RNS Number:7291I
Turbo Genset Inc.
14 March 2003
TURBO GENSET INC
Year ended 31 December 2002 as compared with the five months ended 31 December
2001
Basis of comparison
In 2001 the company changed its year-end from 31 July to 31 December.
Consequently, in that year there was a five-month accounting period ending 31
December 2001.
Profit and loss account
Revenue in the year was C$1.72 million (#0.73 million), entirely from power
electronic systems.
Production costs in the year amounted to C$3.06 million (#1.30 million),
resulting in a loss on sales of C$1.34 million (#0.57 million). The loss is
primarily due to the overheads attributable to the generator system
manufacturing operation, which is currently operating below capacity.
Research and product development costs, which are stated net of capitalised
costs, tax credits and profit contribution from the sale of pre-commercial
units, in the year were C$7.95 million (#3.37 million), compared with C$2.26
million (#0.99 million) for the five months ended 31 December 2001. During the
year, total research and product development expenditure amounted to C$9.89
million (#4.19 million), compared with C$3.91 million (#1.71 million) in the
period ended 31 December 2001.
Total research and product development expenditure includes C$1.94 million
(#0.82 million), which was capitalised in the year compared with C$1.65 million
(#0.72 million) in the period ended 31 December 2001. Current period
expenditure include C$1.42 million (#0.60 million) of sales in respect of pre
commercial units and tax credits of C$1.19 million (#0.50 million) compared with
C$0.75 million (#0.33 million) of tax credits in the period ended 31 December
2001.
General and administrative costs in the year were C$7.73 million (#3.28
million), compared with C$2.84 million (#1.24 million) for the five months ended
31 December 2001. The increase primarily reflects a full year compared to a
five-month period.
Net Interest income in the year was C$1.45 million (#0.62 million), compared
with C$0.98 million (#0.43 million) for the five months ended 31 December 2001.
The weakening of the Canadian dollar against sterling during the year resulted
in an exchange gain of C$3.17 million, primarily arising on the sterling cash
balances. This compares to a gain of C$3.24 million for the five months ended
31 December 2001.
Cash flow and liquidity
Cash outflow from operating activities was C$17.09 million (#6.40 million)
compared with C$6.97 million (#3.50 million). The increase, apart from
reflecting the longer period, is primarily due to a higher operating loss,
restructuring costs of C$0.84 million (#0.36 million) and foreign exchange
movements, partially offset by a reduction in net working capital. The
reduction in net working capital is attributable to the C$3.07 million (#1.3
million) UK Research and Development tax credits received in the fourth quarter
of 2002.
Cash outflow on capital investment in the period was C$6.24 million (#2.64
million) compared with C$6.00 million (#2.62 million) for the five months ended
31 December 2001. The cash outflow for the current period included; an
investment in CERES Power Limited of C$0.34 million (#0.15 million), capitalised
development expenditure of C$1.52 million (#0.65 million) and C$4.37 million
(#1.85 million) on facilities, plant and machinery. The facilities' investment
programme has now been largely completed.
Cash outflow from financing was C$0.45 million (#0.19 million) due to loan
repayments, compared with a cash inflow of C$1.80 million (#0.79 million) in the
five months ended 31 December 2001 due mainly to proceeds from the exercise of
share options and warrants.
Overall the cash outflow for the year was C$16.90 million (#8.56 million),
compared with C$7.98 million (#4.89 million) for the five months ended 31
December 2001.
Three months ended 31 December 2002 as compared with the two months ended 31
December 2001
Profit and loss account
Revenue in the period was C$0.20 million (#0.09 million), entirely from power
electronic systems.
Production costs in the period amounted to C$0.38 million (#0.16 million),
resulting in a loss on sales of C$0.18 million (#0.07 million). The loss is
primarily due to the overheads attributable to the generator system
manufacturing operation, which is currently operating below capacity.
Research and product development costs in the period were C$1.17 million (#0.50
million), compared with C$(0.37) million (#(0.16) million) for the two months
ended 31 December 2001. The net income contribution in 2001 was due to tax
credits of C$0.46 million (#0.20 million) accrued in the two month period.
During the final quarter, total development costs amounted to C$1.56 million
(#0.66 million), compared with C$0.45 million (#0.19 million) in the two months
ended 31 December 2001. The total development expenditure includes C$0.39
million (#0.16 million) which was capitalised in the current period, compared
with C$0.82 million (#0.35 million) in the period ended 31 December 2001.
