TIDMAPC
RNS Number : 3615Y
APC Technology Group PLC
05 December 2017
5 December 2017
("APC" or the "Company")
Final Results for the Year ended 31 August 2017
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 results for the year ended 31
August 2017.
Financial highlights
-- Post-tax result improved to a profit of GBP0.2 million,
compared with a loss of GBP12.9 million in 2016 (which was
predominantly attributable to exceptional and non-recurring
expenses)
-- GBP0.8 million operating profit before exceptional and
non-recurring expenses, compared to GBP0.3 million in the prior
year
-- Revenue from continuing operations GBP15.6 million (2016: GBP18.0 million)
-- Gross profit, before exceptional and non-recurring expenses
GBP5.4 million (2016: GBP6.4 million)
-- Gross margin, before exceptional and non-recurring expenses 34.9% (2016: 35.8%)
-- Headcount within continuing business reduced from 91 to 65
-- Underlying operating overheads reduced by 19% compared with 2016
-- Two share subscriptions completed in the period, resulting in
GBP0.5 million in new equity for the Group
-- Net debt at year-end reduced to GBP3.1 million (2016
GBP3.2m), of which GBP2.5 million (2016: GBP2.7 million) relates to
amount owed under the Group's GBP6 million invoice finance facility
with ABN Commercial Finance.
Operational highlights
-- Bookings in year of GBP16m, representing a positive book to bill ratio for future growth:
o APC Hi-Rel order book at year-end GBP2.4m, double last year,
and bookings during the year GBP7.1m, up 35% on prior year
o APC Time bookings during year GBP1.2m, up 75% on prior year
-- Order highlights in year include:
o GBP1.8m of power supplies for the defence sector,
o GBP700k repeat order for a civil aviation programme,
o GBP250k of counter IED technology, and
o GBP500k revenue to date, with quoted work at over GBP2.5m,
under a new preferred supplier agreement for a major facilities
management group.
-- APC specialist teams generated increased revenue for their partners:
o Group's top 15 suppliers by revenue in 2017 shared average growth of 16%
-- Business development highlights:
o APC Lighting re-focused as a bespoke lighting solutions
provider to property management companies, with three preferred
supplier agreements signed in the period
o UK distribution deals signed with Datel, Crystek, Signal Microwave, MWT and Oregano
o Robust pipeline of other opportunities
Tony Lochery, Chairman of APC, commented:
"The financial year ended 31(st) August 2017 has seen the
successful conclusion of a period of restructuring, a return to
profitability and
the formation of a management team well equipped to lead the
company into a period of sustained growth.
In parallel with the restructuring, we have strengthened
relationships with top suppliers, who shared significant growth
during the period. As a consequence, we have also deepened
relationships with end-users, and this in turn reinforces our
market position as an essential and value-adding link in a
technical and specification driven supply chain.
It is our intention, through sales growth, profit growth, and
cash generation to make APC a reliable and rewarding investment and
trading partner for many years to come. We are currently trading in
line with management's expectation.
We would like to thank our staff, shareholders and suppliers for
their continued support, particularly in the last 12 months."
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 submit their Statutory Strategic
Report for APC Technology Group PLC ("the Company") and its
subsidiary undertakings (together "the Group") for the year ended
31 August 2017, 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
Last year we reported that the Board had reviewed the Group's
strategy and had determined that we should concentrate on our core
strengths, the design, specification and distribution of specialist
electronic components and systems. This review had identified a
number of activities that did not fit with this strategy and
therefore were discontinued during the 2015/6 financial year. In
addition the Board reluctantly concluded that the Green Compliance
water monitoring business also did not readily align with the
strategy and as a result Green Compliance Water Division Limited
was sold on 12 October 2016 to Integrated Water Services Limited
("IWS"), a subsidiary of South Staffordshire PLC.
The transaction triggered an exceptional charge to the 2015/6
income statement of GBP7.6 million, representing a non-cash write
down of the intangible asset value of customer lists and goodwill
relating to the water hygiene business, which was included in
discontinued operations. Exceptional charges relating to other
aspects of the restructuring meant that the 2015/6 financial year
reported a significant loss.
