RNS Number:1674T
Gatekeeper Systems, Inc
19 March 2007
19 March 2007
Gatekeeper Systems, Inc.
Preliminary results for the year ended 31 December 2006
Gatekeeper Systems, Inc. ("Gatekeeper" or "the Group"), the leading global
provider of intelligent shopping cart solutions, is pleased to announce
another year of record results.
Financial Highlights:
* Turnover up 46% to $29.6m (2005: $20.3m)
* Profit before tax increased 27% to $3.3m (2005: $2.6m)
* Net profit increased 30% to $2.4m (2005: $1.9m)
* EBITDA increased 35% to $3.5m (2005: $2.6m)
* Operating cash flow increased to $1.2m (2005: $1.9m cash outflow)
Sales and Operational Highlights
* Completed single largest customer rollout in our history
* Executed long term supplier agreements with two major customers
* Procured first major CartManager contract
* Procured our first major contract outside of retail industry
* Established CartManager assembly and distribution facility in Texas
* Relocated Head Office in California
* Established sales offices in Latin America and Asia
Commenting on the results, President and CEO, Michael Lawler said, "Our
results represent the third consecutive year of record achievement. We have
grown sales 59% on a compounded basis over that period of time, which
coincides with our listing on AIM. We are singularly focused on maintaining
our position as the leading global provider of intelligent shopping cart
solutions for retailers to prevent cart loss and merchandise theft, while
maintaining high customer service and environmental standards. The continued
growth in demand for our trolley containment and theft prevention product
offerings, continued progress in our research and development initiatives,
expansion into the new verticals and expansion of new product offerings
through acquisition are all very exciting. We are gaining significant
momentum in executing on our mission of delivering technology solutions to
retailers throughout the world."
For further information please contact:
Gatekeeper Systems, Inc.
Michael Lawler, CEO +1 949.268.1315
Aaron Neilsen, CFO +1 949.268.1323
Teather & Greenwood: Landsbanki
Rhys Williams (Specialist Sales) +020.7426.9000
Chairman's statement
I am pleased to report year end results of the Group for the year ended 31
December 2006. Our successful operating performance is a reflection of the
organic growth in our major markets and improved synergies gained through
acquisitions in 2005. Product acceptance continued to grow in North America
which recorded a record number of GS2 System installations with all of our
major customers. Europe also experienced strong growth and recorded its best
year ever. Our expanded infrastructure has enabled us to offer and deliver
additional product offerings and high quality customer support to top
European retailers.
Financial results
In 2007, AIM listed companies will be required to report using International
Financial Reporting Standards ("IFRS"). For the period ended 31 December
2006, the Group has elected to adopt these standards one year early. While
there were no material differences, prior period results have been adjusted
to reflect this.
This year we reported our third consecutive year of increased profitability.
Turnover, income from operations and net profitability all exceeded prior
financial periods. Turnover increased to $29.6 million from $20.3 million
in 2005. Profit before tax increased to $3.3 million from $2.6 million in
2005. Profit before tax net of intangible amortization increased to $3.5
million (2005: $2.6 million). Net profit after tax increased to $2.4 million
(2005: $1.9 million).
With the increased acceptance of our GS2 system, turnover exceeded
expectations. While the Group met this increase in customer demand, a larger
mix of installation revenue and use of independent installation partners
lowered overall margins more than anticipated. Product sales totalled $21.9
million up from $15.4 million in 2005. Installation turnover increased to
$7.2 million up from $4.5 million in 2005. Service turnover increased to
$0.6 million (2005: $0.4 million).
The Company's turnover was generated primarily in North America and Europe.
North America turnover increased to $21.5 million up from $15.7 million in
2005. European turnover increased to $8.1 million up from $4.6 million in
2005.
The net cash position at 31 December 2006 remained strong at $7.9 million
($7.9 million at 31 December 2005). Cash flow from operations was $1.2
million inflow compared to an outflow of $1.9 million in 2005.
Product initiatives
In 2006, we continued to experience increased acceptance of our trolley
containment system in both North America and Europe. Today, our customer
base includes 17 of the top 20 global retailers. A major European retailer
increased adoption of our Purchek solution and Gatekeeper also began Purchek
trials with a major North American retailer. In addition, we continued to
invest in research and development with a focus on a long-term aim of using
the Company's patented GS wheel technology to provide real time data to
retailers on trolley fleet management, queue management and location based
marketing statistics.
We are making good progress with our mobility cart initiative. Mobility
carts are used by people with limited mobility to shop in a store.
Retailers, for a variety of reasons, want to restrict the capability of the
cart from being taken outside of the store. Our 2006 product initiatives
focused on working on a solution to resolve this issue for retailers and in
early 2007, we started an initial trial with a major US retailer
demonstrating a prototype solution.
