TIDMTRK
RNS Number : 3630Q
Torotrak PLC
29 November 2016
29 November 2016
Torotrak plc
('Torotrak', the 'Company' or the 'Group')
Half Year Results for the six months ended 30 September 2016
(unaudited)
Torotrak (LSE: TRK), a leading developer and supplier of
emissions reduction and fuel efficiency technology for internal
combustion engine, hybrid and all electric powered vehicles, today
publishes its half year results for the six months ended 30
September 2016.
Strategy
The Group's focus and strategic objective is the
commercialisation and monetisation of its technology for the
benefit of shareholders. Given the progress made in these areas
over the last 12 months, the near term focus is on licensing
V-Charge for passenger cars and Flybrid KERS for off-highway
markets.
V-Charge - delivering lower fuel consumption and lower emissions
engines
-- Technology has exceeded expectations in on-engine performance and responsiveness.
-- Ford Focus demonstrator test drives with 12 OEMs and 6 Tier
1s successfully completed, generating strong interest in
V-Charge.
-- On track to complete second demonstrator vehicle, Ford S-MAX
(with V-Charge enabled 1.0L 3 cylinder engine replacing a 1.5L 4
cylinder engine).
-- Significant interest being shown by multiple global OEMs and Tier 1s in V-Charge technology.
Flybrid KERS - launch in off-highway machines
-- Secured APC funded wheel loader programme in collaboration with Caterpillar Inc.
-- On track to license KERS into the global off-highway market.
-- High level of interest shown by multiple OEMs in
hydraulically-connected energy recovery systems ('ERS') for
excavators, wheel loaders and other off-highway machines.
Financial
-- 26 per cent improvement in equity free cash outflow compared to previous period.
-- Cash balance of GBP7.9 million in line with management's expectations for the half year.
Key Financial Results:
GBP000's Six months Six months
ended ended
30 September 30 September
2016 2015
(unaudited) (unaudited)
----------------------------- -------------- --------------
Revenue 935 1,169
----------------------------- -------------- --------------
Operating loss (3,696) (9,771)
----------------------------- -------------- --------------
Equity free cash outflow(1) (3,390) (4,595)
----------------------------- -------------- --------------
Cash and cash equivalents 7,915 14,422
----------------------------- -------------- --------------
(1) Net decrease in cash and cash equivalents excluding proceeds
from the issue of share capital and the repayment of
borrowings.
Nick Barter, Chairman, commented: "I am pleased with the real
progress we are making towards delivering on our strategic
objectives in terms of commercial progress, cash management and
organisational performance."
Adam Robson, Chief Executive, commented: "I believe we are on
track to deliver the demonstrable monetisation of our technologies
that we committed to in 2015. We are seeing real progress in the
off-highway sector for KERS and the hydraulically-connected ERS
product and V-Charge is exceeding our expectations in terms of
in-vehicle performance, OEM interest and Tier 1 engagement."
For more information, please visit www.torotrak.com or
contact:
Torotrak plc
Adam Robson, Chief Executive / Rex Vevers, Finance
Director
Tel: +44 1772 900931
Cantor Fitzgerald Europe (Financial Adviser &
Broker)
Marc Milmo / Will Goode
Tel: +44 20 7894 7000
Tavistock (Financial PR)
Simon Hudson / Lulu Bridges / James Collins
Tel: +44 20 7920 3150
About Torotrak
Torotrak is a leading developer and supplier of kinetic energy
recovery systems, engine boosting and variable drive transmissions
for internal combustion engine, hybrid and electric powered
vehicles. Our portfolio of technology solutions substantially
improves fuel economy and reduces CO(2) and other emissions in
vehicles through capturing and recycling energy that would
otherwise be lost, harnessing the power of supercharging to improve
engine performance, emissions and responsiveness.
CEO's Review
Introduction
As I set out in our 2016 Annual Report, the key focus of the
Group is on licensing our V-Charge and Flybrid KERS technologies.
During the last six months we have continued to engage extensively
with commercial partners and potential licensees and we have
developed meaningful commercial interest and market pull for both
technology solutions. We have made good progress towards our goal
of licensing KERS in the off-highway market and securing a global
licence for V-Charge in passenger cars as well as growing our
engineering services order book. In parallel, and in support of our
licensing discussions, we have made progress with the in-house
development of our low cost flywheel assembly manufacturing
capability and new low cost manufacturing processes for the discs
and rollers at the heart of V-Charge.
I am pleased with the progress we have made over the last six
months which has created a strong platform for our licensing
discussions. I report below in detail on the specific activities
and the key technical and other achievements as well as on our
progress in improving our cash performance.
Market backdrop and key trends
Passenger cars:
The automotive industry is focused on developing technologies
that can help meet the upcoming regulatory fleet average emissions
targets from 2020 onwards, as measured using the new World
Harmonised Light Vehicles Test Procedure ('WLTP') and the new
real-world driving emissions test ('RDE'). The combination of lower
emissions targets and more representative 'real-world' test
procedures, together with an increasing regulatory focus at
national and city levels on air quality and hence reducing
emissions of NOx and particulates, represents a significant
challenge for the automotive industry.
The impact of these changes has been an accelerating trend
towards increased electrification of vehicle powertrains which is
leading to some significant changes in the focus of technology
development by OEMs and Tier 1s. There is a growing consensus that
in the long term electric vehicles (of some form) will eventually
come to dominate the industry but that in the medium term hybrid
vehicles will form the largest group. A report by the International
Energy Agency in 2016 indicates that by 2050 nearly 60 per cent. of
the global light duty vehicle stock will be non-electric vehicles.
