Sensys Traffic AB (publ) Year-End Report 2014

CEO commentary: Year ends on extremely strong note

The fourth quarter was a robust one in terms of both sales and profit. In sales terms it was Sensys Traffic’s best quarter since 2008. The company is therefore stronger and better positioned than it has ever been. The quarter showed high net sales, a solid operating profit, a strong cash flow and a healthy order intake. Sales, which amounted to SEK 58.7m, continued to increase in the fourth quarter compared with the year-earlier period and also rose compared with the strong level of sales in the third quarter of 2014. Growth was fuelled by continued deliveries to the Swedish Transport Administration, as well as new orders to customers in the Middle East. Operating income for the quarter amounted to SEK 20.5m, compared with SEK 3.7m in the same period last year, which corresponded to an operating margin of 34.8 percent. The gross margin strengthened to 59.5 percent, which is a significant improvement on 46.3 percent for the same period in 2013. The gross margin also saw a sequential improvement compared with Q3 2014, when it amounted to 48.5 percent.

Deliveries to the Swedish Transport Administration continued in the fourth quarter with replacements and new installations in the Swedish road network. During the quarter, Sensys won an order worth SEK 93m for continued replacements and new installations in 2015. After the end of the quarter an order worth SEK 2m was received for additional installation material for the new installations. In this contract, Sensys has shown strong project implementation expertise and is an end-to-end supplier to the Swedish Transport Administration of measurement systems, measurement cabinets and servicing of the Swedish ATC system. Sensys has supplied cabinets, systems and servicing for a total value of SEK 136m since the two contracts with the Swedish Transport Administration were signed in July 2013.

At the end of the fourth quarter, an order worth SEK 17.0m was received from Sensys’ second largest market, the Middle East, where the company now has customers in 8 of the region’s 14 countries.

After the end of the quarter, an additional order from the Middle East was received, at a value of SEK 5m. The market in the Middle East has a combined population of approximately 350 million. These countries have high road fatality rates and to improve the situation, major investments to develop infrastructure and safety are currently underway, primarily in the rapidly growing cities. The investments mean the market for traffic safety systems is experiencing healthy growth, making it strategically significant for Sensys. In light of this development, Sensys has decided to establish a local presence in the Middle East during 2015, in order to better meet demand from both existing and new customers. The main aim of having a local presence is to take advantage of the healthy market growth that the region has to offer. The local companies will enable us to market our products more effectively to both existing and new customers, thus increasing opportunities for add-on and new sales.

Our objective is to continue to outpace the market in terms of growth. Competitive products, an established delivery and service organisation, effective customer relationships, strong reference projects and in particular, a stable financial position, all combine to give Sensys excellent opportunities for continued organic growth. The regional markets are fragmented, with high entry barriers, which is why we are also continuing to examine opportunities to grow via acquisitions.

Johan Frilund

CEO, Sensys Traffic AB

Invitation to presentation for press and analysts

On 29 January at 9.30 a.m., CEO Johan Frilund will present the report and respond to questions in an audiocast. The presentation can be followed online via the link on Sensys’ website: www.sensys.se. You can also listen to the presentation and ask questions over the telephone, using the following numbers:
Sweden: +46 (0)8 505 20 110
US: +1 334 323 6201
UK: +44 (0) 207 1620 077

Password: Sensys. Please call 10 minutes prior to the specified time.

This information is such that Sensys Traffic AB (publ) is required to publish in accordance with the Securities Market Act and/or the Swedish Financial instruments Act. This information was submitted for publication at 8.30 a.m. on 29 January, 2015.

For more information:
Johan Frilund, CEO
Cell phone: +46 (0)73-274 28 23
E-mail: johan.frilund@sensys.se

Sensys Traffic is a leading supplier of system solutions for traffic safety within the ATC area (automatic traffic safety control). Sensys develops, markets and sells systems that are mainly used to monitor and register speed limit violations and for red-light enforcement. In addition to sales of systems, Sensys Traffic also provides service and maintenance. Sensys Traffic’s end customers are primarily police and road authorities all round the world, but also include private operators. Sales are conducted either directly or via partners, agents and distributors. Sensys Traffic is headquartered in Jönköping, Sweden, is listed on NASDAQ OMX Stockholm, has 41 employees and turnover for 2014 was SEK 160.5 million.