TIDMAPC
RNS Number : 5939K
APC Technology Group PLC
17 December 2018
17 December 2018
APC TECHNOLOGY GROUP PLC
("APC",the "Company" or the "Group")
Final Results for the year ended 31 August 2018
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 results for the year
ended 31 August 2018.
Financial highlights
-- Post-tax profit GBP0.6m (2017:GBP0.2m), significantly higher than prior year
-- Earnings per share 0.5p, up from 0.1p in 2017
-- EBITDA GBP1.15m, up from GBP0.8m in 2017
-- Operating profit GBP0.9m, up from GBP0.5m in the prior year
-- Revenue from continuing operations GBP17.1m (2017: GBP15.6m)
-- Gross profit, before exceptional and non-recurring expenses GBP5.7m (2017: GBP5.4m)
-- Gross margin, before exceptional and non-recurring expenses 33.1% (2017: 34.9%)
-- Share placing and subscription in July 2018 to fund
acquisitions, raising GBP2.9m (net of expenses) in new equity for
the Group
-- Year-end cash balances increased from GBP0.4m to GBP0.8m and
net debt decreased to GBP2.7m (2017: GBP3.1m)
Operational highlights
-- Acquisition of First Byte Micro Limited ("FBM") in January
2018, to enhance Locator offering
-- Acquisition of Aspen Electronics Limited ("Aspen") in July
2018, to enhance RF and Microwave business
-- Sale of investment in Open Energy Market in January 2018, to concentrate on core activities
-- Orders taken in the year ("bookings") GBP16.5m (excluding Aspen), an increase of 3.1%
-- Annualised bookings run rate in 2018 for the enlarged Group
GBP22.5m, representing a healthy book to bill ratio for future
growth
-- Order highlights include:
o USD 1.0m repeat order for components for a defence aviation
radar system
o GBP1.0m new order for Counter-IED technology components
o GBP4.1m of lighting orders in the year, up from GBP2.6m in
2017
o First order (GBP0.2m) of a series for smart buildings
technology
-- Business development highlights:
o Minimise Energy re-branded APC Lighting
o APC Lighting and APC Smartwave IoT technology combined to
offer integrated Property Technology services to property and
facility management companies
o Year-on-year APC Locator orders increased tenfold with FBM
acquisition
o Radio Frequency (RF) team augmented and refocused following
Aspen acquisition
o UK and Ireland distribution deal for 3D PLUS microelectronics
products for space applications
o UK distribution deals signed with Oregano Systems and Seven
Solutions (White Rabbit systems) to boost APC's time
synchronisation business
o APC salesforce increased to leverage wider market
opportunities
Tony Lochery, Chairman of APC, commented:
"2018 has been a transformational year for APC. We have
significantly increased the scale and profitability of the business
and this means that we can offer an even greater value added
service to our technology partners and our customers. We will
continue to pursue our three-faceted growth strategy of selling
more of the technology and products that we have with our enlarged
sales force, of signing new proven technology partners and through
strategic bolt-on acquisitions.
We would like to thank our staff, shareholders and suppliers for
their continued support over the past year."
Enquiries
APC Technology Group PLC +44 (0) 330 313 3220
Richard Hodgson, Chief Executive www.apcplc.com
Michael Thompson, Finance Director
Stockdale Securities Limited (Nominated Adviser and Broker) +44
(0)20 7601 6100
Mark Brown / Antonio Bossi / Edward Thomas
STRATEGIC REPORT AND OPERATIONS REVIEW
The Directors are pleased to present their Statutory Strategic
Report for APC Technology Group PLC ("the Company") and its
subsidiary undertakings (together "the Group") for the year ended
31 August 2018, together with a review of the Group's operations
during the year.
Principal activities
The principal activity of the Group and Company during the year
was the design, specification and distribution of specialist
electronic components and systems, lighting technologies and
connectivity products to the defence, aerospace, industrial, real
estate, logistics and healthcare sectors.
