TIDMAPC
RNS Number : 2123L
APC Technology Group PLC
08 January 2016
8 January 2016
APC Technology Group PLC
("APC" or the "Group")
Final results for the year ended 31 August 2015
APC Technology Group PLC (AIM: APC), the provider of
technologies and services to improve organisational sustainability
and the specialist distributor of electronic components, announces
its preliminary results for the year ended 31 August 2015.
Financial summary
-- Revenue increased by 51% to GBP31.1 million (2014: GBP20.6 million)
-- GBP21 million of recurring or repeat revenue across 1,500 customers
-- 13% increase in like-for-like revenues (excluding acquisition of Green Compliance plc)
-- Gross profit before exceptional costs GBP7.8 million (2014: GBP7.6 million)
-- Operating loss before exceptional costs, amortisation,
share-based payments and acquisition costs GBP1.1 million loss
(2014: GBP0.6 million profit)
-- Post-tax loss of GBP5.8 million (2014: GBP0.3 million
profit), after GBP3.9 million exceptional costs, including
discontinued activities
Post period end
-- Good progress made against objectives set out in Group-wide operational review
-- Restructured Board focused on cross-selling strategy between
Energy, Water and Component Distribution customer bases
-- Non-core businesses rationalised, cost saving initiatives
introduced to deliver GBP1 million of annualised cost savings
-- Strengthened order book and significant new contract wins announced since year-end.
Leonard Seelig, Chairman of APC Technology Group PLC,
commented:
"Our focus post period end has been to execute on the
operational review, improving profitability and enhancing growth.
Under the guidance of our new Chief Executive, Richard Hodgson, the
Group is now focused on realising the potential of its profitable
businesses, both through winning new customers and capitalising on
cross-selling opportunities wherever possible. FY2015 was a
challenging year for APC but with the business now stabilised and a
clear new strategy in place, there is cause for a renewed sense of
optimism."
Enquiries:
APC Technology Group PLC 01634 290 588
Leonard Seelig, Chairman www.apc-plc.co.uk
Richard Hodgson, Chief Executive
Cantor Fitzgerald Europe Limited
(Nominated Advisor and Broker) 020 7796 8800
Andrew Craig / Richard Salmond (Corporate Finance)
Redleaf Communications (Financial
PR) 020 7382 4730
Rebecca Sanders-Hewett / David Ison / Susie Hudson
Notes to Editors:
About APC Technology Group PLC
APC's sustainability related activities are designed to offer
its clients a simple, 'one stop shop' approach to meeting their
sustainability obligations. With sustainability related consulting,
energy management and water management under one roof, the Group
are able to deliver all of an enterprises requirements for cost and
consumption reduction.
APC's electronic component distribution business, trading as
Advanced Power Components, sells specialist components into
defence, aerospace, space, transportation medical and industrial
sectors. More latterly the Company's components are used in
connectivity related products in the increasing market around the
Internet of Things. The Company's value-added business model,
centred upon the technical experience and capabilities of the
Company's sales engineers, are of value to both clients and
suppliers, for whom APC typically acts on an exclusive basis.
CHAIRMAN'S STATEMENT
This has been a challenging year of change, not only in our
business but also in the environment in which we operate. The
dramatic drop in energy prices, along with the uncertainty of
changing government policy in the energy and efficiency sectors,
led the Board and management to review its activities during the
period and make difficult decisions to reposition the Group for
future profitable growth.
Our electronic component distribution business enjoyed a steady,
profitable year.
Our cleantech business, Minimise Group, experienced challenging
trading conditions in the LED lighting field, both in the UK and
North America, with adverse effects on the Group's results. Our
water management business, established in September 2014 with the
acquisition of Green Compliance plc, has been successfully
integrated into the Group and, in addition to its own stable and
profitable business, has started to produce opportunities for
cross-selling with other Group businesses. Significant progress has
been made in building a full energy and water management solutions
business, enhanced by the acquisition of EEVS Insight Ltd in July
2015.
The Operational Review undertaken by myself and the Board
examined the whole Group and has resulted in a renewed focus on the
core businesses that are both profitable and cash generative with a
large element of recurring revenue. These core businesses are built
around products and services that are both in demand and have
impressive customer bases providing opportunity for
cross-selling.
