29th Sep 2006 07:05
Gas Turbine Efficiency PLC29 September 2006 29 September 2006 Gas Turbine Efficiency plc Interim Results for the six months to 30 June 2006 Gas Turbine Efficiency plc ("GTE" or "the Company"), a leading supplier ofadvanced high pressure gas turbine cleaning systems for the aviation and powergeneration industries, announces its financial results for the six months to 30June 2006. Financial Highlights • Total revenues were $2.1m (H1 2005: $2.3m) • Aviation revenues were $1.3m (H1: 2005: $1.0m) • Revenues from industrial sector $0.8M (H1 2005: $1.3m) • Operating loss amounted to $1.1m (H1 2005: $1.0m ) • Basic and fully diluted loss per share of $0.02 (H1 2005: $0.04) • Cash and cash equivalents totalled $3.5m as at 30 June 2006 (H1 2005: $0.2m) Operating Highlights • Significant progress made on OEM qualification in the industrial sector with global OEMs which is the cornerstone of GTE's long term strategy • Pratt & Whitney expanded EcoPower(TM)service to Europe and Asia hubs • Multi-year agreement signed with Siemens Industrial Turbines AB • First Middle Eastern order received • Second office opened in New York State for engineering support to existing and potential partners • Set up a Russian subsidiary to target its large installed base of industrial turbines Steven Zwolinski, CEO of GTE, said: "We have made tremendous progress in the first half to strengthen relationships with key industrial global OEMs by focusing on completing the demanding but non-recurring process of GTE technology qualification. We are just entering the last phase of our negotiations with several global OEMs and hope to achieve necessary qualifications soon. These steps have made a positive impact on our business, leading to a strongpipeline of orders for the second half of 2006. As a result, the Company remainsconfident of delivering significant revenue growth for the full year 2006 andbeyond." Enquiries: Gas Turbine Efficiency plcSteven Zwolinski, CEO +44 20 7929 8989 on the day +46 8 546 10 528Libertas CapitalAamir Quraishi, Charles Goodfellow + 44 20 7569 9650 Corfin CommunicationsNeil Thapar, Harry Chathli +44 (0)20 7929 8989 Overview GTE made considerable progress in the first half of 2006 to position itself forsustained long term growth and the steps taken during the period have alreadystarted making a positive impact on the business. The Company's systems enablegas turbine operators to achieve substantial savings in their energy costs,reduce emissions and cut maintenance downtime. Operating data from a number ofgas turbine operators suggests that they are achieving better-than-expected costefficiency in real-life working conditions - which validates the compellingbenefits of our advanced high pressure systems. Our customers include global OEMs such as Pratt & Whitney, Rolls-Royce, Saab andSiemens as well as gas turbine operators such as Calpine, Norsk Hydro, SNAM,Statoil and TexasGenCo. Turnover decreased by 8% to $2.1m (H1 2005: $2.3m) reflecting a lowercontribution from the industrial segment, partly offset by a sharp increase insales into the aviation market. The fall in revenues was in line with theCompany's expectations and its strategy, discussed below, to focus onestablishing long term partnerships with global original equipment manufactures(OEMs). Operating review The Company achieved several notable milestones in the first half of 2006 as itcontinued to target the global market for wash systems in power generation,aviation, oil & gas and marine segments. The market opportunity available to GTEis both large and growing. The global installed base for civilian and militaryaircraft engines is estimated at approximately 120,000 units while the number ofindustrial turbines currently in use is estimated at more than 40,000 units. Aviation systems Revenues from aviation systems, where GTE is the exclusive supplier of on-wingwash systems to Pratt & Whitney's EcoPowerbusiness (PW), rose by 30% to $1m. In February 2006, the Company won a $1.3m order from PW for two completecleaning systems for new commercial aviation hubs in Asia and Europe, taking thetotal number of its service hubs to five. The order reflected a planned globalrollout by EcoPower(TM), which provides wash services to a wide range ofaircraft fleets powered by engines manufactured by PW as well as other majorOEMs. EcoPower(TM)'s first European hub at Schiphol airport commenced operationsin July with Martinair as its launch customer. In Asia, its first hub is locatedin Singapore where it will serve a wide range of aircraft operators. As previously announced, in January 2006 GTE's contract with PW was extended to2014. This