16th Mar 2015 09:15
LONDON (Alliance News) - Electrical machines and electronic systems manufacturer Turbo Power Systems Inc on Monday said it has agreed a one-year extension to its loan deal with TAO Sustainable Power Solutions (UK) Ltd and said it remains in the process of trying to find a buyer as it posted a narrower loss for 2014.
The company said it has secured a one-year extension to its existing loan deal with majority shareholder TAO, which owns an 89% stake in the business. TAO is a subsidiary of Vale Soluções em Energia SA, the energy services arm of Brazilian metals and mining giant Vale SA.
The repayment date on the loan has been extended to April 1, 2017, with all other terms unchanged.
Turbo Power is conducting a strategic review of its business and has appointed investment bank Lincoln International LLP to advise on the sale. It said it remains "critically dependent" on the financial support of Vale Soluções.
The company also published its results for the year to the end of December, showing a slightly narrower loss despite a fall in revenue over the year.
Turbo Power said its pretax loss narrowed to GBP2.3 million from GBP2.9 million last year, despite revenue falling to GBP15.2 million from GBP19 million. The fall in revenue was offset by a lower cost of sales and a reduction in research and development and administrative expenses.
Revenue was dragged lower by weaker production volumes resulting from delays to existing contracts, it said. Order intake for the year ticked up slightly to GBP18 million from GBP17.4 million.
The company also said it turned a pretax profit in the fourth quarter of GBP80,000 despite a 20% fall in revenue thanks to an improvement in its gross margin in the quarter to 41%, compared to a 30% margin in the third quarter.
"We are pleased to announce that Turbo Power Systems returned to pretax profitability in the quarter, and reported a return to operating profit for the half year," said Chief Executive Officer Carlos Neves.
"We continued to implement our strategy of bidding for profitable production and development contracts, whilst maintaining a disciplined and considered approach to costs which has resulted in a reduction in our total expenses by 14% quarter-upon-quarter and significantly improved the level of cash flows from operations," Neves added.
Turbo shares were down 5.1% to 0.37 pence on Monday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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