TIDMENSI
RNS Number : 4813P
EnSilica PLC
10 October 2023
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK Market Abuse Regulation
10 October 2023
EnSilica plc
("EnSilica", the "Company" or the "Group")
Audited Full Year Results for the Year Ended 31 May 2023
EnSilica (AIM: ENSI), a leading mixed signal chipmaker announces
full year results for the year ended 31 May 2023 ("FY 2023").
Financial Highlights
-- Revenue increased to GBP20.5 million (FY 2022: GBP15.3 million)
-- Operating profit increased to GBP0.83 million (FY 2022: adjusted GBP0.70 million)
-- Gross margin 39.9% (FY 2022: 33%)
-- EBITDA GBP1.56 million (FY 2022: Adjusted GBP1.04 million)
-- Diluted eps 2.30p an increase of 1050% (FY 2022: 0.2p)
-- Cash and cash equivalents at 31 May 2023 of GBP3.1 million (FY 2022: GBP5.7 million)
-- Net cash at 31 May 2023 of (GBP1.07 million) (FY 2022: GBP0.6 million)
-- Net assets increased by 31% at 31 May 2023
-- Further investment in IP of GBP4.13 million (FY 2022: GBP2.24 million)
Operational Highlights
-- Strong pipeline of new business across FY 2023
-- Sales and marketing initiatives now generating increased
market visibility and traction resulting in higher value
opportunities
-- Key contract wins and contract extensions include:
o Major industrial factory automation design win worth $30
million
o Automotive ASIC designed into new models increasing revenue
forecast for this product to $40 million
o EUR5m contract award to develop Satellite Broadband Chip
funded by UK Space Agency with a lead customer having committed
EUR2.5 million toward taking the chip to production, including an
order for the first 50,000 chips
o Award of e-mobility sensor ASIC contract estimated to be worth
in excess of $7 million
Outlook
-- The Company has started FY 2024 well, supported by both
existing contracts and new business momentum
-- The business has built a strong pipeline with a sizeable
order book that continues to underpin management's confidence in
the business
-- Looking ahead, the Board believes the Company is well placed
to continue to capitalise on the significant growth opportunity
that exists within the semiconductor industry
Ian Lankshear, Chief Executive Officer of EnSilica plc,
commented:
"I am delighted to be announcing such a strong set of full years
results for EnSilica, which provides a clear indication of the
strength and resilience of our business. Our recent new design wins
are a clear indication that our model is being fully deployed,
securing both revenue and profit growth in the medium term."
Analyst meeting
A briefing for analysts will be held on Tuesday, 10 October 2023
at 10.00 a.m. BST. To attend the meeting please contact Vigo
Consulting by email at ensilica@vigoconsulting.com .
Investor presentation
An online presentation of the annual results will be held on
Wednesday, 11 October 2023 at 12 noon BST. The presentation will be
hosted on the Investor Meet Company platform. Questions can be
submitted pre-event via the Investor Meeting Company dashboard up
until 9.00 a.m. the day before the meeting or at any time during
the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet EnSilica via:
https://www.investormeetcompany.com/ensilica-plc/register-investor
Annual Report and AGM
The annual report and accounts together with notice of the
Annual General Meeting will be posted to shareholders by the end of
October and will be made available on the Company's website.
The Annual General Meeting will be held on 28 November 2023 at
10.00 a.m. at the Company's office at Milton Park Innovation
Centre, 99 Park Drive, Milton Park, Abingdon OX14 4RY.
For further information please contact:
EnSilica plc Via Vigo Consulting
Ian Lankshear, Chief Executive Officer +44 (0)20 7390 0233
www.ensilica.com
Allenby Capital Limited, Nominated Adviser +44 (0)20 3328 5656
& Broker info@allenbycapital.com
Jeremy Porter / Vivek Bhardwaj (Corporate
Finance)
Joscelin Pinnington/Tony Quirke (Sales &
Corporate Broking)
Vigo Consulting (Investor & Financial Public +44 (0)20 7390 0233
Relations) ensilica @vigoconsulting.com
Jeremy Garcia / Kate Kilgallen
About EnSilica
EnSilica is a leading fabless design house focused on custom
ASIC design and supply for OEMs and system houses, as well as IC
design services for companies with their own design teams. The
company has world-class expertise in supplying custom RF, mmWave,
mixed signal and digital ICs to its international customers in the
automotive, industrial, healthcare and communications markets. The
company also offers a broad portfolio of core IP covering
cryptography, radar, and communications systems. EnSilica has a
track record in delivering high quality solutions to demanding
industry standards. The company is headquartered near Oxford, UK
and has design centres across the UK and in Bangalore, India and
Porto Alegre, Brazil.
Executive Chair Review
As you will all be aware the last two years have been difficult
times and economically challenging from a geopolitical risk point
of view as well.
This background to our first full year as a public company has
made the experience even more challenging than it would have been
and so the team are proud that we have delivered a set of results
that surpassed the expectations that were set at the time of the
IPO. It was pleasing to have this recognised by being chosen as
'IPO of the Year' by Small Cap Network.
As I reported last year we went through a tremendous period of
organisational and operational change in the business pre IPO and
in the year since we have built steadily on the corporate
infrastructure whilst delivering these results. Notwithstanding
this considerable progress, equity markets have been nervous and
therefore we believe we have not seen the full advantage of our
shares being publicly quoted. We have continued nonetheless to
deliver on our long term plans and we have begun our second year
with the business in good condition with good demand for our
services across a range of markets on which we focus.
Ian and the team have expanded our sales effort, have enlarged
our engineering resource and adopted new processes and procedures,
whilst delivering significant contract wins and improved margins
and I would like to thank the whole team across our global
footprint for their combined efforts during the year. They have
been tremendous.
This post IPO positive momentum has resulted in an outcome for
the financial year ending 31 May 2023 in which EnSilica delivered
revenues for FY 2023 of GBP20.5m (2022: GBP15.3m), a 34% increase
on the prior year, and an unadjusted EBITDA of GBP1.56m (2022
adjusted: GBP1.04m), and a much improved earnings per share of
2.30p compared to 2022 which was 0.2p, overall delivering resilient
year on year growth.
This performance represents the consolidation of our underlying
business strategy first adopted in 2016, with the start in 2022 of
direct chip supply to our first automotive customer.
That said, our strategy develops and gets refined as we focus on
niche markets within the broader target markets and the year under
review saw the Company's sharper focus in satellite communications
on the design and supply of beamformer chips, a first contract
which was announced recently.
The award of a significant industrial contract, announced in
July 2022, provides further validation of our operating model and
financial drive. This prestigious customer win, combined with our
substantial order book is directly attributable to our highly
experienced team who have worked tirelessly to ensure we remain
best in the business.
As I set out last year, we are committed to pursuing excellent
Board performance and we have worked this year with advisors to
assess and develop how we can work better as a Board with the
foundation of development programmes to promote outstanding
achievement in Board performance attainment. This will be an
ongoing programme each year and we report in our governance report
progress to date.
As a responsible business, we remain focused on corporate
environmental, social, and governance ('ESG') values to build a
strong, profitable, and sustainable business. We have undertaken to
establish critical ESG priorities, opportunities and risks, and
will be reporting across these headings going forward.
Despite the challenges presented by the broader macro-economic
climate, we continue to service a sizeable order book and a strong
level of enquiries for ASICs from a variety of sources across
automotive, industrial, healthcare and satellite communications,
capitalising on our longstanding reputation for innovation and
excellence.
Our staff remain our most important asset and we continue to
develop reward structures that benefit employee development and
efficient and rewarding technical work environments. During the
year the number of our staff increased to 168 (2022:117).
Finally, financial year 2024 has started well with a growing
pipeline. Our supply revenues continue to grow as planned and the
Board are confident that the Company is well placed to continue its
growth trajectory.
Mark Hodgkins
Executive Chair
Chief Executive Review
Introduction
We are delighted to report our first full twelve months as a
quoted company, in which time we have continued to strengthen our
business, delivering a record period of growth.
Pleasingly, we have maintained excellent new business generation
across the period, which has in turn further bolstered our
financial position. To that end, we are pleased to report that both
revenue and EBITDA were in line with expectations at GBP20.5
million and GBP1.56 million respectively.
This ongoing operational and financial progress further
reinforces the strength of EnSilica's business model, which has
enabled the Company to maintain excellent new business momentum
alongside growing the Company's substantial sales pipeline.
Our increased profile owing to the Company's quoted status on
the AIM market of the London Stock Exchange continues to support
the growth of the business, helping us to accelerate our stated
goal to be the premier application specific fabless chipmaker in
Europe. Our enhanced visibility in the market, strengthened balance
sheet, and financial transparency have broadened our engagement
with top-tier customers, enabling increased new business activity.
Proof of this was in July 2022 with the $30 million supply award
from a market leading industrial OEM. Our investment in a European
direct sales organisation and specialist sales representatives has
also increased the quality and lifetime value of the opportunities
being uncovered.
I would like to express my sincere thanks to all our highly
talented and hardworking staff, who continue to be at the heart of
everything we do, and to our loyal customers and investors, who
have played a pivotal role in our success to date and whose
continued support underpins our growth ambitions for the
future.
EnSilica's Business Model
EnSilica operates a Fabless Semiconductor Model, providing an
end-to-end solution for the development, manufacturing and supply
of Integrated Circuits ("ICs") from initial scoping and design
through to the delivery of products. This sits alongside our design
consultancy, supporting customers with their own design teams to
develop ICs.
