Gatekeeper Share Discussion Threads

[unionhall] 14/2/2006 21:07

affc21,

Also a $1m paid out for acquisition of GS Ltd in September.

But hey - I'm just quibbling.

Tremendously strong balance sheet and exceptional growth.

If they can maintain this rate of progress then this will be seen as the time the tide turned in their favour.

I hold.

[affc21] 14/2/2006 20:56

unionhall,I make it $9.9m (£5.8m) cash.

From Results for the Six Months Ended 30 June 2005:
Cash position, which was strengthened by the funds raised from the placing on
6 December 2004, was $11.4 million

minus $1.5 million for purchase of Cart Caddy 02.11.2005

= $9.9m (£5.8m) .




Please comment if not correct.

[unionhall] 14/2/2006 20:47

Not so much cash after the two acquisitions....

But still a nice nest egg.

[affc21] 14/2/2006 18:27

Arthurly,must first of all apologise for not acknowledging posters on this thread prior to posting,was rather busy finding and analysing the info at the time.

Could not agree more with your comments.
To be honest,when you look at the earnings growth,I am expecting a figure of $4m plus EBIT for this year.Was trying to be conservative when $4m mentioned in prior posting.

High growth company in a niche sector,cash in bank and as you also stated, which is now on a low rating (maybe very low if you take all that cash in the balance sheet into account).

[arthurly] 14/2/2006 17:32

affc21 - I think that $4m pretax for the current year may prove to be a very easy target bearing in mind :

1. European expansion is still in early stages and should see a big leap this year.
2. The two acquisitions last year will be profit enhancing this year. Cart Caddy in particular may be able to be expanded quite a lot as Gatekeeper are specialists in the retail sector wheras the company they bought the retail side from, made all sorts of industrial devices and may not have had the resources to market to the big supermarket groups very well.

Towards the end of this year some new products should be launched - perhaps trying to find new markets outside the retail sector and hopefully these will be profit enhancing in 2007.

So it seems to me that you have a high growth company in a niche sector which is now on a low rating (maybe very low if you take all that cash in the balance sheet into account).

[affc21] 13/2/2006 20:11

From armshare.com

AIM COMPANY REVIEWS

Gatekeeper Systems Inc.
Report updated: 9th February 2006
Gatekeeper Systems, Inc. ('Gatekeeper' or 'the Company'), a provider of trolley containment and trolley-based anti-theft systems to the retail industry was floated in December 2004, when a placing of 16.9 million shares 48p per share, raised £8 million. The company, which now has 44 million Ordinary Shares in issue, was valued at £21.2 million.

Gatekeeper is a technology-based solutions provider that designs, sells, installs and services shopping trolley containment and trolley-based shoplifting prevention systems. The Company's ability to design technological solutions for retailers is exemplified by the patented GS1 self-locking trolley system, which helps retailers combat shopping trolley loss and theft of goods from their stores - it has systems installed in 1100 stores woldwide, including 150 with Tesco in the UK.

Shortly after its appearance the company announced that the December full-year income would be 60% ahead of that for 2003, and 20% ahead of the $9.5 million expected by the market for 2004. Giving the pot a post-flotation stir,in February 2005 the company announced the coming launch of its latest, radio-frequency controlled device. In the event the 2004 figures were very good, but the market had clearly been expecting some such.

In May 2005 the GS2 Wheel was launched, with active RFID communication and wireless system diagnostics for assisting trolley fleet management and providing a better trolley service to end customers. In August there was good news on the sales front, as for the first six months, income was running 40% ahead of the comparable period - but ('consistent with the company's plans') expansion of costs would mean a first-half $850,000 loss (2004: profit of $175,000). The company also announced that it had been appointed to provide trolley security systems to a European retailer with over 5,000 stores worldwide - the incumbent supplier is a major Gatekeeper competitor.

In September, Gatekeeper purchased for $1.25 million ($1 million in cash and the balance in shares) certain assets of GS Ltd relating to the latter's Canadian trolley containment business, which for the year ending December 2004 achieved sales of US $1.1 million and pre-tax profit of US $450,000. This transaction provides the company with direct access to the Canadian market, which it had previously accessed via an exclusive distributor - the latter will continue to work with the company under the new arrangements.

The interim results to June 2005 showed sales of $5.9 million (2004: $4.2 million) and pre-tax loss of $719,000 (2004: $194,000 profit), in line with the August trading update. The company reported that in Q1 a European HQ was opened - the company considers the European market to be of similar size to the North American market; R&D expenditure increased by $600,000 over 2004; and as in previous years, the business is expected to be heavily weighted towards H2.

