REG - Sondrel (Holdings) - Results for the half year ended 30 June 2023
21/09/2023 07:00
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RNS Number : 1313N Sondrel (Holdings) plc 21 September 2023
For immediate release 21 September 2023
Sondrel (Holdings) plc
("Sondrel", the "Company" and together with its subsidiaries the "Group")
Results for the half year ended 30 June 2023
Strong financial and operational progress; positive medium-term outlook
Sondrel (Holdings) plc (AIM:SND), the fabless semiconductor business providing
turnkey services in the design and delivery of 'application specific
integrated circuits' ("ASICs") and 'system on chips' ("SoCs") for leading
global technology brands, is pleased to announce its results for the half year
to 30 June 2023 (the 'Period' or 'H1 2023').
Financial Highlights
· Revenue up 17% to £9.3 million (H1 22: £8.0 million)
· ASIC revenue growth of 50% YoY to £8.1 million, representing 87%
of total revenues (H1 22: £5.4m, 68%)
· Adjusted EBITDA increased 33% to £0.4 million (H1 22: £0.3
million)
· Loss Before Tax of £2.0 million (H1 22: £1.5 million)
· Cash balance at period end £0.1 million (H1 22: £(0.7) million)
Operational Highlights
· Strong growth in ASIC revenues with first ASIC devices delivered
to lead customers across high growth megatrend sectors including AI,
smartphones and home networks
· Three ASIC chip designs taped out, delivering initial NRE
(non-recurring engineering) revenues
· Good progress made on the Group's engagement for a Tier 1 OEM
Automotive customer with key milestones being achieved
· Investment in US sales organisation, increasing the headcount and
opening an office in Santa Clara
· Appointment of new sales partner in US
· Signed multi-year partnership extension with Synopsys, the
American electronic design automation company, for its state-of-the-art EDA
tools
· Additional software contract extension was also signed with
blue-chip technology giant, Siemens, in April 2023 for the continued use of
its Electronic Design Automation (EDA) software
Post Period End Highlights
· Appointment of industry veteran Anthony Fernandez as Chief
Operating Officer
· Appointment of Oliver Jones as Vice-President of Strategic Sales
in US
· Appointment of highly experienced Nick Stone as Interim Chief
Financial Officer
· Silicon prototypes delivered for three ASIC projects
Outlook
· Continued momentum in the US with 15 potential customers in the
pipeline, representing substantial design and prototype revenues over the next
few years
· The Board remains confident that the Company will deliver
performance in the FY23 full year in line with current market expectations as
revised on 31 August 2023
· Notwithstanding H2 2023 delays and the consequential impact on
previously anticipated ramp up as we enter FY 2024, increasing traction in the
important US market, strong sales pipeline and positive ongoing relationships
with our existing ASIC customers provides the Board with continued confidence
in the Group's medium-term targets.
Graham Curren, Chief Executive Officer of Sondrel, commented:
"I am pleased with our performance in the first half, notwithstanding
increasingly challenging market conditions during the period. Significant
progress was achieved in key areas that will grow our business in the medium
term, namely the successful tapeouts of three designs, progress with our Tier
1 OEM automotive customer, real progress in the United States and increased
customer production forecasts for our live ASIC projects in Europe.
"Although the customer delays will moderate growth in the near-term, we are
focused on delivering in line with our growth strategy and remain well
positioned to meet our medium-term objective of delivering revenues in excess
of £100m per annum."
Analyst presentation
There will be an in-person presentation for analysts at 9:30 a.m. (BST)
today. If you would like to join, please contact Buchanan at
sondrel@buchanan.uk.com (mailto:sondrel@buchanan.uk.com)
This announcement contains inside information as stipulated under the UK
version of the Market Abuse Regulation No 596/2014 which is part of English
Law by virtue of the European (Withdrawal) Act 2018, as amended. On
publication of this announcement via a Regulatory Information Service, this
information is considered to be in the public domain.
- Ends -
FOR FURTHER ENQUIRIES:
Sondrel (Holdings) plc Via Buchanan
Graham Curren, CEO Tel: +44 (0) 20 7466 5000
Nick Stone, Interim CFO
Cavendish Securities plc Tel: +44 (0)20 7220 0500
Ben Jeynes / Katy Birkin / George Lawson - Corporate Finance
Michael Johnson - Sales
Buchanan Communications Tel: +44 (0) 20 7466 5000
Chris Lane sondrel@buchanan.uk.com (mailto:sondrel@buchanan.uk.com)
Stephanie Whitmore
Jack Devoy
Abby Gilchrist
About Sondrel
Sondrel is a UK-based fabless semiconductor company specialising in high end,
complex digital Application Specific Integrated Circuits (ASICs) and System on
Chips (SoCs). It provides a full turnkey service in the design, prototyping,
testing, packaging and production of ASICs and SoCs.
The Company is one of only a few companies capable of designing and supplying
the higher-spec chips built on the most advanced semiconductor technologies,
selling into a range of hyper growth end markets such as high-performance
computing, automotive, artificial intelligence, VR/AR, video analytics, image
processing, mobile networking and data centres. Sondrel designs have enabled
products by leading technology brands including Apple (iPhone), Sony
(PlayStation), Meta's (Oculus), Samsung, Google and Sony smartphones, JVC
(prosumer camcorders), Tesla and Mercedes-Benz cars.
Sondrel is well-established, with a 20-year track record of successful
delivery, supported by long standing ecosystem partnerships including Arm,
TSMC and Samsung. Headquartered in the UK, Sondrel has a global presence with
offices in UK, USA, China, India and Morocco.
For more information please visit: ir.sondrel.com
(http://www.ir.sondrel.com/) .
Chairman and CEO's Statement
Introduction and overview
The market conditions have become increasingly challenging for the Company, as
Sondrel has had to manage the combined impacts of an unexpectedly long
downturn in the semiconductor market, a collapse in private equity and venture
capital funding for semiconductor companies, continuing geopolitical
uncertainty, and delays in customer investments. Despite these near-term
challenges, the fundamental strengths of the Group's business model remain
unchanged. We were pleased with Sondrel's performance in the first half year
of the year and to have made substantial progress in the key areas which will
grow our business in the medium term.