EnSilica's specialist operation team manage the fabrication of
ICs, working with the leading semiconductor wafer foundries,
following which the processed wafers are sent for dicing, testing,
and packaging by outsourced semiconductor assembly and test
partners.
This model is well proven and used by fabless semiconductor
companies such as Broadcom, Nvidia, and Nordic Semiconductor.
EnSilica's focus on ASIC design and supply embeds the Company
further into the electronics value chain, which sees customers
typically pay an upfront fee towards the costs of design, tooling,
and test development of the ASIC, otherwise known as non-recurring
engineering costs ("NRE"). Customers will subsequently purchase the
EnSilica designed ASIC or, in some cases, pay royalties to EnSilica
for the ASICs that a third party will manufacture on the customer's
behalf.
EnSilica will often co-invest in the development of an ASIC
alongside the customer, and, depending on the sector, the ASIC can
take two to five years to reach full production. At the production
stage, revenues can be high, last several years, and generate gross
margins in the 35% to 60% range. The gross margin will depend on
the market and the level of co-funding of the NRE required, as well
as the amount of EnSilica's intellectual property present in the
finished IC product. Therefore, part of EnSilica's expertise is in
scrutinising the potential financial upside of investing in various
IC development programmes, with the right projects in turn
resulting in long-term component supply or royalty revenue for the
Company.
In niche areas where the Company identifies market
opportunities, the Company invests in its own IP as the basis of a
customer-specific ASIC or what is known as an Applications Specific
Standard Part ("ASSP"). These chips are sold to multiple customers
hence generating even larger returns. Examples of this are the
Company's Satellite Communications and Healthcare Vital signs
sensor technologies.
The Company's recent new business wins are a clear indication
that this model is being fully deployed, securing both revenue and
profit growth in the medium term.
Growth strategy
To that end, our growth strategy remains unchanged from that
outlined during our IPO, and we will continue to pursue the
following business objectives:
-- leverage EnSilica's strong positions and IPR within
automotive, industrial, healthcare, and satellite connectivity
applications for mixed signal ASICs;
-- scale the Company's successful Fabless ASIC Model to fully
exploit revenue opportunities from design and supply
engagements;
-- develop ASSPs to address key customer driven opportunities,
with two significant standard platforms already at the device
evaluation stage; and
-- expand EnSilica's offering through consolidation and vertical integration.
Market Drivers
The market for microchips continues to grow at pace with
estimates now suggesting that 1.1 trillion microchips were produced
in 2021, equating to c.140 per person globally.
EnSilica remains focused on four principal markets where we
believe there is significant growth opportunities: satellite
communications, industrial, automotive, and healthcare.
Satellite Communication Sector
The Satellite Communication Sector, specifically internet
broadband using Lower Earth Orbit (LEO) satellites, is a growing
area. Elon Musk SpaceX's Starlink constellation of more than 4000
satellites has proven that high-speed resilient internet connection
is possible and is considered a vital part of the communication
infrastructure with a very wide range of use cases, including
government, automotive, maritime, and aerospace connectivity, as
well as connectivity for rural households.
A satellite internet system typically contains approximately 600
RF (radio frequency) and 20 beamformer chips per user terminal. As
this market grows we expect to see it drive demand for low cost and
low power RF and mixed signal chip design. Today's subscriber
levels are relatively low at approximately 2 million subscribers,
but even this is driving demand for up to 1.2 billion RF chips and
40 million beamforming chips.
EnSilica has key IPR and know-how and has announced a number of
contracts in this sector, there are a wide range of opportunities
in the growing number of new LEO constellation. Many of these will
be providing services by 2025.
Industrial Sector
Substantial further growth is expected within the Industrial
Sector, with the global industrial semiconductor market worth an
estimated $60 billion in 2021, rising to $130 billion in 2030. The
industrial market also has room for manufacturing optimisation
through realising the benefits of AI and machine learning. The
sector is also undergoing changes due to new cyber security
standards being driven by an EU Directive known as NIS2. Both these
factors are increasing the number of requests for quotations
(RFQs). EnSilica has one of the largest European industrial OEMs as
a supply customer, and hence is well positioned to service the next
generation of industrial chips.
Automotive Sector
The Automotive Sector continues to be driven by innovation and
an accelerated shift to electric powered vehicles, infotainment
systems, advanced driver assist systems, autonomous driving
systems, connectivity, safety, and security systems. A standard
hybrid electric car contains, on average, c3,500 semiconductor
chips. This growing trend is further evidenced with the automotive
semiconductor market expected to be worth an estimated $82 billion
in 2025, increasing to $130 billion by 2030, which further
validates EnSilica's keen focus on this high value end market.
Healthcare Wearables Sector
The Healthcare Wearables Sector remains of considerable interest
to the Company as advancements in AI have made it possible to
detect medical conditions through a range of monitoring devices
from devices worn on the wrist, sensors on a small patch, or even
within earbuds or as a ring. Semiconductors in the healthcare
market is expected to be worth $7.47 billion in 2023, rising to
$12.82 billion by 2028, growing at a CAGR of 11.41% during this
period.
Central to this growing trend is the growth in consumer health
and wellness wearable devices shipped worldwide, which is expected
to be nearly 440 million devices by 2024. These figures include
both smartwatches and medical-grade wearables, which are often
prescribed by healthcare professionals but are also increasingly
becoming available off the shelf.
The Company has developed key IPR including a vital sign sensors
IC offering accurate sensor interfaces with very low power
consumption. This IC is being evaluated by a number of customers
and the Directors believe this will lead to either a standard part
sold to many customers as an ASSP or various customised versions of
the IC optimised for specific customers.
Semiconductor supply chain and Geo-political changes
Looking more broadly at the semiconductor market, the
much-publicised global chip shortage has undoubtedly increased the
awareness of the multitude of benefits of using custom silicon
compared to standard parts, including simplified and secure supply
chains. This has strengthened our turnkey ASIC pipeline to an
all-time high.
Our next stage of accelerated growth will be driven by the
global demand for semiconductors and our expertise in mixed signal
chips, enabling a greener, safer, smarter, and more connected
world.
It took recent chip shortages to cement the "critical" status of
the semiconductor sector, establishing it as a truly essential
industry. In addition, the COVID-19 pandemic highlighted the
importance of access to a local thriving semiconductor ecosystem.
With Asia accounting for 60% of global semiconductor sales,
European and U.S authorities recognise the need to be less
dependent on a handful of East Asian countries to guarantee supply.
To that end, Europe and the U.S have passed multibillion "Chip
Acts" to encourage local semiconductor design and production
capabilities.
Our executive and non-executive team have been actively
contributing to the UK government's plan to become more
self-sufficient in relation to key elements of the semiconductor
supply chain, and in August, the Company was proud to announce that
Janet Collyer, a Senior Independent Director, had been appointed to
the UK Government's Semiconductor Advisory Panel.
With the heightened Chinese/ US tension over Taiwan, there has
been a drive to move the supply chains away from China and even
towards longer term options outside of Taiwan. Investment has been
announced in a number of wafer foundries including major ones in
the USA, Germany, and Japan.
There has also been increased investment in packaging and test
outsources assembly and test (OSAT) increasing their geographical
diversity. Customers are demanding visibility of their full supply
chain with second source and contingency planning. OEMs are seeing
that ASICs are an ideal method of driving this resilient supply
chain.
Customer Activity
The Company currently manages a sales pipeline that is at an
all-time high. Business wins and sales opportunities have been
across all our focus sectors.
Key contract awards since the start of FY 2023 include:
-- Major industrial factory automation design win worth $30 million
-- Automotive ASIC design into new models increasing revenue
forecast for this product to $40 million over 6 years.
-- EUR5 million contract award to develop Satellite Broadband
Chip funded by UK Space Agency, a lead customer also committed
EUR2.5 million toward taking the chip to production, including an
order for the first 50,000 chips
-- Award of sensor ASIC for e-mobility (electric vehicles (EVs),
electric two wheelers, e-bikes and e-scooters applications
estimated to be worth in excess of $7 million.
-- $1.3 million ASIC contract extension and estimated royalty
payment increase from $5 million to $15 million over a five-year
period
In addition, the Company is also pursuing a number of
significant supply ASICs opportunities with both new and existing
customers which are all progressing well. The life-time values per
opportunity has increased significantly compared to the previous
year, this is due to the wider reach of the sales team and the
newly-listed status of the Company capturing a new set of
customers.
Our People
Our team have done an excellent job delivering some of the most
complex semiconductor engineering projects in the industry. This
includes developing innovative advanced node RF designs that very
few teams outside the semiconductor giants could deliver.
The Company remains focused on attracting new talent, and in the
UK we are actively working with the UK Electronics Skills
Foundation ("UK ESF") to offer undergraduate scholarships. EnSilica
employees have also been actively promoting Science, Technology,
Engineering, and Mathematics subjects (STEMS) in schools, with a
focus on encouraging more girls to pursue a career in engineering.
In Brazil and India, our team is undertaking similar initiatives to
attract the best talent into the Company and promote the excellent
career opportunities that exist within the semiconductor
sector.
Industry Recognition
In the prestigious UK TechWorks Award in November 2022, EnSilica
was proud to take home three awards:
-- The Company of the Year Award.
-- The Young Engineer of the Year Award won by Omotade Iluromi.
