 3.5 million in 2011 and USD 3.7 million in 2012. The interest expenses did not decrease in line with the borrowings decrease as a result of relatively higher interest rates applicable to Bombardier CRJ200 finance leases executed in 2011 and 2012. Unwinding of discount of security deposits received recognized as a finance cost relates to initial recognition of the security deposit at fair value. Security deposits are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Fair value of the security deposit at initial recognition is determined by discounting the nominal amount of cash received using the market interest rate and is recognised as revenue under finance income. Subsequent unwinding of security deposit is recognised as finance costs. The significant increase of the unwinding of discount of security deposits in the year ended 31 December 2012 as compared to previous years (USD 1 million in 2012 vs. USD 0.3 million in 2011 and USD 0.3 million in 2010), was attributable to the recalculation of discounting of security deposits pertaining to the transfer of one aircraft sublease agreement into a direct lease with the final client.

12.4.5 Profit (loss) before income tax As a result of the factors discussed above the Group's profit before tax increased by USD 5.6 million or 31.8% in 2012 to USD 23.1 million from USD 17.5 million in 2011. As a result of the factors discussed above the Group's profit before tax increased to USD 17.5 million from a loss of USD 5.5 million in 2010. The recorded loss for the year ended 31 December 2010 was mainly due to the change in accounting policy that resulted in negative aircraft revaluation impact recognized in profit and loss.

12.4.6 Income tax The breakdown of income tax expenses/ (benefit) is provided in the table below.

Table 41. Consolidated income tax expenses/ (benefit) of the Group (USD'000)

Year ended 31 December Item Type 2012 2011 2010 Income tax expenses/(benefit) Current tax (1,818) (219) (323) Deferred tax (1,655) (2,214) 335 Total (3,473) (2,433) 12

Source: IFRS Financial Statements

Effective tax rate for the year ended 31 December 2012 was 15.1% as compared to 13.9% for 2011. Income tax increased by USD 1.0 million or 42.7%, from USD 2.4 million in the year 2011 to USD 3.5 million in 2012. This increase was attributable to an increase of USD 1.6 million in the current income tax expense and a decrease of USD 0.6 million in the change of deferred tax through profit (loss). Higher current income tax expense was caused mainly by higher taxable income. Income tax in 2011 amounted to USD 2.4 million and was by the same amount higher than in 2010. This increase was primarily attributable to an increase of USD 2.5 million in the change of deferred tax through profit (loss) and a decrease of USD 0.1 million in the current income tax expense. Due to the deferred taxation of supplemental maintenance rent and discounting effect the current portion of income tax in 2011 was relatively low in comparison to total income tax expenses. However, current income tax increased

102 AviaAM Leasing AB in 2012 as the Group recognised income tax on the part of supplemental rent not reimbursed to lessees following the expiry of certain lease contracts.

12.4.7 Profit (loss) for the year As a result of the factors discussed above the Group's profit for the year increased by USD 4.5 million or 30.1% in 2012 to USD 19.6 million from USD 15.1 million in 2011. As a result of the factors discussed above the Group's profit before tax increased by USD 20.6 million from a loss of USD 5.5 million in 2010 which was mainly due to the change in accounting policy that resulted in aircraft revaluation loss recognized in profit and loss.

12.5 Analysis of Results of Operations for the Three Months Ended 31 March 2013 and 2012

Table 42. Selected financial data from the consolidated interim statements of comprehensive income (USD'000)

3monthsended31March 2013 2012 (unaudited) (unaudited) Revenue 6,578 12,399 Lease revenue 5,041 4,699 Supplemental maintenance rent 1,454 1,983 Sales of aircraft – 5,500 Other income 83 217

Operating expenses (3,603) (5,728) Depreciation and amortization (2,095) (1,629) Costs of aircraft sold – (3,079) Aircraft maintenance expenses (1,075) (740) Employee-related expenses (140) (140) Other operating expenses (293) (140)

Interest income on loans, other expenses and other gain (losses) net (313) 39 Interest income on loans 45 39 Revaluation of aircraft –– Other gain (losses) net (358) –

Operating profit 2,662 6,710

Finance income 453 619 Finance costs (1,489) (1,473) Finance costs – net (1,036) (854)

Profit (loss) before income tax 1,626 5,856 Income tax (214) (881) Profit (loss) for the year 1,412 4,975

Other comprehensive income ––

Total comprehensive income 1,412 4,975

Source: the Company, Consolidated Interim Financial Information

12.5.1 Revenue The revenue structure of the Group for the three months ended 31 March 2013 and 31 March 2012 is presented in the table below:

103 AviaAM Leasing AB

Table 43. Revenue structure of the Group (USD'000)

3monthsended31March Item Type 2013 2012 (unaudited) (unaudited) Revenue from aircraft leases Lease revenue 5,041 4,699 Supplemental maintenance rent 1,454 1,983 Other income 83 217 Total 6,578 6,899 Revenue from aircraft sales Sales of aircraft – 5,500 Total – 5,500 Total revenue 6,578 12,399 Source: the Company, Consolidated Interim Financial Information

Revenue from aircraft leases The revenue from aircraft leases (i.e. lease revenue, supplemental rent and other income) accounted for 100.0% of total revenue for the three months ended 31 March 2013 and 55.6% for the same period of 2012. There have been no aircraft trading transactions in the three month period ended 31 March 2013. Slight increase in lease revenue by 7.3% in the three months ended 31 March 2013 as compared to the same period in 2012 mainly resulted from increase in the number of Bombardier CRJ200 aircraft on lease. The decrease in supplemental maintenance rent by 26.7% in the three months ended 31 March 2013 as compared to the same period in 2012 mainly resulted from lower utilization of the aircraft by the lessees. The number of aircraft on lease as at 31 March 2013 and 31 March 2012 is provided in the table below.

Table 44. Number of aircraft on lease

As at 31 March Aircraft type 2013 2012 Boeing 737-300 44 Boeing 737-500 44 Boeing 757-200 11 Bombardier CRJ200 85 Total 17 14 Source: the Company

As of 31 March 2013 the Group owned 19 aircraft: 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 8 Bombardier CRJ200. 17 aircraft were leased out under operating lease contracts and 2 aircraft were under preparation for lease. As at 31 March 2012 the Group owned 15 aircraft: 4 Boeing 737-300, 4 Boeing 737-500, 1 Boeing 757-200 and 6 Bombardier CRJ200. 14 aircraft were leased out under operating lease contracts and 1 Bombardier CRJ200 aircraft was under preparation for lease. The table below provides the breakdown supplemental rent collected for each type of aircraft and accumulated flight hours (FH) and flight cycles (CYC) for the 3 months ended 31 March 2013 and 31 March 2012:

Table 45. Breakdown of supplemental rent per each type of aircraft

3monthsended31March 2013 2012 Supplemental rent (USD'000) 1,454 1,983 Boeing 737-300 98 855 Boeing 737-500 382 237 Boeing 757-200 421 463 Bombardier CRJ200 553 428 Flight hours flown (FH) 3,849 4,314 Boeing 737-300 633 2,028 Boeing 737-500 1,018 626 Boeing 757-200 734 806 Bombardier CRJ200 1,464 854 Flight cycles accumulated (CYC) 1,550 1,847 Boeing 737-300 307 794 Boeing 737-500 513 328

104 AviaAM Leasing AB

3monthsended31March 2013 2012 Boeing 757-200 119 138 Bombardier CRJ200 611 587 Supplemental rent expressed per FH (USD) 378 460 Boeing 737-300 155 422 Boeing 737-500 375 379 Boeing 757-200 574 574 Bombardier CRJ200 378 501 Supplemental rent expressed per CYC (USD) 938 1,074 Boeing 737-300 319 1,077 Boeing 737-500 745 723 Boeing 757-200 3,538 3,355 Bombardier CRJ200 905 729 Source: the Company, unaudited

The decrease of 10.8% in total amount of flight hours flown in the three month period ended 31 March 2013 as compared to the same period in 2012 resulted from significantly lower utilization of Boeing 737-300 aircraft by its current operators. Subsequently, the amount of accumulated cycles decreased by 16.1% during the period under review in 2013 as compared to the same period in 2012.

Revenue from aircraft sales There has been no aircraft sales revenue recorded in the three month period ended 31 March 2013 as compared to USD 5.5 million in sales revenue for the three month period ended 31 March 2012. There is a number of aircraft trading transactions the Company is currently pursuing which are expected to be closed in the upcoming months.

12.5.2 Operating Expenses The table below provides the breakdown of operating expenses of the Group.

Table 46. Operating expenses of the Group (USD'000)

3monthsended31March Item Type 2013 2012 (unaudited) (unaudited) Operating expenses Depreciation and amortization (2,095) (1,629) Costs of aircraft sold – (3,079) Aircraft maintenance expenses (1,075) (740) Employee-related expenses (140) (140) Other operating expenses (293) (140) Total (3,603) (5,728)

Source: the Company, Consolidated Interim Financial Information

Depreciation and amortisation The increase in depreciation by 28.6% in the 3 months ended 31 March 2013 as compared to the same period in 2012 was directly related to increase in the Group's aircraft fleet and an increase in aircraft fair values after revaluating them as at 31 December 2012.

Costs of aircraft sold In the three month period ended 31 March 2013 the Company did not engage in any aircraft trading transactions, therefore no cost of aircraft sold was recorded. In the three months ended 31 March 2012 the cost of aircraft sold amounted to USD 3 million.

Aircraft maintenance expenses Aircraft maintenance expenses recognized in the consolidated interim statements of comprehensive income represent costs incurred for the maintenance of aircraft off lease. The 45.3% increase in these costs recorded in the three months ended 31 March 2013 in comparison to the same period in previous year (USD 1 million in the three months ended 31 March 2013 vs. USD 0.7 million in the same period of 2012) was mainly due to maintenance expenses not eligible for capitalization incurred for the newly acquired Bombardier CRJ200 aircraft with the purpose to prepare them for lease or sale pursuant to the requirements of the lessees or buyers.

105 AviaAM Leasing AB

Employee-related expenses The table below provides the breakdown of employee-related expenses of the Group.

Table 47. Employee related expenses of the Group (USD'000)

3monthsended31March Item Type 2013 2012 (unaudited) (unaudited) Employee related expenses Salaries (107) (107) Social insurance expenses (33) (33) Total (140) (140)

Source: Consolidated Interim Financial Information

Employee related expenses consist of salaries and social insurance expenses. These expenses have remained unchanged in the three months period ended 31 March 2013 as compared to the same period in 2012.

Other operating expenses The table below provides the breakdown of other operating expenses of the Group.

Table 48. Other operating expenses of the Group (USD'000)

3monthsended31March Item Type 2013 2012 (unaudited) (unaudited) Other operating expenses Management services (52) (26) Legal and translation expenses (52) (35) Insurance expenses (23) (10) Marketing expenses (38) (12) Travelling expenses (39) (13) Representation expenses (8) (13) Audit and accounting expenses (5) (13) Other administrative expenses (76) (18) Total (293) (140)

Source: Consolidated Interim Financial Information

The Group outsources some of administrative services if it considers the required competences or scale of services are better provided by contractual arrangements referred to as servicing agreements. The Group has such servicing agreements in place for consulting, sales, utilization of resources, software usage and IT administration with Avia Solutions Group. Pricing of such agreements that are driven by hourly rates are subject to transfer pricing documentation scrutiny. The significant increase of management services from USD 26 thousand in the three months ended 31 March 2012 to USD 52 thousand in the same period of 2013 directly resulted from the increase in scope of services purchased from Avia Solutions Group due to preparation of the Company for the Offering. Legal and translation expenses mainly relate to expenses incurred in preparation and execution of aircraft lease and sale contracts. These expenses increased by 48.6% in the three months ended 31 March 2013 as compared to the same period of 2012 mainly due to greater involvement of third-party law firms in preparation and review of contractual documentation. As the Group leases the aircraft under net operating leases where lessees are responsible for insuring the Group's fleet the insurance costs incurred by the Group are nominal and mainly relate to contingent insurance coverage purchased by the Group. These insurance expenses have increased in the three month period ended 31 March 2013 in comparison to the same period in 2012 due to greater number of aircraft insured under contingent insurance policy. Marketing expenses have increased threefold in the period under review in 2013 as compared to corresponding period of 2012 as a result of a larger number of marketing campaigns aimed at increasing the awareness of the Company in its target markets. Increase in travelling expenses is mainly attributed to stronger sales activities, active client relationship management and exploration of potential markets such as Africa and Asia. In the three months ended 31 March 2013 other administrative expenses accounted for 25.9% of all other operating expenses as compared to 12.9% in the three month period ended 31 March 2012. This increase mainly results from expenses related to revaluation of the aircraft for the accounting purposes.

106 AviaAM Leasing AB

12.5.3 Interest income on loans, other expenses and other gain (losses) – net The table below provides the breakdown of interest income on loans, other expenses and other gain (losses) of the Group.

Table 49. Interest income on loans, other expenses and other gain (losses) (USD'000)

3monthsended31March Item Type 2013 2012 (unaudited) (unaudited) Interest income on loans, Interest income on loans 45 39 other expenses and other gain (losses) Other gain (losses) – net (358) – –net Total (313) 39

Source: the Company, Consolidated Interim Financial Information

Interest income on loans refers to interest received on loans to related parties, which increased by 15.4% in the three month period ended 31 March 2013 as compared to the same period in 2012. Other gains (losses) – net encompass gain on sale of assets (namely aircraft components and engines) and other one-off items. In the three months period ended 31 March 2013 the loss of USD 358 thousand results from the sale of Boeing 737-300 airframe.

12.5.4 Financing Activities The breakdown of finance income and costs of the Group is provided in the table below.

Table 50. Consolidated financing activities of the Group (USD'000)

3monthsended31March Item Type 2013 2012 (unaudited) (unaudited) Finance income Discounting of security deposits received 160 245 Unwinding of discount of non-current receivables and loans from related parties 17 35 Foreignexchangegainonfinancingactivities 276 339 Total 453 619 Finance costs Interest expenses (836) (942) Foreignexchangelossonfinancingactivities (492) (378) Unwinding of discount of security deposits received (160) (147) Other finance costs (1) (6) Total (1,489) (1,473) Finance costs – net (1,036) (854)

Source: Consolidated Interim Financial Information

107 AviaAM Leasing AB

12.5.5 Profit (loss) before income tax The Group's profit before tax decreased by USD 4.2 million in the three month period ended 31 March 2013 from USD 5.9 million in the corresponding period in 2012 mainly due to no aircraft trading transactions being performed in the period under review in 2013.

12.5.6 Income tax The breakdown of income tax expenses/ (benefit) is provided in the table below.

Table 51. Consolidated income tax expenses/ (benefit) of the Group (USD'000)

3monthsended31March Item Type 2013 2012 (unaudited) (unaudited) Income tax expenses/ (benefit) Current tax 89 441 Deferred tax 125 440 Total 214 881

Source: Consolidated Interim Financial Information

Income tax decreased by USD 667 thousand or 75.7%, from USD 881 thousand in the three month period ended 31 March 2012 to USD 214 thousand in 2013. This decrease was attributable to smaller taxable profit in the period under review in 2013.

12.5.7 Profit (loss) for the period As a result of the factors discussed above the Group's profit for the three months ended 31 March 2013 decreased by USD 3.6 million or 71.6% in 2013 to USD 1.4 million from USD 5 million in the same period of 2012.

12.6 Analysis of Capital Resources, Borrowing Requirements and Funding Structure as at 31 December 2012, 2011 and 2010 The total assets of the Group as of 31 December 2012 were USD 92.0 million (an increase by 23.1% compared to 31 December 2011). Of the above, current assets formed 27.2% (USD 25.0 million as of 31 December 2012) with the remaining 72.8% (USD 67.0 million) in non-current assets. In turn, the total assets of the Group as of 31 December 2011 were USD 74.7 million (an increase by 69.5% compared to 31 December 2010). Of the above, current assets formed 28.8% (USD 21.5 million as of 31 December 2011) with the remaining 71.2% (USD 53.2 million) in non-current assets. Equity and total liabilities financed 24.6% and 75.4% respectively of the Group's total assets as at 31 December 2012. Working capital (calculated as the difference between current assets and current liabilities) of the Group as at 31 December 2012 totalled to USD 3.4 million (an increase in amount of USD 3.4 million compared to 31 December 2011). The breakdown of capital resources and funding structure of the Group is presented in the table below.

Table 52. Highlights of capital resources and funding structure of the Group, related ratios (USD'000)

As at 31 December Item 2012 2011 2010 Total assets 91,960 74,696 44,064 Total non-current assets 66,989 53,154 38,981 Total current assets 24,971 21,542 5,083 Total equity 22,600 (1,454) (34,430) Total non-current liabilities 47,827 54,687 61,625 Total current liabilities 21,533 21,463 16,869 Net financial debt 51,250 53,256 67,257 Total financial debt 50,845 55,795 70,680 Non-current borrowings (including financial lease obligations) 34,840 43,145 56,432 Current borrowings (including financial lease obligations) 16,005 12,650 14,248 Security deposits received – net 11,520 11,542 5,193 Non-current financial loans receivable(*) (2,150) (347) (5,675) Current financial loans receivable(*) (884) (88) (2,049) Cash and cash equivalents (8,081) (13,646) (892) EBITDA(*) (**) 36,430 22,150 18,790

108 AviaAM Leasing AB

As at 31 December Item 2012 2011 2010 Related ratios:(*) Total current assets / Total current liabilities 1.16 1.00 0.30 Total equity / Total assets, % 24.6% (1.9%) (78.1%) Net financial debt / Total assets, % 55.7% 71.3% 152.6% Net financial debt / EBITDA 1.41 2.40 3.60

Source: the Company, IFRS Financial Statements

(*) unaudited (**) EBITDA = Earnings before interest, taxes, depreciation and amortization. EBITDA is included as a supplemental item, since the Management believes that EBITDA, when considered in conjunction with cash flows from operating, investing and financing activities, may provide useful information. EBITDA is not an indicator of operating performance calculated in accordance with the IFRS and should not be considered as a substitute for operating profit, net income, cash flow from operations or other profit/loss or cash flow data determined in accordance with the IFRS. It should be noted that EBITDA is not a uniform or standardized measure and the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself provides no grounds for comparison with other companies. EBITDA is calculated by the Company as operating profit excluding depreciation and amortization and revaluation of aircraft recognized in net profit.

The structure of the Group's financial interest bearing liabilities (excluding trade payables) of the Group is presented in the table below.

Table 53. The structure of the Group's financial liabilities (USD'000)

As at 31 December Item 2012 2011 2010 Non-current borrowings and finance lease liabilities 34,840 43,145 56,432 Borrowings from related parties – – 10,055 Bank borrowings 21,427 17,680 24,329 Finance lease liabilities 13,413 25,465 22,048 Current borrowings and finance lease liabilities 16,005 12,650 14,248 Borrowings from related parties – – 6,123 Bank borrowings 13,807 6,579 3,745 Finance lease liabilities 2,198 6,071 4,380 Total financial liabilities 50,845 55,795 70,680

Source: IFRS Financial Statements

The total financial liabilities of the Group as of 31 December 2012 were USD 50.8 million, consisting of the non-current financial liabilities of USD 34.8 million and the current financial liabilities of USD 16.0 million. The bank borrowings of the Group as of 31 December 2012 of USD 34.6 million were received with a floating interest rate based on 6 months LIBOR and denominated in the US dollars. The total liability of the Group under finance lease contracts amounted to USD 15.6 million as of 31 December 2012. The finance lease liabilities are with variable interest rate based on 6 months LIBOR and denominated in USD. The assets acquired by the Group under finance lease contracts consisted of 6 Bombardier CRJ200 aircraft as at 31 December 2012. As of 31 December 2012, aircraft were pledged to banks as collateral for the bank borrowings. The breakdown of assets pledged to secure the bank borrowings of the Group is presented in the table below.

Table 54. The breakdown of assets pledged to secure the bank borrowings of the Group (USD'000)

As at 31 December Item 2012 2011 2010 Aircraft 21,944 17,207 18,180 Total assets pledged 21,944 17,207 18,180

Source: IFRS Financial Statements

For all loans granted to the Group by financial institutions, the aircraft purchased with these granted funds are pledged as collateral. These amounts of collateral reflect the market values of the aircraft in any given period. As of December 2012 the market value of pledged aircraft was USD 21.9 million, in previous years 2011 and 2010 the values were USD 17.2 million and USD 18.2 million respectively.

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In addition, according to loan agreement with one bank signed in 2012, the Group should maintain certain debt / EBITDA ratio and the Company should maintain certain capital ratio (equity / assets). The Company and the Group complied with these requirements as at 31 December 2012. The breakdown of financial liabilities by currencies is illustrated in the table below.

Table 55. The breakdown by currencies of the Group's interest bearing financial liabilities (excluding trade payables) (USD'000)

As at 31 December Currency 2012 2011 2010 USD 50,845 55,795 54,485 LTL – – 16,195 Total 50,845 55,795 70,680

Source: IFRS Financial Statements

The table below summarizes the maturity, outstanding balances and average interest rates pertaining to the Group's bank borrowings and finance lease liabilities.

Table 56. The breakdown of the Group's bank borrowings and finance lease liabilities (USD'000)

As at 31 December 2012 Outstanding balance Maturity Reference rate Bank borrowings 35,234 Bank A 18,879 August 2015 6M LIBOR Bank B 9,220 July 2015 6M LIBOR Bank C 7,134 December 2013 6M LIBOR Finance lease liabilities 15,611 Bank D 15,611 May 2017 6M LIBOR Average interest rate 6.47%

As at 31 December 2011 Outstanding balance Maturity Reference rate Bank borrowings 24,259 Bank C 11,668 February 2014 6M LIBOR Bank B 11,302 July 2015 6M LIBOR Bank A 1,288 August 2014 6M LIBOR Finance lease liabilities 31,536 Bank A 22,994 August 2014 6M LIBOR Bank D 8,542 December 2016 6M LIBOR Average interest rate 5.85%

As at 31 December 2010 Outstanding balance Maturity Reference rate Bank borrowings 28,074 Bank B 13,413 July 2015 6M LIBOR Bank C 12,820 February 2014 6M LIBOR Bank A 1,841 August 2014 6M LIBOR Finance lease liabilities 26,428 Bank A 26,428 August 2014 6M LIBOR Average interest rate 6.00%

Source: the Company, unaudited

12.7 Analysis of Capital Resources, Borrowing Requirements and Funding Structure as at 31 March 2013 The total assets of the Group as of 31 March 2013 were USD 90.9 million (a decrease by 1.1% compared to 31 December 2012). Of the above, current assets as of 31 March 2013 formed 22.8% (USD 20.7 million) with the remaining 77.2% (USD 70.2 million) in non-current assets. In turn, the total assets of the Group as of 31 December 2012 were USD 92.0 million. Of the above, current assets formed 27.2% (USD 25.0 million) with the remaining 72.8% (USD 67.0 million) in non-current assets as of 31 December 2012. Equity and total liabilities financed 26.4% and 73.6% respectively of the Group's total assets as at 31 March 2013.

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Working capital (calculated as the difference between current assets and current liabilities) of the Group as at 31 March 2013 totalled to USD 2.7 million (a decrease in amount of USD 702 thousand compared to 31 December 2012). The breakdown of capital resources and funding structure of the Group is presented in the table below.

Table 57. Highlights of capital resources and funding structure of the Group, related ratios (USD'000)

As at Item 31 March 2013 31 December 2012 (unaudited) Total assets 90,917 91,960 Total non-current assets 70,180 66,989 Total current assets 20,737 24,971 Total equity 24,011 22,600 Total non-current liabilities 48,905 47,827 Total current liabilities 18,001 21,533 Net financial debt 52,724 51,250 Total financial debt 50,588 50,845 Non-current borrowings (including financial lease obligations) 35,808 34,840 Current borrowings (including financial lease obligations) 14,780 16,005 Security deposits received net 11,505 11,520 Non-current financial loans receivable(*) (2,927) (2,150) Current financial loans receivable(*) (32) (884) Cash and cash equivalents (6,410) (8,081) EBITDA(*) (**) 4,757 36,430 Related ratios:(*) Total current assets / Total current liabilities 1.15 1.16 Total equity / Total assets, % 26.4% 24.6% Net financial debt / Total assets, % 58.0% 55.7% Net financial debt / EBITDA 11.08 1.41

Source: the Company, Consolidated Interim Financial Information, IFRS Financial Statements

The structure of the Group's financial interest bearing liabilities (excluding trade payables) of the Group is presented in the table below.

Table 58. The structure of the Group's financial liabilities (USD'000)

As at Item 31 March 2013 31 December 2012 (unaudited) Non-current borrowings and finance lease liabilities 35,808 34,840 Bank borrowings 20,331 21,427 Finance lease liabilities 15,477 13,413 Current borrowings and finance lease liabilities 14,780 16,005 Bank borrowings 12,204 13,807 Finance lease liabilities 2,576 2,198 Total financial liabilities 50,588 50,845

Source: Consolidated Interim Financial Information, IFRS Financial Statements

The total financial liabilities of the Group as of 31 March 2013 were USD 50.6 million, consisting of the non-current financial liabilities of USD 35.8 million and the current financial liabilities of USD 14.8 million.

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The bank borrowings of the Group as of 31 March 2013 in a total amount of USD 32.5 million were received with a floating interest rate based on 6 months LIBOR and denominated in the US dollars. The total liability of the Group under finance lease contracts amounted to USD 18.1 million as of 31 March 2013. The finance lease liabilities were with variable interest rate based on 6 months LIBOR and denominated in USD. The assets acquired by the Group under finance lease contracts consisted of 7 Bombardier CRJ200 aircraft as at 31 March 2013. As of 31 March 2013, aircraft were pledged to banks as collateral for the bank borrowings. The breakdown of assets pledged to secure the bank borrowings of the Group is presented in the table below.

Table 59. The breakdown of assets pledged to secure the bank borrowings of the Group (USD'000)

As at Item 31 March 2013 31 December 2012 (unaudited) Aircraft 18,998 21,944 Total assets pledged 18,998 21,944

Source: Consolidated Interim Financial Information, IFRS Financial Statements

For all loans granted to the Group by financial institutions, the aircraft purchased with these granted funds are pledged as collateral. These amounts of collateral reflect the book values of the aircraft in any given period. As of 31 March 2013 the book value of pledged aircraft was USD 19 million, whereas on 31 December 2012 the book value was USD 21.9 million. The breakdown of financial liabilities by currencies is illustrated in the table below.

Table 60. The breakdown by currencies of the Group's interest bearing financial liabilities (excluding trade payables) (USD'000)

As at Currency 31 March 2013 31 December 2012 (unaudited) USD 50,588 50,845 Total 50,588 50,845

Source: Consolidated Interim Financial Information, IFRS Financial Statements

The table below summarizes the maturity, outstanding balances and average interest rates pertaining to the Group's bank borrowings and finance lease liabilities.

Table 61. The breakdown of the Group's bank borrowings and finance lease liabilities (USD'000)

As at 31 March 2013 Outstanding balance Maturity Reference rate Bank borrowings 32,535 Bank A 17,247 August 2015 6M LIBOR Bank B 9,144 July 2015 6M LIBOR Bank C 6,144 December 2013 6M LIBOR Finance lease liabilities 18,053 Bank D 18,053 May 2017 6M LIBOR Average interest rate 6.76%

Source: the Company, unaudited

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12.8 Analysis of Cash Flows for the Years Ended 31 December 2012, 2011 and 2010 The following table summarizes the consolidated cash flows of the Company and its Subsidiaries.

Table 62. Selected data from the consolidated statements of cash flow (USD'000)

Year ended 31 December Item 2012 2011 2010 Cash and cash equivalents at the beginning of the year 13,646 892 2,062 Net cash generated from operating activities 17,512 24,301 10,749 Cash flow generated from (used in) operating activities before changes in working capital and income tax and interest paid 35,340 20,735 22,085 Changes in working capital (14,012) 7,510 (7,860) Income tax and interest paid (3,816) (3,944) (3,746) Net cash used in investing activities (9,222) (1,369) (1,539) Net cash used in financing activities (13,854) (10,178) (10,110) Net increase (decrease) in cash and cash equivalents (5,564) 12,754 (1,170) Cash and cash equivalents at the end of the year 8,081 13,646 892

Source: the Company, IFRS Financial Statements

Cash flow from operating activities before changes in working capital and income tax and interest paid decreased slightly from USD 22.1 million in 2010 to USD 20.7 million in 2011 and then increased to USD 35.3 million in 2012. Growth in 2012 resulted from the increase in lease proceeds and the proceeds from aircraft sales transactions. Working capital changes influenced the level of net cash generated from operating activities in different manner throughout the last three years. In 2010 the impact was negative in the amount of USD 7.9 million, resulting mostly from a significant decrease in trade and other payables, which was mainly due to capitalizing of payables to related parties into the share capital of the Company. In 2011 the change in working capital was positive in an amount of USD 7.5 million as a result of an increase in the security deposits (received as a result of more aircraft on lease) as well as increase of advances, received from clients in the course of aircraft sale transactions. In 2012 changes in working capital were negative at the level of USD 14.0 million, which was mainly a result of increase in trade and other receivables, which was attributable to larger scale of operations of the Group and a decrease in level of advances received. As a result of the negative contribution of changes in working capital, the level of net cash generated from operating activities in 2012 decreased from USD 24.3 million in 2011 to USD 17.5 million. Net cash used in investing activities was negative from 2010 to 2012, corresponding to the expansion of the Group's fleet. Apart from the fleet investments, the cash flow used in investing activities was influenced by USD 3.2 million of loans repaid to the Company in 2011 and USD 1.2 million of proceeds mostly from sale of two engines in 2012. Net cash used in financing activities amounted to USD 10.1 million, USD 10.2 million and USD 13.9 million, in 2010, 2011 and 2012 respectively. It mostly reflected repayments of borrowings and finance lease payments over the last years. As a consequence the abovementioned changes, the net change in cash and cash equivalents in 2010, 2011 and 2012 amounted to negative USD 1.2 million and positive USD 12.8 million and negative USD 5.6 million respectively.

12.9 Analysis of Cash Flows for the Three Months Ended 31 March 2013 and 2012 The following table summarizes the consolidated cash flows of the Company and its Subsidiaries.

Table 63. Selected data from the consolidated interim statements of cash flows (USD'000)

3monthsended31March Item 2013 2012 (unaudited) (unaudited) Cash and cash equivalents at the beginning of the year 8,081 13,646 Net cash generated from operating activities 3,727 405 Cash flow generated from (used in) operating activities before changesinworkingcapital and income tax and interest paid 4,889 8,528 Changes in working capital (326) (7,181) Income tax and interest paid (836) (942) Net cash generated from (used in) investing activities 103 (3,134) Net cash used in financing activities (5,501) (3,563) Net increase in cash and cash equivalents (1,671) (6,292) Cash and cash equivalents at the end of the period 6,410 7,354

Source: the Company, Consolidated Interim Financial Information

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Cash flow from operating activities before changes in working capital and income tax and interest paid decreased by 42.7% from USD 8.5 million for the three month period ended 31 March 2012 to USD 4.9 million for the same period in 2013. This decrease resulted from the lack of aircraft trade transactions. The working capital in the three month period ended 31 March 2013 was negative in the amount of USD 326 thousand, as a result of a decrease in trade and other payables, which was mainly attributable to aircraft maintenance services purchased during the period under review. In the three months ended 31 March 2012 changes in working capital were negative at the level of USD 7.2 million, which was mainly as a result of increase in trade and other receivables, which was mainly attributable to largerscaleofoperationsoftheGroup.Asaresult of contributions of changes in working capital, the level of net cash generated from operating activities in the period under review in 2013 was in the amount of USD 3.7 million and USD 405 thousand in the three month period ended 31 March 2012. Net cash generated from investing activities has remained on a low level due to lack of investment into any new aircraft in the three month period ended 31 March 2013, as opposed to significant investments made in the three month period ended 31 March 2012. The cash flow used in investing activities was mainly influenced by USD 132 thousand of loans repaid to the Company in the period under review in 2013 along with USD 27 thousand of loans granted by the Company. Net cash used in financing activities amounted to USD 5.5 million and USD 3.6 million in the three months ended 31 March 2013 and 2012 respectively. The major event that influenced the cash flow from financing activities was the payment of dividends to the shareholders of the Company in the amount of USD 2 million in the three month period ended 31 March 2013. Aside from that the net cash amount reflected repayments of borrowings and finance lease payments. As a consequence the abovementioned changes, the net change in cash and cash equivalents in the three month period ended 31 March 2013 and the same period in 2012 amounted to negative USD 1.7 million and negative USD 6.3 million respectively.

12.10 Analysis of Investments for the Years Ended 31 December 2012, 2011 and 2010 The information in this Section presents an overview of the Group's investments in non-current tangible assets (property, plant and equipment) during the years ended 31 December 2012, 31 December 2011 and 31 December 2010.

Intangible Assets, Property, Plant and Equipment The breakdown of the Group's investments (additions) in property, plant and equipment is presented in the table below.

Table 64. Acquisitions of property, plant and equipment by the Group (USD'000)

Year ended 31 December Item 2012 2011 2010 Aircraft 20,085 11,470 254 Engines 650 1,549 – Capitalized maintenance expenses 2,104 – – Other long term assets 741 Total 22,846 13,023 255

Source: the Company, unaudited

The vast majority of investments of the Group relate to the acquisition of aircraft. The details on aircraft transactions executed during the years 2012, 2011 and 2010 are presented in Section 10.4 Aircraft Fleet. Capitalized maintenance expenses relate to the amounts reimbursed to lessee's from supplemental rent collected by the Group to cover the cost of certain maintenance tasks for which the supplemental rent was paid by lessees pursuant to aircraft lease agreements.

12.11 Analysis of Investments for the Three Months Ended 31 March 2013 The information in this Section presents an overview of the Group's investments in non-current tangible assets (property, plant and equipment) for the three months ended 31 December 2013.

Intangible Assets, Property, Plant and Equipment The breakdown of the Group's investments (additions) in property, plant and equipment is presented in the table below.

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Table 65. Acquisitions of property, plant and equipment by the Group (USD'000)

3monthsended Year ended Item 31 March 2013 31 December 2012 Aircraft 3,786 20,085 Engines – 650 Landing gear 120 – Capitalized maintenance expenses 524 2,104 Other long term assets 67 Total 4,436 22,846

Source: the Company, unaudited

The vast majority of investments of the Group related to the acquisition of aircraft. Capitalized maintenance expenses related to the amounts reimbursed to lessee's from supplemental rent collected by the Group to cover the cost of certain maintenance tasks for which the supplemental rent was paid by lessees pursuant to aircraft lease agreements.

12.12 Key Forecasts of Operating and Financial Data

Basis for preparation The Prospective Financial Information in this Section of the Prospectus has been prepared by the Management of the Company on a basis consistent with the accounting policies adopted by the Group in the preparation of the IFRS Financial Statements. The Company has compiled the Group's financial outlook for the year 2013 in May 2013. The most material factors having an effect on projected 2013 financials are the further development of aircraft lease activities and the expansion of aircraft trade transactions. Taking into account the existing and future projects that are currently being developed, the Group is forecasting the fleet size of aviation assets on lease to reach 16 aircraft and 2 engines by 31 December 2013. The main assumptions are the following: • Lease rentals in respect of new leases are based on current market lease rates as evaluated by the Management; • Rates of supplemental maintenance rent in respect of new leases are based on the average maintenance costs of maintenance tasks for which supplemental rent is collected; • The average lease term of new leases is 3 years; • The forecasted utilization (i.e. Flight Hours flown and Flight Cycles accumulated) of current aircraft on lease is based on historical utilization of particular aircraft; • The forecasted utilization of aircraft in new leases is based on standard market utilization of these particular aircraft as evaluated by the Management. The forecasted change in fair value of aircraft at the year end is assumed to be equal to the decline in carrying value of aircraft as a result of depreciation, i.e. no significant change in market prices of aircraft is assumed. In regards to aircraft trading, the Group forecasts that it will engage in 9 aircraft purchase/sale transactions. In addition the Group forecasts to sell 3 aircraft from its current fleet following the expiry of the leases. The Management assumes the sales of existing aircraft to yield a conservative gain of USD 0.5 million. In regards to other factors influencing the results of operations of the Group the main assumptions are the following: • Forecasted operating expenses of the Group are based on inflation adjusted historical costs as of the year ended 31 December 2012; • Management does not assume any significant changes in financial income/costs as compared with the year ended 31 December 2012; • Forecasted income tax expense is based on the effective tax rate of 15% (current profit tax rate in Lithuania). Assumptions about factors which the Group's management can influence are limited to decisions on either pursuing or rejecting forecasted lease agreements or trade transactions. The Group's management believes that it would be able to achieve forecasted results due to the following reasons: • Advanced stages of negotiation for forecasted lease contracts; • Availability of target aircraft on the market for trade transactions; • Advanced stages of negotiation for forecasted aircraft sale contracts. Assumptions about factors which are primarily outside the Group's management influence relate to: • Prices of aircraft available on the market, although to certain degree the management can have some influence on negotiating the final price;

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• Decision to sell the aircraft by the seller due to reasons such as offered price, delivery dates or other; • Number of aircraft trading opportunities available on the market; • The fair market value of the Group's aircraft portfolio as of 31 December 2013 and the revaluation effect on the Group's profit for the year; • Currency exchange rate fluctuations. Also, the following assumptions were used to compile the forecasted results: • The Group's management assumes that newly acquired aircraft both for lease and trade purposes will require certain technical modifications to meet the requirements set forth by the clients and/or regulators of a particular region of operations. The expected costs of these technical modifications based on Group's past experience are incorporated in the forecasted financials. • The forecasted purchase prices of the aircraft are based on most recent negotiations with aircraft sellers. Key financial projections are summarized in the table below.

Table 66. Key financial projections, USD'000

Year ended Year ended 31 December 2012 31 December 2013 – Actual –Forecast Revenue 60,242 57,049 Profit for the year 19,603 19,605 EBITDA* 36,430 38,343

* EBITDA = Earnings before interest, taxes, depreciation and amortization. EBITDA is included as a supplemental item, since the Management believes that EBITDA, when considered in conjunction with cash flow from operating, investing and financing activities, may provide useful information. EBITDA isnot an indicator of operating performance calculatedinaccordancewiththeIFRSandshouldnotbeconsidered as a substitute for operating profit, net income, cash flow from operations or other profit/loss or cash flow data determined in accordance with the IFRS. It should be noted that EBITDA is not a uniform or standardized measure and the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself provides no grounds for comparison with other companies. EBITDA is calculated by the Company as operating profit excluding depreciation and amortization and revaluation of aircraft recognized in net profit.

