REG - EnSilica PLC - Audited Full Year Results
05/11/2024 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241105:nRSE9052Ka&default-theme=true
RNS Number : 9052K EnSilica PLC 05 November 2024
The information contained within this announcement was deemed by the Company
to constitute inside information as stipulated under the UK Market Abuse
Regulation.
5 November 2024
EnSilica plc
("EnSilica", the "Company" or the "Group")
Audited Full Year Results for the Year Ended 31 May 2024
- Ongoing contract momentum underpins significant demand for EnSilica's
services
- New contracts signed with a lifetime expected value of $65 m post year end
EnSilica (AIM: ENSI), a leading chip maker of mixed signal ASICs (Application
Specific Integrated Circuits), announces its audited full year results for the
year ended 31 May 2024 ("FY 2024").
Financial Highlights
· Revenues increased by 23% to £25.3 million (FY 2023: £20.5
million)
· EBITDA increased by £0.1 million to £1.7 million (FY 2023: £1.6
million)
· Gross margin of 36% (FY 2023: 40%) distorted by large tape-out
contract
· Operating profit of £0.9 million generated, an increase of £0.1
million versus the prior year
· Cash and cash equivalents increased by £2.1 million to £5.2 million
(FY 2023: £3.1 million)
· Successful completion of equity fundraisings totalling £6.5 million
(net of expenses) during the year
· Further organic investment of £6.4 million in Intellectual Property
("IP") assets
External loans refinanced with a £6 million facility with Lloyds unlocking
£2.1 million of additional working capital, with an additional £3 million
available subject to credit approval
Operational Highlights
· New lead customer contract for its proprietary satellite
broadband chip, valued at £2.5 million
· €3.8 million contract with a prominent European automotive and
industrial semiconductor supplier for the development of a chip incorporating
Arm-based technology
· First IP licence granted to a major semiconductor company of
EnSilica PQC and classical Cryptography accelerator
· ASIC supply contract worth over $7 million in the e-mobility
market
Post Year-End Highlights
· Significant supply-only contract for an Edge AI processing chip,
valued at $7 million, with potential supply revenue exceeding $50 million over
the first five years of production
· Second ASIC design and supply win with Siemens for market-leading
factory automation products , valued at approximately $2.4 million
· Contract signed for the development and supply of a high-end ASIC
for telecommunications infrastructure with Siae Microelettronica. The contract
is expected to be worth in excess of $30 million over a ten-year period
· Five million automotive ASICs shipped delivering key
differentiating features in the chassis control unit of a premium vehicle
· Fourth ASIC moves into production phase, with the first orders
received for industrial ASIC. The total supply value is expected to be worth
more than $30 million over seven years
· Strengthened partnership with TSMC with announcement of EnSilica
joining the TSMC Design Centre Alliance partnership programme
· Contract signed for the development and supply of a controller
ASIC for automotive and industrial applications, the contract is expected to
be worth in excess of $31 million over a seven-year period
· Awarded a £2m ASIC design services contract with a prestigious
supplier of power and propulsion systems used in the air, at sea, and on land
Outlook
· The Company has started FY 2025 strongly, with key milestones
achieved and new business momentum across target sectors including automotive
and industrial. Revenues are expected to be second half weighted as in FY2024.
· The business has built a strong pipeline with a sizeable order book
that continues to underpin management's confidence in the business
· Whilst the Board is confident of the short-term revenue pipeline,
additional external financing may be required should the Company experience
further delays in contracted customer receipts
· Looking ahead, the Board believes the Company is well placed to
continue to capitalise on the significant growth opportunity that exists
within the semiconductor industry
Ian Lankshear, Chief Executive Officer of EnSilica plc, commented:
"EnSilica performed strongly across the full year period and I am particularly
pleased with our continued new supply contract momentum alongside our solid
progress developing our IP portfolio.
From both a financial and operational perspective, EnSilica remains well
positioned to continue to explore commercial opportunities across the
semiconductor supply chain, and, supported by our talented global team, we are
focused on increasing our market share in sectors such as healthcare and
satellite communications where ASICs are integral components of innovations."
Investor presentation
An online presentation of the annual results will be held today at 2.00 p.m.
GMT. The presentation will be hosted on the Investor Meet Company ("IMC")
platform.
Investors can sign up to IMC for free and add to meet EnSilica via:
https://www.investormeetcompany.com/ensilica-plc/register-investor
(https://www.investormeetcompany.com/ensilica-plc/register-investor)
Annual Report and AGM
The Company's annual report and accounts together with notice of the annual
general meeting ("AGM") will be posted to shareholders this week and will be
made available on the Company's website.
The Annual General Meeting will be held on 28 November 2024 at 10.00 a.m. at
the Company's office at Milton Park Innovation Centre, 99 Park Drive, Milton
Park, Abingdon OX14 4RY.
For further information please contact:
EnSilica plc via Vigo Consulting
Ian Lankshear, Chief Executive Officer +44 (0)20 7390 0233
Kristoff Rademan, Chief Financial Officer
www.ensilica.com (http://www.ensilica.com/)
Allenby Capital Limited, Nominated Adviser & Joint Broker +44 (0)20 3328 5656
Jeremy Porter / Vivek Bhardwaj (Corporate Finance) info@allenbycapital.com (mailto:info@allenbycapital.com)
Joscelin Pinnington / Tony Quirke (Sales & Corporate Broking)
Singer Capital Markets, Joint Broker
Rick Thompson / Asha Chotai +44 (0)20 7496 3000
Vigo Consulting (Investor & Financial Public Relations) +44 (0)20 7390 0233 ensilica@vigoconsulting.com
(mailto:visum@vigoconsulting.com)
Jeremy Garcia / Kendall Hill
The person responsible for arranging release of this announcement on behalf of
the Company is Kristoff Rademan, Chief Financial Officer.
About EnSilica
EnSilica is a leading fabless design house focused on custom ASIC design and
supply for OEMs and system houses, as well as IC design services for companies
with their own design teams. The company has world-class expertise in
supplying custom RF, mmWave, mixed signal and digital ICs to its international
customers in the automotive, industrial, healthcare and communications
markets. The company also offers a broad portfolio of core IP covering
cryptography, radar, and communications systems. EnSilica has a track record
in delivering high quality solutions to demanding industry standards. The
company is headquartered near Oxford, UK and has design centres across the UK
and in Bangalore, India and Porto Alegre, Brazil.
Chair's Statement
We have continued to grow in line with, and in some cases exceeded, the
plans that we set out at the time of our IPO, reflecting the strength of our
strategy and the dedication and abilities of all our colleagues globally.
Global demand for ASIC (Application Specific Integrated Circuit) chips is
fast-expanding, with the market expected to reach $25 billion by the end of
2030, delivering a CAGR of 5.1% between 2024-20301. While uncertainty has
impacted investment decisions over the prior year and may continue to do so
in the near future, we remain confident in the growth prospects of the ASIC
market underpinned by continued demand from industries at the forefront of
modern technology and innovation.
To that end, our business remains firmly focused on targeting four high-tech
growth markets; namely communications, healthcare, automotive and industrial.
Pleasingly, we have continued to attract high-value contracts across these
core growth end markets, despite the current macro-economic backdrop. Our
Annual Recurring Revenues (ARR) of chip supply are beginning to feed through
to our results and we expect this to be a permanent feature of the business
going forward. We aim to achieve a return on capital employed (ROCE) in
excess of 20%, supported by strong EBITDA margins, as our ARR continues
to grow. In addition, our order book and pipeline continues to expand and
develop while our customer list has similarly advanced.
Across FY24, we secured several supply and contract wins which have
further diversified our revenue streams, reflecting our well-established
position as a trusted partner for tier 1 global corporations as well as
industrial OEMs and tech startups. Highlights include a €3.8 million
Arm-based technology contract win, and an initial mandate for a high-end
telecoms ASIC worth over $30 million.
As Ian Lankshear sets out in his CEO statement, we are managing to secure
contracts in fields where we know we have particular expertise, including
analogue design, space communications, and radio frequency technology. We
are also excited by the considerable amount of potential new business
opportunities on the horizon, particularly with the increasing demand for
"Edge AI" which we believe provides a significant growth opportunity for
EnSilica.
Our aspiration is to be the premier application specific chip maker in Europe
and our plans are focused on achieving this objective. To help realise this
ambition, we have negotiated and secured improved relationships with key
suppliers in Europe and delivered high-value contracts with European
customers. EnSilica's ASIC design expertise is increasingly capturing the
attention of businesses operating outside of Europe, with the Company
experiencing strong interest from US companies in particular. This is
precisely why we established the EnSilica USA Inc. subsidiary which has
already enabled us to form strong relationships with relevant critical
suppliers, while also providing EnSilica with access to a pipeline of
additional business opportunities. The new financial year has begun well with
a number of new contract wins further fuelling future annual recurring
revenues, the designs of which we are already engaged upon.
