Spectra Systems Share Discussion Threads

[protean] 30/7/2013 08:32

This is the only board I've come across where I get to talk to myself!

[protean] 30/7/2013 07:37

A spot more buying today. And the latest buyers having to pay the full offer.

Could the first 2 trades this morning be director purchases I wonder. The CEO bought a 25k tranche at 40p last October so the size is certainly similar.

[protean] 17/6/2013 08:54

A couple of buys this morning and level 2 has just changed from 1v2 to 2v1 at 20p bid, 25 offered so a bit more buying and price could start to move up after a long sideways period.

[protean] 12/6/2013 10:36

From the recent results in April:

- Revenue increased 26% to USD 9,379m
- Strong ungeared balance sheet, with cash and investments of USD 16,167m at Dec 31st 2012 (works out at GBP 10.3m cash vs GBP 8.4m current market cap)

"The Company's revenues have increased by 26% over 2011 and we continue to have a strong, ungeared balance sheet. With the execution of the new generation materials contract with a G8 central bank, the timely delivery of milestones on our customer's timetable, and record materials sales, we are in a position to achieve a re-phrasing of revenues to produce the earnings the market expects of us."

"The Board believes that the Company has made significant headway in 2012 in achieving key business milestones, that it continues to have excellent prospects and that it will perform strongly in 2013."

Directors were buying a few months ago at much higher prices:

30 Oct 2012 - CEO - 100,000 @ 40p
31 Oct 2012 - CEO - 25,000 @ 40p
26 Nov 2012 - Director - 29,500 @ 40p

So you've got a company with more cash than the market cap, strong growth in revenues and a recent statement saying that it has excellent prospects and will perform strongly in 2013.

Unlike some of the other value shares where business isn't going so well just now but the finances are strong, things seem to be going very well indeed at SPSY but the share price hasn't yet reflected this.

The directors were happy to buy shares @ 40p where currently you can buy in at a much lower 22.5p. Even the upside from the current price to the director purchase price is an impressive 77.8%. And presumably the directors bought at 40p confident that there was significant upside from there.

[protean] 07/6/2013 09:37

Been nibbling a few of these at 22.5p.

[protean] 30/5/2013 12:48

Do you reckon that this is the best value opportunity on the market at the moment Rainmaker?

[protean] 30/5/2013 12:46

Thanks for that.

Amazing how the company seems to be doing so well, yet the share price is languishing.

[rainmaker] 30/5/2013 12:35

Top line growth. Turnover was up an incredible 26% last year.The Company are conducting trials with a G8 Central Bank which will hopefully lead to a multi year contract and they have another CB as a Customer so I expect others to follow and they are plenty potential applications for their curtting edge technology for which there is no competition since they own the international patents.

AIMHO, DYOR as I have done mine.

regards

[protean] 29/5/2013 20:56

Rainmaker - you mention in post 3 that you expect the price to move to several £s. Can I ask how you determine that exactly. Thanks.

[protean] 29/5/2013 15:46

Rainmaker - I can see the value here, but for the moment the market can't. Just before the close I was quoted 20.9 for a max of 37,500 shares so the bid might be about to move lower esp given that someone offloaded at just 15p, a full 25% below the bid. Must be pretty illiquid.

All very intriguing. The price continues to drift yet the results were good and the outlook positive: "The Board therefore believes that the Company continues to have excellent prospects and will perform strongly in 2013."

I also note the director purchases late last year at 40p.

[protean] 29/5/2013 12:51

Yes, certainly very low if the broker forecast proves to be correct. Of course there's no guarantee that profits will be in line with the forecast.

The company statements do have an optimistic ring to them and revenues are rising so if they can start to turn a profit I'm sure the shares will rise strongly. For the time being though they appear unloved and the market isn't convinced. An interesting situation to follow.

