TIDMTWD
RNS Number : 2525B
Trackwise Designs PLC
30 September 2022
TRACKWISE DESIGNS PLC
("Trackwise" or the "Company")
Interim Results for the six months ended 30 June 2022
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
2022.
Financial highlights
-- Revenues of GBP3.8m (H1 2021: GBP4.1m)
-- IHT revenues of GBP0.55m (H1 2021: GBP0.58m)
-- Gross margin of 23.7% (H1 2021: 29.0%)
-- Adjusted(1) EBITDA of GBP0.83m (H1 2021: GBP0.45m)
-- Adjusted(2) operating profit of GBP0.09m (H1 2021: loss GBP0.13m)
-- Reported loss after tax of GBP1.39m (H1 2021: loss GBP0.57m),
after exceptional costs of GBP2.0m
-- Net debt(2) of GBP7.8m (cash of GBP2.4m) (31 December 2021:
GBP2.1m, cash of GBP2.9m), following continued investment at the
Stonehouse facility
-- Basic EPS - loss per share of 3.73 pence (H1 2021: loss per share of 2.00 pence)
(1) Before share based payments and exceptional costs;
(2) Cash less borrowings, excluding IFRS16 right of use lease
liabilities
Operational highlights
-- Completion of equity raise of GBP7m to support growth, as
announced in December 2021
-- Appointment of Paul Cook as Chief Financial Officer
designate
-- Continued progress made in preparing Stonehouse to become
fully operational later in FY22
-- Installed and commissioned Double Belt Press
-- Completion of GBP5.2m asset finance
-- IHT total customers and opportunities across target markets
of 97 as at 30 June 2022
-- Development of plans for Phase 2 of Stonehouse facility, in
response to significant pipeline of demand for EV Cell Connection
Systems (CCS) from UK and EU OEMs and Tier 1s.
Philip Johnston, CEO of Trackwise, commented :
"The development of our third manufacturing site at Stonehouse
continues, and we expect to see this completed in 2022 to meet
production demand from our EV OEM customer.
It is inevitable that our performance is closely linked to that
of our first IHT production customer and the EV OEM announced on 11
August 2022 that it expects lower production volumes in 2022
compared to previous estimates. As we announced earlier this month,
the announcement of the lower production volumes has had a knock-on
impact on the availability, to the Company, of the planned
asset-backed debt funding for the remaining pieces of capital
expenditure at the new Stonehouse facility and, in addition,
increases the Company's short-term cash requirements. Discussions
with the EV OEM are progressing towards agreeing a new contractual
arrangement whereby the EV OEM will provide an advance payment
against future product deliveries, and such advance payment is
expected to be backed by security.
The wider impact of the lower production volumes is that
additional funding will be required and the Company is reviewing a
number of options for additional funding with its advisers and will
provide further updates in due course.
In addition, the Company is exploring longer term strategic
investment partnerships in order to support development and
conversion of the very significant pipeline of identified IHT sales
opportunities, notably for EV battery cell connection systems
("CCS") for UK and EU OEMs, Tier 1 suppliers, and also for other
Medical and Aerospace sales opportunities."
Enquiries
Trackwise Designs plc +44 (0)1684 299 930
Philip Johnston, CEO www.trackwise.co.uk
Paul Cook, 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 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.
Financial Review
Revenue for the period fell slightly to GBP3.8m (H1
2021:GBP4.1m), which reflects the delay of an order at Stevenage
Circuits Limited (SCL) and the delayed start of production for the
EV OEM. Profitability was held back by lower sales, higher utility
costs and the under-recovery of costs as a result of lower than
expected volumes.
The lower gross profit was offset by other income of GBP0.7m,
which was the partial recognition of the estimated compensation due
as a result of the EV OEM's order shortfall against the guaranteed
minimum volumes set out in the contract. The Company incurred
further exceptional costs of GBP2.0m relating to the set-up of the
Stonehouse facility and the commencement of low volume production
for the EV OEM contract at Trackwise's Ashvale site. The loss
before taxation was GBP2.1m (H1 2021: loss GBP0.6m).
The outcome of the period is that losses per share were (3.73)p
(H1 2021 losses per share: (2.00p)) .
