REG - EnSilica PLC - Unaudited Half Year Results
17/02/2023 07:00
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RNS Number : 2216Q EnSilica PLC 17 February 2023
Prior to publication, the information contained within this announcement was
deemed by the Group to constitute inside information for the purposes of
Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.
With the publication of this announcement, this information is now considered
to be in the public domain.
17 February 2023
EnSilica plc
("EnSilica", the "Company" or the "Group")
Unaudited Results for the Half Year Ended 30 November 2022
- Solid operational and financial performance propelled by
significant market opportunity
- Strong order book and new business pipeline underpins confidence
EnSilica (AIM: ENSI), a leading mixed signal chipmaker, announces half year
results for the six months ended 30 November 2022 ("H1 FY23").
Financial Highlights
· Revenue up 23.5% to £8.6 million (H1 FY22: £7.0 million)
· Adjusted operating profit up to £0.15 million (H1 FY22: £0.17
million loss)
· Gross margin 42.5% (H1 FY22: 26.7%)
· Adjusted EBITDA up significantly to £0.66 million (H1 FY22: loss of
£0.08 million)
· Cash and cash equivalents at 30 November of £1.4 million (31 May
2022: £5.7 million)
· Loans reduced by 8% to £4.6 million (31 May 2022: £5.0 million)
· Further investment in Development Costs of £1.7 million (H1 FY22:
£0.56 million)
Operational Highlights
· Ongoing momentum throughout the period, including:
o Successfully bringing a mixed signal automotive ASIC to commercial
production following the launch of a new flagship vehicle by a premium
automotive company
o Winning a significant industrial ASIC supply project worth in excess of
US$30 million over seven years
· Investment in sales and marketing activities, including appointment
of Vice President of Worldwide Sales, alongside working with new sales
partners in Europe and USA
Post Period-end Events
· Secured two new contracts with existing European customers, including
a major automotive Tier 1 company, for a combined total of US$3.6 million.
Both contracts commenced in January 2023
· Named the UK Electronics Company of the Year at the prestigious
TechWorks Awards
· €5 million contract for the development of a satellite user
terminal broadband chip
· Cash at bank of £2.2 million at 31st January 2023
Outlook
· EnSilica has made a solid start to the current financial year, buoyed
by existing contracts that underpin FY 2023 market expectations
· Looking ahead, the Company remains well placed to continue to
capitalise on the significant growth opportunity within the semiconductor
industry, supported by a sizable order book and new business pipeline
Ian Lankshear, CEO of EnSilica, commented:
"Today's results are further evidence of our strong operational capabilities
and sound strategic vision, which together have laid the ground for a series
of sizable new business wins, including our recently announced €5 million
satellite user terminal chip contract.
The EnSilica team, which remains the bedrock of our business, works tirelessly
to deliver best-in-class products and services to our global customer base,
and our recent success at the TechWorks Awards is a true testament to this.
Looking forwards to FY 2023 and 2024, we expect to continue the solid
performance delivered so far, spurred on by further contract momentum and a
healthy pipeline of new business opportunities. Whilst we remain mindful of
the ongoing turbulence of the broader macro climate, the sustained demand for
chips across our key growth markets underscores our confidence in our
medium-term business prospects."
For further information please contact:
EnSilica plc Via Vigo Consulting
Ian Lankshear, Chief Executive Officer +44 (0)20 7390 0233
Matthew Wethey, Chief Financial Officer
www.ensilica.com (http://www.ensilica.com)
Allenby Capital Limited, Nominated Adviser & Broker Tel: +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)
Vigo Consulting (Investor & Financial Public Relations) +44 (0)20 7390 0233
Jeremy Garcia / Kate Kilgallen
ensilica@vigoconsulting.com (mailto:visum@vigoconsulting.com)
About EnSilica plc
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 ASICs 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. Its impressive record
of success has been achieved working with customers ranging from start-ups to
blue-chip companies and EnSilica's project portfolio ranges from module design
to multimillion gate System-on-Chip.
The company is headquartered near Oxford UK with design centres across the UK,
in Bangalore, India and in Porto Alegre, Brazil.
Operational Review
We are pleased to report that the excellent momentum generated in the prior
year has continued across H1 FY23, with customer demand for our services
remaining strong.
Pleasingly, the Group generated £8.6 million (H1 FY22: £7.0 million) in
revenue, an increase of 23.5% on H1 FY22, and £0.66 million in Adjusted
EBITDA versus a loss of £0.1 million in H1 FY22. This solid performance is a
clear demonstration of the business's significant progress since IPO.
