Torotrak shuns IVTs; focuses on KERS, V-Charge

Transmission engineer Torotrak plc has put new focus on two of its three main technologies, namely KERS and V-Charge.

Judging by the company’s latest statement, IVTs or infinitely variable transmissions, which were the company’s original raison d’etre, if not side-lined altogether, are receiving less attention as the company strives to improve shareholder return following the appointment earlier of chief executive officer Adam Robson.

IVT’s have so far failed to deliver the seriously meaningful revenue return long-expected of the technology. Torotrak Plc came into the world originally on the back of the Perbury continuously variable transmission (CVT) as an automatic transmission to replace manual transmissions in passenger cars, later to be evolved for buses and trucks; in buses as a potential to replace the hugely expensive pneumocyclic used by Leyland Trucks & Buses.

Torotrak claims it “has made good progress” in executing the three-year strategy to commercialise its technologies – allocating resources to deliver “near-term commercial returns to shareholders”.

Executives claim that during the last 12 months there has been a significant increase in interest from potential licensees and OEM customers in gaining access to the Torotrak's KERS technology in off-highway and V-Charge in passenger cars.

The Leyland, Lancashire-based company says it “is now focusing” its resources to deliver the near-term commercial opportunities in these two key areas:

◊ Strong interest in our V-Charge technology from Tier 1s and OEMs, both for passenger cars and off-highway vehicle applications:

◊ On-engine V-Charge testing programme being conducted by University of Bath on track with results due early next month

◊ A 'should cost' study conducted with the Tier 1 study partner demonstrating the total system cost advantage of V-Charge technology compared to other advanced boosting solutions

◊ On-track to demonstrate the real-world performance of the V-charge twin-stage boosting configuration in a Ford Focus from late July 2016

◊ KERS off-highway is gaining significant traction - the largest near term opportunity for commercialising the KERS technology:

◊ A fully funded project with one of the largest global manufacturers of off-highway construction and mining equipment to design, develop and demonstrate a high-power KERS system. Could this be JCB, perhaps? JCB has the resources to push through this kind of technology to the marketplace.

◊ The Group is actively engaged with several global off-highway OEMs and in discussions with a number of Tier 1s who have expressed interest in KERS for application in construction and materials handling.

                                    Cloudy future forces delay

Torotrak claims that its KERS-equipped bus has so far delivered fuel savings of 11.1 per cent on the MLTB cycle when compared to the baseline latest Euro6 bus. Simulation studies show that this could be potentially increased up to 14 per cent.

However, the results of the UK Government's Ultra Low Emission Bus ('LEB') grant applications have been delayed and no announcement has been made by the Government to confirm the new date for the awards.

As a result, with this uncertainty over-clouding the whole project, and coupled with persistent low fuel prices, bus operators have postponed investment in all low-emission technologies.#

Not surprisingly, perhaps, Wrightbus and Torotrak have delayed further investment in the production launch of bus KERS until the situation becomes clear.

This allow Torotrak to redeploy its engineering and cash resources onto the “other more promising, revenue generating and near-term commercial opportunities”, in line with the Torotrak’s stated strategy of focusing its resources on the delivery of the key products which are most likely to secure commercial take-up and deliver near-term commercial returns.

Meanwhile, the company claims it has achieved a 20 per cent reduction in net cash operating expenses, with the result that cash at 31 March 2016 was £11.3 million (excluding R&D tax credits of £0.4 million received on 1 April 2016). Cash is a particularly important yardstick for new technology operators such as limited companies like Torotrakwhich have to go to the stock market to raise forward funding.