Operational Review Update

05 November 2015

APC Technology Group PLC

("APC" or the "Group")

Operational Review Update

Further to the announcement made on 18 August 2015, the Board is pleased to announce that we have made significant progress with the operational review. The objective of this review has been to focus our efforts on our profitable and cash generative products and services and by doing so to deliver a stable platform for growth for shareholders.

For the component distribution and water businesses, the focus is on ensuring that the profitable success achieved within these divisions 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 a much greater depth and breadth of product offering. The profitable growth potential within our existing business is therefore significant and can come from customers and areas where we already generate revenue.

Our electronic components, for which we have exclusive distribution agreements, are designed into long running programmes in aerospace, defence and, more latterly, the rapidly growing market for the Internet of Things and are sold to internationally renowned manufacturers.

In the last 12 months our water hygiene engineers serviced over 2,500 properties. 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. Our recently announced Compliance Online water quality monitoring technology already has over 2,000 outlets monitored. 

The detailed review of Minimise Group has identified a number of areas for further action by the Board to ensure that the customer concentration, legacy supplier contracts and extended working capital issues highlighted during the past 12 months are further ameliorated and that efforts within the Minimise Group are focused on customer-led initiatives which can be profitably delivered by the Group within its core markets.

Several actions have already been taken to support these objectives:

· A thorough review of sales and delivery processes across the business has resulted in the introduction of detailed KPIs which are monitored, reviewed and acted upon on a weekly basis;

· Supplier relationships and pricing have been reviewed, renegotiated and improved where appropriate; and,

· Non-profitable, stand-alone products or services are being ceased or reorganised.

The Board is mindful of the Group's working capital resources as we re-focus the business but we are very pleased to announce that we have extended our £6m invoice finance facility with ABN Commercial Finance out to 31 December 2016. Central corporate costs have also been reviewed and these will be kept to a minimum.

The Board believes that the measures already being implemented will provide a stable platform for profitable growth through both margin improvement and transactional sales delivery. Capitalising on the potential of existing products and services into existing customers will be our primary focus for the rest of this fiscal year.

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 solution sales capability to take full advantage of them.

Leonard Seelig, Chairman of APC Technology Group

"Under the guidance of Richard Hodgson, we have undertaken a comprehensive review of the operations of the Group.

A range of specific actions intended to improve profitability and enhance growth have been initiated. We are optimistic that this will result in a Group more focused on realising the potential of our profitable businesses, which will in turn be targeted on delivering the Group's technology, products and solutions to our established customer base.

The Board would like to thank staff and shareholders alike for their patience in recent weeks and look forward to the future with optimism."

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