Although chip supply chain shortages have eased over the last six months, the
security of semiconductor supply remains a primary concern for all major OEMs
and governments alike. As such, the Company is positioning itself as a key
partner in fledgling European semiconductor alliances and supply chain
initiatives.
To this end, management remains keenly focused on the core growth initiatives
outlined at the time of the Company's IPO, namely:
· leveraging EnSilica's strong positions within automotive, industrial,
healthcare and satellite connectivity applications for mixed signal ASICs;
· scaling the Company's successful Fabless ASIC Model to fully exploit
revenue opportunities from design and supply engagements;
· attracting high-quality talent globally to further leverage our
market leading position;
· developing catalogue parts, with two significant standard platforms
already at the device evaluation stage; and
· expanding EnSilica's offering through consolidation and vertical
integration.
The Group delivered strong design win bookings across the automotive,
industrial, and satellite communication sectors in H1 FY23, including a US$30
million contract for a major European industrial OEM announced in July 2022.
This contract is progressing according to schedule, with production and supply
anticipated to commence in the second half of calendar year 2024.
Talent acquisition remains a key long-term objective and to help meet our
headcount targets, we have increasingly been focusing on graduate recruitment,
both through the UK Electronics Skills Foundation ('UKESF'), and by
establishing direct relationships with local universities. The new Bristol
design centre has proved to be a good recruitment base with the team doubling
headcount there in the last six months. Our efforts were further boosted by
our recruitment of an ASIC implementation team comprising six engineers, as
well as the purchase of related non-core IP assets from Blu Wireless
Technologies Limited in June 2022.
Elsewhere, we have invested across our sales and marketing activities,
recruiting a Vice President of Worldwide Sales, alongside working with new
sales partners in Europe and the USA, relationships that have already
generated high-value opportunities that are currently progressing through our
sales pipeline.
Management believes the budding space economy represents significant future
business opportunities for the Company. Custom chips will play an important
role in this exciting new growth market, enabling microsatellites to advance
highspeed satellite broadband to provide greater resilience and security. We
remain extremely confident about the future growth prospects of the Space
sector and believe EnSilica is well positioned to become a key supplier.
Post Period End & Outlook
The Company has made a strong start to H2 FY23, announcing design contracts
totalling US$3.6 million in December 2022, and an additional US$2.9 million in
wins since then. Our recently secured €5 million contract with UKSA brings
our post period end bookings to c.US$10 million, further highlighting the
wealth and quality of opportunities that exist for the Company.
The current sales pipeline of opportunities and potential contracts stands at
c.£250 million following a review by management to focus on projects which
meet our criteria and remains a strong endorsement of the quality of our
business output and our growing reputation in the chip sector. This pipeline
consists of several opportunities at different stages of tender, evaluation
and pre-contract discussion.
We were delighted to see our industry expertise recognised in December 2022 at
the TechWorks Awards, with EnSilica securing the TechNES Design award, Company
of the Year award, and Young Engineer of the Year award, the latter of which
went to our talented colleague Omotade Iluromi.
Irrespective of EnSilica's recent successes, management remains acutely
mindful of the ongoing challenges associated with managing global supply
chains, and the potential impact of current geopolitical instability on the
wider silicon manufacturing industry. These broader headwinds are key
strategic considerations in our future planning, which is why one of our
priorities remains expanding our European footprint. Accordingly, management
continues to monitor world developments closely, striving to build additional
resilience into the business wherever possible.
Despite today's challenging macro environment, the Company continues to trade
well and expects the results for the current financial year to be in line with
market expectations.
Management believes EnSilica's sharp strategic focus and established market
position in the high-growth automotive, industrial, healthcare, and satellite
communications sectors, all of which demonstrate greater resilience in the
face of declining consumer confidence, leave the business well positioned to
continue the impressive growth trajectory seen to date.
