Trackwise shares rocket as it resets agreement with EV OEM

21st Oct 2022 15:24

(Sharecast News) - Printed circuit technology specialist Trackwise Designs has concluded its discussions to replace the product manufacture and supply agreement for the supply of flexible printed circuit boards to its UK electric vehicle original equipment manufacturer (EV OEM) customer, and agreed a new contractual arrangement.

The AIM-traded firm said the new agreement had been entered into for a fixed quantity of flexible printed circuit boards, due to be delivered through to July next year.

It said the new commercial order would provide for a £3.99m advance payment in 2022, with the balance of the contract value satisfied by standard payments on delivery of the products.

The advanced payment would be secured by a charge over various manufacturing assets involved in the production of the circuit boards at the new production facility at Stonehouse, Gloucestershire.

Trackwise said the charge would be released on completion of the supply of the full contracted quantity.

Completion of the new contract and release of the charge would conclude contractual arrangements between the two companies.

Any further supply of existing parts or development of new parts for the EV OEM would be under new arrangements to be agreed.

As it previously announced, the wider impact on Trackwise of the lower production volumes for the EV OEM were that additional funding would be required, with the company reviewing a number of options for additional funding with advisers.

The orders under the new commercial order were "consistent" with Trackwise's base case forecast, the company confirmed.

In addition, Trackwise said it was actively exploring longer-term strategic investment partnerships to support development and conversion of the "very significant pipeline" of identified IHT sales opportunities, notably for EV battery cell connection systems for UK and EU OEMs, with Trackwise as a tier one or tier two supplier, and also for other medical and aerospace sales opportunities.

"Both Trackwise and our EV OEM customer have been faced with delivering their respective innovations and capital projects against a massively challenging macro business environment," said chief executive officer Philip Johnston.

"This has sadly led to the situation where the product manufacture and supply agreement has had to be reset.

"We remain convinced that the Stonehouse facility, as a state-of-the-art roll-to-roll FPC and FPCA facility, is the right investment at the right time, especially to meet the potentially very large future demand for EV connection systems."

Johnston said the length-agnostic manufacturing process that the firm had developed was of "particular relevance" for cell-to-pack application, with Trackwise "actively bidding" into a very large EV connection system sales pipeline worth more than £1bn.

"We recognise that the scale of such a pipeline is likely to be beyond the balance sheet of Trackwise alone and we are therefore actively exploring longer term strategic investment partnerships with larger global businesses - who can, together with Trackwise, leverage our IHT patent and manufacturing know-how to meet this global demand."

At 1512 BST, shares in Trackwise Designs were up 100% at 15p.

Reporting by Josh White at Sharecast.com.