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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Trackwise Designs Plc | LSE:TWD | London | Ordinary Share | GB00BFYT9999 | ORD 0.1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.175 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMTWD
RNS Number : 7849L
Trackwise Designs PLC
15 September 2021
TRACKWISE DESIGNS PLC
("Trackwise" or the "Company")
Interim Results for the six months ended 30 June 2021
Trackwise Designs (AIM: TWD), a leading provider of specialist products using printed circuit technology, is pleased to announce today its interim results for the six months ended 30 June 2021.
Financial highlights
-- Revenues of GBP4.1m (H1 2020: GBP2.4m) -- IHT revenues of GBP0.58m (H1 2020: GBP0.25m) -- Gross margin of 29% (H1 2020: 17.8%) -- Adjusted(1) E BITDA of GBP0.45m (H1 2020: GBP0.10m) -- Adjusted(2) o perating loss of GBP0.13m (H1 2020: GBP0.37m)
-- Reported loss after tax of GBP0.57m (H1 2020: profit GBP0.92m) after additional deferred tax provisions to reflect the change in Corporation Tax rate
-- Net cash(3) of GBP2.6m (GBP4.8m gross of borrowings) (31 December 2020: GBP11.4m), following investment at new Stonehouse site; mortgage finance then in place August 2021
-- Basic EPS of (2.00) (loss) pence per share (H1 2020: 4.98 pence (profit))
(1) Before share based payments; and in addition in the prior year before acquisition expenses, excluding a negative goodwill (credit) arising on the acquisition of SCL and excluding a small FX gain
(2) Prior year included the benefit of a GBP1.6 million negative goodwill (credit) arising on the acquisition of SCL
(3) Cash less borrowings, excluding IFRS16 right of use lease liabilities
Operational highlights
-- Acquisition of a 77,000 sq. ft. freehold property in Stonehouse, Gloucestershire, for GBP2.8 million , to provide additional IHT production capacity
-- Capital investment programme for the facility, aligned with the Electric Vehicle customer's proposed OEM product delivery schedule of early 2022
-- Further investment in people including the appointment of a Chief Operating Officer to oversee the Group's day-to-day operational functions, including the fit out of the Stonehouse site
-- Growing number of enquiries, with the number of IHT total customers and opportunities increasing to 97 at 30 June 2021 (30 June 2020: 82)
Outlook
-- While trading continues to be impacted by supply constraints and inflation, the Group is well-positioned to manage these pressures and is tracking in line with market expectations for the full year
Philip Johnston, CEO of Trackwise, commented :
"The development of our third manufacturing site at Stonehouse continues, and we expect to see this completed early in 2022 to meet production demand from our EV OEM customer.
More widely, we are confident in the opportunities ahead in IHT and we are seeing a fast-growing number of prospects for the application of this technology across our chosen markets. Alongside this, our Advanced PCBs division continues to deliver solid revenues.
We are positive about the prospects for future growth for Trackwise and we look forward to providing further updates on our progress to the market."
Enquiries
Trackwise Designs plc +44 (0)1684 299 930 Philip Johnston, CEO www.trackwise.co.uk Mark Hodgkins, CFO finnCap Ltd +44 (0)20 7220 0500 NOMAD and Broker Ed Frisby/Tim Harper - 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 Technology(TM) ("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 harness in a variety of industries.
The Company manufactures on two sites, located in Tewkesbury and Stevenage (following the acquisition of Stevenage Circuits Ltd in April 2020). It serves customers in Europe and North America. The Company has acquired a third site in Stonehouse Gloucestershire initially for its EV programme.
Trackwise Designs plc was admitted to trading on AIM in 2018 with the ticker TWD. For additional information please visit www.trackwise.co.uk
Financial Review
Revenue for the period increased to GBP4.3m (H1 2020: GBP2.4m), which reflects an improving level of revenue generation in 2021 compared to the Covid impacted revenue of 2020 as well as a full contribution from Stevenage Circuits compared to last year. Throughout H1 we have recorded a steady increase in IHT revenues though APCB revenues have been impacted by material supply difficulties.
Profitability was held back by supplier constraints and the continuing impact of Covid which impacted across the Group during the Covid lockdown in the early part of the period.
During the period we have invested heavily in capacity for the EV OEM product manufacture and supply agreement won last September deliveries for which begin in 2022. Capital expenditure in H1 was GBP8.7m including GBP2.7m which relates to deposits on new equipment, which is disclosed in the balance sheet as Other Receivables. At 30 June 2021 the Company had net cash of GBP2.6m, gross cash of GBP4.8m and unused facilities of up to GBP0.75m. In August a new mortgage finance facility of GBP1.96m was completed on the Stonehouse freehold site.
