Investment and Joint Venture

13 May 2010

Torotrak Plc

("Torotrak" or "the Company")

Acquisition of 15% stake in Danish supercharger technology company, Rotrex AS ("Rotrex") and formation of UK-based joint venture - Rotrak Ltd ("Rotrak")

Development of new-technology solutions to support engine downsizing

Torotrak announces that on 12 May 2010 it invested a total of £500,000 in gross cash terms in the acquisition of a 15% equity stake in Rotrex and the formation of a UK-based 50:50 joint venture (JV) with Rotrex. The JV, Rotrak, will exploit opportunities associated with the downsizing of engines, which Torotrak views to be a material and growing trend in the automotive sector. The JV will enable Torotrak to access a new market, outside main drive transmissions, in the form of cost-effective variable speed superchargers to improve engine fuel efficiency and reduce CO2 emissions.

Market

The Rotrak joint venture will provide the platform to create a range of variable-speed superchargers to support the move towards radical engine downsizing and to compete within the growing market for clean-vehicle technologies. Joint studies carried out by Torotrak and Rotrex indicate that the functional performance and volume production costs of these Rotrak products would be highly competitive compared with alternative technologies, giving both companies the confidence to move immediately into prototype development.

Vehicles using pressure-charged gasoline engines are currently estimated to comprise a global market of 2.5 million units per annum that is forecast to grow to 12 million by 2016 (source: CSM Worldwide), driven mainly by the demand for engine downsizing. In the more established market for pressure-charged diesel engines, estimates are that the current market of 10.5 million vehicles will grow to 16.1 million by 2016 (source: CSM Worldwide).

Strategic context

This development has followed a period of review of Torotrak's strategic objectives against the backdrop of some increasingly material opportunities both within and outside the current portfolio of licensees and customers.

Within this portfolio, Torotrak will now increase the weighting of resources to deliver programme results for established high-value customers. Beyond these priorities, the Company's development efforts will be focused on more recently identified areas of opportunity to expand the application of Torotrak's technology to the rapidly growing markets for efficiency enhancing devices in the field of CO2 mitigation. The arrangements with Rotrex sit firmly within this area of strategic focus.

Further information on the development of Torotrak's strategy will be included in the Company's announcement, on 25 May 2010, of preliminary results for the year to 31 March 2010.

Commercial structure

Torotrak has invested £253,000 in new ordinary shares to acquire a 15% shareholding in Rotrex and has provided Rotrex with a long term loan of £147,000. The investment will serve to underpin a wider strategic relationship and support the Rotrak JV with an appropriate financial structure.

Rotrex and Torotrak have each invested £100,000 of equity and loan financing in Rotrak in return for a 50% shareholding and equal voting rights. Rotrak has been granted exclusive rights to develop and exploit Torotrak's and Rotrex's intellectual property in the field of variable speed drive centrifugal superchargers ("Licensed Field").

The structure allows Torotrak and Rotrex to commercialise their combined intellectual property and know-how in the Licensed Field through the JV, which can then sub-licence or otherwise contract with third parties. It is not the intention to set up a high-volume joint manufacturing capability, although Rotrex is well equipped to satisfy prototype and lower-volume demand from OEMs.

Taking into account the 50% interest in Rotrak, Torotrak's initial combined net investment in Rotrex and Rotrak amounts to £400,000 (ie: after reducing the total £500,000 of combined investment by Torotrak's 50% interest in the £200,000 cash funds held within the JV and which act as a long term financing arrangement).

Rotrex

Rotrex is a technology company based in Copenhagen, Denmark. It develops, manufactures and sells patented traction drive compressor technology for OEM, OES and aftermarket companies worldwide. Rotrex superchargers are designed to achieve the 10 year lifetime requirement of an automotive component, with its products having passed rigorous OEM durability tests.

Rotrex's latest reported turnover was £1.1m with a gross profit of £0.5m for the year to 31 December 2009 and net assets of £0.3m as at the most recent balance sheet date. The company operates its own assembly facilities capable of producing up to 24,000 units per annum, and this capacity can be expanded cost-effectively with additional assembly lines.

Rotrex's strategy is to build sales with OEMs across a broad spread of markets and applications from fuel cells through to engine downsizing vehicle applications, whilst retaining its niche position in the performance-car aftermarket, which provides valuable development experience and product recognition opportunities.

Rotrex has achieved recognition across a range of industries, including winning the 2008 European Powertrain Market Product Innovation Award for its innovative work with vehicle manufacturers to assist in engine downsizing.

Torotrak chief executive Dick Elsy said:

"This new venture, combining two complementary technologies, delivers a compelling new solution to address the pressing challenges faced in the automotive industry to improve engine fuel efficiency and reduce CO2 emissions.

"Our joint investment with Rotrex underlines a new approach by Torotrak to bringing new technology developments to market more quickly and more cost-effectively.

"By expanding the application of our technology outside of main drive transmissions, we are opening up a highly valuable new market area where demand for effective, innovative solutions is immediate and growing."

Rotrex Managing Director, Lars Kristiansen said:

"Torotrak and Rotrex are ideally positioned as partners for the development of variable drive supercharging systems. Torotrak's toroidal drive technology is scalable and efficient and has been proven to be durable in the most demanding of environments. Rotrex has many years of experience in the development and manufacture of innovative, high-speed centrifugal compressor systems. Both partners can draw on extensive systems know-how and development experience with OEMs and Tier One suppliers."

Notes to Editors

Variable supercharging

Vehicle manufacturers are moving aggressively to downsize their engines in order to achieve substantial efficiency gains with reductions in fuel consumption and CO2 emissions. But as engines get smaller, the challenge becomes one of boosting performance across the entire speed-range to provide 'large engine' responsiveness and to make surethat driving remains enjoyable.

A conventional turbocharger struggles at low speed, particularly in these smaller engines. Better low speed boost can be achieved but it is complex and costly. Supercharging is the main alternative, but the fixed ratio between the engine and supercharger speeds means that if you boost the low-end, you waste energy at higher revs.

Adding Torotrak's scalable variable speed traction drive to Rotrex's centrifugal compressor will overcome the compromises that affect current pressure-charging systems. The resulting technology will address the automotive industry's need for affordable, effective, fully variable engine technologies.

Rotrex

Rotrex is a technology-driven company focused on providing forced induction systems. Its patented traction drive enables the Rotrex centrifugal supercharger to achieve superior efficiency, reduced emissions and improved transient response. The Rotrex system is smaller, lighter and quieter than competing products, making it particularly attractive for downsized engines and high-efficiency hybrid powertrains as well as high-performance applications.

Rotrex technology has target applications across three markets:

·; Automotive (including engine downsizing, exhaust gas aftertreatment, performance, hybrids, range extenders and fuel cells)

·; Industrial (including agriculture and fuel cells)

·; Recreational vehicles (including motorcycles and watercraft)

Further information can be found at www.rotrex.com

Torotrak

Torotrak is the world's foremost developer of full-toroidal traction drive technology. The company designs and develops Continuously Variable (CVT) and Infinitely Variable (IVT) transmissions which deliver outstanding levels of performance, functionality and refinement along with improved fuel economy and reduced emissions. Torotrak develops main drive transmissions as well as variable ratio transmissions for application in flywheel-based mechanical hybrid systems and for use as auxiliary drives.

Torotrak operates in the automotive, truck, bus, off-highway and agricultural markets, in motor sport and in outdoor power equipment. Its customers are widely spread across Europe, North America, India and Japan, and include major vehicle makers and tier one transmission manufacturers.

Further information can be found at www.torotrak.com