ANNUAL REPORT AND
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2018
PRINTED ELECTRICAL INTERCONNECT SYSTEMS
Improved Harness Technology
Less weight, less space, more
repeatable, more reliable, faster
installation, high speed data
Trackwise Designs plc
Annual Report and Financial Statements
For the period ended 31 December 2018
1
Contents
Highlights
Chairman’s Statement
Chief Executive’s Strategic Review
Chief Financial Officer’s Report
Corporate Governance Review
Directors’ Remuneration Report
Directors’ Report
Independent Auditor’s Report to the members of Trackwise Designs plc
Statement of Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Company Information [Officers and Professional Advisers]
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3
5
10
12
18
20
23
28
29
30
31
32
51
Registered in England and Wales, Registration no: 3959572
Registered office: 1 Ashvale, Alexandra Way, Ashchurch, Tewkesbury, Gloucestershire, England GL20 8NB
Trackwise Designs plc
2 Highlights
REVENUE
UP
OPERATING
PROFIT
UP
EBITDA
UP
2018 – A YEAR OF SIGNIFICANT ACHIEVEMENTS
¨
¨
¨
¨
¨
¨
¨
January 2018 takes occupancy of new
19,000sq ft manufacturing facility
July 2018 admitted to the AIM market of
the London Stock Exchange raising a net
£4.6M
Installation of 2 new process lines enhancing
manufacturing capability and capacity
Revenue up 23% - 2018: £3.5M (2017:
£2.8M)
Adjusted Operating Profit up 385% - 2018:
£325K (2017: £67K)
EPS 0.63p
Adjusted EBITDA up 171% - 2018: £618K
(2017: £228K)
Ian Griffiths
Non-Executive Chairman
3
Chairman’s statement
Dear Shareholders
BUILDING MOMENTUM
It is my pleasure to present the Company’s first Annual Report, as a quoted company, for the year
ended 31 December 2018.
It was a year of significant progress for Trackwise. The IPO on 31 July 2018 provided an essential platform for the
development and growth of the Company which will celebrate its 30th anniversary in 2019.
The proceeds of the IPO are being invested to increase capacity, refine our capability for the supply of IHT products and
develop opportunities and resources to implement and accelerate our growth strategy.
Performance
I am pleased to report a year of significant performance improvement throughout the Company with encouraging
operational development and growth in the business throughout 2018 in line with our core strategy outlined at the time of
the IPO. Revenues for the period show significant growth over 2017 up 23% at £3,468K (2017: £2,821K) and EBITDA from
recurring business increased 171% to £618K (2017: £228K). The impact of the flotation on 31 July 2018 is reflected in the
increase in net assets from £1.226M to £5.871M.
Since becoming a public company, our corporate profile has grown and we are experiencing increased recognition with
both our existing customer base and new business potential. Our pipeline of opportunities in our chosen IHT markets has
grown from 14 at the time of flotation to 45 at the end of March 2019.
In the early part of 2018, the Company’s operations moved to new premises in Tewkesbury which created the space for
the anticipated growth within the IHT marketplace and facilitated improved operational performance.
Market Review
Our view of the opportunity for IHT is that all in our chosen industry sectors are showing increasing interest in the
technology and we have a developing list of customers engaged in leading-edge technology projects who are placing
orders. Our challenges in the near to mid-term are in meeting growing demand and the Company is deploying the funds
raised at flotation in readiness. Revenues from IHT in 2019 will comfortably exceed last year and we expect the nature of
the orders to change to longer production programmes over the next two years. Our outlook is that over the medium term
the expectations set out at the time of flotation will be achieved.
The Company’s proprietary and patented flexible printed circuit technology, Improved Harness Technology (“IHT”)
has significant applications in multi-billion-pound global high technology markets where traditional wire harnesses are
currently incumbent. IHT has material benefits over wire harnesses, particularly through weight, space and installation
time savings in aerospace, defence and satellite markets as well as automotive applications through electrification of
vehicles.
Board, Senior Management and Employees
I and my non-executive Director colleague, Lesley Jackson, were appointed to the existing Board at flotation. We joined
the Chief Executive Officer, Philip Johnston, inventor of the patented process which forms the basis of the IHT offering
and Chief Financial Officer, Mark Hodgkins.
We have elected to adopt the Quoted Company Alliance Code for governance purposes.
Trackwise Designs plc
Chairman’s statement continued
4
2018 has been a year of major transformation, executed by a strong experienced management team. Following the
factory move and the flotation they are now focused on implementing the growth strategy that these two events have
enabled. This includes continuing development and training of both existing employees and new recruits.
I would like to thank the whole Trackwise team for their efforts during 2018 and the contribution that they continue to make
to support and execute our growth strategy.
Dividend
The Directors do not recommend the payment of a dividend this year as the Company is still in the process of investing
in essential capability and capacity requirements. It is intended that in the future, when commercial conditions allow, then
a progressive dividend policy will be implemented.
Outlook
The new year has begun steadily with revenue in line with our expectations. There is some delay in ordering from new
IHT customers and there is, inevitably, some uncertainty regarding the impact of Brexit, but we continue to experience
accelerating interest and demand for the IHT technology.
The precise timing of many of these new opportunities is outside of Trackwise’s control as a consequence of the
development nature of the customers’ needs, but the accretion of customers, which has accelerated in this current year
to date gives us confidence that our strategy remains on track.
Ian Griffiths
Non-Executive Chairman
10th April 2019
Trackwise Designs plc
Chief Executive’s
Strategic Review
Philip Johnston
Chief Executive Officer
5
“2018 was a transformational year for Trackwise”
2018 was a landmark year for the business; we
moved our manufacturing facility, achieved a
major shift in impetus in the development of our
unique wire harness replacement technology
– Improved Harness Technology™ (“IHT”) and
successfully floated the business on the London
AIM market.
I would like to express my thanks to all the stakeholders
who contributed to this very busy and transformational
year, in particular, to all of our loyal and hardworking staff,
without whom none of this would have been possible, and
to the customers and investors that have shown confidence
in us and our technology.
IHT
The opportunities for IHT are extremely diverse; wherever
wire is used, IHT can potentially offer a benefit. The main
benefits of IHT are:
• Weight saving – up to 75 per cent
• Space Saving
•
•
Improved precision
Improved reliability
• Reduced installation time
• Ability to be bonded onto/into supporting structure
This confidence has allowed Trackwise to plan and now
to deliver a world class multi-layer flexible PCB production
facility.
•
to
Ability
integrate electronic components,
changing an entirely passive interconnect into a
‘smart harness’
In 2018 we increased revenue by 23% compared to last
year at the same time increasing our adjusted operating
profit by 385% to £325K (2017: £67K). A more complete
commentary on our financial performance in 2018 is given
in the Chief Financial Officer’s Report on page 10.
Our legacy RF business will continue to underpin the
business, but as laid out at IPO the growth opportunity
is Improved Harness Technology™ (IHT). IHT is a
unique, proprietary, patented technology. It is not a new
technology, but rather a new method of manufacturing a
proven technology that opens applicability of that proven
technology to a vast new range of applications.
In our first report as a listed entity I set out below some of
the key tenets of our unique product offering together with
some of the nascent and established markets that can
benefit from our capabilities.
length multi-layer flexible PCBs are, we
Unlimited
believe, unique to Trackwise and represent a disruptive
technological process that releases proven advantages
over traditional wire harnesses to a significant total
addressable market, previously excluded by historic
supply chain size limits.
Trackwise Designs plc
Chief Executive’s Strategic Review continued
6
We continue to develop a presence in four principal
markets where there is significant opportunity for the
disruptive qualities that IHT has. These are:
• Aerospace
• Automotive
• Space (including Satellites and Spacecraft)
•
Industrial and Scientific
We seek to work with leading industry players in each
sector who can bring scale and skillset to a global delivery
strategy.
Aerospace:
The benefits of IHT and their importance to aerospace
demands that this sector represents a key target market
(it is worth an estimated $47.5bn 2012-2031). In the short
to medium term the Company has exciting aerospace
opportunities
High Altitude Pseudo-Satellite (HAPS) and Unmanned
Aerial Vehicles
(UAVs) aerospace sub-sectors are
entrepreneurially driven and are not encumbered by legacy
thinking and technology, with new-entrants driving change.
The Company is winning work from this market sector (30%
of IHT revenues in 2018).
We are positioning ourselves at the forefront of these
developing opportunities and our technology will have its
maiden flight in 2019; we are receiving repeat orders, a
vote of confidence in Trackwise technology.
In UAVs we aim to support distributed propulsion, distributed
batteries, distributed sensing and control all of which supports
an already strong case for the use of flexible printed circuits
in place of conventional wire harnesses, let alone smart
harnesses, rather than an entirely passive interconnect,
delivering significant weight reduction a key requirement.
In conventional aerospace, UK and
International R&D
programs allow us to introduce the benefits of flat flex wiring
into multiple applications for example electro-thermal ice
protection, embedded antennas, sensors and crack detection.
We have worked extensively with GKN Aerospace and we intend
to enter into a development contract for the industrialisation of
GKN’s Type 8 Ice Protection System which will see the two
companies building upon existing development work and so
advance the manufacture of the Ice Protection System to rate
production levels.
Trackwise has engaged the services of a US sales
resource to advance the many opportunities that exist in
US Aerospace for IHT.
Trackwise Designs plc
Chief Executive’s Strategic Review continued
7
Automotive:
Space:
We have several developing customers in the Electric
Vehicles space; in 2018 this market accounted for 19.8%
of IHT revenue. This market is growing and though Brexit
is clouding the future for the UK automotive sector the
macro trend is unmistakable; our review of the electric
vehicle market encompasses reports of one billion electric
vehicles on the road globally by 2050.
Participation in the Faraday Challenge is ensuring that we
address the needs of not only road electric vehicles but also
parallel developments in electric flight (UAVs – leading into
Urban Air Mobility (UAM)). The IHT capability enables the
designer to add distributed electronic components into the
flexible harness itself making IHT products a compelling
option for electric vehicles.
The weight and space saving benefits offered by IHT
are of particular interest to the space industry. Trackwise
is experiencing growing interest from a wide range of
international space companies.
Initial focus in this arena is regarding spacecraft solar
arrays – deployable areas of photo-voltaic cells that convert
sunlight into electrical power to power the spacecraft.
Current technology comprises rigid solar arrays, built from
an assembly of hinged panels.
Our customers are exploring an opportunity for a flexible
solar array based on Trackwise flexible circuits as the power
transfer assembly. The power density of such flexible solar
array solutions is much increased, enabling both missions
requiring high power, such as high-power telecom and also
missions with very stringent accommodation constraints,
such as constellation satellites.
The increasing involvement of more countries and the
opening up of space to private investment presents a
valuable market for Trackwise.
Trackwise Designs plc
Chief Executive’s Strategic Review continued
8
Industrial and Scientific:
RF
The proven benefits of IHT also apply to a very wide range
of industrial and scientific applications. In 2018 Trackwise
won customers in food processing (flow measurement),
nuclear (inspection equipment), as well as contracts with
CERN and other scientific facilities. In 2018 revenue from
these streams accounted for 32% of total revenue. 2018
saw an increasing volume of IHT of 300% across an
increasing number of customers and the growth of that
customer base has continued in the first quarter of 2019.
We are well established in the manufacture of antennas
for cellular telephone networks, our legacy business with a
global footprint. The forthcoming roll out of 5G technology
is a re-equipment opportunity which the Directors believe
will continue to create demand for the Company’s RF
products. The Company’s manufacturing assets serve
both the IHT and RF divisions and with the IPO-funding
investment is ensuring that its offering to the market
remains relevant and up-to-date.
