Final Results

RNS Number : 7991Q
Gas Turbine Efficiency PLC
20 April 2009
 






20 April 2009


Gas Turbine Efficiency plc


Preliminary Results for the year ended 31 December 2008


Gas Turbine Efficiency plc ('GTE' or 'the Group'), a leading provider of proprietary cleantech systems for enhancing the performance of industrial and aviation turbines, announces its unaudited preliminary results for the year ended 31 December 2008.


2008 Highlights


  • Group revenue increased 97% to $35.1 million (2007: $17.8 million)

  • Industrial & Combustion revenue increased 124% to $28.2 million (2007: $12.6 million)

  • Aviation revenue increased 33% to $6.9 million (2007: $5.2 million)

  • GTE moved into profit, delivering EBITDA of $2.5 million, excluding exceptional costs (2007: $1.3 million loss)

  • Profit before tax of $0.9 million (2007: $2.9 million loss)

  • Orders won in Aviation from Pratt & WhitneySingapore Airlines, Southwest Airlines, United Airlines as well as military organisations

  • In Industrial & Combustion, GTE increased its global footprint with its first order in Kazakhstan and approval by Abu Dhabi NOC and a major Russian OEM

  • Expansion of global capacity since year end in Sweden, the UKFlorida and South Carolina, to meet increased customer demand


Current Trading


  • Trading for the first three months of 2009 has continued to be robust in all product areas and is in line with the Board's expectations

  • Revenues and order backlog for the 2009 fiscal year as of 31 March 2009 was $26.7 millionup 53at the same point in 2008.



Steve Zwolinski, Chief Executive Officer of GTE, commented:


'Our strong 2008 performance demonstrates the success of the Group's strategy of offering innovative solutions which increase customers' fuel and operating efficiency, while providing significant environmental benefits. In 2008, GTE strengthened its product portfolio to offer a broader range of high value and proprietary solutions. We have substantially diversified our customer base and channel partners and further invested in operational capability to support future growth.


'Although mindful of the current global economic climate, the Board believes the Group's product offering remains compelling, especially for aviation, power generation and oil & gas segments.  Consequently, we are confident that the Group will continue to grow strongly in 2009.'







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 7831 3113


Collins Stewart Europe Limited (Nomad & Joint Broker)
Hugh Field

Bruce Garrow

+44 (0) 20 7523 8350


Mirabaud Securities LLP (Joint Broker)
Peter Krens 

+44 (0)20 7878 3360



About GTE 


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


The Group also provides solutions for burning 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; and fluid and control auxiliaries. 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 centres in Europe and the USA. GTE's shares are traded on London Stock Exchange's AIM (Ticker: GTE).

  Overview


GTE delivered strong growth in 2008 achieving a near doubling of revenue. This significant growth was driven by high levels of demand across GTE's key markets of aviation, power generation and oil and gas and was buoyed by a strong Q4 industrial and combustion performance. Order intake in 2008 was $46.7 million, up 166% on 2007.  


Group revenue, which was all organic, increased by 97% to $35.1 million (2007: $17.8 million) and the gross margin was 41% (2007: 42%). GTE moved into profit in mid-2008 delivering EBITDA excluding exceptional costs of $2.5 million for the year (2007: loss $1.3 million). Profit before tax was $0.9 million (2007: loss $2.9 million). Earnings per share were $0.007, compared to a loss per share of $0.037 in 2007.


The Group's net cash position at 31 December 2008 was $5.4 million (2007: $2.3 million).



Strategy


GTE focuses on gas turbine solutions that provide compelling economic and environmental value to customers in the multi-billion dollar market for gas turbine services and upgrades, namely:  


  • Greater fuel efficiency, parts life extension and lower service and maintenance costs;

  • Increased power output from existing assets, reducing the immediate need for new equipment; and

     

  • COsavings through both fuel efficiency and emissions reduction.


During 2008, GTE demonstrated the success of its strategy of building high value products and solutions for the gas turbine aftermarket and the Group is now firmly established as a solutions provider in the global aftermarket for gas turbines. 


