NOTES NOTE 1 SUBSIDIARIES NOTE 2 RECEIVABLES. Cash flow statement

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1 Blueway annual report 2010 Blueway AS Notes to the Accounts 47 Taxes related to paid group contributions which is booked as an increase of the cost price of the related shares, and taxes related to received group contributions which is booked as a reduction of the cost price of the related shares, are both booked directly against tax in the balance sheet (taxes payable if the Group contri bution affects taxes payable and deferred tax if the Group contribution affects deferred tax). Cash flow statement The cash flow statement has been prepared according to the indirect method. Cash and cash equivalents include cash, bank deposits, and other short term investments with maturity less than 3 months from the date of acquisition and which immediately and with minimal exchange risk can be converted into known cash amounts. NOTES NOTE 1 SUBSIDIARIES Net profit Subsidiary (all figures in NOK 1 000) Registered office Ownership Equity (100%) (100%) Book value Airlift AS Førde 100% Blueway Helicopter AS Bærum 100% Blueway Offshore Norge AS Bærum 100% Airlift Sweden Holding AB Sweden 100% Airlift Sweden Helicopter AB (tier-subsidiary) Sweden 100% Airlift Services AS (tier-subsidiary) Førde 100% DanCopter AS 100 Denmark 100% Vertech Holding AS Lillesand 60% Vertech Offshore AS (tier-subsidiary) Lillesand 60% Closing net book amount Voting rights in the subsidiaries equals the ownership of each company. In 2010, the company invested NOK 12.6 million in Blueway Offshore Norge AS through a capital increase. NOTE 2 RECEIVABLES Receivables Other short-term receivables Prepayments relating to helicopters Dividends Accounts receivables Receivables due later than one year Inter company loans Total During 2010, the company has paid approx. NOK 33.1 million in instalments for three new offshore helicopters (AgustaWestland 139). The helicopters will be delivered in Q and will be used in the Blueway Group s ongoing operations in Nigeria. If the Company should choose to cancel the order, the Company would not be entitled to receive the entire amount of prepayments.

2 48 Blueway AS Notes to the Accounts Blueway annual report 2010 NOTE 3 BORROWINGS Non-current Liabilities Bank borrowings Loan from Shareholders Convertible bonds Total Current liabilities Bank borrowings (next 12 months amortsations) Bank overdraft Current debt to shareholders Current debt to non-controlling interests in subsidiaries Trade and other payables Other current liabilities Total Current debt to minority shareholdes of NOK 5.8 million is related to an Earn Out agreement between Blueway AS and the minority shareholdes in Vertech Holding AS. The Earn Out agreement was established in connection with the acquisition of Vertech Holding AS in The final payment related to this agreement was made in Convertible bonds The Company issued convertible bonds at value of NOK million on 5 July The bonds mature 18 months from the issue date at their nominal value of NOK million or can be converted into shares at the holder`s option at the maturity date. Bank loans The SEB engagement is divided into two facilities. Facility A is a combined NOK and EUR facility, while facility B is denominated in EUR only. Facility B is related to financing of the Group s helicopters. The bank borrowings mature in 2014 and average interest (exclusive interest rate swaps) were 4,88 percent annually (2009: 4,92 percent annually). Loan facility Face value NOK Face value EUR Nominal interest rate NOK Yearly payment EUR Book value NOK Facility A (SEB) NIBOR/ EURIBOR + 2,5% Irredeemable Facility B (SEB) EURIBOR + 1,75% until repayment Total bank borrowings Average interest rate on facility A was 5,37% in Average interest rate on facility B was 4,65% in The carrying amounts of the Company s borrowings are denominated in the following currencies (amount in NOK). NOK Euro Total Interest rate swaps The Company has entered into interest rate swaps for 100 percent of the bank loans until maturity in 2014.