Capital expenditure in the first half was GBP6.4m. While this
reflected continued investment ahead of the EV OEM's start of
production, it also included the installation of the double-belt
press. This is the Company's largest ever single investment and
allows us to fully exploit our Improved Harness Technology patent
and know-how.
The first half also saw an increase in working capital.
Inventory increased by GBP0.7m as a result of a build-up ahead of
the expected start of production for the EV OEM contract and a
stock build of some materials with long lead time at SCL. Debtors
increased by GBP1.7m, primarily as a result of the other income
accrued on the EV OEM contract and up-front payments for the
purchase of nickel foil ahead of the expected ramp-up of the EV OEM
contract.
These cash outflows were financed by from the GBP5.5m of
proceeds from the Placing and Open Offer launched in December 2021
and asset-backed funding of GBP5.2m. In addition, in January 2022 a
new invoice discount facility of GBP1.0m was established for SCL
and has subsequently been partially drawn down.
At 30 June 2021 the Company had net debt of GBP7.8m, reflecting
the cash movements above. Gross cash was GBP2.4m and there were
unused invoice discounting facilities, subject to the lender's draw
down criteria, of GBP1.7m.
Going Concern Review
In our annual report for the year ended 31 December 2021, which
was published on 29 July 2022, we reported that there was a funding
shortfall in our downside scenario forecasts which, together with
the risks surrounding some assumptions within our forecast models,
indicated that there were circumstances that gave rise to a
material uncertainty related to going concern.
At the time the Company was in discussions for the provision of
asset-backed funding of GBP4.4m and a trade finance facility of
GBP1.9m. As mentioned above, on 11 August 2022 the EV OEM customer
announced that it expects lower production volumes in 2022 compared
to previous estimates. This has had a knock-on impact on the
availability of the planned asset-backed debt funding and the trade
finance facility, which has impacted the Company's short-term cash
position.
In order to determine that the going concern assumption for the
preparation of these accounts continues to be correct the Directors
have prepared a Base Case forecast using the following major
assumptions:
Ø The Company shortly agrees a new contractual arrangement
whereby the EV OEM will provide an advance payment against future
product deliveries;
Ø the Group delivers its EV customer's revised orders in 2023.
These volumes are below the level of the current orders on hand and
are significantly below the guaranteed minimum volumes (GMV) set
out in the contract with the EV OEM customer;
Ø there are no further orders from the EV OEM customer for
delivery after June 2023;
Ø there is an improvement in the operating performance of
Stevenage Circuits Limited, the group's other trading subsidiary,
compared to the year ended 31 December 2021;
Ø that our machinery suppliers have no further delivery delays
and consequently the capital expenditure programme for the
Stonehouse facility is completed in 2022;
Ø that the Group's bankers maintain the invoice discounting
facilities that are currently in place; and
Ø discussions for the provision of further funding are
successfully completed.
The Company is discussing a new contractual arrangement whereby
the EV OEM will provide an advance payment against future product
deliveries and the Company is reviewing a number of options for
additional funding with its advisers.
Whilst the Base Case forecast represents, in the Board's view,
the most likely scenario there may be continuing impacts from all
of the risks identified above and so consequently there will be
risks that performance will be below our expectations. Therefore,
the Directors have also prepared a severe but plausible downside
scenario which assumes the following:
Ø that the Company fails to agree the new contractual
arrangement with the EV OEM; and
Ø no further funds can be raised.
In these circumstances the Group would face a funding shortfall
of GBP7.9m. This, together with the risk surrounding some of the
assumptions within the models, indicates that there are
circumstances that give rise to a material uncertainty related to
going concern.
On the basis of the Base Case assumptions noted above the Base
Case forecast shows that the Group will be able to continue as a
going concern.
Board Change
At the company's Annual General Meeting on 22 August 2022 Mark
Hodgkins stepped down as a director and Paul Cook was appointed as
CFO.
CEO's Statement
It remains a difficult time to be in business, with labour
supply, inflation, supply chain dislocation and Brexit-related
customs issues all posing their own challenges to the business.
However, these challenges are being, can be, and will be met by
pro-active management of the issues across the three sites.