We are delighted to have completed a number of small equity raises during
the period, and we will continue to ensure the Company remains adequately
financed to support our new business aspirations and continue our progress on
delivering the plan we set out at the time of our IPO.
We were also delighted to have Kristoff Rademan join us as Chief Financial
Officer in May 2024. With over 20 years' experience working in corporate
finance positions across the pharmaceutical and technology spaces, Kristoff
has quickly become instrumental in the execution of our growth strategy, and
we look forward to seeing how his know-how will further shape the Company's
growth.
After two and a half years with EnSilica, Noel Hurley, Non-Executive Director,
has decided that due to other business commitments, he will not be seeking
re-election as a director at the Annual General Meeting. I would like to thank
Noel for his contribution to the business over this period.
I would also like to thank all our employees for their hard work and
commitment throughout the period, as well as our shareholders for their
continued excellent support. The Board looks forward to delivering further on
our plans to provide valuable investment for all shareholders as we remain
focused on continuing, and enhancing, our growth strategy.
1 https://www
(http://www.verifiedmarketreports.com/product/asic-chips-market-size-and-forecast/)
.verifiedmark
(http://www.verifiedmarketreports.com/product/asic-chips-market-size-and-forecast/)
etreport
(http://www.verifiedmarketreports.com/product/asic-chips-market-size-and-forecast/)
s.com/product/asic-chips-market-size-and-forecast/
(http://www.verifiedmarketreports.com/product/asic-chips-market-size-and-forecast/)
Mark Hodgkins
Executive Chair
Chief Executive's Review
We are pleased to report another strong set of full year results as a quoted
company, which has been supported by our historic investments in supply
contracts and growing our Intellectual Property (IP) portfolio. This ongoing
financial progress is evidenced with FY24 audited revenue and EBITDA both in
line with expectations at £25.3 million (FY23: £20.5 million) and£1.7
million (FY23: £1.6 million) respectively.
EnSilica's transition from a specialist semiconductor service company, which
started in 2016, to a fabless ASIC company offering the design and supply of
custom chips, is now close to being fully realised. The Company now has four
chips in production and over nine in the design pipeline that should deliver
long-term recurring supply revenue as they move into production. When
combined, our anticipated revenue projections could deliver c.£100 million
per annum within the medium term.
We were proud to announce a second design and supply ASIC win with Siemens,
the German multinational technology conglomerate in September 2024, further
validating the quality of our offering. Siemens incorporates ASICs in various
industrial automation systems, and uses these specialised chips to enhance
functionality, reduce power consumption, and improve overall system
reliability, underpinning its desire to collaborate with innovative companies
like EnSilica.
Industrial automation is a focus area for the Company and having Siemens as a
customer demonstrates EnSilica's position as a leading ASIC supplier for
high-quality, high-integrity digital and mixed signal ASICs.
I would like to express my sincere thanks to all our hardworking and talented
staff. Their dedication to innovation and quality is our greatest asset, and
their skills have been key to attracting such prestigious customers.
Business Model
EnSilica operates a Fabless Semiconductor Model, providing an end-to-end
solution for the development, manufacturing and supply of Integrated Circuits
(ICs) from initial scoping and design through to the delivery of products.
EnSilica partners with the leading wafer foundries such as TSMC and Global
Foundries as well as Outsourced Assembly and Test (OSAT) companies to
manufacture our chips. This sits alongside our design consultancy, supporting
customers with their own design teams to develop ICs.
EnSilica's focus on ASIC design and supply embeds the Company further into the
electronics value chain, which sees customers typically pay the fees towards
the costs of design, tooling, and test development of the ASIC, otherwise
known as Non-Recurring Engineering costs (NRE). Customers will subsequently
purchase the EnSilica designed ASIC or, in some cases, pay royalties to
EnSilica for the ASICs that a third party will manufacture on the customer's
behalf.
EnSilica will often co-invest in the development of an ASIC alongside the
customer, and, depending on the sector, the ASIC can take two to five years to
reach full production. At the production stage, revenues can be high, last
several years, and generate gross margins in the 35% to 60% range. The gross
margin depends on the market and the level of co-funding of the NRE required,
as well as the amount of EnSilica's IP present in the finished IC product. A
key part of EnSilica's expertise is in scrutinising the potential financial
upside of investing in various IC development programmes and choosing the
right projects which will result in long-term component supply or royalty
revenue for the Company.
In niche areas where the Company identifies strategic market opportunities,
the Company invests in its own IP as the basis of a customer-specific ASIC, or
if multiple customers have the same requirement for a chip with specific
functions, this is referred to as an Applications Specific Standard Part
(ASSP). These chips are sold to multiple customers, generating even larger
returns. Examples of this include the Company's satellite communications and
healthcare vital signs sensor technologies.
In FY24, we introduced a new "Supply Only" model, enabled by our strengthened
relationships with key foundries and outsourcing partners. In this model,
customers design a significant portion of the chip, while EnSilica typically
provides design support during the final stages. This benefits the customer by
giving them access to a proven supply chain with leading suppliers and an
experienced team to handle the tape-out and production.
EnSilica then manages the foundry interfaces, including the tape-out process,
and supplies either silicon wafers or fully packaged and tested chips back to
the customer - a process overseen by our specialist silicon operations team.
The Board believes this model will both enhance production margins across
EnSilica's ASIC design and supply business through increased wafer volumes,
and strengthen the Group's position within the semiconductor supply chain. The
Company's recent business wins are a clear indication of the efficacy of this
model in securing both revenue and profit growth in the medium term.
Growth Strategy
Our growth strategy remains unchanged as we continue to pursue the following
business objectives:
■ leverage EnSilica's strong positions and IPR within satellite
communications, industrial, automotive and healthcare applications for digital
and mixed signal ASICs;
■ scale the Company's successful Fabless ASIC Model to fully exploit
revenue opportunities from design and supply engagements;
■ capitalise on the growing need for custom Edge AI and enhanced
associated cybersecurity requirements which will necessitate many industrial,
automotive and communication chips to be re-designed; and
■ to develop ASSPs, based upon customer demand and leveraging the
funding available from lead customers, the European Space Agency and various
semiconductor stimuli. EnSilica currently has two significant platforms at the
device evaluation stage
IP Strategy
IP remains the cornerstone of EnSilica's growth strategy and is pivotal in the
competitive landscape of fabless semiconductor companies. Our IP framework not
only accelerates time to market and mitigates risks but also enhances our
profit margins in the longer term. EnSilica's IP portfolio encompasses
patents, copyrighted materials, application know-how, and design flow and
methodology expertise.
A patent grants exclusive rights to an invention, whether a product or a
process, offering a novel solution to a technical problem. Given that many of
our innovations are embedded within microchip circuits, detecting patent
infringements can be challenging. Our patent strategy is focused on securing
UK patents, which will leverage the UK Patent Box relief to reduce our
corporation tax liability on profits on patented products to 10%.
EnSilica develops reusable IP building blocks tailored to our target markets,
enhancing our competitiveness in ASIC development bids. These building blocks
reduce risk, time to market, and third-party costs. We also market our IP
through various online catalogues, showcasing our capabilities and attracting
ASIC enquiries. Additionally, non-competing semiconductor companies can
licence our IP for use in their own chips, creating an additional revenue
stream.
By leveraging our extensive IP portfolio, the Company continues to deliver
innovative solutions that meet the specific needs of the markets we address,
thereby maintaining our competitive edge.
Our Markets
The Semiconductor Industry Association is currently projecting annual global
sales will grow to $611.2 billion in 2024, which would be the industry's
highest-ever annual sales total and is expected to grow further in 2025 to
$687.4 billion2. In addition, innovation across the automotive, industrial and
consumer electronics sectors are fuelling projections for the industry to
reach $1 trillion in sales by 20303.
EnSilica remains focused on four principal markets where there are significant
global growth opportunities: satellite communications, industrial, automotive,
and healthcare.
2 https://www
(http://www.semiconductors.org/global-semiconductor-sales-increase-15-8-year-to-year-in-april-new-industry-forecast-projects-)
.semiconductors.org/global-semiconductor-sales-increase-15-8-year-to-year-in-april-new-industry-forecast-projects-
(http://www.semiconductors.org/global-semiconductor-sales-increase-15-8-year-to-year-in-april-new-industry-forecast-projects-)
market-growth-of-16-0-in-2024/
3 The semiconductor decade: A trillion-dollar industry | McKinsey
Satellite Communications
The satellite communications sector is undergoing transformative changes,
driven by new standards and increased funding, presenting significant
opportunities for EnSilica to expand its already sizeable footprint in this
high-growth sector.
The industry is increasingly becoming standards-based, with the integration of
Non-Terrestrial Networks (NTN) into the 5G standards marking a pivotal shift.