Whilst not having a substantial impact on the first half year results, the
Company has already announced that the challenges mentioned above will impact
our H2 2023 revenue, profitability and cash position. Sondrel's flexible
business model, and strong supplier partnerships. are allowing us to take the
decisions needed to manage the situation as we continue to hit multiple key
milestones and ensure that we will be well positioned as we move into 2024.
The Board remains confident that the Company will deliver performance in the
FY23 full year in line with current market expectations as revised on 31
August 2023.
Looking in more detail at H1 2023, the Group delivered ASIC projects to plan
and completed the second milestone of a material ASIC engagement for a Tier 1
automotive customer, generating milestone payments. As a result of this and
other work, H1 2023 unaudited revenues rose to £9.3m, representing a 17%
increase from H1 2022, with an adjusted EBITDA of £0.4m during the period (H1
2022: £0.1m) 1 (#_ftn1) .
Sondrel has made some excellent new appointments to the management and silicon
operations teams, we have established an office in Santa Clara, California, in
the heart of Silicon Valley, and we have delivered our first ASIC devices to
our lead customers (who themselves are increasingly optimistic about their end
market production opportunities). In particular, our sales penetration into
the US is progressing well as we start to develop this large market
opportunity.
To support the Group's future growth in line with its capability to fulfil new
orders for its full-service ASIC offering of design and supply, we announced
the appointment of Anthony Fernandez as Chief Operating Officer post period
end in July 2023. Anthony has joined us from Refeyn where he was CEO and,
before that, was VP of Asia Pacific for Teledyne Technologies, the US-based
provider of sophisticated digital imaging products and software,
instrumentation, aerospace and defence electronics, and engineered systems.
The semiconductor market overall is now moving into recovery with SEMI
forecasting 10% quarter-on-quarter growth in Q3 2023. 2 (#_ftn2) The ASIC
segment that the Group operates in continues to grow as customers seek
competitive advantage by including customised ASIC devices that enable
differentiation of their end products while managing unit costs and power
consumption, and addressing fast growth technology megatrends including AI,
Automotive, 8k video, Smart Home devices, Wearables and next gen. Consumer
Devices.
Turnkey ASIC business model
Sondrel has successfully transitioned its business model to provide a full
turnkey ASIC design and supply service for its customers. This includes
contracting for the manufacture, testing and production of ASICs as well as
previously offered design and production consulting. Although the testing,
packaging, and other capital-intensive engineering functions necessary for
production of an ASIC will continue to be outsourced to third parties, Sondrel
will provide the product engineering and manage the complex manufacturing
process by engaging third parties directly.
1 Adjusted EBITDA is EBITDA before deduction of exceptional items (see note
9 for reconciliation)
2
( )(https://www.semi.org/en/news-media-press-releases/semi-press-releases/global-semiconductor-industry-on-track-for-2024-recovery-but-near-term-headwinds-remain-semi-reports
(https://www.semi.org/en/news-media-press-releases/semi-press-releases/global-semiconductor-industry-on-track-for-2024-recovery-but-near-term-headwinds-remain-semi-reports)
)
Clear progress has been made in the first half of 2023 with three designs
taping out in the period delivering the initial NRE (non-recurring
engineering) revenues. Previously, as the design is complete at this stage,
this is where Sondrel's engagement with the customer would have ended, but the
Group now stands to benefit from the significant revenues associated with the
production of the ASIC. Further details on the three tapeouts completed in the
period can be found in the Customer Activity section of this report.
The full turnkey offering continues to be attractive to both potential and
existing customers and the pipeline of opportunities remains strong, with the
customers with whom we are engaged being increasingly optimistic about their
sales prospects, and their volume forecasts are strengthening as we get closer
to the start of production.
Continued progress in the US
The Company is pleased to report that good progress has been made in the first
half in expanding the Group's presence in the US with the opening of an office
in Santa Clara, California and the hiring of several key personnel across both
sales and engineering. With one customer already in the US, momentum has
continued to build both during the Period and post the Period end, and the
Group now has 15 potential customers in the pipeline, representing substantial
design and prototype revenues over the next few years, with the potential for
significant production revenues thereafter.
With the passing of the CHIPS Act in the US and subsequent push towards
near-shoring, Sondrel's position as the only advanced ASIC company able to
offer an independent and localised supply chain to Western customers
represents a significant opportunity for the Group and we look forward to
updating on further positive progress in the US market.
Strong relationships with key industry participants
Sondrel has established highly valuable relationships with many participants
in the semiconductor industry and has continued to build upon these in the
period.
In March 2023, the Group signed a multi-year partnership extension with
Synopsys, the American electronic design automation company, for its
state-of-the-art EDA tools. These tools are vital to the process of designing
ASICs down to 3 nanometres and the partnership extension will allow Sondrel to
continue to provide its leading design services to customers.
An additional software contract extension was also signed with Siemens in
April 2023 for the continued use of its Electronic Design Automation (EDA)
software. EDA software is also vital to designing the ultracomplex chips that
form the core of Sondrel's offering to customers and it was very pleasing to
sign this multi-year contract extension.
Sondrel's key strengths and advantages
We believe that Sondrel has several key strengths and advantages that are
important to the success of the business:
1. Sondrel has already delivered designs at 5 nanometres and is now
working on 3 nanometre process nodes. This level of engineering capability is
limited to Sondrel and a small number of Asian direct competitors and
positions Sondrel to benefit from the megatrends driving the increasing use of
ASICs globally and the production of system solutions utilising increasingly
complex design geometries.
2. Sondrel provides leading edge ASIC designs to a global customer
base in advanced end markets with significant structural growth drivers
including high performance computing, automotive, artificial intelligence,
VR/AR, video analytics, image processing mobile networking and data centres.
3. Sondrel has a team of over 140 engineers that are located in design
centres globally. This enables Sondrel to be one of only a handful of
companies worldwide with the scale, capability and strength of industry
relationships to deliver projects in leading technologies.
4. From concept to delivered ASICs, Sondrel is able to act as a single
counterparty to its customers as a provider of a full turnkey service in the
design, prototyping, testing, packaging and production of ASICs. Sondrel is
able to provide customers with the ability to de-risk the design of ASICs
through the use of Sondrel's Architecting the Future intellectual property.
