Apc Technology Share Discussion Threads

[butchcasio] 31/7/2014 16:13

they'd hoped that it would be immaterial due to other leads making up the difference. And as they were ahead did not want to jump the gun with a market warning which at the time they felt was unnecessary.

[brownie69] 31/7/2014 16:00

Been handled poorly but they did eventually tell the market that Morrisons had stopped ordering.

[hydrus] 31/7/2014 09:01

Thanks Simon, I hope you at least get a decent response from the FCA.

[21trader] 31/7/2014 08:00

Sounds a bit like GCO which they are buying.

Brings out a bullish trading update after finally turning things around then goes and sells their business well below current valuation.

Do I really want shares in this instead...the answer is shares in neither !

[simon gordon] 31/7/2014 07:53

Interim Results - 30th May 2014:

"The Board is looking forward to the full year with confidence, with a growing customer base and a significantly increased project pipeline. The market for energy savings products and services is gaining considerable momentum and the Board is confident that the results achieved so far will be expanded upon."

Mark Robinson, CEO.

=====

The new forecast for FY 08/14:

PBT - £0.48m
EPS - 0.6p

APC did PBT of £0.76m in H1, so a loss of £0.28m in H2.

I sincerely hope the FCA go after APC for what I perceive to be misleading the market, specifically in the Interim statement, where no mention of the suspended MRW contract is given and the market was led to believe APC was "looking forward to the full year with confidence". In my view that is not credible when you've had no business for two months from your biggest customer and you can't be sure when they will be back ordering again. APC should have informed the market of the MRW situation.

The CEO is happy to go on BRR Media and trumpet what he thinks is positive news but when he had bad news on MRW it was airbrushed until the Trading Update where the fridge contract news was heralded.

When the FCA (FSA) go after a company that misleads the market they don't hold back:

Telegraph - 2005:

Carl Rigby, former chief executive of software company AIT, will spend three and a half years in jail after being sentenced yesterday at Southwark Crown Court.

Rigby was convicted, along with his former finance director Gareth Bailey, of "recklessly" making a statement to the market that was "misleading, false or deceptive". Bailey was sentenced to two years.

It is the first time that a company director has been convicted for misleading the market under the Financial Services Act of 2000. The severity of the sentences took most people by surprise. Possible penalties ranged from a fine to seven years in jail.

The case, brought by the Financial Services Authority, centred on a statement made by AIT in May 2002 claiming that the company's profits were likely to hit market expectations. Weeks later it issued a surprise profit warning, sending AIT's shares plummeting 80pc in a single day. The forecast depended on the inclusion of three contracts worth £4.8m but customers had not actually signed up to these contracts.

Passing sentence, Judge Elwen said: "If investors large and small come to the view that they cannot trust the information companies announce to the market, they will avoid the market when making investment decisions."

Neil Mirchandani, partner at law firm Lovells, said he was worried that the sentences were too harsh and that "people might decide they don't want to be a director of a public company any more".

=====

This is the last you'll hear from me on the subject, unless the FCA take action, I thought I'd make this post because yesterday I came across the new PBT and EPS forecast.

Good fortune.

[butchcasio] 30/7/2014 20:47

' Background to and reasons for the Offer

In December 2009, Green Compliance was restructured with the stated intention of executing a buy and build strategy to become a significant participant in in the UK "blue collar" compliance services sector. While it was able to execute some 15 acquisitions in the period to December 2011, the financial crisis which began in 2008 severely affected its on-going access to additional equity and debt funding required for it to continue to grow by acquisition and also to a reduction in the trading of each of its main units at the time that the consolidation of these units into the Green Compliance Group was being executed.

Accordingly, with on-going financial pressure, a lack of expansion capital and reduced trading, the then directors of Green Compliance embarked upon a restructuring of the business, its strategy and its financing, which culminated in the Green Compliance 2013 Refinancing which involved a write down of debt facilities and an equity fundraising of approximately £3.5 million at 1p per Green Compliance Share. The successful Green Compliance 2013 Refinancing was completed during the financial year ended 31 March 2014 which, coupled with the divestment of the Green Compliance Pest business and Green Compliance Fire business, has allowed Green Compliance to exit that financial year completely focused on its water hygiene and treatment business.

