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Turbo Genset Inc. (TGN)

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Thursday 14 November, 2002

Turbo Genset Inc.

3rd Quarter Results

Turbo Genset Inc.
14 November 2002


For embargoed release: 14.30 hrs GMT, Thursday 14 November 2002


                   TURBO GENSET INC ANNOUNCES ITS RESULTS FOR
                      THE QUARTER ENDED 30 SEPTEMBER 2002

Turbo Genset Inc. ('Turbo Genset'), which develops and commercialises innovative
products for a diverse range of applications including electrical power
generation, power control systems and high voltage power supplies, announces its
results for the three month period ended 30 September 2002.

Highlights:

• Orders totaling US$1.5 million (£0.9 million) for power electronic
  products expected shortly

• Strategy review completed; the focus will now be on

- Turbine systems above 175kW

- Variable speed generator sets up to 175kW

- Power electronics - high voltage, mobile and power generation inverters

• Worldwide sales and marketing function established, including the recent
  appointment of Michael Hunt as Group Sales and Marketing Director

• Shipments of 400kW generating systems commencing

• Restructuring programme in progress with an expected 20% reduction in
  headcount by the end of the year

• Quarterly cash outflow reduced to £1.6 million (Q2 2002: £3.0 million)
  resulting in cash of £13.5 million (C$33.3 million) at period end.


Commenting on the results, Colin Besant, Chairman, said:

'We are very pleased with the real progress made during this quarter.  With the
completion of the strategic review and the orders achieved, and those which are
in the pipeline, we can see a clear path leading to a successful future.'


Strategic review

The Company has recently completed a strategy review and will focus on the
following product areas;

• Turbine systems above 175kW

• Variable speed generator sets up to 175kW

• Power electronics - high voltage, mobile and power generation inverters

As a result the Company will not be pursuing further development or
commercialisation of products based on the 50kW high-speed alternator.

In September 2002, the Company implemented a restructuring plan in response to
the previously announced delays on the 400kW generator system and the outcome of
the strategic review.  The plan focused on facility consolidation, productivity
improvements in its UK operations, which will result in a reduction of 20% in
the UK workforce by the end of the year, and other cost reduction measures.

Turbine based generator systems

400kW Generator System

Turbo Genset has an order for 50 generator systems from DTE Energy Technologies,
due for delivery between October 2002 and June 2004.  An advance of US$1 million
has been received against this order.  Following discussions with DTE Energy
Technologies, it has been agreed that Turbo Genset will be free to market its
400kW generator system to others.  Additional opportunities are already arising
from this change.

1.2MW Generator System

Following detailed analysis of the market requirements, the Company is excited
about the potential for products in the 1.2MW power range.  The commercial
arrangements for this product are on track and product launch is scheduled for
the first half of 2004.


Other systems

The BP genset has been commissioned.

The development of the 200kW high speed generators for GE Global Research's 
'Advanced Integrated Microturbine System' (AIMS) is proceeding according to 
plan. Delivery of the first units is now scheduled for the first quarter of 
2003. In respect of the hybrid electric turbocharger programme, also with GE 
Global Research, delivery of the motor/generator for integration with a 
locomotive turbocharger is expected by the end of 2002.


Variable speed generator sets

The Company believes that it is difficult for micro turbines below 175kW to be
made commercially viable and is therefore developing a family of low speed,
permanent magnet based generator systems, driven by internal combustion engines.
By using the Company's advanced power electronics, these systems will offer
significant capital and operating cost advantages over alternatives, together
with improved power quality and connectivity benefits.

Construction of prototypes is well advanced and will be available for testing in
the first quarter of 2003 with product launch scheduled for late 2003.  The
products offered will include gas and liquid fuelled variants to meet the needs
of varying geographical markets.


Power electronics

The power electronics products deliver and condition power of precisely defined
characteristics for applications such as, industrial lasers, UV sterilization
systems and transportation systems.  Turbo Genset has a number of established
products and others nearing commercialisation.

