Fly Play hf.

Interim / Quarterly Report • Jul 25, 2024

Fly PLAY hf.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1 January - 30 June 2024

Fly PLAY hf. ꟾ Suðurlandsbraut 14 ꟾ 108 Reykjavík Iceland ꟾ Reg. no. 660319-0180

Contents

Page

Endorsement and Statement by the Board of Directors and the CEO	3
Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income	5
Consolidated Statement of Financial Position	6
Consolidated Statement of Changes in Equity	7
Consolidated Statement of Cash Flows	8
Notes to the Condensed Consolidated Interim Financial Statements	9

Endorsement and Statement by the Board of Directors and the CEO

Fly Play hf. (the "Company" or "PLAY") is an Icelandic low-cost airline that operates a hub-and-spoke model between Iceland, Europe, and North America. The Company launched its services in June 2021 and was listed on the Nasdaq First North Iceland in July 2021. PLAY's primary goal is to make flying affordable for everyone. PLAY offers a safe and pleasant journey in new and comfortable Airbus aircraft to 36 destinations during Q2 2024.

The Condensed Consolidated Interim Financial Statements for the period from January 1 to June 30 2024 have been prepared in accordance with International Financial Reporting Standards (IFRSs) for Interim Financial Statements (IAS 34). The Financial Statements are presented in thousands of US dollars, the Group's functional currency.

Operations in the six-month period ended 30 June 2024

According to the Condensed Consolidated Interim Financial Statement loss for the period was USD 29.7 million whereas loss for the quarter was USD 8.1 million. On June 30, 2024, equity amounted to USD 4.4 million, including share capital in the amount of USD 14 million and a share premium of USD 125.9 million. Reference is made to the Statement of Changes in Equity regarding the information on changes in equity. The average number of full-time employees was 505 in the period thereof 242 men and 263 women, and salaries and related expenses amounted to USD 25.2 million.

PLAY's cash position including restricted cash amounted to USD 51.4 million (including restricted cash) on 30 June 2024. This is an increase in cash position compared to end of last year. On 24 April the Company completed an increase of share capital of USD 32 million.

From the start of operations PLAY has entered into lease agreements for a total of 10 new aircraft. In the quarter PLAY operated 10 aircraft compared to 9 aircraft in the same quarter last year. Any further expansions of fleet will depend on if aircraft can be secured at the right terms.

During Q2 2024, PLAY operated flights to 36 destinations in Europe and North America. Capacity measured in available seat kilometers increased by 11.7% compared to Q2 2023. Load factor increased from 84.6% in Q2 2023 to 85.7% in Q2 2024. In Q2 2024 PLAY flew 442 thousand passengers which is 13% more than the number of passengers flown in Q2 2023, when PLAY flew 392 thousand passengers.

PLAY's total assets amounted to 503 million USD on June 30.

Outlook going forward

PLAY believes that flexibility in scaling production to demand has been and remains crucial for PLAY. We will continue to focus on flexibility, demand-driven growth, and attractive value offering to the market. PLAY is well prepared to weather the uncertainty ahead with its healthy financial position.

Endorsement and Statement by the Board of Directors and the CEO, contd.:

Statement by the Board of Directors and the CEO

According to the Board of and best knowledge, the Condensed Consolidated Interim Financial Statements give a true and fair view of the financial performance of the Group for the six-month period ended 30 June 2024, its assets, liabilities and financial position as at 30 June 2024 and its cash flows for the six-month period ended 30 June 2024.

Further, in our opinion, the Financial Statements and the Endorsement of the Board of Directors and the CEO give a fair view of the development and performance of PLAY´s operations and its position and describes the principal risks and uncertainties faced by PLAY.

The Board of Directors and the CEO have today discussed the Condensed Consolidated Interim Financial Statements of PLAY for the six-month period ended 30 June 2024 and confirm them by means of their signatures.

