APC Technology Regulatory News (APC)

APC Technology Group PLC

("APC" or the "Group")

Final results for the year ended 31 August 2013

APC Technology Group PLC (AIM: APC), the UK specialist distributor and manufacturers' representative of electronic components and promoter of technologies which reduce energy consumption, is pleased to announce its final results for the year ended 31 August 2013.

Highlights

• Completion of the acquisition of share capital in Minimise Limited, not already owned, for a combination of cash and shares. Now a wholly owned subsidiary of APC.

• Revenue growth of 60% from £13.6 million to £21.7 million.

• Profit before tax (excluding exceptional items) growth from £29,000 to £365,000.

• Cash inflow from operating activities of £0.5 million in FY2013 compared to £0.2 million in FY2012.

• Net cash at 31 August 2013 of £1.0 million compared to 2012 net debt of £1.0 million.

• Acquisition of 25% shareholding in Invisible Systems Limited, a key supplier of intelligent energy monitoring technologies.

• Completion of £3 million share placing.

• Post year end signed a joint venture agreement to establish a presence in North America and increased shareholding in Minimise Energy Limited to 100%.

Leonard Seelig, Chairman of APC, commented:

" The year ended 31 August 2013 has been a period of transformational change and significant progress for the Group, resulting in a far stronger cleantech offering and stability in the electronic components distribution business. We are in a strong position going into the next financial year and remain committed to growing the Company and delivering value for shareholders."

Enquiries:

Notes to Editors:

About APC Technology Group PLC

APC Technology Group PLC (APC) is one of the UK's leading distributors of specialist electronic components and a provider of technologies developed to reduce energy consumption.

Since incorporation in 1982, APC has developed long-standing relationships with manufacturers of specialist electronic components and with customers who put significant value on our deep understanding of the challenges of their individual markets, technical expertise and attention to detail. Markets include defence, aerospace, space, transportation, medical and industrial sectors. Products are wide ranging in their complexity and application and are sold through a number of semi-autonomous teams. Each team focuses on specific technologies or markets but are true to the Company's central business strategy of adding value in the supply chain.

Through Minimise Energy, the Group promotes a range of technologies developed to reduce energy consumption and carbon emissions. These products are either sold individually or may be combined to provide an integrated, multi-technology solution to the challenge of improving the energy efficiency of an entire organisation. Monitoring and control of power consumption forms a critical part of effective strategies to improve energy efficiency. The Group's associate Invisible Systems Limited manufactures innovative wireless energy monitoring and control tools. Through its cloud based systems, bespoke software data is gathered and information displayed on dashboards and within a comprehensive reporting suite. Invisible Systems enable clients to operate buildings in an environmentally friendly way - providing visibility of site operational consumption, highlighting where energy use can be reduced and where costs can be saved. Invisible Systems products are sold directly and via Minimise Energy.

Chairman's Statement

The year ended 31 August 2013 has been a period of transformational change and significant progress for the Group, resulting in a far stronger offering in our cleantech businesses and stability in the electronic components distribution business.

Our product and geographic range has been expanded, our management team strengthened and our organisation structure simplified. All these initiatives have resulted in a 60% increase in sales and good profitability for the Group. To reflect the Group's strategic move into sustainable technology and the resultant reorganisation of the business we also changed the name of our company during the year to more closely reflect the nature of the business as a whole.

Trading

Overall sales in the year were £21,657,000 (2012: £13,644,000) and adjusted profit before tax (excluding exceptional items) was £365,000 (2012: £29,000).

Trading in energy savings and efficiency products increased substantially as a result of a pipeline of contracts won by the Group's subsidiary Minimise Limited since acquisition. Significant relationships were developed with one of the foremost supermarket chains in the UK, Wm Morrisions Supermarkets PLC and other multiple site companies. In total we are pleased to report sales of £8,951,000 (2012: £186,000) from energy savings and efficiency products.

Sales in our distribution business were £12,706,000 (2012: £13,458,000). The reduced sales turnover was a reflection of the continuing tight trading conditions that have persisted in the UK electronics industry for a number of years. Although the market was difficult through the year we have begun to see signs of improvement going into the new year. We are especially pleased with a recently signed distribution agreement with Renesas Electronics Europe GmbH for the supply of NLT Technologies displays to the UK market. This new line and other new agreements refresh our product offering and gives us a good platform to grow the business as the UK economy recovers.