contract provides a solid foundation for long term growth for theCompany. GTE generates revenues under this contract from the sale of GTEequipment as well as royalties based on the number of washes carried byEcoPower While the civil aviation market is expected to gain momentum, the Company hasalso targeted the military segment, where it already has a number of customersincluding the Swedish Air Force. As a result, there has been significantincrease in inquiry levels from potential military customers in the first halfof the year. Industrial Revenues from the industrial segment (which includes power generation, oil & gasand marine industries) decreased to $0.8m compared with revenues of $1.3m in thecorresponding period last year. However, the result was in line with theCompany's expectations and its strategy to work directly with global OEMs, andthe required, non-recurring process of GTE technology qualification. During thequalification period, GTE was required to de-emphasise direct sales into asignificant portion of its end-customer base. Although the strategy impacted turnover in the short term, the Company stronglybelieves it will open up considerably larger market opportunities in the longterm by providing access to the global OEMs' large installed user base. To thisend, GTE is currently making excellent progress in achieving an extensive programme of product qualifications at key global OEMs in the US and Europe, which is expected to pave the way for long term partnership agreements. In May 2006 GTE signed a multi-year agreement with Siemens Industrial TurbinesAB (SIT), part of Siemens AG, to supply its cleaning systems as a standardfeature of SIT's complete range of turbines. The deal strengthened an existingarrangement under which GTE's cleaning systems have been incorporated as astandard product in SIT's turbines since 1995. GTE will manufacture and supplygas turbine cleaning systems to SIT in Sweden for inclusion in its entire rangeof industrial turbines, as well as other future models, for shipments worldwide.The turbines are designed to deliver an output of between 17 megawatts and 43megawatts and aimed primarily at the mid-range power generation and the oil &gas industries. New geographic markets The Company has also entered the highly promising markets in the Middle East andRussia. Both regions are attracting major investment by the international oiland gas industry. The Middle East is also investing heavily in waterdesalination plants, which are large consumers of power. In Russia there isalready a large installed base of industrial turbines. GTE is at an advanced stage of appointing a distributor in Abu Dhabi to addressthe Middle East market and has just received its first order from that region.In Russia, GTE has set up a new subsidiary based in St Petersburg with a salesand marketing director. Financial Review Turnover decreased by 8% to $2.1m (H1 2005: $2.3m) reflecting a lowercontribution from the industrial segment, partly offset by a sharp increase insales into the aviation market. Turnover from the eastern hemisphere, whichcovers Europe and the rest of world excluding the Americas, accounted for themajority of the sales. Operating loss amounted to $1.1m (H1 2005: $1.0m). Pre-tax loss amounted to $1.19m compared with a $0.96m loss in the correspondingperiod last year. Basic and fully diluted loss per share was $0.02 (H1 2005: $0.04). Cash and cash equivalents totaled $3.5m as at 30 June 2006 (H1 2005: $0.2m). Outlook During the first half of the year GTE focused on strengthening relationshipswith key global OEMs and on expanding into new regions. These steps have made apositive impact on our business, leading to a strong pipeline of orders for thesecond half of 2006. As a result, the Company remains confident of deliveringsignificant revenue growth for the full 2006 and beyond. ------------------------ ----------------------------------------CONSOLIDATED STATEMENTS OF INCOME For the period ended 30 June 2006 6 months 12 months 6 months ended ended ended 30 June 31 December 30 June 2006 2005 2005 Note unaudited restated unaudited ---------------------------------------- Continuing operations $'000 $'000 $'000 Revenue 2 2 132 5 265 2 318 Cost of sales (1 206) (908) (1 348) ----------------------------------------Gross profit 926 2 357 970 Distribution and selling costs (449) (908) (527)Research and development expenses (144) (243) (71)Administrative expenses (1 554) (3 628) (1 448)Other operating income 73 140 120 ----------------------------------------Operating loss (1 148) (2 282) (956) Finance costs (43) (87) (8) ----------------------------------------Loss