Apc Technology Share Discussion Threads

[battlebus2] 25/7/2018 21:00

Well said PJ, I’ll echo those comments.

[pj 1] 25/7/2018 20:46

GHF is as genuine as they come. No more discussion required on the matter imo

[insider6] 25/7/2018 15:47

Hi everyone, a lot of action as a result of the acquisition. I know APC extremely well having been at one time a major shareholder but now not so much because of various placings. Some I have participated in, some not but during that time have maintained the bulk of my shareholding. I support both of the acquisitions made this year which are ‘back to basics’ where APC first made its name. The first FBM, appears a rock solid deal with their financials way ahead of expectation as announced in the RNS Reach recently. The second Aspen is well known in the industry and has an impressive range of products that dovetail nicely with APC’s.
Microwave and RF is a rapidly expanding component sector, arguably the largest electronic sector whether commercial, industrial or military. Simply put it is the place to be right now and for the foreseeable future.
APC under the new regime since the operational review have kept a fairly low profile. Not too many announcements or trading statements so when they say they will treble or quadruple their revenue in three years everyone should sit up and take notice because I believe that is the first 'forecast' that they have ever put out there. I am sure some will point out that they will do it through share placings but who cares? My shareholding percentage is 2% more today than it will be tomorrow but the value of my shareholding tomorrow will probably be more. Sounds like a good deal to me.

[glasshalfull] 25/7/2018 15:43

Thanks gentlemen.

All the best,
GHF

[kemche] 25/7/2018 14:50

Jailbird - I appreciate the moderation in language and the apology extended to GHF. As you say he is a knowledgeable poster and a gentleman to boot.

I tend to reserve my ire for truly jumped up deserving individuals. Which reminds me - anyone seen Simon Templar? He of the High Net Worth individuals' "professional" investors fame.

[jailbird] 25/7/2018 14:02

GHF,Apologies if I offended you .I know about your integrity and can see you are a knowledged investor from your previous threads.But I am surprised by positive stance on APC. I am not as experienced as you but to me this is a penny share selling something that will keep it as a penny share.Maybe when one is invested , one can lose objectivity sometimes.Like you said we all make mistakes My impressions here are because you in post 838 you come across so arrogantly sure this is a blinding investment .. it is is not No placing .. well we have one Kemche .. well done for seeing this earlier

[glasshalfull] 25/7/2018 13:53

jailbird - Astonishing posts and part of the reason I post infrequently nowadays. Appears that reposting some of my historic posts is in high demand today!

Why don’t you check out my recent posts on RFX thread or my tweets @glasshalfull1 . When I consider negatives or sell out I normally flag as a courtesy to investors. In the case of RFX I posted 3/4 times recently on my concerns and then stepped aside from the thread.

I can assure you I am not recruited or employed by any companies and simply a private investor. Quite a few investors will testify to that & I take exception to you questioning my integrity.

I have addressed concerns on the balance sheet and invited the company to Mello Derby so that other investors would have access to listen to a presentation by the company and meet with the CEO afterwards. Investor engagement isn’t for everyone but it’s served me well in over 20 years investing. Also don’t consider myself naive & having compounded an investment return close to 2,000% in the last 7 and half years I’m comfortable in my approach.

So I reiterate, an investment in APC is not for everyone. The b/s was weak after an extensive restructure but it’s the direction of travel that’s important to me.

I make mistakes like everyone else, but I’m especially disappointed in the questioning of my integrity, especially after 15 years positing on these boards where you can easily verify the substance of anything I’ve written.

[jailbird] 25/7/2018 13:15

I have followed this from 9p days In addition to comments below , so much exaggerated promise of IOT related revenues.The first GHF instantly triggered my cynical side. It is appears more so GHF is recruited or employed to sell only Co positives without considering a balanced view on the other balance sheet concerns After 3 years of jam, I am still struggling to find a reason to invest a few quid here ..

[kemche] 25/7/2018 12:23

Thanks for your reply GHF. I have provided my views on "engagements" with companies.

I am very familiar with this company and its evolution from a very long time ago - many a false dawn have passed. I have them categoraised in my list of "serial disappoiters" and they have yet to let me down. I will of course re-evaluate my stance should they ever manage to break their incessant habit of relying on the largesse of the ever suffering shareholder. Let us not forget that the current incumbent head honcho came with an acquisition which can only be objectively described as a complete POS. A perusal of the narrative provided as the blurb to the last few annual reports will provide hours of mirth.

I have provided my views here for a while as I am genuinely interested in how such a thing evolves and the psychology surrounding it. As you say it takes different views to make a market.

And best wishes to you also GHF. Believe it or not I am a fan of yours - a true gentleman of the old school variety. The company - not so much.

