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www.apcplc.com
April 2017
Results Presentation Six Months to February 2017
MakeclearwhatAPCdoesandourapproachtogrowthMainPurpose
ConveyanenthusiasmfortheopportunitywehaveCreatereassurancethatwehavetheplanandresourcetodeliverObjectives
ProvideaheadlinedescriptionofactivityGothroughtheinterims– ournewstartpointStructure
Today
2
EntrepreneurialresponsetoagrowingglobalelectronicsmarketFoundingofAPC
ProfitabledistributorservingUKDefence andAerospacethatfailedtoadaptThefirst20years
NewleadershipuseAPCasaplatformforEnergyManagementDiversification
Thediversificationdidnotwork,thebusinessbecamedistressed,andtherefollowed18monthsofrestructuringTurnaround
Theoriginalbusinessremainedprofitable;APCisnowbacktoitsorigins– aspecialistdesign-indistributorCurrentsituation
APC History
3
APCconnectsUKBuyersandROWSuppliers
UKDemand ROWSupply
DesignandSpecification SellingandSourcingAdministrationandPhysicalLogistics
APCisadesign-indistributorinspecialistelectroniccomponents,productsandsystems.
APC value proposition
4
EmbeddedProcessing
• Singleboardcomputers
• BoxPCs• PanelPCs• TFTDisplays• Kioskandtouchscreencomponentry
HighReliability
• Semi-conductors• Powersupplies• Powercontrol• Electromagnets• Highvoltagecomponents
RFandMicrowave
• Capacitorsandresistors
• Filters• Semi-conductors• Amplifiers• Switches• Frequencysources
Lighting
• HighendLED
APCNursery
• Infectionprevention
• InternetofThings• Sensors• Synchronisation• Energymeasurement
• Nicheobsoletecomponentsnolongerinmanufacture
ThetotalsizeoftheaddressablemarketsintheUKBuyerbasefarexceeds£1bn.APCbreaksthattotalmarketinto4“portfolios”,withanurseryfornewlines.
UK Demand for APC products
5
EmbeddedProcessing
• Advantech14years• Locosys 4years• +3
HighReliability
• VPT10years• Holt20years• API2years• +5
RFandMicrowave
• Wolfspeed (CREE)9years
• IPP9years• +5
Lighting
• EvolvingrelationshipswithEasternEuropeanLEDandLuminairemanufacturers
APCNursery
• AIS(Keyboards)• Meinberg (TimeSynchronisation)
• Libelium(monitoring)
MostAPCsupplypartnersareintheUSandEurope- privatelyownedenterprises,orautonomoussubsidiariesoflargecorporations.WegenerallydealatCEOlevel.
ROW Supply for APC Products
6
Embedded Hi-Reliability RFandMicrowave
Lighting Nursery
SalesLeadership
MarketingExecution
SalesExecution
Post-SaleProcessing
The“APCWay”– marketanalysis,Manufacturerrelationships,Customerrelationships,technicalknow-how,salesprocess– ispre-defined
The“APCWay”- theproposition,products,pricepositionandmarginrequirement,marketposition,promotion– ispre-defined
The“APCWay”– ordermanagement,compliancewithspecification,compliancewithstandards,compliancewithlegislation,import,storage,onwardlogistics– ispre-defined
Individual Individual Individual Individual Individual
Common
Common
Common
TheModelisbasedonassigningeachproductportfoliotoahighlyincentivised SalesLeader,whohastooperatetocommonmarketing,salesandprocessingstandards.
The business model
7
Completetherestructuring
Driveanyremainingefficienciesinaligningthebusinessmodels,backoffice,property
Thisisunderway,andsignificantlyde-risksthecostbase
Provecostbaseandmargin
Weneedtodemonstratefullcontroloverthecostandmarginfollowingrestructure
Thelast6misveryencouraginginthatrespect,howeverweneedstability
Consolidatedesign-inproposition
Thedistractioncausedovertherestructurehasweakenedouradherencetotheproposition
Fixingthisproblemthroughvisitstosuppliersandcustomersiswellunderway
Re-invigoratemarketing
Weneedtoprovetothemarketthatweareback!
But…thereisalimittowhatwecandountilwestarttogeneratepositivecash
FinaliseimplementationoftheBusiness
Model
Therightpeopleareintherightseats,butwehavemuchworktogettheprocessesright
ImplementingtheBusinessModelwillgivecontrolandprovidetheplatformforgrowth
ReinvigorateSales
Management
RestructuringalwayshasanimpactoncultureandAPCisnodifferent.
