REG - Sondrel (Holdings) - Trading Update and Notice of Results

Sondrel (Holdings)Announcement

31/08/2023 07:00

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RNS Number : 8683K  Sondrel (Holdings) plc  31 August 2023

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK Market Abuse
Regulation

31 August 2023

Sondrel (Holdings) plc

("Sondrel", the "Company" and together with its subsidiaries the "Group")

 

Trading Update and Notice of Results

 

Sondrel (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, provides a further update on trading ahead of the
publication of the Company's interim results for the six months ended 30 June
2023 ("H1 2023") on 21 September 2023.

 

During H1 2023 and immediately post period end, the Company continued to
deliver live ASIC projects in line with its expectations and, as announced by
Sondrel on 3 July 2023, the Company successfully completed the second key
milestone in respect of the material turnkey ASIC engagement for a Tier 1 OEM
Automotive customer - with corresponding milestone payments received by the
Group from the customer. As stated at the time of the Company's IPO, Sondrel
expects typical production volumes for each contract to deliver revenue of
£10m to £100m per annum and the contract with the Tier 1 OEM Automotive
customer could deliver production revenue at the upper end of this range.

 

As a result, the Company now expects to report H1 2023 unaudited revenues of
£9.3m, a 17% increase over the corresponding H1 2022 period (H1 2022: £8.0m)
and adjusted EBITDA of £0.4m (H1 2022: £0.1m).

 

Since the FY22 year end, the Group has been pleased by the continued positive
momentum in the US sales pipeline following the Company's ongoing investment
in the region, with significant traction in the US market for Sondrel's
proposition, the establishment of an office in Santa Clara, California, and
the hiring of a team of experienced sales and engineering personnel in the US.
The US sales pipeline now includes more than 15 potential customers, with the
opportunities now under evaluation representing design and prototype revenues
exceeding $100m over 2 years (excluding potential production related
revenues). The Company cautions that the opportunities in the US sales
pipeline remain uncontracted at this stage.

 

Furthermore, customer production volume forecasts for the Group's live ASIC
projects in Europe have increased by an aggregate of 78%, from US$95m to
US$170m. This, together with the progress made in the US, provides the Company
with confidence for FY24 and beyond.

 

However, and notwithstanding increases in future production volume forecasts
by European customers as a result of ongoing confidence in ASIC project end
markets, it has also now been confirmed that the chip development and
production for three major ASIC customers due to commence in H2 2023 have been
delayed by between six and twelve months as a result of increasing inflation
and weakening demand in end markets reliant on consumer spending as other
sector categories have moved into negative growth. Therefore, their respective
production dates, and earlier material design and NPI related revenues that
had previously been expected to be delivered in FY23, have now been delayed
until FY24. These customers remain fully committed to working with Sondrel to
advance their chip designs into production and remain confident that they will
be very successful in their respective end markets.

 

As a result of these project delays, it is now expected that FY23 full-year
revenue will be not less than £13m, substantially below current market
expectations, with a corresponding impact on FY23 losses.

 

Notwithstanding project delays by customers, the Group continues to manage
cash effectively and to take appropriate actions to ensure it continues to be
able to invest in the priority growth areas, especially in the US and in the
capabilities required for successful production delivery.  The Company is
confident that it has sufficient access to finance for the foreseeable future
following its October 2022 IPO.

 

Notice of Interim Results

 

The Company will announce its unaudited H1 2023 results on Thursday, 21
September 2023.  There will be an in-person presentation for analysts at 9:30
a.m. (BST) on the day of the announcement at Buchanan's offices at 107
Cheapside, London EC2V 6DN.

 

Graham Curren, Chief Executive Officer of Sondrel, commented:

 

"Whilst it is disappointing that the scheduled production dates for three of
our upcoming ASIC projects have moved out, the increased aggregate production
volumes for live ASIC projects are clearly positive for Sondrel and we are
confident about our revenue and profitability in 2024 and beyond.

 

"Our increasing traction in the important US market, strong sales pipeline and
positive ongoing relationships with our existing ASIC customers provides us
with great confidence in our medium-term target to grow revenues to over
£100m and we will ensure that we keep updating shareholders as we make
progress towards this goal."

 

 

 Sondrel (Holdings) plc                                        Via Buchanan
 Graham Curren, CEO                                            Tel: +44 (0) 20 7466 5000
 Joe Lopez, CFO

 Cenkos Securities plc                                         Tel: +44 (0)20 7397 8900
 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: www.ir.sondrel.com
(http://www.ir.sondrel.com/) .

 

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