The year ended 31 August 2017 has seen very considerable
progress, as the Group has been able to concentrate on developing
the new strategy. In addition the year has seen the benefits of the
extensive review of overheads carried out last year. As a result we
are pleased to be reporting a pre-tax profit of GBP166,000 this
year, together with an improvement in our cash flow. More details
on our improved financial performance are set out in the Financial
Results section of this Report.
The Group has benefitted for all or most of the year under
review from a number of major changes made in the last fifteen
months:
-- The Group's sites at 47-48 Riverside, Rochester, and Phoenix
Park, St Neots, were closed last year and throughout 2017 all
Rochester operations have been concentrated at the Group's offices
at Stirling Park.
-- A full-time Finance Director was appointed in April; he and a
strengthened finance team are now all based in Rochester, which
enables a closer relationship with operations and improved working
capital management and financial controls.
-- The business model for lighting was overhauled in 2016 and
the business is enjoying a wider customer base as a result. The key
partnerships established with leading European manufacturers have
reduced freight costs and supplier lead times, enabling a reduction
in inventory levels.
-- Group headcount has been reduced from 91 at 31 August 2016 to 65 at 31 August 2017.
-- The London office at Borough has been vacated and a smaller
serviced office established in central London.
-- Legacy costs relating to headcount reductions in recent years
had largely ceased by the year-end.
As a result of the above, underlying operating overheads in 2017
were 19% less than last year.
In addition, the Board has strengthened the financing base of
the Company in several ways:
-- The already supportive relationship with ABN has been further
enhanced, as their GBP6 million invoice discounting facility
continues.
-- The creditor invoice financing facility with Pay4 Limited has
been increased from GBP300,000 to GBP400,000 (with a further
increase to GBP500,000 since the year-end).
-- Two share placings and share subscriptions raised a total of
GBP0.5 million before expenses.
More details on these financing measures are dealt with in the
funding and cash flow section of this Report.
As a result of the above developments, during the year under
review the Board was able to embark upon a programme of simplifying
the corporate structure and reducing the number of now-dormant
subsidiaries within the Group. 17 such subsidiaries were dissolved
during the financial year and a further 14 since the year-end.
Review of continuing operations
Since the restructuring that took place last year, the Group has
been trading 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 positive progress made by each of these teams in the year
under review is discussed below.
High-Reliability Electronics (trading as APC Hi-Rel) provides
the technical sale of high-reliability, high temperature and high
voltage electronic components into the defence and aerospace
markets. APC represents a range of manufacturers for the UK market
and works on projects that can run for 3 to 5 years. With these
long projects, future bookings are a good measure of success. In
the financial year 2017, bookings were GBP7.1m, which is a 34.6%
uplift to 2016 total bookings.
Design-win success for aerospace-grade power supply units
Resulting from a series of design win successes, APC Hi-Rel is
the sole supplier of units to power flight control systems on
several major civil and military aircraft production programmes.
APC works with the engineering teams of aerospace equipment
manufacturers to incorporate industry-leading products (together
with advanced products from other manufacturers) into multiple
airborne equipment sets including display, weapons and control
systems.
Radio Frequency and Microwave (trading as APC RF &
Microwave) distributes high performance connectors, passive and
active devices and related electronic components to the defence,
telecoms, wireless and broadband markets. 80% of its customer base
is within the defence sector and 20% within other markets including
aerospace. Addressing the wider market is a growth opportunity for
future periods.
Continued involvement in protection of armed forces
In 2017 APC's involvement in advanced counter-improvised
explosive device (IED) technology resulted in year-on-year sales
growth for APC RF and Microwave. The division has worked with
defence customers on this technology since 2008, providing
components that generate radio frequency power to block the signals
often used to trigger IEDs. As the threat of Remote Controlled IEDs
continues to escalate, APC is well placed to provide solutions.
Embedded computing, wireless and Internet of Things (IoT)
(trading as APC Smartwave) sells embedded computer boards and
memory, gateways, sensors and related components to IT, industrial
manufacturing, defence and healthcare sectors. Again, widening the
industry penetration of our major technology lines presents a
growth opportunuty.
