Spectra Systems Share Discussion Threads

[battlebus2] 24/4/2015 10:31

Ok thanks Harrogate.

[harrogate] 24/4/2015 10:28

I understand that - what I am saying is that the broker forecasts don't include anything for that and having worked in brand authentication for 20 years and been an OPSEC shareholder for over 10 ( long suffering - look at the chart!) I believe growth will be glacial for them in this market - the inksure stuff was fairly old technology and I don't think they off very much in brand protection that is different and the use of phospers as taggants is almost a commodity - All about Aeris for me - Let's see as always

[battlebus2] 24/4/2015 10:21

Sorry Harrogate, i didn't explain my train of thought right on where their growth will come from ex the large contract and the Aeris...

Strategy

The Company's strategy for increasing revenue and earnings is based on:

-- Integrating new machine-readable technologies into public security features for banknotes, tax stamps and brand product packaging with a particular focus on Asia

-- Expanding our Secure Transactions Group contributions by providing higher value product upgrades to existing customers

-- Continuing to develop a smartphone-based physical authentication technology to allow consumers to authenticate branded products in real time using mobile phone platforms

-- Validating our products that result in significant savings for central banks with regards to note processing and replacement volumes and

-- Controlling operating costs while maintaining strong capabilities for delivery of products as well as development of technology

This strategy will allow the Company to further exploit its largely developed expertise and technology. In the same way that machine-readable features are added to holograms in our tax stamp and brand authentication products, we are attempting to introduce high-level, covert features into banknotes within existing public features such as inks, security threads and phosphours. By doing so, we hope to overcome the long cycle note redesign process. We believe we will be able to tap into the Asian market with this approach, in both the banknote and product authentication sides of the technology.

Prospects

The Company's prospects have continued to grow through the combination of the Company's organic banknote and product authentication development efforts and the Inksure acquisition, as well as our demonstration of a breakthrough technology for cleaning banknotes.

Particularly important avenues for revenue growth are:

-- Increased sales of taggants and readers to primarily Asian customers in the brand authentication sector

-- Smartphone based product authentication which is gaining customers in Asia

[harrogate] 24/4/2015 09:58

BB - I am afraid that is not right - the WHI revenue forecasts for 2015 and 2016 are $12.7m and $7.8m - that is how one off 2014 was. Value here is all about Aeris or a sale / corporate action in my view

[battlebus2] 24/4/2015 09:49

What about Inksure, phosphour and authentication which have returned to historic levels. It's not all about Aeris imv.

[stewy_18] 24/4/2015 09:33

It is all about cash conservation for me harrogate. If they can keep that cash pile while we wait for news, they will be ok. And if you take the cash pile off the market cap, even with 0.5 pence eps, it looks cheap. But I have to agree, the investment case is weighted towards Aeris being a success. No real visibility in other areas.

[harrogate] 24/4/2015 08:11

The trouble is and this is why this is a bet on Aeris, is that we are not on a PE of 5 - the new WHI numbers for 2016 show an EPS of 0.5p - which shows how 2014 was such a one off year and the company itself said that it would take "several years" to replace the one off revenue in 2014. If Aeris is positive and they get a G8 CB to sign up then we are off to the races - without that it is a long slow lumpy haul that I believe will force a sale to someone - that is why the activists are here and make it more interesting

[patviera] 24/4/2015 08:04

No point paying diviIt's a growth stockBetter keep the cash for rainy day or small acquisitionWe are on pe of 5Cheap!!All about Aeris and that lucrative contract

[battlebus2] 23/4/2015 13:05

You seem very certain on that Patviera, cash or a tasty dividend would suit me fine :))

[patviera] 23/4/2015 11:00

There wont be a return of cash and I wouldn't want itMuch better to have a strong balance sheet as never know when it may be neededBonus is tiny so salary as you say prob based on what hes given to company

[battlebus2] 23/4/2015 10:13

Indeed Harrogate, maybe a return of cash to shareholders if it's not needed.

