SPECTUR LIMITED (ASX:SP3) - Ann: Quarterly Cashflow Report - 30 Sept 2023, 70618449, page-25 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by zeno9: ↑

The cash position as at 31 December 2023 will undoubtedly be positive for the anomalous reasons avinvest has suggested (receipt of $400k R&D tax rebate and receipt of $614k for 5 years worth of advanced subscriptions. However, that will provide nothing to excite unless other more standard income receipts are sufficient enough to bring about a minimum of cashflow neutrality in their own right - that is: sufficient to provide a quarterly cash surplus for Q2 of around $1 million when the above noted more anomalous cash receipts are added to more normal income items for the quarter.

For that to happen, I would expect that there would need to be at least two new material contracts announced prior to 31 December 2023 - a scenario that doesn't seem unreasonable given that the MD has tantalised us (without consummation) for several quarters now with the prospect of some announceable material contracts being potentially imminent. So, several announceable material contracts are either way overdue or they have fallen out of the sales pipeline - but if the latter was true it seems implausible that the MD would continue to tout a growing sales pipeline in his public utterances

I've noted the argument that the payment of $614k for 5 years worth of advanced subscriptions by Southern Cross Security must surely have been offered by Spectur at the expense of a very substantial reduction in revenue that would otherwise accrue on a monthly basis over the 5 year period and I can understand why the question is being asked as to "which customer would pay 5 years of invoices in advance without getting a massive discount?" I can't think of what the logic might have been from Spectur's perspective, but I can understand why some might construe the logic as being a deliberate margin sacrifice to temporarily bolster the short term cash position. No doubt the actual logic will be explained in due course, but it's nevertheless a done deal.

What's not a done deal is an explanation of how (if at all) current and any future advanced subscription payments and the associated accelerated revenue recognition are likely to impact on the performance hurdles that form part of the MD's performance payment arrangements (I might save that one up for a future discussion with the Chairman).

Anyway, my bottom line on all this is that anything much less than a $1million cash surplus for Q2 will fully test my ongoing interest in this company.

zeno9

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Hi zeno69,

If you refer to Notice of AGM dated 23 Oct 23 page 28. Schedule 3 Summary of the terms of the MD performance rights.

This provides some insights into what the MD needs to achieve ( with inclusions and exclusions) over the next 2 years to achieve performance hurdles. Given the alignment this also provides some insights into the financial outcomes that the company is looking to achieve from its current strategy.

In short for the MD to meet 100% performance hurdle - over the next two years:

Total revenue $27.3m
Total EBITDA $2.8m
Total recurring revenue $12.8m

The document also provides outcomes for 80% and 0% achievement hurdles and as I mentioned above specific conditions and rules -inclusions/exclusions.

link is here: p28
https://announcements.asx.com.au/asxpdf/20231023/pdf/05wcwf65ml01sd.pdf

hope this helps.
cheers

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Hi zeno69,If you refer to Notice of AGM dated 23 Oct 23 page 28....

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