www.apcplc.com

December 2018

Business Update

Design, specification and distribution of specialist

electronic components, products and systems

2

Our Company

3

1996 2006− 2008 20181982 2014

APC is incorporated

as a distributor of high

reliability electronic

components.

APC lists on London

Stock Exchange.

APC acquires:▪ Hero Electronics (2006)

▪ Contech Electronics (2008)

▪ Novacom Microwaves (2008)

APC achieves

AS9120 certification

for high reliability

components.

APC acquires:▪First Byte Micro

(2018)

▪Aspen Electronics

(2018)

UK wide offices:

UK & Ireland Coverage:Rochester, Kent (HQ)

Central London

Uxbridge

Lincoln

Essex

• Regional field sales

80 + Employees50 customer facing

positions:

Product Managers,

Technical Sales, Internal

Sales, Sales Administration

Turnover GrowthFY 2018 revenue £17.1M

FY 2018 EBITDA £1.15m

FY 2018 bookings c £22.5m

The APC Group and Vision

4

Components (c.60% of sales)

▪ Military and aerospace

▪ Medical / industrial

▪ Locator - sourcing of obsolete

components

▪ Growth Opportunity: Further

acquisitions; sign new

complementary product lines;

and drive organic growth

through the enlarged platform

Property Technology (c.30% of sales)

▪ Lighting: design, supply and

installation of LED lighting

solutions

▪ Internet of things – smart

buildings and infrastructure

▪ Performance measurement and

verification

▪ Growth Opportunity: Further

market penetration

Time Synchronisation(c.10% of sales)

▪ Time synchronisation for

financial sectors and

broadcasting

▪ Network assurance

▪ Growth Opportunity: Continue

development of ‘go to’ brand in

time synchronisation / digital

network assurance

Triple Size of Business on 3-5 Year View

Target Revenue

£m

3 Year 5 Year

Property

Technology

15 20

Time

Synchronisation

3 5

Components 30 50

Group 48 75

FY 2018 – Financial Highlights

• Post-tax profit of £0.6m (2017:£0.2m),

significantly higher than prior year

• Earnings per share 0.5p, up from 0.1p in 2017

• EBITDA £1.15m, up from £0.8m in 2017

• £0.9m operating profit, up from £0.5m in the

prior year

• Revenue from continuing operations £17.1m

(2017: £15.6m)

• Gross profit, before exceptional and non-

recurring expenses £5.7m (2017: £5.4m)

• Gross margin, before exceptional and non-

recurring expenses 33.1% (2017: 34.9%)

• Share placing and subscription in July 2018 to

fund acquisitions, raising £2.9m net of

expenses in new equity for the Group

• Year-end cash balances increased from £0.4m

to £0.8m and net debt decreased to £2.7m

(2017 £3.1m)

5

2018 2017 % Change

£'000 £'000

Revenue 17,149 15,564 10.2%

Administration expenses (4,571) (4,637) (1.4%)

EBITDA 1,153 884 30.4%

Operating Profit 1,110 794 39.8%

Operating Margin 6.5% 5.1% 27.5%

PBT 633 192 229.7%

Net Debt 2,688 3,101 (13.3%)

Earnings per share (p) 0.5 0.1 400.0%

-200

0

200

400

600

800

1,000

1,200

1,400

2016 2017 2018

PAT and EBITDA Performance £'000

PAT continuing operations EBITDA

FY 2018 – Three Faceted Growth Strategy

Selling more of the technology and products that we have with our enlarged sales force:

• Order highlights in the year include

– USD 1.0m repeat order for components for a defence aviation radar system

– £1.0m new design order for Counter-IED technology components

– £4.1m of lighting orders in the year, up from £2.6m in 2017

– First order (£0.2m) of a series for smart buildings technologies

• Orders taken in the year (“bookings”) £16.5m (excluding Aspen), an increase of 3.1%

• Annualised bookings run rate in 2018 for the enlarged Group £22.5m, representing a healthy book to bill ratio for

future growth

Signing new, proven technology partners:

• UK and Ireland distribution deal for 3D PLUS microelectronics products for space applications

• UK distribution deals signed with Oregano Systems and Seven Solutions (White Rabbit systems) to boost APC’s

time synchronisation business

• APC salesforce increased to leverage wider market opportunities

Strategic bolt-on acquisitions:

• Acquisition of First Byte Micro Limited (“FBM”) in January 2018, to enhance Locator offering

