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Torotrak – you were warned, requires fire sale miracle or it’s administration ahoy

By Steve Moore | Friday 1 December 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Previously writing on Torotrak (TRK) in July I noted hopefully warnings heeded – it’s cash crunch ahoy!. The crunch was noted earlier this week (see HERE) - and now a further financial position update from the company…

This commences “Torotrak plc, a developer and supplier of emissions reduction and fuel efficiency technology for vehicles, provides an update on its financial position. As announced on 28 November 2017, the board has been trying to secure a refinancing of the company to address its financial difficulties. Unfortunately, this has not proved possible”. Uh oh…

“The board is evaluating its remaining options. These include either trying to rapidly realise value from its assets by concluding sales of its technology, intellectual property and other assets to interested parties, including the potential sale of Flybrid Automotive Limited or appointing administrators. The company will make further announcements in due course.”

And uh oh again. Previous results – for its year ended 31st March 2017, announced in July – showed a more than £7 million adjusted operating loss and more than £6 million decline in cash to £5.1 million (£3.3 million net), with net current assets £7.6 million lower to £3.5 million and there also £1.9 million of non-current liabilities (-£1.9 million). This against just £2.7 million of non-current assets – and even that including £1.9 million of intangibles.

That saw me question the board’s ability to deliver on its “determined to realise the value from our extensive IP portfolio and attractive commercial opportunities”. With it now more than four months later, I’d suggest an ability to realise meaningful value rapidly somewhat, er, ‘limited’. With it then administration ahoy, this remains a sell for whatever can be got. My warnings were plentiful!

 


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