29th Mar 2016 08:24
LONDON (Alliance News) - Turbo Power Systems Inc Tuesday said its financial performance significantly improved in 2015, but said it is still pursuing its strategic review of the business as it is still reliant on its major shareholder.
The designer and manufacturer of a wide range of electrical machines and power products said its pretax loss narrowed to only GBP700,000 in 2015 from the GBP2.3 million loss reported a year earlier after the company reduced its costs and significantly improved its gross margin.
Although revenue in the year declined to GBP13.4 million from GBP15.2 million, the company managed to significantly reduce its cost of sales to boost its gross profit to GBP5.1 million from the GBP4.0 million reported in 2014.
Enhancing the improvement to the company's gross margin to 38% from only 26% was lower costs, with total expenses dropping to GBP5.3 million from GBP5.8 million, and a small fall in finance costs.
Earnings before interest, tax, depreciation and amortisation swung to GBP190,000 from the GBP1.4 million loss in 2014.
Turbo Power said its order intake in 2015 plummeted 40% to only GBP10.8 million from GBP18.0 million a year earlier as it concentrated on its key objective to win and deliver profitable contracts.
Turbo Power is currently conducting a strategic review of the business, one of the reasons that its order intake was lower, and is still considering selling the company if the right offer is made.
The company said it is continuing to hold talks with its majority shareholder, Tao Sustainable Power Solutions (UK) Ltd, which is owned by Brazilian mining giant Vale SA, about how best to progress the company.
Turbo Power is currently reliant on its major shareholder after it waived a previous loan which was owed by the company and by providing Turbo Power with a new short term loan to keep the company ticking over.
"The directors are aware that the company remains dependent on its own cash flow, but have a reasonable expectation that the company has sufficient cash resources to achieve its target of being cash flow positive," said Turbo Power.
Turbo Power said it intends to remain a technology-led company, and said its revised strategy has proven worthwhile based on the company's significantly improved financial position in 2015 compared to the previous year.
Turbo Power shares were trading up 8.3% to 0.325 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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