Our RF business has performed well in 2018 and remains
a consistent source of income. I am pleased to say that
many of the capacity and capability investments we are
making for IHT will also benefit our RF business in the
coming years.
Accreditations and Standards
As a new aerospace product category aimed primarily
at aerospace, AS9100 certification was first achieved in
September 2015 for IHT, with the transition to the new
AS9100D standard achieved in October 2017.
We are working to win further accreditations e.g:
•
•
Extending AS9100D to Design and Manufacture of
Products using Printed Circuit Technology.
Nadcap (National Aerospace and Defence Contractors
Accreditation Program)
•
ISO/TS 16949.
2018 saw the Company’s IHT patent granted in China
(previously granted in UK and US). Application processes
in EU, Brazil and Canada are proceeding.
Trackwise Designs plc
Chief Executive’s Strategic Review continued
9
Employees
We are committed to achieving a working environment which reflects diversity, provides equality of opportunity, ensures
freedom from unlawful discrimination and our policy is to treat all employees, applicants and clients with respect and
dignity giving due consideration to all.
We will continue to invest and develop our workforce alongside the development of our IHT technology.
Philip Johnston
Chief Executive Officer
10th April 2019
Trackwise Designs plc
10
Chief Financial Officer’s
Report
Mark Hodgkins
Chief Financial Officer
“Growth in IHT and RF enabled Trackwise to post a strong
increase in profits and the best revenue performance since 2014”
During the year under review the Company made significant strategic progress with changes that created impetus for the
development of IHT, directly as a consequence of our move to new premises in Tewkesbury and the benefits of our IPO which
allowed us to invest over the last 12 months £154,000 in the facility and our capability that has enabled us to have a world class
flexible multi-layer PCB production facility.
The success of the IPO has of course transformed the balance sheet of the Company and further investment is planned
as a consequence.
Trading Performance
Overall Company Operating result
Revenues
Adjusted Operating profit*
Adjusted EBITDA*
2018
£’000
3,468
325
618
2017
£’000
2,821
67
228
*An analysis of adjusted Operating Profit and adjusted EBITDA is given in note 26 of these financial statements
Company revenue for the year increased by 23% from £2.82M in 2017 to £3.47M in 2018 driven by growth in both the IHT
division and the RF division.
The IHT sharply increased revenues in the year to £606K against £191K for 2017 and missed out on much higher reported
revenues only due to the delay in orders in the late part of the year. The growth came principally from our lead customer
in the aerospace sector, but we had increased awareness and interest in IHT giving rise to revenues from a number of
new sources. Since IPO we have increased the number of active customers and opportunities from 14 (at the time of
flotation) to 45 (as at 31 March 2019).
We were held back in our ambitions when our customers, with whom we are partnering, also had elongated adoption
processes for the new technology.
The RF division recorded a growth of 10% in revenues year on year to £2.87M its best performance since 2014.
Measuring Financial Performance
The Company uses a number of specific measures to assess its performance, which are not defined by IFRS, but are used
by the Board to assess the progress of the business against its strategic plan and examines the underlying operational
performance and as such these measures are important and should be considered alongside IFRS measures.
The alternative performance measures are defined in Note 26 of these financial statements.
Reported operating profit increased by 140.3% after taking a charge in the year for share based payments of £155,000
and one-off move costs associated with the 20 years tenancy we vacated during the year of £45,000. Before these
exceptional items our operating profits rose by 385%.
The listing costs are a burden for a small company such as Trackwise and amounted to £1,056K or 19.2% of gross new
money raised and these costs have been charged to Share Premium in accordance with accepted accounting treatment.
Trackwise Designs plc
Chief Finance Officer’s Report continued
11
Results and Dividends
Reported increased profit after taxation of £75,000 (2017: £8,000) enabled the Company to report EPS 0.63p per share
(2017: 0.084p) reflecting the increase in the number of shares in issue from 9,534,275 in 2017 to 14,772,372 in 2018.
At the year end the Company demonstrated a strong balance sheet with net cash of £2,786,000
The Company invested heavily in infrastructure during the year to rapidly advance the Company’s capability. The total
investment during the year in infrastructure was £154,000 and this was accompanied by increased development of the
IHT technology where we spent a total of £1.056M. We anticipate continued investment in 2019 at similar levels to those
in 2018.
During the year we incurred costs in relation to our previous operating facility which the Directors consider to be of a non-
recurring nature and have therefore been treated as such.
The Company continues to develop the technology which we call IHT to enhance production processes and efficiencies in
order to improve current uses for the technology and also other derivatives of the technology for exploitation commercially.
In doing so, the Company benefits from the UK Government’s R+D tax regime. This is expected to continue for the
foreseeable future but cannot be guaranteed. As a consequence, the Company not only receives credits to its P&L account
but also accumulates tax losses that are created in the process and these amount to in excess of £1M. Additionally, the
Company has deferred tax liabilities of £308,000. Consequently, the Company is unlikely to pay tax on profits in the short
to medium term.
The Company’s trading activities are such that there is a natural hedge to a proportion of our currency exposure where
our principal exposures are the Euro and the US Dollar. The Board monitors the exposure carefully, in accordance with
its adopted treasury policy and uses limited derivatives to manage foreign currency risks when exposure is considered
to be higher than normal. Transactions of a speculative nature are, and will continue to be, prohibited. At 31 December
2018 the Company had no liabilities under any foreign currency hedging arrangement.
On 31 July 2018 the Company was admitted to the listing of its shares on the AIM market of the London Stock Exchange.
As part of that process the Company placed 5,238,097 ordinary shares at 105p such that after admission there were
14,772,372 ordinary shares of 4p each.
Prior to flotation the Company capitalised the credit standing to the Capital Redemption Reserve fund with a bonus
issue of 367,195 shares to its existing Shareholders in proportion to their shareholding on 28 June 2018. Following that
capitalisation, the nominal share value of the ordinary shares was reduced from £1 to 4p increasing the number of shares
to 9,534,275.
Mark Hodgkins
Chief Financial Officer
10th April 2019
Trackwise Designs plc
Corporate Governance Review
12
The business of the Company is ultimately managed by the Directors of Trackwise Designs plc who are responsible for
running the Company for the benefit of its Shareholders in accordance with their fiduciary and statutory duties.
The Directors acknowledge the importance of the principles set out in the Corporate Governance Code and the
requirement for companies admitted to trading on AIM to apply a recognised corporate governance code and explain
compliance with that code.
The Directors have chosen to comply with the QCA Corporate Governance Code for Small and Mid-Size companies which
has become a widely recognised benchmark for corporate governance of smaller quoted companies, particularly AIM
companies. In accordance with Rule 26 of the AIM Rules for Companies, details of how the Company complies with the
QCA Code are provided on the Company’s website: www.trackwise.co.uk/investors/corporate/governance
The Board meets at least nine times a year to review, formulate and approve the Company’s strategy, budgets, corporate
actions and oversee the Company’s progress towards its goals. It has established an Audit Committee, a Remuneration
Committee and Nomination Committee with formally delegated duties and responsibilities and with written terms of
reference. From time to time, separate committees may be set up by the Board to consider specific issues when the need
arises.
Board and Committee Independence
The Company’s Board consists of two independent non-executive Directors (including the Chairman) and two executive
Directors. The Company regards the non-executive Directors as “independent non-executive Directors” within the
meaning of the UK Corporate Governance Code and free from any relationship that could materially interfere with the
exercise of their independent judgement.
The Audit Committee
The Audit Committee is chaired by Lesley Jackson and its other members are Ian Griffiths and Philip Johnston. Mark
Hodgkins will be invited to attend as appropriate. The Audit Committee is expected to meet formally at least four times
a year and otherwise as required. It has the responsibility for ensuring that the financial performance of the Company
is properly reported on and reviewed and its role includes monitoring the integrity of the financial statements of the
Company (including annual and interim accounts and results announcements), reviewing internal controls and risk
management systems (to enable compliance with the AIM Rules and with MAR), reviewing any changes to accounting
policies, reviewing and monitoring the extent of the non-audit services undertaken by external auditors and advising on
the appointment of external auditors.
The Remuneration Committee
The Remuneration Committee is chaired by Lesley Jackson and its other members are Ian Griffiths and Mark Hodgkins. The
Remuneration Committee is expected to meet at least twice each year. It will have responsibility for determining, within the
agreed terms of reference, the Company’s policy on remuneration packages of the Company’s Chairman, the executive
Directors, Senior Managers and such other members of the executive management as it is designated to consider. The
Remuneration Committee will also have responsibility for determining (within the terms of the Company’s policy and in
consultation with the Chairman of the Board and/or the Chief Executive officer) the total individual remuneration package
for each executive Director and other designated senior executives (including bonuses, incentive payments and share
options or other share awards). The remuneration of non-executive Directors will be a matter for the Chairman and
executive Directors of the Board. No Director or Manager will be allowed to partake in any discussions as to their own
remuneration. In addition, the Remuneration Committee will have the responsibility for reviewing the structure, size and
composition (including the skills, knowledge and experience) of the Board and giving full consideration to succession
planning. It will also have responsibility for recommending new appointments to the Board.
Trackwise Designs plc
Corporate Governance Review continued
13
The Nomination Committee
The Nomination Committee is chaired by Ian Griffiths and its other members are Lesley Jackson and Philip Johnston.
The Nomination Committee is responsible for considering and making recommendations to the Board in respect of
appointments to the Board, the Board committees and the chairmanship of the Board committees. It is also responsible
for keeping the structure, size and composition of the Board under regular review, and for making recommendations to
the Board with regard to any changes necessary, taking into account the skills and expertise that will be needed on the
Board in the future. The Nomination Committee will meet at least twice a year.
Trackwise Designs plc
Corporate Governance Review continued
14
Internal Controls and Financial Management
The Board has responsibility for establishing and monitoring the maintenance of the Company’s internal financial and
non-financial controls. The Board is cognisant that whilst internal controls reduce risk it cannot eliminate the risk entirely.
The key procedures which the Directors have established to enable to have confidence that the controls are working and
minimising risk are set out below.
•
The Board sets policies which are regularly reviewed both by executive management and the audit committee
and gains assurance that these policies are appropriate to address the key financial, operational, compliance and
reputational risks.
• Authorisation limits are in place
– The Board ensures that appropriately qualified people are in place to exercise the controls that are in place;
–
Company performance is measured against diligently prepared budgets and variations are reviewed on a monthly
basis;
– The business has appropriate segregation of duties and limits to individual’s ability to authorise transactions;
• Financial planning and monitoring
–
The Company sets annual budgets which cover operating performance and balance sheet management including
working capital;
– The Board reviews the performance monthly and re-evaluates future performance
• Policies, procedures and authorisation limits
– The Company has sufficient authorisation limits in place which cover the key areas for the business.
Quality and Integrity of Personnel
The Company aims to recruit the highest calibre employees that it is able to do with high recruitment standards. Employees
with integrity and strong work place ethics are considered essential to the operation of the control environment.
Identification of business risks
The Directors are responsible for identifying the significant business risks and their execution for this task is monitored by
the Audit Committee as well as the main Board.
Going Concern
The Directors have prepared the financial statements on a going concern basis as explained in note 2.1 to the financial
statements. As at 31 December 2018 the Company had cash deposits of £2.786 million. The Company also had undrawn
funding facilities of £700,000 in place which it does not envisage utilising, thus there are sufficient funds available to meet
its liabilities as they fall due for a period not less than twelve months from the date of approval of the financial statements.