Structure

During the year the Group acquired the remaining shares it did not own in both Minimise Limited and QV Controls Limited (subsequently renamed Minimise Controls Limited). After the year-end, we completed the acquisition of the remaining 10% of shares in Minimise Energy Limited not previously owned by the Company, allowing us to adopt the name Minimise Energy as the branding for the cleantech side of our business. As the final element of our strategic restructuring, we have merged the activities of Minimise Limited and Minimise Energy Limited as part of the streamlining process.

We also acquired 25% of the share capital of Invisible Systems Limited, a UK-based energy monitoring and management systems provider, during the year. This acquisition helps ensure that our current offering of energy efficiency and management products is market leading and meets the expectations of our customers.

Following the year end we also established a joint venture operation in the United States, Minimise Energy Americas LLC. We believe this operation will enable us to address the significant market for smart energy saving products and services that exists in North and South America.

Liquidity

In June we were pleased to complete an institutional placing that raised £3,000,000 enabling us to complete the necessary acquisitions during the year. We ended the year with net cash of £1,048,000 (2012: Net debt £1,028,000) reflecting the fund raising and improved trading in the business.

Dividend

The Board has reviewed the Company's dividend policy and whilst it considers it desirable to pay dividends in the long term, it has concluded that currently a greater return can be made to shareholders by investing available funds in the numerous opportunities that exist to grow the business. Therefore, the Board does not recommend a dividend for 2013 (2012: £nil).

Board of Directors

There were a number of changes to the Board during the year with Will David stepping down and Tessa Laws and myself being elected in January 2013.

Future

We are optimistic that 2014 will see continued growth in the Minimise Energy business. The establishment of our joint venture in Miami (Minimise Energy Americas) is just one of the ways we are opening new opportunities and new markets for the Group. In addition the distribution business is well placed to exploit the recent improvement in the UK market place.

I would like to take this opportunity to publicly acknowledge and thank our partners, management, staff and advisors without whom our success this year would not have been achievable and without whom 2014 would not be as we anticipate.

Leonard Seelig

Chairman

6 December 2012

Chief Executive Officer's Review

The last financial year was an exciting one for all involved with APC as we began to reap the rewards of our efforts over the last five years to generate growth from diversification into the cleantech sector. Positioning the Company in this emerging market has taken time but the early success we are enjoying validates the decisions taken over the past five years to continue to invest in diversification despite the tough trading conditions in our traditional electronic component distribution markets.

The increase in Group revenues of 60% in the year to the end of August 2013 was achieved as a direct result of this diversification into the cleantech sector. Minimise Limited, of which we took 100% ownership in June 2013, enjoyed an increase in revenues to £8,924,000 from less than £650,000 in its prior accounting period. Investments in Minimise Controls Limited (previously QV Controls Limited) and Minimise Energy Limited have not, to date, resulted in rapid growth in themselves but have played their part in developments across the business which have created the strong foundations for future growth that now exist in terms of an expanded customer and technology base. Post year end we are now completing a restructuring of these businesses to create a more cohesive organisation with the resources to consolidate the gains made to date and build on them in the future.

It is important for us to recognise that the expansion into the cleantech sector came as a direct result of profits generated by the Group's distribution activities being used to support the cleantech business to varying degrees over the past 5 years. Despite investment in the distribution business being somewhat limited during that period, our core business has remained strong relative to the distribution sector in general and we are optimistic that it will return to profitable growth as numerous initiatives undertaken during the last few years yield results and as the business benefits from a more buoyant UK economy.

Electronic Component Distribution

Revenues in our core electronic component distribution business declined by 5.6% compared with 2012, with the reduction in revenues since 2010 now totalling 5%. However, these headline figures do not reflect a number of positive developments in this part of our business.