The Company has an existing transportation based power electronics business to
which it expects to grow substantially in the very near future by acquiring the
business interests of an established supplier to the rail industry.  The Company
is actively pursuing a number of other opportunities in the transportation
market, which offer significant revenue potential.

The Company expects to receive an order of at least £0.5 million (US$0.8
million) involving the delivery of high voltage power supplies for use with
industrial lasers, subject to final trials of the unit in the last quarter.

Evaluation of our customer's UV system for air and water sterilisation by a
number of potential users is well underway and we are anticipating an order of
£0.4 million (US$0.7 million) in early 2003.


Colin Besant
Chairman

14 November 2002


Company activities

Turbo Genset Inc. develops and commercialises innovative products for a diverse
range of applications including electrical power generation, power control
systems and high voltage power supplies.  The Company has an established range
of power electronics products and deliveries of the first generator system
product, rated at 400kW, are commencing.

The Company has continued to develop other generator systems and high voltage
power electronics products.  The current investment programme in the
manufacturing and test facilities is now nearly complete.

In September 2002, the Company implemented a restructuring plan in response to
the previously announced delays on the 400kW generator system and the outcome of
the strategic review.  The plan focused on facility consolidation, productivity
improvements in its UK operations, which will result in a reduction of 20% in
the UK workforce by the end of the year, and other cost reduction measures.



Nine months ended 30 September 2002 as compared with the nine months ended 31
October 2001

Profit and loss account

Revenue in the period was C$1.52 million (£0.65 million), entirely from power
electronic systems.

Cost of sales in the period amounted to C$2.68 million (£1.15 million),
resulting in a loss on sales of C$1.16 million (£0.50 million).  The loss is
primarily due to the overheads attributable to the generator system
manufacturing operation, which is currently operating below capacity.

Research and development costs, which are stated net of capitalised costs, tax
credits and profit contribution from the sale of pre-commercial units, in the
period were C$6.78 million (£2.91 million), compared with C$4.23 million (£1.90
million) for the nine months ended 31 October 2001. During the period, total
development expenditure amounted to C$8.33 million (£3.58 million) compared with
C$10.06 million (£4.59 million) in the period ended 31 October 2001.  The
decrease in the expenditure is due to the 400kW product reaching the end of the
development programme.  Total development expenditure includes C$1.55 million
(£0.67 million) which was capitalised in the current period compared with C$4.37
 million (£1.99 million) in the period ended 31 October 2001.  The decrease in
the total research and development expenditure and the amount capitalised is due
to the 400kW product nearing the end of the development programme.  Current
period research and development costs include C$0.40 million (£0.19 million) of
sales in respect of pre commercial units and project funding.  Research and
development costs for the comparative period include tax credits of C$1.46
million (£0.70 million).

General and administrative costs in the period were C$5.73 million (£2.46
million) compared with C$3.95 million (£1.77 million) for nine months ended 31
October 2001.  The increase is due to increased staff costs, due to higher
average staff numbers, higher premises costs following the relocation to the new
property in mid 2001 and completion of the fit out in October 2001, and higher
IPS overheads, due to the comparative period in 2001 including overheads for the
four months following acquisition.

Net Interest income in the period was C$1.03 million (£0.44 million), compared
with C$2.09 million (£0.94 million) for the nine months ended 31 October 2001.
The decrease is the result of lower average cash balances and lower average
interest rates.

The weakening of the Canadian dollar against sterling during the period resulted
in an exchange gain of C$2.38 million, primarily arising on the sterling cash
balances.  This compares to an exchange gain of C$2.83 in the nine months ended
31 October 2001.

Cash flow and liquidity

Cash outflow from operating activities was C$14.78 million (£5.82 million)
compared with C$10.81 million (£5.02 million) due largely to higher general and
administrative costs and increased working capital.

Cash outflow on capital investment in the period was C$5.83 million (£2.50
million) compared with C$13.31 million (£5.96 million) for the nine months ended
31 October 2001.  The cash outflow for the current the period included; an
investment in a private company of C$0.34 million (£0.15 million), capitalised
development expenditure of C$1.41 million (£0.61 million) and C$4.08 million
(£1.74 million) on facilities, plant and machinery.