Consequently, there remains a strong requirement for OEMs to
continue to make significant improvements in the efficiency of
internal combustion engines. Indeed, a recent report published by
BHP Billiton Limited forecasts that by 2030 the average light duty
vehicle will become one third more efficient, through advances such
as improved ICE thermal efficiency, engine downsizing /
rightsizing, more transmission speeds and vehicle light-weighting;
a number of which can be achieved with the Group's
technologies.
OEMs require technologies that can meet the new real-world
emissions regulations at the lowest possible cost, whilst
preserving vehicle performance and driveability and importantly
remaining affordable for the end customer. The Group's V-Charge
technology offers OEMs the potential to re-size engines across the
broadest possible range of vehicle platforms - pure ICE and hybrid
- reducing fuel consumption and emissions at a highly attractive
cost per gram of CO(2) saved. Similarly, our KERS technology can
offer OEMs a lower cost way to hybridise their vehicles when
compared to other options, such as further vehicle electrification.
Our traction drive and KERS technologies can also help improve
performance, including acceleration and gradeability of full
battery electric vehicles and fuel cell vehicles. In response to
the trend towards further vehicle electrification, Torotrak is
working with OEMs and Tier 1s to explore opportunities to use the
Group's technologies cost-effectively across their BEV and PHEV
platforms.
Commercial vehicles:
The bus and smaller commercial vehicle sector is influenced by
many of the same trends as the passenger car sector, in particular
with respect to urban pollution. But in the off-highway commercial
vehicle sector the principal drivers remains reduced operator costs
and payback times. With the continued low oil price and difficult
global market conditions in the mining and resources sector, the
uptake of new technologies remains challenging, but Torotrak's
technologies remain highly relevant because of their cost
competitiveness, controllability and robustness. The Group
continues to focus its efforts on reducing the cost of its
technology products and improving fuel efficiency to be able to
offer end customers a rapid payback on the investment in new
products. Both KERS and V-Charge offer the potential to downsize
engines without compromising performance-critical factors such as
low end torque and rapid transient response.
V-Charge
The Group has made very good progress during the last six
months. We have delivered and exceeded the technical milestones in
the independent study conducted by the University of Bath and we
are now developing OEM / Tier 1 market pull and creating the
platform to license the technology into the global passenger car
market.
Technology validation:
During the period the Group announced the successful results of
the on-engine V-Charge testing programme conducted by the
University of Bath in collaboration with a global Tier 1 supplier
of engine boosting systems and with the participation of the Ford
Motor Company (the 'Bath Study'). The results of the independent
testing programme confirm that the key performance targets were
successfully achieved or exceeded and that V-Charge outperforms
other advanced boosting solutions. The following key targets were
achieved using V-Charge in conjunction with a re-matched
turbocharger on a 1.0L 3 cylinder Ford EcoBoost engine:
-- Torque of >145Nm at 1,000rpm,
-- Torque of 240Nm from 1,400rpm upwards,
-- Torque increase of >40% compared to the base engine with a single turbocharger,
-- 31 Bar BMEP,
-- Time to 90% of target torque (216Nm) 1.0s at 1,400 rpm.
Importantly, the on-engine test results confirm that a V-Charge
enabled 3 cylinder 1.0L EcoBoost engine matches the torque output
of a 4 cylinder 1.5L EcoBoost engine. The Group has successfully
demonstrated the increased performance of the V-Charge enabled 1.0L
engine in a Ford Focus demonstrator vehicle and is on track to
demonstrate the increased performance and driveability of a Ford
S-MAX using the V-Charge enabled 3 cylinder 1.0L EcoBoost in place
of the turbocharged 1.5L EcoBoost engine that is normally fitted to
the S-MAX.
Re-sizing engines:
Engine rightsizing and engine downsizing are important
strategies to help OEMs meet the upcoming regulatory emissions
targets whilst simultaneously delivering lower emissions of NOx and
particulates at an affordable cost. Both require improvements in
engine air boosting, in particular by supercharging. V-Charge is a
variable speed mechanical supercharger using the Group's unique
traction drive technology. By supplying variable air on-demand,
V-Charge delivers sustained high power and high torque at any
engine speed with rapid response, avoiding the 'lag' of other
boosting solutions. Other boosting technologies including
turbochargers and other mechanical superchargers are unable to
deliver exactly the required amount of air on-demand, thereby
limiting the opportunity to reduce emissions through smaller
engines (downsizing) or larger engines operating at optimum
efficiency (rightsizing). Further, electric superchargers
("eboosters"), unlike V-Charge, are unable to sustain continuous
boost, due to the lack of sufficient electrical storage on-board,
which is a fundamental constraint on their applicability and
adoption.
Engine downsizing using existing boosting solutions often
results in worse fuel economy in real-world driving and higher
emissions at full load. Current boosting solutions are unable to
deliver sustained high torque at low engine speeds. In an attempt
to remedy this problem a smaller turbocharger may be used to
provide quicker response and enhanced low speed torque, however
this increases exhaust back pressure reducing the combustion
efficiency of the engine, as well as increasing NOx output due to
increased combustion temperatures. As a consequence of high
specific powers and enriched fuelling, downsized turbocharged
gasoline engines require expensive gas particulate filters, whilst
downsized turbocharged diesel engines require expensive de-NOx
after treatment systems to mitigate the emissions from smaller
engines operating at high loads. In contrast, V-Charge delivers
instant and sustained torque at lower engine speeds allowing the
turbocharger to be sized so that the engine operates more
efficiently at higher engine speeds, reducing the need for
expensive after treatment systems. V-Charge offers OEMs the
opportunity to continue to use engine downsizing to reduce
emissions and remain fuel efficient in real-world driving.