-- The TechNES Design Award for innovative design involving
strong industry and academic collaboration. This was awarded for
the satellite RF IC work with Swansea University.
Board
In April 2023, Matthew Wethey stepped down from his position as
Chief Financial Officer and Executive Director of the Company. The
Board is grateful to Matthew for his contribution during a period
of significant operational change and wishes him every success in
the future.
Following Matthew's departure, the Company announced the
appointment of Chris Mann as Interim Chief Financial Officer
(non-Board) from 11 April 2023 to support the business while the
search for a permanent replacement is ongoing.
Outlook
Having successfully delivered our FY 2023 results in line with
market expectations, I am pleased to report that the Company has
started FY 2024 well, supported by existing contracts and ongoing
new business momentum.
The business has built a strong pipeline and order book, which
continues to underpin the confidence we have in the business.
Looking ahead, the Board believes that the Company is well
placed with strong IP and market know-how to continue to capitalise
on the significant growth opportunity that exists within the
semiconductor industry, and in particular, within the high-growth
market segments the business has identified.
Ian Lankshear
Chief Executive Officer
Interim Chief Financial Officer's Review
Introduction
The Company's financial performance during the year under review
has been achieved on the back of cautious financial planning.
At the time of the Company's IPO in May 2022, the economic
outlook had recently become extremely uncertain due to the invasion
of Ukraine. That economic background demanded an approach to
budgeting that ensures that there is no reliance on providers of
finance whether it be equity or debt in the event of growth.
This has allowed the Company, to demonstrate that with careful
planning the "fabless" semi-conductor model, is one that can be
executed from resources generated by the business itself.
Our cash generation was supported by a small equity raise in
March of this year on the back of a strong run of contract wins at
the turn of the year, as well as the receipt of GBP2.1 million as
part of the HMRC research and development credit tax programme.
The Company remains in the investment phase of the fabless
semi-
conductor cycle having invested a further GBP4.13 million in
anticipation of further growth in our revenues and penetration of
our chosen markets. This investment will, in time, pay off with
further supply revenues which have begun to flow in financial year
2024.
Financial Summary
A summary of the key financial results for the year and details
relating to its financial position at the 31 May 2023 are set out
in the table below.
31 May 31 May 31 May
2023 2022 2021
GBP000 GBP000 GBP000
--------------------------------------------- ------- ------- -------
Revenue 20,476 15,293 8,607
--------------------------------------------- ------- ------- -------
Gross Profit 8,170 5,047 2,057
--------------------------------------------- ------- ------- -------
Gross margin (%) 39.9 33.0 23.9
--------------------------------------------- ------- ------- -------
Operating profit/(loss) excluding impairment
of intangible assets and IPO costs 825 705 (169)
--------------------------------------------- ------- ------- -------
IPO costs - (609) -
--------------------------------------------- ------- ------- -------
Impairment of intangible assets - - (2,019)
--------------------------------------------- ------- ------- -------
Profit/(loss) before tax 47 165 (714)
--------------------------------------------- ------- ------- -------
Tax 1,745 683 658
--------------------------------------------- ------- ------- -------
Profit/(loss) for the year 1,792 848 (56)
--------------------------------------------- ------- ------- -------
EBITDA 1,555 1,036 59
--------------------------------------------- ------- ------- -------
31 May 31 May 31 May
2023 2022 2021
GBP000 GBP000 GBP000
-------------------------- ------- ------- --------
Cash and Cash equivalents 3,095 5,742 1,404
-------------------------- ------- ------- --------
Liabilities arising
from financing
activities (4,167) (5,159) (6,095)
-------------------------- ------- ------- --------
Net Debt (1,072) 853 (4,691)
-------------------------- ------- ------- --------
Intangible assets 12,433 8,576 6,506
-------------------------- ------- ------- --------
31 May 31 May 31 May
2023 2022 2021
FTE FTE FTE
---------------------- ------ ------ ------
Administration 17 10 9
---------------------- ------ ------ ------
Marketing 6 5 4
---------------------- ------ ------ ------
Research, development
and technical 146 102 83
---------------------- ------ ------ ------
Average number
of employees 168 117 96
---------------------- ------ ------ ------
Notable from the table above
The Company has delivered a resilient set of results for the
year ending 31 May 2023, building on the strong results of 2022.
Revenue growth of 33.9% (2022: 77%) to GBP20.5 million, compared to
GBP15.3 million for 2022. This was driven by strong growth across
all business lines particularly satellite communications as well as
emerging supply revenues in automotive. Our legacy consulting
revenue stream also contributed to the growth in revenues. In 2022
revenue from two different customers amounted to GBP8.4 million 55%
of total revenue. In 2023 our largest customer represented 28% of
total revenues.
The Company continues to focus on developing the revenue derived
from Supply/NRE revenue streams as compared to its legacy
Consultancy revenues. In the year to 31 May 2023, Supply/NRE has
reduced in percentage terms from 40.9% to 39.9% of total revenue in
the year, although the overall amount has increased 30.8% year on
year.
The Company maintains a level of consultancy work which provides
a reliable income stream, though going forward management will
focus on the higher returns of design and supply work and
consultancy income will become less important to the business.
Supply revenue from prior NRE work, which typically involves 1-2
years' work prior to development is now beginning to flow through.
The pipeline of NRE work, which supports future supply revenues
remains strong. We now have three ASICs which have been released
for production and we anticipate this increasing in line with the
Company's plans. As noted above, we continue to invest in new
contracts with new customers which will feed the supply revenues of
the Company in future years.
The Company has delivered further improvement in its gross
margin percentage by undertaking higher margin projects, increasing
the utilisation of the increasing number of engineers and
leveraging the IP library that has grown strongly in recent years.
As a result the Company was able to increase its gross margins by
6.5% from 33% in FY 2022 to 39.9% in the current year.
We take a critical review of the carrying value of our
intangible fixed assets. The Board has overseen a rigorous review
of the value which is supported by supply revenue streams.
As mentioned above the difficulties in the economy and
investment markets has emphasised the ever present focus on cash
management and it is pleasing to report that EBITDA for the year to
May 2023 continues its improving trend and was GBP1.555 million
unadjusted compared to 2022 GBP1.0 million adjusted. In addition to
the unadjusted EBITDA of GBP1.555 million we recognised GBP2.1
million due from HMRC as an R&D tax credit.
The net debt of GBP1.07 million compares to GBP0.6 million of
net cash at the end of May 2022.
The improving EBITDA and the R&D tax credit have allowed the
repayment of GBP0.8 million loan capital in line with agreed
amortisation. This while maintaining our investment in IP which
amounted to GBP4.13 million.
The Company increased the average number of employees during the
year by 51 heads, of these 44 were research, development and
technical heads. The majority of these are based in the UK.
Financial items of note during the year other than those set out
above
The Company had two bank loans totalling GBP4.167 million at the
end of the current year and GBP4.966 million at the end of the
previous year, these loans charged interest of GBP0.6 million (2022
GBP0.5 million).
The Company qualifies for support under the HMRC R&D Tax
Credit scheme. In the current year the amount recoverable from HMRC
is GBP2.1 million (2022: GBP1.67 million).
Going Concern
It is the Company's normal business practice to prepare short
term, annual and long term plans which are reviewed and approved by
the Board.
The assumptions around projected sales, staffing and purchases
are based on management's expectations and are consistent with the
Company's experience.
The plans take into consideration the possibility of the
continuance of the Russia/Ukraine war, increasing interest rates,
and the current economic environment, which is likely to create
problems for global supply chains and negatively impact demand. The
financial statements have been based on these considerations.
As at 31 May 2023 the Company's financing arrangements consisted
of a loan of GBP2.7 million (2022: GBP3.1 million) from SME
Alternate Financing and a Coronavirus Business Interruption Loan
(CBIL) for GBP1.7 million (2022: GBP2.1 million) used to mitigate
delays caused by Covid-19. The Company held a cash balance of
GBP3.1 million (2022: GBP5.7 million) at that date.
The Directors are satisfied that the Company has adequate
resources to continue in business for the foreseeable future (being
a minimum period of 12 months from the date of signing the balance
sheet), and accordingly continue to adopt the going concern basis
in preparing the accounts.
Financial Risk Management Objectives and Policies
Details of the Company's financial risk management objectives
and policies are disclosed in note 22 to the financial
statements.
Key performance indicators and risks
We have a range of performance measures to monitor and manage
the business, some of which are considered key performance
indicators (KPIs).
Certain one-off items which are shown as exceptionals on the
Income Statement, namely IPO costs and Impairments to Intangible
Assets, have been adjusted for as disclosed in Note 4 in the Notes
of the Financial Statements, in the KPIs below.