Reykjavik July 25, 2024

Board of Directors:

CEO:

Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income

	Notes		2024		2023		2024		2023
Revenue			Q2		Q2		1.1.-30.6		1.1.-30.6
Transport revenue	6		78,327		73,144		132,773		105,884
			78,327		73,144		132,773		105,884
Operating expenses
Aviation expenses	7		46,976		41,090		88,014		67,598
Salaries and other personnel expenses	8		12,907		11,380		25,245		19,650
Other operating expenses	9		7,447		5,965		13,495		10,882
			67,330		58,435		126,754		98,131
Operating profit before depreciation and Amortization (EBITDA)	0		10,997		14,709		6,018		7,753
Depreciation and Amortization	10		15,510		13,822		30,937		24,132
Operating profit (loss) (EBIT)	0	(	4,513)		887	(	24,919)	(	16,379)
Financial income and expenses
Financial income			687		484		858		844
Financial expenses		(	7,055)	(	7,222)	(	14,238)	(	11,762)
Foreign exchange			538	(	33)		811	(	796)
	11	(	5,830)	(	6,771)	(	12,569)	(	11,715)
Loss before tax (EBT)	0	(	10,344)	(	5,884)	(	37,488)	(	28,093)
Income tax			2,290		1,253		7,751		5,621
Loss for the period	0	(	8,054)	(	4,631)	(	29,737)	(	22,472)
Other comprehensive (loss) income Items that are or may be reclassified to the income statement on later date Net gain (loss) on fuel hedge, net of tax			416	(	336)		341	(	2,757)
Net gain (loss) on FX hedge, net of tax			177		0		177		0
			593	(	336)		518	(	2,757)
Total comprehensive loss
for the period		(	7,461)	(	4,967)	(	29,219)	(	25,230)
Earnings per share

Basic and diluted earnings per share (US cent) ....... 15 ( 0.7) ( 0.8) ( 3.1) ( 3.3)

Condensed Consolidated Interim Financial Statements of Fly Play hf. 30 June 2024 5 All amounts are in USD thousands

Consolidated Statement of Financial Position at 30 June 2024

	Notes	30.6.2024	31.12.2023
Assets
Intangible assets		14,381	14,195
Right-of-use assets	12	320,214	338,450
Operating assets		15,002	11,855
Aircraft deposits & security instalments		12,346	13,209
Deferred tax assets		34,040	26,290
Non-current assets		395,983	403,998
Inventories		349	180
Trade and other receivables	13	53,356	32,992
Prepaid expenses		2,187	2,755
Cash and cash equivalents	14	51,394	21,606
Current assets		107,286	57,533
Total assets		503,269	461,531
Shareholders equity Share capital Share premium Other components of equity Accumulated loss Total shareholder equity		14,046 125,897 1,245 ( 136,761) 4,427	6,797 101,490 1,160 ( 107,542) 1,905
Liabilities
Provisions	16	65,557	75,965
Lease liabilities	17	243,721	247,761
Non-current liabilities		309,279	323,726
Provisions	16	22,200	20,399
Lease liabilities Trade and other payables	17	26,822 62,755	25,300 43,731
Deferred income	18	77,786	46,471
Current liabilities		189,564	135,900
Total liabilities		498,842	459,626
Total shareholders equity and liabilities		503,269	461,531

Consolidated Statement of Changes in Equity for the six months ended 30 June

			Other
	Share	Share	components	Accumulated	Total
2023	capital	premium	of equity	loss	equity
Balance at January 1	6,740	100,587	13,844	( 82,685 )	38,486
R&D reserve transfers	0	0	503	( 503 )	0
Stock options	0	0	92	0	92
Total comprehensive loss	0	0	0	( 25,230 )	( 25,230 )
Balance at June 30	6,740	100,587	14,439	( 108,418 )	13,348
2024
Balance at January 1	6,797	101,490	1,160	( 107,542 )	1,906
Share capital increase	7,249	24,406	0	0	31,655
Stock options	0	0	85	0	85
Total comprehensive loss	0	0	0	( 29,219 )	( 29,219 )
Balance at June 30	14,046	125,897	1,245	( 136,761 )	4,427

