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Market Cap
£8.96m
Change Today
Share Price
70.00p
Trading Statement
Turbotec Products PLC
13 February 2008
Press Release 13 February 2008
Turbotec Products Plc
("Turbotec" or "the Company")
Trading Statement
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 results for the nine month period ended 31
December 2007.
Highlights
• New records set for net revenues and net profit during the period
• Net revenues up 21% over prior year period to $20.9m (2006: $17.3m)
• Pre tax profit increase 59% to $2.2m (2006: $1.3m)
• Gross profit margin improved to 26.3% from 22.0% in fiscal 2007 to $5.5m
(31 March 2007: $3.8m)
• Net assets increased to $8.1m from $7.7m at 31 March 2007
• Cash and cash equivalents increased to $543,000 from $45,000 at 31 March 2007
• Refined manufacturing processes continue to generate operating efficiencies
Overview
Revenues were ahead of expectation and set a new record for the Company. For
the nine month period, net revenues were $20.9 million, a 21% ($3.6 million)
increase over the prior year. Shipments to major water source heat pump
customers remained strong throughout the period. The demand for high efficiency
heat pumps as part of a range of environmental initiatives continues to grow and
the advantages of our product design are proving attractive to an increasing
number of customers, both for retrofit and new build applications. In the third
quarter, water source heat pumps comprised a larger proportion of turnover than
in the first half. Turbotec's share of the overall swimming pool heat pump
market continues to grow with the addition of new OEM customers.
Gross margin percentage was 26.3% for the first nine months of fiscal 2008
compared to 22.0% for the same period last year. For the full fiscal year ended
31 March 2007 gross margin percentage was 22.7%. The improvement in gross
margin was a result of a more favourable product mix, adjustments to formulas
passing on the cost increases of raw materials, and production efficiencies
resulting from completed lean manufacturing projects.
Net profit for the period ended 31 December 2007 was $1,430,000 compared to
$953,000 for the same period of the prior year. The improvement in earnings
arose despite increased expenditures relating to operating and corporate
governance functions as the Group invested to support future expansion. This
was also achieved after costs incurred in responding to the ongoing dispute with
our majority shareholder.
Based on the strong results for the first nine months, the Directors anticipate
delivering full year results in line with market expectations. Our expectations
for fiscal 2009 have to take due consideration of the current softness in the US
housing market but the demand for greater energy efficiency and the superior
performance of our products should see us continue to make successful inroads in
market share.
Commenting on the results, Sunil Raina, Managing Director of Turbotec Products
said: "We are pleased by the operating results generated during the first nine
months of the year and the new customers that have selected our products. Our
view of 2009 is tempered by the softening in the US housing market, however, we
are confident that the Company remains firmly on track for 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
Evolution Securities Limited +44 (0)113 243 1619
Joanne Lake/Peter Steel
joanne.lake@evosecurities.com
Media enquiries:
Abchurch Communications
Charlie Jack/ Sarah Hollins Tel: +44 (0) 207 398 7706
charlie.jack@abchurch-group.com www.abchurch-group.com
Copies of this announcement are available for collection from Evolution
Securities Limited's offices at Kings House, 1 King Street, Leeds LS1 2HH and
electronic copies can be obtained from the Company's website
www.turbotecproducts.com
TURBOTEC PRODUCTS PLC
CONSOLIDATED INCOME STATEMENTS
Nine Months Nine Months Year Ended
31 December 31 December 31 March
2007 2006 2007
$'000 $'000 $'000
UNAUDITED UNAUDITED AUDITED
Revenue 20,874 17,312 23,530
Cost of sales (15,382) (13,498) (18,193)
Gross profit 5,492 3,814 5,337
Distribution costs (580) (624) (836)
Administrative expenses (2,699) (1,779) (2,527)
Operating profit 2,213 1,411 1,974
Finance costs (25) (75) (96)
Profit before tax 2,188 1,336 1,878
Income tax expense (758) (383) (564)
Profit for the period 1,430 953 1,314
Earnings per share - basic $ 0.11 $ 0.08 $ 0.10
Earnings per share - diluted $ 0.11 $ 0.08 $ 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
31 DEC 31 DEC 31 MARCH
2007 2006 2007
$'000 $'000 $'000
UNAUDITED UNAUDITED AUDITED
Assets
Non-current assets:
Property, plant and equipment 4,318 3,941 4,175
Intangible assets 471 343 411
4,789 4,284 4,586
Current Assets:
Inventories 3,312 3,862 3,416
Trade and other receivables 2,615 2,734 3,359
Cash and cash equivalents 543 2 45
6,470 6,598 6,820
Current Liabilities
Current portion of long-term borrowings 189 121 108
Bank overdraft - 538 -
Trade and other payables 1,526 1,847 2,315
Current tax liabilities 365 227 481