Time and Frequency Synchronisation (trading as APC Time)
provides time and frequency synchronisation systems to financial
institutions, government bodies, broadcasters, telecoms
organisations and rail companies. APC Time has continued to
represent one of the top three global manufacturers for nine years,
growing the revenue generated for that company within the past year
by 53%.
Transaction timing legislation boosts sales within financial
sector
New financial legislation, MiFID II, which comes into force in
January 2018, has provided a boost in sales for APC Time, providers
of time and frequency synchronisation. Under the new requirements,
financial institutions and those involved in high frequency trading
must comply with stricter limits for the time stamping of
transactions. Significant orders have come from the London
operation of a major French bank and an American multinational
finance company.
Lighting Technologies delivers project-based lighting solutions,
from lighting design and specification through to supply and
installation. This business has been trading as Minimise Energy but
is in the process of re-branding to APC Lighting.
Following a refocus of its business model, APC Lighting
predominately operates through preferred supplier agreements with
property/facilities management companies that manage property
portfolios across all sectors including education, retail, health,
hospitality and leisure. In the financial year APC undertook a
strategic realignment of our partnership base to generate a better
quality of earnings.
Lighting for Facilities Management. APC Lighting has delivered
GBP750k of lighting in the last six months to a leading property
management company across three of the several thousand facilities
that they manage. This has been achieved since signing a new
preferred supplier agreement in June 2017. The current quoted
pipeline is a further GBP2.5m across what is still a small
percentage of the remaining estate.
Performance Management (trading as EEVS) provides energy
efficiency verification services to businesses that have signed
energy performance contracts with service providers, or to public
sector organisations that have funded energy saving measures. This
specialist advisory and analysis service begins at contract
creation and provides on-going, independent validation for projects
in which expenditure or finance is linked to supplier
performance.
Major Telecoms Provider. Following the signing of a long-term
performance management contract with a major high street bank, EEVS
has now also secured a long-term contract with a major telecoms
provider for performance management products and analytical
capability to support its energy efficiency program. EEVS will
supply performance governance and verification products to ensure
savings are properly measured and verified.
Financial results
Group revenue from continuing operations for the financial year
was GBP15,564,000 (2016: GBP17,961,000). Gross profit (excluding
exceptional and non-recurring expenses) was GBP5,431,000 this
year(2016: GBP6,438,000), representing a gross margin of 34.9%
compared with 35.8% last year. The operating profit, before
amortisation and acquisition costs, of GBP271,000 in 2016 improved
to GBP756,000 this year, as a result of a significant cost-cutting
programme that saw underlying overheads from operations reduce from
GBP6,116,000 to GBP4,973,000, a reduction of 19%. In addition, the
Group's ownership of 15% of the issued share capital of Open Energy
Market Limited ("OEM") was valued to a fair value of GBP307,000, in
accordance with fair value hierarchy level 3 under IFRS 13 'Fair
Value Measurements', following an upturn in the OEM business.
Earnings per share, on operating profit before exceptional costs,
amortisation and share based payments improved from 0.3p to
0.4p.
Profit before tax from continuing operations for the year was
GBP166,000, compared with a loss of GBP3,086,000 in 2016 (which had
been incurred through accounting for one-off exceptional costs
totaling GBP3,026,000). The post-tax profit for the year was
GBP192,000 compared with a loss of GBP12,875,000 in 2016 (which had
included a loss of GBP9,789,000 from operations discontinued in
that year).
Funding and cash flow
In the financial year, there was a cash outflow from operating
activities of GBP719,000 which was heavily influenced by a
reduction of GBP2,084,000 in trade and other payables; improved
control over working capital also achieved decreases in trade and
other receivables and inventory levels. This was a significant
improvement on the outflow of GBP4,245,000 in 2016, most of which
had arisen from exceptional costs and discontinued operations. The
Group ended the year with a gross cash balance of GBP377,000 (2016:
GBP444,000).
