13th Nov 2007 07:02
Turbo Power Systems Inc13 November 2007 TURBO POWER SYSTEMS INC. ANNOUNCES ITS RESULTS FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2007 Highlights •Production and development income in the nine months ended 30 September 2007 increased by 92 percent to £8.1 million (2006: £4.2 million) •Loss before tax in the nine months ended 30 September 2007 reduced by 7 percent to £4.8 million (2006: £5.2 million) •Order received today from new US customer for a motor and drive evaluation system - approx US$200k •Production order for 75 high-speed motor and drive systems worth approx. US$2.0 million for delivery during 2008 expected to be signed before end of November •New Chairman appointed to manage next phase of company's development and initiate cost review in Q4 Michael Hunt CEO, said: "We continue to make good progress in winning newcontracts and growing our revenue. It has taken longer than we first envisagedto reach the qualification stages in our aerospace contracts and therefore wehave had to incur extra cost throughout the second half of 2007. However,significant progress has now been made and both programmes are now moving intoqualification testing." Graham Thornton, Chairman, said: "In my short time as a director I have beenimpressed with the Company's technologies and its range of potentialapplications. The markets in which the company operates are growing, as are thecompany's revenues. We will initiate a review in the fourth quarter to ensurefuture costs are better aligned with these revenues."For further information, please contact: Turbo Power Systems Tel: +44 (0)20 8564 4460Michael Hunt, Chief Executive OfficerStephen Sadler, Chief Financial OfficerCompany Website: www.turbopowersystems.com Gavin Anderson (PR) Tel: +44 (0)20 7554 1400Ken CroninMichael Turner KBC Peel Hunt Tel: +44 (0)20 7418 8900Oliver Scott NOTES TO EDITORS About Turbo Power Systems Turbo Power Systems Inc (AIM:TPS.L). is a leading UK based designer andmanufacturer of innovative power solutions. The Group's products are all basedon its core technologies of power electronics and high speed motors andgenerators and are sold into a number of market sectors including aerospace,rail, and various industrial sectors. The Company's products provide improvedefficiency and reduced energy consumption compared to existing technologies. Turbo Power System's existing customers include bluechip companies such asHamilton Sundstrand, Bombardier, The National Rail Equipment Company, EatonAerospace and Lotus. Forward looking statements This news release contains forward-looking statements. Forward-lookingstatements include statements concerning plans, objectives, goals, strategies,future events, or performance, and underlying assumptions and other statementsthat are other than statement of historical fact. These statements are subjectto uncertainties and risks including, but not limited to, the ability to meetongoing capital needs, product and service demand and acceptance, changes intechnology, economic conditions, the impact of competition, the need to protectproprietary rights to technology, government regulation, and other risks definedin this document and in statements filed from time to time with the applicablesecurities regulatory authorities. Notice of no auditor review of interim financial statements Under Canadian National Instrument 51-102, Part 4, subsection 4.3(3)(a), if anauditor has not performed a review of the interim financial statements, theymust be accompanied by a notice indicating that the financial statements havenot been reviewed by an auditor. The accompanying un-audited interim financial statements of the Company havebeen prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these financialstatements in accordance with standards established by the Canadian Institute ofChartered Accountants for a review of interim financial statements by anentity's auditor. OPERATIONAL REVIEW Business of the Company Turbo Power Systems designs and manufactures innovative power solutions whichprovide local, high quality, controllable electrical and motive power. TheGroup's products can be tailored for use in a wide range of industries andapplications, but are all based on its core technologies of high speedelectrical machines and power electronics. The Group's site at Heathrow is the Head Office for UK operations and the designand manufacturing centre for Electrical Machines. The Group's site at Gatesheadis the design and manufacturing centre for Power Electronics. Strategy The Company's strategy is to build a high performance electric machines andpower electronics business which can demonstrate strong and sustainable growthin all of its technology areas and is not dependent on any single market sector,product or operating unit. Our sales strategy is to focus on developing long term relationships with strongpartners in each of our target market sectors where our technology typicallyforms part of a larger product supplied to the end customer. We will combine the skills of our two sites to match the requirements of ourcustomers. Review of operations Our practical experience of operating in the new factory at Gateshead at fullproduction output during the third quarter has reinforced the initial positivefeedback from staff and customers. Manufacturing efficiency and productionmargins are improving and are expected to continue to do so as the moreeffective, lean manufacturing processes reduce build times and improve thecontrol of materials and labour. Overall revenues continued to grow significantly with the year to date total upby over 90% from the equivalent period in 2006. However, while our third quarterEBITDA losses have improved over the second quarter they did not reduce to theextent initially anticipated due to the resource required to complete keytechnical milestones on the aerospace programmes, deferring planned developmentincome stage payments and increasing development costs. Considerable progress has been made in addressing technical issues and plansare now in hand to complete formal product qualification early in Q1 2008. The core TPS technology is a very good fit for the sector and with the benefit of the experience on these launch programmes and the investment we have made in facilities, quality systems and engineering expertise, we remain confident thatwe have the infrastructure and resources to effectively manage future projects. During the quarter the power electronics division continued to generate themajor proportion of the revenues, however the receipt of a significantorder announced today,coupled with the order for 75 high-speed motor and drive systems that is expected to be signed before the end of November, demonstrates that the business at Heathrow can anticipate real growth in the commercial acceptance of the high-speed electrical machines which are at the heart of the core intellectual property held by the Company. The signed contract announced today is a development order for US $200k from an industrial equipment manufacturer in the United States for a motor drive system to be used as a new technology "commercial evaluation" demonstrator. The Company can also confirm that it is in final stage talks regarding the launch order for 75 high-speed motor and drive systems worth US $2million that falls within