Improved performance at Turbo Power Systems Inc. as strategic review continues

Board says there can be "no certainty" that proposals to sell the business will go ahead, or on the terms on which this could happen

Turbo Power Systems
Turbo Power Systems

Directors at a Gateshead company which is being considered for sale say they have “measured confidence” with regards to performance for 2015 after a strong first quarter.

During the three months ended March 31, Turbo Power Systems Inc, which also has a plant in London, saw revenue increase 24%, compared the same period the year before, hitting £4.08m.

Pre-tax profit, meanwhile, lay at £0.03m, up from a £1.44m loss in 2014, while total expenses for the period dropped 18% to £1.48m.

TPS, which was founded in the North East, designs and manufactures innovative power solutions based on core technologies of high speed motors, generators and electronics, which are sold into a wide range of sectors, including aerospace and rail.

A report accompanying the latest results revealed an increase in engineering design revenues came from a number of a new projects taken on in 2014, including with UK Power Networks.

The company also resumed production of Bombardier Toronto Rocket units in the quarter and continued to deliver units to the Bombardier for Chicago Transit Authority.

During the period, it continued to implement a strategy of bidding for profitable production and development contracts, and going forward will focus on three objectives: improving the quality of the portfolio; superior execution within design development, manufacturing operations and support activities; and the consistent delivery of internal improvements.

The results come just three months after TPS announced a strategic review, which left open the possibility of putting the company up for sale, citing the “recent share price movement” as the reason. The TPS share had hit a low of 0.07p in February 2013, from a maximum high of 558.90 on February 2, 2001, around six months after flotation.

However, in the latest report, the business said: “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 report acknowledged that TPS was critically dependent on the continue financial support of its parent undertaking TAO UK.

However, the directors believe they will succeed in securing this and thus will deliver on projected financial performance.

Chief executive Carlos Neves said: “We are pleased to announce that TPS has made a pre-tax proft for the second consecutive quarter, with revenue increased by 19% over the last quarter and 24% over the corresponding quarter in 2014, while maintaining a 41% gross margin.

“The sustained recovery in the business is the result of initiatives implemented since 2012 and the culture of continuous improvement embraced by all employees at TPS.

“We are proud of what has been achieved, whilst conscious of the focus we have to maintain on our strategic objectives.

“The current order book and the short-term opportunities reaffirm the board’s confidence in our performance for the rest of the financial year.”

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