12th Nov 2015 11:23
LONDON (Alliance News) - Turbo Power Systems Inc on Thursday said it has turned a small profit in the first nine months of 2015, but said all the offers made to buy the company have been at a large discount to its current value.
The designer and manufacturer of electric motors and generators booked a GBP280,000 pretax profit in the first nine months of 2015, swinging from a GBP2.4 million loss a year earlier despite revenue falling to GBP11.4 million from GBP11.8 million.
The profit was caused by a huge improvement in its gross margin, rising to 42% from only 22%, producing a GBP4.8 million gross profit in the year compared to GBP2.6 million a year earlier despite that revenue drop.
In addition to lower cost of sales, Turbo Power Systems also cut its overheads across the board, with distribution costs falling to GBP216,000 from GBP529,000, research and development costs trimmed to GBP1.1 million from GBP1.2 million, and general costs sliced to GBP2.7 million from GBP2.9 million.
The improved gross margin and those reduced administration costs pushed it to a GBP811,000 operating profit in the year, swinging from a GBP1.9 million loss a year earlier.
Finance expenses was the only cost to rise, increasing to GBP531,000 from GBP467,000 a year ago.
Turbo Power Systems launched a strategic review of the company back in February.
The company's largest shareholder waived a substantial GBP10.5 million loan that it provided to the company to support the review. However Turbo Power said all offers for the company to date on a debt-free, cash-free basis have been priced at a "substantial discount" to its share price.
That GBP10.5 million loan increases to GBP12.3 million once interest is taken into account.
Turbo Power shares were up 33% to 0.400 pence per share on Thursday morning. It currently has a market cap of just over GBP14.0 million.
"There can be no certainty that any potential transaction will proceed, or as to the terms of any such transaction. The company may discontinue the strategic review process at any time," said the company. "The strategic review is ongoing, further announcements will be made in due course, as appropriate."
By Joshua Warner; [email protected]; @JoshAlliance
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