GTE extended its portfolio to offer a broader range of high value and proprietary solutions, diversified its customer base and channel partners and invested in operational capability to further support the delivery of its products to customers. 


The benefits of GTE's products and solutions to owners and operators of gas turbines are even more relevant in the current challenging economic environment.



Industrial & Combustion


The Industrial & Combustion product lines had a very good year with revenues increasing by 124% to $28.2 million (2007: $12.6 million).  Revenue in the industrial segment rose 99% to $20.7 million, while combustion was up 241% to $7.5 million (2007: $2.2 million).  


Order intake for industrial and combustion activities increased by 104% to $32.6 million in 2008


Sales to leading OEMs increased by 125% to $14.4 million, reflecting continued strong demand and expansion of product lines offered through this channel.


End user sales increased by 123% to $13.8 million reflecting sales to 3rd parties and direct to end users, such as utilities and oil and gas companies and global service providers.


GTE's global footprint expanded with its first order in Kazakhstan.  In the Middle East, distribution and technical support activities increased substantially and GTE's patented compressor cleaning solution was approved by Abu Dhabi NOC. A major Russian OEM also approved GTE's compressor cleaning solution for use on their turbine.


GTE expanded its product portfolio to include fuel treatment and auxiliary solutions; combustion repairs, monitoring and diagnostics and control upgrades. The new solutions are expected to provide compelling value to customers globally.



Aviation


The Aviation division, where GTE is the exclusive supplier of engine wash systems to Pratt & Whitney, had an excellent year, achieving revenue of $6.9 million up 33% (2007: $5.2 million). Order intake increased by approximately 8X to $14.1 million in 2008. 


GTE's technology delivers significant fuel, operational and environmental benefits. Airline customers have stated that GTE's technology delivers benefits of around 1% fuel efficiency savings during flight and around 1.3% fuel efficiency at take-off, while increasing engine time on wing by approximately 18 months (substantially reducing maintenance costs) and significantly lowering CO2 emissions.


In the second half of 2008, GTE received an $8 million order from Pratt & Whitney EcoPowerTM for further global infrastructure expansion. Contracts were also secured with Singapore Airlines, Southwest Airlines, United Airlines as well as military organisations.



Technology Development


Development of innovative solutions for gas turbines has been key to GTE's success in 2008 and will continue to be a driver of future growth.  


In 2008, the number of patents granted to GTE increased from 8 to 16 with an additional 17 patent applications pending or provisionally filed.  The Group substantially strengthened its technology by investing $8.4 million (2007: $4.0 million) in developing new products.    


As previously announced, the Group successfully defended its strong intellectual property portfolio by resolving a patent lawsuit in April 2008. This lawsuit resulted in exceptional costs of $0.4 million.



Capacity Expansion


During 2008, GTE effectively doubled its factory space.  Since the year end, GTE has further expanded to meet increased customer demand.  


In Sweden, GTE signed an agreement to be the cornerstone company in the planned 'Green City Business Park' in Stockholm. The new facility, which will have three times the current capacity, will provide an expanded array of industrial and combustion products lines, in addition to the current aviation solutions.


GTE's Orlando facility has been expanded from 15,000 to 40,000 sq ft. This facility will continue to service the growing demand for industrial products and also serve as a US facility to meet aviation service demand.


In March 2009, GTE formally opened its new combustion and power plant solutions centre in South Carolina (US) which has given it a five-fold increase over its previous facility's capacity to 50,000 sq ft. This facility is located near several important suppliers.



People


GTE has built a world-class team to service the gas turbine market. GTE's top 25 people have over 500 years' combined experience at the highest level of the industry. GTE strengthened its Board in April 2008 with the appointment of Charles Cameron as a non-Executive Director.


The Group recognises that GTE's engineering competence is one of its most significant differentiators and grew its engineering team significantly during the year.


The Board would like to thank all its employees for their tremendous efforts during the year and ongoing support.