[rainmaker] 29/5/2013 12:41

Protean-looking at 2014 estimate of pre tax profit of £4.9mln from wwww.sharelockholmes.com, applying a 23% standard corporate tax rate,equates to a p/e of just over 3 times.

regards

[protean] 29/5/2013 12:41

Thanks for that Rainmaker.

[rainmaker] 29/5/2013 12:20

Spectra Systems Corporation. Final Results
PrintAlert
TIDMSPSC TIDMSPSY
RNS Number : 2299B
Spectra Systems Corporation.
02 April 2013
Spectra Systems Corporation
Preliminary results for the twelve months ended 31 December 2012
Spectra Systems Corporation, a leading provider of advanced technology solutions for banknote and product authentication, is pleased to announce its preliminary results for the twelve months ended 31 of December 2012.
Financial highlights - all figures in (000's):
- Revenue increased 26% to USD 9,379 (2011: USD 7,416)
- Adjusted EBITDA(1) before taxation of USD (727), (2011: 352 USD)
- Adjusted profit / (loss)(1) before taxation of USD (847), (2011: 271 USD)
- Adjusted earnings / (loss)(1) per share of USD (0.02), (2011: USD 0.01)
- Basic earnings / (loss) per share of USD (0.03) (2011: USD 0.00)
- Strong ungeared balance sheet, with cash and investments of USD 16,167 (2011: USD 23,767) at December 31
(1) before stock compensation expense and exceptional items
Operational highlights:
- Authentication material revenues 75% above expected amount
- Executed new generation materials development contract with a G8 central bank
- Completed sensor development milestones in-line with central bank timetable
- New manufacturing facility completed and ready for certification
- ESI and Lapis acquisitions integrated in a new Secure Transactions Group targeting internal control systems for the gaming industry
- Revenues from the Secure Transactions Group were on plan with Lapis customers handled by employees from ESI acquisition
Commenting on the results, Nabil Lawandy, Chief Executive Officer, said:
"The Company's revenues have increased by 26% over 2011 and we continue to have a strong, ungeared balance sheet. With the execution of the new generation materials contract with a G8 central bank, the timely delivery of milestones on our customer's timetable, and record materials sales, we are in a position to achieve a re-phrasing of revenues to produce the earnings the market expects of us.
The acquisitions we made now form the infrastructure of our Secure Transactions Group and this new business unit has met plan. Our expectations for profitability of this new business line, which are based on a combination of expense consolidation, retention of existing business, as well as gaining new customers, are coming to fruition.
Our search for acquisitions in the public level physical security areas has continued with our revisiting several of the companies we had opened a dialogue with. We continue to be optimistic that a suitable transaction will come in time and will not make acquisitions that do not meet our criteria and strategic direction.
The Board believes that the Company has made significant headway in 2012 in achieving key business milestones, that it continues to have excellent prospects and that it will perform strongly in 2013."
Enquiries:

Spectra Systems Corporation

Dr. Nabil Lawandy, Chief Executive Tel: [phone]
Officer

WH Ireland Limited Tel: [phone]
Chris Fielding (Head of Corporate
Finance)
Chief Executive Officer's statement
The Company has achieved some key commercial milestones and revenues grew well above 2011. Execution of a key materials development contract, although later than originally anticipated, has further bolstered the underpinnings of the Company's long term growth expectations. The delivery of the sensor contract milestones on the G8 customer's timeline, has positioned us to do pre-production testing in 2013 and fulfil the entirety of the contract which in turn will support the use of our products for at least another decade.
The successful acquisition of two of the three major companies supplying secure transaction software to the gaming industry has diversified our security products and is well on track to deliver solid profits and growth.
We continue to work with our licensing partner to validate the use of the current generation technology in polymer notes with additional testing expected in Q2 of 2013. Our development of a new authentication technology for use in note acceptors, by commercial banks and for travel documents, has been completed and is under test with a G8 central bank.
Finally, the summons we received in February of 2013 is being effectively handled by our attorneys and we remain confident that we will prevail should we prove unsuccessful at a resolution between parties.
Financial overview (000's)
Revenue exceeded expectations for the year with USD 9,379 (2011: USD 7,416). In addition, orders placed in the second half of the year were above expectations. The adjusted EBITDA before and after taxation for the year amounted to USD (727) (2011: USD 352) - adjusted for stock compensation expense and exceptional items.
Cash and investments at the period end amounted to USD 16,167 (2011: USD 23,767). The company has no debt and therefore has the ability to execute on its acquisition and manufacturing plans with its cash reserves.
Strategy
The company's strategy for increasing revenue and earnings is based on:
1) Expanding partnerships with existing suppliers of public security features (Level I) for banknotes and tax stamps in order to sell our commercial bank and bill acceptor (Level II) and covert central bank (Level III) products
2) Focusing our R&D efforts on products that can result in significant savings for central banks with regards to note processing and replacement volumes
3) Expanding our Secure Transactions Group software sales by;
a. continuing to adapt our products for mobile gaming
b. penetrating the Chinese lottery market c. bundling our software transaction capabilities with our machine readable features to offer authorities complete solutions for tax stamps, IDs and other government documents
4) Applying our expertise in lock and key, material/sensor technology for consumer and industrial applications where there is a need for both quality control and protection against low cost, lower quality consumables
We expanded our strategy on the use of public features as vehicles for our covert technologies to include Level II machine readable security features. Success with this approach will allow us to penetrate the lower denominations which may not carry the highest level covert features, but should increase our materials sales while maintaining the long term revenue of the banknote security business.
Our continued development efforts to create important and game changing advances in banknote fitness we believe will enable us to take advantage of every present and increasing effort to save money by governments. A few percent changes in note production volumes can generate significant cost savings.
Strategic direction for our ICS business is focused on being prepared to take advantage of the expansion of mobile and internet based gaming in the USA, as well as opening the door to the Chinese market where there are over 30 welfare and sports lotteries. We also want to leapfrog our competition in physical security features by offering customers not only cutting edge machine readable security but also the ability to offload their data handling and secure audit needs to us.
Finally, we are continuing to try to open a market for our products with large first adopters in the consumer and industrial applications area. This is an area where our potential customer is not as interested in security but rather in controlling the quality of their customer experience by ensuring that the consumable component of their sales is locked to products they manufacture. Our potential customer hopes to both increase market share as well as ensure that their consumer has the best experience because they are using their consumable and not a low cost inferior product. We believe that if our technology is adopted by a major consumer product manufacturer, not only will they consider applying it to other products they sell but that other manufacturers in different product sectors may adopt variants of the technology we have been developing for our target customer for the past two years.
The Company is pleased to report that we have retained all our employees prior to the acquisitions, grown our staff by six employees in our primarily Canadian based Secure Transactions Group, and have now increased our permanent staff to 31. The retention of our key employees is an indication of the strength of the Company and will make the delivery of sensors and increased levels of materials possible. We are fortunate to have employees that are challenged by the tasks ahead and that take great pride in the products we provide and the benefits they bring to society.
Prospects
The long awaited execution of a development contract with a G8 central bank for new generation technology has proceeded on or ahead of schedule and is expected to lead to significant multi-decade revenue streams once adopted. We expect to realize significant additional development revenues next year as well as gain more insight as to the adoption timetable as we and the customer successfully progress through large scale tests.
2012 materials volumes were significantly higher than previous years and we expect this growth trend to continue in 2013, aided by a central bank issuing a new denomination during that period. We expect this increased demand to allow us to leverage improved margins from our in-house manufacturing facility which is now available to our customers and is expected to be inspected by our principal G8 customer in Q2 of 2013.
Our partnerships with suppliers of public features have led to new opportunities. The Reserve Bank of India tender remains unresolved, although continues to be a live prospect for the company. Other new significant opportunities include tax stamps as well as a Level II feature for a G8 passport, both of which we expect to have a decision for in 2013.
In addition to our core banknote business, we have made significant advances towards adoption of our lock and key technology by a major consumer appliance manufacturer. During 2012 we delivered prototype sensors integrated into their consumer appliance and developed customized inks for all their suppliers in the USA, China, and Korea which do not use the same types of printing processes. We are optimistic that we will arrive at a business arrangement in 2013 which will create a new materials business line with the potential for many additional adoption scenarios by the current target customer as well as by other customers that will follow suit.
The Board therefore believes that the Company continues to have excellent prospects and will perform strongly in 2013.
Nabil M. Lawandy
Chief Executive Officer
April 2, 2013
Statement of Income
for the year ended 31 December 2012