Trackwise Designs plc
Corporate Governance Review continued
15
Principal Risks and Uncertainties Report
KEY: l Low risk l Medium risk l High risk
RISK
DESCRIPTION AND POTENTIAL IMPACT
MITIGATION
Failing to
successfully
implement our
growth strategies
➨
IHT market
adoption
➨
Customer
concentration
➨
Protection of
intellectual
property
➨
Technological risk
➨
Our future success is dependent on the effective implementation
of our growth and diversification strategies.
The Company’s ability to implement its business strategy
successfully may be adversely impacted by factors that the
Company cannot currently foresee, such as unanticipated market
forces, costs and expenses or technological factors. Should it be
unsuccessful in implementing its strategy or should it take longer
than expected to implement, the future financial results of the
Company could be negatively impacted.
We focus our management effort to
address the Company’s strategic goals
and we have clear functional leadership.
We continually assess our management
capacity as well as our progress and
remain alert to the changes in the market
that impacts on our strategy.
The Board monitors
progress against the targets set.
the executive’s
The Company is still at a relatively early stage of engagement
with IHT market participants. The Company is reliant, to some
extent, on the IHT market participants increasing orders and
engagement over the medium-term future.
The Directors are confident about the early positive indications
from various IHT customers. However, if the anticipated IHT
market development is slower than anticipated, there is a risk that
the future financial results of the Company could be negatively
impacted.
the possible
Further penetration of
markets for IHT have reinforced that
the technology has a wide spread of
applications. As this develops the risk of
market adoption will reduce further.
The Company’s customer base is concentrated. Approximately
44% of the Company’s revenue for the year ended 31 December
2018 was derived from 4 customers.
Any deterioration of the Company’s relationship with any one
of these customers, or the loss of orders (or a reduction in the
gross or net margin in respect of the Company’s orders) from
any one of these, could have a material adverse effect on the
Company’s business, financial condition, results of operations,
future prospects and/or the price of the Ordinary Shares.
As we develop our IHT strategy and
increase the acceptance of the new
product our customer concentration
decreases. This decrease in exposure to
risk is expected to fall in the future.
Furthermore we pay good attenton to
monitoring our relationship with our key
customers to moderate any adverse
reaction from these customers.
The technology used by the Company includes a specific
manufacturing technique used to create IHT products. This
process has been developed and is owned by the Company.
Trademarks of the Company are registered and unregistered.
The Company is dependent on proprietary rights in relation to this
technology process, which relies on laws governing copyrights,
trademarks and confidentiality. The Company is also dependent
on contractual provisions
intellectual property
ownership and licensing. These laws enable the Company to
protect and/or enforce intellectual property rights, including the
ability to restrict use of the manufacturing process to those who
have obtained relevant authorisation.
regarding
If the Company cannot successfully enforce its intellectual
property rights, this could have a material adverse effect on the
Company’s business, financial condition and prospects.
The Company has developed an innovative solution to wiring
harnesses that the Directors believe will offer superior advantages
to traditional alternatives. Should technological developments
improve wiring harnesses or offer an alternative solution to
IHT, Trackwise’s product may become obsolete or may be
superseded by new technologies. The Company may be forced
to stop producing IHT or reduce its prices which could have a
material impact on the financial performance of the Company.
The Company is vigilant as to whether
others are adopting processes
that
infringe our IPR.
This review is applied regularly, and any
potential infringement is pursued.
are
The Management
constantly
reviewing the other options that could
arise to IHT whilst at the same time we
focus on continued development of the
IHT technology.
Trackwise Designs plc
Corporate Governance Review continued
16
RISK
DESCRIPTION AND POTENTIAL IMPACT
MITIGATION
The Company depends on the performance, reliability and
availability of its plant, equipment and information technology
systems. Any damage to, or failure of, its equipment and/or
systems could result in disruption to the Company’s operations.
The Company has a permanent planned
maintenance programme
to ensure
preventative maintenance and protect
from unforeseen down time of machines.
The Company’s disaster recovery plans may not adequately
address every potential event and its insurance policies may not
cover any loss in full or in part or damage that it suffers fully or at
all, which could have a materially adverse effect on the Company’s
business, financial condition and results of operations.
Additionally,
the Company monitors
all its equipment on a daily basis and
is continually seeking to improve its
processes wherever possible.
The Company
principally the GBP, the US$ and the Euro.
is exposed
to exchange rate fluctuations,
Changes in foreign currency exchange rates may affect the
Company’s pricing of products sold and materials purchased in
foreign currencies.
The Directors believe that its use of
certain derivative financial instruments,
forward
foreign currency
including
contracts
sale
to
used
commitments denominated in foreign
the Company’s
currencies,
exposure to this risk.
reduces
hedge
As at the date of this document the political, economic, legal
and social consequences, the exact timing of the UKs exit from
the European Union, as well as the potential ultimate outcome of
any agreement between the UK and the European Union, remain
uncertain.
Such potentially prolonged uncertainty and the potential negative
economic trends that may follow could have a material adverse
effect on the Company’s access to European markets, one of the
Company’s largest markets, which in turn could have a negative
impact on the Company’s business, financial position and/or
results of operations.
The risk to a “No Deal” Brexit is now a
strong possibility, the consequences of
which cannot be known.
The Company has incorporated an Irish
subsidiary to manage the import/export
of material which may prevent disruption
but in this uncertain time we cannot
predict its efficacy.
Disruption to
operations or
systems
➨
Exposure to
exchange rate
fluctuations
➨
The impact of
Brexit
➨
Brexit
The continuing political impasse concerning the terms upon which the United Kingdom will depart the European Union is
causing uncertainty for the Company. We have a number of European nationals as employees who are important members
of our team and the uncertainty they are facing could present difficulties for the Company. We are giving what support we
can to those individuals but given the lack of clarity from the political institutions this cannot be a complete solution.
Furthermore, 70% of our RF revenue is generated from Europe and the uncertainty concerning the nature of the trading
relationship we will have be it Customs Union, potential tariffs, WTO etc., means no concrete plans can be made.
We have incorporated an Irish subsidiary (Trackwise Europe Limited) which may aide the administrative burden of dealing
with the European Union in the future but even this cannot be certain.
We have bought forward extra material supplies which we source from France to cover any disruption that might arise from
a precipitative exit under the no-deal scenario though given the extension to April and the possibility of a longer extension
it is questionable whether this precaution will have been of benefit. We will continue to carry heightened levels of material
stock during this period of significantly higher uncertainty.
Given our plans for significant capital expenditure a sum of which is denominated in Euros we have bought forward
currency volatility protection to minimise our exposure to any significant fall in the value of Sterling against the Euro.
The Directors have given due consideration to the impact of a no-deal Brexit and consider that the Going Concern
assumption adopted in preparing these financial statements is appropriate.
Trackwise Designs plc
Corporate Governance Review continued
17
Trackwise Board
Ian Griffiths
Non-Executive Chairman
Ian brings wide-ranging international experience of the engineering business-to-business
sector at both strategic and operational levels, having spent nearly 30 years with GKN plc.
Ian served as a non-executive director on the Board of Ultra Electronics Holdings plc from 2003
to 2012. He has been a non-executive director of Renold plc since 2010 where he also chairs
the Remuneration Committee and was Chairman of Hydro International Limited which he joined
as a non-executive director and Chairman-elect in October 2014. He is also a non-executive
director of AIM listed Autins Group plc which he joined in 2016.
Philip Johnston
Chief Executive Officer
Philip’s early career was in the space industry which included a key management role in the
Prime Contractor team for Envisat, a large European satellite, managing multi-million ECU work
packages involving different companies across Europe.
Philip joined Trackwise in 1999 and acquired the Company in 2000.
Under his stewardship the Company has enjoyed sustained growth based largely through export
success and innovation. Philip is named inventor on several UK and international patents and he has
led several Government supported R&D consortiums including a European CleanSky programme.
Mark Hodgkins
Chief Financial Officer & Company Secretary
Mark is a chartered accountant, a former audit partner with Grant Thornton and corporate
finance partner with Ernst & Young. Since 2005 he has served as CFO of a large private business
as well as CEO of several engineering businesses and a private industrial holding company.
As well as his role with the Company which began in May 2016, Mark is a non-executive director
of EnSilica Limited a growing private fabless chip design business where he is responsible for
overseeing the management’s delivery of its growth strategy.
Lesley Jackson
Non-Executive Director
Lesley is the former CFO and executive director of Stock Spirits Group plc a position which she
had held since 2011.
Before Stocks Spirit Group plc, Lesley was the CFO of United Breweries Ltd from 2005 to 2008
and the group finance director of William Grant & Sons Distillers Limited from 2008 to 2011.
Lesley is a Chartered Accountant.
Trackwise Designs plc
Directors’ Remuneration Report
18
The remuneration of senior executives is subject to the approval and oversight of the Remuneration Committee which is
chaired by Lesley Jackson.
The remuneration policy of the Company is designed to promote steady development towards its strategic goals with
regard to exploiting the IHT technology and maintaining the underpinning RF revenue stream.
In setting the measurement of executive performance careful observation is given to the risk profile of the business to
reward solid dependable progress. The committee believes that the executive team should be rewarded for growth that
endures and provides a good long-term growth path for investor returns.
Fixed pay is based on a market-based approach which takes into account the size of the Company, peer review of
compensation packages and the experience and qualifications of the executive in question. Variable pay is designed to
promote out-performance, which is both achievable, repeatable and sustainable.
Directors
The Directors of the Company are:
Philip Johnston
Mark Hodgkins
Ian Griffiths
Lesley Jackson
As none of the Directors have had their appointment or re-appointment confirmed at a General Meeting then they all retire
and offer themselves for re-appointment by the members at the Annual General Meeting.
Directors’ Interests – Interests in shares (audited)
Philip Johnston
Mark Hodgkins
Ian Griffiths
Lesley Jackson
Holding
Balance at
31 December
2018
Percentage
of Share
Capital at 31
December
2018
4,815,775
32.60%
47,619
14,286
28,571
0.33%
0.10%
0.19%
Directors’ Interests – Interests in share options (audited)
Details of options held by Directors who were in office at 31 December 2018 are set out below. Details of the Company’s
option schemes are set out in note 25 to the financial statements.
The market price of the Company’s shares at 31 December was 100.5 pence. The range of market prices during the year
was 98 pence to 118 pence.
M Hodgkins
Date of Grant
15 June 2018
Number Exercise Price
Expiry Date
78690
£0.28 15 June 2028
Trackwise Designs plc
Directors’ Remuneration Report continued
19
Contracts of service
The Executive Directors, Philip Johnston and Mark Hodgkins, each have a service agreement containing one year’s notice
and claw back and malus clauses with regard to any paid or unpaid bonuses.
The Non-Executive Directors, Ian Griffiths and Lesley Jackson, have a service agreement with a three-month notice
period.
Salaries and benefits
The Remuneration Committee meets at least once a year in order to consider and set the remuneration packages for
Executive Directors. The remuneration packages are benchmarked annually to ensure comparability with companies of a
similar size and complexity. Remuneration comprises basic salary, pension contributions and benefits in kind. In addition,
certain Directors are paid a car allowance or receive a contribution to their travel expenses.
Remuneration also includes share options and carried interest as detailed above.
