Sensys Traffic Annual Report 2006
2
financial
information 2007
The financial information is available at www.sensystraffic.se and can be ordered by:
E-mail: info@sensystraffic.se Telephone:+46 (0)36-34 29 80 Fax +46 (0)36-12 56 99
content
administration report 3
Business operations 3
Developments 3
Market 3
outlook for 2007 3
Board of Directors 4
significant events further to the end of the 4
financial year 4
Goals and policies for managing financial risks 4
environmental issues 4
proposed guidelines for remuneration and other employment conditions of the company’s senior
executives 4
financial trends - 6
five-year summary 6
Definitions of key figures and ratios 7
proposed appropriation of profits 7
income statement 8
Balance sheet 9
Balance sheet 10
changes in shareholders’ equity 10
cash flow statement 11
accounting and valuation principles 12
General principles 12
segments 12
income from sales of goods 12
research and development costs,intangible and tangible
fixed assets 12
taxes 12
earnings per share 13
tangible fixed assets (property, plant and equipment) 13 Depreciation, amortisation and write-downs 13
stocks and inventories 13
receivables and liabilities 13
cash and bank 13
provisions 13
employee stock options 13
leasing 14
pensions 14
notes to the accounts 15
note 1 personnel 15
note 2 total sales 16
note 3 intangible assets 17
note 4 property, plant and equipment 18
note 5 taxes 19
note 6 prepaid costs and accrued income 19
note 7 shareholders’ equity 19
note 8 accrued expenses and deferred income 20
note 9 audit fees 20
Board of Directors and auditors 21
Board of Directors 21
ceo 21
auditors 21
list of shareholders 22
addresses 23
sensys traffic aB (publ) 23
Development offices 23
administration report
The Board of Directors and Chief Executive Officer of Sensys Traffic AB (publ), corporate registration number 556215-4459, hereby present the Annual Report and Accounts for the financial year 1 January 2006 to 31 December 2006.
Business operations
Sensys Traffic develops and markets systems and products for the monitoring of traffic within the motor vehicle and railway sectors.
During 2006 700 stationary speed-monitoring systems was delivered as planned. In parallel, Sensys’ organisa- tion has been significantly developed to create prerequi- sites for managing large delivery and sales volumes.
This reorganisation and expansion have been carried out in order to gradually intensify Sensys’ processing of the market. We are now well-equipped to handle large orders with retained flexibility and speed, and conse- quently able to deliver different kinds of test systems to new markets with varying requirements – as well as to manage large orders in the future.
Sensys has also built up a service and after-market de- partment with focus on customer and market respon- sibility – implying that we are now better-equipped to meet the growing need for customer support and serv- ice associated with the increase in volume of products on the market.
Harry Vesanen was appointed new CEO of Sensys Traffic in the third quarter 2006. Anders Norling has since then been active as a consultant for Sensys, and remains a Board member.
Developments
The Company has continued to expand and refine its product portfolio, including the presentation of a com- pletely new mobile speed-monitoring system. This sys- tem is now available in three different models – tripod- assembled, placed in a vehicle, or as a road-works cone.
The latter also contains a feature warning the presence of road workers.
Sensys’ systems have been updated with increased sup- port for remote control, enabling the modification of software at a distance. The system for red-light monitor- ing has been further-developed to handle driver identifi- cation in intensive traffic.
Cooperation with the Swedish Rail Administration con- tinued throughout the year for the development, testing and evaluation of Sensys’ system for detecting damaged pantographs. Four systems have now been delivered.
The Company also plans to perform final tests of several systems spread across the country.
Cooperation with the Schunk Group continues.
Market
The expansion of speed-monitoring network along main roads in Sweden has continued and Sensys received an additional order i February 2007 amounting to 40 msek.
There is also long-term sales potential with Swedish mu- nicipalities for projects such as speed-monitoring outside schools.
Activities in the Middle East intensified during the year.
Developments in Dubai have been positive, and Sensys has received further orders.
Sensys’ cooperation with TELVENT, a globally active Spanish company, was intensive in 2006, and the Saudi Arabian market in particular required considerable investment.
Two small orders were received at the end of 2006 from Bahrain, which is a new market for Sensys.
We are currently working with a number of major projects in Saudi Arabia, Dubai, Lebanon and Iran.
The sale of PEEK Traffic to Quixote Corporation in the United States hampered Sensys’ sales, and Sensys termi- nated the after-sales agreement in the spring of 2006.
A cooperation agreement was established with CMA Consulting Services at the end of 2006.
Sensys continued to strengthen the Company’s position in Asia during the year, and cooperation agreements currently exist with local systems integrators in China, Taiwan and Malaysia.