5. Sondrel has a clear organic growth strategy focused on increasing
its engineering headcount and investing in IP development to further enhance
its competitive position, accelerating its growth in key geographies including
the US and Europe.
6. Sondrel has a proven and experienced founder-led management team.
Customer Activity
The Group continues to have a strong pipeline of revenue opportunities
providing good visibility of future growth. Customers cover multiple growth
markets, including major industrial OEMs, automotive suppliers, AI and
satellite communication services.
The Group made good progress with customer projects in the first half of 2023,
with three designs taping out in the period. These three designs, for a
provider of Edge AI Hardware Accelerator solutions, a controller for a
smartphone camera and a provider of home network solutions, highlight the
strength of Sondrel's design capabilities and attraction of the full turnkey
offering, as customers can use Sondrel as a single touchpoint throughout the
whole process, providing security in a complex market. In addition to these
three projects, good progress has been made on the Group's engagement for a
Tier 1 OEM Automotive customer with key milestones being achieved during the
year to date.
Sondrel continues to deliver for its customers and the completion of these
three tapeouts in the period highlights the high quality of work that Sondrel
does for its customers and the Group is already having positive discussions
with customers about designing their next generation chips.
Summary and Outlook
As the year has progressed conditions have proven to be increasingly
challenging. However, H1 2023 was a period of significant progress, achieving
multiple material project milestones as well as operational expansion that
will, combined, deliver profitable and sustainable growth for shareholders.
The Company is taking the steps necessary to manage the current difficulties
and continues to develop a strong customer pipeline in multiple end markets
and build a reputation as a premium designer and supplier capable of
fulfilling complex ASIC turnkey solutions across the globe.
Notwithstanding H2 2023 delays and the consequential impact on previously
anticipated ramp up as we enter FY24, our increasing traction in the important
US market, strong sales pipeline and positive ongoing relationships with our
existing ASIC customers provides us with continued confidence in our
medium-term targets and we will ensure that we keep updating shareholders as
we make progress towards this goal.
The Group is also pleased to announce alongside results today the successful
delivery of silicon prototypes for three ASIC projects. The three projects,
detailed in the Customer Activity section of this statement, will now proceed
to validation and qualification and remain on track for release to production.
Investing for growth has delivered promising results, evidenced by particular
progress in the important US market. The onboarding of an experienced sales
and engineering team in Santa Clara, California, has been swift, and a
sizeable sales pipeline is now in place. In addition to this, customer
production volume forecasts for the Group's live ASIC projects in Europe have
increased, further endorsing the Company's strategy.
Nigel Vaughan and Graham Curren
Chairman and Chief Executive Officer
21(st) September 2023
( )
Financial Highlights
· Revenue growth of +17% to £9.3 million (2022: £8.0 million)
· ASIC revenue growth of 50% to £8.1 million (2022: £5.4 million)
· Adjusted EBITDA increased +150% to £0.4million (2022: £0.3
million) 3 (#_ftn3)
· Cash balance decreased -80% £0.1 million (2022: £0.7 million)
· Debt repaid in full £nil (2022: £2.3 million)
Operational Highlights
· Strong growth in ASIC revenues.
· Investment in US sales organisation, increasing the headcount and
opening of an office in Santa Clara.
· Appointment of new sales partner in US.
· Increased US pipeline exceeding $100m.
· Trading in line with management expectations.
Post period end events
· Appointment of Chief Operations Officer.
· Appointment of Vice President of Sales.
· Appointment of new CFO.
Financial Review
Statement of Comprehensive Income
The Group reported revenue for the six-month period of £9.3 million, an
increase of 17% over the £8.0 million reported in 2022. ASIC revenues grew by
50% to £8.1 million as major projects moved into the prototyping phase in
2023 in readiness for production to start in Q4 2023/Q1 2024.
As expected, the gross profit was £1.5 million lower at £1.2 million (2022
H1 £2.4 million) driven by the transition of three projects into the lower
margin prototype phase compared to the same period last year when all major
projects were in the engineering design phase.
Administrative expenses
Following the reclassification of research and development expenditure within
administrative expenses there is a decrease in the period to £3.6 million
from £4.0 million in H1 2022 due to the exceptional costs of £0.5 million
and capitalisation of research and development costs of £0.2 million.
Removing the items above the investment in the US sales, silicon operations
departments and the Board of Directors has increased employment costs 21% to
£1.7 million (H1 2022 £1.4 million). Legal and professional costs increased
95% to £0.3m (H1 2022 £0.1 million) due to the additional costs of public
company governance.
Other operating income increased £1.1 million to £1.5 million (H1 2022 £0.3
million) due to the higher cost of prototype research and development leading
to an increased claim under the large company research and development
expenditure credit scheme (RDEC).
H1 2023 generated a positive adjusted EBITDA (defined as EBITDA excluding
exceptional items) of £0.3 million, an increase of 150% (H1 2022: £0.1
million) at a margin of 5% (2022: 3.7%).
Exceptional costs of £0.5 million (2022: £0.1 million) related to the
downsizing of the China operation to focus investment on the US market.
3 Adjusted EBITDA is EBITDA before deduction of exceptional items (see note 9
for reconciliation)
Operating loss increased by £0.3 million to £1.5 million (2022: loss of
£1.2 million). The decrease in operating profit against the comparative
period reflects the exceptional item of £0.5 million. Removing this item the
operating loss has improved by £0.2 million due to the improved level of
operating income.
The Group reported a loss after tax of £1.8 million (2022: loss of £1.6
million). Net finance costs increased to £0.4 million (2022: £0.3 million)
comprising of the interest associated with the additional software acquisition
in December 2022.
Statement of Financial Position
Total current assets have decreased by £1.9 million from 31 December 2022 to
£13.9 million due to the reduction in inventories and cash, £5.4 million,
offset by the increase in working capital and other receivables of £3.5
million.
Inventory at 31 December 2022 of £1 million relating to the prototype mask
set manufacture was released on successful completion in Q1 2023.
Trade and other receivables increased to £13.5 million (FY 2022: £10.2
million) due to the increase in contract receivables of £1.4 million to £7.4
million and corporation tax receivable £1.7 million to £2.3 million under
the RDEC scheme (FY 2022: £6.0 million and £0.6 million respectively)
demonstrating the increased levels of engineering and research and
development.
