COMPANY ANALYSIS 25 October 2017

Summary

Avtech (AVT-B.ST)

List: First North With eyes on Market Cap: 254 MSEK  The Q3-result was in line with our estimates with an Industry: Information Technology CEO: Christer Fehrling EBIT of SEK -0.8 million versus our expectations of Chairman: Bo Redeborn SEK -0.6 million. Revenue was SEK 2.7 million.

 One of the most likely potential catalyst will be a OMXS 30 Avtech signed contract with one of Lufthansa Groups other 7 subsidiaries. Lufthansa and perhaps EasyJet will be 6 expanding their fleets when they take over Air 5 4 which is good news for AVTECH. 3 2  We have increased our sustained EBIT-margin to 16 1 0 percent (prior 14 percent) due to our strengthened 25-Oct 23-Jan 23-Apr 22-Jul 20-Oct faith in AVTECH’s long term competitive advantage.

Our DCF indicates a value range of SEK 2-11 with a new base case of SEK 4.9 (prior SEK 4.5).

Redeye Rating (0 – 10 points)

Management Ownership Profit outlook Profitability Financial strength

5.0 points 8.0 points 6.5 points 0.0 points 5.0 points

Key Financials

2015 2016 2017E 2018E 2019E Share information Revenue, MSEK 15 12 16 26 48 Share price (SEK) 4.5 Growth 3% -19% 36% 59% 85% Number of shares (m) 56.5 EBITDA -9 -8 1 9 18 Market Cap (MSEK) 254 EBITDA margin -59% -64% 9% 36% 38%

EBIT -13 -11 -3 3 12 Analysts: EBIT margin -87% -93% -18% 10% 25% Tomas Otterbeck Pre-tax earnings -13 -11 -3 3 12 [email protected] Net earnings -13 -11 -3 2 10 Net margin -87% -93% -18% 8% 20% 2015 2016 2017E 2018E 2019E

Dividend/Share 0.00 0.00 0.00 0.03 0.14

2015 2016 2017E 2018E 2019E EPS adj. -0.23 -0.20 -0.05 0.04 0.17

P/E adj. -30.4 -23.0 -87.5 122.0 26.4 EV/S 24.5 19.4 14.3 9.0 4.8 EV/EBITDA -41.9 -30.5 159.1 25.0 12.6

Important information: All information regarding limitation of liability and potential conflicts of interest can be found at the end of the report.

Redeye, Mäster Samuelsgatan 42, 10tr, Box 7141, 103 87 Stockholm. Tel +46 8-545 013 30. E-post: [email protected] Avtech Redeye Rating: Background and definitions

The aim of a Redeye Rating is to help investors identify high-quality companies with attractive valuation.

Company Qualities

The aim of Company Qualities is to provide a well-structured and clear profile of a company’s qualities (or operating risk) – its chances of surviving and its potential for achieving long-term stable profit growth.

We categorize a company’s qualities on a ten-point scale based on five valuation keys; 1 – Management, 2 – Ownership, 3 – Profit Outlook, 4 – Profitability and 5 – Financial Strength.

Each valuation key is assessed based a number of quantitative and qualitative key factors that are weighted differently according to how important they are deemed to be. Each key factor is allocated a number of points based on its rating. The assessment of each valuation key is based on the total number of points for these individual factors. The rating scale ranges from 0 to +10 points.

The overall rating for each valuation key is indicated by the size of the bar shown in the chart. The relative size of the bars therefore reflects the rating distribution between the different valuation keys.

Management Our Management rating represents an assessment of the ability of the board of directors and management to manage the company in the best interests of the shareholders. A good board and management can make a mediocre business concept profitable, while a poor board and management can even lead a strong company into crisis. The factors used to assess a company’s management are: 1 – Execution, 2 – Capital allocation, 3 – Communication, 4 – Experience, 5 – Leadership and 6 – Integrity.