Beyond the contract with the UK EV OEM, we are actively pursuing
the very large market opportunity - which could total many GBP100m
of business - in the developing UK and European EV supply chain for
battery CCS. Stonehouse Phase 2 will be - in our opinion - a unique
and well-positioned resource to deliver that opportunity. We are
confident of further material developments, regardless of the
macro-economic situation.
The APCB division, where we have recently appointed a new
Managing Director, remains an important part of the business, but
the principal growth will come from IHT. The investments that we
have made - the building for growth - are and will continue to
deliver, across the three principal IHT market verticals.
At the top end of our capability, Trackwise is one of, if not
the, leading supplier of long flex PCBs worldwide. I am very
grateful for all stakeholders for their part in helping the
business towards achieving its potential.
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.
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.
With the delivery and commissioning of the Double Belt Press
(DBP), the length-unlimited multilayer flex PCB manufacturing
process envisaged in the original IHT patent application in January
2012 has now been realised as an in-house capability. This is a
major milestone for the business.
The DBP is a key strategic asset, providing a state-of-the-art
capability to manufacture our own metal-clad laminates, as well as
allowing us to bond together individual circuit layers to form the
patented length-unlimited multilayer circuits. A number of customer
developments had been held until such time as we have this
capability in-house, and, more generally, our rate of development
has the potential to speed up immeasurably.
Advanced PCBs
The Advanced PCBs division comprises Stevenage Circuits
Limited.
The division delivered a disappointing first half, with sales
down 10.6%, due to an expected GBP250,000 outsourced order being
deferred, now expected in the second half. Sales of manufactured
products increased by 7.6%, driven largely by price increases.
We were delighted to welcome Christoph Boueke, as Managing
Director of Stevenage Circuits Limited in July 2022.
Current trading and outlook
Following the appointment of the new Managing Director of the
APCB division, we have already started to see improved operations
within the business and performance is expected to continue to
improve in the medium term.
While delays from our EV OEM are disappointing and highly
disruptive to the business, the Company is working with the OEM and
with other funders to allow the roll-to-roll production capability
at the Stonehouse site to begin production in Q4 2022, to achieve
full (single shift) production in Q1 2023, thereby proving our
ability to deliver "Quantity, Quality, Qualified", a key milestone
for the business.
Discussions with the EV OEM are progressing towards agreeing a
new contractual arrangement whereby the EV OEM will provide an
advance payment against future product deliveries, and such advance
payment is expected to be backed by security.
The wider impact of the lower production volumes from our EV OEM
is that additional funding will be required and the Company is
reviewing a number of options for additional funding with its
advisers and will provide further updates in due course.
The Company is exploring longer term strategic investment
partnerships in order to support development and conversion of the
very significant pipeline of identified IHT sales opportunities,
notably for EV battery cell connection systems ("CCS") for UK and
EU OEMs, Tier 1 suppliers, and also for other Medical and Aerospace
sales opportunities.
Interim Condensed Consolidated Statement of Comprehensive
Income
Notes Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
GBP'000 GBP'000 GBP'000
Revenue 3 3,781 4,090 8,011
Cost of sales (2,884) (2,904) (5,699)
Gross profit 897 1,186 2,312
Other operating income 4 729 - 57
Administrative expenses
excluding exceptional
costs and share based
payment (1,540) (1,315) (2,953)
Exceptional and non-recurring
costs 5 (2,013) (195) (941)
Share based payment charges (27) (149) (153)
Total administrative expenses (3,580) (1,659) (4,047)
Operating loss (1,954) (473) (1,678)
Finance income - - 3
Finance costs (175) (138) (301)
Loss before taxation (2,128) (611) (1,976)
Taxation 6 737 42 324
Loss and total comprehensive
expense for the period (1,392) (569) (1,652)
------------ ------------- -------------
Loss per share (pence)
Basic and diluted 8 (3.73) (2.00) (5.78)
------------ ------------- -------------
Interim Condensed Consolidated Statement of Financial Position