The Green Compliance Water business is now a national one stop water management company offering all forms of water treatment and water hygiene, including legionella control, water risk assessments and water sustainability projects, such as rain water capture and grey water re-use. Green Compliance Water has a direct customer list of around 750 clients, to which it provides water treatment and water hygiene compliance services via 145 employees, operating from four premises nationally. The Green Compliance Directors believe that the Company's customer reach is significantly larger than this due to the composition of the existing customer base, which includes many facilities management companies, each of which act on behalf of, in some cases, hundreds of businesses or organisations.

Continuing revenues in the Green Compliance Water business for the year ended 31 March 2014 totalled £8.1 million with an operating profit before exceptional costs, share based payments and amortisation in Green Compliance Water of £0.1 million. Green Compliance Group had net assets as at 31 March 2014 of £4.4 million.

The UK Water hygiene & treatment market

The basic definition of water treatment is the purifying of water to make it suitable for household or business use. The water treatment industry in the UK is worth an estimated £3.8 billion in 2013/14. Water treatment requirements are estimated to be split relatively evenly between domestic and commercial/industrial use. Based on the estimated industry value of £3.8 billion, the commercial areas of the UK water treatment industry are estimated to be valued at approximately £2 billion in 2013/14. A significant percentage of the market relates to the treatment of water in storage, both open and underground reservoirs. The majority of this work is undertaken by water companies, or large global businesses (e.g. GE Water, Nalco).

However, there is a significant addressable market for water treatment services with large corporate organisations, SMEs and commercial organisations such as Green Compliance Water services and this is estimated to be worth in excess of £1 billion per annum in the UK.

Under UK government regulations (Health & Safety Act 1974, ACoP (L8) 4th Edition 2013, COSHH 2002 and Water Supply Regulations 1999), anyone serving the public has a legal duty to prepare and manage a scheme for maintaining safe water quality. Hospitality and leisure facilities, healthcare providers, care homes, as well as employers in general, are therefore faced with the same obligation. As well as requiring risk assessments, organisations subject to the legislation are required to have access to competent help in applying the provisions of health and safety law, water storage and supply and specification for the design, installation, testing and maintenance of services supplying hot and cold water for use within public buildings. All these regulations are principally driven by the necessity to prevent legionella from developing in water systems.

Green Compliance Water provides a comprehensive service across the water hygiene spectrum and the Green Compliance Directors believe that it therefore has an addressable market in the UK for water hygiene services of an estimated £241 million and that this market is growing at an estimated 5 per cent. CAGR.

The main driver for this is the growing concern for companies around water sustainability as water consumption outstrips population growth; water supplies are threatened by pollution, population growth, urbanisation and climate change; water charges increase through metering and acknowledgment of the move to charging and a growing awareness from consumers of the importance of water quality, safety and security.

The Green Compliance Directors also believe that there are further opportunities to service the wider water market as it moves towards greater sustainability products and ultimately the supply of water as the market deregulates. In addition, the Green Compliance directors believe that the Green Compliance customer base and existing water management relationships with those customers gives them access to this increasing market.

The wider sustainability market

The sustainability market is a large and growing market internationally and in the UK in particular:

· the International Energy Agency estimates that investment in key energy efficiency markets worldwide was US$244 billion in 2013, and must increase to US$1 trillion by 2030 to avoid a two degree global temperature rise;

· investment is being driven by the need for businesses to take action or see profits eroded by the cost of energy and punitive legislation;

· improving economic conditions are encouraging businesses to implement strategies created over the past five years; and

· opportunities in energy efficiency will be mirrored by technologies being developed for 'embedded generation', energy storage, water and waste management.

