Turbotec Products Plc 

("Turbotec", "the Company" or "the Group")

Third Quarter Results and Trading Statement

Turbotec Products Plc (TRBO.L), the designer and manufacturer of high performance, high quality heat exchangers and Tru-Twist® heat transfer tubing, announces the following results for the nine months ended 31 December 2008.

Highlights

Overview 

Revenues were ahead of expectations for the nine month period at $22.25 million, up $1.4 million, or 6.6% over the prior year.  Shipments of heat exchangers to our major customers remained strong and slightly ahead of the same period last year. 

The geothermal water source heat pump market was steady during this period and benefited from effect of high energy prices through the summer months along with rebate programs and tax credits available in the US and Canada for geothermal heat pump installations.  Whilst the swimming pool market has remained in decline during the period, our share was steady with the addition of new customers.  

The first manufacturing cell at our new factory in Hickory started production in January.  With the addition of further cells planned over the next few months, we expect the facility to be fully operational by late summer 2009.  Establishing this facility is already helping the Company's overall production capacity by providing access to the regional skilled workforce.  The new facility will also relieve the pressure on our Windsor, Connecticut plant which has run at capacity during this period.  The Company estimates non recoverable start-up costs will amount to approximately $0.25m, spread over the current fiscal year third and fourth quarters.

Whilst profit before tax was up 2% to $2.24m, net profit for the nine month period was down 6.9% to $1.33m compared with the same period of the prior year.  As reported in our interim results, the litigation with Thermodynetics Inc., our majority shareholder, has led to a disproportionate rise in the use of legal and other advisory services resulting in a sharp increase in administrative expenses in preparation for the trial in March 2009. 

Commenting on the interim results, Sunil Raina, Managing Director of Turbotec Products, said: 

"We are pleased to report that nine month sales and earnings have remained steady, despite the negative global economic environment and the continued US housing market decline.  We are now seeing rescheduling of orders, including reduced production at our customers, as they match supply with demand.  Whilst this, along with the steep reduction in commodity costs is expected to reduce our fourth quarter sales and earnings; we expect our full year results to be broadly in line with market expectations.  The Company has been cash generative, has a strong balance sheet and continues to manage its working capital carefully.  We are excited about our operational new manufacturing facility and the new market opportunities we are pursuing.  We have positioned Turbotec so that it can continue to take advantage of the drive towards energy efficient heating and cooling systems, and the Company remains well placed to capitalise on existing and future market opportunities."

-Ends-

For further information please contact:

Media enquiries:

Copies of this announcement are available for collection from Evolution Securities 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 STATEMENT 

TURBOTEC PRODUCTS PLC

CONSOLIDATED BALANCE SHEET

TURBOTEC PRODUCTS PLC

CONSOLIDATED STATEMENTS OF CASH FLOW

 NOTES TO THE FINANCIAL STATEMENTS

1.     BASIS OF PREPARATION

The AIM Rules for Companies require that the annual consolidated financial statements of the Company for the 52 week period ending 31 March 2009 be prepared in accordance with International Financial Reporting Standards adopted for use in the EU ("IFRS").  Consequently this interim financial statement has been prepared on a consistent basis in accordance with the accounting policies adopted in the accounts for the year ended 31 March 2008 and on the basis of the recognition and measurement requirements of IFRS in issue that are either endorsed by the EU and effective (or available for early adoption) at 12 February 2009 and hence on the basis of IFRS that expected to apply in preparation of the accounts for the year ending 31 March 2009. 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 2008 are not the Company's full statutory accounts for that year within the meaning of Section 240 of the Companies Act of 1985. 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:

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:

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.

4.     INTANGIBLE ASSETS

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 2008 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. 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. ANALYSIS OF CASH AND CASH EQUIVALENTS AT:

6. LONG TERM BORROWINGS

The bank loans 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, non-compliance 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 date are as follows:

Maturities of borrowings are as follows: 

7.    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. 

8.     APPROVAL

This trading statement was approved by the Directors of the Company on 12 February 2009. Copies may be obtained on the Company's website, www.turbotecproducts.com, or from the Company Secretary. 

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