Technology award to CTT. CTT in brief

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1 BUSINESS OVERVIEW 2012

2 CTT in brief CTT Systems AB is a Swedish technology group active in the aviation industry, specialising in humidity control systems for commercial aircraft. Customers include both aircraft manufacturers and airlines. The parent company is headquartered in Nyköping, Sweden. It is listed on the Nasdaq OMX Nordic Exhange Stockholm, Small Cap, since Technology award to CTT Recipient of ATW s Aviation Technology Achievement Award 2013 On 26th of March 2013, CTT was awarded the prestigious Aviation Technology Achievement Award from leading industry trade journal Air Transport World. The jury, which included several internationally known industry insiders, unanimously voted CTT winner in the category Airline Technology Leadership. Quite clearly the best we could have wished for at the present time, commented CTT s CEO Torbjörn Johansson. 2

3 Contents CTT in brief 2 Business Overview CEO s Review 6 The VIP market the Formula 1 of air travel 8 Marketing - Proof that we re doing something right 12 Cair 14 Zonal Drying System 17 Cair VIP 20 Crew Humidifiers 22 Competition 24 R&D - A crescendo of milestones 25 Organisation and personnel/ Quality System 26 Manufacturing More muscles relieve growing pains 28 History 29 Another record year for Bribo 30 Busy times for Catron 31 The CTT share 32 Five-year summary The Group 34 Senior executives 36 Board of directors 38 Glossary 39 3

4 Our mission is to create a better climate both inside and outside the aircraft and thereby provide economic and environmental benefits to the airline. The key is to balance humidity levels on board. Our concept increases passenger well-being, contributes to a better environment and improves airline economy, simultaneously. We call it humidity in balance. Business Overview MSEK Order intake Net turnover Profit/loss 4

5 Business concept CTT is dedicated to solving the two humidity issues that exist in today s aircraft preventing condensation forming between the cabin and the outer skin of the aircraft; and raising the relative humidity inside the cabin, improving the comfort and wellbeing for crew and passengers alike. Strategy CTT aims to strengthen its market-leading position through continuous development of its products for humidification and dehumidification. By entering into alliances with other subcontractors in the aviation industry, attractive and competitive system solutions will be created aimed at manufacturers as well as airlines. The long-term goals in terms of volume will be achieved by supplying aircraft manufacturers directly. Mission The company s mission is to create a better climate both inside and outside the aircraft, providing financial and environmental benefits to the airline. The key is to balance humidity levels onboard. The concept increases passenger wellbeing, contributes to a better environment and also improves airline economy. We call this Humidity in Balance. Vision CTT s vision is that every airline should offer cabin comfort, in terms of air humidity, that improves personal wellbeing for crew as well as passengers, during and after the flight this is the essence of comfort. The F11 Air Reconnaissance Museum We located this year s photography session to the Swedish Air Reconnaissance Museum at the former F11 air base outside Nyköping, next door to Stockholm Skavsta Airport. From 1941 to 1980, F11 was the centre for Swedish air reconnaissance. The heritage from this period is cared for by Nyköping Aviation History Association, which runs the museum since 1991 on a voluntary basis. CTT is a proud sponsor of the museum, featuring displays from Sweden s aviation history. The latest addition is a Saab 37 Viggen simulator, well worth a test flight. 5

6 Chief Executive s Review Dear shareholder 2012 became CTT s financial breakthrough year. All companies in the Group increased turnover by double digits and all three companies also had positive results. As a Group, we grew organically by an impressive 52%. Barring any unforeseen events, the years of losses and heavy investments should now be behind us. CTT has taken off. Torbjörn Johansson, CEO, CTT Systems Boeing 787 programme guarantees growth The CTT parent company grew substantially over the year, mainly due to the Boeing 787 programme. Direct sales to Boeing nearly doubled compared to the previous year. Profitable sales of spares also made a significant contribution to the increased turnover and earnings. Even if Boeing at the moment has significant problems with its battery system, and with the subsequent grounding of the aircraft, deliveries from CTT direct to Boeing s production line will increase further over the coming years. CTT s aftermarket revenues will also continue to grow year on year until the first Boeing 787 are taken out of service due to age, most likely in 25 to 30 years time. This said just to stress how significant the Boeing 787 programme is and will remain to CTT for the foreseeable future. First system for A350 aircraft delivered A significant milestone was passed during the year when CTT delivered a complete system consisting of humidifier and Zonal Dryers to Airbus second A350 test aircraft. We estimate that in-flight trials of our system onboard this aircraft will begin in the autumn of This is the first time that Airbus goes all the way to offer premium passengers the same comfortable onboard climate that (thanks to CTT) has almost become standard in large VIP aircraft. There is every reason to believe that the A350 programme will contribute substantially to the continued growth of CTT in a few years time. CTT reinforces its world-leading position in the VIP segment During the year, CTT received orders for Cair systems for a total of ten large VIP aircraft, among them three Boeing To date, we have orders for six systems for the aircraft. We have so far won all contracts and this in competition with the company that developed the air distribution system for the Boeing We are very proud of this achievement, as it shows the superiority of our product compared to that of our competitor. I am convinced that we, over the coming years, will continue to dominate the VIP segment and grow with the total market. EasyJet a substantial opportunity CTT has marketed the Zonal Drying system to the lowcost airlines for many years, with customers such as Transavia, Air Berlin, Jet2.com and FlyDubai already on the books. The fact that EasyJet is now evaluating the system is another positive development for CTT. The high cost of aviation fuel and the hunt for cost savings are factors that increase interest in our Zonal Drying system. An order from EasyJet would not only be the largest single order in the history of CTT, it would also encourage other lowcost carriers to consider our Zonal Drying system. Substantial interest from many large low-cost-carriers would also increase CTT s possibilities of persuading Airbus and Boeing to offer the system for their new short-range aircraft types Airbus A320NEO and Boeing 737MAX. Bribo now has unlimited area for growth When Bribo moved into its new premises during the annual holiday period, it achieved its single most significant objective of the year, whilst doubling the available manufacturing area. Bribo has also purchased nearby land to enable future growth and could double the manufacturing area again at least twice. 6