5G NTN extends 5G technology to include satellite communication, providing
global connectivity to remote areas and, enabling seamless and reliable
communication on a global scale. The 5G NTN market4 is estimated to be worth
$7.2 billion in 2024 and is projected to reach $31.7 billion by 2029 at a
Compound Annual Growth Rate (CAGR) of 34.7% during the forecast period.
Next-generation Low Earth Orbit (LEO) constellations are set to revolutionise
satellite communication, with OneWeb already deploying 634 satellites, and are
designed to provide global coverage and enhanced resilience, supporting
applications from disaster response to high-speed connectivity in remote
areas.
The UK Space Agency has announced substantial funding to support the LEO
satellite communications industry. With£160 million allocated for innovative
projects for Connectivity Low-Earth Orbit (C-LEO), this funding will
supercharge the UK's LEO satellite communications capabilities. EnSilica has
already benefited from €7 million of funded projects targeted at developing
chips for the next generation of user terminals.
Phased array technology is becoming increasingly important in satellite
communication, particularly in user terminals. For example, Starlink's user
terminals utilise sophisticated phased-array antennas which electronically
track fast-moving satellites. These phased-array antennas often incorporate
hundreds of mmWave RF (radio frequency) chips and dozens of beamformer chips
to achieve high-speed, reliable connectivity. EnSilica's strong IP and
know-how in mmWave RF and beamforming technologies position us as a key player
in this space, enabling us to deliver cutting-edge solutions that meet the
demanding requirements of modern satellite communication systems.
EnSilica is actively contributing to advancements in satellite communication
through strategic partnerships and innovative projects. Notably, EnSilica has
been selected by AST SpaceMobile to develop the next-generation ASIC for its
planned space-based cellular broadband network which aims to eliminate
connectivity gaps and bring cellular broadband to around half of the world's
population that still remains unconnected. This collaboration highlights
EnSilica's expertise in delivering state-of-the-art performance and power
efficiency.
By leveraging advancements in 5G NTN, next-generation LEO constellations, and
capitalising on increased funding from the UK Space Agency and lead customers,
EnSilica is well-positioned to seize opportunities in the satellite
communication market and while remaining at the forefront of technological
innovation.
Industrial and Automotive
The global industrial semiconductors market was valued at$78.6 billion in 2023
and is projected to reach $208.1 billion by 2031. Meanwhile the automotive
semiconductor market was worth $78.3 billion in 2023, a figure expected to
increase to $130 billion by 2030. Both sectors share similar quality and
functional safety requirements, making our mixed signal and digital expertise
in high demand. The industrial sector is increasingly adopting advanced
semiconductor solutions to enhance automation, efficiency, and connectivity,
and the automotive sector continues to be driven by innovation and a shift to
electric vehicles (EVs), infotainment systems, advanced driver assist systems,
autonomous driving systems, connectivity, safety, and security systems.
Edge AI is revolutionising both the industrial and automotive landscapes by
enabling real-time data processing and decision- making at the edge of the
network. This shift reduces latency, enhances security, and improves
operational efficiency. In industrial applications, Edge AI supports
intelligent, autonomous systems, while in automotive applications, it enhances
safety and operational efficiency.
The advent of quantum computing poses a significant threat to current
cryptographic standards, necessitating the standardisation of Post-Quantum
Cryptography (PQC)5. EnSilica has proactively addressed this challenge by
incorporating PQC accelerators into our eSi-Crypto range of hardware IP. These
accelerators are designed to withstand quantum attacks, ensuring the security
of both industrial and automotive systems in the quantum era. Our leadership
in PQC technology not only enhances the security of our solutions but also
provides a competitive edge in the market.
By leveraging our experience in the industrial and automotive sectors along
with Edge AI and PQC, EnSilica is well-positioned to capitalise on the growth
in these areas. Notably, EnSilica has developed an ASIC for a high-end
vehicle, which started production in June 2022. This project is estimated to
generate $40 million in revenue over six years - a significant achievement
highlighting our capability to deliver cutting-edge solutions for premium
automotive applications.
4 https://www
(http://www.marketsandmarkets.com/Market-Reports/5g-ntn-market-186116188.html)
.marketsandmarkets.com/Market-Reports/5g-ntn-market-186116188.html
(http://www.marketsandmarkets.com/Market-Reports/5g-ntn-market-186116188.html)
5 https://www
(http://www.nist.gov/news-events/news/2024/08/nist-releases-first-3-finalized-post-quantum-encryption-standards)
.nist.gov/news-events/news/2024/08/nis
(http://www.nist.gov/news-events/news/2024/08/nist-releases-first-3-finalized-post-quantum-encryption-standards)
t-releases-first-3-finalized-post-quantum-encryption-standards
(http://www.nist.gov/news-events/news/2024/08/nist-releases-first-3-finalized-post-quantum-encryption-standards)
Healthcare
Advancements in AI have made it possible to detect medical conditions through
a range of monitoring devices, from wrist-worn devices and small patch sensors
to earbuds and rings. Accompanying this increase in prescribed medical grade
wearable devices is a growing demand for consumer health and wellness wearable
devices; the number of devices shipped worldwide is estimated to reach 640
million by 2027. Semiconductors are essential components of these increasingly
popular devices. Reflecting this growing demand, the semiconductor in
healthcare market size was valued at $7.47 billion in 2024 and is projected to
reach $12.82 billion by 2029, growing at a CAGR of 11.4% during this period6.
EnSilica has developed key IPR for healthcare wearable devices, including a
vital sign sensors IC offering accurate sensor interfaces with very low power
consumption. This IC is being evaluated by a number of customers and the
Directors believe that this will lead to either a standard part sold to many
customers as an ASSP or various customised versions of the IC optimised for
specific customers. However, a restriction on the current availability of
capital to invest has slowed down the pace at which EnSilica can market and
hence commercially exploit this technology.
Semiconductor Supply Chain and Geopolitical Changes
Geopolitical tensions, particularly between the US and China, have continued
to complicate the global semiconductor supply chain. The US continues with
export controls on semiconductor technology to China, prompting many countries
to secure their own supply chains and reduce dependency on foreign sources.
Additionally, tensions between China and Taiwan, a major semiconductor hub,
add to the uncertainty.
In response, there has been a push towards the localisation of semiconductor
supply chains. Companies are investing in local manufacturing and exploring
alternative supply routes to mitigate risks. This trend is expected to
continue as nations seek to bolster their semiconductor industries.
As demand for advanced semiconductor solutions increases, the need for skilled
professionals in design, manufacturing, and R&D becomes more critical,
making talent shortages a key concern. EnSilica is investing in talent
development and retention strategies to actively bring in new talent in our
operational locations.
With increased government and private sector investment in semiconductor
manufacturing and R&D, the industry is keeping pace with growing demand.
EnSilica is committed to leveraging our expertise and strategic partnerships
to ensure a resilient supply chain for our customers.
6 Semiconductor In Healthcare Market Size & Share
Analysis - Industry Research Report - Growth Trends (mordorintelligence.com)
Customer Activity
FY24 has been a strong period of growth and operational development for
EnSilica, driven by our unwavering commitment to delivering innovative and
high-quality solutions to our customers. Our customer-centric approach has
enabled us to forge deeper relationships and expand our footprint across our
chosen high-growth markets.
Key highlights include;
■ announced a second ASIC design and supply win with Siemens to be
used in market leading factory automation products;
■ first production orders for an Arm-based industrial ASIC for a
leading European OEM with production revenues estimated to exceed $30 million
over the next seven years;
■ entered into a design and supply agreement for a high-end
telecommunications infrastructure ASIC for Siae Microelettronica. The contract
is forecast to be worth in excess of $30 million over a ten-year period;
■ secured a follow-on contract with an existing Europe-based customer
valued at approximately $2.4 million;
■ signed a new lead customer contract for its proprietary satellite
broadband chip, valued at £2.5 million;
■ awarded a £2 million ASIC design services contract with a
prestigious supplier of power and propulsion systems used in the air, at sea,
and on land;
■ awarded a significant supply-only contract for an Edge AI processing
chip, valued at $7 million, with potential supply revenue exceeding $50
million over the first five years of production;
■ secured a sensor ASIC supply contract worth over $7 million in the
e-mobility market;
■ secured a €3.8 million contract with a prominent European
automotive and industrial semiconductor supplier for the development of a chip
incorporating Arm-based technology;
■ first IP licence granted to a major semiconductor company of
EnSilica PQC and classical Cryptography accelerator for use in a 5nm
networking chip;
■ entered into a development and supply contract for a controller ASIC
used in automotive and industrial applications, the contract is expected to be
worth in excess of $31 million over a seven-year period.
Our People
Our team continue to deliver some of the most complex semiconductor
engineering projects in the industry. This includes developing innovative
advanced node RF designs that very few teams outside the semiconductor
multinationals could deliver.
