TIDMTRK
RNS Number : 1307Y
Torotrak PLC
27 November 2014
27 November 2014
Torotrak plc
("Torotrak", the "Company" or the "Group")
Half Year Results for the six months ended 30 September 2014
Torotrak (LSE: TRK), a leading developer and supplier of
emissions reduction and fuel efficiency technology for vehicles,
today publishes its half year financial results for the six months
ended 30 September 2014.
Flybrid KERS - mechanical hybrids
-- Milestones achieved:
o Bus testing at Millbrook test track successfully completed in
preparation for in-service trials with Arriva in December 2014
o Fuel savings in StreetLite bus independently validated on a
standard test cycle at Millbrook
o Accelerated flywheel durability testing successfully
completed, equivalent to 10 years in-service running
o JCB excavator production-intent design completed, procurement
underway
-- Validated fuel savings and low cost manufacture confirms
Flybrid KERS operator unsubsidised payback within five years
-- Flybrid bus KERS wins prestigious Society of Motor
Manufacturers & Traders (SMMT) Award for Automotive Innovation
2014
V-Charge - powering downsized engines
-- Milestone achieved:
o Initial results from analysis conducted by University of Bath
in conjunction with global OEM and Tier 1 confirms significant
potential benefits from Torotrak technology in a downsized engine
for the mass market
-- Next generation prototype unit already installed in demonstrator vehicle
Variable traction drive transmissions
-- Milestone achieved:
o Success-related GBP1 million deferred license fee received
from Allison in November 2014
-- Engagement with two new international Off-Highway vehicle
manufacturers, following independent assessments confirming
Torotrak technology advantages
Financial Highlights
-- Cash balance of GBP10.1 million at 30 September 2014, with
GBP1 million deferred license fee received post balance sheet
date
-- Significant self-funded, operational investment in
preparation for 2015 product sales & future licensing with
specific OEMs and Tier 1 manufacturers
Management changes
-- Nick Barter, with his significant automotive experience,
appointed Chairman. Jeremy Deering intends to step-down as CEO in
2015 having established and executed the first phase of the
Company's new strategy for future growth.
Jeremy Deering, Torotrak's Chief Executive said: "Our
focusduring the last six months has been on delivering the plan we
presented to shareholders: to bring our Flybrid commercial vehicle
KERS product to market in commercial volumes in the next financial
year; to put in place skills and infrastructure for in-house,
lower-volume and higher-value manufacturing; and to prepare our
other technologies for market introduction in conjunction with Tier
1 and OEM licensees.
"We are very excited about the progress made with our V-Charge
technology. The independent confirmation of the benefits of our
revolutionary variable boost system for downsized engines provides
an excellent validation of the technology and we believe that the
technology can become a global leader delivering significant fuel
savings and CO(2) emissions reductions.
"Two years ago I set out a new strategy for Torotrak - to take
more control over bringing our technology to market, resulting in
today: an installed manufacturing capability; Flybrid KERS being
established as a market leading product, and; a step change in
engagement with OEMs and Tier 1s reflecting our greater product
reach and wider capability. Torotrak's three technologies are now
at the top of agendas with worldwide automotive manufacturers at a
time when technology and regulatory change is sweeping through the
global automotive industry.
"With this platform for future growth firmly in place, I intend
to step down as CEO in the second quarter of 2015 as part of a
transition to the next stage of the Group's development focusing on
manufacturing. As the first stage of this orderly hand-over, I am
delighted that Nick Barter, with his considerable automotive
experience and passion for the business, will be leading the Board
as Torotrak's new Chairman and that Steve Hughes, formerly
Engineering Director at JCB Transmissions, has joined the Group as
Chief Operating Officer."
For more information, please visit www.torotrak.com or
contact:
Jeremy Deering, Chief Executive / Rex Vevers, Finance Director
Torotrak Plc
Tel: +44 1772 900931
Marc Milmo / Karri Vuori / Carl Holmes
Charles Stanley Securities
Tel: +44 20 7149 6000
Jonny Franklin-Adams / Ben Wright
N+1 Singer
Tel: +44 20 7496 3000
Simon Hudson / Lulu Bridges
Tavistock
Tel: +44 20 7920 3150
Notes to Editors
Torotrak is a leading developer and supplier of variable drive
transmission, engine boosting and energy recovery systems for
vehicles. Our portfolio of technology solutions substantially
improves fuel economy and reduces CO(2) emissions in vehicles
through harnessing the power of supercharging to enable engine
downsizing, capturing and recycling energy that would otherwise be
lost and managing the engine at the optimum point.
Chairman's statement
I have taken over as Chairman at a very exciting time for the
business. We have made substantial progress during the period with
independent confirmation that our bus KERS system can achieve our
target fuel efficiency and manufactured cost, offering bus
operators an unsubsidised payback of less than five years. This is
the most cost-effective hybrid bus system available on the market.
Investors will have the opportunity to experience the system when
the first vehicle fitted with KERS goes into public service with
Arriva next month. This is a very significant moment for the
Company, marking the start of the transition from development into
the operational delivery phase in preparation for market
launch.
On V-Charge, I am pleased to report that independent analysis,
conducted by the University of Bath, a global automotive OEM and a
major Tier 1 boosting supplier, confirms the potential for
significant fuel savings to be achieved with a next generation
downsized gasoline engine enabled with our V-Charge technology.
This is a major validation of the mass market capability of the
technology. We have invested a significant amount of time and money
in developing the technology over the last four years and I am
confident this will open the door for significant licensing
opportunities over the next 12 months, as a precursor to mass
market adoption of the technology into passenger cars.
