TIDMTRBO
RNS Number : 5093T
Turbotec Products PLC
14 December 2012
Press Release 14 December 2012
Turbotec Products Plc
("Turbotec" or "the Company")
Half Yearly Report
Turbotec Products Plc (TRBO.L), the designer and manufacturer of
high performance heat exchangers and Tru-Twist(R) heat transfer
tubing, today announces its interim results for the six months
ended 30 September 2012.
Key Performance Data
-- Revenue of $10.6 million (2011: $11.7 million)
-- Loss before tax of $0.04 million (2011: profit of $0.43
million, including net proceeds from litigation of $0.34
million)
-- Slight decrease in net assets to $11.6 million (2011: $11.8
million)
--
* Continued progress made in relocating operations to
manufacturing facility in North Carolina
Overview
First half sales of $10.6 million were below the $11.7 million
achieved in the comparable period last year, with shipments to
major market segments at decreased levels and unit volumes down by
approximately 9%. Despite the reduction in sales volume, the
Company generated a profit from operations which was offset by the
write down of approximately $0.06 million of certain inventory that
will not be relocated to the new manufacturing facility due to cost
and space considerations. In the comparable 2011 period the Company
recorded operating profit of $0.45 million, which included a one
off gain from the settlement of litigation of $0.34 million.
Without this gain, income from operating activities for the six
months ended 30 September 2011 was comparable to the current year
results, after consideration of the 2012 inventory write-down.
The continuing weak economy, coupled with tight credit markets,
has prolonged the weak housing market for both new construction and
resale properties. Other markets served by the Company have been
similarly impacted by the economy. The residential geothermal heat
pump market trails previous year's shipments, as a result of both
the slow housing market and the sharp reduction in the cost of
natural gas, which is a competing fuel for heating systems. The
demand for swimming pool heat pump applications continues to be
depressed, and combined with the absence of a significant
replacement market resulting from severe weather in the Southern
United States, is expected to remain at reduced levels through the
foreseeable future. Overall the product mix for space conditioning
products has shifted to components used in commercial heating and
cooling applications which typically are of lower efficiency when
compared to the high efficiency residential applications; these
products are priced at points resulting in lower gross margins.
Increased competition in certain of the Company's markets
continues, as reduced demand and excess available manufacturing
capacity have eroded gross margins. The Company has vigorously
worked to retain market share through aggressive contract
negotiations and has secured long term agreements with some of its
major customers which are expected to positively impact the
business outlook for the long term.
Upgraded machinery and newly acquired production equipment has
been transferred from Connecticut to the new Hickory facility; this
process is expected to continue over the next several months. More
than half of the total units are now exclusively manufactured by
the North Carolina plant, with additional products being
transitioned each month once qualification samples are approved by
our OEM customers.
Commenting on the interim results, Sunil Raina, Managing
Director of Turbotec Products, said:
"Whilst the business climate continues to create new challenges
and our markets continue to remain weak, the Company is focused on
preserving its market leadership position as it works diligently to
complete the transition of its operation to the North Carolina
facility. The management team and our staff continue to
aggressively manage costs while investing in the development and
training of the North Carolina manufacturing work force as it
prepares to take on the continually increasing shift in
manufacturing demand from the Connecticut facility."
-Ends-
For further information please contact:
Turbotec Products Plc
Robert Lowe, Non Executive Chairman +44 (0) 79 1714 8930
RLowe@trbohx.com
Sunil Raina, Managing Director Tel: +1 (860) 731-4200
SRaina@trbohx.com www.turbotecproducts.com
Robert Lieberman, Finance Director Tel: +1 (860) 731-4200
RLieberman@trbohx.com www.turbotecproducts.com
Seymour Pierce Limited
Guy Peters, Corporate Finance Tel: +44 (0) 20 7107 8000
Paul Jewell, Corporate Broking www.seymourpierce.com
Media enquiries:
Abchurch Communications
Sarah Hollins / Simone Elviss Tel: +44 (0)20 7398 7728
www.abchurch-group.com
Electronic copies of this announcement can be obtained from the
Company's website www.turbotecproducts.com.