In November, $1.9 million from the company's existing resources was spent on acquiring a business manufacturing Cart Caddy, a line of power assisted machines used for collecting shopping trolleys - Cart Caddy customers generally see dramatic reductions in total labour hours associated with trolley retrieval, decreased retrieval associated injuries and a lower total trolley requirement. Cart Caddy has recently entered into a two year supply agreement with a global top 5 retailer - Gatekeeper will assume this contract. The acquisition enhances Gatekeeper's total solution and the company also believes that its engineering skills can be applied to Cart Caddy to enable it to meet additional customer needs - it is expected to be earnings enhancing in 2006.

The February 2006 update re the final results to December 2005 reported that they will exceed current market expectations based on anticipated sales of $20.0 million (2004: $11.7 million) and pre-tax profit of $2.5 million (2004: $1.2 million).
Research Standing
We said "As with many of 2004's new issues, Gateway's market cap seems to be taking success for granted - an interesting company to watch pending a general market correction". A combination of improving trading at the sales level and a falling share price is beginning to redress the position.

[affc21] 13/2/2006 17:52

Gatekeeper Systems (GKR)

Here is my take,for what its worth,

Gatekeeper was formed in 1996 in the US and designs, sells, installs and services products aimed at combating shopping trolley loss as well as trolley-based shoplifting. Trolley loss, where shopping trolleys are stolen or removed from retail premises, is becoming an increasing problem, not only for retailers but also for customers and the environment. According to a recent survey, shoplifting costs US retailers over US $10 billion per year in lost revenue, while in Europe, the directors of Gatekeeper believe the figure is around Euro3.2 billion per year.

-------------------------

From Interim Results for the six months ended 30 June 2005 (15 September 2005):

Our expansion has been well received and the Company has made substantial progress towards positive results. The Company was recently appointed as the provider of trolley security systems for a major European retailer with over 5,000 stores worldwide. This is particularly significant since the Company was selected over the incumbent supplier, a major competitor of Gatekeeper.

-------------------------

Cash of at least £5.2m ($8.9m),which almost equates to a third of the Market cap (at 37.5p) at £16.55m ($28.1m).

The company appears set to continue for strong growth,with Turnover increasing at 65% to 70% per year from 2003 onwards (Turnover :2005 $20m : 2004 $11.7m: 2003 $7.1m).
Note 2005 results not released as yet,but results for 2005 now known from the Trading Statement of 09 February 2006 (see below).

Profits are on the increase and again from the very recent Trading Statement of 09 February 2006 (see below),profits EBIT for 2005 at $2.5m will have doubled from the previous year (2004) at $1.2m.

Historic (last year to Dec 31 2005) PE ratio (EBIT) =11

Historic (last year to Dec 31 2005) PE ratio (EBIT) if you take into account £5.2m cash =7.5


Now presuming they make a profit of $4m,(which seems possible on their past earnings growth)for 2006 that would put GKR on a:

PE ratio (EBIT) =7

PE ratio (EBIT) if you take into account £5.2m ($8.9m)cash =4.8


Not seen a Brokers note,but could be one released shortly,what with the very recent positive Trading Statement.

Note:1.7 USD to the £.

Downside: The shares are AIM listed but are not on crest.

--------------------------

Historic info

*Turnover : 2005 $20m : 2004 $11.7m: 2003 $7.1m (growth 65/70% per year)
*Profits : 2005 $2.?m: 2004 $1.0m : 2003 $0.1m loss
*Profits EBIT: 2005 $2.5m: 2004 $1.2m : 2003 $0.1m
*Gatekeeper penetration of Continental European market following opening of Strasbourg HQ


Shares in issue =44.1 million Ordinary Shares.

Market cap at 37.5p =£16.55m

Cash = £5.2m

Historic (last year to Dec 31 2005) PE ratio (EBIT) =11

Historic (last year to Dec 31 2005) PE ratio (EBIT) if you take into account £5.2m cash =7.5


Gatekeeper will announce its preliminary
results for the year ended 31st December 2005 on 10th April 2006.

------------------------------
Trading Statement

Gatekeeper Systems (GKR) I Gatekeeper Systems sees FY results to exceed market expectations (09 February 2006):

LONDON (AFX) - Gatekeeper Systems Inc said it expects results for the year ended Dec 31 2005 to exceed current market expectations.
The company, which makes shopping trolley containment systems and anti-theft devices for retailers, anticipates group revenues to be at least 20 mln usd (£11.75m) compared with 11.7 mln usd (£6.9m) in the same period in 2004 and pretax profit to be at least 2.5 mln usd (£1.5m) compared with 1.2 mln (£0.7m) in the same period in 2004.


Website:



Any comments welcome.

[arthurly] 13/2/2006 17:45

Not many articles about Gatekeeper and what they do : this is two years old - Main rival appears to be Carttronics.