Trading
Total turnover during the year was GBP31,069,000, which was a
significant increase on the prior year (2014: GBP20,634,000). This
encouraging revenue growth was underlined by a 13% increase in
like-for-like sales, demonstrating that our products and services
represent an attractive customer solution in a competitive and
challenging marketplace. Sales of the Group's energy and water
saving and efficiency products and services alone grew by 125% to
GBP18,411,000 (2014: GBP8,178,000). GBP10.6 million of these sales
were represented by Minimise Energy Limited's sales and
installation of LED lighting, the Group's energy monitoring
business, Minimise Solutions, made an increased contribution and
Green Compliance plc's water management and hygiene services
contributed GBP7.8 million in almost a full year since its
acquisition in September 2014. Sales in Advanced Power Components,
our electronic component distribution business, were GBP12,658,000
(2014: GBP12,456,000), a solid performance in a slow market, with a
particularly strong performance by the HiRel (high reliability)
components business unit. The result for the year, before
exceptional items, amortisation, share based payments and
acquisition costs, was a loss of GBP1,139,000 (2014: GBP573,000
profit) manifesting the difficult trading conditions in Minimise
Energy. These issues are described further in the Chief Executive's
Review. The Group's post-tax loss was GBP5,774,000 (2014:
GBP302,000 profit), but this included an exceptional loss of
GBP3,871,000, of which GBP1,245,000 related to discontinued
activities.
Liquidity
The financial year ended with net debt of GBP1,986,000 (2014:
GBP326,000). We are very pleased to have renewed our GBP6 million
invoice finance facility with ABN Commercial Finance out to 31
December 2016.
Dividend
The Board has again reviewed the Group's dividend policy. Whilst
it maintains its desire to pay dividends in the long-term, it
continues to believe that greater returns in the near-term are
available from investing available funds in opportunities for
profitable, cash-generative growth. The Board is therefore not
recommending a dividend for 2015 (2014: GBPnil).
Board of Directors
During the financial year, and subsequently, there have been
several changes in the composition of the Board.
In August 2015 Mark Robinson stepped down as Chief Executive
Officer. Richard Hodgson was appointed to the Board as Chief
Financial Officer in September 2014, following the acquisition of
Green Compliance plc, and replaced Mark as CEO in August 2015.
Following the completion of the Operational Review, Andrew Shortis,
Managing Director of Sustainable Technologies, stepped down from
the Board in November 2015. Tessa Laws resigned as a Non-executive
director in February 2015.
These changes mean that the Group moves forward with a leaner
Board, split equally between executive and non-executive roles. It
is our intention to appoint a further non-executive director in the
foreseeable future.
I would like to thank Mark, Andrew and Tessa for their hard work
and commitment during their time with the Group.
Future
At the end of the period we undertook a comprehensive review of
the Group's operations which resulted in a number of actions being
taken to improve profitability and enhance growth. Under the
guidance of our new Chief Executive, Richard Hodgson, the Group is
now focused on realising the potential of its profitable
businesses, both through winning new customers and capitalising on
cross-selling opportunities wherever possible. FY2015 was a
challenging year for APC but with the business now stabilised and a
clear new strategy in place, there is cause for a renewed sense of
optimism.
I would like to take this opportunity to thank our management,
staff and advisors for their dedication and commitment to the Group
and to express our appreciation to our partners and shareholders
for their continued patience and support.
Leonard Seelig
Chairman
7 January 2016
CHIEF EXECUTIVE'S REVIEW
As reported in the Chairman's Statement, our operating units
experienced varying trading conditions during the year. Our
component distribution and water management businesses performed
well, but our energy management businesses experienced challenging
conditions, which had an adverse effect on the Group's overall
results.
As a result, the Board decided in August to initiate an
Operational Review to examine all aspects of our business and
determine which areas should form our core businesses going forward
and which businesses needed to be rationalised or discontinued.
Electronic Component Distribution (Advanced Power
Components)
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Revenues in our specialist electronic component distribution
business, trading as Advanced Power Components, increased by 1.6%
compared with 2014 in a challenging market. This business has
consistently demonstrated that it is stable, profitable and
cash-generative with a steady daily invoicing flow and a relatively
short working capital cycle. Its success is attributable to our
continued focus on specialist applications where our sales
engineers provide a value-added technical interface between the
specialist component manufacturers that we represent and our
customers' design engineering teams. Our staff's technical
expertise is particularly valuable in situations where the end-use
equipment is operating in extreme conditions or running
applications where component failure would be catastrophic. This is
a key factor in differentiating us from other component
distribution companies. More latterly our connectivity components
are well positioned in the fast-growing market for the 'Internet of
Things' (IoT).
This business is seen as a cornerstone of the Group's activities
going forward. It continues to be managed as a single reporting
unit, within which separately branded specialist sales teams focus
on specific product ranges and address targeted markets. The
performance of these units is described below:
HiRel: record sales exceeded all prior years attributable to
design-in success and accelerated customer project schedules. Key
applications in the year under review included components for
flight critical systems on civil aircraft, satellites and space
exploration and oil and gas 'down hole' applications encountering
extreme temperatures.
