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Table of contents 1

CEO’S WORD

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ABOUT AVIA SOLUTIONS a) b) c) d)

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company in brief business philosophy main brands and services the group

RESULTS a) key indicators B) OPERATING FIGURES C) IMPORTANT EVENTS

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MARKET A) b) C) d)

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Overall company profile by business segments aircraft maintenance, repair and overhaul (MRO) aircraft ground handling and fueling pilot and crew training

CORPORATE GOVERNANCE a) the board B) top management c) personnel

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SHARES AND SHAREHOLDERS

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INFORMATION a) CONTACTS


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CEO’S Word

It was a challenging year. The ongoing economic uncertainty across Europe, fluctuating fuel prices, as well as a set of other factors had been pressing airlines all year long thus affecting the entire aviation industry. However, the strength and diversity of our product range combined with our geographical spread allowed us the flexibility to regroup our efforts, adapt to the ever-changing market conditions and successfully achieve an almost twofold performance over the past year. In 2012 Avia Solutions Group’s consolidated revenues from continuing operations increased up to LTL 536 million, or by 84 % compared to LTL 291 million in 2011. Being an operation-focused company, we contributed copious efforts and resources to further geographical expansion and product development thus justifying relatively more moderate profit growth rates. In 2012 the Net profit from the continuing operations increased to LTL 26.1 million (LTL 22.0 million in 2011). The most significant growth was achieved in our aircraft maintenance segment. The rapid development of engine management services, expanded spare parts capabilities, as well as the launch of new line stations in Europe, Asia and the CIS were the factors which had contributed the most to the LTL 289 million revenues in the MRO segment. Despite some challenges faced in the traditional markets, the Pilot and crew training business managed to refocus to new regions, primarily the emerging markets thus ensuring a steady revenue increase of 15%, corresponding to approx. LTL 27.5 million. Compared to 2011, the major change in revenues was achieved in the ground handling and fuelling segment. Its total sales to external customers increased by 108%, topping LTL 218 million in 2012. Almost 85% of those revenues came from the significantly expanded aircraft fuelling services, provided in Vilnius, Warsaw, Krakow and Katowice International Airports. With regard to the charter flight segment, it had been initially considered as a vehicle to support geographical expansion of the Group. Following the successful expansion of the ground service and fuelling segment, with ever growing operations, products and activities requiring more attention, the Group decided that aiming for the best result it was the time to focus on its core business segments i.e. MRO, ground handling and aviation training. Following the sale of Small Planet Airlines AS (Estonia) and the subsequent disposal of its stake in Small Planet Airlines S.r.l. (Italy), the Group also decided to exit Small Planet Airlines UAB (Lithuania) and Small Planet Airlines Sp. z. o. o. (Poland) and completed transaction in March 2013. All in all, throughout 2012 we maintained strong development and growth across the entire Group. We received a new EASA Part 21 certificate, introduced Landing Gear support, launched a Full Flight Simulator MRO business, entered the Italian ground services market, etc. Moreover, the Group started constructing 8,000 sq. m. MRO centre in Kaunas to be completed in October 2013. In addition, we had been actively investing in our expansion to the Asian Pacific market. We intend to continue making strong steps towards becoming a major player at the early stages of the development of some emerging markets. We anticipate that positive results from our investment strategy will be seen as early as in 2013-2015. We expect to deliver even better results for our investors, as well as even more ‘one-stop-shop’ aviation solutions for our clients and partners across new locations around the globe.

General Manager

Linas Dovydėnas


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About AVIA SOLUTIONS GROUP

A) What is Avia Solutions Group? Avia Solutions Group AB is a group of companies globally providing aviation business solutions for aircraft owners and operators offering integrated aircraft maintenance and repair, crew training, technical training, ground handling and fuelling, crew leasing, and other aviation related services. Shares of Avia Solutions Group AB are listed on the Warsaw Stock Exchange (ticker- AVIASG). Via the services of its subsidiaries the group acts across Europe, the CIS and Asia-Pacific regions with its representative offices located in Lithuania, Poland, Italy, the United Kingdom, Russia and Malaysia. The Head Office is situated at Smolensko st. 10, Vilnius, Lithuania.

B) Business Philosophy

One- stop- shop for the integrated aviation services.

To create value for hareholders and customers by providing professional and high quality of aviation related services.

