TORR Canada Reports 2007 Fourth Quarter and Year End Results



    MONTREAL, Aug. 16 /CNW/ - TORR Canada Inc. (TSX: TOR) ("TCI"), dedicated
to providing water treatment to the Oil & Gas industry, today reported its
financial results for the fourth quarter and year ended June 30, 2007. The
Company's financial statements and Management Discussion and Analysis are
available at www.torrcanada.com or at www.sedar.com.

    
    Highlights of the year include:

    -   Highest revenues ever recorded;
    -   Delivered all systems sold to SK Engineering & Construction;
    -   Improved potential from the portfolio of quotations;
    -   Generated high level of activity in the Middle-East with several
        successful field trials;
    -   Successful commissioning and start-up of the Triton Platform systems;
    -   Built an efficient RPA cartridges manufacturing plant;
    -   Strengthened our international sales team; and
    -   Successfully implemented the M&A strategy and concluded a very
        promising and accretive acquisition (conditional to TSX and
        shareholder approval).
    

    "Over the last few years, we have been focused on implementing our
strategic growth plan by developing our produced water expertise, improving
our sales and distribution activities and securing the necessary funds to set
the pace for future growth," said M. Ferland, CEO of TORR Canada. "2007 has
truly been a milestone year for us. We have completed delivery of our biggest
system ever sold and expect increased interest as this unit becomes a
reference in its market. These successes, combined with our recently announced
acquisition of Pure Group are positioning TORR Canada to be a global leader in
upstream process technologies."

    Financial Results

    Revenues were $26,055,117 for the year ended June 30th 2007 compared to
$3,232,270 in 2006. Most revenues were generated by the delivery of seven
systems to SK Engineering & Construction. Other revenues came from services
rendered to Expro in Angola, the sale of RPA cartridges to Wood Group for the
platform Triton located in the North Sea and by field trials mainly in Western
Canada and the Middle-East. It is important to note that TCI recorded a 10%
warranty provision ($2,561,841) during the year related to the SK project.
    The Company now recognizes revenue from the design, fabrication and
delivery of TORR(TM) systems under contract accounting using the completed
contract method. The company changed to this method during the third quarter
to more appropriately reflect the production type nature of the arrangements
to deliver TORR(TM) systems.
    The gross loss was $2,439,680 for the year ended June 30th 2007 compared
to a gross profit of $315,685 in 2006. The gross margin for the year was
negatively impacted by a warranty provision of $2,561,841 related to the
delivery of the systems to SK Engineering. To the extent the provision is not
used, TCI will progressively reverse it some time within the next 18 months.
    During 2007, TCI delivered seven water treatment systems to SK
Engineering & Construction. Year 2007 net loss was $7.9M. There are many
reasons explaining this loss: (i) TCI has provisioned $2.5M for warranty on
the SKEC contract; (ii) it has significantly invested in engineering to
optimize the systems as it was its very first contract integrating other
systems with the TORR; (iii) it also has significantly invested in project
engineering to supervise the overall management of the SKEC project to ensure
the respect of delivery and quality of the systems; and (iv) finally, rather
than establishing a large sales force in Kuwait and South Korea, TCI dealt
with agents who opened these markets and worked a long time before getting the
contract with SKEC.
    During the third quarter, in light of information related to the
commissioning and the start-up of systems installed on the Triton platform,
management decided to reverse $249,000 of warranty provision. In addition,
management decided to reverse $8,000 of warranty provision related to the
system sold to Expro as it has been operating in Western Africa periodically
and successfully since last October.
    The new RPA(R) cartridge plant has been producing at an optimal speed
since the beginning of October 2006. The production capacity is up to 30,000
cartridges per year. This new plant enables TCI to reduce unit cost of
fabrication and increase fabrication capacity to meet expected demand, while
insuring better quality control. TCI also started manufacturing RPA(R) plastic
cartridges. This will again significantly decrease unit costs.
    Sales and marketing expenses were $1,525,820 for the year ended June 30th
2007 compared to $1,723,360 in 2006. In 2006, the amount includes a commission
paid to a commercial partner in relation to the Triton project. During the
year, TCI signed with several agents in the Middle-East and Malaysia, hired a
sales expert in Houston to cover the Gulf of Mexico and an experienced process
engineer who will soon be relocated in the Middle-East.
    Research and development ("R&D") expenses, net of R&D tax credit, were
$474,198 for the year ended June 30th 2007 compared to $543,375 in 2006. Both
the TORR(TM) and RPA(R) technologies are ready to be deployed, but TCI will
continue its R&D program in order to keep its technological edge, develop its
intellectual property portfolio, and expand the conditions under which the
technology can perform in light of increasing potential markets. During the
year, TCI engineers designed a 120,000BPD TORR(TM) system. This will enable
TCI to quote on very large systems and benefit from lower costs.
    General and administrative ("G&A") expenses reached $3,222,026 for the
year ended June 30th 2007 compared to $2,351,083 in 2006. Relative to
revenues, G&A expenses have significantly decreased, but it remains that on an
absolute basis G&A expenses are higher than last year. This is mainly due to a
much higher level of activity, higher consulting fees due to more complex
transactions and a larger company (auditors, tax experts, human resources,
strategic planning, etc.), new mergers & acquisitions related expenses
(advisors, travel, legal fees, etc.), and a significant increase in insurance
premiums due to larger revenues. In addition, usual G&A expenses include rent,
utilities, salaries, benefits, director's fees, office supplies, travel,
telecommunications, and transfer agent fees. TCI has also implemented new
accounting software that has significantly improved internal controls, cost
management, inventory, and procurement management. Increased G&A expenses also
resulted from increased administration expenses to support a larger commercial
network, an expanding manufacturing plant, and the formal implementation of a
mergers & acquisitions strategy.
    Financing charges reached a negative $134,727 (revenues) in 2007 compared
to a positive $667,266 in 2006. During the year, TCI earned $849,423 of
interest on short term investments. A total of $103,550 (revenues) has been
accounted for in relation to derivative financial instrument. Other charges
are mainly interest expenses, amortization of the conversion feature attached
to the convertible loan issued in 2004, and amortization of the value of the
attached warrants. Amortization costs increased to $408,548 in 2007 compared
to $327,371 in 2006. This is mainly due to the investment in demonstration
units and equipments for the RPA(R) cartridges plant.
    TORR Canada Inc. had $19M of cash and equivalents as at the end of
June 30th 2007.
    Net loss for the year ended in 2007 reached $7,935,545 or $0.17 per
share, compared to $5,326,543 or $0.16 per share for the same period in 2006.

