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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Turbo Power | LSE:TPS | London | Ordinary Share | CA8999101030 | COM SHS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.035 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMTPS
RNS Number : 4670D
Turbo Power Systems Inc
27 April 2017
TURBO POWER SYSTEMS
Press Release
27 April 2017
This announcement is released by Turbo Power Systems Inc and contains inside information for the purpose of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), encompassing information relating to the Transaction, and is disclosed in accordance with the Company's obligations under Article 17 of MAR.
For the purposes of MAR and Article 2 of the Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by the Board of the Company.
Turbo Power Systems Inc. ("TPS" or the "Company")
Announces Results for the Quarter
Ended 31 March 2017
Financial highlights:
-- Revenue decreased 4% to GBP3.21 million (Q1 2016: GBP3.35 million).
-- Gross profit increased to GBP1.39 million (Q1 2016: GBP1.30 million), with a margin of 43% (Q1 2016: 39%).
-- Net loss of GBP0.34 million (Q1 2016: Loss GBP0.15 million). -- Cash outflow from operating activities of GBP0.09 million (Q1 2016: GBP0.64 million).
Operational highlights:
-- Order intake in the quarter increased by 17% to GBP2.31 million (Q1 2016: GBP1.98 million).
Annual General Meeting
-- To be held at 1:00pm on Thursday 25 May 2017 at the Company's offices in Gateshead.
-- The Company is, amongst other proposals, presenting resolutions to (1) cancel the Company's admission to trading on AIM with effect from 5 June 2017; and (2) to effect a share consolidation of 5,000:1. Shareholders are strongly urged to review the proposals in detail;
-- Full details were announced in the Notice of Meeting dated 19 April 2017 and which is available on the Company's website www.turbopowersystems.com/investors/press releases
Strategic Review announcement made on 30 March 2017:
-- The Company announced that the Strategic Review had terminated, as TWC3N Limited ("TWC3N"),a company controlled principally by certain members of the Company's existing management team, had acquired the entire issued share capital of TAO Sustainable Power Solutions (UK) Limited ("TAO UK"). TAO UK is the immediate controlling entity of the Company and owns 89.4% of the issued share capital of the Company and has an outstanding loan of GBP0.33 million to the Company, on terms set out below under Funding. TWC3N also acquired the A Ordinary Shares ("A shares") in Turbo Power Systems Limited ("TPSL"). The A shares are convertible into the Company's Common Shares. Further information is provided in Note 10 to the Financial Statements, below.
Funding
On 15 March 2017, pursuant to the terms of the existing agreement announced on 29 March 2016, the Company exercised its option to extend the repayment date of the GBP314,000 loan from 1 April 2017 to 1 April 2018. All other conditions remain the same. At 31 March 2017 the loan amount including accrued interest is GBP0.33 million (2016: GBP0.31 million).
Carlos Neves, Chief Executive Officer, said:
"We are pleased that the Strategic Review has completed and that the Company can now move forward in 2017 with the entire team focused on delivering sustainable growth and achieving profitability of the business. We are pleased that order intake for the first quarter was 17% ahead of 2016 at GBP2.31 million, with a further GBP0.64 million already received in April 2017.
Our pipeline continues to be strong and I expect that in the upcoming months some of these opportunities will be secured following the strategic alignment and with the profitable margins needed to grow the business during 2017 and beyond."
For further information, please contact:
Hot Features
Premium
Turbo Power Systems Tel: +44 (0)191 482 9200
Carlos Neves, Chief Executive
Officer
Charles Rendell, Chief Financial
Officer
Kreab (financial public relations) Tel: +44 (0)20 7074 1800
Robert Speed
finnCap (NOMAD, broker and Tel: +44 (0)20 7220 0500
financial advisor)
Henrik Persson, Emily Watts
Notes to Editors
About Turbo Power Systems
Company Website: www.turbopowersystems.com
Company Twitter: https://twitter.com/turbopowersys
Turbo Power Systems Inc. (AIM: TPS.L) is a leading UK based designer and manufacturer of innovative power solutions. TPS's products are all based on its core technologies of high speed motors and generators and power electronics which are sold into a number of market sectors including transport, industrial, energy and defence sectors. The Company's products provide high performance while improving efficiency and reducing process energy consumption compared to existing technologies.
Turbo Power System's existing customers include blue chip companies such as Bombardier Transportation, Daikin, UK Power Networks, Wabtec and Eaton Aerospace.
Forward looking statements
This press release contains forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, or performance, and underlying assumptions and other statements that are other than statement of historical fact. These statements are subject to uncertainties and risks including, but not limited to, the ability to meet on-going capital needs, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition, the need to protect proprietary rights to technology, government regulation, and other risks defined in this document and in statements filed from time to time with the applicable securities 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 an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying un-audited interim financial statements of the Company have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.
This review has been prepared as at 27 April 2017.
OPERATIONAL REVIEW
Business of the Company
Turbo Power Systems is a technology-led Company that designs and manufactures high-speed permanent magnet electric motors, generators and power electronics systems and provides bespoke solutions to transport, industrial, energy conversion, and defence markets.
Its track record in engineering innovation, which has been built and tested over a substantial number of years, allows the Company to meet challenging design and manufacturing briefs with specific requirements relating to environmental performance and performance to volume demands across the world.
TPS has a proven and worldwide track record in the development and deployment of equipment in many sectors, especially in rail and industrial. Long term relationships with customers in these markets have been built based on delivering competitive products with proven reliability.
Developed over the last 30 years, expertise in high-speed electrical machines and power electronics, allows the Company to explore its current and future portfolio and adjust accordingly to grow successfully in its chosen markets.
Way Forward
As a technology-led business, the Company understands the challenges of the market regarding quality, costs and timing. We continue to concentrate on three important pillars that will be key to achieving our long-term strategy, as follow:
-- Improve the quality of the portfolio;
-- Superior execution within design development, manufacturing operations and support activities; and
-- Consistent delivery of internal improvements.
These will continue to underpin the Company's strategy as the Company drives forward in its chosen markets.
Market Overview
Transport:
Rail is a growing sector with huge investment globally, both in developed and developing countries. As an established supplier for auxiliary power units and battery charges TPS market share can increase based on traction systems, electric distribution systems and other added value services.
