APC TECHNOLOGY GROUP PLC 17December2018
APCTECHNOLOGYGROUPPLC ("APC",the"Company"orthe"Group")
FinalResultsfortheYearended31August2018
APC Technology Group PLC (AIM: APC), the provider of design, specification and distribution services for specialist electronic components and systems, lighting technologies and connectivity products, is pleased to announce its audited resultsfortheyearended31August2018.
Financialhighlights
• Posttaxprofit£0.6m(2017:£0.2m),significantlyhigherthanprioryear
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Earningspershare0.5p,upfrom0.1pin2017
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EBITDA£1.15m,upfrom£0.8min2017 Operatingprofit£0.9m,upfrom£0.5mintheprioryear Revenuefromcontinuingoperations£17.1m(2017:£15.6m)
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Grossprofit,beforeexceptionalandnonrecurringexpenses£5.7m(2017:£5.4m)
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Grossmargin,beforeexceptionalandnonrecurringexpenses33.1%(2017:34.9%)
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ShareplacingandsubscriptioninJuly2018tofundacquisitions,raising£2.9m(netofexpenses)innewequityfor theGroup
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Yearendcashbalancesincreasedfrom£0.4mto£0.8mandnetdebtdecreasedto£2.7m(2017:£3.1m)
Operationalhighlights
• AcquisitionofFirstByteMicroLimited("FBM")inJanuary2018,toenhanceLocatoroffering
• AcquisitionofAspenElectronicsLimited("Aspen")inJuly2018,toenhanceRFandMicrowavebusiness
• SaleofinvestmentinOpenEnergyMarketinJanuary2018,toconcentrateoncoreactivities
• Orderstakenintheyear("bookings")£16.5m(excludingAspen),anincreaseof3.1%
• Annualisedbookingsrunratein2018fortheenlargedGroup£22.5m,representingahealthybooktobillratiofor futuregrowth
• Orderhighlightsinclude:
o USD1.0mrepeatorderforcomponentsforadefenceaviationradarsystem
o £1.0mneworderforCounterIEDtechnologycomponents
o £4.1moflightingordersintheyear,upfrom£2.6min2017
o Firstorder(£0.2m)ofaseriesforsmartbuildingstechnology
• Businessdevelopmenthighlights:
o MinimiseEnergyrebrandedAPCLighting
o APC Lighting and APC Smartwave IoT technology combined to offer integrated Property Technology servicestopropertyandfacilitymanagementcompanies
o YearonyearAPCLocatorordersincreasedtenfoldwithFBMacquisition
o RadioFrequency(RF)teamaugmentedandrefocusedfollowingAspenacquisition
o UKandIrelanddistributiondealfor3DPLUSmicroelectronicsproductsforspaceapplications
o UK distribution deals signed with Oregano Systems and Seven Solutions (White Rabbit systems) to boostAPC'stimesynchronisationbusiness
o APCsalesforceincreasedtoleveragewidermarketopportunities
TonyLochery,ChairmanofAPC,commented:
"2018hasbeenatransformationalyearforAPC.Wehavesignificantlyincreasedthescaleandprofitabilityofthebusiness andthismeansthatwecanofferanevengreatervalueaddedservicetoourtechnologypartnersandourcustomers.We willcontinuetopursueourthreefacetedgrowthstrategyofsellingmoreofthetechnologyandproductsthatwehavewith ourenlargedsalesforce,ofsigningnewproventechnologypartnersandthroughstrategicboltonacquisitions.
Wewouldliketothankourstaff,shareholdersandsuppliersfortheircontinuedsupportoverthepastyear."
Enquiries
| +44(0)3303133220 | |
| www.apcplc.com | |
StockdaleSecuritiesLimited(NominatedAdviserandBroker) | | +44(0)2076016100 |
MarkBrown/AntonioBossi/EdwardThomas | ||
|
APCTechnologyGroupPLC
RichardHodgson,ChiefExecutive
MichaelThompson,FinanceDirector
STRATEGICREPORTANDOPERATIONSREVIEW
TheDirectorsarepleasedtopresenttheirStatutoryStrategicReportforAPCTechnologyGroupPLC("theCompany")and its subsidiary undertakings (together "the Group") for the year ended 31 August 2018, together with a review of the Group'soperationsduringtheyear.
