Sensys Gatso: Quick Comment Regarding the Investigation

Sensys Gatso Netherlands, (former Gatsometer) is subject to an investigation of Fiscal Information and Investigation Service (FIOD). FIOD is investigating allegations of misconduct in Gatso before Sensys’s acquisition of Gatso (in 2014-2015).

Following, a call to the CEO we want to highlight the following:

1. It is very early in the investigation and Sensys Gatso is therefore completely unaware of any details, at this point in time. Nevertheless, it chose to share the information as the CEO says he wants to be 100% transparent.
2. This is not a MAR-labelled press release, i.e. it is a voluntary statement from the company.
3. Sensys Gatso offers its full co-operation and is also investigating the matter internally.
4. We think points no. 1-3 are appropriate actions that are in line with how the company sees integrity as one of the guiding principles of the company’s values.
5. The alleged misconduct happened a long time ago, prior to the acquisition. In our view, the company of today has a strong corporate governance etc. We do not think this problem could have happened today. Thus, besides an eventual question of credibility, the issue is essentially water under the bridge, in our view.

In our view, the investment case has not changed. However, we do not completely rule out that the outcome could lower our valuation (lower Redeye Rating & higher required rate of return), but for now we will maintain our rating. This is a good stress test for the company, and depending on how it handles it, our confidence in the Management and Board could actually improve. Regardless of the outcome, we expect the matter to be settled within a few weeks.

Shares are already depressed, as the stock market had a low confidence in Sensys Gatso prior to today’s news. Understandably, however, there was still a negative reaction (-5% at the moment). We expect the investigation to impede the stock in the short run during the coming weeks, until the Q4 report, on February 25. If the negative sentiment continues, it could create good buying opportunities.