7 CTT has decided that in the future, serial manufacturing of all pads will be Bribo s responsibility. At the end of 2012, Bribo manufactured its first complete pads for CTT s Boeing 787 humidifier. For each aircraft delivered with humidifiers, the annual demand for pads will increase. Bribo will require large manufacturing areas to keep up with CTT s growth and to be able to supply all our customers the world over with new pads. Catron best in class Once again, Catron was the most successful of the Group s three companies. Turnover increased by more than 50% and an operating margin of 22% was achieved. These impressive figures are the result of a very well executed development project. The final deliveries of this project will take place during Catron has also made major progress in the marketing of its specific competencies and a couple of new, major projects are within reach. While 2012 was an exceptional year for Catron, there is every possibility that the company will continue to develop well. CTT s OEM position opens up major opportunities Over the last 10 years, CTT has gone from being a company selling products in the retrofit market, to a fullyfledged OEM supplier with contracts for three newly developed long-haul aircraft families. CTT will continue to market its products towards Airbus and Boeing with the aim of also becoming a supplier for Boeing s aircraft types 777X, and 737Max, as well as for Airbus A320NEO. CTT s position as a successful OEM supplier has also created opportunities for retrofit business. Having the Zonal Drying system as standard in the Boeing 787 is an impressive achievement to many airlines and this improves our sales opportunities in the retrofit market. The fact that our Crew Rest humidifiers are offered by Airbus and Boeing has opened a market to us to also sell these for existing aircraft. It also opens further opportunities to sell our Cair system for the airlines first and business class cabins when these are upgraded to meet the competition of the new long-haul aircraft. CTT is in a unique position in that we do business within all parts of civil aviation; OEM, VIP and direct to the airlines. To add to this, aftermarket sales are growing steadily. Few other companies have so many exciting growth opportunities and such good marketing conditions as CTT. This looks certain to bring many years of profitable growth. Finally I would like to thank all the staff of the CTT Group for having performed so well during We can all proudly enjoy the recognition awarded to us by the Air Transport World jury, selecting us as the winner of the 2013 award in the class Aviation Technology Achievement. Nyköping mars 2013 Torbjörn Johansson CEO» Finally I would like to thank all the staff of the CTT Group for having performed so well during We can all proudly enjoy the recognition awarded to us by the Air Transport World jury, selecting us as the winner of the 2013 award in the class Aviation Technology Achievement. Torbjörn Johansson, CEO» CTT management team

8 The VIP market the Formula 1 of air travel The VIP market is to aircraft what Formula 1 and rally are to the automotive industry. The technology developed and tested there is sooner or later adopted by the commercial airlines. The trendsetters above all others are the customers from the Middle East. What we do for these customers today will sooner or later become much more broadly available. CTT s marketing and sales strategy is based on the fact that nearly everything developed for private customers eventually ends up in commercial aircraft flatbeds, entertainment, moodlights with stars and sunlight. Humidification is no exception. From royalty to first class With our experience and client base especially in the Middle East, where as good as all royal families use our humidification system Cair we have a useful route into the commercial airline industry. The companies in the Middle East, led by Emirates and Qatar Airways, are world leaders in comfort. Their first class passengers are as close to VIP customers as it is possible to get. They know exactly what they want comfort, service, anonymity, privacy. In short, the best. This is one of the reasons our systems have had such good commercial success in large VIP aircraft. From giants like The king of all VIP aircraft, the 747-8, is a graphic example. So far, Boeing has sold eight aircraft of this model, almost exclusively to the Middle East. Six of the buyers have opted for humidification. All have selected CTT s system above those of our competitor, Liebherr. - This has earned us a lot of goodwill in the market, particularly as Liebherr has designed and developed its air distribution system for this aircraft type, says marketing manager Peter Landquist....to small business jets CTT s next move will be towards the VIP market for small aircraft, i.e. those for passengers. The most important players in this segment are Canadian company Bombardier with the aircraft types Challenger and Global; American company Gulfstream; and Brazilian Embraer. 8

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11 With our experience and client base especially in the Middle East, where as good as all royal families use our humidification system Cair we have a useful route into the commercial airline industry. Peter Landquist 11

12 Proof that we re doing something right The order book tells its story of success for CTT, but there is still more reason to be upbeat. The most recent accomplishment was a prestigious award from the leading trade journal ATW. Both events can be seen as proof that we are getting our priorities right. Peter Landquist, VP Sales, Marketing & Support, CTT Systems What is more valuable the opportunity to deliver humidification systems to the royal families of the Middle East, or receiving the Aviation Technology Award from leading trade journal ATW. Regardless of the answer, CTT s marketing manager Peter Landquist has reason to be pleased. First, CTT won six out of eight orders for humidification of the world s largest VIP aircraft, Boeing 747-8, right in front of competitor Liebherr. Then, Aviation Transport World (ATW) came along with its prestigious award. In addition, the manufacturing department is now a hive of activity, as Boeing is ramping up deliveries of its 787 aircraft, where CTT s dehumidification system Zonal Drying is included as standard. All of which is testimony to a job well done. Still, Peter Landquist sees no reasons to rest on the laurels. In 2013, the marketing effort will mainly focus on four areas. VIP-marknaden - As the order book shows, we have managed to communicate our message very successfully in the VIP market. In total, we have sold systems to ten aircraft in 2012, he says. - We are particularly proud to have won almost all the projects that Boeing has sold. Six out of eight orders went our way, although our competitor Liebherr had the advantage of having developed the air distribution system in the aircraft. This makes these orders particularly prestigious. - Now we will continue our efforts in the VIP segment by targeting the market for small business jets, like Canadian company Bombardier with its aircraft types Challenger and Global; American company Gulfstream; and Brazilian Embraer. 12

13 MarKET OVERVIEW from Peter Landquist Crew working climate The part of Cair that humidifies the flight deck, cockpit and crew rest areas is sold separately under the name Crew Humidifier, among others to new aircraft like Boeing 787 and Airbus A350. But it can also be installed in older aircraft when these, after a certain number of hours in the air, come in for what is commonly known as structural checks or D-checks. This upgrade and refurbishing market is an important segment to CTT. - We will aim a focused marketing effort at this segment. We cooperate very well with the completion centres that install crew resting bunks and other equipment on behalf of the airlines, says Peter Landquist. First class humidification Paradoxically, the highest paying passengers on an aircraft have the greatest problem with dry air. This is one of the most powerful sales arguments for Cair. Lufthansa appreciates this and has installed our humidification system in the first class cabin of the A At the moment, this is our only major coup in this area, so we are laying a bit low but are targeting two or three important airlines. We would very much like to have two or three customers committed to using our system onboard the A380 or Boeing 777, and being able to talk about customers having selected our option for the A350, before we use this in our marketing. Trade fairs Trade fairs is an important sales channel. During 2013 CTT will have its own stand at the Hamburg Interior show in April and at Dubai Air Show in November. - We will also be visiting EBACE in Geneva, where all our customers (i.e. completion centres) in the VIP industry are exhibiting, as well as the leading American trade fair in the same segment, NBAA in Las Vegas. Media coverage The contacts with the press pay off handsomely. - We continue to get a lot of coverage in several of the leading journals in the industry, says Landquist and points specifically to the leading trade journal ATW, which recently awarded CTT its prestigious Air Technology Award. The award ceremony takes place at a gala dinner 26th of March in Washington, very timely for CTT as it is certain to generate press interest ahead of the trade fair two weeks later in Hamburg. - The strength of Air Transport World is that it is one of the oldest magazines in the industry. Its award is also the longest established one, having been handed out since 1974, so it is a very prestigious award to receive, says Peter Landquist. Low-cost carriers with large fleets Zonal Drying requires a different type of sales approach. Here, the benefit is that dehumidification reduces the weight of the aircraft, which in turn cuts fuel consumption. In the Boeing 787, first delivered in September 2012 to ANA, Zonal Drying is fitted as standard. Boeing is now ramping up deliveries of the 787, which is a fantastic turn of events for CTT. Deliveries started in 2011 and the manufacturing rate is steadily increasing. - On the Zonal Drying side we haven t seen that many orders yet, but our strategy to focus on low cost carriers with large fleets has started to bear fruit. Market interest is quite clearly growing. We make references to the 787 programme where our system is fitted as standard. The fact that the cost of fuel remains high is to our advantage, says Peter Landquist. 13