Principalactivities
TheprincipalactivityoftheGroupandCompanyduringtheyearwasthedesign,specificationanddistributionofspecialist electroniccomponentsandsystems,lightingtechnologiesandconnectivityproductstothedefence,aerospace,industrial, realestate,logisticsandhealthcaresectors.
Reviewoftheyear
Theyearended31August2018hasseenfurtherprogressindevelopingtheGroup'sstrategyofconcentratingonourcore strengths,thedesign,specificationanddistributionofspecialistelectronicproducts,componentsandsystems.TheGroup hasalsoseenafullyear'sbenefitfromtherestructuringin2016and2017,includingtheconsolidationoftheFinanceand otherGroupfunctionsinRochester,resultinginareductioninoverheads.
Thebenefitsofthisstrategyarereflectedinourresultsfortheyearandwearepleasedtobereportinganincreasedpre tax profit of £555,000 (2017: £166,000) together with a further improvement in our cash flow. More details on our improvedfinancialperformancearesetoutintheFinancialResultssectionofthisReport.
Inaddition,theBoardhasstrengthenedthefinancialpositionoftheGroupinseveralways:
• The supportive relationship with ABN has been further enhanced, as their continuing £6 million invoice discountingfacilityhasbeenaugmentedbyanEnterpriseFinanceGuaranteeloanof£500,000.
• ThecreditorinvoicefinancingfacilitywithPay4Limitedhasbeenincreasedfrom£400,000to£600,000.
• Ashareplacingandsubscriptionraisedatotalof£3.0millionbeforeexpensesinJuly2018,atapriceof6.75pper OrdinaryShare,apremiumofapproximately2%overthemidmarketpriceprevailingatthetime.
MoredetailsonthesefinancingmeasuresaredealtwithinthefundingandcashflowsectionofthisReport.
TheGrouphascontinuedwiththethreecoreelementsofitsgrowthstrategy:
• Increasedrevenuethroughourestablishedandgrowthtechnologies:oursalesteamshavebeenreorganisedand incentivisedtooperatemoreproactivelyinhuntingdownorders.
• Growthbysigningnewproventechnologypartnersmatchingourcorecompetencies.
• Salesgrowththroughboltonacquisitionsincomplementarytechnologies,toprovideadditionalrevenue,andan additionalbankofexistingcustomersandtoleveragetheGroupcentralfunctions.
DuringtheyeartheGroupmadetwoacquisitionsinfurtheranceofthisstrategy:
InJanuary2018theGroupcompletedtheacquisitionofFirstByteMicroLimited("FBM")foranetconsiderationof£0.5m, detailsofwhicharesetoutinnote6below.FBMsourcesandsuppliesawiderangeofelectroniccomponentsfrommajor bluechipmanufacturerssuchasAltera,SeikoInstruments,TexasInstruments,andCypress,andfromotherseitherdirectly under franchise or from authorised open market and worldwide sources. This acquisition provides a platform for a significantboostforAPCLocator'sbusinessandFBMhasnowbeenrebrandedAPCLocator.
In July 2018 the Group acquired Aspen Electronics Limited ("Aspen") for a net consideration of £2.2 million, details of whicharesetoutinnote6below,fundedbyacombinationofpartoftheproceedsofashareplacingandsubscriptionand the issue of 7,407,407 Ordinary Shares that are subject to a lockin. Aspen is a premium distributor of electronic components,specialisinginawiderangeofradiofrequency(RF)andmicrowavecomponentsandtestandmeasurement equipment.TheRFandMicrowavebusinessiscomplementarytoAPC'sexistingbusiness,whichtheBoardexpectswilllead to topline synergy opportunities. In addition, Aspen has inhouse component testing facilities, which allow it to provide enhanced valueadded services to customers and suppliers. It also distributes own brand products and has an online sourcingbusinessforlowervalueRFandmicrowavecomponents.