Hero: this business has seen the first real signs of success in
the sale of ultracapacitors into a variety of applications
including renewable energy systems. Hero has also launched an
exciting new product range targeting IoT applications.
Novacom: performance was adversely affected by the
rationalisation of some product lines, not yet fully compensated
for by their replacements. However, the first quarter of fiscal
year 2016 has started well with an impressive order book already
secured.
Contech: this unit has some great components, which reduce
infection and increase hygiene levels in medical environments. This
is obviously a key potential cross-sell into our water hygiene
business.
Locator: obsolescence management and an increasing incidence of
counterfeit components in all high reliability markets fuels the
services and expertise we provide in sourcing obsolete components.
In particular, Locator is currently engaging with a major rail
transport customer to address a very significant legacy of
obsolescence.
Time: the demand for accurate timing systems has remained
buoyant, resulting in steady trading for this business.
Sustainable Technologies (Minimise Group)
Our sustainable technologies business trades as Minimise Group.
This business is designed to improve our customers' sustainability
and profitability through an integrated range of energy efficiency
and water management products, services and solutions.
Minimise Solutions: The Solutions team is actively engaged
across the Group's customer base with a view to delivering energy
and water management programs designed to reduce customers' natural
resource consumption and cost. This is achieved through the
introduction of monitoring and control technology and data
analytics. This technology is typically sold on multiyear contracts
to enable the team to build long-term relationships with their
customers and to deliver recurring and repeat revenue. Group or
third party products and services are then introduced to achieve
stated natural resource reduction goals. The impending deadline for
Energy Savings Opportunity Scheme (ESOS) compliance and the UK
Government's recent extension of this has helped generate
substantial new business for Minimise Solutions.
Monitoring and control hardware along with reporting software is
pivotal to the Group's strategy of informing clients in the
consumption of utilities and measuring the results of action taken.
During the year our remote monitoring technology has seen
significant growth and already has 14,000 sensors and probes
enabled for monitoring with nearly 1,000 gateways configured on
active systems. Minimise Solutions installed these in the premises
of several blue-chip customers. This expertise has also been
extended from the energy sector into water management with the
Compliance Online water temperature monitoring system for Green
Compliance.
Minimise Water (incorporating Green Compliance): Since its
acquisition in September 2014, Green Compliance has traded in line
with expectations, achieving sales of GBP7.8 million in the
financial year, maintaining its contracted water management and
hygiene monitoring customer base.
Since the acquisition we have launched our Integrated Water
Management product offering, which is seeing significant sales
traction. Many businesses today look at their water management from
a single perspective. This might be cost, compliance or general
usage and is often to meet a specific need or objective. Integrated
Water Management from Minimise Water looks at how businesses use
water from every angle, identifying how they can manage water usage
more effectively to meet an enhanced range of objectives and add
real value. We regard water as a commercial business resource and
can help customers maximise both its use and its effectiveness.
Water usage monitoring positions our customers well for water
deregulation in 2017.
Since the end of the fiscal year our water business has seen
contract sales success, being selected as sole water management
supplier for a major hotel group and appointed to provide water
treatment services to 1,500 key government sites across the South
West. These wins, alongside other contract renewals secured since
the end of the fiscal year, represent a significant annual
recurring revenue stream whilst also securing opportunities to
cross-sell the wider Group's products and services.
Long-standing Group client Network Rail, which has been using
our energy monitoring and control technology at over 20 UK sites
for the past two years, has now installed our new Compliance Online
water temperature monitoring system at its London Bridge site. One
of five new products launched since July 2015 by Minimise Water,
Compliance Online automates continuous temperature monitoring of
water systems to reduce the risk of legionella and provide robust
real-time reporting. We are seeing significant interest and trials
from residential, food manufacturing and educational services for
this product.
Minimise Energy (MEL): Historically this business had relied
heavily on a major customer, Wm Morrison Supermarkets Plc
("Morrisons"). The year under review saw renewed involvement with
Morrisons augmented by several other significant contracts, thus
spreading the Group's risk. However, the business unit's turnover
profile remained uneven and the resources needed to manage this
large installation programme progressively eroded profitability
during the year. In addition, the manufacture of LED lighting in
the Far East has meant excessive freight costs and a lengthy
working capital cycle, including high levels of stockholding and
associated warehouse costs, which in one significant case has been
exacerbated by delays in installation by the customer's third party
contractor. The conclusions of the Operational Review described
below have identified changes in MEL's business model to ensure
that these negative factors are mitigated or eliminated.