Review of the year
The year ended 31 August 2018 has seen further progress in
developing the Group's strategy of concentrating on our core
strengths, the design, specification and distribution of specialist
electronic products, components and systems. The Group has also
seen a full year's benefit from the restructuring in 2016 and 2017,
including the consolidation of the Finance and other Group
functions in Rochester, resulting in a reduction in overheads.
The benefits of this strategy are reflected in our results for
the year and we are pleased to be reporting an increased pre-tax
profit of GBP555,000 (2017: GBP166,000) together with a further
improvement in our cash flow. More details on our improved
financial performance are set out in the Financial Results section
of this Report.
In addition, the Board has strengthened the financial position
of the Group in several ways:
-- The supportive relationship with ABN has been further
enhanced, as their continuing GBP6 million invoice discounting
facility has been augmented by an Enterprise Finance Guarantee loan
of GBP500,000.
-- The creditor invoice financing facility with Pay4 Limited has
been increased from GBP400,000 to GBP600,000.
-- A share placing and subscription raised a total of GBP3.0
million before expenses in July 2018, at a price of 6.75p per
Ordinary Share, a premium of approximately 2% over the mid-market
price prevailing at the time.
More details on these financing measures are dealt with in the
funding and cash flow section of this Report.
The Group has continued with the three core elements of its
growth strategy:
-- Increased revenue through our established and growth
technologies: our sales teams have been reorganised and
incentivised to operate more proactively in hunting down
orders.
-- Growth by signing new proven technology partners matching our core competencies.
-- Sales growth through bolt-on acquisitions in complementary
technologies, to provide additional revenue, and an additional bank
of existing customers and to leverage the Group central
functions.
During the year the Group made two acquisitions in furtherance
of this strategy:
In January 2018 the Group completed the acquisition of First
Byte Micro Limited ("FBM") for a net consideration of GBP0.5m,
details of which are set out in note 6 below. FBM sources and
supplies a wide range of electronic components from major blue chip
manufacturers such as Altera, Seiko Instruments, Texas Instruments,
and Cypress, and from others either directly under franchise or
from authorised open market and worldwide sources. This acquisition
provides a platform for a significant boost for APC Locator's
business and FBM has now been rebranded APC Locator.
In July 2018 the Group acquired Aspen Electronics Limited
("Aspen") for a net consideration of GBP2.2 million, details of
which are set out in note 6 below, funded by a combination of part
of the proceeds of a share placing and subscription and the issue
of 7,407,407 Ordinary Shares that are subject to a lock-in. Aspen
is a premium distributor of electronic components, specialising in
a wide range of radio frequency (RF) and microwave components and
test and measurement equipment. The RF and Microwave business is
complementary to APC's existing business, which the Board expects
will lead to top-line synergy opportunities. In addition, Aspen has
in-house component testing facilities, which allow it to provide
enhanced value-added services to customers and suppliers. It also
distributes own brand products and has an online sourcing business
for lower value RF and microwave components.
As part of the realignment of the Group's activities, the Board
also made the decision in January 2018 to sell the Group's 15%
stake in Open Energy Market Limited ("OEM"), a company specialising
in energy procurement. The Board had concluded that this activity
was not core to the Group's business and a new equity partner was
coming into OEM on terms that would have created a significant risk
of APC not being able to achieve a successful exit from this
investment. The proceeds of sale amounted to GBP307,000.
Review of continuing operations
Following the restructuring that took place in 2016, the Group
continues to trade as a design, specification and distribution
business, comprising individual sales-led teams with specialist
areas of expertise that adopt common marketing, sales and post-sale
processing standards. This combination maximises the opportunity
for technical sales professionals to be incentivised to grow their
focus area in an entrepreneurial way, whilst following a consistent
framework. The teams have specialist expertise, allowing them to
monitor technological advancements, major projects, legislation and
industry needs. APC predominately designs-in and distributes high
reliability, highly durable and long lifespan components and
systems for critical applications, with customers often paying a
premium for this high performance, high specification
technology.
The UK electronic components market is currently worth EUR1.6bn
per annum and growing (Source: IDEA/ECSN/AFDEC), APC is focused on
growth market sectors.