OEMs are increasing the use of alternative combustion cycles
such as Miller to increase engine efficiency. However, these
alternative combustion cycles cannot generate the same engine
power, requiring the engine to be 'rightsized', resulting in
increased emissions due to greater friction, compared to smaller
engines. V-Charge addresses this problem enabling more extensive
use of the Miller combustion cycle even at high torque and low
engine speed, further reducing the emissions penalty of rightsized
larger engines.
By delivering sustained high torque and enabling high power,
V-Charge offers OEMs the opportunity to fully exploit the
combination of engine downsizing and, where appropriate, engine
rightsizing to maximise the improvements in fuel economy and lower
emissions.
Diesel engines:
With an increased focus on improving air quality, there is a
growing requirement to eliminate the problems of soot, NOx and
particulates on all engines. This is a particular problem with
diesel engines which require expensive after treatment systems to
reduce the noxious emissions.
V-Charge can help reduce NOx and particulates emissions produced
by diesel engines, particularly during transient events, thereby
reducing the need for expensive after treatment systems. This is an
important benefit, enabling OEMs to continue to maintain diesel
engine powered vehicles as a significant part of their fleet,
thereby avoiding the additional CO(2) emissions penalty that would
result from moving to more gasoline engine powered vehicles.
Global market opportunity:
The Group has recently completed an in-depth market study
identifying the potential sales opportunities for V-Charge. Using
detailed engine data supplied by IHS Markit Ltd, and following
discussions with a range of OEMs and Tier 1 suppliers, we believe
that V-Charge is applicable to a substantial proportion of both
single-stage and twin-stage boosted engines, offering fuel economy
and emissions benefits which other boosting technologies such as
variable geometry turbochargers and eboosters cannot deliver. The
results of the study, which have been shared with our potential OEM
/ Tier 1 partners, show that there is a market opportunity in 2020
of around 25m engines per annum that could be addressed with
V-Charge, rising to around 45m engines per annum in 2025.
Demonstrator vehicle test drives:
The Group has recently completed an extended pan-European tour
visiting the main global automotive OEMS and Tier 1s (including
those headquartered outside Europe). The visits included test
drives of the V-Charge enabled Ford Focus demonstrator car, sharing
of the results of the Group's market study and a detailed
presentation of V-Charge, including the technical results from the
independent Bath Study. The meetings and the test drives have
generated a significant level of interest in V-Charge and the
feedback to date has been extremely positive, with all participants
commenting on the impressive torque response at low engine speeds
delivered by V-Charge in the demonstrator vehicle. We are currently
involved in follow-on meetings with a number of interested parties
who have expressed an interest in understanding the full capability
of V-Charge and conducting further technical and commercial
evaluation.
In parallel with following up on the interest generated from the
pan-European Focus car test drive programme, as noted above, the
engineering team is completing the installation of the V-Charge
enabled 1.0L 3 cylinder Ford EcoBoost engine in the S-MAX,
replacing the incumbent 1.5L 4 cylinder engine. This larger vehicle
will be used to demonstrate the performance, driveability and
improved fuel economy and emissions of the downsized engine when
installed in a vehicle usually equipped with a 1.5L engine as the
smallest displacement engine. The programme is on track to be
completed next month.
The focus in the coming months is to build on the significant
interest shown in V-Charge and to convert this interest into market
pull from OEM and Tier 1 parties.
KERS
Off-highway:
In April 2016, the Group was awarded a fully-funded programme to
design, develop and demonstrate a high-power KERS for integration
in the main drivetrain of a large mining truck. The programme is
being conducted in collaboration with one of the largest global
manufacturers of off-highway construction and mining equipment and
within the Energy Technologies Institute's ('ETI') Heavy Duty
Vehicle Efficiency programme. The programme is progressing well.
The detailed design work is largely complete with procurement of
long lead time components underway. In parallel, we are in
discussions with the ETI about opportunities to demonstrate the
KERS design in an on-highway commercial vehicle application such as
an articulated truck. The programme is on track and we are
confident that all the technical requirements of this demanding
application will be delivered by the KERS design, demonstrating the
scalability and high power density of the low cost KERS
technology.
The Group recently announced it had been awarded an Advanced
Propulsion Centre ('APC') funded project in collaboration with
Turner Powertrain Systems (a wholly-owned subsidiary of Caterpillar
Inc.). The purpose of the project is to design and develop a low
cost production-intent energy storage and recovery system using the
Group's core flywheel technology for installation in a range of
Caterpillar off-highway machines. The initial target application is
wheel loaders where the KERS technology will be integrated with
Caterpillar's leading edge hydrostatic continuously variable
transmission, delivering significant reductions in fuel consumption
and CO(2) emissions and enabling engine downsizing. Work on the 42
month project is due to commence shortly.
The engineering team has recently completed the cost-down design
iteration of the hydraulically-connected flywheel-based energy
recovery system ('ERS') developed in collaboration with JCB, and
funded by the APC. The improved design has been released to the
Group's supply chain partners who are conducting a detailed costing
exercise, validating the target production-intent system cost. The
next stage in the programme is investment by the Group and its
supply chain partners in production tooling to enable
production-intent ERS units and sub-systems to commence full
validation testing from mid-2017, in preparation for market launch
in mid-2018. The Group has recently completed a detailed market
study which confirms the significant market opportunity for ERS,
offering operator paybacks of less than two years in a range of
off-highway machines including excavators, wheel loaders and
materials handling equipment. In parallel, discussions have been
held with the main global Tier 1s and OEMs about trialling the
production-intent ERS product on a range of machines starting in
the second half of calendar year 2017. These discussions are
ongoing, with a number of OEMs interested in the ERS product.