The outcome of the period is that losses per share were (2.00)p (H1 2020 earnings per share: 4.98p)
Board Change
Mark Hodgkins has indicated his intention to step down from the Board at the next AGM. Mark, 64, would like to reduce his full-time work commitment and pursue a portfolio career. The Board has commenced the search for his successor.
CEO's Statement
I am pleased to report on a period in which Trackwise has ensured it is well positioned to meet further demand for its proprietary technology. We performed well in the first half, seeing an increase in demand across our target markets in our IHT and Advanced PCBs divisions. We have progressed against our strategy through the acquisition of a third manufacturing site. Through the investments into production capabilities, we are significantly better positioned to meet the anticipated uptick in demand expected in our IHT division.
We also invested in a number of new appointments. Steve Hudson as Chief Operating Officer brings over 20 years' experience in the automotive and aerospace industry, having occupied operational and programme leadership roles at Bentley Motors and Rolls Royce Aerospace. As COO, Steve has been responsible for overseeing the day-to-day operational functions of the Company across its three sites and leads on the delivery of the Stonehouse site. In the period we have made a number of senior new hires in advance of production commencing at Stonehouse.
There remains a significant opportunity ahead for Trackwise and the Group is seeing an increasing number of interested parties across its target markets, particularly the automotive and medical devices sectors. While the Group's main focus is on delivering organic growth through the healthy pipeline we see ahead, we remain open to the possibility of acquisition where appropriate.
Improved Harness Technology
Improved Harness Technology (IHT), the long-term growth driver for Trackwise, is the patented technology which enables the manufacture of length-unlimited multi-layer flexible printed circuit boards.
IHT has delivered a strong performance in the first half, as a result of the recovery of trading activity among our end customers in combination with the increase in demand for this technology. During the period, IHT revenues for the first half of 2021 were 95% of those for the whole of 2020 and we expect these revenues to be at record levels at the full year.
In April we completed the acquisition of a 77,000 sq. ft. freehold property in Stonehouse, Gloucestershire, for GBP2.8 million. This site will house the high-volume, low mix, roll to roll IHT production facility and significantly increases Trackwise's production capacity to meet the expected demand for IHT across its target markets.
The Company remains subject to global supply chain issues until the full completion of machinery installation at Stonehouse, but good progress is being made on the delivery of this site. We expect to be in production in early 2022, in line with the revised ramp-up in production by the Company's EV OEM customer, and we are working increasingly closely with the customer as we progress towards this date.
While IHT has a wide range of applications, we have set out the three markets where we expect to see the greatest levels of growth for this technology. These are:
1. Electric Vehicles 2. Medical 3. Aerospace
We remain confident in the applicability of our proprietary technology to these markets and the significant revenues this has the potential to generate.
Electric Vehicles
The Electric Vehicles market is the key area of activity for Trackwise, and interest in IHT from this market continues to be healthy. Following on from the EV OEM manufacturing agreement we signed in September 2020, in July we announced an extension to the agreement from three to four years, with a significant increase in expected volumes and potential value. In line with the Stonehouse site completion expected in January 2022, we expect a ramp up in demand production and revenues from this deal in the same month.
In line with the growing emphasis on the sustainability agenda and an increasing legislative pressure to force the automotive sector towards non-fossil fuel motive power, we expect to see further interest from EV customers. During the year-to-date progress has been made with passenger and commercial vehicle OEMs/Tier1s, including the design, manufacture and supply of IHT sample/development parts.
Medical
IHT's application for medical catheters represents a significant opportunity through the provision of long, narrow flex PCBs to replace multiple micro-wires, very small gauge wires that are currently used to connect remote (distal) electronics through the patient and out to the surgeon.
In May we announced a multi-year agreement with the Stockholm-based medical device technology company CathPrint AB. This agreement paves the way for a potential longer-term ramp up in volume. Elsewhere, the Group has made good progress in this market and is working with a number of other active customers in that sector to supply parts for catheter products, and we expect to see larger production orders placed in the not-too-distant future
Aerospace
Aerospace forms another of the target markets for Trackwise through the application of IHT to battery management systems. Despite the impact of COVID on the global aviation industry, the Group is working with a number of customers in this space and, as trading conditions and aviation activity normalises, we expect to see further opportunities in this field.
