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Market Cap
£6.40m
Change Today
Share Price
50.00p
Interim Results
Turbotec Products PLC
06 November 2007
Press Release 6 November 2007
Turbotec Products Plc
("Turbotec" or "the Company")
Interim Results
Turbotec Products Plc (TRBO.L), the designer and manufacturer of high
performance, high quality heat exchangers and flexible connector products, is
pleased to announce the following Interim Results for the six month period ended
30 September 2007.
Highlights
• Turnover increased by 25% to $14.5m (2006: $11.5m)
• Gross profit up by 44% to $3.7m (2006: $2.6m)
• Profit before tax up 95% to $1.5m (2006: $0.8m)
• Net assets increased by 21% to $7.9m (2006: $6.5m)
• Performance strong despite U.S. housing market downturn
• First interim dividend of 1.1p per ordinary share to be paid
Overview
Revenues were ahead of expectation and set a new record for the Company. For
the six month period net revenues were $14.5 million, up $2.9 million, or 25%
over the prior year. Shipments to the major water source heat pump customers
remained strong for the period despite the continued weakening in the housing
and construction markets. The demand for high efficiency heat pumps has
increased in the past year as requirement for 'green' buildings continues to
give our products broad appeal. The higher efficiency units are being
successfully marketed as a smart investment to reduce increasing energy costs in
existing housing. Shipments of boiler tubing were up significantly in the
current year as the replacement market for high efficiency boilers in schools
and other public facilities benefited from strong sales in the summer period.
Conversely, the swimming pool heat pump market remains down significantly from
the prior year, continuing the trend exhibited through much of fiscal 2008.
Turbotec's share of this market is expected to grow with the addition later this
year of two major OEM customers.
Following a strong first half, the Directors anticipate delivering full year
results in line with market expectations; however, they do expect the sub-prime
fall out to modestly impact the Company's pace of growth in the second half.
Gross margin percentage was 25.6% for the first six months of fiscal 2008
compared to 22.3% for the same period last year. For the full fiscal year ended
31 March 2007 gross margin percentage was 22.6%. The improvement in gross
margin was a result of more favorable market conditions in certain sectors and
adjustments to formulas passing on the cost increases of raw materials, coupled
with production efficiencies resulting from completed lean manufacturing
projects.
Net profit for the current six month period was $949,000 compared to $538,000
for the same period of the prior year. Increased expenditures in marketing,
engineering and corporate governance functions were made in the current year as
the company continues to expand its business base and product applications.
Commenting on the Interim Results, Sunil Raina, Managing Director of Turbotec
Products, said:
"We are delighted to report exceptional first half sales and earnings despite
the worsening status of the U.S. housing market. While we remain optimistic
about the future and continue to aggressively pursue new opportunities, the
extended softness in residential and commercial construction will impact our
order backlog at some major customers, which may eventually affect the Company's
shipments in future periods. However, we are confident that the Company remains
firmly on track for continued long term growth."
- Ends -
Enquiries:
Turbotec Products Plc
Sunil Raina, Managing Director Tel: +1 (860) 683 2005
SRaina@turbotecproducts.com
Robert Lieberman, Treasurer and Chief Financial Officer Tel: +1 (860) 683 2005
RLieberman@turbotecproducts.com www.turbotecproducts.com
Dawnay, Day Corporate Finance Limited
David Rae/ Edward Gay Tel: +44 (0) 20 7509 4570
www.dawnayday.com
Media enquiries:
Abchurch Communications
Charlie Jack/ Emma Johnson Tel: +44 (0) 207 398 7784
emma.johnson@abchurch-group.com www.abchurch-group.com
Copies of this announcement are available for collection from Dawnay, Day
Corporate Finance Limited's offices at 17 Grosvenor Gardens, London, SW1W OBD
and electronic copies can be obtained from the Company's website
www.turbotecproducts.com
CHAIRMAN'S STATEMENT
I am pleased to report that for the interim period ended 30 September 2007, the
Company continued to report record levels of turnover and net profit. The core
markets for our products remained strong despite the extended downturn in the
U.S. housing market and commercial construction projects.
The Board is pleased to announce an interim dividend for the fiscal year ending
31 March 2008 in the amount of 2.3 cents (1.1p) per ordinary share. The
dividend will be paid on 12 December 2007 to qualifying shareholders on
Turbotec's share register at the close of business on 30 November 2007.
We continue to invest in process improvements through our capital project
program and focus on efficient manufacturing techniques. These activities have
had a positive impact on our operating performance during the current year. The
Company's review of pricing policies has added stability to our revenue stream,
further improving gross profit.