Mark
Hodgkins
Ian Lankshear
Chair,
Chief Executive
Officer,
EnSilica
plc
EnSilica plc
16 February 2023
Chief Financial Officer's Review
Financial results summary:
30 Nov 2022 30 Nov 2021 31 May 2022
£000 £000 £000
Revenue 8,592 6,957 15,293
Gross Profit 3,655 1,856 5,047
Gross margin (%) 42.5 26.7 33.0
Adjusted operating profit/(loss) excluding IPO costs 149 (165) 705
IPO costs - - (699)
Adjusted profit/(loss) before tax (202) (465) 165
Tax credit 524 300 683
Adjusted profit/(loss) for the year 322 (165) 848
Adjusted EBITDA 655 (79) 1,036
Cash and Cash equivalents 1,359 1,668 5,742
Liabilities arising from financing activities (4,687) (5,682) (5,159)
Net Debt (3,328) (4,014) 583
Intangible assets 10,001 7,053 8,576
Revenue
EnSilica's revenue for the period was £8.6 million (H1 FY22: £7.0 million)
which was 23.5% higher than in the same period last year, mainly due to
increases in design and supply activities. Our non-recurring engineering (NRE)
revenue from design and supply projects has increased by 39%. We have also
achieved an increase of 119% in the supply of product, mainly due to the
impact of our automotive chip going into production in March 2022. Revenue
from our two largest customers amounted to £4.6 million with the largest, an
NRE project, being £2.6 million or 30% of the revenue for the period, the
other a consultancy project being £2.0 million (23%).
Gross Profit
Gross profit on EnSilica's revenues was £3.7 million (H1 FY22: £1.9 million)
with a gross margin of 42.5% (H1 FY22: 26.7%). Gross margin was higher than in
the prior period, driven broadly by undertaking higher margin projects and
increasing utilisation of the increasing number of engineers. This impact
started in the second half of the previous financial year (H2 FY21) after
margins had been suppressed due to the Group undertaking lower margin work to
maintain its workforce during the COVID 19 pandemic and experiencing lower
utilisation rates.
Administrative expenses
Administrative expenses increased to £3.5 million (H1 FY22: £2.1 million).
This change was driven mainly by additional overhead headcount costs to
support the growth in the business, costs associated with being a public
company and higher depreciation and amortisation charges. The amortisation
charges are principally due to expenses reducing the value of the capitalised
development cost now that production has commenced on the automotive chip.
Profit for the period
Operating profit at £0.149 million was £0.314 million higher than in the
same period last year which was a loss of £0.165 million.
Once depreciation and amortisation of £0.5 million (H1 FY22: £0.1 million)
has been added back, adjusted EBITDA at £0.655 million was £0.734 million
higher than LBITDA of £0.079 million in the same period last year.
Statement of financial position
Total non-current assets have increased from £9.0 million at the end of May
2022 to £12.7 million on 30 November 2022, driven mainly by recognising
additions of £2.2 million for right of use assets, due to leases for the new
HQ and computer equipment, as well as development costs additions of £1.7
million, and other fixed asset additions less the current period's
depreciation and amortisation charges.
Total current assets at £10.1 million have decreased by £0.7m since the year
end mainly due to an increase in working capital and corporation tax
recoverable offsetting a reduction in the cash balance. Inventories are £1
million higher as the Company purchased sufficient wafers to ensure it could
deliver automotive chips in line with the production schedule whilst there was
a shortage of such wafers. This situation is likely to partially reverse by
the year end as wafer supply improves. Trade and other receivables increased
by £2.1 million due to a combination of increased revenues and milestones for
receipts which were not triggered until after the period end. We received the
year end corporation tax recoverable balance of £1.7 million in December.
Total non-current liabilities of £6.1 million (31 May 2022: £4.4 million)
increased by £1.7 million because of the £2.2 million lease liability due to
the IFRS16 right of use assets. This is partially offset by repayments on
borrowings.
Cash flow
The Group's cash position (including cash and cash equivalents) decreased from
£5.7 million on 31 May 2022 to £1.4 million on 30 November 2022.
Cash used in operations during the period aggregated £1.4 million (H1 FY22:
£0.5 million generated from operations) mainly due to an increase in working
capital of £2.2 million (H1 FY22: £0.6 million decrease) being partially
offset by adjusted profit of £0.8 million (H1 FY22: £0.1 million adjusted
loss). £1.0 million of the working capital increase is as a result of the
Company purchasing sufficient wafers to ensure it could deliver automotive
chips in line with the production schedule whilst there was a shortage of such
wafers. As has been previously mentioned this situation is likely to partially
reverse by the year end as wafer supply improves.
The Group continues to invest in the business with £2.0 million (H1 FY22:
£0.8 million) cash deployed in the period, including development costs of
£1.7 million (H1 FY22: £0.6 million) in addition to purchases of property
plant and equipment of £0.3 million (H1 FY22: £0.2 million).
EnSilica experienced cash outflows from financing activities in the period of
£0.8 million (H1 FY22: £0.7 million) in relation to debt reduction and
interest on borrowings. Long-term borrowings reduced by 11% to £3.7 million
at 30 November 2022 (31 May 2022: £4.2 million).