Cash outflow from financing was C$0.33 million (£0.14 million) due to loan
repayments, compared with a cash inflow of C$1.34 million (£0.60 million) in the
nine months ended 31 October 2001 due mainly to proceeds from the exercise of
share options and warrants.

Overall the cash burn during the period was C$16.35 million (£8.0 million),
compared with C$18.25 million (£9.23 million) in the nine months ended 31
October 2001.

Three months ended 30 September 2002 as compared with the three months ended 31
October 2001

Profit and loss account

Revenue in the period was C$0.76 million (£0.32 million), entirely from power
electronic systems.

Cost of sales in the period amounted to C$1.14 million (£0.49 million),
resulting in a loss on sales of C$0.38 million (£0.17 million).  The loss is
primarily due to the overheads attributable to the generator system
manufacturing operation, which is currently operating below capacity.

Research and development costs in the period were C$2.94 million (£1.26
million), compared with C$2.64 million (£1.18 million) for the three months
ended 31 October 2001.  During the period, total development costs amounted to
C$3.57 million (£1.53 million) compared with C$3.46 (£1.54 million) in the
period ended 31 October 2001.  The total development expenditure includes C$0.63
 million (£0.27 million) which was capitalised in the current period compared
with C$0.82 million (£0.36 million) in the period ended 31 October 2001.
Current period research and development costs include C$0.13 million (£0.06
million) of sales in respect of pre commercial units and project funding.

General and administrative costs in the period were C$1.53 million (£0.66
million) compared with C$1.16 million (£0.52 million) for three months ended 31
October 2001.

Net Interest income in the period was C$0.24 million (£0.10 million), compared
with C$0.65 million (£0.29 million) for the quarter ended 31 October 2001 due to
lower average cash balances and interest rates.  The weakening of the Canadian
dollar against sterling during the period resulted in an exchange gain of C$2.23
million, primarily arising on the sterling cash balances.  The exchange rates at
30 September 2002 and 31 December 2001 were C$2.464: £1 and C$2.309: £1,
respectively.  This compares to an exchange gain of C$3.24 million in the three
months ended 31 October 2001.

Cash flow and liquidity

Cash outflow from operating activities was C$4.03 million (£1.18 million),
compared with C$5.70 million (£2.63 million) for the quarter ended 31 October
2001 due mainly to a decrease in working capital offset by higher operational
costs.

Lower capital investment of C$1.22 million (£0.52 million) compared to C$4.46
million (£2.0 million) for the quarter ended 31 October 2001 was due to the
facility investment nearing completion.  The capital investment in the period
comprised; capitalised development expenditure of C$0.50 million (£0.21 million)
and C$0.72 million (£0.31 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 and is comparable with the quarter ended 31 October 2001.

Overall the cash burn during the quarter was C$1.99 million (£1.65 million),
compared with C$7.01 million (£4.29 million) in the quarter ended 31 October
2001.



Balance sheet as at 30 September 2002

The Company's balance sheet remains strong, with cash balances of C$33.33
million (£13.52 million) as at 30 September 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$2.91 million (£0.64 million) during the nine
month period as a result of capital expenditure of C$4.07 million (£1.75
million), primarily on test and manufacturing facilities, capitalised
development expenditure of C$1.42 million (£0.61 million) and an investment in a
private company of C$0.34 million (£0.15 million), partially offset by
amortisation of C$1.74 million (£0.75 million).

Overall, net working capital at period end, excluding cash balances, was
comparable with levels at 31 December 2002.



Restructuring charge

In September 2002 the Company implemented a restructuring plan focused on
facility consolidations, productivity improvements in its UK operations, which
will result in a reduction of 20% in the UK workforce by the end of the year,
and other cost reduction measures.  The charge of C$1.82 million (£0.78 million)
comprises; employee redundancy costs (C$0.85 million - £0.37 million), facility
exit costs (C$0.44 million - £0.19 million) and assets write-downs (C$0.53
million - £0.22 million).