Operations
We continued to expand our servicing capability in both North America and
across Europe. In North America, we opened an assembly and distribution
facility in Dallas, Texas which enabled us to support the CartManager product
line and improve customer support services and expanded trolley containment
distribution capabilities. We also added field service staff and increased
the number of third party installation and service partners which enabled us
to easily meet our growing North American installation opportunity.
Through our European headquarters in France, Europe delivered another year of
strong performance in 2006. We continued to expand our distribution
partnerships across Europe and increase our field service staff in the UK and
France to support our rapidly increasing installation base. Today, over 500
trolley containment systems are installed across 12 European countries.
Post balance sheet event
On 2 March 2007, the Group finalised the renegotiation of the acquisition
purchase price of our Canadian distribution rights for a lump sum payment of
$2.75 million. This payment replaced the contingent consideration set out in
the previous agreement entered into in August 2005 which required payments in
2006 and 2007 based upon a formula of 1.75 times the annual pre-tax profits
of Gatekeeper Systems Canada, Ltd.
Outlook
We are optimistic about 2007, and the strong order volume during the first
two months of the year provides encouragement that the Company will deliver
on expectations for the financial year.
We continue to execute on our product road map and our research and
development team continues to work on a number of new products, some of which
we expect will begin generating turnover in late 2007 or early 2008.
RJ Brandes
Chairman
GATEKEEPER SYSTEMS, INC. AND SUBSIDIARIES
PROFIT AND LOSS ACCOUNT
For the Year Ended
31 December
2006 2005
Notes $'000 $'000
TURNOVER 2 29,626 20,326
COST OF SALES 15,129 9,703
GROSS PROFIT 14,497 10,623
OPERATING EXPENSES
General and administrative expenses 3 8,889 6,381
Selling expenses 2,644 1,963
11,533 8,344
OPERATING INCOME 2,964 2,279
OTHER INCOME (EXPENSE)
Interest income (expense), net 245 306
Other expense, net ( 23) ( 3)
Gain on foreign currency exchange, net 117 17
339 320
INCOME FROM ORDINARY ACTIVITIES BEFORE TAXATION 3,303 2,599
TAX ON INCOME FROM ORDINARY ACTIVITIES 877 734
INCOME FROM ORDINARY ACTIVITIES AFTER TAXATION 2,426 1,865
$ $
NET INCOME PER SHARE
Basic 0.05 0.04
Diluted 0.05 0.04
'000 '000
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 4 44,404 44,213
Diluted 4 44,780 44,608
GATEKEEPER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
31 December
2006 2005
Notes $'000 $'000
FIXED AND OTHER ASSETS
Goodwill 5 5,508 2,530
Other intangible assets 5 647 1,053
Deferred income taxes 308 175
Tangible fixed assets 1,893 620
8,356 4,378
CURRENT ASSETS
Stocks 2,964 3,372
Debtors 8,421 5,494
Cash at bank 7,866 7,929
Prepaid expenses and other current assets 274 238
Notes receivable 100
19,625 17,033
CREDITORS: Amounts falling due within one year
Trade creditors 2,618 2,045
Amounts due under acquisition obligations 6 2,750
Amounts due to affiliates 138
Accrued expenses 1,105 1,335
Accrued warranty expenses 296 246
Accrued income taxes 808 475
Long-term debt, current portion 33 7
Capital lease obligations, current portion 47 17
Deferred revenue 46 41
Other current liabilities 55
7,841 4,221
TOTAL ASSETS LESS CURRENT LIABILITIES 20,140 17,190
CREDITORS: Amounts falling due after more than one year
Long-term debt, net of current portion 142 10
Capital lease obligations, net of current portion 149 26
Deferred income taxes 176 68
467 104
NET LIABILITIES 19,673 17,086
CAPITAL AND RESERVES
Capital shares (200,000,000 shares authorized;
44,468,333 issued and outstanding
at $0.001 par value) 44 44
Additional paid-in capital 7 21,682 21,278
Deferred compensation 3 ( 235) ( 15)
Accumulated deficit ( 1,757) ( 4,183)
Accumulated other comprehensive loss ( 61) ( 38)
SHAREHOLDERS' FUNDS: All equity 19,673 17,086
GATEKEEPER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended
31 December
2006 2005
Notes $'000 $'000
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 2,426 1,865
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortisation 566 246
Loss on disposal of assets ( 22) 14
Share-based expense 3 103 18
Deferred income taxes ( 25) ( 107)
Changes in operating assets and liabilities:
Debtors ( 2,927) ( 2,679)
Stocks 408 ( 2,407)
Notes receivable ( 100)
Prepaid expenses and other current assets ( 36) ( 93)
Intangible and other assets 179 ( 248)
Trade creditors 573 702
Accrued expenses ( 285) 546
Accrued warranty expenses 50 ( 65)
Accrued income taxes 333 210
Deferred revenue 5 1
Net cash provided by (used in) operating
activities 1,248 ( 1,865)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of tangible fixed assets ( 1,596) ( 416)
Acquisition of specified assets ( 2,741)
Net cash used in investing activities ( 1,596) ( 3,157)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from long-term debt financing 413 -
Repayments on long-term debt financing ( 102) ( 7)
Repayment of notes payable to stockholders - ( 199)
Proceeds from issuance of common stock, net of -
related costs ( 7)
Net cash provided by (used in) financing
activities 311 ( 213)
EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH ( 26) ( 31)
NET CHANGE IN CASH AND CASH EQUIVALENTS ( 63) ( 4,840)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7,929 13,195
CASH AND CASH EQUIVALENTS AT END OF YEAR 7,866 7,929
Footnotes:
1. Basis of presentation
These statements do not constitute accounts as defined by section 240
of the Companies Act 1985. The preliminary announcement contains
extracts from the full financial statements.