Financing


In the first half of 2008, GTE raised $10.4 million net of expenses by way of a placing of new ordinary shares to institutional investors. The proceeds have been used to fund GTE's growth initiatives.   GTE had cash and equivalents of $5.4 million as of 31 December 2008.



Current Trading 


Trading for the first three months of 2009 has continued to be robust in all product areas and is in line with the Board's expectations.  Revenues and order backlog for the 2009 fiscal year as of 31 March 2009 was $26.7 millionup 53% at the same point in 2008.


The Group's aviation operations are showing strong progress year-on-year benefitting from the framework order received from Pratt & Whitney in December, 2008 as it accelerates the roll-out of its 'EcoPowerTM' engine wash service worldwide.


Although mindful of the current global economic climate, the Board believes the Group's product offering remains compelling, especially for aviation, power generation and oil & gas segments.  Consequently, we are confident that the Group will continue to grow strongly in 2009.






 






CONSOLIDATED STATEMENTS OF INCOME






for the year ended 31 December 2008



Unaudited





Note


2008


2007





$'000


$'000

Continuing operations







Revenue

2


35 119


17 830


Cost of sales



 (20 764)


(10 358)

Gross profit



14 355


7 472









Distribution and selling costs



(3 598)


(2 204)


Research and development expenses



(1 347)


(1 130)


Administrative expenses



(8 850)


(7 124)


Other operating income

3


320


78







Operating profit/(loss)

4


880


(2 908)









Interest receivable

5


720


164


Finance costs

6


(669)


(150)







Profit/(Loss) before tax



931


(2 894)









Tax

7


(440)


880







PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE 






TO EQUITY HOLDERS OF THE PARENT



491


(2 014)







Profit/(loss) per share

8






From continuing operations







Basic profit/(loss) per share ($)



0.007


(0.037)


Basic and diluted profit/(loss) per share ($)



0.007


(0.037)


Earnings/(loss) before interest, taxes, depreciation and amortisations

(EBITDA)                                                                                                             1 736              (2 425)


Earnings/(loss) before interest, taxes, amortisations and exceptional

items (EBITAE)                                                                                                    2 045              (1 520)


Earnings/(loss) before interest, taxes, depreciation, amortisations and

Exceptional items (EBITDAE)                                                                              2 549               (1 266)  


  

CONSOLIDATED BALANCE SHEET






at 31 December 2008



Unaudited





Note


2008


2007

ASSETS



$'000


$'000

Non-current assets






Intangible assets







Capitalised expenditure for research and development

9


7 491


2 904


Patents

10


1 703


928


Customer relations



318


421


ERP-system



684


506


Goodwill

11


6 186


6 306





16 382


11 065

Tangible assets







Equipment, tools, fixtures and fittings



1 943


1 282








Financial assets







Available for-sale investments



27


187








Deferred tax assets

12


2 056


2 611

Total non-current assets



20 408


15 145








Current assets






Inventories



3 410


1 525








Current receivables







Accounts receivable-trade



8 695


4 525


Income taxes recoverable



104


201


Other receivables



1 173


633


Prepaid expenses and accrued income



531


469





10 503


5 828








Cash and cash equivalents



5 448


2 284

Total current assets



19 361


9 637








TOTAL ASSETS



39 769


24 782


  

CONSOLIDATED BALANCE SHEET



Unaudited



at 31 December 2008 (continued)

Note


2008


2007





$'000


$'000

EQUITY AND LIABILITIES













Equity







Share capital



269


207


Share premium



31 319


20 705


Capital reserve



2 636


2 636


Share based payment reserve



781


540


Revaluation reserve



(32)


(8)


Translation reserves



7


1 966


Retained earnings



(6 186)


(6 677)

Total equity attributable to equity holders of the parent


28 794


19 369








Non-current liabilities







Financial liabilities - borrowings



73


90


Deferred tax liabilities

12


195


266





268


356

Current liabilities







Financial liabilities - borrowings



157


243


Accounts payable - trade



6 338


2 550


Other liabilities



794


307


Accrued expenses 



3 418


1 957





10 707


5 057

Total liabilities



10 975


5 413








TOTAL EQUITY AND LIABILITIES



39 769


24 782


  