Consolidated Statement of Cash Flows for the six months ended 30 June

Cash flows used in operating activities	Notes		2024 Q2		2023 Q2		2024 1.1.-30.6		2023 1.1.-30.6
Loss for the period		(	8,054)	(	4,631)	(	29,737)	(	22,472)
Adjustments for Depreciation and amortization Net finance expense	10 11		15,510 5,830		13,822 6,771		30,937 12,569		24,132 11,715
Stock options Deferred income tax		(	39 2,290) 11,035	(	46 1,253) 14,754	(	85 7,751) 6,103	(	92 5,621) 7,845
Changes in operating assets and liabilities Inventories, increase		(	169)	(	513)	(	169)	(	177)
Trade and other receivables, decrease (increase) Trade and other payables, increase (decrease)		(	5,993 553)		5,068 19,348	(	747) 21,312	(	14,485) 57,809
Changes in operating assets and liabilities			5,272		23,903		20,396		43,147
Cash from operations before int. and taxes			16,307		38,657		26,499		50,992
Financial income received Interest paid		(	0 5,156)	(	484 6,048)	(	858 11,726)	(	844 9,480)
Net cash from operating activities			11,151		33,093		15,631		42,357
Cash flows to investing activities
Deposits		(	52)	(	385)		863	(	930)
Investment of operating assets		(	608)	(	2,611)	(	3,888)	(	5,553)
Investment of intangible assets Net cash used in investing activities		( (	903) 1,563)	( (	773) 3,769)	( (	1,895) 4,920)	( (	1,796) 8,279)
Cash flows from financing activities
Repayment of lease liabilities Proceeds from share issue	16. 17 (		6,481) 31,655	(	12,194) 0	(	12,881) 31,655	(	16,295) 0
Net cash (to)/from financing activities			25,174	(	12,194)		18,775	(	16,295)
Increase in cash and cash equivalents			34,762		17,131		29,486		17,783
Effect of exchange rate fluctuations on cash held		(	597)	(	241)		303		511
Cash and cash equiv. at beginning of the period			17,229		37,638		21,606		36,234
Cash and cash equivalents at the end of the period			51,394		54,528		51,394		54,528
Investment and financing without cash flow effect Acquisition of right-of-use assets New leases	17 12	(	10,224 10,224)	(	69,034) 69,034	(	10,224 10,224)	(	134,023) 134,023
Capitalized maintenance obligation under lease New leases	16 12		0 0	(	21,231) 21,231		0 0	(	42,149) 42,149

1. Reporting entity

Fly Play hf. (the "Group" or "PLAY") is a private limited company and domiciled in Iceland. PLAY is a low-cost airline which operates flights between North America and Europe. The registered office of the company is at Suðurlandsbraut 14 in Reykjavík, Iceland. The Company is listed on the Nasdaq First North Iceland effective from July 9, 2021.

The Condensed Consolidated Interim Financial Statements of the Company as at and for the period ended 30 June 2024 comprise the Company and its subsidiary (together referred to as "the Group" or "PLAY"). PLAY has one subsidiary which is PLAY Lithuania which is a private limited company and domiciled in Lithuania with its registered office at Lvivo g. 101, Vilnius. PLAY's ownership in PLAY Lithuania is 100%.

2. Basis of preparation

a. Statement of compliance

These Condensed Consolidated Interim Financial Statements of the Group are for the six-month period ended 30 June 2024 and have been prepared in accordance with IAS 34 as adopted by the European Union.

The Condensed Consolidated Interim Financial Statements should be read in conjunction with the Group's Annual Consolidated Financial Statements for the year ended 31 December 2023. The Financial Statements for the Group for the period ended 31 December 2023 are available upon request from the Group's registered office or at www.flyplay.com/financial-reports-and-presentations.