Three new markets – Bahrain, Taiwan and Australia – were gained in 2006. Sensys also established new agents in Canada, Malaysia and the United States.
Outlook for 2007
Sensys will continue to improve its market presence in 2007 by developing the Company’s distributor network
and own service organisation.
The Company will also start to invest in the development of new products, as well as accessories to the existing product portfolio, in order to enable a more complete offer of traffic-monitoring system products. Develop- ment has started on a system for both speed and red- light monitoring adapted for the European market.
Board of Directors
The Annual General Meeting of Shareholders was held on 26 April 2006 . Peter Svensson, Jan Bengtsson, Jan Johansson, Ivan Rylander and Anders Norling were re- elected to the Board of Directors.
All Board Members are shareholders, and possess long and extensive experience of several different sectors both in Sweden and internationally. The Board contains both technical and commercial skills and competence.
In 2006, the Board held six minuted meetings. The Board monitors business operations partly through their own work and partly through periodical reporting.
Informal contact is also maintained among the Members of the Board.
The Board proceeds as per an established agenda. The Board shall hold four meetings per financial year. Other meetings may be held if required.
The Board shall primarily devote its time to all-embracing and long-term questions and issues that are of signifi- cance for the Company. The Board shall furthermore continuously assess how the Chief Executive Officer fulfils his responsibilities regarding ongoing operations.
The Chairman of the Board represents the Board both externally and internally. The Chairman shall lead the work of the Board, ensure that the Board fulfils its tasks in accordance with prevailing legislation and the Articles of Association, and to see that meetings be held when required.
The CEO is responsible for ongoing administration as per the guidelines and instructions provided by the Board.
In accordance with separate instructions, the CEO shall refer to the Board all questions that are of fundamental significance, or of unusual character or of considerable value.
Fees were paid in 2006 in the amount of SEK 40,000 to each of the external Board Members and SEK 60,000 to the Chairman, making a total of SEK 180,000.
Significant events further to the end of the financial year
No significant events have taken place further to the end of the financial year that could have an effect on this annual report.
Sensys Traffic’s Dutch partner, Peek Traffic, entered into an agreement in November 2005 with BVOM (Bureau Verkeershandhaving Openbaar Ministerie) for the delivery of red-light and speed-monitoring systems. This was announced in a press release on 28 November 2005 – ”Sensys Traffic wins contract in the Netherlands”.
In February 2007, Sensys Traffic realised that uncertainty prevailed regarding the order, which was subsequently announced to the market in a press release on 7 Febru- ary 2007 – ”Uncertainty in Sensys Traffic’s Dutch order”.
Goals and policies for managing financial risks Sensys’ overall goal is as far as possible to avoid taking financial risks that may arise through changes in foreign currency rates, interest levels and market prices, as well as liquidity, financing and credit risks. Currency risks are eliminated through sales being made in SEK, and when expensive components must be purchased in a foreign currency, equivalent compensation from the customer is secured. Interest risks and market risks for financial instruments do not exist as long as the Company does not have any loans or market-listed financial instru- ments. Liquidity and financing risks refer to the risk of not being able to fulfil payment commitments further to insufficient liquidity or difficulties in obtaining external loans. These risks are managed, when required, through actively acquiring capital on the stock market. Credit risks are avoided through effective creditworthiness analyses/monitoring of existing and potential customers, and in certain cases by obtaining payments in advance.
The Company does not currently have any financial instruments for hedging purposes.
Environmental issues
The Company does not have any operations that could have an effect on the external environment.
Proposed guidelines for remuneration and other employment conditions of the Company’s senior executives
The Board of Directors proposes to the Annual General Meeting of Shareholders that the following guidelines be adopted with regard to the remuneration and other employment conditions of the Company’s senior execu- tives. The Board’s proposal corresponds to previous years’ remuneration principles and is based on contracts
and agreements already entered into between the Company
and each respective executive.
The Company’s management team is composed of Harry Ve- sanen (CEO), Göran Löfqvist, Carlos Löfstedt, Per Enochsson and Helena Claesson.
The Company shall offer market-oriented total remuneration that enables senior executives to be recruited and retained.
Remuneration of the Company’s management team shall consist of a fixed salary, a variable salary, retirement pension and sundry benefits. Together, these various components shall comprise each individual’s total remuneration. The fixed salary and variable salary shall together comprise the employ- ee’s salary.