Our activities are based on the following values: Professionalism – we explore every situation with precision and treat every case uniquely when creatingn solutions. Responsibility – we take 100% responsibility for our solutions and services. Flexibility – we work without any prejudices. That is the major success factor in finding the best way to improve any situation


C) Main Brands and Services


D) The Group (effective holding of the companies in %)


D) The Group (effective holding of the companies in %)

* - The Charter Operations segment is no longer disclosed. It was reclassified to asstes held for sale in the financial statements for the year ended 31 December 2012 and was disposed on 26 March on 2013.


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RESULTS

A) Key Indicators Avia Solutions Group AB is a group of companies globally providing aviation business solutions for aircraft owners and operators offering integrated aircraft maintenance and repair, crew training, technical training, ground handling and fuelling, crew leasing, and other aviation related services. Shares of Avia Solutions Group AB are listed on the Warsaw Stock Exchange (ticker- AVIASG). Via the services of its subsidiaries the group acts across Europe, the CIS and Asia-Pacific regions with its representative offices located in Lithuania, Poland, Italy, the United Kingdom, Russia and Malaysia. The Head Office is situated at Smolensko st. 10, Vilnius, Lithuania.

B) Operating Figures


C) Important Events In 2012 Avia Solutions Group AB and its subsidiaries (hereinafter – the Group) earned net profit from continuing operations of LTL 26.1 million (in 2011: LTL 22.0 million). Comparing with 2011 the consolidated revenue from continuing operations has increased up to LTL 536 million, or by 84 % as compared with LTL 291 million in 2011. Results were generated primarily as a result of strategic decisions made and operational plans implemented. These measures were taken in order to increase the Group’s profitability in the upcoming periods. The Group focused on obtaining additional licenses and further business development.

FL Technics Jets UAB became Hawker Beechcraft Authorized Service Centre. FL Technics Jets UAB certified for Hawker aircraft maintenance in the Russian Federation. Baltic Ground Services Sp. z o.o. launched into-plane fuelling services at Warsaw Frederic Chopin airport.sian Federation. Baltic Ground Services Sp. z o.o. signed into-plane fuelling services agreements with Deutsche Lufthansa AG, Czech Airlines j.s.c. and EasyJet Airline.

FL Technics AB received EASA Part 21 Design Organization Approval.

FL Technics AB acquired Boeing 737-600 aircraft for part-out.

Baltic Ground Services Sp. z o.o. launched catering services in Poland.

FL Technics Ulyanovsk OOO signed the MRO Centre construction agreement with the Government of the Ulyanovsk District.

Baltic Ground Services IT s.r.l. received the approval for ground handling operations in Italy.


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MARKET

A) Overall Company Profile by Business Segments The group operates in three business segments: Aircraft Maintenance, Repair and Overhaul (MRO); Aircraft Ground Handling and Fueling; Pilot and Crew Training. Avia Solutions Group: Sales breakdown by segments in 2011-2012 in % , LTL in millions

Avia Solutions Group: Sales geographical segmentation in 2012 in %


B) Aircraft Maintenance, Repair and Overhaul (MRO) Segment Activities in MRO business segment are conducted by FL Technics AB, FL Technics Jets UAB, Locatory.com AB, Storm Aviation Ltd and include: • • • • • • • • •

Base maintenance services Line maintenance services Components Maintenance Engineering services Spare parts and consumable sales Technical training and consulting services Engine management services Other MRO services Aircraft parts marketplace Avia Solutions Group: Sales breakdown by segments in 2011-2012 in % , LTL in millions

Key Events in MRO Business Segment during 2012: • • • • •

FL Technics Jets UAB became Hawker Beechcraft Authorized Service Centre FL Technics Jets UAB was certified for Hawker aircraft maintenance in the Russian Federation FL Technics AB received EASA Part 21 Design Organization Approval FL Technics AB acquired Boeing 737-600 aircraft for part-out FL Technics Ulyanovsk OOO signed the MRO Centre construction agreement with the Government of the Ulyanovsk District

Base Maintenance Services FL Technics occupies 2 aircraft maintenance hangars together with administrative, warehouse and backshop facilities at Vilnius International Airport – 13,742 sq. meters in total. The hangars are comprised of total 5 airframe maintenance bays. Utilizing these hangars and the nearby premises FL Technics provides base maintenance services, including: aircraft base maintenance checks, structure inspection and structure repairs, routine maintenance, technical defect rectification, interior refurbishment, minor / major modifications (avionics, airframe), engine replacement, landing gear replacement and non-destructive testing. FL Technics Jets provides base maintenance services for Hawker 700-900XP Family.


FL Technics planned new base maintenance facility of 8000 sq. meters at Kaunas International Airport (2013).

