Slide 1: H1 2024 Results
H1 2024 Results October 1, 2024
Slide 2: Disclaimer
DISCLAIMER The information contained in this document (the “Presentation”) has been prepared by Spectra Systems Corporation (the “Company”) solely for informational purposes. All statements of opinion and/or belief contained in this Presentation and all views expressed represent the directors’ own c
Slide 3: Financial highlights
Financial highlights (including the consolidation of a foreign subsidiary acquired in December 2023) • Revenue of $22,739k (2023: $11,621k) up 96% • Adjusted EBITDA1 up 33% at $7,847k (2023: $5,903k) • Adjusted PBTA1 up 6% to $6,225k (2023: $5,873k) • Adjusted earnings2 per share up 4% to US $11.2 c
Slide 4: Financial Statement Forensics: general
Financial Statement Forensics: general • Cartor Security Printers (CSP) was purchased for one primary reason: • Develop a strong and growing polymer substrate business where there are only two suppliers, and one is struggling • Requires $14MM gravure press, and • trained staff to run it • CSP staff
Slide 5: Financial Statement Forensics: Revenue
Financial Statement Forensics: Revenue • CSP did not contribute to H1 last year • They were on a September year end prior to acquisition • During the same Jan-June period prior to acquisition CSP had a revenue of $10.3M and in H1 and this year they contributed ~$7.8M • Over order by Royal Mail in 20
Slide 6: Financial Statement Forensics: sensor contract revenue and profit recognition
Financial Statement Forensics: sensor contract revenue and profit recognition • Auditors required us to use a cost accounting revenue and profit recognition methodology • Sensor manufacturing cost: C • Sensor Revenue total: $39.6M • Amount spent: S • Revenue recognized is ~39M x (S/C) • Profit is Re
Slide 7: Financial Statement Forensics: PBT
Financial Statement Forensics: PBT • PBT in 2023 was ~$5.9M in H1….before acquisition • CSP profit was ($460k) in H1 2024 • Drop in Royal Mail revenue due to overbuy in 2023, and • ~$300k in Spectra driven polymer samples for marketing • Spectra alone H1 PBT had $2.9M shifted to H2 • $2M of developm
Slide 8: Financial Statement Forensics: cash from operations
Financial Statement Forensics: cash from operations • Spectra has historically been a strong cash generating company • Cash from operations is temporarily stunted by ($4.2M): • Advance purchases of sensor equipment • Delayed payment on purchases due to customer bulk payment policy • Cash of $0.262M
Slide 9: Financial Statement Forensics: cash
Financial Statement Forensics: cash • H1 2023 was ~$16.6M • H1 2024 is $4.44M unrestricted ($2M restricted) where is the $12.2? Acquisition cash component: $7M Legal, accounting, valuation fees : ~$0.6M Delayed cash from sensor : $4.8M $13.9 Increase in restricted cash of $1.5M
Slide 10: Free Cash ($ millions)
Cash: is there going to be enough free cash to pay my dividend? Free Cash ($ millions) 15 10 5 $4.44M June 2024 December 2024 May 2025 Accounts for central bank restricted cash of $3.5MM throughout manufacturing
Slide 11: Staffing
Staffing • Two new software engineers • Sensor program • Smartphone authentication Total Staffing at H1: 139 • 73 Wolverhampton, UK • 30 Mauce, France Estimated 8 additional • 14 Vancouver, Canada contract employees from March 2025- December • 22 Rhode Island 2027 to support sensor manufacturing
Slide 12: Covert Material Sales
Covert Material Sales • On target to complete balance of large central bank order placed on October 2024 • Anticipated central bank order at the higher end of average volumes • Increased ordering from licensee
Slide 13: Authentication hardware and systems
Authentication hardware and systems • Sensors are in “pre-factory acceptance” testing stage • Factory acceptance • Product acceptance • Documentation • Production expected to deliver systems beginning June 2025 • Margins significantly higher than previously expected • Quality control units scheduled
Slide 14: Non-banknote authentication update
Non-banknote authentication update • New K-cup printer ordering regularly since December 2023 • New smartphone technology with broad device compatibility and faster easier user experience developed and being evaluated by customers for: • Tax stamps • Postage stamps (Royal Mail) • Passports (Spectra,
Slide 15: Multi-level authentication continuous inkjet inks
Multi-level authentication continuous inkjet Inks: under evaluation by a major track and trace supplier + covert signature
Slide 16: Strong pipeline in security printing with in-house optical materials
Strong pipeline in security printing with in-house optical materials Significant opportunities with tenders submitted ( £ 1.6M/per annum) • Philippines Post • German Ministry of Justice Certificates • Irish Disability Permits High value planned tender submissions (~ £ 1.5M/per annum) • Swiss Post •
Slide 17: Polymer substrate traction
Polymer substrate traction • Highly successful presentation and presence at Banknote 2024 • Substantive discussions • Substantive discussions with printers: with Central Bank • PWPW* traction: • Bundesdruckeri* • Brazil* • Orell Fussli • Philippines • Franciose Oberthur * • Cayman Islands • Casa de
Slide 18: Middle-eastern central bank partner and potential customer
Middle-eastern central bank partner and potential customer • We have successfully passed all print and substrate trials: • Offset • Intaglio • Window design • Abrasion A final test including holographic foil • Crumpling is expected in the • Mechanical tensile strength November/December time frame •
Slide 19: New middle-eastern central bank engagement
New middle-eastern central bank engagement • We had an unsolicited approach from another middle eastern central bank to help and guide them through the conversion to polymer. • opportunity to write the specification! • This central bank is also very interested in machine-readable substrate • This pr
Slide 20: Potential News Float
Potential News Float • Sensor maintenance contract • License and support agreement for smartphone authentication • Certification as a qualified supplier with middle eastern central bank • Qualification of new covert passport feature with major integrator • Order/agreement for new smartphone technolo
Slide 21: Thank You
H 1 Results Jos Done SO THANK YOU!