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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Spectra Systems Corporation | LSE:SPSY | London | Ordinary Share | COM SHS USD0.01 (UNRES) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -2.00 | -0.90% | 221.00 | 216.00 | 226.00 | 223.00 | 221.00 | 223.00 | 9,871 | 12:21:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Programming Service | 19.63M | 6.15M | 0.1364 | 19.06 | 117.15M |
From Apr 2019 to Apr 2024
TIDMSPSY TIDMSPSC
RNS Number : 6234B
Spectra Systems Corporation
24 September 2018
Spectra Systems Corporation
Interim results for the six months ended 30 June 2018
Spectra Systems Corporation, a leading provider of advanced technology solutions for banknote and product authentication, is pleased to announce its interim results for the six months ended 30 June 2018.
This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
Financial highlights:
-- Revenue up 11% in the first half at $7,953k (2017: $7,157k) -- Adjusted EBITDA(1) up 30% at $3,930k (2017: $3,022k) -- Adjusted PBTA(2) up 34% at $3,802k (2017: $2,834k), -- Adjusted earnings(2) per share up 30% at US $7.8 cents (2017: US $6.0 cents) -- Cash generated from operations of $4,051k (2017: $2,668k) -- Strong, debt-free balance sheet, with cash(3) of $12,295k (2017: $9,451k) at 30 June -- Annual dividend up 20% to US$0.06 per share ($2,728 in aggregate) paid in June
(1) Before stock compensation expense and foreign currency effects
(2) Before amortization and stock compensation expense
(3) Does not include $1,099k (2017: $1,097k) of restricted cash and investments
Operational highlights:
-- Executed an exclusive, worldwide, licensing agreement and supply agreement for one of our existing products, which is in use by 18 central banks through an existing licensee, a major supplier of banknotes worldwide
-- Delivered large G7 customer order on time -- Operational expenses reduced due to termination of royalty payments -- Brand Authentication and Secure Transactions Group performing in line with expectations -- QC readers for TruBrand delivered to customer in preparation for production
-- Engaged by a G20 central bank to commence Phase I of a four-phase funded sensor development for use with polymer banknotes
Commenting on the results, Nabil Lawandy, Chief Executive Officer, said:
"The Company's revenues for the first half of 2018 are 11 % higher than 2017 and were driven by delivery of a large G7 customer order and royalty and license revenue from our agreement with a major banknote supplier. As a result of our operating gearing adjusted EBITDA for the first half of the year is markedly higher, 30%, than last year resulting in strong midyear profitability. The continued in line performance of the Secure Transactions Group as well as Brand Authentication puts the company in a strong position to meet market expectations for the full year.
The delivery of two quality control devices to a tobacco manufacturer has increased our chances of introducing our TruBrand smartphone authentication technology in China. This is in addition to the recent allowance by the United States Patent Office of our patents on this technology.
The Board therefore believes that the Company, by achieving key business milestones, will continue to perform well for the remainder of 2018 with excellent prospects for ongoing earnings growth thereafter."
Enquiries:
Hot Features
Premium
Spectra Systems Corporation
Dr. Nabil Lawandy, Chief Executive Tel: +1 (0) 401 274 4700
Officer
WH Ireland Limited Tel: +44 (0) 20 7220 1650
Chris Fielding (Head of Corporate
Finance)
Chief Executive Officer's statement
Introduction
Through achieving key commercial milestones, as described in the Review of Operations below, Spectra Systems is on track to deliver an excellent performance for the full 2018 financial year.
Revenue for the half year was up 11% at $7,953k (2017: $7,157k) due to higher royalties and sales of covert materials. Revenue this year will be heavily biased towards the first half of 2018 with continued positive earnings anticipated throughout H2.
As a result of the above factors, Adjusted EBITDA (before stock compensation expense) for the half year was up 30% at $3,930k compared to the prior year of $3,022k. The termination of royalty payments during the first half of 2018 has led to a significant reduction in operating expenses.
Having generated cash from operations of $4,051k (2017: $2,668k), cash at the period end amounted to $12,295k (2017: $9,451k), excluding $1,099k of restricted cash and investments (2017: $1,097k). This is notwithstanding $2,728k paid to shareholders during June in the form of the Company's dividend of $0.06 per share.
Review of Operations
Authentication Systems
The Authentication Systems business, which includes the security phosphor materials, generated revenue of $7,326k (2017: $6,548k) and Adjusted EBITDA of $3,681k (2017: $2,808k). Authentication Systems revenues, primarily in the form of royalty and license payments by our licensee and direct sales to another G7 central bank, underpin these results.
We have successfully completed the first phase of a sensor development program with a G20 central bank for use of one of our technologies for polymer notes. The program was reviewed by the G20 bank staff in May of this year.
The TruBrand authentication product introduction effort is performing on track with the delivery of two off-line quality control devices to a tobacco factory in China and the notice of allowance of the underlying patents by the United States Patent and Trademark Office.
Secure Transactions Group
The Secure Transactions Group, formed around the various gaming technology acquisitions made in 2012, performed in line with management expectations, generating Adjusted EBITDA of $249k (2017: $214k) on revenue of $627k (2017: $609k).
