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(Alliance News) - Sondrel Holdings PLC on Wednesday said that further delays to a December contract payment have put the group in a precarious cash position.
The Reading, England-based semiconductor design services provider saw its shares sink 33% following the update, from a Tuesday closing price of 6.00 pence to 4.00 pence per share. Shares have nearly bounced back, currently trading at 5.94 pence each, down 1.8% in London on Wednesday morning.
As announced in December, a delayed GBP1.7 million payment from an unnamed "Tier 1 automotive original equipment manufacturer" has pushed tape out for an application-specific integrated circuit project to the end of the first quarter. Sondrel is also seeking further funding for the additional resources required due to the delay.
As a result, Sondrel was unable to meet its December payroll, with directors and senior management agreeing to defer salaries and fees pending receipt of the delayed funds.
Sondrel said that funding discussions with the customer are ongoing, but believes these will not be resolved in advance of publication of the company's full-year results. The roughly GBP2.7 million in expected revenue from the automotive project will instead form part of Sondrel's results for the full year ending December 31, 2024.
Sondrel therefore expects revenue for 2023 to be "materially lower" than analyst forecasts of GBP13.0 million at around GBP10.0 million for the full year, down from GBP17.5 million in 2022.
Sondrel is seeking additional capital before the end of March to provide "a more permanent solution" to its working capital needs. Should the company not receive the delayed automotive project payment by January or February, the group said that this will need to be secured "in shorter order".
However, Sondrel highlighted "significant new ASIC business opportunities" anticipated for starts in early 2024. The group said that indications of a strong demand for its turnkey ASIC services in Europe and the US "remain encouraging".
Chief Executive Officer Graham Curren said: "Whilst it is disappointing to see the [2023] financial results impacted by the previously announced delays in this project, the expectation remains that the project will be completed in the first quarter of 2024 and the company remains encouraged by significant new ASIC business opportunities in the final stages of negotiation."
By Hugh Cameron, Alliance News reporter
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