CONSOLIDATED STATEMENTS OF CASH FLOWS






for the year ended 31 December 2008



Unaudited





Note


2008


2007





$'000


$'000

Cash flow from operating activities














Profit/Loss after financial items



931


(2 894)


Adjustments to operating cash flows

13


1 338


668







Cash flow from operating activities before changes in working capital




2 269



(2 226)

 



 


 







Cash flow from changes in working capital







(Increase)/decrease in inventories



(2 078)


(327)


(Increase)/decrease in receivables



(5 424)


(1 580)


Increase in liabilities



6 246


937








Cash generated/ used by operations



1 013


(3 196)


Interest received



143


151


Finance costs



(384)


(169)







Net cash generated/ used by operating activities


772


(3 214)







Cash flows from investing activities














Purchase of intangible non current assets



(7 010)


(2 931)


Purchase of tangible non current assets



(1 228)


(667)


Operations acquired



-


(2 524)


Sale of tangible non current assets



121


-







Net cash used by investing activities



(8 117)


(6 122)







Cash flows from financing activities







New share issue (net of issue costs)



10 676


10 572


Loans taken



216


158


Loans repaid



(319)


(2 015)








Net cash (used in)/generated by financing activities


10 573


(8 715)

Net change in cash and cash equivalents



3 228


(621)

Cash and cash equivalents at beginning of the year


2 284


2 855

Effect of foreign exchange rate changes



(64)


50







Cash and cash equivalents at end of the year



5 448


2 284


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY









for the year ended 31 December 2008


















Share

Capital 


Share 

premium 


Capital 

reserve 


Share based payment reserve 


Revaluation 

reserve


Translation 

reserve 


Retained 

earnings 


Total share-

holders equity














$'000


$'000


$'000


$'000


$'000


$'000


$'000


$'000



















Balance at 31 December 2006

   156

   8 225

   2 636

   355

   59

   1 621

   (4 663)

   8 389



















New share issue, 5 144 954 shares

at nominal £ 0.002


  20


  4 480


  -


  -


  -


  -


  -


  4 500



































New share issue, 250 000 shares

at nominal £ 0.002


  1


  -


  -


  -


  -


  -


  -


  1



































New share issue, 7 456 140 shares

at nominal £ 0.002


  29


  8 363


  -


  -


  -


  -


  -


  8 392



































Placing costs


  -


  (423)


  -


  -


  -


  -


  -


  (423)



















New share issue, 100 000 shares

at nominal £ 0.002


  1


  60


  -


  -


  -


  -


  -


  61



































Credit to equity for equity-settled

share-based payments


  -


  -


  -


  185


  -


  -


  -


  185



































Decrease in fair value of available- 

for-sale investments


  -


  -


  -


  -


  (67)


  -


  -


  (67)



































Exchange differences arising on

translation of foreign operations


  -


  -


  -


  -


  -


  345


  -


  345



































Net loss for the year


  -


  -


  -


  -


  -


  -


 (2 014)


  (2 014)


















Balance at 31 December 2007

207

20 705

2 636

540

(8)

1 966

(6 677)

19 369


















New share issue, 2 231 000 shares at nominal £ 0.002


9

1 388

-

-

-

-



1 397


































New share issue, 8 989 000 shares at nominal £ 0.002


35

6 683

-

-

-

-

-

6 718


































New share issue, 4 000 000 shares at nominal £ 0.002


16

2 987

-

-

-

-

-

3 003


































New share issue, 476 000 shares at nominal £ 0.002


2

297

-

-

-

-

-

299


































Placing costs


-

(741)

-

-

-

-

-

(741)


















Credit to equity for equity-settled share-based payments


-

-

-

241

-

-

-

241


































Decrease in fair value of available-   For-sale investments


-

-

-

-

(24)

-

-

(24)


