The Secure Transactions Group has won new contracts with two US state lotteries and secured three new licenses as it continues to roll out the 64-bit Premier Integrity product package. The Secure Transaction Group will complete its ISO-27001 Certification in 2018 and continues to look for opportunities to sell its products in the emerging sports betting business in the USA.
Strategy
The Company's strategy for increasing revenue and earnings continues to be focused on brand authentication and specialty optical materials for security applications while maintaining a robust effort to commercialize our covert security technologies with an emphasis on polymer banknotes. The brand authentication sector offers short term growth and some very large opportunities for smartphone based technology while the covert banknote security area provides long term, multi-decade revenues once new contracts are executed.
We have developed and introduced a covert material technology for the polymer notes of a G20 central bank. This technology is in a four phase externally funded development and testing program which has successfully met the first phase milestones. In addition to this polymer note security technology, we have formed a partnership with one of the largest suppliers of polymer substrates as those used for banknotes with the goal of eventually being a supplier of polymer substrates with unique covert properties, a capability which has not been possible to date. Our effort in security features for polymer banknotes is based on the use of polymer notes beginning to outpace paper banknote production.
The Secure Transactions Group continues to innovate within the lottery ICS industry, reducing cost and increasing efficiency with the introduction of Virtualized Machines and its Premier Integrity package. This focus on software innovation has resulted in the recent contract awards from two US state lotteries.
Prospects
The important, near-term opportunities are:
-- The manufacturing of market-trial product to be sold in China for use in conjunction with our TruBrand technology
-- The continued polymer technology sensor development and testing phases with a G20 central bank
-- The adoption of our phosphours for use by a supplier of products to a major Asian central bank
-- The commencement of contracted, 36 month development of third generation sensors for direct sale to a G7 central bank customer
The longer term opportunities are:
-- A licensing and supply agreement for polymer based technology developed through external funding with a major central bank
-- The development and supply of further upgraded sensor capability to a G7 central bank following the contracted development phase
-- The introduction of a secure polymer substrate to central banks, which combines high security and a durable substrate in one product
Nabil M. Lawandy
Chief Executive Officer
September 24, 2018
Statements of income and other comprehensive income
for the half year ended 30 June 2018
Half Year Half Year Full Year
to 30 Jun to 30 Jun to 31 Dec
2018 2017 2017
Unaudited Unaudited Audited
Note USD '000 USD '000 USD '000
Revenue $ 7,953 $ 7,157 $ 12,170
Cost of sales 2,084 1,782 3,514
--------------------------- --------------------------- ---------------------------
Gross profit 5,869 5,375 8,656
Operating
expenses 2,521 2,912 5,625
--------------------------- --------------------------- ---------------------------
Operating
profit (loss) 3,348 2,463 3,031
Interest and
other income 85 18 60
Foreign currency
gain
(loss) (9) (5) 2
--------------------------- --------------------------- ---------------------------
Profit (loss)
before
taxes 3,424 2,476 3,093
Benefit
(provision) for
income taxes (6) (33) 187
--------------------------- --------------------------- ---------------------------
Net income
(loss) $ 3,418 $ 2,443 $ 3,280
--------------------------- --------------------------- ---------------------------
Earnings per
share 2
Basic $ 0.08 $ 0.05 $ 0.07
Diluted $ 0.07 $ 0.05 $ 0.07
Other
comprehensive
income
(loss)
Unrealized loss
on currency
exchange (8) - 10
Reclassification
for
realized loss in
net
income 9 4 (2)
--------------------------- --------------------------- ---------------------------
Total other
comprehensive
income (loss) 1 4 8
Comprehensive
income
(loss) $ 3,419 $ 2,447 $ 3,288
=========================== =========================== ===========================
All of the Group's operations are continuing
Balance sheets
as of 30 June 2018
As of As of As of
30 Jun 2018 30 Jun 2017 31 Dec 2017
Unaudited Unaudited Audited
USD '000 USD '000 USD '000
Current assets
Cash and cash equivalents $ 12,295 $ 9,451 $ 11,181
Trade and other receivables 1,088 2,277 1,425
Inventory 3,337 3,442 3,754
Prepaid expenses 171 388 116
Deferred tax assets - 619 -
---------------------- ------------------------ ----------------------
Total current assets 16,891 16,177 16,476
Non-current assets
Property, plant and equipment, net 1,662 1,954 1,795
Intangible assets, net 6,802 7,170 6,967
Restricted cash and investments 1,099 1,097 1,099
Deferred tax assets 1,303 370 1,225
Other assets 147 156 151
---------------------- ------------------------ ----------------------
Total non-current assets 11,013 10,747 11,237
Total assets $ 27,904 $ 26,924 $ 27,713
====================== ======================== ======================
Current liabilities
Accounts payable $ 263 $ 79 $ 200
Accrued expenses and other
liabilities 978 1,670 1,521
Taxes payable 3 - 8
Deferred revenue 985 1,319 1,074
---------------------- ------------------------ ----------------------
Total current liabilities 2,229 3,068 2,803