P Johnston
M Hodgkins
I Griffiths
L Jackson
Salary
£
156,458
* 185,618
18,750
14,583
Bonus
£
Benefits &
Car Allowance
£
–
–
–
–
19,202
6,375
–
–
Pension
£
12,117
6,250
–
–
Total
2018
£
187,777
* 198,243
18,750
14,583
Total
2017
£
140,549
0
0
0
* included in the remuneration of M Hodgkins are payments made to his personal services company of £112,238. M Hodgkins was appointed a director of
the company on the 23 December 2017 and became an employee on 1 June 2018. His salary since 1 August 2018, the day after flotation and disclosed in
the Company’s admission document, is £150,000 per annum and there have been no alterations to that since flotation.
On behalf of the Board
Mark Hodgkins
Company Secretary
10th April 2019
Trackwise Designs plc
Directors’ Report
20
Principal Activities
The principal activities of the Company are the manufacture of flexible Improved Harness Flex wiring solutions and large
printed circuit boards for the mobile telephony industry. The results for the year are considered by the Directors to be
satisfactory.
The Directors have set out their update on strategy and its development in the Chief Executive’s Strategic Review on
page 5 and that includes a review of the markets that the Company is addressing as well as the actions being taken to
meet the strategic goals of the Company.
The Directors of the Company are:
Ian Griffiths
Philip Johnston
Mark Hodgkins
Lesley Jackson
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer and Company Secretary
Non-Executive Director
Statement of Director’s Responsibilities
The Directors are responsible for preparing the Directors’ Report and the Financial Statements in accordance with
applicable law and regulations.
The Directors are required to prepare Financial Statements for each financial year. The Directors have elected to prepare
the Company Financial Statements in compliance with IFRSs as adopted by the European Union as it applies to the
Financial Statements of the Company for the year ended 31 December 2018.
The Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these Financial
Statements the Directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable and prudent;
• State whether the Financial Statements have been prepared in accordance with IFRS; and
•
Provide additional disclosures when compliance with specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and conditions on the entity’s financial position and
financial performance;
•
Prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company. They
are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
• so far as the Director is aware, there is no relevant audit information of which the Company’s Auditor is unaware; and
•
the Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any
relevant audit information and to establish that the Company’s Auditor is aware of that information.
Trackwise Designs plc
Directors’ Report continued
21
Dividends
The Company’s ability to pay dividends in the future is affected by a number of factors, principally the generation of
distributable profits within the Company. The Board has adopted a progressive dividend policy for the Company subject
to the availability of sufficient distributable profits. The Directors intend to commence the payment of dividends when it
becomes commercially prudent to do so and expect to pay interim and final dividends in the approximate ration of 1/3
interim and 2/3 final.
Research and Development
The Company continues to develop their products to ensure that they remain at the forefront of their markets. The detail
and cost of those developments are set out in the Chief Executive’s Strategic Review and Chief Financial Officer’s Report.
Director’s indemnity
The Company’s Articles of Association provide, subject to the provisions of United Kingdom legislation, for an indemnity
for Directors and Officers of the Company with regard to liabilities that they may incur in the discharge of their duties or in
the exercise of their powers, including any liability relating to proceedings brought against them which relates to anything
done, or omitted, or anything alleged to have been done or omitted by them as officers or employees of the Company or
Group.
Directors’ Liability Insurance is in place in respect of all the Company’s Directors.
Donations
The Company made no charitable or political donations during the year.
Independent Auditor
The Auditor, Mazars LLP, has indicated its willingness under section 489 of the Companies Act 2006 to continue in office
and a resolution that they be re-appointed will be proposed at the Annual General Meeting.
Annual General Meeting
The Company’s Annual General Meeting will be held at the Company premises – 1 Ashvale, Alexandra Way, Tewkesbury,
Gloucestershire GL20 8NB on 26 June 2019 at 10.00 am.
Matters covered elsewhere
As permitted by Paragraph 1A of Schedule 7 to the large and medium sized companies and groups (Accounts and
Reports) Regulations 2008 certain matters that are required to be disclosed in the Directors’ Report have been omitted
as they have been included in either the Strategic Review, Chief Financial Officer’s Report or the Principal Risks
and Uncertainties Report instead. These matters relate to the business review, principle risks and uncertainties, key
performance indicators, future developments and research and development activity.
Trackwise Designs plc
Directors’ Report continued
22
Other Information
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
•
In so far as the Directors are aware there is no relevant audit information of which the Company’s Auditor is unaware;
•
The Director has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself
aware of relevant audit information and to establish that the Company’s Auditor is aware of that information. This
confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies
Act 2006.
By order of the Board
Mark Hodgkins
Company Secretary
10th April 2019
Trackwise Designs plc
Independent Auditor’s Report
to the members of Trackwise Designs plc
23
Opinion
We have audited the Financial Statements of Trackwise Designs plc (the ‘Company’) for the year ended 31 December 2018
which comprise the Company Statement of Comprehensive Income, the Company Statement of Financial Position, the
Company Statement of Changes in Equity, the Company Statement of Cash Flows and Notes to the Financial Statements,
including a summary of significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
•
give a true and fair view of the state of the Company’s affairs as at 31 December 2018 and of its profit for the year
then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, as applied to SME
listed entities and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The impact of uncertainties due to the United Kingdom exiting the European Union
on our audit
The Directors’ view on the impact of Brexit is disclosed on page 16
The terms on which the United Kingdom may withdraw from the European Union, are not clear, and it is therefore not
currently possible to evaluate all the potential implications to the Company’s trade, customers, suppliers and the wider
economy.
We considered the impact of Brexit on the Company as part of our audit procedures, applying a standard firm wide
approach in response to the uncertainty associated with the Company’s future prospects and performance.
However, no audit should be expected to predict the unknowable factors or all possible implications for the Company and
this is particularly the case in relation to Brexit.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
–
–
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the Directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Company’s ability to continue to adopt the going concern basis of accounting for a period
of at least twelve months from the date when the financial statements are authorised for issue.
Trackwise Designs plc
Independent Auditor’s Report to the members of Trackwise Designs plc continued
24
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Area of focus
Revenue recognition
The Company’s accounting policy for revenue recognition
is set out in the accounting policy notes on “Revenue” on
page 33.
Revenue is a material balance for Trackwise Designs plc
and represents the largest balance in the Statement of
Comprehensive Income. An error in this balance could
significantly affect users’ interpretation of the financial
statements.
Therefore, we consider cut-off to be a key audit matter due
to the potential to inappropriately record revenue in the
wrong period.
Capitalisation of research and development expenditure
the capitalisation of expenditure
The Company has a significant intangible asset arising
from
in respect of
the development of its Improved Harness Technology
(‘IHT’) product. The carrying value at 31 December 2018
was £2.5m.
significant
judgement when
Management exercise
assessing the apportionment of costs to the development of
the IHT product, and the expected future economic benefits
through sale of the product. An error in the carrying value
due to inappropriate judgement has the potential to have a
material impact on the financial statements.
Therefore capitalisation of development cost is considered
a key audit matter.
How our audit addressed the area of focus
Our procedures performed over revenue recognition
included, but were not limited to:
–
–
the systems and
Review and walkthrough of
controls in place surrounding revenue recognition,
in particular cut-off;
Testing a sample of revenue transactions around the
year end to ensure they were accounted for in the
appropriate period; and
–
Reviewed for post year end credit notes that may
reverse revenue previously reported during the year.
No material misstatements were identified in cut-off as
a result of the audit procedures performed.
Our procedures performed over capitalisation of
research and development expenditure included, but
were not limited to:
–
–
Testing a sample of additions to ensure they meet
the recognition criteria of IAS 38. This included
reviewing and challenging the apportionment of
capitalised costs;
Reviewing the level of sales in the period relating to
the capitalised asset and the pipeline of forecasted
IHT revenue to ensure technical and commercial
feasibility of the product.
No material misstatements in capitalised costs were
identified as a result of the audit procedures performed.
Trackwise Designs plc
Independent Auditor’s Report to the members of Trackwise Designs plc continued
25
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect
of misstatements, both individually and on the financial statements as a whole. Based on our professional judgement, we
determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
£59,000
This has been calculated with reference to the Company’s revenue, of
which it represents approximately 1.7%.
Revenue has been identified as the principal benchmark within
the financial statements as it is considered to be the focus of the
shareholders.
Performance materiality
£41,000 calculated as approximately 70% of overall materiality.
Reporting threshold
£1,800 calculated as approximately 3% of overall materiality.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the financial
statements. In particular, we looked at where the Directors made subjective judgements such as making assumptions on
significant accounting estimates.
We gained an understanding of the legal and regulatory framework applicable to the Company, the structure of the
Company and the industry in which it operates. We considered the risk of acts by the Company which were contrary to
the applicable laws and regulations including fraud. We designed our audit procedures to respond to those identified
risks, including non-compliance with laws and regulations (irregularities) that are material to the financial statements.
We focused on laws and regulations that could give rise to a material misstatement in the financial statements, including,
but not limited to, the Companies Act 2006. We used the outputs of a risk assessment, our understanding of the Company’s
accounting processes and controls and its environment and considered qualitative factors in order to ensure that we
obtained sufficient coverage across all financial statement line items.
Our tests included, but were not limited to, obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused
by irregularities including fraud, review of minutes of Directors’ meetings in the year and enquiries of management. As a
result of our procedures, we did not identify any Key Audit Matters relating to irregularities, including fraud.
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and
effort, are discussed under “Key audit matters” within this report.
Trackwise Designs plc
Independent Auditor’s Report to the members of Trackwise Designs plc continued
26
Other information
The Directors are responsible for the other information. The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there is a material misstatement in the financial statements
or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
•
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of Company and its environment obtained in the course of the audit, we have
not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
–
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
–
the Company financial statements are not in agreement with the accounting records and returns; or
– certain disclosures of Directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 20, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
Trackwise Designs plc
Independent Auditor’s Report to the members of Trackwise Designs plc continued
27
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of the audit report
This report is made solely to the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the Company’s members as a body for our audit
work, for this report, or for the opinions we have formed.
Louis Burns (Senior Statutory Auditor) for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
45 Church Street
Birmingham
B3 2RT
10th April 2019
Trackwise Designs plc
28
Company Statement of Comprehensive Income
For the year ended 31 December 2018
Revenue
Cost of sales *
Gross profit
Other operating income
Administrative expenses excluding exceptional
costs and share based payment
Exceptional premises move costs
Share based payment charge
Total administrative expenses *
Operating profit
Finance income
Finance costs
Profit/(loss) before taxation
Taxation
Profit and total comprehensive income for the year
Earnings per share (pence)
Basic
Diluted
Notes
3
4
6
6
7
9
9
2018
£’000
3,468
(2,416)
1,052
–
(727)
(45)
(155)
(927)
125
8
(65)
68
7
75
0.63
0.61
2017
£’000
2,821
(1,917)
904
22
(859)
–
–
(837)
67
–
(80)
(13)
21
8
0.084
0.084
* The cost of sales for 2017 has been restated on a basis consistent with 2018 to include an additional £166,000 of direct production
overheads as well as direct labour and materials with a corresponding reduction in administrative expenses.