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 9 10,774 7,940 9,932
Property, plant and
equipment 10 22,731 11,425 13,131
33,505 19,365 23,063
---------- ---------- -------------
Current assets
Inventories 2,679 2,296 2,022
Trade and other receivables 5,538 5,498 7,795
Current tax receivable 1,147 1,146 858
Cash and cash equivalents 2,360 4,806 2,897
---------- ---------- -------------
11,724 13,746 13,572
---------- ---------- -------------
Total assets 45,229 33,111 36,635
---------- ---------- -------------
LIABILITIES
Current liabilities
Trade and other payables (2,844) (2,501) (3,015)
Borrowings 11 (3,036) (887) (1,850)
(5,880) (3,388) (4,865)
---------- ---------- -------------
Non-current liabilities
Deferred income -
grants (1,090) (975) (1,067)
Borrowings 11 (9,397) (3,714) (5,514)
Deferred tax liabilities (153) (506) (623)
Provisions (115) (79) (115)
---------- ---------- -------------
(10,755) (5,274) (7,319)
---------- ---------- -------------
Total liabilities (16,635) (8,662) (12,184)
---------- ---------- -------------
Net assets 28,594 24,449 24,451
---------- ---------- -------------
EQUITY
Share capital 1,500 1,137 1,207
Share premium account 27,215 20,989 22,000
Retained earnings (191) 2,214 1,155
Revaluation reserve 70 109 89
Total equity 28,594 24,449 24,451
---------- ---------- -------------
Interim Condensed Consolidated Statement of Changes in Equity
Share Share Retained Revaluation Total
capital premium earnings reserve equity
account
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 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
--------- --------- ---------- ------------ --------
Loss and total comprehensive
expense for the
period - - (1,083) - (1,083)
Issue of shares 70 1,011 - - 1,081
Share based payment - - 4 - 4
Revaluation realised
in period 20 (20)
At 31 December
2021 1,207 22,000 1,155 89 24,451
--------- --------- ---------- ------------ --------
Loss and total comprehensive
expense for the
period - - (1,392) - (1,392)
Issue of shares 293 5,215 - - 5,508
Share based payment - - 27 - 27
Revaluation realised
in period - - 19 (19) -
--------- ------------
At 30 June 2022 1,500 27,215 (191) 70 28,594
--------- --------- ---------- ------------ --------
Interim Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
Six months Six months Year
ended 30 ended ended
June 2022 30 June 31 December
2021 2021
GBP'000 GBP'000 GBP'000
Cash flow from operating
activities
Loss for the period before
taxation (2,129) (611) (1,976)
Adjustment for:
Employee share-based payment
charges 27 149 153
Depreciation of property,
plant and equipment 585 524 965
Amortisation of intangible
assets 273 181 426
Finance costs 175 138 298
Changes in working capital:
Increase in inventories (657) (286) (12)
Increase in trade and other
receivables (1,660) (732) (375)
(Decrease)/increase in trade
and other payables (204) (221) 1,003
------------ ------------ -------------
Cash (used in)/from operations (3,590) (858) 482
Income tax (paid)/received (22) - 687
------------ ------------ -------------
Net cash (used in)/from operating
activities (3,612) (858) 1,169
------------ ------------ -------------
Cash flow from investing
activities
Purchase of property, plant
and equipment (6,358) (6,266) (10,649)
Purchase of intangible assets (1,030) (1,478) (3,553)
Grant funding 56 92 214
Interest received - - 3
Net cash used in investing
activities (7,566) (7,652) (13,985)
------------ ------------ -------------
Cash flow from financing
activities
Share capital issued 5,855 - 1,230
Expenses relating to share
capital issue (347) - (149)
Interest paid (171) (138) (301)
Lease payments (141) (106) (187)
Bank loan advanced - - 1,960
Bank loan repayments (35) - (23)
Advance of hire purchase finance
against assets already purchased 5,166 135 -
Cash inflow from invoice discounting
and other short-term financing 490 - 184
Repayment of short-term financing - (128) (128)
Repayment of capital element
of lease contracts (410) (377) (801)
-------- --------- ---------
Net cash from/(used in) financing
activities 10,771 (614) 1,785
-------- --------- ---------
Decrease in cash and cash
equivalents (537) (9,124) (11,033)
-------- --------- ---------
Net cash and cash equivalents
at beginning of the period 2,897 13,930 13,930
Net cash and cash equivalents
at end of period (all cash
balances) 2,360 4,806 2,897
-------- --------- ---------
Notes to the condensed interim financial statements
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 2022. These are unchanged from those
applied in the 31 December 2021 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 2022 and 30 June 2021 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 2021 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.
