Trackwise swings to pre-tax loss

Investors have charged out of Trackwise Designs after the unpacking of full-year results. At 195p per share, the business — which manufactures a broad range of products using printed circuit technology (or PCT) — was last trading 14% lower on the day. This has trimmed 12-month gains to a still-impressive 125%.

Trackwise said that revenues increased 109% year-on-year in 2020, to £6.09m. But share pickers were disappointed by news that the UK electronics and electrical equipment share had swung to an adjusted pre-tax loss of £376,000. It had recorded a profit of £231,000 in 2019.

Trackwise had made “[a] resilient response to the pandemic with progress made against all elements of the group’s strategy,” it said. The business pointed to a significant multi-year manufacture and supply contract for its Improved Harness Technology (or IHT) that it had inked with a major British electric vehicle OEM. It also lauded the successful acquisition of Stevenage Circuits Limited last spring.

However, the business saw a sharp uptick in administrative expenses and cost of sales due to the Covid-19 crisis. The latter swelled by 141% year-on-year, to £4.4m.

Covid-19 continues to cause trouble

News of a big loss last year isn’t the only reason why Trackwise’s share price has slumped on Tuesday. In an update for the current year, the UK share said that it is experiencing “healthy interest levels and [a] growing pipeline”. But it added that “Covid-19 continues to impact pace of some customer investment, raw material supplies and operational upgrades such as the fit out of the new facility.”

Trackwise said too that additional development improvements being made to the UK electric vehicle OEM’s products will result in a rephasing of its production. This, combined with those aforementioned coronavirus-related problems, will cause some revenue for last year to be shunted into 2021.

Trackwise has acquired a third site which will allow it to increase capacity for IHT orders in 2021. It has also signed a multi-year IHT deal to supply medical device technology company Cathprint AB.

EV agreement extended but revenues delayed

Finally in a separate release it advised that its agreement with the British electric vehicle OEM had been extended from three to four years and “with a significant increase in expected volumes and potential value.”

The agreement would now be worth up to £54m in the four years to the end of 2020, Trackwise said. This is up from the £38m which the deal signed back in September was estimated to be worth. Trackwise added though that first material revenues were now expected in the first half of 2022 rather than in 2021.

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