Year-End Report 2018

Comments from the CEO

A year of focus
The key word for 2018 has been “Focus”. By concentrating our efforts on sales activities in selected markets we managed to achieve a record order intake for the company. At the same time, we kept good control on our cost base by introducing P&L responsible entities.

Overall, our focus in 2018 on sales activities and operational efficiencies has resulted in a structural improvement of our profitability. For the full year 2018 the EBITDA grew by SEK 53.3 million to SEK 37.6 million (-15.9). The EBITDA in the fourth quarter grew by SEK 11.3 million to SEK 16.7 million (5.4).

Investing for growth
For Managed Services the focus during the year was on operational excellence of existing contracts, recommencing Iowa programs and starting up the Uninsured Vehicle Enforcement Diversion (UVED) Managed Services program in Oklahoma. Due to the start-up costs related to these programs we have seen a slight increase in cost in this segment. These costs relate to additional, but highly flexible processing staff and adapting our software programs PULS and Xilium. The new Managed Services programs will contribute to their full EBITDA potential as of 2019.

Introduction of FLUX
We operate in diverse global market conditions, with customer needs differing from market to market. In our industry we see mega-trends like sustainable cities, big data and Artificial Intelligence affecting our customer’s needs. To meet these needs, we launched our new hardware platform FLUX in December in Dubai. FLUX is being developed to replace our S and T series products over time, creating a single Sensys Gatso Group platform. FLUX seamlessly integrates with our software programs PULS and Xilium to provide a flexible and scalable one-stop traffic enforcement solution.

Available cash and solid financial position
Our available cash at the end of the quarter was SEK 153.2 million (121.3). During the quarter, we have seen a strong operating performance with efficient capital management. This resulted in a positive operating cash flow of SEK 39.0 million (-7.3) for the quarter and SEK 49.3 million (-39.3) for the full year 2018. The equity/assets ratio amounted to 72 percent (67) thanks to the profits in the third and fourth quarter of 2018 and conversion of a part of the vendor loan in to equity. Net interest-bearing debt at the end of the year amounted negative 17.7 million, due to lower debt and a higher cash position compared to last year. The higher cash position at the end of the year was partially a result of prepayments of customers.

Outlook
The focus on sales activities resulted in strong order intake throughout the year. The high order intake of 2018 is expected to drive our top-line in 2019. As we increase our sales, we foresee an increase in our customer-facing employee costs. It remains our ambition to retain our gross margin levels.

Keeping up with ever changing customer needs requires continuous innovation. We launched our new hardware platform FLUX in December 2018. Together with our software solutions PULS and Xilium. FLUX now completes our complete offering of flexible and scalable traffic enforcement solutions. We will continue to develop FLUX in 2019, whilst initiating first sales activities based on the new platform. The major part of our System Sales in 2019 will be based on the T-Series platform.

Key components of the T-Series hardware are sourced from our strategic supplier Prodrive. Beginning of December, a fire struck at this supplier. The effect on our deliveries in 2018 has been minimal. Together with Prodrive we are working to manage deliveries to our customers going forward to a satisfactory level. We expect production to fully restart in April 2019. We also do not expect that the full year 2019 sales will be negatively affected.

With our strong global team, we will continue to focus on our strategy to grow our managed services activities and to deliver innovative software and hardware solutions across the world. With an improving top-line and tight cost control we aim for a gradual improvement of our profitability.

Ivo Mönnink
CEO, Sensys Gatso Group

On 21 February at 09:30 CEO Ivo Mönnink and CFO Simon Mulder will present the Year-End Report of 2018 and answer questions in an audiocast. The presentation can be followed online via the link on Sensys’ website: www.sensysgatso.com or by https://digital.vevent.com/rt/fronto2~sensys-q4-2018

In order to participate in the audiocast you will need to register yourself. This registration is done by an e-mail address, when accessing the link above.

It is also possible to listen to the presentation and ask questions by phone; you can register via the two following options:

Pre-registration via web link
To take part in the telephone conference, we would ask you to pre-register in good time ahead of the event via the following web link:
http://emea.directeventreg.com/registration/7974646
Open the link and follow the instructions. When registration has been completed, a confirmation email will be sent to the email address specified during registration. This email will contain phones number and a code (Direct Event Passcode). Select the appropriate number to call.
To take part in the conference, when prompted, enter the code followed by “#”.

Directly by phone:
As an alternative to online registration to take part in the event via the telephone conference function, the following phone numbers may be called:
Sweden: +46 (0)8 566 194 25
USA: +1 9 175 039 901
UK: +44 (0) 844 571 89 31

You will be prompted to enter an event code; ignore this, and wait instead (1–2 min) until the operator speaks, and then state your: Conference ID: 7974646 or “Sensys” to register.

Please call ten minutes before the time specified.

This information is information that Sensys Gatso Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08.30 on 21 February 2019.

For further information please contact:
Ivo Mönnink, CEO
e-mail: i.monnink@sensysgatso.com

Sensys Gatso Group AB is a global leader in traffic management solutions for nations, cities and fleet owners. Sensys Gatso Group has subsidiaries in Australia, Germany, the Netherlands, Sweden and the USA, and a branch office in the United Arab Emirates. The Sensys Gatso Group’s shares are listed on Nasdaq Stockholm and has 195 employees.

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