Line Maintenance Services Line maintenance is defined as maintenance that is carried out before each flight to ensure that the aircraft is fit for the intended flight and includes: daily service and weekly checks, unscheduled checks, troubleshooting, defect rectification and minor component replacement. As at 31 December 2012 FL Technics and Storm Aviation collectively operated twenty five line stations (as at 31 December 2011 – twenty line stations).

Current and Planned Base Maintenance (2012- 2018) and Line Maintenance (2012) Stations’ Network


Engineering Services FL Technics provides comprehensive engineering management services to aircraft operators, airlines and leasing companies. Basic engineering services provided by FL Technics include: aircraft airworthiness review and renewal, engine condition monitoring, aircraft weighting, flight data read-out, monitoring and analysis and ageing aircraft programmes.

Spare parts and consumable sales FL Technics provides comprehensive spare parts management services including: planning / provisioning, purchasing, inventory control, asset management, warehousing and distribution of spare parts and consumables. One of the core competences of FL Technics is spare parts logistics based on experience and enhanced with good geographical location of Lithuania.

Technical training and consulting services sales FL Technics provides technical training for aviation specialists involved in the maintenance and repair of aircraft, as well as other specialized training programmes and consulting services. The training programmes, which are drawn up in accordance with the requirements of EASA, cover four main areas: basic maintenance training, aircraft type training, specialized aviation training and other consulting services.

Engine Management Services FL Technics provides comprehensive aircraft engine management services aimed at saving its customers‘ time and money. Integrated aircraft engine support solutions cover engine repairs and overhaul, service, engine leases and sales, parts and components management, purchase and tear down and other related services.

Other MRO services Other services are mainly comprised of component repair and overhaul services. FL Technics is also approved to perform nondestructive testing (eddy current, magnetic particle, dye penetrate and ultrasonic) of airframes and components.

Aircraft parts marketplace Locatory.com provides a platform for the aviation industry to search, buy and sell aviation inventory. The platform serves as a vast repository of aviation inventory, spare parts, components and repair services.

C) Aircraft Ground Handling and Fueling Activities in aircraft ground handling and fuelling business segment are conducted by Baltic Ground Services UAB, Baltic Ground Services Sp. z.o.o. and Baltic Ground Services s.r.l. and include: • • • •

Passenger Services Ground handling & Fuelling Catering distribution Airport terminal engineering services


As at 31 December 2012, Baltic Ground Services activities were concentrated in Vilnius International Airport conducted through Baltic Ground Services UAB, in Warsaw International Airport, Krakow International Airport, KatowiceInternational Airport and Warsaw Frederic Chopin in the Republic of Poland conducted through Baltic Ground Services Sp. z.o.o. and in Lamezia Terme Airport in Italy conducted through Baltic Ground Services s.r.l. Key Events in Aircraft Ground Handling and Fuelling Business Segment during 2012: • Baltic Ground Services Sp. z o.o. launched into-plane fuelling services at Warsaw Frederic Chopin airport • Baltic Ground Services Sp. z o.o. signed into-plane fuelling services agreements with Deutsche Lufthansa AG, Czech Airlines j.s.c. and EasyJet Airline • Baltic Ground Services Sp. z o.o. launched catering services in Poland • Baltic Ground Services IT s.r.l. received the approval for ground handling operations in Italy

Avia Solutions Group: Sales geographical segmentation in 2012 in %

Current Airports‘ Network, 2012


D) Pilot and Crew Training Activities in pilot and crew training business segment are conducted by Baltic Aviation Academy UAB and AviationCV.com UAB and include: • • • • • •

Ab Initio pilot training & Cadet program for airlines Pilot type rating & Recurrent training courses Cabin crew training Other aviation training programmes Crew leasing services Consultancy services

Baltic Aviation Academy occupies 1,329.49 sq. m. training centre. It is an integrated learning complex equipped with Boeing 737-300/-400/-500 and Airbus 319/320/321 Full Flight Simulators (FFS) and Real Fire Fighting as well as Smoke Trainers. In addition to the aformentioned, Baltic Aviation Academy leases numerous other aircraft type simulators in the UK, Spain, France, the USA, Sweden, Germany and Russia. The contracted third party simulators allow Baltic Aviation Academy to offer its clients a complete package of Type Rating Training services by combining theoretical training in Vilnius training headquarters and practical FFS training in other locations. AviationCV.com is a global provider of aviation staffing solutions. The company has a vast database of flight crew members to meet the short and long term aviation personnel needs as well as the experience and connections within the aviation industry to present the most exciting job opportunities for pilots, crew members and aircraft technicians. Pilot and crew training business segment: Sales geographical segmentation in 2012 in %


Full Flight Simulators‘ Network,


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CORPORATE GOVERNANCE

According to the Articles of Association of Avia Solutions Group AB the managing bodies of the Company are the General Meeting of Shareholders, the Supervisory Council, the Board and the Head of the Company (the General Manager). The Supervisory Board is responsible for the supervision of activities of the Company and its management bodies. The Board is responsible for the strategic management of the Company, whereas the General Manager manages day-to-day operations of the Company and has the exclusive right to represent the Company in relations with third parties.