AspartoftherealignmentoftheGroup'sactivities,theBoardalsomadethedecisioninJanuary2018toselltheGroup's 15% stake in Open Energy Market Limited ("OEM"), a company specialising in energy procurement. The Board had concludedthatthisactivitywasnotcoretotheGroup'sbusinessandanewequitypartnerwascomingintoOEMonterms that would have created a significant risk of APC not being able to achieve a successful exit from this investment. The proceedsofsaleamountedto£307,000.
Reviewofcontinuingoperations
Followingtherestructuringthattookplacein2016,theGroupcontinuestotradeasadesign,specificationanddistribution business, comprisingindividualsalesledteamswithspecialistareasofexpertisethatadoptcommonmarketing,salesand postsale processing standards. This combination maximises the opportunity for technical sales professionals to be incentivisedtogrowtheirfocusareainanentrepreneurialway,whilstfollowingaconsistentframework.Theteamshave specialistexpertise,allowingthemtomonitortechnologicaladvancements,majorprojects,legislationandindustryneeds. APCpredominatelydesignsinanddistributeshighreliability,highlydurableandlonglifespancomponentsandsystemsfor criticalapplications,withcustomersoftenpayingapremiumforthishighperformance,highspecificationtechnology.
TheUKelectroniccomponentsmarketiscurrentlyworth€1.6bnperannumandgrowing(Source:IDEA/ECSN/AFDEC),APC isfocusedongrowthmarketsectors.
During the year under review the Group made two acquisitions and added further authorised manufacturer distribution relationships, in order to strengthen the technology offering and gain access to wider markets to enable the teams to leveragetheirskillsandexpertise.
Theactivitiesofeachoftheteams,togetherwiththeirprogressintheyear,isdiscussedbelow:
HighReliabilityElectronicComponents
APC's HiRel team specialises in the designin of high reliability, high temperature and high voltage components into projects within the defence, aerospace, space and highend industrial sectors. Operating to AS9120B aerospace quality standards for component distribution, APC is an authorised UK distributor for marketleading global manufacturers. Its engineerled, technical sales team secures the designin of electronic components within a finished system, aircraft or vehicle,oftenresultinginlongtermrecurringrevenuefromcontinuedproduction.
In January 2018 it expanded its product portfolio to address the UK's growing space market (worth £13.7 billion in 2015 and forecast to reach £40 billion in 2030. Source: UK Space) with the appointment by 3D PLUS S.A., a premium manufacturer of space qualified advanced high density microelectronics products, including cameras. In the nine months since signing, APC has secured orders of €130,000, with 2019 orders forecast at €600,000. The turnaround of the oil and gasmarkethasresultedinordersinexcessof$100,000forhightemperaturecapacitorsforadownholeapplication.
RFandMicrowaveComponents
Sales of APC's radio frequency (RF) and microwave components remain buoyant, with orders placed within the financial year up 13% in comparison to 2017. Major Orders were secured for an international aircraft project and the Group's CounterIEDbusinessremainsstrongwithcontractstotallinginexcessof£1m.InJuly2018,APCacquiredAspenElectronics Limited, a leading distributor of RF and microwave components into the military, telecoms, wireless and broadband markets. Aspen brings an additional 50 authorised product lines and 10 customer facing sales staff; with significant
opportunity for synergy and crossselling across APC and Aspen's client base. Defence orders remain strong with a $1m orderforcomponentsforcounterIEDequipment.