As part of the Board's plan to diversify the customer base, especially in the UK, during 2015 the Company won contracts with Wabtec Rail to supply at seat power supplies and air conditioning power supplies which have a shorter delivery timescale which presents fewer long term obstacles to revenue generation. These were shipping during 2016. However, due to changes in the Class 321 upgrade programme, at Wabtec Rail's behest production of the air conditioning power supply ceased. As reported on 15 March 2017, production did not recommence and the Company jointly terminated the contract after the period end in April 2017.
The Company continues to implement its strategy for expanding its Maintenance, Repair and Overhaul (MRO) services, especially in the UK, where it is working closely with both train operators and train service companies. In the UK the train purchasing and refurbishment timetable is governed by the franchise renewal schedule.
Industrial:
The HVAC Systems market has been a major market for the Company where TPS has a long standing relationship with Daikin, a major OEM in this market. The Company continues to work closely with Daikin on the design and production of its next generation product lines, and has seen an increase of business during the quarter compared with the same quarter last year.
Energy:
The Company continues to pursue the energy efficiency market for its electric motors and generators. Market studies have been conducted into energy recovery systems and the Board believes that TPS's technology would work very well with the push into the energy space. The Company is currently exploring opportunities with partners to provide systems that can be self-sufficient for energy recovery and subsequent energy generation at on site locations.
Notwithstanding that this is a market where acceptance by the customer for production takes a considerable period, the Company sees this as an important market for future growth in both development design revenue and production revenues.
Defence:
There is a growing market due to electrification of ships, one where TPS's technologies are suitable for energy recovery, traction and emission mitigation in marine systems. It is a specialised field with high entry barriers. Following the market reviews in 2013, the Company identified that there were unique characteristics to the product range that would be applicable to this market.
The Company had entered into a small design agreement for a low power, high speed motor. It was hoped that this initial agreement will lead to a further contract for the design of a large multi megawatt motor. Currently this is envisaged to be design work with the end customer performing the manufacture. This approach has been adopted to reduce the level of working capital required to complete the project and concentrate on the higher value intellectual property (IP) created by design work. As reported on 15 March 2017 this contract was on hold while the outcome of the Company's Strategic Review is determined. Now that the review has terminated active discussions on the contract are underway and it is expected that design work will commence in Q2.
Current Operations
Revenue in the quarter was down by 2% compared with the last quarter of 2016 and down by 4% on the first quarter of 2016. The decrease in the Production revenue was due to customer driven delays in production contracts.
The Company increased the production capacity for Daikin as this product line took capacity from the cancelled Wabtec contract. Deliveries to Eaton of the Jettison Fuel Pump continued in line with their requirements.
Gross margin increased by 4% to 43% in the quarter, reflecting the impact of the Company's focus on profitable contracts and the mix of contracts.
The overall expenses in the quarter of GBP1.69 million up 20% compared to GBP1.41 million at 31 March 2016, reflecting the increase investment in sales and marketing, focused research and development and administrative and other expenses.
Headcount at 31 March 2017 was 108, down 5 from 31 March 2016:113 and down 4 from 31 December 2016: 112.
Strategic Review
On 30 March 2017 the Company announced the termination of the Strategic Review, when TWC3N Limited ("TWC3N") acquired the entire share capital of TAO Sustainable Power Solutions (UK) Limited ("TAO UK").
The announcement on 30 March 2017 contains further details, including a change in directors for the Company. Charles Rendell and Carlos Neves, directors of the Company, are also directors and shareholders of TWC3N Limited and accordingly the majority of the Board of the Company are TAO UK representatives.
Support from TAO UK
On 15 March 2017, pursuant to the terms of the existing agreement announced on 29 March 2016, the Company exercised its option to extend the repayment date of the GBP314,000 loan, from 1 April 2017 to 1 April 2018. All other conditions remain the same. At 31 March 2017, the loan amount including accrued interest is GBP0.33 million (2016: GBP0.31 million).
Summary
In summary, the Company has continued to implement its strategy of bidding for profitable production and development contracts, whilst maintaining a disciplined and considered approach to costs.
Following the change in control announced on 30 March 2017 the Company will develop a new five year plan, building on the Company's sustained improvement in financial performance over recent years and on the investments, relationships and expertise of the Company in its core Transport, Industrial, Energy and Defence markets.
Going Concern
These consolidated financial statements have been prepared on the basis of International Financial Reporting Standards (IFRS) applicable to a "going concern", which assume that the Company will continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities in the normal course of operations.
As at 31 March 2017 the Company had net operating cash outflows, with current liabilities of GBP4.12 million and current assets of GBP6.29 million, which includes GBP0.37 million of cash. The Company has a cumulative deficit of GBP100.54 million as at 31 March 2017 and was loss making for the period then ended.
The Company remains critically dependent upon i) customers paying to contractual terms and ii) the continued financial support of its intermediate parent undertaking TAO Sustainable Power Solutions (UK) Limited (TAO UK). The Company relies on TAO for continued financial support in the form of the loan made available to the Company, and in order to meet any shortfall in budgeted or forecasted working capital requirements and support the Company's growth plans. If not secured, this may result in the curtailment of the Company's activities. The timing of required financial support from TAO UK will depend on the Company's ability to generate cash from operations. In reasonably sensitised cash flow forecasts, and particularly dependent on the yet to be agreed settlement, including payment profile, of certain warranty provisions, support may well be required before the date of loan repayment in April 2018.
However, the Directors believe that they will succeed in delivering the Company's projected financial performance and that financial support from TAO UK, will remain in place to enable the Company to meet budgeted and forecasted working capital requirements and support the Company's growth plans. As is typical with any company placing reliance on other group entities for financial support, there can be no certainty that this support will continue although, at the date of approval of these financial statements, the Board have no reason to believe that TAO UK will not do so. Although there are no formal letters of support in place for the purpose of the directors' going concern assessment of the Company, the directors of the Company have taken comfort from the actions taken by TAO UK, in that loans have been provided when required (the latest being GBP0.31 million on 29 March 2016), rescheduling the repayment date of that loan to 1 April 2018, that all the debt existing at 12 November 2015 was waived and that the majority of the Board are TAO UK representatives, in forming their conclusion that they believe it is appropriate to prepare these financial statements on a going concern basis. Accordingly, they have continued to adopt the going concern basis of preparation.