[glasshalfull] 25/7/2018 12:07

Kemche - Our posts appear to have crossed.
Think we’ve answered each other’s points

Regards
GHF

[glasshalfull] 25/7/2018 12:06

Thanks kemche...and for clarity my response to your earlier post. Did you ever engage with the company?

We clearly have differing views...I’m delighted with the direction of travel & assume that an investment here is not for you. Best wishes anyway...it’s different views that make a market!


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Glasshalfull 18Apr '18 - 21:59 - 823 of 863 Edit
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Early days kemche. Good to have your skepticism here as an alternative to my bullish posts that have a tinge of the rose coloured spectacles about them!!!

Have to say I was impressed with Michael Thompson, FD who also appeared very focused. I did say in my latest post they’d made progress & acknowledged that they’ve still a lot to do. Good enough for me...we all have different timeframes & investment rationale. I’ve spoken with the team a number of times now & they have mentioned milestones which they are beginning to deliver against.

Rome ne s'est pas faite en un jour!

Recognise you may not be in dialogue with APC (nor wish to be) but I’d certainly recommend the Mello 2018 event as an opportunity to attend a presentation, with the additional opportunity to ask the team about the working capital position & balance sheet. I’ve also spoken with John Conoley who has arranged for the Parity team to attend.

Kind regards,
GHF

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[kemche] 25/7/2018 11:59

"I offered to put you in touch with the company or arrange for you to meet them at Mello but you failed to respond to my post or indeed the the one to meet Parity team. Easy to fire off skeptical comments on a bulletin board while I was assisting the Mello organisers in getting companies to attend so that I and other investors may better appraise. A proactive approach to investing."

Whilst I appreciate the generous offer of "arranging" for me to meet various companies I tend to be old fashioned and let the Financial Statements do the talking. I have yet to meet a BOD who will tell me the truth and can frankly do without their appendage swinging displays. The pitiful cashflow, wafer thin margins and the parlous state of the balance sheet were there for anyone willing to have a look. An objective approach to investing.

How many fundraisings can a company have - is there a competition that I am unaware of?

[kemche] 25/7/2018 11:52

Glasshalfull - I provide the context in full below so that so that everyone is done a service rather than a disservice:



Glasshalfull18 Apr '18 - 18:32 - 821 of 862
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Evening everyone,

I’m currently on holiday abroad & don’t have the time nor inclination for a lengthy write-up on H1 2018 results.

I had the opportunity of a chat with the management team earlier today & delighted with progress as APC emerges from extensive restructure & now begins to deliver profitable growth as highlighted via recent strategic announcements. We are at the early stages of this next chapter, but the signs are positive.

Importantly the company delivered PBT +740% to £0.35m & Op Profit +45% to £0.55m. H1 bookings also increased to £9m.

Working capital (excluding net debt) moved from a deficit of £0.5m as at the end of FY 2017 to a surplus of £0.6m as the end of the interims. Emphasis during H1 was on improving trade payables with the previous position having now unwound, which will help with existing relationships & I’d imagine assist in attracting new suppliers.

Management will of course be presenting at Mello 2018 in a weeks time, so investors will have the opportunity to evaluate the investment case first hand. They confirmed that the growth drivers are in place & they have good control now of fixed costs which resulted in them maintaining the 35% gross margin. While the debtor level has increased this is simply due to the acquisition of First Byte & timing of contracts. The team reiterated no bad debts.

Management v pleased with First Byte which has been successfully integrated into APC Locator.

Focus is very much as described in recent presentations on the growth drivers. I think we’ll see a combination of decent organic growth moving forward aligned with sensible bolt-on acquisitions that improve their Electronic & Components business offering.

The b/s should strengthen in the next 6 months with Stockdale indicating that net debt should fall to £2.9m by year end from £4.0m at end of Feb 2018. As mentioned, net debt had risen to this level due to higher invoice discounting debt reflective of increased trading & inclusion of First Byte.

As mentioned previously, I’m enjoying watching this turnaround story unfold & convinced the entire APC team are working exceptionally hard to realign the business & while they’ve made much progress there is still a considerable amount still to do. I believe we shall witness an ever improving picture around trading statements & results in the months and years ahead.

Kind regards,
GHF
kemche18 Apr '18 - 20:52 - 822 of 862 Edit
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Working capital (excluding liabilities) improved by £843k!

"net debt should fall to £2.9m by year end from £4.0m at end of Feb 2018." That is an improvement of £1.3m (if we take the real debt figure of £4.2m as per the accounts).

This will presumably be paid from profits generated in the second half. They made £353k PBT in the first half so an operating margin of 4.1%. To make £1.3m operating profit in the second half, at the same operating margin, they will need sales of £18.8m or a 119% increase in turnover (or 219% of the first half turnover). If they achieve that then I am a hat.