The Operational Review has concluded that MEL and the supply and
installation of LED lighting remains a core business going forward,
sold alongside an overall solution designed to reduce energy
consumption. As a result, the business model is being overhauled.
In future, large installation projects will be taken on only if the
terms of trade negotiated with the customer allow profit and
working capital utilisation to be optimised. The core focus of the
team will be on the design, specification, supply and installation
of individual LED projects across a diverse customer base, in order
to maximise delivery efficiency and profitability. The Group's
customer base and the 2,500 properties managed by Minimise Water
provide a large opportunity for our team. This new approach will
also enable a significant element of fixed costs to be taken out of
the business and working capital to be managed more
conservatively.
The Operational Review has also identified several areas of our
sustainable technologies business where investment of significant
additional resources cannot be justified at the present time
without seriously diluting resources available to our core
businesses. These businesses will be curtailed or discontinued as
appropriate.
Financial results
Group revenue for the financial year was GBP31,069,000 (2014:
GBP20,634,000). Gross margins improved, resulting in a gross profit
of GBP7,813,000 for the year compared with GBP7,558,000 in 2014.
Operating loss before exceptional costs, amortisation, share based
payments and acquisition costs was GBP1,139,000 (2014: GBP573,000
profit), generating a loss per share of 1.4p compared with earnings
of 1.0p per share last year. The financial year saw the first full
year inclusion of Green Compliance whose main trading business is
water hygiene and treatment. Assets and goodwill acquired in that
transaction are set out in the note to the financial
statements.
Loss before tax from continuing operations for the year was
GBP4,799,000, compared with profit before tax of GBP382,000 in
2014. The loss is after accounting for: one-off exceptional costs
in relation to restructuring of GBP1.732million, one-off
professional fees in relation to the acquisition of Green
Compliance of GBP616,000 and non-cash amortisation of the
intangible customer lists acquired of GBP690,000.
Funding and cash flow
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In the financial year there was a cash outflow from operating
activities of GBP2,790,000 compared with an outflow of GBP657,000
in 2014. The Group ended the year with a gross cash balance of
GBP1,239,000 (2014: GBP552,000).
The Group's net debt at 31 August 2015 was GBP1,986,000 (2014:
GBP326,000). During the year under review the Group had an invoice
discounting facility with ABN Commercial Finance of up to
GBP6,000,000, of which GBP2,543,000 had been drawn down at the
year-end (31 August 2014: GBP752,000). The Group has no other bank
debt.
During the year, the Board authorised two share placings with
existing and new investors and two directors, which raised a total
of GBP3,579,000 before expenses, to strengthen the balance sheet
and provide funds for further expansion.
Outlook
The objective of the Operational Review was to focus on our
profitable and cash generative products and services and by doing
so to deliver a stable platform for growth.
For the component distribution and water businesses, the focus
is to ensure that the profitable success achieved in these
businesses is supported and built upon. Within these businesses we
have over 1,500 customers who regularly buy from us. These long
standing relationships produce a high level of recurring revenue,
which provides stability from which we can grow. Many of our
customers are leading UK business and market leaders and in most
cases there is opportunity for us to provide them with a much
greater depth and breadth of product offering. The profitable
growth potential within our existing businesses is therefore
significant and can come from customers and areas where we already
generate revenue.
The detailed review of Minimise Group has identified a clear
strategy for the profitable sale of our first class LED offering
across a diverse customer base, delivered by a streamlined
business.
The 2015 loss before tax was heavily impacted by one-off costs,
losses from discontinued businesses and overhead increases that
have now been removed from the Group. Cash was similarly impacted
and whilst we are mindful of our working capital resources we
believe that the measures already being implemented will provide a
stable platform for profitable growth and cash generation through
both margin improvement and transactional sales delivery. Since the
year-end we have already removed GBP1m of annualised cost.
Capitalising on the potential of delivering existing products
and services into existing customers will be our primary focus for
FY2016. Longer-term we are confident of the growth opportunities in
the markets in which we operate and with the products and expertise
at our disposal. We will continue to build our solutions sales
capability to take full advantage of them.