Chairman's Statement
Your board is disappointed that it cannot report a real change
in the economic climate that overrides our opportunities and
objectives as a Company. We had hoped that with more activity in
our key markets, particularly the housing market, we could have
reported an upswing in our performance. The housing market has
improved in numbers of sales of existing stock, but not
significantly in the new build sector where our customers make
sales. As an OEM supplier we are held captive by the performance of
our customers in their own markets. These customers have reported
weakening demand for their products domestically and
internationally. More than one customer has cut plant operations to
four days a week reflecting a real weakness in the marketplace.
We are working very closely with all our customers and are being
proactive in trying to help them retain profitability and market
share. The business model of some customers has been truly turned
on its head adding to the uncertainty of our future sales figures.
History is no longer useful as a tool in helping us understand
current changes.
As we look to the future, we are not standing still and are
considering the manufacture of other products that have
applications in different areas of the HVAC industry, using our
proprietary technology. We believe that actions we are taking now
will bring higher sales. Our future growth is dependent on us
achieving this product diversity.
The move of the Windsor manufacturing capability to the new
facility in Hickory NC continues apace with more than 50% of
production now coming from Hickory. These products have been
rigorously tested by our customers and accepted as fit for purpose.
We plan to complete the transition by the end of this fiscal
year.
I am disappointed to have to report this financial performance
during the period but rest assured that we are taking the proper
steps to cut costs, including strict inventory control, headcount
reduction where possible and close management monitoring of all
expenses.
My thanks to the management team under Sunil Raina for working
hard to deliver the best performance possible, under difficult
circumstances.
Rob Lowe
Chairman
14 December 2012
TURBOTEC PRODUCTS PLC
UNAUDITED CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE
INCOME
Six Months Six Months Year Ended
30 September 30 September 31 March
2012 2011 2012
$'000 $'000 $'000
Note
Revenue 10,590 11,728 22,062
Cost of sales (9,088) (9,872) (18,952)
-------------- -------------- -----------
Gross profit 1,502 1,856 3,110
Distribution costs (262) (341) (632)
Administrative expenses (1,214) (1,066) (2,294)
-------------- -------------- -----------
Operating profit 26 449 184
Finance costs 5 (68) (20) (58)
(Loss) / profit before tax (42) 429 126
Income tax (expense) benefit 2 (33) (59) 15
(Loss) / profit and total comprehensive
(loss) / income for the period (75) 370 141
============== ============== ===========
(Loss) / earnings per share -
basic 3 (0.59c) 2.89c 1.10c
(Loss) / earnings per share -
diluted 3 (0.59c) 2.56c 0.97c
There were no items of other comprehensive (loss) / income for
any period.
All of the (loss) / profit and total comprehensive (loss) / income
is attributable to the owners of the parent.
TURBOTEC PRODUCTS PLC
UNAUDITED CONSOLIDATED statement of changes in equity
Share Share Retained Merger Total
capital Premium earnings Reserve
$'000 $'000 $'000 $'000 $'000
Balance at 31 March
2011 228 3,441 7,925 (168) 11,426
Profit and total comprehensive
income for the period - - 370 - 370
Share based payment
expense - - 41 - 41
Balance at 30 September
2011 228 3,441 8,336 (168) 11,837
(Loss) and total comprehensive
(loss) for the period - - (229) - (229)
Share based payment
expense - - 7 - 7
Balance at 31 March
2012 228 3,441 8,114 (168) 11,615
(Loss) and total comprehensive
(loss) for the period - - (75) - (75)
Share based payment
expense - - 24 - 24
Balance at 30 September
2012 228 3,441 8,063 (168) 11,564
========= ========= ========== ========= =======
TURBOTEC PRODUCTS PLC
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 SEPT 30 SEPT 31 MARCH
2012 2011 2012
Note $'000 $'000 $'000
------------- ---------- ----------
Assets
Non-current assets:
Property, plant and equipment 13,944 12,919 13,336
Intangible assets 4 145 229 187
Other 39 37 36
------------- ---------- ----------
14,128 13,185 13,559
------------- ---------- ----------
Current assets:
Inventories 3,660 4,385 4,151
Trade and other receivables 2,665 2,083 2,619
Cash and cash equivalents 6 4 22
------------- ---------- ----------
6,331 6,472 6,792
------------- ---------- ----------