Consolidated Statement of Comprehensive Income
For the year ended 31 May 2023
Note 2023 2022
GBP'000 GBP'000
-------------------------------------------- ---- --------- ---------
Revenue 3 20,476 15,293
Cost of sales (12,306) (10,246)
-------------------------------------------- ---- --------- ---------
Gross profit 8,170 5,047
Other operating/(expense) income 5 8 (14)
-------------------------------------------- ---- --------- ---------
Administrative expenses excluding non-recurring
items (7,352) (4,328)
IPO costs - (699)
-------------------------------------------------- --------- ---------
Total administration expenses (7,352) (5,027)
Operating profit 5 825 6
Interest income 7 7 7 25
Interest expense 8 (785) (565)
-------------------------------------------- ---- --------- ---------
Profit/(loss) before taxation 47 (534)
Taxation 9 1,745 683
-------------------------------------------- ---- --------- ---------
Profit for the year 1,792 149
-------------------------------------------------- --------- ---------
Other comprehensive (expense)/income
for the year
Currency translation differences (50) 40
-------------------------------------------------- --------- ---------
Total comprehensive income for the year 1,742 189
-------------------------------------------------- --------- ---------
Profit for the year attributable to:
Owners of the company 1,792 149
Non-controlling interests - -
-------------------------------------------------- --------- ---------
1,792 149
-------------------------------------------------- --------- ---------
Total comprehensive (expense)/income
for the year attributable to:
Owners of the company (50) 40
Non-controlling interests - -
-------------------------------------------------- --------- ---------
(50) 40
-------------------------------------------------- --------- ---------
Basic earnings per
share (pence) 10 2.36 0.20
Diluted earnings per
share (pence) 10 2.30 0.20
-------------------------------------------- ---- --------- ---------
Adjusted Basic earnings
per share (pence) 10 2.47 1.13
Adjusted Diluted earnings
per share (pence) 10 2.41 1.11
-------------------------------------------- ---- --------- ---------
Consolidated Statement of Financial Position
As at 31 May 2023
2023 2022
Note GBP'000 GBP'000
------------------------------ ------ ---------------- --------
Assets
Non-current assets
Property, plant and equipment 11 2,566 382
Intangible assets 12 12,433 8,576
------------------------------ ------ ---------------- --------
Total non-current assets 14,999 8,958
------------------------------ ------ ---------------- --------
Current assets
Inventories 14 304 215
Trade and other receivables 15 7,025 3,257
Corporation tax recoverable 2,064 1,671
Cash and cash equivalents 16 3,095 5,742
------------------------------ ------ ---------------- --------
Total current assets 12,488 10,885
------------------------------ ------ ---------------- --------
Total assets 27,487 19,843
------------------------------ ------ ---------------- --------
Current liabilities
Borrowings 17 (883) (800)
Lease liabilities 18 (171) (88)
Trade and other payables 19 (4,723) (2,391)
------------------------------ ------ ---------------- --------
Total current liabilities (5,777) (3,279)
------------------------------ ------ ---------------- --------
Non current liabilities
Borrowings 17 (3,284) (4,166)
Lease liabilities 18 (2,104) (105)
Provisions 20 (199) (140)
Deferred tax 21 (160) -
------------------------------ ------ ---------------- --------
Total non current liabilities (5,747) (4,411)
------------------------------ ------ ---------------- --------
Total liabilities (11,524) (7,690)
------------------------------ ------ ---------------- --------
Net assets 15,963 12,153
------------------------------ ------ ---------------- --------
Equity
Issued share capital 23 137 134
Share premium account 8,752 6,900
Currency differences reserve (49) 1
Retained earnings 7,123 5,118
------------------------------ ------ ---------------- --------
Equity attributable to owners
of the Company 15,963 12,153
Non-controlling interests - -
------------------------------ ------ ---------------- --------
Total equity 15,963 12,153
------------------------------ ------ ---------------- --------
The financial statements were approved by the Board of Directors
and authorised for issue on 9 October 2023 and signed on its behalf
by:
Ian Lankshear Mark Hodgkins
Chief Executive Officer Chair
Consolidated Statement of Changes in Equity
For the year ended 31 May 2023
Share Share Currency Retained Total equity
capital premium translation earnings GBP'000
GBP'000 account reserve GBP'000
GBP'000 GBP'000
--------------------------------- -------- -------- ------------ ---------------- ------------------------
At 31 May 2021 2 - (39) 2,875 2,838
--------------------------------- -------- -------- ------------ ---------------- ------------------------
Comprehensive income for the
year to 31 May 2022
Profit for the year - - - 149 149
Other comprehensive income - - 40 - 40
--------------------------------- -------- -------- ------------ ---------------- ------------------------
Total comprehensive income for
the year - - 40 149 189
--------------------------------- -------- -------- ------------ ---------------- ------------------------
Share based payment - - - 120 120
Deferred tax in respect of share
options - - - 1,713 1,713
Corporation tax in respect of
share options - - - 378 378
Issue of share capital 132 7,407 - - 7,539
Costs of share issue - (507) - - (507)
Bonus share issue - - - (117) (117)
--------------------------------- -------- -------- ------------ ---------------- ------------------------
At 31 May 2022 134 6,900 1 5,118 12,153
--------------------------------- -------- -------- ------------ ---------------- ------------------------
Comprehensive income for the
year to 31 May 2023
Profit for the year - - - 1,792 1,792
Other comprehensive expense - - (50) - (50)
------------------------------- --- ----- ---- ----- ------
Total comprehensive income for
the year - - (50) 1,792 1,742
------------------------------- --- ----- ---- ----- ------
Share based payment - - - 213 213
Issue of share capital 3 2,015 - - 2,018
Costs of share issue - (163) - - (163)
------------------------------- --- ----- ---- ----- ------
At 31 May 2023 137 8,752 (49) 7,123 15,963
------------------------------- --- ----- ---- ----- ------
Non-controlling interests hold 0.002% of the issued share
capital of the Indian subsidiary, EnSilica India Private Limited in
accordance with local requirements and there is a non-controlling
interest of GBPnil at 31 May 2023 (31 May 2022:GBPnil), further
details are disclosed in note 27.
Consolidated Statement of Cash Flows
For the year ended 31 May 2023
Note 2023 2022
GBP'000 GBP'000
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Cash flows from operating activities
Cash generated from operations A 290 (1,915)
Tax received 1,512 3,306
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Net cash generated from operating activities 1,802 1,391
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Cash flows from investing activities
Purchase of property, plant and equipment (395) (276)
Additions to intangible assets (4,133) (2,241)
Interest received 7 25
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Net cash used in investing activities (4,521) (2,492)
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Cash flows from financing activities
Proceeds from issuance of ordinary shares 1,855 6,915
Interest paid (785) (565)
Lease liability payments (166) (103)
Repayment of bank loans (832) (768)
Commitment fees - (80)
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Net cash generated from financing activities 72 5,399
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Net (decrease)/increase in cash and cash equivalents (2,647) 4,298
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Cash and cash equivalents at beginning of year 5,742 1,404
Foreign exchange gains/(losses) - 40
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Cash and cash equivalents at end of year B 3,095 5,742
----------------------------------------------------------------------------------------------------------------------------------------------------- ------- -------
Notes to the Consolidated Statement of Cash Flows
For the year ended 31 May 2023
A. Cash generated from operations
2023 2022
GBP'000 GBP'000
------------------------------------------- --------- ---------------------------
Profit for the year 1,792 149
Adjustments for:
Depreciation 454 160
Amortisation of intangible assets 276 171
Share based payments 213 120
Net interest costs 778 540
Tax credit (1,745) (683)
------------------------------------------- --------- ---------------------------
1,768 456
Working capital movements
Increase in inventories (89) (185)
Increase in trade and other receivables (3,770) (304)
Increase/(decrease) in trade and other
payables 2,322 (699)
Increase/(decrease) in provisions 59 (1,183)
------------------------------------------- --------- ---------------------------
Cash generated from/(used in) operations 290 (1,915)
------------------------------------------- --------- ---------------------------
B. Analysis of net debt
At June 2021 Cash Non-cash changes At 31 May
GBP'000 flow GBP'000 2022
GBP'000 GBP'000
Loans (5,799) 768 65 (4,966)
Lease liabilities (296) 50 53 (193)
----------------------------- ------------ --------- ---------------- ---------
Liabilities arising from
financing activities (6,095) 818 118 (5,159)
Cash and cash equivalents 1,404 4,298 40 5,742
----------------------------- ------------ --------- ---------------- ---------
Net debt (4,691) 5,116 158 583
----------------------------- ------------ --------- ---------------- ---------
At June 2022 Cash flow Non-cash At 31 May
GBP'000 GBP'000 changes 2023
GBP'000 GBP'000
Loans (4,966) 832 (33) (4,167)
Lease liabilities (193) 363 (2,445) (2,275)
----------------------------- ------------ --------- ---------------- ---------
Liabilities arising from
financing activities (5,159) 1,195 (2,478) (6,442)
Cash and cash equivalents 5,742 (2,647) - 3,095
----------------------------- ------------ --------- ---------------- ---------
Net debt 583 (1,452) (2,478) (3,347)
----------------------------- ------------ --------- ---------------- ---------
Parent Company Statement of Financial Position
As at 31 May 2023
2023
Note 2022
GBP'000 GBP'000
------------- -------------------------------------------------------------------------------------------- --------
Assets
Non-current
assets
Property,
plant and
equipment 11 2,459 228
Intangible
assets 12 12,433 8,576
Investments 13 89 68
------------- -------------- ---------------------------------------------------------------------------- --------
Total
non-current
assets 14,981 8,872
------------- -------------- ---------------------------------------------------------------------------- --------
Current
assets
Inventories 14 304 215
Trade and
other
receivables 15 6,985 2,909
Corporation
tax
recoverable 2,064 1,671
Cash and cash
equivalents 16 2,903 5,655
------------- -------------- ---------------------------------------------------------------------------- --------
Total current
assets 12,257 10,450