A) The Board

Gediminas Žiemelis 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 Žvilgsnis iš arčiau UAB (2001–2005) (currently named Creditinfo UAB), which was engaged mainly in debt recovery and credit risk management, the General Manager of ŽIA VALDA AB (2002–2006) and the General Manager of brokerage firm Finhill UAB FMĮ (in 2007).

GEDIMINAS ŽIEMELIS CHAIRMAN OF THE BOARD • • • •

Director of Development of Avia Solutions Group AB Born in 1977, Master of Law Chairman since 2009 With Avia Solutions Group since 2009

Gediminas Žiemelis is a shareholder and a member of the Management Board in ŽIA VALDA AB and since 2007 he acts as the Manager of the Development Department. Since 2005 Gediminas Žiemelis also acts as the Manager in East Mining Group UAB, since 2006 – as the General Manager of Eastern Agro Holdings UAB. Since 2009 till 2010 Gediminas Žiemelis also acted as a consultant in Avia Solutions Group Holdings AB. Moreover, Gediminas Žiemelis is a member of the Supervisory Board in Agrowill AB since 2010. Since 2012, he also acts as a member of the Management Board of AviaAM Leasing AB.


AURIMAS SANIKOVAS BOARD MEMEBER

• Chief Financial Officer • Born in 1978 • With Avia Solutions Group since 2009

Aurimas Sanikovas started his career as an audit associate in Pricewaterhouse Coopers, Lithuania in 2001. In 2007 his last position held at the company was that of a manager. He performed supervision and execution of audit engagement performed in accordance with the IAS and US GAAS. During his auditing career Aurimas Sanikovas obtained principal expertise in telecommunications, IT, manufacturing, construction, consumer products and energy sectors. From 2007 he acts as the Chief Financial Officer of Avia Solutions Group Holdings AB that for the purpose of IPO was structured into Avia Solutions Group AB. His main responsibilities at Avia Solutions Group AB include control of operations of subsidiaries, leading budgeting, reporting, treasury and risk management functions, finance function staffing, fund raising, deal structuring, tax planning and managing the resolution of finance related issues. Aurimas Sanikovas also acted as a member of the Management Board of Avia Asset Management AB (2008–2009), a member of the Management Board of FL Technics (2008–2010), Small Planet Airlines PL (2009–2010), a member of the supervisory board of Small Planet Airlines EE (2009 – 2011) and the General Manager of Avia Funds Management UAB (2010-2011). Since 2010, he is a member of the Management Board of Avia Solutions Group AB. Moreover, since 2010 Aurimas Sanikovas is a member of the Supervisory Board of Agrowill Group AB. In 2012 Aurimas Sanikovas was also acted as a member of the Management Board of AviaAM Leasing AB (2012). Aurimas Sanikovas obtained his bachelor’s and master’s degrees in economics at the Faculty of Economics, Vilnius University, Lithuania with an exchange term in the University of Copenhagen. Since 2006, Aurimas Sanikovas is a member of the Association of Chartered Certified Accountants (ACCA). Mr Aurimas Sanikovas is a direct shareholder of the Company and has 11,050 shares of AB “Avia Solutions Group” that accounts to almost 0,19 per cent of the share capital.

Saulius Batavičius started his carrier as an accountant in 1998 in Šiaulių Stumbras AB (1998–2000). He further acted as a production planning team leader in Baltik vairas AB, the Lithuanian branch of Panther International (Germany) (2000–2002), as the General Service and Finance Manager in Šiaulių tauro televizoriai UAB (2002–2004), as the Executive Manager in Televolna OOO, Kaliningrad (2004–2005), as well as the Manager in Banga Electronics UAB (2005–2006). Since 2006, he is acting as the CEO of an Avia Solutrions Group subsidiary companyBaltic Ground Services, UAB. Saulius Batavičius obtained a bachelor’s degree in business administration at Siauliai University, Lithuania in 1999. In 2001 Saulius Batavičius obtained a master’s degree in business management at Klaipeda University, Lithuania. In 2005 he also finished his Master studies in International Business Management for managers at the Baltic Management Institute.