Outlook

The current cash burn rate is expected to reduce next quarter due to lower
capital expenditure, as the facilities investment programme is substantially
complete, cost reductions arising from the restructuring programme and a
reduction in working capital, primarily from the receipt of research and
development tax credits of C$3.03million (£1.30 million) which were received in
October 2002.


Fraser Searle
Chief Financial Officer

14 November 2002





TURBO GENSET INC.
CONSOLIDATED PROFIT AND LOSS ACCOUNT - PART 1 OF 2
NINE MONTHS ENDED 30 SEPTEMBER 2002

                                        Notes             Nine months ended               Nine months ended
                                                           30 September 2002              31 October 2001
                                                       £'000          C$'000           £'000           C$'000
Revenue
     Sales                                               651           1,516             381              851

Expenses
     Cost of sales                                     1,149           2,676             243              543
     Research and development                          2,912           6,781           1,896            4,232
     General and administrative                        2,463           5,734           1,768            3,946
     Amortisation                                        493           1,149             317              708
                                                    --------        --------        --------         --------
                                                       7,017          16,340           4,224            9,429
                                                    --------        --------        --------         --------
Operating loss                                       (6,366)        (14,824)         (3,843)          (8,578)

Other income and expense
     Net interest income                                 444           1,034             937            2,091
     Restructuring charges              10             (782)         (1,821)               -                -
     Foreign exchange gains             11                 -           2,382               -            2,831

                                                    --------         -------        --------         --------
                                                       (338)           1,595             937            4,922
                                                    --------         -------        --------         --------
Loss for the period                                  (6,704)        (13,229)         (2,906)          (3,656)
                                                    ========                        ========
Deficit, beginning of the period                                    (26,425)                         (20,875)
                                                                   ---------                        ---------
Deficit, end of the period                                          (39,654)                         (24,531)
                                                                   =========                        =========
Loss per share                                       (3.8) p         (7.5) c         (1.7) p          (2.1) c
                                                     -------         -------         -------          -------

Weighted average number                          
 of shares outstanding                           175,228,544                     172,419,681







TURBO GENSET INC.
CONSOLIDATED PROFIT AND LOSS ACCOUNT - PART 2 OF 2
THREE MONTHS ENDED 30 SEPTEMBER 2002

                                        Notes             Three months ended              Three months ended
                                                           30 September 2002              31 October 2001
                                                       £'000          C$'000           £'000           C$'000
Revenue
     Sales                                               324             755             290              648

Expenses
     Cost of sales                                       488           1,136             203              452
     Research and development                          1,261           2,937           1,181            2,636
     General and administrative                          659           1,535             521            1,163
     Amortisation                                        168             391             154              343
                                                    --------        --------        --------         --------
                                                       2,576           5,999           2,059            4,594
                                                    --------        --------        --------         --------
Operating loss                          2            (2,252)         (5,244)         (1,769)          (3,946)

Other income and expense
     Net interest income                                 104             242             291              650
     Restructuring charges              10             (782)         (1,821)               -                -
     Foreign exchange gains             11                 -           2,225               -            3,242
                                                    --------         -------        --------         --------
                                                       (678)             646             291            3,892
                                                    --------         -------        --------         --------
Loss for the period                                  (2,930)         (4,958)         (1,478)             (54)
                                                    ========         =======        ========
Deficit, beginning of the period                                    (35,056)                         (24,477)
                                                                   ---------                        ---------
Deficit, end of the period                                          (39,654)                         (24,531)
                                                                   =========                        =========
Loss per share                                       (1.6) p         (2.6) c          (0.9)p            0.0 c
                                                     -------         -------         -------        ---------

Weighted average number                          
 of shares outstanding                           175,247,107                     173,482,774