Sustainability covers both energy and water and the Green Compliance Directors believe that a number of their existing customers include both energy and water as part of their considerations in relation to sustainability. Additionally, there is evidence to suggest that a significant number of these customers have an individual or team with responsibility for both energy management and water management. Increasingly the market is viewing these two sub-sectors together, as companies look for similar solutions to both issues and with new entrants to the market offering combined solutions to asset owners or facilities managers which are typically Green Compliance's and APC's customers. This synergy, in relation to sustainability, is also being driven by the proposed deregulation of the supply of water to businesses in England which is expected to come into effect in 2017 (2013 Draft Water Bill).

The Green Compliance Directors believe that all of these factors provide significant revenue opportunities for a sustainable water management offering that sits alongside a wider sustainability engagement with customers, as customers come to view water more and more in the same way as they view other sustainability issues such as energy efficiency and waste management.

To date APC has not been active in the water market, although it does have a stated strategy of increasing the products and services in its sustainability focused business, 'Minimise'. APC has seen significant growth in its energy efficiency focused business, which shares a common type of customer to Green Compliance in that it is typically asset owners and facilities managers which are focused on issues of sustainability.

Through APC's Minimise business it has a growing expertise, customer base and pipeline in energy efficiency related products and solutions. APC currently has three main sustainability offerings:

· Minimise Energy: these include Energy monitoring, LED lighting, boiler optimisation, solar gain reduction, remote energy control and electric motor optimisation;

· Minimise Solutions: energy procurement, energy strategy development, building accreditation, energy measurement and verification; and

· Minimise Finance: bespoke Energy Efficiency Service Agreement (EESA) funding which enables businesses to achieve energy reduction targets through an upfront reduction in capital expenditure.

The proposed acquisition allows APC to move into:

· Water Sustainability: including rain and waste water harvesting, water consumption monitoring and management, leak detection and remediation, and the management of water hygiene (especially legionella control) or water treatment needs versus water conservation needs.

The abovementioned set of water sustainability products are either currently offered by Green Compliance to its customer base or are in development by Green Compliance. In addition, Green Compliance's customer base is already actively engaged with Green Compliance in seeking to procure these products across a larger end customer base.

Following this acquisition the Enlarged Group will seek to pursue a strategy to further extend the sustainability offering into:

· Renewable energy generation: thermal solar PV-T, heat pumps, hybrid solar solutions and embedded generation; and

· Energy from waste: on-site waste processing and waste to energy generation.

[butchcasio] 30/7/2014 18:00

CEO on why they're buying GCO audio interview

[hydrus] 30/7/2014 17:48

Interestingly despite the early rise looking promising, APC hasn't broken out of its downtrend.

[brownie69] 30/7/2014 17:20

Hmmn, APC certainly needed to do something and given the lack of APC cash maybe this is a step in the right direction. I'd be mad f I was a GCO shareholder but on the face of it APC have a bit of a steal on their hands once the synergies are taken out of the deal. Personally I think it could be more like £500,000.
I want to understand cash conversion and working capital for the combined entity before going too mad on the deal but I've stopped selling APC for now.

[callumross] 30/7/2014 16:07

Having read the offer document it looks a good acquisition for APC. The GCO shareholders are not happy with the deal. GCO is only slightly above break even but the removal of most of the directors together with the AIM, compliance and regulatory costs should immediately turn this into a business generating £400k PBT all other things being equal. And that is not taking account the cross selling benefits as the 2 businesses are really quite complementary. Also GCO business will gain from being part of bigger group. Just a little footnote. Cheaper way into PMC currently is to buy the GCO shares while a penny or less. You can buy APC shares for less than 34.5p per share this way rather than paying 35.75p in the market. Hence I bought 355k GCO shares earlier which will convert into 10k APC shares. Seems a no brainer to me if you like the deal from an APC perspective.

[hydrus] 30/7/2014 14:37

What an intra day turn around

[rivaldo] 30/7/2014 13:45

Not a holder of either APC or GCO, though APC were on my watchlist for ages.

Effectively APC are paying £6.7m for GCO, i.e £4.8m in shares plus around £1.9m of GCO's net liabilities, including £1.6m of borrowings. They get in return a business operating at around cash break-even on continuing operations per the results highlights.