There is also a minor matter of a £100k loan note and £270k to be paid for the acquisition.

It is possible. But is it probable?

And why do we keep reinventing the definition of working capital?

I am sure that I have made some grave errors in my calculations in which case please do forgive the foregoing.

[glasshalfull] 25/7/2018 11:44

Rivaldo - Thanks for the update. Good to see you here. Delighted that this equates to +79% earnings growth next year & indicates they’ve raised FY18/19 earnings forecasts by +32%

Kemche - We both know you are being selective & have taken a sentence from my recent update out of context. I offered to put you in touch with the company or arrange for you to meet them at Mello but you failed to respond to my post or indeed the the one to meet Parity team. Easy to fire off skeptical comments on a bulletin board while I was assisting the Mello organisers in getting companies to attend so that I and other investors may better appraise. A proactive approach to investing.

Their growth strategy has been well flagged for almost a year now - acquisitive & organic growth - & this is an excellent deal IMO, with raise predominantly for the acquisition & of course £800k to repay loan notes & for some w.c. which I believe entirely reasonable & sensible in improving the balance sheet.

I’ve mentioned on a number of occasions that I’d like to see a stronger b/s and that there was still much work to be done. The nature of your posts does you a disservice.

Kind regards
GHF

[kemche] 25/7/2018 11:27

How two months fly:

"He reiterated to myself & a number of other investors that there is no requirement for any placing."

[kemche] 25/7/2018 11:01

I am shocked!


kemche - 21 Apr 2018 - 12:54:00 - 830 of 860 APC Technology PLC set for growth on profits. - APC

If I was a cynic which,to be clear, I am not, then I would imagine the next fundraising to be accompanied by an acquisition to assuage the shareholders that the funds were required for the sole purpose of the acquisition rather than to plug a gaping hole elsewhere. But as I say that is what a cynic would surmise - but not me.

[rivaldo] 25/7/2018 09:16

Hi GHF. I had a small introductory holding here, but have bought quite a few more this morning.

Today's news is excellent, and summarised beautifully as always in your above post.

I see Stockdale have increased their target price to 12p (from 10p).

And their forecasts going forward have increased to:

2019 - 0.75p EPS
2020 - 0.86p EPS

On which basis today's share price looks rather cheap.

[owenski] 25/7/2018 08:35

Thanks for the work gone into that post GHF.

Excellent analysis.

[glasshalfull] 25/7/2018 08:01

Morning everyone,

APC

Acquisition & Placing

Courtesy to update that I took part in the placing & added substantially to my holding.



I was v impressed with APC’s management throughout the process. They were eager to ensure that existing holders would NOT be diluted via a discounted placing. The positive aspects of the acquisition of Aspen & raise allowed them to conclude it at a price of 6.75p which was a premium of +3.8% to the mid-price of 6.5p of the shares during the last fortnight (it rose 0.25p just prior to close last night, so RNS only considers the raise at premium of +2%).

It was apparent to many investors that this acquisition of Aspen will help propel the company into meaningful profitable growth & improve the balance sheet in one fell swoop.

We observed that January 2018’s acquisition of First Byte (FB) is looking like an excellent addition. They have already increased turnover by +33% in the first 6 months of acquisition. With the well publicised worldwide component shortage I can only see APC Locator (with FB now fully integrated) growing substantially in the years to come.

In Aspen I’ve every confidence that they have chosen wisely for this second & much larger acquisition & hopeful they will execute in similar fashion to that of FB.

Benefits...

This really is a fantastic deal for APC as it delivers: -

* an earnings enhancing acquisition in FY18/19 with acquisition price on multiple equivalent to 3 x EBITDA
* offers scale & cross selling opportunities via increased suppliers & customer base of which there is little overlap
* brings in-house services that APC currently undertake via a 3rd-party
* material cost savings through synergy benefits
* material interest savings through removal of loan-notes which bear interest of 10%
* provides additional working capital
* brings new institutional holders on board to support future growth ambitions

Why Aspen?

Well it appears an excellent addition on a number of metrics as I’ve alluded to. Not only will it help to scale APCs existing Components business - which is currently c.60% of group sales - but APC were at pains to confirm they have an excellent reputation in the industry & the APC team know the business well, having courted the possibility of acquiring them for sometime. Importantly it offers a complementary RF & Microwave business to APC’s with a test & measurement equipment business & provision of in-house testing facilities. In other words the acquisition will allow APC to provide value added services to customers & suppliers of the combined business. This should be viewed as an important addition to APC, as they currently utilise 3rd-party testing & can immediately bring this in house. Therefore significant synergistic benefits which the FD anticipated will result in overall savings equating to a six-figure sum.