TURBO GENSET INC.
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 2002
                                          Notes             As at 30 September             As at 31 December
                                                                  2002                           2001
                                                          £'000          C$'000           £'000          C$'000
Assets:
Current assets:
     Cash and short-term deposits                        13,525          33,329          21,520          49,683
     Debtors                                              2,745           6,761           2,437           5,628
     Stock and work in progress                           1,007           2,482             985           2,273
                                                       --------        --------        --------        --------
                                                         17,277          42,572          24,942          57,584
                                                       --------        --------        --------        --------
Long term assets:
     Investments                          9                 279             688             150             346
     Intangible assets                   4,9              3,920           9,660           3,578           8,260
     Tangible assets                      9               5,002          12,325           4,834          11,161
                                                       --------        --------        --------        --------
                                                          9,201          22,673           8,562          19,767
                                                       --------        --------        --------        --------
                                                         26,478          65,245          33,504          77,351
                                                       ========        ========        ========        ========

Liabilities and Shareholders' Equity:

Creditors: amounts falling due within                     2,281           5,620           2,005           4,629
 one year                                              --------         -------        --------         -------

Creditors: amounts falling due after                        166             409             151             349
 more than one year                                    --------         -------        --------         -------

Capital and reserves
     Share capital                        8              40,123          98,870          42,794          98,798
     Profit and loss account deficit                   (16,092)        (39,654)        (11,446)        (26,425)
                                                     ----------      ----------      ----------      ----------
     Shareholders' funds                  1              24,031          59,216          31,348          72,373
                                                      ---------      ----------       ---------      ----------
                                                         26,478          65,245          33,504          77,351
                                                      =========        ========        ========        ========





TURBO GENSET INC.
CONSOLIDATED CASH FLOW STATEMENT - PART 1 OF 2
NINE MONTHS ENDED 30 SEPTEMBER 2002

                                          Notes             Nine months ended               Nine months ended
                                                            30 September 2002                31 October 2001
                                                          £'000          C$'000           £'000         C$'000

Cash outflow from operating activities   2,11           (5,819)        (14,778)         (5,022)       (10,806)

Returns on investments and servicing
     of finance
     Net interest received                                  467           1,088           1,155          2,579
                                                      ---------       ---------       ---------      ---------
Net cash outflow from operating                         (5,352)        (13,690)         (3,867)        (8,227)
     activities

Taxation paid                                                 -               -               -              -

Capital investment
     Purchase of capital assets                         (1,748)         (4,070)         (3,500)        (7,811)
     Capitalised development                              (608)         (1,415)         (2,076)        (4,634)
expenditure
     Investment in shares                                 (147)           (342)           (153)          (342)
     Purchase of Intelligent Power                            -               -           (233)          (520)
Systems
                                                      ---------      ----------       ---------      ---------
Net cash outflow before financing                       (7,855)        (19,517)         (9,829)       (21,534)

Financing
     Proceeds from issue of shares,
     net of costs:                                            3               8             686          1,532
     Loan repayment                                       (143)           (333)            (85)          (189)

                                                      ---------       ---------       ---------      ---------
Cash flow from financing                                  (140)           (325)             601          1,343

Exchange gain/ (loss) on cash held in     
 foreign currency                         11                  -           3,488               -          1,942
                                                      ---------       ---------       ---------      ---------
Decrease in cash                                        (7,995)        (16,354)         (9,228)       (18,249)

Cash, beginning of the period                            21,520          49,683          31,347         68,902
                                                      ---------      ----------       ---------      ---------
Cash, end of the period                                  13,525          33,329          22,119         50,653
                                                      =========        ========        ========       ========





TURBO GENSET INC.
CONSOLIDATED CASH FLOW STATEMENT - PART 2 OF 2
THREE MONTHS ENDED 30 SEPTEMBER 2002

                                          Notes            Three months ended              Three months ended
                                                            30 September 2002               31 October 2001
                                                         £'000          C$'000           £'000          C$'000

Cash outflow from operating activities   2,11          (1,176)         (4,031)         (2,631)         (5,699)