Trackwise Designs plc
Company Statement of Financial Position
For the year ended 31 December 2018
29
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Derivative liability
Borrowings
Non-current liabilities
Deferred income – grants
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
EQUITY
Share capital
Share premium account
Retained earnings
Revaluation reserve
Capital redemption reserve
Total equity
Notes
2018
£’000
2017
£’000
2016
£’000
10
11
12
13
14
17
15
14
15
18
20
20
20
2,619
1,264
3,883
380
846
156
2,786
4,168
8,051
(815)
–
(161)
(976)
(539)
(357)
(308)
(1,204)
(2,180)
5,871
591
4,234
840
206
–
1,649
1,257
2,906
313
550
95
166
1,124
4,030
(1,123)
(49)
(662)
(1,834)
(306)
(410)
(254)
(970)
(2,804)
1,226
14
–
600
245
367
1,136
893
2,029
278
638
34
122
1,072
3,101
(504)
–
(277)
(781)
(189)
(559)
(234)
(982)
(1,763)
1,338
14
–
673
284
367
5,871
1,226
1,338
The financial statements were approved and authorised for issue by the Board and were signed on its behalf by:
Mark Hodgkins
Director
10th April 2019
Trackwise Designs plc
30
Company Statement of Changes in Equity
For the year ended December 2018
Share
capital
£’000
Share
premium
account
£’000
Retained Revaluation
reserve
earnings
£’000
£’000
Capital
redemption
reserve
£’000
673
284
367
Total
equity
£’000
1,338
8
(120)
–
–
–
–
367
1,226
–
(367)
–
–
–
–
75
–
4,444
126
–
5,871
8
(120)
39
600
75
–
–
126
39
840
–
–
(39)
245
–
–
–
–
(39)
206
At 1 January 2017
Profit and total comprehensive
income for the year
Dividends paid
Revaluation realised in year
At 31 December 2017
Profit and total comprehensive
income for the year
Bonus issue of shares
Issue of shares
(net of £1,056,000 of issue expenses)
Share based payment
Revaluation realised in year
14
–
–
–
14
–
367
210
–
–
–
–
–
–
–
–
–
4,234
–
–
At 31 December 2018
591
4,234
Trackwise Designs plc
Company Statement of Cash Flows
For the year ended December 2018
31
Cash flow from operating activities
Profit for the year before taxation
Adjustment for:
Employee share based payment charge
Depreciation of property, plant & equipment
Profit on sale of fixed assets
Amortisation of intangible assets
Net finance costs
Changes in working capital:
Decrease/(increase) in inventories
(Increase)/decrease in trade and other receivables
(Decrease)/Increase in trade and other payables
Cash generated from operations
Income tax received
Net cash (used in)/from operating activities
Cash flow from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant & equipment
Purchase of intangible assets
Grant funding – purchase of intangible assets
Interest received
Net cash used in investing activities
Cash flow from financing activities
Dividends paid to shareholders
Share capital issued
Expenses relating to Share Capital issue
Interest paid
Increase/(decrease) in invoice discounting
Proceeds from borrowings
Repayment of borrowings
Repayment of capital element of finance lease contracts
Net cash from/(used in) financing activities
Increase in cash and cash equivalents
Net cash and cash equivalents at beginning of the year
Net cash and cash equivalents at end of year (all cash balances)
Notes
2018
£’000
2017
£’000
68
(13)
11
10
6
12
13
14
155
196
(1)
97
57
(67)
(275)
(337)
(107)
36
(71)
(214)
11
10
(1,067)
128
8
–
158
–
3
80
(35)
88
599
880
–
880
(257)
–
(402)
–
–
(1,134)
(659)
8
–
(120)
15
15
15
15
5,500
(1,056)
(65)
–
–
(515)
(39)
3,825
2,620
166
2,786
–
–
(80)
(129)
515
(241)
(122)
(177)
44
122
166
Trackwise Designs plc
32
Notes to the company financial statements
For the year ended December 2018
1. Corporate information
Trackwise Designs Plc (“the Company”) is a Public Company limited by Shares 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 is the development, manufacture and sale of printed circuit boards.
2. Accounting policies
2.1 Basis of preparation
Statement of compliance
These Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted
by the European Union and in accordance with the applicable provisions of the Companies Act 2006. These are the first Annual
Financial Statements prepared by the Company under IFRS and details of the transition are set out in note 24. These policies have
been applied consistently to all periods presented, unless otherwise stated. In line with the transition provisions of IFRS 9 Financial
Instruments and IFRS 15 Revenue from Contracts with Customers the Company has elected to apply on transition to these standards
on 1 January 2018 a limited retrospective approach. Applying a limited retrospective approach on adoption of IFRS 9 and IFRS 15 in
2018 results in no restatement of comparative periods and there have been no classification, measurement or recognition adjustments
relating to application of these two new standards in these financial statements. No contract balances arise under IFRS15 as income is
recognised when goods are despatched, and performance of the seller’s obligations is complete.
Basis of measurement
The Financial Statements have been prepared on the historical cost basis as modified for the revaluation of plant on transition to IFRS
and for certain financial instruments at fair value.
Going concern
The Directors have considered the principal risks and uncertainties facing the business, along with the Company’s objectives, policies
and processes for managing its exposure to financial risk. In making this assessment the Directors have prepared cash flows for
the foreseeable future, being a period of at least 12 months from the expected date of approval of the financial statements. 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.
Based on the above factors, the Directors have prepared the Financial Statements on a going concern basis.
Consolidation
The Company is exempt by virtue of Section 402 of the Companies Act 2006 from the requirement to prepare group financial
statements as the Directors consider its subsidiary is not material for the purposes of giving a true and fair view. These financial
statements present information about the Company as an individual undertaking and not about its Group.
Functional and presentational currency
These Financial Statements are presented in Pound Sterling (“Sterling”) rounded to the nearest thousand pounds.
Use of estimates and judgments
The preparation of the Financial Statements in conformity with IFRS requires management to make judgments, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods affected.
The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Property, plant and equipment
Management have estimated the useful life of assets based upon the period that the assets are able to and expected to generate
revenue. These estimates are reviewed annually for continued appropriateness and events which may cause the estimate to be
revised. (Note 11)
Trackwise Designs plc
Notes to the company financial statements continued
For the year ended December 2018
33
Share Based Payments
The Company uses the Black-Scholes option-pricing model where applicable, with inputs, in particular volatility, requiring significant
judgement in application.
Intangible assets
Management have used their judgement in respect of the capitalisation of development costs. The viability of the new technology and
know-how supported by the results of testing and customer trials and by forecasts for the overall value and timing of sales supports
the approach taken. (Note 10)
Amortisation commences once management consider that the asset is available for use, i.e. when it is judged to be in the location
and condition necessary for it to be capable of operating in the manner intended by management and the cost is amortised over the
estimated useful life of the know-how based on expected customer product cycles and lives.
2.2 Revenue
Revenue comprises income from the sale of printed circuit boards and represents the amount receivable for the sale of goods,
excluding VAT and trade discounts. Revenue is recognised when all of the following conditions have been satisfied:
I.
The Company has received and accepted the purchase order from the customer
II.
Sales prices are based on quotes for each customer’s unique product and include transport which is insignificant in the context of
the sale price. The sales price is determined after submission of a quote to each customer for their unique product and which has
been agreed with them and includes transport which is also agreed with the customer
III. Revenue is recognised when the goods have been despatched to the customer
2.3 Grants
Income based grants
Income based grants are recognised in other operating income based on the specific terms related to them as follows:
–
–
–
A grant is recognised in other operating income when the grant proceeds are received (or receivable) provided that the terms of
the grant do not impose future performance-related conditions.
If the terms of a grant do impose performance-related conditions then the grant is only recognised in income when the
performance-related conditions are met.
Any grants that are received before the revenue recognition criteria are met are recognised in the Statement of Financial Position
as another creditor within liabilities.
Capital grants
Grants received relating to tangible and intangible fixed assets are treated as deferred income and released to the Statement of
Comprehensive Income over the expected useful lives of the assets concerned.
2.4 Share based payment
The Company operates an equity-settled share-based compensation plan in which the Company receives services from employees as
consideration for share options. The fair value of the services is recognised as an expense, determined by reference to the fair value
of the options granted.
2.5
Income tax
Current income tax assets and/or liabilities comprise obligations to, or claims from, fiscal authorities relating to the current or prior
reporting periods, that are unpaid/due at the reporting date. Current tax is payable on taxable profits, which may differ from profit
or loss in the Financial Statements. Calculation of current tax is based on the tax rates and tax laws that have been enacted or
substantively enacted at the reporting period.
Deferred taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and
liabilities and their tax bases.
A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will
be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither
accounting profit nor taxable profit (tax loss).
Trackwise Designs plc
Notes to the company financial statements continued
34
For the year ended December 2018
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or
the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting
period.
2.6 Goodwill
Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually
identifiable and separately recognised. After initial recognition, goodwill is measured at cost less accumulated impairment losses. See
Note 2.10 for a description of impairment testing procedures.
2.7 Research and development cost
An internally generated intangible asset arising from development (or the development phase) of an internal project is recognised if,
and only if, all of the following have been demonstrated:
–
It is technically feasible to complete the development such that it will be available for use, sale or licence;
– There is an intention to complete the development;
– There is an ability to use, sell or licence the resultant asset;
– The method by which probable future economic benefits will be generated is known;
– There are adequate technical, financial and other resources required to complete the development;
– There are reliable measures that can identify the expenditure directly attributable to the project during its development.
The amount recognised is the expenditure incurred from the date when the project first meets the recognition criteria listed above.
Expenses capitalised consist of employee costs incurred on development, direct costs including material or testing and an
apportionment of appropriate overheads.
Where the above criteria are not met, development expenditure is charged to the consolidated Statement of Comprehensive Income in
the period in which it is incurred.
Capitalised development costs are initially measured at cost. After initial recognition, they are recognised at cost less any accumulated
amortisation and any accumulated impairment losses.
The depreciable amount of a development cost intangible asset with a finite basis useful life is allocated on a straight line basis over its
useful life, currently expected to be 20 years. Amortisation begins when the asset is available for use, i.e. when it is in the location and
condition necessary for it to be capable of operating in the manner intended by management.
The amortisation period and the amortisation method for the assets with a finite useful life is reviewed at least each financial year-end.
If the expected useful life of the asset is different from previous estimates, the amortisation period is changed accordingly.
2.8 Patent costs
Patent cost assets are initially measured at cost. After initial recognition, they are recognised at cost less any accumulated amortisation
and any accumulated impairment losses. The costs are amortised over the 15 year life of the patent.
2.9 Property plant and equipment
Property, plant and equipment is recognised as an asset only if it is probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be measured reliably.
An item of property, plant and equipment that qualifies for recognition as an asset is measured at its cost. Cost of an item of
property, plant and equipment comprises the purchase price and any costs directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating in the manner intended by management. On transition to IFRS, plant and
equipment was revalued and this amount has been used as the deemed cost with no further revaluations.
After recognition, all property, plant and equipment (including Leasehold improvements and plant and machinery) is carried at cost
less any accumulated depreciation and any accumulated impairment losses.
Depreciation is provided at rates calculated to write down the cost of assets, less estimated residual value, over their expected useful
lives on the following basis:
Leasehold improvements
Plant and machinery
Straight line over the period of the lease
10-33% straight line
Trackwise Designs plc
Notes to the company financial statements continued
For the year ended December 2018
35
The residual value and the useful life of an asset is reviewed at least at each financial year-end and if expectations differ from previous
estimates, the changes are accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors.
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal
proceeds and the carrying value of the asset and are recognised in profit or loss.
2.10 Impairment of goodwill, other intangible assets and property, plant and equipment
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash flows. As
a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to
those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest
level within the Company at which management monitors goodwill.
Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or
cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable.
An asset or cash-generating unit is impaired when its carrying amount exceed its recoverable amount. The recoverable amount is
measured as the higher of fair value less cost of disposal and value in use. The value in use is calculated as being net projected cash
flows based on financial forecasts discounted back to present value.
The impairment loss is allocated to reduce the carrying amount of the asset, first against the carrying amount of any goodwill
allocated to the cash-generating unit, and then to the other assets of the unit pro-rata on the basis of the carrying amount of each
asset in the unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist. An impairment loss is reversed if the asset’s or cash-generating unit’s recoverable amount
exceeds its carrying amount (see note 10).
2.11 Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of
purchase, costs of conversion and an appropriate proportion of fixed and variable overheads incurred in bringing the inventories to
their present location and condition. Net realisable value is calculated as the estimated selling price less costs to complete and sell.
Where necessary, provision is made to reduce cost to no more than net realisable value having regard to the nature and condition of
inventory, as well as its anticipated utilisation and saleability.
2.12 Financial instruments
The Company classifies all of its financial assets at amortised cost. Financial assets do not comprise prepayments. Management
determines the classification of its financial assets at initial recognition.
These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate
other types of financial assets where the objective is to hold their assets in order to collect contractual cash flows and the contractual
cash flows are solely payments of the principal and interest. They are initially recognised at fair value plus transaction costs that
are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate
method, less provision for impairment.
The Company’s financial assets held at amortised cost comprises trade and other receivables and cash and cash equivalents in the
Statement of Financial Position.
Financial assets
Financial assets are recognised in the Statement of Financial Position when, and only when, the Company becomes a party to the
contractual provisions of the instrument.
Financial assets are initially recognised at fair value, which is usually the cost, plus directly attributable transaction costs.
Financial assets are measured at amortised cost using an effective interest method and discounting is omitted where the effect is
immaterial.
Impairment provisions are recognised based on the simplified approach within IFRS 9 using the lifetime expected credit losses.
During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the
amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised
within administrative expenses in the Statement of Comprehensive Income. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off against the associated provision.
Trackwise Designs plc
Notes to the company financial statements continued
36
For the year ended December 2018
A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial
asset and all substantial risks and reward are transferred.
Financial liabilities
Financial liabilities include borrowings, trade and other payables and derivatives in respect of forward foreign exchange contracts.
Financial liabilities are obligations to pay cash or other financial assets and are recognised in the Statement of Financial Position when,
and only when, the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities, other than derivatives, are initially recognised at fair value adjusted for any directly attributable transaction costs.
After initial recognition, financial liabilities, other than derivatives, are measured at amortised cost using the effective interest method, with
interest-related charges recognised as an expense in finance costs. Discounting is omitted where the effect of discounting is immaterial.
Derivatives are measured at fair value through profit and loss for any movements.
A financial liability is derecognised only when the contractual obligation is extinguished, that is, when the obligation is discharged,
cancelled or expires.
2.13 Leased assets
Finance leases and hire purchase obligations
The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of
ownership of the leased asset. Where the Company is a lessee in this type of arrangement, the related asset is recognised at the
inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease or hire purchase payments plus
incidental payments, if any. A corresponding amount is recognised as a finance lease or hire purchase liability.
This liability is reduced by payments net of finance charges. The interest element of lease payments represents a constant periodic
rate of interest on the outstanding capital balance and is charged to profit or loss, as finance costs over the period of the lease.
Operating leases
All other leases are treated as operating leases. Where the Company is a lessee, payments on operating lease agreements are
recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are
expensed as incurred.
2.14 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short term, highly liquid investments
that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
2.15 Foreign currencies
Transactions entered into by the Company in a currency other than the functional currency of sterling are recorded at the rates ruling
when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date.
Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the
Statement of Comprehensive Income.
The Company does not apply hedge accounting in respect of forward foreign exchange contracts held to manage the cash flow
exposures of forecast transactions denominated in foreign currencies. The Company utilises forward exchange contracts to mitigate
the risk of adverse exchange rate movements on foreign currency denominated revenue. These derivatives are measured at the fair
market value, at the reporting date, with the fair value gain or loss movements arising being recognised within administrative expenses
in the Statement of Comprehensive Income.
2.16 Equity and reserves
Share capital represents the nominal value of shares that have been issued. Share premium represents the excess consideration
received over the nominal value of share capital upon the sale of shares, less any incidental costs of issue.
Retained earnings include all current and prior period retained profits.
The revaluation reserve represents the extent to which a revaluation of plant on transition to IFRS exceeded the historical net book
value. Transfers are made to retained earnings in respect of the depreciated element of the revaluation.
Capital redemption reserves are non-distributable reserves relating to the redemption or purchase of the Company’s own shares.
Trackwise Designs plc
Notes to the company financial statements continued
For the year ended December 2018
37
2.17 Standards, amendments and interpretations in issue but not yet effective
The following new standards, interpretations and amendments that may or will have an effect on the Company’s future financial
statements are:
IFRS 16 Leases
This standard is effective for accounting periods beginning on or after 1 January 2019 and will therefore impact the results for the year
ending 31 December 2019. It sets out the principles for the recognition, measurement, presentation and disclosure of leases for both
lessees and lessors. It replaces IAS 17 Leases and IFRIC 4 determining whether an arrangement contains a lease.
The most significant changes are in relation to lessee accounting for operating leases. Under the new standard, the concept of
assessing a lease contract as either operating or financing is replaced by a single lessee accounting model. Under this new model,
substantially all lease contracts will result in a lessee acquiring a right-to-use asset and obtaining financing. The lessee will be required
to recognise a corresponding asset and liability. The asset will be depreciated over the term of the lease and the interest on the
financing liability will be charged over the same period.
Adopting this new standard will result in a material change to the Statement of Financial Position, with right-to-use assets and
accompanying financing liabilities for the Company’s lease of premises being recognised for the first time. Based on the current lease
in place it is estimated that an asset and corresponding liability of approximately £0.7m would be accounted for as at 31 December
2018.
There are no other new standards, interpretations and amendments which are not yet effective in these Financial Statements, expected
to have a material effect on the Company’s future Financial Statements.
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 Company comprised only one operating segment until 31 December 2017 for the sale of printed circuit boards. 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 have begun to be separately reviewed and monitored. Revenue of
£2,862,000 arose from RF and £606,000 from IHT in the year ended 31 December 2018.
All assets, liabilities and revenues are located in, or derived from, 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 2018 the Company had a major customer who represented 26% of revenue reported in the Europe segment (2017: 2 customers
representing 33% and 14%).
Turnover by geographical destination
UK
Europe
Other
Operating Profit by geographical destination
UK
Europe
Other
2018
£’000
866
2,368
234
3,468
2018
£’000
31
85
9
125
2017
£’000
702
1,983
136
2,821
2017
£’000
17
47
3
67
Trackwise Designs plc
Notes to the company financial statements continued
38
For the year ended December 2018
4 Operating profit
Operating profit is stated after charging/(crediting)
Amortisation of intangible assets
Depreciation of property, plant and equipment
Grant income (note 10)
Cost of inventory sold
Development expenditure expensed in year
Foreign exchange (gains)/loss
(Gain)/Loss on fair valued derivative
Operating lease expenses
Costs of moving main premises
Share based payment charge
2018
£’000
2017
£’000
97
196
–
6
155
(22)
1,331
1,073
–
14
(49)
125
45
155
75
65
49
91
–
–
Staff payroll costs (net of capitalised development costs)
1,178
879
During the year the Auditors received £31,000 for audit services and £132,423 for non audit services of which £120,000 was related to
the flotation of the Company on AIM.
5 Staff and key management personnel
Average monthly number of employees
Management and administration
Production
Payroll costs
Gross salaries
Social security costs
Share based payment
Other pension contributions
The directors’ remuneration was as follows.
Year ended 31 December 2018
P Johnston
M Hodgkins
I Griffiths
L Jackson
Year ended 31 December 2017
P Johnston
Trackwise Designs plc
2018
Number
2017
Number
13
29
42
£’000
1,401
139
155
58
10
23
33
£’000
933
85
–
35
1,753
1,053
Salary
£’000
Benefits
£’000
Pension
£’000
Total
£’000
156
186
19
15
376
19
6
–
–
25
12
6
–
–
18
Salary
£’000
121
Benefits
£’000
–
Pension
£’000
7
187
198
19
15
419
Total
£’000
128
Notes to the company financial statements continued
For the year ended December 2018
39
6 Finance income and Expense
Finance income
Interest receivable on bank deposits
Finance expense
Interest payable on loans and overdrafts
Interest payable on finance leases
7. Income tax
Current tax:
UK corporation tax:
Total current tax credit
Deferred tax:
Origination and reversal of temporary differences
Effect of change in tax rate on opening liability
Adjustment for prior periods
Total deferred tax expense
Total tax credit
2018
£’000
2017
£’000
8
30
35
65
–
63
17
80
2018
£’000
2017
£’000
61
61
(39)
–
(15)
(54)
7
41
41
(20)
–
–
(20)
21
The tax rate used for the reconciliation is the corporate tax rate of 19% (2017: 19.25%) payable by corporate entities in the UK on
taxable profits under UK tax law. Changes to reduce the corporation tax rate to 17% from 1 April 2020 have been substantively
enacted. The tax rate used to calculate deferred tax is 17% (2017: 17%), being the rate at which the timing differences are expected
to unwind based on currently enacted UK corporate tax legislation.
The credit for the year can be reconciled to the profit/(loss) for the year as follows:
Profit/(loss) before taxation
Income tax calculated at 19% (2017: 19.25% 2016: 20%)
Disallowable expenses including share based payment
Enhanced research and development allowances
Adjustment for prior periods
Differing deferred tax and R&D tax credit rates
Total tax credit
2018
£’000
68
(14)
(27)
37
(15)
26
7
2017
£’000
(13)
3
–
28
–
(10)
21
In addition to the tax credit, a further development expenditure tax related credit of £35,000 (2017: £20,000) is included in operating
expenses.
Trackwise Designs plc
Notes to the company financial statements continued
40
For the year ended December 2018
8 Dividends paid and proposed
Amounts recognised as distributions to equity holders in the period:
Interim ordinary dividends paid for the year ended 31 December 2018 of £nil
(2017: £8.47) paid per ordinary share
9 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
Earnings for the purpose of basic and diluted earnings per share being net
profit attributable to the shareholders
Number of shares
2018
£’000
2017
£’000
–
120
2018
£’000
2017
£’000
75
8
2018
2017
Weighted average number of ordinary shares for the purposes of basic earnings
per share
11,830,427
9,534,275
Weighted average number of ordinary shares for the purposes of diluted earnings
per share
12,370,189
9,534,275
Earnings per Share (pence)
Basic
Diluted
0.63
0.61
0.084
0.084
The earnings per share for both periods above is calculated from the number of £0.04 ordinary shares in issue at 30 June 2018 of
9,534,275. This reflected the 14,176 £1 shares allotted as of 31 December 2017, an issue of 367,195 £1 ordinary shares to existing
shareholders utilising the capital redemption reserve on 28 June 2018 and a subdivision of £1 shares into £0.04 shares on 28 June
2018. On 24 July 2018, 5,238,097 £0.04 ordinary shares were issued at £1.05 per share.
Options over 990,015 shares (after the subdivision) were granted to employees on 15 June 2018 which are potentially dilutive shares.