14 Cair The journey starts in the cabin. 14

15 Airbus decision to offer cabin humidification as an option for the A350 was a major breakthrough for CTT. Since CTT started designing its first humidifier, the objective has been to offer passengers improved air quality during long-haul flights. Now, 10 years later, this has been achieved with Airbus new aircraft types A350 and A380. Technology Normal indoor air has between 30 and 60 percent humidity. In a long-haul aircraft, this drops to between 5 and 15 percent. This is because the fresh air drawn in at high altitude is extremely dry. The driest air is experienced in first and business class as these areas have the lowest passenger density. CTT s Cair humidifies the air in first and business class at the same time as it dehumidifies the space between the cabin ceiling and the aircraft body. This creates a relative humidity of approximately 25 percent in the cabin without causing condensation. The passengers in tourist class also benefit to some extent as the air is recirculated in the cabin. It has been scientifically proven that passengers feel better with higher air humidity onboard. In addition, it reduces sleeping problems as well as dryness of eyes, skin and mucous membranes. The risk of catching a cold or a virus is reduced, along with problems with dry skin and allergies. Market CTT s Cair is aimed at all the world s long-distance carriers that offer first and business class travel. As humidification of VIP aircraft is becoming standard practice and new aircraft are delivered with cabin humidification, premium passengers will expect improved air quality also in older long-haul aircraft. This will create favourable market conditions when selling direct to the airlines. The installation of Cair in the first class of Lufthansa s A380 highlights the connection between VIP aircraft and the first class offer provided by the airlines. Airlines like Emirates, Qatar and Etihad lead the way regarding premium class comfort and are also likely to lead when it comes to air quality. CTT Humidifier A typical 1st class installation Boeing 777 with one Humidifier and one Zonal Dryer. 15

16 OEM Airbus decision to offer cabin humidification as an option for the A350 was a major breakthrough for CTT. The airlines can select to humidify up to three temperature zones, i.e. half the aircraft. The Cair system in Lufthansa s A380 aircraft has worked well and the passengers appreciate the improved comfort. This should mean that Airbus will offer more A380 customers the possibility to install the system even if it is not yet on the official list of options. Air Out Aircraft Electrical Interface 28VDC CAIR Control Unit - CAN Air Vent Valve Water Bypass Valve Cabin Control Panel Aircraft Interface Zonal Dryer Control Unit Water Shut off Valve Air In Potable Water Supply Future opportunities CTT has great opportunities to also be delivering Cair to Boeing s long-haul aircraft, 787, 777 and There is strong competition between these aircraft types and Airbus A350 and A380. If the cabin humidification in the A350 is well received, the major airlines are going to want the same air quality in their Boeing aircraft as well. CTT s control system in Boeing 787 is prepared to also control a cabin humidifier, which makes the installation of cabin humidification relatively simple. Boeing 777 will most likely be upgraded in the coming years to meet the competition from the A350. CTT has already delivered humidification systems for three 777 VIP aircraft, which proves that installation is possible. CTT is now developing Cair for Boeing VIP, which helps provide a credible offer also for Boeing s flagship product. Relative Humidity Sensor Relative Humidity% Relative Humidity% 25,0 15,0 5,0 25,0 15,0 5,0 Duct temp sensor Overflow to bilge Average Cabin Humidity without Cair 5 % 7 % First Class Business Class Economy Average Cabin Humidity with Cair 22 % 22 % Drain to bilge or drain mast Water Pulse Valve 12 % 16 % First Class Business Class Economy Trim air Cair Customers OEM A350 (option) A380 (Lufthansa option) 16

17 Inside an aircraft, rain should be the last thing to worry about. 17

18 Zonal Drying System The first product developed by CTT was Zonal Drying System. The idea was conceived in the early 1990s and the first commercial system was installed by Martinair in The dry air is being distributed throughout the crown area using a piccolo ducting system Technology The outside skin of the aircraft is extremely cold and when the cabin air meets this cold surface, condensation forms as frost and ice. When the exterior of the plane warms up during landing, the frost and ice melt into water. Most of the water drains through the drainage vents of the aircraft while the plane is on the ground, but some stays in the insulation or accumulates in cavities inside the body of the aircraft. Zonal Drying System draws air from the cabin, dehumidifies the air and circulates it between the cabin and the outside skin of the aircraft. The airflow dries the insulation and reduces the relative humidity of the air that comes into contact with cold surfaces, resulting in less condensation. The technology is based on Munters well-known dehumidification technology used in military aviation. In this application, the equipment is used on the ground. CTT has developed this technology further by designing small, lightweight driers installed for permanent operation onboard commercial aircraft. Zonal Drying System is now available for practically all Airbus and Boeing aircraft types. Market Airlines that have high passenger density and use the aircraft for long hours benefit most from the system. Not surprisingly, most customers are charter and low-cost carriers. The arguments for investing in Zonal Drying System are lower fuel consumption and reduced maintenance costs. With higher fuel costs and the The Boeing 787 Zonal Dryer The dry air is being distributed thorughout the crown area using a piccolo ducting system. airlines focus on cutting costs, there are great opportunities to increase sales also outside Europe. CTT s largest airline customers are: KLM, Transavia, Air Berlin, Monarch, Continental, Jet2.com, Air New Zealand and Flydubai. OEM The system for Boeing s /800 aircraft was developed in Boeing installs the systems at the customer s request when assembling the aircraft. In 2005, CTT signed a contract with Boeing to develop the system for the new 787 aircraft. The system is now installed as standard in all aircraft of this type. Design of a system for Airbus A350 was started in Here, the system is offered as an option aimed particularly at airlines with high passenger density. If the airlines select humidification of first or business class, dehumidification with Zonal Drying System is also installed. Future opportunities The most favourable scenario for CTT would be if Airbus and Boeing were to actively combat condensation in their new narrow-body aircraft. At the moment, Airbus is redesigning its A320 family. The new aircraft will be called A320NEO. The Boeing equivalent is called 737MAX. Having Zonal Drying System specified for these two programmes would mean a considerable increase in volume for CTT. Both these aircraft types are estimated to be built at a rate of at least 30 per month. In the market for wide-body aircraft, there is a possibility that the airlines might decide to install humidification of the cabin air, which would make Zonal Drying System more or less compulsory in these aircraft. 18