the Memorandum of Understanding signed in November 2005 with a major international capital equipment manufacturer. This contract is expected to be signed before the end of November 2007. In the rail sector, the Company is focused on the two major developmentprogrammes with Bombardier for power distribution systems for new subway carsbeing supplied to the Chicago and Toronto Transit Authorities. Both systems willbe prototype tested during the early part of 2008 with production deliveriesscheduled to commence towards the end of the year, ramping up from 2009. Outlook Given the extra work on our aerospace programmes the company has incurred moresignificant costs in the second half than were planned. However, theseengineering costs will fall significantly once the units are qualified. Third quarter revenues were unusually high given high levels of shipments toNREC and we would expect fourth quarter revenues to be at slightly lower levels.The extended beta programme on our US Industrial motor and drive agreement, inconjunction with slightly reduced projected rail revenues, means that we expect2008 revenues to be below previous management expectations but still showsignificant growth over 2007. The company is initiating a review in the nearterm to ensure the cost base for 2008 is better matched to these revenues. Customers and contracts in more detail TPS designs and manufactures motor/generator and power electronics technologyacross a range of sectors and applications but the Company's products all havein common the aim to provide improved efficiency and reduced energy consumptioncompared to existing technology. 1) Direct Drive Industrial High Speed Motors and Drives The TPS direct drive technology is designed to provide significant performanceimprovements and operating cost reductions for a wide range of industrialcompression and turbo-machinery applications. By eliminating the need formechanical gearboxes and conventional low speed motors and by operating moreefficiently across a wider range of load points, the customer's energyrequirements and costs can be reduced. SKF TPS continues to build up the early volumes of the high-speed motor and drivesystems for integration by SKF with their magnetic bearing technology into theircompressor product. The current expectation is that we will ramp up the volumesto a running rate of approximately 50 systems per month within the next year. US Industrial Motor and Drive Agreement The recent review of Alpha unit testing at the customer's site has created apositive platform for the next steps in the programme announced today: •An order for the supply of 5 Beta reliability testing systems has been received (at a value of approx US$220k) which will be used to carry out extensive field reliability testing over a period of 9-12 months. In order to maximize the effectiveness of the reliability testing programme the customer is making a significant investment in a number of mobile transportable systems which can be rapidly deployed at a number of "friendly" sites, testing a broad combination of operational and ambient temperature environments. •The expected launch purchase order for 75 production systems is likely to be signed before the end of November (at a value of approximately US$2M) and will be deliverable between August and November 2008 subject to an initial reliability demonstration milestone in May 2008. This will be the first release against the Memorandum of Agreement previously announced with the global capital equipment manufacturer, which provides for the purchase of 500 systems in the first two years of production. In previous reports, initial production was expected to have commenced earlier,however given the strategic importance to the customer of the new technology thecustomer has now decided to extend the range and depth of the pre-productionrelease trials prior to the formal production launch. New order for trial programme TPS has received an order (approx. value US$200k) from a US industrial andprocess gas company planning to test the use of high speed permanent magnetmotors, magnetic bearings, and related control and power electronics for turbomachinery in air separation processes. This opportunity is expected to lead to future production contracts subject tosuccessful systems trials and further widens the range of applications for theTPS technology. The system being offered is based on existing TPS productdesigns. 2) Specialist Motors and Drives In addition to the long-term design investment that the Company has made in thehigh speed electrical machine technology, the Company has accumulatedconsiderable expertise in motor and controller designs for aggressive and highperformance environments This expertise is now providing the basis for a newrange of products targeted at both the aerospace sector and the oil and gasmarkets. Aerospace On both the aerospace programmes development costs have exceeded the level ofcustomer funded development income and in the case of Hamilton Sundstrand, whichwas initiated by the customer as a late programme nearly a year after Eaton, thecost overrun is expected to be significant. Unit margins will be derived from the final design costs, and we are currentlyin discussion with both companies to finalise these. TPS continues to see the sector as an excellent fit to both its electronics andelectrical machines technologies and all new bids are now constructed to reflectour "learning curve" experience on these initial launch programmes. Eaton Pump motor drive units for the new Boeing 787 at Safety of Flight standard havebeen delivered to Aircraft One and Two in support of the Boeing flight testprogramme. A significant amount of pre-qualification testing has already completedsuccessfully. The timing of the final qualification program has been agreed withEaton and Boeing and will commence in November and be completed in early 2008. Hamilton Sundstrand The HS 787 Ram Fan motor drive programme, which was placed with TPS late on inthe 787 programme, has continued to require extra resource to complete the prototype development testing of the hardware and software elements, and additional engineering resources have been deployed to recover the situation. Considerable progress has now been made and the Company is planning to complete full qualification before the end of Q1 2008. Artificial Lift Company (Oil and Gas) Negotiations for a follow-up quantity of 7 motors are nearing conclusion. Testing in Great Yarmouth with two existing motors is going well. ALC are nowoperating the two motors on a 24/7 continuous basis. On successful completion ofthe UK trials, six motor modules will be provided by TPS in support of theoperational oil field testing in North America in the first half of 2008, wherethe systems will then undergo extended endurance testing under actual oil wellconditions. Production, which is dependent on successful reliabilitydemonstrations in North America, is expected to begin before the end of 2008. 