The Company is moving into the next phase of its development,
involving the commercialisation and operational delivery of the
first of our products, KERS for buses, in 2015. Having established
a new strategy for the Company, led the successful acquisition of
Flybrid and the investment in lower-volume manufacturing
capability, our Chief Executive, Jeremy Deering has announced his
intention to step down next year allowing a smooth transition to be
made.
On behalf of the Board, I would like to thank Jeremy for his
leadership of the Company over the last three years and prior to
that, for his role in securing the key licensing arrangements that
funded the Company to get to where it is today. I am pleased to say
that he will provide continuing support into next year in that
regard. The Board has commenced a process to appoint a new Chief
Executive and I look forward to updating shareholders on this in
due course.
I am also pleased to report that Steve Hughes, formerly
Engineering Director of JCB Transmissions, has joined the Group as
Chief Operating Officer. Steve brings with him a wealth of
experience in delivering engineering programmes and taking new
transmission products into successful commercial production. These
skills are crucial as we build the capability and prepare for
commercial production of bus KERS and launch of the product into
the market next year.
I would like to thank all of our staff for their hard work and
diligence in moving the Company forward over the last six months.
Finally, I would also like to thank John Weston for his successful
Chairmanship of the Board over the last three years.
Nick Barter
Chairman
Chief Executive's Review
Introduction
I am pleased to report on the progress made across all of our
technology product programmes during the last six months. To
achieve a market launch of our Flybrid KERS product, into the bus
market in commercial volumes next year, has required considerable
internal-facing programme activity, as well as the installation of
new manufacturing equipment, processes and test capability. In
parallel, we have been focused on moving our V-Charge and variable
traction drive transmission programmes to the next stages -
requiring detailed engineering activity, in conjunction with the
key licensees and potential partners, whose confidence and
commitment is critical as we progress our technology to
commercialisation.
I believe firmly that this activity will prove to be fundamental
to the reaping of rewards in terms of both external commitments and
new customers which will become more evident as the current
financial year progresses and into the following financial
year.
I am pleased to report that the business development team has
risen to the challenge in terms of a step change in the level of
incoming enquiries, trade shows and exhibitions and we continue to
support the requests for engineering services programmes that are
an important part of our business plan and we are confident of
entering 2015 with a strong order book. Importantly, these new
programmes are predominantly targeted at delivering a commercial
margin, having undertaken a high proportion of self or partially
funded programmes in 2014 (in line with our product development
plans). We are seeing the benefits of the combination of Flybrid
and Torotrak in terms of the broader product offering and increased
range of skills, which has noticeably improved our engagement with
new OEMs and Tier 1s.
Whilst moving the product programmes forward, we have made two
extensive business development visits to China which confirm the
very strong opportunity in this region. China is in need of CO(2)
emissions reducing technology to cost-effectively address its
well-known urban pollution and air quality challenges and there has
been strong interest in all of our technology and product areas
which is why we have chosen to open a representative office. The
business model for China and issues relating to licensing and IP
protection, of course requires careful consideration. However, our
view is that there is a new and exciting business climate emerging,
with an opportunity for Torotrak to work with some forward-looking
enterprises and to take advantage of the considerable investment
available in moving from second and third generation IP, to
class-leading technology for the Chinese domestic economy.
Japan is also growing in importance in terms of our focus, and
it is noticeable how Torotrak's technologies are now very much "on
the radar", compared with this time last year. Our long-standing
Tier 2 Licensee, Univance, enables us to offer our potential
partners and licensees a well-established manufacturing route for
key components in support of IVT and V-Charge.
In line with our December 2013 Prospectus, we are making
considerable investment in preparation for market launch of KERS
next year as well as prototyping , simulation and other
quantitative analysis targeted at increasing our profile with OEMs
and Tier 1s across our three key products. A significant proportion
of the GBP3.4 million operating loss in the first half relates to
the operational investment for future product sales and development
of technology with specific OEMs and Tier 1s.
In the second half of the current financial year, we will be
increasing our focus on KERS marketing for commercial vehicles. It
was important to have the validated fuel economy results, and
manufacturing cost position, to achieve this. We have a number of
interested parties and developed relationships that are being
actively engaged.
Looking forwards, our strategic objectives are clear:
-- Achieve a successful market launch of Flybrid KERS in
commercial vehicles, beginning with buses;
-- Build growing product revenues supported by higher-value,
lower-volume in-house manufacturing;
-- Showcase our technology through feasibility and demonstration
programmes that help fund product development for future licensing
or product sales; and
-- Establish Tier 1, licensed manufacturing partnerships for
mass market uptake of our products in the critical 2017-2019 window
for next generation vehicle platforms.
I report below, in the Operating review, on the highlights over
the last six months.
Operating review
Bus KERS
The key focus during the period has been on completing the
development, calibration and testing of the KERS systems that have
been installed in Wrightbus StreetLite vehicles; this is in
preparation for commencing public bus trials with Arriva in
December. In parallel, the engineering team has been completing the
second generation bus KERS production-intent design; a lighter,
more efficient and lower cost configuration.
Flybrid bus KERS systems have been built and installed in two
Wrightbus StreetLite vehicles. Both buses have undergone an
extensive period of calibration and testing on public roads and on
the Millbrook test track. We have worked closely with Wrightbus and
the drivetrain manufacturers to optimise the energy capture,
maximise the fuel savings and deliver excellent driveability across
a wide range of real-world drive cycles.
The StreetLite buses have completed multiple fuel measurement
test cycles to validate the fuel savings achievable over a wide
range of typical bus duty cycles operated in the UK. The
independent Millbrook tests confirm that the current bus KERS
system delivers substantial fuel savings giving bus operators an
unsubsidised payback of 5 years or less. The StreetLite vehicles on
which these tests were conducted are efficient vehicles fitted with
modern Euro 5 engines. Importantly, by installing a retrofit
Flybrid KERS system to the existing bus fleet, the majority of
which uses the less efficient Euro 3 engine, the potential payback
is significantly improved given the increased fuel savings that the
Flybrid KERS system can deliver from these less efficient
vehicles.
