Third quarter results Presentation for analysts 25 September 2006 Content 1 Financial Overview – Birgir Haraldsson, Director Audit 2 Aviation Services – Hafþór Hafsteinsson, CEO 3 Shipping & Logistics – Baldur Guðnason, CEO 4 Charter & Leisure – Magnus Stephensen, CEO 5 Summary – Magnús Þorsteinsson, Chairman Financial overview Birgir Haraldsson, Director Audit Financial overview • All companies started using the accounting year 1.11-31.10 at beginning of November 2005. • The comparative figures in the financial statement are for the 10 month period 1 January – 31 October 2005 • Operating revenues $ 1,400 million • Operating expenses $ 1,424 million • Loss before tax $ 83 million • Net loss $ 69 million 4 Financial overview • Total block hours flown decreased by 43% to 71,000 in Aviation Services • Number of passengers increased by 14% to 2,933 in Charter & Leisure • Total tonnes transported increased by 16% to 1,677 in Shipping & Logistics • EBITDA: $ 34 million • EBITDA / revenues: 2,5% • EBIT: $- 24 million • EBIT / revenues: -1,7% • Total assets: $ 2,129 million • Total equity: $ 523 million • Equity ratio: 25% • Current ratio: 0.98 5 1 Financial Overview 2 Income Statement & Cash flow 3 Balance Sheet 6 Income Statement for 3Q 2006 All amounts in $ ,000 2005/6 2006 2005 1.11-31.7 3Q 1.1-31.10 Net sales ............................................................................... 1.374.319 668.778 1.379.537 Other income ........................................................................ 25.335 7.653 21.954 Total operating revenue 1.399.654 676.431 1.401.491 Aviation Services .................................................................. (316.531) (94.829) (367.017) Charter & Leisure ................................................................. (744.514) (428.181) (797.999) Shipping and Logistics ......................................................... (362.605) (133.837) (189.793) Total operating expenses (1.423.650) (656.847) (1.354.809) Operating result.............................................................. (23.996) 19.584 46.682 Effects of associated companies ........................................... (1.713) (2.074) (203) Financial income (expenses) ................................................. (57.242) (8.702) (1.965) Net financial income (expenses) (58.955) (10.776) (2.168) Result before taxes........................................................ (82.951) 8.808 44.514 Income tax ............................................................................ 14.086 (5.973) (12.116) Net result for the period................................................. (68.865) 2.835 32.398 7 Cash Flow for the 2006 All amounts in $ ,000 2005/6 2005 1.11-31.7 1.1-31.10 Net earnings (loss) ................................................................. (68.865) 32.398 Net cash (to) from operating activities ...................................... (41.638) 1.093 Net cash used in investing activities ......................................... (100.646) (209.614) Net cash provided by financing activities .................................. 272.452 305.563 Net change in cash and cash equivalents ........................... 130.169 97.042 Effects of foreign exchange adjustments ............................ 2.813 (5.557) Cash and cash equivalents at beginning of year ................ 150.346 58.861 Cash and cash equivalents at end of period ....................... 283.328 150.346 8 Financial ratios and key figures All amounts in $ ,000 9m 2006 10m 2005 Equity ratio ...................................................................... 24,6% 29,9% Current ratio .................................................................... 0,98 0,71 Return on equity .............................................................. -14,2% 13,7% Working capital provided by operating activit. ................ (7.501) 71.535 EBIT ................................................................................. (23.996) 46.682 EBITDA .......................................................................... 34.410 100.524 EBIT / revenue ................................................................. -1,7% 3,3% EBITDA / revenue ........................................................... 2,5% 7,2% Total block hours flown .................................................. 71.236 133.053 Number of passangers (thousands) .................................. 2.933 3.066 Total ocean freight transported (tonn) .............................. 1.676.961 9 1 Financial Overview 2 Income Statement & Cash flow 3 Balance Sheet 10 Balance Sheet 31 July 2006 All amounts in $ ,000 31.7.2006 31.10.2005 Goodwill ...................................................................... 