The fixed salary shall take into consideration the individual’s area of responsibility and experience. The variable salary shall be dependent on the individual’s fulfilment of quantitative and qualitative goals. The Chief Executive Officer’s variable salary shall be SEK 824,000. The Chief Executive Officer (Harry Vesanen) did not receive a bonus for the financial year 2006. For other senior executives, the variable salary varies depending on their respective position and agreements. As a rule, the variable component consists of 14 to 120 percent of the fixed salary, and altogether the salary may amount to a maximum of SEK 1,850,000.
As previously, the Chief Executive Officer shall benefit from a supplementary pension scheme with a premium that rep- resents approximately 35 percent of the prevailing annual salary. Other members of the Company’s management team shall have the right to retirement pensions as per the Swedish ITP plan or equivalent. Retirement age is 65 years.
Other remuneration and benefits shall be at market condi- tions and contribute to enabling each respective senior execu- tive to fulfil his/her tasks.
The employment contracts of senior executives include termi- nation conditions. According to these contracts, employment may normally be terminated upon the employee’s request with a period of notice of three to six months, and upon the Company’s request with a period of notice of six to twelve months. The salary shall remain unchanged during the period of notice of termination.
The Board of Directors shall have the right to deviate from the above guidelines should the Board deem in individual cases that particular circumstances prevail to motivate such deviation.
66
five-year summary
financial trends -
INCOME STATEMENT 2006 200 200 200 2002
Sales 181,402 14,812 14,110 15,686 9,072
Operating expenses -104,062 -28,724 -22,754 -26,148 -23,773
Exceptional items 0 0 0 0 3,287
Operating profit/loss 77,0 -,92 -8,6 -0,62 -,
Capital loss upon sale of subsidiary 0 0 0 0 0
Financial items 831 181 -111 -203 -1,799
Loss before tax 78,7 -,7 -8,7 -0,66 -,2
Year-end appropriations 0 0 0 0 0
Tax -21,900 46,624 0 0 0
Profit/loss for the period 6,27 2,89 -8,7 -0,66 -,2
BALANCE SHEET 2006 200 200 200 2002
Fixed assets 30,141 54,379 11,673 15,721 19,545
Current assets 114,191 20,884 28,273 14,592 9,127
Total assets ,2 7,26 9,96 0, 28,672
Shareholders’ equity 127,595 68,804 35,979 23,765 22,256
Non-current liabilities 0 0 0 2,537 2,537
Current liabilities 16,737 6,459 3,967 4,011 3,879
Total equity and liabilities ,2 7,26 9,96 0, 28,672
DATA PER SHARE 2006 200 200 200 2002
Earnings per share 31/12, SEK 0.26 0.15 -0.04 -0.06 - 0.1
Equity per share, SEK 0.59 0.32 0.16 0.14 0.16
Dividend per share, SEK 0 0 0 0 0
Share price 31/12, SEK 5.50 3.05 0.82 0.47 0.48
P/E ratio 21.15 19.8 Neg Neg Neg
Number of shares at end of period
before full conversion 1), (thousand) 215,927 213,927 213,927 170,991 136,210 Number of shares at end of period
after full conversion 1), (thousand) 215,927 215,927 215,927 171,668 177,869 Average number of shares during
the period before full conversion 1),
(thousand) 214,497 213,927 175,149 172,469 182,403
1. In order to facilitate comparison over the years, the number of shares at the end of each period has been adjusted to take into consideration the split and bonus issues.
-0,10 -0,05 0,00 0,05 0,10 0,15 0,20 0,25 0,30
Earnings per share
The figures below for 2002-2005 are based on previously applied accounting principles, i.e. the Swedish Financial Accounting Standards Council’s recommendations 1-29. The accounts have not been restated for the application of RR32. All amounts are expressed in SEK thousands unless otherwise stated.
7
KEY FIGURES & RATIOS 2 006 200 200 200 2002
Adjusted equity 127,595 68,804 35,979 23,765 22,256
Capital employed 127,595 68,804 35,979 26,302 24,794
Interest-bearing liabilities 0 0 0 2,538 2,538
Return on equity, % 57 63 Neg Neg Neg
Return on capital employed, % 79 Neg Neg Neg Neg
Operating margin, % 43 Neg Neg Neg Neg
Net margin, % 31 222 Neg Neg Neg
Rate of asset turnover, multiple 1.85 0.3 0.5 0.6 0.4
Equity/assets ratio, % 88 91 90 78 78
Proportion of risk-bearing capital, % 88 91 90 78 78
Cash flow from current operations 78,131 -11,134 -8,208 -5,490 -14,832
Investments in tangible fixed assets 1,010 137 45 372 45
Investments in development costs 0 0 0 0 0
Average number of employees 28 19 15 14 14
Definitions of key figures and ratios Equity and capital
Adjusted equity: Reported shareholders’ equity + untaxed reserves after deduc- tion for deferred tax at the current rate of tax.