Principal Risks and Uncertainties Report
EnSilica has considered the principal risks and uncertainties facing the Group
for the first six months of the 2022/2023 financial year and does not consider
them to have changed from those set out on pages 15 to 18 of the Annual Report
and Consolidated Financial Statements for the year ended 31 May 2022, which is
available on the Group's website.
Matthew Wethey
Chief Financial Officer
EnSilica plc
16 February 2023
Interim Financial Statements
Condensed Interim Consolidated Statement of Comprehensive Income
Condensed Interim Consolidated Statement of Financial Position
Condensed Interim Consolidated Statement of Changes in Equity
Condensed Consolidated Statement of Cash Flows
Notes to the Interim Condensed Consolidated Financial Statements
Interim Financial Statements
Condensed Interim Consolidated Statement of Comprehensive Income
for the six months ended 30 November 2022
Six months ended Six months ended Twelve months ended
30 Nov 2022 30 Nov 2021 31 May 2022
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Revenue 2 8,592 6,957 15,293
Cost of sales (4,937) (5,101) (10,246)
Gross profit 3,655 1,856 5,047
Other (expense)/operating income 8 63 (14)
Administrative expenses excluding non-recurring items (3,514) (2,084) (4,328)
Impairment of intangible assets - - -
IPO costs - - (699)
Total administrative expenses (3,514) (2,084) (5,027)
Operating profit/(loss) 149 (165) 6
Interest income 6 2 25
Interest expense (357) (302) (565)
(202) (465) (534)
Loss before taxation
Taxation 4 524 300 683
Profit/(loss) for the period 322 (165) 149
Other comprehensive income/(expense) for the period
Currency translation differences 5 32 40
Total comprehensive income/(expense) for the period 327 (133) 189
Profit/(loss) for the period/year attributable to:
Owners of the company 322 (133) 149
Non-controlling interests - - -
322 (133) 149
Other comprehensive income/(expense) for the period attributable to:
Owners of the company 5 (32) 40
Non-controlling interests - - -
5 (32) 40
Total comprehensive income/(expense) for the period attributable to:
Owners of the company 327 (165) 189
Non-controlling interests - - -
327 (165) 189
Interim Financial Statements
Earnings per Share Attributable to the Owners of the Parent During the Period
(expressed in pence per share)
Six months ended Six months ended Twelve months ended
30 Nov 2022 30 Nov 2021 31 May 2022
Unaudited Unaudited Audited
Note pence pence pence
Basic earnings per share (pence) 5 0.43 (0.47) 0.20
Diluted earnings per share (pence) 5 0.39 (0.47) 0.20
Adjusted Basic earnings per share (pence) 5 0.43 (0.47) 1.13
Adjusted Diluted earnings per share (pence) 5 0.39 (0.47) 1.11
Interim Financial Statements
Condensed Interim Consolidated Statement of Financial Position
as at 30 November 2022
30 Nov 2022 30 Nov 2021 31 May 2022
Unaudited Unaudited Audited
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment 6 2,711 393 382
Intangible assets 7 10,001 7,053 8,576
Total non-current assets 12,712 7,446 8,958
Current assets
Inventories 1,172 366 215
Trade and other receivables 8 5,344 2,596 3,257
Corporation tax recoverable 2,271 1,500 1,671
Cash and cash equivalents 1,359 1,668 5,742
Total current assets 10,146 6,130 10,885
22,858 13,576 19,843
Total assets
Current liabilities
Borrowings 9 (833) (803) (800)
Lease liabilities (147) (101) (88)
Trade and other payables 10 (3,186) (3,690) (2,391)
Corporation tax payable - (95) -
Total current liabilities (4,166) (4,689) (3,279)
Non current liabilities
Borrowings 9 (3,726) (4,635) (4,166)
Lease liabilities (2,182) (143) (105)
Provisions (206) (91) (140)
Deferred tax - (1,290) -
Total non current liabilities (6,114) (6,159) (4,411)
Total liabilities (10,280) (10,848) (7,690)
Net assets 12,578 2,728 12,153
Equity
Issued share capital 11 134 2 134
Share premium account 6,900 - 6,900
Currency differences reserve 6 (7) 1
Retained earnings 5,538 2,733 5,118
Equity attributable to owners of the Company 12,578 2,728 12,153
Non-controlling interests - - -
Total equity 12,578 2,728 12,153
The notes are an integral part of these condensed interim financial
statements.
