Agreement to join manufacturing initiative

Torotrak signs agreement with Tata Steel, Mira and Productiv to join UK government funded manufacturing initiative

Leyland, UK: 18 February 2013 - Torotrak (LSE: TRK) has today concluded a collaboration agreement with Tata Steel UK Limited, MIRA Limited and Productiv Limited, which are the lead partners in a government-backed initiative to help bring UK low carbon technologies to market.

This agreement centres around the creation of 'The Proving Factory', which allows the Company to benefit from shared development, manufacturing and quality processes. Torotrak is one of a small group of founding member developers that will work with the lead partners described above and other industry partners, which include Jaguar Land Rover, Schaeffler and the Manufacturing Technology Centre.

The arrangements allow the Company to benefit from the industrialization expertise provided by the partners as well as enjoy support from grant funding via the Advanced Manufacturing Supply Chain Initiative (AMSCI).

This will help launch product into the automotive supply chain with reduced investment costs, being a key aim of the initiative. The Proving Factory will work with Torotrak to create production-ready, validated design and then take this from prototype and pilot production through to medium volume manufacturing.

Jeremy Deering, Chief Executive said: "The combination of this agreement and the recently announced integration of a high-precision manufacturing facility at our technical centre will help support our licensees in bringing Torotrak technologies to market. The increased capability will accelerate development timescales and help focus programmes from the start on getting to market rapidly. With the 2015 and 2020 legislative targets uppermost in manufacturers' minds it is especially important that innovative CO2 reduction technology such as ours earns its place on production plans; that means getting hardware and demonstrable results out quickly."

The initial application for the project will be Torotrak's "V-Charge" technology, which allows single or dual stage variable boost, addressing the growing market for CO2-reducing downsized engines. The Proving Factory should allow capacity of up to 20,000 units of manufacturing capacity per annum. Higher volumes will then be targeted at licensed manufacturing arrangements.

Torotrak also gains access to the new high-precision component manufacturing facility in Rotherham, South Yorkshire that was the site of a visit today from Vince Cable, Secretary of State for Business, Innovation and Skills, who officially launched the initiative. This complements the flexible assembly facility that will be based in the West Midlands.

The Proving Factory arrangements help support our strategy announced in November last year, where we determined that Torotrak would initiate its own low to medium volume manufacturing capability. We announced on 15 February another supportive move for this strategy, with the acquisition of Motorsport Components Limited ("MCL") which provides in-house, high precision prototype engineering capabilities. MCL will be fully integrated into Torotrak's operations and will speed up turnaround time for precision components and so help in shortening lead times on our critical prototype build and test activities. It also enhances and supports our engineering services business, which we aim to grow materially over the next few years.

Concluding, Deering highlighted that the new Proving Factory's manufacturing capability will run alongside increased investment at Torotrak's own site to manufacture and supply certain lower volume applications:

"The Proving Factory allows us to supply lower volumes into the market ahead of Tier 1 production, but at the same high quality standards, providing access to high volume markets such as V- Charge. In certain parts of our business, where volumes are lower but values are higher, we aim to build a business based on supplying product entirely through Torotrak or a nominated manufacturer; for example, we currently see substantial opportunities with M-KERS in the urban bus and delivery vehicle markets where we are progressing towards fleet trials."

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