Further to my comments in the Annual Report, we have narrowed our search of
suitable locations for the expansion of our manufacturing facilities, required
to meet the growing needs of our diverse customer base and proximity to supply
chain partners. We continue to seek staff additions that will increase our
management depth and technical expertise.
As the prolonged depression in the U.S. housing market continues unabated,
certain of our major customers have begun to experience reductions in their
order backlog. The impact has not been felt by the Company at this time but we
are continually monitoring the situation. However, the Company outlook for the
remainder of 2007 is likely to remain in line with previous guidance. We remain
very optimistic about our long term prospects and see excellent growth potential
in our core markets.
Tom Nairn
Chairman
6 November 2007
TURBOTEC PRODUCTS PLC
CONSOLIDATED INCOME STATEMENTS
Six Months Six Months Year Ended
30 September 30 September 31 March
2007 2006 2007
$'000 $'000 $'000
UNAUDITED UNAUDITED AUDITED
Revenue 14,458 11,545 23,530
Cost of sales (10,748) (8,975) (18,193)
Gross profit 3,710 2,570 5,337
Distribution costs (403) (419) (836)
Administrative expenses (1,811) (1,338) (2,527)
Operating profit 1,496 813 1,974
Finance costs (15) (55) (96)
Profit before tax 1,480 758 1,878
Income tax expense (531) (220) (564)
Profit for the period 949 538 1,314
Earnings per share - basic $ 0.07 $ 0.04 $ 0.10
Earnings per share - diluted $ 0.07 $ 0.04 $ 0.10
The profit for the periods shown is all attributable to the equity holders of
the parent company.
The accompanying notes are an integral part of these consolidated financial
statements.
TURBOTEC PRODUCTS PLC
CONSOLIDATED BALANCE SHEETS
30 SEPT 30 SEPT 31 MARCH
2007 2006 2007
$'000 $'000 $'000
UNAUDITED UNAUDITED AUDITED
Assets
Non-current assets:
Property, plant and equipment 4,239 3,787 4,175
Intangible assets 460 306 411
4,699 4,093 4,586
Current Assets:
Inventories 3,897 3,653 3,416
Trade and other receivables 3,206 2,731 3,359
Cash and cash equivalents 1 2 45
7,104 6,386 6,820
Current Liabilities
Current portion of long-term borrowings 78 123 108
Bank overdraft 13 197 -
Trade and other payables 2,313 2,358 2,315
Current tax liabilities 407 145 481
2,811 2,823 2,904
Net current assets/(liabilities)
4,293 3,563 3,916
Non-current liabilities
Long-term borrowings 412 168 224
Deferred tax 672 982 595
1,084 1,150 819
Net assets 7,908 6,506 7,683
Shareholders' equity:
Share capital 228 228 228
Share premium account 3,441 3,441 3,441
Merger reserve (168) (168) (168)
Retained earnings 4,407 3,005 4,182
Total equity 7,908 6,506 7,683
The accompanying notes are an integral part of these consolidated financial
statements
TURBOTEC PRODUCTS PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX SIX YEAR
MONTHS MONTHS ENDED
30 SEPT 30 SEPT 31 MARCH
2007 2006 2007
($000's) ($000's) ($000's)
UNAUDITED UNAUDITED AUDITED
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 1,306 (376) 965
Taxes paid (529) - (514)
Net cash provided by (used in) operating activities
777 (376) 451
CASH FLOWS FROM INVESTING ACTIVITIES
Development costs paid (48) (60) (171)
Payments for property, plant and equipment (204) (256) (773)
Net cash used in investing activities (252) (316) (944)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank borrowings 190 92 133
Proceeds from stock placing - 4,382 4,382
Share issue costs - (892) (892)
Principal payments on long term debt (30) (377) (377)
Principal payments on capital lease obligations - - -
Dividends paid (743) (98) (98)
Net cash used in financing activities (583) 3,107 3,148
NET CHANGE IN CASH AND CASH EQUIVALENTS (58) 2,415 2,655
CASH AND CASH EQUIVALENTS, beginning of period 46 (2,610) (2,610)
CASH AND CASH EQUIVALENTS, end of period (12) (195) 45
The accompanying notes are an integral part of these consolidated financial
statements
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The interim financial statements have been prepared using the recognition and
measurement principles of International Financial Reporting Standards ("IFRS"
and IFRIC interpretations) issued by the International Accounting Standards
Board as adopted for use in the European Union and with those parts of the
Companies Act of 1985 applied to companies preparing their accounts under IFRS.
