Interim Results

30 September 2010

Gas Turbine Efficiency plc

Interim results for the six months ended 30 June 2010

Gas Turbine Efficiency plc ('GTE' or 'the Group'), a leading provider of proprietary systems for enhancing the performance of industrial and aviation turbines, today announces its unaudited interim results for the six months ended 30 June 2010 (H1).

H1 2010 Highlights

- Group revenue increased by 7% to $19.7m (H1 2009: $18.4m)

o Energy Services revenue up 13% to $16.4m (H1 2009: $14.5m)

o Long term growth areas performed strongly with the combustion business up 33% and the recently launched (3Q 2009) outage service group delivering revenues of $3.4m, exceeding expectations

o Aviation revenue down 16% to $3.3m (H1 2009: $3.9m)

- Gross profit margin at 35% (H1 2009: 40%, FY 2009: 35%)

- EBITDA negative $2.6m, after charging $0.9m in exceptional costs

- Additional $10m secured credit facility agreed with existing and new investors

- Board of Directors reconstituted, including appointment of new CFO

- Cash and cash equivalents of $3.3m as at 30 June 2010

Consistent with GTE's market channel strategy, in the first half of 2010, there has been a significant shift in sales mix from traditional OEMs towards direct sales to third parties and end users.

- Sales to third parties and end users more than doubled from $5.1m to $11.5m driven by continued investment in combustion, services and commercial resources. This channel accounted for over half of revenue (up from approximately 30% in H1 2009).

- Sales through the OEM channel were down 47% from $9.4m to $5.0m due to the effect of continuing recessionary pressures on customers' spending. This channel represented approximately 25% of revenue, down from approximately 50% in H1 2009.

- Sales to the aviation sector were down 16% from $3.9m to $3.3m due to delays in customer orders in a difficult industry environment. Aviation sales represented 17% of total H1 2010 sales (down from 21% in H1 2009).

Current Trading

- Current year revenue and order backlog up 5% to $33.8m as at 1 September 2010 (2009: $32.1m)

- Energy Services revenue and order backlog up 7% to $28.8m (2009: $27.0m)

- Aviation revenue and order backlog reduced by 2% to $5.0m (2009: $5.1m)

- Full year Group revenue now expected to be approximately 15% ahead of 2009, against a very challenging marketplace and economy

- Full year gross margin performance anticipated to be broadly in line with H1 2010

Steve Zwolinski, Chief Executive Officer of GTE, commented:

"GTE delivered solid growth in the first half, with Group revenue up 7%. This growth was driven by a particularly strong performance in the combustion and services business where demand for our products and services has strengthened despite the difficult economic backdrop. Although the longer cycle segments remain sluggish due to the lingering impact of the recession, we expect improved bookings in our Energy Services business in the second half of 2010.

"GTE provides compelling economic and environmental value to customers in the multi-billion dollar market for gas turbine services and upgrades. However, in the short term, our customers' cash constraints have caused a delay in investment and plant upgrade decisions. Although these delays limit short term order visibility, general customer engagement around our current and new products has increased during the period and, longer term, we feel we are well positioned to benefit when our markets improve."

Zwolinski added: "We successfully concluded a $10m secured loan in January and arranged a further $10m secured credit facility in June with existing and new investors of which $4.5m has been drawn in the third quarter. This confirms that our major investors remain supportive of GTE's strategy for growth."

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 7269 7291

Matrix Corporate Capital LLP Nick Ellis

+44 (0) 20 3206 7000

About GTE

Gas Turbine Efficiency plc (GTE) designs, manufactures and supplies proprietary energy saving and performance enhancing systems and support services to the Power Generation, Oil and Gas and aviation industries. GTE's extensive portfolio of patented solutions save fuel, reduce emissions, increase availability, and extend turbine and parts life.

The Group provides solutions for application of 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, fluid and control auxiliaries and outage management services. 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 centers in Europe and the USA. GTE's shares are traded on London Stock Exchange's AIM (Ticker: GTE).

Overview

GTE delivered solid revenue growth in the first half with Group revenue up 7%. This growth was driven by a particularly good performance in the Energy Services division (primarily combustion and services) where demand for our products and services strengthened despite the difficult economic backdrop.

Gross margins in H1 2010 were 35% (H1 2009: 40%) reflecting both the increase in revenue contribution from Energy Services and the product mix within this division.

GTE delivered EBITDA of negative $2.6m (H1 2009: $0.7m) reflecting $0.9m of exceptional costs associated with new financing arrangements coupled with lower than anticipated sales. Net results were a loss of $3.0m (H1 2009: $0.06m). Basic and fully diluted (loss)/earnings per share was $(0.030) (H1 2009: $0.001).

The total number of patents granted increased by 20% to 24 from 20 at 31 December 2009, with an additional 18 patent applications pending or provisionally filed. The Group's cash and cash equivalents position at 30 June 2010 was $3.3m and $10m remained available for borrowing as of 30 June 2010 under GTE's recently signed secured credit facility. Approximately $4.5m of this credit facility has been utilized at the time of this announcement.

Operating Review

Energy Services - Combustion, Services & Auxiliaries

Despite the challenging economic back drop, demand across our core range of products and services has strengthened and revenues from the Energy Services division were up 13% to $16.4m in H1 2010 as compared to H1 2009, primarily in the combustion and services segment.