Ownership Our Ownership rating represents an assessment of the ownership exercised for longer-term value creation. Owner commitment and expertise are key to a company’s stability and the board’s ability to take action. Companies with a dispersed ownership structure without a clear controlling shareholder have historically performed worse than the market index over time. The factors used to assess Ownership are: 1 – Ownership structure, 2 – Owner commitment, 3 – Institutional ownership, 4 – Abuse of power, 5 – Reputation, and 6 – Financial sustainability.

Profit Outlook Our Profit Outlook rating represents an assessment of a company’s potential to achieve long-term stable profit growth. Over the long-term, the share price roughly mirrors the company’s earnings trend. A company that does not grow may be a good short-term investment, but is usually unwise in the long term. The factors used to assess Profit Outlook are: 1 – Business model, 2 – Sale potential, 3 – Market growth, 4 – Market position, and 5 – Competitiveness.

Profitability Our Profitability rating represents an assessment of how effective a company has historically utilised its capital to generate profit. Companies cannot survive if they are not profitable. The assessment of how profitable a company has been is based on a number of key ratios and criteria over a period of up to the past five years: 1 – Return on total assets (ROA), 2 – Return on equity (ROE), 3 – Net profit margin, 4 – Free cash flow, and 5 – Operating profit margin or EBIT.

Financial Strength Our Financial Strength rating represents an assessment of a company’s ability to pay in the short and long term. The core of a company’s financial strength is its balance sheet and cash flow. Even the greatest potential is of no benefit unless the balance sheet can cope with funding growth. The assessment of a company’s financial strength is based on a number of key ratios and criteria: 1 – Times-interest-coverage ratio, 2 – Debt-to-equity ratio, 3 – Quick ratio, 4 – Current ratio, 5 – Sales turnover, 6 – Capital needs, 7 – Cyclicality, and 8 – Forthcoming binary events.

Company analysis 2 Avtech Q3 comments

The Q3-result was in line with our estimates with an EBIT of SEK -0.8 million versus our expectations of SEK -0.6 million. The revenue, however, was SEK 0.7 million lower than expected. We had higher hopes for the initial revenue boost from the new contract with EasyJet.

Our estimates vs actuals:

The YoY growth between Q2 and Q3 2017 was not very different which was quite surprising due to the implementation of Aventus Nowcast Full Flight at easyJet. AVTECH has communicated to reach break-even at the end of this year. AVTECH wrote in the report that the ramp-up should be completed in Q4.

Except for revenues, it was personnel cost that deviated the most. At the end of Q3 AVTECH had 7 full-time employees (an average of 6 employees during the period). Our expectation was 8 full-time employees during the entire Q3.

Lufthansa Cargo October 6 AVTECH announced the long-awaited commercial cooperation A proof that Aventus Nowcast is a quality product. with . This was our second catalyst for the stock that was fulfilled in a six months period. The evaluation period with Lufthansa Cargo started a year ago, and this is, of course, a proof that Aventus Nowcast is a quality product. The contract is a five-year-long commercial agreement.

The initial revenue for AVTECH is less than SEK 1 million, so the financial importance of this contract is not great but much needed to focus on further

Company analysis 3 Avtech growth and to reach break-even. More important however was perhaps this sentence in the press release:

“We will shortly discuss our weather service with other in the Lufthansa-group, as each in the group independently decides if they will join the signed agreement”.

As we wrote one year ago when the evaluation period with Lufthansa Cargo had announced the likelihood that AVTECH would receive another prestigious contract with one of the world's top airline Lufthansa Group was increased significantly when the first collaboration was announced. After the commercialization that was announced earlier this month the likelihood had increased even more.

Lufthansa is when combined with its subsidiaries the largest airline in Europe, regarding fleet size. In total the group has over 600 aircrafts including the subsidiaries , Swiss International Airlines Airlines and more. In comparison Lufthansa Cargo has 17 aircrafts in its fleet.