The Company remains focused on retaining and attracting the best new talent in
all its operating locations. In the UK, we are actively working with the UK
Electronics Skills Foundation (UKESF) to offer undergraduate scholarships and
in Brazil and India we are tapping into the universities to identify the most
talented graduates. Examples of this in FY24 includes:
■ Vasiliki Xiradaki, a UKESF scholar who was awarded the STEM Pioneer
Rising Star at the Women Leaders in Engineering awards and gained a
First-Class honours degree. Vasiliki joined EnSilica UK staff in September
2024; and
■ Tulio Pereira Bitencourt, who is now part of EnSilica Brazil staff and
had his master degree work selected Best Master Thesis in Microelectronics in
Brazil awarded by the Society of Microelectronics of Brazil.
Board
The Company was pleased to announce that Kristoff Rademan was appointed Chief
Financial Officer and director of the Company in May 2024. Kristoff has
already made an immediate contribution to the business, and we look forward to
further leveraging his vast experience in executive finance roles at
innovation-led companies.
Outlook
Having successfully delivered our FY24 results in line with market
expectations, I am pleased to report that the Company has started FY25 well
with a number of high-value contract wins and strong supply revenues.
EnSilica's sales and marketing initiatives have significantly increased its
market visibility, resulting in higher-value opportunities and a robust
pipeline of new business. The Company has continued to invest in its R&D
initiatives such as PQC and satellite communication technology with support
from the UK Space Agency.
EnSilica remains committed to its mission of being a trusted IC partner for
its customers and the Company's strategic focus on its chosen high-growth
markets, coupled with its strong existing foothold, positions it well to
capitalise on future opportunities. EnSilica will continue to prioritise
customer satisfaction and strive to exceed expectations through innovation,
quality, and reliability.
This strategic report has been approved by the Board of Directors and signed
on its behalf by:
Ian Lankshear
Chief Executive Officer
Chief Financial Officer's Review
FY24 has seen continued success for the Group with growth again achieved in
revenues, EBITDA and Operating Profits. The Group has achieved increased
revenues and profits through new contracts won in competitive tendering
processes. Contract wins during FY24 included a $20 million tape-out and
supply contract with a US electronics manufacturer, a $7 million design and
supply contract for the e-mobility market, a €2.5 million supply contract
win for our satellite broadband chip, as well as a $2.4 million follow on
contract for the development of an advanced networking ASIC.
The Group has been able to demonstrate this year that it is successfully
executing its stated aim of becoming the international "fabless"
semi-conductor company of choice for the development and supply of ASICs in
satellite communications, industrial, automotive and healthcare applications.
Our cash generated from operations has been supported by equity raises during
the year totalling £6.5 million, with funds raised on the back of a number of
strong contract wins, as well as the receipt of
£1.8 million as part of the HMRC research and development credit tax
programme.
As part of its growth strategy and in conjunction with its customers, the
Group continues to co-invest in the development of customer ASICs, as well as
its own IP and know-how. As such, the Group has invested a further £6.4
million in supply contracts and IP assets with the expectation of achieving
future supply or royalty revenues as a result of this investment.
A summary of the key financial results for the year are set out in the table
below:
Revenues
The Group's revenues increased by 23% to £25.3 million (FY23:£20.5 million).
This was driven by strong growth in our NRE/Supply revenue streams,
particularly our satellite communications division, partly offset by lower
revenues in our legacy Consulting stream. The Group continues to focus on
developing the revenue derived from NRE/Supply as part of its 'fabless'
semiconductor business model while maintaining a level of consultancy work
which provides a reliable income stream. Looking ahead the Group will continue
to focus on the higher returns of design and supply work, and consultancy
income will become a less significant contributor to the business over time.
Chip supply revenue post NRE work incurred in developing the chip remained
steady in 2024 but is expected to grow substantially in 2025 as a result of a
number of tape-outs which occurred during 2024 and the start of 2025. We now
have three ASICs which have been released for supply and we anticipate this
increasing during 2025 in line with the Group's forecasts. We continue to
target closing two to three new customer design and supply contracts each year
which will continue to feed the supply revenues of the Group in future years.
Gross Margin
Gross margins in 2024 have been negatively impacted by a large lower margin
tape-out which occurred in the last quarter of FY24 bringing down the gross
margin of the Group by 4% from 40% in FY23 to 36% in FY24. Tape-outs represent
a key final development stage of NRE projects which are generally lower margin
as there are significant third party costs incurred.
Operating Expenses
Operating expenses were 11% higher increasing from £6.6 million in FY23 to
£7.3 million in FY24 due to additional staff costs, IT expenditure and
inflationary increases.
EBITDA
As a result of the large increase in revenues offset by a corresponding
increase in cost of goods and a smaller increase in operating expenses, EBITDA
increased by £0.1 million from £1.6 million in FY23 to £1.7 million in
FY24.
Profit after tax
Interest expense remained stable at £0.9 million whilst the research and
development tax credit decreased by £0.5 million due to a decrease in the
rate at which HMRC reimburses eligible R&D expenditure, leading to a
smaller claim to be submitted for 2024. The Company also increased the
deferred tax liability recognised on its intangible assets leading to a
deferred tax charge of £1.3 million. The net impact of the above is a loss
after tax of £0.2 million, £1.9 million lower than the prior year.
Headcount
Group headcount has remained stable throughout the period with only minor
changes due to employee turnover.
Balance sheet
A summary of the key financial results for the year are set out in the table
below.
Cash and cash equivalents
Cash and cash equivalent have increased as a result of the movements as
described in the cash flow section below.
Intangible assets
Intangible assets have increased from £12.4 million to £18.6 million at the
end of FY24 mainly as a result of additions of £6.4 million as the Group
continues to co-invest in the development of customer ASICs as well as its own
IP and know-how, offset by amortisation of £0.4 million. We take a critical
review of the carrying value of our intangible fixed assets with the Board
having overseen a rigorous review of the value, which is supported by
forecasted supply revenue streams.
Loans
The Company had bank loans totalling £4.0 million at the end of FY24 (FY23:
£4.2 million), one of £2.1 million from SME Alternate Financing, a
Coronavirus Business Interruption Loan (CBIL) of
£1.2 million and a loan of £0.7 million (2023: £0) from SPRK Capital.
Cash Flow
The Company generated an EBITDA of £1.7 million and after positive working
capital movements and a R&D tax receipt of£1.8 million, generated net
cash flow from operations of £4.3 million. The Company made investments in
intangibles of £6.4 million, mainly driven by the co-development of customer
projects, and spent £0.9 million on mainly manufacturing equipment capital
expenditure. Interest paid on loans and leasehold property liabilities
amounted to £0.9 million, leading to a cash consumption of £4.0 million.
Net proceeds from financing included equity fundraise of £6.5 million, a loan
advanced of £0.7 million, and offset by loan and lease liability repayments
of £1.0 million. The movement in cash in the year was therefore an increase
of £2.1 million.
Financial outlook
The Group expects FY25 revenues to be circa £30 million, with revenues for
the year being second half weighted. The Group currently has good visibility
of FY25 revenues with about 65% of revenues being from contracted customers or
contracts in negotiation, and the remainder to be earned from new contract
wins with identified customers.
EnSilica also reiterates its guidance of achieving an EBITDA of circa£5
million in FY25. Gross margins are expected to improve over those achieved in
FY24 and tight costs controls will be maintained over operating expenses, with
only inflationary growth expected leading to an increased expected EBITDA of
circa £5 million.
As outlined in the Going Concern section below, EnSilica expects to require
additional external financing should the Company experience further delays in
contracted customer receipts.
Going Concern
For the year ended 31 May 2024 the Group generated revenues of £25.3 million
and an operating profit of £0.9 million and generated cash flow from
operations of £4.3 million. As at 31 May 2024 the Group held cash balances of
£5.2 million and the Group's financing arrangements consisted of a loan of
£2.1 million from SME Alternate Financing, a Coronavirus Business
Interruption Loan (CBIL) for£1.2 million and a £0.7 million loan from SPRK
Capital.
In considering the basis of preparation of the Annual Report and Accounts, the
Directors have prepared a cash flow forecast for a period of at least 12
months from the date of approval of these financial statements, based in the
first instance on the Group's 2025 annual budget, and forecasts for 2026. The
Directors have undertaken a rigorous assessment of the forecast and assessed
identified downside risks and mitigating actions. Due to the Company's
investment in the co-development of ASICs with customers in order to achieve
long term future recurring revenues from supply, the Company requires
additional financing in the form of loan financing or equity financing, or
advance contract payments in order to continue its operations and current
capabilities.