Capital employed: Total assets less non-interest-bearing liabilities including defer- red tax liabilities in untaxed reserves.
Profitability
Return on equity: Net profit as a percentage of average adjusted equity.
Return on capital employed: Profit after net financial items + financial costs as a percentage of average capital employed.
Operating margin: Profit after depreciation as a percentage of the year’s invoicing.
Net margin: Net profit as a percentage of the year’s invoicing.
Sundry
Rate of asset turnover: The year’s invoicing divided by average divided by average capital employed.
Equity/assets ratio: Adjusted equity as a percentage of total assets.
Risk-bearing capital: Adjusted equity + deferred tax liabilities in untaxed reserves as a percentage of total assets.
0 30000 60000 90000 120000 150000 Adjusted equity
-20000 -10000 0 10000 20000 30000 40000 50000 60000 70000 80000
Cash flow from current operations
0 5 10 15 20 25 30
Average number of employees
Proposed appropriation of profits
The following profits are at the disposal of the Annual General Meeting of Shareholders:
Profit brought forward 32,892,551 Share premium upon new issue 2,420,000 Profit for the year 56,270,700
Total 9,8,2
The Board of Directors and the Chief Executive Officer propose that the above profits be carried forward.
The general position of the Company as per 31 December 2006 and 2005 as well as operating results for the financial years 2006 and 2005 are set out in the following income statements, balance sheets, cash flow statements, year-end comments and notes to the accounts. All amounts are expressed in Swed- ish kronor (SEK).
Share price movements 1 January 2006 to 31 December 2006 (Source: OMX website)
Sensys Traffic AB
8 Income Statement
SEK Note 2006 200
Net sales 2 181,402,319 14,811,701
Cost of goods sold 3 -71,913,624 -8,756,399
Gross profit 09,88,69 6,0,02
Sales costs -11,093,734 -6,290,898
Administration costs -4,401,281 -1,904,354
Development costs 3 -16,750,287 -11,888,644
Sundry operating income 96,000 116,498
Operating profit/loss ,,0 77,9,9 -,92,096
Profit/loss from financial investments
Interest income 902,782 187,628
Income expense -71,032 -6,906
Profit/loss after financial items 78,7, -,7,7
Tax 5 -21,900,443 46,623,924
PROFIT FOR THE YEAR 6,270,700 2,892,0
Earnings per share before dilution 0.26 0.15
Earnings per share after dilution 0.26 0.15
Proposed dividend per share 0 0
9 Balance Sheet
SEK Note .2.2006 .2.200
ASSETS
Fixed assets
Intangible fixed assets
Capitalised development expenditure 3 4,274,249 7,339,176
,27,29 7,9,76
Property, plant and equipment
Plant and machinery 771,783 275,733
Equipment 371,669 140,645
,,2 6,78
Financial fixed assets
Deferred tax receivable 5 24,723,481 46,623,924
2,72,8 6,62,92
Total fixed assets 0,,82 ,79,78
Current assets Stocks and inventories
Raw materials and consumables 4,792,847 2,795,999
Finished products and goods for resale 12,628,770 3,664,374
Products in progress 0 3,414,256
7,2,67 9,87,629
Current receivables
Trade debtors 7,271,893 1,394,384
Other receivables 2,175,798 1,092,757
Prepaid expenses and accrued income 6 1,275,014 605,844
0,722,70 ,092,98
Cash and bank 86,07,26 7,9,88
Total current assets ,9,78 20,88,72
TOTAL ASSETS ,2,760 7,262,90
0 Balance Sheet
SEK Note .2.2006 .2.200
EQUITY AND LIABILITIES
Shareholders’ equity
Restricted equity
Share capital 7 10,796,353 10,696,353
Statutory reserve 25,214,947 25,214,947
6,0,00 ,9,00
Non-restricted equity
Share premium reserve 2,420,000 0
Profit brought forward 32,892,550 0
Profit for the year 56,270,700 32,892,550
9,8,20 2,892,0
Total shareholders’ equity 27,9,0 68,80,80
Current liabilities
Trade creditors 2,304,340 3,199,181
Other liabilities 10,260,698 556,434
Accrued expenses
and deferred income 8 4,173,172 2,703,485
6,78,20 6,9,00
TOTAL EQUITY AND LIABILITIES ,2,760 7,262,90
Pledge assets and contingent liabilities
Pledged assets None None
Contingent liabilities None None
Changes in shareholders’ equity
Share capital Statutory reserve Share premium Non-restricted
reserve equity
Equity 01.01.2005 10,696,353 25,282,447 0 0
Costs related to share issues -67,500
Profit for the year 32,892,550
Equity 31.12.2005 10,696,353 25,214,947 0 32,892,550
2006
New share issue 100,000 2,420,000
Profit for the year 56,270,700
Equity 31.12.2006 10,796,353 25,214,947 2,420,000 89,163,250
Cash Flow Statement
SEK .2.2006 .2.200
Operating activities
Operating profit/loss 77,9,9 -,92,096
Adjustment for non-cash items
Depreciation and amortisation 3,347,773 4,054,339
80,687,66 -9,87,77
Interest received 902,783 187,628
Interest paid -71,031 -6,905
Cash flow from operating activities before
changes in working capital 8,8,98 -9,677,0