Financials

In terms of financials the deal is also compelling. Aspen delivered turnover of £4.3m in FY16/17 (30.06.2017), gross profit of £1.35m & adjusted EBITDA of £0.35m. They’ve just completed FY17/18 (30.06.2018) with EBITDA forecasted to have risen by +70% to c.£0.55m. The £3.2m purchase price appears an excellent price. Aspen has net assets of £2m including £1m of cash (which the seller will retain on completion of the transaction). Therefore the net purchase price is £2.2m. Excluding cash, and after synergies, the purchase price is expected to equate to 3 x EBITDA & will be earnings enhancing in FY18/19.

APC are raising £2.5m to acquire Aspen & also placing £500k of shares with the seller, for total issue of £3m shares. It will only cost APC net acquisition costs of £2.2m, the deal has been structured as part cash + shares as the seller was looking to take equity in APC, with £1.7m cash + £500k shares (with a 1 year lock-in) going to the seller, which leaves £0.7m that will be used to repay the convertible loan notes which have a 10% coupon & remainder for w.c. purposes.

So at a stroke APC will save considerable interest costs on the loan notes. The FD also confirmed that b/s improvements will help APC realise interest savings amounting to a six-figure sum...therefore we should witness the double benefit of cost/synergistic savings & interest savings

Organic Growth opportunities

While the acquisition & placing transform the business IMHO, it’s also worthwhile highlighting that the other c.40% of APC comprises Property Technology (c.30% of sales) & Time Synchronisation (c.10% of sales) which offer substantial organic growth.

I’ve written about the growth opportunities of both previously & therefore won’t regurgitate. (see link if interested)



I’m excited about the Property Tech side - which comprising APC Lighting, APC Smartwave (IOT) & EEVS - & which is growing substantially through a number of agreements they’ve established with a few Facility Management (FM) companies to offer a complete suite of services. The APC team have confirmed the growing opportunities in this area.

Equally their Time Sync business is also growing significantly as a number of businesses are adopting time sync functionality due to compliance or tech requirements. This offers APC increasing opportunities across a number of businesses in the financial, broadcasting, power, telecoms & infrastructure markets. I was quite astonished to learn the types of opportunities & the number of industries & companies requiring time sync was quite staggering. I can see this side of the business delivering strong organic growth for the foreseeable.

APC believe that both Property Tech & Time Sync businesses provide v good organic growth opportunities, well into double digit % over the months & years ahead.

Further bolt-on acquisitions

The management team alluded to the fact that the UK electronic components market is currently worth c.£1.5bn per annum. This is a highly fragmented market with hundreds of distributors, many of which are owned by people that are looking to exit & retire. This creates the opportunity for APC to offer an exit route to such owners & at the same time augment the organic growth of Property Tech & Time Sync, as a consolidation play in the Components market.

It’s therefore important that APC demonstrate the benefits of the Aspen acquisition, similar to that of January’s FB, as this will no doubt encourage further investor support for future acquisitions & I believe could lead to a material re-rating of the company in due course.

Conclusion

APC have now moved from the aftermath of a significant 18 month restructure , returning to profit & the small bolt-on acquisition of First Byte in January, before releasing H1 2018 results that highlighted op profit +45% and spoke of further improvement.

This is the next step on the journey. Pleasingly initiating a small raise at a small premium to the mid-price of the shares which will not only scale the business but also improve the b/s at the same time.

A few posts back I mentioned Stockdale’s forecasts as:

31.08.2018

Turnover £17.51m
PBT £0.68m
EPS 0.42p (+57%)

31.08.2019

Turnover £19.78m
PBT £0.94m
EPS 0.57p (+36%)

and envisage material upgrades for FY18/19 in light of this acquisition & accrued benefits.

It has been a pleasure watching them execute their well publicised strategy and I look forward to the journey ahead.

Disclosure - I own over 2% of the equity...so clearly talking my own book!

Kind regards,
GHF

[debsdowner] 25/7/2018 07:46

Fifty to seventy turnover in a few years! Excellent Owen.

[playful] 25/7/2018 07:15

Today’s announcement confirms the CEO is focused on his roll-up acquisition strategy to grow revenue and hopefully significantly increase operating profit.

Aspen have been in business 44 Years so its fair to say it’s a well-established business.



I’m happy with a smaller slice of a big cake instead of a big shareholding in a fondant fancy.

[owenski] 25/7/2018 07:09

No discount to SP, investors keen then?

[aishah] 17/7/2018 21:08

Developed by the NHS, distributed in the UK and Ireland by APC and featured on #NHS70 BBC series last night hxxps://t.co/n5XW6F7U27. The Medigenic keyboard reduces bacteria and pathogen levels found on this common touch point by 70% hxxps://t.co/FiRxOxyFqL

[golddigger1] 10/7/2018 13:29

I appreciate you taking the time to post the figs GHF, also the web links. Impressive growth projection, we will see.