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AviaAM Leasing AB

XIII ADMINISTRATIVE AND MANAGEMENT BODIES AND SENIOR MANAGEMENT

13.1 Management Structure The Company has a three-tier management system, i.e. the Supervisory Council, the Management Board and the Manager of the Company (the General Manager). The Supervisory Council is a collegial supervisory body, which is responsible for supervising the activities of the Company and its management bodies, the appointment and removal of the members of the Management Board, submitting its comments and proposals to the General Meeting on the Company's operating strategy, sets of financial statements, drafts of profit/loss appropriation, the reports of the Company, the activities of the Management Board and the General Manager, submitting proposals to revoke decisions of the Management Board or the General Manager, etc. The Management Board is a collegial management body, which is responsible for the strategic management of the Company, the appointment and removal of the Manager of the Company (the General Manager), calling the General Meetings, adoption of other corporate decisions which are economically feasible for the Company, etc. The General Manager is responsible for the day-to-day management of the Company and enjoys the exclusive right of representing the Company vis-`a-vis third parties. In addition, the Company employs several Key Executives: the Deputy General Manager and the Executive Director. As the Company is a holding entity with no extensive business operations, there are no other key executives apart from the General Manager and the ones named herein. All the employees of the Company are directly subordinated and report to the General Manager. The internal management structure of the Company is indicated below.

Figure 14. Internal management structure of the Company

Supervisory Council

Management Board

General Manager

Deputy General Manager Executive Director

13.2 Members of the Supervisory Council, the Management Board, Key Executives

13.2.1 Supervisory Council According to the Articles of Association the Supervisory Council is comprised of three members elected for the tenure of four years. In order to ensure the direct participation of the Company's investors in the Supervisory Council, current shareholders of the Company expressed their intention to replace one of the members of the Supervisory Council with the candidate proposed by the major Institutional Investors. Thus, in case the major Institutional Investors will propose their candidate to the Supervisory Council, the Company intends to include the relevant question on the agenda of the first General Meeting to be held after the successful Offering and Admission.

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The Supervisory Council has the Chairman, elected by the Supervisory Council from among its members. The business address for all members of the Supervisory Council is AviaAM Leasing AB, Smolensko str. 10, LT-03201 Vilnius, Lithuania. The list of the members of the Supervisory Council is presented below.

Table 67. Members of the Supervisory Council

Name Position in the Company Antanas Petrošius Chairman of the Supervisory Council Tomas Mokrikas Member of the Supervisory Council Diuginta Balèiun- ÿe Member of the Supervisory Council

Antanas Petrošius. Antanas Petrošius possesses profound professional experience and expertise, gained in the international banking, finance advisory, derivative and investment segments over the past 13 years. Antanas Petrošius started his carrier in 2001 when he joined Credit Suisse, a Switzerland-based multinational financial services company, where he spent 10 years and had been promoted to various top executive positions, including: the CEO of Credit Suisse Kazakhstan; Co-Head of Investment Banking Russia/CIS. In 2011 Antanas Petrošius joined UBS, the largest Swiss global financial services company, as the Deputy CEO for Russia&CIS and Head of Investment Banking Russia&CIS. He obtained a bachelor's degree in Public Finance at Vilnius University, and a master's degree in International Economics and Finance at GSIEF, Brandeis University. Antanas Petrošius does not participate in the capital of any legal entities. Tomas Mokrikas. Tomas Mokrikas holds comprehensive executive experience in investment, retail, food, pharmacy, real estate, beauty, household, and many other business segments. Tomas Mokrikas started his professional career in 1994 as the General Director at Travonas UAB, the first Lithuanian reseller of Avon products. In 1999 he became the Sales Director at Avon Cosmetics, the official representative of Avon Products Inc. in Lithuania. In 2004 Tomas Mokrikas joined the pharmacy business, while holding various executive positions in Lithuanian and Polish retail pharmacy chains. During the 2006–2008 period he gained executive experience in investment, retail and food industries, while being a member of the Board at EVA Grupeÿ UAB, the chairman of the board at Aibÿe Baltic UAB, the deputy general manager at Vilniaus Pergalÿe AB and other. In 2008 Tomas Mokrikas was appointed as the Director of an investment company TB Investicija UAB. Until March 2011 he was also holding the managerial positions in real estate companies Stirnu² projektas UAB and Latako projektas UAB. Since 2010 Tomas Mokrikas is a Chairman of the Supervisory Council of a Polish confectionery maker ZPC MIESZKO S.A. At the moment Tomas Mokrikas also serves as the Director of NG Investicija UAB and Solingas UAB, as well as a Chairman of the Supervisory Council at POSTI and member of Supervisory Council at CENOS Sp. z.o.o. He graduated from Vilnius University in Economics in 1995. Tomas Mokrikas owns 50 percent of shares at Hoteksas UAB and is also a sole shareholder in Solingas UAB. Diuginta Balèiun- ÿe. Diuginta Balèiun- ÿe has a considerable legal experience. She gained her professional experience at the law firm Broda-Warnke-Schartner in Berlin (in 2003), in the Chamber of Industry and Commerce in Berlin (in 2005), at the law firm N. Motiejunien- ÿe, M. Pukas- and Partners (Rödl & Partner UAB) in Vilnius, Lithuania (in 2006) and in the Political Unit of Representation of the European Commission in Berlin (in 2006). Diuginta Balèiun- ÿe worked as an associate lawyer at the law firm Bernotas and Dominas GLIMSTEDT in Vilnius (2006–2008) and as an associate lawyer at the law firm RAIDLA LEJINS & NORCOUS in Vilnius (2009–2010) and since 2010 she works as a lawyer at the law firm of Diuginta Balèiun- ÿe. Diuginta Balèiun- ÿe has a special knowledge in mergers and acquisitions, real estate law, bankruptcy and restructuring. Diuginta Balèiun- ÿe takes memberships in various non-political and non-profit organisations: she was member of the Diplomat club "Willkommen in Berlin" at the Ministry of Foreign Affairs, Berlin (2004–2005), member of the Association of the family members of Lithuanian diplomats (2006 – present), member of the Association "Alumni" at the Vilnius University, Faculty of Law (2006 – present), member of Lithuanian Countryside Tourism Association (2009 – present), member of the Lithuanian Young Bar Association (2007 – present), member of the Lithuanian Bar Association (2010 – present). Moreover, since 2010 Diuginta Balèiun- ÿe is a member of the Audit Committee, as well as of the Nomination and Remuneration Committee of the Supervisory Council of Avia Solutions Group AB, and a member of the Supervisory Council of Agrowill Group AB. Diuginta Balèiun- ÿe graduated from the Vilnius University, Faculty of Law in 2004 and obtained a Master of German and European Law and Legal Practice (M.LL.P.) in Humboldt University, Law faculty, in Berlin, Germany. Diuginta Balèiun- ÿe owns 49 percent of shares at Panevÿeio HIDROPLANAS, UAB.

13.2.2 Management Board The Company's Management Board is comprised of five members elected for the tenure of four years. The Management Board has the Chairman elected by the Management Board from among its members. The business address for all members of the Management Board is AviaAM Leasing AB, Smolensko str. 10, LT-03201 Vilnius, Lithuania. The list of the members of the Management Board is presented below.

Table 68. Members of the Management Board

Name Position in the Company Gediminas iemelis Chairman of the Management Board Justinas Gilys Member of the Management Board Aurimas Sanikovas Member of the Management Board Linas Dovydÿenas Member of the Management Board Gediminas Šiaudvytis Member of the Management Board

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Gediminas iemelis. Gediminas iemelis has a unique management and advisory experience. In 2008, under the request of the Prime Minister of the Republic of Lithuania he gave practical proposals on anti-crisis actions to be taken. He started his carrier in 1999 as the assistant manager of the Vindication and Fraud Division in Lietuvos taupomasis bankas, AB (currently, Swedbank, AB), the Department of Problematic Assets and Vindication (1999–2001). He acted as the General Manager of vilgsnis iš arèiau UAB (2001–2005) (currently named Creditinfo UAB), which was engaged mainly in debt recovery and credit risk management, the General Manager of IA Valda AB (2002–2006) and the General Manager of brokerage firm Finhill UAB FM²I (in 2007). Gediminas iemelis is a shareholder and a member of the Management Board in IA Valda AB and since 2008 he acts as the Manager of the Development Department. Since 2005 Gediminas iemelis also acts as the Manager in East Mining Group UAB, since 2006 – as the General Manager of Eastern Agro Holdings UAB. Since 2010 until now Gediminas iemelis presides over the Management Board of Avia Solutions Group AB, since 2011 until now takes the post of the Chairman of the Management Board at AviaAM Leasing AB. Moreover, Gediminas iemelis is a member of the Supervisory Council in Agrowill AB since 2010. Gediminas iemelis obtained a bachelor's degree at the Faculty of Business Management in the Vilnius Gediminas Technical University, Lithuania in 1999 and a master's degree at the Faculty of Law in the Mykolas Romeris University, Lithuania in 2006. He has also finished the Program for Leadership Development (PLD) in the Harvard Business School, Boston, MA, U.S.: Accelerating the Careers of High-Potential Leaders. Gediminas iemelis is also one of the initiators of establishment of the Association of Aviation Companies (www.aia.lt) (in 2009). Gediminas iemelis does not have any securities, shares, etc. in other companies in addition to his participation in the authorised capital of the Company and other companies, as mentioned in Section 13.5 Conflicts of Interest. Justinas Gilys. Justinas Gilys has over 10 years of experience in finance specializing in the fields of insurance and aviation. He started his professional carrier as client manager in 2001 in Aon Lietuva UAB (currently named Aon Baltic UAB), the largest insurance broker in Lithuania. In 2003 Justinas Gilys joined Lithuanian Airlines AB where he started his career in the aviation sector as a risk manager. In 2006 he took the position of a Head of Management Accounting. Justinas Gilys joined the business of aircraft leasing in 2007 when he took a position of Chief Financial Officer in Avia Asset Management AB (currently named AviaAM B04 UAB). Eventually he rose to the ranks of Managing Director in 2009 and since 2011 occupies the position of Executive Director in AviaAM Leasing AB. Since 2011 Justinas Gilys also takes the Management Board membership role at AviaAM Leasing AB. Justinas Gilys obtained his bachelor's degree in economics at Vilnius University and finished the MSc studies in economic analysis and planning in the same university. Justinas Gilys does not participate in the capital of any legal entities. Aurimas Sanikovas. Aurimas Sanikovas started his carrier as an audit associate in PricewaterhouseCoopers Lithuania in 2001. In 2007 his last position held at the company was of a manager. He performed supervision and execution of audit engagement performed in accordance with the ISA and US GAAP. From 2007 he acts as the Chief Financial Officer of Avia Solutions Group AB and its predecessors. Currently he also takes board membership roles in Avia Solutions Group AB from 2010 and AviaAM Leasing AB from 2011 and has supervisory membership role in Agrowill Group AB from 2010. Aurimas Sanikovas also acted as a member of the Management Board of Avia Asset Management AB (currently named AviaAM B04 UAB) (2008–2009), a member of the Management Board of FL Technics AB (2008–2010), a member of the Management Board of Small Planet Airlines Sp. z.o.o. (Poland) (2009–2010), member of the Supervisory Council of Small Planet Airlines AS (Estonia) (2009–2011), member of the Management Board of Ridota AB (2008–2010) and the Director General of Avia Funds Management UAB (currently named AviaAM Leasing AB) (2010–2011). Aurimas Sanikovas obtained his bachelor's and master's degrees in economics at the Faculty of Economics, Vilnius University, Lithuania with an exchange session in the University of Copenhagen. Since 2006 Aurimas Sanikovas is a member of the Association of Chartered Certified Accountants (ACCA). Apart from holding 294,478 Shares in the Company (1.0% of all the Shares) and 11,050 shares in Avia Solutions Group AB (0.2% of all the shares) Aurimas Sanikovas does not participate in the capital of any other legal entities. Linas Dovydenas.ÿ Linas Dovydenasÿ started his carrier in 1995 in Sanitex UAB, Lithuania. He worked for this company for 7 years and his last two positions held at Sanitex UAB were Key Account Manager and Regional Manager Horeca. From 2002 to 2007 he worked for Philip Morris Baltic States. He held the following positions at the company: Supervisor Key Accounts Baltic States, Manager National Sales Estonia, Manager Customer Development Lithuania and Manager National Sales Lithuania. In 2008 Linas Dovydenasÿ joined Avia Solutions Group AB and is the General Manager of the company since then. He also acted as Chairman of the Supervisory Council of Small Planet Airlines AS (Estonia) and was a member of the Management Board in FL Technics AB. Since 2011 Linas Dovydenasÿ carries the duties of the member of the Management Board of AviaAM Leasing AB. In 1997 Linas Dovydenasÿ obtained a bachelor's degree in Business and Business Administration at the Faculty of Economics, Vilnius University, and in 2006 he obtained an executive MBA at the Baltic Management Institute. Apart from holding 441,717 Shares in the Company (1.5% of all the Shares) Linas Dovydenasÿ does not participate in the capital of any other legal entities. Gediminas Šiaudvytis. Gediminas Šiaudvytis is a top-performing senior executive, who has gathered comprehensive experience in both the private and public sectors over the past 20 years. Professional career of Gediminas Šiaudvytis started in the Ministry of Foreign Affairs of the Republic of Lithuania where he worked for over 10 years, having reached the position of the Director of the Consular Department, as well as being honoured with the title of Extraordinary Minister and Plenipotentiary Envoy for his exceptional achievements during his service. In 2004, Gediminas Šiaudvytis joined DAB Foundation and B&S Holding GmbH where he held various executive positions, including: General Manager and Chairman of the Board at Forum Palace, one of the largest business, leisure and sports centres in the Baltic states; General Manager of the Representative Office at Atlas Corporate Service; Regional Director Europe at Vision International People Group Public Limited and others. Since 2012, he also holds the positions of Senior Vice President at Avia Solutions Group AB and Management Board

119 AviaAM Leasing AB member at AviaAM Leasing AB. In 2003 Gediminas Šiaudvytis was granted an Order of Merit: Cross of Knight by H.E. President of the Republic of Lithuania Valdas Adamkus, in 2009 – medalled a Star of Labor of Lithuanian Chamber of Commerce, Industry and Crafts (for achievement in export of Švenèioniu² Vaistaoliu² Fabrikas) by H.E. President of Lithuania Dalia Grybauskaite.ÿ Gediminas Šiaudvytis holds two Master Degrees – one in Management which he gained at Kingston University (with distinction), and another in German Philology and Literature, gained at Vilnius University. Gediminas Šiaudvytis does not participate in the capital of any legal entities.

13.2.3 Key Executives

Table 69. Key Executives

Name Position in the Group Tadas Goberis General Manager of the Company Justinas Gilys Executive Director of the Company Gediminas Šiaudvytis Deputy General Manager of the Company

Tadas Goberis. Tadas Goberis has obtained an exceptional level of experience in the sales and organization management, accumulated during his 15 years of professional activity in IT industry. He started his career as a Sales Manager in 1999 at Baltic Amadeus UAB, the first IT company in Lithuania, providing programming and IT services. In 2001 Tadas Goberis joined Sonex kompiuteriai UAB as a Project Manager, where he supervised and lead large IT projects. Four years later he was appointed as the Director of Tetraneta UAB, a daughter company of Sonex Group, which has provided IT outsourcing services in the market. In 2006 Tadas Goberis joined Hewlett-Packard UAB, the Lithuanian branch of one of the world's leading IT technology vendor, Hewlett-Packard. Over the following two and a half years, Tadas proved to be a true and dedicated sales professional and was subsequently appointed to the position of Sales Director in Lithuania. In 2012, Tadas Goberis was promoted to the position of the Sales Director in the Baltic States thus taking the lead of the entire sales team and organization for the region's three countries. The diverse experience Tadas Goberis has accumulated throughout his successful professional career has lead him to the current position of the Chief Executive Officer at AviaAM Leasing AB, a global aviation company engaged in the aircraft leasing and management business. Tadas Goberis obtained a bachelor's degree in Business Management at Vilnius Gediminas Technical University. Tadas Goberis does not participate in the capital of any legal entities. Information about Justinas Gilys and Gediminas Šiaudvytis is presented in Section 13.2.2 Management Board above.

13.3 Principal Activities Outside the Company of Members of the Management and Supervisory Bodies Information on participation of the members of the Supervisory Council, Management Board and the Key Executives of the Company in the administration, management or supervision of other entities during the last five years (since 2008) is provided below. The table below does not include the positions held within the Company.

Table 70. Principal activities of the members of the Management Board, members of the Supervisory Council and the Key Executives outside the Company

Held Name Entity Position Since Until currently Linas Other companies: Dovydÿenas Small Planet Airlines AS Chairman of the Supervisory Council 2008 2010 No Ridota AB Chairman of the Management Board 2008 2010 No Ridota AB Member of the Management Board 2008 2008 No FL Technics AB Member of the Management Board 2008 2010 No Avia Solutions Group AB incl. General Manager 2008 – Yes predecessors Ridota AB General Manager 2007 2011 No

Held Name Entity Position Since Until currently Gediminas Other companies: iemelis Agrowill Group AB Member of the Supervisory Council 2010 – Yes Avia Solutions Group AB Chairman of the Management Board 2010 – Yes FL Technics AB Chairman of the Supervisory Council 2008 2010 No Ridota AB Chairman of the Supervisory Council 2008 2010 No Ridota AB Member of the Supervisory Council 2008 2008 No IA valda AB Chairman of the Management Board 2008 – Yes

120 AviaAM Leasing AB

Held Name Entity Position Since Until currently Ridota AB Chairman of the Management Board 2007 2008 No Eastern Agro Holdings UAB General Manager (CEO) 2006 – Yes East Mining Group UAB General Manager (CEO) 2005 – Yes Agrowill Group AB Member of the Management Board 2004 2010 No IA valda AB Manager of Development Department 2008 – Yes

Held Name Entity Position Since Until currently Aurimas Other companies: Sanikovas Agrowill Group AB Member of the Supervisory Council 2010 – Yes Avia Solutions Group AB Member of the Management Board 2010 – Yes Small Planet Airlines Sp. z o.o. Member of the Management Board 2009 2010 No Small Planet Airlines AS Member of the Supervisory Council 2008 2011 No FL Technics AB Member of the Management Board 2008 2010 No Ridota AB Member of the Management Board 2008 2010 No Avia Solutions Group AB incl. Chief Financial Officer (CFO) 2007 – Yes predecessors

Held Name Entity Position Since Until currently Justinas Group companies: Gilys AviaAM B01 Executive Director 2011 – Yes AviaAM B02 Executive Director 2011 – Yes AviaAM B03 Executive Director 2011 – Yes AviaAM B04 Executive Director 2007 – Yes AviaAM B05 Executive Director 2011 – Yes AviaAM B06 Executive Director 2011 – Yes AviaAM B07 Executive Director 2011 – Yes

Held Name Entity Position Since Until currently Gediminas Other companies: Šiaudvytis AviaAM Leasing AB Deputy General Manager 2012 – Yes Domeu UAB Co-owner 2011 – Yes Vision International People Group Public Limited Regional General Manager Europe 2009 2011 No (Switzerland-Cyprus) Vision E-shop GmbH General Manager (CEO) 2009 2011 No DAB Foundation (Austria) General Manager (CEO) 2008 2011 No Švenèioniu²vaistaolÿes UAB Chairman of the Management Board 2008 2011 No Forumo rumai- UAB Chairman of the Management Board 2007 2011 No Forum Fitness UAB Chairman of the Management Board 2007 2011 No Vision DEM 4 Laboratory General Manager of Representative Office 2007 2011 No Forumo rumai- UAB General Manager (CEO) 2004 2011 No General Manager of Consular Department, Ministry of Foreign Affairs of Extraordinary Minister and Plenipotentiary Envoy 1991 2011 No the Republic of Lithuania at Ministry of Foreign Affairs of Lithuania

Held Name Entity Position Since Until currently Antanas Other companies: Petrošius Latest position held – Deputy CEO for Russia UBS AG 2011 2013 No and CIS Latest position held – Co-Head of Investment Credit Suisse Group AG 2001 2011 No banking for Russia and CIS

121 AviaAM Leasing AB

Held Name Entity Position Since Until currently Tomas Other companies: Mokrikas Cenos Sp. z.o.o. Member of the Supervisory Council 2012 – Yes Posti LT UAB Chairman of the Supervisory Council 2011 – Yes Solingas UAB General Manager (CEO) 2011 – Yes NG Investicija UAB General Manager (CEO) 2011 – Yes Eva GrupÿeUAB Member of the Management Board 2011 – Yes ZPC Mieszko S.A. Chairman of Supervisory Council 2010 – Yes Vilniaus PergalÿeAB Member of the Management Board 2009 2010 No Stirnu²projektasUAB General Manager (CEO) 2009 2011 No Latako Projektas UAB General Manager (CEO) 2009 2011 No TB Investicija UAB General Manager (CEO) 2008 2011 No Vilniaus PergalÿeAB Deputy CEO 2008 2008 No Vilniaus PergalÿeAB Member of the Supervisory Council 2007 2008 No Kapitalis UAB General Manager (CEO) 2007 2013 No New Retail LV UAB Chairman of the Management Board 2007 2008 No (AibÿeBalticUAB) Travonas UAB Member of the Management Board 1994 2010 No Travonas UAB General Manager (CEO) 1994 2010 No

Held Name Entity Position Since Until currently Diuginta Other companies: - ÿ Balèiune Avia Solutions Group AB Member of the Supervisory Council 2010 – Yes Agrowill Group AB Member of the Supervisory Council 2010 – Yes Diuginta Balèiun- ÿe Law Firm Attorney of Law 2010 – Yes

Held Name Entity Position Since Until currently Tadas Other companies: Goberis Hewlett Packard UAB Latest position held – Sales Director 2008 2013 No

Source: the Company

13.4 Declarations To the best knowledge of the Company, for the last five years neither any member of the Supervisory Council, Management Board nor any Key Executive of the Company (i) was convicted for any fraud offences, (ii) was associated with any bankruptcies, receiverships or liquidations in their capacity as members of the administrative, management or supervisory bodies, partners with unlimited liability, founders or senior managers, or (iii) was subject to any official public incrimination and/or sanctions by statutory or regulatory authorities (including designated professional bodies) or was disqualified by a court from acting as a member of the administrative, management or supervisory bodies of the Company or from acting in the management or conduct of the affairs of any entity.

13.5 Conflicts of Interest Mr Gediminas iemelis, Mr Linas Dovydenas,ÿ Mr Aurimas Sanikovas (members of the Management Board of the Company) and Mr Tadas Goberis (General Manager of the Company) are direct shareholders of the Company, holding 1.1%, 1.5%, 1.0% and 0.5% of Shares respectively. Mr Gediminas iemelis is an indirect shareholder of the Company and has an indirect control thereof through ZIA Valda Cyprus Leasing Ltd. ZIA Valda Cyprus Leasing Ltd., as indicated below, has 58.0% shareholding in the Company and the sole shareholder of ZIA Valda Cyprus Leasing Ltd. is IA Valda AB, 80% shareholding in which is owned by Mr Gediminas iemelis. It is possible that the direct and indirect shareholders of the Company (four of which are members of the Management) may favour their own interests rather than those of the Company.

122 AviaAM Leasing AB

Apart from the above, the Company is not aware of any potential conflict of interests between any duties to the Company of the members of the Supervisory Council, the Management Board or the Key Executives of the Company. Furthermore, none of the members of the Management Board is related to any other member of this body as well as to any other member of the Supervisory Council and/ or the Key Executives by blood or marriage.

13.6 Remuneration and Benefits During the year 2012 the amount of remuneration paid (including any contingent or deferred compensation), and benefits in kind granted to the Management by the Company and its Subsidiaries for services in all capacities to the Company and its Subsidiaries amounted to USD 120 thousand. Furthermore, following the Agreement on Provision of Legal Services, entered with the Attorney of Law Diuginta Balèiun- ÿe, who is also a member of the Supervisory Council, during the year 2012 the Company has paid to this Supervisory Board member a fee for provision of legal services of USD 14 thousand plus VAT of USD 3 thousand, in total USD 17 thousand. The information on the indicated amounts is provided in the table below. Gross amounts which include social security, income and other taxes applicable under legal acts are shown below.

Table 71. Remuneration and benefits paid to Management Board, Supervisory Council and Key Executives by the Company and its Subsidiaries, USD'000

Period Name Position in the Company Amount Year ended Tadas Goberis(*) General Manager – 31 December 2012 Justinas Gilys Executive Director 99 Gediminas Šiaudvytis(**) Deputy General Manager 21 Diuginta Balèiun- ÿe Member of the Supervisory Council 17

Source: the Company, unaudited

(*) Tadas Goberis joined the Company on 16 April 2013. (**) Gediminas Šiaudvytis joined the Company on 30 July 2012.

Other members of the Management Board and the Supervisory Council did not receive any payments from the Company or the Subsidiaries. The Group has not set aside or accrued any amounts to provide pension, retirement or similar benefits to any member of the Supervisory Council, Management Board or Key Executive of the Company. There are no loans granted by the Group to the members of the Supervisory Council, Management Board or the Key Executives of the Company, except for a single loan which is described in detail below. On 25 April 2012 Mr Gediminas iemelis (Chairman of the Management Board) was granted a loan in the amount of USD 700 thousand by AAL Capital Aircraft Holdings. The loan is subject to two percent annual interest rate and is to be repaid by 30 June 2013. AAL Capital Aircraft Holdings assigned its claim to the outstanding loan and accrued interest payable as at 15 March 2013 to Mr Vaidas Barakauskas (the sole shareholder of Indeco: Investment and Development UAB) who took over the debt so assigned against the payment of Mr Gediminas iemelis. According to the respective Agreement on Assignment of Claim Rights, the parties agreed that Mr Vaidas Barakauskas shall pay to AAL Capital Aircraft Holdings the price for transfer of claim rights not later than within 30 days following the sale of 0.9% of the Shares, owned by Mr Gediminas iemelis during this Offering. The parties also agreed that in the event that Mr Gediminas iemelis for any reason fails to sell the Shares during the Offering, Mr Vaidas Barakauskas shall have no obligation to pay to AAL Capital Aircraft Holdings for transfer of claim rights and the Agreement on Assignment of Claim Rights shall be deemed terminated as of the moment when it becomes apparent that Mr Gediminas iemelis shall not sell the Shares during the Offering.

13.7 Board Practices

13.7.1 Term of Office The term of office of the Supervisory Council, the Management Board and the Key Executives of the Company as well as the period during which respective persons hold positions are provided herein below.

Table 72. Tenure of the Management Board, the Supervisory Council and the Key Executives of the Company

In the position Name Position within the Company Since Until Supervisory Council Antanas Petrošius Chairman of the Supervisory Council 1 April 2013 Until the annual General Tomas Mokrikas Member of the Supervisory Council 1 April 2013 Meeting, to be held in 2017 Diuginta Balèiun- ÿe Member of the Supervisory Council 1 April 2013

123 AviaAM Leasing AB

In the position Name Position within the Company Since Until Management Board Gediminas iemelis Chairman of the Management Board 29 May 2012 Justinas Gilys Member of the Management Board 29 May 2012 Until the annual General Aurimas Sanikovas Member of the Management Board 29 May 2012 Meeting, to be held in 2016 Linas Dovydÿenas Member of the Management Board 29 May 2012 Gediminas Šiaudvytis Member of the Management Board 11 January 2013 Key Executives Tadas Goberis General Manager 16 April 2013 Indefinite Justinas Gilys Executive Director 21 March 2011 Indefinite Gediminas Šiaudvytis Deputy General Manager 30 July 2012 Indefinite

Source: the Company

According to the Law on Companies, the tenure of the Supervisory Council and Management Board may not last longer than until the annual General Meeting convened in the last year of the tenure of the respectively Supervisory Council or Management Board. There is no limitation on the number of terms of office a member of the Supervisory Council and Management Board may serve. The Key Executives have employment relations with the Company which are of unlimited duration. Under the Law on Companies the General Manager may be revoked from the position by the Management Board of the Company without any early notice for any cause. Other Key Executives may be dismissed from the Company only on the grounds and following the procedure indicated in the Labour Code of the Republic of Lithuania.

13.7.2 Severance Payments According to the Labour Code of the Republic of Lithuania, those who are employed in any Group company under an employment agreement are entitled to severance payments upon termination of their employment (except for certain termination grounds, such as on one's own will, due to the employee's fault, etc.). Apart from such statutory payments, the employment agreements entered between the members of the Supervisory Council, Management Board and/or Key Executives and respective Group Companies do not provide for any other severance payments or benefits upon termination of such agreements, except for the employment agreement, entered with the General Manager, Mr Tadas Goberis. This agreement foresees, that if it is terminated within 24 months as from signature thereof (i.e. as from 16 April 2013) on the initiative of the Company (and without the fault of the employee), the Company undertakes to pay to Mr Tadas Goberis a severance payment, equal to the average monthly payments for 6 months. The parties also agreed, that this payment shall include any severance payments that the Company would have to pay to the employee upon termination of the employment agreement, following the imperative provisions of the applicable Lithuanian laws.

13.7.3 Compliance with the Corporate Governance Regime The Company complies with the Lithuanian corporate regime established by the Lithuanian law and the Articles of Association. The Shares of the Company are not yet listed on any regulated market and are planned to be listed on the WSE for the first time. The WSE, on which the Shares are planned to be listed, has a corporate governance code, which is the Code of Best Practice for WSE Listed Companies, the most recent version being the Appendix to Resolution No.19/1307/2012 of the Exchange Supervisory Board dated 21 November 2012 (the "WSE Corporate Governance Code"). With respect to the WSE Corporate Governance Code, the "comply or explain" principle is applied. The Company will be obliged to report on each non-compliance together with a justification of such non-compliance and will be obliged to include summary information on non-compliance with the WSE Corporate Governance Code in the annual report. The Company acknowledges the importance of good corporate governance and intends to seek the compliance with the WSE Corporate Governance Code to the extent possible. Especially, the Company intends to be as transparent as it is legally and practically possible using multilingual Company's website. Moreover, the majority members of the Supervisory Council are independent. However, due to, inter alia, differences between Polish and Lithuanian Corporate Law the Company will not comply with the following rules of the WSE Corporate Governance Code: – Rule II.3 and Rule III.9, according to which the Supervisory Council should approve a significant transaction/agreement with a related entity at the request of the Management Board. In accordance with Lithuanian law, the Supervisory Council is not entitled to approve any decisions of the Management Board; – Rule III.8, according to which annex I to the Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) council should apply to the tasks and the operation of the committees of the Supervisory Council. As at the date of this Prospectus, the Supervisory Council has not

124 AviaAM Leasing AB

formed any committee, however due to the limited number of the Supervisory Council members the entire Supervisory Council will act as the particular committee and it will aim to apply the rules indicated in the Commission Recommendation mentioned above; – Rule IV 10, according to which the Company should enable its shareholders to participate in a general meeting using electronic communication means through real-life broadcast of General Meetings and real-time bilateral communication where shareholders may take the floor during a general meeting from a location other than the general meeting. The Company does not enable participation in the general meeting by using electronic communication means through real-life broadcast and real-time bilateral communication. However, the Company does not exclude that such means will be adopted in the future. Furthermore, the Company will not comply with the following recommendations: – Recommendation I.5, according to which the Company should have a remuneration policy and rules of defining the policy. The Company has not adopted such policy, since the Company's group is developing and the number of employees and members of management do not justify implementation of a complex set of rules; – Recommendation I.9, according to which a balanced proportion of women and men in management and supervisory functions should be ensured. Currently, there is only one woman in governing bodies of the Company, Mrs Diuginta Balèiun- ÿe, the member of the Supervisory Council. However, the Company does not exclude that this recommendation will be implemented in the future; – Recommendation I.12, according to which the Company should enable its shareholders to exercise the voting right during a general meeting either in person or through a proxy, outside the venue of the general meeting, using electronic communication means. Currently, the Company does not envisage possibility to enable its shareholders to exercise the voting right during a general meeting outside the venue of the general meeting, using electronic communication means. However, the Company does not exclude that relevant solutions will be introduced in the future. The Company's report as to its compliance with the recommendations in the WSE Corporate Governance Code will be included in the annual report of the Company for the first time for the financial year ending 31 December 2013.

125 AviaAM Leasing AB

XIV EMPLOYEES

14.1 Number of Employees As at 31 March 2013, as at 31 December 2012 as well as at the date of this Prospectus, the number of full-time staff employed by the Group totalled 13, including 2 employees on maternity leave. As at 31 December 2011 the number of full-time staff employed by the Group totalled 12, including 2 employees on maternity leave. As at 31 December 2010 number of full-time staff employed by the Group totalled 9. As at 31 March 2013, as at 31 December 2012 as well as at the date of this Prospectus, the number of full-time staff employed by the Company totalled 3. As at 31 December 2011 the number of full-time staff employed by the Company totalled 2. As at 31 December 2010 number of full-time staff employed by the Company totalled 1. All employees of the Group are employed in Lithuania and are engaged with the primary business of the Group, i.e. aircraft leasing and trading.

14.2 Collective Bargaining No collective agreements are in effect in the Group and the Group does not anticipate any collective bargaining initiatives in any of its companies in the observable future.

14.3 Shareholdings and Stock Options Information on the Shares of the Company, held by the members of the Management and the Supervisory Council is provided in Section 13.5 Conflicts of Interest.

14.4 Arrangements for Involving the Employees in the Capital of the Issuer There are no such arrangements.

126 AviaAM Leasing AB

XV SHAREHOLDERS AND SHARES

15.1 Shareholders of the Issuer prior and after the Offering The authorised capital of the Company at the date of this Prospectus is LTL 29,447,803 and is divided into 29,447,803 ordinary Shares with a par value of LTL 1 each, all of which are fully paid-up. All Shares carry equal voting rights. There are 9 shareholders in the Company at the date of the Prospectus. Two Major Shareholders own 95.0% of the Shares of the Company. The rest 5.0% of the Shares are owned by one legal person, related to the Chairman of the Management Board Mr Gediminas iemelis (IA Valda AB), five natural persons (including four members of the Company's Management) and one legal person related to one of the Major Shareholders – Mesotania Holdings Ltd. (Indeco: Investment and Development UAB, which directly controls Mesotania Holdings Ltd.) The list of the Company's shareholders is provided in Table below.

Table 73. The Shareholders and share capital of the Company as of the date of this Prospectus

Number of shares Percentage of shares No Shareholder Role in the Company's Management and votes owned and votes owned 1 ZIA Valda Cyprus Leasing Ltd. 17,078,622 58.00 2 Mesotania Holdings Ltd. 10,899,858 37.01 3LinasDovydÿenas Member of the Management Board 441,717 1.50 4 Gediminas iemelis Chairman of the Management Board 323,926 1.10 5 Aurimas Sanikovas Member of the Management Board 294,478 1.00 6 Virginija Svilainytÿe 161,963 0.55 7 Tadas Goberis General Manager of the Company 147,239 0.50 8IAValdaAB 60,000 0.20 9 Indeco: Investment and Development UAB 40,000 0.14 Total 29,447,803 100.00

Source: the Company

Mr Gediminas iemelis is also an indirect shareholder of the Company and has an indirect control thereof through ZIA Valda Cyprus Leasing Ltd. ZIA Valda Cyprus Leasing Ltd., as indicated above, has 58.0% shareholding in the Company and the sole shareholder of ZIA Valda Cyprus Leasing Ltd. is IA Valda AB, 80% shareholding in which is owned by Mr Gediminas iemelis. The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change in control of the Company. Also, the Company is not aware of any common control agreements between its shareholders. As of the date of the Prospectus, the Company is not aware of any existing agreements between the shareholders of the Company on the use of voting rights in effect following the completion of the Offering.

Dilution The table below indicate the Issuer's shareholding structure after the Offering:

Table 74. The Shareholders and share capital of the Company after the Offering1

Number of shares Percentage of shares No Shareholder and votes owned and votes owned 1 ZIA Valda Cyprus Leasing Ltd. 17,078,622 39.44 2 Mesotania Holdings Ltd. 10,899,858 25.17 3LinasDovydÿenas 441,717 1.02 4 Aurimas Sanikovas 294,478 0.68 5 Virginija Svilainytÿe 161,963 0.37 6 Tadas Goberis 147,239 0.34 7IAValdaAB 60,000 0.14 8 Indeco: Investment and Development UAB 40,000 0.09 9Freefloat 14,181,716 32.75 Total 43,305,593 100.00

Source: the Company

1 Assuming that all the Offer Shares are allotted in the Offering.

127 AviaAM Leasing AB

15.2 Share Capital of the Company

Table 75. Share capital of the Company as of the date of this Prospectus

Nominal value, Total nominal value, Part in the share capital, Name of securities Number of securities LTL LTL % Ordinary registered shares 29,447,803 1 29,447,803 100

Source: IFRS Financial Statements

Amendments to share capital of the Issuer within 3 last years

Table 76. Amendments to share capital of the Issuer from 1 January 2010 until the date of this Prospectus

Registration of Amount of share capital Share capital after the amended share capital prior to amendment, LTL Amendment, LTL Reason the amendment, LTL Increase of the share capital by 03-12-2010 10,000 + 90,000 additional contributions 100,000 Increase of the share capital by 10-08-2011 100,000 + 29,347,803 additional contributions 29,447,803

Source: IFRS Financial Statements

Information on shares, not representing capital The Issuer has not issued shares, not representing its capital.

The number, book value and face value of shares in the Issuer held by or on behalf of the Issuer itself or by Subsidiaries of the Issuer The Issuer has no shares of its own, held by itself or which are held on Issuer's behalf or which are held by the Subsidiaries.

The amount of any convertible securities, exchangeable securities or securities with warrants, with an indication of the conditions governing and the procedures for conversion, exchange or subscription The Issuer has not issued any convertible securities, exchangeable securities or securities with warrants.