Putting the cart before the loss
By Lorrie Grant, USA TODAY
Tired of watching their investment, and profits, roll away, retailers are trying out electronic systems to prevent customers from taking shopping carts off the premises.

Shopping carts aren't cheap; they cost an average of $100 apiece.


It's no minor problem. The theft of carts is costly - an average $100 each. And increasingly, it is costing retailers money even for carts "borrowed" and recovered: New laws in many cities levy fines on retailers for carts found abandoned by customers who pushed them loaded to bus stops, rail stations or nearby neighborhoods.

For industries with razor-thin margins, such as supermarkets, thousands of dollars in sales are needed to make up for the loss of one cart or to pay fines. So stores in both cities and suburbs are looking to a fledgling technology to cut their losses. Similar cart-disabling technologies by two California-based loss prevention companies, Carttronics in San Diego and Gatekeeper Systems in Irvine, are helping retailers strike back.

"We lose thousands of carts a year by people who take them off the property, and the consumer pays for it with the cost passed on in the food," says Barry Scher at the 198-store Giant Food chain in the mid-Atlantic region. Five Giant stores now use disabling systems and have cut the loss of carts by almost 100%.

The system works using a cart wheel with a locking device that is activated by a low-voltage antenna buried around the perimeter of the store parking lot, much like an electronic dog fence. Signs and yellow markings on the lot warn customers to keep shopping carts on the property. If they try to take a cart past the perimeter, the wheel locks.

The security is not cheap. "It costs about $60 per cart, including caster and transmitter and installation," says Don Chartrand, director of products and services at Carttronics.

It's money well spent, the retailers say.

Apple Tree Supermarket, a family-owned chain of five stores in Southern California and Carttronics' first customer, lost as many as 100 carts a year from its store in Ocean Beach.

Because of its location, the biggest loss was to people who used the carts to collect cans and bottles or haul their belongings.

"It became a hassle and a nightmare," says Saad Hirmez, one of the chain's owners. "We had to go around the neighborhood and wrestle with the homeless to get our carts back so that customers could have clean carts to use."

Among costs beyond the cart itself causing retailers to fight back with the locks:

•Cart retrieval. Retailers have to either use employee time to round up carts from nearby places or pay third-party companies to retrieve them.

"When you can't retrieve the carts, you have to replace them so customers will have one to use," says Jeff Lowrance of Food Lion, which uses lock systems at about 100 of its 1,200 supermarkets "where we were losing more than 100 carts a year." Food Lion, however, has extended the perimeter to bus stops in some locations since beginning to install the devices two years ago.

•City ordinances. Seeing wayward carts as potential public hazards, municipalities are cracking down. In Las Vegas, for example, shopping carts found in public spaces are impounded at a cost of $7.50 for the first three carts and $50 per cart thereafter.

Other cities with similar laws now include: Denver; Minneapolis; San Jose, Calif.; and Kissimmee, Fla.

Such laws have led to greater use of the technologies by retail giants Wal-Mart (48 stores), Kmart (16), Home Depot (200) and Lowe's (eight).

"It's something we can test in the event that we are faced with the issue where there would be potential fines in some communities," says Chris Ahearn of Lowe's.

•Customer satisfaction. Some mall-based locations of Sears and Federated Department Stores' Bon-Macy's are using the devices to keep carts available for customers by preventing theft and keeping carts from wandering off to the food court.

Sears has the carts in 30 stores that were recently remodeled and will continue to roll them out that way, while Federated has them in a third of stores.

"We have had an issue with theft, and we have been testing this solution in the New York and New Jersey area," says Jean Coggan of Federated.

[spooky] 10/2/2006 12:25

WJCCGHCC - There can be questions regarding registration and settlement which may influence the issue for a company with majority foreign ownership,but i do not know the specific reasons in this case and it is a good question to ask the company or its broker.If someone gets an answer please post it,alternatively i will do so when i have the conversation.

[kidney] 10/2/2006 11:51

What is an expected price target for this share before the results,given that we know what to expect,as they have just told us?

[wjccghcc] 10/2/2006 11:45

Fair enough spooky, but given that they're listed here, why don't they clear through CREST?

[planetgong] 10/2/2006 11:32

Wig - it's all really strawberry, man; look out the window of your mind and dig that flaky blue sky vibe................

[wiganer] 10/2/2006 11:07

Arthurly- the other problem is that they've been in business since 1996 and have successfully translated R&D activities into profitable products.

People still seem to prefer flaky blue-sky concept stocks to more modest genuine success stories.