Ian Lankshear
Matthew Wethey
Chief Executive
Officer
Chief
Financial Officer
Company registration number: 04220106
Interim Financial Statements
Condensed Interim Consolidated Statement of Changes in Equity
Share capital Share premium account Currency translation reserve Retained earnings Attributable to owners of the parent Non-controlling interests Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
2 (39) 2,875 2,838 - 2,838
At 31 May 2021 -
Comprehensive income/(expense) for the six months to 30 November 2021
Loss for the period - - - (165) (165) - (165)
Other comprehensive income - - 32 - 32 - 32
Total comprehensive income for the period - - 32 (165) (133) - (133)
Share based payment - - 23 23 - 23
-
2 (7) 2,733 2,728 - 2,728
At 30 November 2021 -
Comprehensive expense for the six months to 31 May 2022
Profit for the period - - - 314 314 - 314
Other comprehensive expense - - 8 - 8 - 8
Total comprehensive expense for the period - - 8 314 322 - 322
Share based payment - - 97 97 - 97
-
Deferred tax in respect of share options - - - 1,713 1,713 - 1,713
Corporation tax in respect of share options - - - 378 378 - 378
Issue of share capital 132 7,407 - - 7,539 - 7,539
Costs of share issue - (507) - - (507) - (507)
Bonus share issue - - - (117) (117) - (117)
At 31 May 2022 134 6,900 1 5,118 12,153 - 12,153
Comprehensive income for the six months to 30 November 2022
Profit for the period - - 322 322 - 322
-
Other comprehensive expense - 5 - 5 - 5
-
Total comprehensive income for the period - - 5 322 327 - 327
Share based payment - - 98 98 - 98
-
At 30 November 2022 134 6,900 6 5,538 12,578 - 12,578
Interim Financial Statements
Interim Condensed Consolidated Statement of Cash Flows
for the six months ended 30 November 2022
Note Six months ended Six months ended Twelve months ended
30 Nov 2022 30 Nov 2021 31 May 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Cash (used)/generated from operations A (1,415) 450 (1,915)
Tax (paid)/received (76) 1,214 3,306
Net cash (used in)/generated from operating activities (1,491) 1,664 1,391
Cash flows from investing activities
Purchase of property, plant and equipment (336) (205) (276)
Additions to intangible assets (1,731) (557) (2,241)
Interest received 6 2 25
Net cash used in investing activities (2,061) (760) (2,492)
Cash flows from financing activities
Proceeds from issuance of ordinary shares - - 6,915
Interest paid (357) (239) (565)
Lease liability payments (60) (52) (103)
Receipt of bank loans - - -
Repayment of bank loans (413) (361) (768)
Commitment fees - - (80)
Net cash generated from/(used in) financing activities (830) (652) 5,399
Net (decrease)/increase in cash and cash equivalents (4,383) 252 4,298
Cash and cash equivalents at beginning of year 5,742 1,404 1,404
Foreign exchange gains/(losses) - 12 40
Cash and cash equivalents at end of year B 1,359 1,668 5,742
Interim Financial Statements
Notes to the Condensed Interim Consolidated Cash Flow Statement
for the six months ended 30 November 2022
A. Cash generated from operations
The reconciliation of profit/(loss) for the year to cash generated from
operations is set out below:
Six months ended 30 Nov 2022 Six months ended Twelve months ended
30 Nov 2021 31 May 2022
£'000 £'000 £'000
Profit/(loss) for the period 322 (165) 149
Adjustments for:
Depreciation 199 76 182
Amortisation of intangible assets 307 10 170
Other amortisation 7 - -
Impairment of intangible assets - - -
Share based payments 98 23 120
Grant income not cash received - (63) -
Net interest costs 351 300 540
Tax credit (524) (300) (683)
760 (119) 478
Working capital movements
Increase in inventories (957) (336) (185)
(Increase)/decrease in trade and other receivables (2,088) 374 (304)
Increase/(decrease) in trade and other payables 804 589 (721)
Increase/(decrease) in provisions 66 (58) (1,183)
Cash (used in) /generated from operations (1,415) 450 (1,915)
B. Analysis of net debt
At Cash flow Non-cash changes At
1 June 2021 30 Nov 2021
£'000 £'000 £'000 £'000
Loans (5,799) 361 - (5,438)
Lease liabilities (296) 55 (3) (244)
Liabilities arising from financing activities (6,095) 416 (3) (5,682)
Cash and cash equivalents 1,404 264 - 1,668
Net debt (4,691) 680 (3) (4,014)
At Cash flow Non-cash changes At
1 December 2021 31 May 2022
£'000 £'000 £'000 £'000
Loans (5,438) 407 65 (4,966)
Lease liabilities (244) (5) 56 (193)
Liabilities arising from financing activities (5,682) 402 121 (5,159)
Cash and cash equivalents 1,688 4,034 40 5,742
Net debt (4,014) 4,436 161 583
At Cash flow Non-cash changes At
1 June 2022 30 Nov 2022
£'000 £'000 £'000 £'000
Loans (4,966) 413 - (4,553)
Lease liabilities (193) 49 10 (134)
Liabilities arising from financing activities (5,159) 462 10 (4,687)
Cash and cash equivalents 5,742 4,383 - 1,359
Net debt 583 3,921 10 (3,328)
Interim Financial Statements
Notes to the Condensed Interim Consolidated Financial Statements
For the Period ended 30 November 2022
1. General information
Ensilica plc is a public limited company incorporated in the United Kingdom,
quoted on the AIM Market 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 condensed consolidated interim financial statements were approved for
issue on 16 February 2023.