SAULIUS BATAVIČIUS BALTIC GROUND SERVICE, CEO • • • •

Born in 1975 Master in Business Management Board Memeber since 2008 With Avia Solutions Group since 2008


Jonas Butautis started his career in 1998 as an executive partner in Cesim Group (Finland). He acted for this group until 2004 and performed start up and successful development of Cesim Central & Eastern Europe in the areas of consulting and management development, established long-term relationships with key clients in selected target industries, including telecommunications, energy, railways, oil, post, banking, and performed daily management of the company. In 2001–2003 Jonas Butautis acted as a consultant for the new EU members in the OECD (Organization for Economic Co-operation and Development). He formulated conclusions and suggested future action steps for the Governments to reduce business development obstacles in their respective services industries. Jonas Butautis also acted as a manager for Australia and Asia regions for BTS Group UAB (2003–2008) and as a consultant, Deputy Manager of the Corporate Governance and Control at ŽIA VALDA AB (2008–2009). Since 2009 he acts as the General Manager of FL Technics. Jonas Butautis obtained a Master’s degree in Business Administration at Vytautas Magnus University (in 2000). In 1999 he undertook International Economics and Marketing Studies in SDA Bocconi, Italy.

JONAS BUTAUTIS FL TECHNICS, CEO • • • •

Born in 1975 Master in Business Management Board Memeber since 2008 With Avia Solutions Group since 2008

On 21st of May 2013, following the balance sheet date Mr. Butautis decreased its stake in the Company to 22 100 shares, corresponding to approx. 0,375 per cent of the share capital.

B) Top Management

LINAS DOVYDĖNAS Avia Solutions Group, CEO

DARIUS ŠALŪGA FL Technics Jets, CEO

ŽILVINAS SADAUSKAS Locatory.com, CEO

EGLĖ VAITKEVIČIŪTĖ

Baltic Aviation Academy, CEO

SKAISTĖ KNYZAITĖ AviationCV.com, CEO

JONAS BUTAUTIS FL Technics, CEO

SAULIUS BATAVIČIUS Baltic Ground Service, CEO


C) Personeel Number of the Group’s employees at the end of the year:

The breakdown of the number of employees by company:


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SHARES AND SHAREHOLDERS

The authorised capital of the Company as at 31 December 2012 was LTL 5,893,333 and is divided into 5,893,333 ordinary shares with a par value of LTL 1 each. All shares carry equal voting rights. On 3 March 2011 shares of the Company were introduced to trading at Warsaw Stock Exchange Shareholders, holding more than 5 per cent of the share capital and votes, as on 31 December 2012:


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INFORMATION Contacts

Avia Solutions Group (Lithuania) Smolensko st. 10, LT-03201 Vilnius, Lithuania Tel.: +370 5 252 5500 Fax.: +370 5 252 5501 E-mail: info@aviasg.com

Avia Solutions Group (Italy) Casella postale 140, 88040 Lamezia Terme (CZ), Italy Tel.: +39 0968 418540 Fax.: 39 0968 418540 E-mail: info.suf@bgs.aero

Avia Solutions Group (Russian Federation) st. Tverskaya 16, building 1, 7th floor, office 14, Moscow Tel.: +7 495 705 91 43 Fax.: +7 495 935 89 62 E-mail: moscow@aviasg.com

Avia Solutions Group (United Kingdom) st. 259 Capability Green, Luton LU1 3LU, United Kingdom Tel.: +44 1582 390640 Fax.: +44 1582 480455 E-mail: admin@stormaviation.com

Avia Solutions Group (Poland) Okęcie Business Park – Notus i Zephirus st. Stycznia 17 - 45B, Warsaw, Poland Tel.: +48 22 427 90 92 Fax.: +48 22 427 90 93 E-mail: warsaw@aviasg.com

Avia Solutions Group (Malaysia) Unit No. SW-03-28 COVA SQUARE, JLN Teknologi, Kota Damansara PJU5, 47810 Petaling Jaya, Selangor, Malaysia Tel.: +60 12 538 1088 Fax.: +60 3 6151 6088 E-mail: malaysia@fltechnics.com

www.aviasg.com

Consolidated annual prospectus–report for the year ended 31 december 2012  
Consolidated annual prospectus–report for the year ended 31 december 2012  

http://www.aviasg.com/private/uploads/files/docs/Consolidated_Annual_Prospectus–Report_for_the_year_ended_31_December_2012.pdf

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