The Board review of the detailed cash flow forecast prepared as part of the
going concern assessment process identified that the Company would not be able
to continue its activities for at least 12 months from the date of approval of
these financial statements if the Company could not secure external financing
and continue to execute and recover known and expected revenues from existing
customers under long-term contracts which are ongoing but still to be
delivered, or win new customer contracts for NRE and consultancy revenues.
At the start of November 2024, the Company completed the refinancing of its
long-term external debt on more favourable terms for a £3 million term loan
and £3 million revolving credit facility which will unlock an additional
£2.1 million of cash to fund its working capital requirements.
If the Company is unable to secure the external financing and receipt of the
revenues described above, it has assessed that it would not be able to
generate sufficient cash flows to support its level of activities beyond the
third quarter of FY2025. The above situation gives rise to a material
uncertainty, as defined in auditing and accounting standards, related to
events or conditions that may cast significant doubt on the entity's ability
to continue as a going concern and in such circumstances it may therefore be
unable to realise its assets and discharge its liabilities in the normal
course of business.
However, despite the above uncertainties, the Board has confidence that the
accounts should be prepared on a going concern basis for the following
reasons:
■ At the start of November 2024, the Company completed the refinancing
of its long-term external debt on more favourable terms for a £3 million term
loan and £3 million revolving credit facility which will unlock an additional
£2.1 million of cash to fund its working capital requirements;
■ the Company's ability to continue to be successful in winning new
customers and building its brand as demonstrated by:
■ signing of a substantial development and supply agreement with a
telecoms customer, SIAE, with a lifetime value of $30 million;
■ signing of a further design and supply agreement with Siemens,
another contract with an established automotive tier 1 with a forecast
lifetime value of $31m, and a further £2m services contract with a
prestigious supplier of power and propulsion systems;
■ the Company is in the contract negotiation stage for a further 3
design and supply contracts with NRE worth £11.1 million which are expected
to be signed by the end of the year, these contracts are supported by
significant upfront payments.
■ the Company's history of being able to access capital markets as
evidenced by the raising of £5.2 million gross equity in May 2024 and,
■ the Company's ability to control capital expenditure and lower other
operational spend, as necessary.
Taking account of the matters described above, the Directors are confident
that the Company will have sufficient funds to continue to meet their
liabilities as they fall due for at least 12 months from the date of approval
of the financial statements and therefore have prepared the financial
statements on a going concern basis.
Financial Risk Management Objectives and Policies
Details of the Company's financial risk management objectives and policies are
disclosed in note 22 to the financial statements.
Key performance indicators and risks
We have a range of performance measures to monitor and manage the business,
some of which are considered key performance indicators (KPIs).
Kristoff Rademan
Chief Financial Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 May 2024
2024 2023
Note £'000
£'000
Revenue 3 25,266 20,476
Cost of sales (16,267) (12,306)
Gross profit 8,999 8,170
Other operating income 5 38 8
Administrative expenses (8,165) (7,352)
Total administration expenses (8,165) (7,352)
Operating profit Interest income Interest expense 872 825
7 1 7
8 (925) (785)
(Loss)/profit before taxation (52) 47
Taxation 9 (130) 1,745
(Loss)/profit for the year (182) 1,792
Other comprehensive (expense) for the year
Currency translation differences (68) (50)
Total comprehensive (expense)/income for the year (250) 1,742
(Loss)/profit for the year attributable to:
Owners of the Company Non-controlling interests (182) 1,792
- -
(182) 1,792
Total comprehensive (expense) for the year attributable to:
Owners of the Company Non-controlling interests (68) (50)
- -
(68) (50)
Basic earnings per share (pence) Diluted earnings per share (pence) 10 (0.23) 2.36
10 (0.23) 2.30
Adjusted Basic earnings per share
(pence)
10 (0.23) 2.47
Adjusted Diluted earnings per share (0.23) 2.41
(pence)
10
53
Consolidated Statement of Financial Position
For the year ended 31 May 2024
2024 2023
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment Intangible assets 11 2,997 2,566
12 18,565 12,433
Total non-current assets 21,562 14,999
Current assets
Inventories 13 753 304
Trade and other receivables 14 8,390 7,025
Corporation tax recoverable 1,349 2,064
Cash and cash equivalents 15 5,156 3,095
Total current assets 15,648 12,488
Total assets 37,210 27,487
Current liabilities
Borrowings 16 (1,717) (883)
Lease liabilities 17 (199) (171)
Trade and other payables 18 (7,118) (4,723)
Total current liabilities (9,034) (5,777)
Non-current liabilities
Borrowings (2,298) (3,284)
16
Lease (1,904) (2,104)
liabilities
17
Provisions (206) (199)
19
Deferred (1,365) (160)
tax
20
Total non-current liabilities (5,773) (5,747)
Total liabilities (14,807) (11,524)
Net assets 22,403 15,963
Equity
Issued share 153 137
capital
21
Share premium account 14,957 8,752
Currency differences reserve (117) (49)
Retained earnings 7,410 7,123
Equity attributable to owners of the Company 22,403 15,963
Non-controlling interests - -
Total equity 22,403 15,963
The financial statements were approved by the Board of Directors and
authorised for issue on 4 November 2024 and signed on its behalf by:
Ian
Lankshear Kristoff
Rademan
Chief Executive Officer Chief
Financial Officer Company registration number: 04220106
54
Consolidated Statement of Changes in Equity
For the year ended 31 May 2024
Share capital Share premium Currency translation Retained earnings Total equity
account reserve
£'000 £'000 £'000 £'000 £'000
At 31 May 2022 134 6,900 1 5,118 12,153
Comprehensive income for the year to 31 May 2023
Profit for the year - - - 1,792 1,792
Other comprehensive expense - - (50) - (50)
Total comprehensive income for the year - - (50) 1,792 1,742
Share based payment - - - 213 213
Issue of share capital 3 2,015 - - 2,018
Costs of share issue - (163) - - (163)
At 31 May 2023 137 8,752 (49) 7,123 15,963
Comprehensive income for the year to 31 May 2024
Loss for the year - - - (68) (181) (181)
Other comprehensive expense - - - (68)
Total comprehensive income for the year - - (68) (181) (249)
Share based payment - (217) - 468 251
Issue of share capital 16 6,893 - - 6,909
Costs of share issue - (471) - - (471)
At 31 May 2024 153 14,957 (117) 7,410 22,403
Non-controlling interests hold 0.002% of the issued share capital of the
Indian subsidiary, EnSilica India Private Limited in accordance with local
requirements and there is a non-controlling interest of £nil at 31 May 2024
(31 May 2023: £nil), further details are disclosed in note 27.
55
Consolidated Statement of Cash Flows
For the year ended 31 May 2024
2024 2023
Note £'000 £'000
Cash flows from operating activities
Cash generated from 2,482 290
operations
A 1,788 1,512
Tax received
Net cash generated from operating activities 4,270 1,802
Cash flows from investing activities Purchase of property, plant and equipment
Additions to intangible assets
(927) (395)
Interest received
(6,425) (4,133)
1 7
Net cash used in investing activities (7,351) (4,521)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 6,480 1,855
Interest paid (925) (785)
Lease liability payments (172) (166)
Proceeds from loans and borrowings 713 -
Repayment of bank loans (865) (832)
Net cash generated from financing activities 5,231 72
Net increase/(decrease) in cash and cash equivalents 2,150 (2,647)
Cash and cash equivalents at beginning of year 3,095 5,742
Foreign exchange losses (89) -
Cash and cash equivalents at end of year B 5,156 3,095
56
Notes to the Consolidated Statement of Cash Flows
For the year ended 31 May 2024
A. Cash generated from operations
2024 2023
£'000 £'000
(Loss)/profit for the year (182) 1,792
Adjustments for:
Depreciation 495 454
Amortisation of intangible assets 322 276
Share based payments 248 213
Net interest costs 924 778
Tax charge/(credit) 130 (1,745)
1,937 1,768
Working capital movements
Decrease in inventories (448) (89)
Increase in trade and other receivables (997) (3,770)
Increase in trade and other payables 1,983 2,322
Increase in provisions 7 59
Cash generated from operations 2,482 290
B. Analysis of net debt
At June 2022 Cash flow Non-cash changes At 31 May 2023
£'000 £'000 £'000 £'000
Loans (4,966) 832 (33) (4,167)
Lease liabilities (193) 363 (2,445) (2,275)
Liabilities arising from financing activities (5,159) 1,195 (2,478) (6,442)
Cash and cash equivalents 5,742 (2,647) - 3,095
Net debt 583 (1,452) (2,478) (3,347)
At June 2023 Cash flow Non-cash changes At 31 May 2024
£'000 £'000 £'000 £'000
Loans (4,167) 152 - (4,015)
Lease liabilities (2,275) 172 - (2,103)
Liabilities arising from financing activities (6,442) 324 - (6118)
Cash and cash equivalents 3,095 2,150 (89) 5,156
Net debt (3,347) 2,474 (89) (962)
57
Notes to the Consolidated Financial Statements
For the year ended 31 May 2024
1. General information
EnSilica plc is a public limited company incorporated in the United Kingdom,
listed on the Alternative Investment Market (AIM) of the London Stock
Exchange. The Company is domiciled in the United Kingdom and its registered
office is 100 Park Drive, Milton Park, Abingdon, OX14 4RY. The consolidated
financial statements comprise the Company and its subsidiaries (together
referred to as the 'Group').