2,080 2,733 2,904
Net current assets/(liabilities) 4,390 3,865 3,916
Non-current liabilities
Long-term borrowings 384 242 224
Deferred tax 692 985 595
1,076 1,227 819
Net assets 8,103 6,922 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 4,602 3,421 4,182
Total equity 8,103 6,922 7,683
The accompanying notes are an integral part of these consolidated financial statements
TURBOTEC PRODUCTS PLC
cONSOLIDATED Statements of Cash Flows
NINE NINE YEAR
MONTHS MONTHS ENDED
31 DEC 31 DEC 31 MARCH
2007 2006 2007
($000's) ($000's) ($000's)
UNAUDITED UNAUDITED AUDITED
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 2,486 (529) 965
Taxes paid (780) - (514)
Net cash provided by (used in) operating activities
1,706 (529) 451
CASH FLOWS FROM INVESTING ACTIVITIES
Development costs paid (59) (102) (171)
Payments for property, plant and equipment (353) (474) (773)
Net cash used in investing activities (412) (576) (944)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank borrowings 357 104 133
Proceeds from stock placing - 4,382 4,382
Share issue costs - (892) (892)
Principal payments on long term debt (117) (317) (377)
Principal payments on capital lease obligations - - -
Dividends paid (1,037) (98) (98)
Net cash used in financing activities (797) 3,179 3,148
NET CHANGE IN CASH AND CASH EQUIVALENTS 497 2,074 2,655
CASH AND CASH EQUIVALENTS, beginning of period 46 (2,610) (2,610)
CASH AND CASH EQUIVALENTS, end of period 543 (536) 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:
Nine Months Ended Nine Months Ended Year Ended
31 Dec 31 Dec 31 March
2007 2006 2007
($000's) ($000's) ($000's)
Current 662 244 514
Deferred 96 50 50
Taxation 758 294 564
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:
9 Months 9 Months Year Ended
31 Dec 31 Dec 31 March
2007 2006 2007
($000's) ($000's) ($000's)
Profit before tax 2,188 1,336 1,878
Profit before tax multiplied by rate of
corporate tax in the UK of 30% 656 401 563
Effect of:
Temporary differences between book and tax income (48) (56) (75)
Higher rate of tax on overseas earnings 251 60 75
Dividend from overseas subsidiary taxed at higher UK rate - - 167
Tax credits used to reduce taxes paid (100) (118) (166)
Other (1) 7 -
Total taxation 758 294 564
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.
Nine Months 31 Dec 2007 Nine Months 31 Dec 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 1,430 - 953 - 1,314 -
Weighted average shares - 12,806,773 - 12,402,735 - 12,523,273
Diluted EPS-
Effect of Dilutive
Securities
Stock options - 800,000 - - - 21,918
Diluted EPS 1,430 13,606,773 953 12,402,735 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 31 Dec 2007
Cost and net book value
Balance at 1 April 2007 94 317 411
Additions - 60 60
Balance at 31 Dec 2007 94 377 471
Period Ended 31 Dec 2006
Cost and net book value
Balance at 1 April 2006 94 146 240
Additions - 103 103
Balance at 31 Dec 2006 94 249 343
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 94 317 411
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:
Nine Months Ended 31Dec 2006
Nine Months Ended 31 Dec 2007 and Year Ended 31 March 2007
2007 2006
Authorized
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
Nine Months Nine Months Year Ended
31 Dec 2007 31 Dec 2006 31 Mar 2007
2007 2006 2006
($000's) ($000's) ($000's)
Profit before tax 1,430 744 1,878
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 210 189 254
Changes in operating assets and liabilities:
Decrease (increase) in trade and other receivables 743 (409) (1,246)
Decrease (increase) in inventory 104 (861) (414)
(Decrease) Increase in trade and other payables (928) (261) (5)
Increase (decrease) in accrued expenses and taxes 899 69 497
Charge recognized in respect of share based payment 28 - 1
Net cash provided by operating activities 2,486 (529) 965
7. ANALYSIS OF CASH AND CASH EQUIVALENTS AT:
31 Dec 31 Dec 31 March
2007 2006 2007
($000's) ($000's) ($000's)
Cash available on demand 543 2 45
Bank overdrafts - (538) -
543 (536) 45
8. LONG TERM BORROWINGS
31 Dec 31 Dec 31 March
2007 2006 2007
Current Financial Liabilities ($000's) ($000's) ($000's)
Bank overdrafts - 538 -
Bank loans- secured 189 121 108
189 659 108
Non-current financial liabilities -
Bank loans- secured 384 242 224
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:
31 Dec 2007 31 Dec 2006 31 March 2007
Bank overdrafts and secured loans 7.25% 8.25% 8.25%
Maturities of borrowings are as follows:
31 Dec 31 Dec 31 March
2007 2006 2007
($000's) ($000's) ($000's)
In less than 1 year 189 121 108
In 1-2 years 186 98 98
In 3-4 years 198 121 43
Thereafter - 23 -
573 363 332
9. DIVIDEND PAYMENTS 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 was paid on 12 December 2007 to qualifying shareholders on Turbotec's
share register at the close of business on 30 November 2007. Cash dividends
aggregating $295,000 were paid to shareholders, of which $166,000 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.
This information is provided by RNS
The company news service from the London Stock Exchange