Spectra Systems Corp (LON:SPSY) delivered a resilient 2020 performance with the global pandemic exerting little drag on the operational performance or financials of the banknotes and security specialist.
Revenue gained 11% year-on-year at US$14.7mln, adjusted EBITDA grew by 16% to US$6.4mln, while cash generated from operations was US$5.6mln.
As of December 31, Spectra had just over US$14mln on the balance sheet allowing it to declare an annual dividend of 9.5 cents (it made a 9 cents special pay-out last financial year).
It has also extended the authorisation to buy back up to 4.5mln shares, of which 846,000 have already been purchased and cancelled.
Spectra is an innovator in the area of advanced security materials and technology used in paper and plastic money, and is a company trusted by central banks.
READ:Our Spectra deep-dive article
It has two G7 countries as customers and supplies mainly covert technologies.
Key to picking up sophisticated counterfeit currency is incredibly accurate sensors used in bank machines that count notes at a rate of 40 per second.
Development of manufacturing revenues could be worth more than US$50mln over the period 2019-2025, Spectra said.
In the year just gone it has:
- Executed contract for phase-one development work for sensor technology development for a central bank
- Completed three quality control systems for a central bank print works
- Successfully delivered on a new contract with a central bank to enhance existing authentication sensors to detect a unique type of counterfeit notes
Spectra said it has also seen strong sales of optical materials for K-cups, used in a popular coffee vending system. At the same time, the Secure Transactions operation completed six lottery contract renewals.
A possible difference-maker for the business are its fully-printed, machine-readable polymer banknotes with covert taggants that make currency easy to track and count, but difficult to counterfeit.
Many of the industry’s larger players have tried but have thus far failed at matching Spectra’s achievement with ‘plastic’ money.
In September’s interim result statement, the company said the new covert technology could increase authentication revenues “by an order of magnitude”.
The opportunity to formally pitch the new product to a large number of central banks will likely present itself in February of 2022 at the rescheduled industry conference.
In the meantime, aggressive marketing efforts are underway with direct target central banks.
Away from banknotes, Spectra has introduced an authentication product called TruBrand to the Chinese tobacco market that allows retailers to distinguish between branded and counterfeit packets of cigarettes using nothing more than a smartphone.
An initial 6mln-unit trial has the potential to morph into something more substantial.
The company said it is “confident” TruBrand “will reach several hundred million packs in 2021-2022”.
Spectra also believes there is significant potential in its Aeris banknote cleaning decontamination and its newly-developed decontamination systems.