Losses widen as Torotrak tries new route

TOROTRAK’S revenues for the six months to September 30 more than halved to £800,000, causing its losses to increase by £200,000 to £2m.

The Leyland-based maker of gearless drive technology blamed the timing of licence fee agreements for the slump in revenues, but said efforts made to address its own operating costs meant that it had been able to significantly reduce its expenses.

The size of its board has been cut by a third, and its directors have agreed to a cut in basic pay in favour of a greater share of variable rewards based on the company’s future performance. This has shaved around £800,000 off the company’s costs.

“At a time when the markets are critical about pay, we feel we are leading by example,” chief executive Dick Elsy told TheBusinessDesk.com.

It said that staff and resources had been geared towards helping partners to undertake more of the product development work themselves under licence agreements.

Torotrak also said that progress had been made on three major licensing programmes for commercial vehicles, where it has agreements in place with US-based heavy duty gearbox maker Allison Transmissions, an unnamed European busmaker and Indian giant Tata Motors.

Torotrak said the programmes had confirmed that vehicles achieved “strong” fuel economy benefits and lower carbon emissions when using its systems.

Elsy added that Torotrak’s technologies, which also include a mechanical flywheel that is “smaller, lighter and cheaper” than batteries currently used in hybrid cars, is maturing at a time when there is significant pressure from authorities in the US for vehicle makers to reduce emissions from their products.

“We feel the market is playing absolutely to our strengths.”

He also pointed to the fact that it had achieved a cash inflow of £700,000 during the period, compared with a £2.5m loss last year. However, its cash pile has depleted by £2.2m to £8.8m.

Elsy argued that its cash position remained very strong, and said the company’s aim was to operate “at or close to a cash-neutral position” for the next two years, and then to reap the benefits as the technology it has developed finds more commercial benefits.

Moreover, despite the decline in half-year revenues, he said that payments could be “lumpy” in terms of their arrival, but added that its full-year trading prospects remained in line with expectations.