The next stage in the programme is to complete the final
handover of the KERS-enabled StreetLite bus to Arriva in December
2014 in order to commence in-service trials on a public bus route
in Kent. This is later than we had predicted earlier in the year
but it incorporates the latest productionised design and has not
impacted our planned commercial launch for the end of 2015. This
latest design is lower cost and more efficient, using 25% fewer
components and achieving an overall weight reduction. Importantly,
this design incorporates input from our supply chain partners
including a global Tier 1 supplier to the commercial vehicle market
where discussions are well advanced to enable the Group to supply
complete bus KERS systems at a cost that will offer bus operators
an unsubsidised payback of less than five years. The Group has
access to a well-established, volume-capable supply chain,
incorporating best-practice design for manufacture from the outset
and confirming our low cost bill of materials.
In parallel with the in-vehicle testing, we have completed
extensive accelerated flywheel assembly durability testing
equivalent to more than 10 years of in-service operation; this
confirms the target design life of at least 1 million kilometres.
Compared to battery hybrids, which require a mid-life battery pack
replacement, this is a significant benefit to the business case for
bus operators, avoiding expensive battery replacements and
operating downtime. Extensive destructive testing to validate the
flywheel functional safety has also been successfully performed,
proving the patented safety features of the system. The Vehicle
Certification Agency has confirmed that the bus to be delivered to
Arriva has successfully passed the brake stability tests necessary
to operate on a public bus route.
There is significant potential for the technology in other
commercial vehicles, and we are starting to investigate other
potential on-highway commercial vehicle applications.
We were also delighted that Flybrid was the 2014 winner of the
prestigious Society of Motor Manufacturers and Traders (SMMT) Award
for Automotive Innovation (AAI) for KERS for buses and commercial
vehicles. The AAI recognises new UK-developed low carbon vehicle
technologies which will make a lasting impression on the motor
industry for years to come.
Off-highway KERS
The collaboration with JCB, part-funded by the UK-Government
formed Advanced Propulsion Centre, to design and develop
production-intent flywheel systems for excavators is progressing
well and is on track. This programme, announced in April this year,
followed the initial prototype testing conducted at the end of last
year. The design phase is complete and we have worked closely with
the JCB engineering team to optimise the design to meet the
challenging requirements of low cost, high efficiency and long
lifetime. The multi-discipline project team including engineering
procurement has ensured that design for manufacture and assembly
has been incorporated from the outset to achieve a low cost bill of
materials. This is critical as off-highway applications demand
rapid payback and extended operations in harsh environments.
The next phase of the programme is hardware procurement and
building a number of systems for functional/performance testing
commencing in Q2 2015.
Passenger Car KERS
We are engaged with multiple passenger car manufacturers
investigating the opportunities for KERS with feasibility and
demonstrator vehicle programmes. We are also in early stage
discussions with potential Tier 1s who are looking very closely at
the opportunity for KERS to help deliver the challenging emissions
reductions targets for 2020 onwards.
Meanwhile, we have completed a significant design exercise on a
demonstrator 'large KERS and small engine' vehicle and are
currently building early hardware units for our test programme. Our
lead customer is at this stage confidential. The success of this
programme could materially influence worldwide car manufacturer
engagement with KERS and act as a stimulus for market entry via
premium car segments into the mainstream passenger car markets. We
anticipate being able to report to shareholders on this in the next
six months.
V-Charge
One of the main activities in the last six months has been on
work to optimise the V-Charge product as a key enabler for more
efficient, downsized engines. We have worked with the University of
Bath (a world recognised centre of excellence in this field) in
conjunction with a Tier 1 engine boosting supplier and a passenger
car OEM that is a class leader in more efficient passenger car
engines. This work is focussed on fully exploiting the capability
of V-Charge technology through optimisation of multiple engine
parameters demonstrating the emissions reduction and performance
improvement opportunities for the technology. The technology has
the potential to reduce the complexity and cost of multi-stage
boosting systems that are necessary to achieve increased specific
engine outputs.
The initial simulation results from the University of Bath
collaboration confirms that V-Charge has the potential to
significantly improve the performance or fuel economy of a modern
downsized gasoline engine, when compared to competing advanced
boosting technologies. Using current supercharger compressor
technology, V-Charge can provide improved low speed torque output,
and under part-load conditions is predicted to deliver
significantly improved fuel consumption and CO(2) emissions
reduction without the 'lag' associated with existing boosting
solutions. Time to torque, a measure of engine response and vehicle
drivability, matches the best available boosting products.
Configured with next generation compressor technology that fully
exploits the characteristics of V-Charge, further benefits are
expected. These results are achieved with simplified hardware
integration and superior noise vibration and harshness
characteristics compared to the competition.
These initial results confirm the opportunities for V-Charge as
a key enabler of fundamental engine downsizing - providing the
performance needed but in a simpler, more cost-effective manner
than traditional technologies.
We continue to work closely with another passenger car
manufacturer conducting simulation and trials of V-Charge hardware
on next generation engine platforms. This work is progressing well
with the simulation results demonstrating performance and emissions
reduction benefits over the incumbent boosting solutions. The next
stage of the programme is to deliver hardware for on-vehicle
testing.
The opportunity to use V-Charge continuously variable
transmission ("CVT") technology to improve fuel efficiency in an
on-highway commercial vehicle boosting application remains of
interest to us, and a number of OEMs. The work completed to date
appears to confirm the benefits of Torotrak's CVT in this type of
application over and above competitor technologies.
