Turbo Power Systems Inc Pre-close Trading Update (2194L)

TIDMTPS

RNS Number : 2194L

Turbo Power Systems Inc

08 January 2016

Turbo Power Systems Inc. ("TPS" or the "Company")

Pre-Close Trading Update,

Contract Win

&

Strategic Review Update

Turbo Power Systems Inc. (AIM: TPS.L), a leading UK based designer and manufacturer of innovative power solutions, is pleased to announce a Pre-Close Trading Update for the 12 months to 31 December 2015.

The Company expects to report full year revenue of approximately GBP13.5 million (2014: GBP15.2 million), with the Company expecting to report a substantial year on year improvement in full year Earnings Before Interest and Tax ("EBIT"), with EBIT of approximately break-even compared to 2014: loss GBP1.7 million. The substantial improvement in EBIT reflects the Company's focus on production efficiencies. TPS's investment in product development continues in order to drive future growth. Included within these expected results is a one off provision expense booked in the final quarter's results of approximately GBP0.5 million for warranty repair to a fault within motor units delivered to a customer during 2013 to 2015, affecting one single customer specific product. It is expected that the cash impact will be mainly in the first half of 2016.

Cash at 31 December 2015 was GBP0.5 million (31 December 2014: Net Debt GBP9.9 million).

On 12 November 2015 the Company announced that as part of seeking to facilitate the Strategic Review, Tao Sustainable Power Solutions (UK) Ltd ("TAO UK"), which owns 89.4% of the issued share capital of the Company, has waived the entire outstanding loan of GBP10.5 million and all unpaid accrued interest of GBP1.9 million. TAO UK agreed this waiver for the potential benefit of all TPS shareholders.

Additionally, the Company is pleased to announce that it has won a GBP1m contract from Porterbrook, one of three major UK rolling stock leasing companies. The scope of work, expected to be delivered in 2016 and 2017, includes the manufacture of battery chargers for Porterbrook's Class 170 Turbostar Diesel Multiple Units ("Turbostar"). Currently there are more than 500 existing Turbostars operating in various fleets across the UK including; Abellio Greater Anglia, Abellio ScotRail, CrossCountry, First TransPennine Express and London Midland.

The Turbostars use batteries to support both the low voltage standby and emergency circuits. To obtain the longest life and minimum maintenance periods for these batteries, the charging voltage needs to be controlled within close limits. The TPS battery chargers for Porterbrook's Turbostars will provide a stable power supply, throughout the trains' lifetime, and feed all of the car's low voltage loads as well as charging the back-up batteries.

The Strategic review is ongoing; as noted on 12 November 2015 the Board notes that all expressions of interest received to date (up to 7 January 2016) as part of the Strategic Review from potential offerors for 100% of the issued and to be issued share capital of the Company on a debt-free, cash-free basis have been indicatively priced at a substantial discount to the share price. The Board continues to regularly discuss with its majority owner how best to proceed with the Strategic Review.

Further announcements will be made in due course, as appropriate. In the meantime there can be no certainty that any potential transaction will proceed, or as to the terms of any such transaction. The Company may discontinue the Strategic Review process at any time.

The Company is a Canadian Business Corporation, carrying on the business under the Business Corporation Act of Yukon, Canada and is not subject to the provisions of the UK City Code on Takeovers and Mergers.

The Company expects to report its results in March 2016.

For further information, please contact:

 
Turbo Power Systems                        Tel: [phone] 
Carlos Neves, Chief Executive Officer 
 Charles Rendell, Chief Financial Officer 
Kreab (financial public relations)         Tel: [phone] 
Robert Speed 
finnCap (NOMAD and broker)                 Tel: [phone] 
Ed Frisby, 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 Applied and Eaton Aerospace. Tao Sustainable Power Solutions (UK) Ltd ("TAO UK"), which is a wholly owned subsidiary of Vale S.A., Brazil's largest mining company, owns 89.4% of the issued share capital of the Company.

This information is provided by RNS

The company news service from the London Stock Exchange

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January 08, 2016 02:00 ET (07:00 GMT)