[harrogate] 23/4/2015 09:04

Pat - His salary is clearly very high in UK terms but I am afraid is not out of kilter with US levels. I had thought that the figure you quote included a bonus so is not necessarily the level going forward. I also think you need to factor in that Nabil is the chief scientist and the inventor as well as the CEO and that most of the IP has come from him. Not saying I am happy with it but it is not the key issue for SPSY - If Aeris takes off his salary will be a total irrelevance. I am not that confident as it happens about 2015 and beyond since I see Aeris being very slow and they are already saying it will be several years before the one off revenues in 2014 are replaced. The presence of the activists makes it much more interesting though and if Nabil doesn't make progress they will push for a sale I am sure

[stewy_18] 23/4/2015 08:24

Yes, good to be reminded of why I'm invested here. It won't be a quick win but if the contract with the Asian bank goes ahead, I'm pretty sure it will multi bag from these levels.

[battlebus2] 23/4/2015 08:12

Thankyou GHF, anyone with half an eye can see these are cheap :))

[glasshalfull] 23/4/2015 03:22

Only able to check in periodically at the moment & pleased to read the strong results posted by SPSY which were significantly ahead (+30%) of broker forecasts.

Thought you may be interested to read extracts from WH Ireland's take on results. See the paragraph emboldened.

Strong performance in 2014, results ahead of expectation

"...results are better than expected, at both the revenue and profit levels (30% ahead). We are encouraged that much of the core revenue streams that underpinned our estimates progressed as planned and continue to do so into 2015. With respect to R&D and some of the many development or potential commercial opportunities on the horizon, there appears to continued progress with the costs associated with these as expected in 2014. Our model continues to assume no revenue is derived from these opportunities.

The balance sheet retains its robust state with $9.8m of unrestricted cash available (+$2.5m restricted). With the shares well backed by a cash-strong balance sheet, we retain our Buy recommendation.

Revenues to December 2014 increased 46% to $16.9m (2013: $11.6m), $1m ahead of our $15.9m estimate. This reflects a part year contribution of Inksure (March 2014), sensor deliveries commencing in H2 2014, although shipments were lower than our estimate, and strong demand for certain high margin materials, which we expect to normalise in 2015. The increased revenue contribution, particularly from higher margin material sales, against a cost base broadly flat, sees adjusted EBITDA swing back to a profit of $2.2m (2013 loss of $0.7m), and an adjusted PBT of $1.7m (before exceptional and amortisation costs), 30% higher than our $1.4m expectation."

"...2014 saw strategic advances. These include the completion and commissioning of a new manufacturing facility for materials with first shipments made to one customer in the year and with a G8 central bank in final material qualification testing ahead of expected deliveries in 2016; the purchase of the assets of Inksure; the commencement of the delivery of sensors to a central bank worth $8m and phosphor and authentication material sales returning to at least that of historic order patterns."

"... Asian markets remain a significant opportunity for SPSY. To that end, although no news is released, discussions with a major Asian central bank for a covert bank note feature continue to gain traction with a development agreement expected to be signed in 2015 (2017 -2018 adoption prospectively) ... it is pleasing too to see brand protection technologies and associated sales of taggants gaining momentum. Discussions with another G8 central bank about the use of its next gen materials previously developed under contract and adapted to polymer substrates also continue on the back of positive test results. SPSYs new technology for the fitness and cleaning of bank notes also continues to be well received by the industry and with further recent notable PR exposure. Testing with a G8 central bank currency continues, with good results, and a further test partner in a major Asian central bank due to start in Q3-15."

---

Suppose the lumpy revenue model deters many investors but, again, interesting to see the market value this almost at cash...therefore considerable risk/reward opportunity IMHO should the likes of Aeris or Brand Protection really take off.

Regards,
GHF

[patviera] 22/4/2015 23:02

RmIs 600/- bucks salary for Lawandy outrageous in this tiny little company??Surely better to have compensation linked to spsy share price??450 gbp must be the highest salary for a CEO on AimWhy???!!!

[sonofbanjosinger] 22/4/2015 19:02

A really good share to hold and wait for the good times. I have to thank rainmaker for bringing this to my attention also Titon which is also another share that I have a large holding.