Cash flow from changes in working capital
Trade debtors -5,877,509 514,428
Stocks and inventories -7,546,988 -4,994,542
Trade creditors -894,841 1,556,776
Other changes in working capital 9,421,738 1,466,650
Cash flow from operating activities 76,62,8 -,,722
Investment activities
Acquisition of property, plant and equipment -1,009,920 -136,966
Cash flow from investment activities -,009,920 -6,966
Financing activities
New share issue 2,520,000 -67,500
Cash flow from financing activities 2,20,000 -67,00
Cash flow for the year 78,,98 -,8,88
Liquid funds at the beginning of the year 7,915,858 19,254,046
Liquid funds at the end of the year 86,047,256 7,915,858
22
accounting and valuation principles
General principles
This Annual Report has been prepared in ac- cordance with the Swedish Annual Accounts Act, and as of 2006 with consideration to the Swedish Financial Accounting Standards Council’s recommendation RR32 – Account- ing for Legal Entities. The application of RR32 has been determined by amendments to the Stockholm Stock Exchange’s listing agree- ment of 1 July 2006. The principal rule of the recommendation is that legal entities shall apply the International Financial Reporting Standards (IFRS), which are applied by groups, as far as such is possible within the framework of the Swedish Annual Accounts Act and with consideration to the relation between ac- counting and taxation. The recommendation sets out which exceptions and supplements shall be made vis-à-vis the IFRS. Comparative figures for 2005 have been adapted to the new accounting principle. This modification has not affected the income statement and balance sheet as such, apart from certain headings and descriptions.
Segments
The Company’s operations consist of the development, production and marketing of radar sensors that are incorporated in traffic informatics systems. According to the IAS 14 definition for operating activities, the Com- pany’s entire operations constitute just one activity. In view of that the Company’s risks and opportunities are essentially linked with products that are developed and manufac- tured, the Company’s only activity is also to be considered as being the Company’s primary segment. Furthermore, and in view of that information regarding the primary segment is the same as the Company’s external and internal reporting, no separate reporting is provided for the primary segment.
For the secondary segment, composed of geographical areas, the Company provides only information about income from external customers. See note below. All assets and investments in intangible and tangible assets
concern all operations, which are all based in Sweden.
Income from sales of goods
Income has been stated at the fair value of the amount received or that will be received.
Income from sales of goods is reported when the significant risks and benefits related to the ownership rights of the goods have been transferred to the purchaser and when the amount of the income can be computed in a reliable manner.
Research and development costs, intangible and tangible fixed assets Costs incurred up to and including 2001 for the development of radar sensors and lane- identification technology have been stated as an asset in the balance sheet. The related projects have been valued as the total of direct costs plus a reasonable amount for in- direct costs. Thereafter, research and develop- ment costs, which can often be considered as additional costs for product adaptation, have not fulfilled all of the criteria required to be taken up as an asset in the balance sheet, and have therefore been reported in the income statement. Development costs reported in the income statement in 2005 also include the amortisation of capitalised development costs.
In view of that the Company’s production and sales were both larger and more regular in 2006, such amortisation is now consequently reported as cost of goods sold.
Taxes
The Company reported negative results for a number of years, and has consequently ac- cumulated a significant amount of unutilised fiscal deficit deductions. The future utilisation of these deficit deductions depends upon tax- able profits. In the annual report and accounts for 2005, the entire deferred tax receivable was re-stated as an asset and tax income.
This is based on an assessment made by the Company’s management and board of direc- tors that the Company has significantly better potential to utilise these deficit deductions in
Sweden 83%
Middle East 13%
Eastern Europe 2%
Rest of the world 2%
Turnover per geographical regions
-0,10 -0,05 0,00 0,05 0,10 0,15 0,20 0,25 0,30
Earnings per share
the future through growth in profitable sales of the Company’s products.