General and administrative costs in the quarter were C$2.00 million (#0.85
million), compared with C$1.68 million (#0.73 million) for the two months ended
31 December 2001. The proportionate reduction in these costs reflects the cost
savings from the restructuring programme.
Net Interest income in the period was C$0.42 million (#0.18 million), compared
with C$0.33 million (#0.14 million) for the two months ended 31 December 2001.
The weakening of the Canadian dollar against sterling during the period resulted
in an exchange gain of C$0.79 million, primarily arising on the sterling cash
balances.
Cash flow and liquidity
Cash outflow from operating activities was C$2.31 million (#0.55 million),
compared with C$1.27 million (#0.83 million) for the two months ended 31
December 2001, mainly due to a proportionately higher operating loss,
restructuring costs of C$0.57 million (#0.25 million) and foreign exchange
movements, partially offset by a reduction in net working capital. The
reduction in net working capital is attributable to the C$3.07 million (#1.3
million) UK Research and Development tax credits received in the fourth quarter
of 2002.
Lower capital investment of C$0.41 million (#0.17 million), compared to C$1.54
million (#0.67 million) for the period ended 31 December 2001 was due to the
facility investment nearing completion. The capital investment in the period
comprised; capitalised development expenditure of C$0.11 million (#0.05 million)
and C$0.30 million (#0.13 million) on plant and facilities, primarily the test
cells.
Cash outflow from financing was C$0.12 million (#0.05 million) due to loan
repayments compared with C$1.89 million (#0.83 million) relating to share issue
proceeds for the period ended 31 December 2001.
Overall the cash outflow during the quarter was C$0.55 million (#0.56 million),
compared with C$0.97 million (#0.60 million) for the two months ended 31
December 2001.
Balance sheet as at 31 December 2002
The Company's balance sheet remains strong, with cash balances of C$32.78
million (#12.96 million) as at 31 December 2002 compared with C$49.68 million
(#21.52 million) as at 31 December 2001. Substantially all of the Company's
cash balances are denominated in Sterling.
Long-term assets increased by C$3.08 million (#0.47 million) during the year as
a result of capital expenditure of C$4.37 million (#1.85 million), primarily on
test and manufacturing facilities, capitalised development expenditure of C$1.52
million (#0.65 million) and an investment in a private company of C$0.34 million
(#0.15 million), partially offset by amortisation of C$2.44 million (#1.03
million).
Overall, net working capital at year-end, excluding cash balances was C$1.91
million (#0.75 million), compared with C$3.28 million (#1.42 million) as at 31
December 2001.
Restructuring charge
In September 2002 the Company implemented a restructuring plan focused on
facility consolidations and productivity improvements in its UK operations,
which resulted in a reduction of 20% in the UK workforce by the end of the year
and other cost savings. The charge of C$1.82 million (#0.77 million) comprises;
employee redundancy costs (C$0.85 million - #0.36 million), facility exit costs
(C$0.44 million - #0.19 million) and assets write-downs (C$0.53 million - #0.22
million).
TURBO GENSET INC.
CONSOLIDATED PROFIT AND LOSS ACCOUNT - PART 1 OF 2
YEAR ENDED 31 DECEMBER 2002
Notes Year ended Five months ended Year ended
31 December 2002 31 December 2001 31 July 2001
#'000 C$'000 #'000 C$'000 #'000 C$'000
Revenue
Sales 727 1,716 355 812 100 219
Expenses
Production 1,295 3,057 540 1,236 41 91
costs
Research and 3,369 7,954 988 2,262 2,794 6,150
product
development
General and 3,275 7,732 1,241 2,841 2,219 4,884
administrative
Amortisation 749 1,769 277 634 247 543
-------- -------- -------- -------- -------- --------
8,688 20,512 3,046 6,973 5,301 11,668
-------- -------- -------- -------- -------- --------
Operating loss (7,961) (18.796) (2,691) (6,161) (5,201) (11,449)
Other income and expense
Net interest income 615 1,450 426 976 1,604 3,532
Restructuring 10 (771) (1,821) - - - -
charges
Foreign exchange 11 25 3,171 - 3,237 - (1,128)
gains / (losses) ---------- ------- -------- ------- -------- -------
(131) 2,800 426 4,213 1,604 2,404
---------- ------- --------- ------- ------- -------
Loss before taxation (8,092) (15,996) (2,265) (1,948) (3,597) (9,045)
Taxation - - - - (66) (146)
---------- ---------- ---------- ----------- ---------- ----------
Loss for the period (8,092) (15,996) (2,265) (1,948) (3,663) (9,191)
====== ===== =====
Deficit, beginning of the (26,425) (24,477) (15,286)
period
---------- ---------- ----------
Deficit, end of the period (42,421) (26,425) (24,477)
====== ====== ======
Loss per share (4.6) p (9.1) c (1.3) p (1.1) c (2.1) p (5.4) c
--------- ---------- ------- ------- ------- -------
Weighted average number of 175,240,593 173,852,908 171,664,425
shares outstanding
TURBO GENSET INC.