The condensed consolidated interim financial statements have not been audited
or reviewed.
The condensed consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 May 2022 were approved by the
Board of Directors on 14 October 2022 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements comprise the Company
and its subsidiaries (together referred to as the 'Group').
Basis of preparation
This condensed consolidated interim financial report for the period ended 30
November 2022 has been prepared in accordance with Accounting Standard IAS 34
Interim Financial Reporting.
The interim report does not include all the notes of the type normally
included in an annual financial report. Accordingly, this report is to be read
in conjunction with the Annual Report and Consolidated Financial Statements
for the year ended 31 May 2022 and any public announcements made by EnSilica
plc during the interim reporting period.
The consolidated financial statements of the Group have been prepared in
accordance with UK-adopted International Accounting Reporting Standards (IAS)
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 below.
Going concern
In assessing the appropriateness of the going concern assumption, the Board
has considered the availability of funding alongside the possible cash
requirements of the Group and Company. After due consideration, the directors
have concluded that there is a reasonable expectation that the Group has
adequate resources to continue in operational existence for at least 12 months
from the date of this report.
Accounting policies
The accounting policies adopted are consistent with those of the previous
financial year.
Use of estimates and assumptions
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these condensed interim financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
to the annual financial statements for the year ended 31 May 2022.
Financial instruments
The Group's financial instruments comprise cash and cash equivalents,
receivables and payables arising directly from operations, and derivatives.
The directors consider that the fair values of the Group's financial
instruments do not differ significantly from their carrying values.
2. Analysis of revenue
The Board continues to define all the Group'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.
Six months ended 30 Nov 2022 Six months ended 30 Nov 2021 Twelve months ended 31 May 2022
£'000 £'000 £'000
Recognised at a point in time
Supply of products
1,235 563 1,769
Recognised over time
NRE design services 3,409 2,449 6,250
Consultancy design services 3,700 3,908 7,073
Licensing related income 248 37 201
7,357 6,394 13,524
8,592 6,957 15,293
By destination:
UK 970 1,721 2,808
Rest of Europe 4,432 2,494 4,721
Rest of the World 3,190 2,742 7,764
Total revenue 8,592 6,957 15,293
The nature of the design services and projects is such that there will be
significant customers as a proportion of revenue in any one reporting period
but that these may be different customers from one period to the next. Revenue
in respect of two customers amounted to £2.6m and £2.0m each representing
30% and 23% respectively of the revenue for the six months ended 30 November
2022 (30 November 2021: two different customers amounted to £4.1m being 35%
and 24% of the reported revenue).
The group's non-current assets comprising investments, tangible and intangible
fixed assets and the net assets by geographical location are:
30 Nov 2022 30 Nov 2021 31 May 2022
Non-current assets Net assets Non-current assets Net assets Non-current assets Net assets
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 12,570 11,244 7,320 1,989 8,804 11,301
India 62 1,251 78 671 67 817
Brazil 80 84 48 68 87 35
12,712 12,578 7,446 2,728 8,958 12,153
3. Alternative performance measures
These 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 Group's view that excluding them
from operating profit gives a better representation of the underlying
performance of the business in the year.
The Group's primary results measure, which is considered by the directors of
Ensilica plc to better represent the underlying and continuing performance of
the Group, is Adjusted 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.