Earnings per share
Earnings per share before dilution are com- puted as the year’s profit divided by a weight- ed average of outstanding shares during the period. Earnings per share after dilution are computed as the year’s profit divided by a weighted average of outstanding shares dur- ing the period as well as a weighted average of the number of shares that there would be if all potential shares giving rise to a dilu- tion effect were to be converted into shares.
Shares that could arise from stock warrants, for which the current value of the subscription price is the same as or higher than the actual value, are not included in the computation.
Tangible fixed assets (property, plant and equipment)
Tangible fixed assets (property, plant and equipment) are reported at acquisition value less accumulated depreciation and any write- downs that may have been made.
Depreciation, amortisation and write- downs
Intangible and tangible fixed assets are amortised/depreciated on a straight-line basis over the length of their useful life as of the moment they are taken into use.
• Capitalised development costs 5 years
• Machines 5 years
• Computer equipment 3.3 years
• Other equipment 5 years
The reported value of the Company’s assets is regularly reviewed to see if any write-down is required should events or a change in prerequisites indicate that the reported value may possibly not be recoverable. Should such indications be present and if the reported value exceeds the estimated recoverable value, the asset will be written-down to the recover- able amount. The recoverable amount shall be the highest of the net sales value and the utilisation value. When assessing the utilisa- tion value, future cash flows discounted to current value using a pre-tax discount factor will be estimated, which will reflect the pre- vailing market assessments of the monetary time-value and the specific risks related to the
asset. Write-downs shall be made whenever the reported value of assets or their cash-gen- erating unit exceeds the recoverable value.
The reversal of write-downs shall be made if grounds for such write-downs no longer exist.
Write-downs and reversals of write-downs shall be reported in the income statement.
Stocks and inventories
Stocks and inventories are valued at the low- est of the acquisition value as per the first-in first-out principle (FIFO) and the net sales value. The acquisition value of own-produced goods includes direct production costs and a reasonable portion of indirect production costs. A requisite deduction for obsolescence has been made further to individual assess- ment.
Receivables and liabilities
Receivables are taken up at the lowest of the nominal value and the amount that is expected to be collected. Liabilities expressed in foreign currencies are restated at the rate of exchange prevailing on the balance sheet date.
Cash and bank
This balance sheet item includes cash and funds deposited with a bank.
Provisions
Provisions are made when the Company has a legal or informal obligation as a consequence of previous events and that it is probable that a payment will be required in order to fulfil the obligation, and that it be possible to reli- ably estimate the amount that will be paid.
The balance sheet contains provisions related to guarantee commitments. Provisions are reviewed at each financial year-end.
Employee stock options
Stock options held by members of staff are standardised stock options and give the holder the right but not an obligation to subscribe to shares in the Company during a certain period of time. The Company’s CEO has a stock option program that implies the possibility to purchase 300,000 shares in Sensys Traffic at a predetermined value of SEK 9 per share.
This stock option agreement will expire on 24 November 2009.
-20000 -10000 0 10000 20000 30000 40000 50000 60000 70000 80000
Cash flow from current operations
20-30 years 42%
30-40 years 45%
40-50 years 4%
50-60 years 5%
60-70 years 4%
Age structure among employees
0 5 10 15 20 25 30
Average number of employees
Leasing
Leasing charges concerning operational leasing contracts are reported as a cost in the income statement and are spread on a straight-line basis over the period of each respective contract. There are no financial leasing contracts.
Pensions
Defined-contribution pension plans exist for all employees, for which the Company pays ongoing established charges to a separate legal entity, such as an insurance company, and consequently does not have any legal or informal obligation to pay further charges.
The Company’s costs for these are reported as a cost in the period when the employees concerned have performed the services related to such cost.
notes to the accounts
All amounts are expressed in SEK thousands Note Personnel
Average number of employees 2006 200
Men 26 18
Women 2 1
Total 28 19
Salaries and other remuneration 2006 200
Board of Directors 180 180
Chief Executive Officer 2,420 857
Other employees 14,231 5,942
16,831 6,979
The Board of Directors received remuneration for SEK 180,000 (180,000), of which the Chairman received SEK 60,000 (60,000).
Pension costs 2006 200
Board of Directors 0 0
Chief Executive Officer 510 378
Other employees 1,400 837
1,910 1,215
Legal and contractual social charges 2006 200
5,863 2,978
Bonus program
An agreement was introduced in 2006 whereby a bonus of 5 percent of the year’s net profit, with a maximum of SEK 3 million, shall be divided among existing staff with the exception of the CEO. Individual bonuses shall be based on the same percentage as each employee’s annual salary vis-à-vis the Company’s total salaries. Full provision has been made in 2006 for the related liability in the total amount of SEK 3,959 thousand. The first bonus payments will be made in April 2009.