19 Zonal Drying System Customers OEM A350 (option) 787 (standard) 737 (option) 19

20 Feel the difference The first Cair VIP system was installed in a BBJ aircraft for Lufthansa Technik in Since then, CTT has delivered Cair to a further 49 aircraft. Technology The air in a VIP aircraft becomes extremely dry during longdistance flights. The reason is that the air drawn in by the engines at an altitude of 10,000 metres is very dry. Although the air is partially recirculated inside the aircraft, air humidity does not increase substantially as there are so few passengers on a VIP aircraft. The Cair system for a VIP aircraft is made up by anything from one to eight humidifiers. The system also has between one and four Zonal Dryers. So far, CTT s Cair system has been controlled by an analogue control unit, but for the new Boeing 747-8, a new digital control unit is being developed by German company Nord-Micro. The new control unit will primarily improve the possibility to adjust the system as well as the built-in diagnostic function. 20

21 Cair VIP A318, A319, A320, A321 A typical Cair installation in a Boeing svart = 85% PMS 7545 turkos C 93 M 0 Y 24 K 0 PMS 313 ljus-blå, 40% av: C 100 M 28 Y 24 K 0 PMS 277 A , A Market CTT s Cair VIP is market leading in the large VIP aircraft market and has developed systems for practically all large VIP aircraft models. Demand for humidification in VIP aircraft increases steadily as the customers experience a great improvement in personal comfort when travelling with humidified aircraft. The global demand for large VIP aircraft depends on the world economy. A , A , A , A BBJ1, 737-BBJ2, 737-BBJ3 Completion centres CTT has delivered Cair to 14 different completion centres and very good business relationships have been established. Thanks to these good relations, the end customer is recommended to opt for cabin air humidification at an early stage. This way, CTT receives the best possible help in its marketing of Cair VIP Future opportunities At the end of 2011, CTT delivered its first Cair VIP for a Boeing 777 undergoing overhaul and upgrade. Many VIP aircraft delivered about a decade ago are now coming in for overhaul and upgrades to the cabin. This offers CTT the opportunity to also provide Cair VIP for retrofit , Cair VIP Customers , CTT Systems has delivered Cair for the following aircraft: 21

22 Handle with cair. CTT started designing its first humidifier in As early as 2003, CTT won a contract, together with AOA Gauting, to develop humidifiers for the A380 aircraft. Technology The humidifier, which works according to the principle of evaporative humidification, has been developed in cooperation with Munters. The main component in the humidifier is a pad of fibre glass structure with specially designed air channels that are humidified by a spreader system. When the dry air passes the moist surface of the pad, the water evaporates as moisture is absorbed by the air, while the air is also being cooled. By regulating the flow of water to the pad, the output can be controlled. Minerals and other impurities in the water are precipitated and stay in the pad, which is replaced at regular intervals, the length of which vary with the mineral content of the water. There is no risk that bacteria will spread through the humidifier as the water evaporates when transferred to the air and thus cannot carry any bacteria. The humidifier is installed in the air supply ducts for the areas that are to be humidified and the water is drawn from the regular water supply in the aircraft. 22

23 Crew Humidifiers Air Vent Valve Water Shut off Valve Bypass Valve Potable Water Supply Air Out Air In Duct temp sensor Pulse Valve Overflow to bilge Drain to bilge or drain mast Trim air Market The flight deck is the driest area in an aircraft and a reliable humidification system is high on the wish-list for all pilots flying long-haul. Many long range aircraft have crew rest bunks. Normally, there is one for the pilots and one for the cabin crew. As the crew suffers from the dry air on long-distance flights, it would seem reasonable that the airlines will increasingly want to meet their crews requests for humidifiers in these crew rest bunks. The market for humidifiers to the crew rest areas will grow in conjunction with long distance f lying. OEM CTT supplies humidifiers for the crew rest areas in the Airbus A380. Airlines like Emirates and Singapore Airlines has ordered humidifiers for their crew rest bunks. Singapore Airlines have operated these humidifiers reliably since For Boeing 787, CTT supplies humidifiers both for the flight deck and for the two crew rest areas of the aircraft as an option. CTT estimates that humidification of the flight A Crew Rest Bunk rest area for pilots and cabin crew during long haul flights. deck has been selected in approximately 90 percent of orders. If the airlines choose to purchase crew rest bunks, CTT s humidifiers are included in this option. In the A350, Airbus offers flight deck humidification as an option for the first time. CTT supplies humidifiers for the flight deck and for the two crew rest bunks in the aircraft. All these humidifiers are optional. Future opportunities CTT hopes to provide flight deck and crew area humidifiers for Boeing s long-distance aircraft 777 and Should this happen, CTT would have virtually all of the OEM market. As the new long-distance aircraft come into service and the reliability of the humidifiers is proven, the possibility will open to supply humidifiers for the crew rest areas direct to the airlines existing fleets. Cooperation with a company delivering crew rest bunks for retrofit could boost sales further. Crew Humidifiers Customers - OEM For installation in the crew rest compartments (Crew Rest Humidifiers) For installation in the cockpit (Flight Deck Humidifiers) A350 (option) A380 (option) 787 (option) A350 (option) 787 (option) 23

24 Competition Dehumidifier systems CTT is currently the sole supplier of active dehumidifier systems to the aviation industry. Up until now, aircraft manufacturers have tackled the problem of condensation in aircraft using the following passive measures: Covering the cabin with fibreglass blankets Installing gutters to divert the water Fastening pieces of rubber foam to rods etc. to catch running water Attaching felt to roof panels and other parts, to catch water which should then evaporate Installing bilge trays to raise insulation in the hold of the aircraft enabling condensation water to trickle underneath The SPUD system that blows additional ECS air into a number of selected locations in the crown area in order to dry these. These methods do not prevent condensation. In the shortterm, they stop water from entering the cabin, but water will still be present in the fuselage with the problems this entails: increased weight, corrosion, mould and mildew in the insulation, and the risk of disturbance to the electrical system and components. Humidifier systems There are currently two other companies supplying humidifier systems for aircraft: Hamilton Sundstrand Hamilton Sundstrand (USA) has developed a humidifier in which water diffuses through a membrane system. This humidifier is available as an option for the flight deck in Boeing 777 and 747 aircraft. This is an older system, no longer favored by the customers. Liebherr-Aerospace Liebherr-Aerospace (Germany/France) provides a humidifier that uses a heat exchanger to generate steam with the help of hot air emitted from the engines. This system is available as an option for the Bombardier Global Express business jet. The company also uses the Le Bozec system. This system uses a humidifier that generates steam using electricity. This product competes with CTT in the VIP market for large aircraft. We estimate that it has approximately 5% of the market. 24