The Company is a leading fabless design house focused on custom ASIC design
and supply for OEMs and system houses, as well as IC design services for
companies with their own design teams. The Company has world-class expertise
in supplying custom RF, mmWave, mixed signal and digital ICs to its
international customers in the automotive, industrial, healthcare and
communications markets. The Company also offers a broad portfolio of core IP
covering cryptography, radar and communications systems. EnSilica has a track
record in delivering high quality solutions to demanding industry standards.
The Company is headquartered near Oxford, UK and has design centres across the
UK, India, Brazil and a sales office in Germany.
In July 2022 the Company launched a subsidiary in Munich, Germany that has the
purpose of acting as the sales office to further enhance and capitalise on the
Group's opportunities.
In October 2023 the Company launched a subsidiary in the USA to service our
American markets.
Basis of preparation
The consolidated financial statements of the Company have been prepared in
accordance with UK-adopted International Accounting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB) and the Companies Act
2006.
The financial information has been prepared under the historical cost
convention unless otherwise specified within these accounting policies. The
financial information and the notes to the financial information are presented
in thousands of pounds sterling (£'000), the functional and presentation
currency of the Group, except where otherwise indicated.
The principal accounting policies adopted in preparation of the financial
information are set out below. The policies have been consistently applied to
all periods presented, unless otherwise stated.
Judgements made by the Directors in the application of the accounting policies
that have a significant effect on the financial information and estimates with
significant risk of material adjustment in the next year are discussed in note
2.
2. Accounting policies
Going concern
For the year ended 31 May 2024 the Group generated revenues of £25.3 million
and an operating profit of £0.9 million and generated cash flow from
operations of £4.3 million. As at 31 May 2024 the Group held cash balances of
£5.2 million and the Group's financing arrangements consisted of a loan of
£2.1 million from SME Alternate Financing, a Coronavirus Business
Interruption Loan (CBIL) for £1.2 million and a £0.7 million loan from SPRK
Capital.
In considering the basis of preparation of the Annual Report and Accounts, the
Directors have prepared a cash flow forecast for a period of at least 12
months from the date of approval of these financial statements, based in the
first instance on the Group's 2025 annual budget, and forecasts for 2026. The
Directors have undertaken a rigorous assessment of the forecast and assessed
identified downside risks and mitigating actions. Due to the Company's
investment in the co-development of ASICs with customers in order to achieve
long term future recurring revenues from supply, the Company requires
additional financing in the form of loan financing or equity financing, or
advance contract payments in order to continue its operations and current
capabilities.
The Board review of the detailed cash flow forecast prepared as part of the
going concern assessment process identified that the Company would not be able
to continue its activities for at least 12 months from the date of approval of
these financial statements if the Company could not secure external financing
and continue to execute and recover known and expected revenues from existing
customers under long-term contracts which are ongoing but still to be
delivered, or win new customer contracts for NRE and consultancy revenues.
At the start of November 2024, the Company completed the refinancing of its
long-term external debt on more favourable terms for a £3 million term loan
and £3 million revolving credit facility which will unlock an additional
£2.1 million of cash to fund its working capital requirements.
If the Company is unable to secure the external financing and receipt of the
revenues described above, it has assessed that it would not be able to
generate sufficient cash flows to support its level of activities beyond the
third quarter of FY2025. The above situation gives rise to a material
uncertainty, as defined in auditing and accounting standards, related to
events or conditions that may cast significant doubt on the entity's ability
to continue as a going concern and in such circumstances it may therefore be
unable to realise its assets and discharge its liabilities in the normal
course of business.
However, despite the above uncertainties, the Board has confidence that the
accounts should be prepared on a going concern basis for the following
reasons:
■ At the start of November 2024, the Company completed the refinancing
of its long-term external debt on more favourable terms for a £3 million term
loan and £3 million revolving credit facility which will unlock an additional
£2.1 million of cash to fund its working capital requirements;
■ the Company's ability to continue to be successful in winning new
customers and building its brand as demonstrated by:
■ signing of a substantial development and supply agreement with a
telecoms customer, SIAE, with a lifetime value of $30 million;
■ signing of a further design and supply agreement with Siemens, another
contract with an established automotive tier 1 with a forecast lifetime value
of $31m, and a further £2m services contract with a prestigious supplier of
power and propulsion systems;
■ the Company is in the contract negotiation stage for a further 3 design
and supply contracts with NRE worth £11.1 million which are expected to be
signed by the end of the year, these contracts are supported by significant
upfront payments;
■ the Company's history of being able to access capital markets as
evidenced by the raising of £5.2 million gross equity in May 2024 and,
■ the Company's ability to control capital expenditure and lower other
operational spend, as necessary.
Taking account of the matters described above, the Directors are confident
that the Company will have sufficient funds to continue to meet their
liabilities as they fall due for at least 12 months from the date of approval
of the financial statements and therefore have prepared the financial
statements on a going concern basis.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at 31 May 2024. Control is achieved when the
Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power
over the investee. Specifically, the Group controls an investee if, and only
if, the Group has:
■ Power over the investee (i.e. existing rights that give it the
current ability to direct the relevant activities of the investee)
■ Exposure, or rights, to variable returns from its involvement with
the investee
■ The ability to use its power over the investee to affect its returns
generally, there is a presumption that a majority of voting rights results in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
■ The contractual arrangement(s) with the other vote holders of the
investee
■ Rights arising from other contractual arrangements
■ The Group's voting rights and potential voting rights. The Group
re-assesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of
control.
Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated financial statements from the
date the Group gains control until the date the Group ceases to control the
subsidiary. Profit or loss and each component of OCI are attributed to the
equity holders of the parent of the Group and to the non-controlling
interests, even if this results in the non-controlling interests having a
deficit balance. When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies in line with the
Group's accounting policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation. A change in the ownership
interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary, it
derecognises the related assets (including goodwill), liabilities,
non-controlling interest and other components of equity, while any resultant
gain or loss is recognised in profit or loss. Any investment retained is
recognised at fair value.
Critical accounting estimates and judgements
The preparation of the financial information under IFRS requires the use of
certain critical accounting assumptions and requires management to exercise
its judgement and to make estimates in the process of applying the Company's
accounting policies.
Management bases its estimates on historical experience and on various other
assumptions that management believes to be reasonable in the circumstances.
The key estimates and judgements used in the preparation of this financial
information that could result in a material change in the carrying value of
assets or liabilities within the next twelve months are as follows:
Intangible assets - capitalisation, impairment and amortisation of development
expenditure
Judgement
The capitalisation of development costs is subject to a degree of judgement in
respect of the timing when the commercial viability of new technology and
know-how is reached, supported by the results of testing and customer trials,
and by forecasts for the overall value and timing of sales which may be
impacted by other future factors which could impact the assumptions made. In
making their judgements, the Directors considered the carrying values that are
disclosed in note 12.
Estimation
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 asset based on
experience of and future expected customer product cycles and lives. The
useful economic lives and residual values are re-assessed annually. They are
amended when necessary to reflect current estimates, based on technological
advancement, future investments and economic utilisation.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its fair value less
costs of disposal and its value in use. The fair value less costs of disposal
calculation is based on available data from binding sales transactions,
conducted at arm's length, for similar assets or observable market prices less
incremental costs of disposing of the asset. The value in use calculation is
based on a DCF model. The cash flows are derived from the budget for the next
five years and do not include restructuring activities that the Group is not
yet committed to or significant future investments that will enhance the
performance of the assets of the CGU being tested. The recoverable amount is
sensitive to the discount rate used for the DCF model as well as the expected
future cash-inflows and the growth rate used for extrapolation purposes. These
estimates are most relevant to goodwill and other intangibles with indefinite
useful lives recognised by the Group. The key assumptions used to determine
the recoverable amount for the different CGUs, including a sensitivity
analysis, are disclosed and further explained in Note 12.
Revenue
Estimation
In accordance with the policy on revenue recognition, management are required
to judge the percentage of completion of the contract in order to recognise
revenues. The overall recognition of revenue will depend upon the nature of
the project and whether it is billed on a time and materials basis, or, on a
project milestone basis where invoices can only be raised on completion of
specific, pre-agreed objectives. The Company maintains complete and accurate
records of employees' time and expenditure on each project which is regularly
assessed to determine the percentage completion, and thereby whether it is
appropriate to recognise revenues.