We are continuing discussions to licence our KERS technology
into the global off-highway sector.
On-highway:
We continue to explore opportunities for the Bus KERS product in
on-highway bus and truck applications outside the UK. Discussions
with potential customers and partners are at an early stage and we
will update shareholders with any significant progress in these
applications.
Passenger cars:
The passenger car market remains an important target for the
Group's KERS technology. The key driver for adoption onto vehicle
platforms from 2020 onwards is a competitive cost per gram of CO(2)
saved compared to alternative hybridisation options, such as
electric solutions. The Group is conducting initial feasibility
studies with several OEMs looking at KERS on both hybrid and full
battery electric vehicles, where the KERS technology offers
superior cost per gram of CO(2) saved.
We are discussing the Group's participation in an EU-funded
consortium including vehicle OEMs and Tier 1s about the use of our
KERS technology in conjunction with an electric motor offering an
alternative electro-mechanical hybridisation solution for hybrid
electric vehicles. The project would leverage the Group's low cost
KERS technology and would be evaluated in a demonstrator vehicle
against other hybrid solutions.
IVT/CVT
Our main focus in the last six months has been to build on the
progress made earlier in the year in the development and validation
of new low cost mass manufacturing methods for discs and rollers
for use in V-Charge and other applications. The work, being
conducted in collaboration with the Advanced Forming Research
Centre and the Manufacturing Technology Centre, underpins the
Group's confidence in achieving the target, and highly competitive,
bill of materials cost for V-Charge.
We have received a number of enquiries from automotive Tier 1s
and OEMs about the potential opportunity to use the Group's core
variator technology in the drivetrain for battery electric vehicles
('BEV'). Whilst these enquiries are at an early stage, it appears
that drivetrains using our core CVT technology have the potential
to offer BEVs a cost effective improvement in performance,
including acceleration and gradeability, whilst maintaining the
feel of 'liquid power'. A number of auxiliary power applications
using the core CVT technology are also in the early stages of
evaluation.
The Group continues to support its strategic partner Univance in
looking at opportunities for the Group's CVT technology in
off-highway applications. Univance offers licensees of Torotrak's
variator technology the opportunity to source low cost discs,
rollers and complete variators from an established volume Tier 2
supplier of transmissions and transmission components for lower
volume passenger cars and off-highway applications.
Flywheel assembly manufacturing
During the last six months, the Group has been working to
validate the design for lower cost flywheels in conjunction with
the Group's strategic supply chain partners. Flywheels manufactured
using a low cost forging process have successfully completed the
full life durability testing programme, exceeding the target life
requirements for the off-highway market. The next step in the
development programme is to validate further cost-down
opportunities using lower cost materials and further improvements
to the current design. This work is important to delivering the
step-change reduction in the cost of the hydraulically-connected
ERS product and meeting the challenging cost targets in passenger
car applications.
We have completed the set-up of the Group's low-volume flywheel
assembly manufacturing cell facility in Leyland. This facility
includes some initial automation with processes managed to
automotive quality controlled standards. This is a significant step
forward in building the in-house capability to assemble complete
flywheels in volumes of up to 10,000 units p.a.
Financial
Revenue in the period was GBP0.9 million (2015: GBP1.2 million)
reflecting the focus on business development activities related to
licensing V-Charge and KERS and customer funded development
programmes commencing part way through the period. The reduction in
gross profit of GBP0.2 million in the period is due to lower
engineering services revenues and a lack of licensing revenues in
the period (2015: GBP0.1m licence revenue). Revenue is targeted to
increase in the second half of the year.
The operating loss before intangible asset amortisation
(know-how) and exceptional items for the period was GBP3.3 million,
in line with the same period last year. The reduction in gross
profit of GBP0.2 million and higher non-cash expenses, being
depreciation and share-based payments, of GBP0.2 million were
offset by an 11 per cent. reduction in net cash operating expenses
of GBP0.4 million. The loss for the period was GBP3.5 million, a
reduction of GBP5.9 million over the previous period due to the
exceptional costs in the previous period of GBP6.0 million relating
to the restructure of the Flybrid acquisition agreement, write down
of the Group's investment in, and loan to, Rotrex A/S and other
restructuring costs.
During the period the equity free cash outflow (EFCF(1) ) was
GBP3.4 million (2015: GBP4.6 million); an improvement of 26 per
cent. This has largely been achieved through the successful
reduction in net cash operating costs as previously reported, a
GBP0.4 million receipt of research and development tax credits and
is despite a GBP0.1 million increase in capital expenditure, mainly
as a result of the investment in the flywheel assembly
facility.
(1) Net decrease in cash and cash equivalents, excluding
proceeds from the issue of share capital and the repayment of
borrowings.
The closing cash balance of GBP7.9 million (2015: GBP14.4
million) is in line with management's expectations. Our focus
during the period has been on business development to secure
licence revenues and to deliver increased engineering services
revenue in the second half of the current financial year and
beyond. Accordingly we expect our cash usage to further improve
during the second half of this financial year.