3) Rail and Industrial Power Electronics TPS designs and manufactures rugged power electronics products for both rail andindustrial applications, all of which require high reliability and availabilityin operation. Bombardier Transportation-Canada Beijing Production of the auxiliary power systems for the unmanned rail transit cars forthe Beijing airport subway extension is proceeding well, with all units expectedto be delivered by the end of 2008 as scheduled. TPS engineers have participatedin a number of commissioning trials in China in support of our customerBombardier. The Company is supplying 40 car sets with a contract value ofUS$1.5M. Chicago Transit Authority The development programme is well underway, system mock up units have beenevaluated by the end customer, and functional prototypes will be available forqualification testing in December. The Chicago (and Toronto) designs incorporatea new generation of hardware and software microprocessor control system whichthe Company is investing in as a common modular platform for all future railproducts. The base contract is valued at some US$14M including production,spares and engineering services, with possible options for additional cars whichcould increase the value to more than US$20M. Bombardier will be testing severalsubway cars on CTA tracks during 2008, with production volumes planned tocommence at the end of 2008. Toronto Although placed some months later than CTA, the Toronto S1 programme has anaggressive schedule and also has a target prototype qualification testing dateof the end of 2007. The initial production schedule for 2008 is 15 car sets,with the rate ramping up into 2009. The contract for the initial quantity of 234cars is expected to exceed US$8M, with the potential for further optionquantities to extend that to some US$14M. National Rail Equipment Co. NREC was once again the largest individual customer during the third quarter,and TPS has increased the capacity within the manufacturing cell layout toaccommodate potential further increases in demand. In order to support theexpanding field population of NREC locomotives additional TPS field serviceresources have been provided in North America, and a number of potential sitesfor a possible US service and maintenance centre are currently under review. As part of expanding it's range of low emissions shunting locomotives NREC hascontracted TPS to supply a variant of the existing traction electronics systemdesign for a six-axle version, and initial hardware is currently in manufacture. NREC will remain the major customer for rail and traction equipment until theBombardier CTA and Toronto contracts enter production in the latter half of2008. NREC marketing activities have extended to cover Europe and Australasia aswell as North America. Toronto Transit Commission - H6 Subway Programme Production continues to proceed smoothly, with contract completion scheduled forearly 2008. PRC Production demand from the customer for the pulsed laser power supply continuesto be maintained at good monthly levels, with a high level of customersatisfaction in the equipment performance. FINANCIAL PERFORMANCE REVIEW OF NINE MONTHS TO 30 SEPTEMBER 2007 Overview The first nine months of 2007 have seen continued production growth withturnover increasing strongly quarter on quarter. Development income hasincreased by 76% in the period as work continued on the aerospace programmes andbegan on the Chicago and Toronto rail programmes. Improvements in productionefficiency and benefits from the new factory location have aided improvingproduction margins. However, on the aerospace programmes we have experienced thedual effect of deferred milestone related development income and increasingdevelopment costs. As a result third quarter, and consequently year to date, EBITDA figures are worse than anticipated. Mitigating actions have been taken to ensure milestones are met in the near term, allowing the release of the related development income. Turnover for the nine months of £7.1 million represents a 95% increase over thefirst nine months of 2006 as more of our programmes have moved into production.In particular, our contract with NREC for rail traction electronics has made amuch stronger contribution as a result of this customer's increased sales andthis programme was again our largest contributor to turnover in the thirdquarter. We expect fourth quarter turnover to again be at good levels althoughprobably slightly lower than the third quarter. We have seen gross marginsincreasing throughout the period and this effect has been accelerated in thethird quarter following our move into new premises in Gateshead. Development income of £1.0 million includes receipts from Bombardier on theToronto, Chicago and Beijing programmes as well as receipts from Eaton andHamilton Sundstrand on the 787 programme. Research and development costs of £3.9 million throughout the period comprisecontinued work on our aerospace and major rail development programmes as well ascosts associated with a new microprocessor control system to be used for futurerail and aerospace business. Increased costs in the third quarter reflectincreased resource allocated to the aerospace programmes both in terms ofpersonnel and test house costs as the programmes move towards flightqualification. Administrative expenses for the nine months were £3.0 million. Included in thisfigure in the second quarter are expenses related to the relocation of ourGateshead factory totaling £0.2 million. The loss before interest, tax, depreciation, amortisation and stock compensationfor the nine month period was (£3.6) million. Third quarter EBITDA of (£1.2)million reflects in particular the increased net development cost associatedwith the Eaton and Hamilton Sundstrand programmes. Cash outflows before movements in working capital of £3.7 million for the ninemonths included interest payments in January of £331,000 to convertible noteholders relating to the period 1 July 2006 to 31 December 2006. The followingconvertible note interest payment, paid in July 2007, was significantly less at£56,000 following the redemption of £9.36 million of the convertible notes inlate December 2006 and early January 2007. Also included in cash outflows beforemovements in working capital are Gateshead relocation costs not capitalized of£0.2 million. Continuing production growth and the purchase of long lead time items led tosignificant stock increases in the period of £1.0 million. Tax credits received in the period of £312,000 comprise research and developmenttax credit claims for the year to 31 December 2006. Long term assets purchased of £0.6 million principally represent the investmentin fixed assets at the company's new production facilities in Gateshead. Thecompletion of the move allowed TPS to claim £250,000 of grant funding from thedevelopment agency, One North East, and this amount was received in the thirdquarter. Movements in restricted funds of £147,000 represent net movements in performancebond cash during the half year as certain performance bonds reached maturityincluding the release of performance bond cash on the cancelled CLRV programme. Net receipts from an institutional equity placing during the second quartercontributed £3.8 million. The overall decrease in cash during the period was £1.1 million leaving theCompany with an unrestricted cash balance of £5.6 million and further restrictedcash of £1.4 million at 30 June 2007. Revenue Production revenue in the nine months ended 30 September 2007 was £7.08 millioncompared with £3.63 million in 2006 and comprised 2007 2006 £'000 £'000 Power electronics 6,855 3,459Electrical machines 220 172 -------------- 7,075 3,631 The Power Electronics division has again seen strong turnover growth. Outputvolumes have grown significantly on the majority of production contracts and inparticular on National Railway Equipment Co which is the highest contributor torevenues for the nine months. Spares and service revenues were £0.3m for the nine months (2006: £0.8m). In the Electrical Machines division revenue for the quarter related principallyto the SKF contract and initial units on the Industrial motor and driveprogramme. Development income Development income in the nine months was £1.02 million compared with £0.58million in 2006 and included receipts from Hamilton Sundstrand on the Boeing 787Dreamliner programme, and initial incomes from Bombardier on both the ChicagoTransit and Toronto Transit programmes. 