The preparation of the interim financial statements requires management to make
judgments, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenses. Actual results
may differ from these estimates. These interim financial statements are
unaudited.
The comparatives for the full year ended 31 March 2007 are not the Company's
full statutory accounts for that year. A copy of the statutory accounts for
that year has been delivered to the Registrar of Companies. The auditors'
report on those accounts was unqualified and did not contain a statement under
section 237(2)-(3) of the Companies Act 1985.
2. TAXATION
Analysis of charge in period:
Six Months Ended Six Months Ended Year Ended
30 Sept 30 Sept 31 March
2007 2006 2007
($000's) ($000's) ($000's)
Current 455 172 514
Deferred 76 48 50
Taxation 531 220 564
Tax reconciliation:
The effective tax rates for the periods are different than the standard rate of
corporate tax in the UK (30% for all periods presented). The differences are
attributable to the following:
6 Months 6 Months Year Ended 31
30 Sept 30 Sept March
2007 2006 2007
($000's) ($000's) ($000's)
Profit before tax 1,480 758 1,878
Profit before tax multiplied by rate of
corporate tax in the UK of 30% 444 228 563
Effect of:
Temporary differences between book and tax income (20) (10) (75)
Higher rate of tax on overseas earnings 170 26 75
Dividend from overseas subsidiary taxed at higher UK rate - - 167
Tax credits used to reduce taxes paid (60) (20) (166)
Other (3) (4) -
Total taxation 531 220 564
3. BASIC EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE
The calculations of basic and diluted earnings per ordinary share are based on
the profit for the financial year and the weighted average number of equity
voting shares in issue and dilutive shares during the period.
Six Months 30 Sept 2007 Six Months 30 Sept 2006 Year Ended 31 March 2007
(Numerator) (Denominator) (Numerator) (Denominator) (Numerator) (Denominator)
($000's) Weighted ($000's) Weighted ($000's) Weighted
Average Shares Average Shares Average Shares
Basic EPS
Profit for the period 949 - 538 - 1,314 -
Weighted average shares - 12,806,773 - 12,095,662 - 12,523,273
Diluted EPS-
Effect of Dilutive
Securities
Stock options - 800,000 - - - 21,918
Diluted EPS 949 13,606,773 538 12,095,662 1,314 12,545,191
The comparative figures are pro-forma based on the number of shares that would
have been in issue had the capital structure of the parent company always have
been in place.
4. INTANGIBLE FIXED ASSETS
Capitalized
Development
Goodwill Costs Total
($000's) ($000's) ($000's)
Period Ended 30 Sept 2007
Cost and net book value
Balance at 1 April, 2007 94 317 411
Additions - 49 49
Balance at 30 Sept, 2007 94 366 460
Period Ended 30 Sept 2006
Cost and net book value
Balance at 1 April, 2006 94 146 240
Additions - 66 66
Balance at 30 Sept, 2006 94 212 306
Period Ended 31 March 2007
Cost and net book value
Balance at 1 April, 2006 94 146 240
Additions - 171 171
Balance at 31 March, 2007 94 206 411
Goodwill relates to the acquisition of a technology company acquired by the US
parent company in 1985. The operations of that company were subsequently
integrated into the company's primary manufacturing facility. The technology
acquired continues to be used by the group as an integral part of the
engineering and manufacturing of its current product line.
The Company operates as a single integrated business and as such has one
operating segment, which is used as the reporting unit for the purposes of
evaluating goodwill impairment. In accordance with IFRS 3, the Group regularly
monitors the carrying value of intangible assets. A review was undertaken at 31
March 2007 to assess whether the carrying value of assets was supported by the
net present value of cash flows derived from those assets using future cash flow
projections. The discount rates for the review were based on company specific
weighted average cost of capital and ranged from 6% to 8%. The future cash
flows have been modeled to increase in line with historic rates. Further to the
review, there have been no impairments to the carrying amount of goodwill in any
period. The deferred development costs will be amortized over the expected
lives of the related products once sales of these products commence on a
commercial level.
