APC in IC12 Jun 2015 19:01
Business needs
Emergent technologies can make for exciting investments, but for businesses and investors innovation is only worthwhile if it’s adopted. Government directives and boardroom efforts to make cost savings wherever possible mean most companies are primed to expand their use of existing energy-efficient technologies.
One company to market those benefits is APC Technology (APC). Originally an electronic component distribution business to the defence, transportation and industrial sectors, APC is increasingly focused on its secondary energy efficiency division, which operates under the Minimise brand. The consultancy works with companies including WM Morrison (MRW) (see box, below) and Royal Mail (RMG) in the UK and Wendy’s fast-food chain in the US, delivering multi-million pound annual contracts that address water, energy measurement & generation and waste, efficiency strategies and finance. Interim results in May highlighted the growing demand for the company’s services, with Minimise’s revenues up 41 per cent. Big contracts mean earnings have been choppy, but APC now services more than 50 major customers a month, and large companies are alive to the potential savings.
APC works with companies including Morrisons to help them improve energy efficiency
“A year ago, I would have said the significant interest in energy efficiency was down to rising energy prices,” says APC chief executive Mark Robinson. “Those have come down in the past six months, but we’ve still got large demand – it’s difficult to know exactly what the drivers are, but it’s a long-term trend.”
He cites the example of one FTSE 100 company that APC works with that spends around £25m a year on energy savings. “Of that, we’ll expect £5m of direct spend relates to water, and probably £5m or so relates to renewable energy generation, which leaves £15m for broader energy efficiency programmes.” As ESOS becomes mandatory, APC thinks it could likely benefit from increased interest from companies wanting a one-stop assessment and solution to their energy needs. The consultancy is also well placed to benefit from operational gearing as sales rise, which analysts at Cantor Fitzgerald think will lead to earnings per share of 2.7p in 2017, or just seven times the current price.
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