Information about and terms of any acquisition rights and or obligations over authorised but unissued capital or an undertaking to increase the capital The Issuer has not issued any acquisition rights and has no obligations over authorised but unissued capital or an undertaking to increase the capital.

Information about any capital of any member of the Group which is under option or agreed conditionally or unconditionally to be put under option and details of such options including those persons to whom such options relate None of the aforementioned transactions are signed by any member of the Group.

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XVI RELATED PARTY TRANSACTIONS

The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions. Transactions within the related parties fall under the following categories: – Sale / purchase of assets; – Sale / purchase of services; – Financing transactions in the ordinary course of business (e.g. loan transactions). The Management believes that all arrangements between the related parties are entered into at the arm's length principle. This Section provides information on the transactions of the Company and its Subsidiaries with the related parties. The related parties are classified into the following groups: – The Ultimate Parent; – The Parent; – Other Related Parties. The Ultimate Parent of the Group is IA Valda AB. The Parent of the Group is: – Since 10 August 2011 – ZIA Valda Cyprus Leasing Ltd.; – Until 10 August 2011 – IA Valda AB. Other Related Parties include other shareholders of the Group, subsidiaries and other related parties of IA Valda AB, associates and jointly controlled entities of the Group; key management of the Group and entities controlled or jointly controlled by key management personnel or their close relatives. Other Related Parties also include Avia Solutions Group and its subsidiaries. The full list of subsidiaries of Avia Solutions Group as of 31 December 2012 and 31 March 2013 is provided in the table below.

Table 77. Subsidiaries of Avia Solutions Group (USD'000)

Share of equity Share of equity Subsidiaries of Country of as at as at Operating segment Avia Solutions Group establishment 31 December 31 March 2012, % 2013, % AviationCV.com UAB Lithuania Pilot and crew training 100.0% 100.0% Baltic Aviation Academy UAB Lithuania Pilot and crew training 100.0% 100.0% Baltic Ground Services UAB Lithuania Aircraft ground handling and fuelling 100.0% 100.0% Baltic Ground Services Sp. z o.o. Poland Aircraft ground handling and fuelling 100.0% 100.0% Baltic Ground Services s.r.l. Italy Aircraft ground handling and fuelling 100.0% 100.0% Baltic Ground Services UA TOV Ukraine Aircraft ground handling and fuelling 100.0% 100.0% Ground Handling CIS UAB Lithuania Aircraft ground handling and fuelling 100.0% 100.0% FL Technics AB Lithuania Aircraft maintenance, repair and overhaul (MRO) 100.0% 100.0% FL Technics Jets UAB Lithuania Aircraft maintenance, repair and overhaul (MRO) 100.0% 100.0% FL Technics Line OOO Russia Aircraft maintenance, repair and overhaul (MRO) 93.0% 93.0% FL Technics Ulyanovsk OOO Russia Aircraft maintenance, repair and overhaul (MRO) 99.0% 99.0% FLT Trading House UAB Lithuania Aircraft maintenance, repair and overhaul (MRO) 100.0% 100.0% Locatory.com UAB Lithuania Aircraft maintenance, repair and overhaul (MRO) 95.0% 95.0% Small Planet Airlines UAB(*) Lithuania Charter operations 95.5% – Small Planet Airlines Sp. z o.o.(*) Poland Charter operations 95.5% – Small Planet Airlines s.r.l. Italy Charter operations 35.5% 35.5% Storm Aviation Ltd. United Kingdom Aircraft maintenance, repair and overhaul (MRO) 100.0% 100.0% Storm Aviation (Cyprus) Ltd. Cyprus Aircraft maintenance, repair and overhaul (MRO) 100.0% 100.0%

Source: the Company

(*) Avia Solutions Group sold its 95.5% stakes in Small Planet Airlines UAB (Lithuania) and Small Planet Airlines Sp. z o. o. (Poland) to the management of these companies in March 2013. Following the sale these companies ceased to be related parties to the Group.

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The table above provides a full list of subsidiaries of Avia Solutions Group, however the Group's most material transactions were performed only with the following subsidiaries: FL Technics AB and subsidiaries of Avia Solutions Group operating in charter operations business as discussed in the Sections below.

16.1 Related Party Transactions for the Years Ended 31 December 2012, 2011 and 2010

16.1.1 Sales to related parties The sale transactions with the related parties are summarized in table below.

Table 78. The sales to the related parties by the Company and its Subsidiaries (USD'000)

Year ended 31 December Item Related party 2012 2011 2010 Sales of services TheUltimateparent – – – TheParent ––– Other related parties 7,529 8,353 9,846 Total sales to related parties 7,529 8,353 9,846 % from revenues of the Group 12.5% 30.3% 47.4%

Source: IFRS Financial Statements

Most material sales of services were performed to subsidiaries of Avia Solutions Group operating in charter operations business and where related to aircraft leasing. The number of aircraft leased to the aforementioned subsidiaries out of the total number of aircraft is presented in the table below.

Table 79. Breakdown of aircraft on lease to related parties

Aircraft on lease Name of the Related Party Country of operations As at 31 December 2012 2011 2010 Small Planet Airlines UAB Lithuania 11– Small Planet Airlines s.r.l. Italy 1(*) –– Small Planet Airlines Sp. z o.o. Poland ––1 Small Planet Airlines AS Estonia –11 Total number of aircraft on lease to related parties 2 2 2 % from total number of aircraft on lease 13.3% 16.6% 22.2%

Source: the Company, unaudited

(*) The aircraft was leased to Small Planet Airlines UAB and subleased to Small Planet Airlines s.r.l.

16.1.2 Purchases from related parties The purchase transactions with the related parties are summarized in the table below.

Table 80. The purchases from the related parties by the Company and its Subsidiaries (USD'000)

Year ended 31 December Item Related party 2012 2011 2010 Purchase of assets TheUltimateparent – – – TheParent ––– Other related parties 900 800 123 Total 900 800 123 Purchase of services TheUltimateparent – 1 2 TheParent ––– Other related parties 1,135 659 949 Total 1,135 660 951 Total purchases from related parties 2,035 1,460 1,074

Source: IFRS Financial Statements

All purchases of assets were performed with FL Technics AB and were related to acquisitions of airframes, engines and other aircraft components.

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The most material purchases of services from related parties relate to aircraft maintenance services. During the year 2012 expenses for aircraft maintenance services purchased from FL Technics AB were USD 440 thousand (2011: USD 512 thousand; 2010: USD 189 thousand). Purchase of services from the related parties also include purchase of administrative services from Avia Solutions Group, such as consulting, sales, utilization of resources, software usage and IT administration. These services amounted to USD 561 thousand in 2010, USD 100 thousand in 2011 and USD 102 thousand in 2012.

16.1.3 Trade receivables and payables The breakdown of trade and other receivables, trade payables and prepayments received from the related parties is presented in tables below.

Table 81. Trade receivables of the Company and its Subsidiaries from the related parties (USD'000)

As at 31 December Item Related party 2012 2011 2010 Trade and other receivables TheUltimateparent – – – from related parties TheParent ––– Other related parties 2,246 292 833 Total 2,246 292 833

Source: the Company, IFRS Financial Statements

As at 31 December 2012 trade receivables from a group of Small Planet Airlines amounted to USD 1,968 thousand (2011: USD 89 thousand; 2010: USD 833 thousand) and were related to aircraft leasing services. Trade receivables from FL Technics AB amounted to USD 277 thousand as at 31 December 2012.

Table 82. Payables and prepayments of the Company and its Subsidiaries to/from the related parties (USD'000)

As at 31 December Item Related party 2012 2011 2010 Payables and prepayments to/ TheUltimateparent 4 – – from related parties The Parent 1,179 – – Other related parties 1,822 1,790 77 Security deposits received – 3,210 – Total 3,005 5,000 77

Source: the Company, IFRS Financial Statements

As at 31 December 2012 payables to related parties included dividends payable in total amount of USD 1,972 thousand to the Ultimate parent, the Parent and other shareholders. Payables for services and assets purchased from FL Technics AB amounted to USD 268 thousand as at 31 December 2012 (2011: USD 1,550 thousand).

16.1.4 Loans received and granted The breakdown of non-current and current loans received from the related parties is presented in the table below.

Table 83. The loans received by the Company and its Subsidiaries from the related parties (USD'000)

As at 31 December Item Related party 2012 2011 2010 Non-current loans received TheUltimateparent – – 5,195 TheParent ––– Other related parties – – 4,860 Total – – 10,055 Current loans received TheUltimateparent – – – TheParent ––– Other related parties – – 6,123 Total – – 6,123 Total loans received from the related parties – – 16,178

Source: the Company, IFRS Financial Statements

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The breakdown of non-current and current loans granted to the related parties is provided in the table below.

Table 84. The loans granted by the Company and its Subsidiaries to the related parties (USD'000)

As at 31 December Item Related party 2012 2011 2010 Non-current loans granted TheUltimateparent – – – TheParent ––– Other related parties 2,150 347 5,675 Total 2,150 347 5,675 Current loans granted TheUltimateparent – – – TheParent ––– Other related parties 884 88 2,049 Total 884 88 2,049 Total loans granted to the related parties 3,034 435 7,724

Source: the Company, IFRS Financial Statements

The loans granted to other related parties as of 31 December 2012 were denominated in US Dollars. The non-current loans granted to related parties as at 31 December 2012 consisted fully of a loan granted to the Joint Venture of the Company – Regional Charter Capital – which matures in 2014.

16.2 Related Party Transactions for the Three Months Ended 31 March 2013 and 2012

16.2.1 Sales to related parties The sale transactions with the related parties are summarized in table below.

Table 85. The sales to the related parties by the Company and its Subsidiaries (USD'000)

3monthsended31March Item Related party 2013 2012 (unaudited) (unaudited) Sales of services TheUltimateparent – – The Parent – – Other related parties 666 1,009 Total sales to related parties 666 1,009 % from revenues of the Group 10.1% 8.1%

Source: Consolidated Interim Financial Information

Table 86. Breakdown of aircraft on lease to related parties

Aircraft on lease Name of the Related Party Country of operations As at 31 March 2013 2012 Small Planet Airlines UAB(*) Lithuania 22 Small Planet Airlines s.r.l. Italy 1(**) – Total number of aircraft on lease to related parties 3 2 % from total number of aircraft on lease 17.6% 13.3%

Source: the Company, unaudited

(*) Avia Solutions Group sold its 95.5% stake in Small Planet Airlines UAB to the management of the company in March 2013. Following the sale the company ceased to be a related party to the Company and the Group. (**) The aircraft was leased to Small Planet Airlines UAB and subleased to Small Planet Airlines s.r.l.

16.2.2 Purchases from related parties The purchase transactions with the related parties are summarized in the table below.

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Table 87. The purchases from the related parties by the Company and its Subsidiaries (USD'000)

3monthsended31March Item Related party 2013 2012 (unaudited) (unaudited) Purchase of assets TheUltimateparent – – The Parent – – Other related parties 577 – Total 577 – Purchase of services TheUltimateparent – – The Parent – – Other related parties 306 288 Total 306 288 Total purchases from related parties 883 288

Source: Consolidated Interim Financial Information

All purchases of assets were performed with FL Technics AB and were related to capitalized maintenance of aircraft components. During the three months ended 31 March 2013 majority of services were purchased from: (i) FL Technics AB in the amount of USD 182 thousand which mainly related to aircraft maintenance services and (ii) Avia Solutions Group in the amount of USD 72 thousand (including USD 52 thousand for management services).

16.2.3 Trade receivables and payables The breakdown of trade and other receivables, trade payables and prepayments received from the related parties is presented in tables below.

Table 88. Trade receivables of the Company and its Subsidiaries from the related parties (USD'000)

As at Item Related party 31 March 2013 31 December 2012 (unaudited) Trade and other receivables from related TheUltimateparent – – parties The Parent – – Other related parties 376 2,246 Total 376 2,246

Source: the Company, Consolidated Interim Financial Information, IFRS Financial Statements

The trade receivables for 31 March 2013 in the amount of USD 373 thousand were related to FL Technics AB and USD 3 thousand related to Baltic Aviation Academy UAB. Trade receivables from related parties as at 31 March 2013 do not include receivables from Small Planet Airlines UAB and Small Planet Airlines Sp. z o.o., as the companies were sold to their management on 29 March 2013 and ceased to be related parties to the Company and the Group.

Table 89. Payables and prepayments of the Company and its Subsidiaries to/from the related parties (USD'000)

As at Item Related party 31 March 2013 31 December 2012 (unaudited) Payables and prepayments to/ from related TheUltimateparent – 4 parties The Parent – 1,179 Other related parties 1,349 1,822 Total 1,349 3,005

Source: the Company, Consolidated Interim Financial Information, IFRS Financial Statements

Payables as at 31 March 2013 consisted of payables for services and assets purchased. As at 31 March 2013 the majority of payables in the amount of USD 1.1 million related to FL Technics AB mainly for engine and aircraft maintenance.

16.2.4 Loans received and granted There were no loans received from the related parties.

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The breakdown of non-current and current loans granted to the related parties is provided in the table below.

Table 90. The loans granted by the Company and its Subsidiaries to the related parties (USD'000)

As at Item Related party 31 March 2013 31 December 2012 (unaudited) Non-current loans granted TheUltimateparent – – The Parent – – Other related parties 2,927 2,150 Total 2,927 2,150 Current loans granted TheUltimateparent – – The Parent – – Other related parties 32 884 Total 32 884 Total loans granted to the related parties 2,959 3,034

Source: the Company, Consolidated Interim Financial Information, IFRS Financial Statements

The loans granted to other related parties as of 31 March 2013 were denominated in US Dollars. The non-current loans granted to related parties as at 31 March 2013 consisted of loan granted to Gediminas Ziemelis in the amount of USD 0.7 million and loan granted to the Joint Venture of the Company – Regional Charter Capital – in the amount of USD 2.2 million.

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XVII LEGAL PROCEEDINGS

Neither the Company nor any of its Subsidiaries have, during the 12 months preceding the date of this Prospectus, been or are currently involved in any material governmental, legal or arbitral proceedings (including any such proceedings which are pending or threaten of which the Company is aware) or material disputes which may have or have had a significant adverse effect on the business, results of operations or financial position or profitability of the Company and/or the Group as a whole.

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XVIII DESCRIPTION OF ISSUER'S SHARES, CORPORATE RIGHTS & OBLIGATIONS

18.1 Description of the Shares

Description of the Shares (including the Offer Shares):

Type of the Shares: ordinary registered shares ISIN number: LT0000128555. After issuance of the New Shares and assimilation of the previous issue, ISIN number of the New Shares will be the same as the number of Shares, already issued Currency of the Share issue: LTL Form of the Shares: Registered shares in book-entry form. Entity currently in charge of keeping the records is Orion Securities UAB FM²I, corporate ID code 122033915, registered at Antano Tumÿeno str. 4, B block, Vilnius, the Republic of Lithuania

Legislation under which the Shares have been created Legislation, under which the Shares have been created, includes the Civil Code of the Republic of Lithuania, the Law on Companies, the Law on Securities and other related legal acts.

Decision by which the New Shares are issued The New Shares are being issued by the resolution of the General Meeting of 10 May 2013.

Transfer restrictions There are no restrictions on transfer of Shares (including the Offer Shares) as they are described in the applicable laws. However, the Offer Shares are subject to transfer restrictions as revealed in greater detail in the Section XXII Selling Restrictions. The Offering includes the new issue of the Shares and the sale of Sale Shares by the Selling Shareholder. All Major Shareholders and the Minority Shareholders (except the Selling Shareholder) are subject to lock-up as described in the Section XXI Placing – Lock-up Agreements.

18.2 Rights and Obligations Granted by the Shares All the Shares, including the Offer Shares, are pari passu (at an equal pace without preference) with regard to property and non-property rights they grant to shareholders. Exercise of rights granted by Shares of the Company may be limited only on the grounds and under the procedure prescribed by laws. The Articles of Association do not provide for any exceptions to this rule. The record date of the property rights of shareholders is the tenth business day after the General Meeting that took a relevant decision, i.e. the property rights determined by a decision of the General Meeting are held by the persons who were shareholders of the Company at the close of the tenth business day after the General Meeting that took a relevant decision. The list of the shareholders' rights indicated in the Articles of Association is provided in Section XXIV Articles of Association. Below is the brief description of certain material rights of the Company's shareholders.

Dividend and other distributions Pursuant to the Law on Companies, the Issuer may distribute its profits or assets to shareholders only (i) by paying dividend; (ii) in case of liquidation of the Issuer; or (iii) in case of reduction of the authorised capital of the Issuer. The persons, who were shareholders of the Company at the close of the tenth business day (the record date) after the General Meetingthattookarelevantdecision,shallhave a right to receive the respective amounts.

Dividend A dividend is a share of profit allocated to a shareholder in proportion to the nominal value of shares owned by him/her/it. If a share is not fully paid-up and the time limit for the payment has not yet expired, a dividend will be reduced in proportion to the unpaid amount of the share price. If the share is not fully paid-up and the time limit for the payment has expired, no dividend is paid. Dividend can be declared by a decision of the General Meeting. The Issuer can declare dividend from the profit available for appropriation, which consists of the new profit of the accounting year, plus or minus, respectively, the profit (loss) brought forward from the previous year and reserves that the shareholders, following the procedure established by laws, decide to distribute, and minus any sums that the General Meeting decides to allocate for other purposes pursuant to the requirements of the Law on Companies.

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Dividend is paid to shareholders pro rata to the aggregate nominal value of shares held by them. Dividend is not cumulative as the Issuer has not issued any preference shares with cumulative dividend, owners of which would be guaranteed the right to dividend in the amount indicatedinsuchshares. The General Meeting may not adopt a decision to allocate and pay dividend if: (i) the Issuer has outstanding obligations which became due before the decision of the General Meeting; (ii) the Issuer's result of the reporting financial year available for distribution is negative (i.e. losses have been incurred); (iii) the equity of the Issuer is lower or upon payment of dividend would become lower than the aggregate amount of the authorised capital, the mandatory reserve, the revaluation reserve and the reserve for redemption of own shares. The Issuer must pay the allocated dividend within one month from the day of adoption of a decision by the General Meeting on allocation and payment of dividend. The term of limitations with respect to filing a dividend payment claim with the court expires 10 years after the date the dividend had to be paid, in which case the unpaid dividend amount goes to the Issuer. The Law on Companies also provides with a possibility to pay dividend to shareholders for a period shorter than a financial year (interim dividend). The following conditions for distribution of interim dividend are established: (i) the right to initiate distribution of dividend lies with shareholders, shares held by which carry at least 1/3 of all the votes, unless the Articles of Association of the company establish a higher majority; (ii) the distribution of dividend must be preceded by the preparation and audit of the set of interim financial statements, the interim report and a draft of the decision on distribution of dividend for a period shorter than a financial year; (iii) interim dividend is allocated by a decision of the General Meeting (the General Meeting must be held within 3 months after the end of the period, for which distribution of dividend is proposed, but in any case no earlier than the approval of the set of annual financial statements and distribution of the Company's profit (loss) for the earlier financial year and no later than the end of the financial year); (iv) interim dividend can be distributed if all the following conditions are met: (a) an audited set of interim financial statements has been approved; (b) the profit (loss) amount for a period shorter than a financial year is positive (there is no loss); (c) the amount distributed for payment of dividend does not exceed the profit (loss) for the period shorter than a financial year, the amount of the retained earnings (loss) for the previous financial years as at the end of the previous financial year, upon deduction of the share of profit earned during the period shorter than a financial year, which must be appropriated to reserves according to the law or according to the Articles of Association; (d) the company must not have outstanding obligations, which matured before taking of the decision, and upon payment of dividend it would be capable of fulfilling its obligations for the current financial year; (v) upon distribution of interim dividend, it is allowed to allocate dividend for another period shorter than a financial year no earlier than 3 months later. Both residents and non-residents of Lithuania are subject to the same dividend payment rules, except for the taxation maters described in the Section XXIII Taxation of the Issuer's Shares. For more information on dividends please also see Section V Dividend Policy. Dividend payments and other payments made by the Issuer will be conducted through the CSDL acting as primary depository. The Issuer shall transfer via the CSDL system to the NDS the amount due to the shareholders which Shares are listed on the WSE. The NDS shall redistribute the dividend and other payments among its participants (e.g. brokerage houses) and the NDS participants shall credit the respective investors' accounts. As the dividend will be paid in Lithuanian Litas, the bank, in which the NDS keeps its foreign currency account, will redistribute the dividend to the NDS participants' accounts kept in Lithuanian Litas and if such participants do not have such account to the account in other currency. The participants will convert Lithuanian Litas into Polish zloty and transfer it to the shareholder account run by them. NDS participants may charge conversion fee for such operation. This mechanism may be subject to changes after the CSDL and NDS further arrangements.

Distribution of the Issuer's assets in case of liquidation In case of liquidation of the Issuer, the Issuer's assets remaining after settlement of accounts with creditors are distributed to shareholders pro rata to the aggregate nominal value of shares held by them. In case of voluntary liquidation of the Issuer, the Issuer's assets can be distributed among shareholders only after the Issuer settles accounts with its creditors and upon a lapse of two months after a public notice about liquidation made pursuant to requirements of the laws. In case of disputes in court regarding fulfilment of the Issuer's debt obligations, the Issuer's assets are distributed among shareholders only upon final resolution of the disputes and settlement of accounts with creditors.

Other cases of distribution of the Issuer's capital The Issuer may distribute funds to its shareholders by reducing its authorised capital in accordance with the procedure set by the Law on Companies. The authorised capital may be reduced by way of annulment of shares or reduction of the nominal value of shares, but the reduced authorised capital of the Issuer may not be less than the minimum amount of the authorised capital provided for in the Law on Companies (i.e. LTL 150,000).

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Only the annual General Meeting may adopt the decision to reduce the share capital with the purpose of paying funds to the shareholders, provided that all of the following conditions are met: (i) the set of annual financial statements and the profit distribution account have been approved; (ii) following the reduction of the share capital the legal reserve of the Company will not be lower than 1/10 of the Company's share capital; and (iii) no undistributed loss and long-term liabilities are recorded in the set of annual financial statements of the Company. The decision to reduce the share capital with the purpose of paying out the funds to its shareholders may not be adopted if on the date of the decision the Company is insolvent or after the payment of funds would become insolvent. The funds must be paid within one month from the registration of the amended Articles of Association with the Register of Legal Persons. The funds are paid pro rata to the nominal value of shares held by each shareholder and may only be paid in cash.

Further Capital Calls by the Company If the Company's distributable result, as approved by the annual General Meeting, is negative and the meeting adopts a decision to cover the Company's losses or part thereof by additional contributions of the shareholders, according to the Law on Companies, the shareholders who voted in favour of such decision are obliged to pay the contributions to the Company. The shareholders who did not participate at the General Meeting or voted against such decision are entitled not to pay any additional contributions to the Company.

Modification of Shareholders' Rights The Articles of Association do not provide for any specific conditions regarding modification of shareholders' rights. Shareholders' rights may be modified only pursuant to the provisions of Lithuanian laws.

Conditions of Conversion Currently, the Issuer has not issued any convertible securities.

Conditions of Redemption Pursuant to the Law on Companies, the Issuer has the right to redeem its own shares. The total nominal value of shares redeemed by the Issuer cannot be more than 1/10 of the authorised capital. If the aggregate number of the repurchased shares exceeds 10% of the share capital of the Company, it must transfer the excess shares to other persons within 12 months after exceeding the threshold. Upon redemption of its own shares, the Issuer has no right to exercise property and non-property rights conferred by such shares. A detailed procedure of redemption of own shares is provided for in the Law on Companies. The Issuer can redeem its own shares only after the Issuer has formed a reserve for redemption of own shares, which may not be less than the total purchase price of all the redeemed shares. Furthermore, the Company may not purchase own shares if this would result in the equity capital falling below the aggregate amount of the paid-up authorised capital, mandatory reserve and reserve for own shares. As a general rule, the Company may not repurchase its shares which are not fully paid. In order to repurchase its shares the Company must submit a voluntary takeover bid and when redeeming its own shares, the Company must ensure equal possibilities for all the shareholders to sell shares of the Company to the Company.

Voting rights Pursuant to the Law on Companies and the Articles of Association, each share of the Company confers one vote in the General Meeting. Only shareholders who have fully paid-up their shares are entitled to vote at the General Meeting. Persons, who were shareholders of the Company at the end of the record date of the General Meeting, are entitled to attend and vote at the General Meeting or repeated General Meeting. The record date of the General Meeting of the Company is the fifth business day before the General Meeting. The shareholders may vote personally or through their proxies or persons with whom a voting rights transfer agreement is concluded. The shareholders may also vote in writing (by filling in the general ballot paper). The shareholder does not have the right to vote on the decision regarding the withdrawal of the pre-emptive right to acquire securities newly issued by the Company, if according to the agenda of the General Meeting the right to acquire such securities is to be granted to him or persons related to him.

Pre-emptive rights Pursuant to the Law on Companies, the Company's share capital may be increased by a decision of the General Meeting and may be effected by (i) issuing additional shares; (ii) increasing the nominal value of existing shares; or (iii) issuing convertible bonds. Increases in share capital by way of issuance of additional shares may be effected through one or a combination of the following: (i) in consideration for cash; (ii) in consideration for assets contributed in kind; (iii) by conversion of bonds previously issued; (iv) from the Company's own funds (i.e. by capitalisation of profits or share premiums), etc. If the Company issues additional shares or convertible bonds other than from the Company's own funds, current shareholders will have a pre-emptive right to subscribe for such securities on a pro rata basis. The pre-emptive right requires that the Company give priority treatment to current shareholders. The Company must announce the proposal to exercise the pre-emptive rights as well as the period of

138 AviaAM Leasing AB such exercising in the electronic publication for public notifications administered by the manager of the Register of Legal Persons (in case if due to technical reasons it is not possible to announce the proposal as indicated above, the Company must announce such proposal in the daily Lietuvos Rytas or to inform every single shareholder individually). When the Company is listed on the WSE, the relevant provisions regarding publication of the respective information will also be applicable to the Company. The time limit for a shareholder to acquire the securities on a pre-emptive basis may not be less than 14 days after the public announcement thereof by the Register of Legal Persons. The pre-emptive right to subscribe for shares or convertible bonds of a certain issue can be withdrawn by a decision of the General Meeting, 3 which has to be adopted by a /4 majority of votes present in the meeting. The pre-emptive right can be withdrawn only in respect of all the shareholders of the Company. A written proposal to withdraw the pre-emptive right to subscribe for securities must be given by the Management Board, indicating reasons and causes for such withdrawal, as well as persons who would be offered to acquire the newly issued securities. The General Meeting, taking a decision on withdrawal of the pre-emptive right, must justify the necessity to withdraw such a right and specify the person or persons who are given the right to subscribe for newly issued securities, save for cases when the pre-emptive right is withdrawn because of the intention to make a public offering of securities of the Company under the procedure set by the Law on Securities. The Company's share capital may be increased from the Company's own funds. In such case the current shareholders are entitled to receive the new additional shares free of charge on a pro rata basis. Furthermore, the par value of all the Company's shares may be increased. The pre-emptive right to acquire the shares or convertible bonds issued by the Company as well as the right to receive shares free of charge in the case of the increase of the share capital from the Company's own funds is granted to the persons who were shareholders of the Company at the end of the rights record date (i.e. the tenth business day following the day the respective decision was adopted by the General Meeting).

Right to receive information According to the legal acts of the Republic of Lithuania, the Company must, at a shareholder's written request and within 7 days from the receipt of the request, grant to the shareholder access to and/or submit to him copies of the following documents: the Articles of Association, sets of annual and interim financial statements, annual and interim reports on the activities of the Company, the auditor's opinions and audit reports, minutes of the General Meetings or other documents constituting decisions of the General Meetings, the recommendations and responses of the Supervisory Council to the General Meetings, the lists of shareholders, the lists of members of the Management Board and the Supervisory Council, also other documents of the Company that must be publicly accessible under laws, minutes of the meetings of the Management Board and Supervisory Council or other documents constituting decisions of the indicated bodies of the Company, unless these documents contain a commercial (industrial) secret, confidential information. A shareholder or a group of shareholders, who own more than 1/2 of shares of the Company, have the right to access all documents of the Company subject to presenting a written pledge not to disclose a commercial (industrial) secret, confidential information. The Articles of Association foresees, that the documents of the Company or other information is provided to the Company's shareholders free of charge.

Challenging of Decisions Decisions of bodies of the Company may be invalidated in court if they are in conflict with imperative rules of law, incorporation documents of the Company or the principles of reasonability or fairness. A statement of claim may be filed by creditors of the Company if the decision violates their rights or interests, a member of the Management Board or Supervisory Council of the Company, a shareholder or other persons specified in the law. Such claim may be filed in a competent court of Lithuania within 30 days as of the day on which a relevant person learnt or should have learnt about the challenged decision. In addition, a shareholder may apply to the court for the compensation of damages caused by the members of the Management Board or the Manager by non-performance or improper performance of their duties prescribed by the laws of the Republic of Lithuania and the Articles of Association, as well as in other cases provided by laws.

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XIX CERTAIN LITHUANIAN AND POLISH SECURITIES MARKET REGULATIONS

The Issuer intends to apply for admission to trading and to list all of the Shares on the main market of the WSE. As a result, the Issuer will be subject to certain Polish securities and capital market regulations. Moreover, the Issuer, being incorporated under the laws of Lithuania will be subject to certain aspects of the European Union and Lithuanian securities regulation. The Issuer will also be subject to the supervision of relevant regulatory authorities, in particular the LB and, to a limited extent, the PFSA. The information set out below describes certain aspects of the Lithuanian and Polish securities market regulations regarding mandatory takeover bids, squeeze-out and sell-out rules that may be applied to the Shares once the Shares are admitted to trading on the WSE, and is included for general information purposes only. This summary does not purport to be a comprehensive description of all Lithuanian and Polish securities market regulatory considerations that may be relevant to a decision to acquire, hold or dispose of the Shares. Moreover, conclusions derived from the description below may not fully reflect a proper interpretation of Lithuanian and Polish laws. Each prospective investor should consult a professional legal adviser regarding the legal consequences of acquiring, holding and disposing of the Shares under the laws of their country and/or state of citizenship, domicile or residence. This summary is based on legislation, published case law, treaties, rules, regulations and similar documentation in force as at the date of the Prospectus, without prejudice to any amendments introduced at a later date and implemented with retroactive effect.

19.1 EU Takeover Bids Regulations Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004, on takeover bids ("Takeover Directive") was adopted by the Council on 30 March 2004, and became effective on 20 May 2004. It has been implemented into the laws of Lithuania by the Law on Securities of the Republic of Lithuania, dated 18 January 2007, as amended ("Law on Securities") and has been implemented into the laws of Poland primarily through the Public Offering Act. The relevant conflict of law provisions of the Takeover Directive do explicitly state that if the offeree company's shares are not admitted to trading on a regulated market in the Member State in which the company has its registered office, and if the offeree company's shares are admitted to trading on regulated markets in another Member State, then the authority competent to supervise the bid for all the remaining shares in the company shall be that of the Member State of the market on which the shares are admitted to trading, i.e. in the present case, the competent financial authority in Poland, the PFSA. With respect to governing law, matters related to the consideration offered in the case of a bid for all of the remaining shares in the company in particular, the price, and matters related to the bid procedure in particular, the information on the offeror's decision to make a bid, the contents of the offer document and the disclosure of the bid, shall be dealt with in accordance with the rules of the Member State of the competent authority, i.e. in the present case, the competent financial authority in Poland, the PFSA. However, the Law on Securities has also a conflicting provision, which states that the requirements with respect to the consideration offered in case of mandatory takeover bid established by the Law on Securities mutatis mutandis shall be applicable with respect to securities of the Lithuanian company which are not traded on the Lithuanian regulated market or the Lithuanian multilateral trading facility. In the absence of regulatory guidance, a clear resolution as to such conflicts of laws cannot be provided. However, in matters related to the information to be provided to the employees of the offeree company and in matters related to company law in particular, the percentage of voting rights which confer control and any derogation from the obligation to launch a bid for all the remaining shares in the company, the applicable rules and the competent authority shall be those of the Member State in which the offeree company has its registered office, i.e. in the present case, the LB which is the competent authority in Lithuania.

19.2 Regulation of the Polish Securities Market

Takeover Bids The Takeover Directive allows the Member States to introduce, next to the mandatory takeover bids, additional protection of the interests of the minority shareholders, such as the obligation to make a partial bid where the offeror does not acquire control of the company. Poland introduced such additional instruments. Pursuant to article 72 of the Public Offerings Act, any acquisition of shares in a public company in secondary trading and within a period of less than 60 days by a shareholder who holds shares entitling it to less than 33% of votes at a general shareholders' meeting, leading to the increase of its share in the total number of voting rights by more than 10%, must be effected exclusively through a public tender offer. Furthermore, any acquisition of shares in a public company by a shareholder who holds shares entitling it to at least 33% of votes at a general shareholders' meeting, in secondary trading and within a period of less than twelve months, leading to the increase of its share in the total number of voting rights by more than 5%, must be effected exclusively through a public tender offer. Additionally a shareholder that wishes to cross the 33% voting rights threshold is obliged to launch a public tender for shares that will entitle it to hold 66% of votes. However, if the indicated thresholds are exceeded due to the acquisition of shares in a public offering, in-kind contribution, merger or division of a company, amendments to the articles of incorporation of the company or occurrence of certain other

140 AviaAM Leasing AB events, the shareholder must either launch a public tender as described above within three months, or sell the appropriate amount of shares so that the number of votes to which the shareholder is entitled is no more than 33% of votes. It should be noted that the Polish law explicitly excludes application of the Polish regulations concerning thresholds only with respect to 1 the 66% threshold as the mandatory threshold under the Takeover Directive. In such a case, the Lithuanian threshold of 33 /3% should apply. On the other hand, the additional threshold of 33% stipulated in the Polish law is a separate obligation imposed by Poland 1 irrespective of the Takeover Directive. Therefore, the announcement of a take-over bid when exceeding 33 /3% of votes to satisfy the obligations imposed by the Takeover Directive should be deemed a different obligation from the obligation to announce a bid for 66% of votes when exceeding 33% of votes to satisfy additional Polish requirements. The regulations set a number of detailed conditions to be followed in connection with a public tender offer, including without limitation the rules of determining the tender price, required security and settlement.

Sell-out and squeeze-out rules Pursuant to article 82 of the Public Offerings Act, a shareholder in a public company that, on its own or together with its subsidiaries or parent companies or with companies which are parties to an agreement regarding the purchase of shares, voting in concert at the shareholders' meeting or conducting long-term policy against the company, reaches or exceeds 90% of the overall number of votes in such public company, may demand, within three months from the date on which such shareholder reaches or exceeds of the relevant threshold, that the remaining shareholders sell all the shares held by them to such shareholder. Pursuant to article 83 of the Public Offerings Act, a shareholder in a public company may demand that another shareholder, which has reached or exceeded 90% of the total number of votes, purchase from it the shares it holds in such company. The demand is made in writing within three months from the date on which such shareholder reaches or exceeds the relevant threshold. It should be noted that Polish law does not explicitly exclude the application of Polish regulations concerning squeeze-out and sell-out in public companies to companies listed on the WSE which are incorporated outside of Poland.

19.3 The Warsaw Stock Exchange The WSE operates one of the two regulated markets in Poland within the meaning of the MiFID. The other regulated market (BondSpot, the subsidiary of the WSE) concentrates mainly on bond trading and OTC transactions. The WSE is a public joint-stock company and is controlled by the Polish State. Members of the WSE include banks and Polish and international brokers. Shares listed on the WSE may be traded in a continuous price-setting system or in the single-price auction system, depending on capitalisation and intensity of trading. In addition, there are two markets for shares: Main and Parallel, the latter being for smaller, less liquid issuers. Listed companies are classified into four segments according to their capitalisation: MINUS 5, 5 PLUS, 50 PLUS or 250 PLUS. To be traded in a specific market and segment, certain non-statutory criteria must be met by the securities in addition to the statutory listing criteria. Shares of companies which have high price volatility, or which are under bankruptcy proceedings may be classified into the Alert List segment and then moved to listing under the single-price auction system. Settlement of all transactions executed on the WSE is handled by the NDS, a joint-stock company in which the WSE has a 33.3% stake (with the remaining shares held by the National Bank of Poland and the State Treasury of the Republic of Poland). The electronic trading system used by the WSE is UTP, which is also used inter alia by NYSE Euronext in New York, Paris, Lisbon, Amsterdam and Brussels. As of 29 May 2013, shares of 440 companies, including 53 foreign companies, were listed on the WSE.

19.4 Regulation of the Lithuanian Securities Market

Takeover Bids and sell-out and squeeze-out rules The issued securities are subject to all mandatory takeover bids and squeeze-out and sell-out rules specified in the Law on Securities. Following the Law on Securities, where a person, acting independently or in concert with other persons, acquires shares that in connection with the holding held by him or by other persons acting in concert entitles him to more than 1/3 of votes at the general meeting of shareholders of the company, he must either transfer shares exceeding this threshold, or announce a mandatory takeover bid to buy up the remaining shares of the company granting the voting rights and the securities confirming the right to acquire shares granting the voting rights. A person, when acting independently or in concert with other persons and having acquired not less than 95 percent of the capital carrying voting rights and not less than 95 percent of the total votes at the general meeting of the issuer shall have a right to require that all the remaining shareholders of the issuer sell the voting shares owned by them, and the shareholders shall be obligated to sell the shares. A person can exercise this right within three months after the implementation of the mandatory takeover bid or the voluntary takeover bid to buy up the remaining shares of the issuer granting the voting rights.