The Group's net debt at 31 August 2017 was GBP3,101,000 (2016:
GBP3,161,000), The Group has an invoice discounting facility with
ABN of up to GBP6,000,000, of which GBP2,502,000 had been drawn
down at the year-end (2016: GBP2,711,000). ABN have demonstrated
considerable support for the business since the facility was
established in early 2015 and the facility continues with no fixed
termination date. In addition, the Group had a trade payment credit
facility with Pay4 Limited of GBP400,000 which was fully utilised
at 31 August 2017. Since the year-end the facility has been
increased to GBP500,000.
During the year, the Board authorised two share subscriptions by
existing investors and Board members, which raised a total of
GBP479,000. These measures further strengthened the balance sheet,
while providing adequate working capital for the Group as it
emerges from its period of restructuring.
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
The Board started the financial year with two Executive and two
Non-executive Directors, assisted by the interim Chief Financial
Officer.
As reported last year, the Senior Independent Director Ian
Davidson and the Chairman Leonard Seelig were both due to retire by
rotation at the Annual General Meeting in February 2017 and decided
not to seek re-election. Ian Davidson stepped down from the Board
on 13 December 2016 and Leonard Seelig at the conclusion of the
Annual General Meeting on 24 February 2017. We are most grateful to
both Leonard and Ian for their significant contributions during a
period of considerable change in the Group's structure and
strategy.
Tony Lochery was appointed to the Board on 24 February 2017 and
was elected Chairman following the conclusion of the Annual General
Meeting on that date. Tony Lochery has been chairing business to
business service and distribution companies for the last 12 years
and has an excellent record of value growth and realisation. He
brings significant experience in strategy development and
operational execution, for businesses trading in the UK and
internationally. Tony has held Board positions for over 30 years
including 13 positions as Chairman and other executive roles. Prior
to becoming non-executive, Tony built his own company, which was
sold to Kwik Fit PLC, where he became Group Managing Director.
After the sale of Kwik Fit PLC to Ford, Tony became Chief Executive
of City Holdings, a privately owned facilities management company
employing 10,000 people.
A further change occurred in April with the appointment of
Michael Thompson as Finance Director, in place of Art Russell who
stepped down as Chief Financial Officer. Art had played a
significant role, on an interim basis, in helping to steer the
Group through the financial effects of the Operational Review and
subsequent restructuring. The Board is very grateful to him for his
efforts, but considered that the time had now come for a full-time
Finance Director to join the Board, based in Rochester where the
majority of the Group's operations, including a strengthened
finance team, are now concentrated.
Michael Thompson qualified as a Chartered Accountant in 2007
following three years at a London practice. He then spent several
years working for Vantis plc and FRP Advisory LLP, specialising in
audit and business recovery. For the past 6 years Michael has
worked in the fresh produce sector, formerly as a senior finance
manager for Bakkavor, and since 2014 as Finance Director for
Newmafruit Farms Limited, a premier fruit farming and packing
business with a turnover of GBP25M.
Market growth factors
From a market perspective, there are a number of macro factors
that are going to affect APC in the next three years.
Defence Expenditure: According to HM Treasury data and
forecasts, capital and resource departmental expenditure limits
(DELs) are anticipated to grow by a total of GBP4.6 billion between
2016/17 to a total of GBP39.7 billion in 2020/21. In addition to
increased total spend, the UK government has committed to raise the
percentage spend that goes to small and medium sized enterprises to
25% by 2020. This could be beneficial to APC, which currently
receives 40% of its components revenue from customers operating
within military, space, aerospace and defence, not only into the
Hi-Rel business but also the RF and Microwave, Smartwave and Time
businesses.
US trade: At the present time, the UK exports more to the US
than it imports. With HM Revenue and Customs reporting a 1.8% month
on month rise in US imports to GBP3.6bn in May 2017, part of a
post-Brexit arrangement may well be a significant increase in US to
UK trade, with a Trump administration likely to demand parity. This
will be beneficial for APC, for whom 72% of component sales come
from US manufacturers.
Brexit: The effect of Brexit, and in particular the impact on
trade with Europe, remains unknown. However a distributor such as
APC, with an established network of end-users in industrial
markets, should be able to capitalise on the uncertainty facing
manufacturers seeking to penetrate the UK market, not least by
helping them navigate the changing clearances and accreditations
required to sell and export their products to the UK.