[rainmaker] 29/5/2013 12:16

Hi Protean, Yes and you shouldn't need to complete a form to buy the stock-remember there are two types, restricted and unrestricted and it's the latter you want code SPSY and not the former(I think circa 10% of the shares).You're right, the spread, in percentage terms has got large as the share price has dropped. IMHO this is a strong business franchise with good prospects, protected by international patents,with a rock solid balance sheet stuffed with cash, available at around minimum liquidation value.The shares are down some 80% for no reason that I can see.I'm just going to ignore the share price and concentrate on the performance and prospects of the business.

DYOR, AIMHO

regards

[protean] 29/5/2013 09:02

Do you hold SPSY Rainmaker?

The positive newsflow and prospects certainly seem to be contradictory to the falling share price.

The spread is a killer though. 25p on the offer, 20p on the bid. I guess a decent broker might be able to trade within the spread but I still reckon it's going to be a large % and that's probably discouraging people buying and selling the shares.

Also I notice that you need to complete a W-8BEN form to be able to buy the shares.

[rainmaker] 03/5/2013 23:54

Thanks Pye, very nice to hear from you............Value Investing is lonely business.I'm glad that at least one other Person recognises the potential here. This is definitely a share that I will hold for at least a couple of years and I expect the share price which is currently 25p offered to go to several £s.It's clearly a strong business franchise protected by US and foreign patents with great growth(sales up 26%) and a bright outlook. If you read my Value thread it will become apparent that I consider that there very few genuine Value share opportunities. The Company is trading at it's minimum liquidation value yet has everything going for it.I also like this Company's low key approach, quietly making low cost but strategically important acquisitions.

Do a bit of research and let me know what you think but be careful of the market cap quoted since I haven't seen a single give the correct figure and there seems to be some confusion over the restricted and unrestricted shares. If you have any Company ideas then please feel free to post them on my Value thread, the only criteria is that you feel they are genuine opportunities for whatever reason.

best wishes

[pyemckay] 02/5/2013 21:23

This is an interesting company which definitely requires further research. I would love to hear your research on this company rainmaker. I will read the last annual report to familiarise myself with the company and its prospects.

pye..

[rainmaker] 02/5/2013 21:16

Thanks for setting up this thread, Spob. This Company is way "off the map" and "under the radar" misunderstood, overlooked, neglected ie an archetypal Value share opportunity look at the number of posts on this thread-a lack of posts of a specific stock thread IMHO is always a promising sign. The Company keep a very low profile making very modest yet strategically important and effective acquisitions. The share price is some 80% down in the last year IMHO reason than it presumably failed to instantly live up to all the unrealistic IPO hype. The Company is not a newcomer but has been around since 1995, I believe,and it was set up the commercialize the inventions of,Browns University,one of eight Ivy League Universities in the States-you can look at them as the equivalent of our Oxford and Cambridge. The Company are headed by an multi award winning, Chemist/Physicist, Doctor Nabil Lawandy and own several US and foreign patents.The Company have multi year contracts with two central banks and I expect them to win further business from trial they are currently participating in with one of them. More later.