25 Torleif Nilsson from the R&D department A crescendo of milestones Calling it intense is just the beginning. The past year has been a formidable crescendo to the R&D department. Multiple deadlines have strained the resources to the limit. But impressive loyalty and professionalism, including many hours of overtime, enabled the department to successfully stick to the delivery schedule. Torleif Nilsson and his staff at the R&D department had to roll their sleeves up during It will be a while before they can roll them back down again. Torleif Nilsson, Engineering Manager, CTT Systems Boeing s OEM project 787 One of the most demanding projects concerns the Boeing 787. As more operators take the aircraft into use, CTT s activities enter a new phase. Now, it is all about upgrades, improvements and repairs, both with warranty and nonwarranty issues. -We were always aware that fast and efficient routines would be required. Still, in the heat of the moment, with lots of technical decisions to make and actions to take, it is easy to underestimate the demand, says R&D manager Torleif Nilsson. Despite the pressure, CTT has yet again shown its flexibility. The organisation rapidly adjusts to new demands, delivering one sophisticated solution after another. - You could say we are learning the hard way, what time and which resources are needed to keep all our products, and all their variants, operational around the clock in service with the end customers. Airbus A350 An ambitious target was also set in relation to Airbus. By the end of 2012, CTT was to deliver airworthy systems, both Zonal Dryers and humidifiers, for testing with the Airbus A350 test aircraft. - Our A350 team is behind a remarkable achievement! As well as delivering a complete system, most of the qualification work for the serial units has also been completed, says Torleif Nilsson. Prestige project In parallel with the projects just mentioned, CTT has also developed its largest Cair VIP installation for Boeing six separate installations for four different customers. - A demanding and interesting challenge, that made us realise that we need a new software based control system. We are now developing this in cooperation with a partner in Germany. The development work will be finished and the units delivered during Another project that required quite a few adjustments was adapting Cair to Boeing s aircraft type With very little available space and restricted accessibility, this was probably one of our most demanding design challenges ever, says Torleif Nilsson. Pipeline full up The pressure looks likely to keep up during In the first instance, it s about serial deliveries for the A350, support for the growing 787 fleet and completion of development work as well as finishing installations of Cair for the The engineers also need to develop and modify the Zonal Dryer and Cair for new aircraft types. And as if this was not enough, another challenge looms: - The more products we get into the market, the more space is required for long-term testing. For this reason we are now extending the test lab and developing new test rigs, partially for in-house testing and maintenance, but also to support repair work around the world, says Torleif Nilsson. 25

26 Quality CTT complies with Swedish Transport Agency rules and regulations applying to Quality Assurance in the aviation industry. Quality control is applied at every level, from design through production to delivery, with subsequent followup checks and customer support. Third-party approval Today, CTT is certified by the Swedish Transport Agency in accordance with the common European standards issued by the EASA (European Aviation Safety Agency), Part 21 subpart G and Part 145. These authorisations together mean that CTT is qualified to manufacture and maintain airworthy material. CTT is also certified in accordance with ISO9001 and EN9100. Maria Wester, Quality Manager, CTT Systems GROUP ORGANISATION CTT Systems AB (publ.) Bribo Mekaniska AB Catron Elektronik AB CTT Systems Inc (dormant) Certification An aircraft s basic configuration has a type certificate (TC). All retrofit equipment installed must be approved with a Supplement Type Certificate (STC). An STC means that the certifying civil aviation authority has approved both the system and its installation from an airworthiness viewpoint. Within the EU, STCs are often issued by the EASA. An STC issued by the FAA (Federal Aviation Authority in the USA) is in reality the same as global certification. CTT and Lufthansa Technik have a cooperation agreement regarding certification. This agreement means that Lufthansa Technik acts as CTT s formal design organisation and maintains STCs for CTT products in return for royalties on systems sold. This agreement is very useful in the sales process as Lufthansa Technik has an excellent reputation for certification and can maintain STCs from both the EASA and FAA. Production CTT s production strategy is to perform the final assembly and maintenance of its own products. A large portion of the products comprise standard components from the aviation industry that are purchased from reputable suppliers. In the case of key components, long-term agreements have been signed to ensure 26

27 QUALITY AND HR MANAGER MARIA WESTER Maria Wester Quality Manager Torbjörn Johansson President Quality Assurance & HR Mikael Brate CFO Peter Landquist VP Sales, Marketing Stefan Hammar Production Manager Torleif Nilsson Engineering Manager Finance & IT Customer Support Procurement Design Engineering Assembly System Engineering Maintenance & Overhaul Development Test competitive prices even for short production runs. Manufacturing and assembly are contracted to carefully selected suppliers, including our subsidiary Bribo Mekaniska AB, enabling CTT to increase turnover rapidly without investing heavily in machinery or personnel. Installation For sales of systems for retrofitting to aircraft already in service, installation is undertaken by airline personnel in accordance with CTT s drawings and instructions. To facilitate the installation process, CTT instructors (supervisors) participate in the first installation of systems. Installation of a Zonal Drying System requires man-hours, whereas installation of a complete Cair system requires some man-hours. The formal responsibility for the installation rests with the airlines. By way of agreements with Airbus and Boeing, installation is undertaken during production of new aircraft at the manufacturer s premises. If installation takes place as part of initial construction, manufacturers assume responsibility for the installation. Organisation and personnel The parent company CTT Systems AB is headquarted in Nyköping, Sweden. Bribo Mekaniska AB in Nybro became a wholly owned subsidiary within the Group on 1 November 2007, as did Catron Elektronik AB in Gustavsberg on 1 December CTT has recruited strategically important key individuals with core competencies within the areas of engineering, mechanics, air systems, avionics and airworthiness administration, as well as financial matters and administration of listed companies. Several employees have long experience within the Swedish and international aviation industries. Production personnel plan and administer manufacturing, which is for the most part subcontracted. There are a total of 73 employees, 14 of whom are women. There is an even distribution in the age of employees from 20 to 60. Absence through illness is low within the Group. 27