[spooky] 10/2/2006 11:04

WJCCGHCC - Several months ago i had someone look at the company's market,the conclusions were very positive.Growth has only just started and the potential market is substantial,with new applications the markets which can be addressed are numerous and demand is global.Gatekeeper is very well positioned and has contracts with a number of household names,this has allowed it to lead in what has been a fragmented market with a number of competitors unable to finance R and D and new product development.

My concerns were with the management of the company and i wanted proof that they would be able to manage the growth.The year we have just completed presented a number of different challenges and i had my concerns,i have been around long enough to know that you should never take anything on trust.Yesterday's announcement provided evidence that the company has met or indeed surpassed my expectations and the time had arrived to begin building a position.This could be a substantial business in a couple of years.

[arthurly] 10/2/2006 10:18

The trouble with this company is that it's located in California. If it had been Uzbekistan it would be up another 30% today on rumours it was entering a joint venture to mine molybdenum.

[wiganer] 10/2/2006 09:50

how are the pot head pixies?

[planetgong] 09/2/2006 17:16

"How do you get a PE of 10?"

profit of about 1.5m and capitalization of about 15m ; sadly that's about the limit of my in depth analysis :-)

I agree with all your misgivings WJC especially the absence of info or coverage, but if the story was perfect then they wouldn't be trading at this cheap price?

I also like the fact that a non exec director bought 40000 I think, at 50p plus. Obviously a mistaken call but I take this a a sign that the company is a real enterprise and not some sort of con trick.

cheerio pg

[wiganer] 09/2/2006 16:36

From their website:

Gatekeeper Systems, inc

Gatekeeper Systems was founded in 1996 on the principles of innovation, quality, and service. Recognizing the significant impact of shopping cart loss on retailers, Gatekeeper set out to design and develop what is now regarded as the industry's preeminent cart containment system. That vision is now an international reality. Over the years, we've gained a unique insight into the needs of our customers and have engineered a range of integrated solutions that offer a unique blend of technological sophistication and ease-of-use.
From the first handmade prototype to today's industry-leading line of cart-based technology solutions, Gatekeeper remains committed to providing our customers with world-class products backed by unsurpassed service and support.

PROVEN SUCCESS
With hundreds of thousands of carts protected worldwide, the proven success of the Gatekeeper solution has made us the market leader in cart-based loss prevention with a global customer list that includes the biggest names in retail. Gatekeeper is the clear choice and the numbers back it up: fifteen of the top-twenty worldwide cart-based retailers are Gatekeeper customers.

And, those aren't the only giants taking notice. More and more companies all over the world are realizing that Gatekeeper is the clear choice option when it comes to a provider that can deliver integrated, value-added solutions designed to maximize return-on-investment.

FUTURE
The spirit of innovation on which the company was founded remains the driving force behind our evolving technology. Gatekeeper is dedicated to enhancing the GS Technology Platform to deliver a broader range of products to our existing customer base.

But the vision doesn't stop there. Our continuing development in the arena of mobile asset tracking and containment will result in revolutionary new solutions that appeal to a diverse group of industries. From today's market-leading cart containment and cart-based shoplifting prevention solutions, to the future of real-time asset tracking and management, Gatekeeper will continue to develop tomorrow's technology for today's industry.

[wiganer] 09/2/2006 16:33

Competitive enough, if today's RNS is accurate...

[wjccghcc] 09/2/2006 16:31

Perhaps I was a bit hasty spooky, but I've looked at these in the past and always wondered why they bothered listing here. They're not on CREST, have very little newsflow, report in US$ and everything is pretty much H2 weighted which only makes them interesting for about 2 months of the year - as you can see from the drift over the last 6 months. The other problem is that any investor is totally reliant on a brokers forecast since it's very hard for us to have any idea of end market demand.

They're certainly cheap if you exclude the cash but do you have any idea of the sustainability/competitive position of their products?

[arthurly] 09/2/2006 15:52

spooky - I think when a lot more peeps have familiarised themselves with this company they will conclude that it's one of cheapest growth companies on AIM. Also I like the fact that it's in a niche market even though it has to deal with the supermarkets. So many growth companies these days, have got to look over their shoulders to what's going on in Taiwan etc

[spooky] 09/2/2006 15:34

WJCCGHCC - You are correct but they are trading at less than 10 times current year earnings forecasts, and following today's announcement there is every chance that those forecasts will rise.As Wiganer suggests that doesn't allow for the fact that the company has more than 40% of the current market cap in cash.So taking out the cash they are probably on 5 - 6 times forecast earnings which in my opinion is far too cheap for a company growing as fast as they are,with the market position they have.

[wiganer] 09/2/2006 14:55

Personally I like to work on asset adjusted PEs. GKR is on an AAPE of about 5.

[arthurly] 09/2/2006 14:48

Higher than 10 but lower than 15 I think. US tax rates being lower than UK.