20th Apr 2009 07:00
20 April 2009
Gas Turbine Efficiency plc
Preliminary Results for the year ended 31 December 2008
Gas Turbine Efficiency plc ('GTE' or 'the Group'), a leading provider of proprietary cleantech systems for enhancing the performance of industrial and aviation turbines, announces its unaudited preliminary results for the year ended 31 December 2008.
2008 Highlights
Group revenue increased 97% to $35.1 million (2007: $17.8 million)
Industrial & Combustion revenue increased 124% to $28.2 million (2007: $12.6 million)
Aviation revenue increased 33% to $6.9 million (2007: $5.2 million)
GTE moved into profit, delivering EBITDA of $2.5 million, excluding exceptional costs (2007: $1.3 million loss)
Profit before tax of $0.9 million (2007: $2.9 million loss)
Orders won in Aviation from Pratt & Whitney, Singapore Airlines, Southwest Airlines, United Airlines as well as military organisations
In Industrial & Combustion, GTE increased its global footprint with its first order in Kazakhstan and approval by Abu Dhabi NOC and a major Russian OEM
Expansion of global capacity since year end in Sweden, the UK, Florida and South Carolina, to meet increased customer demand
Current Trading
Trading for the first three months of 2009 has continued to be robust in all product areas and is in line with the Board's expectations
Revenues and order backlog for the 2009 fiscal year as of 31 March 2009 was $26.7 million, up 53% at the same point in 2008.
Steve Zwolinski, Chief Executive Officer of GTE, commented:
"Our strong 2008 performance demonstrates the success of the Group's strategy of offering innovative solutions which increase customers' fuel and operating efficiency, while providing significant environmental benefits. In 2008, GTE strengthened its product portfolio to offer a broader range of high value and proprietary solutions. We have substantially diversified our customer base and channel partners and further invested in operational capability to support future growth.
"Although mindful of the current global economic climate, the Board believes the Group's product offering remains compelling, especially for aviation, power generation and oil & gas segments. Consequently, we are confident that the Group will continue to grow strongly in 2009."
For further information, please contact:
Gas Turbine Efficiency plc Steven Zwolinski, CEO +46 (0)8 546 10 528
Financial Dynamics Jon Simmons Susanne Yule +44 (0) 20 7831 3113
Collins Stewart Europe Limited (Nomad & Joint Broker) Hugh Field Bruce Garrow
+44 (0) 20 7523 8350
Mirabaud Securities LLP (Joint Broker) Peter Krens
+44 (0)20 7878 3360
About GTE
Gas Turbine Efficiency plc (GTE) designs, manufactures and supplies proprietary cleantech energy saving and performance enhancing systems to the aviation, industrial and combustion industries. GTE's extensive portfolio of patented cleantech solutions save fuel, reduce emissions, increase availability, and extend turbine and parts life.
The Group also provides solutions for burning a wider variety and quality of primary and alternative fuels. Specific products and services developed by our world-class technology team include compressor cleaning and power augmentation systems; fuels management systems; combustion design, repair, upgrade and monitoring; and fluid and control auxiliaries. The Group's systems and associated services are provided to turbine end users and OEMs including General Electric, Pratt & Whitney, Rolls Royce, Caterpillar-Solar and Siemens from operation centres in Europe and the USA. GTE's shares are traded on London Stock Exchange's AIM (Ticker: GTE).
Overview
GTE delivered strong growth in 2008 achieving a near doubling of revenue. This significant growth was driven by high levels of demand across GTE's key markets of aviation, power generation and oil and gas and was buoyed by a strong Q4 industrial and combustion performance. Order intake in 2008 was $46.7 million, up 166% on 2007.
Group revenue, which was all organic, increased by 97% to $35.1 million (2007: $17.8 million) and the gross margin was 41% (2007: 42%). GTE moved into profit in mid-2008 delivering EBITDA excluding exceptional costs of $2.5 million for the year (2007: loss $1.3 million). Profit before tax was $0.9 million (2007: loss $2.9 million). Earnings per share were $0.007, compared to a loss per share of $0.037 in 2007.
The Group's net cash position at 31 December 2008 was $5.4 million (2007: $2.3 million).
Strategy
GTE focuses on gas turbine solutions that provide compelling economic and environmental value to customers in the multi-billion dollar market for gas turbine services and upgrades, namely:
Greater fuel efficiency, parts life extension and lower service and maintenance costs;
Increased power output from existing assets, reducing the immediate need for new equipment; and
CO2 savings through both fuel efficiency and emissions reduction.
During 2008, GTE demonstrated the success of its strategy of building high value products and solutions for the gas turbine aftermarket and the Group is now firmly established as a solutions provider in the global aftermarket for gas turbines.
GTE extended its portfolio to offer a broader range of high value and proprietary solutions, diversified its customer base and channel partners and invested in operational capability to further support the delivery of its products to customers.
The benefits of GTE's products and solutions to owners and operators of gas turbines are even more relevant in the current challenging economic environment.