2007 2006 £'000 £'000 Development income 1,017 577 ------------- Production costs The cost of product revenues in the nine months amounted to £5.32 million (2006:£2.80 million) and reflects the growth in production revenue. 2007 2006 £'000 £'000 Power electronics 4,544 2,187Electrical machines 776 615 -------------- 5,320 2,802 -------------- Production costs include certain fixed facilities costs attributable to themanufacturing operation. Included in production costs for the nine months are stock compensation chargeson options awarded of £80,000 (2006: £34,000). Research and product development Research and product development expenditure in the nine months was £3.90million compared with £2.61 million in 2006, and comprised 2007 2006 £'000 £'000 Research and product 3,902 2,660development expenditure Accrued R&D tax credits - (50) -------------Total expenditure 3,902 2,610 -------------- Product development costs increased in the nine months as development workprogressed on both the Eaton contract and the Hamilton Sundstrand contract forthe Boeing 787 Dreamliner and the Bombardier Chicago and Toronto Railprogrammes. Included in research and product development expenditure for the nine months arestock compensation charges on options awarded of £290,000 (2006: £188,000). No R&D tax credits were accrued in the nine months as the majority of theGroup's development resource moved on to commercial programmes. General and administrative General and administrative costs of £3.03 million (2006: £2.38 million) consistmainly of staff costs and facilities costs. Included in this category areGateshead move costs of £0.20 million which have not been capitalized. Alsoincluded are stock compensation charges on options awarded of £170,000 (2006:£151,000). Amortisation Amortisation was £0.66 million compared with £0.89 million in 2006. Thereduction reflects a number of assets becoming fully written down. Interest income Interest income for the nine months was £0.27 million compared with£0.21 million in 2006. Interest expense and finance charges Interest expense and finance charges arise from the issue of convertible bondsin July 2003 and March 2005, and the redemption of bonds and issue of shares inJanuary 2007, and comprised 2007 2006 £'000 £'000 Finance charges 118 66Interest payable 87 420Amortisation of deferred finance charges - 121Debt accretion 62 291 ------------ 267 898 Finance charges for the nine months were £118,000 (2006: £nil) and were made upas below: (S) During 2006 the company purchased U.S. dollar denominated currencycontracts covering expected dollar income from programmes scheduled for 2006 and2007. The value of the option as at 30 September 2007 was £37,000, resulting ina cost for the nine months of £7,000 (2006: £57,000). (S) During the first half year the company redeemed 4,500,000 loannotes, resulting in a net charge of £82,000 (2006: £nil). (S) Charges related to the restricted cash movements and performancebonds totaled £29,000 (2006: £9,000). Convertible bonds are considered to be compound financial instruments, and theliability component and the equity component must be presented separately, asdetermined at initial recognition. The Company has valued the equity componentof these bonds using the residual value of equity component method, whereby theliability component is valued first using current market rate for comparableinstruments, at the time of issuance. The difference between the proceeds of thebonds issued and the fair value of the liability is assigned to the equitycomponent. The equity element of the March 2005 bond issue was estimated at£1.11 million. The equity element of the 2003 bond issue was estimated at£0.91 million. The carrying value of the debt element is increased over the termof the debt and this accretion expense is charged to the profit and lossaccount. During the nine months this charge amounted to £62,000 (2006:£291,000). CASH FLOWS FOR THE NINE MONTHS Cash outflow from operating activities Operating cash outflow before movements in working capital was £3.75 million forthe period (2006: £3.77 million). Included in this amount are interest paymentsto convertible note holders of £0.38 million for the period 1 July 2006 to 30June 2007 and Gateshead move costs of £197,000. Movements in stocks, work in progress and debtors and creditors produced a netcash outflow of £1.26 million during the period principally as a result ofincreased stock requirements (2006: outflow of £0.22 million). Tax credits During the nine months the company received research and development tax creditreceipts of £0.31 million (2006: £0.12 million). Investing activities Purchases of long term tangible assets amounted to £0.60 million (2006: £0.12million) and principally relate to the new Power Electronics facility inGateshead. Cash inflows related to movements in restricted funds of £0.15million (2006: £nil) are the net result of the cancellation of performance bondspreviously provided of £250,000 and £515,000, and the creation of new bondstotaling £615,000. Cash flow from financing activities Cash inflow from financing in the nine months of £3.80 million relates to netreceipts of £3.88 million from an institutional placing of £4.0 million (gross)completed in June 2007, and the payment of final expenses of £7,000 in relationto the fundraising in December 2006, when the Company completed a £6.0 million(gross) financing agreement with institutional investors. Overall cash flow for the nine months Overall the cash outflow for the period was £1.09 million. This compares with acash outflow of £4.07 million in 2006. BALANCE SHEET AS AT 30 SEPTEMBER 2007 The Company ended the period with an unrestricted cash balance of £5.58 millioncompared with £6.67 million at 31 December 2006. Substantially all of theCompany's cash balances are denominated in Sterling. In addition the Company had restricted cash amounts of £1.35 million relating toperformance bonds (2006: £1.50 million). Long term assets excluding restricted cash have decreased from £3.69 million at31 December 2006 to £3.16 million at 30 September 2007, after depreciationcharges of £0.66 million and additions in plant and equipment of £0.44. Long term liabilities have decreased to £1.89 million at 30 September 2007compared to £6.13 million at 31 December 2006, reflecting the reduction in LoanNotes following the redemption of £4.5 million notes in January 2007. Net working capital at 30 September 2007, excluding cash balances, was £1.89million, compared with £0.85 million as at 31 December 2006. As at 14 November 2007, the Company had 318,571,062 common shares issued and115,000,000 A shares. As at that date there were 31,494,650 outstanding shareoptions and 10,500,000 outstanding warrants. REVIEW OF THIRD QUARTER TO 30 SEPTEMBER 2007 Revenue Production revenue in the quarter ended 30 September 2007 was £2.70 millioncompared with £1.47 million in 2006 and comprised 2007 2006 £'000 £'000 Power electronics 2,616 1,380Electrical machines 84 90 -------------- 2,700 1,470 The Power Electronics division has again demonstrated strong turnover growth asa result of increased volumes on established programmes. Spares and service revenues were £0.10 million for the quarter (2006: £0.30m). In the Electrical Machines division revenue for the quarter related principallyto the Industrial Motor and Drive contract. Development income Development income in the quarter was £0.65 million compared with £0.29 millionin 2006. 