REG - Trackwise Designs - Contract and Trading Update

Trackwise DesignsAnnouncement

30/03/2023 07:00

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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                                  +44 (0)1684 299 930
 Philip Johnston, CEO                                   www.trackwise.co.uk (http://www.trackwise.co.uk/)
 Paul Cook, CFO

 finnCap Ltd                                            +44 (0)20 7220 0500
 NOMAD and Broker
 Ed Frisby/Fergus Sullivan - Corporate Finance

 Andrew Burdis/Barney Hayward - ECM

 Alma PR                                                +44 (0)20 3405 0205
 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.
(http://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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