------------- -------------- ---------------------------------------------------------------------------- --------
Total assets 27,238 19,322
------------- -------------- ---------------------------------------------------------------------------- --------
Current
liabilities
Borrowings 17 (883) (800)
Lease
liabilities 18 (146) (50)
Trade and
other
payables 19 (5,643) (2,860)
------------- -------------- ---------------------------------------------------------------------------- --------
Total current
liabilities (6,671) (3,710)
------------- -------------- ---------------------------------------------------------------------------- --------
Non-current
liabilities
Borrowings 17 (3,284) (4,166)
Lease
liabilities 18 (2,104) (78)
Deferred tax 19 (160) -
------------- -------------- ---------------------------------------------------------------------------- --------
Total
non-current
liabilities (5,548) (4,244)
------------- -------------- ---------------------------------------------------------------------------- --------
Total
liabilities (12,220) (7,954)
------------- -------------- ---------------------------------------------------------------------------- --------
Net assets 15,018 11,368
------------- -------------- ---------------------------------------------------------------------------- --------
Equity
Issued share
capital 23 137 134
Share premium
account 8,752 6,900
Retained
earnings 6,129 4,334
------------- -------------- ---------------------------------------------------------------------------- --------
Total equity 15,018 11,368
------------- -------------- ---------------------------------------------------------------------------- --------
The profit/(loss) for the financial year dealt with in the
financial statements of the Parent Company was profit GBP1,582,000
(2022: loss GBP126,000). The financial statements were approved by
the Board of Directors and authorised for issue on 9 October 2023
and are signed on its behalf by:
Ian Lankshear Mark Hodgkins
Chief Executive Officer Chair
Company registration number: 04220106
Parent Company Statement of Changes in Equity
For the year ended 31 May 2023
Share
Share premium Retained Total
capital account earnings equity
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------------------------------------- -------------- --------- --------------
At 31 May 2021 2 - 2,366 2,368
------------------------------------ ------------------------------------- -------------- --------- --------------
Comprehensive income for the year
to 31 May 2022
Loss for the year - - (126) (126)
Other comprehensive expense - - - -
------------------------------------ ------------------------------------- -------------- --------- --------------
Total comprehensive income for the
year - - (126) (126)
------------------------------------ ------------------------------------- -------------- --------- --------------
Share based payment - - 120 120
Deferred tax in respect of share
options - - 1,713 1,713
Corporation tax in respect of share
options - - 378 378
Issue of share capital 132 7,407 - 7,539
Costs of share issue - (507) - (507)
Bonus share issue - - (117) (117)
------------------------------------ ------------------------------------- -------------- --------- --------------
At 31 May 2022 134 6,900 4,334 11,368
------------------------------------ ------------------------------------- -------------- --------- --------------
Comprehensive income for the year
to 31 May 2023
Profit for the year - - 1,582 1,582
Other comprehensive expense - - - -
------------------------------------ ------------------------------------- -------------- --------- --------------
Total comprehensive income for the
year - - 1,582 1,582
------------------------------------ ------------------------------------- -------------- --------- --------------
Share based payment - - 213 213
Issue of share capital 3 2,015 - 2,018
Costs of share issue - (163) - (163)
At 31 May 2023 137 8,752 6,129 15,018
------------------------------------ ------------------------------------- -------------- --------- --------------
Parent Company Statement of Cash Flows
For the year ended 31 May 2023
2023 2022
Note GBP'000 GBP'000
-----------------------------------------------------------------------
Cash flows from operating activities
Cash used in operations A 2 (1,748)
Tax received 1,671 3,378
----------------------------------------------------- ------- -------
Net cash generated from/(used in) operating
activities 1,673 1,630
----------------------------------------------------- ------- -------
Cash flows from investing activities
Purchase of property, plant and equipment (385) (174)
Additions to intangible assets (4,133) (2,241)
Acquisition of subsidiary (21) (68)
Net cash used in investing activities (4,539) (2,483)
----------------------------------------------------- ------- -------
Cash flows from financing activities
Proceeds from issuance of ordinary shares 1,855 6,915
Interest paid (782) (556)
Lease liability payments (127) (75)
Repayment of bank loans (832) (768)
Commitment fees - (80)
----------------------------------------------------- ------- -------
Net cash generated from financing activities 114 5,436
----------------------------------------------------- ------- -------
Net (decrease)/increase in cash and cash equivalents (2,752) 4,583
----------------------------------------------------- ------- -------
Cash and cash equivalents at beginning of year 5,655 1,072
----------------------------------------------------- ------- -------
Cash and cash equivalents at end of year B 2,903 5,655
----------------------------------------------------- ------- -------
Notes to the Parent Company Statement of Cash Flows
For the year ended 31 May 2023
A. Cash generated from operations
The reconciliation of profit/(loss) for the year to cash generated
from operations is set out below:
2023 2022
GBP'000 GBP'000
----------------------------------------------------------------------------------------------------
Profit/(loss) for the year 1,582 (126)
Adjustments for:
Depreciation 402 115
Amortisation of intangible assets 276 171
Share based payments 213 120
Net interest costs 782 556
Tax credit (1,903) (754)
----------------------------------------------------------- --------- ----------------------------
1,352 82
Working capital movements
Increase in inventories (89) (185)
Increase in trade and other receivables (4,077) (176)
Increase/(decrease) in trade and other payables 2,816 (295)
Decrease in provisions - (1,174)
----------------------------------------------------------- --------- ----------------------------
Cash used in operations 2 (1,748)
B. Analysis of net debt
At 1 June At 31 May
2021 Cash flow Non-cash changes 2022
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- --------- ---------------- ----------
Loans (5,799) 768 65 (4,966)
Lease liabilities (203) 50 25 (128)
------------------------------------------- -------------- --------- ---------------- ----------
Liabilities arising from
financing activities (6,002) 818 90 (5,094)
Cash and cash equivalents 1,072 4,583 - 5,655
------------------------------------------- -------------- --------- ---------------- ----------
Net debt (4,930) 5,401 90 561
------------------------------------------- -------------- --------- ---------------- ----------
At 1 June Non- cash At 31 May
2022 Cash flow changes 2023
GBP'000 GBP'000 GBP'0000 GBP'000
------------------------------------------- -------------- --------- ---------------- ----------
Loans (4,966) 832 (33) (4,167)
Lease liabilities (128) 324 (2,446) (2,250)
------------------------------------------- -------------- --------- ---------------- ----------
Liabilities arising from
financing activities (5,094) 1,156 (2,479) (6,417)
Cash and cash equivalents 5,655 (2,752) - 2,903
------------------------------------------- -------------- --------- ---------------- ----------
Net debt 561 (1,596) (2,479) (3,514)
------------------------------------------- -------------- --------- ---------------- ----------
Notes to the Consolidated Financial Statements
For the year ended 31 May 2023
1. General information
EnSilica plc is a public limited company incorporated in the
United Kingdom, listed on the Alternative Investment Market ('AIM')
of the London Stock Exchange. The Company is domiciled in the
United Kingdom and its registered office is 100 Park Drive, Milton
Park, Abingdon, OX14 4RY. The consolidated financial statements
comprise the Company and its subsidiaries (together referred to as
the 'Group').
The Company is a leading fabless design house focused on custom
ASIC design and supply for OEMs and system houses, as well as IC
design services for companies with their own design teams. The
Company has world-class expertise in supplying custom RF, mmWave,
mixed signal and digital ICs to its international customers in the
automotive, industrial, healthcare and communications markets. The
Company also offers a broad portfolio of core IP covering
cryptography, radar and communications systems. EnSilica has a
track record in delivering high quality solutions to demanding
industry standards. The Company is headquartered near Oxford, UK
and has design centres across the UK, India, Brazil and a sales
office in Germany.
In July 2022 the Company launched a subsidiary in Munich,
Germany that has the purpose of acting as the sales office to
further enhance and capitalise on the Group's opportunities.
Basis of preparation
The consolidated financial statements of the Company have been
prepared in accordance with UK-adopted International Accounting
Standards ("IFRS") as issued by the International Accounting
Standards Board (IASB) and the Companies Act 2006.
The financial information has been prepared under the historical
cost convention unless otherwise specified within these accounting
policies. The financial information and the notes to the financial
information are presented in thousands of pounds sterling
('GBP'000'), the functional and presentation currency of the Group,
except where otherwise indicated.
The principal accounting policies adopted in preparation of the
financial information are set out below. The policies have been
consistently applied to all periods presented, unless otherwise
stated.
Judgements made by the Directors in the application of the
accounting policies that have a significant effect on the financial
information and estimates with significant risk of material
adjustment in the next year are discussed in note 2.
2. Accounting policies
Going concern
As part of its normal business practice, the Company regularly
prepares both annual and longer-term plans which are based on the
directors' expectations. The assumptions around project sales,
staffing and purchases are based on management's expectations and
are consistent with the Company's experience since June 2022. As at
31 May 2023 the Company's financing arrangements consisted of a
loan of GBP2.7 million from SME Alternate Financing and a
Coronavirus Business Interruption Loan (CBIL) for GBP1.7 million
used to mitigate delays caused by Covid-19. The Company held a cash
balance of GBP3.1 million at that date. The possible continuing and
future impact of the Russia/Ukraine war on the Company has been
considered in the preparation of the financial statements.