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 leverage their skills and
expertise.
The activities of each of the teams, together with their
progress in the year, is discussed below:
High Reliability Electronic Components
APC's Hi-Rel team specialises in the design-in of high
reliability, high temperature and high voltage components into
projects within the defence, aerospace, space and high-end
industrial sectors. Operating to AS9120B aerospace quality
standards for component distribution, APC is an authorised UK
distributor for market-leading global manufacturers. Its
engineer-led, technical sales team secures the design-in of
electronic components within a finished system, aircraft or
vehicle, often resulting in long-term recurring revenue from
continued production.
In January 2018 it expanded its product portfolio to address the
UK's growing space market (worth GBP13.7 billion in 2015 and
forecast to reach GBP40 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 EUR130,000, with 2019 orders forecast at
EUR600,000. The turnaround of the oil and gas market has resulted
in orders in excess of $100,000 for high temperature capacitors for
a downhole application.
RF and Microwave Components
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 Counter-IED business
remains strong with contracts totalling in excess of GBP1m. In July
2018, APC acquired Aspen Electronics 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 cross-selling across APC
and Aspen's client base. Defence orders remain strong with a $1m
order for components for counter IED equipment.
Embedded Computing and Displays
APC is a Premier Channel Partner for the number one global
manufacturer of embedded computer boards, industrial PCs 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 revenues expected in 2019, in addition to ongoing billings
from existing design projects within equipment manufacturing,
intrinsically safe computing equipment and military communication
systems.
Component Sourcing Solutions
APC's component buyers and engineers have historically supported
customers by sourcing obsolete or hard-to-find components and
providing component level testing and processes. In January 2018,
APC acquired First Byte Micro Ltd, an authorised and independent
distributor of electronic components with a strong customer base of
industrial equipment manufacturers and two decades of expertise.
Leveraging its network of authorised open market sources for
components, APC Locator delivers quick turn business within APC's
client base, providing components from multiple high profile global
manufacturers in addition to APC's portfolio of authorised
distribution product lines. Within the first six months of trading
it delivered GBP1m of bookings compared to a run rate of GBP1.5m
per annum prior to acquisition.
Time and Frequency Synchronisation
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 technology changes and compliance
requirements in key markets.
APC Time has continued its expansion, both through a focus on
the growth markets of finance and broadcast and the signing of
proven, complementary switching and antenna technology partners,
enabling them to provide customers with a more complete
solution.
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 well-known industry
innovator, the BBC's endorsement may well drive further adoption of
APC's product portfolio within the sector.
Lighting Technologies
APC's lighting team delivers project-based 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 relationships worth circa GBP1m per annum and are in
discussion with a further ten FM providers.
Working with global FM CBRE, APC Lighting has completed lighting
upgrades at the Genting Arena events and exhibition venue in the
Midlands, Morgan Stanley offices at Canary Wharf, Spitalfields
Market, Birmingham NEC and at the Tower 42 skyscraper in London.
Within the retail sector, working with both a retail real estate
and a car park facilities company, they have upgraded lighting
within retail venues in Maidstone, Paisley, Morecambe and
Bexley.
Sensors and connectivity
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 conditions into offices within The Shard, the
Deloitte building and most recently for use in a leading
supermarket's London headquarters. In addition to operating through
FM providers, APC has undertaken a major project with Network Rail
Wales to a provide legionella compliance system to 76 remote
trackside buildings, negating the need for manual monitoring by
Network Rail staff.
Performance Management
Trading as EEVS, APC provides advisory and performance analysis
services for clients undertaking energy efficiency projects 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 governance and supplier
accountability structures between their customer and its
suppliers.
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 management based energy performance
contracts for Lloyds Banking Group and Vodafone.
Financial results
Group revenue from continuing operations for the financial year
was GBP17,149,000 (2017: GBP15,564,000). Gross profit (excluding
exceptional and non-recurring expenses) was GBP5,681,000 this year
(2017: GBP5,431,000), representing a gross margin of 33.1% compared
with 34.9% last year. The small decrease was mainly attributable to
the mix of products, but the effect of this was offset by the lower
overhead base achieved by the restructuring in 2016 and 2017. The
operating profit, before exceptional and other non-recurring costs,
of GBP1,078,000 was up 43% on the GBP756,000 achieved in 2017.
