Contract and Trading Update

RNS Number : 6939U

Trackwise Designs PLC

30 March 2023

 

TRACKWISE DESIGNS PLC

('Trackwise', the 'Company' or the 'Group')

Contract and Trading Update

Trackwise Designs plc (AIM: TWD), a leading manufacturer of specialist products using printed circuit technology, announces an update on progress under the New Commercial Order for its UK EV OEM customer (the "EV OEM") and an update on trading for the year ended 31 December 2022.

Contract Update

On 21 October 2022 the Company announced a new agreement (the "New Commercial Order" or the "Contract") for a fixed quantity of flexible printed circuit boards (the "Parts") for delivery through to July 2023. The New Commercial Order provided for a £3.99 million advanced payment, which was paid in October 2022, with the balance of the contract value (being an additional £3.99 million) to be satisfied by standard payments on deliveries of the Parts. The Company expected to commence volume production for the EV OEM customer in Q1 of 2023, with first cash receipts for Parts expected in early April 2023, and production completion in July 2023.

The Company now expects a delay in the manufacture and deliveries of the Parts to the EV OEM, whilst the EV OEM undertakes a redesign and validation of the Parts to meet their revised design requirements. The Change Control procedure within the Contract has been initiated, including the impact upon the Parts price and production completion.  At this time the Change is yet to be quantified and agreed but the Company expects this to include an amended payment profile, to offset the delay in cash receipt to the Company as a result of the redesign and validation of the Parts.

The Company previously announced on 14 December 2022 that, subject to completion of the fundraising, and including cashflows from the New Commercial Order, it would be funded through to completion of the New Commercial Order in July 2023, and then on through to August 2023. This position was then improved by the small upsizing of the Placing and cash received from the Open Offer. In the event this expected Parts redesign and consequential production delay as referred to above are not resolved in the coming months, this would be expected to reduce the Company's previously announced cash runway to the end of May 2023, or potentially later in the event of an amended payment profile from the EV OEM.

Trading Update

Subject to audit, the Company expects to report full year revenues of £7.52m (2021: £8.01m), an adjusted* operating loss of approximately £2.92m (2021: loss of £0.58m) and a pre-tax loss of £7.71m** (2021: loss of £1.98m).

Net debt*** at the year-end was £9.34m prior to the receipt of the placing and open offer net proceeds of the recent equity raise which completed in the new financial year of approximately £4.75m (before expenses).

As previously announced, following a disappointing first half at Stevenage Circuits Limited ("SCL") in 2022, a new managing director was appointed in July 2022 and the business started to see improved operations and performance. Whilst progress has been made, the investment held by the Company has been subject to a review for impairment. The impairment test has been based on risk adjusted future cash flows, based on latest internal forecasts, discounted using appropriate discount rates. The Company now expects to recognise a 100% impairment of its investment in SCL and a 100% impairment of the inter-company loan owed by SCL in the Company's forthcoming unconsolidated Company accounts for the year ended 31 December 2022.  The resulting impairment charge in the Company's consolidated income statement for the year ended 31 December 2022 will be determined by the time of publication of the Company's forthcoming final results.

Stonehouse Site and Sales Pipeline

The Stonehouse Site factory equipment installation is now complete. The impact of the redesigned Parts on the installed equipment has yet to be determined but is not expected to be material.

Trackwise continues to have a significant pipeline of identified IHT sales opportunities with a number of the previously identified EV cell-to-pack CCS opportunities progressing positively towards the anticipated supplier nomination dates.

*Before exceptional costs and share based payments

** Before accounting for the SCL impairment

***Cash less borrowings, excluding IFRS16 lease liabilities

The financial information for 2022 included in this announcement is unaudited.

Enquiries

Trackwise Designs plc	[phone]
Philip Johnston, CEO	www.trackwise.co.uk
Paul Cook, CFO
finnCap Ltd	[phone]
NOMAD and Broker
Ed Frisby/Fergus Sullivan - Corporate Finance Andrew Burdis/Barney Hayward - ECM
Alma PR	[phone]
Financial PR and IR
David Ison/Caroline Forde/Josh Royston/Kieran Breheny

Notes to editors

Trackwise is a UK-based manufacturer of specialist products using printed circuit technology.

The full suite includes: Improved Harness Technologyª ("IHT") and Advanced PCBs - Microwave and Radio Frequency ("RF"), Short Flex, Flex Rigid and Rigid Multilayer products.

IHT uses a proprietary, patented process that Trackwise has developed to manufacture multilayer flexible printed circuits of unlimited length. While the technology has many applications, the directors expect that one of its primary uses will be to replace traditional wire harnesses in a variety of industries.

The Company operates from three sites, located in Tewkesbury, Stonehouse and Stevenage. It serves customers in Europe and North America.

Trackwise Designs plc was admitted to trading on AIM in 2018 with the ticker TWD. For additional information please visit www.trackwise.co.uk.

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

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