Industrial & Combustion
The Industrial & Combustion product lines had a very good year with revenues increasing by 124% to $28.2 million (2007: $12.6 million). Revenue in the industrial segment rose 99% to $20.7 million, while combustion was up 241% to $7.5 million (2007: $2.2 million).
Order intake for industrial and combustion activities increased by 104% to $32.6 million in 2008.
Sales to leading OEMs increased by 125% to $14.4 million, reflecting continued strong demand and expansion of product lines offered through this channel.
End user sales increased by 123% to $13.8 million reflecting sales to 3rd parties and direct to end users, such as utilities and oil and gas companies and global service providers.
GTE's global footprint expanded with its first order in Kazakhstan. In the Middle East, distribution and technical support activities increased substantially and GTE's patented compressor cleaning solution was approved by Abu Dhabi NOC. A major Russian OEM also approved GTE's compressor cleaning solution for use on their turbine.
GTE expanded its product portfolio to include fuel treatment and auxiliary solutions; combustion repairs, monitoring and diagnostics and control upgrades. The new solutions are expected to provide compelling value to customers globally.
Aviation
The Aviation division, where GTE is the exclusive supplier of engine wash systems to Pratt & Whitney, had an excellent year, achieving revenue of $6.9 million up 33% (2007: $5.2 million). Order intake increased by approximately 8X to $14.1 million in 2008.
GTE's technology delivers significant fuel, operational and environmental benefits. Airline customers have stated that GTE's technology delivers benefits of around 1% fuel efficiency savings during flight and around 1.3% fuel efficiency at take-off, while increasing engine time on wing by approximately 18 months (substantially reducing maintenance costs) and significantly lowering CO2 emissions.
In the second half of 2008, GTE received an $8 million order from Pratt & Whitney EcoPowerTM for further global infrastructure expansion. Contracts were also secured with Singapore Airlines, Southwest Airlines, United Airlines as well as military organisations.
Technology Development
Development of innovative solutions for gas turbines has been key to GTE's success in 2008 and will continue to be a driver of future growth.
In 2008, the number of patents granted to GTE increased from 8 to 16 with an additional 17 patent applications pending or provisionally filed. The Group substantially strengthened its technology by investing $8.4 million (2007: $4.0 million) in developing new products.
As previously announced, the Group successfully defended its strong intellectual property portfolio by resolving a patent lawsuit in April 2008. This lawsuit resulted in exceptional costs of $0.4 million.
Capacity Expansion
During 2008, GTE effectively doubled its factory space. Since the year end, GTE has further expanded to meet increased customer demand.
In Sweden, GTE signed an agreement to be the cornerstone company in the planned 'Green City Business Park' in Stockholm. The new facility, which will have three times the current capacity, will provide an expanded array of industrial and combustion products lines, in addition to the current aviation solutions.
GTE's Orlando facility has been expanded from 15,000 to 40,000 sq ft. This facility will continue to service the growing demand for industrial products and also serve as a US facility to meet aviation service demand.
In March 2009, GTE formally opened its new combustion and power plant solutions centre in South Carolina (US) which has given it a five-fold increase over its previous facility's capacity to 50,000 sq ft. This facility is located near several important suppliers.
People
GTE has built a world-class team to service the gas turbine market. GTE's top 25 people have over 500 years' combined experience at the highest level of the industry. GTE strengthened its Board in April 2008 with the appointment of Charles Cameron as a non-Executive Director.
The Group recognises that GTE's engineering competence is one of its most significant differentiators and grew its engineering team significantly during the year.
The Board would like to thank all its employees for their tremendous efforts during the year and ongoing support.
Financing
In the first half of 2008, GTE raised $10.4 million net of expenses by way of a placing of new ordinary shares to institutional investors. The proceeds have been used to fund GTE's growth initiatives. GTE had cash and equivalents of $5.4 million as of 31 December 2008.
Current Trading
Trading for the first three months of 2009 has continued to be robust in all product areas and is in line with the Board's expectations. Revenues and order backlog for the 2009 fiscal year as of 31 March 2009 was $26.7 million, up 53% at the same point in 2008.
The Group's aviation operations are showing strong progress year-on-year benefitting from the framework order received from Pratt & Whitney in December, 2008 as it accelerates the roll-out of its "EcoPowerTM" engine wash service worldwide.
Although mindful of the current global economic climate, the Board believes the Group's product offering remains compelling, especially for aviation, power generation and oil & gas segments. Consequently, we are confident that the Group will continue to grow strongly in 2009.