Main drive transmissions
In November 2014, Allison paid the final GBP1.0 million license
fee, deferred from earlier in the year; confirming the step-change
improvement in key component durability and lifetime. During the
period, the Group has worked closely with Allison to understand the
key drivers of component lifetime and the potential impact of these
improvements on transmission design. This detailed development work
and the associated testing continues and is an important element of
the combined engineering and product development programme.
We are seeing a notable increase in interest in Torotrak's
IVT/CVT transmission technology for commercial vehicle
applications. Two international OEMs are considering our
technology, with the potential to progress in 2015 into
production-intent programmes. This builds on the significant
testing and development experience gained during the last few years
enabling the Group's technology to meet the demanding challenges of
durability, lifetime and cost that are required in the off-highway
markets.
Manufacturing
To support the Group's strategy to take more control of its
routes to market, during the period we have made a number of
investments in manufacturing and test and build equipment at the
Leyland facility. Investment in carbon fibre filament winding, in
conjunction with the flywheel hub manufacturing capacity installed
earlier this year, means that we now have the capability to
manufacture complete flywheels in lower volumes of thousands of
flywheel assemblies meeting the requirements for on and off-highway
commercial vehicle markets.
We have invested in additional CNC machining capability enabling
the Group to manufacture multiple high-value components across the
Group's different technologies. This capability makes an important
financial contribution to the Group and also enables the multiple
engineering programmes to be delivered more quickly and
cost-effectively and capture valuable design-for-manufacture
learnings and IP.
Additional investments have also been made in flywheel test
rigs. We now have the capability of 24-hour ('lights-out')
accelerated flywheel durability testing in addition to further KERS
development test facilities. This new capability has the potential
to generate financial returns and speed up product development
cycles. This capability is critical as we move through the
productionisation phase towards commercial product launch with our
key KERS partners including Wrightbus and JCB.
Financial review
The financial results of the Group for the six months ended 30
September 2014 show revenue of GBP1.6 million (2013: GBP1.7
million). The main drivers are the final GBP1.0 million license fee
from Allison (the cash being received post period end) and GBP0.6
million of engineering services revenue across all three of the
Group's technologies. The gross profit of GBP1.3 million (2013:
GBP1.5 million) represents license fees and engineering services
after deduction of bought-in materials and services. In addition,
recorded on the balance sheet is GBP2.5 million of deferred income.
This represents work in progress at the period end.
The operating loss before intangible amortisation (knowhow) and
exceptional items for the period was GBP3.4 million, which compares
to a loss in the six months ended 30 September 2013 of GBP1.4
million. The current period loss is driven by a GBP1.6 million
increase in development expenses and a GBP0.5 million increase in
administrative expenses. The increase in development expenses
primarily relates to the inclusion of a full six months' operating
costs of Flybrid and the costs relating to the bus KERS programme.
During the period the Group incurred exceptional costs of GBP0.1
million (2013: GBP0.1 million) relating to a re-organisation and
non-cash costs relating to the amortisation of intangible assets
(knowhow) arising on the acquisition of Flybrid of GBP0.4 million
(2013: GBPnil). Loss for the period was GBP3.7 million (2013:
GBP1.5 million).
Net cash used in operating activities of GBP4.0 million (2013:
GBP1.8 million) arises from the operating loss for the period and
an increased net working capital outflow of GBP1.3 million (2013:
GBP0.9 million) mainly relating to the accrued license fee that was
received from Allison post period end. During the period the Group
spent GBP0.6 million (2013: GBP0.4 million) acquiring property,
plant and equipment (being mainly manufacturing and test equipment)
and GBP0.3 million (2013: GBP0.2 million) filing new patents. The
cash balance at 30 September 2014 was GBP10.1 million (March 2014:
GBP14.9 million), reflecting the operating loss and investment in
capital expenditure during the period.
Management Changes
Following my appointment as Chief Executive in 2012, I announced
a new strategic direction for the Company focused on taking greater
control over getting our products to market. Since then we have
acquired Flybrid, installed lower-volume manufacturing capability
and achieved a step change in engagement with OEMs and Tier 1s.
Having established this platform for the future, I am announcing my
intention to step down as CEO during the second quarter of 2015 as
part of an orderly hand-over ahead of the next stage of the Group's
development. As the first stage of this process, I am delighted
that Nick Barter, with his considerable experience of the passenger
car market and passion for the business, will be leading the Board
as Torotrak's new Chairman. I am also pleased that Steve Hughes has
joined the Group as Chief Operating Officer with responsibility for
delivery of the Group's commercial engineering programmes,
manufacturing and test operations. Steve has extensive experience
in the engineering of transmissions and drivelines and in taking
programmes through into volume production in automotive and
commercial vehicles. Steve joins from JCB where he held the post of
Engineering Director Transmissions for the last four years having
previously worked for Ricardo.
Outlook
Our key objectives for the next six months are as follows:
-- Complete the initial trials of a Wrightbus StreetLite vehicle
fitted with Flybrid KERS operating on a public bus route with
Arriva;
-- Announce our manufacturing strategy and partners for the commercial launch of bus KERS;
-- Commence design verification testing of the new lower cost industrialised bus KERS system;
-- Build a pipeline of sales prospects for bus KERS supporting
the start of commercial production for end calendar year 2015;
-- Complete the build of the production-intent JCB excavator
flywheel system and commence the testing programme in conjunction
with JCB;
-- Supply next generation V-Charge hardware for trials on a
multi-stage premium automotive application; and
-- Develop Tier 1 licensing opportunities for KERS and V-Charge in passenger cars.