These Condensed Consolidated Interim Financial Statements do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

The Condensed Consolidated Interim Financial Statements were approved by the Board of Directors of Fly Play hf. on July 25, 2024.

b. Basis of measurement

The Consolidated Financial Statements are prepared on the historical cost basis except that derivative financial instruments are recognized at fair value. Further details of the Group´s accounting policies are included the 2023 financial statements.

c. Going concern

These Condensed Consolidated Interim Financial Statements are prepared on a going concern basis.

3. Functional and presentation currency

These Condensed Consolidated Interim Financial Statements are presented in United States Dollars (USD), which is the Group's functional currency. All financial information presented in United States Dollars has been rounded to the nearest thousand unless otherwise stated.

4. Use of estimates and judgements

In preparing these Condensed Consolidated Interim Financial Statements, management has made judgements, estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Consolidated Financial Statements as at and for the year ended 31 December 2023.

Determination of fair value is based on assumptions subject to management's assessment of the development of various factors in the future. The actual selling price of assets and settlement value of liabilities may differ from these estimates.

Notes, cont.:

Measurement of fair values

A number of the accounting policies and disclosures require the measurement of fair value, for both financial and non-financial assets and liabilities. Where applicable, further information about the assumptions made in determining the fair value of assets or liabilities are in the notes to the relevant assets and liabilities.

5. Accounting policies

Standards issued but not yet effective

The accounting policies adopted in the preparation of the Condensed Consolidated Interim Financial Statements are consistent with those followed in the preparation of the annual Consolidated Financial Statements for the year ended 31 December 2023, except for the adoption of new standards effective as of 1 January 2024. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Several amendments apply for the first time in 2024, but do not have an impact on the Condensed Consolidated Interim Financial Statements of the Group.

Operating segments

The Group operates as a single operating segment.

6.	Revenue Revenue is specified as follows:	2024 1.1.-30.6		2023 1.1.-30.6
	Airfare	86,824		74,542
	Ancillary	37,108		26,498
	On board sales	4,787		1,922
	Cargo revenue	2,359		1,824
	Other revenue	1,695		1,099
	Transport revenue total	132,773		105,884
7.	Aviation expenses Aviation expenses are as follows:
	Aircraft fuel	44,426		35,094
	Emissions permits (ETS)	(	68)	3,506
	Aircraft handling, landing and communication	32,774		22,082
	Maintenance of aircraft	7,674		4,210
	Catering		822	473
	Other aviation expenses	2,385		2,233
	Aviation expenses total	88,014		67,598
8.	Salaries and other personnel expenses Salaries and other personnel expenses are specified as follows:
	Salaries	20,702		16,033
	Accrued vacation		653	616
	Pension fund contributions	2,143		1,629
	Other salary related expenses	1,662		1,280
	Stock options		85	92
	Total salaries and other personnel expenses	25,245		19,650
	Average number of full year equivalents		505	323
	Employees at the end of the period		572	502
9.	Other operating expenses
	Other operating expenses are as follows:
	Housing and office expenses		435	135
	Marketing and sales expenses	4,743		4,179
	IT cost	2,958		49
	Travel and other employee expenses	4,605		4,058
	Audit, legal and other professional services		667	2,411
	Other operating expenses		86	50
	Other operating expenses total	13,495		10,882
10.	Depreciation and Amortization The depreciation and amortization are specified as follows:
	Amortization of intangible assets	1,709		1,293
	Depreciation of right-of-use assets	28,488		22,314
	Depreciation of operating assets		740	525
	Depreciation and amortization recognized in profit or loss	30,937		24,132

Notes, cont.:

11 Financial income and (expenses)

Financial income and (expenses) is specified as follows: 2024 2023

		1.1.-30.6		1.1.-30.6
Interest income on bank deposits		858		844
Interest expenses of lease liabilities	(	10,930)	(	9,201)
Other finance expenses and transaction fees	(	3,308)	(	2,561)
Net foreign currency exchange rate gain (loss)		811	(	796)
Net financial expenses	(	12,569)	(	11,715)