They are exercisable at 28.25 pence per share after a period of 3 years. The share-based payment charge of 72.25 pence per option
share has been measured using the Black Scholes model applying the three-year vesting period, a volatility of 50% and annual risk
free rate of 1.5%.
Trackwise Designs plc
Notes to the company financial statements continued
For the year ended December 2018
41
10 Intangible assets
Cost
As at 1 January 2017
Additions
As at 31 December 2017
Additions
As at 31 December 2018
Amortisation or impairment
As at 31 January 2017
Charge
As at 31 December 2017
Charge
As at 31 December 2018
Carrying amount
As at 31 December 2016
As at 31 December 2017
As at 31 December 2018
Goodwill
£’000
Patent costs
£’000
Computer Development
costs
£’000
Software
£’000
104
–
104
–
104
–
–
–
–
–
104
104
104
52
3
55
7
62
13
3
16
3
19
39
39
43
78
–
78
11
89
72
3
75
2
77
6
3
12
987
516
1,503
1,049
2,552
–
–
–
92
92
987
1,503
2,460
Total
£’000
1,221
519
1,740
1,067
2,807
85
6
91
97
188
1,136
1,649
2,619
The carrying amount of goodwill relates to the acquisition of the original RF technology based business, whilst all the capitalised
development costs relate to projects in respect of the Company’s Improved Harness Technology (‘IHT’) process for unlimited length
printed circuit boards and know-how which has since been developed by the Company with amortisation on the initial development
projects commencing in 2018.
To determine the values of the costs capitalised management include the actual cost of purchase for all materials which are acquired
for product development purposes, they collect daily time analyses of work performed by design or product engineers which
captures the time spent on development activities which is then evaluated using a labour rate appropriate for the engineer who has
worked the time and finally an element of direct relevant overhead cost is incorporated to reflect the additional cost of operating the
developmental department of the Company.
Impairment tests for goodwill
The Company tests goodwill annually for impairment, or more frequently if events or changes in circumstances indicate that the asset
might be impaired. The carrying values are assessed on a value in use basis for impairment purposes by calculating the net present
value (NPV) of future cash flows arising from the original acquired business. The goodwill impairment review assessed whether the
carrying value of goodwill was supported by the NPV of future cash flows based on management forecasts for 5 years, an assumed
growth rate of 1% (2017: 1%) for the next 5 years and a discount rate of 12% (2017: 12%). There is significant headroom in the
assessment from a range of reasonable sensitivities.
Government grants
The Company has received aggregate grants from UK and European government research and development initiatives amounting to
£633,000 (2017: £306,000) which fund a proportion of development work and which have been deferred in line with the capitalised
development cost assets above that they relate to. In addition, £nil (2017: £22,000) of similar government technology income related
grants have been recognised in other operating income. There are no unfulfilled conditions or contingencies attached to the grants.
Trackwise Designs plc
Notes to the company financial statements continued
42
For the year ended December 2018
11 Property, plant and equipment
Leasehold
improvements
£’000
Plant and
machinery
£’000
Cost
At 1 January 2017
Additions
As at 31 December 2017
Additions
Disposals
As at 31 December 2018
Depreciation
At 1 January 2017
Charge
As at 31 December 2017
Charge
Disposals
As at 31 December 2018
Carrying amount
As at 31 December 2016
As at 31 December 2017
As at 31 December 2018
62
159
221
154
–
375
62
–
62
29
–
91
–
159
284
Total
£’000
1,593
519
2,112
214
(44)
1,531
360
1,891
60
(44)
1,907
2,282
638
155
793
167
(33)
927
893
1,098
980
700
155
855
196
(33)
1,018
893
1,257
1,264
Included within the carrying amount of the above, are assets held under finance leases of £692,000 (2017: £660,000) relating to plant
and machinery.
12 Inventories
Raw materials
Work in progress
Finished goods
2018
£’000
222
58
100
380
2017
£’000
143
122
48
313
There is no material difference between the value of inventories stated and their replacement cost. There are no material stock
provisions at any period end, neither have material amounts of stock been written off in any of the periods presented.
13 Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
2018
£’000
524
26
296
846
2017
£’000
419
99
32
550
2016
£’000
141
104
33
278
2016
£’000
577
46
15
638
Trade receivables are stated net of impairment for estimated irrecoverable amounts of £nil (2017: £61,000). There has been no
material write off or change in impairment throughout the periods covered and as a result no expected credit loss provision is made for
these. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Trackwise Designs plc
Notes to the company financial statements continued
For the year ended December 2018
43
Trade receivables past their due dates but not impaired were:
31 December 2016
31 December 2017
31 December 2018
Less than
60 days
overdue
£’000
60 to
120 days
overdue
£’000
More than
120 days
overdue
£’000
7
24
15
–
56
12
–
2
–
The Directors consider the credit quality of trade and other receivables that are neither past due nor impaired to be of good quality.
14 Trade and other payables
Amounts falling due within one year:
Trade payables
Taxes and social security costs
Other payables
Accruals and deferred income
Amounts falling due after more than one year:
Deferred income - grants
2018
£’000
332
49
44
390
815
539
2017
£’000
428
32
476
187
1,123
306
2016
£’000
421
28
20
35
504
189
The Directors consider that the carrying amount of trade and other payables approximates to their fair values.
15 Borrowings
Amounts falling due within one year:
Revolving credit facility
Invoice discounting facility
Bank loans
Finance leases (note 16)
Amounts falling due after more than one year:
Bank loans
Finance leases (note 16)
Total borrowings
2018
£’000
2017
£’000
2016
£’000
–
–
–
161
161
–
357
357
518
515
–
–
147
662
–
410
410
1,072
–
129
44
104
277
197
362
559
836
The revolving credit facility was secured by fixed and floating charges over the property and other assets of the Company and bore
interest at a market rate for the facility which was typically 10%. Finance leases are secured on the specific tangible fixed assets to
which they relate.
Trackwise Designs plc
Notes to the company financial statements continued
44
For the year ended December 2018
Financing activities and movements in total borrowings
As at 31 December 2016
Cash movements:
Decrease in invoice discounting
Repayment of loans
Revolving loan advanced
Finance lease repayments
Interest paid
Non-cash movements:
Interest accrued
New finance leases
As at 31 December 2017
Cash movements:
Repayment of revolving loan
Revolving loan advanced
Finance lease repayments
Interest paid
Non-cash movements:
Interest accrued
New finance leases
As at 31 December 2018
16 Finance leases
£’000
836
(129)
(241)
515
(122)
(80)
80
213
1,072
(515)
–
(164)
(65)
65
125
518
Minimum lease payments under finance leases are as follows:
In one year or less
Between one and five years
Future finance charges
Present value of finance lease liabilities
2018
£’000
2017
£’000
2016
£’000
185
414
599
(81)
518
169
474
643
(86)
557
120
414
534
(68)
466
17 Financial instruments and capital management
Risk management
The Board has overall responsibility for the determination of the Company’s risk management objectives and policies. The overall
objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s innovation
and flexibility. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of
Directors. The Company is exposed to financial risks in respect of market, credit, foreign exchange, liquidity and interest rate risk.
Capital management
The Company’s capital comprises all components of equity which includes share capital, retained earnings and other reserves as
indicated in the Statement of Financial Position.
The Company’s objectives when maintaining capital are to safeguard the entity’s ability to continue as a going concern, so that it can
continue to provide returns for Shareholders and benefits for other stakeholders, and to provide an adequate return to Shareholders by
pricing products and services commensurately with the level of risk.
Trackwise Designs plc
Notes to the company financial statements continued
For the year ended December 2018
45
The capital structure of the Company consists of Shareholders equity with all working capital requirements financed from cash and
revolving credit facilities.
The Company sets the amount of capital it requires in proportion to risk. It manages its capital structure and makes adjustments to it
in the light of changes in economic conditions, terms of borrowing facilities and the risk characteristics of the underlying assets and
activity. The Company has complied with the minimum net asset requirements which are required by the borrowing facility. In order
to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to Shareholders, return capital to
Shareholders, issue new shares, or sell assets to reduce debt.
Market risks
These arise from the nature and location of the customer markets, foreign exchange and interest rate risks.
The Company trades within the UK, European and US aeronautical and communications markets, and accordingly there is a risk
relating to the underlying performance of these markets. The Directors monitor this and the foreign exchange risk closely with the
intention to foresee downturns in trade or changes in the use of technology.
Foreign exchange risk
The Company trades in overseas markets and, whilst it has net foreign currency balances, has forward contracts in place with an
option to sell foreign currency receipts at a fixed rate which it uses to manage pricing and the exposure to currency risks. There has
therefore been limited sensitivity to fluctuations in exchange rates.
The company had the following net cash, sales ledger and purchase ledger balances denominated in foreign currencies:
Euro denominated
US dollar denominated
Interest rate risk
2018
£’000
92
11
2017
£’000
313
(20)
2016
£’000
337
(6)
The Company entered into a revolving credit facility with Growth Street in 2017, in order to finance development of the key technology,
upon which interest was charged at a variable market rate for facilities of this nature. The outstanding value of this facility at 31
December 2017 was £515,000 on which the variable interest charged has typically been at a rate of 10%. This was fully repaid in
2018 and the Company now holds cash balances. The Directors do not consider that the Company is exposed to a material risk from
fluctuations in these interest rates; had the base rate been 1.0% higher throughout the 2017 financial year this would have increased
the interest cost by approximately £6,000.
The Company makes use of fixed rate finance lease or hire purchase agreements to acquire property, plant and equipment; this
ensures that the Company maintains its existing working capital and ensures certainty of costs at the point of acquisition of those
assets. These liabilities are set out in note 16.
Credit risk
Credit risk is the risk of financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The
Company is mainly exposed to credit risk from credit sales and attempts to mitigate credit risk by assessing the creditworthiness of
customers and closely monitoring payments history. Given the long experience of the Company with its customers and in view of the
systems and relations with customers that the Company has, the Directors do not consider there is any significant risk at the balance
sheet date.
The ageing of debtors is included in note 13. There have been no material impairments to trade or other receivables invoiced within the
3 years included within these financial statements.
Credit risk on cash and cash equivalents is considered to be minimal as the counterparties are all substantial banks with high credit
ratings.
Trackwise Designs plc
Notes to the company financial statements continued
46
For the year ended December 2018
Liquidity risk
The maturity of the Company’s financial liabilities including borrowing facilities detailed above is as set out below. Current liabilities
were payable on demand or to normal trade credit terms with the exception of finance leases payable monthly. The derivative liability in
2017 related to a forward exchange contract expiring within a year. Liquidity risk of the business is managed by the preparation of and
monitoring of a rolling weekly cash forecast which is integrated with a regular review of credit risk exposure (as detailed above) and
the Board level review of three-month rolling finance facility headroom.
At 31 December 2016
Trade and other payables
Invoice discounting
Bank loans
Finance leases
At 31 December 2017
Trade and other payables
Bank loans
Finance leases
At 31 December 2018
Trade and other payables
Finance leases (incl. interest)
Up to 1 year
£’000
1-2 years
£’000
2-5 years
£’000
441
129
44
120
734
–
–
44
120
164
–
–
153
294
447
Up to 1 year
£’000
1-2 years
£’000
2-5 years
£’000
903
515
169
1,587
–
–
169
169
–
–
305
305
Up to 1 year
£’000
1-2 years
£’000
2-5 years
£’000
543
185
728
–
180
180
–
234
234
Classification of financial instruments
All financial assets are held at amortised cost, and all financial liabilities have been classified as other financial liabilities measured at
amortised cost with the exception of the forward currency contract measured at fair value as a derivative instrument.