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Usually, the price of squeeze-out shares is equal to (i) with regard to certain conditions, the price paid for the issuer's shares bought according to the mandatory or voluntary takeover bid in accordance with the provisions of the Law on Securities, or (ii) the fair price, determined by the person buying up the shares, subject to a relevant approval of the LB. The minority shareholders have the right to challenge the squeeze-out price in court if, in their opinion, the price breaches the principle of fairness. Besides, any minority shareholder shall have a right to require that a person, who, when acting independently or in concert with other persons, has acquired the shares comprising not less than 95 per cent of the capital carrying the voting rights and not less than 95 per cent of the total votes at the general meeting of shareholders, would buy the shares belonging to the minority shareholder and granting the voting rights, while the said person shall be obligated to purchase those shares. The duration of validity of this right and the price of sell-out shares are determined according to the above-mentioned rules. Following the decision of the company's shareholders to delist the shares of the issuer from the trading on the regulated market (such 3 a decision is taken by the majority of /4 of all votes attaching to shares of the shareholders attending the general meeting of shareholders), a takeover bid must be submitted and implemented to buy-up the shares of the issuer admitted to the regulated market. The mandatory takeover bid must be submitted by the shareholders who voted for the decision to delist the shares of the issuer from the trading on the regulated market. One or several shareholders have the right to implement this duty for other shareholders. The shareholders who voted "against" or did not vote when the decision was taken to delist the shares of the issuer from the trading on the regulated market operating in the Republic of Lithuania have the right to sell their shares during the effective term of the mandatory takeover bid. The Issuer does not have the right to demand that shareholders sell their shares to the Issuer, whereas the shareholders do not have the right to demand that the Issuer buy up shares held by them. The issue of New Shares does not result in appearance of duties in connection with a mandatory takeover bid and appearance of any rights in connection with sell-out or squeeze-out of shares or other any rights other than those set in the Law on Securities and other applicable laws. There have been no public takeover bids by third parties in respect of the Company's Shares.

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XX THE OFFERING AND THE PLAN OF DISTRIBUTION

20.1 General Information On the basis of this Prospectus, the Issuer is offering up to 13,857,790 New Shares and the Selling Shareholder is offering up to 323,926 Sale Shares. In total, up to 14,181,716 Offer Shares are being offered in the Offering. The New Shares and the Sale Shares are offered jointly, so to the investors subscribing for Offer Shares can be allocated only with the New Shares, only with the Sale Shares or with the New Shares and the Sale Shares. The Issuer and the Selling Shareholder reserve the right to allocate in total a smaller number of Offer Shares than 14,181,716. This may happen, for instance, as a result of insufficient demand at a price level satisfactory to the Issuer and the Selling Shareholder. In such case, the number of New Shares and Sale Shares to be allotted to the investors may be reduced proportionally. The Offering consists solely of (i) a public offering to retail investors in the Republic of Poland (the "Retail Offering") and institutional investors in the Republic of Poland (the "Polish Institutional Offering" and, together with the Retail Offering, the "Public Offering"); and (ii) a private placement to institutional investors in certain jurisdictions outside of Poland and the United States in accordance with Regulation S under the U.S. Securities Act of 1933 (the "International Offering" and together with the Polish Institutional Offering, the "Institutional Offering"). The Prospectus has been filed with the LB, which is the competent authority under the relevant implementing measures of the Prospectus Directive in Lithuania, and was approved on 4 June 2013. Lithuania is the home member state of the Issuer and the LB is solely authorized to approve this Prospectus. The Issuer will be authorised to carry out the Offering in the Republic of Poland once the LB, which is the competent authority for the purposes of the relevant implementing measures of the Prospectus Directive in the Republic of Lithuania, has approved this Prospectus and provided the competent authority in Poland, the PFSA with (i) a certificate of approval attesting that this Prospectus has been drawn up in accordance with the Prospectus Directive, (ii) a copy of the Prospectus in English, (iii) a Polish translation of the Prospectus summary, and (iv) website address of the LB, on which the electronic version of the Prospectus is published, also once the Prospectus has been made available to the public together with a translation of the Prospectus summary into the Polish language. No public offering in Lithuania will take place, although for the purpose of the public offering in Poland the Issuer has taken and will take certain actions in Lithuania as its home member state. For further information on selling restrictions regarding the Offer Shares, please refer to Section XXII Selling Restrictions, and with respect to the rights pertaining to the Shares, please refer to Section 18.2 Rights and Obligations Granted by the Shares. The Offer Shares may be acquired by Retail Investors and Institutional Investors. As at the date of this Prospectus, there is no restriction on the amount of Offer Shares that will be allocated to each category of investors. However, the Issuer and the Selling Shareholder intend to allocate approximately 10% of the final number of the Offer Shares to the Retail Investors, unless there is insufficient demand to allocate the remaining Offer Shares to Institutional Investors at the set Offer Price, and vice versa, in which case this proportion may be altered by the Issuer and the Selling Shareholder acting in agreement with the Lead Manager. Such an alteration, if any, will be announced, together with the Offer Price and the final number of Offer Shares. The Offer Shares are being offered at the Offer Price, which will be determined through a book-building process and expressed in PLN. The final number of the Offer Shares allotted to the investors will be set by the Issuer and the Selling Shareholder in agreement with the Lead Manager after the Offer Price is determined, but will not be higher than 14,181,716. On 10 May 2013, the General Meeting acknowledged public offering of up to 1.1% of the outstanding Shares to be offered for sale by the Selling Shareholder as well as decided to increase the authorised capital by up to LTL 13,857,790, issuing up to 13,857,790 New Shares to be offered for subscription based on this Prospectus (including revocation of the pre-emptive right to acquire the New Shares for the existing shareholders for this purpose) and adopted resolutions regarding the listing of all outstanding Shares (including the New Shares) on the WSE. In addition, the General Meeting approved preparation of a prospectus for the purpose of the envisaged Offering. The issuance of the New Shares is scheduled to occur upon the Management Board's execution of a resolution to that effect, registration of the increase of the share capital of the Company in the Register of Legal Persons and registration of the New Shares with the CSDL, as well as with the NDS foreign account in the CSDL, shortly prior to delivery and listing of the New Shares, as outlined below. The Management Board and the Selling Shareholder, upon agreement with the Offering Agent, will determine (i) the final number of Offer Shares offered to each category of investors and, (ii) the Offer Price. Upon the decision hereon, the Issuer will issue the New Shares.

20.2 Timetable of the Offering The timetable below lists key dates related to the Offering. All times and dates referred to in this timetable are based on Warsaw local time:

7 June to 13 June 2013 Subscription Period for Retail Investors (until 5 p.m. Warsaw-time)

6 June to 13 June 2013 Roadshow

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12 June to 13 June 2013 Book-building (until 6 p.m. Warsaw-time)

Not later than on or about 14 June 2013 Determination and announcement of the Offer Price and the preliminary allotment of the Offer Shares

14 June to 18 June 2013 Subscription Period and payment for the Offer Shares by Institutional Investors

18 June 2013 Determination and announcement of the final number of the Offer Shares and the allotment between the Retail Investors and the Institutional Investors (the "Allotment Date")

On or about 25 June 2013 Delivery of the Offer Shares to investors and closing of the Offering ("Settlement Date")

On or about 28 June 2013 Start of trading on the WSE ("Listing Date")

After consultation with the Lead Manager and Adviser, the Issuer, together with the Selling Shareholder, may decide to amend the above dates. Changes made to the stated dates, if any, will be made public in the form of an announcement pursuant to the Law on Securities, and the Public Offering Act. If in the Issuer's opinion, a change of dates for subscriptions would be a material factor affecting the evaluation of the Offer Shares, then such changes would be made public in the form of a supplement to this Prospectus.

20.3 Purchase by the Current Shareholders of the Issuer, the Members of the Management Board and Supervisory Council To the best of the Issuer's knowledge, neither the existing shareholders of the Issuer, nor any member of the Management Board or Supervisory Council or any of the Key Executives intend to purchase any Offer Shares in the Offering.

20.4 Supplements to the Prospectus In accordance with regulations in force in Lithuania and Poland applicable to public share offerings, and the admission of securities to trading on a regulated market (and taking into account that the public offering of the Offer Shares will take place only in Poland), any significant new factor, material error or inaccuracy related to the information included in this Prospectus which could affect the assessment of the Offer Shares, and which arises or becomes known between the date of approval of this Prospectus and the Listing Date, will be communicated through a supplement to this Prospectus. If a supplement is published no later than on the Allotment Date, then the investors who have placed their subscription orders before publication of the supplement shall have the right to withdraw their subscriptions within 2 business days of its publication, and any paid-in moneys shall be repaid to the investors not later than within 10 business days. In such case, and if necessary, the Allotment Date will be adjusted in order to enable the investors to withdraw their subscriptions.

20.5 Cancellation, Suspension or Modification of the Offering The Issuer and/or the Selling Shareholder may cancel the Offering and/or modify the terms and dates of the Offering at any time prior to the Subscription Period for the Retail Investors, without disclosing any reason for doing so. Information on modification of the terms of the Offering will be made available publicly in the form of the supplement to the Prospectus to be approved by the LB and notified to the PFSA, as well as published in the same manner as this Prospectus. Any information on cancelation of the Offering will be made available publicly in the form of an announcement. The Issuer and/or the Selling Shareholder, may also cancel or suspend or modify the terms or the dates of the Offering at any time after the opening of the Subscription Period for the Retail Investors up until the Allotment Date if it considers there are reasons to believe that proceeding with the Offering is, or has become, impracticable or inadvisable. Such reasons may include, but are not limited to: (i) the suspension of, or material limitation in, trading in securities generally on the WSE, as well as any other official stock exchange in the U.S. or European Union; (ii) a sudden and material adverse change in the economic or political situation in Poland, Lithuania, and/or any other jurisdictions in which the Issuer operates worldwide; (iii) a material loss, or interference with the Issuer's business; (iv) an insufficient, in the opinion of the Issuer or the Lead Manager, expected free float of the Shares on the WSE; (v) any change or development in, or affecting, the general affairs, management, financial position, Major Shareholders' equity or results of the Issuer's operations or the operations of its Subsidiaries in a materially adverse way; or (vi) an unsatisfactory level of demand for the Offer Shares in the book-building process. In such an event, subscription orders for the Offer Shares that have been made will be disregarded, and any subscription payments received will be returned without interest or any other compensation, net of transfer costs, no later than 7 business days after the date of the notice of cancellation of the Offering is made public. If the Offering is suspended, the Issuer together with Selling Shareholder and Lead Manager may decide that orders placed and payments made will remain valid for up to 7 days. In such case, investors may withdraw their orders by submitting a withdrawal request within two business days after the suspension or postponed is announced.

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20.6 Maximum Price, Offer Price and Final Number of Offer Shares The Offer Price will not be set at higher than PLN 16 (the "Maximum Price"). During the book-building process amongst Institutional Investors invited by the Lead Manager, such Institutional Investors interested in subscribing for the Offer Shares will indicate the number of the Offer Shares they will be willing to acquire and the price, not higher than the Maximum Price, they will be willing to pay. Retail Investors will not participate in the book-building process. The Offer Price will be determined by the Issuer and the Selling Shareholder in agreement with the Lead Manager and will not be higher than the Maximum Price. The Offer Price will be determined based on: (i) the volume and price sensitivity of the demand estimated in the book-building process; (ii) the current and forecast situation in the capital markets; and (iii) development outlook, risk factors and other information concerning the Company's business. The Offer Price will be the same for both Retail Investors and Institutional Investors. All monetary amounts used in the Offering will be expressed in PLN. In particular, the Offer Price will be set and the book-building process will be carried out in PLN. The Offer Price for one Share expressed in PLN should not be less than the nominal value of the Share, i.e. LTL 1.00 as on the day of settlement of the Offer Price. The Offer Price will be filed with the LB, the PFSA and then publicised on the website of the Issuer (www.aviaam.com), the Offering Agent (www.ingsecurities.pl) as soon as available.

20.7 Placement of Subscription Orders The subscription order placed by an investor must be given with respect to at least one Offer Share. Orders may be withdrawn (and new orders placed) at any time until the end of the Subscription Period for each category of investors. All investors have the right to place multiple subscription orders. Subscription orders for a number of Offer Shares greater than the total number of Offer Shares shall be considered to be orders for all Offer Shares. Subscription orders will be accepted only from those prospective investors who, at the time of placing their orders, have opened securities accounts with entities at investor's choice licensed to provide such services within the territory of Poland. At the time of placing a subscription order, investors are required to make an irrevocable instruction for depositing the Offer Shares in a securities account maintained in their name. By placing subscription orders, each of the prospective investors will be deemed to have (i) read the Prospectus; (ii) accepted the terms of the Offering as described in the Prospectus; and (iii) consented to being allotted a lower number of Shares than the number specified in such investor's subscription orders, or not be allotted any Shares at all, pursuant to the terms and conditions set forth in the Prospectus. The form of the subscription order will be in English language. Any consequences of a form of subscription for the Offer Shares being incorrectly filled out will be borne by the investor. Subscriptions via Internet, by phone, facsimile or other communication are allowed in accordance with the regulations of the entities accepting subscriptions, providing the protection of the text of subscriptions is guaranteed and the signature may be identified (where applicable). Based of the subscriptions via the indicated communications the Offering Agent shall on behalf of its clients fill and sign the subscriptions according to the relevant powers of attorney, issued by the clients. If the order is delivered via e-mail or fax, the physical form should follow via traditional post. The subscription orders provided by the investors, which shall be allotted with Offer Shares (and in the relevant amount) shall be accepted by the Issuer or persons authorised by the Issuer not later than within 10 calendar days as from the Allotment Date. The acceptance shall be provided to the investors in the form decided by the Issuer.

Subscriptions by Retail Investors Subscription orders for the Offer Shares must be placed by Retail Investors using the subscription order forms made available by the investment firms accepting subscription orders for the Offer Shares, unless an investment firm accepting subscription orders specify otherwise. Retail Investors will place their subscriptions at the Maximum Price, indicating the number of Offer Shares they are willing to buy. An investor must ensure that all information contained in the subscription order is correct, complete and legible. The Issuer and the Selling Shareholder reserve the right to reject any subscription orders that are incomplete, incorrect, unclear or ineligible, or that have not been completed and submitted during the Subscription Period and in accordance with all requirements set out in these terms and conditions. The Offering Agent will not charge any fees from the investors in connection with the submission, cancellation or amendment of the subscription order. For information on detailed rules governing the placing of subscription orders by Retail Investors, in particular: (i) the documents required if a subscription order is placed by a statutory representative, proxy or any other person acting on behalf of an investor; and (ii) the possibility of placing subscription orders and deposit requests in a form other than written (e.g. via the Internet), Retail Investors

145 AviaAM Leasing AB should contact a customer service center at an investment firm accepting orders for the Offer Shares from Retail Investors at which they intend to place their subscription order. Contact details for investment firms accepting subscription orders from Retail Investors will be published on the Issuer's website (www.aviaam.com) and on the website of the Offering Agent (www.ingsecurities.pl) no later than at the beginning of the Subscription Period for the Retail Investors.

Subscriptions by Institutional Investors The Lead Manager will invite Institutional Investors to participate in the book-building process and, at the same time, to submit subscription orders. Subscription orders from Institutional Investors will be accepted only by the Offering Agent. After the Offer Price is established and the preliminary allotment is made, the Institutional Investors, whom the Offer Shares were preliminary allotted, will be informed about their preliminary allotment by the Offering Agent. The Institutional Investors should contact the Offering Agent for information on detailed rules governing the placement of subscription orders, in particular: (i) the documents required if an order is placed by a statutory representative, proxy or any other person acting on behalf of an investor; and (ii) the possibility of placing orders and deposit instructions in non-written form. Institutional Investors that manage assets on behalf of third parties may submit a combined order in favour of their customers, attaching alistofsuchcustomers.

20.8 Payment for the Offer Shares

Payment by Retail Investors in Poland Subscription orders placed by Retail Investors must be paid in full on the day when the subscription order is placed, or their order will be deemed null and void, unless regulations of the investment firm accepting such an order provide otherwise, in which case the subscription must be paid in full not later than at the end of the Subscription Period for the Retail Investors. The amount of the payment should be equal to the multiple of the number of Offer Shares for which the investor is placing the subscription order at the Maximum Price. The investment firm accepting subscription orders may charge the brokerage commission, if any, for execution of this action. The amount of the payment shall be transferred to the bank account of the investment firm accepting subscription order. Retail Investors who have not been allotted any Offer Shares or whose subscriptions have been reduced will receive reimbursements of the payment made upon placing the subscription order in accordance with instructions provided by each Retail Investor as required under the procedures applicable in the investment firm with which the subscription order was placed. The reimbursement will take place within 7 business days of the end of the Subscription Period for Retail Investors or from the date of the publication of the supplement to the Prospectus on the cancellation of the Offering. Moreover, any overpayments resulting from determination of the Offer Price will be returned within 7 business days of the end of the Subscription Period for Retail Investors. The payments shall be returned without any reimbursement for costs incurred by the investors in the course of subscribing for the Offer Shares, and be net of all transfer expenses and without interest.

Payment by Institutional Investors Within 4 days from the day when the Institutional Investors are informed on the preliminary allotment of the Offer Shares by the Offering Agent the Institutional Investors will be required to pay for the Offer Shares in the amount equal to the multiple of a number of the Offer Shares preliminary allotted to them and the Offer Price. The Institutional Investors should pay for the Offer Shares preliminary allotted to them in a manner agreed with the Offering Agent. If an investor does not pay-up in full for the Offer Shares preliminary allotted to such investor, its subscription shall be valid for the number of Shares corresponding to the amount paid by the investor, ignoring fractional entitlements. Payments may be done in PLN and should be transferred to such accounts as indicated by the Offering Agent.

20.9 Allotment of the Offer Shares The total number of the Offer Shares allotted to the Retail Investors and the Institutional Investors will be determined by the Issuer and the Selling Shareholder with the agreement with the Offering Agent, at their discretion. The Issuer, the Selling Shareholder and the Offering Agent are not obliged to allocate any Shares to any investors participating in the Offering but, where they have determined to do so, the minimum allocation will be one Offer Share. Both the New Shares and the Sale Shares (existing Offer Shares) will be offered jointly to both Retail Investors and Institutional Investors. Consequently, Investors will receive an allotment of New Shares or Sale Shares only or both New Shares and Sale Shares. In case of insufficient demand for all the Offer Shares, the number of New Shares and Sale Shares to be allotted to the investors may be reduced proportionally. The final number of the Offer Shares and the allotment between the Retail Investors and the Institutional Investors, including the reduction of order placed, will be announced on the Allotment Date and publicised on the website of the Issuer (www.aviaam.com) and on the website of the Offering Agent (www.ingsecurities.pl) as soon as available.

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Allotment to Retail Investors The allotment of the Offer Shares to Retail Investors will be made by the Offering Agent. In the event of an oversubscription, the Offer Shares shall be allotted to the Retail Investors participating in the Offering pro rata to the size of each order placed. Fractional allocations (after the proportional reduction, if any) will be rounded down to the nearest integer value, and the remaining Offer Shares will be allocated to the Retail Investor who subscribed for the largest number of the Offer Shares. Retail Investors participating in the Offering will receive relevant notifications in accordance with the regulations of their securities accounts. The Issuer will not give preferential treatment or discriminate against and between Retail Investors. There is no target minimum individual allotment within the Retail Investors.

Allotment to Institutional Investors Offer Shares shall be allotted, subject to payment and in accordance with the provisions set forth in this Prospectus, to those Institutional Investors who have been invited by the Offering Agent to participate in the book-building and have submitted subscription orders, have been included in the preliminary allotment list prepared by the Issuer and the Selling Shareholder based upon the recommendation and with the agreement of the Offering Agent, and have paid-up in full for the Offer Shares preliminary allotted to them. The allocation of the Offer Shares to particular Institutional Investors participating in the Offering will be determined by the Offering Agent, at its discretion, subject to the consent of the Issuer and the Selling Shareholder. The Institutional Investors participating in the Offering will be notified of their allocations of Offer Shares by the Offering Agent.

20.10 Registration and Settlement As at the date of the Prospectus, the Shares are in a book-entry form, registered on the Issuer's securities account maintained by Orion Securities UAB FM²I. In accordance with applicable Lithuanian regulations, all Shares of the Issuer, including the Sale Shares, are (and the New Shares will be) electronically registered with CSDL (in Lithuanian: Lietuvos Centrinis Vertybiniu²Popieriu² Depozitoriumas), the clearing and settlement institution in Lithuania, with its seat at Lvovo str. 25, LT-09320 Vilnius, Lithuania. The Shares of the Issuer have been assigned and the New Shares will be assigned ISIN code LT0000128555. Krajowy Depozyt Papierów Wartoœciwych (National Depository for Securities or the "NDS"), with its seat at ul. Ksi¹¿êca 4, 00-498 Warsaw, Poland, which is the Polish central clearinghouse and depository for securities, will act as a secondary depository for the Shares, including Offer Shares. After the Allotment Date, the Issuer shall file an application for entering all of the Shares with the NDS. All Shares are (also the New Shares will be) in book-entry form and, therefore, shareholders may only hold them through their respective investment accounts opened with and maintained by investment firms and custodians that are NDS or CSDL participants. In order to deliver Offer Shares, Orion Securities UAB FM²I on behalf of the Issuer and the Selling Shareholder will give instruction to the CSDL to deliver a respective amount of shares to the NDS. The delivery of the Offer Shares will be made in accordance with instructions made by the investors in the subscription orders, through the facilities of CSDL, and onward through the facilities of the NDS in accordance with standard NDS procedures applicable to the settlement of public offerings of shares. Delivery of the Offer Shares is expected to take place on or around 25 June 2013, barring unforeseen circumstances. The exact delivery dates will depend on the timing of the share transfer from the CSDL to NDS system. Notices of the recording of the Offer Shares in the investor's securities account will be delivered to investors in accordance with the rules of a given investment firm. However, the date of the delivery of such notice to the investors will have no impact on the date of starting the listing of the Issuer's Shares, including the Offer Shares, on the WSE, as the notices may be delivered to the investors after the listing has commenced.

20.11 Listing of the Shares As of the date of this Prospectus, the Shares of the Issuer are not listed on any regulated or equivalent market. The Issuer intends to make an application to the WSE for the admission of all of the Shares (including Offer Shares) for listing on the main market on the continuous trading system. The admission and introduction of the Shares, including the Offer Shares to trading on the WSE requires, inter alia: (a) the approval of the Prospectus by the LB and notification to the PFSA; (b) execution by the Issuer of an agreement with the NDS to register the Shares, including the Offer Shares, in the NDS; and (c) an application to be made, and resolutions of the WSE's management board passed, to admit and introduce the Shares to trading on the WSE. Several days may elapse between the Settlement Date and the Listing Date on the WSE. Trading in the Shares is expected to commence on or about 28 June 2013. Any dealings in the Offer Shares prior to the start of trading on the WSE will be at the sole risk of investors concerned. In particular, as such transactions are not carried out on a regulated market, they are likely to result – depending on the particular circumstances of each transaction and the parties to it – in a stamp duty or similar tax being assessed. Investors trading on the WSE should consider that under the laws of Lithuania the following registration processes are needed in order to validly issue New Shares: (i) registration of the increase of the authorised capital of the Company with the Register of Legal Persons

147 AviaAM Leasing AB and (ii) registration of the newly issued shared in the CSDL as well as on the NDS foreign account in the CSDL. Thus, the New Shares will be eligible for the listing application upon their payment by Investors and the aforementioned registrations. The Issuer will not be seeking to apply for listing of temporary share receipts, such as "rights to shares" within the meaning of article 3 of the Trading in Financial Instruments Act. No entity has a commitment of any kind to act in secondary trading in the Shares or provide liquidity through bid and offer rates. After admission of the Shares to listing and trading on the WSE all the Issuer's reports and regulated information should be communicated via the ESPI system in Poland. The Issuer's reports will be available to the public on the Issuer's website (www.aviaam.com) and on the website operated by the WSE (www.gpwinfostrefa.pl).

20.12 Offering Agent The Issuer and the Selling Shareholder have appointed ING Securities S.A. with its registered address at Plac Trzech Krzy¿y 10/14, 00-499 Warsaw, Poland, to act as the intermediary with respect to the Offer Shares for the purposes of the Offering in Poland ("Offering Agent") and admission of the Shares to trading on the main market of the WSE ("Listing Agent"). No paying agent has been established for the purpose of the Offering.

20.13 Public Announcement of the Offering Results Information on the results of the Offering will be made public within two weeks of its completion on the website of the Issuer (www.aviaam.com), the Offering Agent (www.ingsecurities.pl). Furthermore, the placement report will be filed with the LB within three business days as from the registration of the capital increase of the Issuer.

20.14 Overallotment The Issuer or Selling Shareholder have not granted and will not grant any overallotment option or the green shoe type option and therefore no overallotment is foreseen. No stabilisation will be undertaken.

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XXI PLACING

The Issuer and the Selling Shareholder intend to enter, prior to the Allotment Date, into a placement agreement (the "Placement Agreement") in respect of the Offering with inter alia the Offering Agent and the Adviser, in which the Offering Agent will commit to undertake certain actions in connection with organization of the Offering and the Admission. The Issuer, the Selling Shareholder and the Offering Agent and Adviser do not expect to enter into an underwriting agreement. The Offering Agent will act as an offering agent with respect to the Offer Shares for the purposes of the Offering and admission to trading on the WSE. In connection with the Offering, the Issuer has agreed to pay to the Offering Agent and the Adviser a fee of up to 2% and 0.9%, respectively, of the gross proceeds from the placement and sale of the Offer Shares. Following the preliminary calculations, the Issuer's fixed expenses, related to this issue, shall comprise of up to USD 280 thousand (including, without limitation, the fixed fees (if any) for the Lead Manager, the Advisor, the Lithuanian and Polish legal counsels, fees to the LB for approval of the Prospectus, fees to the CSDL, NDS and WSE, fees for preparation of the Prospectus, auditors' fees, marketing of the Offering and costs of analyses prepared with respect to the Offering). In addition, the Issuer and the Selling Shareholder have agreed to hold harmless the Offering Agent and the Adviser against certain liabilities and to reimburse the Offering Agent and the Adviser for some of their expenses in connection with the management of the Offering. The Offering Agent and the Adviser are entitled in certain circumstances to be released and discharged from their respective obligations under the Placement Agreement prior to the Listing Date. Such circumstances include the non-satisfaction of certain conditions precedent and the occurrence of certain force majeure events. The Offering shall be conducted following the principle of "best endeavours". The final amount of expenses will be calculated after the Offering and will be publicly announced within two weeks from the Settlement Date. The Issuer and the Selling Shareholder agreed to pay all commissions and expenses in connection with the Offering. However, investors will bear their own costs connected with the evaluation and participation in the Offering, i.e. standard brokerage fees charged by brokers.

Stabilization The Lead Manager did not undertake to enter into any transaction aiming at stabilization of the price of the Offer Shares.

Lock-up Agreements The Company agrees that in the period of 12 months from the first day of listing of the Shares on the WSE, will not, without a prior written consent of the Lead Manager, which shall not be unreasonably withheld, propose or otherwise support an offering of any of the Company's shares, announce any intention to offer new shares and/or to issue any securities convertible into the Company's stock or securities that in any other manner represent the right to acquire the Company's shares, or conclude any transaction (including any transaction involving derivatives) whose economic effect would be similar to the effect of selling the Company's stock. Moreover, the Major Shareholders and Minority Shareholders, except Gediminas iemelis, have agreed that for the period of 12 months from the first day of listing of the Shares on the WSE they will not, without a prior written consent of the Offering Broker, which consent shall not be unreasonably withheld, sell or announce an intention to sell any of the Shares or otherwise transfer any Shares, issue any securities exchangeable into the Shares, issue any securities that in any other manner represent the right to acquire the Shares, or conclude any transaction (including any transaction involving derivatives) whose economic effect would be similar to the effect of selling the Shares and not to dispose of the Shares in any other manner that could give rise to consequences in the form of a change of ownership of Shares, and in particular not to pledge shares as a security for liabilities incurred by oneself or any third party, unless the Lead Manager provides awrittenconsentforsuchanaction. In addition, Major Shareholders and Minority Shareholders, except Gediminas iemelis, undertake with the Lead Manager that, within the period of 12 months from the first day of listing of the Shares on the WSE, they will not propose, vote in favour of or otherwise support, without the prior written consent of the Lead Manger, which consent shall not be unreasonably withheld (i) any increase of the Company's share capital; (ii) any issuance of securities convertible or exchangeable into the Company's existing or new shares; (iii) any issuance of any other securities that in any other manner represent the right to acquire existing or new shares in the Company; and/or (iv) the conclusion of any transaction (including any transaction including derivatives) of which the economic effect would be similar to the effect of causing the Company to issue such instruments. Furthermore, according to the Share Sale-Purchase Agreements, whereby the Minority Shareholders Linas Dovydenas,ÿ Aurimas Sanikovas, Virginija Svilainyteÿ and Tadas Goberis acquired Shares of the Company from Mesotania Holdings Ltd. and from Zia Valda Cyprus Leasing Ltd. the following major arrangements with respect to lock-up and transfer of Shares of the Company are established: during the non-trading period, which lasts for a term of 1 year as from entering into the respective agreement or for a term of 1 year after the date of the Offering, whichever occurs later (in case of Tadas Goberis the respective term is 2 years), the indicated Minority Shareholders undertook (i) not to transfer, sell or otherwise dispose all or any part of the Shares to any third parties (save for, respectively, Mesotania Holdings Ltd. and ZIA Valda Cyprus Leasing Ltd. repurchase rights), (ii) not to assign or pledge any rights, title or interest to the Shares to anyone than, respectively, Mesotania Holdings Ltd. and ZIA Valda Cyprus Leasing Ltd., as well as (iii) not to create or cause permit to be created any encumbrance on the Shares or any part thereof.

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Interests of Natural and Legal Persons Participating in the Offering The Offering Agent has a contractual relationship with the Issuer and the Major Shareholders in connection with the Offering and the Admission, and has been mandated to act as the Offering Agent for the Offering and listing of the Issuer's Shares on the WSE. The Adviser and the Offering Agent advise the Issuer and the Selling Shareholder in connection with the Offering and Admission and coordinate the structuring and execution of the transaction. Furthermore, the Offering Agent is involved in the Prospectus preparation process. If the transaction is successfully executed, the Offering Agent and the Adviser will receive a combined commission which depends on the actual value of the sold Offer Shares. The Offering Agent or the Adviser or their affiliates may acquire in connection with the Offering the Offer Shares as Investors and hold or sell those Shares for their own account, also outside of the offering period, which shall not constitute a preferential allotment. The Offering Agent and the Adviser do not intend to disclose the extent of such investments or transactions unless required by law. The Offering Agent and its affiliates could have been engaged and the Adviser and its affiliates have engaged in and may in the future engage in, investment banking, advisory services and other commercial dealings in the ordinary course of business with the Company and the Major Shareholders and any of its affiliates. The Offering Agent and the Adviser and their affiliates have received and may receive in the future customary fees and commissions for these transactions and services.

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XXII SELLING RESTRICTIONS

Prospectus This Prospectus constitutes a prospectus within the meaning of the Prospectus Directive and the Law on Securities (which implemented the Prospectus Directive into the Lithuanian law), for the purpose of providing any information with regard to the Company and the Shares it as well as the Selling Shareholder intend to offer pursuant to this Prospectus, which is necessary to enable prospective Investors to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the Company. This Prospectus constitutes a prospectus in the form of a single document within the meaning of Article 5.3 of the Prospectus Directive and Article 6 of the Law on Securities. This Prospectus has been filed with, and was approved by the LB, which is the competent authority in Lithuania to approve this document as a prospectus. Under the Prospectus Directive and the Law on Securities, this Prospectus, once approved by the competent authority of one member state of the EU ("Home Member State") may be used for making a public offering and admission of securities to listing on a regulated market in another Member State of the EU ("Host Member State"), provided that the competent authority of the Home Member State provides the competent authority of the Host Member State with a certificate of approval of the Prospectus (in accordance with Article 18 of the Prospectus Directive and Article 12 of the Law on Securities). Consequently, the Company and the Selling Shareholder will be authorized to carry out the Offering to the public in Poland, once the LB has provided the PFSA with (1) a certificate of approval of this Prospectus (in accordance with Article 12 of the Law on Securities, Article 18 of the Prospectus Directive and Article 37 of the Public Offerings Act) and (2) a copy of the Prospectus together with a summary of the Prospectus in the Polish language and after the Prospectus in the English language and its summary in the Polish language have been made available to the public, which is equivalent to authorizing the Offering to the public in Poland.

No Public Offering outside of Poland This Prospectus has been prepared on the basis that there will be no public offers of the Offer Shares, other than the Offering to the public in the territory of Poland in accordance with the Prospectus Directive, as implemented in Lithuania and Poland, respectively. Accordingly, any person making or intending to make any offering, resale or other transfer within the European Economic Area (the "EEA"), other than in Poland, of the Offer Shares may only do so in circumstances under which no obligation arises for the Issuer, the Selling Shareholder, the Major Shareholders or the Offering Agent to produce an approved prospectus or other offering circular for such offering. Neither the Issuer, the Selling Shareholder, the Major Shareholders, nor the Offering Agent have authorized, nor will any of them authorize, the making of any offer of the Offer Shares through any financial intermediary, other than offers made by the Offering Agent under this Prospectus. No action has been or will be taken by the Issuer, the Selling Shareholder, the Major Shareholders or the Offering Agent in any jurisdiction other than Poland that would permit a public offering of the Offer Shares, or the possession or distribution of this Prospectus or any other offering material relating to the Issuer or the Shares in any jurisdiction where action for that purpose is required. Accordingly, the Shares may not be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering material or advertisements in connection with the Shares may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction. The distribution of this Prospectus and the Offering in certain jurisdictions may be restricted by law and therefore persons into whose possession this Prospectus comes should inform themselves about and observe any such restrictions on the distribution of this Prospectus and the Offering, including those in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions. This Prospectus does not constitute an offer to subscribe for or buy any of the Offer Shares offered hereby to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.

Notice to Investors Because of the following restrictions, prospective investors are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of the shares offered hereby. No actions have been taken to register or qualify the Offer Shares or otherwise permit a public offering of the Offer Shares in any jurisdiction other than in Poland. The distribution of this Prospectus and the offer of the Offer Shares in certain jurisdictions may be restricted by law, and therefore persons into whose possession this Prospectus comes should inform themselves about and observe any such restrictions, including those in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions.

Notice to Investors in the European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), an offer to the public of any Offer Shares (including by means of a resale or other transfer) may not be made in that Relevant Member State, other than the offer in Poland after the publication of a Prospectus in relation to the Offer Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that relevant member state, all in accordance with the Prospectus Directive, except that it may make an offer of

151 AviaAM Leasing AB the Offer Shares to the public in that Relevant Member State under the following exemptions under the Prospectus Directive, if such exemptions have been implemented in that Relevant Member State: • to legal entities which are qualified investors as defined under the Prospectus Directive; • by the Offering Agent to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the "2010 PD Amending Directive", 150 natural or legal persons, as permitted under the Prospectus Directive, subject to obtaining the prior written consent of the Lead Manager nominated by the Issuer for any such offers; or • in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of the Offer Shares should result in a requirement for the Issuer and the Offering Agent to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. Each person in a Relevant Member State (other than, in the case of paragraph (a) below, persons in Poland receiving the offer in Poland contemplated in the Prospectuses) who receives any communication in respect of, or who acquires any the Offer Shares under, the offer contemplated in the Prospectuses will be deemed to have represented, warranted and agreed to and with each of the Issuer and the Offering Agent limited that: (a) it is a qualified investor as defined under the Prospectus Directive Article 2(1)(e); and (b) in the case of any of the Offer Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the Offer Shares acquired by it in the offer have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Offering Agent has been given to the offer or resale. For the purposes of the provisions and representations above, the expression an "offer to the public" in relation to any the Offer Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the Offering and the Offer Shares to be offered so as to enable an investor to decide to purchase any the Offer Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

Notice to investors in the United Kingdom This Prospectus and any other material in relation to the securities described herein may only be distributed to and may only be directed at persons in the United Kingdom (the "UK") that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors") that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth entities, and other persons to whom the Prospectus may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order and (iii) to whom it may otherwise lawfully be distributed (all such persons together being referred to as "Relevant Persons"). The Offer Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such the Offer Shares will be engaged in only with, Relevant Persons. This document and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) by recipients to any other person in the UK. Any person who is not a Relevant Person should not act or rely on this document or any of its contents. No prospective investor should consider any information in this Prospectus to be investment, legal, tax or other advice. Each prospective investor should consult its own counsel, accountant and other advisers for such advice. None of the Issuer and the Offering Agent and Adviser makes any representation to any offeree or purchaser of the Offer Shares regarding the legality of an investment in such shares by such offeree or purchaser. The Offering Agent is acting solely for the Issuer and the Selling Shareholder and no one else in connection with this offering and is not, and will not be, responsible to any other person for providing advice in respect of this offering or for providing the protections afforded to their respective clients. The Offering Agent and certain related entities may acquire a portion of the Offer Shares for their own accounts. In connection with the Offering, the Offering Agent and the Advisor and any affiliate acting as an investor for its own account may acquire the Offer Shares and in that capacity may retain, purchase or sell for its own account the Offer Shares and any of the Issuer's other securities or related investments and may offer or sell the Offer Shares or other investments otherwise than in connection with the Offering. Accordingly, references in this document to the Offer Shares being offered should be read as including any offering of securities to the Offering Agent and any affiliate acting in such capacity. The Offering Agent and other managers do not intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so. In relation to member states of the EEA other than the United Kingdom, there may be further rules and regulations of such country or jurisdiction within the EEA relating to the offering of the Offer Shares or distribution or publication of this Prospectus or any other offering material or advertisement; persons into whose possession this Prospectus comes should inform themselves about and observe any restrictions on the distribution of the Prospectus and the offer of Offer Shares applicable in such EEA member state.

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United States The Offer Shares have not been, and will not be, registered under the U.S. Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions in reliance on Regulation S under the U.S. Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the U.S. Securities Act. In addition, until 40 days after the commencement of the Offering, an offer or sale of Offer Shares within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from registration under the U.S. Securities Act. Offering Agent has agreed that, except as permitted by the Placement Agreement, it will not offer, sell or deliver the Offer Shares within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the Offering and the closing date, and that it will have sent to each dealer to which it sells Offer Shares during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Offer Shares within the United States or to, or for the account or benefit of, U.S. persons. This Prospectus has been prepared by the Company for use in connection with the offer and sale of the Offer Shares outside the United States and for the listing of the Offer Shares on the Warsaw Stock Exchange. The Company, the Selling Shareholder and the Offering Agent reserve the right to reject any offer to purchase the Offer Shares, in whole or in part, for any reason.

Canada This Prospectus is not, and under no circumstances is to be construed as, a Prospectus, an advertisement or a public offering of the securities described herein in any province or territory of Canada. No securities commission or similar authority in Canada has reviewed or in any way passed upon this document or the merits of the securities described herein, and any representation to the contrary is an offence.