before taxation (1 191) (2 369) (964) Tax 3 321 963 4 LOSS FOR THE PERIOD ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT (870) (1 406) (960) Loss per share From continuing operations Basic and diluted loss per share ($) 4 (0.02) (0.05) (0.04) --------------------------------------- --------------------------------------- --------------------------- ---------------------------------------CONSOLIDATED BALANCE SHEETS At 30 June 2006 6 months 12 months 6 months ended ended ended 30 June 31 December 30 June 2006 2005 2005 unaudited restated unaudited ---------------------------------------- $'000 $'000 $'000 ASSETS Non-current assets Intangible assets Capitalized expenditure for research and development 459 135 187 Patents 322 183 114 ERP-System 82 85 90 Goodwill 1 163 084 1 103 ---------------------------------------- 2 026 1 487 1 494 Tangible assets Equipment, tools, fixtures and fittings 460 405 383 ---------------------------------------- 460 405 383 Financial assets Available for sale investments 169 152 142 Deferred tax assets 1 449 1 128 10 ---------------------------------------- Total non-current assets 4 104 3 172 2 029 Current assets Inventories 585 442 486 Current receivables Accounts receivable-trade 459 1 843 764 Income taxes recoverable 51 - 21 Other receivables 2 344 2 080 51 Prepaid expenses and accrued income 655 631 297 ---------------------------------------- 3 509 4 554 1 133 Cash and cash equivalents 3 500 4 705 204 Total current assets 7 594 9 701 1 823 TOTAL ASSETS 11 698 12 873 3 852 ---------------------------------------- ---------------------------------------- --------------------------- ----------------------------------------CONSOLIDATED BALANCE SHEETS (continued) At 30 June 2006 6 months 12 months 6 months ended ended ended 30 June 31 December 30 June 2006 2005 2005 unaudited restated unaudited ---------------------------------------- $'000 $'000 $'000EQUITY AND LIABILITIES Equity Share capital 156 156 95 Share premium 8 225 8 225 - Capital reserve 2 636 2 636 2 636 Share based payment reserve 269 184 - Revaluation reserve 30 30 18 Translation reserve 1 251 602 586 Retained earnings (3 244) (2 374) (1 928) ----------------------------------------Total equity attributable to equity 9 323 9 459 1 407holders of the parent Non-current liabilities Financial liabilities 81 94 113 Deferred tax liabilities 75 66 67 ---------------------------------------- 156 160 180 Current liabilities Financial liabilities 553 1 292 458 Accounts payable - trade 670 904 773 Income tax liability - 31 - Other liabilities 28 142 527 Accrued expenses 968 885 507 ---------------------------------------- 2 219 3 254 2 265 ---------------------------------------- Total liabilities 2 375 3 414 2 445 TOTAL EQUITY AND LIABILITIES 11 698 12 873 3 852 ---------------------------------------- ---------------------------------------- ------------------------ ----------------------------------------CONSOLIDATED STATEMENTS OF CASH FLOWS For the period ended 30 June 2006 6 months 12 months 6 months ended ended ended 30 June 31 December 30 June 2006 2005 2005 Note unaudited restated unaudited ---------------------------------------- $'000 $'000 $'000 Cash flow from operating activities Loss before tax (1 191) (2 369) (964) Adjustments to operating cash flows 5 227 329 149 ---------------------------------------- Cash flow from operating activities before changes in working capital (964) (2 040) (815) Adjustments for changes in working capital (Decrease)/ increase in inventories (91) 201 125 (Decrease)/ increase in receivables 1 523 (1 342) 55 (Decrease)/ increase in liabilities (412) 1 058 934 ---------------------------------------- 56 (2 123) 299 Cash used by operations Income taxes received - 16 125 Net interest paid (42) (88) (8) ---------------------------------------- Net cash generated/(used) by operating activities 14 (2 195) 416 Cash flows from investing activities Purchase of intangible fixed assets (449) (231) (176) Purchase of tangible fixed assets (116) (356) (312) ---------------------------------------- Net cash used by investing activities (565) (587) (488) Cash flows from financing activities New share issue (net of issue costs) - 5 371 - Loans taken - 1 945 157 Repayment of liabilities (877) - - ---------------------------------------- Net cash (used)/generated by financing activities (877) 7 316 157 ----------------------------------------Net change in cash and cash equivalents (1 428) 4 534 85 Cash and cash equivalents at beginning of the period 4 705 137 137Effect of foreign exchange rate changes 223 34 (18) Cash and cash equivalents ----------------------------------------at