Outlook
The first six months of the year have seen an increase in the
level of engagement from potential parties interested in the
Group's technologies. With a focus on our strategic objective of
commercialising and monetising our technologies, the Group's
immediate priorities for the next 6 months are:
-- Completing demonstrations of the Ford S-MAX,
-- Licensing V-Charge into the global passenger car market,
-- Licensing KERS into the global off-highway market,
-- Developing commercial interest in the Group's
hydraulically-connected ERS product underpinning the commercial
uptake in excavators and/or wheel loaders from 2018 onwards,
-- Commencing the production of low cost flywheel assemblies for
use in the ERS validation programme.
I look forward to reporting progress on our delivery against
these key priorities.
Adam Robson
Chief Executive Officer
29 November 2016
Condensed consolidated income statement
for the six months ended 30 September 2016
Unaudited Unaudited
six months six months
to 30/09/16 to 30/09/15
Notes GBP000 GBP000
---------------------------------------------------------------------------------- ------ ------------ ------------
Revenue 5 935 1,169
Direct costs (528) (535)
---------------------------------------------------------------------------------- ------ ------------ ------------
Gross profit 407 634
Operating loss 5 (3,696) (9,771)
Operating loss before intangible asset amortisation (know-how) and exceptional
items (3,313) (3,345)
Intangible asset amortisation (know-how) 6 (383) (383)
Exceptional items 7 - (6,043)
---------------------------------------------------------------------------------- ------ ------------ ------------
Operating loss (3,696) (9,771)
---------------------------------------------------------------------------------- ------ ------------ ------------
Net finance costs (89) (24)
---------------------------------------------------------------------------------- ------ ------------ ------------
Loss before tax (3,785) (9,795)
Income tax credit 8 276 369
---------------------------------------------------------------------------------- ------ ------------ ------------
Loss for the period attributable to the owners of the Parent Company (3,509) (9,426)
---------------------------------------------------------------------------------- ------ ------------ ------------
Basic and diluted loss per share (pence) 9 (0.65) (2.50)
---------------------------------------------------------------------------------- ------ ------------ ------------
The results above derive from continuing operations.
The notes on pages below form an integral part of these
condensed consolidated half yearly financial statements.
Condensed consolidated balance sheet
as at 30 September 2016
Unaudited Audited Unaudited
as at as at as at
30/09/16 31/03/16 30/09/15
Notes GBP000 GBP000 GBP000
----------------------------------------------------------- ------ ---------- ---------- ----------
Assets
Non-current assets
Intangible assets 6 14,265 14,576 14,965
Property, plant and equipment 6 1,375 1,379 1,391
Investments 10 3 3 3
Total non-current assets 15,643 15,958 16,359
----------------------------------------------------------- ------ ---------- ---------- ----------
Current assets
Inventories 176 221 314
Trade and other receivables 11 1,102 964 762
Tax receivable 592 779 727
Cash and cash equivalents 12 7,915 11,305 14,422
----------------------------------------------------------- ------ ---------- ---------- ----------
Total current assets 9,785 13,269 16,225
----------------------------------------------------------- ------ ---------- ---------- ----------
Total assets 25,428 29,227 32,584
----------------------------------------------------------- ------ ---------- ---------- ----------
Liabilities
Non-current liabilities
Finance lease obligations (130) (190) (251)
Deferred tax (1,733) (1,809) (2,044)
Borrowings (1,800) (1,811) (1,800)
----------------------------------------------------------- ------ ---------- ---------- ----------
Total non-current liabilities 13 (3,663) (3,810) (4,095)
----------------------------------------------------------- ------ ---------- ---------- ----------
Current liabilities
Finance lease obligations (121) (122) (120)
Trade and other payables (1,505) (1,993) (1,254)
---------- ---------- ----------
Total current liabilities 13 (1,626) (2,115) (1,374)
----------------------------------------------------------- ------ ---------- ---------- ----------
Total liabilities (5,289) (5,925) (5,469)
----------------------------------------------------------- ------ ---------- ---------- ----------
Net assets 20,139 23,302 27,115
----------------------------------------------------------- ------ ---------- ---------- ----------
Capital and reserves
Issued share capital 14 30,355 30,319 30,319
Share premium 23,851 23,851 23,851
Other reserves (230) (194) (204)
Accumulated loss (33,837) (30,674) (26,851)
------ ---------- ---------- ----------
Total equity attributable to equity holders of the Parent 20,139 23,302 27,115
----------------------------------------------------------- ------ ---------- ---------- ----------
The notes below 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 2016
Issued Share capital Share premium Other reserve Accumulated loss Total equity
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 April 2015 27,629 9,140 (244) (17,541) 18,984
Loss for the period - - - (9,426) (9,426)
Total comprehensive expense - - - (9,426) (9,426)
---------------------------- --------------------- --------------- -------------- ----------------- -------------
Issue of shares to Allison
Transmission Inc. 174 1,046 - - 1,220
Transfer of shares under
share incentive plan - - 40 (15) 25
Share-based payment charge - - - 131 131
Issue of shares to vendors
of Flybrid Automotive Ltd 714 4,286 - - 5,000
Issue of shares as a result
of the Placing and Open
Offer and Firm Placing
(net of costs)
(i) 1,802 9,379 - - 11,181
Total transactions with
owners 2,690 14,711 40 116 17,557
---------------------------- --------------------- --------------- -------------- ----------------- -------------
Balance at 30 September
2015 30,319 23,851 (204) (26,851) 27,115
Loss for the period - - - (4,072) (4,072)
Total comprehensive expense - - - (4,072) (4,072)
---------------------------- --------------------- --------------- -------------- ----------------- -------------
Transfer of shares under
share incentive plan - - 10 (4) 6
Share-based payment charge - - - 253 253
Total transactions with
owners - - 10 249 259
---------------------------- --------------------- --------------- -------------- ----------------- -------------
Balance at 31 March 2016 30,319 23,851 (194) (30,674) 23,302
Loss for the period - - - (3,509) (3,509)
Total comprehensive expense - - - (3,509) (3,509)
---------------------------- --------------------- --------------- -------------- ----------------- -------------
Issue of shares under share
incentive plan 36 - (36) - -
Share-based payment charge - - - 346 346
Total transactions with
owners 36 - (36) 346 346
---------------------------- --------------------- --------------- -------------- ----------------- -------------
Balance at 30 September
2016 30,355 23,851 (230) (33,837) 20,139
---------------------------- --------------------- --------------- -------------- ----------------- -------------
Note (i) The amount shown in share premium includes costs of
GBP1,433k in relation to the fund raise in July 2015.