Trade and other payables increased to £16.9 million (FY 2022: £15.0
million)) driven by the increased cost of prototype activity in H1, offset by
a reduction in accrued contract liabilities.
Cash flow
The Group's cash position decreased from £4.5 million on 31 December 2022 to
£0.1 million on 30 June 2023.
Operating cash outflow before movements in working capital of £0.04 million
(H1 2022: £nil);
· Less a negative working capital flux of £1.9 million (H1 2022:
positive flux of £3.6 million) driven by the increase in work in progress and
reduction in supplier payables;
· Less cash used in investing activities of £1.1 million for the
software capital expenditure (H1 2022: £2.5 million);
· Less cash outflow from repayment of the remaining debt £0.7
million and interest against the software asset and leasing obligations of
£0.6 million (H1 2022: £0.4 million).
Receivables increased by 3.4 million due the amalgamation of project
milestones for receipts, which were not triggered until after the period end.
One milestone receipt of £2.5 million was received post the period end.
Unaudited interim condensed consolidated statement of comprehensive income
For the six months ended 30 June
Six months ended 30 June 2023 Six months ended 30 June 2022
Note £ £
Revenue 5 9,334,652 7,951,648
Cost of sales (8,173,815) (5,555,718)
Gross profit 1,160,837 2,395,930
Exceptional items 6 (478,804) (52,446)
Administrative expenses (3,555,361) (3,804,291)
Other operating income 7 1,350,375 261,182
Operating loss (1,522,953) (1,199,625)
Finance income 221 3
Finance expense (427,932) (318,381)
Loss before taxation (1,950,664) (1,518,003)
Tax credit/(expense) 8 107,993 (35,888)
Loss for the period attributable to the owners of the parent company (1,842,671) (1,553,891)
Earnings per share attributable to the owners of the parent company 10
Basic (0.02) (0.03)
Diluted (0.02) (0.03)
All activity in both the current and the prior periods relates to continuing
operations.
The notes on pages 12 to 23 form part of these unaudited interim condensed
consolidated financial statements
Unaudited interim condensed consolidated statement of comprehensive income
For the six months ended 30 June
Six months ended 30 June 2023 Six months ended 30 June 2022
£ £
Loss for the period (1,842,671) (1,553,891)
Other comprehensive income/(expense):
Exchange differences on translation of foreign operations 16,634 (16,518)
Total comprehensive expense for the period (1,826,037) (1,570,409)
The notes on pages 12 to 23 form part of these unaudited interim condensed
consolidated financial statements.
Unaudited interim condensed consolidated statement of financial position
As at 30 June 2023
(Unaudited) (Audited)
30 June 31 December 2022
2023
£ £
Assets Notes
Non-current assets
Property, plant and equipment 303,147 293,914
Right-of-use assets 548,971 637,100
Intangible assets 11 13,446,882 14,547,870
Deferred tax assets 3,236,418 3,199,744
Total non-current assets 17,535,418 18,678,628
Current assets
Inventories - 1,044,069
Trade and other receivables 12 13,526,788 10,197,124
Cash and cash equivalents 132,227 4,449,812
Income tax receivable 273,580 149,853
Total current assets 13,932,595 15,840,858
Total assets 31,468,013 34,519,486
Equity and liabilities
Equity
Share capital 14 87,462 87,462
Share premium 18,286,562 18,286,562
Foreign currency translation reserve (38,962) (55,597)
Share-based payment reserve 812,676 812,676
Retained earnings (12,490,284) (10,647,613)
Total equity 6,657,454 8,483,490
Non-current liabilities
Other payables 13 7,589,110 9,984,228
Borrowings - 700,000
Lease liabilities 227,675 307,944
Deferred tax liabilities 88,298 74,933
Total non-current liabilities 7,905,083 11,067,105
Current liabilities
Trade and other payables 13 16,629,559 14,677,767
Short-term lease liabilities 275,917 291,124
Total current liabilities 16,905,476 14,968,891
Total liabilities 24,810,559 26,035,996
Total equity and liabilities 31,468,013 34,519,486
G S Curren
Director
The notes on pages 12 to 23 form part of these unaudited interim condensed
consolidated financial statements
Unaudited interim condensed consolidated statement of changes in equity
For the six months ended 30 June
Share capital Share premium Foreign SBP reserve Retained earnings Total
Currency
translation
reserve
For the six month period ended 30 June 2023
£ £ £ £ £ £
As at 1 January 2023 87,462 18,286,562 (55,597) 812,676 (10,647,613) 8,483,490
Loss for the period - - - - (1,842,671) (1,842,671)
Currency translation differences - - 16,634 - - 16,634
Total other comprehensive income - - 16,634 - - 16,634
Total comprehensive income - - 16,634 - (1,842,671) (1,826,037)
Transactions with owners in their capacity as owners:
Share based payment charge - - - - - -
As at 30 June 2023 87,462 18,286,562 (38,962) 812,676 (12,490,284) 6,657,454
For the year ended 31 December 2022
As at 1 January 2022 8,345 122,431 (16,518) 1,236,397 (7,927,194) (6,576,539)
Loss for the period - - - (3,191,901) (3,191,901)
Currency translation differences - - (39,079) - - (39,079)
Total other comprehensive income - - (39,079) - - (39,079)
Total comprehensive income - - (39,079) - (3,191,901) (3,230,980)
Transactions with owners in their capacity as owners:
Share issues 36,364 18,164,131 - - - 18,200,495
Exercise of share options 1,029 - - (513,206) 513,206 1,029
Bonus issues 41,724 - - - (41,724) -
Share based payment charge - - - 89,485 - 89,485
As at 31 December 2022 87,462 18,286,562 (55,597) 812,676 (10,647,613) 8,483,490
For the six month period ended 30 June 2022
As at 1 January 2022 8,345 122,431 (16,518) 1,236,397 (7,927,194) (6,576,539)
Loss for the period - - - (1,553,891) (1,553,891)
Currency translation differences - - (16,518) - - (16,518)
Total other comprehensive income - - (16,518) - - (16,518)
Total comprehensive income - - (16,518) - (1,553,891) (1,570,409)
Transactions with owners in their capacity as owners:
Share based payment charge - - - - -
As at 30 June 2022 8,345 122,431 (33,036) 1,236,397 (9,4981,085) (8,146,948)
The notes on pages 12 to 23 form part of these unaudited interim condensed
consolidated financial statements.
