(“Torotrak” or the “Company”)
Interim Management Statement
Torotrak (LSE: TRK) today provides an Interim Management Statement for the period from 1 October 2012 to 15 February 2013.
Since we announced our evolution in strategy with the half year results in November 2012, progress has continued apace; both with our key partners in main drive transmissions, M-KERS, and V-Charge; and with delivering on our stated objective of providing a faster, more effective route to market for our http://medicines4all.com technologies.
Summary – since last reporting we have:
- Entered discussions with Allison Transmission Inc (“Allison”) regarding Torotrak’s engineering support for their programme and the licensing option for Allison to maintain exclusivity post 15 March 2013.
- Confirmed with our European Truck and Bus Manufacturer the predicted fuel economy improvement of our IVT, following their formal review of our technology
- Commissioned independent research into the market opportunity for M-KERS that, alongside extensive feedback from commercial vehicle operators and manufacturers, shows that there is strong potential to build a valuable business, commencing with a mechanical hybrid for buses, focusing initially on the UK market’s predominant medium sized “Midi” bus
- Developed a second-generation V-Charge unit, “VC2”, with important improvements to size, weight, cost and fuel economy. This is now being evaluated on our test rigs
- Acquired the business and assets of Motorsport Components Limited, giving us an in-house, high-precision manufacturing capability for components that do not require advanced surface engineering
For more information, please visit www.torotrak.com or contact:
|Jeremy Deering,Chief Executive
Group Director – Engineering and Programme Delivery
|Simon HudsonLulu Bridges||Marc MilmoKarri Vuori
|Torotrak Plc||Tavistock Communications||Charles Stanley Securities|
|Tel: +44 1772 900931||Tel: +44 20 7920 3150||Tel: +44 20 7149 6000|
Commercial vehicles – on highway
We are currently in discussions with our major licensee, Allison Transmission Inc, to finalise the next steps for our engineering and development support, and to reach a decision on their licensing option for continued exclusivity. This decision is due by the end of March 2013, and we will report to shareholders separately as soon as matters are concluded and a decision has been made.
Our European Truck and Bus Manufacturer (“ETBM”) has confirmed a very positive evaluation of our IVT technology, following a formal review with its technical steering committee. Our IVT’s key differentiating features (against a benchmark product) have been confirmed by demonstration in two commercial vehicles. These include:
- Excellent driveability and feel;
- Fuel economy results that confirm our own predictions (around 20% increase in fuel economy in the highest urban drive cycles);
- Equivalent CO2 reduction potential; and
- Reduced nitrogen oxide emissions.
Although our first priority remains achieving market launch in shorter haul applications, recent research and development and new patentable intellectual property that improve our IVT’s size, weight, and efficiency, allow us to also focus development on the heavier, longer haul vehicle segment.
Commercial vehicles – off highway
Our relationship with specialist geartrain manufacturer Univance continues to bring world-class expertise to our specialist disc and roller components, which is helping to deliver progress towards the productionisation of our IVT technology with licensee Carraro. Meanwhile, Carraro’s field testing of its IVT transmission has continued to yield positive results.
Since last reporting, we have received strong third party endorsement of our view that there is a material market opportunity for M-KERS, and the basis for a valuable business. Independent research, and our feedback from bus operators and manufacturers, supports our plan to commence with a mechanical hybrid for buses, focusing initially on the medium sized “Midi” bus, which forms one of the main fleets in the UK market. This segment offers an excellent first route to market in conjunction with UK operator trial partners.
We continue to work on optimising the route for M-KERS into the bus market, which includes collaborating closely with flywheel providers as we build our relationships with bus operators and fleet manufacturers.
As discussed in our half year results, our Renault Clio 1.2 litre demonstrator vehicle, fitted with the first V-Charge prototype, was very well received. Driveability, improved “bottom end” performance, exceptional quietness, and attractive cost relative to competitors, all stood out as major differentiating factors.
The second stage prototype, “VC2”, is currently being evaluated on our test rigs and includes a number of key improvements that:
- Reduce size and weight;
- Reduce cost; and
- Improve fuel economy.
We are in discussion with a number of Tier 1 and Tier 2 suppliers regarding potential volume manufacturing options.
Prototyping and low volume manufacturing – precision components
We are pleased to announce an important step towards building our prototyping and low volume manufacture capability, through the acquisition on 12 February 2013 of Motorsport Components Limited (“MCL”), based in Bolton, Lancashire. MCL, with which we have long had a close relationship, produces precision machined components.
This gives us an in-house, high-precision manufacturing capability for components that do not require advanced surface engineering, and enables us to produce prototype machined components more quickly and accurately.
We acquired the assets for a consideration of £175,000. The business brings a small but highly skilled workforce and is profitable with a modest annualised turnover of £214,000. We expect this to figure to grow as MCL becomes an important element in our integrated future engineering services business. Relationships with MCL’s major customers, including Chevron Cars Limited, will continue to be supported, and developed.