The notes below 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 2016
Unaudited Unaudited
six months six months
to 30/09/16 to 30/09/15
Notes GBP000 GBP000
---------------------------------------------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Loss for the period (3,509) (9,426)
Adjustments for:
Non-cash exceptional cost in relation to the restructure of the Flybrid
acquisition agreement - 5,000
Impairment of investment in Rotrex A/S - 270
Creation of provision against Rotrex A/S loan - 147
Depreciation 6 214 300
Amortisation 6 482 473
Net finance costs 89 24
Loss on disposal of plant and equipment - 9
Taxation 8 (276) (369)
Charge for equity-settled employee share schemes and bonuses 346 131
Decrease in inventories 45 69
(Increase)/decrease in trade and other receivables (140) 406
Decrease in trade and other payables (464) (1,258)
Cash used in operations (3,213) (4,224)
Tax received 386 -
---------------------------------------------------------------------------------- ------ ------------ ------------
Net cash used in operating activities (2,827) (4,224)
---------------------------------------------------------------------------------- ------ ------------ ------------
Cash flows from investing activities
Acquisition of property, plant and equipment (286) (67)
Acquisition of intangible assets (patents) (128) (228)
Net cash used in investing activities (414) (295)
---------------------------------------------------------------------------------- ------ ------------ ------------
Cash flows from financing activities
Proceeds from the issue of share capital (net of costs) - 12,401
Net finance costs (88) (18)
Repayment of borrowings - (1,000)
Net hire purchase finance (61) (58)
---------------------------------------------------------------------------------- ------ ------------ ------------
Net cash (used in)/generated from financing activities (149) 11,325
---------------------------------------------------------------------------------- ------ ------------ ------------
Net (decrease)/increase in cash and cash equivalents (3,390) 6,806
Cash and cash equivalents at start of period 11,305 7,616
Cash and cash equivalents at end of period 12 7,915 14,422
---------------------------------------------------------------------------------- ------ ------------ ------------
The notes below 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 interim financial statements were
approved for issue on 28 November 2016.
The Group's activities focus on the design, development and
commercialisation of a range of technologies that enable vehicle
manufacturers to meet new regulations as well as improving
fuel-efficiency, reducing emissions and enhancing performance.
The interim financial statements for the period ended 30
September 2016 do not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006.
The financial information set out in this interim statement
relating to the year ended 31 March 2016 does not constitute
statutory accounts for that period. Full statutory accounts of the
Group in respect of that financial year were approved by the Board
of Directors on 26 July 2016 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 Chief Executive Officer's Review ('CEO's
Review'). The financial position of the Group and liquidity
position are described within the CEO's Review.
After making all necessary enquiries, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for a period of at least twelve
months from the date that these interim Financial Statements were
approved, given the cash resources available to the Group and the
future cash flow forecast. Accordingly, the Directors believe that
it is appropriate for the Financial Statements to continue to be
prepared on the going concern basis.
2. Basis of preparation
These condensed consolidated interim financial statements for
the six months ended 30 September 2016, have neither been reviewed
or 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 2016 which have
been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the EU.
3. Accounting policies
The accounting policies adopted in preparation of the condensed
consolidated interim financial statements as at, and for the six
months to, 30 September 2016 are consistent with the policies
applied by the Group in its consolidated financial statements as
at, and for the year to, 31 March 2016, except as described
below:
- Taxes on income in the interim periods are accrued using the
effective tax rate that would be applicable to expected total
annual profit or loss.
There are no new standards or amendments to standards that are
mandatory for the first time in the financial year beginning 1
April 2016 that have an impact on the Group financial
statements.
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 2016.