Richard Hodgson
Chief Executive
7 January 2016
CONSOLIDATED STATEMENT OF INCOME
For the year ended 31 August 2015
2015 2014
----------------------------- --------- ----------------
Exceptional
Results and
from non-recurring
operations expenses Total Total
(Note
3)
Note GBP000 GBP000 GBP000 GBP000
Revenue 2 31,069 - 31,069 20,634
Cost of sales (23,256) (757) (24,013) (13,076)
Gross profit 7,813 (757) 7,056 7,558
Administrative
expenses (8,961) (1,182) (10,143) (6,957)
Share of results
of associates 9 - 9 (28)
Operating (loss)/profit
before amortisation,
share based payments
and acquisition
costs (1,139) (1,939) (3,078) 573
Amortisation
of intangible
asset (690) (71) (761) -
Share based payments (99) - (99) (103)
Cost of acquisitions - (616) (616) (43)
--------------------------- ----- ------------ --------------- --------- ----------------
Operating (loss)/profit (1,928) (2,626) (4,554) 427
Financing income 4 4 - 4 14
Financing costs 4 (249) - (249) (59)
(Loss)/profit
before taxation (2,173) (2,626) (4,799) 382
Taxation expense 5 270 - 270 (80)
(Loss)/profit
for the period
from continuing
operations (1,903) (2,626) (4,529) 302
------------ --------------- --------- ----------------
Discontinued
operations 6
Loss for the
year from discontinued
operations, net
of tax - (1,245) (1,245) -
(Loss)/profit
for the year (1,903) (3,871) (5,774) 302
Attributable
to:
Equity holders
of the parent (1,876) (3,871) (5,747) 554
Non-controlling
interests (27) - (27) (252)
------------ ---------------
(1,903) (3,871) (5,774) 302
============ =============== ========= ================
Earnings per share from continuing and discontinuing operations
attributable to the equity holders of the parent during the
year.
Note 2015 2014
Basic earnings
per share
From continuing
operations (5.3p) 1.0p
From discontinued
operations (1.5p) -
------- -----
From profit for
the year (6.8p) 1.0p
======= =====
Diluted earnings
per share
From continuing
operations - 0.9p
From discontinued
operations - -
------- -----
From profit for
the year - 0.9p
======= =====
Earnings - operating
profit before
exceptional costs,
amortisation,
share based payments
and acquisition
costs 7 (1.4p) 1.0p
======= =====
There is no dilutive effect of options in 2015 due to the Group
loss.
There were no other items of comprehensive income. Accordingly,
no consolidated statement of comprehensive income has been
prepared. There were no discontinued activities in 2014.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 August 2015
2015 2014
GBP000 GBP000
Non-current assets
Intangible assets 16,353 7,260
Property, plant
and equipment 227 343
Associates and
financial assets 1,524 1,571
Deferred tax asset - 33
18,104 9,207
--------- ----------
Current assets
Inventories 2,633 2,237
Trade and other
receivables 4,327 4,011
Current tax asset 29 -
Cash and cash equivalents 1,239 552
8,228 6,800
--------- ----------
Total assets 26,332 16,007
--------- ----------
Current liabilities
Trade and other
payables (8,588) (3,651)
Borrowings (2,565) (754)
Current tax liability - (99)
(11,153) (4,504)
--------- ----------
Total assets less
current liabilities 15,179 11,503
Non - current liabilities
Financial liabilities (660) (102)
Deferred tax liability (828) (16)
Net assets 13,691 11,385
========= ==========
Equity attributable
to the equity holders
of the parent
Called - up share
capital 1,831 1,199
Share premium account 11,302 8,244
Share option reserve 497 398
Merger reserve 4,635 -
Translation reserve (10) (10)
Retained earnings (4,344) 1,611
Equity attributable
to the equity holders
of the parent 13,911 11,442
Non-controlling
interests (220) (57)
Total equity 13,691 11,385
========= ==========
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Consolidated statement of Changes in Equity
For the year
ended 31 August
2015
Attributable to the equity Non-controlling
holders 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
2013 1,147 8,010 295 - - 1,180 10,632 (41) 10,591
-------- -------- ---------- -------- ------------ ------------------- -------- ---------------- --------
Profit for the
year - - - - - 554 554 (252) 302
Other
comprehensive
income - - - - (10) - (10) (7) (17)
-------- -------- ---------- -------- ------------ ------------------- -------- ---------------- --------
Total
comprehensive
income for the
year - - - - (10) 554 544 (259) 285
-------- -------- ---------- -------- ------------ ------------------- -------- ---------------- --------
Transactions
with equity
holders
of the parent
Issue of new
shares 52 234 - - - - 286 - 286
Group and
non-controlling
interest in new
subsidiary - - - - - 304 304 202 506
Non-controlling
interest
acquired - - - - - (41) (41) 41 -
IAS27 transfer
to reserves - - - - - (386) (386) - (386)
Share option
charge - - 103 - - - 103 - 103
52 234 103 - - (123) 266 243 509