Six months ended Six months ended Twelve months ended
30 Nov 2022 30 Nov 2021 31 May 2022
£'000 £'000 £'000
Operating profit/(loss) before interest 149 (165) 6
IPO costs - - 699
Adjusted Operating profit/(loss) before interest 149 (165) 705
Impairment of intangible fixed assets - - -
Depreciation 199 76 160
Amortisation of intangible assets 307 10 171
Adjusted EBITDA 655 (79) 1,036
Profit/(loss) for the period 322 (165) 149
IPO costs - - 699
Adjusted Profit/(loss) for the period 322 (165) 848
IPO Costs
Attributable costs relating to the IPO performed during the previous year have
been recognised within the consolidated statement of comprehensive income as
an exceptional cost. These costs are excluded from the adjusted results of the
Group since the costs are one-off in nature and will not repeat in future
years.
4. Taxation on profit/(loss)
Six months ended Six months ended Twelve months ended
30 Nov 2022 30 Nov 2021 31 May 2022
£'000 £'000 £'000
Current taxation
UK corporation tax credit 600 451 1,293
Foreign tax charge (76) (35) (71)
524 416 1,222
Deferred taxation
Origination and reversal of timing differences - (116) (539)
- (258) (539)
Tax credit on profit/(loss) 524 300 683
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 19% (2021: 19%). The
differences are reconciled below:
Six months ended 30 Nov 2022 Six months ended Twelve months ended
30 Nov 2021 31 May 2022
£'000 £'000 £'000
Loss before taxation (202) (465) (534)
Corporation tax at standard rate (38) (88) (102)
Factors affecting charge for the year:
Disallowable expenses 127 19 135
Research and development allowances (807) (382) (1,205)
Reduced rate on surrender of R&D losses for tax credit 115 140 360
Restricted tax losses 79 - -
Other timing differences - (24) -
Differing tax rates - 35 -
Charge due to change in tax rate - - 129
Tax credit on loss (524) (300) (683)
The UK government announced on 23 September 2022 the intention to cancel the
proposed increase in the corporation tax rate from 19% to 25% from April 2023,
this intention was subsequently reversed. At 30 November 2022 the main rate of
25% remained enacted; the Company does not revalue deferred tax balances at
the half year.
5. Earnings per share
Six months ended 30 Nov 2022 Six months ended Twelve months ended
30 Nov 2021 31 May 2022
Profit/(loss) used in calculating EPS (£'000) 322 (165) 149
Number of shares for basic EPS ('000s) 75,232 35,286 75,232
Basic earnings per share (pence) 0.43 (0.47) 0.20
Number of shares for diluted EPS ('000s) 82,767 35,286 76,106
Diluted earnings per share (pence) 0.39 (0.47) 0.20
Adjusted Earnings per share
Six months ended 30 Nov 2022 Six months ended Twelve months ended
30 Nov 2021 31 May 2022
Adjusted Profit/(loss) used in calculating EPS (£'000) 322 (165) 848
Number of shares for basic EPS ('000s) 75,232 35,286 75,232
Adjusted basic earnings per share (pence) 0.43 (0.47) 1.13
Number of shares for diluted EPS ('000s) 82,767 35,286 76,106
Adjusted diluted earnings per share (pence) 0.39 (0.47) 1.11
There are 424,440 of exercisable share options over ordinary shares
respectively which are potentially dilutive to profit.
As part of the Company's 2022 long term incentive plan, share options over
6,661,500 ordinary shares and warrants over 450,000 ordinary shares are
potentially dilutive to profit.
The figures for 2021 have been restated to better reflect the conversion of
ordinary shares that took place as part of the IPO process in 2022 and shows
results as though the share conversion on IPO had taken place in 2021.