2007 2006 £'000 £'000 Development income 647 285 -------------- Production costs The cost of product revenues in the quarter amounted to £1.91 million (2006:£1.13 million) and reflects the growth in production revenue. 2007 2006 £'000 £'000 Power electronics 1,663 842Electrical machines 249 288 --------------- 1,912 1,130 Production costs include certain fixed facilities costs attributable to themanufacturing operation. Included in production costs for the quarter are stock compensation charges onoptions awarded of £28,000 (2006: £18,000). Research and product development Research and product development expenditure in the quarter was £1.74 millioncompared with £0.92 million in 2006, and comprised 2007 2006 £'000 £'000 Research and product 1,736 927development expenditure Accrued R&D tax credits - (10) ---------------Total expenditure 1,736 917 Included in research and product development expenditure for the quarter arestock compensation charges on options awarded of £97,000 (2006: £66,000). No R&D tax credits were accrued in the quarter as the majority of the Group'sdevelopment resource moved on to commercial programmes. General and administrative General and administrative costs of £1.08 million (2006: £0.81 million) consistmainly of staff costs and facilities costs. Included in this category areGateshead move costs of £0.20 million which have not been capitalized. Alsoincluded are stock compensation charges on options awarded of £43,000 (2006:£54,000). Amortisation Amortisation was £0.22 million compared with £0.23 million in 2006. Interest income Interest income for the three months was £0.11 million compared with£0.06 million in 2006. Interest expense and finance charges Interest expense and finance charges arise from the issue of convertible bondsin July 2003 and March 2005, and the redemption of bonds and issue of shares inJanuary 2007, and comprised 2007 2006 £'000 £'000 Finance charges 3 66Interest payable 29 132 Amortisation of deferred - 40finance charges Debt accretion 10 97 ------------ 42 335 CASH FLOWS FOR THE THREE MONTHS Cash outflow from operating activities Operating cash outflow before movements in working capital was £1.19 million forthe period (2006: £1.37 million). Movements in stocks, work in progress and debtors and creditors produced a netcash outflow of £0.84 million during the period (2006: outflow of £0.26million). Investing activities Purchases of long term tangible assets amounted to £0.12 million (2006: £0.15million) and principally relate to the new Power Electronics facility inGateshead. Cash flow from financing activities Cash outflow from financing in the three months relates to settlement of finalfees from an institutional placing of £4,000,000 (gross) completed in June 2007. Overall cash flow for the three months Overall the cash outflow for the period was £2.11 million. This compares with acash outflow of £1.66 million in 2006. TURBO POWER SYSTEMS INC.CONSOLIDATED STATEMENTS OF NET LOSS, COMPREHENSIVE LOSS AND LOSS DEFICITUNAUDITED Notes Nine months ended 30 September 2007 2006 £'000 £'000 (unuadited) (unaudited)Statement of Net Loss Revenue 2,3 7,075 3,631Development income 2 1,017 577 -------- -------- 8,092 4,208ExpensesProduction costs 5,320 2,802Research and product 4 3,902 2,610developmentGeneral and 3,026 2,384administrativeAmortisation 660 892 -------- -------- 12,908 8,688 Loss before interest andfinance (4,816) (4,480)charges Interest income 269 206Interest expense andfinance 5 (267) (898)chargesForeign exchange losses (7) (22) -------- -------- (5) (714) -------- --------Net loss for the period (4,821) (5,194) ===== ===== Statement ofComprehensive Loss Net loss (4,821) (5,194)Exchange adjustment onconsolidation (16) 59 -------- --------Comprehensive Loss for (4,837) (5,135)the period ===== ===== Statement of Loss Deficit Loss deficit, beginning (53,636) (44,718)of periodNet loss for the period (4,821) (5,194)Adjustment on adoption of 1 (140) -CICA3855Equity adjustment onissue of 11 (2,512) -shares -------- --------Loss deficit, end of (61,109) (49,912)period ===== ===== Loss per share - basic 7 (1.6) p (2.7) pLoss per share - diluted 7 (1.6) p (2.7) p TURBO POWER SYSTEMS INC.CONSOLIDATED STATEMENTS OF NET LOSSUNAUDITED Notes Three months ended 30 September 2007 2006 £'000 £'000 (unaudited) (unaudited)Statement of Net Loss Revenue 2,3 2,700 1,470Development income 2 647 285 -------- -------- 3,347 1,755ExpensesProduction costs 1,912 1,130Research and product 4 1,736 917developmentGeneral and 1,083 814administrativeAmortisation 218 230 -------- -------- 4,949 3,091 Loss before interest andfinance (1,602) (1,336)charges Interest income 106 59Interest expense andfinance 5 (42) (335)chargesForeign exchange losses (20) (11) -------- -------- 44 (287) -------- --------Net loss for the period (1,558) (1,623) ===== ===== Statement ofComprehensive Loss Net loss (1,558) (1,623)Exchange adjustment onconsolidation (108) (2) -------- --------Comprehensive loss for (1,666) (1,625)the period ===== ===== Loss per share - basic 7 (0.5) p (0.8) pLoss per share - diluted 7 (0.5) p (0.8) p TURBO POWER SYSTEMS INC.CONSOLIDATED BALANCE SHEETSUNAUDITED Notes As at 30 As at 31 September December 2007 2006 £'000 £'000 (unaudited) (unaudited)Current assetsCash and cash equivalents 5,579 6,669Restricted cash 8 - 765Trade and other 2,508 1,544receivablesStock and work in 2,248 1,230progressPrepayments 323 419Tax recoverable 451 718 -------- -------- 11,109 11,345 -------- --------Long-term assetsRestricted cash 8 1,349 731Prepayments 89 254Investments 9 35 31Intangible assets 9 55 77Goodwill 9 820 820Deferred finance charges 9 - 145Tangible assets 9 2,159 2,361 -------- -------- 4,507 4,419 -------- -------- 15,616 15,764 ===== =====Liabilities andshareholders' equityCreditors: amountsfalling due withinone yearTrade and other payables 3,284 3,109Deferred income 441 206 -------- -------- 3,725 3,315 -------- --------Creditors: amountsfalling due aftermore than one yearWarranty provision 303 303Convertible notes 1,591 5,827 -------- -------- 1,894 6,130 -------- --------Capital and reservesShare capital and otherequity 10 71,190 60,023instrumentsAccumulated othercomprehensive (84) (68)incomeLoss deficit (61,109) (53,636) ---------- ----------Shareholders' funds 9,997 6,319 --------- --------- 15,616 15,764 ====== ======TURBO POWER SYSTEMS INC.CONSOLIDATED