Japan The Shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended), and are not being offered or sold and may not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan (which term as used herein includes any corporation or other entity organized under the laws of Japan), or to others for offering or sale, directly or indirectly, in Japan or to, or for the account of, any resident of Japan, except (i) pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law of Japan and (ii) in compliance with any other applicable requirements of Japanese law.

Switzerland The Prospectus does not constitute a prospectus within the meaning of Articles 652a or 1156 of the Swiss Federal Code of Obligations, or a listing prospectus according to Article 27 et seq. of the Listing Rules of the SIX Swiss Exchange. The Offer Shares will not be listed on the SIX Swiss Exchange and therefore, the Prospectus does not comply with the disclosure standards of the Listing Rules of the SIX Swiss Exchange. Accordingly, the Offer Shares may not be offered to the public in or from Switzerland, but only to a selected and limited group of investors which do not subscribe for the Offer Shares with a view to distribution to the public. The investors may be individually approached by any of the Managers from time to time. The Prospectus is personal to each offeree and does not constitute an offer to any other person. The Prospectus may only be used by those persons to whom it has been handed out in connection with the offer described herein, and may neither directly, nor indirectly be distributed or made available to other persons without the express consent of the Issuer. It may not be used in connection with any other offer and shall, in particular, not be copied and/or distributed to members of the public in or from Switzerland.

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XXIII TAXATION OF THE ISSUER'S SHARES

The following is a summary of certain Lithuanian and Polish tax implications of ownership and disposition of the Shares. The summary is based on the tax laws of Lithuania and Poland as in effect on the date of this Prospectus, and is subject to changes in such laws, including changes that could have a retroactive effect. The summary does not purport to be a comprehensive description of all the tax implications that may be relevant for making a decision to purchase, own or dispose of the Offer Shares. You are advised to consult your own professional tax advisors as to the Lithuanian, Polish and other tax implications of the Offering and the purchase, ownership and disposition of the Shares. Prospective investors who may be affected by the tax laws of other jurisdictions should consult their own tax advisors with respect to the tax implications applicable to their particular circumstances.

23.1 Taxation in Lithuania

23.1.1 Taxation on Dividends

Legal persons Dividends received by Lithuanian or foreign legal persons are subject to the corporate income tax at a rate of 15%. Dividends are not subject to the corporate income tax when a recipient (a Lithuanian or foreign legal person) has been or intends to be in control of not less than 10% of voting shares of a Lithuanian company distributing dividends for an uninterrupted period of at least 12 months (including the moment of distribution of dividends). This participation exemption does not apply if dividends are paid to foreign legal persons registered or otherwise organized in a tax haven jurisdiction. If dividends are paid out to the legal persons that are residents of a foreign country with which Lithuania has concluded a treaty for the avoidance of double taxation and such a treaty limits the rights of Lithuania to tax dividends, the rules set in that treaty will be applied. The obligation to calculate, withhold and pay the withholding tax on dividends arises for the Lithuanian legal person (the payer of dividends).

Individuals Dividends received by Lithuanian and foreign individuals are subject to the personal income tax at a rate of 20%. If dividends are paid out to the residents of a foreign country with which Lithuania has concluded a treaty for the avoidance of double taxation and such treaty limits the rights of Lithuania to tax dividends, the rules set in that treaty will be applied. The obligation to calculate, withhold and pay the withholding tax on dividends arises for the Lithuanian legal entity (the payer of dividends).

23.1.2 Taxation on Capital Gains

Legal persons No specific capital gains tax is established under the Lithuanian tax legislation. Therefore, capital gains received by a Lithuanian legal person or by a foreign legal person through its permanent establishment in Lithuania from the sale of shares are included in the taxable income for the corporate income tax purposes. The standard rate of the corporate income tax is 15%. An exemption is available, and capital gains are not subject to the corporate income tax if the following conditions are met: 1) an entity the shares of which are being transferred is registered in the EEA Member State or a country with which Lithuania has concluded a treaty for the avoidance of double taxation, and this entity is a payer of corporate income or equivalent tax; and 2) an entity transferring shares has been in control of more than 25% of voting shares for an uninterrupted period of at least two years. The exemption is not applied if shares are transferred to the issuer. Lithuanian entities and permanent establishments of foreign entities have the right to carry forward losses due to the disposal of securities and/or derivative financial instruments for five consecutive years for the purpose of the Lithuanian corporate income tax. The said losses can be covered only with income generated from disposals of securities and/or derivative financial instruments. Capital gains received by the foreign legal persons from the disposal of shares of Lithuanian companies are not subject to the Lithuanian corporate income tax.

Individuals Capital gains received from the sale of shares by the Lithuanian residents are subject to 15% personal income tax. Capital gains from the sale of shares are not taxed if the shares are sold not earlier than 366 days after the date of their acquisition and the individual had not held more than 10% of the shares of the entity for three years preceding the end of the tax period during which the shares were sold. The application of the said exemption is restricted in respect of the shares received by the shareholder free of charge due to the increase in the issuer's share capital from its own funds or in case the nominal value of the sale shares was increased from the issuer's own funds (in which case the application of the exemption will be restricted solely to the income equal to the amount of

154 AviaAM Leasing AB the increase in the nominal value of the sale shares). Moreover, the application of the said exemption is restricted if shares are transferred to the issuer. The personal income tax on capital gains received by individuals should be calculated, paid and declared by individuals by the 1st of May of the calendar year following the taxable year. Capital gains received from the disposal of shares of Lithuanian companies by the individuals who are not considered to be Lithuanian residents for tax purposes are not taxed in Lithuania.

23.1.3 Taxation on Gifts and Inheritance If the Issuer's shares are given as a gift to a natural person, generally the acquisition of shares is subject to personal income tax at a rate of 15%, charged on income received at the transfer of the shares as a gift. The tax is not applicable where a spouse, children (adopted children), parents (adoptive parents), brothers, sisters, grandchildren or grandparentsgivesharesasagiftorwheresharesaregivenasagiftto a non-Lithuanian resident. Furthermore, donation incomes received from other persons are not subject to taxation, unless such incomes exceed LTL 8,000 in a calendar year. Inherited Issuer's shares are subject to inheritance tax as follows: if the taxable value of the inherited property does not exceed LTL 500,000, the tax rate is 5%; if the taxable value of the inherited property exceeds that amount, the tax rate is 10%. The property is exempted from the tax where the property is inherited by a spouse upon the death of the other spouse, by parents (adoptive parents), children (adopted children), grandparents, grandchildren, brothers, sisters, guardians (custodians), wards (foster children), or where the shares are inherited by a non-Lithuanian resident or the value of the inherited property does not exceed LTL 10,000.

23.1.4 Value added tax Generally, under effective laws, share acquisition or transfer transactions are not subject to value added tax (VAT) in Lithuania.

23.2 Taxation in Poland

23.2.1 Taxation on Capital Gains

Polish Tax Residents

Individuals Under the Personal Income Tax Act, natural persons being Polish tax residents are liable to pay tax on all of their worldwide income (revenue), regardless of the location of the source of revenue (unlimited tax obligation). As a rule, a natural person is deemed a resident of Poland if: (i) the centre of his/her personal or economic interests is situated within the territory of Poland, or (ii) he/she resides within the territory of Poland for more than 183 days in any given tax year. In case of the disposal of shares in a Lithuanian company by a Polish tax resident, the Double Tax Treaty concluded between Poland and Lithuania applies. According to Art. 13, section 4 of the Treaty, capital gains from the disposal of shares are, as a rule, taxed exclusively in the country of residence of the taxpayer. Thus, income from the disposal of the Offer Shares earned by Polish residents shall be taxed in Poland. Pursuant to Art. 30b, section 1 of the Personal Income Tax Act, income earned on the disposal of shares in exchange for any form of consideration is not aggregated with other types (sources) of income derived by an individual and is taxed at a flat rate of 19%. Taxable income is computed as the difference between proceeds from the disposal of shares (if the sales price declared for tax purposes significantly differs from the fair market value of the shares, the tax authorities may reassess the due tax) and the tax-deductible costs, e.g. expenditures related to the acquisition of the shares. Income is taxed when due, e.g. upon sale of shares, even if it has not yet actually been received. A taxpayer is obliged to calculate and pay due tax, as well as to submit the relevant tax return, by 30 April of the calendar year following the year in which income was earned. There is no requirement to pay tax advances during the tax year. Tax is not withheld and paid to the tax authorities by any third party. The above regulations do not apply if a disposal of shares is performed as part of business activity. In such case, revenues and relevant costs should be settled according to the terms that apply to the taxation of a business activity. It should also be noted that pursuant to Art. 9, section 6 of the Personal Income Tax Act, tax losses incurred during a fiscal year on the disposal of shares may be deducted from the income earned from that source over the following five consecutive fiscal years (however, the amount of the deduction cannot exceed 50% of the amount of the loss in any single fiscal year of the five-year period).

Corporate Persons In accordance with Art. 3, section 1 of the Corporate Income Tax Act, any taxpayer with a legal seat or place of effective management within the territory of Poland are liable to pay tax on all of their worldwide income, regardless of the location of the source of revenue.

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In case of the disposal of shares in a Lithuanian company by a Polish tax resident, the Double Tax Treaty concluded between Poland and Lithuania applies. According to Art. 13, section 4 of the Treaty, capital gains from the disposal of shares are, as a rule, taxed exclusively in the country of residence of the taxpayer. Thus, income from the disposal of the Offer Shares earned by Polish residents shall be taxed in Poland. Income from the disposal of shares is aggregated with other types of income of the given fiscal year and subject to the general 19% CIT rate. Taxable income is computed as the difference between proceeds from the disposal of shares (if the sales price declared for tax purposes significantly differs from the fair market value of the shares, the tax authorities may reassess the due tax) and the tax-deductible costs, e.g. expenditures related to the acquisition of the shares.

Non-Polish Tax Residents

Individuals In accordance with Art. 3, section 2a of the Personal Income Tax Act, natural persons, if they do not reside within the territory of Poland, are liable to pay tax exclusively on income (revenue) obtained within the territory of Poland (limited tax obligation). Polish tax law does not give clear direction as to whether income from a sale of securities of a Lithuanian company should be treated as income derived from Poland if the securities are traded on the Warsaw Stock Exchange. It seems that the prevailing approach of the tax authorities is that trades on the Warsaw Stock Exchange shall be treated as a Polish source of income. Consequently, as a rule, such income could be subject to Polish income tax. In practice however, most of the tax treaties would exempt such income from taxation in Poland. This should be verified on a case-by-case basis.

Corporate Persons In accordance with Art. 3, section 2 of the Corporate Income Tax Act, taxpayers not being Polish tax residents, are liable to pay Polish corporate income tax exclusively on income obtained within the territory of Poland. Polish tax law does not give clear direction as to whether income from a sale of securities of a Lithuanian company should be treated as income derived from Poland if the securities are traded on the Warsaw Stock Exchange. It seems that the prevailing approach of the tax authorities is that trades on the Warsaw Stock Exchange shall be treated as a Polish source of income. Consequently, as a rule, such income could be subject to Polish income tax. In practice however, most of the tax treaties would exempt such income from taxation in Poland. This should be verified on a case-by-case basis.

23.2.2 Polish Tax on Dividends

Polish Tax Residents

Individuals Taxation of dividend income obtained by an individual being a Polish tax resident from a company residing in Lithuania is regulated by the provisions of the Double Tax Treaty concluded between Poland and Lithuania. Pursuant to Art. 10 of this Treaty, dividends paid by a company with a seat in Lithuania to a person who is a tax resident in Poland may be taxed in Poland. However, dividends may also be taxed in Lithuania but the tax levied in Lithuania cannot exceed 15% of the dividend. The applicable withholding tax rate according to the relevant Lithuanian laws was indicated in description of Lithuanian tax regime. According to Art. 25 of the Treaty, Poland should allow for a reduction of tax due in Poland on dividends by the amount of tax withheld on dividends in Lithuania. Pursuant to Art. 30a, section 1, point 4 of the Personal Income Tax Act, dividends and other income from a share in the profits of legal persons is not aggregated with income from any other sources and is subject to taxation at a flat rate of 19% of the dividend received. Under Art. 30a, section 9 of the Personal Income Tax Act tax withheld abroad on dividends may be deducted from the tax due in Poland (up to the amount of tax due in Poland on such dividends). As a rule, according to Art. 30a, section 11 of the Personal Income Tax Act, tax due on dividends earned outside of Poland shall paid by a taxpayer, as well as be disclosed in the relevant tax return, by 30 April of the calendar year following the year in which dividend was received. There is no requirement to pay tax advances during the tax year. It is not absolutely clear whether tax due on dividend earned by a Polish tax resident from a company with its seat in Lithuania shall be withheld by a Polish brokerage house assisting in the payment. There is a regulation (Art. 41, section 4d of the Personal Income Tax Act) that imposes on brokerage houses the obligation to withhold the tax in relation to dividends paid to taxpayers only if two conditions are jointly met: (i) the dividend is earned within the territory of Poland and is strictly related to securities registered on brokerage accounts kept by a Polish brokerage house and (ii) the dividend is paid out to the taxpayer through a Polish brokerage house. It should be noted that under the prevailing approach, dividends from a company with its seat in Lithuania should not be treated as income earned within the territory of Poland, even if the company is listed on the WSE. Thus, the first condition specified above shall not be met and the tax should not be withheld by brokerage houses. However, in case of any doubt, a taxpayer should consult a tax adviser.

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Corporate Persons Taxation of dividend income obtained by a Polish tax resident from a company residing in Lithuania is regulated by the provisions of the Double Tax Treaty concluded between Poland and Lithuania. Pursuant to Art. 10 of this Treaty, dividends paid by a company with a seat in Lithuania to an entity which is a tax resident in Poland may be taxed in Poland. However, dividends may also be taxed in Lithuania but the tax levied in Lithuania cannot exceed 15% of the dividend (or 5% in case dividend is earned by a company owning at least 25% of the share capital in a company paying the dividend). The applicable withholding tax rate according to the relevant Lithuanian laws was indicated in description of Lithuanian tax regime. According to Art. 25 of the Treaty, Poland should allow for a reduction of tax due in Poland on dividends by the amount of tax withheld on dividends in Lithuania. As a rule, dividends paid by a company with a seat in Lithuania to a legal person being a Polish tax resident may be taxed in Poland at a flat rate of 19% of the income earned. Under Art. 20, section 1 of the Corporate Income Tax Act tax withheld abroad on dividends may be deducted from the tax due in Poland (up to the amount of tax due in Poland on such dividends). Pursuant to Art. 20, section 3 of the Corporate Income Tax Act, income (revenue) from dividends and other revenue from participation in profits generated by Lithuanian companies are tax exempt if all of the following conditions are satisfied jointly: i. the entity paying out the dividends and other revenue from participation in profits generated by legal persons, is a company liable to pay income tax in any of the EU member states other than Poland or in any other country of the European Economic Area, with respect to its world-wide income, regardless of the place where it is generated; ii. the entity receiving income (revenue) from dividends and other revenue from participation in profits generated by legal persons, as referred to in section (i), is a company liable to pay income tax in Poland and has its registered seat or place of effective management within the territory of Poland and is not exempt from income tax in relation to its world-wide income; and iii. the company referred to in section (ii) directly own at least 10% shares in the share capital of the company which pays out the dividend (company referred to in section (i)) for an uninterrupted period of at least two years. The exemption also applies if the two-year period of uninterrupted holding of shares by a company earning income ends after the date of obtaining such income. In the case of failure to satisfy the condition of uninterruptedly holding shares in the required amount for two years, the company which benefited from the exemption is obliged, under the relevant regulations, to submit a corrected declaration for the fiscal years of gaining the exemption. The above exemption will not apply, however, if distributions are made upon liquidation of a company.

Non-Polish Tax Residents

Individuals As indicated above, under the prevailing approach, dividends from a company with its seat in Lithuania should not be treated as income earned within the territory of Poland, even if the company is listed on the WSE. Thus, dividends distributed by a Lithuanian company to non-Polish tax residents should not be subject to taxation in Poland.

Corporate Persons As indicated above, under the prevailing approach, dividends from a company with its seat in Lithuania should not be treated as income earned within the territory of Poland, even if the company is listed on the WSE. Thus, dividends distributed by a Lithuanian company to non-Polish tax residents should not be not subject to taxation in Poland.

23.2.3 Transfer Tax (Tax on Civil Law Transactions) The tax on civil law transactions ("TCLT") is levied on agreements providing for the sale or exchange of rights, provided that these rights are executed in Poland or, if executed abroad, that the purchaser is a Polish tax resident and that the transaction is effected in Poland. The tax rate on the sale of shares and the exchange of shares is 1.0% of their market value and should be paid by the purchaser of shares within 14 days of the date the sale or exchange agreement was concluded.(inthecaseofanexchangeofshares,theliabilityforpaying the tax due is borne jointly and severally by the parties to the exchange of the share transaction). Exemptions from the TCLT apply, without limitation, to transactions concerning (i) the sale of shares to investment companies or to foreign investment companies or (ii) the sale of shares with an intermediation of investment companies or foreign investment companies or (iii) the sale of shares within a regulated market or (iv) the sale of shares made by investment companies or foreign investment companies outside a regulated market, provided that such instruments were acquired by those companies within a regulated market – as defined in the Polish Trading in Financial Instruments Act. In general, trading in shares on the WSE is exempt from the TCLT.

23.2.4 Taxation of Gifts and Inheritance The inheritance and donation tax is charged on the acquisition by natural persons of shares within the territory of Poland, by way of, among others, inheritance, bequest or donation. The inheritance and donation tax is also charged on the acquisition by natural persons of shares outside the territory of Poland, provided that at the moment of inheritance or conclusion of a donation, the acquirer was a Polish citizen or his/her place of residence was within the territory of Poland.

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The tax is not charged on an acquisition of shares within the territory of Poland if, on the date of such acquisition, neither the transferee, nor the testator were Polish citizens and had no place of permanent residence or registered office within the territory of Poland. The tax liability is borne by the person acquiring shares and may arise at different times, depending on the legal form of such acquisition. The amount of tax depends on the degree and type of kinship or relationship or other personal ties between the testator and the heir, or the donor and the beneficiary. Generally, the tax rates increase progressively from 3% to 20% of the tax base, depending on the tax group in which the transferee qualifies. There is a tax-free amount defined for each of these groups. Unless the tax is collected by the tax remitter, the taxpayers are required to file, within one month from the date on which the tax liability arose, a tax return disclosing the acquisition of shares in the appropriate form, with the head of the relevant tax office. The tax is payable within 14 days of receiving a decision of the head of the relevant tax office assessing the amount of the tax liability. Shares acquired by the closest relatives (spouse, descendants, ascendants, stepchildren, siblings, stepfather and stepmother) are tax-exempt, subject to filing an appropriate notice with the relevant tax office in due time. The exemption applies if, at the time of acquisition, the acquirer was a citizen of Poland, another Member State, European Free Trade Association member state being party to the EEA Agreement, or was a resident of Poland or such state.

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XXIV ARTICLES OF ASSOCIATION

Issuer's objects and purposes Following paragraph 3.1 of the Articles of Association of the Company, the main purpose of the activities of the Company is to gain profit by carrying out commercial business activities efficiently and productively. Paragraph 3.2 establishes that the object of the Company's activities is investments, management and development of companies. The Company may engage in any lawful activity that is not in conflict with legal acts of the Republic of Lithuania.

Bodies of the Issuer Pursuant to item 6 of the Articles of Association of the Company, the bodies of the Company are the following: • the General Meeting of Shareholders (General Meeting); • the Supervisory Council; • the Management Board; • the Manager (General Manager).

General Meeting The competence of the General Meeting does not differ from the competence of the general meeting of shareholders as provided for in the Law on Companies, therefore is not specified in the Articles of Association. According to the Law on Companies, the General Meeting of the Company has the exclusive right to: • amend the Articles of Association of the Company, except where the Law on Companies provides otherwise; • change the address of the registered office of the Company; • elect the members of the Supervisory Council; • remove the Supervisory Council or its members; • select and remove the firm of auditors for the carrying out of the audit of a set of annual financial statements, set the conditions for auditor remuneration; • determine the class, number, nominal value and the minimum issue price of the shares issued by the Company; • adopt a decision regarding conversion of the Company's shares of one class into shares of another class, approve the share conversion procedure; • approve the set of annual financial statements; • adopt a decision on profit/loss distribution; • adopt a decision on the formation, use, reduction and liquidation of reserves; • approve the set of interim financial statements, compiled for adoption of a decision regarding distribution of dividends for a shorter period, than the financial year; • adopt a decision regarding distribution of dividends for a shorter period, than the financial year; • adopt a decision on the issue of convertible bonds; • adopt a decision on withdrawal for all the shareholders the pre-emptive right in acquiring the Company's shares or convertible bonds of a specific issue; • adopt a decision on increase of the authorised capital; • adopt a decision on reduction of the authorised capital, except where the Law on Companies provides otherwise; • adopt a decision for the Company to purchase its own shares; • adopt a decision on the reorganisation or spin-off of the Company and approve the terms of reorganisation or spin-off, except where the Law on Companies provides otherwise; • adopt a decision on transformation of the Company; • adopt a decision on restructuring of the Company; • adopt a decision on liquidation of the Company, cancellation of the liquidation of the Company, except where the Law on Companies provides otherwise; • elect and remove from office the liquidator of the Company, except where the Law on Companies provides otherwise.

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Decision making of the General Meeting does not differ from the rules of the Law on Companies which are the following: The General Meeting takes the following decisions by a qualified majority vote that must be not less than 2/3 of all the votes carried by the shares held by the shareholders attending the meeting: • to amend the Articles of Association of the Company, except where the Law on Companies provides otherwise; • to determine the class, number, nominal value and the minimum issue price of the shares issued by the Company; • to convert the Company's shares of one class into shares of another class, approve the share conversion procedure; • on distribution of profit/loss; • on formation, use, reduction and liquidation of reserves; • on distribution of dividends for a shorter period, than the financial year; • ontheissueofconvertiblebonds; • to increase the authorised capital; • to reduce the authorised capital, except where the Law on Companies provides for otherwise; • to adopt a decision on the reorganisation or spin-off of the Company and approve the terms of reorganisation or spin-off; • on the transformation of the Company; • on the restructuring of the Company; • on the liquidation of the Company and cancellation of Company's liquidation except where otherwise provided for by the Law on Companies. The decision to withdraw for all shareholders the pre-emptive right in acquiring the Company's newly issued shares or convertible bonds of aspecificissuerequiresaqualifiedmajorityvotethatmustbenotless than 3/4 of all the votes conferred by the shares of the shareholders present at the General Meeting and entitled to decide on the issue. All other decisions of the General Meeting require a simple majority vote, i.e. not less that 1/2 of all the votes conferred by the shares of the shareholders present at the General Meeting.

Supervisory Council The Supervisory Council of the Company is a collegial body supervising the activities of the Company. The competence of the Supervisory Council is the same as the competence of the Supervisory Council defined under the Law on Companies, in particular: • election of the members of the Management Board and their removal from the office. If the Company is operating at a loss, the Supervisory Council must consider the suitability of the Management Board members for their office; • supervision and control of the activities of the Management Board and the Manager of the Company; • submission of comments and proposals to the General Meeting on the Company's operating strategy, set of annual financial statements, draft of profit/loss distribution and the annual report of the Company as well as on the activities of the Management Board and the Manager of the Company; • submission of comments and proposals to the General Meeting on the Company's draft decision on distribution of dividends for a period, shorter than a financial year and on the set of interim financial statements compiled and the interim report prepared for adoption thereof; • submission of proposals to the Management Board and the Manager to revoke their decisions which are in conflict with laws and other legal acts of the Republic of Lithuania, the Articles of Association of the Company or the decisions of the General Meeting; • taking the decisions on other issues, related to supervision competence, indicated in the Articles of Association, as well as designated by the General Meeting.

Management Board The Management Board is a collegial management body of the Company. The competence of the Management Boards is the same as the competence of the Management Board defined under the Law on Companies, in particular the Management Board: • shall consider and approve: – the operating strategy of the Company; – the annual report of the Company; – the interim report of the Company; – the management structure of the Company, the positions of the employees;

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– the positions to which employees are recruited through competition; – regulations of branches and representative offices of the Company; • shall elect and remove from office the Manager of the Company, fix his salary and set other terms of the employment contract, approve his job description, provide incentives for and impose penalties against him; • shall elect and remove the managers of affiliates or representative offices of the Company; • shall determine which information shall be considered to be the Company's commercial (industrial) secret and confidential information; • shall: – adopt the decisions to become a promoter of or a member in other business entities; – adopt the decisions to establish or terminate activities of affiliates or representative offices of the Company; – adopt the decisions to invest, transfer, lease of long-term assets of the balance value exceeding 1/20 of the authorised capital of the Company (calculated individually for every type of transaction); – adopt the decisions to mortgage and pledge of long-term assets of the balance value exceeding 1/20 of the authorised capital of the Company (per aggregate sum of transactions); – adopt the decisions to make guaranties in respect of or assure the performance by other persons of obligations undertaken for the value in excess of 1/20 of the authorised capital of the Company; – decisions to acquire long-term assets at a price exceeding 1/20 of the authorised capital of the Company; – decisions on restructuring of the Company in the cases laid down by the Law on Restructuring of Enterprises of the Republic of Lithuania; – other decisions falling within the scope of authority of the Management Board in accordance with the Law on Companies or resolutions adopted by the General Meeting; • shall analyze and evaluate the following: – the materials provided by the Manager on the carrying out of the business strategy of the Company, the organization of the business operations of the Company, the financial position of the Company and on the results of business activities, income and loss accounts, inventorying related and other accounting records reflecting change in assets; – the draft of set of annual financial statements and draft of profit (loss) distribution of the Company and together with the annual report shall present the same to the Supervisory Council and the General Meeting for consideration; – draft of the decision on allocation of dividends for shorter period than the financial year and the set of interim financial statements, compiled in order to adopt it, which together with the interim report of the Company shall be presented to the Supervisory Council and the General Meeting for consideration; • shall be responsible for the convening and organisation of the General Meetings in due time.

General Manager Business operations of the Company are organised and conducted by the General Manager, the latter being the Head of the Company appointed and revoked by the Management Board pursuant to the procedure determined by the Law on Companies. The General Manager of the Company abides by the Lithuanian legal acts, the Articles of Association, decisions of the General Meeting, the Supervisory Council and the Management Board and the job description of the General Manager of the Company. The competence of the General Manager is the same as the competence of the Manager of the company defined under the Law on Companies, in particular: • organisation of activities and implementation of purposes of the Company; • drawing up of the set of annual financial statements and drafting of the annual report of the Company; • compiling the draft decision on distribution of dividends for shorter period than the financial year, drawing the set of interim financial statements and preparation of the interim report for the purpose of adoption the decision on distribution of dividends for shorter period than the financial year; • conclusion of a contract with a firm of auditors; • submission of information and documents to the General Meeting, the Supervisory Council and the Management Board in the cases laid down in the Law on Companies or at their request; • submission of documents and particulars of the Company to the manager of the Register of Legal Persons; • submission of documents to the LB and the CSDL; • publication of information, indicated in the Law on Companies or other legal acts following the order, established by the applicable laws;

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• submission of information to shareholders of the Company; • performance of other duties laid down in the Law on Companies and other laws and legal acts as well as in the Articles of Association and the job description of the General Manager. Following the Articles of Association, the General Manager is entitled to issue a special power of attorney (procuracy) to act on behalf of the Company, which has to be registered with the Register of Legal Persons. On 22 April 2013 the General Manager has issued the indicated procuracy to the Executive Director of the Company Justinas Gilys, which was registered with the Register of Legal Persons on 24 April 2013. Following the indicated procuracy, Justinas Gilys generally has the same rights to act on behalf of the Company as the General Manager himself, with the exception that he has no right to: • transfer the real estate (enterprise), owned by the Company or restrict the rights thereto; • sign the balance sheet of the Company and the tax returns; • announce the bankruptcy of the Company; • issue a procuracy or delegate its powers to other person.

Rights conferred by the Shares of the Company Pursuant to items 5.1 and 5.2 of the Articles of Association, rights conferred by the Shares of the Company are as follows: • to receive a part of the Company's profit (dividend); • to receive the Company's funds when the share capital of the Company is reduced in order to pay out the Company's funds to its shareholders; • to receive shares gratis in the event the share capital is increased from the Company's own funds, except cases indicated in the Law on Companies; • the pre-emptive right over each new issue of the Company's shares or convertible bonds, except when pursuant to the procedure laid down in the Law on Companies the General Meeting has made a decision to withdraw the said right for all shareholders (this decision 3 has to be adopted by a /4 majority vote of shareholders present at the General Meeting); • to lend the funds to the Company under the procedure prescribed by the applicable Lithuanian law; • to receive a part of the residual assets of the Company in liquidation; • to attend the General Meetings; • to give questions to the Company in advance relating to the items on the agenda of the General Meetings; • to vote at the General Meetings in accordance with the rights attached to shares; • to receive information about the Company following the procedure prescribed by the Law on Companies; • to apply to the court for the compensation of damages caused by the Management Board members or the Manager of the Company by non-performance or improper performance of their duties prescribed by the laws of the Republic of Lithuania and the Articles of Association, as well as in other cases provided by laws; • other property and non-property rights, indicated in the applicable Lithuanian laws. All the Shares confer equal rights to all the shareholders.

Procedure of amending the Articles of Association of the Company Article 14 of the Articles of Association foresees, that the Articles of Association may be amended pursuant to the procedure determined by the Law on Companies, i.e.: • the Articles of Association may be amended by the decision of the General Meeting, adopted by qualified majority of 2/3 votes, except where the Law on Companies provides otherwise; • following the decision by the General Meeting to amend the Articles of Association, the full text of the amended Articles of Association shall be drawn up and signed by the person authorised by the General Meeting; • amended Articles of Association together with other documents shall be provided to the manager of the Register of Legal Persons, following terms and conditions of the applicable Lithuanian legal acts.

Procedures of the General Meeting Following item 7 of the Articles of Association the questions, related to activities of the General Meeting and the decisions, adopted thereby (not indicated in the Articles of Association) shall be regulated by the Law on Companies. The main rules of convocation of and attending the General Meeting are as follows:

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The right of initiative to convene the General Meeting is vested in the Supervisory Council, the Management Board and the shareholders who have at least 1/10 of all votes. As a rule, the General Meetings are convened by a decision of the Management Board. General Meetings are annual and extraordinary. An annual General Meeting must be held every year within four months after the close of the financial year. The Law on Companies indicates that an extraordinary General Meeting must be convened if: (i) the Company's equity capital falls below 1/2 of the share capital and this matter has not been discussed at an annual General Meeting; (ii) the number of the Supervisory Council members falls below the 2/3 of the total number specified in the Articles of Association or below the minimum number indicated in the Law on Companies (i.e. three); (iii) the audit firm terminates the contract with the Company or is unable to audit the set of annual financial statements of the Company due to other reasons; (iv) the convocation of the General Meeting is requested by the shareholders who have the right to initiate such convocation or by the Management Board or the Supervisory Council. Once the Shares will be listed on the WSE, a notice of convocation of the General Meeting is to be made public no later than 21 days before the date of the General Meeting through the stock exchange information distribution system as a material event, and is also to be published on the Company's website http://www.aviaam.com. Additional matters to be included into the agenda of the General Meeting may be proposed by the Supervisory Council, the Management Board and one or several shareholders holding shares that carry at least 1/20 of all votes no later than 14 days prior to the meeting. In addition, they may propose new draft decisions on the matters in the agenda prior to and during the General Meeting. If the General Meeting is not held, a repeated General Meeting must be convened. Once the Shares will be listed on the WSE, it will have be convened after the lapse of at least 14 days and not later than after the lapse of 21 days following the day of the General Meeting which was not held. The shareholders will have be notified of the repeated General Meeting no later than 14 days before the date of the repeated General Meeting in the same manner, as indicated above. The persons who were shareholders of the Company at the close of the record date of the General Meeting (i.e. the fifth business day prior the date of the General Meeting) have the right to attend and vote at the General Meeting. The shareholder's right to attend the General Meeting also includes the right to speak and to ask questions regarding the items on the agenda of the meeting. The questions given to the Company by the shareholder regarding the items on the agenda of the General Meeting must be answered before the General Meeting, if such questions were received not later than 3 business days before the General Meeting. Shareholders or persons authorised by them or persons with whom an agreement on assignment of voting rights is concluded may attend and vote at the General Meeting. A person attending the General Meeting and entitled to vote must present a document which is a proof of his identity. A person who is not a shareholder must additionally present a document attesting to his right to vote at the General Meeting. A shareholder or his proxy has the right to vote in advance in writing, by filling in a general ballot paper. If the shareholder requests so, the Company, no later than 10 days before the General Meeting, must dispatch a general ballot paper by registered mail free of charge or delivered by hand. Once the Shares of the Company are listed on the WSE, the general ballot paper will also have to be available on the Company's website http://www.aviaam.com no later than 21 days before the General Meeting. The filled-in general ballot paper and the document attesting to the right to vote must be submitted to the Company prior to the General Meeting (it may be delivered by sending to the Company at the address Smolensko str. 10, Vilnius, the Republic of Lithuania, by registered mail, or delivered by hand). If the general ballot paper is signed by a person, who is not a shareholder of the Company, a document attesting to his right to vote at the General Meeting must be additionally presented. The Company does not provide a possibility to attend the General Meeting and to vote by means of electronic communications.

A description of any provision of the Articles of Association, statutes, charter or bylaw that would have an effect of delaying, deferring or preventing a change in control of the Issuer There are no such provisions.

An indication of the Articles of Association, statutes, charter or bylaw provisions, if any, governing the ownership threshold above which shareholder ownership must be disclosed There are no such provisions.

A description of the conditions imposed by the memorandum and Articles of Association statutes, charter or bylaw governing changes in the capital, where such conditions are more stringent than is required by law There are no more stringent provisions.

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XXV HISTORICAL FINANCIAL INFORMATION (ANNEX)

1. IFRS Financial Statements

2. Consolidated Interim Financial Information

164 AVIAAM LEASING AB INDEPENDENT AUDITOR'S REPORT, CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED ANNUAL REPORT FOR THE THREE YEARS ENDED 31 DECEMBER 2012

A-1 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONTENTS Pages

INDEPENDENTAUDITOR'SREPORT...... A-3

FINANCIALSTATEMENTS...... A-5

CONSOLIDATEDSTATEMENTSOFCOMPREHENSIVEINCOME...... A-5

CONSOLIDATEDBALANCESHEETS...... A-6

CONSOLIDATEDSTATEMENTSOFCHANGESINEQUITY...... A-7

CONSOLIDATEDSTATEMENTSOFCASHFLOW...... A-9

NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS...... A-10

CONSOLIDATED ANNUAL REPORT ...... A-54

A-2 AviaAM Leasing AB

A-3 AviaAM Leasing AB

A-4 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

2012 2011 2010 (restated) (restated) Note USD LTL USD LTL USD LTL

Revenue 6 60,242 161,853 27,528 68,316 20,785 54,155 Interest income on loans 72 200 172 428 341 888 Depreciation and amortisation (7,594) (20,403) (4,153) (10,307) (6,771) (17,641) Costs of aircraft sold (21,399) (57,492) (3,566) (8,850) – – Revaluation of aircraft 12 (1,779) (4,780) 3,678 9,128 (17,890) (46,610) Aircraft maintenance expenses (3,083) (8,284) (828) (2,055) (468) (1,219) Employee-related expenses 7 (598) (1,607) (461) (1,144) (374) (975) Impairment of receivables andprepayments ––––(128) (334) Other operating expenses 8 (1,022) (2,745) (695) (1,724) (1,366) (3,559) Othergain(losses)net 2,2185,951–––– Operating profit 27,057 72,693 21,675 53,792 (5,871) (15,295)

Finance income 9 1,157 3,107 765 1,898 5,123 13,348 Finance costs 9 (5,138) (13,802) (4,938) (12,255) (4,750) (12,376) Finance costs – net (3,981) (10,695) (4,173) (10,357) 373 972

Profit (loss) before income tax 23,076 61,998 17,502 43,435 (5,498) (14,323) Income tax 10 (3,473) (9,330) (2,433) (6,039) 12 30 Profit (loss) for the year 19,603 52,668 15,069 37,396 (5,486) (14,293)

Other comprehensive income Gain on revaluation of aircraft 7,557 19,694 6,790 18,125 – – Deferred income tax on revaluation of aircraft (1,133) (2,953) (1,019) (2,720) – – Currency translation differences on translation to presentation currency – (1,137) – 3,978 – (11,488) Total other comprehensive income 6,424 15,604 5,771 19,383 – (11,488)

Total comprehensive income 26,027 68,272 20,840 56,779 (5,486) (25,781)

Basic and diluted earnings (loss) per share (USD/LTL) 11 0,67 1,79 1,30 3,22 (324,54) (845,53)

The notes on pages A-10 to A-53 are an integral part of these consolidated financial statements.

The financial statements on pages A-5 to A-53 have been approved by the General Manager as at 2013 and signed by the General Manager.

