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11 December 2020 | Update

Spectur (ASX:SP3) | One to watch

 

On the cusp of breaking even having endured a rough year

Spectur (ASX:SP3)

Spectur is an Australian-based developer of security, surveillance, and warning solutions powered by solar, IoT (Internet of Things), camera, and Cloud-based technology. The company owns the rights to its innovative hardware and disruptive Cloud-based systems which are deployed to provide solutions to industries including government and utilities, and the building, construction, and civil sector.

Spectur’s core products are solar-powered deterrence and surveillance systems and associated Cloud-based platforms. These systems incorporate cameras, lighting, audible warnings, and a hardware IoT platform, remotely-accessed and connected via 3G/4G technology to a Cloud-based platform. The offering is complemented by a longer distance, 24-hour thermal camera deterrence solution, suitable for customers with long perimeters.

Spectur is used and trusted by small businesses to multinationals and the company is currently implementing a strategic growth plan to build market dominance in the Australian government and utilities sector to meet the demand for innovative, remote camera and IoT solutions.

Spectur closes $614k of contracts in October 2020

In October 2020, Spectur closed $614,413 of new contracts. These contracts included the sale of 25 Spectur STA6 and HD5 platforms and the rental of 46 platforms delivering associated field services and recurring revenue.

Approximately three-quarters of the contract value added in October relates to longer-term rental contracts, which have higher gross margin returns compared with hardware sales.

Recent sales and rentals demonstrate product refresh success

Spectur launched the STA6 security and sensing platform in July of 2020. After initial smaller production runs to optimize performance, the Company has driven a substantial STA6 update in Q2 FY21 with target customers of this premium platform. The existing HD5 product also remains popular with customers, delivering ongoing sales and rentals growth.

The pipeline of high-quality customers in target sectors is growing

The pipeline of potential sales is also increasing, with growth in inbound and outbound opportunities as well as advanced verbal approvals for 45 STA6 systems, including the new STA6 Pro (which offers a 360-degree panoramic vision in 16K). Pending sales of these systems are to new and existing customers across Australia in the construction, defence, urban development, mining, and agriculture sectors.

 

Spectur Managing Director, Gerard Dyson, said:

“This is a very exciting time for Spectur as we see the fruits of investments we have made in the last 16 months into technology development, marketing, and sales. It is tremendous not just to see sales of the STA6, but to see sales and rentals with new customers, in our key target sectors. Spectur’s experience is that new customers tend to become repeat and growing customers, so we plan to expand these new strategic relationships in the longer term, underpinning sustainable growth.

Due to the increasing portion of rental contracts noted over the year, and in particular, since the market impacts of COVID-19, we are seeing a reshaping and smoothing of our revenue curves compared with the more volatile hardware sales biased models of twelve months ago. In recognition of this ongoing trend, Spectur expects to introduce a longer-term Hardware as a Service (HaaS) commercial offering in the near term, to sit between rentals and hardware purchase options. 

The popularity of the STA6 platform has also created a demand that has temporarily outstripped our ability to supply within our preferred short cycle time, however, we have managed customer expectations accordingly and staged delivery and installations to suit. These delays to installations have had some impact on our ability to recognise revenue however we have active plans to adjust to meet the growing demand and reduce our supply times of STA6 platforms going forward.”

 

Spectur Limited launches Spectur NZ

Highlights

  • Spectur New Zealand formally launched between Spectur Limited (51%) and key New Zealand (NZ) channel partner Deus Ex Limited (Deus Ex) (49%)
  • Spectur sees attractive demand dynamics in the NZ market prompted by activity levels across the building, construction, and government sectors
  • The ownership structure allows Spectur to leverage Deus Ex’s facilities, technical, sales, and managerial support while pursuing sales growth and margin expansion through vertical integration

With a population of 4.8 million people, a comparable culture to Australia, and similar business dynamics, New Zealand has been considered the next geographic frontier for the expansion of Spectur for some time. After some initial trials with resellers, Spectur Limited established Spectur NZ with collaborative partner Deus Ex in November 2020.

Ongoing market testing via resellers with Spectur solutions has demonstrated an appetite for Spectur products and lower competitive pressures than those encountered in some states of Australia. With government stimulus programs expected to provide investment into the building and construction sectors, as well as overall government spend increases, the timing for Spectur to enter NZ more formally is opportune, whilst remaining focused on its existing

 

Spectur Managing Director, Gerard Dyson, said:

“We are very pleased to announce the establishment of Spectur NZ in New Zealand. With a trusted and capable in-country collaborative partner, we have been able to establish a new business at a very low cost. We think the culture of Deus Ex and its principals will fit very closely with the culture of Spectur and look forward to a long term, successful relationship, that could be the template for further expansion in the future.

The formation of this incorporated joint venture is also a strong validation of two of the foundations for growth that we announced in July 2020. We are growing our reseller networks and also advancing acquisitions with carefully selected targets”.

 

 

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