Laboratory and telecom network technology group BATM Advanced Communications Ltd (LON:BVC) said a maiden profit in its biomedical arm had driven it back into the black.
BATM revealed the biomedical division, which makes up 54% of BATM's sales, had become profitable for the first time in the group's history.
The division's gross margin improved to 25% versus 23% in 2014, its distribution business expanded in absolute terms in all markets and its diagnostics unit reached break-even.
The group made a US$700,000 adjusted operating profit in the year to December 31 against a US$1mln loss a year ago.
BATM's telecom division started showing a recovery as it reported a US$300,000 operating profit in the second half against a US$900,000 loss last time.
New products and technologies also continued to increase sales and replace legacy products, positioning the group to further improve revenues and gross margins.
Group pre-tax earnings before interest, depreciation and amortisation were US$2.5mln against US900,000mln a year ago.
Constant currency revenue rose to US$111.7mln from US$109.2mln beforehand.
WHAT THE CHIEF EXECUTIVE SAID
On the performance in 2015...
Zvi Marom said: "We believe we have turned a corner and transformed the group in both our divisions.
"In particular, the diagnostics unit reached a major milestone by reaching break-even for the first time and also increased its production capacity, for both instruments and reagents, to cater for anticipated demand in 2016.
On the outlook...
"Looking ahead, we entered 2016 in a stronger position, with a higher backlog, than at the same time in the prior year. We expect to maintain the momentum of last year.
"The board expects to achieve growth in line with market expectations."
ABOUT THE COMPANY
Currency head-winds ruffled BATM in 2015, but the group is confident biomedical business advances and a telecoms recovery will help it ride the turbulence.
Foreign exchange volatility weighed on the group's reported revenue by US$14.6mln, although constant currency revenue lifted 2.3% to US$111.7mln.
But BATM racked up its first profit in its bio-medical division and pointed to a recovery in its telecoms arm as evidence that business is on track.
The bio-medical division, which is involved in developing diagnostic systems, biological waste products and analytical instruments, increased its gross margin to 25% against 23% a year earlier.
The distribution business grew, in absolute terms, in all markets and its diagnostic arm reached break-even.
It signed an agreement with Gamida for Life to establish a joint venture company, Ador, to develop and market a unique rapid-results molecular diagnostics system, and earlier this year, BATM announced the acquisition of Green Lab Hungary Engineering Ltd, which develops and distributes analytical instruments, for US$3.8mln.
Its telecoms division showed signs of getting back on track after tussling with lower revenue and a stock write-off related to legacy products.
The business achieved a second-half operating profit due to tight cost control, resulting in a full-year adjusted operating profit of US$300,000, compared to a US$900,000 loss in the second half of 2014.
It won telecoms-related contracts in Asia Pacific and the US and netted a government deal potentially worth US$10mln or more in the growing cyber-security market.
In June 2016, telecoms subsidiary Telco also completed a 10 Gigabit Ethernet (GE) installation for a major telecoms group in south-east Asia.
The contract was a follow on from an earlier network modernisation upgrade to 4G/LTE services. At network capacity of 10GE, the telecoms group can support more broadband traffic and offer higher quality services, BATM said.
Adjusted basic earnings per share were 0.02 cents against a loss per share of 0.36 cents in 2014. Cash outflow was US$2.2mln against US$5.3mln last time.
At the end of 2015, the group had cash and cash equivalents and financial assets of US$23.8mln versus US$34.9mln a year earlier.
Marom said: "We expect to maintain the momentum of last year across our divisions, supported by our recent Green Lab acquisition.
"We are particularly excited by the interest being received by Ador, our diagnostics joint venture company with Gamida."
WHAT THE SHARE PRICE DID
Shares in the group were 16.47p in mid-morning trading in London.
WHAT THE BROKERS SAID
Broker and adviser to BATM, Shore Capital, noted that the balance sheet remained strong with liquidity of about US$23.8mln and net cash of some US$19mln.
It expects biomedical to make up more of the company's revenues in 2016, although currency head-winds are likely to continue to weigh.
It added that positive signs continue to emerge of improving market traction in telecoms and cyber activities appeared to be gaining traction.
"We note the government sole supplier agreement for a security solution signed last year – a strong reference point for future sales, in our view," the broker's Robin Speakman said.
Speakman added that Shore was keeping its forecast of a steady improvement in profit on recovering sales at an underlying constant currency level.
He said: "We expect positive news flow on strategic development to continue."
-- updates for June Telco announcement and share price --