Unaudited interim condensed consolidated statement of cash flows
For the six months ended 30 June
Six months ended 30 June 2023 Six months ended 30 June 2022
£ £
Cash flows from operating activities:
Loss for the financial period (1,842,671) (1,553,891)
Adjustments for:
Amortisation of intangible assets 1,273,975 1,272,994
Depreciation of property, plant and equipment 51,874 47,176
Depreciation of right-of-use assets 156,619 125,864
Loss on disposal of tangible assets 745 -
Interest expense 427,932 318,381
Interest income (221) (3)
Taxation charge/(credit) (107,993) 35,888
Working capital adjustments:
Increase in receivables (3,368,707) (2,734,617)
Increase in payables 475,628 6,248,371
Decrease in inventories 1,044,069 -
Corporation tax paid - (80,476)
Unrealised foreign currency losses 19,817 (566)
Net cash generated from / (used in) operating activities (1,868,933) 3,679,121
Cash flows from investing activities
Purchase of intangible fixed assets (1,073,276) (2,281,172)
Purchase of property, plant and equipment (59,139) (170,566)
Interest received 221 3
Proceeds from sale of tangible fixed assets 760 -
Net cash used in investing activities (1,131,434) (2,451,735)
Cash flows from financing activities
Repayment of bank loans (700,000) (175,000)
Interest paid (416,279) (161,230)
Interest paid on lease liabilities (28,440) (9,278)
Principal element of lease payments (172,499) (85,089)
Net cash flows used in financing activities (1,317,218) (430,597)
Net increase / (decrease) in cash and cash equivalents (4,317,585) 796,789
Cash and cash equivalents at beginning of the period 4,449,812 (1,243,719)
Cash and cash equivalents at end of the period 132,227 (446,930)
The notes on pages 12 to 23 form part of these unaudited interim condensed
consolidated financial statements.
1. Corporate information
These unaudited interim condensed consolidated financial statements of Sondrel
(Holdings) Plc ("the Company") and its subsidiaries (collectively, the
"Group") for the six months ended 30 June 2023 were authorised for issue in
accordance with a resolution of the directors on 20(th) September 2023
Sondrel (Holdings) Plc (the "Company") is a public limited company, limited by
shares, which is listed on the Alternative Investment Market (AIM) of the
London Stock Exchange. The Company is incorporated, domiciled and registered
in England and Wales, with registration number 07275279. The address of its
registered office is Sondrel House, Theale Lakes Business Park, Moulden Way,
Sulhamstead, Reading, RG7 4GB.
These unaudited financial statements incorporate the financial information of
the Company and its subsidiaries (together referred to as the "Group").
The Group's principal activity is the execution of system-on-chip IC designs,
and associated engineering services, with particular focus on AI, video,
automotive and IoT related applications. The Company's principal activity is
to act as an investment holding company that provides management services to
its subsidiaries.
2. Summary of Significant Accounting Policies
2.1. Basis of preparation
The unaudited interim financial statements in this report has been prepared
using accounting policies consistent with International Financial Reporting
Standards ("IFRS") as adopted by the UK. This is consistent with the financial
statements for the year ended 31st December 2022. Financial information
contained in this document does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006 ("the Act"). The statutory
accounts for the year ended 31 December 2022 have been filed with the
Registrar of Companies. The report of the auditors on those statutory accounts
was unqualified, did not draw attention to any matters by way of emphasis and
did not contain a statement under section 498(2) or (3) of the Act. The group
has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing the
interim financial information.
The unaudited interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's annual
consolidated financial statements as at 31 December 2022. These unaudited
interim financial statements do however present selected explanatory notes to
explain events and transactions that are significant to an understanding of
the changes in the Group's financial position and performance since 31
December 2022.
Since the 31 December 2022 results were published, management has made a
presentational change to re-allocate R&D costs from cost of sales to
overheads. The directors believe this permits the reader a better
understanding of the true direct costs of generating revenues. Research and
Development activity is not directly aligned to sales being made in the
period, and therefore the Directors believe including these within cost of
sales does not present a fair reflection of the true margin made during the
period. This allocation of costs has been applied throughout the current
period, and will be adopted by the Group going forward. The figures relating
to the six month period to June 2022 also reflect the revised presentation.
2.2. Going Concern
Notwithstanding the loss from continuing operations for the six month period
to June 2023, the directors have prepared the unaudited interim financial
information under the going concern basis.
As part of normal business practice, the Group prepares monthly detailed
financial forecasts which incorporate year-to-date performance and scenario
planning. The Directors have considered the cashflow requirements of the Group
and concluded will have sufficient funds to meet its financial liabilities as
and when they fall due, for a period of at least 12 months from the date of
this report.
2.3. Summary of significant accounting policies
(a) Revenue from contracts with customers
The Group is in the business of providing system-on-chip and associated
engineering services. Revenue from contracts with customers is recognised
when, in accordance with IFRS 15, control of the goods or services are
transferred to the customer at an amount that reflects the consideration to
which the Group expects to be entitled in exchange for those goods or
services.
Project revenue
The Group provides services to customers in project arrangements, covering the
Design phase, New Product Integration ("NPI") phase and Production phase.
There are situations where contracts with customers for these phases are
entered into simultaneously. Where this is the case, and the contracts are
negotiated as a package with a single commercial objective, they are accounted
for as a single contract.
In order to identify the performance obligations in the contract, the
Directors assess the services provided in the contracts and whether they are
capable of being distinct and distinct in the context of the contract. The
Group has identified that the Design service, NPI service and Production
service are separate performance obligations.
Where the contracts with customers contain more than one performance
obligation, any discount provided to the customer in the contract is allocated
on a proportionate basis over all performance obligations within the contract.
When project contracts contain only one performance obligation, and are not
combined with other performance obligations, the contracts with customers are
for fixed price consideration with no variable components.
The Group does not enter into any arrangements with customers which include a
significant financing component.
The service provided to customers does not create an asset with an alternative
use to the Group and the Group has an enforceable right to payment for
performance completed at contracted rates which include cost plus a reasonable
profit margin. Therefore, the Group recognises revenue from these performance
obligations over time.