Going Concern
The auditor's report on those accounts was unqualified, but
includes reference to a material uncertainty in respect of the
going concern basis without qualifying its report and did not
contain a statement under section 498(2)-(3) of the Companies Act
2006.
The Directors have considered the principal risks and
uncertainties facing the business. In making this assessment the
Directors have prepared cash flows for the foreseeable future.
These forecasts show that the Company should be able to manage its
working capital and existing resources to enable it to meet its
liabilities as they fall due. These forecasts have considered the
risks that the Company faces, notably:
Ø The Company shortly agrees a new contractual arrangement
whereby the EV OEM will provide an advance payment against future
product deliveries;
Ø that the EV OEM places a replacement order at higher prices
than those currently being charged;
Ø the Group delivers its EV customer's replacement order in full
in H1 2023. These volumes are below the level of the current orders
on hand and are significantly below the guaranteed minimum volumes
(GMV) set out in the contract with the EV OEM customer;
Ø there are no further orders from the EV OEM customer for
delivery after June 2023;
Ø there is an improvement in the operating performance of
Stevenage Circuits Limited, the group's other trading subsidiary,
compared to the year ended 31 December 2021;
Ø that our machinery suppliers have no further delivery delays
and consequently the capital expenditure programme for the
Stonehouse facility is completed in 2022;
Ø that the Group's bankers maintain the invoice discounting
facilities that are currently in place; and
Ø discussions for the provision of further funding are
successfully completed.
Further narrative in respect to the going concern evaluation
performed by management is disclosed within the Going Concern
section of the Financial Review above.
The risk surrounding some of the assumptions within the
forecasts indicates that there are circumstances that give rise to
a material uncertainty related to going concern. However, the
directors remain confident that the group remains a going concern
and as such have prepared the Financial Statements on a going
concern basis.
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 APCB and
IHT activities began to be separately reviewed and monitored,
initially in respect of revenue.
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 2022 the group had one major IHT
customer who represented 11.2% and one APCB customer who
represented 9.6% of total revenue (30 June 2021: one major customer
who represented 11% of total revenue, and full year ended 31
December 2021:one APCB customer representing 12.7% of total revenue
and one IHT customer representing 9.5% of total 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 2022 June 2021 2021
GBP'000 GBP'000 GBP'000
IHT 546 581 1,480
APCB 3,235 3,509 6,531
--------------- ------------ -------------
3,781 4,090 8,011
--------------- ------------ -------------
UK 2,706 3,053 6,065
Europe 592 732 1,309
Other 483 305 637
3,781 4,090 8,011
--------------- ------------ -------------
4. Other operating income
There have been delays in orders from a major new customer
contract which are subject to compensatory income for the Company.
Other operating income includes GBP698,000 which is an estimate of
this income and is subject to a significant degree of judgement in
respect of the overall commercial negotiations as the production is
set up and commences.
5. 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 2022 June 2021 2021
GBP'000 GBP'000 GBP'000
New facility set up costs 1,219 141 941
Additional production and 794 - -
set-up costs
Integration and other costs - 54 -
2,013 195 941
--------------- ------------ -------------
The new facility and production contract requirements have
resulted in costs relating to the Stonehouse site during
preparation and set up ready for production. In addition there have
been ongoing additional costs of production and inefficiencies at
Ashvale in order to meet orders on a temporary basis whilst all new
plant is set up and commissioned. At the new facility, costs arise
from employing staff that have been engaged in refurbishment and
installation work rather than volume production. There are also the
property running costs including utilities, rates and professional
fees arising in this non-productive phase.
6. Income tax
Taxation is provided at the estimated rate of tax for the
period, applying the enacted rate of 25% (2021:25%) to deferred tax
balances as applicable to the expected reversal dates after March
2023, and including the benefit of enhanced allowances for research
and development costs in tax losses used to claim a credit payable
as cash to the group.
The overall 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 2022 June 2021 2021
GBP'000 GBP'000 GBP'000
Development expenditure
tax credits 267 342 740
Deferred tax in respect
of share options (58) (141) (252)
Deferred tax change in rate - (121) (168)
Deferred tax from other
timing differences 528 (38) 4
--------------- ------------ -------------
737 42 324
--------------- ------------ -------------
7. Dividends paid and proposed
No dividends have been paid or proposed in the period ended 30
June 2022 or year ended 31 December 2021.