CONSOLIDATED PROFIT AND LOSS ACCOUNT - PART 2 OF 2
THREE MONTHS ENDED 31 DECEMBER 2002
Notes Three months ended Two months ended
31 December 2002 31 December 2001
Unaudited Unaudited
#'000 C$'000 #'000 C$'000
Revenue
Sales 85 200 72 164
Expenses
Production costs 161 381 343 784
Research and product 497 1,173 (163) (374)
development
General and administrative 846 1,998 733 1,678
Amortisation 263 620 127 291
-------- -------- -------- --------
1,767 4,172 1,040 2,379
-------- -------- -------- --------
Operating loss (1,682) (3,972) (968) (2,215)
Other income and expense
Net interest income 177 416 142 326
Foreign exchange gains 11 22 789 - (5)
/ (losses) -------- ------- -------- --------
199 1,205 142 321
------- ------- -------- --------
Loss for the period (1,483) (2,767) (826) (1,894)
======= ========
Deficit, beginning of the period (39,654) (24,531)
---------- ----------
Deficit, end of the period (42,421) (26,425)
========== ==========
Loss per share (0.8) p (1.6) c (0.5) p (1.1) c
------- ------- ------- -------
Weighted average number 175,251,346 174,411,143
of shares outstanding
TURBO GENSET INC.
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2002
As at 31 December 2002 As at 31 December 2001 As at 31 July 2001
Notes #'000 C$'000 #'000 C$'000 #'000 C$'000
Assets:
Current assets:
Cash and 12,961 32,780 21,520 49,683 26,412 57,663
short-term
deposits
Debtors 1,644 4,159 2,437 5,628 4,152 9,065
Stock and 726 1,836 985 2,273 528 1,152
work in
progress -------- -------- -------- -------- -------- --------
15,331 38,775 24,942 57,584 31,092 67,880
-------- -------- -------- -------- -------- --------
Long term
assets:
Investments 272 688 150 346 - -
Intangible 4,9 3,941 9,968 3,578 8,260 3,074 6,712
assets
Tangible 9 4,819 12,187 4,834 11,161 3,404 7,431
assets -------- -------- -------- -------- -------- --------
9,032 22,843 8,562 19,767 6,478 14,143
-------- -------- -------- -------- -------- --------
24,363 61,618 33,504 77,351 37,570 82,023
======== ======== ======== ======== ======== ========
Liabilities and
Shareholders' Equity:
Creditors: 1,616 4,088 2,005 4,629 4,205 9,180
amounts
falling due
within
one year
-------- ------- -------- ------- -------- -------
Creditors: 406 1,027 151 349 191 417
amounts
falling due
after
more than
one year
-------- ------- -------- ------- -------- -------
Capital and
reserves
Share 8 39,114 98,924 42,794 98,798 44,386 96,903
capital
Profit and (16,773) (42,421) (11,446) (26,425) (11,212) (24,477)
Loss
account
deficit ---------- ---------- ---------- ---------- ---------- ----------
1 22,341 56,503 31,348 72,373 33,174 72,426
Shareholders'
funds --------- ---------- --------- ---------- --------- ----------
24,363 61,618 33,504 77,351 37,570 82,023
====== ====== ====== ====== ====== ======
TURBO GENSET INC.