If the Company is unable to either generate positive cash flows from operations or ensure the continued financial support from TAO UK and ultimately TWC3N its parent company, or secure additional debt or equity financing, these conditions and events indicate the existence of a material uncertainty which may cast significant doubt regarding the Company's ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business.
These consolidated financial statements do not reflect any adjustments that would be necessary if the going concern assumption were not appropriate.
Summary of Quarterly Results
The following table shows selected quarterly consolidated financial information of the Company for the last eight quarters:
Revenue Research General Operating Net (loss)/profit Loss
All amounts and product and administrative (loss)/profit per
in GBP'000 development share
pence
June 2015 4,086 448 978 257 81 0.00
September
2015 3,246 118 831 346 34 0.00
December
2015 1,973 360 790 (895) (992) (0.03)
March 2016 3,350 416 916 (136) (148) (0.00)
June 2016 3,732 413 863 227 164 0.00
September
2016 3,575 486 883 66 22 0.00
December
2016 3,267 504 1,102 (753) (803) (0.02)
March 2017 3,210 568 966 (297) (344) (0.01)
Quarterly revenues down by GBP0.06 million on the previous quarter, but in line with the Board's expectations.
Research and development expenditure continues to increase, up GBP0.06 million over the previous quarter, following the Board approved strategy to drive the Company's technology forward.
General and Administration expenses have decreased 12% in the first quarter compared with the fourth quarter of 2016, and remain in line with the Company's expectations for 2017.
Copies of Quarterly and Annual Results
The Company's full Financial Results and Managements' Discussion and Analysis for 2016 together with the First quarter 2017 Financial Results and Managements' Discussion and Analysis are available on www.sedar.com. The Annual Report and Financial Statements for 2016 have been mailed to shareholders.
Copies of the quarterly and annual results are available from the Company's office at 1 Queens Park, Queensway North, Team Valley Trading Estate, Gateshead, NE11 0QD, United Kingdom or available to view from the Company's website at www.turbopowersystems.com.
Annual General Meeting ("AGM")
As previously announced, the AGM will be held at 1:00 pm (GMT+1) on Thursday 25 May 2017, at the Company's offices at 1 Queens Park, Queensway North, Team Valley Trading Estate, Gateshead NE11 0QD.
Copies of the Annual Report and Financial Statements for 2016 and the Notice of Meeting, Management Proxy and Information Circular have been posted to Shareholders, where applicable. Copies are also available on www.sedar.com and the Company's website www.turbopowersystems.com.
The resolutions to be put forward at the AGM directly impact upon shareholders and shareholders are strongly urged to review the Notice of Meeting in detail.
Review of the quarter ended 31 March 2017
Revenue
Revenue in the quarter ended 31 March 2017 was down 4% at GBP3.21 million (Q1 2016: GBP3.35million.)
2017 2016
GBP'000 GBP'000
Production 2,853 3,056
Development 357 294
-------- --------
3,210 3,350
-------- --------
Production revenue decreased in the quarter by 7% to GBP2.85 million (Q1 2016: GBP3.06 million), due to customer driven delays in production contracts.
Development revenue increased by 21% to GBP0.36 million (Q1 2016: GBP0.29 million) as development contracts progress.
Cost of Sales
The cost of sales was GBP1.82 million (Q1 2016: GBP2.45 million).
Gross Profit
Gross profit increased by 7% to GBP1.39 million (Q1 2016: GBP1.30 million), with gross margin increasing to 43% (Q1 2016: 39%).
The Company remains committed to increasing the profitability of both its current and future contracts.
Research and product development
Research and product development costs in the quarter increased by 37% to GBP0.57 million (Q1 2016: GBP0.42 million), in line with the Board's plans for the Company has become more product focused. This is net of RDEC tax credits of GBP0.05 million (Q1 2016: GBP0.05 million).
General and administrative costs
General and administrative costs, which consist mainly of staff costs, facilities costs and the costs associated with the Company's public listings, were up by 5% compared to 2016 to GBP0.97 million (Q1 2016: GBP0.92 million).
The Company continues to review and control its costs without prejudicing the business operational strengths, with a reduction in headcount of 4% compared with 31 March 2016 (31 March 2017: 108, 31 December 2016: 112 and 31 March 2016: 113)
Operating loss
Operating loss before other operating income was GBP0.30 million (Q1 2016: profit GBP0.12 million).
Finance expense
Finance expense was GBP0.01 million which arose from the interest on the historical loans from TAO UK (Q1 2016: GBPnil).
Net loss
The Company recorded a net loss of GBP0.34 million (Q1 2016: profit GBP0.15 million).
Cash flows for the quarter ended 31 March 2017
Operating cash flows
The Company recorded an operating cash outflow before working capital movements of GBP0.29 million for the quarter (Q1 2016: outflow GBP0.07 million).
After adjusting for changes in working capital items the Company had an overall cash outflow from operations of GBP0.06 million (Q1 2016: GBP0.64 million).
Investing activities
Cash outflows from capital investments in the quarter were GBP0.10 million (Q1 2016: GBP0.05 million).
Financing activities
There was no cash received from financing activities in the first quarter (Q1 2016: GBP0.31 loan from TAO UK).
Overall cash outflow for the period
Overall the cash outflow during the quarter was GBP0.20 million (Q1 2016: Outflow GBP0.39 million).
Balance sheet as at 31 March 2017
The Company ended the period with an unrestricted cash balance of GBP0.37 million compared with GBP0.57 million at 31 December 2016. Substantially all of the Company's cash balances are denominated in Sterling.
In addition, the Company had restricted cash amounts of GBP3,000 (31 December 2016: GBP4,000), relating to utilities deposits
Non-current assets have increased from GBP0.83 million at 31 December 2016 to GBP0.88 million at 31 March 2017, after depreciation and amortisation charges of GBP0.06 million.
Loans and borrowings are the TAO UK loan of GBP0.31 million plus GBP0.02 million of accrued interest. The loan and interest are shown as a non-current liability repayable on 1 April 2018, and accrues interest at 6% per annum, payable annually.
Net current assets at 31 March 2017, excluding restricted cash balances included under current assets, were GBP2.17 million (31 December 2016: GBP2.56 million).