|
|
||||||
|
CONSOLIDATED STATEMENTS OF INCOME |
||||||
|
for the year ended 31 December 2008 |
Unaudited |
|||||
|
Note |
2008 |
2007 |
||||
|
$'000 |
$'000 |
|||||
|
Continuing operations |
||||||
|
Revenue |
2 |
35 119 |
17 830 |
|||
|
Cost of sales |
(20 764) |
(10 358) |
||||
|
Gross profit |
14 355 |
7 472 |
||||
|
Distribution and selling costs |
(3 598) |
(2 204) |
||||
|
Research and development expenses |
(1 347) |
(1 130) |
||||
|
Administrative expenses |
(8 850) |
(7 124) |
||||
|
Other operating income |
3 |
320 |
78 |
|||
|
Operating profit/(loss) |
4 |
880 |
(2 908) |
|||
|
Interest receivable |
5 |
720 |
164 |
|||
|
Finance costs |
6 |
(669) |
(150) |
|||
|
Profit/(Loss) before tax |
931 |
(2 894) |
||||
|
Tax |
7 |
(440) |
880 |
|||
|
PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE |
||||||
|
TO EQUITY HOLDERS OF THE PARENT |
491 |
(2 014) |
||||
|
Profit/(loss) per share |
8 |
|||||
|
From continuing operations |
||||||
|
Basic profit/(loss) per share ($) |
0.007 |
(0.037) |
||||
|
Basic and diluted profit/(loss) per share ($) |
0.007 |
(0.037) |
||||
Earnings/(loss) before interest, taxes, depreciation and amortisations
(EBITDA) 1 736 (2 425)
Earnings/(loss) before interest, taxes, amortisations and exceptional
items (EBITAE) 2 045 (1 520)
Earnings/(loss) before interest, taxes, depreciation, amortisations and
Exceptional items (EBITDAE) 2 549 (1 266)
|
CONSOLIDATED BALANCE SHEET |
||||||
|
at 31 December 2008 |
Unaudited |
|||||
|
Note |
2008 |
2007 |
||||
|
ASSETS |
$'000 |
$'000 |
||||
|
Non-current assets |
||||||
|
Intangible assets |
||||||
|
Capitalised expenditure for research and development |
9 |
7 491 |
2 904 |
|||
|
Patents |
10 |
1 703 |
928 |
|||
|
Customer relations |
318 |
421 |
||||
|
ERP-system |
684 |
506 |
||||
|
Goodwill |
11 |
6 186 |
6 306 |
|||
|
16 382 |
11 065 |
|||||
|
Tangible assets |
||||||
|
Equipment, tools, fixtures and fittings |
1 943 |
1 282 |
||||
|
Financial assets |
||||||
|
Available for-sale investments |
27 |
187 |
||||
|
Deferred tax assets |
12 |
2 056 |
2 611 |
|||
|
Total non-current assets |
20 408 |
15 145 |
||||
|
Current assets |
||||||
|
Inventories |
3 410 |
1 525 |
||||
|
Current receivables |
||||||
|
Accounts receivable-trade |
8 695 |
4 525 |
||||
|
Income taxes recoverable |
104 |
201 |
||||
|
Other receivables |
1 173 |
633 |
||||
|
Prepaid expenses and accrued income |
531 |
469 |
||||
|
10 503 |
5 828 |
|||||
|
Cash and cash equivalents |
5 448 |
2 284 |
||||
|
Total current assets |
19 361 |
9 637 |
||||
|
TOTAL ASSETS |
39 769 |
24 782 |
||||
|
CONSOLIDATED BALANCE SHEET |
Unaudited |
|||||
|
at 31 December 2008 (continued) |
Note |
2008 |
2007 |
|||
|
$'000 |
$'000 |
|||||
|
EQUITY AND LIABILITIES |
||||||
|
Equity |
||||||
|
Share capital |
269 |
207 |
||||
|
Share premium |
31 319 |
20 705 |
||||
|
Capital reserve |
2 636 |
2 636 |
||||
|
Share based payment reserve |
781 |
540 |
||||
|
Revaluation reserve |
(32) |
(8) |
||||
|
Translation reserves |
7 |
1 966 |
||||
|
Retained earnings |
(6 186) |
(6 677) |
||||
|
Total equity attributable to equity holders of the parent |
28 794 |
19 369 |
||||
|
Non-current liabilities |
||||||
|
Financial liabilities - borrowings |
73 |
90 |
||||
|
Deferred tax liabilities |
12 |
195 |
266 |
|||
|
268 |
356 |
|||||
|
Current liabilities |
||||||
|
Financial liabilities - borrowings |
157 |
243 |
||||
|
Accounts payable - trade |
6 338 |
2 550 |
||||
|
Other liabilities |
794 |
307 |
||||
|
Accrued expenses |
3 418 |
1 957 |
||||
|
10 707 |
5 057 |
|||||
|
Total liabilities |
10 975 |
5 413 |
||||
|
TOTAL EQUITY AND LIABILITIES |
39 769 |
24 782 |
||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
|
for the year ended 31 December 2008 |
Unaudited |
|||||
|
Note |
2008 |
2007 |
||||
|
$'000 |
$'000 |
|||||
|
Cash flow from operating activities |
||||||
|
Profit/Loss after financial items |
931 |
(2 894) |
||||
|
Adjustments to operating cash flows |
13 |
1 338 |
668 |
|||
|
Cash flow from operating activities before changes in working capital |
|
|
2 269 |
|
(2 226) |
|
|
|
|
|
||||
|
Cash flow from changes in working capital |
||||||
|
(Increase)/decrease in inventories |
(2 078) |
(327) |
||||
|
(Increase)/decrease in receivables |
(5 424) |
(1 580) |
||||
|
Increase in liabilities |
6 246 |
