BTG, the world’s leading intellectual property rights concern which is raising £25m via a placing of new shares, is to put half of the money into Torotrak, the infinitely variable vehicle transmission (IVT) business, the newly-profitable gem in its portfolio of 8,500 patents.
Torotrak has six licensees, including Ford and Toyota, and ongoing development contracts with 10 international firms. City watchers believe further development will convince licensees that IVT will work in high volume vehicle production.
BTG’s cash raising was announced along with its 1996-97 results showing that Torotrak had contributed its first operating profits – £750,000 – on sales of £3.31m. The previous year it lost £250,000 on £1.71m sales.
Torotrak is increasingly seen by the automotive industry as a supplier of IVT engineering and design expertise rather than just a licenser of novel patents.
The company is handing the cash to Torotrak in the form of a loan. The parent concedes that floating the subsidiary on the stock market is one option for its future. Its board has just been beefed up and its status will stay under review `to see how best to maximise shareholder value from it’.
Meanwhile, Torotrak has started to fill some of the gaps left in BTG’s earnings since patents ran out in 1994 on the previous big money-spinner, Pyrethrin, the insecticide which contributed up to £10m a year of revenue.
Despite Torotrak’s contribution, £6m of revenue from MRI, the body-scanner business, and revenues from new bioscience launches, BTG turned in a pre-tax loss little changed from the year before at £2.73m on turnover up 8% at £22.46m.
Balance from the cash-raising will be applied to the development of health care and electronic products.
The City was also excited by BTG’s announcement that it has signed with Lucent Technologies (formerly AT&T’s systems and technology business) to commercialise certain Lucent patents outside its core business, including high temperature superconductor technologies.
By Hugh Sharpe