As at 31 March 2017, the Company had 3,336,865,922 common shares issued and outstanding and 892,777,778 A ordinary shares issued and outstanding. As at that date there were 4,872,728 outstanding share options.
Contractual Obligations
Payments due by period
Total 2017 2018 2019 2020 2021
and
there
after
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other
payables 3,074 3,074 - - - -
Loan notes 333 - 333 - - -
Operating leases 1,694 221 295 295 295 588
______ ______ ______ ______ ______ ______
5,101 3,295 628 295 295 588
______ ______ ______ ______ ______ ______
Shareholders' equity
The movement in shareholders' surplus comprised:
2017
GBP'000
As at 1 January
2017 3,132
Loss for the
quarter (344)
As at 31 March
2017 2,788
--------
As at 27 April 2017, the Company had 3,336,865,922 common shares issued and outstanding and 892,777,778 A ordinary shares issued and outstanding. As at that date there were 4,872,728 outstanding share options.
Liquidity
Cash and cash equivalents at 31 March 2017 were GBP0.37 million (31 December 2016: GBP0.57 million).
Restricted cash at 31 March 2017 was GBP3,000 (31 December 2016: GBP4,000).
The Company reported a loss in the quarter of GBP0.34 million and has a cumulative deficit of GBP100.54 million. The Company's ability to continue as a going concern depends on its ability to generate positive cash flows from operations or secure additional debt or equity financing.
The Company has not changed its approach to Currency risk and Interest rate risk management from that of the prior year and as disclosed in the annual statements at 31 December 2016.
Currency risk management
The Company's expenditure is principally denominated in Sterling, which is funded from Sterling cash balances. Exchange differences, which arise on consolidation of the Company's Canadian operations, are included in exchange adjustments within the income statement. At 31 March 2017 the Sterling equivalent of Canadian Dollar denominated net liabilities amounted to GBP13,750 (31 December 2016: net liabilities GBP5,900).
The Company receives a significant proportion of its revenue in US Dollars (including from contracts with Canadian customers). As such the Company routinely maintains a significant receivables balance in US Dollars, which are revalued at each period end. At 31 March 2017 the Sterling equivalent of the US Dollar denominated assets amounted to GBP0.74 million (31 December 2016: GBP0.54 million).
To manage its foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, the Company uses forward foreign exchange contracts. Further information is provided in Note 7 Derivative Financial Instruments.
Interest rate risk management
The analysis of the Company's financial assets and borrowings analysed between floating and fixed interest rates is shown below
31 March 31 December
2017 2016
GBP'000 GBP'000
Floating rate
financial assets 370 565
Fixed rate borrowings (333) (328)
The fixed rate borrowings are at 6.0% per annum.
Financial instruments
The Company's financial assets and liabilities consist primarily of the cash and cash equivalents, restricted cash, trade receivables, trade payables and loans.
31 March 2017 31 December 2016
Loans and Financial Loans and Financial
receivables liabilities receivables liabilities
GBP'000 GBP'000 GBP'000 GBP'000
Asset/(Liability)
Cash and cash equivalent 370 - 565 -
Restricted cash 3 - 4 -
Trade, prepayments
and other receivables 2,827 - 2,272 -
Trade and other
payables - (3,074) - (2,569)
Derivative financial
instruments - - - (4)
Loans - (333) - (328)
Total 3,200 (3,407) 2,841 (2,901)
============= ============= ============= =============
The amounts at which the assets and liabilities above are recorded are considered to approximate to fair value.
Fair value estimation
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Techniques, such as estimated discounted cash flows, are used to determine fair value for the financial instruments. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the balance sheet date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to the short-term nature of trade receivables and payables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.
Derivative financial instruments
The Company uses foreign exchange forwards to help manage its foreign exchange risk. The Company classifies these derivatives as financial assets at fair value through profit and loss. Derivatives are classified as current assets.
Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.
Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in the income statement within 'Other gains - net' in the period in which they arise.
Financial Risk Management and Capital Structure
The Company's risk management programme remains as detailed on page 51 in the Annual Report and Financial Statements 31 December 2016. There have been no significant changes since 31 December 2016.
Further information is provided in Management's Discussion and Analysis and the notes to these Condensed Consolidated Interim Financial Statements.
Related Party Transactions
On 15 March 2017 the Company announced that its wholly owned subsidiary Turbo Power Systems Limited had exercised its option to extend the repayment date of the GBP314,000 loan provided by TAO UK from 1 April 2017 to 1 April 2018.
Critical accounting policies and estimates
These condensed consolidated interim financial statements have been prepared on the basis of International Financial Reporting Standards applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. As at 31 March 2017 the Company had net operating cash outflows. Therefore, the Company may require additional funding which, if not raised, may result in the curtailment of activities. The Company has a cumulative deficit of GBP100.54 million as at 31 March 2017.
Further information on Going Concern is provided in Note 2.
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, revenue and expenses and the related disclosures of contingent assets and liabilities. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately differ from those estimates.
Estimates and underlying assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future period affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial year are disclosed on page 42 in the Annual Report and Financial Statements for 31 December 2016.
Principal Risks and Uncertainties
Risk or uncertainty Mitigation approach
Operating revenues
TPS has entered into large The Company is seeking
development and manufacturing to change the emphasis
contracts. The outcome on new contract signings.
of this is that large amounts The Company has a growing
of revenue are associated revenue stream associated
with one product line and with repair, maintenance
one customer. As there and overhaul that does
is reliance on large contracts not rely on large value
being signed by the Company, contracts. The Company
the impact of not signing is focusing efforts to
a large contract would increase the percentage
be high on the results of revenue associated with
of the Company in any one these activities in addition
year. The Company recognises with the new major contract
that it is increasingly awards.
difficult to forecast when The Company has always
these new contracts will worked closely with its
be signed due to the importance current customer base.
customers associate such Going forward this will
large values. The Company continue, but greater emphasis
has suffered and will continue is being put into working
to suffer from delays in with new customers and
expected contract award hence increasing the number
dates. of contracts in bid and
diluting the relative impact
of individual contract
awards.