Exchange differences arising on long term intercompany loans


-

-

-

-

-

(1 029)

-

(1 029)


































Exchange differences arising on translation of foreign operations


-

-

-

-

-

(930)

-

(930)


































Net profit for the year


-

-

-

-

-

-

491

491

Balance at 31 December 2008 Note 14

269

31 319

2 636

781

(32)

7

( 6 186)

28 794


Note 1  Basis of preparation


The consolidated financial information contained within these preliminary results is unaudited and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 December 2008 will be delivered to the Registrar of Companies in due course. It is expected that the annual report will be posted to shareholders at the end of May 2009.


The preparation of the preliminary results requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The significant judgements and estimates applied by the Group in these preliminary results have been applied on a consistent basis with the statutory accounts for the years ended 31 December 2007. Although such estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those of estimates.


The accounting policies applied in these preliminary results are in accordance with International Financial Reporting Standards, as endorsed by the European Union ('IFRS'), and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS, and are in accordance with the IFRS accounting policies that were applied in the Group's statutory accounts for the year ended 31 December 2007.


The adoption of the following IFRSs in 2008 has not impacted the financial statements.


• IFRIC 7 Applying the Restatement Approach under IAS 29

• IFRIC 8 Scope of IFRS2

• IFRIC 9 Reassessment of Embedded Derivatives 

• IFRIC 10 Interim Financial Reporting and Impairment


  

Note 2  Segment information








For management purposes, the Group is currently organised into the following two operating divisions: Eastern and Western hemisphere, where Western hemisphere relates to US and the Americas and Eastern relates to Europe and the rest of the world. These divisions are the basis on which the Group reports its primary and only segment information. Inter-segment sales are charged at prevailing market rates.










31 December 2008








Continuing operations

Western


Eastern

Eliminations

Total for Group



$'000


$'000


$'000


$'000

Revenue from sales 


















External sale of goods

25 112


10 007


-


35 119


Inter-segment sale of goods & services

8


54


(62)


-










Segment result - operating profit

666


214


-


880











Other interest income and similar items






720


Interest expense for group companies






(669)










Profit before tax







931











Tax credit







(440)

Profit for the year







491










Other information


















Capital additions

1 396


6 842


-


8 238


Depreciation, amortisation and write downs

(468)


(387)


-


(856)















Unallocated









assets/





Western


Eastern


liabilities

Total for Group

Balance sheet

$'000


$'000


$'000


$'000

Assets:









Segment assets:

17 155


15 022


7 592


39 769

Liabilities: 









Segment liabilities:

6 171


4 395


409


10 975


  

31 December 2007








Continuing operations

Western


Eastern

Eliminations

Total for Group



$'000


$'000


$'000


$'000

Revenue from sales 


















External sale of goods

10 203


7 627


-


17 830


Inter-segment sale of goods & services

2 150


320


(2 470)


-










Segment result - operating loss

(2 205)


(523)


 (180)


(2 908)











Other interest income and similar items






164


Interest expense for group companies







(150)










Loss before tax







(2 894)











Tax credit







880

Loss for the year







(2 014)










Other information


















Capital additions

594


3 004


-


3 598


Depreciation, amortisation and write downs

(233)


(250)


-


(483)















Unallocated









assets/





Western


Eastern


liabilities

Total for Group

Balance sheet

$'000


$'000


$'000


$'000

Assets:









Segment assets:

10 106


9 580


5 096


24 782

Liabilities: 









Segment liabilities:

2 803


2 011


599


5 413


  

Note 3  Other operating income








2008


2007




$'000


$'000







Exchange differences - operating transactions


320


69

Other income


-


9




320


78













Note 4  Operating profit/(loss)











Operating profit/(loss) has been stated after charging the following








2008


2007




$'000


$'000







Exchange differences - operating transactions


(370)


(318)

Exceptional legal costs


(351)


(1 159)

Exceptional trade mark costs


(325)


-

Exceptional administrative costs


(137)


-

Write down on inventories 


(15)