This reflected a full year's benefit from last year's
significant cost-cutting 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 GBP307,000 write-back of the
investment in Open Energy Market Limited) despite the two
acquisitions made in the year.
Profit before tax from continuing operations for the year
improved from GBP166,000 in 2017 to GBP555,000 this year. The
post-tax profit for the year improved from GBP192,000 in 2017 to
GBP633,000 this year and earnings per share improved from 0.1p to
0.5p.
Funding and cash flow
In the financial year, there was a cash outflow from operating
activities of GBP288,000, a significant improvement on the outflow
of GBP719,000 in 2017. The Group ended the year with a gross cash
balance of GBP777,000 (2017: GBP377,000). Like-for-like trade and
other payables (excluding acquisitions in the year) reduced by
GBP748,000.
The Group's net debt at 31 August 2018 was GBP2,688,000 (2017:
GBP3,101,000), excluding the loan notes that had matured before the
year-end and had been repaid by the date of this Report. The Group
has an invoice discounting facility with ABN Amro of up to
GBP6,000,000, of which GBP2,261,000 had been drawn down at the
year-end (2017: GBP2,502,000). ABN has demonstrated considerable
support for the business since the facility was established in
early 2015. The facility itself continues with no fixed termination
date and during the year was augmented by an additional loan of
GBP500,000 under the Enterprise Finance Guarantee scheme. In
addition, the Group had a trade payment credit facility with Pay4
Limited of GBP600,000, which was fully utilised at 31 August
2018.
In July 2018, the Board authorised a share placing and
subscription by existing and new investors and Board members, for a
total of 44,970,998 Ordinary Shares, as follows:
(a) 37,563,591 Ordinary Shares, at 6.75 pence per share, to
raise approximately GBP2.54 million before expenses. These measures
further strengthened the balance sheet, while enabling the Group's
loan notes to be repaid either immediately or over several months,
with all matured loan notes paid off by the end of November
2018.
(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
GBP2.2 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 mid-market price of the shares
prevailing at the time.
On the basis of current financial projections and available
funds and facilities, the Directors are satisfied that the Group
and parent company have adequate resources to continue in operation
for the foreseeable future. The Directors therefore continue to
adopt the going concern basis of accounting when preparing the
financial statements, as described more fully in the Directors'
Report and the note on accounting policies in the financial
statements.
Board of Directors and senior management
Throughout the year under review the composition of the Board
remained unchanged, consisting of the Non-executive Chairman and
three Executive Directors. The Group was therefore able to benefit
from a full year of continuity.
Outlook
Last year we reported that the Group would pursue three main
growth strategies:
-- growth through increased bookings and billings from its
existing and high growth technologies;
-- growth through the signing of new complementary product lines; and
-- growth through targeted bolt-on acquisitions.
The past year has been one of overlaying this growth strategy
over the base achieved through the restructuring carried out in
2016 and 2017. This has resulted in an increase in the Group's
profit for the year.
The year has already seen satisfying progress in these areas,
with a restructuring and investment in the new sales team, with two
acquisitions completed and with additional franchises added to
broaden our offering. The Board is confident that the Group is on
track to deliver on its medium term growth strategy and to continue
to realise further profitable growth.
Given that the Group essentially connects rest of world,
including European, suppliers with UK manufacturers, the Board is
cognisant of the wider macro-economic factors which may impact the
business model in the short term, as a result of the Brexit
negotiations. Whilst the Group is not currently experiencing any
such issues, the Board is keeping the situation under continuous
review and will update the market in the event of any significant
changes.
The Board would once again like to thank our management, staff
and advisers for their enthusiasm, hard work, professionalism,
dedication and commitment to the Group, and to express our
appreciation and thanks to our suppliers, partners and shareholders
for their continued support.