EmbeddedComputingandDisplays
APCisaPremierChannelPartnerforthenumberoneglobalmanufacturerofembeddedcomputerboards,industrialPCs and displays used in applications within defence, oil and gas, medical, transport, kiosks and industrial machinery. In addition APC has a range of complementary embedded and asset tracking products and components. The embedded product team has achieved project design wins for a wind turbine application and an above ground oil project with revenuesexpectedin2019,inadditiontoongoingbillingsfromexistingdesignprojectswithinequipmentmanufacturing, intrinsicallysafecomputingequipmentandmilitarycommunicationsystems.
ComponentSourcingSolutions
APC's component buyers and engineers have historically supported customers by sourcing obsolete or hardtofind componentsandprovidingcomponentleveltestingandprocesses.InJanuary2018,APCacquiredFirstByteMicroLtd,an authorised and independent distributor of electronic components with a strong customer base of industrial equipment manufacturersandtwodecadesofexpertise.Leveragingitsnetworkofauthorisedopenmarketsourcesforcomponents, APCLocatordeliversquickturnbusinesswithinAPC'sclientbase,providingcomponentsfrommultiplehighprofileglobal manufacturersinadditiontoAPC'sportfolioofauthoriseddistributionproductlines.Withinthefirstsixmonthsoftrading itdelivered£1mofbookingscomparedtoarunrateof£1.5mperannumpriortoacquisition.
TimeandFrequencySynchronisation
APC Time provides systems to synchronise time and frequency across critical IT networks within financial trading institutions, broadcast, telecoms, power and data centres. As the UK and Ireland representative for one of the top three global timing system manufacturers, APC Time has experienced 30% compound annual growth since 2016, driven by technologychangesandcompliancerequirementsinkeymarkets.
APC Time has continued its expansion, both through a focus on the growth markets of finance and broadcast and the signingofproven,complementaryswitchingandantennatechnologypartners,enablingthemtoprovidecustomerswitha morecompletesolution.
Following the implementation of MiFID II regulations in January 2018, the financial trading sector continues to drive APC Time orders as institutions seek to improve their technology solutions and demonstrate ongoing compliance. Within the broadcast sector, technology changes are driving growth. The BBC has chosen APC's technology as the preferred time synchronisation technology across its major IP infrastructure upgrades. As a wellknown industry innovator, the BBC's endorsementmaywelldrivefurtheradoptionofAPC'sproductportfoliowithinthesector.
LightingTechnologies
APC's lighting team delivers projectbased lighting solutions, from lighting design and product specification through to supply, installation and lighting commissioning. APC Lighting predominately operates through preferred supplier agreements with property and facilities management (FM) companies that manage property portfolios including commercial real estate, education, public sector, retail and leisure. Currently the team has four preferred supplier relationshipsworthcirca£1mperannumandareindiscussionwithafurthertenFMproviders.
Working with global FM CBRE, APC Lighting has completed lighting upgrades at the Genting Arena events and exhibition venueintheMidlands,MorganStanleyofficesatCanaryWharf,SpitalfieldsMarket,BirminghamNECandattheTower42 skyscraperinLondon.Withintheretailsector,workingwithbotharetailrealestateandacarparkfacilitiescompany,they haveupgradedlightingwithinretailvenuesinMaidstone,Paisley,MorecambeandBexley.
Sensorsandconnectivity
As part of APC's property technologies offering, APC Smartwave specialises in providing the property and facilities management sector with the sensors, controls and technologies to create connected workspaces, improve employee wellbeing and drive cost savings through energy management and predictive maintenance. In 2018 APC Smartwave has
supplied a range of smart building sensors that detect desk occupancy, temperature, humidity and other environmental conditionsintoofficeswithinTheShard,theDeloittebuildingandmostrecentlyforuseinaleadingsupermarket'sLondon headquarters.InadditiontooperatingthroughFMproviders,APChasundertakenamajorprojectwithNetworkRailWales to a provide legionella compliance system to 76 remote trackside buildings, negating the need for manual monitoring by NetworkRailstaff.