The next potential catalyst will be a signed contract with one of Lufthansa Groups other subsidiaries. As communicated in the press release “each New contract within Lufthansa Group within 3-12 airline in the group independently decides if they will join the signed months. agreement”. This should mean that each subsidiary does not have to evaluate the product for 12 months like Lufthansa Cargo. It is more likely there will be no need at all to evaluate the product which means a commercialization with a subsidiary could be imminent. In this business this however means 3-12 months.

Consolidating industry Two of AVTECH’s biggest customers are currently involved 1-2 big acquisitions in the aviation industry, Lufthansa Group and EasyJet. In August Air Berlin filed for insolvency after losing the support from its biggest shareholder . Air Berlin signed a partnership agreement with AVTECH two years ago. The deal was never commercialized. Etihad has also evaluated AVTECH’s product but choose Boeing’s solution in the final stage instead.

Lufthansa Group has signed a deal to buy half of Air Berlin, which means the carrier expects to take 81 of the in total 140 planes and 3000 employees. According to Bloomberg Air Berlin had 8600 employees in August when the airline filed for insolvency. Air Berlin confirmed on Thursday 12 October that Lufthansa would buy , its Austrian holiday airline, regional carrier LGW, as well as 20 other aircrafts. According to people close to Air Berlin the transaction amounted to EUR 210 million. Lufthansa has declined to confirm the number.

Company analysis 4 Avtech However the EU-commission has to finalise the transaction. But it is in very unlikely the acquisition won’t be approved given what the outcome would be otherwise. However has raised competition concerns in the event.

Negotiations with EasyJet, which is in the running to buy between 20 to 30 of Air Berlin’s aircraft, are ongoing according to Financial Times. EasyJet has not made any comments on the rumours.

Three European airline Three European airline carriers have entered insolvency in the last six carriers have entered months, after intense competition in the short-haul market has put insolvency in the last six months. increasing pressure on weaker carriers.

At the beginning of October UK’s Monarch became the latest airline to collapse. Earlier Italian national carrier entered administration in May after its employees rejected a restructuring plan. Lufthansa reportedly has offered EUR 500 million to acquire the planes, airport runway slots and air crew of Alitalia. The deal won’t be accepted the reason for this is that the Government in Rome wants to sell the whole of Alitalia in one package and avoid a split of its aviation and ground service activities

Further development to reduce fuel consumption

Norwegian Air Shuttle and AVTECH are initiating a cooperation with the purpose to develop AVTECH's weather information service further. This was communicated in a press release on Wednesday October 25. In a joint project, in part financed by the Swedish Energy Agency, pilots on Norwegian flights will during a trial period exploring the possibility of reducing fuel consumption.

Norweigan’s ambition is to continue reducing emissions per passenger and help make aviation carbon neutral by 2050. Today Norwegian’s fleet of aircraft is one of the most environmentally friendly in the world.

The joint project is planned to last between October 2017 and February 2018. The announced cooperation will only have a marginal financial effect on AVTECH during 2017.

The press release is another proof of the unique product AVTECH has to offer. Norweigan has 130 Boeing planes which means they have access to Boeings solution that in many ways are comparable to AVTECH’s. This indicates AVTECH’s solution is superior to its competitors.

All kinds of such assignment are of course of great value for AVTECH for marketing purposes and will increase its likelihood of signing new contracts. In this cooporation Norweigan hopefully, will understand the benefits of AVTECH’s solution.

Company analysis 5 Avtech Valuation

In the coming three-year period the growth rate is abnormally high due to the expected growth trajectory from a relatively low of sales. On a total revenue basis, we estimate that the rate of growth in sales will remain steady at around 30-35 percent during the period 2020 – 2024, with the majority of growth coming in the upcoming three years. In terms of margins, we expect EBIT-margins to be around 25-30 percent during the same period due to competition, and peaking at approximately 35 percent in 2020, when the company reaches a maturity state scenario. Nevertheless, this is highly contingent on the RSA rate, the rate of consultancy projects, investments in personnel and the development of competitive software relative to total revenues, which could all significantly impair the margin.