Tony Lochery Richard Hodgson Michael Thompson Phil Lancaster
Non-executive Chairman Chief Executive Finance Director
Business Development Director
14 December 2018
CONSOLIDATED STATEMENT OF INCOME
For the year ended 31 August 2018
2018 2017
Exceptional
Results and Results Exceptional
from non-recurring from and non-recurring
operations expenses Total operations expenses Total
(Note (Note
3) 3)
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 2 17,149 - 17,149 15,564 - 15,564
Cost of sales (11,468) - (11,468) (10,133) (24) (10,157)
Gross profit 5,681 - 5,681 5,431 (24) 5,407
Administrative
expenses (4,571) (128) (4,699) (4,637) (228) (4,865)
Operating profit
before share
based
payments and
acquisition
costs 1,110 (128) 982 794 (252) 542
Share based
payments (32) - (32) (38) - (38)
Operating
profit/(loss) 1,078 (128) 950 756 (252) 504
Financing costs 4 (395) - (395) (338) - (338)
Profit before
taxation 683 (128) 555 418 (252) 166
Taxation credit 78 - 78 26 - 26
Profit for the
year
attributable
to the equity
holders
of the parent 761 (128) 633 444 (252) 192
=========== ================ ======== =========== ================= ========
Earnings per share from continuing and discontinued operations
attributable to the equity holders of the parent during the
year.
2018 2017
Basic earnings per
share 5
From profit for the
year 0.5p 0.1p
===== =====
There were no other items of comprehensive income. Accordingly,
no consolidated statement of comprehensive income has been
prepared.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 August 2018
2018 2017
GBP000 GBP000
------------------------------- --------- ---------
Non-current assets
Intangible assets 9,126 7,378
Property, plant and
equipment 564 55
Associates and financial
assets - 307
9,690 7,740
--------- ---------
Current assets
Inventories 1,330 832
Trade and other receivables 4,133 2,985
Current tax asset 73 -
Cash and cash equivalents 777 377
6,313 4,194
--------- ---------
Total assets 16,003 11,934
--------- ---------
Current liabilities
Trade and other payables (4,375) (4,332)
Borrowings (3,820) (3,478)
(8,195) (7,810)
--------- ---------
Total assets less current
liabilities 7,808 4,124
Non-current liabilities
Deferred tax (110) -
Net assets 7,698 4,124
========= =========
Equity attributable
to the equity holders
of the parent
Called-up share capital 3,597 2,698
Share premium account 14,890 13,232
Share option reserve 308 297
Merger reserve 4,987 4,635
Retained earnings (16,084) (16,738)
Total equity 7,698 4,124
========= =========
Consolidated statement of Changes in Equity
Attributable to the equity holders of the parent
---------------------------------------------------------------------
Share
Share option
Share premium valuation Merger Translation Retained
capital account reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------- ------- --------- ------- ----------- ---------- ------
At 31 August 2016 2,556 12,895 548 4,635 (10) (17,219) 3,405
------- ------- --------- ------- ----------- ---------- ------
Profit for the year - - - - - 192 192
Other comprehensive income - - - - - - -
------- ------- --------- ------- ----------- ---------- ------
Total comprehensive income
for the year - - - - - 192 192
------- ------- --------- ------- ----------- ---------- ------
Transactions with equity
holders of the parent
Issue of new shares 142 337 - - - - 479
Share option charge - - (251) - - 289 38
Non-controlling interest
disposed - - - - 10 - 10
142 337 (251) - 10 289 527
------- ------- --------- ------- ----------- ---------- ------
At 31 August 2017 2,698 13,232 297 4,635 - (16,738) 4,124
------- ------- --------- ------- ----------- ---------- ------
Profit for the year - - - - - 633 633
Other comprehensive income - - - - - - -
------- ------- --------- ------- ----------- ---------- ------
Total comprehensive income
for the year - - - - - 633 633
------- ------- --------- ------- ----------- ---------- ------
Attributable to the equity holders of the parent
Share
Share option
Share premium valuation Merger Translation Retained
capital account reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------- ------- --------- ------- ----------- ---------- ------
Transactions with equity
holders of the parent
Issue of new shares 899 1,784 - 352 - - 3,035