Non-current liabilities
Deferred revenue 458 306 458
---------------------- ------------------------ ----------------------
Total non-current liabilities 458 306 458
Total liabilities 2,687 3,374 3,261
---------------------- ------------------------ ----------------------
Stockholders' equity
Common stock 455 454 454
Additional paid in capital - common
stock 55,298 55,164 55,224
Accumulated other comprehensive
loss (104) (109) (105)
Accumulated deficit (30,432) (31,959) (31,121)
---------------------- ------------------------ ----------------------
Total stockholders' equity 25,217 23,550 24,452
---------------------- ------------------------ ----------------------
Total liabilities and stockholders'
equity $ 27,904 $ 26,924 $ 27,713
====================== ======================== ======================
Statements of cash flows
for the half year ended 30 June 2018
Half Year Half Year Full Year
to 30 Jun to 30 Jun to 31 Dec
2018 2017 2017
Unaudited Unaudited Audited
USD '000 USD '000 USD '000
Cash flows from
operating activities
Net income $ 3,418 $ 2,443 $ 3,280
Adjustments to
reconcile net
income to net cash
provided
by operating
activities
Depreciation and
amortization 507 497 1,103
Stock based
compensation
expense 75 63 123
Allowance for
doubtful accounts - - 36
Deferred Taxes (78) - (236)
Provision for excess
and obsolete
inventory 51 - 92
Loss on disposal of
assets - - 32
Changes in operating
assets
and liabilities
Accounts and other
receivables 334 429 1,246
Inventory 366 (528) (932)
Prepaid expenses (56) (282) (9)
Other assets 4 (1) 3
Accounts payable 62 (291) (171)
Accrued expenses
and other
liabilities (547) 231 89
Deferred revenue (85) 107 13
--------------------------- --------------------------- ---------------------------
Net cash provided by
operating
activities 4,051 2,668 4,669
Cash flows from
investing activities
Restricted cash and
investments - (5) (7)
Payment of patent and
trademark
costs (139) (161) (396)
Payment of software
costs - (9) (8)
Asset acquisitions - - -
Cash refund on
property and
equipment - 405 405
Purchases of property,
plant
and equipment (71) (31) (71)
--------------------------- --------------------------- ---------------------------
Net cash provided by
(used
in) investing
activities (210) 199 (77)
Cash flows from
financing activities
Dividends paid (2,728) (2,270) (2,270)
Proceeds from exercise
of stock
options - 42 42
--------------------------- --------------------------- ---------------------------
Net cash used in
financing
activities (2,728) (2,228) (2,228)
Effect of exchange
rate on
cash and cash
equivalents 1 4 9
--------------------------- --------------------------- ---------------------------
Net increase
(decrease) in
cash and cash
equivalents 1,114 643 2,373
Cash and cash
equivalents,
beginning of period 11,181 8,808 8,808
--------------------------- --------------------------- ---------------------------
Cash and cash
equivalents,
end of period $ 12,295 $ 9,451 $ 11,181
=========================== =========================== ===========================
Notes to financial information
1. Basis of preparation
This report was approved by the Directors on 20 September 2018.
This financial information has been prepared using the recognition and measurement principles of US Generally Accepted Accounting Principles. The Group has not elected to apply IAS 34 Interim Financial Reporting.
The principal accounting policies used in preparing the interim results are those the Company expects to apply in its financial statements for the year ending 31 December 2018 and are unchanged from those disclosed in the Company's Annual Report for the year ended 31 December 2017.
The results for the half year are unaudited. The financial information for the year ended 31 December 2017 does not constitute the full statutory accounts for that period. The Annual Report and financial statements for the year ended 31 December 2017 have been filed with the Registrar of Companies. The Independent Auditors' Report on the financial statements for the year ended 31 December 2017 was unmodified and did not draw attention to any matters by way of emphasis.
2. Earnings per share
The calculation of basic earnings per share is based on the net income divided by the weighted average number of common shares outstanding. Diluted earnings per share is calculated by considering the dilutive impact of common stock equivalents under the treasury stock method as if they were converted into common stock as of the beginning of the period or as of the date of grant, if later. The following table shows the calculation of basic and diluted earnings per common share.
Half Year Half Year Full Year
to 30 Jun to 30 Jun to 31 Dec
2018 2017 2017
Numerator:
Net income $ 3,418,000 $ 2,443,000 $ 3,280,000
Denominator:
Weighted average common
shares 45,450,098 45,319,499 45,369,084
Effect of dilutive securities:
Stock Options 3,509,747 1,486,897 2,512,699
--------------------- --------------------- ---------------------
Diluted weighted average
common shares 48,959,845 46,806,396 47,881,783
===================== ===================== =====================
Earnings per common share:
Basic: $ 0.08 $ 0.05 $ 0.07
===================== ===================== =====================
Diluted: $ 0.07 $ 0.05 $ 0.07
===================== ===================== =====================
3. Copies of this statement are available to the public on the Company's website at http://www.spsy.com.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR LTMTTMBATBAP
(END) Dow Jones Newswires
September 24, 2018 02:00 ET (06:00 GMT)
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