However, in the longer term due to the previously mentioned factors, the margin is also maintained on a high level by further investments by meteorology providers, but partially compensated by a likely stronger position for AVTECH from a negotiation standpoint due to scale. Along with the rating parameters, the discount rate is set to 12.4 percent (prior 13.2 percent), which among other factors reflect the risk of not fulfilling the estimated Aventus Nowcast-contracts and competitive escalation.

We have increased our sustained EBIT-margin to 16 percent (prior 14 percent) due to strengthened faith in AVTECH’s competitive advantage in the solutions the offer.

The profitability component of the rating will most likely be increased when the profitability is established in the coming years, which will lead to a somewhat lower discount rate. The discount rate along with the assumptions of the model leads to a DCF value of approximately SEK 4.9 per share (prior 4.5).

Company analysis 6 Avtech

Scenario Analysis

Three different scenarios are presented in order to discuss the valuation, which is based upon the DCF model, for different circumstances concerning the company’s future.

Bear case scenario

Most likely negative scenario In this scenario we assume that the process of gaining new contracts will be will result in significantly less more difficult than estimated. Due to existing contractual arrangements as number of flights well as the prioritization of cost saving measures being more profound, procurement process delays will have an effect on larger legacy carrier orders. This will significantly impact the margins on the downside and will have a negative impact on the sales growth rate. The probability of this scenario is 25 percent, leading to a DCF value of SEK 2 per share.

Assumptions  In our bear case scenario we are expecting a relative slow revenue growth of 30 percent in 2017. In 2018 it is accelerating to 50 percent from a relative low level. Break-even for the whole year is established first in 2018.  For the period 2019-2023 the revenue growth rate is set to 22 percent on average. EBIT margin is set to be lower on average by 20 percent during the period.

Base case scenario In the base case scenario In line with the temporary competitive advantage of Aventus Nowcast Full revenues in the longer term Flight we believe that the company can establish a strong niche and revenue are supported by more accurate wind-feed data. growth with several Airlines in the shorter term (2-3 years), for primarily low cost carriers. In the longer term, we expect that the benefit savings increase as the meteorological provider’s wind feed data becomes more real-time, supporting revenue growth. The probability of this scenario is 50 percent leading to a DCF value of 4.9 SEK per share.

Assumptions  In our base case scenario we are expecting a revenue growth of 35 percent in 2017. In 2018 it is accelerating to 59 percent from a relative low level. Break-even for the whole year is established first in 2018.

 The revenue growth rate will be close to 40 percent on average for the period 2019-2023. EBIT margin will be approximately 30 percent during the same period.

Company analysis 7 Avtech Bull case scenario

EBIT margin in the long term The bull case scenario involves a more rapid degree of successful will be approximately 37 procurement processes by 2017-2018, as a result of primarily successful percent in our Bull case. low-cost carriers due to more intensive sales efforts. This development is also led by faster adaption of airlines than expected, and by a more pronounced effect of the regulatory presence on the airline carriers’ implementation speed.

AVTECH´s new product “Management Dashboard” and other additional services based on the software from Aventus Nowcast will start generating revenues by 2018 on a license basis imposed on airports. The probability of this scenario is 25 percent leading to a DCF value of 11 SEK per share.

Assumptions  In our bull case scenario we are expecting a revenue growth of 40 percent in 2017. In 2018 the high level of growth continues at 85 percent from a relative low level. The company makes a loss around SEK 2 million for the whole year in 2017 and an EBIT around SEK 7 million in 2018.

 The revenue growth rate will be around 50 percent on average for the period 2019-2023, with the majority of growth coming in the upcoming three years. EBIT margin will be approximately 40 percent during the period 2019-2023.

Company analysis 8 Avtech Investment Thesis

AVTECH is the current world-leader in software solutions for full flight and time-based operations. After years of significant research and commercialization issues, the company has materialized a 5 year contract for the Aventus NowCast product with Southwest Airlines (SWA), proving its commercial viability with one of the largest commercial airlines in the world. The contract with Southwest is and will be paramount to enhance its cash flow in the coming years.