According to the Association of Franchised Distributors of Electronic Components (AFDEC) the UK distribution market which we address has shrunk by 15.4% over the same 3-year period indicating that we have successfully gained market share. The commercial and industrial markets for electronic components have, with few exceptions, been significantly affected by the prolonged recession and defence spending has been noticeably reduced by government cutbacks. As a result, and as is always the case during periods of declining markets, a number of electronic component manufacturers reacted by evaluating their distribution arrangements and making changes in an effort to address the market through different channels to boost short-term profitability. As would be expected, the impact of this process on APC has been both positive and negative. During the past 3 years the Company lost some lines which had generated consistent revenues for, in a couple of cases, more than 25 years. Although this contributed to the declining revenues experienced during the period, we are very pleased that overall this repositioning process has been a positive one for us as the few manufacturers that we lost have been more than offset by the potential offered by several new relationships that we have entered into. We position ourselves very carefully as a specialist distributor using our technical expertise to design components into applications which will generate revenues for a number of years. This has been recognised by a number of manufacturers including Mercury Systems Inc, Renesas Electronics Europe GmbH for the (supply of NLT Technologies displays), Spacek Labs Inc and Nicomatic SA all of which are amongst the leaders in their particular niche and offer us good growth potential now that we have entered into relationships with them. There is always a time lag between signing with a new manufacturer and the generation of full production revenues but the systems we operate to track design-in activity through the various stages from first customer engagements to full production orders indicate that we should see a return to growth in our distribution business in the foreseeable future.

The distribution business is managed as a single reporting unit within which separately branded specialist sales teams focus on specific product ranges and address targeted markets.

Contech; unlike the rest of the economy, the medical and broadcast sectors have remained buoyant because of an increasing use of IT across most medical establishments and an increase in the complexity of broadcasting services. Our success to date in the medical sector has mainly been in hospitals, which remains a key target market for us, but increasing awareness of the need for infection control in other sectors and the introduction of additional related products has resulted in opportunity in new markets including dentists and veterinaries.

Hero; the industrial market has faced challenging times as a result of the recent economic climate. As a result we have experienced a downturn in customer confidence which has resulted in companies being protective of cash flow and cautious in placing long-term orders. To counter this we have re-focussed our product offering and resources on growing a base of new design wins in growing technology sectors and expect to see the early signs of increased customer confidence that we are now seeing lead to growth in the coming year.

HiRel; our HiRel team has performed well recently, particularly on sales of DC-DC converters, Data Bus i/c's & hardware and other components into civil aircraft and space applications. We are seeing some excellent opportunities going forward, both for these core products, and our more recent innovative lines in high temperature semiconductors, ultra capacitors and semi-custom interconnect products.

Locator; after a tough couple of years there are now some exciting opportunities starting to emerge due to work undertaken to strengthen relationships with some of the largest companies within the defence, aerospace, oil & gas and transport sectors. Locator specialises in obsolescence management and an increasing infiltration of counterfeit components into all high-reliability markets will continue to drive a need for the services and expertise we provide.

Novacom; the traditional market for high-frequency electronics in aerospace and space applications remain quite buoyant; demand for components used in improvised explosive device (IED) jamming systems remains very strong despite the reduction in the deployment of UK armed forces overseas. The recent addition of Mercury to the supplier base and the new product lines from Spacek and CTT will begin to make an important contribution starting in the current financial year.

Time; we expect continued steady growth in this part of our business as the need for accurate timing systems grows in line with an expansion in global trading.

Displays+; we anticipate that revenues for displays and for single board computers will grow steadily over the next few years following our appointment as the prime route to market for NLT displays on October 1st. NLT, a joint venture between NEC displays and AVIC Technologies is one of the top 5 displays manufacturers in the world and we are already starting to develop some significant opportunities.

All in all we've worked hard over the last few years to position ourselves for growth in every part of our distribution business and expect that the rewards will start to materialise in the current financial year.

Cleantech Activities

During the last financial year our activities in the cleantech sector gathered momentum. Our Minimise Energy brand offers what we believe to be a compelling proposition for organisations interested in reducing waste in their property portfolio by becoming more efficient in the way they consume energy. To date it has been through the sale of LED lighting that we have enjoyed the majority of our success, but we consider ourselves to be a provider of energy efficiency solutions and, therefore, offer a wide portfolio of technologies and services.

Following the investment in Invisible Systems Limited (ISL) in June, the Group's technology and intellectual property portfolio, enables us to approach clients with powerful but simple to install, wireless, cloud based monitoring system to develop an understanding of their energy consumption. Once there is a real time, granular understanding of where and when energy is being consumed, we work with the client to use the control capabilities offered by the ISL system coupled with energy efficient retrofit technologies to make a significant improvement in the building's energy efficiency, in many cases reducing consumption by well over 20%.