Cost overrun on contracts
due to technology risk The Company seeks to mitigate
TPS is a technology-led these risks by significant
company. As the products up front planning and research.
that it develops are technology The new ideas are reviewed
driven, the Company is by senior personnel and
looking to use the latest approved before use in
design and practices when new projects. A project
a new contract is won. based reporting and review
This enables the Company system is in place to monitor
to make the most efficient the activities and the
solution for each project. output from design and
Due to these technology testing phases. A system
advances there is a significant of cost control is in place
risk extra costs may be to ensure that budgets
incurred while developing are monitored and any variances
new ideas to fulfil contracts. recognised early and taken
into account to mitigate
them in future activities.
Further development activities
TPS undertakes research The Company has a structure
activities to ensure that of senior engineers who
the technology used is are responsible for reviewing
current and forward looking. market trends and identifying
There is a risk that the new technologies as they
Company misses a directional become useful in our products.
change in where technology The Company also partakes
is moving and does not in research projects that
produce new and efficient are originated via bodies
designs. such as Innovate UK. These
projects typically involve
University departments
as well as a diverse group
on interested parties.
This helps the Company
understand potential customer
and supplier's knowledge
and requirements.
Manufacturing issues
The Company is at the forefront The Company seeks to minimise
of electrical machine design manufacturing issues by
and power electronic forethought. conforming to international
The Company is always looking quality standards such
for ways to make its products as ISO 9001, and AS 9100.
more efficient and to use The Company is fiercely
latest technology to enhance proud of its quality process
the product offering. and takes good practice
seriously.
As part of this culture,
the manufacture of the During the manufacturing
product can be extremely process all new processes
complex and time consuming. are documented with pictures
There may be issues with to ensure that they are
the design that are only easy to follow and check.
evident when in volume The process is then approved
manufacture and there may by operations, engineering
be a difficult, and therefore and quality departments
risky, manufacturing process. in line with best practice.
These may adversely impact
the quality of the units The manufacturing engineer
manufactured and the manufacturing role acts as a bridge between
efficiency cost effectiveness. the design team and the
If faults are found internally, manufacturing personnel.
then there is an increase This is pivotal in ensuring
in manufacturing costs that any issues are resolved
and therefore decrease efficiently and with the
profitability. If faults correct long term objective.
are only found when with
the customers then this The quality inspections
impacts warranty costs during manufacture should
and can have a big impact reduce the chances of incorrect
on reputation. assembly and lead to a
quality unit being produced.
Commercial relationships
TPS has longstanding commercial The Company seeks to mitigate
relationships with major this risk by working closely
customers. However, there with the customer. This
is no guarantee that customers involvement starts with
will continue to design understanding their future
and manufacture the appropriate product roadmap and working
products that require our closely at an early stage
technology. Any integration, to help overcome new design
design or manufacturing problems. This works especially
problems that the customer well on projects with existing
encounters could adversely customers. However, the
affect the financial results Company is constantly reviewing
of the Company. the profile of its salesforce
as part of seeking to expand
The risk could be that the customer base. This
the customer's designs requires the Company to
no longer require, say, bring new fresh ideas to
an auxiliary power unit the market and identify
and therefore future orders current problems encountered
cease. Alternatively, a in the marketplace.
customer could be having
issues with, say, the overall In Rail, whilst the Company
train design and manufacture tries to mitigate customer
and therefore revenue could issues with train manufacture
be delayed. in regard to its own product
line it will always be
at risk of the overall
train manufacture timing
issues. The Company seeks
to mitigate these through
contractual timeframes
and terms.
Dependence of key personnel
TPS is a technology-led The Company works closely
company and hence reliant with key personnel to ensure
on key personnel. The Company that they are fully motivated
has a group of senior personnel and engaged on interesting
who oversee the design and rewarding projects.
research and implementation. The Company believes that
Having been through major the roles should be aligned
personnel number changes to the individual's ability,
in the last few years, so these can be within
key positions exist within technical expertise or
the Company that require management responsibility.
succession plans to be
in place. Where a key position has
been identified a succession
plan has been drawn up.
Foreign currency exchange
rate fluctuations The Company seeks over
TPS is subject to foreign time, to balance currency
currency risk. Foreign requirements with currency
currency sales (and to inflows. Where there is
a much lesser extent) purchases excess currency inflow
are made in US Dollars. the Company seeks to match,
The Company's major contracts to the extent possible,
are denominated in US Dollars planned currency sales
and therefore a major portion through forward foreign
of cash receipts are in currency exchange contracts.
US Dollars. The Company The level of currency hedging
is therefore exposed to is dependent on the credit
movements in foreign currency limits available for future
rates over time. currency deals and the
perceived currency forecast
This fluctuation has been movement.
significantly severe during
2016 following the referendum Part of the Board's strategy
in June to leave the European has been to seek increased
Union. sales where contracts are
undertaken in GBP Sterling.
Future funding
The Company has been loss The Company works closely
making for a number of with TAO UK, its majority
years and has been critically shareholder, to ensure
reliant on regular increases that it is fully aware
in external funding. As of the financial situation
noted above under Going of the Company on a very
Concern, TPS is dependent regular basis and also
on customers paying to of customer concerns. The
contractual terms in order Company seeks to gain approval
to meet forecast working for all budgets, working
capital requirements and closely with TAO UK on
support the Company's growth all financial and operational
plans. If this does not matters, assisted by the
continue, this may well two representatives of
result in the curtailment TAO UK on the Board who
of the Company's activities, form the majority of the
partly due to customer Board.
concerns over the Company's
continuing viability. The Company has extended
the repayment date of its
borrowings, of GBP314,000
from TAO UK from 1 April
2017 to 1 April 2018.
Internal Control
The Board of Directors has overall responsibility for the accounting policies and ensuring that the Company maintains an adequate system of internal financial control to provide them with reasonable assurance that assets are safeguarded and of the reliability of financial information used for the business and for publication. More detail on the Company's internal control can be found on page 27 of the Annual Report and Financial Statements for the year ended 31 December 2016.
Turbo Power Systems Inc.