    2007 Fourth Quarter and Year End Results Conference Call & Web Cast

    Management of TORR Canada will host a conference call to discuss its 2007
fourth quarter and year end financial results on August 20th at 8:30 a.m. EST.
The conference call will also be audio-cast live at www.newswire.ca and
archived for 90 days at www.torrcanada.com. For replay please call either
1-877-289-8525 or 1-416-640-1917 and enter in reference number 21243824
followed by the number sign.

    About TORR Canada Inc.

    TCI is dedicated to providing water treatment solutions to the oil and
gas industry. TCI designs, develops, manufactures and commercializes the
TORR(TM) and Reusable Petroleum Absorbent ("RPA(R)") cartridge technologies to
separate oil and water in produced water generated by oil and gas production.
For more information, please visit www.torrcanada.com.

    Caution concerning forward-looking statements
    ---------------------------------------------
    This press release contains forward-looking statements. Such statements
inherently involve numerous risks and uncertainties. Actual future results may
differ from the anticipated results expressed in the forward-looking
statements contained in this press release and TCI does not undertake to
update this information. Investors are cautioned against placing undue
importance on forward-looking information contained herein and should consult
the final short form prospectus and the documents incorporated by reference
therein, which contain a more exhaustive analysis of risks and uncertainties
connected to TCI's business.


    Consolidated Financial Statements of
    TORR CANADA Inc.

    June 30, 2007 and 2006


    
    TORR CANADA Inc.
    Consolidated statements of loss and deficit
    years ended June 30, 2007 and 2006

    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
                                                              $            $

    Revenue                                          26,055,117    3,232,270
    Cost of goods sold                               28,494,797    2,916,585
    -------------------------------------------------------------------------
                                                     (2,439,680)     315,685
    -------------------------------------------------------------------------

    Expenses

      Sales and marketing (net of Government
       grant amounting to $165,391; nil in 2006)      1,525,820    1,723,360
      Research and development,(net of R&D tax
       credits of $105,524; $147,063 in 2006)           474,198      543,375
      General and administrative (net of Government
       grant amounting to $14,127; nil in 2006)       3,222,026    2,351,083
    -------------------------------------------------------------------------
                                                      5,222,044    4,617,818
    -------------------------------------------------------------------------
                                                     (7,661,724)  (4,302,133)