Returns on investments and servicing
     of finance
     Net interest received                                 102             237             377             840
                                                     ---------       ---------       ---------       ---------
Net cash outflow from operating                        (1,074)         (3,794)         (2,254)         (4,859)
     activities

Taxation paid                                                -               -               -               -

Capital investment
     Purchase of capital assets                          (309)           (719)         (1,475)         (3,292)
     Capitalised development                             (213)           (496)           (368)           (821)
expenditure
     Investment in shares                                    -               -           (155)           (346)
                                                     ---------      ----------       ---------       ---------
Net cash outflow before financing                      (1,596)         (5,009)         (4,252)         (9,318)

Financing
     Proceeds from issue of shares,
     net of costs:                                           -               -               -               1
     Loan repayment                                       (53)           (123)            (41)            (91)
                                                     ---------       ---------       ---------       ---------
Cash flow from financing                                  (53)           (123)            (41)            (90)

Exchange gain/ (loss) on cash held in     11                 -           3,147               -           2,398
     foreign currency                                ---------       ---------       ---------       ---------
Decrease in cash                                       (1,649)         (1,985)         (4,293)         (7,010)

Cash, beginning of the period                           15,174          35,314          26,412          57,663
                                                    ----------      ----------       ---------       ---------
Cash, end of the period                                 13,525          33,329          22,119          50,653
                                                    ==========        ========        ========       =========          
 





TURBO GENSET INC.
NINE MONTHS ENDED 30 SEPTEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 1 OF 6

     1 Movements in shareholders' funds

                                                              Nine months                      Nine months
                                                                    ended                            ended
                                                             30 September                       31 October
                                                                     2002                             2001
                                                                   C$'000                           C$'000

       Loss for the period                                       (13,229)                          (3,656)

       Shares issued, net of costs
            Exercise of share options                                   8                            1,532
            Issued in connection with                                   -                            3,286
       Intelligent
              Power Systems
       Contributed surplus                                             64                                -
                                                                ---------                        ---------
       Net decrease in shareholders'                             (13,157)                            1,162
            funds
       Opening shareholders' funds                                 72,373                           71,211
                                                                 --------                        ---------
       Closing shareholders' funds                                 59,216                           72,373
                                                                 ========                        =========


     2 Reconciliation of operating loss to net cash outflow from operating activities

                                                    Nine months ended                Three months ended
                                             30 September      31 October     30 September      31 October 
                                                     2002            2001             2002            2001
                                                   C$'000          C$'000           C$'000          C$'000

       Operating loss for the period             (14,824)         (8,578)          (5,244)         (3,946)

       Adjustment for amortisation (a)              1,744             941              600             432

       Movements in working capital
       balances
            (Increase)/decrease in                
            debtors                               (1,211)              99            (567)           3,062
            (Decrease)/increase in                    
            creditors                                 929         (2,394)            1,947         (5,470)
            (Increase)/decrease) in                 
            stocks and work in progress             (209)         (1,808)              305           (656)

       Restructuring cash payments                  (270)               -            (270)               -

       Other non cash items
             Stock compensation expense                64               -               22               -
             Foreign exchange gains/              
             (losses)                             (1,001)             934            (824)             879
                                                ---------       ---------       ----------      ----------
       Cash outflow from operating               
       activities                                (14,778)        (10,806)          (4,031)         (5,699)
                                                =========       =========       ==========      ==========


       (a)   The total amortisation for the nine months ended 30 September 2002 and 31 October 2001 and
             the three months ended 30 September 2002 and 31 October 2001 includes, C$595,000, C$233,000,
             C$209,000 and C$89,000, respectively, which is included in research and development
             expenditure.