937 |
||||
|
Cash generated/ used by operations |
1 013 |
(3 196) |
||||
|
Interest received |
143 |
151 |
||||
|
Finance costs |
(384) |
(169) |
||||
|
Net cash generated/ used by operating activities |
772 |
(3 214) |
||||
|
Cash flows from investing activities |
||||||
|
Purchase of intangible non current assets |
(7 010) |
(2 931) |
||||
|
Purchase of tangible non current assets |
(1 228) |
(667) |
||||
|
Operations acquired |
- |
(2 524) |
||||
|
Sale of tangible non current assets |
121 |
- |
||||
|
Net cash used by investing activities |
(8 117) |
(6 122) |
||||
|
Cash flows from financing activities |
||||||
|
New share issue (net of issue costs) |
10 676 |
10 572 |
||||
|
Loans taken |
216 |
158 |
||||
|
Loans repaid |
(319) |
(2 015) |
||||
|
Net cash (used in)/generated by financing activities |
10 573 |
(8 715) |
||||
|
Net change in cash and cash equivalents |
3 228 |
(621) |
||||
|
Cash and cash equivalents at beginning of the year |
2 284 |
2 855 |
||||
|
Effect of foreign exchange rate changes |
(64) |
50 |
||||
|
Cash and cash equivalents at end of the year |
5 448 |
2 284 |
||||
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
||||||||||||||||||||||||||
|
for the year ended 31 December 2008 |
||||||||||||||||||||||||||
|
Share Capital |
Share premium |
Capital reserve |
Share based payment reserve |
Revaluation reserve |
Translation reserve |
Retained earnings |
Total share- holders equity |
|||||||||||||||||||
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|||||||||||||||||||
|
Balance at 31 December 2006 |
156 |
8 225 |
2 636 |
355 |
59 |
1 621 |
(4 663) |
8 389 |
||||||||||||||||||
|
New share issue, 5 144 954 shares at nominal £ 0.002 |
20 |
4 480 |
- |
- |
- |
- |
- |
4 500 |
||||||||||||||||||
|
New share issue, 250 000 shares at nominal £ 0.002 |
1 |
- |
- |
- |
- |
- |
- |
1 |
||||||||||||||||||
|
New share issue, 7 456 140 shares at nominal £ 0.002 |
29 |
8 363 |
- |
- |
- |
- |
- |
8 392 |
||||||||||||||||||
|
Placing costs |
- |
(423) |
- |
- |
- |
- |
- |
(423) |
||||||||||||||||||
|
New share issue, 100 000 shares at nominal £ 0.002 |
1 |
60 |
- |
- |
- |
- |
- |
61 |
||||||||||||||||||
|
Credit to equity for equity-settled share-based payments |
- |
- |
- |
185 |
- |
- |
- |
185 |
||||||||||||||||||
|
Decrease in fair value of available- for-sale investments |
- |
- |
- |
- |
(67) |
- |
- |
(67) |
||||||||||||||||||
|
Exchange differences arising on translation of foreign operations |
- |
- |
- |
- |
- |
345 |
- |
345 |
||||||||||||||||||
|
Net loss for the year |
- |
- |
- |
- |
- |
- |
(2 014) |
(2 014) |
||||||||||||||||||
|
Balance at 31 December 2007 |
207 |
20 705 |
2 636 |
540 |
(8) |
1 966 |
(6 677) |
19 369 |
||||||||||||||||||
|
New share issue, 2 231 000 shares at nominal £ 0.002 |
9 |
1 388 |
- |
- |
- |
- |
1 397 |
|||||||||||||||||||
|
New share issue, 8 989 000 shares at nominal £ 0.002 |
35 |
6 683 |
- |
- |
- |
- |
- |
6 718 |
||||||||||||||||||
|
New share issue, 4 000 000 shares at nominal £ 0.002 |
16 |
2 987 |
- |
- |
- |
- |
- |
3 003 |
||||||||||||||||||
|
New share issue, 476 000 shares at nominal £ 0.002 |
2 |
297 |
- |
- |
- |
- |
- |
299 |
||||||||||||||||||
|
Placing costs |
- |
(741) |
- |
- |
- |
- |
- |
(741) |
||||||||||||||||||
|
Credit to equity for equity-settled share-based payments |
- |
- |
- |
241 |
- |
- |
- |
241 |
||||||||||||||||||
|
Decrease in fair value of available- For-sale investments |
- |
- |
- |
- |
(24) |
- |
- |
(24) |
||||||||||||||||||
|
Exchange differences arising on long term intercompany loans |
- |
- |
- |
- |
- |
(1 029) |
- |
(1 029) |
||||||||||||||||||
|
Exchange differences arising on translation of foreign operations |
- |
- |
- |
- |
- |
(930) |
- |
(930) |
||||||||||||||||||
|
Net profit for the year |
- |
- |
- |
- |
- |
- |
491 |
491 |
||||||||||||||||||
|
Balance at 31 December 2008 Note 14 |
269 |
31 319 |
2 636 |
781 |
(32) |
7 |
( 6 186) |
28 794 |
||||||||||||||||||
Note 1 Basis of preparation
The consolidated financial information contained within these preliminary results is unaudited and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 December 2008 will be delivered to the Registrar of Companies in due course. It is expected that the annual report will be posted to shareholders at the end of May 2009.