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
At amortised cost
Trade and other payables
Invoice discounting
Bank loans
Finance leases
At fair value
Derivative liability
Trackwise Designs plc
2018
£’000
550
2,786
3,336
2018
£’000
543
–
–
518
1,061
2017
£’000
550
166
716
2017
£’000
961
–
515
557
2016
£’000
638
122
760
2016
£’000
476
129
241
466
2,033
1,312
–
49
–
Notes to the company financial statements continued
For the year ended December 2018
47
234
20
254
54
308
2016
£’000
31
2016
£’000
–
14
–
14
18 Deferred tax liabilities
Liability/(asset) in respect of:
As at 31 December 2016
Debit to profit or loss
As at 31 December 2017
Debit to profit or loss
As at 31 December 2018
Accelerated/
(decelerated)
capital
allowances
£’000
148
17
165
6
171
Intangible
assets
£’000
Share Based
Payment
£’000
Losses
£’000
Total
£’000
99
68
167
104
271
–
–
–
(36)
(36)
(13)
(65)
(78)
(20)
(98)
19 Defined contribution scheme
The Company contributes to personal pension plans for the benefit of certain employees. The pension cost charge represents
contributions payable by the Company to the fund.
Contributions payable by the Company for the year
20 Share capital
Allotted, called up and fully paid
14,772,372 Ordinary Shares of £0.04 each
14,175 Ordinary Shares of £1 each
1 ‘A’ Ordinary Share of £1 each
2018
£’000
58
2018
£’000
591
–
–
591
2017
£’000
35
2017
£’000
–
14
–
14
Ordinary shares have equal rights to votes in any circumstances and are non-redeemable.
Ordinary shares have rights to receive dividends and capital distributions.
There was an issue of 367,195 £1 ordinary shares to existing Shareholders utilising the capital redemption reserve on 28 June 2018
and a subdivision of all the £1 shares into 9,534,275 £0.04 ordinary shares on 28 June 2018. On 24 July 2018, 5,238,097 £0.04
ordinary shares were issued at £1.05 per share. This included a share premium amount of £5,290,000 against which £1,056,000 of
share issue expenses were debited resulting in a net amount of £4,234,000 in the share premium account.
Analysis of Movements in Share Capital
1 January
Bonus Issue
Sub-Division
Share Issue
31 December
21 Contingent liabilities
At 31 December 2018, the Company had no contingent liabilities (2017: none).
2018
£’000
2017
£’000
2016
£’000
14,176
367,195
9,152,904
5,238,097
14,176
14,176
–
–
–
–
–
–
14,772,372
14,176
14,176
Trackwise Designs plc
Notes to the company financial statements continued
48
For the year ended December 2018
22 Financial commitments
At 31 December 2018, the Company’s future minimum rentals payable under non-cancellable operating leases were as follows:
Land and buildings
In one year or less
Between one and five years
Total financial commitments
2018
£’000
110
328
438
2017
£’000
106
411
517
2016
£’000
60
–
60
The company leases its premises under a 10-year lease with a break option available after 5 years.
23 Ultimate controlling party and related party transactions
There was no individual controlling party as at 31 December 2018.
The key management personnel are considered to be the Directors. Please refer to Note 5 for details of key management personnel
remuneration. M Hodgkins, a Director of the Company, holds options over 78,690 ordinary shares in the Company (see note 9). A
company controlled by M Hodgkins, Manumit Strategies Limited, invoiced £75,420 of fees and expenses to the Company in respect of
consultancy services relating to the AIM listing.
A motor vehicle was sold to P Johnston, a Director of the Company, for £13,425 during the year.
24 IFRS transition adjustments
The Statement of Comprehensive Income for the year ended 31 December 2017 and the Statement of Financial Position as of 31
December 2017 is extracted from the 31 December 2017 audited financial statements prepared under UK Financial Reporting
Standard 102. These have been adjusted to apply IFRS as presented in the Company’s AIM listing document with a transition date of 1
January 2017, together with a reclassification of production overhead expenses from administrative expenses to costs of sales.
IFRS 3 ‘Business combinations’: There are no business combinations that occurred after the transition date. Under the IFRS 1
exemption, the net book value of goodwill carried at the transition date has been adopted as cost at that date and is no longer
amortised. It is subject to annual impairment testing resulting in a reversal of the amortisation charge of £19,000 for the year ended 31
December 2017 and £53,000 of accumulated amortisation at 31 December 2017.
IFRS 1 and IAS 16: The Company applied the transition option under IFRS1 to fair value plant and equipment and to use this as
deemed cost at transition resulting in an increase in net book value at 1 January 2017 of £284,000.
Deferred taxation has been applied in respect of the adjustments made. This resulted in an additional £77,000 deferred tax liability at
transition in respect of the increased fixed asset values and additional tax credits of £25,000 for the three years ended 31 December
2017 with £2,000 of this relating to 2017 and a net increase in the deferred tax liability at 31 December 2017 of £52,000.
Income statement for the year ended 31 December 2017
UK GAAP
as reported
£’000
Depreciation
and
amortisation
£’000
Tax
adjustments Reclassification
£’000
£’000
2,821
(1,749)
1,072
22
(1,044)
50
(80)
(30)
19
(11)
–
(2)
(2)
–
19
17
–
17
–
17
–
–
–
–
–
–
–
–
2
2
–
(166)
(166)
–
166
–
–
–
–
–
IFRS
£’000
2,821
(1,917)
904
22
(859)
67
(80)
(13)
21
8
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Operating profit
Finance costs
Loss before taxation
Taxation
(Loss)/profit and total comprehensive income
for the year
Trackwise Designs plc
Notes to the company financial statements continued
For the year ended December 2018
49
Statement of financial position as at 1 January 2017
UK GAAP Revaluation of
fixed assets
£’000
as reported
£’000
Reverse
amortisation
Deferred tax
£’000
of goodwill Reclassification
£’000
£’000
Intangible assets
Tangible assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Share capital
Capital redemption reserve
Revaluation reserve
Retained earnings
Total equity
1,096
615
1,072
(781)
(928)
1,074
14
367
–
693
1,074
–
284
–
–
–
284
–
–
284
–
284
Statement of financial position as at 31 December 2017
–
–
–
–
(54)
(54)
–
–
–
(54)
(54)
34
–
–
–
–
34
–
–
–
34
34
6
(6)
–
–
–
–
–
–
–
–
–
UK GAAP Revaluation of
fixed assets
£’000
as reported
£’000
Reverse
amortisation
Deferred tax
£’000
of goodwill Reclassification
£’000
£’000
Intangible assets
Tangible assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Share capital
Capital redemption reserve
Revaluation reserve
Retained earnings
Total equity
25. Share Option Plan
Introduction
1,593
976
1,124
(1,834)
(918)
941
14
367
–
560
941
–
284
–
–
–
284
–
–
245
39
284
–
–
–
–
(52)
(52)
–
–
–
(52)
(52)
53
–
–
–
–
53
–
–
–
53
53
3
(3)
–
–
–
–
–
–
–
–
–
IFRS
£’000
1,136
893
1,072
(781)
(982)
1,338
14
367
284
673
1,338
IFRS
£’000
1,649
1,257
1,124
(1,834)
(970)
1,226
14
367
245
600
1,226
The Company established the EMI Share Option Plan on 15 June 2018 which allows for the grant of enterprise management incentive
share options which qualify for favourable tax treatment under the provisions of Schedule 5 to Income Tax (Earnings and Pensions) Act
2003 (ITEPA) (EMI Options) and awards of non-qualifying options (together Awards).
The awards are not transferable. Only the person to whom an Award is granted or his or her personal representatives may acquire
Ordinary Shares pursuant to an Award
The Board and Remuneration Committee has overall responsibility for the operation and administration of the Share Option Plan and
discretion to select the persons to whom Awards are to be granted.
Size of EMI Options grants/plan limits
The Company will grant EMI Options for as long as the Company satisfies the qualifying conditions set out in the EMI Code.
Under the EMI Code, an employee may hold EMI Options over Ordinary Shares with a value (as at the date of grant) up to £250,000.
Trackwise Designs plc
Notes to the company financial statements continued
50
For the year ended December 2018
Where this threshold is exceeded, the employee may not receive EMI Options for three years. He may, however, receive non-qualifying
Awards, subject to the limit as set out below.
Unless the Remuneration Committee otherwise determines, the aggregate number of Ordinary Shares over which Awards may be
granted under the Share Option Plan on any date shall be limited so that the total number of Ordinary Shares issued and issuable
pursuant to Awards granted under the Share Option Plan and any other share scheme operated by the Company in any rolling 10-year
period will be restricted to 10 per cent of the Company’s issued Ordinary Share capital from time to time calculated at the relevant
time.
Rights to attaching to shares
Ordinary Shares issued in connection with the exercise of Awards will rank equally with Ordinary Shares of the same class then in
issue. Application will be made for admission to trading on AIM of new Ordinary Shares issued.
Malus and Clawback
The Remuneration Committee may apply clawback where at any time before or within a year of vesting it determines that the final
results of the Company were misstated. The Remuneration Committee may also apply the clawback at any time if it is discovered that
the participant engaged in fraudulent or dishonest conduct prior to vesting that justified, or would have justified, summary dismissal
from office or employment.
Awards
Included in these awards are options over 78,690 Ordinary Shares granted to Mark Hodgkins, one of the Directors.
26. Adjusted Operating Profit and EBITDA
In monitoring the performance of the business the Directors focus on operating profit adjusted for material non-recurring or non-
trading expenses and the adjustments so made are set out below:
Adjusted Operating profit:
Operating profit
Add back: Share based payments
Costs relating to factory move
Adjusted operating profit
£
125,000
155,000
45,000
325,000
The measure of EBITDA is not recognised by IFRS however it remains an important performance measure for management. The
adjusted operating profit (see above) adjusted for depreciation and amortisation is calculated and set out below:
£
125,000
196,000
97,000
155,000
45,000
618,000
Adjusted EBITDA:
Operating profits
Depreciation
Amortisation
Share based payments
Move costs
Adjusted EBITDA
Trackwise Designs plc
Officer and Professional Advisers
51
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
Registered in England/Wales Company no: 3959572
Registered in Ireland Company no: 635429
DIRECTORS
SECRETARY
REGISTERED OFFICE
Trackwise Designs plc
REGISTERED OFFICE
Trackwise Europe Ltd
AUDITORS
LAWYERS
NOMINATED ADVISOR
& BROKER
REGISTRARS
Ian Griffiths
Philip Johnston
Mark Hodgkins
Lesley Jackson
Mark Hodgkins
1 Ashvale
Alexandra Way
Tewkesbury
Gloucestershire
GL20 8NB
The Black Church
St. Mary’s Place
Dublin 7
Ireland
Mazars LLP
45 Church Street
Birmingham
B3 2RT
Gateley Plc
111 Edmund Street
Birmingham
B3 2HJ
Arden Partners Plc
5 George Road
Edgbaston
Birmingham
B15 1NP
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Trackwise Designs plc
RF PRINTED CIRCUIT BOARDS
World leading RF PCBs
Providing connection under the
most demanding conditions
Trackwise Designs plc
1 Ashvale | Alexandra Way | Tewkesbury | Gloucestershire GL20 8NB | UK
T: +44 (0)1684 299930 | E: enquiries@trackwise.co.uk | W: www.trackwise.co.uk