Total Assets 20,459 19,657 20,351
============= ========== ==========
Liabilities
Non-current liabilities:
Loans and borrowings 5 3,179 3,320 2,965
Deferred tax liability 2 1,276 894 1,146
------------- ---------- ----------
4,455 4,214 4,111
------------- ---------- ----------
Current liabilities:
Trade and other payables 1,582 2,217 1,633
Loans and borrowings 5 2,858 1,389 2,992
------------- ---------- ----------
4,440 3,606 4,625
------------- ---------- ----------
Total Liabilities 8,895 7,820 8,736
------------- ---------- ----------
Net Assets 11,564 11,837 11,615
============= ========== ==========
Shareholders' equity:
Share capital 228 228 228
Share premium account 3,441 3,441 3,441
Merger reserve (168) (168) (168)
------------- ---------- ----------
Retained earnings 8,063 8,336 8,114
------------- ---------- ----------
Total equity 11,564 11,837 11,615
============= ========== ==========
TURBOTEC PRODUCTS PLC
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX
MONTHS SIX MONTHS YEAR ENDED
30 SEPT 30 SEPT 31 MARCH
2012 2011 2012
--------- ----------- -----------
$'000 $'000 $'000
Cash flows from operating activities
(Loss) / profit before tax (42) 429 126
Adjustments to reconcile net income
to net
cash provided by operating activities:
Depreciation and amortization 251 259 458
Finance expense 68 20 58
Charge recognized in respect of share
based payment 24 41 48
Cash flows from operating activities
before changes in working capital 301 749 690
(Increase) in trade and other receivables (49) (141) (392)
Decrease / (increase) in inventory 491 (20) 214
Increase / (decrease) in trade and
other payables 46 (285) (803)
Cash (used in) generated from operations 789 303 (291)
Taxes paid - (43) (67)
---------
Net cash generated from / (used in)
operations 789 260 (358)
--------- ----------- -----------
Cash flows from investing activities
Purchases of property, plant and equipment (817) (1,358) (1,932)
--------- -----------
Net cash (used in) investing activities (817) (1,358) (1,932)
--------- ----------- -----------
Cash flows from financing activities
Proceeds from bank borrowings 467 1,270 2,668
Principal payments on long term debt (387) (153) (303)
Finance expense (68) (20) (58)
--------- ----------- -----------
Net cash provided by financing activities 12 1,097 2,307
--------- ----------- -----------
Net change in cash and cash equivalents (16) (1) 17
Cash and cash equivalents, beginning
of period 22 5 5
--------- ----------- -----------
Cash and cash equivalents, end of
period 6 4 22
========= =========== ===========
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 2013 be prepared in accordance with International
Financial Reporting Standards adopted for use in the EU ("IFRS").
This half year 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 2012 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 14 December 2012 and hence on the basis of IFRS
that are expected to apply in preparation of the accounts for the
year ending 31 March 2013. 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 have neither been audited nor reviewed pursuant to
guidelines issued by the Auditing Practices Board
The comparatives for the full year ended 31 March 2012 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 498(2) or
498(3) of the Companies Act 2006.
2. TAXATION
Analysis of charge in period:
Six months Six months Year ended
ended 30 ended 30 31 March
Sept Sept 2012
2012 2011
$'000 $'000 $'000
Current / (Benefit) (97) 59 (267)
Deferred 130 - 252
----------- ----------- -----------
Total Taxation /
(Benefit) 33 59 (15)
=========== =========== ===========
Tax reconciliation:
The effective tax rates for the periods are different than the
standard rate of corporate tax in the UK (see table for applicable
tax rate). The differences are attributable to the following:
Six months Six months Year ended
ended 30 ended 30 31 March
Sept Sept 2012
2012 2011
$'000 $'000 $'000
(Loss) / profit before tax (42) 429 126
(Loss) / profit before tax multiplied
by rate of corporate tax in the
UK of 24% (30 Sept 2011: 28%,
31 March 2012: 26% ) (10) 120 33
Effect of:
Differences between book and
taxable income 47 10 50
Higher rate of tax on overseas
earnings (2) 34 (62)
Utilisation of tax loss carry
forward (5) (94) (34)
Tax credits used to reduce taxes
paid - (5) -
Other 3 (6) (2)
----------- ----------- -----------
Total taxation / (benefit) 33 59 (15)
=========== =========== ===========
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 / (loss) for the period and the
weighted average number of equity voting shares in issue and
dilutive shares during the period.