A bonus agreement has also been established regarding the CEO (Anders Norling), implying a maximum amount of SEK 1 million for the Company including social costs. Full provision has been made in 2006 for the related liability. The salary and other remuneration for the CEO re- ported above include a bonus of SEK 750 thousand, which will be paid in April 2007.
Agreements regarding severance pay
The Company does not have any signed agreements regarding severance pay or similar benefits to Members of the Board, the CEO or other people in the Company’s management team. The period of notice of termination of the CEO is 12 months.
66 Breakdown by gender of the Company’s management team
Breakdown between men and women 2006 200
in the Company’s Board of Directors:
Women 0% 0%
Men 100% 100%
Breakdown between men and women 2006 200
in the Company’s management team:
Women 20% 20%
Men 80% 80%
Sickness absenteeism 2006 200
Sickness absenteeism - women 0.0% 0.0%
Sickness absenteeism - men 0.9% 0.6%
Sickness absenteeism for employees younger
than 30 years 1.4% 0.4%
Sickness absenteeism for employees between
30-49 years 2.0% 0.9%
Sickness absenteeism for employees older than
49 years 0.0% 0.0%
Sickness absenteeism for each of the above groups is given as a percentage of the group’s total ordinary working hours.
Total sickness absenteeism 0.8% 0.7%
Long-term sickness absenteeism 0.0% 0.0%
Total sickness absenteeism is given as a percentage of the employees’ total ordinary working hours. Long-term sickness absenteeism is the portion of sickness absenteeism for a total period of 60 days or more.
Ordinary working hours have been defined as the working hours stated in collective agreements or other agreements with each employee. Holidays and leave of absence are included in ordinary working hours.
Note 2 Total sales
Net total sales amounted to SEK 181,402 thousand (14,811) with the following market spread:
Sweden SEK 151,326 thousand (1,437) Rest of Europe SEK 4,345 thousand (2,503) United States SEK 0 thousand (3,914) Middle East SEK 21,806 thousand (5,522) Rest of the world SEK 3,925 thousand (1,435)
77 Note Intangible assets
Capitalised development costs
2006 200
Opening/closing accumulated acquisition value 2, 2,
Opening accumulated amortisation -17,860 -14,149
Amortisation for the period -3,065 -3,711
Closing accumulated amortisation -20,92 -7,860
Closing/opening accumulated acquisition value -7,355 -7,355
Carrying amount ,27 7,0
Research and development costs amounted to SEK 16.7 million (11.9) in 2006, of which amor- tisation and depreciation represented SEK 0.1 million (3.9) and personnel costs SEK 12.0 million (4.4).
Remaining capitalised costs concern sensor and Multilane. It is deemed that the carrying amount as per 31 December 2006 does not exceed the recoverable value for capitalised costs.
8 Note Property, plant and equipment
2006 200 2006 200 2006 200 2006 200
Opening accumulated acquisition value 2,231 3,053 1,660 2,656 0 0 0 0
Acquisitions 0 10 335 127 206 0 469 0
Disposals 0 -832 0 -1,123 0 0 0 0
Closing accumulated acquisition value 2,2 2,2 ,99 ,660 206 0 69 0
Opening accumulated depreciation -1,382 -1,936 -250 -1,308 0 0 0 0
Depreciation for the period -102 -278 -104 -65 -69 0 -8 0
Disposals 832 1,123 0 0 0 0
Closing accumulated depreciation -,8 -,82 - -20 -69 0 -8 0
Opening accumulated write-downs -573 -573 -1,270 -1,270 0 0 0 0
Closing accumulated write-downs -7 -7 -,270 -,270 0 0 0 0
Carrying amount 7 276 7 0 7 0 6 0
Breakdown of amortisation/depreciation as per plan
2006 200
Cost of goods sold 3,111 35
Sales costs 78 124
Administration costs 13 18
Development costs 146 3,877
Total amortisation/depreciation as per plan ,8 ,0
Amortisation of intangible fixed assets is reported in 2006 as Cost of Goods Sold, and in 2005 as Development Costs.
Leasing
The Company has entered into the following operational leasing contracts:
Machines, plant and equipment Premises
Minimum leasing charges that fall due within 1 year 488 2,223
Minimum leasing charges that fall due within 1-5 years 796 5,286
Minimum leasing charges that fall due later than 5 years 0 0
Leasing costs for the year 312 1,584
Leasing contracts for machines, plant and equipment concern computers, photocopy machines, motor vehicles and special equipment.