Tadas Goberis Laima Gruzdieneÿ General Manager Chief Financier

A-5 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED BALANCE SHEETS

31 December 2012 31 December 2011 31 December 2010 31 December 2009 (restated) (restated) (restated) Note USD LTL USD LTL USD LTL USD LTL ASSETS Non-current assets Property, plant and equipment 12 64,113 167,078 47,931 127,950 28,596 74,633 53,002 127,483 Prepayments for property, plant andequipment 135501,4333,4029,081–––– Intangibleassets 11111111 Investments in associates andjointlycontrolledentities 2052–––––– Trade and other receivables 15 2,305 6,008 498 1,330 5,829 15,215 3,627 8,723 Deferred income tax assets – – 1,322 3,529 4,555 11,888 4,221 10,151 66,989 174,572 53,154 141,891 38,981 101,737 60,851 146,358 Current assets Inventory 14 2,5416,6233,5839,564–––– Trade and other receivables 15 14,334 37,355 4,220 11,265 4,171 10,887 6,164 14,827 Prepaid income tax 15 37 93 248 20 51 – – Cash and cash equivalents 16 8,081 21,060 13,646 36,426 892 2,328 2,062 4,959 24,971 65,075 21,542 57,503 5,083 13,266 8,226 19,786 Total assets 91,960 239,647 74,696 199,394 44,064 115,003 69,077 166,144

EQUITY Equity attributable to the Group's equity shareholders Share capital 17 12,232 29,448 12,232 29,448 38 100 4 10 Legal reserve 17 1,1312,947–––––– Revaluation reserve 17 12,19531,7795,77115,405–––– Cumulative translation reserve 17 – (652) – 485 – (3,493) – 7,995 Retained earnings (2,958) (4,640) (19,457) (49,220) (34,468) (86,466) (5,948) (22,301) Total equity 22,600 58,882 (1,454) (3,882) (34,430) (89,859) (5,944) (14,296)

LIABILITIES Non-current liabilities Borrowings 18 34,840 90,795 43,145 115,171 56,432 147,283 56,279 135,363 Security deposits received 20 11,520 30,020 11,542 30,810 5,193 13,552 4,851 11,665 Deferred income tax liabilities 21 1,4673,823–––––– 47,827 124,638 54,687 145,981 61,625 160,835 61,130 147,028 Current liabilities Borrowings 18 16,005 41,708 12,650 33,768 14,248 37,188 10,946 26,329 Trade and other payables 19 3,932 10,246 3,021 8,065 2,158 5,631 2,711 6,520 Advances received 19 – – 5,574 14,878 140 365 124 301 Current income tax liabilities 1,596 4,173 218 584 323 843 110 262 21,533 56,127 21,463 57,295 16,869 44,027 13,891 33,412 Total liabilities 69,360 180,765 76,150 203,276 78,494 204,862 75,021 180,440 Total equity and liabilities 91,960 239,647 74,696 199,394 44,064 115,003 69,077 166,144

The notes on pages A-10 to A-53 are an integral part of these consolidated financial statements.

Tadas Goberis Laima Gruzdieneÿ General Manager Chief Financier

A-6 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

USD Note Share Legal Revaluation Retained Total capital reserve reserve earnings equity

Balance at 1 January 2010 4 – – 22,059 22,063 Effect of changes in accounting policies 5 – – – (28,007) (28,007) Balance at 1 January 2010 (restated) 4 – – (5,948) (5,944) Comprehensive income Loss for the year – – – (5,486) (5,486) Total comprehensive loss – – – (5,486) (5,486) Transactions with owners Increase of share capital of the Company 17 34 – – – 34 Distribution to owners 17 – – – (23,034) (23,034) Total transactions with owners 34 – – (23,034) (23,000) Balance at 31 December 2010/ 1 January 2011 38 – – (34,468) (34,430)

Comprehensive income Revaluation of aircraft – – 6,790 – 6,790 Deferred income tax on revaluation of aircraft – – (1,019) – (1,019) Other comprehensive income (loss) for the year – – 5,771 – 5,771 Profit for the year – – – 15,069 15,069 Total comprehensive income – – 5,771 15,069 20,840 Transactions with owners Increase of share capital of the Company 17 12,194 – – – 12,194 Distribution to owners – – – (58) (58) Total transactions with owners 12,232 – – (58) 12,136 Balance at 31 December 2011// 1 January 2012 12,232 – 5,771 (19,457) (1,454)

Comprehensive income Revaluation of aircraft – – 7,557 – 7,557 Deferred income tax on revaluation of aircraft – – (1,133) – (1,133) Other comprehensive income (loss) for the year – – 6,424 – 6,424 Profit for the year – – – 19,603 19,603 Total comprehensive income – – 6,424 19,603 26,027 Transactions with owners Transfer to reserves – 1,131 – (1,131) – Dividends 17 – – – (1,972) (1,972) Total transactions with owners – 1,131 – (3,103) (1,972) Balance at 31 December 2012 12,232 1,131 12,195 (2,958) 22,600

The notes on pages A-10 to A-53 are an integral part of these consolidated financial statements.

Tadas Goberis Laima Gruzdieneÿ General Manager Chief Financier

A-7 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

LTL Note Share Legal Revaluation Cum. Retained Total capital reserve reserve trans earnings equity

Balance at 1 January 2010 10 – – 5,771 47,287 53,068 Effect of changes in accounting policies 5 – – – – (69,588) (69,588) Currency translation differences – – – 2,224 – 2,224 Balance at 1 January 2010 (restated) 10 – – 7,995 (22,301) (14,296) Comprehensive income Loss for the year – – – – (14,293) (14,293) Currency translation differences – – – (11,488) – (11,488) Total comprehensive loss for the year – – – (11,488) (14,293) (25,781) Transactions with owners Increase of share capital of the Company 17 90 – – – – 90 Distribution to owners 17 – – – – (49,872) (49,872) Total transactions with owners 90 – – – (49,872) (49,782) Balance at 31 December 2010/ 1 January 2011 100 – – (3,493) (86,466) (89,859)

Comprehensive income Revaluation of aircraft – – 18,125 – – 18,125 Deferred income tax on revaluation of aircraft – – (2,720) – – (2,720) Other comprehensive income (loss) for the year – – 15,405 – – 15,405 Profit for the year – – – – 37,396 37,396 Currency translation differences – – – 3,978 – 3,978 Total comprehensive income for the year – – 15,405 3,978 37,396 56,779 Transactions with owners Increase of share capital of the Company 17 29,348 – – – – 29,348 Distribution to owners – – – – (150) (150) Total transactions with owners 29,348 – – – (150) 29,198 Balance at 31 December 2011/ 1 January 2012 29,448 – 15,405 485 (49,220) (3,882)

Comprehensive income Revaluation of aircraft – – 19,694 – – 19,694 Deferred income tax on revaluation of aircraft – – (2,953) – – (2,953) Currency translation differences – – – (1,137) – (1,137) Other comprehensive income (loss) for the year – – 16,741 (1,137) – 15,604 Profit for the year – – – – 52,668 52,668 Total comprehensive income for the year – – 16,741 (1,137) 52,668 68,272 Transactions with owners Transfer to reserves – 2,947 – – (2,947) – Dividends 17 – – – – (5,140) (5,140) Currency translation differences – – (367) – (1) (368) Total transactions with owners – 2,947 (367) – (8,088) (5,508) Balance at 31 December 2012 29,448 2,947 31,779 (652) (4,640) 58,882

The notes on pages A-10 to A-53 are an integral part of these consolidated financial statements.

Tadas Goberis Laima Gruzdieneÿ General Manager Chief Financier

A-8 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED STATEMENTS OF CASH FLOW

2012 2011 (restated) 2010 (restated) Note USD LTL USD LTL USD LTL Operating activities Profit (loss) before income tax 23,076 61,977 17,502 43,435 (5,498) (14,323) Adjustments for: Depreciation and amortisation 7,594 20,403 4,153 10,307 6,771 17,641 Impairmentofaccountsreceivableandprepayments ––––96250 Discounting effect 177 477 (451) (1,118) (745) (1,849) Finance costs – net 3,703 9,950 3,209 7,963 3,571 9,303 Change in fair value of fixed assets 1,779 4,780 (3,678) (9,128) 17,890 46,610 Profit / Loss from Sale of fixed assets (989) (2,657) –––– Changes in working capital: Trade and other receivables (8,191) (21,987) (2,399) (5,953) 877 2,266 Trade and other payables (2,564) (6,890) 864 2,143 (8,788) (22,974) Security deposits and advances received (5,500) (14,777) 12,233 30,360 51 133 Inventory 2,243 6,025 (3,188) (7,915) – – Cash generated from operations 21,328 57,301 28,245 70,094 14,225 37,057 Interest paid (3,671) (9,863) (3,548) (8,805) (3,720) (9,691) Income tax paid (145) (388) (396) (983) (26) (67) Net cash generated from (used in) operating activities 17,512 47,050 24,301 60,306 10,479 27,299

Investing activities Purchase of property, plant and equipment and intangible assets (9,087) (24,415) (4,954) (12,294) (178) (464) Sale of property, plant and equipment and intangible assets 1,1503,090–––– Loans granted (1,887) (5,069) – – (1,555) (4,052) Loans repaid 581 1,561 3,246 8,056 – – Interest received 21 56 339 842 194 507 Net cash used in investing activities (9,222) (24,777) (1,369) (3,396) (1,539) (4,009)

Financing activities Proceedsfromissuanceofordinaryshares ––––3490 Borrowings received – – 11 27 2,200 5,732 Repayment of borrowings (12,019) (32,293) (3,827) (9,497) (11,564) (30,127) Lease (finance lease) payments (1,835) (4,930) (6,362) (15,789) (780) (2,032) Net cash generated from (used in) financing activities (13,854) (37,223) (10,178) (25,259) (10,110) (26,337)

Increase in cash and cash equivalents (5,564) (14,950) 12,754 31,651 (1,170) (3,047) Movement in cash and cash equivalents At beginning of year 13,646 36,426 892 2,328 2,062 4,959 Increase in cash and cash equivalents (5,565) (14,950) 12,754 31,651 (1,170) (3,047) Foreign translation differences – (416) – 2,447 – 416 At end of the year 16 8,081 21,060 13,646 36,426 892 2,328

The notes on pages A-10 to A-53 are an integral part of these consolidated financial statements.

Tadas Goberis Laima Gruzdieneÿ General Manager Chief Financier

A-9 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 General information

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

The shareholders' structure of the Company as at 31 December 2012 and 31 December 2011 was as follows:

Number of shares %

ZIA Valda Cyprus Leasing Ltd. 17,608,682 59.80 Mesotania Holdings Ltd. 11,739,121 39.86 IA Valda AB 60,000 0.20 Indeco: Investment and Development UAB 40,000 0.14 Total 29,447,803 100.00

The shareholder's structure of the Company as at 31 December 2010 was as follows:

Number of shares %

IA Valda AB 60,000 60.00 Indeco: Investment and Development UAB 40,000 40.00 Total 100,000 100.00

The Company and its subsidiaries (together, the Group) are engaged in the business of aircraft leasing and management. The principal activity of the Group is operating leasing, management and trading of mid-life narrow body and regional jet aircraft. As of 31 December 2012 the Group owned 18 aircraft: 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 7 Bombardier CRJ200 aircraft. 15 aircraft were leased out under operating lease contracts, 2 aircraft were under preparation for use and one aircraft was off lease. As of 31 December 2011 the Group owned 13 aircraft: 4 Boeing 737-300, 4 Boeing 737-500, 1 Boeing 757-200 and 4 Bombardier CRJ200. 12 aircraft were leased out under operating lease contracts and 1 Bombardier CRJ200 aircraft was kept for sale. As of 31 December 2010 the Group owned 9 aircraft: 4 Boeing 737-300, 4 Boeing 737-500, 1 Boeing 757-200. All aircraft were leased out under operating lease contracts. As at 31 December 2012 the number of full-time staff employed by the Group totalled 13, including 2 employees on maternity leave. As at 31 December 2011 the number of full-time staff employed by the Group totalled 12, including 2 employees on maternity leave. As at 31 December 2010 number of full-time staff employed by the Group totalled 9. The parent of the Group is ZIA Valda Cyprus Leasing Ltd. and the ultimate parent of the Group is IA Valda AB (referred to as the Ultimate Parent). The ultimate controlling party of the Group is Mr. Gediminas iemelis. The shareholders of the Company have a statutory right to approve these financial statements or not to approve them and to require preparation of another set of financial statements.

A-10 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

1 General information (continued)

The subsidiaries, which are included in the Group's consolidated financial statements are indicated below:

Share of equity at 31 December, % The Group's Country of 2012 2011 2010 Date of acquiring (establishment) / activity / companies establishment address of establishment

AviaAM B01 UAB Lithuania 100 100 100 Date of acquiring: 4 January 2010 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B02 UAB Lithuania 100 100 100 Date of acquiring: 4 January 2010 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B03 UAB Lithuania 100 100 100 Date of acquiring: 22 January 2010 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B04 UAB Lithuania 100* 100* –* Date of establishment: 22 February 2007 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B05 UAB Lithuania 100 100 – Date of establishment: 28 June 2011 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B06 UAB Lithuania 100 100 – Date of establishment: 15 July 2011 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B07 UAB Lithuania 100 100 – Date of establishment: 30 September 2011 / Aircraft leasing / Smolensko g. 10, Vilnius AAL Capital Aircraft Cyprus 100 100 – Date of establishment: 29 September 2011 / Holdings Ltd Aircraft leasing / Dimitriou Karatasou 15, Anastasio Building, 6th floor, Flat/office 601, Strovolos, 2024, Nicosia, Cyprus AviaAM Leasing Bermuda 100** 100** – Date of establishment: 16 September 2011 / Bermuda Ltd Aircraft leasing / Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda

* As at 31 December 2010 Dangiruva AB owned 100 per cent of AviaAM B04 UAB. As at 31 December 2010 IA Valda AB (the Ultimate Parent) controlled 60 per cent of Dangiruva AB and 60 per cent of the Company. AviaAM B04 UAB was acquired by the Company in 2011 in a transaction under common control and has been consolidated retrospectively in these financial statements.

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

A-11 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

1 General information (continued)

Historical information The Group commenced its operations on 22 February 2007 when AviaAM B04 UAB was established by Ridota AB, a subsidiary of the Ultimate Parent and entered the business of mid-life narrow body jet aircraft leasing. In January 2008 AviaAM B04 UAB was transferred to Dangiruva AB, also a subsidiary of the Ultimate Parent. In April 2009 Dangiruva AB established another entity – AviaAM Leasing AB (the Company) which also entered aircraft leasing business. In January 2010, shell companies AviaAM B01 UAB, AviaAM B02 UAB and AviaAM B03 UAB have been acquired by the Company for the purpose of further development of aircraft leasing activities. AviaAM B01 UAB, AviaAM B02 UAB and AviaAM B03 UAB are under the legal control of the Company and comprised separate legal group (together referred as the AviaAM Leasing group). Whereas the AviaAM Leasing group and AviaAM B04 UAB comprised jointly managed mid-life narrow body aircraft leasing business as at 31 December 2010 under the control of the Ultimate Parent. In 2010 business restructuring commenced with the aim of transferring aircraft leasing business from AviaAM B04 UAB to AviaAM Leasing group. In April 2010 and November 2010 AviaAM B04 UAB transferred 3 (three) Boeing 737-300 and 4 (four) Boeing 737-500 aircraft to AviaAM B01 UAB and AviaAM B03 UAB respectively together with the related bank loans attributable for financing of specific aircraft for the purpose of matching the assets with their respective financing sources and consolidating the aircraft leasing business under control of the Company. In December 2010 AviaAM Leasing group has been transferred from Dangiruva AB to its ultimate shareholders IA Valda AB (60 per cent) and Indeco: Investment and Development UAB (40 per cent) (referred to as the Ultimate Shareholders). As at 31 December 2010 AviaAM B04 UAB was directly controlled by Dangiruva AB and was ultimately controlled by the same shareholders as the Company – i.e. IA Valda AB (60 per cent) and Indeco: Investment and Development UAB (40 per cent). In 2011 with the aim to fully transfer all aircraft leasing business under the control of the Company the share capital of AviaAM B04 was increased from LTL 150 thousand to LTL 5,000 thousand by issuing 4,850,000 new shares which have been acquired by the Company by capitalising amounts receivable from AviaAM B04 UAB of the same amount. As a result, the Company became the majority shareholder of AviaAM B04 UAB. The remainder of the shares of AviaAM B04 UAB were acquired from Dangiruva AB by the Company at the par value of LTL 1 each. As a result of the aforementioned restructuring which was completed on 28 September 2011 the Company became the sole shareholder of AviaAM B04 UAB. The acquisition of AviaAM B04 UAB by the Company was performed under common control therefore predecessor accounting with retrospective application was used to account for the transaction. As a result AviaAM B04 UAB is treated as part of the Group for all the periods presented in these financial statements.

A-12 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Changes in accounting policy have been disclosed in Note 5.

2.1.1 Basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). References to IFRS hereafter should be construed as references to IFRS as adopted by the EU. The financial statements for all periods in this report have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and its interpretations and amendments that are effective as at 31 December 2012 ("IFRS"). The financial statements have been prepared on a going concern basis and under the historical cost convention. The consolidated financial statements are presented in US Dollars (USD) and Lithuanian litas (LTL) and all values are rounded to the nearest thousand (USD'000 and LTL'000) except when otherwise indicated. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.

2.1.2 Changes in accounting policy and disclosures

(a) New and amended standards and interpretations adopted by the Group There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2012 that would be expected to have a material impact on the Group.

(b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group: IFRS 10, Consolidated Financial Statements (issued in May 2011 and effective for annual periods beginning on or after 1 January 2013), replaces all of the guidance on control and consolidation in IAS 27 "Consolidated and separate financial statements" and SIC-12 "Consolidation – special purpose entities". IFRS 11, Joint Arrangements, (issued in May 2011 and effective for annual periods beginning on or after 1 January 2013), replaces IAS 31 "Interests in Joint Ventures" and SIC-13 "Jointly Controlled Entities – Non-MonetaryContributionsbyVentures". Changes in the definitions have reduced the number of types of joint arrangements to two: joint operations and joint ventures. Amendments to IAS 1, Presentation of Financial Statements (issued June 2011, effective for annual periods beginning on or after 1 July 2012), changes the disclosure of items presented in other comprehensive income. The amendments require entities to separate items presented in other comprehensive income into two groups, based on whether or not they may be reclassified to profit or loss in the future. The Group is currently evaluating the impact of these new standards.

A-13 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2.2 Consolidation

Subsidiaries Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the group.

Business combinations with entities not under common control The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred.

Business combinations between entities under common control IFRS 3, 'Business combinations' is not applied to business combinations between entities under common control, therefore, for the purpose of these financial statements business combinations between entities under common control were accounted for using the predecessor accounting (pooling of interest) method. The application of this method in practice consists of the following procedures: – the assets and liabilities of the entities in business combination are stated at their carrying amounts; – no newly arising goodwill is recognised on business combination; – any differences between consideration paid and the carrying amount of net assets acquired as at the date of acquisition is recognised directly in equity within retained earnings; – the acquiree's results are consolidated as if the acquiree had always been controlled by the acquirer (or from the date the common control arises).

Inter-company transactions Inter-company transactions, balances, income and expenses on transactions between entities including consolidated financial statements are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated.

Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

A-14 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2.2 Consolidation (continued)

Associates and joint ventures Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Joint venture is an entity of joint operations, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. Investments in associates and joint ventures are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee after the date of acquisition. The group's share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the group's share of losses in an associate or joint venture equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. The group determines at each reporting date whether there is any objective evidence that the investment in the associate or joint venture is impaired. If this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the associate/joint venture and its carrying value and recognises the amount adjacent to 'share of profit/(loss) of associates/joint ventures in the income statement. Profits and losses resulting from upstream and downstream transactions between the group and its associate/joint venture are recognised in the group's financial statements only to the extent of unrelated investor's interests in the associates/joint ventures. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates/joint ventures have been changed where necessary to ensure consistency with the policies adopted by the group. Dilution gains and losses arising in investments in associates/joint ventures are recognised in the income statement.

2.3 Foreign currency translation

(a) Functional and presentation currency Items included in the financial statements of each of the Group entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The functional currency of the Company and all its subsidiaries is the US Dollar (USD) as a significant proportion of their business is conducted in the US Dollars and management uses the information prepared in USD to manage business risks and exposures and to measure performance of the business. The financial statements are presented in US dollars, which is the functional currency of the Company and all its subsidiaries, and, due to the requirements of the laws of the Republic of Lithuania, also in Lithuanian Litas (LTL) which is the Group's second presentation currency.

A-15 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2.3 Foreign currency translation (continued) From 2 February 2002 the exchange rate of the Litas has been pegged to the euro at a rate of LTL 3,4528 = EUR As at 31 December 2012 the exchange rate of US Dollar to Lithuanian Litas was USD 1 = LTL 2,606 (2011: USD 1 = LTL 2,6694 2010: USD 1 = LTL 2,6099). The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and (c) all resulting exchange differences are recognised in other comprehensive income.

(b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

2.4 Property, plant and equipment Property, plant and equipment comprise aircraft, aircraft under preparation for use and other tangible fixed assets. In 2012 the accounting policy for aircraft was changed from historical cost to revalued amounts (see note 5). Aircraft are carried at a revalued amount, being its fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are made at the end of each reporting period. The market value of the aircraft is obtained from reports prepared by external valuators holding a recognised and appropriate professional qualification in valuation of similar category assets (note 4(a)). The fair value measurement of aircraft is performed at each reporting date, and changes in the fair value are accounted as follows. If an asset's carrying amount is increased as a result of a revaluation, the increase is recognised in other comprehensive income and accumulated in equity under the heading of revaluation surplus. However, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. If an asset's carrying amount is decreased as a result of a revaluation, the decrease is recognised in profit or loss. However, the decrease is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus. The revaluation surplus included in equity in respect of an aircraft is transferred directly to retained earnings when the asset is derecognised.

A-16 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2.4 Property, plant and equipment (continued) Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Aircraft classified as aircraft under preparation for use are reclassified to aircraft group when they are ready for their intended use. Depreciation of aircraft is calculated using the component-based approach by writing off the cost of assets to their residual values based on their expected use or over their estimated useful life as follows: D-Check (Airframe Heavy Maintenance Visit) 24,000 flight hours Engines Shop Visits based on Engine Life Limited Parts 23,000 cycles 24,000 cycles (Bombardier CRJ200) Airframe 7 years Other tangible fixed assets are measured at cost less depreciation and impairment losses. Depreciation of other tangible fixed assets is calculated using the straight-line method to write off the cost of assets to their residual values over their estimated useful life as follows: Other tangible fixed assets 3–6 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within 'Other (losses)/gains – net' in the income statement.

2.5 Intangible assets Intangible assets expected to provide economic benefit to the Group in future periods are valued at acquisition cost less any accumulated amortisation and any accumulated impairment losses. Amortisation is calculated on the straight-line method over estimated benefit period as follows: Computer software 3 years Costs associated with maintaining computer software programmes are recognised as an expense as incurred.

2.6 Impairment of non-financial assets Assets that are subject to amortisation and depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

A-17 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2.7 Financial assets The Group classifies its financial assets into the following measurement categories: loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. During all the periods presented the Group has not held any financial assets in available-for-sale or at fair value through profit or loss categories.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection of the loans and receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

2.8 Inventory Inventory consists of aircraft and aircraft components acquired which carrying amount is to be recovered through a sale transaction. Inventory is stated at the lower of cost and net realisable value.

2.9 Cash and cash equivalents In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the balance sheet, bank overdrafts are shown within borrowings in current liabilities.

2.10 Share capital Ordinary shares are stated at their par value and classified as equity.

2.11 Trade payables and security deposits Trade payables are obligations to pay for goods or services that have been acquired in the ordinarycourseofbusinessfrom suppliers. Accounts payable and security deposits are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables and security deposits are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Fair value of the security deposit at initial recognition is determined by discounting the nominal amount of cash received using the market interest rate.

2.12 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

A-18 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2.13 Borrowing costs General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.14 Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Profit is taxable at a rate of 15% (2011 and 2010:15) in accordance with Lithuanian regulatory legislation on taxation. Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

A-19 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2.15 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the group's activities, as described below.

(a) Sales of services Revenue of the Group consists of lease revenue, supplemental maintenance rent from aircraft leases and other operational revenue. As a lessor, the Group leases aircraft under operating leases and reports rental income on a linear basis over the life of the lease as it is earned. All aircraft lease agreements provide for the payment of a fixed, periodic amount of lease rentals. In addition to lease revenue the Group receives supplemental maintenance rent from aircraft leases, based on the utilization of airframes, engines and other major life-limited components, and which is recognised into income over the lease term based on a measure of utilization of the leased aircraft.

(b) Sales of aircraft Revenue from sale of aircraft is recognised when aircraft is delivered and all risks and benefits from disposal of aircraft is passed to the customer.

(c) Interest income Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

2.16 Leases – where the Group is the lessor Leases in which 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 charged to the income statement on a straight-line basis over the period of the lease.

Finance lease Leases of property, plant and equipment where the lessee has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's commencement at the lower of the fair value of the leased property and 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 long-term payables except for instalments due within 12 months which are included in current liabilities

Operating lease Leases in which 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 charged to the profit or loss on a straight-line basis over the period of the lease.

A-20 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2.17 Employee benefits

Social security contributions The Group pays social security contributions to the state Social Security Fund (the Fund) on behalf of its employees based on the defined contribution plan in accordance with the local legal requirements. A defined contribution plan is a plan under which the Group pays fixed contributions into the Fund and will have no legal or constructive obligations to pay further contributions if the Fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior period. The social security contributions are recognised as an expense on an accrual basis and are included within employee related expenses.

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

3 Financial risk management

3.1 Financial risk factors The Group's activities expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk), credit risk, liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group. Risk management is carried out by the General Manager. The General Manager identifies and evaluates financial risks in close co-operation with the Chief Financier. The General Manager provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investing excess liquidity.

Market risk

(i) Foreign exchange risk

2012 2011 2010 USD LTL USD LTL USD LTL

Reasonably possible change of LTL to USD in per cent 2.30% 2.30% 9.00% Financial assets denominated in LTL 1,596 4,160 2,003 5,346 4,556 11,891 Financial liabilities denominated in LTL 1,044 2,720 1,510 4,032 16,341 42,649 Projected effect on profit 13 33 11 30 (1,061) (2,768)

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

A-21 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

3 Financial risk management (continued)

(ii) Cash flow interest rate risk The Group's interest rate risk arises from long-term borrowings and loans granted with variable interest rates. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Cash flow interest rate risk is managed by monitoring the repricing dates of the borrowings.

2012 2011 2010 USD LTL USD LTL USD LTL

Reasonablypossiblechangeininterestrate(bythecurrencyoffinancialassets/liabilities)–expressedinpercentagepoints LTL (VILIBOR) 2.00 2.00 2.00 USD (USD LIBOR) 1.00 1.00 1.00 Financial asset subject to variable interest rates (by the currency of financial assets/liabilities) LTL ––––4,77412,458 USD –––––– Financial liabilities subject to variable interest rates (by the currency of financial assets/liabilities) LTL ––––9,56524,963 USD 50,233 130,907 55,493 148,132 54,503 142,247 Projected effect on profit (502) (1,308) (555) (1,481) (641) (1,673)

The table below presents split of the Group's borrowings according to the interest rate repricing terms.

Repricing terms of interest rates 2012 2011 2010 USD LTL USD LTL USD LTL

3 months or less 24,829 64,704 20,121 53,710 13,382 34,926 3–6 months 25,401 66,195 34,396 91,817 39,082 102,003 Fixed 615 1,604 1,278 3,412 18,216 47,542 50,845 132,503 55,795 148,939 70,860 184,471

Credit risk Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and loans granted. Credit risks are controlled by the application of credit terms and monitoring procedures. Group procedures are in force to ensure that services are sold only to customers with an appropriate credit history and do not exceed acceptable credit exposure limit. Cash transactions are limited to high credit quality financial institutions.

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

A-22 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

3 Financial risk management (continued)

2012 2011 2010 USD LTL USD LTL USD LTL

Trade and other receivables from customers in aviation business 15,363 40,036 2,500 6,674 9,614 25,09

Trade receivables are related to limited number of customers. Largest customer amounts to 54% of total trade and other receivables as at 31 December 2012 (33% as at 31 December 2011; 38% as at 31 December 2010).

(ii) Maximum exposure of credit risk

The table below summarises all credit risk exposures relating to on-balance sheet items of the Group. Maximum exposure to credit risk before collateral held or other credit enhancements:

2012 2011 2010 USD LTL USD LTL USD LTL

Loans granted 3,034 7,907 435 1,162 7,724 20,158 Trade receivables 12,329 32,129 2,065 5,512 1,890 4,932 Other receivables 154 403 815 2,176 126 333 Cash and cash equivalents 8,081 21,060 13,646 36,426 892 2,328 23,598 61,499 16,961 45,276 10,632 27,751

(iii) Financial assets neither past due nor impaired – credit quality of financial assets

(a) Trade receivables (trade customers without external credit rating)

2012 2011 2010 USD LTL USD LTL USD LTL

Group 1 – new customers (less than 6 months) 16 42 – – 229 599 Group 2 – old customers (more than 6 months) 6,989 18,214 1,397 3,728 90 235 7,005 18,256 1,397 3,728 319 834

The group old customers consist of customers with proven credit history and low risk of default.

(b) Cash and cash equivalents in banks (assessed in accordance with long – term borrowing ratings*)

2012 2011 2010 USD LTL USD LTL USD LTL

A+ 4,587 11,953 3,458 9,232 790 2,061 B+ ––––95248 B ––24719 Other** 3,494 9,106 10,186 27,190 – – 8,081 21,060 13,646 36,426 892 2,328

* – External long term borrowings ratings set by international agency FitchRatings as at March 2012. ** – Cash classified in Other category is held in a fiduciary bank, in which accounts are segregated from other funds therefore credit risk of this bank is assumed as low

A-23 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

3 Financial risk management (continued)

(c) Loans granted All loans are granted to the related parties which are closely monitored by the management of the Group and therefore considered aslowdefaultrisk.

(iv) Financial assets past due but not impaired

(a) The aging analysis of trade and other receivables past due but not impaired

2012 2011 2010 USD LTL USD LTL USD LTL

Past due up to 3 months 3,718 9,691 1,428 3,812 1,469 3,833 Past due 4–6 months 1,760 4,585 55 148 222 579 Pastdueformorethan6months ––––718 5,478 14,276 1,483 3,960 1,698 4,430

(b) The aging analysis of loans past due but not impaired

2012 2011 2010 USD LTL USD LTL USD LTL

Pastdueupto3months ––––3180 Pastdue4–6months ––––41107 Pastdueformorethan6months –––––– ––––72187

(v) Impaired financial assets

(a) Trade and other receivables impaired

2012 2011 2010 USD LTL USD LTL USD LTL

Impaired trade and other receivables – gross amount 1,077 2,598 1,136 2,756 2,163 5,432 Less: impairment of receivables (1,077) (2,598) (1,136) (2,756) (2,163) (5,432) Impairedtradeandotherreceivables–netamount ––––––

Trade receivables that are less than six months past overdue are not considered impaired. The impairment of overdue trade receivables is performed going individually through the customers list and assessing the expectation of recovery. The cost of establishment of provision for impaired receivables has been included in the income statement. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash and all appropriate documentation according to the legislations were collected.

A-24 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

3 Financial risk management (continued)

Movement on provisions for impairment of trade and other receivables

2012 2011 2010 USD LTL USD LTL USD LTL

At 1 January 1,136 2,756 2,163 5,432 2,163 5,225 Exchange rate difference – (5) – 69 – 445 Provision for trade receivables impairment 25 65 89 234 – – Receivables written off during the year as uncollectible (84) (218) (1,116) (2,979) – – At 31 December 1,077 2,598 1,136 2,756 2,163 5,432

(b) Loans granted impaired

2012 2011 2010 USD LTL USD LTL USD LTL

Impairedloansgranted–grossamount ––––144375 Less:impairmentofloans –––––– Impaired loans granted – net amount ––––144375

Movement on provisions for impairment of loans

2012 2011 2010 USD LTL USD LTL USD LTL

At 1 January Provisionforloansgrantedimpairment ––––(96)(250) Loansgrantedwrittenoffduringtheyearasuncollectible––––96250 At 31 December ––––––

Liquidity risk Liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Liquidity risk is managed by the General Manager, who is required to maintain a minimum required liquidity position. In addition, the Group's liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these. The table below analyses the Group's financial liabilities into relevant maturity groupings based on remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table below are the contractual undiscounted cash flows.

A-25 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

3 Financial risk management (continued)

USD Less than Between Over 1year 1and2years 2years At 31 December 2012 Borrowings from banks 15,683 23,499 – Security deposits received – 6,350 6,800 Lease liabilities 3,526 3,426 13,063 Trade and other payables 3,932 – – 23,141 33,275 19,863 At 31 December 2011 Borrowings from related parties – – – Borrowings from banks 7,726 7,371 11,378 Security deposits received 550 – 12,800 Lease liabilities 8,336 6,813 22,277 Trade and other payables 3,021 – – 19,633 14,184 46,455 At 31 December 2010 Borrowings from related parties 7,073 – 22,743 Borrowings from banks 5,062 7,629 19,086 Security deposits received – 550 6,000 Lease liabilities 6,123 5,525 19,678 Trade and other payables 158 – – 18,416 13,704 67,507

LTL Less than Between Over 1year 1and2years 2years At 31 December 2012 Borrowings from banks 40,871 61,239 – Security deposits received – 16,548 17,721 Lease liabilities 9,188 8,929 34,043 Trade and other payables 10,246 – – 60,305 86,716 51,764 At 31 December 2011 Borrowings from related parties – – – Borrowings from banks 20,623 19,677 30,372 Security deposits received 1,468 – 34,168 Lease liabilities 22,252 18,188 59,465 Trade and other payables 8,065 – – 52,408 37,865 124,005

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AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

3 Financial risk management (continued)

At 31 December 2010 Borrowings from related parties 18,460 – 59,357 Borrowings from banks 13,212 19,910 49,813 Security deposits received – 1,435 15,659 Lease liabilities 15,979 14,419 51,357 Trade and other payables 411 – – 48,062 35,764 176,186

3.2 Capital risk management The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including 'current and non-current borrowings' as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as 'equity' as shown in the consolidated balance sheet plus net debt. The Group's strategy is to reduce the gearing ratio and to maintain it within 65 per cent and 80 per cent.

As at 31 December the Group's capital structure was as follows:

2012 2011 2010 USD LTL USD LTL USD LTL

Borrowings 50,845 132,503 55,795 148,939 70,680 184,471 Less: cash and cash equivalents (8,081) (21,060) (13,646) (36,426) (892) (2,328) Net debt 42,764 111,443 42,149 112,513 69,788 182,143 Total equity 22,600 58,882 (1,454) (3,882) (34,430) (89,859) Total capital 65,364 170,325 40,695 108,361 35,358 92,284 Gearing ratio 65% N/A N/A

Pursuant to the Lithuanian Law on Companies the authorised share capital of a public limited liability company and private limited liability company must be not less than LTL 150,000 and LTL 10,000 respectively and the equity capital of the company may not be less than 1/2 of the authorised capital indicated in the Articles of Association. As of 31 December 2012 four of the Group companies have not complied with these requirements. No actions were yet taken in 2013 to rectify the situation. According to the Lithuanian Law on Companies, if the equity capital of a company falls below 1/2 of the amount of the authorised capital, the General Meeting of Shareholders must be convened within 3 months from the day on which it has been learnt or ought to have been learnt about the existing situation. In case the General Meeting of Shareholders fails to adopt a decision on remedying the situation existing in the company or such situation is not rectified within six months, the Board of the company (if the Board is not formed, the manager of the company) must refer to court for reduction of the company's authorised capital by the amount whereby the equity capital has fallen below the authorised capital. There are no significant implications for the Group for incompliance with the above requirements.

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AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

3 Financial risk management (continued)

According to the covenants described in one of the borrowing agreements concluded in 2012, the Company should maintain the capital ratio at certain level. The Company did not breach this covenant as at 31 December 2012.

3.3 Fair value estimation The fair value of financial assets and financial liabilities for the disclosure purposes is estimated by discounting the cash flows from each class of financial assets or financial liabilities. The carrying value less impairment losses of trade receivables and carrying value of payables are assumed to approximate their fair value. The carrying value of borrowings issued at variable rates approximate their fair value because repricing dates of the borrowings interest rates are short (up to 6 months) and banks' margins have not changed materially since the loans were obtained. Fair value of loans granted to related parties approximate the book value because interest rates applied are similar to the market interest rates at balance sheet dates. The fair value of security deposits received applying 7.25% discount rate amounted to USD 12,471 thousand (LTL 32,499 thousand) as at 31 December 2012.

4 Critical accounting estimates

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements that have the most significant effect on the amounts recognised in the financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year include:

(a) Fair value Aircraft are carried at revalued amounts being fair value at the end of each reporting period. Fair value measurements as at 31 December 2009, 31 December 2010, 31 December 2011, 31 December 2012 were performed by an independent appraiser Ascend: A Flightglobal Advisory Service. The valuation was performed in line with the requirements of the International Valuation Standards. Each value determined by Ascend is intended to reflect what might have been expected from the result of an 'arm’s-length, single sale transaction' conducted in an orderly manner between a 'willing buyer and willing seller', with the aircraft free of any lease or charge. Basis of fair value is comparable sales transactions in the aircraft sales market. In order to obtain fair values of the aircraft possessed by the Group the valuation was performed using two step approach. Firstly, Ascend has obtained market transactions data related to the same types of aircraft as the Group have and using the data on the conditions of the subject aircraft produced "Half-Life" values for each one at each valuation date. The term "Half-Life" refers to the airframe, engines, landing gear, APU and all major components being half way between major overhauls, inspections or performance restorations as appropriate; with engine LLPs having 50% of their certified lives remaining.

A-28 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

4 Critical accounting estimates (continued)

The "Half-Life" values were then adjusted to produce the fair values of each of the Group's aircraft using the data regarding the identification, specifications and maintenance status as well as accrued hours/cycles of the subject aircraft of the Group at each valuation date. The maintenance data was pertaining to the airframe, engine, landing gear and engine overhauls and engine Life Limited Parts (LLPs) remaining useful lives. Judgment was applied when determining values of separate components of aircraft for depreciation calculation purposes. Any changes in these assumptions could result in significant changes in the value of aircraft and could have a significant impact on the financial statements.

(b) Related-party transactions In the normal course of business the Group enters into transactions with their related parties. These transactions are priced predominantly at market rates. Judgement is applied in determining if transactions are priced at market or non-market rates, where there is no active market for such transactions. The basis for judgement is pricing for similar types of transactions with unrelated parties.

(c) Income taxes Tax contingencies and uncertain tax positions. Lithuanian tax legislation which was enacted or substantively enacted at the end of the reporting period may be subject to varying interpretations. Consequently, tax positions taken by management and the formal documentation supporting the tax positions may be successfully challenged by relevant authorities. Fiscal periods remain open to review by the authorities in respect of taxes for calendar years preceding the year of review. Management is not aware of any circumstances that could lead to significant tax charges and penalties in the future that have not been provided for or disclosed in these financial statements. The Group's uncertain tax positions are reassessed by management at the end of each reporting period. Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted by the end of the reporting period, and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes other than on income are recognized based on management's best estimate of the expenditure required to settle the obligations at the end of the reporting period.