STATEMENT OF CHANGES IN EQUITYUNAUDITED Common Share A Ordinary Other Accumulated Loss Total Equity capital capital equity other deficit income £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1January 2006 44,753 - 2,144 (128) (44,718) 2,051Loss for theperiod (6,318) (6,318)Exchange gain 60 60Stockcompensation 511 511Conversion toshares 3,383 4,320 (674) (2,600) 4,429Issue of shares 4,059 2,000 6,059Expiry ofwarrants 117 117Fundraisingcosts (393) (197) (590) --------- --------- --------- --------- --------- ---------Balance at 31December 2006 51,919 6,123 1,981 (68) (53,636) 6,319Loss for theperiod (4,821) (4,821)Exchange loss (16) (16)Stockcompensation 540 540Conversion toshares 7,379 (638) (2,512) 4,229Issue of shares 4,017 4,017Fundraisingcosts (131) (131)Charge arisingon adoption ofCICA Section3855 -FinancialInstruments -RecognitionandMeasurement (140) (140) --------- --------- --------- --------- --------- ---------Balance at 30September 2007 55,805 13,502 1,883 (84) (61,109) 9,997 ===== ===== ===== ===== ====== ===== TURBO POWER SYSTEMS INC.CONSOLIDATED STATEMENTS OF CASH FLOWSUNAUDITED Nine months ended 30 September Notes 2007 2006 £'000 £'000 (unaudited) (unaudited) Net loss from operations (4,821) (5,194)Amortisation 805 892Accretion of debt 62 291Stock compensation 540 373chargesForeign currency 7 -instrument lossMovement in net interest (340) (134)accrual --------- ---------Cash outflow before (3,747) (3,772)movements inworking capitalDecrease/(increase) in (436) (878)debtorsDecrease/(increase) in (1,018) (524)stockIncrease/(decrease) in 199 1,185creditors --------- ---------Net cash outflow from operating activitiesbefore tax (5,002) (3,989) --------- ---------Tax credits 312 121 --------- ---------Net cash outflow from operating activitiesafter tax (4,690) (3,868) --------- ---------Investing activitiesPurchase of long-term (596) (198)assetsCapital grant received 250 -Movement in restricted 147 -funds --------- ---------Cash outflow from (199) (198)investing activities --------- ---------Financing activitiesEquity placing 11 4,001 -Net expense from equity 11 (202) -placing --------- ---------Cash inflow from 3,799 -financing activities --------- ---------Increase/(decrease) in (1,090) (4,066)cash in the period ====== ====== Cash and cashequivalents:Beginning of period 6,669 6,525 ---------- ----------End of period 5,579 2,459 ====== ====== TURBO POWER SYSTEMS INC.CONSOLIDATED STATEMENTS OF CASH FLOWSUNAUDITED Three months ended 30 September Notes 2007 2006 £'000 £'000 (unaudited) (unaudited) Net loss from operations (1,558) (1,623)Amortisation 234 149Accretion of debt 10 97Stock compensation 168 138chargesForeign currencyinstrument (9) -loss/(gain)Movement in net interest (33) (134)accrual --------- ---------Cash outflow before (1,188) (1,373)movements inworking capitalDecrease/(increase) in (352) (749)debtorsDecrease/(increase) in (73) (110)stockIncrease/(decrease) in (411) 602creditors --------- ---------Net cash outflow from operatingactivities before tax (2,024) (1,630) --------- ---------Tax credits - 121 --------- ---------Net cash outflow from operatingactivities after tax (2,024) (1,509) --------- ---------Investing activitiesPurchase of long-term (123) (150)assetsCapital grant received 250 -Movement in restricted (208) -funds --------- ---------Cash outflow from (81) (150)investing activities --------- ---------Financing activitiesEquity placing 11 - -Net expense from equity 11 (6) -placing --------- ---------Cash outflow from (6) -financing activities --------- ---------Increase/(decrease) incash in the (2,111) (1,659)period ====== ====== Cash and cashequivalents:Beginning of period 7,690 4,118 ---------- ----------End of period 5,579 2,459 ====== ====== TURBO POWER SYSTEMS INC.NINE MONTHS ENDED 30 SEPTEMBER 2007NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED 1 Basis of preparation The consolidated financial statements of the Company have been prepared bymanagement in accordance with Canadian Generally Accepted AccountingPrinciples (Canadian GAAP). The Company provides a reconciliation fromCanadian GAAP to International Financial Reporting Standards in Note 21 of theConsolidated Financial Statements for the year ended 31 December 2006. Thepreparation of the consolidated financial statements requires management tomake estimates and assumptions that affect the amounts reported in theconsolidated financial statements and accompanying notes. Actual results coulddiffer from those estimates. The consolidated financial statements include theaccounts of Turbo Power Systems Inc. ("the Company"), and the accounts of itswholly owned subsidiary company Turbo Power Systems Limited (collectively "theGroup"). The significant accounting policies are consistent with prior years.Certain comparative figures have been reclassified to conform to the financialstatement presentation adopted for 2007. The Company's interim financial statements do not conform in all respects tothe requirements of Canadian GAAP for annual financial statements. TheCompany's interim statements should be read in conjunction with theconsolidated financial statements of the Company for the year ended 31December 2006. These interim financial statements are prepared in accordancewith the requirements of Canadian GAAP for interim financial statements asrecommended by CICA Handbook section 1751 "Interim Financial Statements".These consolidated financial statements follow the same accounting policiesand methods of application as for the Company's 31 December 2006 financialstatements, except as described below: Going concern These consolidated financial statements have been prepared on a going concernbasis, which presumes that the Company will be able to realise its assets anddischarge its liabilities in the normal course of operations for theforeseeable future. The Company has incurred cumulative losses including aloss of £4.82 million for the nine month period ended 30 September 2007 andhas a cumulative deficit of £61.11 million as at 30 September 2007. TheCompany's ability to continue as a going concern depends on its ability togenerate positive cash flow from operations or secure additional debt orequity financing. On January 1 the Company adopted new CICA accounting standards comprising CICAHandbook Section 3855 "Financial Instruments - Recognition and Measurement",Section 3861 "Financial Instruments - Disclosure and Presentation", Section1530 "Comprehensive Income", and Section 3251, "Equity". As a result ofadopting these requirements, a new statement has been added to reportmovements in Comprehensive Loss, after Net Loss, and consists of the gains andlosses from the translation of the Company's self-sustaining foreignoperations. Accumulated other income is presented as a separate section withinthe Statement of Changes in Equity. In determining the fair value of financialinstruments, as required by Section 3855, the carrying value of theConvertible debt was decreased by £140,000, and the net value of the DeferredFinance Charges was offset against the Convertible debt balance, resulting inthe elimination of the deferred finance charge asset, and a reduction in theConvertible debt balance of £145,000. TURBO POWER SYSTEMS INC.NINE MONTHS ENDED 30 SEPTEMBER 2007NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED 1 Basis of preparation (continued) Derivative financial instruments are used by the Company to manage a portion of its exposure to foreign exchange rate fluctuations. The Company does not utilise derivative financial instruments for trading or speculative purposes. The Company enters into foreign currency options denominated in U.S. Dollars, to manage foreign exchange rate fluctuation exposure on receipts from customers billed in U.S. Dollars. These derivative contracts, not accounted for as hedges, are marked to market, and any changes in the market value are recorded in income or expense when the changes occur. The fair value of these instruments is recorded as accounts receivable or payable. Most of the Company's operations are conducted by its United Kingdom subsidiaries in Sterling. All numbers reported in these financial statements are stated in Sterling unless otherwise noted. 