-------- -------- ---------- -------- ------------ ------------------- -------- ---------------- --------
At 31 August
2014 1,199 8,244 398 - (10) 1,611 11,442 (57) 11,385
-------- -------- ---------- -------- ------------ ------------------- -------- ---------------- --------
Loss for the
year - - - - - (5,747) (5,747) (27) (5,774)
Other -
comprehensive
income - - - - - - - -
-------- -------- ---------- -------- ------------ ------------------- -------- ---------------- --------
Total
comprehensive
income for the
year - - - - - (5,747) (5,747) (27) (5,774)
-------- -------- ---------- -------- ------------ ------------------- -------- ---------------- --------
Transactions
with equity
holders
of the parent
Issue of new
shares 345 3,234 - - - - 3,579 - 3,579
Issue of
ordinary
shares related
to a business
combination 287 - - 4,635 - - 4,922 - 4,922
Overseas
repayment
of capital - - - - - (208) (208) (136) (344)
Costs associated
with share
issue - (176) - - - - (176) - (176)
Share option
charge - - 99 - - - 99 - 99
632 3,058 99 4,635 - (208) 8,216 (136) 8,080
-------- -------- ---------- -------- ------------ ------------------- -------- ---------------- --------
At 31 August
2015 1,831 11,302 497 4,635 (10) (4,344) 13,911 (220) 13,691
======== ======== ========== ======== ============ =================== ======== ================ ========
ConSolidated statement OF CASH FLOWS
For the year ended 31 August 2015
2015 2014
GBP000 GBP000
Reconciliation of
cash flows from operating
activities
Profit/ (loss)
before taxation
including discontinued
operations for
the financial
year (6,044) 382
Share of results
of associates (9) 28
Loss on disposal
of property, plant
and equipment 56 5
Finance costs 249 59
Finance income (4) (14)
(Increase)/decrease
in financial assets 156 (156)
Taxation (receipts)/payments 13 (52)
Depreciation of
property, plant
and equipment 132 99
Amortisation of
intangibles 761 -
(Increase) / decrease
in inventories (396) (645)
(Increase) / decrease
in trade and other
receivables 1,429 (24)
(Decrease) / Increase
in trade and other
payables 768 (813)
Acquisition of
non-controlling
interest - 371
Share-based payments
charge 99 103
Net cash (used
in)/from operating
activities (2,790) (657)
-------- -------
Cash flows from
investing activities
Acquisition of
property, plant
and equipment (72) (202)
Acquisition of
subsidiary undertakings,
net of cash acquired 240 (385)
Other investment (100) (200)
Eligible development
costs capitalised - (87)
Net cash used
in investing activities 68 (874)
-------- -------
Cash flows from
financing activities
Finance income 4 14
Finance costs (249) (59)
Proceeds of share
issue 3,403 286
Finance leases (57) 42
Short-term borrowings 872 639
Overseas repayment
of capital (344) -
Issue/(repayment)
of loan notes (220) (21)
Net cash from
financing activities 3,409 901
-------- -------
Increase/(decrease)
in net cash 687 (630)
-------- -------
Cash and cash
equivalents as
at 1 September 552 1,182
Increase/(decrease)
in net cash 687 (630)
Cash and cash
equivalents as
at 31 August 1,239 552
======== =======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
Statement of compliance
The financial information contained in this announcement has
been prepared on the basis of the accounting policies set out in
the statutory accounts for the year ended 31 August 2015. While the
financial information has been prepared in accordance with the
recognition and measurement criteria of IFRS, this announcement
does not itself contain sufficient information to comply with IFRS.
The Group expects to publish full financial statements that comply
with IFRS on 25 January 2016 (see note 10).
Going concern basis of accounting
These 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.
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The Group incurred a consolidated loss after tax of GBP5,774,000
for the year, GBP3,871,000 of which related to exceptional and
non-recurring expenses (Note 3) and discontinued operations (Note
6). Cash from operations for the year was negatively impacted by
GBP2,948,000; this was funded by two share placings, which raised a
total of GBP3,403,000 after costs of issuance, and a GBP874,000
drawdown on the Group's invoice financing facility.
The operating loss before exceptional and non-recurring
expenses, amortisation, share-based payments and acquisition costs
was GBP1,139,000, of which GBP1,227,000 related to the
sustainability business, Minimise Group, which experienced
challenging trading conditions in the LED lighting field, both in
the UK and North America, with adverse effects on the Group's
working capital. Management has implemented a number of initiatives
to eliminate cost and improve control over contract tendering and
execution which management expects will restore profitability to
this part of the operation.