The preparation of the preliminary results requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The significant judgements and estimates applied by the Group in these preliminary results have been applied on a consistent basis with the statutory accounts for the years ended 31 December 2007. Although such estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those of estimates.
The accounting policies applied in these preliminary results are in accordance with International Financial Reporting Standards, as endorsed by the European Union ('IFRS'), and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS, and are in accordance with the IFRS accounting policies that were applied in the Group's statutory accounts for the year ended 31 December 2007.
The adoption of the following IFRSs in 2008 has not impacted the financial statements.
• IFRIC 7 Applying the Restatement Approach under IAS 29
• IFRIC 8 Scope of IFRS2
• IFRIC 9 Reassessment of Embedded Derivatives
• IFRIC 10 Interim Financial Reporting and Impairment
|
Note 2 Segment information |
||||||||
|
For management purposes, the Group is currently organised into the following two operating divisions: Eastern and Western hemisphere, where Western hemisphere relates to US and the Americas and Eastern relates to Europe and the rest of the world. These divisions are the basis on which the Group reports its primary and only segment information. Inter-segment sales are charged at prevailing market rates. |
||||||||
|
31 December 2008 |
||||||||
|
Continuing operations |
Western |
Eastern |
Eliminations |
Total for Group |
||||
|
$'000 |
$'000 |
$'000 |
$'000 |
|||||
|
Revenue from sales |
||||||||
|
External sale of goods |
25 112 |
10 007 |
- |
35 119 |
||||
|
Inter-segment sale of goods & services |
8 |
54 |
(62) |
- |
||||
|
Segment result - operating profit |
666 |
214 |
- |
880 |
||||
|
Other interest income and similar items |
720 |
|||||||
|
Interest expense for group companies |
(669) |
|||||||
|
Profit before tax |
931 |
|||||||
|
Tax credit |
(440) |
|||||||
|
Profit for the year |
491 |
|||||||
|
Other information |
||||||||
|
Capital additions |
1 396 |
6 842 |
- |
8 238 |
||||
|
Depreciation, amortisation and write downs |
(468) |
(387) |
- |
(856) |
||||
|
Unallocated |
||||||||
|
assets/ |
||||||||
|
Western |
Eastern |
liabilities |
Total for Group |
|||||
|
Balance sheet |
$'000 |
$'000 |
$'000 |
$'000 |
||||
|
Assets: |
||||||||
|
Segment assets: |
17 155 |
15 022 |
7 592 |
39 769 |
||||
|
Liabilities: |
||||||||
|
Segment liabilities: |
6 171 |
4 395 |
409 |
10 975 |
||||
|
31 December 2007 |
||||||||
|
Continuing operations |
Western |
Eastern |
Eliminations |
Total for Group |
||||
|
$'000 |
$'000 |
$'000 |
$'000 |
|||||
|
Revenue from sales |
||||||||
|
External sale of goods |
10 203 |
7 627 |
- |
17 830 |
||||
|
Inter-segment sale of goods & services |
2 150 |
320 |
(2 470) |
- |
||||
|
Segment result - operating loss |
(2 205) |
(523) |
(180) |
(2 908) |
||||
|
Other interest income and similar items |
164 |
|||||||
|
Interest expense for group companies |
(150) |
|||||||
|
Loss before tax |
(2 894) |
|||||||
|
Tax credit |
880 |
|||||||
|
Loss for the year |
(2 014) |
|||||||
|
Other information |
||||||||
|
Capital additions |
594 |
3 004 |
- |
3 598 |
||||
|
Depreciation, amortisation and write downs |
(233) |
(250) |
- |
(483) |
||||
|
Unallocated |
||||||||
|
assets/ |
||||||||
|
Western |
Eastern |
liabilities |
Total for Group |
|||||
|
Balance sheet |
$'000 |
$'000 |
$'000 |
$'000 |
||||
|
Assets: |
||||||||
|
Segment assets: |
10 106 |
9 580 |
5 096 |
24 782 |
||||
|
Liabilities: |
||||||||
|
Segment liabilities: |
2 803 |
2 011 |
599 |
5 413 |
||||
|
Note 3 Other operating income |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Exchange differences - operating transactions |
320 |
69 |
|||
|
Other income |
- |
9 |
|||
|
320 |
78 |
||||
|
Note 4 Operating profit/(loss) |
|||||
|
Operating profit/(loss) has been stated after charging the following |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Exchange differences - operating transactions |
(370) |
(318) |
|||
|
Exceptional legal costs |
(351) |
(1 159) |
|||
|
Exceptional trade mark costs |
(325) |
- |
|||
|
Exceptional administrative costs |
(137) |
- |
|||
|
Write down on inventories |
(15) |
(63) |
|||
|
Loss on disposal of fixed assets |
- |
(14) |
|||
|
Depreciation of equipment, tools, fixtures and fittings |
(504) |
(254) |
|||
|
Amortisation of intangible assets |
(352) |
(210) |
|||
|
Impairment loss on tangible assets |
- |
(19) |
|||
|
Auditors' remuneration |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Fees payable to the Group's auditor for the audit |