Order intake for Energy Services activities increased by 30% to $18.1m in the first half of 2010 as compared to H1 2009, driven by the addition of Services as noted below.

Sales to OEMs decreased by 47%. End user sales increased by 126% to $11.5m reflecting sales to third parties and direct to end users, such as utilities, oil and gas companies and global service providers.

Combustion Business

Overall the combustion business grew 33% to $4.9m. Product development in the Energy Services sector continues on track with more than ten new product introductions and a wide range of turbine model overhaul service offerings, including extensions of capability for the 50Hz turbines used in the European market. In line with the Group's globalization strategy, the European commercial team was strengthened by significant senior hires to target the critical market segment of power generation and oil and gas.

Services

GTE entered the US turbine services market in July 2009. The new business unit was launched and the first order was received from a leading US utility within three months. With 2010 as the first full year of turbine services operation, the new business unit exceeded plans for the first half with revenue of $3.4m and is on track to deliver comparable results in H2. Key customer relationships and service agreements have been established with several major US power generators supporting ongoing work volume.

Auxiliaries

Our industrial business continues to be focused on three customer markets including OEMs, end users and third parties. This global market strategy shows promising growth prospects.

First half revenues declined by 25% (from $10.8m to $8.1m) driven by lingering recessionary effects on the OEM channel which was down 46% (from $8.9m to $4.8m). The OEM decline reflects the longer cycle 'new build' segment and generally lags economic cycles.

On a very positive note, GTE's long term strategic growth areas strengthened. The GTE patented compressor cleaning solution increased 89% (from $0.9m to $1.7m). Sales direct to end users and third parties were up 74% (from $1.9m to $3.3m) and EMEA regional sales were up 13% (from $0.8m to $0.9m).

Backlog strengthened in H1 2010 as compared to H1 2009 across the board. Total backlog was up 33% (from $5.5m to $7.3m) vs. the same point in 2009.

Gross margins declined 3 pts (from 29% to 26%) due to product mix and market conditions. Backlog indicates a return to historical levels in the second half of 2010.

Aviation

The Aviation business experienced a decline in revenue of 16% in H1 2010 to $3.3m, which was below expectations.

During the first half of 2010, GTE began discussions to sell substantially all of the assets of the Aviation business. These discussions are ongoing.

Corporate and Board Matters

During the first half of calendar 2010, GTE successfully concluded both a $10m secured borrowing and a $10m secured credit facility with existing and new investors. These credit facilities allow the Company to continue its product development as well as meeting working capital requirements. Approximately $5.5m remains available to borrow under the secured credit facility at the time of this announcement.

The Board of GTE has been reconstituted beginning in January 2010, when Mr. John Grant was appointed as the Company's Non-executive Chairman, Chairman of the Remuneration Committee, and a member of the Audit and Nomination Committees. He brings wide experience from both executive and non-executive roles following a career spent primarily in the engineering and automotive industries in the US and the UK.

Additionally, effective 1 July 2010, Mr. Harry W. Zike was appointed as Chief Financial Officer and elected as a member of the Board of GTE. Mr. Zike has spent his career in a variety of senior international Board and Chief Financial Officer roles within both public and private companies in the energy and technology sectors. Further to the announcement made at the time of Mr. Zike's appointment, during the past five years Mr. Zike has also been a director at: New Energy Associates LLC, Siemens Westinghouse Power Corp, Siemens Shares Services LLP and Siemens Demag Delaval Turbomachinery, Inc. (all of which were Siemens subsidiaries).

Finally, in July, 2010, Mr. John Mapplebeck was elected as a Non-executive Director following Mr. Charles Cameron's resignation from the Board. Mr. Mapplebeck brings a wealth of experience in the energy sector from a wide range of executive and non-executive positions. In addition to the 8,862 GTE shares he owns, Mr. Mapplebeck's wife has a beneficial interest in a further 250,000 shares in GTE, held on her behalf on a non-discretionary basis.

Current Trading & Outlook

Current year revenue and order backlog as at 1 September 2010 was up 5% to $33.8m compared to $32.1m at the same point in 2009. Energy Services revenue and order backlog is up 7% to $28.8m (2009: $27.0m). However, as noted above, Aviation revenue and order backlog for the period to 1 September was down slightly at $5.0m (2009: $5.1m). In spite of an ongoing challenging marketplace, full year Group revenue is now expected to be approximately 15% ahead of 2009. Gross margin for the full year is anticipated to be broadly in line with the first half of the year.

Despite the energy industry continuing to conserve cash and the consequent reduced demand, GTE continues to experience growth in the combustion and service segments of its Energy Services business. GTE is well positioned to grow in this market with newly launched products and services targeted at the more "recession resistant" energy aftermarket segment.

As previously disclosed, GTE remains in discussions with a strategic investor for an investment in the Company. These discussions are ongoing.

Notes to the financial statements

1 Accounting policies

The unaudited interim accounts for the 6 months ended 30 June 2010 have been prepared using accounting policies that are consistent with the Company's statutory accounts for the year ended 31 December 2009. New or amended standards and Interpretations from IFRIC have not had a material impact on the financial position or results of the Group.

2 Segment information