Condensed consolidated interim income statement
Unaudited
________________________________________________________________________________
Notes Quarter
ended
31 March
2017 2016
GBP'000 GBP'000
Revenue 5 3,210 3,350
Cost of sales (1,820) (2,052)
-------- --------
Gross profit 1,390 1,298
Expenses
Distribution costs (157) (81)
Research and product development (568) (416)
General and administrative (966) (916)
-------- --------
Total expenses (1,691) (1,413)
Operating (loss) before
other operating income (301) (115)
Other losses - net 4 (21)
Operating (loss) (297) (136)
Finance expense (5) -
(Loss) before tax (302) (136)
Income tax expense (42) (12)
Net (loss) and total comprehensive
(loss) for the periods (344) (148)
======== ========
(Loss) per share - basic
and diluted 6 (0.01)p (0.00)p
======== ========
The Notes form an integral part of these condensed consolidated interim financial statements.
Turbo Power Systems Inc.
Condensed consolidated interim statement of financial position
Unaudited
________________________________________________________________________________
Notes As at As at
31 March 31 December
2017 2016
GBP'000 GBP'000
Current assets
Restricted cash 3 4
Inventories 2,745 3,163
Trade and other receivables 2,827 2,272
Prepayments 347 170
Cash and cash equivalents 370 565
---------------------- ------------------
6,292 6,174
---------------------- ------------------
Non-current assets
Intangible assets 403 431
Property, plant and equipment 474 402
877 833
Total assets 7,169 7,007
====================== ==================
Current liabilities
Trade and other payables 3,074 2,569
Derivative financial instruments 7 - 4
Provisions 8 712 712
Loans and borrowings 10 333 328
---------------------- ------------------
4,119 3,613
---------------------- ------------------
Non-current liabilities
Provisions 8 262 262
---------------------- ------------------
262 262
---------------------- ------------------
Total liabilities 4,381 3,875
Equity (deficit)
Share capital 11 71,408 71,408
Capital contribution reserve 11 12,786 12,786
Convertible shares 11 17,310 17,310
Other reserves 1,823 1,823
Retained deficit (100,539) (100,195)
---------------------- ------------------
Equity 2,788 3,132
Total liabilities and equity 7,169 7,007
====================== ==================
Approved by the Board:
R J Piper, Chairman
27 April 2017
The Notes form an integral part of these condensed consolidated interim financial statements.
Turbo Power Systems Inc.
Condensed consolidated interim statement of changes in equity
Unaudited
________________________________________________________________________________
Common Capital Convertible Other Accumulated Total
Share Contribution Shares reserves deficit
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2016 71,408 12,367 17,310 1,823 (99,430) 3,478
Net loss - - - - (148) (148)
Balance at 31
March 2016 71,408 12,367 17,310 1,823 (99,578) 3,330
Capital contribution - 419 - - - 419
Net loss - - - - (617) (617)
Balance at 31
December 2016 71,408 12,786 17,310 1,823 (100,195) 3,132
Net loss - - - - (344) (344)
Balance at 31
March 2017 71,408 12,786 17,310 1,823 (100,539) 2,788
========= ============== ============ ========== ============ ========
The Notes form an integral part of these condensed consolidated interim financial statements.
Turbo Power Systems Inc.
Condensed consolidated interim statement of cash flows
Unaudited
_____________________________________________________________________
Quarter ended
31 March
2017 2016
GBP'000 GBP'000
Cash flows from operating
activities
Net (loss) for the period (344) (148)
Adjustments for:
Finance expense 5 -
Taxation 42 -
Depreciation of property,
plant and equipment 30 32
Amortization of intangible
assets 28 26
Derivative financial instrument (4) 21
R and D Tax Credits (50) -
Operating cash flows before
movements in working capital (293) (69)
Changes in working capital
items
Decrease in inventories 418 128
Decrease in restricted 1 -
cash
(Increase) in trade and
other receivables (515) (294)
(Increase) in prepayments (177) (200)
Increase/(Decrease) in
trade and other payables 505 (122)
(Decrease) in provisions - (91)
-------- --------
Cash used in operating activities (61) (648)
-------- --------
Taxation (32) -
-------- --------
Net cash used in operating
activities (93) (648)
Investing activities
Purchase of property, plant
and equipment (102) (46)
Purchase of intangible
assets - (5)
Net cash used in investing
activities (102) (51)
Cash flows from financing
activities
Proceeds from increase
in loans - 314
-------- --------
Net cash from financing
activities - 314
-------- --------
Net decrease in cash and
cash equivalents (195) (385)
Cash and cash equivalents
at the beginning of the
period 565 496
Cash and cash equivalents
at the end of the period 370 111
======== ========
The Notes form an integral part of these condensed consolidated interim financial statements.
Turbo Power Systems Inc.
Notes to the condensed consolidated interim financial statements
Unaudited
________________________________________________________________________________
1 Reporting entity
Turbo Power Systems Inc. ("The Company") is subsisting pursuant to the Business Corporations Act (Yukon Territory). The Company's registered office is Suite 200-204 Lambert Street, Whitehorse, Yukon Y1A 3T2, Canada.
The Company conducts operations through its wholly owned subsidiary company, Turbo Power Systems Limited ("TPSL"), whose main trading address is 1 Queens Park, Queensway North, Team Valley Trading Estate, Gateshead NE11 0QD, United Kingdom.
The Company's parent undertaking is TAO Sustainable Power Solutions (UK) Limited ("TAO UK"), a company registered in England and Wales, UK. The Company's ultimate parent company is TWC3N Limited, a company controlled principally by members of the Company's management team.
These condensed consolidated interim financial statements of the Company as at and for the quarter ended 31 March 2017 comprises of the Company and its subsidiaries. The Company's subsidiaries comprise:
Trading Place of % Ownership
status incorporation
Turbo Power Systems Limited Trading England 100%
Turbo Power Systems Development
Limited Dormant England 100%
Intelligent Power Systems
Limited Dormant England 100%
Nada-Tech Limited Dormant England 100%
2 Going concern
These consolidated financial statements have been prepared on the basis of International Financial Reporting Standards (IFRS) applicable to a "going concern", which assume that the Company will continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities in the normal course of operations.
As at 31 March 2017 the Company had net operating cash outflows, with current liabilities of GBP4.12 million and current assets of GBP6.29 million, which includes GBP0.37 million of cash. The Company has a cumulative deficit of GBP100.54 million as at 31 March 2017 and was loss making for the period then ended.