As it satisfies its performance obligations, the Company recognises revenue
and the related contract asset with regards to the milestone- based
development contracts. Revenues are recognised on a percentage of completion
basis and as such require estimation in terms of the assessment of the correct
percentage of completion for that specific contract.
Management judgement is based on a strong track record of successful
completion of projects and accurate forecasting of the time required together
with the hindsight period available to support the balance sheet date
assumptions made.
Adjusting items
The Company has chosen to present an adjusted measure of profit and earnings
per share, which excludes certain items which are separately disclosed due to
their size, nature or incidence, and are not considered to be part of the
normal operating costs of the Company. The Company believes adjusting for
these items provides additional useful information to users of the financial
statements to enable a better understanding of the Company's underlying
financial performance. The classification of items as adjusting requires
significant management judgement.
3. Analysis of revenue
The Board continues to define all the Company's trading as operating in the
integrated circuit design market and considers all revenue to relate to the
same, one operating segment. Revenue is defined as per the accounting
policies.
Revenue in respect of the supply of products is recognised at a point in time.
Design and related services including income for the use of IP are recognised
over the period when services are provided.
2024 2023
£'000 £'000
Recognised at a point in time
Supply of products 2,926 2,856
Recognised over time
NRE 15,228 8,175
Consultancy design services 7,112 9,400
Licensing related income - 45
22,340 17,620
25,266 20,476
By destination:
UK 2,513 1,831
Rest of Europe 9,863 11,817
Rest of the World 12,890 6,828
Total revenue 25,266 20,476
The nature of the design services and projects is such that there will be
significant customers as a proportion of revenue in any one year but that
these may be different customers from year to year. Revenue in respect of one
customer amounted to £8.8 million representing 35% of the revenue for the
year ended 31 May 2024, with only one other customer contributing over 10% of
revenue. (2023: two customers amounted to
£5.7 million and £5.4m at 28% and 27% respectively).
The Group's non-current assets comprising investments, tangible and intangible
fixed assets and the net assets by geographical location are:
31 May 2024 31 May 2023
Non-current assets Net assets Non-current assets Net assets
£'000 £'000 £'000 £'000
United Kingdom 21,501 21,621 14,892 14,967
India 3 1,304 34 1,199
Brazil 58 (27) 73 67
Germany - (495) - (270)
21,562 22,403 14,999 15,963
4. Alternative performance measures
Certain items are included in normal operating costs of the business, but are
significant cash and non-cash expenses that are separately disclosed because
of their size, nature or incidence. It is the Company's view that excluding
them from operating profit gives a better representation of the underlying
performance of the business in the year.
The Company's primary results measure, which is considered by the Directors of
EnSilica plc to better represent the underlying and continuing performance of
the Company, is EBITDA as set out below. EBITDA is a commonly used measure in
which earnings are stated before net finance income, amortisation and
depreciation as a proxy for cash generated from trading.
2024 2023
£'000 £'000
Operating profit before interest 872 825
Adjusted Operating profit before interest 872 910
Depreciation 495 454
Amortisation of intangible assets 322 276
Adjusted EBITDA 1,689 1,640
5. Operating profit
The operating profit is stated after charging:
2024 2023
£'000 £'000
Depreciation of property, plant and equipment 177 164
Depreciation of right-of-use assets 318 290
Amortisation of intangible assets 322 276
Cost of inventory sold 1,815 1,863
Research and development costs 2,738 4,603
Share based payments 248 213
Foreign exchange losses 76 50
Research and development expenditure credit - (8)
Total government grants received - (8)
Development expenditure was also capitalised in each year as disclosed in note
12.
Auditor's remuneration:
Audit of the Company and Company financial statements - current year 78 80
- previous year Non-audit services (2) 11
6 20
Total Fees payable to the Company's auditor 82 111
6. Information regarding directors and employees
Employees
The aggregate remuneration of employees comprised:
2024 2023
£'000 £'000
Wages and salaries Social security costs Other pension costs 9,207 8,727
Share based payments 938 989
1,259 1,042
248 213
Total 11,652 10,971
Average number of employees
The monthly average number of employees in the year was:
2024 2023
£'000 £'000
Administration Marketing 16 16
Research, development and technical 6 6
146 146
Total 168 168
Directors' remuneration
2024 2023
£'000 £'000
Directors' remuneration - aggregate emoluments 460 825
Company pension contributions in respect of 3 (2023:3) directors Share based 48 66
payments
136 146
644 1,037
Remuneration of the highest paid director Company pension contributions 225 231
Share based payments 37 20
45 -
307 251
Key management is defined as those persons having authority and responsibility
for planning, directing, and controlling the activities of the Company, and
was considered to be only the executive directors with compensation as
disclosed above.
7. Interest Income
2024 2023
£'000 £'000
Bank interest receivable 1 7
1 7
8. Interest expense
2024 2023
£'000 £'000
Interest on bank and other borrowings Lease liability financing charges 682 565
Other interest 219 201
24 19
925 785
9. Taxation on profit
2024 2023
£'000 £'000
Current taxation
UK corporation tax credit Foreign tax charge 1,258 2,064
(183) (159)
1,075 1,905
Deferred taxation
Origination and reversal of timing differences 1,205 160
Tax (charge)/credit on profit (130) 1,745
Factors affecting the tax credit for the year
The tax credit on the profit/(loss) for the year differs from applying the
standard rate of corporation tax in the UK of 25% (2023: 20%). The differences
are reconciled below:
2024 2023
£'000 £'000
(Loss)/profit before taxation (52) 47
Corporation tax at standard rate (2024:25%, 2023 20%) 13 9
Factors affecting charge for the year:
Disallowable expenses 304 164
Allowances and enhanced deductions (1,320) (966)
Research and development allowances (1,555) (1,940)
Reduced rate on surrender of R&D losses for tax credit 1,539 762
RDEC expenditure credit (249) (62)
Foreign tax charges 183 85
Deferred tax 1,205 160
Share options 62 43
Tax charge/(credit)on profit/(loss) 130 (1,745)
10. Earnings per share
2024 2023
£'000 £'000
(Loss)/profit used in calculating EPS (£'000) (182) 1,792
Number of shares for basic EPS ('000s) 80,747 75,833
Basic earnings per share (pence) (0.23) 2.36
Number of shares for diluted EPS ('000s) 80,747 77,874
Diluted earnings per share (pence) (0.23) 2.30
Adjusted Earnings per share
2024 2023
£'000 £'000
Adjusted (Loss)/profit used in calculating EPS (£'000) (182) 1,877
Number of shares for basic EPS ('000s) 80,747 75,833
Adjusted basic earnings per share (pence) (0.23) 2.47
Number of shares for diluted EPS ('000s) 80,747 77,874
Adjusted diluted earnings per share (pence) (0.23) 2.41
As part of the Company's 2022 long term incentive plan, share options over
6,915,549 Ordinary shares and warrants over 3,535,000 Ordinary shares are
potentially dilutive to profit.
As the Company made a loss this year and the prior year, there is therefore no
difference between the basic loss per ordinary share and the diluted loss per
ordinary share in the current period.
11. Property, plant and equipment
Right-of-use property Leasehold improvements Office equipment Right-of-use equipment Computer equipment
Group £'000 £'000 £'000 £'000 £'000 Total
£'000
Cost
At 1 June 2022 213 - 198 174 455 1,040
Additions 1,825 240 45 423 110 2,643
Exchange adjustments - - (3) - (2) (5)
At 31 May 2023 2,038 240 240 597 563 3,678
Depreciation
As at June 2022 (156) - (69) (125) (308) (658)
Charge for the year (211) (24) (43) (79) (97) (454)
Exchange adjustments - - - - - -
At 31 May 2023 (367) (24) (112) (204) (405) (1,112)
Net book value At 31 May 2023
1,671 216 128 393 158 2,566
Cost
At 1 June 2023 2,038 240 240 597 559 3,674
Additions - - 4 640 283 927
Disposals - - - (126) - (126)
Exchange adjustments - - (3) - (3) (6)
At 31 May 2024 2,038 240 241 1,111 839 4,469
Depreciation
As at June 2023 (367) (24) (111) (204) (404) (1,110)
Charge for the year (211) (18) (43) (106) (115) (493)
On disposals - - - 126 - 126
Exchange adjustments - - 2 1 2 5
At 31 May 2024 (578) (42) (152) (183) (517) (1,472)
Net book value At 31 May 2024
1,460 198 89 928 322 2,997
12. Intangible Assets
Development Intellectual property
costs Software Total
Group £'000 £'000 £'000 £'000
Cost
At 1 June 2021 9,143 123 - 9,266
Additions 2,241 - - 2,241
At 31 May 2022 11,384 123 - 11,507
Amortisation and impairment
At 1 June 2021 (2,756) (4) - (2,760)
Charge for the year (148) (23) - (171)
At 31 May 2022 (2,904) (27) - (2,931)
Net book value
At 31 May 2022 8,480 96 - 8,576
Cost
At 1 June 2022 11,384 123 - 11,507
Additions 4,094 - 39 4,133
At 31 May 2023 15,478 123 39 15,640
Amortisation and impairment
At 1 June 2022 (2,904) (27) - (2,931)
Charge for the year (248) (24) (4) (276)
At 31 May 2023 (3,152) (51) (4) 3,207
Net book value
At 31 May 2023 12,326 72 35 12,433
Cost
At 1 June 2023 Additions 15,478 123 39 15,640
6,425 - - 6,425
At 31 May 2024 21,903 123 39 22,065
Amortisation and impairment
At 1 June 2023 Charge for the year (3,152) (51) (4) (3,207)
(265) (24) (4) (293)
At 31 May 2024 (3,417) (75) (8) (3,500)
Net book value
At 31 May 2024 18,486 48 31 18,565
Capitalised development expenditure relates to developed intellectual property
in respect of circuit and chip design. The recoverable amount of a cash
generating unit (CGU) is assessed using a value in use model across each
individual project that forms the intellectual property that has been
capitalised. The value in use for each portion is dependent on the expected
life cycle of the CGU using a discount factor of 11.50% (2023:11.5%), being
the cost of capital for the CGU.