8. 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 2022 June 2021 2021
GBP'000 GBP'000 GBP'000
Loss for the purpose of basic
and diluted earnings per share
being net loss attributable
to the shareholders (1,392) (569) (1,652)
--------------- ------------ -------------
Number Number Number
Weighted average number of
ordinary shares for the purposes
of basic and diluted loss
per share 37,305,605 28,426,122 28,597,901
--------------- ------------ -------------
There are options which remain exercisable over 1,528,912
ordinary shares at 30 June 2022 and which are potentially dilutive
shares. There is no dilution of a loss for the period or
comparative periods.
9. Intangible fixed assets
Development
costs
GBP'000
Cost
At 1 January 2021 6,815
Additions 1,548
As at 30 June 2021 8,363
Additions 2,236
As at 31 December 2021 10,599
Additions 1,107
As at 30 June 2022 11,706
------------
Amortisation
At 1 January 2021 523
Charge 175
As at 30 June 2021 698
Charge 227
As at 31 December 2021 925
Charge 259
As at 30 June 2022 1,184
------------
Carrying amount
As at 30 June 2021 7,665
------------
As at 31 December 2021 9,674
------------
As at 30 June 2022 10,522
------------
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.
10. Tangible fixed assets
Freehold Leasehold Plant Right Assets Total
property improvements and machinery of use under
asset construction
-buildings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
As at 1 January
2021 - 480 7,239 2,728 - 10,447
Additions 3,002 4 302 - 625 3,933
As at 30 June
2021 3,002 484 7,541 2,728 625 14,380
Additions - 8 656 36 1,611 2,311
Disposals - (62) (47) - - (109)
---------- -------------- --------------- ------------ -------------- --------
As at 31 December
2021 3,002 430 8,150 2,764 2,236 16,582
Additions - - 6,379 - 3,894 10,273
As at 30 June
2022 3,002 430 14,529 2,764 6,130 26,855
---------- -------------- --------------- ------------ -------------- --------
Depreciation
At 1 January 2021 - 161 1,771 340 - 2,272
Charge - 21 513 149 683
As at 30 June
2021 - 182 2,284 489 2,955
Charge - 21 434 150 - 605
Disposals - (62) (47) - - (109)
----------
As at 31 December
2021 - 141 2,671 639 - 3,451
Charge - 18 502 153 - 673
As at 30 June
2022 - 159 3,173 792 - 4,124
---------- -------------- --------------- ------------ -------------- --------
Carrying amount
As at 30 June
2021 3,002 302 5,257 2,239 625 11,425
---------- ------------
As at 31 December
2021 3,002 289 5,479 2,125 2,236 13,131
---------- -------------- --------------- ------------ -------------- --------
As at 30 June
2022 3,002 271 11,356 1,972 6,130 22,731
---------- -------------- --------------- ------------ -------------- --------
The group has continued to invest in the freehold production
facility at Stonehouse with the fit out of the property and new
plant being commissioned.
11. Borrowings
New hire purchase agreements have been drawn on in the period
ended 30 June 2022 in order to finance the new plant and equipment
at the Stonehouse facility. Other short-term financing represents
advances against equipment which is expected to be converted to a
term agreement when the equipment is fully in place.
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
Amounts falling due within
one year:
Lease liabilities 290 187 274
Hire purchase contract
obligations 1,452 700 772
Bank loan 71 - 71
Invoice financing 840 - 184
Other short-term financing 383 - 549
-------- -------- ------------
3,036 887 1,850
-------- -------- ------------
Amounts falling due between
one and five years:
Lease liabilities 1,362 1,289 1,308
Hire purchase contract
obligations 4,639 1,485 1,557
Bank loan 1,831 - 1,866
-------- -------- ------------
7,832 2,774 4,731
-------- -------- ------------
Amounts falling due in
more than five years:
Lease liabilities 572 940 783
Hire purchase contract 993 - -
obligations
-------- -------- ------------
1,565 940 783
-------- -------- ------------
Total borrowings 12,433 4,601 7,364
-------- -------- ------------
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END
IR BKCBNFBKDCCB
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