3 Blueway annual report 2010 Blueway AS Notes to the Accounts 49 Loan facility Hedged amount Payment structure Maturity Estimated market value at 31 December 2010 Facility A NOK quarterly payments 31 December 2014 NOK Facility A EUR quarterly payments 31 December 2014 EUR Facility B EUR quarterly payments 30 June 2014 EUR Total estimated marked value at 31 December 2010 NOK The interest rate swaps are not recognised in the balance sheet. Covenants The covenants on the Company s bank loans are linked to the financial performances of the Blueway Group and not directly to the company. Three out of five financial covenants have been operative during The Group is per in breach with one covenant concerning the relationship between the last 12 months EBITDA (Operating profit before depreciations, amortisations and impairments) and total senior debt. The company received a waiver for this covenant breach. The two last covenants will be operative from The financial covenants are related to requirements such as debt/ebitda-ratio, minimum liquidity level, cash flow, minimum market value of the helicopter fleet and investment levels. Bank borrowings are secured by shares in subsidiaries, helicopters, trade receivables and buildings owned by subsidiaries. Secured debt Book value of assets pledged as security Shares in subsidiaries Trade receivables Total NOTE 4 RELATED PARTY TRANSACTIONS Receivables Payables Blueway Helicopter AS DanCopter AS Airlift AS Vertech Holding AS Blueway Offshore Norge AS Airlift Helicopter AB Miscellaneous short-term inter company debt Total The Company s operating revenue is made up of intercompany fees related to the performance of management services. In addition, the Company has provided loans to some of its subsidiaries and subsequent interest income from these loans. Debt to Shareholders In March and June 2009, the owners granted two loans to Blueway AS amounting to NOK 30 million and NOK 20 million, respectively. The owners have made pro rata contributions according to ownership percentage as of the time the loans were granted, i.e. 60 percent granted from Reiten & Co Capital Partners VI LP, 38 percent from Helicopter Transportation Group AS and 2 percent from Skogstad Corporate AS. Both loans were included in one agreement in 2010 and the duration was extended until the latest event of February 2012 or the final repayment of the Company s current loan facilities in SEB. As such, the loan was reclassified to non-current liabilities. The loan carries an interest rate of 8 percent which is accumulated on the loan until final repayment. As of 31 December 2010, accumulated interest on the loan amounted to NOK 6.1 million.

4 50 Blueway AS Notes to the Accounts Blueway annual report 2010 NOTE 5 EQUITY Changes in equity during the year (NOK 1 000) Share capital Share premium Retained earnings Total Equity Equity at 1 January Profit for the year Equity at 31 December NOTE 6 SHARE CAPITAL AND SHAREHOLDER INFORMATION The share capital of NOK consists of authorised ordinary shares with a par value of NOK 100. All issued shares have equal rights. Shareholders at 31 December 2010 (NOK 1 000) Number of shares Ownership Reiten & Co Capital Partners VI LP % Helicopter Transportation Group AS % Skogstad Corporate AS % Total number of shares % The Chairman of the Board in Blueway AS, Aage Krog, controls 40 percent of the shares in Helicopter Transportation Group AS through his company La Mani AS. Member of the Board in Blueway AS, Jan Bragnes, controls 28 percent of the shares in Helicopter Transportation Group AS through his company Lave AS. NOTE 7 TAXES Calculation of deferred tax/deferred tax benefit Temporary differences (NOK 1 000) Net temporary differences Tax losses carried forward Basis for deferred tax % deferred tax Deferred tax benefit not shown in the balance sheet - - Deferred tax in the balance sheet Basis for income tax expense, changes in deferred tax and tax payable Result before taxes Permanent differences Basis for the tax expense for the year Change in temporary differences and tax losses carried forward Basis for payable taxes in the income statement - - +/- Group contributions received/given - - Taxable income (basis for payable taxes in the balance sheet) - -

5 Blueway annual report 2010 Blueway AS Notes to the Accounts 51 Components of the income tax expense Payable tax on this year's result - - Adjustment in respect of priors - - Total payable tax - - Change in deferred tax Tax expense NOTE 8 REVENUE Segment allocation (NOK 1 000) Management services Total Geographic allocation Norway Denmark Sweden Total NOTE 9 SALARIES, RETIREMENT BENEFIT PLAN, AUDITORS FEE ETC. Wages and salaries (NOK 1 000) Wages and salaries Social security tax Pension costs Other benefits Total The Company is obliged to provide an employment pension plan and the company has established a defined contribution plan for its employees. Under a defined contribution plan the Company is only obliged to pay a fixed premium and will have no obligation to pay further contributions. For the defined contribution plans the premiums are expensed. Average number of people employed in 2010 was Management remuneration (NOK 1 000) CEO Board of Directors CEO Board of Directors Wages and salaries Invoiced fee CEO Pension costs Other benefits Total The CEO during 2010 was hired in October The CEO has been paid according to monthly invoices and has not received salaries from the Company. As such, he has not been part of the Company s pension scheme and all expenses related to the CEO are classified as other operating expenses.the CEO has had a contractual performancebased successive bonus plan related to the development in the Group s EBITDA. This is based on a defined basis level of EBITDA. The agreement has no upper limit, but is adjusted for changes in EBITDA caused from sale and purchase of enterprises. The engagement is regulated by a contract with duration of 18 months, which can be unilaterally extended by the company. By the time of the finalization of the Financial Statements, the CEO has informed the Board of Directors that he will resign from his positon with effect from June 20th No loans or guarantees are granted in favour of the CEO, Chairman of the Board or other related parties. No single loan/guarantee amounts to more than 5 percent of the Company s equity.

