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Gas Turbine Efficiency

  • BY: Andrew Hore |
  • POSTED: 29/12/2010 |

Shares in Gas Turbine Efficiency have more than doubled after it revealed that it had agreed the sale of its aviation engine wash services business to Pratt & Whitney for $17.1m.

GTE supplies equipment to clean aero engines and industrial gas turbines in order to make them more efficient but it has decided that the aviation part of the business is non-core. The focus will be on the power generation and oil and gas sectors. Costs will be reduced.

The initial payment from Pratt & Whitney is $14.8m with the rest being paid over an 18 month period – assuming no breach of the acquisition agreement. The book value of the assets is $6.5m. They generated revenues of $5.7m in 2010.

The disposal will help to reduce debt. Even so, GTE still needs additional investment.

GTE is also losing its outage service team, which generated revenues of $6.3m and gross margin of $1.5m in 2010. The team is returning to its previous employer.

GTE expects to report an increase in revenues from $37.1m to $40m in 2010. The order book is better than one year ago.

At 7.5p, up 3.875p on the day, GTE is valued at £7.65m.

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