Other IHT
The Group continues to attract interest from a number of additional markets in which IHT is applicable. The Group continues to explore these markets and engage with potential customers, and this year it has successfully delivered a project to customer in nuclear fusion, and the Group expects further demand from this customer in due course.
Advanced PCBs
The Advanced PCBs division comprises Trackwise's legacy radiofrequency (RF) division and the printed circuit board manufacturer Stevenage Circuits Limited, acquired by Trackwise in 2020.
This division delivered a solid first half, despite the ongoing impact from supply chain issues, with revenues up c. 6% from H2 2020. Our order book remains strong and there will be an additional shift added to accommodate demand seen recently and anticipated in future.
Current trading and outlook
The Company is making good progress with its investment into the Stonehouse site, enabling the roll-to-roll production of IHT in the new year in order to service our EV OEM customer and other customers being developed.
Alongside this, IHT acceptance continues to grow, and the Company is on track to deliver record IHT revenues in 2021. Our EV OEM product delivery is due to begin in early 2022, aligned with the opening of our third site at Stonehouse.
While the Company has successfully navigated the supply chain issues around the supply of copper, we are not immune from the ongoing uncertainty in the wider external environment. As a result, while they will naturally ebb and flow, further supply chain issues are likely to continue to affect the Group's end customers and suppliers in the short term.
The Group is well-positioned to manage these pressures and, as a result, management expects to report 2021 trading in line with market expectations. Overall, the long-term prospects for the Company remain as exciting as ever and we remain confident in the Group's strategy and future growth prospects.
Interim Condensed Consolidated Statement of Comprehensive Income
Notes Unaudited Unaudited Audited Six months Six months Year ended ended 30 ended 30 31 December June 2021 June 2020 2020 GBP'000 GBP'000 GBP'000 Revenue 3 4,090 2,389 2 6,068 Cost of sales (2,904) (1,964) (4,350) Gross profit 1,186 425 1,718 Administrative expenses excluding exceptional costs and share based payment (1,315) (790) (1,903) Exceptional and non-recurring costs (195) - (128) Share based payment charges 4 (149) (112) (228) Total administrative expenses (1,623) (902) (2,259) Operating loss (473) (477) (541) Negative goodwill arising on acquisition - 1,545 1,642 Acquisition expenses - (214) (226) Exceptional integration costs - - (278) Finance income - - 4 Finance costs (138) (66) (195) (Loss)/profit before taxation (611) 788 406 Taxation 5 42 133 828 (Loss)/profit and total comprehensive (expense)/income for the period (569) 921 1,234 ------------ ------------- ------------- (Loss)/earnings per share (pence) Basic 7 (2.00) 4.98 5.96 ------------ ------------- ------------- Diluted 7 (2.00) 4.82 5.70 ------------ ------------- -------------
Interim Condensed Consolidated Statement of Financial Position
Notes Unaudited Unaudited Audited 30 June 30 June 31 December 2021 2020 2020 GBP'000 GBP'000 GBP'000 ASSETS Non-current assets Intangible assets 8 7,940 5,200 6,482 Property, plant and equipment 11,425 8,363 8,175 19,365 13,563 14,657 ---------- ---------- ------------- Current assets Inventories 2,296 1,740 2,010 Trade and other receivables 5,498 1,585 1,752 Current tax receivable 1,146 448 804 Cash and cash equivalents 4,806 3,209 13,930 ---------- ---------- ------------- 13,746 6,982 18,496 ---------- ---------- ------------- Total assets 33,111 20,545 33,153 ---------- ---------- ------------- LIABILITIES Current liabilities Trade and other payables (2,501) (2,210) (1,956) Borrowings (887) (575) (1,055) (3,388) (2,785) (3,011) ---------- ---------- ------------- Non-current liabilities Deferred income - grants (975) (914) (910) Borrowings (3,714) (3,640) (4,078) Deferred tax liabilities (506) (401) (206) Provisions (79) (310) (79) ---------- ---------- ------------- (5,274) (5,265) (5,273) ---------- ---------- ------------- Total liabilities (8,662) (8,050) (8,284) ---------- ---------- ------------- Net assets 24,449 12,495 24,869 ---------- ---------- ------------- EQUITY Share capital 1,137 885 1,137 Share premium account 20,989 9,374 20,989 Retained earnings 2,214 2,088 2,615 Revaluation reserve 109 148 128 Total equity 24,449 12,495 24,869 ---------- ---------- -------------
Interim Condensed Consolidated Statement of Changes in Equity