28 Manufacturing situation according to Stefan Hammar More muscles relieve growing pains Growing pains is an expression used by Stefan Hammar to describe the situation in the manufacturing department. The cure spells recruitment, overtime and lean manufacturing, as in continuous improvement. The reinforcement with seven new members of staff enabled the department to increase turnover by 50 to 60 percent during 2012 with relative ease. - We were incredibly pushed at the end of last year. I d never previously seen so much that had to be achieved in such a short space of time at CTT, says Stefan Hammar. Thanks to seven new staff being recruited, and by extraordinary efforts from the 23-strong crew, the objectives were eventually achieved. However, for long periods, the overtime requirement was 20 hours per month. - We have been lucky to get staff who can learn fast. Some are newly trained aerospace engineers and these have the right approach right from the beginning. The fact that one of the production planners has been promoted to team leader has given welcome relief. A doubling of the manufacturing area has also helped make things a lot easier. - A new strategic buyer has been tasked with improving the purchasing department. While getting the right price is important, the top priority is that deliveries work well and that the parts turn up in time. These days, all the companies in the Group use the Nova quality management and production planning system. Subsidiary Bribo, which supplies sheet metal parts to CTT, has been using it since Catron, supplying control units, joined in Stefan Hammar, Production Manager, CTT Systems - This gives more of a common ground and improves the possibilities to control our routines, says Stefan Hammar and looks to the future: - I think that 2013 will be another year of expansion. Perhaps not on the same level as we are experiencing now, though you can never be certain as it depends on how things turn out for our large customers, Boeing and Airbus. In any case, recruitment looks set to continue during The manufacturing facility is large enough, although some rearrangement may be necessary to accommodate high voltage testing. - Apart from that, most of my work is aimed at becoming more efficient, all the time. We investigate whether we can reduce a few minutes from various operations. It gives a lot of leverage if you can cut five or ten minutes from an operation that you carry out perhaps 300 times each year. Small actions, that you may not initially think of, plays an important role for the final result, concludes Stefan Hammar as he lifts the phone to make another call. The black boxes manufactured here are Zonal Dryers, i.e. dehumidifiers, for Boeing Aerospace sealing compound is used when riveting. Here, a humidification unit for the Dreamliner, Boeing 787, gets hermetically sealed. Sometimes space is so restricted that workers have to put their heads through the opening to reach the seam. Sealing in progress. CTT has built a specially ventilated room to enable staff to work without face masks 28

29 History How one customer group leads to another CTT traces its origins to the concept Dehumidifiers for aircraft presented in 1988 by the company s founders, Christer Nordström, Thomas White and Tomas Axelsson. In military aviation, aircraft had for a long time been dehumidified using ground-based equipment but this was not a viable solution for passenger aircraft with long flying hours. Having spent a number of years designing prototypes and presenting the idea to the Swedish Civil Aviation Administration as well as various airlines, CTT Systems AB was established in May 1991 to patent and commercialise the concept. The first global certification was received in 1997, relating to a system for Boeing 767. Later the same year, the company s stock was listed on the SBI list that existed at the time. In 1999, the company was listed on the O-list at the Stockholm Stock Exchange, today s Small Cap at Nasdaq OMX Stockholm AB. Until 2004, sales were aimed at airlines and aircraft in operation. Through the signing of a number of agreements, the company has achieved its strategic goal of becoming an OEM manufacturer with aircraft manufacturers as its customers. The most significant agreements are: With Boeing: Zonal Drying System as an option for Boeing 737NG Zonal Drying System as standard for Boeing 787 Humidification of crew rest areas and flight deck as an option for Boeing 787 With Airbus: Humidification as option for crew rest areas for Airbus A380 Zonal Drying System as an option for Airbus A350 Humidification of crew rest areas and flight deck as an option for Airbus A350 Cair humidification of the cabin air as an option for Airbus A350 During the autumn of 1999, development started on a humidification system, which aimed to offer improved cabin comfort for passengers and crew. To avoid problems with condensation when humidifying the cabin air, the humidification system is combined with CTT s dehumidification system Zonal Drying System. This integrated concept is marketed as a protected trade mark with the brand Cair. Retrofit = airlines Initially, CTT aimed its sales effort almost exclusively at operators (normally airlines) that wished to fit dehumidifiers (Zonal Dryers) in existing aircraft to combat the problem of condensation. This retrofit market encompasses all imaginable aircraft types. Each installation is bespoke. Before CTT s system can be designed, the individual aircraft has to be inspected, free areas have to be found and space allocated for dehumidifiers and cabling. VIP segment = private jets Over time it became clear that dry cabin air causes almost as many problems as condensation. CTT s answer was to develop a humidification system, Cair, primarily aimed at owners of private jets. To achieve greater impact in the market, CTT also approached a number of completions centres around the world, i.e. workshops that modify and equip aircraft. OEM market = major aircraft manufacturers The success in the VIP market proved to the major aircraft manufacturers that CTT s systems were effective for dehumidification and humidification of large passenger aircraft. Airbus and Boeing were both in the process of designing new aircraft types that aimed to satisfy high demands for fuel economy and passenger comfort. Both companies saw the advantages and CTT was trusted with the development of systems designed for the new aircraft types Boeing 787 and Airbus A350 and A380. This is where we are now, with two product segments accepted by the most important players in the market and which, each in its way, help further the long term goals of the aviation industry: Zonal Drying by reducing fuel consumption, emissions and maintenance; Cair by benefiting the passengers wellbeing and making longdistance flying more pleasurable. 29

30 Bribo MD Tony Rosendahl Another record year for Bribo Not even a move of the whole company was able to halt the progress. Bribo has increased its turnover for the third year running. Most is due to spare parts for Boeing, but during the year, the Group s sheet metal working company has also managed to find a new, potentially large customer. - We increased our turnover for the third year running, but this time at a somewhat slower pace. This suited us well as we were very busy completing our new building during the spring, and on top of that we had a challenging move to manage, says MD Tony Rosendahl. The move took place at the beginning of July. Within a month, manufacturing was up and running again. - You need to be on your toes to successfully manage a move like this, but all went 100% according to plan. I m very pleased with the way the move went, says Tony Rosedahl and praises his staff for their responsible actions, careful planning and effective follow-up. Due to the increased capacity, CTT has been able to move its pad assembly from Nykoping to Nybro during the year. The pad, part of the humidifier, is a consumable designed for yearly replacement. - That was another painless move. As early as December, we were able to deliver a first batch, says Tony Rosendahl. But more manufacturing requires more staff. Three more staff were recruited in 2012 and the next step is professional development. Tony Rosendahl, MD, Bribo - During 2013 we will hold a number of training sessions, partly to raise ourselves above the competition but also to equip ourselves for future growth. In other respects, daily work continues as normal. The work with integration of the enterprise planning system continues. More standardised routines are introduced. Early in the new year, a new deburring machine was being installed. Another challenge for Tony Rosendahl is to redraw his big picture. In August, it will be five years since he started as MD. The first thing he did as MD was to draw up a plan and decide where he wanted the company to be in five years time. Now, this day has come. - So, we now need to take a new grip over the entire operation, stake out a new five-year scenario and based on this, make a plan for how we aim to move on. Bribo specialises in precision manufactured sheet metal parts. These are generally complex products requiring several operations. CTT s humidifier is a typical example, but the company also has many customers outside the Group, for instance in the furniture industry 30