Europe: APC end users are involved in significant collaborations
across Europe. The financial performance of the Eurozone, the trade
outcome of Brexit, and European elections will all affect APC. We
view the uncertainty this brings, for those seeking to sell to the
UK, as a major opportunity for APC.
Component shortage: The electronics supply chain has not faced a
severe shortage for more than a decade. This has now changed, with
leading component suppliers quoting lead times into the first
quarter of 2018, and there is a growing emphasis on the importance
of cultivating strong relationships with suppliers or
distributors.
Outlook
Over the last 18 months, the business has undertaken a
significant refocus and restructuring. This has resulted in the
first profit since 2014. The Board are pleased that despite this
restructuring the order book in the Group's core business has
remained strong. The Group has a real focus and structure built
around its six product groupings.
The Group will 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. We are already seeing traction in all of these areas.
We are currently trading in line with management's expectation.
The Board consider that, given the progress it is seeing, the
business now has a strong platform for profitable growth and a
clear vision for the future.
The Board would once again like to take this opportunity to
thank our management, staff and advisers for their hard work,
dedication, professionalism and commitment to the Group, and to
express our appreciation to our suppliers, partners and
shareholders for their continued support.
Tony Lochery Richard Hodgson Michael Thompson
Non-executive Chairman Chief Executive Finance Director
4 December 2017
CONSOLIDATED STATEMENT OF INCOME
For the year ended 31 August 2017
2017 2016
--------------------------------------- ----------------------------------------
Exceptional Exceptional
Results and Results and
from non-recurring from non-recurring
operations expenses Total operations expenses Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 2 15,564 - 15,564 17,961 - 17,961
Cost of sales (10,133) (24) (10,157) (11,523) (736) (12,259)
Gross profit 5,431 (24) 5,407 6,438 (736) 5,702
Administrative
expenses (4,637) (228) (4,865) (6,116) (2,290) (8,406)
Operating
profit
/ (loss)
before
amortisation,
share based
payments and
acquisition
costs 794 (252) 542 322 (3,026) (2,704)
Share based
payments (38) - (38) (51) - (51)
---------------- ----- ------------ -------------- --------- ------------ --------------- ---------
Operating
profit
/ (loss) 756 (252) 504 271 (3,026) (2,755)
Financing
income 4 - - - 1 - 1
Financing costs 4 (338) - (338) (332) - (332)
Profit / (loss)
before
taxation 418 (252) 166 (60) (3,026) (3,086)
Taxation credit 26 - 26 - - -
Profit / (loss)
for the year
from
continuing
operations 444 (252) 192 (60) (3,026) (3,086)
Discontinued
operations
Loss for the
year from
discontinued
operations,
net of tax - - - - (9,789) (9,789)
Profit / (loss)
for the year
attributable
to the equity
holders of
the parent 444 (252) 192 (60) (12,815) (12,875)
------------ -------------- --------- ------------ --------------- ---------
Earnings per share from continuing and discontinued operations
attributable to the equity holders of the parent during the
year.