5. CALLED UP SHARE CAPITAL
Called up share capital is as follows:
Six Months Ended 30 Sept 2006
Six Months Ended 30 Sept 2007 and Year Ended 31 March 2007
Authorized
2007 2006
Number of Number of
Shares $000's Shares $000's
Ordinary shares of 1p each 20,000,000 356 20,000,000 356
Issued, Called Up and Fully Paid
Ordinary shares of 1p each
2007 2006
Number of Number of
Shares $000's Shares $000's
At beginning of year 12,806,773 228 10,009,590 178
Shares issued during period - - 2,797,183 50
12,806,773 228 12,806,773 228
Turbotec Products Plc (the "Company") was incorporated on 14 October 2005 in the
UK and re-registered as a public company on April 11, 2006 and is the parent
company of a wholly owned subsidiary, Turbotec Products, Inc (Turbotec)
(together 'the Company').
On May 8, 2006, Thermodynetics, Inc. ("Thermodynetics"), formerly the sole
shareholder of the Company, completed the sale of a minority interest of the
company, whereby approximately 43.68% of the Company's shares was sold or issued
to institutional investors pursuant to a placing on the AIM Market of the London
Stock Exchange. Pursuant to the placing, Thermodynetics sold and the Company
issued 2,797,183 shares each (a total of 5,594,366 ordinary shares in the
Company) at the price of 85 pence per ordinary share. Thermodynetics now owns
56.32% of Turbotec Products Plc, with the balance owned by institutional
investors.
6. RECONCILIATION OF PROFIT BEFORE TAX TO NET CASH FLOW FROM OPERATING
ACTIVITIES -
Six Months Six Months Year Ended
30 Sept 2007 30 Sept 2006 31 Mar 2007
2007 2006 2006
($000's) ($000's) ($000's)
Profit before tax 949 538 1,878
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 140 126 254
Changes in operating assets and liabilities:
Decrease (increase) in trade and other receivables 152 (625) (1,246)
Decrease (increase) in inventory (481) (651) (414)
(Decrease) Increase in trade and other payables (191) 166 (5)
Increase (decrease) in accrued expenses and taxes 719 70 497
Charge recognized in respect of share based payment 18 - 1
Net cash provided by operating activities 1,306 (376) 965
7. ANALYSIS OF CASH AND CASH EQUIVALENTS AT:
30 Sept 30 Sept 31 March
2007 2006 2007
($000's) ($000's) ($000's)
Cash available on demand 1 2 45
Bank overdrafts (13) (197) -
(12) (195) 45
8. LONG TERM BORROWINGS
30 Sept 30 Sept 31 March
2007 2006 2007
Current Financial Liabilities ($000's) ($000's) ($000's)
Bank overdrafts 13 197 -
Bank loans- secured 78 123 108
91 320 108
Non-current financial liabilities -
Bank loans- secured 412 168 224
The bank loans and overdraft are secured by a fixed charge over the assets of
the group. In addition, the Group must comply with certain financial and
non-financial covenants, noncompliance with which would be considered an event
of default and provide the bank with the right to demand repayment prior to the
loan's maturity date.
The interest rate on floating rate financial liabilities is linked to the bank's
prime rate. The interest rates charged at the balance sheet are as follows:
30 Sept 2007 30 Sept 2006 31 March 2007
Bank overdrafts and secured loans 7.75% 8.25% 8.25%
Maturities of borrowings are as follows:
30 Sept 30 Sept 31 March
2007 2006 2007
($000's) ($000's) ($000's)
In less than 1 year 78 123 108
In 1-2 years 132 93 98
In 3-4 years 72 15 43
Thereafter 107 - -
490 291 332
9. DIVIDEND PAYMENT TO EQUITY SHAREHOLDERS
At the Annual General Meeting of the Company held on 14 August 2007,
shareholders approved a final dividend of 5.8 cents per ordinary share for the
2007 fiscal year, payable to qualifying shareholders at the close of business on
27 July, 2007. Cash dividends aggregating $743,000 were paid to shareholders,
of which $413,000 was recovered against administration fees previously paid to
the Company's majority shareholder pursuant to Company's Relationship Agreement
entered into with the majority shareholder at the time of the Company's
Admission.
In October 2007 the Company announced an interim dividend for the fiscal year
ending 31 March 2008 in the amount of 2.3 cents (1.1p) per ordinary share. The
dividend will be paid on 12 December 2007 to qualifying shareholders on
Turbotec's share register at the close of business on 30 November 2007.
10. ULTIMATE PARENT COMPANY
The ultimate parent undertaking is Thermodynetics, Inc, a company incorporated
in the United States. This is largest and smallest Company into which the
Company's results are consolidated.
11. APPROVAL
This interim report was approved by the Directors of the Company on 6 November
2007. Copies may be obtained on the company's website, www.turbotecproducts.com
, or from the Company Secretary.
This information is provided by RNS
The company news service from the London Stock Exchange