So it seems a rather expensive deal for APC prima facie, in the short-term anyway, and doesn't seem to be a bad deal for GCO holders either - it just means that the current share price was too high.

Though I appreciate that there will be savings via synergies, some GCO directors chopped off at the knees, listing costs etc.

Happy to be corrected on anything and told how wrong I am :o))

[21trader] 30/7/2014 13:21

If they get GCO for 1p a share approx they are getting a really great deal as the
GCO management have just stitched us up agreeing to sell their business substantially below the trading price of last 6 months and considering their
results were sound and outlook very good.

[hydrus] 30/7/2014 13:19

Thanks 21trader. Hadn't seen that, 2 sudden acquisitions - is that because they are worried about the current business prospects?

[21trader] 30/7/2014 13:09

Advfn not mentioned they have put in offer for GCO here as well

[brownie69] 29/7/2014 08:43

But Morrissons are now on stop for several months, albeit we have only recently been told.

Supplying a UK supermarket without a purchase Order is naïeve (with respect) if you think its just because their back office cant tick boxes quickly enough.

Cash is tight here and to be spending on stock without having the 100% clarity of an order is just plain reckless. Coming on the back of the way they held back the information that Morrissons had stopped taking delivery for several months is probably not a surprise. But this kind of poor management will not attract institutional shareholders which are needed to drive the share price

[eclectictrends] 28/7/2014 18:12

I have recently purchased a few shares here, as I think the situation is getting more interesting again. The current business seems to get lumpy orders, with no real recurring revenue, so should probably always trade a low PE. The audio interview today says they have a letter of intent from the new customer, which is OK I think, they are, after all a small supplier, and have to probably demonstrate some determination to help the customer get the kit installed quickly, whilst the back office functions of the customer will no doubt require " various tick lots of boxes in vendor set up, that all big companies need nowadays, such as geting the SAP procurement database set up etc. The previous RNS referenced the new customer as a "major food and clothing retailer", sounds like M&S maybe? If they can land some more of the six prospective new customers they referred to previously, this share might start to turn round around. I last bought the shares in October 2012, when they had a profits warning, but announced a significant opportunity had arisen with a supermarket (confirmed a few months later as Morrisons). The scenario today feels a bit similar to 2012

[envirovision] 28/7/2014 10:51

desperate or what talk about lost it, but then am i correct in saying the management have no credibility ?

[brownie69] 28/7/2014 10:48

Why supply without a PO?
Makes no sense. Supermarkets are notorious for screwing suppliers.

[hydrus] 28/7/2014 08:54

I'm really confused as to why a major supermarket would not want to raise a PO. What's going on?

[brownie69] 28/7/2014 07:38

Couple of announcements today. Looks like much ado about nothing on the face of it.

The bank deal is fairly small and normal course of business stuff. Hardly the stuff of an RNS except that the beleaguered management probably think they need to start covering the damage from not telling us about the loss of orders from the "major UK supermarket.

Seems like they have recommenced deliveries to the supermarket, but without waiting to get Purchase Orders! How stupid is that??

The acquisition is a minority stake and is using up precious cash which seems to be in short supply at APC.

Might create a selling opportunity I suppose.

[hydrus] 18/7/2014 13:40

I agree, if you are more willing to take on risk then might be worth it but I'm not, the trust issue is too important.

[brownie69] 18/7/2014 13:23

Buy this at your peril until management earn some credibility and meet market expectation. For all we know they are sitting on more bad news that they have not communicated to the market.

Too much jam tomorrow in the update statement as well. They need to deliver hard results now before the share price can recover in my opinion.

[hydrus] 18/7/2014 10:39

That sounds positive for the company and listening to the CEO I'd be confident they are moving forward now. However the whole Morrisons contract issue is of course quite concerning - I wonder if they will learn from it, they need to be a lot better at communicating on a timely basis with shareholders. This is a company with good prospects but with risks around shareholder treatment. On balance it could be worth a punt at these levels I suppose depending on risk tolerance. Always the chance of the issue above repeating.....