CONSOLIDATED CASH FLOW STATEMENT - PART 1 OF 2
YEAR ENDED 31 DECEMBER 2002
Notes Year ended Five months ended Year ended
31 December 2002 31 December 2001 31 July 2001
#'000 C$'000 #'000 C$'000 #'000 C$'000
Cash outflow from operating 2,11 (6,401) (17,092) (3,502) (6,973) (5,293) (11,565)
activities
Returns on investments and
servicing of finance
Net interest received 676 1,595 442 1,011 1,564 3,441
--------- --------- --------- --------- --------- ---------
Net cash outflow from operating (5,725) (15,497) (3,060) (5,962) (3,729) (8,124)
activities
Taxation paid - - - - (66) (146)
Capital investment
Purchase of capital (1,851) (4,369) (1,747) (3,999) (2,802) (6,167)
assets
Capitalised development (646) (1,524) (722) (1,651) (1,732) (3,812)
expenditure
Investment in shares (147) (342) (151) (346) - -
Purchase of - - - - (234) (516)
Intelligent Power --------- ---------- --------- ---------- --------- ----------
Systems
Net cash outflow before (8,369) (21,732) (5,680) (11,958) (8,563) (18,765)
financing
Financing
Proceeds from issue
of shares, net of 3 8 828 1,895 939 2,067
costs:
Loan repayment (193) (456) (40) (92) (45) (98)
--------- --------- --------- --------- --------- ---------
Cash flow from financing (190) (448) 788 1,803 894 1,969
Exchange gains/ (losses) on 11 - 5,277 - 2,175 - (1,201)
cash held in foreign currency
--------- --------- --------- --------- --------- ---------
Decrease in cash (8,559) (16,903) (4,892) (7,980) (7,669) (17,997)
Cash, beginning of the period 21,520 49,683 26,412 57,663 34,081 75,660
--------- ---------- --------- ---------- --------- ----------
Cash, end of the period 12,961 32,780 21,520 49,683 26,412 57,663
====== ====== ====== ====== ====== ======
TURBO GENSET INC.
CONSOLIDATED CASH FLOW STATEMENT - PART 2 OF 2
THREE MONTHS ENDED 31 DECEMBER 2002
Notes Three months ended Two months ended
31 December 2002 31 December 2001
Unaudited Unaudited
#'000 C$'000 #'000 C$'000
Cash outflow from operating 2,11 (554) (2,314) (830) (1,274)
activities
Returns on investments and servicing
of finance
Net interest received 215 507 75 171
--------- --------- --------- ---------
Net cash outflow from operating (339) (1,807) (755) (1,103)
activities
Capital investment
Purchase of capital assets (127) (299) (309) (707)
Capitalised development (46) (109) (363) (830)
expenditure
--------- ---------- --------- ---------
Net cash outflow before financing (512) (2,215) (1,427) (2,640)
Financing
Proceeds from issue of shares,
net of costs: - - 828 1,894
Loan repayment (52) (123) - -
--------- --------- --------- ---------
Cash flow from financing (52) (123) 828 1,894
Exchange gains/(losses) on cash 11 - 1,789 - (224)
held in foreign currency
--------- --------- --------- ---------
Decrease in cash (564) (549) (599) (970)
Cash, beginning of the period 13,525 33,329 22,119 50,653
---------- ---------- --------- ---------
Cash, end of the period 12,961 32,780 21,520 49,683
========== ========== ========= =========
TURBO GENSET INC.
YEAR ENDED 31 DECEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 1 OF 7
1 Movements in shareholders' funds
Year ended Five months Year ended
31 December 31 December 2001 31 July 2001
2002
C$'000 C$'000 C$'000
Loss for the period (15,996) (1,948) (9,191)
Shares issued, net of costs
Exercise of share options and warrants 8 1,895 2,256
Issued in connection with Intelligent Power - - 3,287
Systems
Contributed surplus 118 - -
--------- --------- ---------
Net decrease in shareholders' funds (15,870) (53) (3,648)
Opening shareholders' funds 72,373 72,426 76,074
-------- -------- --------
Closing shareholders' funds 56,503 72,373 72,426
======== ======== ========
2 Reconciliation of operating loss to net cash outflow from operating activities
Year Five months Year Three months Two months
31 December 31 December 31 July 2001 31 December 31 December
2002 2001 2002 2001
Unaudited Unaudited
C$'000 C$'000 C$'000 C$'000 C$'000
Operating loss for the period (18,796) (6,161) (11,449) (3,972) (2,215)
Movements in working capital
balances:
Decrease in debtors 889 3,719 521 2,100 657
Decrease/(increase) in 436 (1,122) (1,152) 645 (466)
stocks and work in progress
Increase/(decrease) in 658 (5,316) (255) (271) 154
creditors
Restructuring cash payments (844) - - (574) -
Adjustment for amortisation (a) 2,437 802 687 693 370
Other non cash items:
Stock compensation expense 118 - - 54 -
Foreign exchange (1,990) 1,105 83 (989) 226
(losses)/gains --------- --------- --------- ---------- ---------
Cash outflow from operating (17,092) (6,973) (11,565) (2,314) (1,274)
activities
========= ========= ========= ========= =========
(a) The total amortisation for the year ended 31 December 2002, the five
months 31 December 2001, the year ended 31 July 2001, the three
months ended 31 December 2002 and the two months ended 31 December
2001 includes, C$668,000, C$168,000, C$144,000, C$73,000 and
C$79,000, respectively, which is included in research and development
expenditure.