end of the period 3 500 4 705 204 ---------------------------------------- ---------------------------------------- --------------------------------------------------------------------------------CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Ordinary Share Capital Share based Shares premium reserves payment reserve $'000 $'000 $'000 $'000 -------------------------------------------------- Balance at 31 December 2004 95 - 2 636 - Exchange differences arising on translation of foreign operations. - - - - Financial investments valued through equity - - - - Net loss for the period - - - - --------------------------------------------------Balance at 30 June 2005 95 - 2 636 - New share issue, 18 000 000 shares at nominal £ 0.002 61 9 263 - - IPO costs - (1 038) - - Recognition of share-based payments - - - 184 Financial investments valued through equity Exchange differences arising on translation of foreign operation - - - - Net loss for the period - - - - --------------------------------------------------Balance at 31 December 156 8 225 2 636 1842005 Recognition of share-based payments - - - 85 Exchange differences arising on translation of foreign operations. - - - - Net loss for the period - - - - --------------------------------------------------Balance at 30 June 2006 156 8 225 2 636 269 -------------------------------------------------- CCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(continued) Total Revaluation Translation Retained shareholders reserve reserve earnings Equity $'000 $'000 $'000 $'000 -------------------------------------------------- Balance at 31 December 2004 - 1 038 (968) 2 801 Exchange differences arising on translation of foreign operations. - (452) - (452) Financial investments valued through equity 18 - - 18 Net loss for the period - - (960) (960) --------------------------------------------------Balance at 30 June 2005 18 586 (1 928) 1 407 New share issue, 18 000 000 shares at nominal £ 0.002 - - - 9 324 IPO costs - - - (1 038) Recognition of share-based payments - - - 184 Financial investments valued through equity 12 - - 12 Exchange differences arising on translation of foreign operations. - 16 - 16 Net loss for the period - - (446) (446) --------------------------------------------------Balance at 31 December 30 602 (2 374) 9 4592005 Recognition of share-based payments - - - 85 Exchange differences arising on translation of foreign operations. - 649 - 649 Net loss for the period - - (870) (870) --------------------------------------------------Balance at 30 June 2006 30 1 251 (3 244) 9 323 -------------------------------------------------- -------------------------------------------------- Note 1: Accounting policies The unaudited interim accounts for the 6 months ended 30 June 2006 have beenprepared using accounting policies that are consistent with the company'sstatutory accounts for the year ended 31 December 2005 with the exception of thefollowing: Test equipment Equipment which is held by customers was previously treated as inventory andheld at cost until disposed of. The directors have determined that, as thisequipment is used by clients for extensive periods and the value thus decreases,this equipment should be treated as a non-current tangible asset and depreciatedover its useful life, which is estimated to be 5 years. As this is a change in accounting policy under IAS 8, comparatives have beenrestated, resulting in an increase in non-current tangible assets as at 31December 2005 of $227 005 and an increase in the retained loss for the yearended 31 December 2005 of $34 526 due to depreciation on these assets. Available for sale financial assets Under the amendment to IAS 39, certain investments which had previously beenclassified as "financial assets at fair value through profit or loss" have beenreclassified in the current and prior period balance sheets as "available forsale financial assets". The book value of these investments at 31 December 2005was $152,000. The net loss for the year ended 31 December 2005 has beenincreased by $30 255 reflecting gains now taken through equity. Change of format of income statement The classification of the income statement for the year ended 31 December 2005has been changed from by nature to by function. In the director's view, this isappropriate because it better describes the company and the development of thecompany. Income statement by function is also the standard within the energysector. Note 2 Segment information For management purposes, the Group is currently organised into thefollowing two operating divisions: Eastern and Western hemisphere,where Western hemisphere relates to US and the Americas and Easternrelates to Europe and the rest of the world. These divisions arethe basis on which the Group reports its primary and only segmentinformation. Inter-segment sales are charged at prevailing marketrates. 