The leasing period is three years after which the lessee has the possibility to acquire the leased item, which will probably occur.
There are no variable charges.
Machines and other
technical plant Equipment Test equipment Vehicles
9 Note Taxes
2006 200
Pre-tax profit/loss for the period 78,171 -13,731
Tax as per prevailing tax rate (28%) -21,887 3,845
Tax effect of non-tax items:
Share issue costs 0 18
Sundry 14 -25
Tax cost/income for the year -21,901 3,838
Effective tax rate 28.02% 27.95 %
Deferred tax receivable due to fiscal deficits at the beginning of the year 46,624 42,786
Deferred tax receivable reported in the balance sheet 24,723 46,624
The Company’s total estimated unutilised fiscal deficit deductions amounted as at 31 December 2006 to SEK 88,297 thousand (166,513). The Company’s assets and liabilities are reported at fiscal values, which is why there are not any fiscal temporary differences. Deferred tax receivable relating to the aforementioned deficit deduction with the prevailing tax rate (28%) amounts to SEK 24,723 thousand (46,624). The entire deferred tax receivable has been taken up as an asset and tax income in the accounts for 2005. This is based on a change in the assessment of the Company’s possibility to utilise deficit deductions in the future through growth in profitable sales of the Company’s products.
Note 6 Prepaid costs and accrued income
2006 200
Prepaid leasing charges 36 15
Prepaid rent 390 363
Other items 849 228
,27 606
Note 7 Shareholders’ equity
Share capital
The share capital of Sensys Traffic AB amounts to SEK 10,696,352 (10,696,352) divided into 213,927,051 (213,927,051) shares. The quote value, previously the nominal value, is SEK 0.05 per share. All shares have an equal right to a portion of the Company’s assets and profits.
Each share gives right to one vote. At shareholders’ meetings, each person entitled to vote may vote for the full number of shares owned and represented by him/her without any restriction in the number of votes.
The share capital and number of shares has developed as follows since 1 January 1995:
Year Transaction Increase in Increase in Total Nominal
number of share capital share capital Number of amount
shares (SEK) (SEK) shares (SEK)
1995 Opening amount 50 000 500 100
1997 Bonus issue 500 50,000 100,000 1,000 100
1998 Split 1000:1 999,000 100,000 1,000,000 0.10
1998 Bonus issue 4,000,000 400,000 500,000 5,000,000 0.10
1998 New share issue 1,025,000 102,500 602,500 6,025,000 0.10
1999 New share issue 4,065,999 406,600 1,009,100 10,090,999 0.10
2000 Bonus issue 1,009,100 2,018,200 10,090,999 0.20
2000 Split 4:1 30,272,997 2,018,200 40,363,996 0.05
2000 Exch. convertibles 5,888,218 294,411 2,312,611 46,252,214 0.05
2000 New share issue 10,068,556 503,428 2,816,039 56,320,770 0.05
2001 Exch. convertibles 101,776 5,089 2,821,128 56,422,546 0.05
2002 New share issue 79,787,095 3,989,355 6,810,483 136,209,641 0.05
2003 New share issue 34,781,829 1,739,091 8,549,574 170,991,470 0.05
2004 Red. warrants 360,000 18,000 8,567,574 171,351,470 0.05
2004 New issue (conv.) 3,171,909 158,595 8,726,169 174,523,379 0.05
2004 New share issues 35,783,672 1,789,184 10,515,353 210,307,051 0.05
2005 Red. warrants 3,620,000 181,000 10,696,353 213,927,051 0.05
2006 Red. warrants 2,000,000 100,000 10,796,353 215,927,051 0.05
20 Note 8 Accrued expenses and deferred income
2006 200
Holiday pay liability 1,942 1,344
Social charges 1,004 686
Reserve for invoices not received 135 135
Other items 1,092 538
,7 2,70
Note 9 Audit fees
Audit fees paid during the year to Ernst & Young amounted to SEK 89 thousand (79).
Remuneration for consultancy services amounted to SEK 73 thousand (72).
The income statement and balance sheet will be presented to the Annual General Meeting of Shareholders for adoption on 26 April 2007.
Jönköping, March 2007
Peter Svensson Chairman of the Board
Jan Johansson Jan Bengtsson Ivan Rylander
Harry Vesanen Chief Executive Officer
My Audit Report was submitted on 2 March 2007
Gunno Rydberg Authorised Public Accountant