TURBO GENSET INC.
YEAR ENDED 31 DECEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 2 OF 7
3 Basis of preparation
The financial statements of the Company have been prepared by management in
accordance with International Accounting Standards and generally accepted
accounting principles in Canada for interim financial statements. The financial
statements have, in management's opinion, been properly prepared using judgement
within reasonable limits of materiality. These financial statements do not
include all the note disclosures required for annual financial statements and
therefore they should be read in conjunction with the Company's audited
consolidated financial statements for the year ended 31 December 2002. The
significant accounting policies are consistent with prior years', except as
noted below:
Stock Based Compensation
Effective 1 January 2002, the Company adopted the recommendations of CICA
Handbook Section 3870, Stock based compensation and other stock-based payments.
This section requires that direct awards of stock and liabilities based on the
price of common stock be measured at fair value at each reporting date, with the
change in fair value reported in the statements of income and encourages, but
does not require, the use of the fair value method for all other types of
stock-based compensation plans. None of the Company's plans qualify as direct
awards of stock or as plans that create liabilities based on the price of the
company's stock, and as a result, the implementation of the section has no
impact on the financial statements. The Company has chosen not to use the fair
value method to account for stock-based employee compensation plans, but to
disclose pro-forma information for options granted after 1 January 2002. The
Company records no compensation expense when options are issued to employees.
Any consideration paid by employees on the exercise of the options is credited
to capital stock. Stock options issued to non-employees are recorded as a
credit to contributed surplus based on the fair value at the grant date and are
charged to earnings over the service period. When the terms of stock options
issued are amended, any incremental fair value of the amended option is included
in the proforma information provided for employees and is recorded as an expense
for non-employees and consultants.
Goodwill and other intangible assets
Effective January 1, 2002, the Company adopted the new recommendations of the
Canadian Institute of Chartered Accountants (CICA) Handbook Section 3062,
Goodwill and other intangible assets. The section requires that goodwill and
intangible assets, which are determined to have indefinite lives, are no
longer amortised but are tested for impairment annually by comparison to their
fair values. Impairment tests for goodwill have been conducted and no provision
for impairment has been made. The following table shows the effect of the new
recommendation on the net loss and basic and diluted loss per share:
Year ended Five months Year ended
31 December 31 December 31 July
2002 2001 2001
All amounts in C$'000
Net loss for the period (15,996) (1,948) (9,191)
Amortisation of goodwill - 30 63
-------- -------- --------
Adjusted net loss for the period (15,996) (1,918) (9,128)
======== ======== ========
All amounts in c per share
Loss per share - basic and diluted (9.1) (1.1) (5.4)
Amortisation of goodwill - - 0.1
-------- -------- --------
Adjusted loss per share - basic and diluted (9.1) (1.1) (5.3)
======== ======== ========
TURBO GENSET INC.
YEAR ENDED 31 DECEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 3 OF 7
4 Research and product development expenditure
The research and product development expenditures incurred during the year
comprise;
Year ended Five months Year ended
31 December 2002 31 December 2001 31 July
2001
All amounts in C$'000
Research and product development expenditure 12,501 4,665 12,340
Tax credits (1,192) (752) (2,377)
Sales of prototype and pre commercial units (1,416) - -
-------- -------- --------
Total expenditure 9,893 3,913 9,963
Net amounts deferred during the year / period (1,939) (1,651) (3,813)
-------- -------- --------
Net expenditure charged to profit and loss account 7,954 2,262 6,150
======== ======== ========
Deferred development expenditure, net of accrued tax credits, at 31 December
2002 amounted to C$7,386,000 (31 December 2001 - C$5,464,000, 31 July 2001 -
C$3,813,000). Accrued tax credits at 31 December 2002 amounted to C$323,000
(31 December 2001 - C$733,000, 31 July 2001 - C$443,000). Capitalised
development costs comprise materials,labour and allocated overheads. During the
year amortisation of C$17,000 was charged.