2 Segmental analysis The Group's two reportable segments are the power electronics segment, which is involved in the development and manufacture of electrical power supply and control systems and the electrical machines segment, which is involved in the development and commercialisation of high speed electrical machines. Corporate charges relating to the financing of the group and other related management activities are allocated between the two reportable segments. The power electronics and electrical machines segments both operate in the United Kingdom. All amounts in Power Electrical Total£'000 electronics machines 2007 2006 2007 2006 2007 2006Nine months ended 30 SeptemberRevenue 6,855 3,459 220 172 7,075 3,631Developmentincome 1,017 577 - - 1,017 577Interest income 134 103 135 103 269 206Interestexpense (43) (210) (44) (210) (87) (420)Amortisation (104) (104) (556) (788) (660) (892)Net loss (1,182) (1,240) (3,639) (3,954) (4,821) (5,194)Capitalexpenditure 408 87 28 30 436 117 Three months ended 30 SeptemberRevenue 2,616 1,380 84 90 2,700 1,470Developmentincome 647 285 - - 647 285Interest income 53 29 53 30 106 59Interestexpense (15) (163) (14) (163) (29) (326)Amortisation (34) (34) (184) (196) (218) (230)Net loss (305) (261) (1,253) (1,362) (1,558) (1,623)Capitalexpenditure 114 48 9 6 123 54 TURBO POWER SYSTEMS INC.NINE MONTHS ENDED 30 SEPTEMBER 2007NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED 2 Segmental analysis (continued) As at Sep 2007 Dec Sep Dec Sep Dec 2006 2007 2006 2007 2006 Total assets 6,372 3,868 9,244 11,896 15,616 15,764Total liabilities 2,474 2,159 3,145 7,286 5,619 9,445 3 Significant Customers During the nine month period ended 30 September 2007, 54% of the Company's revenue was from two customers (2006: 41% from three customers). During the three months to 30 September 2007, 59% of the Company's revenue was from two customer (2006: 28% from two customers). 4 Research and product development Research and product development expenditure incurred during the period comprised: Nine months ended Three months ended 30 September 30 September 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Research and product 3,902 2,660 1,736 927 development cost Accrued tax credits - (50) - (10) -------- -------- -------- -------- Total expenditure 3,902 2,610 1,736 917 ===== ===== ===== ===== Total accrued tax credits receivable at 30 September 2007 amounted to £180,000 (31 December 2006: £490,000). 5 Interest expense and finance charges Nine months ended Three months ended 30 September 30 September 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Finance charges 118 66 3 66 Interest payable 87 420 29 132 Amortisation of - 121 - 40 deferred finance charges Debt accretion 62 291 10 97 --------- --------- --------- --------- 267 898 42 335 ====== ====== ====== ======TURBO POWER SYSTEMS INC.NINE MONTHS ENDED 30 SEPTEMBER 2007NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED 6 Financial Instruments Certain of the Company's business transactions occur in currencies other than Sterling. The Company had a foreign exchange average rate option contract in place during the nine months ended 30 September 2007, and during the nine months ended 30 September 2006, to reduce exposure to fluctuations in foreign exchange rates on remittances from customers denominated in U.S. Dollars. The Company holds an average rate option over $5.898million U.S. Dollars at a strike rate of 2.00 U.S. Dollars which expires on 27 December 2007. During the first nine months a loss of £7,000 was realised on this option (2006: loss £57,000). As at 30 September 2007 the unrealised gain from the contract included within prepayments was £37,000 (2006: £23,000). 7 Loss per share Loss per common share has been calculated using the weighted average number of shares in issue during the relevant financial periods. The treasury stock method was used in determining the weighted average number of shares outstanding for each period. The weighted average number of shares outstanding in the nine months was 292,753,630 (2006: 191,165,301). The loss for the nine months ended 30 September 2007 was £4,821,000 (2006: £5,194,000).The weighted average number of shares outstanding in the three months ended 30 September 2007 was 318,571,062 (2006: 191,494,592). The loss for the three months ended 30 September 2007 was £1,558,000 (2006: £1,623,000) Anti-dilutive potential securities outstanding not included in the loss per common share calculation at 30 September 2007 total 171,902,983 (2006: 111,012,749) 8 Restricted cash In 2004 the Company committed cash bonds in support of contracts placed by the Toronto Transit Commission for the CLRV and H6 programmes. The associated contracts required the bonds to remain in place until two years after all equipment is delivered. According to the current contract schedule that would result in the cash related to the H6 programme being under the performance bond restriction until 2010. In September 2005 the Company committed cash bonds of £250,000 in support of a development contract. The contract required the bonds to remain in place until completion of certain contract milestones. These milestones were completed in January 2007 when the bond was cancelled and the cash became unrestricted. In March 2007 the CLRV contract was cancelled and the cash bond of £515,000 in respect of this programme was cancelled and the cash became unrestricted. During March 2007 the Company committed cash bonds totalling £410,000 in support of contracts placed by Bombardier Transportation for the CTA and TTC programmes. The associated contracts require the bonds to remain in place until after development and the prototype equipment is delivered. The Company has also provided a property lease guarantee bond which is held in escrow and totals £231,000. At 30 September 2007 cash subject to restrictions totalled £1,349,000 (December 2006: £1,496,000). TURBO POWER SYSTEMS INC.NINE MONTHS ENDED 30 SEPTEMBER 2007NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED 9 Long - term assets Cost Impairment Amortisation Net book value £'000 £'000 £'000 £'000 At 30 September 2007: Investments 108 73 - 35 Intangible assets 4,080 1,663 2,362 55 Goodwill 863 43 - 820 Tangible assets 8,780 - 6,621 2,159 -------- -------- -------- -------- Total long term assets 13,831 1,779 8,983 3,069 ===== ===== ===== ===== At 31 December 2006: Investments 104 73 - 31 Intangible assets 4,074 