AI-powered surveillance tech business Spectur Limited (ASX: SP3) has shored up its capital position thanks to a successful restructuring of its debt facility in a move which management hope will take the company through to positive operating cash flow as it continues to execute on its growth plans.

The company’s $1.1 million debt facility owed to major shareholder EGP Capital was due by the end of 2023, but the board successfully negotiated to shift the repayment date of the majority of the debt out by a year in return for a partial early repayment and an adjustment of interest. 

This was enabled via a small $500,000 placement to management and top shareholders which allowed the company to reduce the debt by $450,000, with the remainder now due at the end of 2024. This extra year could prove very valuable to Spectur, given their current growth trajectory and plan to move into profitability in the near to medium term, but most of all it allows the team to focus on execution.

“The extension and reduction of this facility combined with the placement removes the uncertainty as to how this debt was to be addressed at the end of this year,” Spectur Managing Director Dr Gerard Dyson said. 

“Our focus was on getting the balance right between achieving a favourable debt outcome while minimising dilution resulting from the equity that we had to raise to get there. We are delighted with this result and would like to thank our shareholders and employees for their support in making this possible.“

Spectur’s new Head of Sales and Marketing participated in the placement and Chairman Darren Cooper recently committed to take 100% of his Director fees into shares in Spectur over the six months from 1st April 2023 to 30th September 2023.

Dr Gerard Dyson will hold an online investor briefing at 1pm (AEST) next Tuesday 6th June, where he will discuss Spectur’s improved capital position and provide a company update. Register here or request a replay.

Further growth at improved margins expected for FY24

Spectur develops and manufactures surveillance systems powered by artificial intelligence, solar and camera/cloud-based technology. Its solutions are used across Australia, servicing clients such as Optus Singtel and Surf Life Saving, and is also trusted by the Department of Defence. Last year, the company raised over $3 million to embark on a growth plan and roll out its unique products from its home market Western Australia to the rest of ANZ and potentially beyond. 

Spectur has 2,805 installed cameras and 2,342 installed systems active across ANZ with WA holding 45% of the installed base (as at 3rd May 2023).

Emphasising the scope of the opportunity in a recent presentation, Dr Dyson explained that if Spectur’s current product per capita penetration in WA could be replicated in the rest of ANZ this would imply five times headline growth, representing a revenue opportunity of over $35 million. This is before counting in further upside from the observed growth of the market itself or from other sectors and geographies the company may be targeting beyond this.

Spectur has started to put the money to work and so far delivered on their growth plan. Year to date revenues as of Q3 FY23 were up 20%, with an unweighted pipeline rising to circa $11.5 million (Q3 FY23), an all time high and featuring an increasing share of institutional grade contracts. A major 2023 milestone was the near-doubling of the Statement of Works with Optus to protect more of its mobile towers from vandalism, with the contract increasing to over $2 million.

On top of this organic growth momentum, Spectur also acquired Three Crowns Technologies Pty Ltd in a small but highly targeted bolt-on acquisition. Management expects this transaction to not only bring in an additional $1.2 million of profitable revenue and more than $250,000 overheads savings per year, but also to allow the company to leapfrog years of R&D in product development plus cross selling synergies.

Upbeat as ever, Dr Dyson believes the company is now “primed to reap the fruits” of their investments made in the past year which have yielded a “highly effective and modular technology stack, an expanded sales and marketing offering, and material progress in executing our strategy to grow further into the reseller market.”

“Taking the debt issue off the table for 19 months and reducing interest cost frees the business to finish the job and move to our first phase of profitability.”

Spectur MD Gerard Dyson will hold an online investor briefing at 1pm (AEST) next Tuesday, 6th June where he will discuss the restructured debt facility and provide a wider company update. Register here or request a replay.

Reach Corporate provides Corporate Advisory Services, including managing investor communications on behalf of Spectur Limited and will receive fees for its services.

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