(63)

Loss on disposal of fixed assets


-


(14)

Depreciation of equipment, tools, fixtures and fittings


(504)


(254)

Amortisation of intangible assets


(352)


(210)

Impairment loss on tangible assets


-


(19)







Auditors' remuneration








2008


2007




$'000


$'000







Fees payable to the Group's auditor for the audit


(147)


(103)

of the financial statements





Fees payable to the Group's auditor and its associates





for other services






Audit of the financial statement of the Company's


(20)


(20)


subsidiaries pursuant to legislation


 


 




(167)


(123)














  

Note 5  Interest receivable








2008


2007




$'000


$'000







Interest on bank deposits


37


151






Exchange differences on non operating transactions


683


13









720


164







Note 6  Finance costs








2008


2007




$'000


$'000







Interest on bank overdrafts and loans


(66)


(125)

Interest on obligations under finance leases


(23)


(13)







Total borrowing costs


(89)


(138)







Total borrowing costs


(89)


(138)

Exchange differences on non operating transactions


(561)


-

Other interest expense


(19)


(12)







Total interest expense


(669)


(150)


Note 7 Taxation


2008


2007




$'000


$'000






Current tax - Continuing operations


18


-

Deferred tax assets (Note 12)


501


840

Deferred tax liabilities (Note 12)


(79)


40










440


880







The total credit for the year can be reconciled to the accounting loss before tax as follows:




2008


2007




$'000


$'000







Profit/Loss before tax 


931


(2 894)







Tax at the domestic tax rate in the Group's trading location 


261


810

of  Sweden of 28% (2007: 28%)











Tax effect of expenses that are not deductible


230


(65)

in determining taxable profit











Tax effect of income that is not taxable in


(259)


15

determining taxable profit











Tax effect of utilisation of tax losses not previously recognised


(85)


34







Tax effect of not recognised tax losses


158


(131)







Effect of different tax rates of subsidiaries operating in


135


217

other jurisdictions


 


 







Tax credit for the year


440


880


Note 8  Profit/Loss per share






Basic profit/loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.










2008


2007







Profit/Loss attributable to equity holders of the Company ($)

491 081


(2 014 417)







Weighted average number of ordinary shares in issue


67 180 952


53 960 288







Basic profit/loss per share ($ per share) - Continuing operations

0.007


(0.037)







There are dilutive potential ordinary shares up to an amount of 1 854 250





 










Diluted profit/loss per share ($ per share)


0.007


(0.037)


  

Note 9 Intangible assets - Capitalised expenditure for research and development





2008


2007




$'000


$'000

Cost





As at 1 January


3 155


932

Operations acquired


-


48

Purchases


5 621


2 085

Disposals


-


(19)

Exchange differences


(969)


109

As at 31 December


7 807


3 155







Amortisation





As at 1 January


(251)


(167)

Provided for the year


(143)


(70)

Exchange differences


78


(14)

As at 31 December


(316)


(251)







Net book value





As at 31 December 


7 491


2 904


The Group continuously seeks to develop new techniques and methods to enhance the performance of its current product range at the same time as new products are developed. 


Where a project is deemed to have a commercially qualifying product - with future positive cash flows - the costs of development are capitalised and amortised over the product's estimated economic life.


  

Note 10  Intangible assets - Patents








2008


2007




$'000


$'000

Cost





As at 1 January


938


382

Purchases


1 021


531

Exchange differences


(243)


25

As at 31 December


1 716


938







Amortisation





As at 1 January


(10)


(6)

Provided for the year


(4)


(3)

Exchange differences


1


(1)

As at 31 December


(13)


(10)







Net book value





As at 31 December 


1 703


928



















Patents are amortised over their estimated useful lives, which is on average 10 years.