A-29 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

5 Change in accounting policy

In previous periods the Group has accounted for aircraft at their historical cost less accumulated depreciation and any accumulated impairment loss. Historical cost included expenditure that is directly attributable to the acquisition of the items. In 2012 the Company has changed its accounting policy on aircraft and started accounting it at revaluated amounts. This change in accounting policy was adopted on a retrospective basis from 1 January 2010. Change in the accounting policy resulted in decrease in the book value of the aircraft in all the previous periods due to the reason that market value of the aircraft was below its value in use under cost model – see additional information in Note 12.

Information about the effect of changes in accounting policy on the comparative financial information as at 31 December 2011, 31 December 2010, 31 December 2009 is given in the table below:

USD Amount before adjustment Adjustment Amount after adjustment

2011 2010 2009 2011 2010 2009 2011 2010 2009 Balance sheet line items Property, plant and equipment 74,251 73,722 85,952 (26,320) (45,126) (32,950) 47,931 28,596 53,002 Revaluation reserve (net of deferred tax) – – – (5,771) – – 5,771 – – Deferred income tax assets (liabilities) (2,653) (2,535) (722) 3,975 7,090 4,943 1,322 4,555 4,221 Retained earnings 8,659 3,568 22,059 (28,116) (38,036) (28,007) (19,457) (34,468) (5,948) ––– Profit/loss line items Depreciation and amortization (12,491) (12,485) – 8,338 5,714 – (4,153) (6,771) – Revaluation of aircraft – – – 3,678 (17,890) – 3,678 (17,890) – Income tax (337) (2,135) – (2,096) 2,147 – (2,433) 12 – 9,920 (10,029) – Other comprehensive income items Gain on revaluation of aircraft – – – 6,790 – – 6,790 – – Deferred income tax on revaluation of aircraft – – – (1,019) – – (1,019) – – 5,771 – –

A-30 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

5 Change in accounting policy (continued)

LTL Amount before adjustment Adjustment Amount after adjustment

2011 2010 2009 2011 2010 2009 2011 2010 2009 Balance sheet line items Property, plant and equipment 198,208 192,407 206,734 (70,258) (117,774) (79,251) 127,950 74,633 127,483 Revaluation reserve (net of deferred tax) – – – (15,405) – – 15,405 – – Deferred income tax assets (liabilities) (7,085) (6,616) (1,736) 10,614 18,504 11,887 3,529 11,888 10,151 Retained earnings 21,895 9,267 47,287 (71,115) (95,733) (69,588) (49,220) (86,466) (22,301) Cumulative translation reserve 4,419 44 5,771 3,934 3,537 (2,224) 485 (3,493) 7,995 ––– Profit/loss line items Depreciation and amortization (30,999) (32,528) – 20,692 14,887 – (10,307) (17,641) – Revaluation of aircraft – – – 9,128 (46,610) – 9,128 (46,610) – Income tax (836) (5,549) – (5,203) 5,579 – (6,039) 30 – 24,617 (26,144) – Other comprehensive income items Gain on revaluation of aircraft – – – 18,125 – – 18,125 – – Deferred income tax on revaluation of aircraft – – – (2,720) – – (2,720) – – Currency translation differences on translation to presentation currency 4,374 (5,727) (986) (396) (5,761) 2,223 3,978 (11,488) 1,237 15,009 (5,761) 2,223

6 Revenue

2012 2011 2010 USD LTL USD LTL USD LTL

Lease revenue 21,360 57,387 15,195 37,708 14,658 38,191 Supplemental maintenance rent 9,985 26,828 6,752 16,758 6,102 15,898 Sales of aircraft 28,897 77,638 5,500 13,649 – – Other income – – 81 201 25 66 60,242 161,853 27,528 68,316 20,785 54,155

A-31 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

6 Revenue (continued)

The future aggregate minimum lease revenue (not including supplemental maintenance rent) under operating leases is as follows:

2012 2011 2010 USD LTL USD LTL USD LTL

Not later than 1 year 18,263 49,067 17,771 44,104 14,640 38,142 Later than 1 year but not later than 5 years 31,956 85,856 34,804 86,374 37,353 97,319 Laterthan5years –––––– 50,219 134,923 52,575 130,478 51,993 135,461

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

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

2012 2011 2010 Lease and sale customers USD LTL USD LTL USD LTL

Customer A 35,136 94,400 18,481 45,864 12,865 33,519 Customer B 9,243 24,833 377 936 – – Customer C 5,612 15,078 4,763 11,820 4,344 11,318 Customer D 3,576 9,608 3,576 8,875 3,576 9,318 Other customers 6,675 17,934 331 821 – – 60,242 161,853 27,528 68,316 20,785 54,155

A-32 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

6 Revenue (continued)

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

2012 2011 2010 Country USD LTL USD LTL USD LTL

Russia 9,605 25,806 627 1,556 – – Kazakhstan 35,136 94,400 18,481 45,864 12,865 33,519 Lithuania 4,504 12,102 167 414 537 1,399 BritishVirginIslands 3,80010,209–––– Tajikistan 3,576 9,608 3,576 8,875 3,576 9,318 Bermuda 2,5006,717–––– Poland – – 2,336 5,797 1,521 3,963 Estonia 133 357 2,341 5,810 2,286 5,956 Italy 9882,654–––– 60,242 161,853 27,528 68,316 20,785 54,155

The segment's non-current assets (aircraft on leases) according to geographical location (based on the residence of lessee's):

2012 2011 2010 Country USD LTL USD LTL USD LTL

Russia 35,109 91,494 18,837 50,283 – – Kazakhstan 14,746 38,428 17,066 45,556 18,435 48,114 Lithuania 1,383 3,603 2,975 7,942 – – Tajikistan 5,817 15,159 7,126 19,023 5,049 13,177 Poland – – – – 2,456 6,410 Estonia – – 1,922 5,132 2,653 6,924 Italy 2,9727,745–––– 60,027 156,429 47,926 127,936 28,593 74,625

7 Employee related expenses

2012 2011 2010 USD LTL USD LTL USD LTL

Salaries 436 1171 330 819 281 731 Social insurance expenses 162 436 131 325 93 244 598 1,607 461 1,144 374 975

A-33 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

8 Other operating expenses

2012 2011 2010 USD LTL USD LTL USD LTL

Management services 102 275 100 249 561 1,462 Legal and translation expenses 188 506 273 678 340 885 Insurance expenses 250 673 1 3 204 532 Marketing expenses 149 402 2 5 10 27 Travelling expenses 86 230 40 99 21 55 Representation expenses 56 152 9 22 19 49 Audit and accounting expenses 46 125 50 124 4 11 Other administrative expenses 145 382 220 544 207 538 1,022 2,745 695 1,724 1,366 3,559

9 Finance costs – net

2012 2011 2010 USD LTL USD LTL USD LTL

Interest income on cash and cash equivalents 5 13 5 12 13 35 Discounting of security deposits received 546 1,467 305 757 – – Unwinding of discount of non-current receivables and loans from related parties 328 881 435 1,079 1,017 2,648 Foreign exchange gain on financing activities 278 746 20 50 4,093 10,665 Finance income 1,157 3,107 765 1,898 5,123 13,348 Interest expenses (3,671) (9,863) (3,548) (8,805) (3,765) (9,810) Foreign exchange loss on financing activities (411) (1,104) (1,053) (2,614) (646) (1,683) Unwinding of discount of security deposits received (1,052) (2,823) (318) (789) (320) (834) Other finance costs (4) (12) (19) (47) (19) (49) Finance costs (5,138) (13,802) (4,938) (12,255) (4,750) (12,376) Finance costs – net (3,981) (10,695) (4,173) (10,357) 373 972

10 Income tax

2012 2011 (restated) 2010 (restated) USD LTL USD LTL USD LTL

Current tax 1,818 4,882 219 543 323 842 Deferred tax 1,655 4,448 2,214 5,496 (335) (872) Total income tax expenses/(benefit) 3,473 9,330 2,433 6,039 (12) (30)

A-34 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

10 Income tax (continued)

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the Group as follows:

2012 2011 (restated) 2010 (restated) USD LTL USD LTL USD LTL

Profit (loss) before tax 23,076 61,998 17,502 43,435 (5,498) (14,323) Tax calculated at a tax rate of 15% 3,462 9,302 2,625 6,515 (825) (2,148) Tax effects of: – Expenses non-deductible for tax purposes 6 15 339 841 133 346 –Non-taxableincomes ––––9692,523 –Deferredtaxassetsnotrecognised ––––(36)(93) –Effectofchangesoftaxrate ––––(15)(38) – Impact of foreign exchange differences 5 13 (531) (1,318) (237) (619) –Othereliminations –––––– Total income tax expenses/(benefit) 3,473 9,330 2,433 6,039 (12) (30)

11 Earnings (loss) per share

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

2012 2011 2010 USD LTL USD LTL USD LTL

Net profit (loss) attributable to shareholders 19,603 52,668 15,069 37,396 (5,486) (14,293) Weighted average number of ordinary shares issued 29,448 11,598 17

Basic earnings (loss) per share (USD/LTL) 0,67 1,79 1,30 3,22 (324,54) (845,53)

The Group has no dilutive potential ordinary shares, therefore, the diluted earnings per share are the same as basic earnings per share.

A-35 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

12 Property, plant and equipment

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

Opening net book amount as at 1 January 2010 (restated) 50,861 2,137 4 53,002 Additions – 254 1 255 Reclassifications 2,391 (2,391) – – Depreciation charge (6,769) – (2) (6,771) Revaluation loss (17,890) – – (17,890) Closing net book amount as at 31 December 2010 (restated) 28,593 – 3 28,596

At 31 December 2010 (restated) Cost or valuation 28,593 – 6 28,599 Accumulated depreciation – – (3) (3) Net book amount (restated) 28,593 – 3 28,596

Opening net book amount as at 1 January 2011 (restated) 28,593 – 3 28,596 Additions 13,016 – 4 13,020 Depreciation charge (4,151) – (2) (4,153) Revaluation surplus 12,095 – – 12,095 Revaluation loss (1,627) – – (1,627) Closing net book amount as at 31 December 2011 (restated) 47,926 – 5 47,931

At 31 December 2011 Cost or valuation 47,926 – 10 47,936 Accumulated depreciation – – (5) (5) Net book amount (restated) 47,926 – 5 47,931

Opening net book amount as at 1 January 2012 47,926 – 5 47,931 Additions 19,889 2,950 7 22,846 Disposals (3,848) – – (3,848) Reclassifications (1,000) – – (1,000) Depreciation charge (7,591) – (3) (7,594) Revaluation surplus 8,828 1,563 – 10,391 Revaluation loss (4,177) (436) – (4,613) Closing net book amount as at 31 December 2012 60,027 4,077 9 64,113 At 31 December 2012 Cost or valuation 60,027 4,077 17 64,121 Accumulated depreciation – – (8) (8) Net book amount 60,027 4,077 9 64,113

A-36 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

12 Property, plant and equipment (continued)

Aircraft are carried at revalued amounts being fair value at the end of each reporting period. Fair value measurements as at 31 December 2009, 31 December 2010, 31 December 2011, 31 December 2012 (Note 4).

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

Opening net book amount as at 1 January 2010 (restated) 122,330 5,144 9 127,483 Additions – 659 2 661 Reclassifications 6,231 (6,231) – – Depreciation charge (17,637) – (4) (17,641) Revaluation loss (46,610) – – (46,610) Exchange differences 10,311 428 1 10,740 Closing net book amount as at 31 December 2010 (restated) 74,625 – 8 74,633

At 31 December 2010 Cost or valuation 74,625 – 16 74,641 Accumulated depreciation – – (8) (8) Net book amount (restated) 74,625 – 8 74,633

Opening net book amount as at 1 January 2011 (restated) 74,625 – 8 74,633 Additions 32,311 – 12 32,323 Depreciation charge (10,302) – (5) (10,307) Revaluation surplus 31,291 – – 31,291 Revaluation loss (4,038) – – (4,038) Exchange differences 4,048 – – 4,048 Closing net book amount as at 31 December 2011 (restated) 127,935 – 15 127,950

At 31 December 2011 Cost or valuation 127,935 – 28 127,963 Accumulated depreciation – – (13) (13) Net book amount (restated) 127,935 – 15 127,950

Opening net book amount as at 1 January 2012 (restated) 127,935 – 15 127,950 Additions 53,436 7,926 18 61,980 Disposals (10,330) – – (10,330) Reclassifications (2,688) – – (2,688) Depreciation charge (20,395) – (8) (20,403) Revaluation surplus 22,998 4,200 – 27,918 Revaluation loss (11,113) (1,171) – (12,284) Exchange differences (4,015) (329) (1) (4,345) Closing net book amount as at 31 December 2012 156,428 10,626 24 167,078

A-37 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

12 Property, plant and equipment (continued)

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

At 31 December 2012 Cost or valuation 156,429 10,626 45 167,100 Accumulated depreciation – – (21) (21) Net book amount 156,429 10,626 24 167,078

Split of recognised revaluation in profit/loss 2012 2011 2010 (restated) (restated) USD LTL USD LTL USD LTL

Revaluation loss recognized (3,248) (8,727) (1,627) (4,038) (17,890) (46,610) Revaluation loss reversed 1,469 3,947 5,305 13,166 – – Revaluation of aircraft (1,779) (4,780) 3,678 9,128 (17,890) (46,610)

Split of recognised revaluation 2012 2011 2010 in other comprehensive income (restated) (restated) USD LTL USD LTL USD LTL

Revaluation gain recognized 8,922 23,251 6,790 18,125 – – Revaluation gain reversed (1,365) (3,557) –––– Revaluation of aircraft 7,557 19,694 6,790 18,125 – –

If aircraft were stated on the historical cost basis, the amounts would be as follows:

2012 2011 2010 USD LTL USD LTL USD LTL

Cost 132,410 345,060 121,772 325,062 108,752 283,833 Accumulated depreciation (56,062) (146,097) (47,521) (126,854) (35,030) (91,426) Net book amount 76,348 198,963 74,251 198,208 73,722 192,407

Due to identified impairment indicators, the Group has performed impairment tests for its aircraft using the value in use method based on discounted future cash flows at 31 December 2009, 2010 and 2011. Lease agreements with clients were signed during 2007–2008 when aviation market was on peak, with lease rates slightly above market values and fixing them for 5–6 years. During the economic crisis in 2009–2010, when aviation market shrank and lease rates or market values for aircraft decreased, the Company didn't change contracts with their clients and continuously generated high cash flows from aircraft rent, therefore aircraft value in use has not changed in line with the market conditions. As a result, recoverable amount of aircraft fleet of the Group calculated applying discounted future cash flows method was not lower than the book value.

A-38 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

12 Property, plant and equipment (continued)

Leased assets, where the Group is a lessee under finance lease contracts comprised as follows as at 31 December:

2012 2011 (restated) 2010 (restated) Aircraft USD LTL USD LTL USD LTL

Cost or valuation – capitalised finance lease 29,711 79,301 29,475 76,929 10,410 25,513 Net book amount 29,711 79,301 29,475 76,929 10,410 25,513

Capitalisation of borrowing costs

2012 2011 2010

Capitalised net borrowing costs (USD) – – 76 Capitalised net borrowing costs (LTL) – – 199 Capitalisation rate (%) – – 7.00%

Aircraft were pledged to the banks as collateral for borrowings (Note 17). Carrying amounts of pledged aircraft as at 31 December:

2012 2011 (restated) 2010 (restated) USD LTL USD LTL USD LTL

Aircraft 21,944 58,578 17,207 41,386 18,180 44,555 21,944 58,578 17,207 41,386 18,180 44,555

13 Prepayments for property, plant and equipment

2012 2011 2010 USD LTL USD LTL USD LTL

Prepayments for aircraft 550 1,433 3,402 9,081 – –

14 Inventories

2012 2011 2010 USD LTL USD LTL USD LTL

Aircraft – – 3,050 8,142 – – Aircraft components 2,541 6,663 533 1,422 – – Total 2,541 6,623 3,583 9,564 – –

A-39 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

15 Trade and other receivables

2012 2011 2010 USD LTL USD LTL USD LTL

Trade receivables from third parties 10,083 26,277 1,773 4,733 2,137 5,578 Less:provisionforimpairmentoftradereceivables ––––(1,080) (2,820) Trade receivables from third parties – net 10,083 26,277 1,773 4,733 1,057 2,758 Receivables from related parties 3,294 8,374 1,340 3,301 1,881 4,696 Less: provision for impairment of trade receivables from related parties (1,048) (2,522) (1,048) (2,522) (1,048) (2,522) Receivables from related parties – net (Note 24) 2,246 5,852 292 779 833 2,174 Loans granted to related parties (weighted average interest rate 5,61%) (Note 24) 3,034 7,907 435 1,162 7,724 20,158 Other receivables 183 479 903 2,410 161 423 Less: provision for impairment of other receivables (29) (76) (88) (234) (35) (90) Other receivables – net 154 403 815 2,176 126 333 Prepayments 94 246 100 266 54 142 VAT receivables 1,028 2,678 1,303 3,479 206 537 16,639 43,363 4,718 12,595 10,000 26,102

Non-current portion: (2,305) (6,008) (498) (1,330) (5,829) (15,215) Current portion: 14,334 37,355 4,220 11,265 4,171 10,887

The nominal amounts of the trade and other receivables are denominated in the following currencies:

2012 2011 2010 USD LTL USD LTL USD LTL

EUR 1642–––– USD 15,229 39,688 2,807 7,494 5,757 15,025 LTL 1,385 3,610 1,911 5,101 4,243 11,077 GBP 923–––– 16,640 43,363 4,718 12,595 10,000 26,102

16 Cash and cash equivalents

Cash and cash equivalents are dominated in following currencies:

2012 2011 2010 USD LTL USD LTL USD LTL

USD 6,687 17,427 13,539 36,141 580 1,515 EUR 1,183 3,083 15 40 – – LTL 211 550 92 245 312 813 Total cash and cash equivalents 8,081 21,060 13,646 36,426 892 2,328

A-40 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

17 Share capital and reserves

Share capital As at 31 December 2012 and 31 December 2011 the share capital of the Company and the Group amounts to LTL 29,447,807 (USD 12,232 thousand) and consists of 29,447,807 ordinary registered shares with a nominal value of LTL 1 each. On 10 August 2011 share capital of the Company has been increased from LTL 100,000 (USD 38 thousand) to LTL 29,447,807 (USD 12,232 thousand) by issuing 29,347,803 additional shares with par value of LTL 1 each. All shares are fully paid up. This issue was paid-up by capitalizing the borrowings from the shareholders of the Group (refer to Note 24). In 2010 share capital of the Company was increased to LTL 100,000 (USD 38 thousand). In 2010 the distribution to owners amounting to LTL 49,872 thousand (USD 23,034 thousand) relates to reduction of share capital of the Group company AviaAM B04 UAB by setting-off with the loans granted by the company to its previous shareholders. The transaction accounted through retained earnings in these financial statements as a result of retrospectively applied predecessor accounting for acquisition of this company in 2011. The reduction of the share capital was made by offsetting the receivable from shareholders (refer to Note 24). For further details see also Note 1 (Historical information).

Legal reserve The legal reserve is compulsory under the Lithuanian Law on Companies and is formed from profit to be appropriated. Annual transfers of 5 per cent of net profit are required until the reserve reaches 10 per cent of the authorised share capital. The legal reserve may be used to cover the Company's losses only. A part of the legal reserve in excess of 10 per cent of the authorised share capital may be redistributed when appropriation of profit for the following financial year is performed. Legal reserve comprises only legal reserve of the Company.

Revaluation reserve Revaluation reserve comprises increase in the value of aircraft on revaluation.

Cumulative translation reserve Cumulative translation reserve represents accumulated foreign exchange differences arising from translation of Group's balances and results from functional currency USD to presentation currency LTL.

Dividends In 2012 declared dividends were not yet paid as at 31 December 2012.

18 Borrowings

2012 2011 2010 USD LTL USD LTL USD LTL

Non-current Borrowingsfromrelatedparties(Note24) ––––10,05526,243 Bank borrowings 21,427 55,838 17,680 47,196 24,329 63,497 Finance lease liabilities 13,413 34,957 25,465 67,975 22,048 57,543 34,840 90,795 43,145 115,171 56,432 147,283

A-41 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

18 Borrowings (continued)

2012 2011 2010 USD LTL USD LTL USD LTL Current Borrowingsfromrelatedparties(Note24) ––––6,12315,981 Bank borrowings 13,807 35,980 6,579 17,563 3,745 9,776 Finance lease liabilities 2,198 5,728 6,071 16,205 4,380 11,431 16,005 41,708 12,650 33,768 14,248 37,188 Total borrowings 50,845 132,503 55,795 148,939 70,680 184,471

The nominal amounts of the borrowings are denominated in the following currencies:

2012 2011 2010 USD LTL USD LTL USD LTL

USD 50,845 132,503 55,795 148,939 54,485 142,202 LTL ––––16,19542,269 50,845 132,503 55,795 148,939 70,680 184,471

Bank borrowings mature in 2013–2015. Borrowings are secured by the aircraft (Note 12) and guarantees provided by related parties (Note 24).

The table below analyses the Group's bank borrowings (excluding finance lease liabilities) according to relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date:

2012 2011 2010 USD LTL USD LTL USD LTL

Less than 1 year 13,807 35,980 6,579 17,563 3,745 9,776 Between 1 and 5 years 21,427 55,838 17,680 47,196 24,329 63,497 Over5years –––––– 35,234 91,818 24,259 64,759 28,074 73,273

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

2012 2011 2010

Borrowings from related parties – – 8.00% Bank borrowings 5,67% 4,81% 5,05% Finance lease liabilities 8,08% 7,19% 7.00%

According to loan agreements with one bank signed in 2012, the Group should maintain certain Debt / EBITDA ratio and the Company should maintain certain Capital ratio (Equity / Assets). In 2012, the Group has substituted the finance lease agreements to the loan agreements with the same bank for the amount of USD 19,437 thousand. In 2010, the Group has substituted the loan agreements to the finance lease agreements with the same bank for the amount of USD 27,208 thousand.

A-42 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

18 Borrowings (continued)

Finance lease liabilities – minimum lease payments:

2012 2011 2010 USD LTL USD LTL USD LTL

Not later than 1 year 3,526 9,188 8,336 22,252 6,123 15,979 After 1 year but not later than 5 years 16,490 42,972 29,090 77,653 25,202 65,776 After5years –––––– Less: future finance lease charges (4,405) (11,475) (5,890) (15,725) (4,897) (12,781) Present value of finance lease liabilities 15,611 40,685 31,536 84,180 26,428 68,974

2012 2011 2010 USD LTL USD LTL USD LTL

Present value of finance lease liabilities: Not later than 1 year 2,198 5,728 6,071 16,205 4,380 11,431 After 1 year but not later than 5 years 13,413 34,957 25,465 67,975 22,048 57,543 After5years –––––– 15,611 40,685 31,536 84,180 26,428 68,974

In 2012, the Group has acquired aircraft as non-cash transactions based on finance lease agreements for the amount of USD 8,906 thousand (2011: 8,593; 2010: -).

19 Trade and other payables and advances received

2012 2011 2010 USD LTL USD LTL USD LTL

Trade and other payables – financial liabilities Trade payables 198 515 162 431 – – Trade payables to related party (Note 24) 1,033 2,661 1,790 4,777 77 201 Salaries and social security payable, including vacation accrual 103 270 71 189 35 91 Accruals 26 98 18 49 46 119 Provisionforlitigation ––––2,0005,220 Dividendspayable(Note24) 1,9725,140–––– 3,332 8,684 2,041 5,446 2,158 5,631

Trade and other payables – non-financial liabilities Other payables 600 1,562 980 2,619 – – 600 1,562 980 2,619 – –

Total trade and other payables 3,932 10,246 3,021 8,065 2,158 5,631

A-43 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

19 Trade and other payables and advances received (continued)

2012 2011 2010 USD LTL USD LTL USD LTL Advance payments received – non-financial liabilities Advance payments from customers related to acquisition of aircraft – – 5,500 14,682 – – Other advances received – – 74 196 140 365 – – 5,574 14,878 140 365

The carrying amounts of the Group's trade and other payables are denominated in the following currencies:

2012 2011 2010 USD LTL USD LTL USD LTL

LTL 1,044 2,720 1,297 3,462 145 380 USD 812 2,115 7,003 18,694 2,153 5,616 EUR 2,076 5,411 281 750 – – GPB – – 14 37 – – 3,932 10,246 8,595 22,943 2,298 5,996

20 Security deposits received

2012 2011 2010 USD LTL USD LTL USD LTL

Security deposits repayable after one year at nominal value 13,150 34,269 13,350 35,636 6,550 17,095 Less: discounting effect (1,630) (4,249) (1,808) (4,826) (1,357) (3,543) Security deposits repayable after one year 11,520 30,020 11,542 30,810 5,193 13,552 Securitydepositsrepayablewithinoneyear –––––– 11,520 30,020 11,542 30,810 5,193 13,552

Average rates used for security deposits discounting are as follows: 2012: 7.50%, 2011: 5.00%, 2010: 5.00%. Security deposits serve as a security by a lessee for the performance of its obligations under the aircraft lease agreements and upon termination of lease lessor is obliged return it to lessee. All of the Group's security deposits are denominated in USD. Security deposits are not interest-bearing (Note 2.11).

A-44 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

21 Deferred income taxes

The movement in deferred tax assets and liabilities of the Group (prior to offsetting of balances) is as follows:

2012 2011 (restated) 2010 (restated) USD LTL USD LTL USD LTL

Deferred tax assets At beginning of the period 5,412 14,447 6,596 17,214 6,590 15,850 Recognised through profit (loss) (1,004) (2,616) (1,184) (3,161) 6 15 Exchange rate differences – (344) – 394 – 1,349 At end of year 4,408 11,487 5,412 14,447 6,596 17,214

Deferred tax liabilities At beginning of the period (4,090) (10,918) (2,041) (5,326) (2,370) (5,699) Recognised through profit (loss) (652) (1,698) (1,030) (2,751) 329 858 Recognised through other comprehensive income (1,133) (2,953) (1,019) (2,720) – – Exchange rate differences – 259 – (121) – (485) At end of year (5,875) (15,310) (4,090) (10,917) (2,041) (5,326)

The analysis of deferred tax assets and deferred tax liabilities is as the follows:

2012 2011 (restated) 2010 (restated) USD LTL USD LTL USD LTL Deferred tax assets Deferredtaxtoberecoveredwithin1year –––––– Deferred tax to be recovered after 1 year 4,408 11,487 5,412 14,447 6,596 17,214

Deferred tax liability Deferredtaxtoberecoveredwithin1year –––––– Deferred tax to be recovered after 1 year (5,875) (15,310) (4,090) (10,918) (2,041) (5,326)

Deferred income tax asset for the year is recognised to the extent that the realization of the related tax benefit through the future taxable profit is probable.

A-45 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

21 Deferred income taxes (continued)

The movement in deferred tax assets and deferred tax liabilities of the Group (prior to offsetting of balances) are as follows:

USD Accumulated Difference Supplemental Discounting Other Total Deferred tax assets taxable losses between tax basis rent effect accrued and accounting expenses basis (fair value) of aircraft (restated)

At 31 December 2009 40 6,247 101 176 26 6,590 Charged / (credited) to the profit or loss 1,806 (1,624) (101) (49) (26) 6 At 31 December 2010 1,846 4,623 – 127 – 6,596 Charged / (credited) to the profit or loss (823) (414) – 39 14 (1,184) At 31 December 2011 1,023 4,209 – 166 14 5,412 Charged / (credited) to the profit or loss (885) (112) – (2) (5) (1,004) At 31 December 2012 138 4,097 – 164 9 4,408

USD Difference Exchange rate Supplemental Discounting Other Total Deferred tax liabilities between tax basis differences for tax rent effect accrued and accounting purposes expenses basis (fair value) (depreciation) of aircraft (restated)

At 31 December 2009 – (572) (1,705) (86) (7) (2,370) Charged / (credited) to the profit or loss – (169) 675 (181) (4) 329 At 31 December 2010 – (741) (1,030) (267) (3) (2,041) Charged / (credited) to the profit or loss 5 (209) (986) 160 – (1,030) Charged / (credited) to the other comprehensive income (1,018) – – – – (1,018) At 31 December 2011 (1,014) (950) (2,016) (107) (3) (4,090) Charged / (credited) to the profit or loss (210) 310 (796) 37 (1) (652) Charged / (credited) to the other comprehensive income (1,133) – – – – (1,133) At 31 December 2012 (2,357) (640) (2,812) (70) (4) (5,874)

A-46 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

21 Deferred income taxes (continued)

LTL Accumulated Difference Supplemental Discounting Other Total Deferred tax assets taxable losses between tax basis rent effect accrued and accounting expenses basis (fair value) of aircraft (restated)

At 31 December 2009 96 15,024 242 424 64 15,850 Charged / (credited) to the profit or loss 4,715 (4,239) (262) (128) (71) 15 Exchange rate difference 8 1,279 20 36 6 1,349 At 31 December 2010 4,819 12,064 – 332 (1) 17,214 Charged / (credited) to the profit or loss (2,197) (1,103) – 104 35 (3,161) Exchange rate difference 112 275 – 7 – 394 At 31 December 2011 2,734 11,236 – 443 34 14,447 Charged / (credited) to the profit or loss (2,308) (291) (5) (12) (2,616) Exchange rate difference (67) (266) – (11) – (344) At 31 December 2012 359 10,679 – 427 22 11,487

LTL Difference Exchange rate Supplemental Discounting Other Total Deferred tax liabilities between tax basis differences for tax rent effect accrued and accounting purposes expenses basis (fair value) (depreciation) of aircraft (restated)

At 31 December 2009 – (1,374) (4,101) (207) (17) (5,699) Charged / (credited) to the profit or loss – (421) 1,762 (473) (10) 858 Exchange rate difference – (116) (350) (18) (1) (485) At 31 December 2010 – (1,911) (2,689) (698) (28) (5,326) Charged / (credited) to the profit or loss 13 (582) (2,631) 428 21 (2,751) Charged / (credited) to the other comprehensive income (2,720) – – – – (2,720) Exchange rate difference 1 (45) (61) (16) – (121) At 31 December 2011 (2,706) (2,538) (5,381) (286) (7) (10,918) Charged / (credited) to the profit or loss (548) 832 (2,076) 96 (2) (1,698) Charged / (credited) to the other comprehensive income (2,953) – – – – (2,953) Exchange rate difference 64 61 128 6 – 259 At 31 December 2012 (6,143) (1,645) (7,329) (184) (9) (15,310)

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when deferred income taxes relate to the same fiscal authority.

A-47 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

21 Deferred income taxes (restated) (continued)

The following amounts, determined after appropriate offsetting, are shown in the balance sheet:

2012 2011 2010 USD LTL USD LTL USD LTL

Deferred tax assets 4,408 11,487 5,412 14,447 6,596 17,214 Deferred tax liabilities (5,875) (15,310) (4,090) (10,918) (2,041) (5,326) (1,467) (3,823) 1,322 3,529 4,555 11,888

Deferred income tax asset and liability are calculated at 15% rate.

22 Commitments and contingencies

Capital commitments

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

2012 2011 2010 USD LTL USD LTL USD LTL

Aircraft 3,188 8,307 19,388 51,753 – –

As at 31 December 2012 and 31 December 2011 commitments of the Group relates to the acquisition of aircraft.

23 Financial instruments by category

Category – loans and receivables

2012 2011 2010 USD LTL USD LTL USD LTL

Loans to related parties – net 3,034 7,907 435 1,162 7,724 20,158 Trade receivables and receivables from related parties – net 12,329 32,129 2,065 5,512 1,890 4,932 Other receivables 154 403 815 2,176 126 333 Cash and cash equivalents 8,081 21,060 13,646 36,426 892 2,328 23,598 61,499 16,961 45,276 10,632 27,751

A-48 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

23 Financial instruments by category (continued)

Category – financial liabilities measured at amortised cost

2012 2011 2010 USD LTL USD LTL USD LTL

Bank borrowings 35,234 91,818 24,259 64,759 28,074 73,273 Loansfromrelatedparties ––––16,17842,224 Lease liabilities 15,611 40,685 31,536 84,180 26,428 68,974 Trade payables 198 515 162 431 – – Trade payables to related parties 1,033 2,661 1,790 4,777 77 201 Accruals and other payables 1,998 5,238 18 49 2,046 5,339 Security deposits received (Note 20) 11,520 30,020 11,542 30,810 5,193 13,552 65,594 174,937 69,307 185,006 77,996 203,563

24 Related party transactions

The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions. Related parties included as follows: • Ultimate parent – IA Valda AB (until 10 August 2011 also Parent); • Parent since 10 August 2011 – IA Valda Cyprus Leasing Ltd.; • Other related parties – shareholder Mesotania Holdings Ltd., subsidiaries and other related parties of IA Valda AB, associates and jointly controlled entities of the Group; key management of the Group and entities controlled or jointly controlled by key management personnel or their close relatives. All major transactions and outstanding balances with other related parties relate to associate group of companies of IA Valda AB.

Transactions with related parties:

2012 2011 2010 USD LTL USD LTL USD LTL

Salesofservicesto: Other related parties 7,529 20,229 8,353 20,730 9,846 25,651

Purchases of assets from: Other related parties 900 2,345 800 1,985 123 320

Purchasesofservicesfrom: Ultimateparent ––1224 Other related parties 1,135 3,050 659 1,636 949 2,471 Total purchases of services 1,135 3,050 660 1,638 951 2,475

Total purchases of assets and services 2,035 5,395 1,460 3,623 1,074 2,795

A-49 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

24 Related party transactions (continued)

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

Trade and other receivables from related parties 2012 2011 2010 USD LTL USD LTL USD LTL

Other related parties 3,294 8,374 1,340 3,301 1,881 4,696 Trade and other receivables at nominal value 3,294 8,374 1,340 3,301 1,881 4,696 Less: provision for impairment of receivables from other related parties (1,048) (2,522) (1,048) (2,522) (1,048) (2,522) 2,246 5,852 292 779 833 2,174

The ageing of trade and other receivables from related parties is as follows:

Trade and other receivables from related parties 2012 2011 2010 USD LTL USD LTL USD LTL

Ofwhichnotoverdue 62161–––– Overdue up to 3 months 1,220 3,179 292 779 611 1,595 4 to 6 months 964 2,512 – – 222 579 Overdue more than 6 months 1,048 2,522 1,048 2,522 1,048 2,522 Provision for receivables impairment (1,048) (2,522) (1,048) (2,522) (1,048) (2,522)

Total trade receivables from related parties 2,246 5,852 292 779 833 2,174

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

Movements on the Group's provision for impairment of receivables from related parties:

2012 2011 2010 USD LTL USD LTL USD LTL

At 1 January 1,048 2,522 1,048 2,522 1,048 2,522 Provisionforreceivablesimpairment –––––– At 31 December 1,048 2,522 1,048 2,522 1,048 2,522

A-50 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

24 Related party transactions (continued)

Payables to and prepayments from related parties 2012 2011 2010 USD LTL USD LTL USD LTL

Ultimateparent 410–––– Parent 1,1793,072–––– Other related parties 1,822 4,719 1,790 4,777 77 201 Security deposits received – – 3,210 8,570 – – Total payables to and prepayments from related parties 3,005 7,801 5,000 13,347 77 201

* As at 31 December 2012, payables consist of dividends payable for the amount of USD 1,972 (LTL 5,140) thousand to shareholders. Payables as at the end of previous periods consist of payables for services and assets purchased.

Loans received from other related parties 2012 2011 2010 USD LTL USD LTL USD LTL

Beginning of the year – – 16,189 42,252 – – Loansreceivedduringtheyear ––––1,8774,898 Loansassumedfromrelatedparties ––––16,18942,252 Loanrepaymentsasmonetarytransactions ––––(2,000) (5,220) Loans repayments by offsetting with loans granted – – (3,872) (12,582) – – Contributed to share capital (Note 17) – – (12,194) (29,348) – – Interest on loans charged – – 313 777 117 306 Interest on loans repaid – – (436) (1,099) (5) (12) Endoftheyear ––––16,17842,224

Loans granted to other related parties 2012 2011 2010 USD LTL USD LTL USD LTL

Beginning of the year 435 1,162 7,724 20,129 5,085 12,231 Loans advanced during the year as monetary transactions 1,887 5,070 – – 1,555 4,052 Loans advanced during the year by transferring trade receivables to loans 1,248 3,354 2,449 6,078 11,624 20,102 Loan repayments received as monetary transactions (581) (1,561) (3,246) (8,056) – – Loan repayments as a non-monetary offset with loan liabilities – – (3,872) (12,582) – – Loan repayments as a non-monetary offset with trade payables – – (2,527) (3,281) (4,788) (12,499) Loans granted to related parties by assuming liabilities (seethetableabove) ––––16,18942,252 Offsetwithdistributiontoshareholders(Note17) ––––(23,034) (49,872) Discountingeffect(10%) ––––1,0422,720 Interest charged 66 178 125 310 347 908 Interest received (18) (48) (278) (690) (194) (477) Exchange rate differences (3) (248) 60 (746) (102) 741 End of the year 3,034 7,907 435 1,162 7,724 20,158

A-51 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

24 Related party transactions (continued)

As at 31 December 2012, all loans granted to related parties are denominated in USD and weighted average effective interest rate of these loans is 4.2 per cent. The repayments are scheduled in 2013–2014. As at 31 December 2011, total loans granted were long term loans with repayment date set at 31 July 2013. As at 31 December 2010, loans was classified as long term loans, with due dates up to 31 August 2014.

Guarantees from related parties As at 31 December 2012 Dangiruva AB had guarantees granted in the amount of USD 16,355 (LTL 42,621) to the bank on behalf of the Group for the credits granted to the Group which expire in 2014–2015.

25 Remuneration of the Group's key management personnel

General manager, operating managers and chief financier are considered as the key management personnel of the Group.