6 52 Blueway AS Notes to the Accounts Blueway annual report 2010 Auditors fee Auditor s fee is allocated as follows: Audit services (incl. technical assistance with financial statements) Other assurance services Tax advisory (incl. technical assistance with tax returns) Other assistance (specified below) Total IFRS conversion 280 Accounting compliance advice 433 Other 70 Total other assistance 783 All fees in the tables are excl. VAT. NOTE 10 OTHER OPERATING EXPENSES Other operating expenses (NOK 1 000) Consultants, legal and finance Travel expenditures Premises IT/communication Misc. other operating expenses Total other operating expenses NOTE 11 FINANCIAL ITEMS Inter company interest income on long term loans Other interest income Unrealized agio/disagio long term monetary items Realized agio/disagio (7 090) Group contributions Dividend received Financial income Interest expenses on inter company non-current liabilities (679) (174) Interest expenses on non-current liabilities (42 770) (42 062) Other financial expenses (378) (1 135) Financial expenses Net financial income/(expenses)

7 Blueway annual report 2010 Blueway AS Notes to the Accounts 53 NOTE 12 RESTRICTED FUNDS, BANK OVERDRAFTS Restricted funds (NOK 1 000) Tax deduction employees Granted bank overdrafts Bank overdraft Of this not used NOTE 13 RISK MANAGEMENT The Company s operations is exposed to several financial risk elements such as currency risk and interest rate risk. Currency risk The Company s exposure to currency risk is mainly due to the fact that a significant part of the borrowings is denominated in Euro. In 2010 the Company had recognised approx. MNOK 6.5 of net unrealised currency gain arising from the loan portfolio as a result of currency fluctuations between EUR and NOK. The Company s income is solely denominated in NOK. Most of its daily expenses is also in NOK but interest expenses on the majority of the Company s external bank financing is made in EURO. During 2010, the Company did not use any hedging strategies to reduce the company s currency exposure, but this is evaluated continuously by the Company s Board and Management. Interest rate risk The Company s interest rate risk exposure is mainly related to interest expenses relating to the long-term loan portfolio. During 2009 the Company entered interest rate swap agreements towards the loan portfolios payment structure in order to ensure predictability for future interest rate payments. The bank is acting as counterparty in the interest rate swap agreements, where the Company swaps fixed to floating interest rates. The agreements ensures both parties a mutual option on pre-maturity settlements against settlement of excess/diminished values at maturity date. In 2010, the Company has made interest payments of approximately MNOK 42.8 million in relation to its long-term borrowings. Liquidity risk Cash flow forecasting is performed in the operating entities of the Group and aggregated by group treasury. Group treasury monitors rolling forecasts of the Group s liquidity requirements with aim to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external regulatory or legal requirements for example, currency restrictions. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the group treasury. Group treasury primarily deposit surplus cash in interest bearing bank accounts. NOTE 14 EVENTS AFTER THE REPORTING PERIOD In April 2011, DanCopter AS, a subsidiary of the Company won a significant five year contract with Mærsk Oil & Gas. The contract includes a defined period of options for extension. The contract is an offshore contract consisting of crew changes on offshore installations in the North Sea. Mærsk Oil & Gas has the options for extension of the contract. The operations will start in July 2012 and the Group will be using three new EC225 helicopters for these operations in addition to one equal back-up helicopter. The three first helicopters were ordered during Q with deliveries during Q The Group paid approx EURO 3 mill as a first down payment for these three helicopters during Q and is currently working towards the remaining financing of the helicopters. The order of the helicopters and other necessary investments will in total amount to approx MNOK These investments trigger at financing need over the next months of approx MNOK The Group is currently analyzing various options in order to arrange for the best possible financing solution. At this stage, the options include a range of different loan structures as well as a financial lease structure. Mr. Leif Salomonsen has decided to resign from the position as CEO in Blueway with effect from June 20th Mr. Salomonsen has held this position since he joined the Group in October EVP Offshore, Mr. Jakob Bae took on the position as CEO from the same date. Johnny Skoglund, former deputy CEO of SAS Norway, has accepted the position as new Managing Director in Blueway AS subsidiary Airlift AS. Mr Skoglund will also be responsible for the Onshore Business Area in the Group. Mr. Skoglund joined the Group in May In January 2011, Airlift AS won a court case raised by some insurance companies related to an accident in The insurance companies have decided not to appeal the courts decision and the case is closed for any further litigations.