• Acquisition of Aspen Electronics Limited (“Aspen”) in July 2018, to enhance RF and Microwave business

• Robust pipeline of other opportunities at various stages of discussion

• Highly fragmented €1.6bn market with over 500 companies operating in it

6

FY 2018 – Profit and Loss

7

For the Year

Ended

For the Year

Ended

31 August

2018

31 August

2017

£000 £000

Revenue 17,149 15,564

Cost of sales (11,468) (10,133)

Gross profit 5,681 33.1% 5,431 34.9%

Administration expenses (4,571) (4,637)

Share of results of associates - -

Operating profit before exceptional items 1,110 794

Exceptional items (128) (252)

Amortisation of intangible assets - -

Share Based Payments (32) (38)

Operating profit 950 504

Financing income - -

Financing expense (395) (338)

Profit before taxation 555 166

Taxation credit 78 26

Profit for the period from continuing operations 633 192

FY 2018 – Working Capital and Net Debt

8

* Other payables includes matured loan notes repaid post year

end

Working Capital August August

2018 2017

Inventories 1,330 832

Trade Receivables 3,722 2,856

Other Receivables 83 5

Prepayments 328 124

5,463 3,817

Trade Payables (2,381) (2,041)

Other Payables* (998) (703)

Accruals (1,351) (1,588)

(4,730) (4,332)

Net Working Capital, Excluding Net Debt 733 (515)

* Unsecured debt

1 Loan notes exclude matured loan notes treated as other

payables

Net Debt August August

2018 2017 Change

ABN invoice Discounting 2,261 2,502 241

ABN Enterprise Loan* 500 - (500)

PAY4 trade Payments* 595 405 (190)

Finance Leases 9 16 7

Loan Notes1 100 555 455

Cash and cash equivalents (777) (377) 400

Net Debt 2,688 3,101 413

9

Appendix

Principal Shareholders

10

Shareholder

% of Issued Share

Capital

Cumulative % of

Issued Share Capital

Canaccord Genuity 17.4 17.4

Rockridge Investments 11.1 28.5

Octopus Investments 6.8 35.3

Mr Roger Robinson 6.0 41.3

Harwood Capital 5.0 46.2

Hargreaves Lansdown Asset Management 4.6 50.8

Howard Venning 4.1 54.9

Interactive Investor 4.0 58.9

Mr Stuart Hawthorne 3.2 62.1

Barclays Wealth 3.1 65.2

AJ Bell Securities 2.7 67.9

Mr John Mitchell 2.2 70.1

Unicorn Asset Management 2.0 72.1

Management 4.0 76.1

* As at 10 October 2018

Components

11

Customer industry sectors:

• Military / aerospace

• Space

• Medical

• Industrial

Limited organic growth due to project / manufacturer churn:

• Therefore 3 – 5 year plan is achieved through strategic

acquisitions and attracting new technology partners to the

enlarged base

• Acquisition targets in RF & Microwave, Hi-Rel distributors,

Locator and value added manufacturers

• Recent First Byte Micro and Aspen acquisitions

Immediate acquisition target pipeline strong

Growth from new lines in power electronics for military /

aerospace

£m 3 to 5 year

target

Revenue 30 - 50

Core 12 - 15

Acquisitions 15 - 30

New lines 3 - 5

Gross margin Stable

ComponentsAcquisitions to complement organic growth

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Market ripe for consolidation

UK electronic components market1: €1.6 bn p.a.

Highly fragmented: over 500 Electronic Component Distributors2

2018 growth estimated between 6.5% and 10.5%1

End User Market

Medium to high growth

High complexity

Limited number of suppliers

Requirement for added value from

suppliers

High loyalty in established relationships

Sustainable, medium to high margin

Brexit beneficiary

Supply Market

Technology led

Many new entrants

Consolidation / M&A activity

Limited international distribution channels

Requirement for added value from

distributors

High loyalty in established relationships

UK Distributor Market

Highly fragmented

Ageing owner population looking to retire

Limited exit opportunities leading to low

valuations

Notes:

1) Source IDEA / ECSN / AFDEC quarterly return from members

2) Plimsoll

Property Technology

Lighting

• Over £2bn p.a. market opportunity

• Increase penetration of strategic FM relationships

- Currently four relationships worth c.£1m p.a. each

- In discussions with a further 10 FMs

IoT

• Delivered one major project for Mitie/Deloitte in 2017/18,

already getting follow on orders in FY 2018/19

• Increased spend by FM on lighting controls and smart

infrastructure

• Cross selling opportunities for other IoT technologies from

lighting relationships

Performance measurement

• Blue chip clients: Lloyds, Vodafone, Royal Mail

• Provides significant value add over standard property

technology sales

• Well regarded team in the energy performance sector

13

£m 3 to 5

year

target

Revenue 15 - 20

Lighting 10 - 12

IoT 3.5 - 5

Performance

Measurement

1.5 - 3

Gross margin Stable

UNDERSTANDINGOperational, compliance,

legislative, CSR and financial objectives and constraints

DISCOVERY & BASELINEGranular monitoring,

measurement, energy audits and in-depth usage analysis

STRATEGIC PLANActivity plan with detailed targets and KPIs tailored

objectives e.g. capital projects, funded solutions,

behavioral change

IMPLEMENTATIONImplement and support approved

tactical activities. Real-time measurement, rolling verification

and reporting

REVIEW & REFRESHRigorous M&V evidences cash

flows from savings. Strategic plan revisited and refreshed

Property TechnologyLeverage Lighting to create value added Property Technology Services

14

… through APC Lighting, EEVS and APC Smartwave we already provide all of these services

15

Opportunity for a high value added bespoke lighting solution provider

Opportunity to provide broader suite of property technology products and

services to same customer base

UK lighting market1: £2 bn p.a.

44% growth since 20132

End User Market

Commercial / industrial property sector

High technical complexity

FM consolidators

Requirement for added value from

suppliers

Contracted relationships

Sustainable, medium to high margin

Supply Market

Service led manufacturers

- Low appetite to provide integrated

solutions

Service led FM consolidators

- Low in-house competence, high

dependence on sub-contractors

- High loyalty in established relationships

- Consolidation to increase dependence

on value added specialists

Lighting / Property Technology Distributor

Market

Fit out sub-contractors, highly fragmented

Low level of added value

Difficult to break into new FM relationships

Organic driven growth

Emphasis on differentiating added value

Complement technology supply with

services

Notes:

1) Source: LIA / Lux Review

2) Source: AMA Research

Property TechnologyAccelerated organic growth opportunity

Time Synchronisation / Network Assurance

Time synchronisation

• 2015 - 2019 c.30% p.a. growth1

• European time sync market: c.€300 million p.a.

• UK market estimated at €60m p.a. dominated by

financial services and broadcasting industries

• Growth from markets converting to digital:

broadcast, telecoms, power and infrastructure

• Technology and compliance driven growth

• Five technologies of which APC has exclusivity

on one

16

£m 3 to 5 year

target

Revenue 3 - 5

Gross margin 34%

Notes:

1) Source European Global Navigation Satellite Systems Agency 2017 GNSS market report

Time synchronisationTechnology and compliance driven growth opportunity

17

Target to supply 10% of the market by being the ‘go to’ provider of time

sync and network assurance products

Global market for GNSS1 based timing systems2: €1.2 bn p.a.

25% growth 2015-2019End User Market

Compliance requirements for IT networks

and infrastructure

High technical complexity

1) Broadcast industry: transition from

legacy SDI to IP networks

2) Finance: compliance driven

3) Telecoms: technology driven for

infrastructure

4) Power: compliance and security (e.g

smart grid)

5) Military and defence: technology

driven

Supply Market

Dominated by small number of mid to

high end specialist global manufacturers

1) Meinberg (Germany): T/O c. $25m

2) Microsemi (US): T/O c. $190m

3) Spectracom (Switz.): T/O c. $50m

4) Oscilliquartz (Germany): T/O c. $25m

5) Tektron (NZ): T/O c. $10m

UK Distributor Market

Established channel partners by region

for each supplier

Upside from complementary products,

e.g.:

- GNSS signal distribution systems

- PTP aware network switches

- Interface cards

Notes:

1) Global Navigation Satellite Systems

2) Source European Global Navigation Satellite Systems Agency 2017 GNSS market report

www.apcplc.com

© APC Technology Group plc. Copying, distributing, or any other unauthorised use of

the content contained within this document, without the recreating express written

consent of APC Technology Group plc, is strictly prohibited.

Thank you

Richard Hodgson

Chief Executive

+44 7880 787 924

richard.hodgson@apcplc.com

Michael Thompson

Finance Director

+44 7854 703 655

michael.thompson@apcplc.com