PerformanceManagement
TradingasEEVS,APCprovidesadvisoryandperformanceanalysisservicesforclientsundertakingenergyefficiencyprojects within public sector, government, healthcare, education and the private sector. EEVS provides consultancy services to prove the financial return on energy efficiency investments, manage the risk of funded projects and set in place strong governanceandsupplieraccountabilitystructuresbetweentheircustomeranditssuppliers.
This year, EEVS continued work on the Scottish Government's public sector energy performance contracting framework, developing performance measurement plans and reporting, with further public sector work with RF:FIT Cymru and the European Commission funded QualitEE project. EEVS continues to deliver quarterly assurance services for major facilities managementbasedenergyperformancecontractsforLloydsBankingGroupandVodafone.
Financialresults
Group revenue from continuing operations for the financial year was £17,149,000 (2017: £15,564,000). Gross profit (excluding exceptional and nonrecurring expenses) was £5,681,000 this year (2017: £5,431,000), representing a gross marginof33.1%comparedwith34.9%lastyear.Thesmalldecreasewasmainlyattributabletothemixofproducts,butthe effectofthiswasoffsetbytheloweroverheadbaseachievedbytherestructuringin2016and2017.Theoperatingprofit, beforeexceptionalandothernonrecurringcosts,of£1,078,000wasup43%onthe£756,000achievedin2017.
This reflected a full year's benefit from last year's significant costcutting programme, as a result of which underlying operating overheads in 2018 were 7.5% less than in 2017 (after taking account of last year's £307,000 writeback of the investmentinOpenEnergyMarketLimited)despitethetwoacquisitionsmadeintheyear.
Profitbeforetaxfromcontinuingoperationsfortheyearimprovedfrom£166,000in2017to£555,000thisyear.Thepost taxprofitfortheyearimprovedfrom£192,000in2017to£633,000thisyearandearningspershareimprovedfrom0.1pto 0.5p.
Fundingandcashflow
In the financial year, there was a cash outflow from operating activities of £288,000, a significant improvement on the outflowof£719,000in2017.TheGroupendedtheyearwithagrosscashbalanceof£777,000(2017:£377,000).Likefor liketradeandotherpayables(excludingacquisitionsintheyear)reducedby£748,000.
The Group's net debt at 31 August 2018 was £2,688,000 (2017: £3,101,000), excluding the loan notes that had matured beforetheyearendandhadbeenrepaidbythedateofthisReport.TheGrouphasaninvoicediscountingfacilitywithABN Amro of up to £6,000,000, of which £2,261,000 had been drawn down at the yearend (2017: £2,502,000). ABN has demonstrated considerable support for the business since the facility was established in early 2015. The facility itself continueswithnofixedterminationdateandduringtheyearwasaugmentedbyanadditionalloanof£500,000underthe Enterprise Finance Guarantee scheme. In addition, the Group had a trade payment credit facility with Pay4 Limited of £600,000,whichwasfullyutilisedat31August2018. InJuly2018,theBoardauthorisedashareplacingandsubscriptionbyexistingandnewinvestorsandBoardmembers,for atotalof44,970,998OrdinaryShares,asfollows:
(a) 37,563,591 Ordinary Shares, at 6.75 pence per share, to raise approximately £2.54 million before expenses. These measuresfurtherstrengthenedthebalancesheet,whileenablingtheGroup'sloannotestoberepaideitherimmediately oroverseveralmonths,withallmaturedloannotespaidoffbytheendofNovember2018.
(b) 7,407,407 shares were issued to the vendors of Aspen Electronics Limited. These shares, combined with part of the proceeds of the above placing, formed the net consideration of £2.2 million paid to the vendors of Aspen Electronics Limited.
The placing price of 6.75 pence per share represents a premium of approximately 2% above the midmarket price of the sharesprevailingatthetime.
Onthebasisofcurrentfinancialprojectionsandavailablefundsandfacilities,theDirectorsaresatisfiedthattheGroupand parent company have adequate resources to continue in operation for the foreseeable future. The Directors therefore
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APC Technology Group plc published this content on 17 December 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 17 December 2018 08:34:03 UTC