Costs associated with share
issue - (126) - - - - (126)
Share option charge - - 11 - - 21 32
899 1,658 11 352 - 21 2,941
------- ------- --------- ------- ----------- ---------- ------
At 31 August 2018 3,597 14,890 308 4,987 - (16,084) 7,698
------- ------- --------- ------- ----------- ---------- ------
ConSolidated statement OF CASH FLOWS
For the year ended 31 August 2018
Group Group
2018 2017
GBP000 GBP000
--------------------------------------------- -------- --------
Reconciliation of cash flows from operating
activities
Profit/(loss) before
taxation including discontinued
operations for the financial
year 554 166
Loss on write-off of
investment in associates - -
Gain on revaluation
of other investment - (307)
Finance costs 395 338
Taxation receipts 111 26
Depreciation of property,
plant and equipment 43 90
(Increase)/decrease
in inventories (76) 248
(Increase)/decrease
in trade and other receivables (136) 766
(Decrease)/Increase
in trade and other payables (1,211) (2,084)
Share-based payments
charge 32 38
Net cash used in operating
activities (288) (719)
-------- --------
Cash flows from investing
activities
Acquisition of property,
plant and equipment (5) (13)
(Acquisition)/sale of
subsidiary undertakings;
net of cash acquired (1,971) 641
Sale of other investment 307 -
Net cash from investing
activities (1,669) 628
-------- --------
Cash flows from financing
activities
Finance income - -
Finance costs (395) (338)
Proceeds of share issue
(net of associated costs) 2,409 479
Finance leases (4) (21)
Increase/(decrease)
in short-term borrowings 447 (96)
Increase/(decrease)
in loan notes (100) -
Net cash from financing
activities 2,357 24
-------- --------
Increase/(decrease)
in net cash 400 (67)
-------- --------
Cash and cash equivalents
as at 1 September 377 444
Increase/(decrease)
in net cash 400 (67)
Cash and cash equivalents
as at 31 August 777 377
======== ========
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1. Basis of preparation
Statement of compliance
This financial information has been prepared under the
historical cost convention, as modified by the revaluation of
certain financial assets at fair value, as required by IAS 39
'Financial Instruments: Recognition and Measurement'. This
financial information has been prepared in accordance with the
recognition and measurement principles of IFRS as adopted by the
European Union and on the same basis as the accounting policies
adopted in the financial statements for the year ended 31 August
2018, but does not contain sufficient information to comply with
IFRS as adopted by the European Union.
Going concern basis of accounting
The financial information has been prepared on a going concern
basis, as management believes the Group will be able to meet its
liabilities as they fall due.
In the financial year, there was a cash outflow from operating
activities of GBP288,000, a significant improvement on the outflow
of GBP719,000 in the previous year. Following last year's
improvement in the Group's speed of discharging its liabilities,
the current period saw a smaller further reduction in trade and
other payables. Operating cash flow was also influenced positively
by the Group's increased profitability and working capital cycle.
The cash requirement of the Group was funded partly by trading,
partly by improved working capital management and partly by a share
issue to new and existing shareholders and Board members in July
2018. This raised a total of GBP2,909,000, of which GBP2,433,000
represented the consideration for the acquisition of Aspen
Electronics Limited, leaving net proceeds of GBP476,000 to
strengthen the Balance sheet.
These factors enabled a further reduction of GBP1.2 million in
amounts due to suppliers and other creditors, while the Group's
cash balances increased from GBP377,000 in 2017 to GBP777,000 this
year The Group's matured loan notes have also been paid off in full
since the financial year-end.
Management has examined going concern against a detailed profit,
working capital, and cash flow forecast to 31 December 2019, which
reflects the matters discussed in the preceding paragraph but does
not reflect any additional share placings, new debt facilities, nor
sale of any assets other than in the normal course of business.