The announced product shift in 2016 to Aventus Full Flight is a significant driver of value as the fuel savings can be between 7-30 times larger than for Aventus Descent. Thus the total EBIT from a key contract such as Southwest alone from all flight segments, can be between SEK 10 – 30 million in a yearly basis, in the lower interval symbolizing conservative assumptions and more optimistic in the higher intervals.

By far the most important factor for this company and the stock is essentially its speed in securing new contracts to ensure a strong position in the market for full flight systems which would lead to fulfillment of expectations. Furthermore, AVTECH has been able to develop a competitive edge, although temporary, by focusing its efforts on the specialization in small undeveloped niche segments. 10 contracts of various sizes are estimated to be attained in the next 6-24 months according to our analysis.

In 2016 a partnership agreement with Met Office, ’s Partnership with Met national weather service, was announced. The partnership creates a long Office creates long term term value in AVTECH. The product Aventus Nowcast becomes more value in AVTECH valuable on the market at the same time as cost is reduced for AVTECH. This partnership will also create value in additional services to the Aventus Nowcast product creating data delivery with extreme weather condition information from turbulence, extreme winds, thunders and lightnings.

In 2017 a collaboration project between Met Office, EasyJet and the airport at Gatwick in was annonced. The purpose of the project is to improve the efficiency of arriving aircrafts to Gatwick using AVTECH’s product Aventus as a timing tool in so called Time Based Operations. This deepens the relationship with Met Office and EasyJet. It will also prove AVTECH’s as a solution in the eco system between aircrafts and airports which is one of the company’s biggest visions.

The company’s largest single risk is that of full flight planning system providers searching for less competitive arenas and successfully developing equivalent products, thereby bypassing the patent protection. This would significantly impair the projected intake of contracts and revenue estimates. Other significant risks include; prolonged procurement processes due to regulatory or organizational circumstances, risk of significant estimation deviation due to limited pricing transparency of current contracts, and the possibility of extended procurement processes due to priorities of cost- savings actions.

Company analysis 9 Avtech Summary Redeye Rating

The rating consists of five valuation keys, each constituting an overall assessment of several factors that are rated on a scale of 0 to 2 points. The maximum score for a valuation key is 10 points.

Management 5.0p The current leadership have substantial experience in developing systems as well as core competencies in the aviation industry. During the years the company has taken several steps during harsh times that we consider the right action. Although, historically, management has not delivered on its estimates, which most is the consequence of a stagnant industry. Arguably, a lack of focus has previously been a problem for the company, this have been improved upon as of late, with the main focus being Aventus NowCast Full flight efficiency systems.

Ownership 8.0p Ownership of the company is aligned to a few larger shareholders whom have been operationally active in the company for several years. These people will most likely add value in the future given their experience and persistence. However, we think an institution and some board re- alignments would be healthy for the growth phase the company is now transitioning to.

Profit outlook 6.5p The difficulty relating to successful procurement processes in the sector lies within the fact that many companies prioritize other efficiency measures first, and the often bureaucratic organization for legacy carriers does not benefit AVTECH. Significant potential exists for an innovative company like AVTECH to succeed in a niche market like CDA and transit towards whole flight planning. Whole flight planning systems are more competitive than optimized CDA solutions, but the largely untapped market along with the fact that low-cost carriers seek to optimize costing, solutions such as AVTECH’s, should become more interesting. Profitability 0.0p

Historically, the company has been unprofitable accompanied with several equity issues to support the growth potential. The company will soon be profitable which will make this rating gradually increase as the profitability trend gradually establishes itself.

Financial strength 5.0p The strong liquidity position of the company is expected to secure funding for product development required to enable the growth in the longer term. The financial strength consists of approximately SEK 25 million in cash after debt repayments. The reason for its relatively weak rating, considering its cash position, is because the company has historically had a significantly weaker balance sheet.