2012 2011 2010 USD LTL USD LTL USD LTL

Salaries 294 790 239 593 197 514 Social insurance expenses 91 245 73 182 62 162 385 1,035 312 775 259 676

26 Events after the balance sheet date

Acquisition and sale of aircraft In January 2013 the Group acquired one Bombardier CRJ200 aircraft and leased it to a customer in Russian Federation. On 1 February 2013 the Group completed the sale of one Boeing B737-300 airframe, the lease of which expired in November 2012.

Other events after the balance sheet date On 7 February 2013 The Group sold 2.500 shares (100% of owned stake) of AviaIM Jet Trading Ltd. During 2012 AviaIM Jet Trading Ltd was not involved in any business activities therefore the shares were sold at the same value as acquired. On 26 February 2013 new body of the Company – Supervisory Council has been established. On 15 April 2013 Tadas Goberis has been appointed as General Manager of the Company. On 26 March 2013 the Group entered into agreement to sell one CFM56-3B2 Engine, which was acquired in 2012 together with Boeing B737-300 aircraft. In March 2013 shareholders ZIA Valda Cyprus Ltd. and Mesotania Holdings Ltd. sold respectively 530,060 and 839,263 shares in the Company, which were acquired by Linas Dovydenas,ÿ Gediminas iemelis, Aurimas Sanikovas, Virginija Svilainyteandÿ Tadas Goberis. As a result the shareholders' structure of the Company following this acquisition became as follows:

A-52 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

26 Events after the balance sheet date (continued)

Number of shares % ZIA Valda Cyprus Leasing Ltd. 17,078,622 58.00 Mesotania Holdings Ltd. 10,899,858 37.01 Linas Dovydÿenas 441,717 1.50 Gediminas iemelis 323,926 1.10 Aurimas Sanikovas 294,478 1.00 Virginija Svilainytÿe 161,963 0.55 Tadas Goberis 147,239 0.50 IA Valda AB 60,000 0.20 Indeco: Investment and Development UAB 40,000 0.14 Total 29,447,803 100.00

A-53 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED ANNUAL REPORT

I. GENERAL INFORMATION

Reporting period Year ended 31 December 2012

The Company and its contact details

Name of the Company AviaAM Leasing AB (hereinafter – "AviaAM Leasing" or "the Company") Legal form Public company (joint-stock company) Date of registration 6 April 2009 Registrar State Enterprise Centre of Registers Company code 302330793 Registered office Smolensko g. 10, LT-03201 Vilnius, Lithuania Telephone number +370 5 252 55 25 Fax number +370 5 252 55 24 E-mail [email protected] Web address www.aviaam.com

Main activities The Company and its subsidiaries (together, "the Group") is engaged in the business of aircraft leasing and management. The principal activity of the Group is operating leasing, management and trading of mid-life narrowbody and regional jet aircraft. The corporate objective of the Group is to create value for its shareholders by focusing on the niche market for used aircraft. Specifically, the Group is most active in the market for mid-life mainline narrowbody and regional jet aircraft such as Boeing 737 "Classics", Boeing 737 NGs, Boeing 757-200s, Airbus A320s and Bombardier CRJ200s.

As at 31 December 2012 the Group consisted of the parent company – AviaAM Leasing AB – and its effective subsidiaries:

Name of the company Date of acquiring (establishment) / Country of establishment Effective holding Company code / of the Company, % Address of establishment

AviaAM B01 UAB Date of acquiring: 4 January 2010 / Lithuania 100 Company code: 125808161 / Smolensko g. 10, Vilnius

AviaAM B02 UAB Date of acquiring: 4 January 2010 / Lithuania 100 Company code: 300618156 / Smolensko g. 10, Vilnius

AviaAM B03 UAB Date of acquiring: 22 January 2010 / Lithuania 100 Company code: 300887740 / Smolensko g. 10, Vilnius

AviaAM B04 UAB Date of establishment: 22 February 2007 / Lithuania 100 Company code: 300651619 / Smolensko g. 10, Vilnius

AviaAM B05 UAB Date of establishment: 28 June 2011 / Lithuania 100 Company code: 302642412 / Smolensko g. 10, Vilnius

A-54 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

Name of the company Date of acquiring (establishment) / Country of establishment Effective holding Company code / of the Company, % Address of establishment

AviaAM B06 UAB Date of establishment: 15 July 2011 / Lithuania 100 Company code: 302647509 / Smolensko g. 10, Vilnius

AviaAM B07 UAB Date of establishment: 30 September 2011 / Lithuania 100 Company code: 302671887 / Smolensko g. 10, Vilnius

AAL Capital Aircraft Date of establishment: 29 September 2011 / Cyprus 100 Holdings Ltd. Company code: HE294651 / Dimitriou Karatasou 15, Anastasio Building, 6th floor, Flat/office 601, Strovolos, 2024, Nicosia, Cyprus

AviaAM Leasing Bermuda Ltd. Date of establishment: 16 September 2011 / Bermuda 100 Company code: 45778 / Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda

As at 31 December 2012 the Company had no branches. As at 31 December 2012 the number of full-time staff employed by the Group totalled 13, including 2 employees on maternity leave. As at 31 December 2011 the number of full-time staff employed by the Group was 12, including 2 employees on maternity leave.

II. INFORMATION ABOUT SHARE CAPITAL AND SHAREHOLDERS As at 31 December 2012 the share capital of the Company and the Group amounted to LTL 29,447,807 and consisted of 29,447,807 ordinary registered shares with a nominal value of LTL 1 each. All shares are fully paid up.

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

Number of shares %

ZIA Valda Cyprus Leasing Ltd. 17,608,682 59.80 Mesotania Holdings Ltd. 11,739,121 39.86 IA Valda AB 60,000 0.20 Indeco: Investment and Development UAB 40,000 0.14 Total 29,447,803 100.00

III. FINANCIAL AND OPERATIONAL INFORMATION

Aircraft portfolio During the year 2012 the Group expanded its aircraft portfolio by acquiring 2 Boeing 737-300, 2 Boeing 737-500 and 4 Bombardier CRJ200 aircraft for its leasing activities. In addition 6 more Bombardier CRJ200 aircraft were acquired and subsequently resold. Moreover the Group sold 1 Boeing 737-300 aircraft and 1 Bombardier CRJ200 which was acquired in 2011. As a result, as of 31 December 2012 the Group owned 18 aircraft: 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 7 Bombardier CRJ200 aircraft. 15 aircraft were leased under operating lease contracts, 2 aircraft were under preparation for use and one aircraft was off lease. The book value of the aircraft portfolio amounted to USD 64.1 million (LTL 167.1 million) as at 31 December 2012.

A-55 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

The acquisition of aircraft was financed via finance leases and using own funds. Management of the Group accesses the capital markets for funds at times and on terms and conditions considered appropriate. The Group relies significantly on middle-term financing and thereby attempt to closely match the lease terms of the Group's aircraft. To date, the Group has been able to purchase and finance aircraft on terms which have permitted to lease aircraft portfolio in line with required return on equity and market expectations.

Aircraft leasing All aircraft of the Group, except the aircraft purchased for sale, are leased under operating leases. Under an operating lease, the lessee is responsible for the maintenance and servicing of the aircraft during the lease term and the lessor receives the benefit, and assumes the risk, of the residual value of the aircraft at the end of the lease. All operating leases are on a "net" basis with the lessee responsible for all operating expenses, which customarily include fuel, crews, airport and navigation charges, taxes, licenses, registration and insurance. In addition, the lessee is responsible for normal maintenance and repairs, airframe and engine overhauls, and compliance with return conditions of flight equipment on lease. All lease contracts of the Group provide for the payment of a fixed, periodic amount of rent. In addition to lease rentals the lessees are required to pay supplemental maintenance rent, the amount of which is calculated with reference to the utilisation of airframes, engines and other major life-limited components. Under the provisions of all leases, for certain airframe and engine overhauls, the Group is obliged to reimburse the lessee for cost incurred up to, but not exceeding, related maintenance rentals ("supplemental maintenance rent") paid by lessee. At lease expiration to the extent that a lessee has paid to the Group a higher supplemental rent than it was reimbursed, the excess maintenance rent is to be retained within the Group. The Group recognises lease rentals and supplemental maintenance rent as revenue. The Group's revenue for the year 2012 from aircraft leases amounted to USD 31.3 million (LTL 84.2 million). Before making any decision to lease an aircraft the Group performs an extensive review of the prospective lessee, which generally includes reviewing financial statements, business plans, cash flow projections, maintenance records, operational performance histories and relevant regulatory approvals and documentation. AviaAM Leasing Group also performs on-site credit reviews for new lessees which typically include extensive discussions with the prospective lessee's management before the Group enters into a new lease. Depending on the credit quality and financial condition of the lessee, guarantees or other financial support from acceptable financial institutions or other third parties could be demanded from the lessee. Furthermore, all lessees are required to provide the Group with security deposits in order to protect the value of the Group's assets.

Results of operations The total consolidated Group's revenue for the year 2012 was USD 60.2 million (LTL 161.9 million). Revenues from rentals of aircraft were USD 31.3 million (LTL 84.2 million) for the year ended 31 December 2012, including supplemental maintenance rent in an amount of USD 10 million (LTL 26.8 million). The revenue from sales of aircraft amounted to USD 28.9 million (LTL 77.6 million) for the year 2012. Depreciation of aircraft and amortisation of intangible assets were USD 7.6 million (LTL 20.4 million) for the year ended 31 December 2012. Costs of aircraft sold were USD 21.4 million (LTL 57.5 million). Revaluation of aircraft resulted to loss of USD 1.8 million (LTL 4.8 million). Aircraft maintenance expenses in 2012 amounted to USD 3.1 million (LTL 8.3 million). Employee-related and other operating expenses were USD 0.6 million (LTL 1.6 million) for the year ended 31 December 2012. Net finance costs were USD 4 million (LTL 10.7 million) for the year ended 31 December 2012. Provisions for income taxes amounted to USD 3.5 million (LTL 9.3 million). As a result, net profit for the year 2012 was USD 19.6 million (LTL 52.7 million).

A-56 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

Change in accounting policy In 2012 the Company has changed its accounting policy on aircraft and started accounting it at revaluated amounts. This change in accounting policy was adopted on a retrospective basis (see Note 5 of the Group's Financial Statements for the year ended 31 December 2012). In previous periods the Group has accounted for aircraft at their historical cost less accumulated depreciation and any accumulated impairment loss.

Information about related party transactions Information about related party transactions is provided in Note 24 of the Group's Financial Statements for the year ended 31 December 2012. Following the International Financial Reporting Standards as adopted by EU, the parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions.

Research and development activities There were no major research and development projects undertaken by the Group in 2012.

Significant post balance sheet events The significant post balance sheet events of the Group relate to aircraft leasing and trading activities: – In January 2013 the Group acquired one Bombardier CRJ200 aircraft and leased it to a customer in Russian Federation. – On 1 February 2013 the Group completed the sale of one Boeing B737-300 airframe, the lease of which expired in November 2012. – On 26 March 2013 the Group entered into agreement to sell one CFM56-3B2 Engine, which was acquired in 2012 together with Boeing B737-300 aircraft.

Growth Strategy The Management of the Group intends to follow a disciplined approach to future aircraft acquisitions, seeking to create a portfolio of aircraft in the niche markets for used, midlife to end-of-life (generally, ten years of age or older) narrowbody jet and regional aircraft. To execute this strategy, the Group will focus on the following: – Generating higher yields: the Management of the Group believes the aforementioned target assets typically have higher lease rates relative to their purchase price (i.e. as the lease rate factor) than newer aircraft, thus allowing the Group to generate attractive, cash-on-cash yields; – Identifying transactions that are not widely marketed: through the management's relationships with aircraft lessors, financial investors and brokers, the Group expects to have access to transactions that are not widely marketed; – Strategically acquiring attractive assets during market weakness: while the Group intends to be active in the aircraft leasing market throughout market cycles, the Group will seek to take advantage of the cyclicality in the aviation industry by opportunistically acquiring selected aircraft (such as narrowbody jet aircraft that currently are trading near cyclical lows) during market downturns; – Providing for flexible resales and part-out: the Group expects to employ a flexible divestment strategy to allow to sell assets when the market cycle makes asset sales most advantageous; – Focusing on high growth markets: the Group is primarily focused on the Eastern European, Russian and CIS markets; however due to the nature of the aircraft operating leasing business the Group is seeking for expansion of the geography of our operation into other markets such as Western Europe, Middle East and Southeast Asia. Acquisitions of additional aircraft will be pursued through the co-operation with aircraft operators, manufacturers, financial institutions, private investors and third party lessors. Management of the Group has extensive experience in the aircraft leasing industry and maintains strong relationships with a wide variety of market participants throughout the world. Each potential acquisition will be evaluated to determine if it supports the primary objective of increasing the distributable cash flow while maintaining desired portfolio characteristics. The key considerations in the decision to purchase an aircraft include its price, market value, configuration, condition and maintenance history, operating efficiency, lease terms, financial

A-57 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2012

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

condition and creditworthiness of the lessee, jurisdiction, industry trends and the potential for future redeployment and conversion into freighter configuration. The careful analysis of these factors enables the Group to maintain an effective portfolio that maximises the returns and minimises the risk profile.

Tadas Goberis General Manager

A-58 AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013 UNAUDITED

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONTENTS Pages

CONSOLIDATEDINTERIMSTATEMENTSOFCOMPREHENSIVEINCOME...... A-61

CONSOLIDATEDINTERIMBALANCESHEETS...... A-62

CONSOLIDATEDINTERIMSTATEMENTSOFCHANGESINEQUITY...... A-63

CONSOLIDATEDSTATEMENTSOFCASHFLOW...... A-65

NOTESTOTHECONSOLIDATEDINTERIMFINANCIALINFORMATION...... A-66

MANAGEMENTCONFIRMATIONOFTHECONSOLIDATEDINTERIMFINANCIALINFORMATION...... A-79

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

3monthsended31March 2013 2012 Note USD LTL USD LTL

Revenue 3 6,578 17,210 12,399 32,661 Interest income on loans 45 118 39 102 Depreciation and amortisation (2,095) (5,481) (1,629) (4,291) Costs of aircraft sold – – (3,079) (8,111) Aircraft maintenance expenses (1,075) (2,814) (740) (1,949) Employee-related expenses 4 (140) (367) (140) (368) Other operating expenses 5 (293) (766) (140) (369) Other gain (losses) net (358) (938) – – Operating profit 2,662 6,962 6,710 17,675

Finance income 6 453 1,185 619 1,632 Finance costs 6 (1,489) (3,896) (1,473) (3,880) Finance costs – net (1,036) (2,711) (854) (2,248)

Profit (loss) before income tax 1,626 4,251 5,856 15,427 Income tax 7 (214) (561) (881) (2,322) Profit (loss) for the year 1,412 3,690 4,975 13,105

Other comprehensive income Currency translation differences on translation to presentation currency – 2,217 – 335 Total other comprehensive income – 2,217 – 335

Total comprehensive income 1,412 5,907 4,975 13,440

Basic and diluted earnings per share (USD/LTL) 8 0.05 0.13 0.17 0.45

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED INTERIM BALANCE SHEETS

31 March 2013 31 December 2012 Note USD LTL USD LTL ASSETS Non-current assets Property, plant and equipment 9 67,102 181,068 64,113 167,078 Prepayments for property, plant and equipment 10 – – 550 1,433 Intangible assets 1111 Investments in associates and jointly controlled entities – – 20 52 Trade and other receivables 12 3,077 8,302 2,305 6,008 70,180 189,371 66,989 174,572 Current assets Inventory 11 1,247 3,366 2,541 6,623 Trade and other receivables 12 13,080 35,294 14,334 37,355 Prepaid income tax – – 15 37 Cash and cash equivalents 13 6,410 17,298 8,081 21,060 20,737 55,958 24,971 65,075 Total assets 90,917 245,329 91,960 239,647

EQUITY Equity attributable to the Group's equity shareholders Share capital 14 12,232 29,448 12,232 29,448 Legal reserve 1,131 2,947 1,131 2,947 Revaluation reserve 12,195 31,779 12,195 31,779 Cumulative translation reserve – 1,565 – (652) Retained earnings (1,547) (950) (2,958) (4,640) Total equity 24,011 64,789 22,600 58,882

LIABILITIES Non-current liabilities Borrowings 15 35,808 96,625 34,840 90,795 Security deposits received 17 11,505 31,045 11,520 30,020 Deferred income tax liabilities 1,592 4,297 1,467 3,823 48,905 131,967 47,827 124,638 Current liabilities Borrowings 15 14,780 39,882 16,005 41,708 Trade and other payables 16 1,498 4,043 3,932 10,246 Current income tax liabilities 1,723 4,648 1,596 4,173 18,001 48,573 21,533 56,127 Total liabilities 66,906 180,540 69,360 180,765 Total equity and liabilities 90,917 245,329 91,960 239,647

A-62 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

USD Note Share Legal Revaluation Retained Total capital reserve reserve earnings equity

Balance at 1 January 2012 12,232 – 5,771 (19,457) (1,454)

Comprehensive income Revaluation of aircraft – – 7,557 – 7,557 Deferred income tax on revaluation of aircraft – – (1,133) – (1,133) Other comprehensive income (loss) – – 6,424 – 6,424 Profit for the year – – – 19,603 19,603 Total comprehensive income – – 6,424 19,603 26,027 Transactions with owners Transfer to reserves – 1,131 – (1,131) – Dividends – – – (1,972) (1,972) Total transactions with owners – 1,131 – (3,103) (1,972) Balance at 31 December 2012/ 1 January 2013 12,232 1,131 12,195 (2,958) 22,600

Comprehensive income Profit for the period – – – 1,412 1,412 Total comprehensive income – – – 1,412 1,412 Transactions with owners Transfertoreserves ––––– Dividends ––––– Totaltransactionswithowners ––––– Balance at 31 March 2013 12,232 1,131 12,195 (1,547) 24,011

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

LTL Note Share Legal Revaluation Cum. Retained Total capital reserve reserve trans earnings equity

Balance at 1 January 2012 29,448 – 15,405 485 (49,220) (3,882)

Comprehensive income Revaluation of aircraft – – 19,694 – – 19,694 Deferred income tax on revaluation of aircraft – – (2,953) – – (2,953) Currency translation differences – – – (1,137) – (1,137) Other comprehensive income (loss) – – 16,741 (1,137) – 15,604 Profit for the year – – – – 52,668 52,668 Total comprehensive income – – 16,741 (1,137) 52,668 68,272 Transactions with owners Transfer to reserves – 2,947 – – (2,947) – Dividends – – – – (5,140) (5,140) Currency translation differences – – (367) – (1) (368) Total transactions with owners – 2,947 (367) – (8,088) (5,508) Balance at 31 December 2012/ 1 January 2013 29,448 2,947 31,779 (652) (4,640) 58,882

Comprehensive income Currency translation differences – – – 2,217 – 2,217 Other comprehensive income (loss) – – – 2,217 – 2,217 Profit for the period 3,690 3,690 Total comprehensive income 2,217 3,690 5,907 Transactions with owners Transfertoreserves –– –––– Dividends –– –––– Total transactions with owners –– –––– Balance at 31 March 2013 29,448 2,947 31,779 1,565 (950) 64,789

A-64 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW

3monthsended31March 2013 2012 Note USD LTL USD LTL Operating activities Profit (loss) before income tax 1,626 4,251 5,856 15,427 Adjustments for: Depreciation and amortisation 2,095 5,481 1,629 4,291 Discounting effect (15) (38) 177 467 Finance costs – net 825 2,149 866 2,281 Profit / Loss from sale of fixed assets 358 938 – – Changes in working capital: Trade and other receivables 627 1,644 (9,098) (23,965) Trade and other payables (953) (2,498) (1,577) (4,154) Security deposits and advances received – – (89) (235) Inventory – – 3,583 9,438 Cash generated from operations 4,563 11,927 1,347 3,550 Interest paid (836) (2,188) (942) (2,481) Net cash generated from (used in) operating activities 3,727 9,739 405 1,069

Investing activities Purchase of property, plant and equipment and intangible assets – (3,187) (8,396) Loans granted (29) (77) – – Loans repaid 132 356 53 140 Net cash used in investing activities 103 279 (3,134) (8,256)

Financing activities Dividends paid (2,007) (5,251) – – Repayment of borrowings (2,699) (7,062) (1,766) (4,652) Lease (finance lease) payments (795) (2,079) (1,797) (4,735) Net cash generated from (used in) financing activities (5,501) (14,392) (3,563) (9,387)

Increase in cash and cash equivalents (1,671) (4,374) (6,292) (16,574)

Movement in cash and cash equivalents At the beginning of the period 8,081 21,060 13,646 36,426 Increase in cash and cash equivalents (1,671) (4,374) (6,292) (16,574) Foreign translation differences – 612 – 1,208 At the end of the period 13 6,410 17,298 7,354 21,060

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION

1 General information

The shareholders' structure of the Company as at 31 March 2013 was as follows:

Number of shares %

ZIA Valda Cyprus Leasing Ltd. 17,078,622 58.00 Mesotania Holdings Ltd. 10,899,858 37.01 Linas Dovydÿenas 441,717 1.50 Gediminas iemelis 323,926 1.10 Aurimas Sanikovas 294,478 1.00 Virginija Svilainytÿe 161,963 0.55 Tadas Goberis 147,239 0.50 IA Valda AB 60,000 0.20 Indeco: Investment and Development UAB 40,000 0.14 Total 29,447,803 100.00

The shareholder's structure of the Company as at 31 December 2012 was as follows:

Number of shares %

ZIA Valda Cyprus Leasing Ltd. 17,608,682 59.80 Mesotania Holdings Ltd. 11,739,121 39.86 IA Valda AB 60,000 0.20 Indeco: Investment and Development UAB 40,000 0.14 Total 29,447,803 100.00

In March 2013 shareholders ZIA Valda Cyprus Ltd. and Mesotania Holdings Ltd. sold respectively 530,060 and 839,263 shares in the Company, which were acquired by Linas Dovydenas,ÿ Gediminas iemelis, Aurimas Sanikovas, Virginija Svilainyteÿ and Tadas Goberis. The Company and its subsidiaries (together, the Group) are engaged in the business of aircraft leasing and management. The principal activity of the Group is operating leasing, management and trading of mid-life narrow body and regional jet aircraft. As of 31 March 2013 the Group owned 19 aircraft: 4 Boeing 737-300, 6 Boeing 737-500, 1 Boeing 757-200 and 8 Bombardier CRJ200 aircraft. 17 aircraft were leased out under operating lease contracts, and 2 aircraft were under preparation for lease. The parent of the Group is ZIA Valda Cyprus Leasing Ltd. and the ultimate parent of the Group is IA Valda AB (referred to as the Ultimate Parent). The ultimate controlling party of the Group is Mr. Gediminas iemelis.

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

1 General information (continued)

The subsidiaries, which are included in the Group's consolidated financial statements are indicated below:

Share of equity, % The Group's Country of As at 31 March As at 31 December Date of acquiring (establishment) / companies establishment 2013 2012 activity / address of establishment

AviaAM B01 UAB Lithuania 100 100 Date of acquiring: 4 January 2010 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B02 UAB Lithuania 100 100 Date of acquiring: 4 January 2010 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B03 UAB Lithuania 100 100 Date of acquiring: 22 January 2010 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B04 UAB Lithuania 100 100 Date of establishment: 22 February 2007 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B05 UAB Lithuania 100 100 Date of establishment: 28 June 2011 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B06 UAB Lithuania 100 100 Date of establishment: 15 July 2011 / Aircraft leasing / Smolensko g. 10, Vilnius AviaAM B07 UAB Lithuania 100 100 Date of establishment: 30 September 2011 / Aircraft leasing / Smolensko g. 10, Vilnius AAL Capital Aircraft Cyprus 100 100 Date of establishment: 29 September 2011 / Holdings Ltd Aircraft leasing / Dimitriou Karatasou 15, Anastasio Building, 6th floor, Flat/office 601, Strovolos, 2024, Nicosia, Cyprus AviaAM Leasing Bermuda 100* 100* Date of establishment: 16 September 2011 / Bermuda Ltd Aircraft leasing / Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda

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

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

2 Accounting policies

The consolidated interim financial information for the three month period ended 31 March 2013 (hereinafter, the Consolidated Interim Financial Information) is prepared in accordance with the International Financial Accounting Standards, as adopted by the European Union, includes IAS 34 "Interim financial reporting". In all material respects, the same accounting principles have been followed as in the preparation of financial statements for 2012. The financial statements have been prepared on a going concern basis and under the historical cost convention. The consolidated financial statements are presented in US Dollars (USD) and Lithuanian Litas (LTL) and all values are rounded to the nearest thousand (USD'000 and LTL'000) except when otherwise indicated. The Consolidated Interim Financial Information for the three month period ended 31 March 2013 is not audited. Financial Statements for the year ended 31 December 2012 were audited by external auditor PricewaterhouseCoopers UAB.

3 Revenue

3monthsended31March 2013 2012 USD LTL USD LTL

Lease revenue 5,041 13,187 4,699 12,377 Supplemental maintenance rent 1,454 3,803 1,983 5,223 Sales of aircraft – – 5,500 14,488 Other income 83 220 217 573 6,578 17,210 12,399 32,661

3monthsended31March 2013 2012 Lease and sale customers USD LTL USD LTL

Customer A 2,494 6,522 8,693 22,899 Customer B 2,544 6,656 1,524 4,015 Customer C 563 1,473 887 2,338 Customer D 894 2,339 894 2,355 Other customers – 184 481 6,495 16,990 12,182 32,088

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

3 Revenue (continued)

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

3monthsended31March 2013 2012 Country USD LTL USD LTL

Russia 2,544 6,655 1,707 4,496 Kazakhstan 2,493 6,522 8,694 22,899 Lithuania 376 983 754 1,988 Tajikistan 894 2,339 894 2,355 Estonia – – 133 350 Italy 188 491 – – 6,495 16,990 12,182 32,088

4 Employee related expenses

3monthsended31March 2013 2012 USD LTL USD LTL

Salaries 107 280 107 281 Socialinsuranceexpenses 33873387 140 367 140 368

5 Other operating expenses

3monthsended31March 2013 2012 USD LTL USD LTL

Management services 52 137 26 69 Legal and translation expenses 52 137 35 93 Insuranceexpenses 23601026 Marketing expenses 38 100 12 33 Travelling expenses 39 103 13 35 Representation expenses 8 22 13 34 Audit and accounting expenses 5 13 13 34 Other administrative expenses 76 194 18 45 293 766 140 369

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

6 Finance costs – net

3monthsended31March 2013 2012 USD LTL USD LTL

Interest income on cash and cash equivalents – – Discounting of security deposits received 160 417 245 645 Unwinding of discount of non-current receivables and loans from related parties 17 45 35 92 Foreign exchange gain on financing activities 276 723 339 895 Finance income 453 1,185 619 1,632 Interest expenses (836) (2,188) (942) (2,481) Foreign exchange loss on financing activities (492) (1,286) (378) (995) Unwinding of discount of security deposits received (160) (418) (147) (388) Other finance costs (1) (4) (6) (16) Finance costs (1,489) (3,896) (1,473) (3,880) Finance costs – net (1,036) (2,711) (854) (2,248)

7 Income tax

3monthsended31March 2013 2012 USD LTL USD LTL

Current tax 89 233 441 1,161 Deferred tax 125 328 440 1,161 Total income tax expenses/(benefit) 214 561 881 2,322

8 Earnings (loss) per share

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

3monthsended31March 2013 2012 USD LTL USD LTL

Net profit (loss) attributable to shareholders 1,412 3,690 4,975 13,105 Weighted average number of ordinary shares issued 29,448 29,448

Basic earnings (loss) per share (USD/LTL) 0.05 0.13 0.17 0.45

The Group has no dilutive potential ordinary shares, therefore, the diluted earnings per share are the same as basic earnings per share.

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

9 Property, plant and equipment

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

At 31 December 2012 Cost or valuation 60,027 4,077 17 64,121 Accumulated depreciation – – (8) (8) Net book amount 60,027 4,077 9 64,113

Opening net book amount as at 1 January 2013 60,027 4,077 9 64,113 Additions 4,425 5 6 4,436 Disposals (617) – – (617) Reclassifications 1,266 – – 1,266 Depreciation charge (2,095) – (1) (2,096) Closing net book amount as at 31 March 2013 63,006 4,082 14 67,102

At 31 March 2013 Cost or valuation 63,006 4,082 23 67,111 Accumulated depreciation – – (9) (9) Net book amount 63,006 4,082 14 67,102

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

9 Property, plant and equipment (continued)

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

Opening net book amount as at 1 January 2012 127,935 – 15 127,950 Additions 53,436 7,926 18 61,980 Disposals (10,330) – – (10,330) Reclassifications (2,688) – – (2,688) Depreciation charge (20,395) – (8) (20,403) Revaluation surplus 22,998 4,200 – 27,918 Revaluation loss (11,113) (1,171) – (12,284) Exchange differences (4,015) (329) (1) (4,345) Closing net book amount as at 31 December 2012 156,428 10,626 24 167,078

At 31 December 2012 Cost or valuation 156,429 10,626 45 167,100 Accumulated depreciation – – (21) (21) Net book amount 156,429 10,626 24 167,078

Opening net book amount as at 1 January 2013 156,429 10,626 24 167,078 Additions 11,578 13 16 11,607 Disposals (1,615) – – (1,615) Reclassifications 3,313 – – 3,313 Depreciation charge (5,481) – (3) (5,484) Exchange differences 5,790 377 2 6,169 Closing net book amount as at 31 March 2013 170,014 11,016 39 181,068

At 31 March 2013 Cost or valuation 170,014 11,016 62 181,092 Accumulated depreciation – – (24) (24) Net book amount 170,014 11,016 39 181,068

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

31 March 2013 31 December 2012 USD LTL USD LTL

Aircraft 18,998 51,264 21,944 58,578 18,998 51,264 21,944 58,578

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

10 Prepayments for property, plant and equipment

31 March 2013 31 December 2012 USD LTL USD LTL

Prepayments for aircraft – – 550 1,433 – – 550 1,433

11 Inventories

31 March 2013 31 December 2012 USD LTL USD LTL

Aircraft components 1,247 3,366 2,541 6,623 1,247 3,366 2,541 6,623

12 Trade and other receivables

31 March 2013 31 December 2012 USD LTL USD LTL

Trade receivables from third parties 12,193 32,900 10,083 26,277 Less:provisionforimpairmentoftradereceivables –––– Trade receivables from third parties – net 12,193 32,900 10,083 26,277 Receivables from related parties 1,421 3,834 3,294 8,374 Less: provision for impairment of trade receivables from related parties (1,045) (2,820) (1,048) (2,522) Receivables from related parties – net 376 1,014 2,246 5,852 Loans granted to related parties (weighted average interest rate 5,61%) 2,959 7,985 3,034 7,907 Other receivables 28 75 183 479 Less: provision for impairment of other receivables (28) (75) (29) (76) Other receivables – net – – 154 403 Prepayments 47 126 94 246 VAT receivables 582 1,571 1,028 2,678 16,157 43,596 16,639 43,363

Non-current portion: (3,077) (8,302) (2,305) (6,008) Current portion: 13,080 35,294 14,334 37,355

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AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

13 Cash and cash equivalents

Cash and cash equivalents are dominated in following currencies:

31 March 2013 31 December 2012 USD LTL USD LTL

USD 5,234 14,125 6,687 17,427 EUR 1,027 2,771 1,183 3,083 LTL 149 402 211 550 Total cash and cash equivalents 6,410 17,298 8,081 21,060

14 Share capital

Share capital As at 31 March 2013 and 31 December 2012 the share capital of the Company and the Group amounted to LTL 29,447,807 (USD 12,232 thousand) and consists of 29,447,807 ordinary registered shares with a nominal value of LTL 1 each.

Dividends In 2012 declared dividends were paid on 31 January 2013.

15 Borrowings

31 March 2013 31 December 2012 USD LTL USD LTL

Non-current Bank borrowings 20,331 54,861 21,427 55,838 Finance lease liabilities 15,477 41,764 13,413 34,957 35,808 96,625 34,840 90,795 Current Bank borrowings 12,204 32,931 13,807 35,980 Finance lease liabilities 2,576 6,951 2,198 5,728 14,780 39,882 16,005 41,708 Total borrowings 50,588 136,507 50,845 132,503

Bank borrowings mature in 2013–2015. Borrowings are secured by the aircraft and guarantees provided by related parties.

A-74 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

15 Borrowings (continued)

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

31 March 2013 31 December 2012

Bank borrowings 6,17% 5,67% Finance lease liabilities 7,82 8,08%

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

16 Trade and other payables and advances received

31 March 2013 31 December 2012 USD LTL USD LTL

Trade and other payables – financial liabilities Trade payables 29 79 198 515 Trade payables to related parties 1,349 3,639 1,033 2,661 Salaries and social security payable, including vacation accrual 100 270 103 270 Accruals 20 55 26 98 Dividends payable – – 1,972 5,140 1,498 4,043 3,332 8,684

Trade and other payables – non-financial liabilities Other payables – – 600 1,562 – – 600 1,562

Total trade and other payables 1,498 4,043 3,932 10,246

17 Security deposits received

31 March 2013 31 December 2012 USD LTL USD LTL

Security deposits at nominal value 13,150 35,484 13,150 34,269 Less: discounting effect (1,645) (4,439) (1,630) (4,249) Security deposits 11,505 31,045 11,520 30,020

Average rates used for security deposits discounting are as follows: 2013: 8%; 2012: 7.50%. Security deposits serve as a security by a lessee for the performance of its obligations under the aircraft lease agreements and upon termination of lease lessor is obliged return it to lessee. All of the Group's security deposits are denominated in USD. Security deposits are not interest-bearing

A-75 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

18 Commitments and contingencies

Capital commitments

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

31 March 2013 31 December 2012 USD LTL USD LTL

Aircraft – – 3,188 8,307 – – 3,188 8,307

As at 31 December 2012 commitments of the Group related to the acquisition of aircraft.

19 Related party transactions

The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions. Related parties included as follows: • Ultimate parent– IA Valda AB; • Parent – IA Valda Cyprus Leasing Ltd.; • Other related parties – other shareholders of the Company, subsidiaries and other related parties of IA Valda AB, associates and jointly controlled entities of the Group; key management of the Group and entities controlled or jointly controlled by key management personnel or their close relatives. All major transactions and outstanding balances with other related parties relate to associate group of companies of IA Valda AB.

Transactions with related parties:

3monthsended31March 2013 2012 USD LTL USD LTL

Salesofservicesto: Other related parties 666 1,742 1,009 2,632

Purchases of assets from: Other related parties 577 1,507 – –

Purchasesofservicesfrom: Other related parties 306 804 288 746

Total purchases of assets and services 883 2,311 288 746

A-76 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

19 Related party transactions (continued)

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

Trade and other receivables from related parties

31 March 2013 31 December 2012 USD LTL USD LTL

Other related parties 1,424 3,536 3,294 8,374 Trade and other receivables at nominal value 1,424 3,536 3,294 8,374 Less: provision for impairment of receivables from other related parties (1,048) (2,522) (1,048) (2,522) 376 1,014 2,246 5,852

Individually impaired receivable relates to the customer that is in bankruptcy proceedings. Trade receivables do not include receivables from Small Planet Airlines UAB and Small Planet Airlines Sp. z o.o., as the companies were sold to their management and as at 31 March, 2013 were not related parties.

Payables to and prepayments from related parties

31 March 2013 31 December 2012 USD LTL USD LTL

Ultimate parent – – 4 10 Parent – – 1,179 3,072 Other related parties 1,349 3,639 1,822 4,719 Total payables to and prepayments from related parties 1,349 3,639 3,005 7,801

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

Loans granted to other related parties

31 March 2013 31 December 2012 USD LTL USD LTL

Beginning of the period 3,034 7,907 435 1,162 Loans advanced during the period as monetary transactions 29 77 1,887 5,070 Loans advanced during the period by transferring trade receivables to loans – – 1,248 3,354 Loan repayments received as monetary transactions (132) (356) (581) (1,561) Interest charged 40 109 66 178 Interest received (9) (24) (18) (48) Exchange rate differences (3) 272 (3) (248) End of the period 2,959 7,985 3,034 7,907

As at 31 March 2013, all loans granted to related parties are denominated in USD and weighted average effective interest rate of these loans is 4.2 per cent. The repayments are scheduled in 2013–2014.

A-77 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

19 Related party transactions (continued)

Guarantees from related parties As at 31 March 2013 Dangiruva AB had guarantees granted in the amount of USD 15,288 (LTL 41,253) to the bank on behalf of the Group for the credits granted to the Group which expire in 2014–2015.

A-78 AviaAM Leasing AB

AVIAAM LEASING AB CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013

(All tabular amounts are in USD'000 and LTL'000 unless otherwise stated)

MANAGEMENT CONFIRMATION OF THE CONSOLIDATE INTERIM FINANCIAL INFORMATION

We, Tadas Goberis, General Manager of AviaAM Leasing AB, and Laima Gruzdiene,ÿ Chief Financier of AviaAM Leasing AB, hereby confirm that, to the best of our knowledge, the unaudited Consolidated Interim Financial Information for the three month period ended 31 March 2013 of AviaAM Leasing AB is prepared in accordance with International Financial Reporting Standards as adopted by the European Union and give a true and fair view of the assets, liabilities, financial position, profit or loss and cash flows of the Group.

General Manager Chief Financier Tadas Goberis Laima Gruzdieneÿ

23 May 2013

A-79 COMPANY AviaAM Leasing AB Smolensko str. 10, LT-03201 Vilnius, Lithuania tel. +370 5252 5525 fax. + 370 5252 5524

LEAD MANAGER AND OFFERING AGENT ING Securities S.A. ul. Sokolska 34, 40-086 Katowice, Poland

FINANCIAL ADVISER Rubicon Partners Corporate Finance S.A. ul. Emilii Plater 28, 00-113 Warsaw, Poland

LEGAL ADVISERS To the Lead Manager as to Polish Law Baker & McKenzie Krzy¿owski i Wspólnicy sp.k. Rondo ONZ 1, 00-124 Warsaw, Poland

To the Lead Manager as to Lithuanian Law and as to Legal Due Diligence of Lithuanian Group Companies TARK GRUNTE SUTKIENE Didioji str. 23, LT-01128 Vilnius, Lithuania

AUDITOR PricewaterhouseCoopers UAB J. Jasinskio str. 16B, Vilnius, Lithuania