5. Operating segments
Operating segmental analysis for the six months ended 30
September 2016
Income from licence Development activities
Engineering services agreements (i) Total
GBP000 GBP000 GBP000 GBP000
---------------------------- --------------------- ---------------------------- ----------------------- --------
Revenue (by technology)
IVT 50 - - 50
Flybrid ERS 854 - - 854
V-Charge and other 31 - - 31
Total revenue 935 - - 935
Direct costs (528) - - (528)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Gross profit 407 - - 407
Other operating costs - - (2,416) (2,416)
Total segmental
profit/(loss) 407 - (2,416) (2,009)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Other operating costs not
allocated to segments (1,687)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Operating loss (3,696)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Operating segmental analysis for the six months ended 30
September 2015
Income from licence Development activities
Engineering services agreements (i) Total
----------------------------
GBP000 GBP000 GBP000 GBP000
---------------------------- --------------------- ---------------------------- ----------------------- --------
Revenue (by technology)
IVT 66 100 - 166
Flybrid ERS 999 - - 999
V-Charge and other 4 - - 4
Total revenue 1,069 100 - 1,169
Direct costs (533) (2) - (535)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Gross profit 536 98 - 634
Other operating costs - - (2,735) (2,735)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Total segmental
profit/(loss) 536 98 (2,735) (2,101)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Other operating costs not
allocated to segments (7,670)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Operating loss (9,771)
---------------------------- --------------------- ---------------------------- ----------------------- --------
Note (i) 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 30/09/16 to 30/09/15
GBP000 GBP000
--------------------------- ------------ ------------
Allison Transmission Inc. - 100
Undisclosed customer - 633
Undisclosed customer - 150
Undisclosed customer 762 130
--------------------------- ------------ ------------
6. Property, plant and equipment and intangible assets
Property plant and Intangible assets Intangible assets
equipment (patents) (goodwill and know-how) Total
GBP000 GBP000 GBP000 GBP000
--------------------------- ------------------------- -------------------------- ------------------------- -------
Net book value at 1 April
2015 1,698 2,314 12,907 16,919
Additions 7 217 - 224
Disposals (14) - - (14)
Amortisation/depreciation (300) (90) (383) (773)
Net book value at 30
September 2015 1,391 2,441 12,524 16,356
--------------------------- ------------------------- -------------------------- ------------------------- -------
Additions 250 158 - 408
Disposals - (30) - (30)
Amortisation/depreciation (262) (93) (384) (739)
Impairment provision - (40) - (40)
Net book value at 31 March
2016 1,379 2,436 12,140 15,955
--------------------------- ------------------------- -------------------------- ------------------------- -------
Additions 210 171 - 381
Amortisation/depreciation (214) (99) (383) (696)
Net book value at 30
September 2016 1,375 2,508 11,757 15,640
--------------------------- ------------------------- -------------------------- ------------------------- -------
7. Exceptional items
Unaudited Unaudited
as at 30/09/16 as at 30/09/15
GBP000 GBP000
--------------------------------------------------------------------------------- ---------------- ---------------
Restructuring costs - severance related - 539
Share issue in relation to the restructure of the Flybrid acquisition agreement - 5,000
Impairment of investment in Rotrex A/S - 270
Provision against the loan to Rotrex A/S - 147
Restructuring costs - one-off legal and other costs - 87
Total - 6,043
--------------------------------------------------------------------------------- ---------------- ---------------
The severance related restructuring costs relate to redundancy,
severance and associated expenses in relation to a reduction in
employees.
In the financial year ended 31 March 2016 the Group received
Shareholder approval to restructure the acquisition agreement with
the vendors of Flybrid Automotive Limited and as such a one-off
settlement was agreed with the vendors by way of issuing new
ordinary shares in the Group to the value of GBP5m. The vendors of
Flybrid Automotive Limited, Jon Hilton (Non-Executive Director) and
Doug Cross (Chief Technology Officer), received shares to the value
of GBP3.5m and GBP1.5m respectively as part of the settlement. The
GBP5m was treated as an exceptional item.
The investment in Rotrex A/S and the loan due from Rotrex A/S
were written down in the financial year ended 31 March 2016 due to
the uncertainty of the value of the net assets of Rotrex A/S and
also the recoverability of the loan.
The one-off legal and other costs relate to the restructuring of
the Flybrid acquisition agreement.
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 period is based on the estimated
effective tax rate of 33.35% (2015: 33.35%).
Changes to the UK corporation tax rates were announced on 8 July
2015. These changes were substantively enacted as part of the
Finance Bill 2015 on 26 October 2015 and include reductions to the
main rate to 19% from 1 April 2017 and to 18% from 1 April 2020. On
16 March 2016 further changes to the UK corporation tax rate were
announced including a further reduction in the UK corporation tax
rate to 17% from 2020, which supersedes the change enacted on 26
October 2015, and which was substantively enacted as part of the
Finance Bill 2016 on 15 September 2016.
The deferred tax liability relates solely to the intangible
assets recognised on the acquisition of Flybrid Automotive Limited.
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 Unaudited
as at 30/09/16 as at 30/09/15
GBP000 GBP000
---------------- --------------- ---------------
R&D tax credit 199 292
Deferred tax 77 77
Total 276 369
---------------- --------------- ---------------
9. Loss per share
The basic and diluted loss per share are based on a loss after
tax of GBP3,509,000 (2015: GBP9,426,000). The weighted average
number of shares was 543.4 million shares (2015: 376.8 million) and
the diluted weighted average number of shares was 621.3 million
(2015: 390.7 million).
For the six months ended 30 September 2016 and 2015 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 30/09/16 to 30/09/15
------------------------------------------------------------------------------------------ ------------ ------------
The basic loss per share from continuing operations attributable to the equity holders of
the Company (pence) (0.65) (2.50)
------------------------------------------------------------------------------------------ ------------ ------------
The diluted loss per share from continuing operations attributable to the equity holders
of
the Company (pence) (0.65) (2.50)
------------------------------------------------------------------------------------------ ------------ ------------
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 4,925,535 (2015:
2,369,723).
10. Investments
Unaudited Audited Unaudited
as at 30/09/16 as at 31/03/16 as at 30/09/15
GBP000 GBP000 GBP000
---------------------------------------- --------------- --------------- ---------------
Net investment in Rotrak joint venture 3 3 3
---------------------------------------- --------------- --------------- ---------------
The Group also holds an investment in Rotrex A/S. This
investment is no longer supported by the net assets of Rotrex A/S
and as such an impairment provision was created in the financial
year ended 31 March 2016 in accordance with the Group's accounting
policy. This investment has a net book value of GBPnil (2015:
GBPnil).
