AVTECH Sweden AB (publ) INTERIM REPORT January - December 2019

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  • AVTECH Group's sales for the fourth quarter of 2019 amounted to MSEK 3.8 (3.4).
  • Operating profit before depreciation for the fourth quarter of 2019 was MSEK +0.5 (+0.7).
  • Net profit for the fourth quarter of 2019 amounted to MSEK -0.3 (+0.1) or SEK -0.005 (+0.002) per share and for the twelve-month period +0.8 (-1.9).
  • Cash flow from operating activities for the fourth quarter of 2019 was SEK +0.2 (-0.1) million. The Group's cash and cash equivalents at the end of the period amounted to SEK 13.3 million (15.7 at the previous year-end). Increased market and development efforts of approximately SEK 2.3 million have affected liquidity during January - December.
  • Equity at the end of the period amounted to SEK 28.9 million (28.1 at the previous year-end) or SEK 0.51 (0.50) per share. The Group's equity ratio was 92.50 (92.70) percent.

The lower than forecasted sales for the quarter is largely a result of delays in ongoing contract processes with new airlines.

During the quarter, a contract was signed with Eurowings for Aventus Full-flight wind up-links from December 1st.

The launch of AVTECH's new Cruise Optimizer continued during the Flight Ops conference in London on December 3rd-4th, where Norwegian presented their positive experiences with the service and its fuel saving effects, to all airlines participating at the conference.

A decision has been made to postpone EASA (European Union Aviation Safety Agency) approval of proFLIGHT in favor of release the planned payment version in Q1. With this, in the first stage we launch proFLIGHT directly to all the pilots who are already testing the service.

  • With proFLIGHT, pilots can get a complete graphical solution containing AVTECH's Aventus Full Flight, cruise optimization and the weather warning system SIGMA. This means that aircraft equipped with WiFi, or satellite communications, can receive real-time information either through this form of communication or via ACARS.

The following market activities, among others, were carried out during the quarter:

  • Two articles published in trade press - "Avoiding Turbulence" (proFLIGHT) and "Let precise winds optimize every flight with AVTECH In-flight Cruise Profile Optimizer"
  • Attendance at two conferences - EFB Users Forum, Madrid, which resulted in 18 new company contacts, and Flight Ops Conference, London which resulted in 15 new company contacts
  • Campaigns via email and social media
  • Cruise optimizer campaign
  • 61 contacted Cargo operators generated 6 leads
  • 67 contacted 737 operators generated 17 leads
  • Turbulence campaign towards Longhaul-operating companies
  • 100 contacts generated 9 leads

The increased interest in tools supporting airlines' efforts to reduce fuel consumption, become more environmentally friendly and to avoid in-flight turbulence means that our current product offering seems to be attracting more and more airlines.

An increasing concern in the airline industry in general, caused by, for example; the uncertainty about the effects the global warming will have on the aviation industry. An expected global economic downturn as well as signs that more airlines are moving towards a period of lower profitability is another contributing factor. Continued uncertainty regarding the 737 MAX flight stop also continues to affect the focus of several of AVTECH's current and future customers. Despite these factors, we can see a growing interest in our products.

Events after the end of the period

  • Eurowings is in full operation with Aventus Full-flight Winds on approximately 100 aircraft and during the spring 2020 an analysis and evaluation of the result will be carried out. This analysis will then be the basis for decision in other companies within the Lufthansa Group to decide whether to join the service.
     
  • The dialogue with easyJet has taken a positive direction in January and it seems that a solution to the current communication limitation may be close. This would enable a complete roll-out of climb and cruise winds as well as a deeper cooperation on cruise optimization and turbulence warnings.
     
  • The test period with a medium-sized European operator, according to previously communicated Letter of Intent (LOI), is proceeding according to plan and is expected to turn into a commercial contract during the first quarter of 2020.
     
  • Another European airline started a test period in January for Aventus full-flight and SIGMA, which is expected to be completed during the second quarter of 2020.
     
  • The dialogue with Southwest continues and has been intensified regarding cruise winds and cruise optimization projects.
     
  • A full roll-out of AVTECH's Cruise Optimizer was made in January to Norwegians full 737NG fleet, consisting of about 100 aircraft. This means that Norwegian is the first reference customer and commercial user of this more advanced optimization service from AVTECH. Norwegian will support and help promote the service to more airlines through articles, conferences and meetings.
     
  • proFLIGHT is now used by more than 1000 pilots from more than 100 airlines. During Q1, work continues to roll-out a payment solution that makes the app available to individual professional pilot users. In parallel with this, marketing continues to make as many pilots as possible aware of the benefits of proFLIGHT and to increase the number of users.
     
  • Today, AVTECH’s turnover mostly consist of revenue from one product, Aventus. We look forward to a great interest and potential in our newly developed products Optimizer, proFLIGHT and SIGMA. More customers and more products for current customers.
     
  • On January 30th, AVTECH conducted an online webinar for proFLIGHT. This generated great interest with over 138 people from more than 67 airlines.
    • A video link will be made available on AVTECH's website in February
       
  • During the first quarter, the main focus in marketing will be on Environment, Cruise Optimizer and proFLIGHT.
    • On February 7th, a press release was released by Norwegian regarding their experience of using AVTECH's Cruise Optimizer service, and the savings of 10-15,000 tons of CO2 per year.
    • Two articles in the trade press are currently planned; one focusing on the environment and the other focusing on the uniqueness and effect of high resolution 10K weather.
    • In addition, a video campaign with the UK Met Office is planned around the benefits of high-resolution weather.
       
  • An important part of our marketing plan is participation in fairs and conferences for the aviation industry. AVTECH together with the UK Met Office are currently planning to participate in:
    ​​​​​​​
    • Airline & Aerospace MRO & Flight Operations IT Conference - Americas - March 11th-12th, Miami
      ​​​​​​​During this fair, Norwegian will present experiences and results as users of AVTECH's Cruise Profile Optimizer.
    • 14th Annual Flight Operations Conference, December 1st-2nd, London
      ​​​​​​​
  • Preparatory planning has been made to carry out a service for monitoring flights through volcanic ash, in order to optimize engine maintenance. The project will take about 6 months from the start and is currently awaiting a go-ahead from a dedicated development customer. The service will likely be of interest to more airlines.

For further information, please contact
David Rytter, CEO, +46 (0) 8 544 104 80
Britt-Marie Lodenius, Chief Financial Officer, +46 (0) 8 544 104 80
or visit the company's website www.avtech.aero, https: / /www.avtech.aero/report#content
AVTECH Sweden AB (publ), corporate identity number 556568-3108, has its registered office in Stockholm municipality.
Postdress: Färögatan 33, 24 tr, 164 51 KISTA, Sweden.
The company's B-share (short-term AVT B) has been traded on the NASDAQ First North Growth Market since February 2012. The company's A-share is not traded on any marketplace. Certified Adviser is Redeye AB (www.redeye.se), tel: 08-121 576 90, e-mail address certifiedadviser@redeye.se. For explanation of technical terms, see glossary on page 73 of the Company's New Issue Prospectus 2011. The information in this pressrelease is published in accordance with EU Market Abuse Regulation (MAR) The information was submitted, through the above contact person's provision, for publication on February 12th, 2020 at CET 10.00 AM

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