13. Inventories
Group and Company 2024 2023
Raw materials and consumables £'000 £'000
753 304
No impairment losses have been recorded in respect of inventory in the period.
14. Trade and other receivables
Current
Trade receivables 1,743 3,893
Other receivables 1,062 807
Prepayments 1,306 483
Accrued income 4,279 1,842
Total 8,390 7,025
15. Cash and cash equivalents
31 May 2024 31 May 2023
Group £'000 £'000
Cash at bank and in hand 5,156 3,095
16. Borrowings
2024 2023
£'000 £'000
Current
Bank loans 1,717 883
Non-current
Bank loans 2,298 3,284
Total 4,015 4,167
A bank loan of £1,203,000 (2023: £1,657,000) is secured by fixed and
floating charges over the assets of the group and bears interest at rates of
8% over SONIA or 10% if higher. It is repayable in monthly instalments over
the period to August 2026. A loan of £2,099,000 (2023: £2,662,000) is
unsecured and bears interest at a fixed rate of 13%. It is being repaid by
quarterly instalments over the period to October 2027.
A secured loan of £713,000 (2023: £nil) which bears interest at a fixed rate
of 16%. It will be repaid on receipt of the R&D tax credit for the period,
which is anticipated to be received by the end of 2024.
The loan liabilities are stated net of unamortised loan issue costs as at 31
May 2024 of £119,000 (2023: £152,000) which are being amortised over the
period to the loan repayment dates.
17. Lease liabilities
The Company has entered into lease contracts in respect of property in the
jurisdictions from which it operates, and the use of equipment which are
typically for terms of 3 to 5 years. In respect of options to extend the
initial period these are factored into the liabilities where the Company plans
to use these for a longer period. For property leases, it is customary for
lease contracts to be reset periodically to market rental rates. Leases of
equipment comprise only fixed payments over the lease terms.
Right of use assets, additions and amortisation are included in note 11.
Interest expenses relating to lease liabilities are included in note 8. The
amounts relating to leases were as follows:
2024 2023
£'000 £'000
Interest on finance leases 217 257
Cash outflow for capitalised leases 172 169
Total cash outflow from leases 389 426
Within 1 year 199 171
1-2 years 288 193
2-5 years 1,616 1,911
Total 2,103 2,275
18. Trade and other payables
2024 2023
£'000 £'000
Current
Trade payables 3,496 2,388
Taxation and social security 943 281
Other payables 170 161
Accruals 1,293 1,293
Contract liabilities 1,216 600
Total 7,118 4,723
The carrying amounts of trade and other payables are considered to be the
same as their fair values, due to their short-term nature.
In the year ended 31 May 2024 £600,000 of revenue was recognised in respect
of contract liabilities at 31 May 2023 (year ended 31 May 2023:
£14,000 in respect of liabilities at 31 May 2022).
19. Provisions
2024 2023
£'000 £'000
At 31 May 2023 199 140
Foreign exchange revaluation (7) (6)
Gratuity redeemed (55) (3)
Provided in year 69 68
Total 206 199
The provision relates to the liability under the Government of India Gratuity
Act in respect of payments to employees on cessation of service in respect of
death or disability or otherwise after more than 5 years' service.
20. Deferred tax liabilities
Accelerated capital
Intangible assets allowances Tax losses Other Total
£'000 £'000 £'000 £'000 £'000
At 31 May 2022 2,120 79 (173) (2,026) -
Charge/(credit) for the year 952 - - (792) 160
At 31 May 2023 3,072 79 (173) (2,818) 160
Charge/(credit) for the year 1,058 68 - 79 1,205
At 31 May 2024 4,130 147 (173) (2,739) 1,365
Deferred tax has been recognised at an average rate of 25% (2023: 25%).
21. Share capital
2024 2023
£'000 £'000
1,700,000 A ordinary shares of £0.001 each - -
273,000 B ordinary shares of £0.001 each - -
93,468,928 (2023: 78,115,158) ordinary shares of £0.001 each 94 78
59,190 (2022: 59,190) Deferred shares of £1.00 each 59 59
153 137
On 14 December 2023, the Company announced a placing to existing shareholders
to raise £1.56 million before expenses via the issue of 3,892,500 new
ordinary shares of 0.1 pence each ("Ordinary Share") at 40 pence per new
Ordinary Share.
On 27 February the Company announced a placing to existing shareholders which
resulted in a raise of £1.1 million before expenses via the issue of
2,230,000 Ordinary Shares at 50 pence per new Ordinary Share. On 18 March 2024
the Company announced that warrants were exercised at 55 pence per new
Ordinary Share, raising a further £0.4m and creating an additional 767,500
new Ordinary Shares. On 4 April 2024 the Company announced that an additional
40,000 warrants were exercised at 55 pence per new Ordinary Share, raising a
further £0.02 million.
On 24 May 2024, the Company announced that it had raised gross proceeds of
£4.9 million through an equity fundraise at 45 pence per new Ordinary Share.
8,423,770 new Ordinary Shares issued on 28 May 2024, representing £3.8
million with the balance of 2,465,119 new Ordinary Shares issued on 19 June
2024, representing £1.1 million.
22. Share premium
2024 2023
£'000 £'000
At 1 June 8,752 6,900
Issue of new shares 6,892 2,015
Costs of warrants issued (217) -
Expenses relating to share issue (470) (163)
Total 14,957 8,752
The net proceeds of the Fundraising are to be used primarily to develop
further the Company's depth and strength of offering. As well as providing the
Company with funds it will enhance both transparency and the international
profile of the Company with customers, allow the Company to access equity
capital to fund growth and support potential M&A opportunities, and enable
the Company to attract, recruit and retain key employees.
Share issue costs relate to commissions charged and other directly
attributable costs of fundraising.
23. Post balance sheet events
The Company has entered into a new debt facility to refinance its existing
external loan facilities. The new debt facility provides EnSilica with total
funding of up to £9 million. The Facility has been agreed with Lloyds Bank
plc, and provides the Company with additional flexibility to underpin ongoing
working capital commitments and ensuring that EnSilica can fully capitalise on
its existing new business pipeline.
The Facility consists of a three year £3 million repayment term loan facility
and a five year £3 million revolving credit facility with an accordion option
for an additional £3 million credit facility subject to credit approval by
the Lender. The Facility also improves the borrowing costs of the Company with
the Facility offering more favourable interest rates in comparison to the
Company's legacy external loan facilities. The Facility contains standard
representations, warranties, covenants, indemnities and events of default for
a debt facility of its type. This includes ordinary course financial
covenants.
As a result of a delay to the signature of a large customer contract and
related upfront receipt post year end, the Company incurred a breach of its
quarterly 12 month cashflow financial covenant under the terms of its loan
agreement with SME Alternate Financing. In order to compensate for the
negative impact of the delayed receipt on our cashflow, the Company raised
£5.2 million in new equity during May and June 2024. No action was taken by
the lender and the outstanding balance of the loan has been repaid as part of
the £6 million refinancing of its existing external loans.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR DZMGMFDNGDZZRecent news on EnSilica
See all newsRCS - EnSilica PLC - Investment in Space Industry Fuelling Chip Demand
AnnouncementREG - EnSilica PLC - MoU with European Satellite Operator
AnnouncementREG - EnSilica PLC - Trading Update
AnnouncementREG - EnSilica PLC - $18m 7 Year Design and Supply ASIC Contract
AnnouncementREG - EnSilica PLC - EnSilica Agrees a Multimillion Pound Contract
Announcement