Based upon this review, the continuation of the GBP6,000,000
invoice discounting facility with ABN, which has no fixed
termination date, agreement of extended payment terms with
suppliers as necessary, and other prudent working capital
management, the Board believes that the Group will continue to be
able to meet its liabilities as they fall due. Management also has
the ability to raise capital through issuance of additional loan
notes, further private share placings, or sale of additional assets
if required.
2. Revenue and segmental information
Operating segments
IFRS 8 'Operating Segments', requires consideration of the chief
operating decision maker ("CODM") within the Group. In line with
the Group's internal reporting framework and management structure,
the key strategic and operating decisions are made by the CEO, who
reviews internal monthly management reports, budget and forecast
information as part of this process.
Accordingly, the CEO is deemed to be the CODM.
The Company has determined that it has only a single reportable
segment, being the design, specification and distribution of
specialist electronic components and systems.
The Group had one customer representing over 10% of revenue
(2017: none).
Revenue by product and service
2018 2017
GBP000 GBP000
----------------------- -------- ------- -------
Electronic Components 12,603 11,214
LED Lighting 3,765 3,504
Consulting 781 846
------- ---------
17,149 15,564
======= =======
Revenue by geographic location
2018 2017
GBP000 GBP000
UK 16,685 15,216
North America 140 82
Europe and Asia 324 266
------- -------
17,149 15,564
======= =======
3. Exceptional and non-recurring expenses
2018 2017
GBP000 GBP000
Corporate re-organisation - compromise agreements
and redundancy costs 37 399
Corporate re-organisation - professional
fees 91 68
Corporate re-organisation - dilapidations
and onerous lease provisions - 57
Corporate re-organisation - third party creditors - (335)
Costs associated with aborted contract - 24
Foreign exchange loss arising from unprecedented
market volatility - 39
128 252
======= =======
Exceptional items are items that, by virtue of their nature and
incidence, have been disclosed separately in order to draw them to
the attention of the reader of the financial information. These
costs are deemed as exceptional as they do not represent normal
trading activities of the business.
4. Finance costs
2018 2017
GBP000 GBP000
Financing costs
Other interest payable 265 174
Other finance costs 130 164
---- ----
395 338
==== ====
5. Earnings per share
The calculation of basic earnings per share is based on the
profit after taxation attributable to equity holders of the parent
company for the period and the weighted average number of shares in
issue during the period.
Diluted earnings per share is calculated by adjusting the
weighted average number of shares outstanding by the dilutive
effect of Ordinary Shares that the Company may potentially issue
relating to its share option scheme.
Earnings per share on operating profit, before exceptional
costs, share based payments and loss on discontinued operations,
are considered to be the most realistic measure of earnings and the
calculation is based on the weighted average number of shares.
The result for the year and the weighted average number of
shares used in the calculations are set out below:
2018 2017
GBP000 GBP000
Earnings attributable to equity holders
of the parent 633 192
------------ --------
Weighted average number of
shares (thousands) 139,472 130,326
Dilutive/free shares 917 917
------------ ------------
Diluted number of
shares 140,389 131,243
------------ ------------
Earnings per share 0.5p 0.1p
-------- ------------
6. Acquisitions in the year
Business combinations are accounted for using the acquisition
accounting method as at the acquisition date, which is the date at
which control is transferred to the Group. Goodwill is measured at
the acquisition date as the fair value of consideration, less the
recognised amount of the identifiable assets and liabilities
assumed, in accordance with the accounting policy definition set
out in the Accounting Policy notes.
Acquisition of First Byte Micro Limited
On 10 January 2018 the Group acquired 100% of the share capital
of First Byte Micro Limited ("FBM") a company incorporated in
England, whose principal activity is acting as a franchised and
independent distributor of electronic components. The purchase
consideration consists of GBP1.2 million, of which GBP0.7 million
represents cash at completion in FBM. Of the remaining GBP0.5
million, GBP0.27 million was paid in cash on completion and the
residual GBP0.23 million will be paid 12 months after completion.
Contingent consideration is payable to the previous owner remaining
with the business for growth in profitability over and above that
acquired. At the year-end no contingent consideration has been
provided for as determination of such requires a full year trading
to be completed.