We enter the second half of the financial year having
successfully completed a number of important milestones. We have
made significant progress in all the key areas of the business and
I would like to thank all our staff for their hard work and
effort.
Jeremy Deering
Chief Executive
Condensed consolidated income statement
for the six months ended 30 September 2014
Unaudited Unaudited
six months six months
to 30/09/14 to 30/09/13
Notes GBP000 GBP000
------------------------------------------------------------------------------- ------ ------------ ------------
Revenue 5 1,614 1,666
Direct costs (275) (128)
------------------------------------------------------------------------------- ------ ------------ ------------
Gross profit 1,339 1,538
Operating loss (3,827) (1,513)
Operating loss before intangible amortisation (knowhow) and exceptional items (3,352) (1,369)
Amortisation of intangible asset (knowhow) 7 (382) -
Exceptional items 14 (93) (144)
------------------------------------------------------------------------------- ------ ------------ ------------
Operating loss (3,827) (1,513)
------------------------------------------------------------------------------- ------ ------------ ------------
Share of loss from associate - (69)
Finance income 6 21
------------------------------------------------------------------------------- ------ ------------ ------------
Loss before taxation (3,821) (1,561)
Income tax credit 8 149 106
------------------------------------------------------------------------------- ------ ------------ ------------
Loss for the period (3,672) (1,455)
------------------------------------------------------------------------------- ------ ------------ ------------
Basic and diluted loss per share (pence) 6 (1.34) (0.83)
------------------------------------------------------------------------------- ------ ------------ ------------
The results above derive from continuing operations.
The notes on page 14 to 20 form an integral part of these
condensed consolidated half-yearly financial statements.
Condensed consolidated balance sheet
as at 30 September 2014
Restated (note 3)
Unaudited Audited Unaudited
as at as at as at
30/09/14 31/03/14 30/09/13
Notes GBP000 GBP000 GBP000
----------------------------------------------------------- ------ ---------- ------------------ ----------
Assets
Non-current assets
Property, plant and equipment 7 1,905 1,742 1,033
Intangible assets 7 15,449 15,719 1,737
Net investment in joint venture 3 3 -
Investments 9 270 270 3,184
Trade and other receivables 10 147 147 161
----------------------------------------------------------- ------ ---------- ------------------ ----------
Total non-current assets 17,774 17,881 6,115
----------------------------------------------------------- ------ ---------- ------------------ ----------
Current assets
Inventories 462 205 91
Trade and other receivables 10 3,349 743 434
Tax receivable 8 436 604 234
Cash and cash equivalents 11 10,119 14,859 6,720
----------------------------------------------------------- ------ ---------- ------------------ ----------
Total current assets 14,366 16,411 7,479
----------------------------------------------------------- ------ ---------- ------------------ ----------
Total assets 32,140 34,292 13,594
----------------------------------------------------------- ------ ---------- ------------------ ----------
Liabilities
Non-current liabilities
Finance lease obligation (336) (243) -
Deferred tax 8 (2,198) (2,275) -
Joint Venture loan - - (14)
----------------------------------------------------------- ------ ---------- ------------------ ----------
Total non-current liabilities 12 (2,534) (2,518) (14)
----------------------------------------------------------- ------ ---------- ------------------ ----------
Current liabilities
Trade and other payables 12 (6,737) (5,433) (1,076)
Provisions - - (436)
----------------------------------------------------------- ------ ---------- ------------------ ----------
Total current liabilities (6,737) (5,433) (1,512)
----------------------------------------------------------- ------ ---------- ------------------ ----------
Total liabilities (9,271) (7,951) (1,526)
----------------------------------------------------------- ------ ---------- ------------------ ----------
Net assets 22,869 26,341 12,068
----------------------------------------------------------- ------ ---------- ------------------ ----------
Capital and reserves
Issued share capital 27,625 27,420 17,729
Share premium 9,157 9,093 1,771
Other reserves (250) (141) (147)
Accumulated loss (13,663) (10,031) (7,285)
------ ---------- ------------------ ----------
Total equity attributable to equity holders of the Parent 22,869 26,341 12,068
----------------------------------------------------------- ------ ---------- ------------------ ----------
The notes on pages 14 to 20 form an integral part of these
condensed consolidated half-yearly financial statements.
Condensed consolidated statement of changes in equity
for the six months ended 30 September 2014
Share capital Share premium account Other reserve Accumulated loss Total equity
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 April 2013 17,496 55,497 (100) (59,574) 13,319
Comprehensive income
Loss for the period - - - (1,455) (1,455)
Total comprehensive income - - - (1,455) (1,455)
--------------------------- -------------- ----------------------- -------------- ----------------- -------------
Transactions with owners
Issue of shares under
share incentive plan 47 - (47) - -
Share premium reduction - (53,726) - 53,726 -
Share based payment charge - - - 204 204
Issue of shares from
exercise of LTPSP 186 - - (186) -
--------------------------- -------------- ----------------------- -------------- ----------------- -------------
Total transactions with
owners 233 (53,726) (47) 53,744 204
--------------------------- -------------- ----------------------- -------------- ----------------- -------------
Balance at 30 September
2013 17,729 1,771 (147) (7,285) 12,068
Comprehensive income
Loss for the period - - - (2,769) (2,769)
Total comprehensive income - - - (2,769) (2,769)
--------------------------- -------------- ----------------------- -------------- ----------------- -------------
Transactions with owners
Issue of shares to Allison
Transmission Inc. 1,271 1,016 - - 2,287
Transfer of shares under
share incentive plan - - 6 (4) 2
Share based payment charge - - - 45 45
Issue of shares from
exercise of LTPSP 18 - - (18)
Issue of shares as
consideration for Flybrid
acquisition 784 1,216 - - 2,000
Issue of shares as a
result of the open offer
and firm placing (net of
costs) 7,618 5,090 - - 12,708
Total transactions with
owners 9,691 7,322 6 23 17,042
--------------------------- -------------- ----------------------- -------------- ----------------- -------------
Balance at 31 March 2014 27,420 9,093 (141) (10,031) 26,341
Comprehensive income
Loss for the period - - - (3,672) (3,672)
Total comprehensive income - - - (3,672) (3,672)
--------------------------- -------------- ----------------------- -------------- ----------------- -------------
Transactions with owners
Issue of shares under
share incentive plan 109 - (109) - -
Share based payment charge - - - 136 136
Adjustment to costs as a
result of open offer and
firm placing - 64 - - 64
Issue of shares from
exercise of LTPSP 96 - - (96) -
--------------------------- -------------- ----------------------- -------------- ----------------- -------------
Total transactions with
owners 205 64 (109) 40 200
--------------------------- -------------- ----------------------- -------------- ----------------- -------------
Balance at 30 September
2014 27,625 9,157 (250) (13,663) 22,869
--------------------------- -------------- ----------------------- -------------- ----------------- -------------
The notes on pages 14 to 20 form an integral part of these
condensed consolidated half-yearly financial statements.