(147) |
(103) |
|||
|
of the financial statements |
|||||
|
Fees payable to the Group's auditor and its associates |
|||||
|
for other services |
|||||
|
Audit of the financial statement of the Company's |
(20) |
(20) |
|||
|
subsidiaries pursuant to legislation |
|
|
|||
|
(167) |
(123) |
||||
|
Note 5 Interest receivable |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Interest on bank deposits |
37 |
151 |
|||
|
Exchange differences on non operating transactions |
683 |
13 |
|||
|
720 |
164 |
||||
|
Note 6 Finance costs |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Interest on bank overdrafts and loans |
(66) |
(125) |
|||
|
Interest on obligations under finance leases |
(23) |
(13) |
|||
|
Total borrowing costs |
(89) |
(138) |
|||
|
Total borrowing costs |
(89) |
(138) |
|||
|
Exchange differences on non operating transactions |
(561) |
- |
|||
|
Other interest expense |
(19) |
(12) |
|||
|
Total interest expense |
(669) |
(150) |
|||
|
Note 7 Taxation |
2008 |
2007 |
|||
|
$'000 |
$'000 |
||||
|
Current tax - Continuing operations |
18 |
- |
|||
|
Deferred tax assets (Note 12) |
501 |
840 |
|||
|
Deferred tax liabilities (Note 12) |
(79) |
40 |
|||
|
440 |
880 |
||||
|
The total credit for the year can be reconciled to the accounting loss before tax as follows: |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Profit/Loss before tax |
931 |
(2 894) |
|||
|
Tax at the domestic tax rate in the Group's trading location |
261 |
810 |
|||
|
of Sweden of 28% (2007: 28%) |
|||||
|
Tax effect of expenses that are not deductible |
230 |
(65) |
|||
|
in determining taxable profit |
|||||
|
Tax effect of income that is not taxable in |
(259) |
15 |
|||
|
determining taxable profit |
|||||
|
Tax effect of utilisation of tax losses not previously recognised |
(85) |
34 |
|||
|
Tax effect of not recognised tax losses |
158 |
(131) |
|||
|
Effect of different tax rates of subsidiaries operating in |
135 |
217 |
|||
|
other jurisdictions |
|
|
|||
|
Tax credit for the year |
440 |
880 |
|||
|
Note 8 Profit/Loss per share |
|||||
|
Basic profit/loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. |
|||||
|
2008 |
2007 |
||||
|
Profit/Loss attributable to equity holders of the Company ($) |
491 081 |
(2 014 417) |
|||
|
Weighted average number of ordinary shares in issue |
67 180 952 |
53 960 288 |
|||
|
Basic profit/loss per share ($ per share) - Continuing operations |
0.007 |
(0.037) |
|||
|
There are dilutive potential ordinary shares up to an amount of 1 854 250 |
|||||
|
|
|||||
|
Diluted profit/loss per share ($ per share) |
0.007 |
(0.037) |
|||
Note 9 Intangible assets - Capitalised expenditure for research and development
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Cost |
|||||
|
As at 1 January |
3 155 |
932 |
|||
|
Operations acquired |
- |
48 |
|||
|
Purchases |
5 621 |
2 085 |
|||
|
Disposals |
- |
(19) |
|||
|
Exchange differences |
(969) |
109 |
|||
|
As at 31 December |
7 807 |
3 155 |
|||
|
Amortisation |
|||||
|
As at 1 January |
(251) |
(167) |
|||
|
Provided for the year |
(143) |
(70) |
|||
|
Exchange differences |
78 |
(14) |
|||
|
As at 31 December |
(316) |
(251) |
|||
|
Net book value |
|||||
|
As at 31 December |
7 491 |
2 904 |
|||
|
The Group continuously seeks to develop new techniques and methods to enhance the performance of its current product range at the same time as new products are developed. Where a project is deemed to have a commercially qualifying product - with future positive cash flows - the costs of development are capitalised and amortised over the product's estimated economic life. |
|
Note 10 Intangible assets - Patents |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Cost |
|||||
|
As at 1 January |
938 |
382 |
|||
|
Purchases |
1 021 |
531 |
|||
|
Exchange differences |
(243) |
25 |
|||
|
As at 31 December |
1 716 |
938 |
|||
|
Amortisation |
|||||
|
As at 1 January |
(10) |
(6) |
|||
|
Provided for the year |
(4) |
(3) |
|||
|
Exchange differences |
1 |
(1) |
|||
|
As at 31 December |
(13) |
(10) |
|||
|
Net book value |
|||||
|
As at 31 December |
1 703 |
928 |
|||
|
Patents are amortised over their estimated useful lives, which is on average 10 years. |
|||||
|
The Group's granted and pending patents protect the design and specification of its gas turbine washing products in countries in Europe, Asia and the Americas. |
|||||
|
Note 11 Intangible assets - Goodwill |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Cost |
|||||
|
As at 1 January |
6 306 |
1 255 |
|||
|
Operations acquired |
- |
5 074 |
|||
|
Exchange differences |
(120) |
(23) |
|||
|
As at 31 December |