31 Catron catron s MD vd Jörgen jörgen Bruhn bruhn Busy times for Catron Catron succeeded with a mission that to some might have seemed impossible to develop and deliver an audio system for an aviation application in a little more than a year. At the same time, the company received the permits required to work with products subject to export restrictions. Now the company is investing in new staff and equipment, preparing for future challenges. Jörgen Bruhn, MD, Catron Catron has 40 years experience of designing and manufacturing audio and intercom systems for aerospace and aviation. In the summer of 2011, the company recievied its largest order ever, regarding audio systems for aerospace company Saab. Deliveries started in 2012 following a fast-track development programme - Intense! Is the one word MD Jörgen Bruhn uses to describe the year just passed. If we rewind the tape, we can see why. During the summer of 2011, the company received its largest order ever, regarding audio systems for aerospace company Saab. The equipment, intended for the aircraft type Saab 2000, was required in record time. At the same time, an intensive programme for operations management and quality control was taking place. There are rigorous requirements to get permission to work with this type of equipment. - In June, we received approval from the National Inspectorate of Strategic Products, which shows we have the necessary systems in place to enable us to control the export of our products, says Jörgen Bruhn. Being able to develop as well as deliver a system like this within a year is a staggering achievement. The greatest challenge was to convert the customer s requirements into a testing environment and a test rig, then to an actually working installation in an aircraft. - Our way of working closely with the customer in all phases of the project has enabled us to quickly solve any problems that have arisen. We have had staff on site with the customer who have taken part in testing and fault finding. This has been vitally important to keeping the agreed delivery schedule. Still, it is too soon to relax. Firstly, Catron still has to manufacture and deliver the remaining systems to Saab. And secondly, as for all companies, when you are at your busiest getting products out the door, you also have to ensure future orders are coming in. - So we are now increasing our effort to find new opportunities with existing and new customers through active sales work, both in Sweden and internationally. We are also investing in further testing facilities in-house to become self-sufficient in this area. Once projects get moving, customers normally want quick results. - For this reason we are reinforcing our R&D function, to be ready to process and respond to complicated enquires quickly, concludes Jörgen Bruhn. 31

32 The CTT share Share capital Share capital in CTT amounts to SEK distributed among shares with a quota value of SEK 1 each. All shares give the same entitlement to the company s assets and income. Each share entitles the holder to one vote. At the AGM, each person entitled to vote may vote for the full number of shares he owns and/or represents without limitation of voting rights CTT Systems AB (publ.) No. of shares traded in thousands Share OMX Stockholm_PI Growth in share capital Since the company was formed in 1991, the share capital has developed as illustrated on the next page Share price development and turnover since listing in Ownership structure The tables on the next page illustrate the ownership structure of CTT based on information from Euroclear AB as at 31 December The number of shareholders has decreased since from to CTT Systems AB (publ.) 2012 No. of shares traded in thousands Share OMX Stockholm_Pl Share listings 35 Shares in CTT were first listed on the SBI list in 1997, but were transferred in 1999 to the O-list of the Stockholm Stock Exchange, now the Small Cap listing of Nasdaq OMX Stockholm AB. Listing means, among other things, that CTT follows rules regarding stock market information. The company thus publishes financial reports and other stock market information, and follows other rules and practices that apply to a listed company Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec Share price development and turnover per month Share price development The highest closing price for the share during the last financial year of SEK was noted on November the 2nd, 15th and 19th. while the lowest closing price of SEK was noted on january 2nd The final closing price on December 28th 2012 was SEK (29.20). Information policy The Board of CTT has established an information policy that takes into account the rules set out by the Stock Exchange in the listing agreement. Apart from the Chairman and President, the CFO is also authorised to make statements on the company s reports and officially communicated business. The company distributes all its reports, including the year-end report and press bulletins, via Cision AB. The company s website, is updated simultaneously with the same information, and also contains the information policy, as well as the annual report and interim reports for download. Dividend policy To date, CTT has not distributed any dividends. The standpoint of the Board is that the dividend should, in the long-term, be well balanced between the company s need for capital in order to grow (with regard to its financial goals) and the desire for a good direct return on 32

33 Classification of SHAREHOLDERS Swedish individuals 34,2% Swedish organisations 55,9% Overseas individuals 0,1% Overseas organisations 9,8% No. of shares/ No. of No. of No. of shares shareholders owners shares as a% ,4% ,0% ,3% ,5% ,8% Total ,0% THE LARGEST Shareholders No. of Capital and AS AT shares shares as a % VOLITO AB ,5 TRULSCOM FÖRVALTNING AB ,4 CATRON DESIGN AB ,8 IF SKADEFORSAKRING AB ,5 LAND & BERG AB ,7 LOVIMA AB ,6 NYA JORAME HOLDING AB ,6 SEB PRIVATE BANK S.A., NQI ,4 AMF AKTIEFOND SMÅBOLAG ,3 LÄNSFÖRSÄKRINGAR SMÅBOLAGSFOND ,3 Total ,0 Other shareholders ,0 Total no. of shares ,0 Total no. of shareholders Share cap. Transaction Change Total no. Increase in Total Nominal Development of shares of shares share capital share capital amount in no. SEK SEK SEK 1991/92 New issue /95 New issue /96 New issue /97 New issue /98 New issue /98 Split 100: /98 New issue /99 New issue /01 New issue /04 New issue /05 New issue /06 New issue /07 New issue New issue New issue New issue investment. At the present time, it is not considered meaningful to quantify the size of dividends in relation to future profits. In view of the Board s future expansion plans for CTT, it is considered that the dividend policy will continue to be restrictive in the coming years. According to the Articles of Association, no dividend may be distributed before the conditional shareholders contribution of SEK 4.9 million has been repaid to Volito AB. A proposal regarding repayment of shareholders contributions will be presented to the Annual General Meeting on May 16, Shareholders agreement To the Board s knowledge, no shareholders agreement exists between shareholders in CTT. 33

