Advanced Power Components Predict a Return to Profit

Advanced Power Components (LON:APC) the AIM listed specialist distributor of electronic components have today provided their shareholders with a welcome boots, by announcing through a trading statement an anticipated return to profit before tax in line with market expectations for the financial year ending August 31 2010.  Astaire Securities, a house broker estimated back in May a profit before tax in the region of £220k. [ref] Astaire Securities Research Note II, First half results Recovery underway, May 2010, http://www.apc-plc.com/documents/Astair%20Assoc.%2010-5-2010.pdf [/ref]

Commenting on the results the company stated, [ref] Trading Update, 14 October 2010, http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10687650 [/ref]

“This strong performance results from APC's prudent cost cutting measures, along with the Company's increased focus on technical sales, which has resulted in a number of additional promising opportunities being pursued.”

This is a welcome return to profit for the company and its investors, and follows the plan laid out 12 months ago in which the senior management reviewed and restructured the business, which was to result in approximately £40,000 of cost savings per month.  Over the period APC has also cleared the differed considerations for previous acquisitions and strengthened its senior team and BOD.  Through the initiatives implemented Advance Power Components are set to report a positive cash flow from operating activities in excess of £750,000 (un-audited)        

Going forward, investors will be eager to see the APC business recovery continue and what impact the new lines announced during FY10 along with  ‘imop’ energy saving device will have on FY11 earnings.  Based on sales of existing lines only, Astaire Securities a house broker forecasted following the interims earlier this year an adjusted profit before tax figure of £350,000 which would give an EPS of 1.4p for FY11. [ref] Astaire Securities Research Note, May 2010, http://www.apc-plc.com/documents/Astair%20Assoc.%2010-5-2010.pdf [/ref]

Basic overview

Advance Power Components based in Rochester, Kent, operate under a number of different autonomous brands;

• APC-Hi Rel: products such as power semiconductors, power supplies, memory, wound and high voltage components.
• APC-Hero: Specialist products such as  LEDS/LAMPS, drivers, wireless devices and modules, Zigbee, specialist sensors and crystals
• APC-Displays+: technical and commercial support for a wide range of LCD’s, standard, custom, TFT, e-signage, character, graphics, driver boards, IC’s, etc
• APC-Locator: concentrates on locating obsolete and hard-to-find parts for its customers 
• APC-Contech: Products such as data input devices for the industrial, broadcasting and medical sectors
• APC-Novacom: RF and microwave frequency electronic components
• APC-Go!: Services on offer range from material procurement to full production management
• APC-Kvar: power saving equipment

Ticker code: APC

Shares in issue: 25.15m

Market capitalisation: £3.77m

Current SP: 15.00

52 week low: 6.13p (17/12/2009)

52 week high: 28.75 (24/05/2010)

Note: As previously announced, an interview with Mark Robinson CEO will be published soon.