The Company remains critically dependent upon i) customers paying to contractual terms and ii) the continued financial support of its intermediate parent undertaking TAO Sustainable Power Solutions (UK) Limited (TAO UK). The Company relies on TAO for continued financial support in the form of the loan made available to the Company, and in order to meet any shortfall in budgeted or forecasted working capital requirements and support the Company's growth plans. If not secured, this may result in the curtailment of the Company's activities. The timing of required financial support from TAO UK will depend on the Company's ability to generate cash from operations. In reasonably sensitised cash flow forecasts, and particularly dependent on the yet to be agreed settlement, including payment profile, of certain warranty provisions, support may well be required before the date of loan repayment in April 2018.
However, the Directors believe that they will succeed in delivering the Company's projected financial performance and that financial support from TAO UK, will remain in place to enable the Company to meet budgeted and forecasted working capital requirements and support the Company's growth plans. As is typical with any company placing reliance on other group entities for financial support, there can be no certainty that this support will continue although, at the date of approval of these financial statements, the Board have no reason to believe that TAO UK will not do so. Although there are no formal letters of support in place for the purpose of the directors' going concern assessment of the Company, the directors of the Company have taken comfort from the actions taken by TAO UK, in that loans have been provided when required (the latest being GBP0.31 million on 29 March 2016), rescheduling the repayment date of that loan to 1 April 2018, that all the debt existing at 12 November 2015 was waived and that the majority of the Board are TAO UK representatives, in forming their conclusion that they believe it is appropriate to prepare these financial statements on a going concern basis. Accordingly, they have continued to adopt the going concern basis of preparation.
If the Company is unable to either generate positive cash flows from operations or ensure the continued financial support from TAO UK and ultimately TWC3N its parent company, or secure additional debt or equity financing, these conditions and events indicate the existence of a material uncertainty which may cast significant doubt regarding the Company's ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business.
These consolidated financial statements do not reflect any adjustments that would be necessary if the going concern assumption were not appropriate.
3 Basis of preparation
These condensed consolidated interim financial statements have been prepared in accordance with IAS34 Interim Financial Reporting.
The Company's condensed consolidated interim financial statements were prepared in accordance with the accounting policies set out in Note 3 to the consolidated financial statements for the year ended 31 December 2016, and using the same methods of computation.
The condensed consolidated interim financial statements were authorised for issuance by the Board of Directors on 27 April 2017.
The condensed consolidated interim financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments.
The condensed consolidated interim financial statements are presented in GBP sterling, rounded to the nearest GBP1,000, which is the Company's functional and presentation currency.
4 Critical accounting judgements and key sources of estimation uncertainty
These condensed consolidated interim financial statements have been prepared on the basis of International Financial Reporting Standards applicable to a 'going concern', which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. As at 31 March 2017 the Company had net operating cash outflows. Therefore, the Company may require additional funding which, if not raised, may result in the curtailment of activities. The Company has a cumulative deficit of GBP100.54 million as at 31 March 2017.
Further information on Going Concern is provided in Note 2.
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, revenue and expenses and the related disclosures of contingent assets and liabilities. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
Estimates and underlying assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future period affected.
5 Segmental analysis
The Company reports by its distinct segments of production and development, both segments operate in the United Kingdom. Except for the investments held by the Company which are located in Canada, all of the Company's assets are located in the United Kingdom.
Quarter ended 31 Production Development Unallocated Total
March 2017
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2,853 357 - 3,210
=========== ============ ============ ========
Segment operating
profit/(loss) 471 (772) 4 (297)
Finance expense - - (5) (5)
Taxation expense - - (42) (42)
Net loss and total
comprehensive loss 471 (772) (43) (344)
=========== ============ ============ ========
Total assets 5,863 933 373 7,169
Total liabilities (2,306) (768) (1,307) (4,381)
Quarter ended 31 Production Development Unallocated Total
March 2016
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 3,056 294 - 3,350
=========== ============ ============ ========
Segment operating
profit/(loss) 505 (620) - (115)
Finance expense - - - -
Taxation expense - - (12) (12)
Net loss and total
comprehensive loss 505 (620) (12) (127)
=========== ============ ============ ========
Total assets 6,372 944 177 7,493
Total liabilities (2,215) (738) (1,189) (4,142)
Geographic Segmental Information
Quarter ended
31 March
Total Revenues by destination 2017 2016
GBP'000 GBP'000
UK 1,824 1,573
USA 1,037 1,374
Rest of world 281 252
Canada 68 151
3,210 3,350
======== ========
All property, plant and equipment were located within the United Kingdom during both periods ended 31 March 2017 and 31 March 2016
6 (Loss) per share
(Loss) per common share has been calculated using the weighted average number of shares in issue during the relevant financial periods.
Quarter ended
31 March
2017 2016
Numerator for basic loss
per share calculation:
(Loss)/profit attributable (GBP344,000) (GBP148,000)
to equity shareholders
Denominator:
For basic net (loss) -
weighted average shares
outstanding 3,336,865,922 3,336,865,922
For diluted net (loss)
- weighted average shares 4,234,516,428 4,235,626,428
Basic and diluted
Basic loss per common share
- pence (0.01)p 0.00p
Diluted loss per common
share - pence (0.01)p 0.00p
As the Company experienced a loss in 2016 all potential common shares outstanding from dilutive securities are considered anti-dilutive and are excluded from the calculation of diluted loss per share.
Details of dilutive potential securities outstanding included in EPS calculations at 31 March 2017 are as follows:
As at 31 As at 31
March March
2017 2016
Common shares potentially
issuable:
- under stock options 4,872,728 5,982,728
- pursuant to A Ordinary
Share conversion 892,777,778 892,777,778
------------ ------------
897,650,506 898,760,506
============ ============
7 Derivative financial instrument
31 March 31 December
2017 2016
Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000
Forward Exchange
Contracts - - - 4
Total - - - 4
---------- ------------- ------------- ------------
Less non-current portion: - - - -
---------- ------------- ------------- ------------
Current portion - - - 4
========== ============= ============= ============
The notional principal amounts of the outstanding forward foreign exchange contracts at 31 March 2017 were GBPnil million (2016: GBP0.67 million).