Condensed consolidated statement of cash flows
for the six months ended 30 September 2014
Unaudited Unaudited
six months six months
to 30/09/14 to 30/09/13
Notes GBP000 GBP000
---------------------------------------------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Loss for the period (3,672) (1,455)
Adjustments for:
Depreciation 7 280 179
Amortisation 7 473 78
Finance income receivable (6) (21)
Loss on disposal of plant and equipment 1 -
Taxation 8 (149) (106)
Share based payment charge 136 204
Changes in working capital:
Increase in inventories (257) (8)
(Increase)/decrease in trade and other receivables (2,606) 151
Increase/(decrease) in trade and other payables 1,540 (746)
Decrease in provisions - (314)
Cash used in operations (4,260) (2,038)
Tax received 241 251
---------------------------------------------------------------------------------- ------ ------------ ------------
Net cash used in operating activities (4,019) (1,787)
---------------------------------------------------------------------------------- ------ ------------ ------------
Cash flows from investing activities
Acquisition of property, plant and equipment (555) (357)
Acquisition of patents (294) (174)
Net finance income received 6 24
Change in investments - 69
---------------------------------------------------------------------------------- ------ ------------ ------------
Net cash used in investing activities (843) (438)
---------------------------------------------------------------------------------- ------ ------------ ------------
Cash flows from financing activities
Proceeds from the issue of share capital 68 -
Net hire purchase financing 54 -
---------------------------------------------------------------------------------- ------ ------------ ------------
Net cash used in financing activities 122 -
---------------------------------------------------------------------------------- ------ ------------ ------------
Net decrease in cash and cash equivalents (4,740) (2,225)
Cash and cash equivalents at start of period 14,859 8,945
Cash and cash equivalents at end of period 11 10,119 6,720
---------------------------------------------------------------------------------- ------ ------------ ------------
Cash and cash equivalents held in the JV not under direct control of the Group
(included above) 11 - 3
---------------------------------------------------------------------------------- ------ ------------ ------------
The notes on pages 14 to 20 form an integral part of these
condensed consolidated half-yearly financial statements.
Notes to the half year financial information
1. General information
Torotrak PLC (the Company) is a public limited company
incorporated and domiciled in the UK. The address of its registered
office is 1 Aston Way, Leyland, Lancashire PR26 7UX. The Company is
listed on the London Stock Exchange under the trading symbol TRK.
These condensed consolidated half-year financial statements were
approved for issue on 27 November 2014 and the information
contained therein is unaudited.
The interim financial statements for the period ended 30
September 2014 do not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006.
The financial information set out in this statement relating to
the year ended 31 March 2014 does not constitute statutory accounts
for that period. Full statutory accounts of the Group in respect of
that financial period were approved by the Board of Directors on 28
May 2014 and have been delivered to the Registrar of Companies. The
report of the auditors on these accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain a
statement under section 498 of the Companies Act 2006.
1.1 Going concern basis
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Operational Review. The financial position of
the Group and liquidity position are described within the Financial
Review.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the Interim Statement.
2. Basis of preparation
These condensed consolidated interim Financial Statements for
the six months ended 30 September 2014, have been reviewed but not
audited, have been prepared in accordance with the Disclosure and
Transparency Rules (DTR) of the Financial Conduct Authority and in
accordance with IAS 34, 'Interim financial reporting' as adopted by
the European Union (EU). The condensed consolidated interim
financial statements should be read in conjunction with the annual
financial statements for the year ended 31 March 2014 which have
been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted for use in the EU.
3. Accounting policies
The accounting policies are consistent with those of the annual
financial statements for the year ended 31 March 2014, except as
described below:
-- Taxes on income in the interim periods are accrued using the
tax rate that would be applicable to expected total annual
earnings.
(a) New and amended standards adopted by the Group
The following new standards and amendments to standards are
mandatory for the first time for the financial year beginning 1
April 2014 and have an impact on the Group:
-- IFRS 11, 'Joint Arrangements'. Prior to the adoption of IFRS
11, the Group accounted for its investments in joint ventures by
applying the proportional consolidation method. Under IFRS 11,
proportional consolidation is no longer an accepted accounting
treatment and therefore the Group's investments in joint ventures
are now accounted for using the equity method. The impact of this
change in accounting policy has been to reduce loans due to and
from joint ventures and cash and cash equivalents with an
offsetting entry being made within non-current assets to 'net
investments in joint ventures'. As required by IAS 1, the change in
accounting policy has been applied retrospectively and the prior
year financial statements have been restated to reflect the impact
of the change in policy as described above. The change in
accounting policy has had no impact on the net assets of the Group
or its loss for the current and prior periods.