Management has examined going concern against a detailed profit,
working capital, and cash flow forecast to December 2016. Based
upon this review, the actions taken to restore profitability to the
Minimise Group, the extension of the GBP6,000,000 invoice
discounting facility to December 2016, and prudent working capital
management, the board believes 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
or further private share placings 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.
Operating segments have then been identified based on the
reporting information and management structures within the Group.
The Group had one customer representing over 10% of revenue
(GBP3,632,000), revenue from which is classed within the Cleantech
segment.
The Group operates in two trading business segments.
-- The distribution of specialist electronic components
(Distribution).
-- The sale of smart energy saving products and water services
(Cleantech).
The Group also contains a central services segment that provides
support to the trading businesses.
In the table below reportable segment assets and liabilities
include inter segment balances. These have been included to reflect
the assets and liabilities of the segment as monies are freely
moved around the group to provide funding for working capital where
required. The central services have been allocated between the two
revenue-earning segments. The head office costs represent
exceptional costs/(credits) associated with acquisitions and
goodwill.
Head Total
Distribution Cleantech office
Segmental Information GBP000 GBP000 GBP000 GBP000
2015
Revenue
Total 12,658 18,995 - 31,653
Intersegment - (584) - (584)
Revenue from
external customers 12,658 18,411 - 31,069
------------- ---------- ---------- ----------
Profit /(loss)
before tax 696 (1,021) (1,158) (1,483)
Amortisation
of intangible
asset (690)
Exceptional items (2,626)
Taxation 270
----------
Profit after
tax before discontinued
items (4,529)
----------
Statement of
Financial Position
Assets 10,609 15,723 - 26,332
Liabilities (3,771) (8,870) - (12,641)
------------- ---------- ---------- ----------
Net assets 6,838 6,853 - 13,691
============= ========== ========== ==========
Other
Net finance income
/ (expense) (122) (123) - (245)
Capital expenditure 17 55 - 72
Property, plant
and equipment 51 176 - 227
Depreciation (39) (93) - (132)
---------------------------- ------------- ---------- ---------- ----------
Clean Head Total
Distribution tech office
Segmental Information GBP000 GBP000 GBP000 GBP000
2014
Revenue
Total 12,456 8,178 - 20,634
Inter segment - - - -
Revenue from
external customers 12,456 8,178 - 20,634
------------- -------- -------- --------
Profit /(loss)
before tax 508 (83) (43) 382
Fair value adjustments -
Taxation (80)
--------
Profit after
tax 302
--------
Balance Sheet
Assets 6,628 9,379 - 16,007
Liabilities (2,350) (2,272) - (4,622)
Net assets 4,278 7,107 - 11,385
------------- -------- -------- --------
Other
Net finance income
/ (expense) (25) (20) - (45)
Capital expenditure 51 201 - 252
Property, plant
and equipment 123 220 - 343
Depreciation (33) (66) - (99)
Capitalised development
expenditure - 87 - 87
--------------------------- ------------- -------- -------- --------
Revenue by geographic
location 2015 2014
GBP000 GBP000
UK 28,959 18,856
North America 828 491
Europe and Asia 1,282 1,287
------- -------
31,069 20,634
======= =======
3. Exceptional and non-recurring expenses
2015 2014
GBP000 GBP000
Corporate re-organisation (compromise
agreements and redundancy costs) 975 -
Costs associated
with aborted contract 757 -
Costs incurred in preparation
for acquisition of Green
Compliance Plc 616 43
Write off financial
assets 156 -
Impairment of R&D
capitalised costs 71 -
Alignment of group
accounting policies 51 -
2,626 43
======= =======
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 as these
costs are deemed as exceptional as they do not represent normal
trading activities of the business.
4. Net financing
2015 2014
GBP000 GBP000
Financing income
Other Interest
receivable 4 14
======= =======
Financing costs
Other interest
payable 55 4
Other finance costs 194 55
249 59
======= =======
5. Taxation
(a) Analysis of charge in period
2015 2014
GBP000 GBP000
Current tax:
UK corporation tax
on profits for the
current year (91) 119
Adjustments in
respect of prior
years (58) -
------------ -------
Total current tax (149) 119
Deferred tax (121) (39)
Tax charge/ (credit)
on profit on continuing
operations (270) 80
============ =======
(b) Factors affecting the tax charge for the period
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The tax charge for the period is different to the standard rate
of corporation tax in the UK. The composite rate of corporation tax
for this purpose has been taken as 20.58% for 2015 (2014:
21.58%).