In order to determine a measure of progress of satisfaction of the Design and
NPI performance obligations, the Group uses the input method based on time
incurred, as this best reflects the progress of satisfaction of the
performance obligations and the delivery of the output to the customer.
Contract variations are treated as modifications, as there is only one
performance obligation to the design phase of a contract, any variations to
scope cannot be distinct and are recognised on a cumulative catch-up basis.
Consultancy revenue
The Group provides consultants to provide services to customers. Each of these
consultancy arrangements are separate performance obligations. The customer
simultaneously receives and consumes the benefits provided by the Group's
performance and so the Group recognises revenue for this performance
obligation over time.
The majority of contracts with customers are for fixed price consideration
with no variable components. Certain contracts contain fixed rebates payable
to the customer for which no distinct service is provided to the Group. These
rebates constitute a form of variable consideration and are recognised as a
reduction to the revenue.
The Group had one arrangement with a customer which involved the withholding
of a retention until completion of the project. The arrangement provided the
customer with protection for the Group failing to adequately complete
obligations under the contract. Therefore, this is not accounted for as a
significant financing component. As this is a contractual payment term,
revenue is recognised in full as the Group performs, with a contract asset
recognised for the retention element. In order to determine a measure of
progress of satisfaction of the performance obligation, the Group uses the
input method based on time incurred, as this best reflects the progress of
satisfaction of the performance obligation.
Warranties
The Group provides warranties to customers that ensure that the products
comply with agreed-upon-specifications. The warranty arrangements are not
recognised as separate performance obligations because they cannot be
purchased separately and do not provide the customer with a service in
addition to the assurance that the product complies with agreed-upon
specifications. A provision is recognised for warranty claims when they meet
the recognition criteria.
Contract balances
Contract assets / receivables
A contract asset is initially recognised for revenue earned from services in
advance of an invoice being issued where the Group does not have an
enforceable right for payment for work performed. Where the Group does have an
enforceable right for payment for work performed, unbilled revenue is
recognised as other contract receivables. Upon the issuance of an invoice, the
amount recognised is reclassified to trade receivables.
Contract cost - costs to obtain a contract
Costs to obtain a contract relate to sales commission paid which would not be
payable if the contract has not been obtained. This cost is recognised as an
asset and amortised over the duration of the contract. Where the amortisation
period of the asset would be one year or less, the cost is recognised as an
expense when incurred.
Contract cost - costs to fulfil a contract
Costs to fulfil a contract mainly relate to direct labour costs and software
tools which are expensed as incurred. The Group does not incur costs to fulfil
their obligations under a contract once it is obtained, but before
transferring goods or services to the customer and therefore no contract cost
asset is recognised.
Contract liabilities
A contract liability is recognised if a payment is received or a payment is
due (whichever is earlier) from a customer before the Group transfers the
related services. Contract liabilities are recognised as revenue when the
Group performs under the contract.
(b) Lease employee benefits
Short-term employee benefits including holiday pay and annual bonuses are
accrued as services are rendered.
Contributions to defined contribution pension schemes are charged to profit or
loss as they become payable in accordance with the rules of the scheme.
Differences between contributions payable in the year and those actually paid
are shown as either accruals or other receivables in the statement of
financial position.
(c) Share-based payments
Employees (including senior executives) of the Group receive remuneration in
the form of share-based payments, whereby employees render services as
consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the
date when the grant is made using an appropriate valuation model. That cost is
recognised as an expense, together with a corresponding increase in equity,
over the period in which the service and, where applicable, the performance
conditions are fulfilled (the vesting period). The cumulative expense
recognised for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has expired and
the Group's best estimate of the number of equity instruments that will
ultimately vest.
Where an award is cancelled by the entity or by the counterparty, any
remaining element of the fair value of the award is expensed immediately
through profit or loss.
(d) Interest
Interest income and expense is recognised using the effective interest rate
basis.
(e) Taxation
The tax expense for the period comprises current and deferred tax. Tax is
recognised in profit or loss, except if it arises from transactions or events
that are recognised in other comprehensive income or directly in equity. In
this case, the tax is recognised in other comprehensive income or directly in
equity respectively.
Current tax
Current tax is based on the taxable profit for the year and is calculated
using the tax rates in force or substantively enacted at the reporting date.
Taxable profit differs from accounting profit either because some income and
expenses are never taxable or deductible, or deductible in other years.
Deferred tax
Deferred tax is recognised in respect of all temporary differences between the
carrying value of assets and liabilities in the consolidated statement of
financial position and the corresponding tax base, with the exception of
temporary differences arising from goodwill or from the initial recognition
(other than in a business combination) of assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively enacted by the
reporting date.
The measurement of deferred tax assets and liabilities reflect the tax
consequences that would follow the manner in which the Group expects, at the
end of the reporting period, to recover or settle the carrying amount of its
asset and liabilities.
Deferred tax assets are recognised only to the extent that the Group considers
that it is probable (i.e. more likely than not) that there will be sufficient
taxable profits available for the asset to be utilised within the same tax
jurisdiction. Deferred tax assets and liabilities are offset only when there
is a legally enforceable right to offset current tax assets against current
tax liabilities, they relate to the same tax authority and the Group's
intention is to settle the amounts on a net basis.
Tax credits
The Group makes claims for research and development tax relief in the UK under
both the Research and Development Expenditure Credit (RDEC) scheme and the
small or medium-sized enterprise (SME) research and development tax relief
scheme. Claims under the RDEC scheme are recognised in other operating
income. Enhanced expenditure relief under the SME scheme is recognised
within the taxation charge / credit.
Research and development tax credits are recognised in the period in which the
costs are incurred, and the claim submitted on the basis of an established
record of successful research and development tax credit claims for the work
undertaken by the employees of the Group.
(f) Earnings per share and dividends
Basic EPS
Basic earnings per share is calculated on the Group's profit or loss after
taxation attributable to the parent entity and on the basis of weighted
average of issued and fully paid ordinary shares at the end of the year.
Diluted EPS
Diluted EPS is calculated by dividing the profit or loss after taxation
attributable to the parent entity by the weighted average number of ordinary
shares outstanding during the year plus the weighted average number of
ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares (after adjusting for outstanding share awards
arising from the share-based payment scheme) into ordinary shares.