Weneedtobuildahighachievement,highrewardculture– andthisisunderway
GrowsalesThebusinesshastogrowrevenuesignificantlyoverthenext12m
Wehavetheplatforminplace,thedistractionsaregoing,thefocusisturnover
• Outofturnaroundandenteringstabilisation.
• Aprovenmodel,sowedonotneedtore-invent,nor(intheshort-term)findnewcustomers,productsormarkets.
• Thefocusisonexecutingtoahighlevelthosebusinesselementsweknowwillwork.
The plan forward
8
Interim Results - Financial Highlights
9
§ Operatingprofitbeforeexceptionalitemsof£0.4m,representingasignificantimprovementfromthe£0.1moperatinglossinthecomparativeperiod
§ Totalprofitfortheperiodof£0.1m(H12016:£1.9mloss);firstreportedprofitsincetheyearended31August2014
§ Revenueof£8.3m,comparedto£9.5minthecomparativeperiod;themaindifferencedueto£1.6mofresidualrevenuefromthemulti-yearMorrison’scontractincludedinpriorperiod
§ Grossmarginof34.4%intheperiodrepresentsastrongmarginforthelowerfixedcost,design-indistributionbusiness
§ Administrativeexpensesreducedby£1.2mfromsameperiodlastyear
§ Cashfromearningsof£0.3m,beforenetinvestmentinworkingcapitalimprovement
§ Workingcapital(excludingnetdebt)improvedby£0.5mandnetdebtreducedby£0.3mcomparedto31August2016,reflectingastrengthenedbalancesheetposition
Interim Results - Operational Highlights
10
§ Green Compliance Water Division Limited sold in October 2016 for a total consideration of £1.8m (£0.8m cash and £1.0m in repayment of debt). The transaction included the disposal of £0.7m of future liabilities under operating leases
§ Group re-centred on the proven business model of specialist electronic components, products and systems design-in distribution
§ £8.25m first half bookings for the refocused business with March 2017 Group bookings of £2.1m underpinning confidence in the new business model and a profitable outlook for the full year
§ Significant follow-on orders received from long standing customer relationships and significant new orders gained through new preferred supplier agreements signed with major blue chip customers
§ Tony Lochery appointed Non-Executive Chairman and joined the Board as a Director on 24 February 2017
11
Interim Results 6monthsended
6monthsended Yearended
28February2017
28February2016
31August
2016
£000 £000 £000
Revenue 8,304 9,472 17,961
Costofsales (5,445) (5,941) (11,523)
Grossprofit 2,859 34.4% 3,531 37.3% 6,438 35.8%
Administrationexpenses (2,475) (3,649) (6,116)
Shareofresultsofassociates - - -
Operatingprofitbeforeexceptionalitems 384 (118) 322
Exceptionalitems (154) (764) (3,026)
Amortisationofintangibleassets - - -
ShareBasedPayments (26) (46) (51)
Operatingprofit 204 (928) (2,755)
Financingincome - - 1
Financingexpense (162) (116) (332)
Profitbeforetaxation 42 (1,044) (3,086)
Taxationexpense 26 32 -
Profitfortheperiodfromcontinuingoperations 68 (1,012) (3,086)
Profit(loss)fortheperiodfromdiscontinuedoperations - (782) (9,789)
Profitfortheperiod 68 (1,794) (12,875)
Attributableto:
Equityholdersoftheparent 68 (1,794) (12,875)
Non-controll inginterests - - -
68 (1,794) (12,875)
12
Working Capital (excluding net debt)
Ø Net working capital position has improved by £0.5m
February2017 2016
Inventories 897 1,080TradeReceivables 2,440 3,377OtherReceivables 141 146Prepayments 194 228
3,672 4,831
TradePayables (2,223) (2,931)OtherPayables (626) (1,163)Accruals (1,928) (2,322)
(4,777) (6,416)
NetWorkingCapital,ExcludingNetDebt (1,105) (1,585)
13
Net Debt
Ø Net debt decreased by £0.3 million during the period
February2017 2016 Change
ABNinvoiceDiscounting 2,236 2,711 475
PAY4tradePayments* 290 294 4
FinanceLeases 26 45 19
ConvertibleLoanNotes* 555 555 -
Cashandcashequivalents (244) (444) (200)
NetDebt 2,863 3,161 298
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