Gas Turbine Efficiency 27p

The business was initially founded in Sweden in 1998 before shares in the company were admitted to AIM in December 2005 at a price of 30p. At the time of flotation, 18m new shares were issued raising £5.4m for the company before expenses.

As the name of the company implies, Gas Turbine Efficiency designs, manufactures and supplies systems that improve the efficiency of the gas turbines that are found in aircraft engines, generators and compressors for offshore oil and gas rigs and in power stations.

The company has developed an extensive portfolio of systems that can help to save fuel, reduce emissions and extend the life of turbines and their component parts.

The group supplies its systems and services to turbine end users and original equipment manufacturers (OEMs) such as General Electricity, Pratt & Whitney, Rolls Royce and Siemens.

The company is based in London and has operation centres in Sweden, Russia and the US with sales offices in Singapore and Abu Dhabi.

Since the company joined AIM in 2005, it has expanded its activities both organically and by acquisition. In February 2007 the group purchased a business based in Orlando, Florida, and, in July, 2007, the group bought a specialist gas turbine services and repair business.

In the year to 31 December, 2008, group revenue increased by 97 per cent to $31.1m (2007: $17.8m) and the group moved into the black, making pre-tax profits of $0.9m (2007: loss of $2.9m).

The significant growth in revenue was driven by high levels of demand across the group’s key markets in aviation, power generation and oil and gas and was buoyed by a strong performance in the last quarter of the year in the industrial and combustion operations. Earnings per share for the year emerged at $0.007 and the group ended the year with net cash of $5.4m (2007: $2.3m).

At the end of March the group’s order revenues and backlog for 2009 had reached $26.7m, an increase of 53 per cent on the same point last year.

Last year the group effectively doubled its factory space and since the year end it has expanded further to meet increased customer demand. The facility in Florida was also expanded and a new centre in South Carolina (US) was opened in March.

These are clearly positive developments for the group and although mindful of the current economic climate, the directors believe that the group’s product offering is compelling and therefore expect further growth in 2009. We rate the shares as a BUY.

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.