6 186 |
6 306 |
|||
|
Impairment |
|||||
|
As at 1 January and 31 December |
- |
- |
|||
|
Net book value as at 31 December |
6 186 |
6 306 |
|||
|
Goodwill is allocated to the Group's cash-generating units (CGUs) identified according to country of operation. |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Western |
5 074 |
5 074 |
|||
|
Eastern |
1 112 |
1 232 |
|||
|
6 186 |
6 306 |
||||
|
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. |
|||||
|
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. Developments of Western hemisphere acquisitions are in line with management's expectations. Combined revenues for 2008 grew to $ 22 867 000 (2007: $ 10 203 000). |
|||||
|
The Group prepares cash flow forecasts derived from the most recent financial forecasts approved by the Board of Directors. The view of the Board of Directors is that the future discounted cash flows of the Company over the next 3 years significantly exceed the currently booked goodwill asset of $ 6 186 000 (2007: $ 6 306 000) . The company has not prepared discounted cashflow forecasts beyond these 3 years. |
|||||
|
The rate used to discount the forecast cash flows from the business related to the Eastern and Western CGU is 12 per cent. |
|||||
|
Note 12 Deferred tax |
|||||||||
|
The following are the deferred tax liabilities and assets recognised by the Group, and the movements thereon, during the current and prior reporting periods. |
|||||||||
|
Deferred tax assets |
Research & |
Tax Loss |
|||||||
|
Inventory |
Development |
Carry-forward |
Total |
||||||
|
$'000 |
$'000 |
$'000 |
$'000 |
||||||
|
At 1 January 2007 |
26 |
- |
1 717 |
1 743 |
|||||
|
Credited to the income statement |
(3) |
53 |
790 |
840 |
|||||
|
Exchange differences |
(1) |
- |
29 |
28 |
|||||
|
At 31 December 2007 |
22 |
53 |
2 536 |
2 611 |
|||||
|
Debited to the income statement |
2 |
74 |
(577) |
(501) |
|||||
|
Exchange differences |
- |
(6) |
(48) |
(54) |
|||||
|
At 31 December 2008 |
24 |
121 |
1 911 |
2 056 |
|||||
|
Intangible |
Untaxed |
||||||||
|
Deferred tax liabilities |
assets |
reserves |
Total |
||||||
|
$'000 |
$'000 |
$'000 |
|||||||
|
At 1 January 2007 |
(18) |
(57) |
(75) |
||||||
|
Operations acquired |
(225) |
- |
(225) |
||||||
|
Charged to the income statement |
40 |
- |
40 |
||||||
|
Exchange differences |
(3) |
(3) |
(6) |
||||||
|
At 31 December 2007 |
(206) |
(60) |
(266) |
||||||
|
Operations acquired |
- |
- |
- |
||||||
|
Charged to the income statement |
45 |
34 |
79 |
||||||
|
Exchange differences |
- |
(8) |
(8) |
||||||
|
At 31 December 2008 |
(161) |
(34) |
(195) |
||||||
|
At the balance sheet date December 31 2008, the Group has unused tax losses of $ 4 929 000 (2007: $ 6 761 000) available for offset against future profits. These tax losses carried forwards expire as follows. |
|||||||||
|
Year |
Amount |
||||||||
|
$'000 |
|||||||||
|
2016 |
74 |
||||||||
|
2017 |
93 |
||||||||
|
2018 |
999 |
||||||||
|
2019 |
882 |
||||||||
|
2020 |
938 |
||||||||
|
2021 |
1 737 |
||||||||
|
2022 |
206 |
||||||||
|
Later |
- |
||||||||
|
4 929 |
|||||||||
|
At 31 December 2008, the total tax losses carried forwards generated deferred tax assets of $ 1 911 000 (2007: $ 2 536 000). The tax losses carried forwards can be utilised to reduce future taxable income. Their future utilisation does not mean a lower tax charge for the Group. A deferred tax asset has not been recognised in respect of tax losses of $1 838 000 (2007: $1 884 000) due to the unpredictability of future income streams. |
|||||||||
|
A deferred tax asset in respect of the total amount of these losses has been recognised as management's forecasts for the next three years indicate that these losses will be utilised by offset against available profits over the forecast period. |
|||||||||
|
Note 13 Adjustments to operating cash flows |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Depreciation of tangible and intangible assets |
856 |
464 |
|||
|
Loss on disposal of fixed assets |
- |
14 |
|||
|
Impairment loss on intangible assets |
- |
19 |
|||
|
Share based payments |
241 |
185 |
|||
|
Finance costs |
384 |
150 |
|||
|
Interest received |
(143) |
(164) |
|||
|
1 338 |
668 |
||||
|
Note 14 Share capital |
|||||
|
2008 |
2007 |
||||
|
$'000 |
$'000 |
||||
|
Authorised |
|||||
|
150 000 000 ordinary shares of £0.002 each |
494 |
399 |
|||
|
(2007: 100 000 000 ordinary shares of £0.002 each) |
|||||
|
Issued and fully paid |
|||||
|
72 397 594 ordinary shares of £0.002 each |
269 |
207 |
|||
|
(2007: 56 701 594 ordinary shares of £0.002 each) |
|||||
|
Issued and part paid |
|||||
|
Nil ordinary shares of £0.002 each |
- |
- |
|||
|