The differences are explained below:
2015 2014
GBP000 GBP000
Profit on continuing
operations before tax (4,799) 382
-------- -------
Rate of corporation
tax 20.58% 21.58%
Tax on profit based
on standard rate (987) 83
Effects of:
Accelerated capital
allowances - (19)
Expenses not deductible
for tax purposes 105 45
Deferred tax not
recognised 574 -
Share options exercised
in year 33 (138)
Share options vested
but not exercised - (33)
Losses in overseas
subsidiaries - 136
Difference in deferred
tax rate 22 -
Effects of associates - 6
Prior period adjustments (58) -
Other 41 -
Total tax charge/ (credit)
for the period (270) 80
======== =======
6. Discontinued operations
The losses relating to Minimise Generation Limited, Green
Compliance Limited, and Green Compliance Fire Division Limited have
been classified as discontinued as at the reporting date.
There were no significant balances held in the balance sheet of
these entities at the reporting date. As a result there has not
been a re-measurement of assets or disposal group.
Analysis of the result of discontinued operations is as
follows:
2015
GBP000
Revenue 91
Expenses (1,336)
--------
Loss before tax of discontinued
operations (1,245)
========
7. 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:
2015 2014
GBP000 GBP000
Continuing earnings: (loss)/profit
attributable to equity holders
of the parent (4,502) 554
--------- -------
Dis-continuing earnings:
(loss)/profit attributable
to equity holders of the
parent (1,245) -
--------- -------
From (loss)/ profit for the
year (5,747) 554
--------- -------
Earnings: operating (loss)/profit
before exceptional and non-recurring
expenses, share based payments,
amortisation and loss on
discontinued operations (1,139) 573
--------- -------
Weighted average number
of shares (thousands) 84,004 58,087
Dilutive/free
Shares 273 1,084
Diluted number
of shares 84,277 59,171
8. 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. The value of non-controlling interest recognised at the
date of acquisition is calculated as a proportion of net assets of
the entity acquired.
Acquisition of Green Compliance plc
On 12 September 2014 the Group acquired through an all-share
offer 100% of the share capital of Green Compliance plc ("Green
Compliance"), a company incorporated in England and listed on AIM,
whose principal activity comprises the provision of water quality
monitoring services, in order to broaden its cleantech activities
into the market for water management. The purchase consideration
consisted of the issue of 2 new ordinary shares in APC Technology
Group PLC for every 71 shares in Green Compliance.
As a result of the acquisition, the Group is expected to
increase its presence in the water management business and utilise
the water client base to cross sell existing APC group products and
services into the larger water customer base.
A full year's trading has been included in the consolidation.
The continuing parts of the water business have contributed
GBP7,760,000 of revenue and a profit before tax of GBP344,000.
Acquisition of EEVS Insight Limited
On 30 July 2015 the Group acquired EEVS Insight Limited, whose
principal activity is performance analysis and verification
services for any sustainability project, product, service or
investment in the energy efficiency space. The consideration
consisted of GBP164,461 satisfied by the issue of 986,273 new
ordinary shares of 2 pence each in APC.
The services provided by EEVS enable procurement decisions to be
based on hard evidence gathered and presented using internationally
recognised processes and the Group believes that it will benefit
from the increased confidence it can give organisations who are
interested in investing in low energy lighting and other energy
efficiency related projects, services and products.
One month's trading has been included within the consolidated
group results. A revenue of GBP24,000 and a loss before tax of
GBP91,000 has been recognised. Full year results show a revenue of
GBP244,000 and a loss before tax of GBP260,000.
Recognised amounts of identifiable assets acquired and
liabilities assumed:
Green EEVS
Compliance Insight
PLC Limited
GBP000 GBP000
Cash and cash equivalents 213 27
Customer lists 4,832 -
Trade and other
receivables 1,656 89
Trade and other
payables (4,042) (157)
Borrowings (917) -
Loan note (835) -
Deferred taxes (966) -
(59) (41)
Goodwill 4,817 205
------------ ---------
Total purchase
consideration:
Share offer 4,758 164
============ =========
Acquisition related costs of GBP616,000 have been charged to
exceptional costs in the consolidated income statement for the year
ended 2015.
9. Post Balance Sheet Events
Exercise of share options
Options over 30,000 shares were exercised on 4 September 2015
with proceeds of GBP3,000.
Operations Review
Prior to the year-end the Board commenced a comprehensive review
of its operations. The results of this review have been announced
since the year-end and include the curtailment or cessation of
several non-core activities. Following the completion of the
Operations Review, Andrew Shortis has resigned from the Board.
The effect of discontinued operations on the results for the
year is shown in note 6.
10. 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 2015 and the year ended 31 August 2014 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 2014 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 2015 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.
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