Share Share premium Retained earnings Revaluation reserve Total equity capital account GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 1 January 2020 591 4,234 1,045 167 6,037 Profit and total comprehensive income for the period - - 921 - 921 Issue of shares 294 5,140 - - 5,434 Share based payment - - 103 - 103 Revaluation realised in period - - 19 (19) - --------- -------------------- ------------------ -------------------- ------------- At 30 June 2020 885 9,374 2,088 148 12,495 --------- -------------------- ------------------ -------------------- ------------- Profit and total comprehensive income for the period - - 313 - 313 Issue of shares 252 11,615 - - 11,867 Share based payment - - 160 160 Prior year tax adjustment - - 34 - 34 Revaluation realised in period - - 20 (20) - At 31 December 2020 and 1 January 2021 1,137 20,989 2,615 128 24,869 --------- -------------------- ------------------ -------------------- ------------- Loss and total comprehensive expense for the period - - (569) - (569) Share based payment - - 149 - 149 Revaluation realised in period - - 19 (19) - -------------------- -------------------- At 30 June 2021 1,137 20,989 2,214 109 24,449 --------- -------------------- ------------------ -------------------- -------------
Interim Condensed Consolidated Statement of Cash Flows
Unaudited Six Unaudited Six Audited months ended 30 months ended 30 Year ended 31 June 2021 June 2020 December 2020 GBP'000 GBP'000 GBP'000 Cash flow from operating activities (Loss)/profit for the period before taxation (611) 788 406 Adjustment for: Employee share based payment charges 149 112 263 263 Depreciation of property, plant and equipment 524 349 693 Amortisation of intangible assets 181 118 265 Negative goodwill credited - (1,545) (1,642) Finance costs 138 66 191 Changes in working capital: Increase in inventories (286) (314) (584) (Increase)/decrease in trade and other receivables (732) 459 374 (Decrease)/increase in trade and other payables (221) 21 (362) ------------------- ------------------- -------------------- Cash (used in)/from operations (858) 54 (396) Income tax received - 420 669 ------------------- ------------------- -------------------- Net cash (used in)/from operating activities (858) 474 273 ------------------- ------------------- -------------------- Cash flow from investing activities Purchase of property, plant and equipment (6,266) (359) (911) Purchase of intangible assets (1,478) (1,036) (2,246) Purchase of subsidiary (net of cash acquired) - (1,629) (1,628) Grant funding - purchase of intangible assets 92 - 109 Interest received - - 4 (4,672) Net cash used in investing activities (7,652) (3,024) (4,672) ------------------- ------------------- -------------------- Cash flow from financing activities Share capital issued - 5,873 18,492 Expenses relating to share capital issue - (439) (1,191) Interest paid (138) (66) (195) Lease payments (106) (81) (87) Advance of hire purchase finance against assets already purchased 135 - 1,139 Repayment of other finance (128) - - Repayment of capital element of lease contracts (377) (95) (396) ---------- -------- --------- Net cash (used in)/from financing activities (614) 5,192 17,762 ---------- -------- --------- (Decrease)/increase in cash and cash equivalents (9,124) 2,642 13,363 ---------- -------- --------- Net cash and cash equivalents at beginning of the period 13,930 567 567 Net cash and cash equivalents at end of period (all cash balances) 4,806 3,209 13,930 ---------- -------- ---------
Notes to the Interim Financial Information
1. Corporate information
Trackwise Designs plc is a public company incorporated in the United Kingdom. The registered address of the Company is 1 Ashvale, Alexandra Way, Ashchurch, Tewkesbury, Gloucestershire, GL20 8NB.
The principal activity of the Company and the Group is the development, manufacture and sale of printed circuit boards.
2. Accounting policies
Basis of preparation
This unaudited consolidated interim financial information has been prepared in accordance with IFRS as adopted by the United Kingdom including IAS 34 'Interim Financial Reporting'. The principal accounting policies used in preparing the interim results are those it expects to apply in its financial statements for the year ending 31 December 2021. These are unchanged from those applied in the 31 December 2020 Company financial statements
The financial information does not contain all of the information that is required to be disclosed in a full set of IFRS financial statements. The financial information for the six months ended 30 June 2021 and 30 June 2020 is unreviewed and unaudited and does not constitute the Group or Company's statutory financial statements for those periods.
The comparative financial information for the full year ended 31 December 2020 has, however, been derived from the audited statutory financial statements for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying its report and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.
The financial information in the Interim Report is presented in Sterling.
3. Segmental reporting
IFRS 8, Operating Segments, requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the company's chief operating decision maker. The chief operating decision maker is considered to be the Board of Directors.