The following new standards and amendments to standards are
mandatory for the first time for the financial year beginning 1
April 2014 and have no impact on the Group:
-- IFRS 10, 'Consolidated Financial Statements'
-- IFRS 12, 'Disclosures of Interests in Other Entities'
-- IAS 27 (revised 2011) 'Separate Financial Statements'
-- Amendments to IFRS 10,11 and 12 on transition guidance
-- Amendments to IAS 32 on financial instruments asset and liability offsetting
-- Amendment to IAS 36 'Impairment of Assets' on recoverable amount disclosures
-- Amendment to IAS 39 'Financial Instruments: Recognition and
Measurement' on novation of derivatives and hedge accounting
The following new standards, which have been issued but are not
yet effective, have not been early adopted by the Group:
-- IFRS 9, 'Financial Instruments' Effective date not set
-- IFRS 15, 'Revenue from contracts with customers' Effective 1 January 2017
4. Critical accounting estimates and assumptions
In applying the accounting policies, appropriate estimates have
been made in many areas. The key areas of estimation uncertainty,
where assumptions and estimates are significant in terms of impact
upon the Financial Statements, are the same as those that are
described in the annual financial statements for the year ended 31
March 2014.
5. Operating segmental analysis
Operating segmental analysis for the six months ended 30
September 2014
Income from licence Development activities
Engineering services agreements Note 1 Total
GBP000 GBP000 GBP000 GBP000
Total revenue 614 1,000 - 1,614
Direct costs (255) (20) - (275)
Gross profit 359 980 - 1,339
Other operating costs - - (3,700) (3,700)
Total segmental
profit/(loss) 359 980 (3,700) (2,361)
---------------------------- --------------------- --------------------------- ----------------------- ---------
Other operating costs not
allocated to segments (1,466)
---------------------------- --------------------- --------------------------- ----------------------- ---------
Operating loss (3,827)
---------------------------- --------------------- --------------------------- ----------------------- ---------
Operating segmental analysis for the six months ended 30
September 2013
Income from licence Development activities
Engineering services agreements Note 1 Total
----------------------------
GBP000 GBP000 GBP000 GBP000
---------------------------- --------------------- ---------------------------- ----------------------- --------
Total revenue 266 1,400 - 1,666
Direct costs (128) - - (128)
Gross profit 138 1,400 - 1,538
Other operating costs - - (2,100) (2,100)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Total segmental
profit/(loss) 138 1,400 (2,100) (562)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Other operating costs not
allocated to segments (951)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Operating loss (1,513)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Note 1: Development activities include research and the creation
of intellectual property.
Significant customers
The following revenues are attributable to significant
customers:
Unaudited Unaudited
six months six months
to 30/09/14 to 30/09/13
GBP000 GBP000
--------------------------- ------------ ------------
Allison Transmission Inc. 1,292 1,550
--------------------------- ------------ ------------
6. Loss per share
The basic and diluted loss per share are based on a loss after
tax of GBP3,672,000 (2013: GBP1,455,000). The weighted average
number of shares was 273.1 million shares (2013: 175.1 million) and
the diluted weighted average number of shares was 281.3 million
(2013: 182.1 million).
For the six months ended 30 September 2014 and 2013 potential
share options are antidilutive, as their inclusion in the diluted
loss per share calculation would reduce the loss per share, and
hence have been excluded.
Unaudited Unaudited
six months six months
to 30/09/14 to 30/09/13
------------------------------------------------------------------------------------------ ------------ ------------
The basic loss per share from continuing operations attributable to the equity holders of
the Company (pence) (1.34) (0.83)
------------------------------------------------------------------------------------------ ------------ ------------
The diluted loss per share from continuing operations attributable to the equity holders
of
the Company (pence) (1.34) (0.83)
------------------------------------------------------------------------------------------ ------------ ------------
In accordance with IAS33 'Earnings per Share' the number of
shares used in the calculation excludes the weighted average number
of shares held by the Employee Benefits Trust of 1,638,355 (2013:
1,057,906).
7. Fixed assets
Property plant and Intangible assets Intangible assets
equipment (patents) (goodwill and knowhow) Total
GBP000 GBP000 GBP000 GBP000
--------------------------- ------------------------- ------------------------- ------------------------ -------
Net book value at 1 April
2013 855 1,650 - 2,505
Additions 357 165 - 522
Amortisation/depreciation (179) (78) - (257)
Net book value at 30
September 2013 1,033 1,737 - 2,770
Additions 934 380 13,799 15,113
Disposals - (24) - (24)
Release of impairment
provision - 39 - 39
Amortisation/depreciation (225) (85) (127) (437)
Net book value at 31 March
2014 1,742 2,047 13,672 17,461
Additions 446 203 - 649
Disposals (3) - - (3)
Amortisation/depreciation (280) (91) (382) (753)
Net book value at 30
September 2014 1,905 2,159 13,290 17,354
--------------------------- ------------------------- ------------------------- ------------------------ -------
8. Taxation
The Finance Act 2000 introduced the research and development tax
credit, which allows companies with qualifying expenditure to
surrender their tax losses for cash. The credit for research and
development tax credits for the year is based on the estimated
effective tax rate of 24.75% (2013: 24.75%).
The deferred tax liability relates solely to the intangible
assets recognised on the acquisition of Flybrid Automotive Limited
and is based on 20 per cent. of the intangible asset value. The
deferred tax liability will be amortised through the Income
Statement to match the amortisation of the underlying intangible
asset, being over 15 years.