1,663 2,334 77 Goodwill 863 43 - 820 Deferred finance 474 - 329 145 Tangible assets 8,350 - 5,989 2,361 -------- -------- -------- -------- Total long term assets 13,865 1,779 8,652 3,434 ===== ===== ===== ===== 10 Share capital - issued shares Common A Ordinary Number £'000 Number £'000 At 1 January 2006 190,510,259 44,753 - - Conversion of 541,665 65 - - convertible notes Redemption of 32,450,000 3,435 31,250,000 4,320 convertible notes Issue of common shares, 50,442,668 3,666 25,000,000 1,803 net of share issue costs --------------- -------- --------------- -------- At 31 December 2006 273,944,592 51,919 56,250,000 6,123 ========= ===== ========= ===== Redemption of - - 58,750,000 7,379 convertible notes Issue of common shares, 44,626,470 3,886 - - net of share issue costs --------------- -------- --------------- -------- At 30 September 2007 318,571,062 55,805 115,000,000 13,502 ========= ===== ========= ===== No options or warrants were exercised during the nine months ended 30 September 2007. On 7 June 2007 the Company completed a £4,000,000 placing agreement withinstitutional investors for 44,450,000 Common shares of no par value in Turbo Power Systems Inc., at a price of £0.09 per placing share. TURBO POWER SYSTEMS INC.NINE MONTHS ENDED 30 SEPTEMBER 2007NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED 11 Financing On 11 July 2003 the Company completed a £5,000,000 financing agreementwith institutional investors. The financing comprised unsecuredConvertible Notes and Warrants. The Convertible Notes have a term of fiveyears and bear interest at a rate of 3.5% per annum. They were convertibleinto an aggregate of 25,000,000 Common Shares in Turbo Power Systems Inc.at a conversion price of £0.20 per share. The Warrants had a term of threeyears and were convertible into an aggregate of 3,500,000 Common Shares inTurbo Power Systems Inc. at an exercise price of £0.15 per share, andlapsed on 10 July 2006 On 11 March 2005 the Company completed a £8,000,000 (gross) financingagreement with institutional investors. The financing comprised unsecuredConvertible Notes and Warrants. The Convertible Notes have a term of fiveyears plus one day and bear interest at a rate of 6.5% per annum. They areconvertible into an aggregate of 66,666,667 Common Shares in Turbo PowerSystems Inc. at a conversion price of £0.12 per share. The Warrants have aterm of five years and are convertible into an aggregate of 7,000,000Common Shares in Turbo Power Systems Inc. at an exercise price of £0.15per share. On 28 December 2006 the Company completed a £6,000,000 (gross) financingagreement with institutional investors. The financing comprised 50,000,000Common Shares in the company and 25,000,000 A-Ordinary shares in Turbo PowerSystems Limited. The financing included the issue of 3,500,000 Warrants, havinga term of three years and being convertible into an aggregate of 3,500,000Common Shares in Turbo Power Systems Inc. at an exercise price of £0.15 pershare. These warrants were issued on 6 January 2007 (see note 12). On 28 December 2006, per an agreement reached with the holders of theconvertible notes, the Company redeemed £2,500,000 of the 2003 Convertible LoanNotes and £2,360,000 of the 2005 Convertible Loan Notes at a redemption price of£0.08. The redemption was dependant upon the Company's shares being approved fortrading on the AIM exchange which occurred on 28 December 2006. A further £2,500,000 of the 2003 Convertible Loan Notes and £2,000,000 of the2005 Convertible Loan Notes were redeemed in January 2007 at a redemption priceof £0.08. The Company has incorporated the guidance provided by the CICA's Emerging IssueCommittee Abstract 96 "Accounting for the Early Extinguishment of ConvertibleSecurities Through (1) Early Redemption or Repurchase and (2) Induced EarlyConversion" (EIC96) in accounting for the early redemption of the convertiblenotes. EIC96 provides guidance on the treatment of the fair value of theconversion feature on the extinguishment of the convertible debenture.Redemption of the convertible debentures in January 2007 resulted in an increasein deficit of £82,000 and an increase in retained deficit of £2,512,000. 12 Stock options, warrants and compensation expense The number of options and warrants outstanding as at 30 September 2007, and themovement during the nine months then ended, are as follows: Options Warrants Number Number Outstanding at 1 January 2007 21,567,281 7,000,000 Cancelled (1,832,631) - Issued 11,760,000 3,500,000 ------------- ------------ Outstanding at 30 September 31,494,650 10,500,000 2007 ======== ======= TURBO POWER SYSTEMS INC.NINE MONTHS ENDED 30 SEPTEMBER 2007NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED 12 Stock options, warrants and compensation expense (continued) The stock based compensation expense for the nine month period ended 30September 2007, included in Production costs was £80,000 (2006: £34,000), inResearch and product development was £290,000 (2006:£188,000), and in Generaland administrative costs was £170,000 (2006: £151,000). On 6 January 2007 the Company issued 3,500,000 warrants as part of itsfinancing agreement with institutional investors (see Note 11). The fair value of the stock options is the estimated fair value at grant date.The fair value is calculated using the Black-Scholes option-pricing model. Incalculating the fair values of the options granted during the quarter ended 31March 2007 a dividend yield of Nil, expected volatility of 65%, a risk freeinterest rate of 5.0% and an expected option life of 5 years have beenassumed, and for options granted during the quarter ended 30 June 2007 adividend yield of Nil, expected volatility of 75%, a risk free interest rateof 5.0% and an expected option life of 5 years have been assumed. The fairvalue of the stock options granted during the quarters ended 31 March 2007 and30 June 2007 was £0.06 per share. The Black-Scholes option-pricing model was developed for use in estimating thefair value of traded options that have no vesting restrictions and are fullytransferable. In addition, option-pricing models require the input of highlysubjective assumptions including the expected price volatility. The Companyuses expected volatility rates, which are based on historical volatility ratestrended into future years. Changes in the subjective input assumptions canmaterially affect the fair value estimate, and therefore the existing modelsdo not necessarily provide a reliable single measure of the fair value of theCompany's stock options. 13 Contingent loss The Company is currently working on two aerospace contracts which couldresult in future losses. Since negotiations are ongoing on the contractsin question a reliable estimate of any contingent liability can not bemade at this time and no amount has been accrued. 14 Selected quarterly information The following table sets forth selected consolidated financial informationof the Company for the eight most recent quarters. Revenue Net loss (Loss) per share UK pence £'000 £'000 December 2005 874 (1,249) (0.6)March 2006 969 (1,859) (1.0)June 2006 1,192 (1,712) (0.9)September 2006 1,470 (1,624) (0.8)December 2006 1,851 (1,124) (0.6)March 2007 2,033 (1,387) (0.5)June 2007 2,342 (1,876) (0.7)September 2007 2,700 (1,558) (0.5) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TPS.L