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 £3.8m (H1 2021: £4.1m)

·    IHT revenues of £0.55m (H1 2021: £0.58m)

·    Gross margin of 23.7% (H1 2021: 29.0%)

·    Adjusted1 EBITDA of £0.83m (H1 2021: £0.45m)

·    Adjusted2 operating profit of £0.09m (H1 2021: loss £0.13m)

·    Reported loss after tax of £1.39m (H1 2021: loss £0.57m), after exceptional costs of £2.0m

·    Net debt2 of £7.8m (cash of £2.4m) (31 December 2021: £2.1m, cash of £2.9m), 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 £7m 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 £5.2m 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™ ("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 £3.8m (H1 2021:£4.1m), 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 £0.7m, 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 £2.0m 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 £2.1m (H1 2021: loss £0.6m).

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 £6.4m.  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 £0.7m 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 £1.7m, 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 £5.5m of proceeds from the Placing and Open Offer launched in December 2021 and asset-backed funding of £5.2m.  In addition, in January 2022 a new invoice discount facility of £1.0m was established for SCL and has subsequently been partially drawn down.

At 30 June 2021 the Company had net debt of £7.8m, reflecting the cash movements above.  Gross cash was £2.4m and there were unused invoice discounting facilities, subject to the lender's draw down criteria, of £1.7m.



 

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 £4.4m and a trade finance facility of £1.9m.  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 £7.9m.  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 £100m 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 £250,000 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 Six months ended 30 June 2022

 

Unaudited Six months ended 30 June 2021

 

Audited

Year ended 31 December 2021

 

 

£'000

 

£'000

 

£'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 30 June 2022


Unaudited 30 June 2021


Audited

31 December 2021

 

 

£'000

 

£'000

 

£'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 capital

 

Share premium account

 

Retained earnings

 

Revaluation reserve

 

Total equity

 

£'000

 

£'000

 

£'000

 

£'000

 

£'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 Six months ended 30 June 2022

 

Unaudited Six months ended 30 June 2021

 

Audited

Year ended 31 December 2021

 

 

 

 

£'000

 

£'000

 

Cash flow from operating activities






 

Loss for the period before taxation



(611)


(1,976)

 

Adjustment for:

 

 




 

Employee share-based payment charges

 

27


149


153

 

Depreciation of property, plant and equipment

 


524


965

 

Amortisation of intangible assets

 


181


426

 

Finance costs

 


138


298

 

Changes in working capital:

 





 

Increase in inventories

 


(286)


(12)

 

Increase in trade and other receivables

 


(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

 


(6,266)


(10,649)

 

Purchase of intangible assets

 


(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 Six months ended 30 June 2022

 

Unaudited Six months ended 30 June 2021

 

Audited

Year ended 31 December 2021

 

        £'000

 

£'000

 

£'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 £698,000 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 Six months ended 30 June 2022

 

Unaudited Six months ended 30 June 2021

 

Audited

Year ended 31 December 2021

 

        £'000

 

£'000

 

£'000







New facility set up costs

1,219


141


941

Additional production and set-up costs

794


-


-

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 Six months ended 30 June 2022

 

Unaudited Six months ended 30 June 2021

 

Audited

Year ended 31 December 2021

 

        £'000

 

£'000

 

£'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:

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



 

£'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 property

Leasehold improvements

Plant and machinery

Right of use asset -buildings

Assets under construction

Total

 

£'000

£'000

£'000

£'000

£'000

£'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

 

 

£'000

£'000

£'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 obligations

 

993

-

-


 

1,565

940

783


 

 

 

 

Total borrowings

 

12,433

4,601

7,364

 

 

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