34 Five-year summary The Group (MSEK) ) ) ) 2008 Income statement Income 159,3 103,7 71,8 62,5 43,2 Expenses -138,1-100,5-77,2-64,0-60,2 Depreciation -7,8-8,0-13,0-10,2-9,2 Profit/loss after depreciation 13,4-4,8-18,4-11,6-26,2 Financial income 1,5 1,5 4,1 5,7 0,7 Financial expenses -1,9-1,7-0,9-1,0-6,2 Earnings before tax 13,0-5,0-15,2-6,9-31,7 Tax -10,3 28,1 12,6 7,9 0,8 Profit/loss for the year 2,7 23,1-2,7 1,0-30, BALANCESHEET Assets Intangible fixed assets 22,7 21,7 25,5 33,8 23,5 Tangible fixed assets 30,1 15,0 9,9 12,0 15,5 Financial fixed assets 34,5 43,8 15,8 3,4 0,0 Other current assets 84,5 83,6 53,7 43,4 47,9 Cash and bank balances 1,6 6,4 0,9 12,8 3,7 Total assets 173,4 170,6 105,7 105,4 90,6 Shareholders equity and liabilities Shareholders equity 66,2 63,4 40,2 42,9 29,4 Provision for warranty commitments 2,9 2,1 2,1 2,0 1,2 Long-term liabilities, interest-bearing 26,5 34,9 19,4 20,0 23,7 Long-term liabilities 3,2 4,3 4,3 4,3 0,0 Short-term liabilities, interest-bearing 25,3 16,5 17,7 17,2 18,5 Short-term liabilities 49,4 49,3 22,0 19,0 17,8 Total shareholders equity and liabilities 173,4 170,6 105,7 105,4 90,6 Key ratios Share of risk capital % Return on shareholders equity % Return on total assets % Return on capital employed % Liquidity ratio % Interest coverage ratio Operating margin % Debt ratio 0,8 0,8 0,9 0,9 1,4 Equity/assets ratio % Profit margin % Personnel No. of personnel, average Income per employee 2,2 1,7 1,8 1,2 0,9 Salaries 30,9 25,0 21,8 18,6 18,8 Share data Earnings per share, SEK 0,24 2,04-0,22 0,09-2,85 Earnings per share, after dilution, SEK 0,24 2,04-0,22 0,09-2,85 Equity per share, SEK 5,81 5,58 3,53 3,77 2,71 Equity per share 5,81 5,58 3,53 3,77 2,71 Cash flow from current operations per share, SEK 1,75-0,28-1,12 0,62-0,56 No. of shares Number of shares after dilution Average number of shares Share price on balance sheet date, SEK 39,90 29,20 25,70 24,60 15,50 Dividend per share, SEK Dividend per share, after dilution, SEK ) Adjusted for revised additional payment for Catron Elektronik AB

35 35

36 Senior executives Torbjörn Johansson CEO, born Master of Science in mechanical engineering, Linköping Institute of Technology. Engineer s apprenticeship at SAAB aircraft division Design engineer on JAS39 Gripen, SAAB Design engineer/manager, EPI GmbH (now Telair), Germany Engineering Director, Elektrometall GmbH, Germany Technical Director, CTT Systems AB CEO of CTT Systems AB since Holds shares in CTT. Maria Wester Quality Manager and Personnel Manager, born Professional engineer, electrical and telecoms engineering. Diploma in business administration at Örebro University. Studies in quality engineering at Mälardalen University, Västerås. Postgraduate Programme Personnel Administration. Project management/sales, Trade Motion Technical/financial assistant, Burndy AB/FCI Quality and Personnel Manager, Framatome Connectors Sweden AB Quality Manager, CTT Systems AB since Holds shares in CTT. Stefan Hammar Production Manager, born Mechanical engineer. Konstruktion Studsvik Energiteknik AB Group Manager design, manufacturing, electricity and electronics at Studsvik Nuclear AB Design Manager at Studsvik Nuclear AB Design and Laboratory Manager at Studsvik Nuclear AB Production, maintenance- and purchasing Manager at CTT Systems AB since Holds 0 shares in CTT. Mikael Brate CFO, born Master of Science in Industrial Engineering and Management Economics, Linköping Institute of Technology Graduate engineer Measurement and Control technology at Falun/Borlänge Project and Marketing Controller at CelsiusTech Electronics AB Financial Director at Mälardiagnostik AB Financial Director at Camfil Components Business and Management consultant at Cap Gemini Financial Director at Catech AB (publ.) , Financial Director at CTT Systems AB since Holds shares in CTT. 36

37 Torleif Nilsson Director of Engineering, born Institute Engineer Mechanical Engineering Stress Engineer on JAS39 Gripen, Saab , Appointed Senior Stress Engineer Aircraft Systems Manager Stress Aircraft Systems in Weapons Integration & Structural Technology Department, Saab Aerosystems Head of Development at CTT Systems AB from Holds shares in CTT. Peter Landquist VP Sales, Marketing and Customer Support, born Graduate industrial technology high school, Production and design AB Nyge Aero Head of Design at CTT Systems AB Technical Director Technical Sales Aftermarket Manager VP Sales, Marketing and Customer Support from Holds shares in CTT. Tony Rosendahl MD Bribo Mekaniska AB, born Professional Engineer, mechanical engineering, Planning, procurement and production manager at Ogo AB Production manager at Mönsterås Metall AB MD Bribo Mekaniska AB since Holds shares in CTT. Jörgen Bruhn MD Catron Elektronik AB, born BA Public Administration, Linköpings Universitet Buyer, Saab Aircraft , Sales Manager, Spares and Logistical Services Saab Aircraft , Business Development Manager, Spares, Saab Aircraft , Manager, Supplier Management, Saab Aircraft , Director, Supplier Management, Saab Aircraft Services MD Catron Elektronik AB from Holds 0 shares in CTT. Supplementary information in accordance with NBK s recommendations There are no further agreements regarding pension age, or future pension, for the CEO or other senior executives. The company subscribes to a pension plan for the individual where the company s commitment is limited to paying the agreed premium during the period of employment. Notice and severance pay Managing directors of CTT and its subsidiaries are entitled to severance pay according to contract if the individual is requested by the company to leave the position. Severance pay, including pay during any notice period, amounts to two years salary for the MD of the parent company and one year s salary for the MDs of the subsidiaries. All other senior staff enjoy severance benefits according to standard contract. The holdings reported are accurate as at Includes the holdings of spouses, minors and private companies. 37

38 board of directors Ordinary Board members Johan Lundsgård Born Chairman of CTT Systems since Economist. CEO of Volito Group AB. Board member of Finnveden Bulten AB (publ.) Member of CTT s board since Holds 0 shares in CTT. Anders Helmner Born 1953, Master of Science, Lund. President of Telair International AB. Member of CTT s board since Holds shares in CTT. Henrik Ossborn Born Candidate of Law, University of Lund. Lawyer, equity partner of law firm Vinge. Member of CTT s board since Holds 0 shares in CTT. Björn Rönnqvist Born Bachelor of Science in Economics, Uppsala University. President of Icecapital Securities AB. Member of CTT s board since Holds shares in CTT. Gert Schyborger Born 1940, Swedish National Defence College, Columbia University Business School MBA. Member of the board of Hawker Pacific Ltd. Digital Vision AB, Rote-konsult AB and several other companies. Member of CTT s board since Holds shares in CTT. Maria Nordberg Born 1963, MSE, mechanical engineering, Lund Institute of Technology. Quality Director Saint-Gobain Sekurit International, France. Member of CTT s board since Holds 0 shares in CTT. 38