Advanced Power Components 

Electronic components distributor APC delivered strong annual results to August, yet news of recent exchange rate losses took much of the shine off the news.

Profits sparked up by 20% to £730,000 last year, while turnover increased by 25% to £12.2m, despite flat sales in the core business, which actually represented a creditable performance in tough markets. It was therefore the astute recent Contech and Novacom acquisitions that delivered the growth.

Since year-end, APC has made strong operational progress with orders running ahead of budget and costs under control. However, it has been hit by the sharp depreciation of sterling against the US dollar and Euro. Roughly 90% of products are sourced overseas and two thirds of sales are sterling denominated, which has meant the swift decline in the value of the pound resulted in substantial currency losses, blighting an otherwise excellent first half. Analysts now expect a small interim loss and have downgraded full year forecasts to profits of £494,000 and earnings of 1.6p.

Currency swings aside, the acquisitive APC remains a high-margin venture enjoying high levels of repeat business, based on its technical expertise and design-in sales approach.

Furthermore, APC has boosted its growth prospects and green credentials through a licensing deal with US-based KVAR, whose products can reduce energy usage and lower electricity bills for clients by optimising the performance of electrical motors. It will now make and distribute KVAR products in markets outside North and South America.

APC, marked down from a 52-week high of 27p where it sells for less than seven times forward earnings, represents a decent recovery bet.