SKS Technologies is positioned for a strong FY21/22 on the back of its APEC Technologies purchase and a profitable June quarter.

Tech integrator, SKS Technologies Group (ASX:SKS), has finished FY 20/21 with a positive cash performance with the acquisition of APEC Technologies exceeding revenue expectations on a year-to-year basis, establishing a solid foundation for the new financial year.

SKS, which is a leading provider of audio-visual and IT solutions, electrical and communications networks in the commercial, retail, health, defence and education sectors nationally, has benefited from the transformational impact the COVID-19 pandemic has had on the workplace environment.

It has become essential to be able to connect remote employees and clients on an integrated system with converged audio-visual / IT networks becoming increasingly more important.

The rise of sophisticated audio-visual solutions, like those supplied by SKS, has been driven by the popularity of video communication as well as increasing demand for corporate boardroom conferencing and collaboration tools to create engaging experiences and help facilitate real-time interactions.

This can be seen in their positive cash performance for the June quarter, which was $740,000 – a stellar turnaround from a $1.21 million loss in the previous quarter for SKS.

The result was driven by larger cash receipts from customers, increasing 44% in the quarter to $10.92 million.

 

Full benefit of APEC Technologies purchase to still flow through

Despite operating as an integrated business since April 1 and bearing all operating costs, full revenue impact of SKS’s buyout of APEC Technologies, is yet to occur.

Receipts accruing to APEC only started to flow through towards the end of Q4.

However, CEO Matthew Jinks said purchasing the technology and product firm that serves the corporate sector has been a positive and will bolster future growth.

“The impact of the APEC Technologies acquisition has exceeded revenue expectation on a year-to-date basis, which combined with record levels of work on hand establishes a solid foundation for FY22,” Jinks said.

Work on hand currently sits above $26 million.

 

Operating costs rise during APEC takeover

SKS’s cash operating costs were up to $10.8 million in Q4 from $8.76 million the previous quarter. A doubling in staff costs from $2.2 million to $4 million primarily drove the increase.

Around 40 staff from APEC were added to the SKS Technologies payroll. The company also bolstered staff numbers to support continuing organic growth.

Fit-out of SKS’s new West Melbourne premises impacted the companies cashflow around $310,000 in the final quarter.   The company’s cash at bank increased to $110,000 from $20,000.

Jinks said working capital remains at a comfortable level with the $3 million facility undrawn at the end of the June quarter.

 

Future growth projected

SKS expects continued growth across the fully integrated business and is focused on ensuring the company derives the anticipated value from its acquisition of APEC.

The company is also looking at expansion with a move into the managed AV and IT integrated solution space.

“We want to take the next logical step in our capability expansion with such a move utilising much of our expertise as well as building a solid recurring revenue model to diversify revenue streams,” Jinks said.

This article was developed in collaboration with Fresh Equities, a Stockhead advertiser at the time of publishing.

 This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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