TURBO GENSET INC.
NINE MONTHS ENDED 30 SEPTEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 2 OF 6

   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 interim financial statements have, in management's opinion, been properly
     prepared using judgement within reasonable limits of materiality. These interim 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 2001. The significant accounting policies follow that of the most recently
     reported Annual financial statements, 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.
     Transitional impairment tests for goodwill will be conducted during the current year and, if
     applicable, any initial impairment loss will be charged to opening retained earnings.
     The following table shows the effect of the new recommendation on the net loss and basic and diluted
     loss per share:

                                                                Nine months ended         Nine months ended
                                                                30 September 2002           31 October 2001
         All amounts in C$'000
         Net loss for the period (C$'000)                                (13,229)                   (3,656)
         Amortisation of goodwill                                               -                       143
                                                                         --------                  --------
         Adjusted net loss for the period                                (13,229)                   (3,513)
                                                                         ========                  ========
         All amounts in c per share

         Loss per share - basic and diluted                                 (7.5)                     (2.1)
         Amortisation of goodwill                                               -                       0.1
                                                                         --------                  --------
         Adjusted loss per share - basic and diluted                        (7.5)                     (2.0)
                                                                         ========                  ========



TURBO GENSET INC.
NINE MONTHS ENDED 30 SEPTEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 3 OF 6

     4 Capitalised development expenditure

       Deferred development expenditure, net of accrued tax credits, at 30 September 2002 amounted to
       C$6,880,000

       (31 December 2001 - C$5,464,000).  Accrued tax credits at 30 September 2002 amounted to C$733,000
       (31 December 2001 - C$733,000).  Capitalised development costs comprise materials, labour and
       allocated overheads.

     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 in          Power electronics      Generator systems          Corporate               Total
C$'000's                 United Kingdom          United Kingdom             Canada
                     September    October    September    October   September   October September     October
                          2002       2001         2002       2001        2002      2001      2002        2001
Nine months ended

Revenue                  1,516        448            -        403           -         -     1,516         851
Net interest              (12)       (19)          602        701         444     1,409     1,034       2,091
Amortisation             (146)      (175)      (1,003)      (533)           -         -   (1,149)       (708)
Restructuring                
charges                      -          -      (1,821)          -           -         -   (1,821)           -
Foreign exchange             -          -          (7)        (3)       2,389     2,834     2,382       2,831
Profit/(loss) for        
the period               (959)      (737)     (13,320)    (6,272)       1,050     3,353  (13,229)     (3,656)

Three months ended

Revenue                    755        253            -        395           -         -       755         648
Net interest                 1       (16)          136        235         105       431       242         650
Restructuring                
charges                      -          -      (1,821)          -           -         -   (1,821)           -
Amortisation              (47)       (81)        (344)      (262)           -         -     (391)       (343)
Foreign exchange             -          -            -          -       2,225     3,242     2,225       3,242
Profit/(loss) for        
the period               (144)      (422)      (6,187)    (2,885)       1,733     3,253   (4,598)        (54)


As at                September   December    September   December   September  December September    December
                          2002       2001         2002       2001        2002      2001      2002        2001

Total Assets             7,864      6,223       41,339     58,272      16,042    12,856    65,245      77,351




TURBO GENSET INC.
NINE MONTHS ENDED 30 SEPTEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 4 OF 6

   6 Selected quarterly information

     The following table set forth selected consolidated financial information of the Company for the eight most
     recently completed quarters

                                                           Revenue                    Net loss       Earnings per 
                                                            C$'000                      C$'000        share cents

January 2001                                                     -                     (3,010)              (1.8)
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                     (4,958)              (2.6)


   7 Stock options issued and compensation expense

     During the nine months ended 30 September 2002, the Company issued the following stock options:

            Options issued             Option price                 Option life             Number of options
                                       C$      £(a)                       years         currently exercisable

                    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 issued 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:

                                                  Nine months ended                     Three months ended
                                                  30 September 2002                      30 September 2002
       Net loss for the period (C$'000)
            as reported                                    (13,229)                                (4,958)
            proforma                                       (15,206)                                (6,911)

       Loss per share - basic and diluted (c)
            as reported                                       (7.5)                                  (2.6)
            proforma                                          (8.7)                                  (3.9)