5 Segmental analysis
The Group's three reportable segments are power electronics, which is involved
in the development and manufacture of electrical power supply and control
systems, generator systems which is involved in the development and
commercialisation of electrical machines and related power electronics, and the
corporate segment, which is responsible for the financing of the Group and other
related corporate activities. The power electronics and generator systems
segments operate in the United Kingdom and corporate segment operates in Canada.
All amounts Power electronics Generator systems Corporate Total
in C$'000
United Kingdom United Kingdom Canada
Year 5 mths Year Year 5 mths Year Year 5 mths Year Year 5 mths Year
Dec Dec July Dec Dec July Dec Dec July Dec Dec July
2002 2001 2001 2002 2001 2001 2002 2001 2001 2002 2001 2001
Revenue 1,716 331 195 - 481 24 - - - 1,716 812 219
Net interest (2) (27) (3) 781 411 798 671 592 2,737 1,450 976 3,532
Amortisation (453) (169) (94) (1,316) (465) (449) - - - (1,769) (634) (543)
Restructuring - - - (1,821) - - - - - (1,821) - -
charges
Foreign exchange (9) - - 64 - (6) 3,116 3,237 (1,122) 3,171 3,237 (1,128)
(Loss)/profit for(1,527) (668) (315) (15,900) (3,107) (8,795) 1,431 1,827 (81) (15,996) (1,948) (9,191)
the period
As at Dec Dec July Dec Dec July Dec Dec July Dec Dec July
2002 2001 2001 2002 2001 2001 2002 2001 2001 2002 2001 2001
Total Assets 8,839 6,223 5,400 23,930 58,272 37,827 28,849 12,856 38,796 61,618 77,351 82,023
TURBO GENSET INC.
YEAR ENDED 31 DECEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 4 OF 7
6 Selected quarterly information
The following table sets forth selected consolidated financial
information of the Company for the eight most recently completed quarters
Revenue Net loss Earnings per share
C$'000 C$'000 cents
Unaudited Unaudited Unaudited
April 2001 8 (1,198) (0.7)
July 2001 195 (2,404) (1.4)
October 2001 648 (54) (0.0)
December 2001 (two months) 164 (1,894) (1.1)
March 2002 293 (4,816) (2.7)
June 2002 468 (3,815) (2.2)
September 2002 755 (4,598) (2.6)
December 2002 200 (2,767) (1.6)
7 Stock options granted and compensation expense
During the year ended 31 December 2002, the Company granted the following
stock options:
Options granted Option price Option life Number of options
currently exercisable
C$ # (a) years
25,000 1.50 5 25,000
3,777,416 0.77 0.335 7 -
25,000 0.77 5 25,000
23,589,963 1.83 0.80 5 23,350,332
------------- --------------
27,417,379 23,400,332
======== ========
Note a The exercise price of certain options is stated in both Sterling
and C$.
The Company does not record compensation expense when stock options are granted
to employees, as disclosed in Note 3. Had compensation expense been determined
based on the fair value at the grant dates, the net loss and loss per share
would have been reduced to the pro forma amounts indicated below:
Year Three months
ended ended
31 December 2002 31 December 2002
Unaudited
Net loss for the period (C$'000)
as reported (15,996) (2,767)
proforma (18,046) (2,840)
Loss per share - basic and diluted (c)
as reported (9.1) (1.6)
proforma (10.3) (1.6)
TURBO GENSET INC.
YEAR ENDED 31 DECEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 5 OF 7
7 Stock options issued and compensation expense - continued
The fair value of stock options used to compute pro forma net loss and loss per
common share disclosures is the estimated fair value at grant date using the
Black-Scholes option-pricing model with the following weighted average
assumptions for the year ended 31 December 2002:
Dividend yield Nil
Expected volatility 45%
Risk-free interest rate 5.0%
Expected option life 3 to 5 years
The Black-Scholes option-pricing model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option-pricing models require the input of highly
subjective assumptions including the expected price volatility. The Company
uses expected volatility rates, which are based on historical volatility rates
trended into future years. Changes in the subjective input assumptions can
materially affect the fair value estimate, and therefore the existing models do
not necessarily provide a reliable single measure of the fair value of the
Company's stock options.