6. Property, plant and equipment
Right-of-use property Leasehold improvements Office equipment Right-of-use equipment Computer equipment Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 June 2022 213 - 198 174 455 1,040
Additions 1,825 235 41 370 61 2,532
Cessation of lease/disposals - - - - - -
Exchange adjustments - - (2) - (2) (4)
At 30 November 2022 2,038 235 237 544 514 3,568
Depreciation
At 1 June 2022 (156) - (69) (125) (308) (658)
Charge for the year (91) (9) (21) (29) (49) (199)
Cessation of lease/disposals - - - - - -
Exchange adjustments - - - - - -
At 30 November 2022 (247) (9) (90) (154) (357) (857)
Net book value
At 30 November 2022 1,791 226 147 390 157 2,711
At 31 May 2022 57 - 129 49 147 382
At 30 November 2021 5 - 120 85 183 393
7. Intangible assets
Development costs Software Total
Intellectual
property
£'000 £'000 £'000 £'000
Cost
At 1 June 2022 11,384 123 - 11,507
Additions 1,692 - 40 1,732
At 30 November 2022 13,076 123 40 13,239
Amortisation and impairment
At 1 June 2022 (2,904) (27) - (2,931)
Charge for the period (295) (12) - (307)
Impairment in the period - - - -
At 30 November 2022 (3,199) (39) - (3,238)
Net book value
At 30 November 2022 9,877 84 40 10,001
At 31 May 2022 8,480 96 - 8,576
At 30 November 2021 6,944 109 - 7,053
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 envisaged life cycle of the CGU using a discount factor of
10% (2021:10%), being the cost of capital for the CGU.
8. Trade and other receivables
30 Nov 2022 30 Nov 2021 31 May 2022
Current £'000 £'000 £'000
Trade receivables 1,661 1,608 1,541
Other receivables 952 353 458
Prepayments 562 189 248
Accrued income 2,169 446 1,010
Total 5,344 2,596 3,257
9. Borrowings
30 Nov 2022 30 Nov 2021 31 May 2022
Current £'000 £'000 £'000
Bank loans 833 803 800
Non-current
Bank loans 3,726 4,635 4,166
Total 4,559 5,438 4,966
A bank loan of £1,867,000 (2021: £2,258,000) 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 £2,875,000 (2021: £3,301,000) is unsecured and bears interest at a
fixed rate of 13%. It is being repaid by quarterly instalments over the period
to October 2027.
The loan liabilities are stated net of unamortised loan issue costs as at 30
November 2022 of £189,000 (2021: £132,000) which are being amortised over
the period to the loan repayment dates.
10. Trade and other payables
30 Nov 2022 30 Nov 2021 31 May 2022
Current £'000 £'000 £'000
Trade payables 1,475 1,469 919
Taxation and social security 519 238 227
Other payables 120 12 75
Accruals 939 913 1,156
Contract liabilities 133 1,058 14
Total 3,186 3,690 2,391
11. Share capital
Allotted, called up and fully paid 30 Nov 2022 30 Nov 2021 31 May 2022
£'000 £'000 £'000
1,700,000 A ordinary shares of £0.001 each - 2 -
273,000 B ordinary shares of £0.001 each - - -
75,231,809 ordinary shares of £0.001 each 75 - 75
59,190 (2021:Nil) Deferred shares of £1.00 each 59 - 59
134 2 134
12. Share based payment
The company does not report share based payment detailed analysis as part of
its half year reporting.
An estimated provision totalling £98,000 (30 November 2021 £23,000) has been
made for the period under review.
13. Post balance sheet events
Subsequent to the end of the period under review there have been no events
that the company feels should be brought to the shareholders' attention.
14. Related party transactions
During the period under review, the company undertook transactions with the
following related parties:
Six months to 30 Nov 2022 Six months to 30 Nov 2021 Twelve months to 31 May 2022
Name Services Transactions during the period Balance Owing/ (owed) at 30 Nov 2022 Transactions during the period Balance Owing/ (owed) at 30 Nov 2021 Transactions during the year Balance Owing/ (owed) at 31 May 2022 £'000
£'000
£'000
Ensilica India Private Limited Semiconductor design services 724 770 546 198 1,428 Nil
EnSilica Do Brasil Sociedade Unipessoal Limitada Semiconductor design services 535 Nil 228 Nil 614 Nil
Non-Executive Directors services prior to Company appointment:
Hexameter Services Limited Consultancy services - D Tilston Nil Nil Nil Nil 14 Nil
Janet Collyer Consultancy services Nil Nil Nil Nil 14 Nil
Statement of Directors' responsibilities
The directors confirm that these condensed interim financial statements have
been prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and that the
interim management report includes a fair review of the information required,
namely:
· an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related-party transactions in the first six months and any
material changes in the related-party transactions described in the last
annual report. The directors of EnSilica plc are listed on pages 24 to 27 of
the annual report.
The directors are responsible for the maintenance and integrity of the Group's
website www.ensilica.com. Legislation in the UK governing the preparation and
dissemination of interim financial statements may differ from legislation in
other jurisdictions.
On behalf of the Board
Ian Lankshear
Matthew Wethey
Chief Executive Officer,
Chief Financial Officer
EnSilica plc
EnSilica plc
16 February 2023
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