Company analysis 10 Avtech

Income statement 2015 2016 2017E 2018E 2019E DCF valuation Cash flow, MSEK Net sales 15 12 16 26 48 WACC (%) 12.4 % NPV FCF (2017-2019) -1 Total operating costs -24 -20 -15 -17 -30 NPV FCF (2020-2026) 88 EBITDA -9 -8 1 9 18 NPV FCF (2027-) 165 Non-operating assets 25 Depreciation 0 0 0 0 0 Interest-bearing debt 0 Amortization -4 -4 -4 -7 -6 Fair value estimate MSEK 277 Impairment charges 0 0 0 0 0 Assumptions 2017-2023 (%) EBIT -13 -11 -3 3 12 Average sales growth 46.1 % Fair value e. per share, SEK 4.9 EBIT margin 21.4 % Share price, SEK 4.5 Share in profits 0 0 0 0 0 Net financial items 0 0 0 0 0 Exchange rate dif. 0 0 0 0 0 Profitability 2015 2016 2017E 2018E 2019E Pre -tax profit -13 -11 -3 3 12 ROE -24% -28% -8% 6% 24% ROCE -24% -28% -8% 8% 31% Tax 0 0 0 -1 -2 ROIC -72% -74% -26% 18% 76% Net earnings -13 -11 -3 2 10 EBITDA margin -59% -64% 9% 36% 38% EBIT margin -87% -93% -18% 10% 25% Balance 2015 2016 2017E 2018E 2019E Net margin -87% -93% -18% 8% 20% Assets Current assets Data per share 2015 2016 2017E 2018E 2019E Cash in banks 30 25 19 20 23 EPS -0.23 -0.20 -0.05 0.04 0.17 Receivables 8 1 7 10 19 EPS adj -0.23 -0.20 -0.05 0.04 0.17 Inventories 1 1 2 3 5 Dividend 0.00 0.00 0.00 0.03 0.14 Other current assets 0 0 0 0 0 Net debt -0.53 -0.44 -0.34 -0.36 -0.41 Current assets 39 27 28 33 47 Total shares 56.50 56.50 56.50 56.50 56.50 Fixed assets

Tangible assets 0 0 0 0 0 Valuation 2015 2016 2017E 2018E 2019E Associated comp. 0 0 0 0 0 EV 365.4 234.9 234.3 233.4 230.6 Investments 0 0 0 0 0 P/E -30.4 -23.0 -87.5 122.0 26.4 Goodwill 0 0 0 0 0 P/E diluted -30.4 -23.0 -87.5 122.0 26.4 Cap. exp. for dev. 0 0 0 0 0 P/Sales 26.5 21.5 15.5 9.8 5.3 O intangible rights 10 11 11 10 11 EV/Sales 24.5 19.4 14.3 9.0 4.8 O non-current assets 0 0 0 0 0 EV/EBITDA -41.9 -30.5 159.1 25.0 12.6 Total fixed assets 10 11 11 10 11 EV/EBIT -28.1 -20.8 -80.8 89.8 19.2 Deferred tax assets 0 0 0 0 0 P/BV 8.7 7.2 7.6 7.2 5.9