The Directors are satisfied that the Company has adequate
resources to continue in business for the foreseeable future (being
a minimum period of 12 months from the date of signing the balance
sheet), and accordingly continue to adopt the going concern basis
in preparing the accounts.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries as at 31 May 2023.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if, and only
if, the Group has:
-- Power over the investee (i.e., existing rights that give it
the current ability to direct the relevant activities of the
investee)
-- Exposure, or rights, to variable returns from its involvement with the investee
-- The ability to use its power over the investee to affect its
returns generally, there is a presumption that a majority of voting
rights results in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
- The contractual arrangement(s) with the other vote holders of the investee
- Rights arising from other contractual arrangements
- The Group's voting rights and potential voting rights. The
Group re-assesses whether or not it controls an investee if facts
and circumstances indicate that there are changes to one or more of
the three elements of control.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of OCI are attributed to the
equity holders of the parent of the Group and to the
non-controlling interests, even if this results in the
non-controlling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to
bring their accounting policies in line with the Group's accounting
policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation. A change in the
ownership interest of a subsidiary, without a loss of control, is
accounted for as an equity transaction. If the Group loses control
over a subsidiary, it derecognises the related assets (including
goodwill), liabilities, non-controlling interest and other
components of equity, while any resultant gain or loss is
recognised in profit or loss. Any investment retained is recognised
at fair value.
Revenue recognition
Revenue, in accordance with IFRS15 is recognised at an amount
that reflects the consideration to which the Company expects to be
entitled in exchange for transferring control of goods or services
to a customer. Revenue is measured at the fair value of the
consideration received, excluding discounts, rebates, VAT and other
sales taxes or duty.
The following principles are applied to each area of revenue as
set out below:
-- Identify the contract with a customer
-- Identify the performance obligations in the contract
-- Determine the transaction price
-- Allocate the transaction price to the performance obligations in the contract
-- Recognise revenue when the Company satisfies performance obligations
Services
Design services are provided specifically for each customer and
may be either consultancy services only in respect of IC design or
design services as part of a design and supply model involving a
contract for the initial non-recurring engineering costs of
development (NRE). When the outcome of a contract can be measured
reliably, the Company recognises both income and costs over a
period of time by reference to the percentage of completion of the
contract as this is considered the most appropriate measurement of
performance of the obligations. If the outcome cannot be reliably
measured, all costs are expensed, and revenue is only recognised to
the extent that it is probable that costs are recoverable.
Sale of goods
Revenue from the sale of goods is recognised at a point in time
when control over the goods has passed to the buyer, usually on
dispatch of the goods when the amount of revenue can be measured
reliably and it is probable that the economic benefits associated
with the transaction will flow to the entity as the Company fulfils
its performance obligation.
Licensing and similar income
Income in respect of a licensing arrangement for the use of IP
is recognised on a straight line basis over the period of the
agreement or where typically linked to the delivery of design
services, recognised by reference to the underlying arrangement and
delivery of services.
Invoicing of revenue is undertaken in accordance with the terms
of the agreement with the customer. If amounts recognised in
respect of revenue for completed performance obligations have not
been invoiced at the financial position date, accrued income is
recognised. When an invoice is due for payment at the statement of
financial position date but the associated performance obligations
have not been fulfilled the amounts due are recognised as trade
receivables and a deferred income contract liability is recognised
for the value of the performance obligations that have not been
provided.
Employee benefits
The EnSilica Group operates a defined contribution pension
scheme. Contributions are recognised in the Statement of
Comprehensive Income in the year in which they become payable in
accordance with the rules of the scheme.
Short term employee benefits including holiday pay are
recognised as an expense in the period in which the service is
rendered.
Share based payment
The Company operates an equity-settled share-based compensation
plan in which the Company receives services from employees as
consideration for share options. The fair value is established at
the point of grant using an appropriate pricing model and then the
cost is recognised as an expense in administrative expenses in the
statement of comprehensive income, together with a corresponding
increase directly in equity over the period in which the services
are fulfilled. This is the estimated period to vesting in respect
of employees. The cumulative expense recognised for equity-settled
transactions at each reporting date until vesting date reflects the
extent to which the vesting period has expired and the Company's
best estimate of the number of equity instruments that will
ultimately vest.
Taxation
The taxation expense or credit comprises current and deferred
tax recognised in the profit for the financial period or in other
comprehensive income or equity if it arises from amounts recognised
in other comprehensive income or directly in equity. Current tax is
provided at amounts expected to be paid (or recovered) in respect
of the taxable profits for the period using tax rates and laws that
have been enacted or substantively enacted by the reporting
date.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the
consolidated financial statements. However, deferred tax
liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not accounted
for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that, at the
time of the transaction, affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the
end of the reporting period and are expected to apply when the
related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised to the extent that it is
regarded as more likely than not that they will be recovered.
Deferred tax assets and liabilities are offset only where there
is a legally enforceable right to offset and where the deferred tax
balances relate to the same taxation authority.
Non-recurring items
The Company classifies certain one-off charges or credits that
have a material impact on the Company's financial results as
'non-recurring items'. These are disclosed separately to provide
further understanding of the financial performance of the
Company.
Government grants
Grants are accounted under the accruals model, and grants of a
revenue nature are recognised in the Statement of Comprehensive
Income in the same period as the related expenditure. Government
grants relate to the receipt of Coronavirus Job Retention Scheme
income, to innovation grants and to the interest free period on
Coronavirus Business Interruption loans.
Foreign exchange
Transactions denominated in foreign currencies are translated
into sterling at the rates ruling on the date of the transaction.
Monetary assets or liabilities denominated in foreign currencies at
the Statement of Financial Position date are translated at the rate
ruling on that date and all translation differences are charged or
credited in the Statement of Comprehensive Income.
On consolidation, the results of overseas operations are
translated into Sterling at rates approximating to those ruling
when the transactions took place. All assets and liabilities of
overseas operations are translated at the rate ruling at the
reporting date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas
operations at actual rate are recognised in other comprehensive
income and accumulated in a separate equity reserve.
Intangible assets - research and development expenditure
Intangible assets are represented by capitalised development
costs including proprietary intellectual property developed by the
business for both its own use and for licensing to third
parties.
An internally generated intangible asset arising from
development (or the development phase) of an internal project is
recognised if, and only if, all of the following have been
demonstrated:
-- It is technically feasible to complete the development such
that it will be available for use, sale or licence;
-- There is an intention to complete the development;
-- The method by which probable future economic benefits will be generated is known;
-- The Company is able to sell or use the product;
-- There are adequate technical, financial and other resources
required to complete the development;
-- There are reliable measures that can identify the expenditure
directly attributable to the project during its development.
The amount recognised is the expenditure incurred from the date
when the project first meets the recognition criteria listed above.
Where the above criteria are not met, development expenditure is
charged to the consolidated income statement in the period in which
it is incurred. The capitalisation of development costs is subject
to a degree of judgement in respect of the viability of new
technology and know-how, supported by the results of testing and
customer trials and by forecasts for the overall value and timing
of sales which may be impacted by other future factors which could
impact the assumptions made.
Subsequent to initial recognition, internally generated
intangible assets are reported at cost less accumulated
amortisation and impairment losses. An impairment review is
undertaken annually, and amortisation commences once management
consider that the asset is available for use, i.e., when it is
judged to be in the location and condition necessary for it to be
capable of operating in the manner intended by management and the
cost amortised over the estimated useful life of the know-how based
on expected customer product cycles and lives. This is typically 5
to 10 years, and the charge is reported within administrative
expenses in the consolidated statement of comprehensive income.
During the year under review the policy to charge amortisation was
changed to match the level of revenue. This method allocated the
charge in a more representative manner, with larger charges made in
years where most revenue was recognised, but still over the same
time period. The prior year charge would not have been materially
affected by this change, and hence no adjustment was made to
reflect this.
As part of the impairment review, consideration is also made
regarding the validity of impairment provisions made in previous
periods, and to whether the provision is still warranted in the
period under review.
Research expenditure is recognised as an expense in the period
in which it is incurred.
Financial assets
Financial assets, including trade and other receivable balances
are initially recognised at transaction price, unless the
arrangement constitutes a financing transaction, where the
transaction is measured at the present value of the future receipts
discounted at a market rate of interest. Such assets are
subsequently carried at amortised cost using the effective interest
method. Cash and cash equivalents comprise cash held at bank which
is available on demand.
The Company applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables. The Company measures loss
allowances at an amount equal to lifetime expected credit loss
(ECL), which is estimated using past experience of the Company's
historical credit losses experienced over the three year period
prior to the period end. Historical loss rates are then adjusted
for current and forward-looking information on macroeconomic
factors affecting the Company's customers, such as inflation rates.
The gross carrying amount of a financial asset is written off
(either partially or in full) to the extent that there is no
realistic prospect of recovery.
To measure expected credit losses on a collective basis, trade
receivables and contract assets are grouped based on similar credit
risk and ageing. The contract assets have similar risk
characteristics to the trade receivables for similar types of
contracts.
The Company recognises loss allowances for expected credit
losses on financial assets measured at amortised cost to the extent
that these are material. The Company has determined that there is
no material impact of ECLs on the financial information.
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Financial liabilities
Financial liabilities, including trade and other payables and
bank borrowings are initially recognised at transaction price,
unless the arrangement constitutes a financing transaction, where
the debt instrument is measured at the present value of the future
receipts discounted at a market rate of interest. Debt instruments
are subsequently carried at amortised cost, using the effective
interest rate method.