Note 2017 2016
Basic earnings
per share 5
From continuing
operations 0.1p (3.0p)
From discontinued
operations - (9.4p)
----- --------
From profit for
the year 0.1p (12.4p)
----- --------
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 2017
2017 2016
GBP000 GBP000
----------------------------- --------- -------------
Non-current assets
Intangible assets 7,378 7,378
Property, plant
and equipment 55 132
Associates and
financial assets 307 -
--------- -------------
7,740 7,510
--------- -------------
Current assets
Inventories 832 1,080
Trade and other
receivables 2,985 3,751
Cash and cash equivalents 377 444
--------- -------------
4,194 5,275
Assets held for
sale - 3,036
--------- -------------
4,194 8,311
--------- -------------
Total assets 11,934 15,821
--------- -------------
Current liabilities
Trade and other
payables (4,332) (6,416)
Borrowings (3,478) (3,027)
--------- -------------
(7,810) (9,443)
Liabilities directly
associated with
the assets held
for sale - (2,395)
--------- -------------
(7,810) (11,838)
--------- -------------
Total assets less
current liabilities 4,124 3,983
Non-current liabilities
Financial liabilities - (578)
--------- -------------
Net assets 4,124 3,405
--------- -------------
Equity attributable
to the equity holders
of the parent
Called-up share
capital 2,698 2,556
Share premium account 13,232 12,895
Share option reserve 297 548
Merger reserve 4,635 4,635
Translation reserve - (10)
Retained earnings (16,738) (17,219)
Total equity 4,124 3,405
--------- -------------
Consolidated statement of Changes in Equity
For the year ended 31 August 2017
Attributable to the equity holders Non-controlling
of the parent interests
----------------------------------------------------------------------------------- ----------------
Share
Share option
Share premium valuation Merger Translation Retained Retained
capital account reserve reserve reserve earnings Total earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
At 31 August
2015 1,831 11,302 497 4,635 (10) (4,344) 13,911 (220) 13,691
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Loss for
the year - - - - - (12,875) (12,875) - (12,875)
Other -
comprehensive
income - - - - - - - -
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Total
comprehensive
income for
the year - - - - - (12,875) (12,875) - (12,875)
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Transactions
with equity
holders of
the parent
Issue of
new shares 725 1,756 - - - - 2,481 - 2,481
Disposal
of
non-controlling
interest - - - - - - - 220 220
Costs associated
with share
issue - (163) - - - - (163) - (163)
Share option
charge - - 51 - - - 51 - 51
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
725 1,593 51 - - - 2,369 220 2,589
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
At 31 August
2016 2,556 12,895 548 4,635 (10) (17,219) 3,405 - 3,405
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Profit for
the year - - - - - 192 192 - 192
Other -
comprehensive
income - - - - - - - -
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Total
comprehensive
income for
the year - - - - - 192 192 - 192
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Attributable to the equity holders Non-controlling
of the parent interests
----------------------------------------------------------------------------------- ----------------
Share
Share option
Share premium valuation Merger Translation Retained Retained
capital account reserve reserve reserve earnings Total earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
Transactions
with equity
holders of
the parent
Issue of
new shares 142 337 - - - - 479 - 479
Share option
charge - - (251) - - 289 38 - 38
Non-controlling
interest
disposed - - 10 - 10 - 10
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
142 337 (251) - 10 289 527 - 527
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
At 31 August
2017 2,698 13,232 297 4,635 - (16,738) 4,124 - 4,124
-------- -------- ---------- -------- ------------ ---------------- --------- ---------------- ---------
ConSolidated statement OF CASH FLOWS
For the year ended 31 August 2017
Group Group
2017 2016
GBP000 GBP000
--------------------------- -------- ---------
Reconciliation of cash
flows from operating
activities
Profit/(loss) before
taxation including
discontinued operations
for the financial
year 166 (12,875)
Impairment loss
on assets held
for sale - 6,704
Loss on write-off
of investment in
associates - 788
Gain/(loss) on
revaluation of
investment in associate (307) 307
Loss on discontinued
subsidiary interests - 1,120
Finance costs 338 401
Finance income - (1)
Taxation receipts 26 29
Depreciation of
property, plant
and equipment 90 95
Decrease in inventories 248 846
Decrease / (increase)
in trade and other
receivables 766 (1,025)
Decrease in trade
and other payables (2,084) (685)
Share-based payments
charge 38 51
-------- ---------
Net cash used in
operating activities (719) (4,245)
-------- ---------
Cash flows from
investing activities
Acquisition of
property, plant
and equipment (13) (23)
Sale of subsidiary
undertakings 641 -
Sale of investment
in associates - 319
-------- ---------
Net cash from investing
activities 628 296
-------- ---------
Cash flows from
financing activities
Finance income - 1
Finance costs (338) (401)
Proceeds of share
issue 479 2,318
Finance leases (21) (22)
(Decrease) / Increase
in short-term borrowings (96) 1,340
Repayment of loan
notes - (60)
-------- ---------
Net cash from financing
activities 24 3,176
-------- ---------
Decrease in net
cash (67) (773)
-------- ---------
Cash and cash equivalents
as at 1 September 444 1,239
Decrease in net
cash (67) (773)
Cash in assets
held for sale - (22)
-------- ---------
Cash and cash equivalents
as at 31 August 377 444
-------- ---------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
Statement of compliance
These financial statements have 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'. These
financial statements have been prepared in accordance with IFRS as
adopted by the European Union, and with those parts of the
Companies Acts applicable to companies reporting under IFRS.