The number of options and warrants outstanding as at 31 December 2002 and the
movement during the year then ended are as follows:
Options Warrants
Number Number
Outstanding at 1 January 2002 27,580,725 3,325,780
Surrendered/cancelled (24,746,676) -
Lapsed - (1,108,593)
Granted 27,417,379 -
Exercised (30,000) -
---------- ----------
Outstanding at 31 December 2002 30,221,428 2,217,187
========== ==========
The weighted average fair values of the Company's stock options, calculated
using the Black-Scholes option-pricing model, granted during the year ended 31
December 2002 was C$0.12 per share.
8 Share capital - issued common shares
Number
In issue at 1 January 2002 175,221,346
Share options exercised 30,000
-----------
In issue at 31 December 2002 175,251,346
===========
TURBO GENSET INC.
YEAR ENDED 31 DECEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 6 OF 7
9 Long - term assets - cumulative amortisation
The cumulative amortisation by category of long-term assets were as follows;
As at 31 As at 31 As at
December 2002 December 2001 31 July
2001
C$000 C$000 C$000
Tangible assets 4,587 1,943 1,294
Intangible assets 700 378 226
10 Restructuring charges
During the quarter ended 30 September 2002, the Company commenced a
restructuring programme in response to delays in the commercialisation of the
400kW generator system and a decision not to pursue further development or
commercialisation of products based on the 50 kW alternator. The restructuring
plan focused on facility consolidation, productivity improvements in the UK
operations, which resulted in a 20% reduction in the UK workforce, and other
cost reduction measures.
The amount charged to the profit and loss account comprises:
Total
C$000
Provision for redundancy costs 852
Provision for facility exit costs 439
Asset write downs 530
------
1,821
======
The movements in the restructuring provisions are as follows:
Redundancy Facility Total
costs exit costs
C$000 C$000 C$000
Provision 852 439 1,291
Cash payments (762) (82) (844)
Foreign exchange differences 20 32 52
-------- -------- --------
Provision at 31 December 2002 110 389 499
======== ======== ========
The redundancies were made in the generator systems business segment, affects 28
employees and impacted across all areas of this segment's operation. The
redundancy programme was substantially completed by 31 December 2002
The lease obligations relate to a property, which is no longer required
following the rationalisation of group's facilities. The asset write downs
relate to the building improvements and plant and equipment of the property.
The facility exit programme is expected to be completed by the third quarter of
2003.
TURBO GENSET INC.
YEAR ENDED 31 DECEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 7 OF 7
11 Exchange rates
The Canadian Dollar amounts have been converted into Sterling for convenience
purposes using the average and period end exchange rates as follows:
Year ended 31 December 2002 2.361
Five months ended 31 December 2001 2.289
Year ended 31 July 2001 2.200
As at 31 December 2002 2.529
As at 31 December 2001 2.309
As at 31 July 2001 2.183
The Sterling profit and loss account and cash flow convenience translations
have been adjusted for exchange differences arising in the Canadian Dollar
reported numbers, which would not arise in if the profit and loss account and
cash flow statements were reported in Sterling.
12 Bank Guarantees
The Company has provided bank guarantees, which are secured by a charge over its
cash balances, amounting to #344,000 (C$870,000).
For further information, please contact:
Turbo Genset Inc
UK Tel: +44 (0)20 8564 4460
Peter Hollins, Chief Executive Officer
Fraser Searle, Chief Financial Officer
Canada
Richard Kapuscinski, Business Development Tel: +1 (905) 690 1722
Website: www.turbogenset.com
Gavin Anderson (PR) Tel: +44 (0)20 7554 1400
Neil Bennett
Ken Cronin
Seton Services (IR)
Toni Vallen Tel: +44 (0)20 7373 3536
Email: toni@setonservices.com
NOTES TO EDITORS
About Turbo Genset
Turbo Genset develops innovative products for power generation and power
conditioning. The Group was established in 1993 as a spin-off from Imperial
College, London and was floated on the London stock exchange in July 2000 and
soon after obtained a secondary listing in Toronto.
In July 2001, the Group acquired Intelligent Power Systems Limited (IPower)
specialising in power electronics.
About Power Electronics
Power electronics products take a range of power inputs and condition them to
achieve outputs of precisely defined characteristics for applications such as
industrial lasers, Ultra Violet sterilization systems and railway power
electronics systems.
Forward Looking statements
This news 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
ongoing 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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