8 Provisions
Asset Warranty Total
Retirement
Obligations
GBP'000 GBP'000 GBP'000
Balance at 1 January
2016 285 681 966
Utilised in period - (91) (91)
Balance at 31 March
2016 285 590 875
Utilised in period (191) (360) (551)
Provided in period - 650 650
Balance at 31 December
2016 94 880 974
Utilised in period - - -
Balance at 31 March
2017 94 880 974
============= ========= ========
31 Mar 31
Dec
Analysed as: 2017 2016
GBP'000 GBP'000
Current liabilities 712 712
Non-current
liabilities 262 262
Total 974 974
======== ========
Asset Retirement Obligations:
During 2010 the Company recognised a requirement for a provision for the asset retirement obligations related to the two properties it then leased. One lease has subsequently terminated in 2013 and the other will terminate in 2022. Accordingly a provision, based on the present value of the future expected expenditure was recorded at GBP674,000 as at 31 December 2010. Following a 2015 review of the provision against expected costs the Company released GBP39,000 of this provision. In 2016 the Company agreed a settlement for the lease that was terminated in 2013 and consequently released the provision of GBP191,000 relating to this lease. The Company has recorded no further increase in accretion expense in 2017 (2016: GBPnil). After the expiry of the current lease in 2022 the provision is expected to be released.
Warranty:
Production units sold by the Company are provided with a warranty against operational failure. The warranty period provided is dependent upon the sales agreement with the customer and the nature of the unit, but typically is between one and two years from the date of delivery. The warranty provision is maintained at a level calculated to reflect the current costs of repair and incidence of failure of existing and similar units.
During the final quarter of 2015 the Company received a claim from a customer for warranty, relating to a fault within motor units delivered to a customer during 2013 to 2015. The Company included a one off provision expense in 2015 of GBP0.50 million, of which GBP0.45 million remained at 31 December 2015. During 2016 the GBP0.45 million was fully utilised.
The Company reported a contingent liability as at 31 December 2015 in relation to further costs that might be arising out of the warranty claim. Having reviewed the current situation, especially in relation to ongoing customer relationships and insurance proceeds that might be receivable, the Company provided a further GBP0.65 million as at 31 December 2016 (2015: GBP0.50 million) to cover any further potential negotiations. Subject to those negotiations, this matter has been treated as a current liability as it is more than likely to be resolved within the next twelve months. Any payment related to this matter will be dependent on agreement with our customer on all matters that are critical for maintaining the long-term relationship between the two companies.
9 Loans and borrowings
On 29 March 2016, the Company announced that its wholly owned subsidiary Turbo Power Systems Limited had entered into an agreement to draw down on a new loan to be provided by TAO UK, to support working capital requirements. The additional amount available to draw down as follows:
29 March 2016 GBP314,000
This amount was repayable on 1 April 2017, which can be extended, at the Company's request, for a further year, and accrues interest at 6% per annum, payable annually. In March 2017, TAO UK extended the loan repayment date to 1 April 2018. All other conditions remain the same.
31 March 31 December
2017 2016
Fixed rate loans GBP'000 GBP'000
Due after one year
Loans 314 314
Accrued Interest 19 14
--------- ------------
Total 333 328
========= ============
The Company has drawn down on all its borrowing facilities as at 31 March 2017 (2016: all loans drawn down in full). There is unpaid accrued interest of GBP0.01 million included in the loan amount at 31 March 2017 (2016: GBPnil)
10 Share capital and options
Share capital and other reserves
Share Capital
Common Shares Convertible Shares
(A Ordinary Shares)
Number GBP'000 Number GBP'000
At 31 March
2016 and at
31 December
2016 3,336,865,922 71,408 892,777,778 17,310
At 31 March
2017 3,336,865,922 71,408 892,777,778 17,310
================ ========== ============== ==============
The Company is authorised to issue an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, without nominal or par value. All common shares rank equally with regard to the Company's residual assets.
The holders of common shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.
Holders of A Ordinary Shares of Turbo Power Systems Limited ("TPSL") (Convertible shares), carry no voting rights, cannot attend any shareholder meetings and, in the event of winding-up of TPSL are entitled to a maximum distribution of GBP500,000 in aggregate, to rank before the Common Shares. The A Ordinary shares are convertible into an equal number of Common Shares of the Company on request by the holder, having given 61 days' notice. Under certain take over or change in control events, the A Ordinary Shares are exchangeable under "super exchange" rights, converting for 3 Common shares of the Company for every A Ordinary Share held. As at 31 March 2017 all the A Ordinary Shares were owned by TWC3N, the Company's ultimate parent company.
As the A Ordinary Shares are non-participating interests in TPSL and are non-voting, no current year or cumulative net losses have been allocated to the A Ordinary Shares.
Capital contribution reserve
At 31 March 2017 the Capital contribution reserve, from the waiver of the TAO UK Loans and accrued interest and the repayment of the Regional Growth Fund grant, was GBP12.79 million (31 December 2016: GBP12.79 million).
Other reserves
At 31 March 2017, other reserves comprise of the stock compensation reserve of GBP1,823,000 (31 December 2016: GBP1,823,000).
Potential issue of common shares
The Company has issued share options under the 2002 Stock Option Plan and A Ordinary Shares that are convertible into common shares of the Company.
31 March 31 December
2017 2016
Under stock option plan 4,872,728 4,872,728
Pursuant to A Ordinary
Share conversion 892,777,778 892,777,778
------------
897,650,506 897,650,506
--------------- ------------
11 Related party transactions
Transactions with the parent and ultimate parent company
During the periods ended 31 March 2016 and 31 March 2017 the Company undertook no significant transactions with related parties.
Save for the loans and borrowings (see Note 9 above) and any accrued interest, there were no amounts outstanding at 31 December 2015 and 31 March 2016 between either the Company and TAO UK or the Company and TWC3N Limited.
Key Management personnel compensation
In addition to their salaries, the Company provides non-cash benefits to executive management and contributes to a defined contribution pension plan. Some executive officers participate in the share option programme.
Key management personnel compensation comprises the following:
Quarter Ended
31 March
2017 2016
GBP'000 GBP'000
Salaries 140 138
Pension contributions 10 9
150 147
======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFBLGDSGSDBGRL
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April 27, 2017 02:00 ET (06:00 GMT)
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