    Financial (income) charges, net                    (134,727)     667,266
    Loss on disposal of capital assets                        -       29,773
    Amortization                                        408,548      327,371
    -------------------------------------------------------------------------
    Net loss                                         (7,935,545)  (5,326,543)

    Deficit, beginning of year                       30,725,679   23,826,512
    Share issue costs                                         -    1,572,624
    -------------------------------------------------------------------------
    Deficit, end of year                             38,661,224   30,725,679
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss per share                      (0.17)       (0.16)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    TORR CANADA Inc.
    Consolidated balance sheets
    As at June 30, 2007 and 2006

    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
                                                              $            $
    Assets
    Current assets
      Cash and cash equivalents                      16,507,702   23,441,741
      Receivables                                     4,420,479    2,731,934
      Deferred contract costs                            76,411    1,681,281
      Inventories                                       383,627      152,240
      Prepaid expenses                                  159,450      439,980
      Investment                                      2,491,971            -
      Derivative financial instrument                   103,550            -
    -------------------------------------------------------------------------
                                                     24,143,190   28,447,176

    Investment                                                -    2,239,837
    Capital assets                                      887,318      433,772
    Patents and technology                              594,420      702,395
    Deferred financing costs                             68,657       98,081
    Deferred costs                                      562,809            -
    -------------------------------------------------------------------------
                                                     26,256,394   31,921,261
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current liabilities
      Accounts payable and accrued liabilities        6,621,331    1,776,350
      Deferred revenue                                  383,908    4,744,589
      Current obligation under a capital lease            2,275        2,275
    -------------------------------------------------------------------------
                                                      7,007,514    6,523,214


    Interest payable                                    713,262      416,766
    Long-term debt                                    1,616,327    1,449,995
    -------------------------------------------------------------------------
                                                      9,337,103    8,389,975
    -------------------------------------------------------------------------

    Commitments and contingencies

    Shareholders' equity
      Share capital                                  46,382,045   46,127,528
      Contributed surplus                             9,198,470    8,129,437
      Deficit                                       (38,661,224) (30,725,679)
    -------------------------------------------------------------------------
                                                     16,919,291   23,531,286
    -------------------------------------------------------------------------
                                                     26,256,394   31,921,261
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Approved by the Board

    "Alain Ferland" ................................ Alain Ferland, Director

    "Gérard Caron" .................................. Gérard Caron, Director



    TORR CANADA Inc.
    Consolidated statements of cash flows
    years ended June 30, 2007 and 2006

    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
                                                              $            $
    Operating activities

      Net loss                                       (7,935,545)  (5,326,543)
      Items not affecting cash
        Stock-based compensation                        816,125      388,964
        Deferred licensing agreement                          -      (24,990)
        Amortization of capital assets                  300,573      217,847
        Loss on disposal of capital assets                    -       29,773
        Amortization of patents and technology          107,975      109,524
        Amortization of financing related costs         282,332      282,333
        Accreted interest                               465,102      593,952
        Gain on derivative financial instrument        (103,550)           -
        Accrued interest on investment                 (252,134)           -
    -------------------------------------------------------------------------
                                                     (6,319,122)  (3,729,140)

      Changes in non-cash operating working
       capital items                                    448,853    1,308,659
    -------------------------------------------------------------------------
                                                     (5,870,269)  (2,420,481)
    -------------------------------------------------------------------------

    Investing activities

      Acquisition of capital assets                    (753,204)    (377,399)
      Disposal of capital assets                              -        2,489
      Deferred costs                                   (562,809)           -
      Investment                                              -   (2,239,837)
    -------------------------------------------------------------------------
                                                     (1,316,013)  (2,614,747)
    -------------------------------------------------------------------------

    Financing activities

      Reimbursement of long-term debt                    (2,274)      (1,425)
      Share issue costs                                       -   (1,572,624)
      Issuance of share capital                         254,517   20,821,390
    -------------------------------------------------------------------------
                                                        252,243   19,247,341
    -------------------------------------------------------------------------


    (Decrease) increase in cash and cash
     equivalents                                     (6,934,039)  14,212,113
    Cash and cash equivalents, beginning of year     23,441,741    9,229,628
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year           16,507,702   23,441,741
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00009317E




For further information:

For further information: TORR Canada Inc., Jacques L. Drouin, Senior
Vice-President & CFO, (514) 522-5550, ext. 226, jdrouin@torrcanada.com; The
Equicom Group Inc., Eric Bouchard, (514) 844-7997, ebouchard@equicomgroup.com

Organization Profile

TORR CANADA INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890