(g) Property, plant and equipment
Property, plant and equipment is stated at cost, less accumulated depreciation
and any accumulated impairment losses. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset to its
working condition for its intended use.
Depreciation is included within administrative expenses and is calculated on a
straight-line basis over the estimated useful lives of the assets, as follows:
Office equipment - 3 - 10 years straight line
Additions to property, plant and equipment are depreciated from the date the
asset becomes available for intended use.
An item of property, plant and equipment is derecognised upon disposal (i.e.,
at the date the recipient obtains control) or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in profit
or loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property,
plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate.
(h) Intangible assets
Intangible assets are initially recognised at cost and subsequently carried at
cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite lives are amortised over the useful economic
life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are reviewed at least
at the end of each reporting period. Changes in the expected useful life or
the expected pattern of consumption of future economic benefits embodied in
the asset are considered to modify the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates.
An intangible asset is derecognised upon disposal (i.e. at the date the
recipient obtains control) or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising upon derecognition of the
asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of profit or loss.
(i) Research and development
Research expenditure relates primarily to new internal process improvements
that will bring tangible benefits to future product development. Expenditure
on the research phase of projects is recognised as an expense as incurred.
Costs that are directly attributable to a project's development phase are
recognised as intangible assets, provided they meet the following recognition
requirements:
· the development costs can be measured reliably
· the project is technically and commercially feasible
· the Group intends to and has sufficient resources to complete the
project
· the Group has the ability to use or sell the developed software
· the developed software will generate probable future economic
benefits
Development costs not meeting these criteria for capitalisation are expensed
as incurred.
The key judgement areas are the ability to measure the future economic
benefits reliably and determining the period over which these benefits are
delivered. The Group measures each research and development project on its own
merits.
The main costs attributed to development costs are that of payroll, third
party contractors and third party software.
Under IAS 38, at the point where activities no longer relate to development
but to maintenance, capitalisation is discontinued.
Amortisation is included within cost of sales and is recognised as follows:
Software licences - on a usage basis over the length of licence agreement. Licence agreements have
lives of between 1 and 3 years.
Development costs - not amortised until brought into use. The useful life is considered to be 10
years.
(j) Impairment of non-financial assets
Assets that are subject to depreciation or amortisation are assessed at each
reporting date to determine whether there is any indication that the assets
are impaired. Where there is any indication that an asset may be impaired, the
carrying value of the asset is tested for impairment. An impairment loss is
recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset's fair
value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows. Non-financial assets that have been
previously impaired are reviewed at each reporting date to assess whether
there is any indication that the impairment losses recognised in prior periods
may no longer exist or may have decreased.
(k) Government grants
Government grants are recognised where there is reasonable assurance that the
grant will be received and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised as income on a
systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. When the grant relates to an asset, it
is recognised as income in equal amounts over the expected useful life of the
related asset.
(l) Inventories
Inventories relate to work in progress and are valued at the lower of cost and
net realisable value. Costs incurred relate to direct materials.
(m) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits.
Bank overdrafts are included in cash and cash equivalents for the purposes of
presentation in the statement of cash flows because they are an integral part
of the Group's cash management. Bank overdrafts are included in trade and
other payables in the statement of financial position.
(n) Financial instruments
Financial assets
Financial assets comprise trade and other receivables and cash and cash
equivalents.
Trade and other receivables are initially measured at transaction price, and
subsequently at their amortised cost subject to any impairment in accordance
with IFRS 9.
Impairment
For trade receivables, contract receivables and contract assets, the Group
applies a simplified approach in calculating expected credit losses (ECLs).
Therefore, the Group recognises a loss allowance based on lifetime ECLs at
each reporting date. The Group has established a provision matrix that is
based on its historical credit loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment. The Group
considers a financial asset in default when contractual payments are 60 days
past due.
Financial liabilities
Financial liabilities comprise trade and other payables and loans and
borrowings and are recognised initially at fair value net of directly
attributable transaction costs (if any), and subsequently at amortised cost.
Modification of financial liabilities
Where there is a modification to a financial liability, the discounted present
value of the cash flows under the new terms, using the original effective
interest rate, is compared to the discounted present value of the remaining
cash flows of the original liability. If the difference is greater than 10%,
this is considered to be a substantial modification, resulting in a
derecognition of the original liability and the recognition of a new
liability.
(o) Equity
Equity instruments issued are recorded at fair value on initial recognition
net of transaction costs.
(p) Borrowings
Interest bearing bank loans and overdrafts are initially recorded at the value
of the amount received, net of attributable transaction costs. Interest
bearing borrowings are subsequently stated at amortised cost with any
difference between cost and redemption value being recognised in the
consolidated statement of profit and loss and other comprehensive income over
the period of the borrowing using the effective interest method.
2.4. Standards in issue but not yet effective
At the date of authorisation of these financial statements there were
amendments to standards which were in issue, but which were not yet effective,
and which have not been applied. The principal ones were:
Amendment to IFRS 16 - Leases on sale and leaseback transaction (effective for
annual periods beginning on or after 1 January 2024)
Amendments to IAS 1, Presentation of financial statements on classification of
liabilities (effective date deferred until accounting periods starting not
earlier than 1 January 2024)
The Directors do not expect the adoption of these amendments to standards to
have a material impact on the financial statements.
3. Significant events and transactions
There were no significant events and transactions during the period.
4. Segment information
The Group considers there to be only one business segment which is monitored
and reported to the Chief Operating Decision Maker ('CODM'), being the Board
of Directors. This judgement is based on the fact that the Group provides
similar products and services to all its customers, and the key performance
indicators monitored by the CODM are total revenue and profit/(loss) for the
period.
5. Revenue from contracts with customers
In the following table, revenue is disaggregated by major products/service
lines and primary geographical market. All revenue is recognised over time.
Six months ended 30 June 2023 Six months ended 30 June 2022
£ £
Service line
Projects 8,135,504 5,433, 970
Consultancy 1,199,148 2,517, 678
Total 9,334,652 7,951,648
Primary geographical markets
UK 1,569,289 3,142,119
Rest of the world 7,765,363 4,809,529
Total revenue 9,334,652 7,951,648
The operations are not cyclical and there is no significant seasonality to the
operations.