Unaudited Audited Unaudited
as at 30/09/14 as at 31/03/14 as at 30/09/13
GBP000 GBP000 GBP000
---------------- --------------- --------------- ---------------
R&D tax credit 72 484 106
Deferred tax 77 25 -
Total 149 509 106
---------------- --------------- --------------- ---------------
9. Investments
Unaudited Audited Unaudited
as at 30/09/14 as at 31/03/14 as at 30/09/13
GBP000 GBP000 GBP000
---------------------------------------------- --------------- --------------- ---------------
15% investment in Rotrex AS 270 270 253
20% investment in Flybrid Automotive Limited - - 2,931
---------------------------------------------- --------------- --------------- ---------------
Total investments 270 270 3,184
---------------------------------------------- --------------- --------------- ---------------
At 30 September 2013 the Group held a GBP2.9 million investment
in Flybrid Automotive Limited (GBP3 million net of the loss for the
6 months to 30 September 2013). In January 2014 the Group completed
the purchase of the remaining 80% and therefore this investment is
now removed upon consolidation.
For the year ended 31 March 2014 in order to maintain its 15%
stake, the Group subscribed for its pro rata share of the new
shares issued by Rotrex A/S at a cost of GBP17k. No further
investment has been made in the current period.
10. Trade and other receivables
Restated (note 3)
Unaudited Audited Unaudited
as at 30/09/14 as at 31/03/14 as at 30/09/13
GBP000 GBP000 GBP000
---------------
Non-current assets
Loan to joint venture - - 14
Loan to Rotrex 147 147 147
-------------------------------------- --------------- ------------------ ---------------
Total non-current assets 147 147 161
-------------------------------------- --------------- ------------------ ---------------
Current assets
Trade receivables 1,544 64 60
Other receivables and accrued income 1,377 242 137
Prepayments 428 437 237
Total current assets 3,349 743 434
-------------------------------------- --------------- ------------------ ---------------
11. Cash and cash equivalents
Restated (note 3)
Unaudited Audited Unaudited
as at 30/09/14 as at 31/03/14 as at 30/09/13
GBP000 GBP000 GBP000
------------------------------------ --------------- ------------------ ---------------
Cash 10 7 2
Sterling short term cash deposits 10,093 14,836 6,693
Foreign currency and cash deposits 16 16 22
Cash held in the joint venture - - 3
Total 10,119 14,859 6,720
------------------------------------ --------------- ------------------ ---------------
12. Trade and other payables
Restated (note 3)
Unaudited Audited Unaudited
as at 30/09/14 as at 31/03/14 as at 30/09/13
GBP000 GBP000 GBP000
--------------------------------- --------------- ------------------ ---------------
Non-current liabilities
Finance lease 336 243 -
Deferred tax 2,198 2,275 -
Share of loan to Rotrak Limited - - 14
Total non-current liabilities 2,534 2,518 14
Current liabilities
Trade and other payables 330 550 26
Social security and income tax 121 99 84
Accrued pension liabilities 31 39 30
Accruals 871 1,765 843
Finance lease 132 72 -
Vendor loan notes 2,800 2,800 -
Deferred income 2,452 108 93
Total current liabilities 6,737 5,433 1,076
--------------------------------- --------------- ------------------ ---------------
13. Related party transactions
There was a loan outstanding of GBP28,000 to Rotrak at 30
September 2014 (2013: GBP28,000). There was a long term loan
outstanding to Rotrex of GBP147,000 (2013: GBP147,000).
There was an amount due to Jon Hilton of GBP1,960,000 (2013:
Nil) as loan notes as shown in note 12 in relation to the
acquisition of Flybrid Automotive Limited and an amount due from
Jeremy Deering of GBP33,000 (2013: Nil) for tax and national
insurance in relation to the exercise of an LTPSP award which is
shown as other receivables. No other amounts were due (to)/from
these personnel at 30 September 2014.
14. Exceptional items
Unaudited Audited Unaudited
as at 30/09/14 as at 31/03/14 as at 30/09/13
GBP000 GBP000 GBP000
------------------------------- --------------- --------------- ---------------
Re-organisation costs 93 117 -
One-off legal and other costs - 555 144
Total 93 672 144
------------------------------- --------------- --------------- ---------------
The re-organisation costs relate to redundancy, severance and
associated expenses.
The one-off legal and other costs relate to the acquisition of
Flybrid Automotive Limited.
15. Commitments
Capital expenditure contracted for at the balance sheet date but
not yet incurred was GBP14,000 (2013: GBP27,000).
16. Financial Risk Management
The Group's activities expose it to a variety of financial
risks: currency risk; credit risk; liquidity risk; and interest
rate risk.
The condensed consolidated interim financial statements do not
include all financial risk management information
and disclosures required in the annual financial statements;
they should be read in conjunction with the Group's
annual financial statements as at 31 March 2014. There have been
no changes in any risk management policies
since the year end.
17. Seasonality
The Group's results and activities are not affected by
seasonality.
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge, this
condensed consolidated set of half-year financial statements has
been prepared in accordance with IAS 34, as adopted by the European
Union. The half-year management report includes a fair review of
the information required by 4.2.7 and 4.2.8 of the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority, namely:
-- an indication of the important events that have occurred
during the first six months of the financial year ending 31 March
2015 and their impact on the condensed consolidated set of
half-year financial statements and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- disclosure of material related party transactions in the
first six months of the financial year and any material changes in
the related party transactions described in the last Annual
Report.
The Directors of Torotrak plc are listed in the Torotrak plc
Annual Report for the year ended 31 March 2014. A list of current
Directors is maintained on the Torotrak plc website:
www.torotrak.com.
By order of the Board
Jeremy Deering
Chief Executive
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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