As a result of the acquisition, the Group will have gained a
significant capability in the sourcing of hard to find, obsolete
and end-of life components, products and systems.
Eight months' trading has been included in the consolidation,
contributing GBP251,000 revenue and GBP140,000 profit before tax.
Full period results show revenue of GBP251,000 and a loss before
tax of GBP21,000.
Acquisition of Aspen Electronics Limited
On 26 July 2018 the Group acquired 100% of the share capital of
Aspen Electronics Limited, whose principal activity is acting as a
premium distributor of electronic components, specialising in radio
frequency (RF) and microwave components and test and measurement
equipment. The net consideration consisted of GBP2.4 million,
satisfied partly in Ordinary Shares in APC and partly in cash.
The RF and Microwave business is complementary to APC's existing
business, which the Board expects will lead to top-line synergy
opportunities. In addition, Aspen has in-house component testing
facilities, which allow it to provide enhanced value-added services
to key customers and suppliers.
One month's trading has been included within the consolidated
group results. Revenue of GBP466,000 and a profit before tax of
GBP53,000 has been recognised. Full year results show revenue of
GBP5.3 million and a profit before tax of GBP106,000.
Recognised amounts of identifiable assets acquired and
liabilities assumed.
First
Byte Aspen
Micro Electronics
Limited Limited
GBP000 GBP000
Cash and cash equivalents 718 986
Tangible fixed assets - 550
Inventory 36 387
Trade and other receivables 130 881
Trade and other payables (213) (707)
Deferred taxes - (110)
671 1,987
Goodwill 553 1,195
--------- -------------
Total purchase consideration 1,224 3,182
========= =============
Analysed as follows:
First
Byte Aspen
Micro Electronics
Limited Limited
GBP000 GBP000
Initial cash consideration 276 1,460
Cash acquired 718 963
Vendor ordinary shares - 259
New shares in APC Technology
Group PLC - 500
Deferred consideration 230 -
Total acquisition cost 1,224 3,182
========= =============
New shares in APC Technology Group PLC were issued to the vendor
at the placing price of 6.75p per share.
The fair value of the financial assets includes receivables with
a fair value of GBP856,000. The best estimate at the acquisition
date of the contractual cashflows potentially not collectible is
GBP85,000.
Acquisition related costs of GBP69,000 have been charged to
exceptional costs in the consolidated income.
The assessment of the fair value of assets and liabilities
acquired remains under review and subject to change under the
completion mechanism of the Sale and Purchase Agreement.
7. Publication of non-statutory accounts
The financial information set out in this announcement does not
constitute the statutory financial statements for the year ended 31
August 2018 and the year ended 31 August 2017 in accordance with
section 434 of the Companies Act 2006 but is derived from those
accounts.
The financial statements for the years ended 31 August 2017 and
31 August 2018 were prepared in accordance with IFRS as adopted by
the European Union and those for the year ended 31 August 2017 have
been delivered to the Registrar of Companies. The financial
statements for the year ended 31 August 2018 will be delivered to
the Registrar of Companies following the Company's Annual General
Meeting. The auditor's reports on both financial statements were
unqualified, did not include references to any matters to which the
auditor drew attention by way of emphasis without qualifying their
report and did not contain statements under sections 498(2) or (3)
of the Companies Act 2006.
The full audited financial statements of APC Technology Group
PLC for the year ended 31 August 2018 are expected to be posted on
Friday 25 January 2019 to those shareholders who have elected to
receive hard copies. They will also be available to the public at
the Company's registered office, 6 Stirling Park, Laker Road,
Rochester, Kent, ME1 3QR and available to view on the Company's
website at www.apcplc.com from the date of posting.
8. Annual General Meeting
The Annual General Meeting of the Company will be held on Friday
22 February 2019 at 11.00 a.m. at the offices of the Company's
auditors, RSM UK Audit LLP, 25 Farringdon Street, London EC4A
4AB.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR DZLFFVLFXFBF
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December 17, 2018 02:00 ET (07:00 GMT)
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