Year-End Report 2019

Comments from the CEO

High order intake drives growth
During the fourth quarter, Sensys Gatso reinforced the already strong order book for 2019. The order book increased by 67 percent to SEK 241 (144) million in the fourth quarter, arriving at a record high total year order intake of SEK 562 million (428). Sensys Gatso achieved strong fourth quarter results, net sales increased by 27 percent to SEK 158 (124) million and the EBITDA was positive SEK 27 (17) million. Our strategy remains the same. We continue to focus on increasing our recurring Traffic enforcement as a Service (TRaaS) revenues with innovative solutions and new customers. We advanced further into the promising US market, where we signed 9 contracts during the year, combining our flexible hardware and software platform. We entered the Latin America market with two new orders from Colombia.

Sensys Gatso significantly expanded the business in 2019 and in parallel we developed our agile way of working to ensure increased efficiency. Customers in our markets are increasingly investing in infrastructure and Sensys Gatso is in a good position to handle the growing demand for new solutions and services.

Traffic enforcement on the rise
Several global trends continued to favor Sensys Gatso, not the least the world’s drive for sustainable cities and the UN’s 2030 sustainable development goals. Making the roads safer by changing human behaviour in traffic is our business strategy. Our TRaaS business model supports our customers in the transformation towards sustainable and safe environments. An example of this is the global increased interest in distracted driving enforcement, for which we are participating in customer pilot projects.

We saw healthy demand from our customers in EMEA, retaining our strong market position. In Australia, Sensys Gatso received technical and legal approval of our innovative in-vehicle solution, followed by a strong order intake in the fourth quarter of an impressive SEK 167 million. The USA, our biggest single market, showed solid demand for our full TRaaS-offering. Sensys Gatso is currently present in 11 states with 34 active programs. During the year we have successfully implemented the first state-wide Uninsured Vehicle Enforcement program, a promising business vertical in this market.

Our strong international brand name and US presence helped us to win significant orders in two separate departments in Colombia, leading Sensys Gatso to enter the new Latin America market in 2019. After the quarter we received a notice of award from Costa Rica for the country’s Nationwide Intelligent Transportation System for a total value of SEK 192 million. This further reinforces our position in Latin America.

Transforming to a service provider
A few years ago we decided to focus on becoming a full solution provider to our customers. This has been particularly successful in the US market, where we fully maintain and control the enforcement infrastructure, including the back-office, and where we get paid per citation. Our TRaaS revenues now accounts for more than 44 (38) percent of our revenues. This strengthens the bond with our customers and gives our research and development engineers invaluable information. With this we continue to create the best solutions and programs in the market. As a result, Sensys Gatso is changing more and more from an equipment provider with one-off revenue to a service provider with recurring revenue. This is what we call the Traffic Enforcement as a Service (TRaaS) transformation.

Long-term financial goals set the ambition
Sensys Gatso is focused on our home markets Sweden and Netherlands, on growth markets like the US, MEA and Latin America and on growth segments such as uninsured vehicles and distracted driving. Across all our markets and enforcement segments, the number one priority is to grow our recurring TRaaS-business, with the ambition to achieve long-term profitable growth. Management and the board have developed a 2025 strategy, which is built around growing this TRaaS business and around the focus markets and segments.

Diverse global market conditions and customer needs are changing faster than ever. Sensys Gatso’s investments in technology have resulted in scalable software solutions combined with flexible hardware. The great strength of our FLUX hardware platform is that it seamlessly integrates with our existing software solutions PULS and Xilium. This means that we can offer complete, flexible and scalable solutions for traffic enforcement. This allows us to scale up much faster, targeting new customers and new verticals like uninsured vehicles and parking enforcement. It also allows for faster geographical expansion into new markets like Latin America. In our existing markets we focus on expanding our service and maintenance business.

To provide direction internally and share our ambition with our investors, Sensys Gatso has set new long-term financial goals for 2025, based on a thorough review of our strategy and our long-term business plan. We are on a long-term plan to grow our net sales from SEK 400 million in 2019 to more than SEK 1 billion, of which TRaaS revenues is more than SEK 600 million, in 2025. Our ambition is to increase the profitability from 7 percent EBITDA margin in 2019 to more than 15 percent in 2025.

Doing the right thing
Our mission and focus remain the same. Sensys Gatso plays a leading role in changing traffic behavior and saving lives. Thanks to the combination of our scalable software solutions and flexible hardware, our strong global brand heritage and our competent global team, we feel we have a unique opportunity to increase our recurring revenues through our TRaaS offering on highways, rural roads and in cities.

Ivo Mönnink
CEO, Sensys Gatso Group

Financial information
Invitation to a presentation for press and analysts
On 20 February at 9 am CET Sensys Gatso Group invites to a presentation/audiocast. The company’s CEO Ivo Mönnink and CFO Simon Mulder will present the financial results in English.

The presentation/audiocast can be joined online or via telephone and will be available on the company’s webpage https://www.sensysgatso.com

Link to the presentation/audiocast:
https://tv.streamfabriken.com/sensys-gatso-group-q4-2019

Call-in details:
Sweden +46 8 505 583 54
UK: +44 333 300 92 66
US: +1 8 335 268 347

The presentation in connection with this report will be published on the website.

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 20 February 2020.

For further information please contact:
Ivo Mönnink, CEO
e-mail: i.monnink@sensysgatso.com
e-mail IR: investors@sensysgatso.com
Telephone: +46 36 34 29 80

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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