Whilst there are a number of significant projects using the ISL technology under development there was very limited financial impact from it in the year under review. The vast majority of cleantech revenues in 2013 were generated from the sale and installation of LED lighting by Minimise primarily to Wm Morrisions Supermarkets PLC who used the retrofit of LED lighting to reduce their energy consumption related to lighting where installed by more than 50%. Minimise's strategy of offering its own, advanced brand of LED products fully installed is a key part of the strategy moving forward. This approach disrupts traditional supply chains which would ordinarily see products pass through a number of organisations en route from the factory to the end customer. Minimise customers achieve a return on investment which we believe to be increasingly compelling, especially when considering the scale of expected increases in energy prices.

Outlook

Over the next few months, we anticipate seeing the first signs of growth in our electronic component distribution business and expect to be able to report an increase in our cleantech customer base across a number of our target market sectors. This will herald the next stage of our growth as we build on existing success in the UK and develop the same business model overseas, starting in the Americas where we have entered into a joint venture with partners based in Miami. We believe that the markets in North, South and Central America offer exciting growth potential and already we are seeing signs that the effectiveness of our business model is being recognised. It is too early to predict the timing or scale of future growth in this market, but we are encouraged by the initial indications.

Mark Robinson

Chief Executive Officer

CONSOLIDATED STATEMENT OF INCOME

For the year ended 31 August 2013

There were no other items of comprehensive income. Accordingly, no consolidated statement of comprehensive income has been prepared.

There were no discontinued activities in either 2013 or 2012.CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 August 2013

Consolidated Statement of Changes in Equity

For the year ended 31 August 2013

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 August 2013

Notes to the Consolidated Financial Statements

For the year ended 31 August 2013

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. The basis of consolidation is set out below. 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.

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 2013. 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 in December 2013.

2. Revenue and segmental information

Operating Segments

IFRS 8 "operating segments", requires consideration of the chief operating decision maker ('COD M') 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. Accordingly the CEO is deemed to be the COD M.

Operating segments have then been identified based on the reporting information and management structures within the Group.

The Group has one customer representing over 10% of revenue and most of the revenue in the Cleantech segment was derived from this one customer.

The Group operates in two trading business segments.

• The distribution of specialist electronic components (Distribution).

• The sale of smart energy saving products and services (Cleantech).

The Group also contains a central services segment that provides support to the trading businesses.

In the table overleaf 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.

93% (2012: 89%) of segment revenues and 100% (2012: 100%) segment assets by geographical location are based in the UK.

3. Finance cost

4. Taxation

During the period, Finance Act 2013 was enacted and included legislation to reduce the main rate of corporation tax to 21% from 1 April 2014 and by a further 1% reaching 20% with effect from 1 April 2015. As this change was substantively enacted at the balance sheet date, deferred tax is recognised at 20% in the current period.

5. Earnings per share

The calculation of basic earnings per share is based on the profit after taxation 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 and in the prior year also to its convertible loan notes. The profit / (loss) for the year is adjusted to add back the tax interest cost on the liability component of the convertible loan notes. Where the effect of the above adjustments is anti-dilutive they are excluded from the calculation of diluted earnings per share.

The profit for the year and the weighted average number of shares used in the calculation are set out overleaf:

6. Events after the reporting period

Options over 234,000 shares were exercised on 6 September 2013 with proceeds of £31,000.

On 1 November 2013 the Group completed the acquisition of the remaining 10% of Minimise Energy Limited that it did not previously own for a consideration of £385,000 satisfied in cash. In accordance with IAS27 the consideration net of non-controlling interest acquired will be charged to reserves.

7. Publication of non-statutory accounts

The financial information set out in this announcement does not constitute the statutory financial statements for the year ended 31 August 2013 and the year ended 31 August 2012 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 2011 were prepared in accordance with Adopted IFRS and have been delivered to the Registrar of Companies. The financial statements for the year ended 31 August 2013 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 2013 will be posted to shareholders on 19 December 2013 and will be available to the public at the Company's registered office, 47 Riverside, Medway City Estate, Rochester, Kent, ME2 4DP and available to view on the Company's website at www.apc-plc.co.uk from 9 December 2013.

8. Annual General Meeting

The Annual General Meeting will be will be held at the offices of Redleaf Polhill, First Floor, 4 London Wall Buildings, Blomfield Street, London, EC2M 5NT, on Friday 31 January 2014 at 12.00 noon.