8th Jan 2016 08:41
LONDON (Alliance News) - Turbo Power Systems Inc shares rose on Friday after it said its earnings in 2015 have significantly improved from last year and reached a breakeven level despite reporting an 11% drop in revenue, but said takeover offers for the company are still not meeting management's valuation as it continues with its strategic review of the business.
Turbo Power shares were trading up 31% to 0.360 pence per share on Friday morning.
The manufacturer said its earnings before interest, tax and depreciation has experienced a "substantial improvement" in 2015 and reached a breakeven level, compared to the GBP1.7 million loss reported in 2014, driven by the company's focus on efficiencies.
That improvement comes despite Turbo Power reporting an 11% year-on-year fall in revenue to GBP13.5 million from GBP15.2 million.
The good news comes as the company, which manufacturers electric motors, generators and other products, continues with its previously announced strategic review which could see the company sold in its entirety if it can secure a solid deal, with all existing offers to buy the company failing to meet the management's valuation of the company.
Included in those results is a one-off provision expense of GBP500,000 in relation to a warranty repair on one of its specific motor units delivered to one specific customer between 2013 and 2015. Importantly, the bulk of the financial impact of those problems is expected to come during the first half of 2016, it said.
At the end of December, Turbo Power had a cash balance of GBP500,000 compared to net debt of GBP9.9 million at the end of 2014 after its largest shareholder Tao Sustainable Power Solutions (UK) Ltd waived a GBP10.5 million loan plus interest during the year.
In a short update on its strategic review, Turbo Power said it is holding regular discussions with Tao, which holds an 89.4% stake in the company, about how to best progress the strategic review and about offers that are coming in for the business. The company stated there is still no certainty an acceptable offer would be made or that a deal will be done.
In addition, Turbo Power has secured a new GBP1.0 million contract from Porterbrook, one of the three major UK rolling stock leasing companies. The company will manufacture and deliver battery chargers for Porterbrook's Class 170 Turbostar diesel multiple units in 2016 and 2017. Currently, there are 500 existing Turbostars operating across numerous fleets in the UK, including Abellio Greater Anglia, Abellio ScotRail, CrossCountry, First TransPennine Express and London Midland.
The Turbostars use batteries to support both the low voltage standby and emergency circuits. To obtain the longest life and minimum maintenance periods for these batteries, the charging voltage needs to be controlled within close limits. The Turbo Power System battery chargers for Porterbrook's Turbostars will provide a stable power supply, throughout the trains' lifetime, and feed all of the car's low voltage loads as well as charging the back-up batteries.
By Joshua Warner; [email protected]; @JoshAlliance
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