6 months ended 30 June 2006 Western Eastern Eliminations Total for groupContinuing operations $'000 $'000 $'000 $'000 -------------------------------------------------- Revenue from sale of goods External sales 128 2 004 - 2 132 Inter-segment sales - 108 (108) - -------------------------------------------------- Segment result (841) (448) 141 (1 148) Financial items (43) -------Loss before tax (1 191) Income tax credit 321 -------Loss for the period (870) -------Other information Capital additions 345 221 - 566 Depreciation, amortisation and write downs (27) (68) - (95) Balance sheet assets: Segment assets: 4 078 7 620 - 11 698 ------- Liabilities: Segment liabilities: 514 1 861 - 2 375 ------- 6 months ended 30 June 2005 Western Eastern Eliminations Total for groupContinuing operations $'000 $'000 $'000 $'000 -------------------------------------------------- Revenue from sale of goods External sales 107 2 211 - 2 318 Inter-segment sales - 125 (125) - -------------------------------------------------- Segment result (1 156) 200 - (956) Financial items (8) -------Loss before tax (964) Income tax credit 4 -------Loss for the period (960) -------Other information Capital additions 208 254 - 462 Depreciation, amortisation and write downs (21) (58) - (79) Balance sheet assets: Segment assets: 1 450 2 402 - 3 852 ------- Liabilities: Segment liabilities: 954 1 491 - 2 445 ------- --------------------- --- -----------------------------------Note 3 Taxation 6 months 12 months 6 months ended ended ended 30 June 31 December 30 June 2006 2005 2005 unaudited restated unaudited ---------------------------------------- $'000 $'000 $'000 Current tax - Continuing operations - (149) (9)Deferred tax assets 321 1 115 13Deferred tax liabilities (1) (3) - ---------------------------------------- Tax credit for the year 321 963 4 ---------------------------------------- ---------------------------------------- Deffered taxation for the period has been credited at 27%, representing the bestestimate of the weighted average deferred tax rate expected for the full year. Note 4 Loss per share Basic loss per share is calculated by dividing the loss attributable to equityholders of the Company by the weighted average number of ordinary shares inissue during the year. ------------------------ ---------------------------------------- 6 months 12 months 6 months ended ended ended 30 June 31 December 30 June 2006 2005 2005 unaudited restated unaudited ---------------------------------------- Loss attributable to equity holders of the (870) (1 406) (960)Company Weighted average number of ordinary shares in issue 43 750 500 26 103 780 25 750 500Basic and diluted loss per share ($ per share) - Continuing operations (0.02) (0.05) (0.04)There are no dilutive potential ordinary shares. ----------------------- -------Note 5 Adjustments to operating cash flows 6 months 12 months 6 months ended ended ended 30 June 31 December 30 June 2006 2005 2005 unaudited restated unaudited ---------------------------------------- $'000 $'000 $'000 Depreciation of tangible and intangible assets 95 195 79Unrealized exchange rate difference 4 (33) -Fair value adjustments of intangible assets - 26 -Impairment losses recognised in loss - - 62 Share based payments 85 53 -Net interest expense 43 88 8 ---------------------------------------- Total 227 329 149 ---------------------------------------- ---------------------------------------- Non Cash flow transactions 6 months 12 months 6 months ended ended ended 30 June 31 December 30 June 2006 2005 2005 unaudited restated unaudited ---------------------------------------- Conversion of debt to shares. - 1 009 - Note 6: Basis of preparation This interim report was approved by the Board on 29 September 2006. It is notthe company's statutory accounts. The figures for the year to 31 December 2005 were derived from the statutoryaccounts for that year as restated for the changes referred to in note 1. Thestatutory accounts for the year ended 31 December 2005 have been delivered tothe Registrar of Companies and received an audit report which was unqualifiedand did not contain statements under s237(2) or s237(3) of the Companies Act1985. The restatement for the year ended 31 December 2005 is unaudited. The sixmonths results for both years are unaudited. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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