The Group's granted and pending patents protect the design and specification of its gas turbine washing products in countries in Europe, Asia and the Americas


Note 11  Intangible assets - Goodwill








2008


2007




$'000


$'000

Cost






As at 1 January


6 306


1 255


Operations acquired


-


5 074


Exchange differences


(120)


(23)

As at 31 December


6 186


6 306







Impairment






As at 1 January and 31 December 


-


-

Net book value as at 31 December 


6 186


6 306







Goodwill is allocated to the Group's cash-generating units (CGUs) identified according to country of operation.







  




2008


2007




$'000


$'000







Western


5 074


5 074

Eastern


1 112


1 232










6 186


6 306







The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.







The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.


Developments of Western hemisphere acquisitions are in line with management's expectations.

Combined revenues for 2008 grew to $ 22 867 000 (2007: $ 10 203 000).


The Group prepares cash flow forecasts derived from the most recent financial forecasts approved by the Board of Directors. The view of the Board of Directors is that the future discounted cash flows of the Company over the next 3 years significantly exceed the currently booked goodwill asset of $ 6 186 000 (2007: $ 6 306 000) . The company has not prepared discounted cashflow forecasts beyond these 3 years.







The rate used to discount the forecast cash flows from the business related to the Eastern and Western CGU is 12 per cent. 


  

Note 12  Deferred tax



















The following are the deferred tax liabilities and assets recognised by the Group, and the movements thereon, during the current and prior reporting periods.











Deferred tax assets



Research &

Tax Loss





Inventory

Development

Carry-forward


Total




$'000


$'000


$'000


$'000











At 1 January 2007


26


-


1 717


1 743


Credited to the income statement


(3)


53


790


840


Exchange differences


(1)


-


29


28

At 31 December 2007


22


53


2 536


2 611












Debited to the income statement


2


74


(577)


(501)


Exchange differences


-


(6)


(48)


(54)

At 31 December 2008


24


121


1 911


2 056















Intangible


Untaxed



Deferred tax liabilities




assets


reserves


Total






$'000


$'000


$'000











At 1 January 2007




(18)


(57)


(75)


Operations acquired




(225)


-


(225)


Charged to the income statement




40


-


40


Exchange differences




(3)


(3)


(6)

At 31 December 2007




(206)


(60)


(266)












Operations acquired




-


-


-


Charged to the income statement




45


34


79


Exchange differences




-


(8)


(8)

At 31 December 2008




(161)


(34)


(195)


  

At the balance sheet date December 31 2008, the Group has unused tax losses of $ 4 929 000 (2007: $ 6 761 000) available for offset against future profits. These tax losses carried forwards expire as follows.




Year


Amount










$'000








2016


74








2017


93








2018


999








2019


882








2020


938








2021


1 737








2022


206








Later


-










4 929















At 31 December 2008, the total tax losses carried forwards generated deferred tax assets of $ 1 911 000 (2007: $ 2 536 000). The tax losses carried forwards can be utilised to reduce future taxable income. Their future utilisation does not mean a lower tax charge for the Group. A deferred tax asset has not been recognised in respect of tax losses of $1 838 000 (2007: $1 884 000) due to the unpredictability of future income streams.











A deferred tax asset in respect of the total amount of these losses has been recognised as management's forecasts for the next three years indicate that these losses will be utilised by offset against available profits over the forecast period.


Note 13  Adjustments to operating cash flows








2008


2007




$'000


$'000







Depreciation of tangible and intangible assets


856


464

Loss on disposal of fixed assets


-


14

Impairment loss on intangible assets


-


19

Share based payments


241


185

Finance costs


384


150

Interest received


(143)


(164)










1 338


668


Note 14 Share capital








2008


2007




$'000


$'000

Authorised





150 000 000 ordinary shares of £0.002 each


494


399

(2007: 100 000 000 ordinary shares of £0.002 each)











Issued and fully paid











72 397 594 ordinary shares of £0.002 each


269


207

(2007: 56 701 594 ordinary shares of £0.002 each)











Issued and part paid





Nil ordinary shares of £0.002 each


-


-

(2007: Nil ordinary shares of £0.002 each)








269


207







The company has one class of ordinary shares which carry no rights to fixed income.