(2007: Nil ordinary shares of £0.002 each) |
|||||
|
269 |
207 |
||||
|
The company has one class of ordinary shares which carry no rights to fixed income. |
|||||
Note 15 Post balance sheet events
Extraordinary General Meeting
An extraordinary general meeting was held on 12 March 2009 for the purposes of seeking approval to the implementation of the Gas Turbine Efficiency plc 2009 Long Term Incentive Plan, the Gas Turbine Efficiency plc 2009 Restricted Share Plan, the Gas Turbine Efficiency 2009 Share Option Plan (see "Grant of share awards") and also to make an amendment to the Company's Articles of Association to bring the articles in line with the Companies Act 2006 relating to notices for General Meetings. All resolutions were duly passed.
Grant of share awards
On 13 February 2009 the Board of the Company announced that, the Remuneration Committee had granted the following share awards to the Executive Directors of the Company over ordinary shares in the Company under the Gas Turbine Efficiency plc 2009 Long Term Incentive Plan ('LTIP'), the Gas Turbine Efficiency plc 2009 Restricted Share Plan ('RSP') and the Gas Turbine Efficiency 2009 Share Option Plan ('SOP') (the LTIP, RSP and SOP together being the 'Schemes'). The grant of the share awards under the Schemes was approved by shareholders of each of the Schemes at an Extraordinary General Meeting which was held on 12 March 2009.
|
Director |
Number of Ordinary Shares subject to LTIP Award |
Number of Ordinary Shares subject to RSP Award |
Number of Ordinary Shares subject to SOP Option |
|
Steven Zwolinski |
1 000 000 |
989 472 (A) |
250 000 |
|
Magnus Nordgren |
300 000 |
191 031 (A) 100 000 (B) |
Nil |
LTIP
In accordance with the rules of the LTIP, the LTIP awards were granted, in the form of conditional share awards, at a price of 24.25 pence per ordinary share (being the closing mid market share price on 12 February 2009).
The shares subject to the LTIP awards will vest three years from the date of grant subject to continued employment and subject to the satisfaction of share price targets. 20% of the ordinary shares subject to LTIP awards will vest if the Company's share price is 30 pence at the end of the three-year period with vesting increasing on a sliding scale to 100% if the Company's share price is 80 pence at the end of the three-year period.
RSP
In accordance with the rules of the RSP, RSP awards were granted, in the form of conditional share awards, at a price of 24.25 pence per ordinary share (being the closing mid market share price on 12 February 2009).
The RSP awards denoted (A) above relate to deferred annual bonus payments and the shares subject to the awards will vest three years from the date of grant subject to continued employment.
The RSP awards denoted (B) above will vest over a four-year period subject to continued employment.
SOP
In accordance with the rules of the SOP, the SOP option was granted with an exercise price of 24.25 pence per ordinary share (being the closing mid market share price on 12 February 2009).
The shares subject to the SOP option will vest over a four-year period subject to continued employment.
The Company may issue up to 15% of its shares within a ten-year period to satisfy awards to participants in the Schemes operated by the Company under which shares are issued.
Capacity expansion
On 11 March the Company announced that it had expanded global capacity to meet increased demand:
GTE had signed an agreement to be the cornerstone company in the planned 'Green City Business Park' in Stockholm, Sweden. The new facility, which will have three times the current capacity, will continue to provide aviation solutions for Pratt & Whitney's EcopowerTM business. Additional capability for industrial, fuel and combustion solutions will be added to service customers in Europe, Russia, Middle East, and Asia.
GTE recently expanded its assembly operation in Florida (US) from 15,000 to 40,000 sq ft. This facility will continue to service the growing demand for industrial products and have the flexibility to meet aviation demand in the US.
On 15 March 2009, GTE would also formally open its new combustion and power plant solutions centre in South Carolina (US) which will give GTE a five-fold increase over its previous facility's capacity to 50,000 sq ft.
New legal entity
In order to extend the Company's footprint in the Eastern hemisphere, the Company incorporated a new UK operating subsidiary (Gas Turbine Efficiency UK Limited) on 9 February 2009. This presence will extend the Company's footprint in the region and will be further extended to commercially support EMEA customers.
Related Shares:
Gran Tierra