Six Months 30 Sept Six Months 30 Sept Year Ended 31 March
2012 2011 2012
$'000 Weighted $'000 Weighted $'000 Weighted
Average Average
Shares Shares Average Shares
Basic EPS
(Loss) / profit
for the period (75) - 370 - 141 -
Weighted average
shares - 12,806,773 - 12,806,773 - 12,806,773
Diluted EPS-Effect
of Dilutive
Securities
Stock options - - - 1,623,470 - 1,756,450
Diluted EPS (75) 12,806,773 370 14,430,243 141 14,563,223
============== =========== ======= ============ ============= ===============
4. INTANGIBLE ASSETS
Capitalized
Development
Net Book Value Goodwill Costs Total
$'000 $'000 $'000
--------- ------------ ------
Period Ended 30 Sept 2012
Balance at 1 April 2012 94 93 187
Amortization - (42) (42)
--------- ------------ ------
Balance at 30 Sept 2012 94 51 145
--------- ------------ ------
Period Ended 30 Sept 2011
Balance at 1 April 2011 94 177 271
Amortization - (42) (42)
--------- ------------ ------
Balance at 30 Sept, 2011 94 135 229
--------- ------------ ------
Period Ended 31 March 2012
Balance at 1 April 2011 94 177 271
Amortization - (84) (84)
--- ----- ------
Balance at 31 March 2012 94 93 187
--- ----- ------
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 Group 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 2012 to
assess whether the carrying value of assets was supported by the
net present value of cash flows derived from those assets using
detailed future cash flow forecasts for a period of two years
followed by projections up to a ten year period. Management has
deemed this time frame appropriate to measure this asset given the
expected marketability of the underlying products supported by this
technology. The discount rates for the review were based on Company
specific weighted average cost of capital, which approximated 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.
5. LONG TERM BORROWINGS
30 Sept 30 Sept 31 March
2012 2011 2012
$'000 $'000 $'000
Current financial liabilities
Bank loans - secured 465 261 466
======== ======== =========
Non-current financial
liabilities
Bank loans - secured 3,179 3,320 2,965
======== ======== =========
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 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.
In April 2010 the Group entered into a mortgage agreement with
its bank as the primary source of funding for the Hickory, North
Carolina facility. The mortgage was in the amount of $2,215,000,
repayable under a 25 year amortization schedule with a maturity
date of April 2015. Interest for the first three years has been
fixed at a rate of 5.4% with a floating rate thereafter.
During the current year the Company received funding of
approximately $467,000 for manufacturing equipment purchases under
a line of credit arrangement with its bank that provides for a
total of $500,000 to be advanced for qualified purchases. Under the
terms of the agreement, interest only is payable at a floating rate
on advances made through April 2013, with the aggregate principal
amount repayable in 48 successive equal monthly installments.
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:
30 Sept 2012 30 Sept 2011 31 March 2012
Bank overdrafts and secured
loans 3.25% 3.25% 3.25%
Maturities of long term borrowings over the next five years are
as follows (including interest payments at current rates):
30 Sept 30 Sept 31 March
2012 2011 2012
$'000 $'000 $'000
In less than 1 year 671 501 638
In 1-2 years 709 569 596
In 2-3 years 634 553 592
In 3-4 years 1,915 482 2,081
In 4-5 years 59 1,919 -
-------- -------- ---------
3,988 4,024 3,907
======== ======== =========
The Group has a revolving line of credit with its primary bank,
originally dated October 31, 1994, that is subject to annual
renewal. The agreement provides for a borrowing base equal to the
sum of 80% of qualified receivables, plus the lesser of $1,500,000
or 50% of the lower of cost or market value of eligible inventory
(as defined), less undrawn letters of credit and acceptances issued
by the bank, to a maximum of $3,250,000. Interest is charged at the
bank's prime rate. In April 2012, concurrent with the issuance of a
new $500,000 line of credit for future capital expenditures, the
availability under the revolving line of credit was reduced to
$2,500,000.
Approximately $107,000, $2,122,000 and $724,000 was available
for borrowing against the Company's revolving line of credit at 30
September 2012, 30 September 2011, and 30 March 2012,
respectively.
6. APPROVAL
This interim report was approved by the Directors of the Company
on 14 December 2012. 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
END
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