Note 15 Post balance sheet events


Extraordinary General Meeting


An extraordinary general meeting was held on 12 March 2009 for the purposes of seeking approval to the implementation of the Gas Turbine Efficiency plc 2009 Long Term Incentive Plan, the Gas Turbine Efficiency plc 2009 Restricted Share Plan, the Gas Turbine Efficiency 2009 Share Option Plan (see 'Grant of share awards') and also to make an amendment to the Company's Articles of Association to bring the articles in line with the Companies Act 2006 relating to notices for General Meetings. All resolutions were duly passed.


Grant of share awards


On 13 February 2009 the Board of the Company announced that, the Remuneration Committee had granted the following share awards to the Executive Directors of the Company over ordinary shares in the Company under the Gas Turbine Efficiency plc 2009 Long Term Incentive Plan ('LTIP'), the Gas Turbine Efficiency plc 2009 Restricted Share Plan ('RSP') and the Gas Turbine Efficiency 2009 Share Option Plan ('SOP') (the LTIP, RSP and SOP together being the 'Schemes'). The grant of the share awards under the Schemes was approved by shareholders of each of the Schemes at an Extraordinary General Meeting which was held on 12 March 2009.


Director

Number of Ordinary Shares subject to LTIP Award

Number of Ordinary Shares subject to RSP Award

Number of Ordinary Shares subject to SOP Option





Steven Zwolinski

1 000 000

989 472 (A)

250 000

Magnus Nordgren

300 000

191 031 (A)

100 000 (B)

Nil


LTIP

In accordance with the rules of the LTIP, the LTIP awards were granted, in the form of conditional share awards, at a price of 24.25 pence per ordinary share (being the closing mid market share price on 12 February 2009).


The shares subject to the LTIP awards will vest three years from the date of grant subject to continued employment and subject to the satisfaction of share price targets. 20% of the ordinary shares subject to LTIP awards will vest if the Company's share price is 30 pence at the end of the three-year period with vesting increasing on a sliding scale to 100% if the Company's share price is 80 pence at the end of the three-year period.


RSP

In accordance with the rules of the RSP, RSP awards were granted, in the form of conditional share awards, at a price of 24.25 pence per ordinary share (being the closing mid market share price on 12 February 2009).


The RSP awards denoted (A) above relate to deferred annual bonus payments and the shares subject to the awards will vest three years from the date of grant subject to continued employment.


The RSP awards denoted (B) above will vest over a four-year period subject to continued employment.


SOP

In accordance with the rules of the SOP, the SOP option was granted with an exercise price of 24.25 pence per ordinary share (being the closing mid market share price on 12 February 2009).


The shares subject to the SOP option will vest over a four-year period subject to continued employment.


The Company may issue up to 15% of its shares within a ten-year period to satisfy awards to participants in the Schemes operated by the Company under which shares are issued.


Capacity expansion


On 11 March the Company announced that it had expanded global capacity to meet increased demand:

  • GTE had signed an agreement to be the cornerstone company in the planned 'Green City Business Park' in StockholmSweden. The new facility, which will have three times the current capacity, will continue to provide aviation solutions for Pratt & Whitney's EcopowerTM business. Additional capability for industrial, fuel and combustion solutions will be added to service customers in Europe, Russia, Middle East, and Asia.

  • GTE recently expanded its assembly operation in Florida (US) from 15,000 to 40,000 sq ft. This facility will continue to service the growing demand for industrial products and have the flexibility to meet aviation demand in the US.

  • On 15 March 2009, GTE would also formally open its new combustion and power plant solutions centre in South Carolina (US) which will give GTE a five-fold increase over its previous facility's capacity to 50,000 sq ft.


New legal entity


In order to extend the Company's footprint in the Eastern hemisphere, the Company incorporated a new UK operating subsidiary (Gas Turbine Efficiency UK Limited) on 9 February 2009. This presence will extend the Company's footprint in the region and will be further extended to commercially support EMEA customers.



This information is provided by RNS
The company news service from the London Stock Exchange
 
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