[patviera] 22/4/2015 17:05

Rm where are you?

[patviera] 22/4/2015 10:13

ive not sold a share
this is a very long term play
if aeris takes off we are a pound
if not then we are fairly priced
upside is in for for nowt

[battlebus2] 22/4/2015 10:11

Hi Stuart, if you take out the liability and the acquistion they have held the cash balances fairly well. Sell on news brigade again :))

[stewy_18] 22/4/2015 08:25

Hi Battlebus,

Nice results and good news that the banknote cleaning is progressing well with one bank. Hopefully, we will have some news this year and they start another with an Asian bank in Q3 2015.

The only negative was the $3.6 million cash burn. Yes, there was an acquisition for $1 million, but production and validation for the banknote cleaning are only running at 350K per year.

Actually I seem to remember the contingent liability of $2 million being RNS'd so maybe not much of a surprise?

One thing I also note. Their strategy is quite verbose. I wonder if they are trying to do too much?

I am really glad they are delivering while we wait for the outcome of the bank note cleaning pilot. They said they will probably not replicate this years revenues, but they expect it to be made up from other streams.

Is anyone in contact with the company as to when they think they will have more news on the bank note cleaning pilot?

Best

Stuart

[patviera] 22/4/2015 07:54

RmWhat was the eps figureCant see it on my iphoneLooks like good figs but stmnt says many contracts come to end so cautious?

[battlebus2] 22/4/2015 07:53

Just proves these are very cheap imv. 16 million turnover and gross profit of 8.7 million and $9 million in cash ....

[battlebus2] 22/4/2015 07:44

Excellent results this morning....


Spectra Systems Corporation Preliminary Results
Print
Alert
TIDMSPSY TIDMSPSC

RNS Number : 9514K

Spectra Systems Corporation

22 April 2015

Spectra Systems Corporation

("Spectra Systems" or the "Company")

Preliminary results for the twelve months ended 31 December 2014

Spectra Systems, a leading provider of advanced technology solutions for banknote and product authentication, announces its preliminary results for the twelve months ended 31 December 2014.

Financial highlights:

- Revenue increased 46% to USD 16,906k (2013: USD 11,572k)

- Adjusted EBITDA(1) before taxation of USD 2,143k, compared to a prior year loss of USD (657k)

- Adjusted earnings(1) per share of USD 0.05, compared to a prior year loss of USD (0.02)

- Strong balance sheet, with cash of USD 9,773k (2013: USD 13,435k) at 31 December

(1) before stock compensation expense and exceptional items

Operational highlights:

-- Large G8 banknote authentication materials order fully fulfilled
-- Shipping of sensors for $8MM contract continued through 2014, and expected to be completed by Q3 2015

-- Phosphour sales at record levels in 2014
-- New manufacturing facility is security cleared by our corporate partner. First deliveries shipped for sale to corporate partner's 18 central bank customers. Final material qualification for a Spectra G8 central bank customer is underway and expected to conclude by Q3 2015

-- Aeris(TM) note cleaning testing on behalf of a G8 central bank progressing very well and testing on behalf of an Asian central bank commencing Q3 of 2015. USA patents for the technology were issued in Q1 2015

-- Secure Transactions Group performed in line with expectations
-- Inksure asset purchase transaction closed in 2014, generating sales in line with expectations, with growth forecasted in 2015

Commenting on the results, Nabil Lawandy, Chief Executive Officer, said:

"I am delighted to present this set of results in which Spectra, on the back of a 46% increase in revenues, has turned an adjusted EBITDA of USD (657k) in 2013 into an Adjusted EBITDA of USD 2,143k in 2014, comfortably meeting market expectations.

This excellent set of results is built on a particularly strong performance from our authentication activities, combined with satisfactory performances in our other activities.

We are delighted that the overall business is on an upward trajectory. It should be noted that we benefited in 2014 from several significant contracts, the revenues from which are not expected to be replicated in 2015. The Board is however confident that new opportunities for consumables will compensate for these concluded revenues within several years.

The Board therefore believes that the Company continues to have excellent prospects.