Going concern basis of accounting
The financial statements have 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 GBP719,000 which was heavily influenced by a
reduction of GBP2,084,000 in trade and other payables, while
improved control over working capital also achieved decreases in
trade and other receivables and inventory levels.
The cash requirement of the Group was funded partly by trading,
partly by improved working capital management and partly by two
share subscriptions by existing shareholders and Board members,
which raised a total of GBP480,000, and GBP641,000 proceeds from
the sale of the water business. These measures enabled a reduction
of GBP96,000 in short term borrowings and a significant reduction
of over GBP2 million in amounts due to suppliers and other
creditors.
Management has examined going concern against a detailed profit,
working capital, and cash flow forecast to December 2018, 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.
As a result of the sale of Green Compliance Water Division
Limited in the previous year, the Company determined that it now
has only a single reportable segment, being the design,
specification and distribution of specialist electronic components
and systems.
The Group had no customers representing over 10% of revenue
(2016: GBP2,168,000).
Revenue by product and service
2017 2016
GBP000 GBP000
----------------------- ------- -------
Electronic Components 11,214 10,894
LED Lighting 3,504 6,114
Consulting 846 953
------- -------
15,564 17,961
------- -------
Revenue by geographic location
2017 2016
GBP000 GBP000
----------------- ------- -------
UK 15,216 16,996
North America 82 235
Europe and Asia 266 730
------- -------
15,564 17,961
------- -------
3. Exceptional and non-recurring expenses
2017 2016
GBP000 GBP000
------------------------------------------- ------- -------
Corporate re-organisation - compromise
agreements and redundancy costs 399 1,543
Corporate re-organisation - professional
fees 68 200
Corporate re-organisation - dilapidations
and onerous lease provisions 57 254
Corporate re-organisation - third
party creditors (335) -
Costs associated with aborted contract 24 736
Foreign exchange loss arising from
unprecedented market volatility 39 293
------- -------
252 3,026
------- -------
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. Net financing
2017 2016
GBP000 GBP000
------------------ -------- -------
Financing income
Other Interest
receivable - 1
--- -------
Financing costs
Other interest
payable 174 158
Other finance costs 164 174
---- ----
338 332
---- ----
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:
2017 2016
GBP000 GBP000
------------------------------------- -------- ---------
Continuing earnings / (loss)
attributable to equity holders
of the parent 192 (3,086)
-------- ---------
Discontinuing earnings /
(loss) attributable to equity
holders of the parent - (9,789)
-------- ---------
From profit / (loss) for
the year 192 (12,875)
-------- ---------
Earnings: operating profit
/ (loss) before exceptional
and non-recurring expenses,
share based payments, amortisation
and loss on discontinued
operations 794 322
-------- ---------
Weighted average number
of shares (thousands) 130,326 103,678
Dilutive / free
shares 917 28
-------- ---------
Diluted number
of shares 131,243 103,706
-------- ---------
6. 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 2017 and the year ended 31 August 2016 in accordance with
section 434 of the Companies Act 2006 but is derived from those
accounts.
The financial statements for the year ended 31 August 2016 were
prepared in accordance with EU adopted IFRS and have been delivered
to the Registrar of Companies. The financial statements for the
year ended 31 August 2017 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The
auditor's report on both accounts was 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 2017 are expected to be posted on
Thursday 18 January 2018 to those shareholders who have elected to
receive hard copies. It 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.
7. Annual General Meeting
The Annual General Meeting of the Company will be held on
Thursday 22 February 2018 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 company news service from the London Stock Exchange
END
FR LZLLBDLFZFBL
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December 05, 2017 02:00 ET (07:00 GMT)
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