6. Exceptional Items
Six months ended 30 June 2023 Six months ended 30 June 2022
£ £
Cost of listing - 52,446
Cost of restructure 478,804 -
Total 478,804 52,446
Exceptional expenses in the six month period ended 30 June 2023 relate to the
restructuring of the engineering activity in China. This forms part of the
company strategy to focus on the US market. Exceptional expenses in the six
month period ended 30 June 2022 relate to the costs of the group undergoing
the Initial Public Offering in October 2022.
7. Other Operating Income
Six months ended 30 June 2023 Six months ended 30 June 2022
£ £
R&D tax credit 1,350,375 261,182
Total 1,350,375 261,182
8. Taxation
The Group calculated the income tax expense for the period using the tax rate
that would be applicable to the expected total annual earnings. The major
components of income tax expense in the unaudited interim condensed
consolidated statement of profit or loss are:
Six months ended 30 June 2023 Six months ended 30 June 2022
£ £
Income taxes
Current tax (credit) / expense (84,684) 35,888
Deferred tax (credit) (23,309) -
Total tax (credit) / charge (107,993) 35,888
Tax for the six month period is charged at 25% (six months ended 30 June 2022:
19%), representing the best estimate of the average annual effective tax rate
expected for the full year, applied to the pre‑tax income of the six month
period.
9. 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 the operating profit gives a better representation of the underlying
performance of the business in the period.
The Group's primary results measure, which is considered by the directors of
Sondrel (Holdings) 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.
A further alternative performance measure for the Group is adjusted loss for
the period before tax. This is used to measure earnings before tax adjusted
for amortization and exceptional items.
Six months ended 30 June 2023 Six months ended 30 June 2022
£ £
Loss for the period before tax (1,950,664) (1,518,003)
Exceptional costs (note 6) 478,804 52,446
Depreciation 208,493 166,912
Amortisation (note 11) 1,273,975 1,272,994
Finance costs 427,932 318,381
Adjusted EBITDA 438,540 292,730
Loss for the period before tax (1,950,664) (1,518,003)
Exceptional items (note 6) 478,804 52,446
Amortisation (note 11) 1,273,975 1,272,994
Adjusted loss for the period before tax (197,885) (192,563)
10. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit attributable to ordinary
shareholders of the Group by the weighted average number of ordinary shares
outstanding during the period.
Six months ended 30 June 2023 Six months ended 30 June 2022
£ £
Loss for the period (1,842,671) (1,553,891)
Weighted average number of shares 87,461,772 50,068,686
Basic earnings loss per share (£) (0.02) (0.03)
Loss for the period (1,842,671) (1,553,891)
Weighted average number of shares 87,461,772 50,068,686
Dilutive effect of share options - -
Weighted average number of diluted shares 87,461,772 50,068,686
Diluted loss per share (£) (0.02) (0.03)
During the six month periods ending 30 June 2022 and 30 June 2023, the Group
made a loss and so the share options are anti-dilutive. As such they are not
taken into account in determining the weighted average number of shares for
calculating the diluted Earnings Per Share. As a result, the diluted Earnings
Per Share is equal to the Basic Earnings Per Share.
11. Intangibles
Software licenses Development costs Total
£ £ £
Cost
At 1 January 2022 12,511,590 - 12,511,590
Disposals (917,118) - (917,118)
At 30 June 2022 11,594,472 - 11,594,472
Additions 8,098,891 239,373 8,338,264
Disposals (1,021,447) - (1,021,447)
At 31 December 2022 18,671,916 239,373 18,911,289
Additions 18,373 154,613 172,986
At 30 June 2023 18,690,289 393,986 19,084,275
Amortisation
At 1 January 2022 3,165,209 - 3,165,209
Amortisation charge for the period 1,272,994 - 1,272,994
Disposals (917,118) - (917,118)
At 30 June 2022 3,521,085 - 3,521,085
Amortisation charge for the period 1,683,085 - 1,683,085
Disposals (840,752) - (840,752)
At 31 December 2022 4,363,418 - 4,363,418
Amortisation charge for the period 1,273,975 - 1,273,975
At 30 June 2023 5,637,393 - 5,637,393
Net book value
At 30 June 2023 13,052,896 393,986 13,446,882
At 31 December 2022 14,308,497 239,373 14,547,870
At 30 June 2022 8,073,387 - 8,073,387
The additions in the period relate to capitalised development costs and
externally generated software licenses.
12. Trade and other receivables
(Unaudited) 30 June (Audited)
2023 31 December 2022
Current trade and other receivables: £ £
Trade receivables 3,478,571 3,138,895
Contract receivables 7,385,833 5,972,166
10,864,404 9,111,061
Allowance for expected credit losses (91,306) (91,306)
10,773,098 9,019,755
Other receivables 2,061,691 827,928
Prepayment and accrued income 691,999 349,441
Total 13,526,788 10,197,124
Management have assessed the expected credit loss up to 30 June 2023 and the
change from the year end balance (31 December 2022) was deemed immaterial.
13. Trade and other payables
(Unaudited) 30 June (Audited)
2023 31 December 2022
Current trade and other payables: £ £
Trade payables 3,437,468 586,072
Social security and other taxes 289,280 432,596
Other payables 4,657,223 4,514,832
Accruals 4,242,460 3,390,621
Contract liabilities 4,003,128 5,753,646
Total 16,629,559 14,677,767
Non-current trade and other payables:
Other payables 7,589,110 9,984,228
Total 7,589,110 9,984,228
Trade payables are non-interest bearing and are normally settled on 60 day
payment terms.
Other payables represent the amounts owed in relation to the acquisition of
software licences and are repayable in staged instalments over 3 years. An
effective interest rate of 4.68% to 7.56% has been charged on this payables
balance. The rate is determined by each part of the contract.
14. Share capital
(Unaudited) 30 June (Audited) 31 December 2022 (Unaudited) 30 June (Audited) 31 December 2022
2023 2023
Number Number £ £
Ordinary shares of £0.001 each 87,461,772 87,461,772 87,462 87,462
Total 87,461,772 87,461,772 87,462 87,462
15. Subsequent events
There are no events subsequent to the reporting date which would have a
material impact on the financial statements.
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