558.928 501.226 Other intangible assets ................................................ 36.718 30.566 Property, aircraft, vessels and equipment ..................... 516.705 449.490 Investment in associated companies ............................ 26.305 839 Other investment .......................................................... 106.862 40.050 Guarantee deposits ....................................................... 26.868 18.309 Deferred tax assets ....................................................... 31.449 12.864 Total non-current assets 1.303.835 1.053.344 Inventories ................................................................... 21.688 16.105 Trade receivables ......................................................... 251.080 184.422 Other receivables ......................................................... 249.076 91.020 Cash and cash equivalents ............................................ 283.328 150.346 Assets classified as held for sale .................................. 20.367 9.775 Total current assets 825.539 451.668 Total assets 2.129.374 1.505.012 11 Balance Sheet 31 July 2006 All amounts in $ ,000 Equity 31.7.2006 31.10.2005 Issued capital ........................................... 26.346 22.013 Share premium .......................................... 516.053 365.393 Reserves .................................................... (30.204) 10.030 Retained earnings ..................................... (15.802) 51.637 Stockholders' equity 496.393 449.073 Minority interest ....................................... 26.709 1.495 Total equity 523.102 450.568 12 Balance Sheet 31 July 2006 All amounts in $ ,000 Liabilities 31.7.2006 31.10.2005 Non-current liabilities Interest bearing loans and borrowings ................... 656.649 410.132 Guarantee deposits ................................................. 3.375 1.697 Employee benefits ................................................. 313 1.073 Provisions .............................................................. 94.455 0 Deferred tax liabilities ........................................... 6.685 7.934 Total non-current liabilities 761.477 420.836 Current liabilities Interest bearing loans and borrowings ................... 137.370 222.177 Trade payables ....................................................... 163.095 152.476 Other payables ....................................................... 544.330 258.955 Total current liabilities 844.795 633.608 Total liabilities 1.606.272 1.054.444 Total equity and liabilities 2.129.374 1.505.012 13 Aviation Services Division Hafþór Hafsteinsson – CEO Aviation Services Aviation Services Division • The main focus of Aviation Services Air Atlanta Icelandic provides ACMI services to the air passenger and cargo markets worldwide. Air Atlanta Division is the International Wet Icelandic operates a fleet of approximately 40 aircraft . Lease Operation of Air Atlanta Air Atlanta Icelandic has approximately 1,500 employees Icelandic , and aircraft trading and contractors at peak times. activities of the newly formed Avion Aircraft Trading. Avion Aircraft Trading is a newly established company handling the Group's aircraft dealing. The company is part of Aviation Services. Avion Aircraft Trading recently concluded the purchase of eight Boeing 777-200 cargo • Supporting activities are aircraft. Maintenance & Engineering Services provided by Avia Technical Services (ATS), airport handling provided by Avia Technical Services in a maintenance, repair and Southair. overhaul company that performs maintenance services on Avion Group’s aircraft and third party aircraft. ATS has approximately 300 employees. SouthAir Iceland is a leading ground handling company which has been at Keflavik International Airport for over six years. SouthAir employs has approximately 20 employees. 15 AVIATION SERVICES 1 Financial Overview 2 Operational Overview 3 Outlook 2006 16 AVIATION SERVICES – Financial overview 9 months 3rd Quarter • Operating Revenues $361 million • Operating Revenues $102 million • Operating Expenses $383 million • Operating Expenses $115 million • EBITDA was $ 11 million • EBITDA was $3.6 million • EBITDA 3% • EBITDA 4% • EBIT was $-22 million • EBIT was $-13 million • EBIT -6% • EBIT -13% 17 AVIATION SERVICES 1 Financial Overview 2 Operational Overview 3 Outlook 2006 18 In transition after 16 years continues growth period Continued Growth – Merger - Transition growth 700 Transition AAI has shown exceptional 600 revenue growth between Merger period 1991 and 2004 at a CAGR of 500 33% 400 1991 – 2004 revenue CAGR 33% The growth slowed down 300 during the merger period 2004 and 2005 Revenue (USDm) 200 In 2006, AAI has undergone 100 transition period as a result 0 of strategic change to 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*