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities. Trade payables are recognised
initially at transaction price and subsequently measured at
amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is
extinguished, that is when the contractual obligation is
discharged, cancelled or expires.
Borrowings are initially stated at the fair value of the
consideration received after deduction of wholly attributable issue
costs. Borrowings are subsequently stated at amortised cost using
the effective interest method.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or
sale are capitalised as part of the cost of the asset. All other
borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity
incurs in connection with the borrowing of funds.
Leases
The Company as lessee
The Company assesses whether a contract is or contains a lease,
at inception of the contract. The Company recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For
these leases, the Company recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Company uses its incremental
borrowing rate.
The incremental borrowing rate depends on the term, currency and
start date of the lease and is determined based on a series of
inputs including: the risk-free rate based on government bond
rates; a country-specific risk adjustment; a credit risk adjustment
based on bond yields; and an entity-specific adjustment when the
risk profile of the entity that enters into the lease is different
to that of the Company and the lease does not benefit from a
guarantee from the Company.
Lease payments included in the measurement of the lease
liability comprise:
-- Fixed lease payments (including in-substance fixed payments),
less any lease incentives receivable.
-- Variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date. The amount expected to be payable by the lessee under
residual value guarantees.
-- The exercise price of purchase options, if the lessee is
reasonably certain to exercise the options.
-- Payments of penalties for terminating the lease, if the lease
term reflects the exercise of an option to terminate the lease. The
lease liability is presented as a separate line in the consolidated
statement of financial position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the lease payments made.
The Company remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
-- The lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate.
-- The lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used).
-- A lease contract is modified and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of the modification.
The Company did not make any such adjustments during the years
presented.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any
initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Whenever the Company incurs an obligation for costs to dismantle
and remove a leased asset, restore the site on which it is located
or restore the underlying asset to the condition required by the
terms and conditions of the lease, a provision is recognised and
measured under IAS 37. To the extent that the costs relate to a
right-of-use asset, the costs are included in the related
right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the right-of-use asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Company expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
Variable rents that do not depend on an index or rate are not
included in the measurement the lease liability and the
right-of-use asset. The related payments are recognised as an
expense in the period in which the event or condition that triggers
those payments occurs and are included in the line "Other expenses"
in profit or loss.
As a practical expedient, IFRS 16 permits a lessee not to
separate non-lease components, and instead account for any lease
and associated non-lease components as a single arrangement. The
Company has not used this practical expedient. For contracts that
contain a lease component and one or more additional lease or
non-lease components, the Company allocates the consideration in
the contract to each lease component on the basis of the relative
stand-alone price of the lease component and the aggregate
stand-alone price of the non-lease components.
Property, plant and equipment
Property, plant and equipment assets are stated at cost less
depreciation. 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 provided on
all property, plant and equipment assets at rates calculated to
write off the cost of each asset on a straight line basis over its
expected useful life, as follows:
Asset class Depreciation method rate
Leasehold improvements Over the period of the lease
Computer Software 5 years straight line on cost
Office Equipment 4 years straight line on cost
Computer Equipment 3 years straight line on cost
Inventories
Inventories are valued at the lower of purchase cost and net
realisable value, after due regard for any slow moving items. Net
realisable value is based on selling price less anticipated costs
to completion and selling costs. Cost is based on the cost of
purchase on a weighted average basis. Work in progress and finished
goods include labour and attributable overheads.
At each reporting date, inventories are assessed for impairment.
If inventory is impaired, the carrying amount is reduced to its net
realisable value. The impairment loss is recognised immediately in
the Statement of Comprehensive Income.
Share capital and reserves
Financial instruments issued by the company are treated as
equity only to the extent that they do not meet the definition of a
financial liability. The parent company's ordinary shares are
classified as equity instruments.
The cumulative currency differences reserve represents
translation differences in respect of the net assets of overseas
subsidiaries.
Retained earnings comprises opening retained earnings and total
comprehensive income for the year, net of dividends paid.
New or revised accounting standards and interpretations
At the date of authorisation of these financial statements, the
company has not early adopted the following amendments to Standards
and Interpretations that have been issued but are not yet
effective:
Standard or Interpretation Effective for
accounting periods
commencing on
or after
Annual improvements to IFRS standards 2018-2020: 01 January 2023
Amendments to IAS 1: Classification of Liabilities
as Current or Non-Current
Amendments to IAS 1 and IFRS Practice Statement 01 January 2023
2: Disclosure of Accounting Policies
Amendments to IAS 8: Definition of Accounting 01 January 2023
Estimates
Amendments to IAS 12 Deferred Tax related to 01 January 2023
Assets and Liabilities arising from a Single
Transaction
The application of these standards is not expected to have a
material impact on the amounts reported in these financial
statements.
Critical accounting estimates and judgements
The preparation of the financial information under IFRS requires
the use of certain critical accounting assumptions and requires
management to exercise its judgement and to make estimates in the
process of applying the Company's accounting policies.
Management bases its estimates on historical experience and on
various other assumptions that management believes to be reasonable
in the circumstances. The key estimates and judgements used in the
preparation of this financial information that could result in a
material change in the carrying value of assets or liabilities
within the next twelve months are as follows:
Intangible assets - capitalisation, impairment and amortisation
of development expenditure
Judgement
The capitalisation of development costs is subject to a degree
of judgement in respect of the timing when the commercial viability
of new technology and know-how is reached, supported by the results
of testing and customer trials, and by forecasts for the overall
value and timing of sales which may be impacted by other future
factors which could impact the assumptions made. In making their
judgements, the Directors considered the carrying values that are
shown in note 12.
Estimation
Amortisation commences once management consider that the asset
is available for use, i.e. when it is judged to be in the location
and condition necessary for it to be capable of operating in the
manner intended by management and the cost is amortised over the
estimated useful life of the know-how based on experience of and
future expected customer product cycles and lives. The useful
economic lives and residual values are re-assessed annually. They
are amended when necessary to reflect current estimates, based on
technological advancement, future investments and economic
utilisation.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash
generating unit exceeds its recoverable amount, which is the higher
of its fair value less costs of disposal and its value in use. The
fair value less costs of disposal calculation is based on available
data from binding sales transactions, conducted at arm's length,
for similar assets or observable market prices less incremental
costs of disposing of the asset. The value in use calculation is
based on a DCF model. The cash flows are derived from the budget
for the next five years and do not include restructuring activities
that the Group is not yet committed to or significant future
investments that will enhance the performance of the assets of the
CGU being tested. The recoverable amount is sensitive to the
discount rate used for the DCF model as well as the expected future
cash-inflows and the growth rate used for extrapolation purposes.
These estimates are most relevant to goodwill and other intangibles
with indefinite useful lives recognised by the Group. The key
assumptions used to determine the recoverable amount for the
different CGUs, including a sensitivity analysis, are disclosed and
further explained in Note 12.
Revenue
Estimation
In accordance with the policy on revenue recognition, management
are required to judge the percentage of completion of the contract
in order to recognise both income and costs. The overall
recognition of revenue will depend upon the nature of the project
and whether it is billed on a time and materials basis, or, on a
project milestone basis where invoices can only be raised on
completion of specific, pre-agreed objectives. The company
maintains complete and accurate records of employees' time and
expenditure on each project which is regularly assessed to
determine the percentage completion, and thereby whether it is
appropriate to recognise any profits.
The level of management judgement is based on a strong track
record of successful completion of projects and accurate
forecasting of the time required together with the hindsight period
available to support the balance sheet date assumptions made.
Adjusting items
The Company has chosen to present an adjusted measure of profit
and earnings per share, which excludes certain items which are
separately disclosed due to their size, nature or incidence, and
are not considered to be part of the normal operating costs of the
Company. These costs include IPO preparation costs. The Company
believes adjusting for these items provides additional useful
information to users of the financial statements to enable a better
understanding of the Company's underlying financial performance.
The classification of items as adjusting requires significant
management judgement.
Treatment of costs incurred in relation to the IPO
The decision of how to split the costs incurred on an equity
raise via IPO requires judgement given that, whilst costs incurred
on an equity raise should be recognised against equity in share
premium, costs that relate to a stock market listing should be
recognised as an expense in the consolidated statement of
comprehensive income.
3. Analysis of revenue
The Board continues to define all the Company's trading as
operating in the integrated circuit design market and considers all
revenue to relate to the same, one operating segment. Revenue is
defined as per the accounting policies.
Revenue in respect of the supply of products is recognised at a
point in time. Design and related services including income for the
use of IP are recognised over the period when services are
provided.
2023 2022
GBP'000 GBP'000
----------------------------------------------
Recognised at a point in time
Supply of products 2,856 1,769
------------------------------ ------ ------
Recognised over time
NRE 8,175 6,250
Consultancy design services 9,400 7,073
Licensing related income 45 201
------------------------------ ------ ------
17,620 13,524
------------------------------ ------ ------
20,476 15,293
------------------------------ ------ ------
By destination:
UK 1,831 2,808
Rest of Europe 11,817 4,721
Rest of the World 6,828 7,764
------------------------------ ------ ------
Total revenue 20,476 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 year but that these may be different customers from year to
year. Revenue in respect of two customers amounted to GBP5.7
million and GBP5.4 million representing 28% and 27% of the revenue
for the year ended 31 May 2023 (2022: two different customers
amounted to GBP3.6 million at 36% and 19% respectively). The
Group's non-current assets comprising investments, tangible and
intangible fixed assets and the net assets by geographical location
are:
31 May 2023 31 May
Net assets Non-current 2022
Non-current assets assets Net assets
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------------------- -----------
United Kingdom 14,892 14,967 8,804 11,301
India 34 1,199 67 817
Brazil 73 67 87 35
Germany - (270) - -
--------------- ------ -------------- ---------- -----------
14,999 15,963 8,958 12,153
--------------- ------ -------------- ---------- -----------
4. 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 Company's view that excluding them from operating profit
gives a better representation of the underlying performance of the
business in the year.