TURBO GENSET INC.
NINE MONTHS ENDED 30 SEPTEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 5 OF 6

     7 Stock options issued and compensation expense - cont'd

       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 nine months ended 30 September 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 30 September 2002 and the movement during the
       Nine month period then ended are as follows:

                                                                   Options        Warrants
                                                                    Number          Number

       Outstanding at 1 January 2002                            27,580,725       3,325,780
       Surrendered/cancelled                                  (24,242,437)               -
       Issued                                                   27,417,379               -
       Exercised                                                  (30,000)               -
                                                           --------------- ---------------
       Outstanding at 30 September 2002                         30,725,667       3,325,780
                                                           =============== ===============


       The weighted average fair values of the Company's stock options, calculated using the Black-Scholes
       option-pricing model, granted during the nine months ended 30 September 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 30 September 2002                                           175,251,346
                                                                           ===============


TURBO GENSET INC.
NINE MONTHS ENDED 30 SEPTEMBER 2002
FINANCIAL NOTES TO THE ACCOUNTS - PART 6 OF 6

    9 Long - term assets - cumulative amortisation

      At 30 September 2002, the cumulative amortisation by category of long-term assets were as follows;

                                                                              As at 30
                                                                        September 2002
                                                                                 C$000

      Tangible assets                                                            4,003
      Investment                                                                   -
      Intangible assets                                                           595


   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 will result in
      a reduction of 20% in the UK workforce, and other cost reduction measures.


                                                Redundancy         Facility            Asset            Total
                                                     costs       exit costs       writedowns
                                                     C$000            C$000            C$000            C$000

      Provision                                        852              439              530            1,821
      Cash payments                                  (270)                -                -            (270)
      Foreign exchange differences                      34               26                -               60
                                           ---------------  ---------------  ---------------  ---------------
      Provision at 30 September 2002                   616              465              530            1,611
                                           ===============  ===============  ===============  ===============


      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 will be completed by the end of
      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.


   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:

      Nine months ended 30 September 2002            2.328
      Nine months ended 31 October 2001              2.232
      As at 30 September 2002                        2.464
      As at 31 December 2001                         2.309

      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.




For further information, please contact:

Turbo Genset Inc
UK                                             Tel: +44 (0)20 8564 4460
Colin Besant, Chairman
Peter Hollins, Interim Chief Executive Officer
Fraser Searle, Chief Financial Officer
Canada
Richard Kapuscinski, Business Development      Tel: +1 (905) 690 1722

Website:                                       www.turbogenset.com


Seton Services (IR)
Toni Vallen, Seton Services                    Tel:   +44 (0)20 7373 3536
                                               Fax:  +44 (0)20 7792 0430
                                               Email: toni@setonservices.com


The Wriglesworth Consultancy (PR)
Michelle James                                 Tel: +44 (0)20 7620 2228
                                               Email: m.james@wriglesworth.com



NOTES TO EDITORS

Turbo Genset Inc., through its wholly owned subsidiary, The Turbo Genset Co. Ltd
('TGC'), based in London, UK, has initiated commercialisation of its technology
in relation to high-speed permanent-magnet machine systems for power generation,
transportation and industrial applications. With its low weight and small size,
the machine systems' applications include mobile power generation, distributed
power, standby power and hybrid turbochargers for medium to large diesel engines
for trucks and locomotives. The technology also has a promising future for use
in hybrid vehicle power trains in which it can provide for higher efficiency and
lower emissions with the advantage of its small size and weight.  Intelligent
Power Systems ('IPS') was acquired in July 2001 and is a leading company in the
design and manufacture of specialised power supplies and power management and
control systems for a variety of applications.  In addition to manufacturing and
supplying power electronics to TGC, it provides products to major companies
involved in the power electronics and motor control markets.  IPS is based in
the North East of England.


NOTES TO EDITORS - continued

The shares of Turbo Genset Inc. are listed on the London Stock Exchange
(www.londonstockexchange.com under the symbol TGN) and the Toronto Stock
Exchange (www.tse.com under the symbol TGN).

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