APC Technology gross margins improve

APC Technology Group expects to post an operating profit for the year to the end of August compared with a loss last time after an improvement in gross margins.

The full year results to 31 August from continuing operations are expected to show revenue of £17.9m (2015: £22.8m), gross profit of £6.4m (2015: £6.0m) and an operating profit of £0.3m (2015: £1.4m loss).

The group says these results reflect the commitment of the operational review undertaken earlier in the year to deliver a profitable business and to concentrate on activities where the group can create value. This is reflected in the increase in gross profit margin to 35.8% (2015: 26.3%). These results are before expected exceptional costs and loss from discontinued operations of £12.8m. These largely non-cash costs are attributable to the restructuring of the group, the cessation or sale of non-core activities, and the non-cash write-off of goodwill and other intangible assets. The cash impact of loss for the year is expected to be £4.6m, of which £4.2m related to exceptional costs and discontinued operations, and was funded by £2.3m of equity, £0.3m sale of investments, and £2.0m increase in net debt.

Net debt at the end of the year is expected to be £3.2m of which £2.7m related to amounts owed under the Group's £6m invoice finance facility with ABN Commercial Finance which has been extended to December 2017.

Chief executive Richard Hodgson said: "I am very pleased with the solid start we have made to this new financial year, with the restructuring behind us and with a realigned business focused on our core competency of design, specification, and distribution of specialist technologies. This is a business that we have historically done well and which has proven to be profitable and cash generative.

"The year to 31 August 2016 was a difficult year for the Group and necessitated many hard decisions with all but core activities terminated or sold. While this resulted in some significant write-off of past costs, with a large proportion of that write off being non cash, it establishes a solid profitable base upon which to build for the future.

"We have strength in the stability that our core electronic component business brings and also some real established growth drivers in our lighting technologies and connected products and systems."

At 8:12am: (LON:APC) APC Technology Group PLC share price was +0.5p at 6.63p