The operating segments are monitored by the chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results. From January 2018 the RF and IHT activities began to be separately reviewed and monitored, initially in respect of revenue. Since the acquisition of Stevenage Circuits Limited in April 2020 the Company monitors separately the IHT business and the Advanced PCB business, which comprises the Stevenage Circuits Limited and the RF business of Trackwise Designs plc.
All assets, liabilities and revenues are located in, or derived in, the United Kingdom. The material assets and liabilities relate to overall activity with the exception of the intangible development costs and deferred grants which are solely in respect of IHT.
In the six months ended 30 June 2021 the group had one major customer who represented 11% of revenue (30 June 2020: two major customers who each represented 12% of total revenue, and full year ended 31 December 2020: 3 customers with similar revenue levels together representing 29% of revenue).
Revenue by product and geographical destination was as follows:
Unaudited Unaudited Audited Six months Six months Year ended ended 30 ended 30 31 December June 2021 June 2020 2020 GBP'000 GBP'000 GBP'000 IHT 581 251 601 APCB 3,509 2,138 5,467 --------------- ------------ ------------- 4,090 2,389 6,068 --------------- ------------ ------------- UK 3,053 1,495 3,693 Europe 732 751 1,688 Other 305 143 687 4,090 2,389 2 6,068 --------------- ------------ ------------- 4. Exceptional and non-recurring items
Non recurring amounts disclosed in administrative expenses are as follows:
Unaudited Unaudited Audited Six months Six months Year ended ended 30 ended 30 31 December June 2021 June 2020 2020 GBP'000 GBP'000 GBP'000 New production site set 141 - - up expenditure Integration and other costs 54 - - Set up costs for new customer - - 128 --------------- ------------ ------------- 195 - 128 --------------- ------------ ------------- 5. Income tax
Taxation is provided at the estimated rate of tax for the period, applying the enacted rate of 25% (2020:19%) to deferred tax balances as applicable to the expected reversal dates, and including the benefit of enhanced allowances for research and development costs in tax losses used to record a credit paid to the group.
The credits have been impacted by both the change in deferred tax rate following enactment of the Finance Act 2021 and by movements in the period end share price directly affecting deferred tax in respect of future deductions from the exercise of share options. These non-recurring items have been analysed in the elements of the tax credit shown below.
Unaudited Unaudited Audited Six months Six months Year ended ended 30 ended 30 31 December June 2021 June 2020 2020 GBP'000 GBP'000 GBP'000 Development expenditure tax credits 342 133 633 Deferred tax in respect of share options (141) - 440 Deferred tax change in rate (121) - 53 Deferred tax from other timing differences (38) - (298) --------------- ------------ ------------- 42 133 828 --------------- ------------ ------------- 6. Dividends paid and proposed
No dividends have been paid or proposed in the period ended 30 June 2021 or year ended 31 December 2020.
7. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Unaudited Unaudited Audited Six months Six months Year ended ended 30 ended 30 31 December June 2021 June 2020 2020 GBP'000 GBP'000 GBP'000 (Loss)/earnings for the purpose of basic and diluted earnings per share being net (loss)/profit attributable to the shareholders (569) 921 1,234 --------------- ------------ ------------- Number Number Number Weighted average number of ordinary shares for the purposes of basic (loss)/earnings per share 28,426,122 18,503,836 20,687,836 Weighted average number of ordinary shares for the purposes of diluted (loss)/earnings per share 28,426,122 19,116,462 21,659,166
Options over 901,909 shares were granted to employees on 15 June 2018 and 984,000 on 24 June 2020 which are still exercisable and potentially dilutive shares included in the weighted average for the year ended 31 December 2020.
8. Intangible fixed assets Development costs GBP'000 Cost At 1 January 2020 4,368 Additions 1,024 As at 30 June 2020 5,392 Additions 1,423 As at 31 December 2020 6,815 Additions 1,548 As at 30 June 2021 8,363 ------------ Amortisation or impairment At 1 January 2020 268 Charge 113 As at 30 June 2020 381 Charge 142 As at 31 December 2020 523 Charge 175 As at 30 June 2021 698 ------------ Carrying amount As at 30 June 2020 5,011 ------------ As at 31 December 2020 6,292 ------------ As at 30 June 2021 7,665 ------------
The capitalised development project costs relate to the significant continuing investment in respect of the Company's Improved Harness Technology ('IHT') process for unlimited length printed circuit boards and know-how which is being developed by the Company with amortisation on the initial development projects commencing in 2018.
The remainder of intangible assets is represented by software assets and an unchanged amount of goodwill in respect of the initial technology.
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