The consolidated financial statements include the accounts of
Gatekeeper Systems Inc. and its subsidiaries (collectively, the Group).
In 2006, the company acquired the remaining minority interest in
Gatekeeper Systems, Ltd. SAS. All intercompany transactions and
balances have been eliminated in consolidation. Certain prior year
amounts have been reclassified to conform with the current year's
presentation.
2. Geographic information
The Company's revenues were generated in various geographic areas throughout the
world as follows:
For the year ended
31 December
2006 2005
'$000 '$000
North America $ 21,526 $ 15,678
Europe 8,100 4,648
$ 29,626 $ 20,326
3. Stock based compensation
In 2006, the Company adopted financial accounting standard ("FAS) No.
123R which requires employee stock options and rights to purchase
shares under stock participation plans be accounted for under the fair
value method. The company used a Black Scholes option model to
estimate fair value. As allowed under FAS 123R, the company elected to
adopt this standard using the modified prospective recognition method.
For the year ended 31 December 2006, the company recognized $103,000
in stock option expense and had $235,000 in deferred compensation expense.
4. Earnings per common share
Basic earnings per share is computed by dividing the income available
to common shareholders by the average number of common shares
outstanding. Diluted earnings per share includes the dilutive effect,
if any, from the potential exercise of stock options using the treasury
stock method. The weighted average shares outstanding used in the
calculations of earnings per share were as follows:
For the year ended
31 December
2006 2005
'$000 '$000
Shares outstanding, beginning 44,358 44,108
Weighted average shares issued 45 105
Weighted average shares outstanding - basic 44,403 44,213
Effect of dilutive securities (stock options) 377 395
Weighted average shares outstanding - diluted 44,780 44,608
At 31 December 2006, options to purchase 3,018,000 shares of the
Company's common stock were outstanding, expiring on various future
dates through December 2015. For 2006 and 2005, 1,288,000 and
1,280,000 outstanding stock options were excluded from the calculations
of diluted earnings per share, respectively, because their exercise
price was greater than the average market price of the common shares
and, therefore, the effect would be anti-dilutive.
5. Goodwill and other intangible assets
The Company accounts for intangible assets under Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets. As such, goodwill and other intangible assets deemed to have
indefinite lives are no longer amortized but are instead subject to
annual impairment tests. SFAS 142 requires the company to compare the
fair value of the reporting unit, determined based on discounted cash
flows, to its carrying amount on an annual basis to determine if there
is potential impairment. An impairment loss, if any, is recorded to
the extent that that fair value of the goodwill within the reporting
unit is less than its carrying value. In management's opinion, there
has been no impairment to the value of goodwill during the year ended
31 December 2006.
At 31 December 2006, the company had identifiable intangible assets
with finite lives consisting of organization costs, trademarks and
intellectual properties. Identifiable finite-lived intangible assets
are amortized on a straight-line basis over their estimated useful
lives, ranging from 2 to 7 years.
6. Post balance sheet event
On 2 March 2007, the Group finalised the renegotiation of the
acquisition purchase price of our Canadian distribution rights for a
lump sum payment of $2.75 million. This payment replaced the
contingent consideration set out in the previous agreement entered into
in August 2005 which required payments in 2006 and 2007 based upon a
formula of 1.75 times the annual pre-tax profits of Gatekeeper Systems
Canada, Ltd.
7. Issuance of common stock
On 4 August 2006, the company purchased the remaining 10% minority
interest in Gatekeeper Systems SAS in exchange for 110,000 ordinary
shares of Gatekeeper. The issuance of the shares had a non-cash value
of $90,000.
8. Annual report
The annual report of the Company for the year ended 31 December 2006
will be sent to shareholders during May 2007 and will be available,
free of charge, from the offices of Teathers and Greenwood located at
Beaufort House 15 St. Botolph Street, London, United Kingdom, EC3A 7QR.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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