11. Trade and other receivables
Unaudited Audited Unaudited
as at 30/09/16 as at 31/03/16 as at 30/09/15
GBP000 GBP000 GBP000
---------------
Current assets
Net trade receivables 357 66 153
Other receivables and accrued income 379 367 313
Prepayments 366 531 296
Total trade and other receivables 1,102 964 762
-------------------------------------- --------------- --------------- ---------------
At 30 September 2016 the Group had a loan outstanding of GBP147k
with Rotrex A/S. In the financial year ended 31 March 2016 a
provision was created against the value of this loan due to the
uncertainty of recoverability. This loan has a net book value of
GBPnil (2015: GBPnil).
The net trade receivables includes a provision for impairment of
GBP51k in relation to a potentially unrecoverable debt in
accordance with the Group's accounting policy.
12. Cash and cash equivalents
Unaudited Audited Unaudited
as at 30/09/16 as at 31/03/16 as at 30/09/15
GBP000 GBP000 GBP000
------------------------------------ --------------- --------------- ---------------
Cash 17 17 20
Sterling short term cash deposits 7,039 10,481 14,033
Foreign currency and cash deposits 859 807 369
Total cash and cash equivalents 7,915 11,305 14,422
------------------------------------ --------------- --------------- ---------------
13. Trade and other payables
Unaudited Audited Unaudited
as at 30/09/16 as at 31/03/16 as at 30/09/15
GBP000 GBP000 GBP000
-------------------------------- --------------- --------------- ---------------
Non-current liabilities
Finance lease obligations 130 190 251
Deferred tax 1,733 1,809 2,044
Borrowings (i) 1,800 1,811 1,800
Total non-current liabilities 3,663 3,810 4,095
Current liabilities
Trade payables 462 862 212
Social security and income tax 134 119 164
Accrued pension contributions 34 36 2
Accruals 781 618 841
Finance lease obligations 121 122 120
Interest on borrowings 10 - 10
Deferred income 84 358 25
Total current liabilities 1,626 2,115 1,374
-------------------------------- --------------- --------------- ---------------
(i) The borrowings represent a five year term loan from the
vendors of Flybrid Automotive Limited as detailed in note 15. The
loan is secured on the tangible and intangible assets of Flybrid
Automotive Limited and can be repaid by the Company at any time
during the five years. The loan carries a fixed annual interest
rate of 7 per cent.
14. Issued Share Capital
Unaudited Audited Unaudited
as at 30/09/16 as at 31/03/16 as at 30/09/15
GBP000 GBP000 GBP000
--------------------------------- ----------------- ----------------- -----------------
Allotted and fully paid
Ordinary shares of 1 pence each 5,489 5,453 5,453
Deferred shares of 9 pence each 24,866 24,866 24,866
--------------------------------- ----------------- ----------------- -----------------
Total Share Capital 30,355 30,319 30,319
--------------------------------- ----------------- ----------------- -----------------
Unaudited Audited Unaudited
as at 30/09/16 as at 31/03/16 as at 30/09/15
Number of shares Number of shares Number of shares
--------------------------------- ----------------- ----------------- -----------------
Allotted and fully paid
Ordinary shares of 1 pence each 548,909,251 545,357,557 545,357,557
Deferred shares of 9 pence each 276,286,047 276,286,047 276,286,047
--------------------------------- ----------------- ----------------- -----------------
15. Related party transactions
There was a loan outstanding of GBP30,000 to Rotrak Limited at
30 September 2016 (2015: GBP29,000).
There was a long term loan outstanding to Rotrex A/S of
GBP147,000 (2015: GBP147,000), against which a provision has been
created due to the uncertainty of recovery, as explained in note
11.
There was a loan amount due to Jon Hilton of GBP1,260,000 (2015:
GBP1,260,000) and Doug Cross of GBP540,000 (2015: GBP540,000) as
explained in note 13 in relation to the acquisition of Flybrid
Automotive Limited.
In the period to 30 September 2016 there was an amount of
GBP44,466 paid to Jon Hilton and an amount of GBP19,057 paid to
Doug Cross in respect of loan interest. GBP7,250 was due to Jon
Hilton and GBP3,107 due to Doug Cross in respect of loan interest
at 30 September 2016; these amounts were paid on 1 October
2016.
Jon Hilton is a Director of Celeratis Limited. In the period to
30 September 2016 there was an amount of GBP40,165 paid to
Celeratis Limited for consultancy services. There was an amount due
to Celeratis Limited of GBP2,478 at 30 September 2016.
16. Commitments
Capital expenditure contracted for at the balance sheet date but
not yet incurred was GBPnil (2015: GBP6,000).
17. Financial Risk Management
The Group's activities expose it to a variety of financial risks
including 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 2016. There have been no changes in any risk management
policies or financial risks since the year end.
18. 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,
these condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 'interim financial reporting' as
adopted by the European Union and that the interim management
report includes a fair review of the information required by DTR
4.2.7 and DTR 4.2.8, namely:
-- an indication of the important events that have occurred
during the first six months and their impact on the condensed
consolidated interim financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- material related-party transactions in the first six months
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 2016. A list of current
Directors is maintained on the Torotrak plc website:
www.torotrak.com.
By order of the Board on 28 November 2016
Adam Robson
Chief Executive
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGGMAGUPQPPR
(END) Dow Jones Newswires
November 29, 2016 02:01 ET (07:01 GMT)
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