12. Right-of-use assets

Right-of-use assets and depreciation are specified as follows:

	Aircraft	Other	Total
Balance at January 1, 2023	296,595	1,445	298,040
Additions	90,323	0	90,323
Depreciation	( 49,577)	( 429)	( 50,006)
Indexed leases	0	94	94
Balance at December 31, 2023	337,340	1,110	338,450
Balance at January 1, 2024	337,340	1,110	338,450
Additions	10,224	0	10,224
Depreciation	( 28,267)	( 220)	( 28,488)
Indexed leases	0	28	28
Balance at June 30, 2024	319,297	917	320,214

13. Trade and other receivables

Trade and other receivables have increased due to increased bookings and are mostly due to claims on the companies aqcuirers.

14. Cash and cash equivalents

Restricted cash is held in bank accounts pledged against credit cards acquirers, tax authorities and airport operators. The largest amount (\$7.8 million) is pledged against credit card claims. Other restricted cash amounts (USD 2.6 m. ) which are pledged against airport operators, handling agents and the tax authorities.

Notes, cont.:

15. Earnings per share

The calculation of basic EPS has been based on the following net loss attributable to ordinary shareholders and weighted‑average number of ordinary shares outstanding. The calculation of diluted earnings per share is the same as basic earnings per share as the effect of warrants would not dilute the earnings per share only decrease loss per share.

Basic earnings per share

		2024		2023
		1.1.-30.6		1.1.-30.6
Loss for the period attributable to equity holders of the Group	(	29,737)	(	22,472)
Weighted average number of shares for the period		9,470		6,740
Basic earnings per share in US cent per share	(	3.1)	(	3.3)
Diluted earnings per share in US cent per share	(	3.1)	(	3.3)

16. Provisions

Provisions for aircraft maintenance on leased aircraft are as follows:

	2024	2023
	1.1.-30.6	1.1.-31.12
Balance at the beginning of the period	96,364	89,281
Increases in provisions during the period	0	21,289
Utilization of provision during the period	( 8,606)	( 14,206)
Balance at the end of the period	87,757	96,364
Current provisions	( 22,200)	( 20,399)
Total non-current provisions	65,557	75,965

17. Lease liabilities

Lease liabilities are as follows: The Group has in total ten aircraft on lease which constitute a financial lease under IFRS 16.

		Year of
	Rate	maturity	Aircraft	Real estate	Total
Lease payments in USD	5.6%	8-12 years	269,678	0	269,678
Lease in ISK, indexed	4.3%	5 years	0	865	865
Total lease liabilities			269,678	865	270,543

		2024		2023
		1.1.-30.6		1.1.-31.12
Balance at the beginning of the period		273,060		224,053
New leases		10,224		69,034
Indexed leases		2		16
Payment of lease liabilities	(	12,881)	(	20,381)
Currency translation		139		339
Balance at the end of the period		270,543		273,060
Current maturities	(	26,822)	(	25,300)
Total non-current lease liabilities		243,721		247,761

17. Lease liabilities cont.

Repayments of lease liabilities are distributed over the next years as follows:

Repayments 2024-2025	26,822
Repayments 2025-2026	28,309
Repayments 2026-2027	29,485
Repayments 2027-2028	31,134
Repayments 2028-2029	32,906
Subsequent repayments	121,887
Total lease liabilities	270,543

18. Deferred income

Among current payables is recognized deferred income in the amount of USD 77.8 million due to sale of unflown flights and outstanding gift certificates at year end. Revenues from passenger flights are recognized in the statement of comprehensive income when the relevant flight has been flown.

19. Events after the reporting period

No events have arisen after the reporting period of these Interim Financial Statements that require amendments or additional disclosures in the interim Financial Statements for the period ended 30 June 2024.