Total (assets) 49 38 39 44 58 Share performance Growth/year 15/17e 1 month 11.1 % Net sales 4.9 % Liabilities 3 month 6.9 % Operating profit adj -52.8 % Current liabilities 12 month -20.5 % EPS, just -52.8 % Short -term debt 0 0 0 0 0 Since start of the year 33.6 % Equity -14.5 % Accounts payable 3 1 5 8 14 O current liabilities 1 1 1 1 1 Current liabilities 4 2 6 9 15 Shareholder structure % Capital Votes Long-term debt 0 0 0 0 0 Avanza Pension 16.8 % 7.1 % O long-term liabilities 0 0 0 0 0 Lars Lindberg 8.0 % 28.5 % Convertibl es 0 0 0 0 0 Christer Fehrling 4.8 % 6.1 % Total Liabilities 4 2 6 9 15 Peter Muth 2.6 % 1.1 % Deferred tax liab 0 0 0 0 0 Mats Tonsjö 2.6 % 1.1 % Provisions 0 0 0 0 0 Lars Bäckvall 2.4 % 1.7 % Shareholders' equity 45 36 33 35 43 Cda Förvaltning AB 2.0 % 0.8 % Minority interest (BS) 0 0 0 0 0 Johnny Olsson 1.8 % 0.8 % Minority & equity 45 36 33 35 43 Nordnet Pensionsförsäkring 1.7 % 0.7 % Lars Wahlund 1.7 % 0.7 % Total liab & SE 49 38 39 44 58 Share information Free cash flow 2015 2016 2017E 2018E 2019E Reuters code AVTCHb.ST Net sales 15 12 16 26 48 List First North Total operating costs -24 -20 -15 -17 -30 Share price 4.5 Depreciations total -4 -4 -4 -7 -6 Total shares, million 56.5 EBIT -13 -11 -3 3 12 Market Cap, MSEK 253.7 Taxes on EBIT 0 0 0 0 -1 NOPLAT -13 -11 -3 2 11 Management & board Depreciation 4 4 4 7 6 CEO Christer Fehrling Gross cash flow -9 -8 1 9 18 CFO Britt-Marie Lodenius Change in WC -2 5 -2 -2 -4 IR Britt-Marie Lodenius Gross CAPEX 0 -4 -5 -6 -7 Chairman Bo Redeborn

Free cash flow -10 -7 -6 1 6 Financial information

Capital structure 2015 2016 2017E 2018E 2019E Equity ratio 92% 95% 86% 81% 74% Debt/equity ratio 0% 0% 0% 0% 0% Net debt -30 -25 -19 -20 -23 Analysts Redeye AB Capital employed 15 11 14 15 20 Tomas Otterbeck Mäster Samuelsgatan 42, 10tr Capital turnover rate 0.3 0.3 0.4 0.6 0.8 [email protected] 111 57 Stockholm

Growth 2015 2016 2017E 2018E 2019E Sales growth 3% -19% 36% 59% 85% EPS growth (adj) 128% -13% -74% -172% 362%

Company analysis 11 Avtech

Revenue & Growth (%) EBIT (adjusted) & Margin (%)

60 100.0% 15 40.0% 80.0% 20.0% 50 10 60.0% 0.0% 40 5 40.0% -20.0% 30 20.0% 0 -40.0% 2014 2015 2016 2017E 2018E 2019E 20 -60.0% 0.0% -5 -80.0% 10 -20.0% -10 -100.0% 0 -40.0% 2014 2015 2016 2017E 2018E 2019E -15 -120.0%

Net sales Net sales growth EBIT adj EBIT margin

Earnings per share Equity & debt-equity ratio (%)

0.2 0.2 1 5.0% 0.15 0.15 0.9 4.0% 0.1 0.1 0.8 0.05 0.05 0.7 3.0% 0.6 0 0 0.5 2.0% -0.05 2014 2015 2016 2017E 2018E 2019E -0.05 0.4 -0.1 -0.1 0.3 1.0% -0.15 -0.15 0.2 0.0% -0.2 -0.2 0.1 -0.25 -0.25 0 -1.0% -0.3 -0.3 2014 2015 2016 2017E 2018E 2019E

EPS, unadjusted EPS, adjusted Equity ratio Debt-equity ratio

Conflict of interests Company description Tomas Otterbeck owns shares in the company : Yes AVTECH Sweden AB develops and sells products and services in the area of digital air traffic management worldwide. The company provides Aventus NowCast systems that optimize continuous descent Redeye performs/have performed services for the Company and approaches by digital uplinking of wind information to the aircraft’s receives/have received compensation from the Company in connection computed optimized trajectory. with this.

Company analysis 12 Avtech

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Redeye Rating (2017-10-25)

Rating Management Ownership Profit Profitability Financial outlook Strength 7,5p - 10,0p 39 36 16 10 21 3,5p - 7,0p 67 63 91 33 41 0,0p - 3,0p 20 27 19 83 64 Company N 126 126 126 126 126

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Company analysis 13