The Company's primary results measure, which is considered by
the directors of EnSilica plc to better represent the underlying
and continuing performance of the Company, is 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.
2023 2022
GBP'000 GBP'000
--------------------------------------------------------
Operating profit before interest 825 6
Compensation for loss of office 85 -
IPO costs - 699
------------------------------------------ ----- -----
Adjusted Operating profit before interest 910 705
Depreciation 454 160
Amortisation of intangible assets 276 171
------------------------------------------ ----- -----
Adjusted EBITDA 1,640 1,036
------------------------------------------ ----- -----
Profit for the year 1,792 149
Compensation for loss of office 85 -
IPO costs - 699
------------------------------------------ ----- -----
Adjusted Profit for the year 1,877 848
------------------------------------------ ----- -----
Compensation for loss of office
Compensation for loss of office covers the non-recurring costs
in relation to the termination of employment of a Director as
described in the Remuneration Committee report.
IPO Costs
Attributable costs relating to the IPO performed during the
prior year were recognised within the consolidated statement of
comprehensive income as an exceptional cost. These costs were
excluded from the adjusted results of the Company since the costs
are one-off in nature and will not repeat in future years.
5. Operating profit
The operating profit is stated after charging:
2023 2022
GBP'000 GBP'000
----------------------------------------------------------------------------------------------------------------------
Depreciation of property, plant and equipment 164 106
Depreciation of right-of-use assets 290 54
Amortisation of intangible assets 276 171
Cost of inventory sold 1,863 1,717
Research and development costs 4,603 3,133
Share based payments 213 120
Foreign exchange (gains)/losses 50 (40)
Research and development expenditure credit (8) 14
Total government grants received (8) 14
---------------------------------------------------------------------------------------------------- --------- -----
Development expenditure was also capitalised in each year as shown
in note 12.
----------------------------------------------------------------------------------------------------------------------
Auditor's remuneration:
Audit of the Company and Company financial
statements - current year 80 53
- previous
year 11 -
Non-audit services 20 83
---------------------------------------------------------------------------------------------------- --------- -----
Total Fees payable to the Company's auditor 111 136
---------------------------------------------------------------------------------------------------- --------- -----
6. Information regarding directors and employees
Employees
The aggregate remuneration of employees comprised:
2023 2022
GBP'000 GBP'000
----------------------------------------------------------------------------------------------------------------------
Wages and salaries 8,727 6,601
Social security costs 989 679
Other pension costs 1,042 777
Share based payments 213 46
10,95311
---------------------------------------------------------------------------------------------------- --------- -----
Total 10,971 8,103
---------------------------------------------------------------------------------------------------- --------- -----
Average number of employees
The monthly average number of employees in the year was:
2023 2022
----------------------------------------------------------------------------------------------------------------------
Administration 16 10
Marketing 6 5
Research, development and technical 146 102
---------------------------------------------------------------------------------------------------- --------- -----
Total 168 117
---------------------------------------------------------------------------------------------------- --------- -----
6. Information regarding directors and employees - continued
Directors' remuneration
2023 2022
GBP'000 GBP'000
-----------------------------------------------------------
Directors' remuneration - aggregate emoluments 825 378
Company pension contributions in respect of
3 (2022:2) directors 66 12
Share based payments 146 -
----------------------------------------------- ----- ---
1,037 390
----------------------------------------------- ----- ---
Remuneration of the highest paid director 231 140
Company pension contributions 20 5
Share based payments - -
----------------------------------------------- ----- ---
251 145
----------------------------------------------- ----- ---
Key management is defined as those persons having authority and
responsibility for planning, directing, and controlling the
activities of the Company, and was considered to be only the
executive directors with compensation as disclosed above.
7. Interest income
2023 2022
GBP'000 GBP'000
-------------------------------------------------------------
Bank interest receivable 7 25
----------------------------------------------- ----- -----
7 25
----------------------------------------------- ----- -----
8. Interest expense
2023 2022
GBP'000 GBP'000
-------------------------------------------------------------
Interest on bank and other borrowings 565 461
Lease liability financing charges 201 15
Interest on conversion of convertible loan
note - 47
Other interest 19 42
----------------------------------------------- ----- -----
785 565
----------------------------------------------- ----- -----
9. Taxation on profit
2023 2022
GBP'000 GBP'000
-------------------------------------------------------------
Current taxation
UK corporation tax credit 2,064 1,293
Foreign tax charge (159) (71)
----------------------------------------------- ----- -----
1,905 1,222
----------------------------------------------- ----- -----
Deferred taxation
Origination and reversal of timing differences 160 (539)
Charge due to change in tax rate - -
----------------------------------------------- ----- -----
160 (539)
----------------------------------------------- ----- -----
Tax credit on profit 1,745 683
----------------------------------------------- ----- -----
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 20%
(2022: 19%). The differences are reconciled below:
2023 2022
GBP'000 GBP'000
--------------------------------------------------------------
Profit/(loss) before taxation 47 (534)
-------------------------------------------- ------- -------
Corporation tax at standard rate (2023:20%,
2022 19%) 9 (102)
Factors affecting charge for the year:
Disallowable expenses 164 135
Allowances and enhanced deductions (966) -
Research and development allowances (1,940) (1,205)
Reduced rate on surrender of R&D losses for
tax credit 762 360
RDEC expenditure credit (62) -
Foreign tax charges 85 -
Deferred tax 160 -
Share options 43 -
Charge due to change in tax rate - 129
-------------------------------------------- ------- -------
Tax credit on profit/(loss) (1,745) (683)
-------------------------------------------- ------- -------
10. Earnings per share
2023 2022
------------------------------------------------------------------
Profit used in calculating EPS (GBP'000) 1,792 149
Number of shares for basic EPS ('000s) 75,833 75,232
Basic earnings per share (pence) 2.36 0.20
Number of shares for diluted EPS ('000s) 77,874 76,106
Diluted earnings per share (pence) 2.30 0.20
-------------------------------------------------- ------ ------
Adjusted Earnings per share
2023 2022
------------------------------------------------------------------
Adjusted Profit used in calculating EPS (GBP'000) 1,877 848
Number of shares for basic EPS ('000s) 75,833 75,232
Adjusted basic earnings per share (pence) 2.47 1.13
Number of shares for diluted EPS ('000s) 77,874 76,106
Adjusted diluted earnings per share (pence) 2.41 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 6,684,300 Ordinary shares and warrants over 450,000
Ordinary shares are potentially dilutive to profit.
11. Property, plant and equipment
Right-of-use Leasehold Office Right-of-use Computer
property improvements equipment equipment equipment Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------ ---------------- ------------- ---------- -------
Cost
At 1 June 2021 194 - 56 174 321 745
Additions - - 142 - 134 276
Exchange adjustments 19 - - - - 19
--------------------- ------------ ---------------- ------------- ------------ ---------- -------
At 31 May 2022 213 - 198 174 455 1,040
--------------------- ------------ ---------------- ------------- ------------ ---------- -------
Depreciation
At 1 June 2021 (112) - (46) (100) (225) (483)
Charge for the year (29) - (23) (25) (83) (160)
Exchange adjustments (15) - - - - (15)
--------------------- ------------ ---------------- ------------- ------------ ---------- -------
At 31 May 2022 (156) - (69) (125) (308) (658)
--------------------- ------------ ---------------- ------------- ------------ ---------- -------
Net book value
At 31 May 2022 57 - 129 49 147 382
--------------------- ------------ ---------------- ------------- ------------ ---------- -------
Cost
At 1 June 2022 213 - 198 174 455 1,040
Additions 1,825 240 45 423 110 2,643
Exchange adjustments - - (3) - (2) (5)
---------------------- ------ ----- ------ ------ ------ --------
At 31 May 2023 2,038 240 240 597 563 3,678
---------------------- ------ ----- ------ ------ ------ --------
Depreciation
As at June 2022 (156) - (69) (125) (308) (658)
Charge for the year (211) (24) (43) (79) (97) (454)
Exchange adjustments - - - - - -
---------------------- ------ ----- ------ ------ ------ --------
At 31 May 2023 (367) (24) (112) (204) (405) (1,112)
---------------------- ------ ----- ------ ------ ------ --------
Net book value
At 31 May 2023 1,671 216 128 393 158 2,566
---------------------- ------ ----- ------ ------ ------ --------
Right-of-use Leasehold Office Right-of-use Computer
property improvements equipment equipment equipment Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------ --------- -------
Cost
At 1 June
2021 - - 52 126 347 525
Additions - - 96 - 78 174
At 31 May
2022 - - 148 126 425 699
------------- ------------ --------- -------
Depreciation -
At 1 June
2021 - - (43) (92) (221) (356)
Charge for
the
year - - (19) (26) (70) (115)
At 31 May
2022 - - (62) (118) (291) (471)
------------- --------------------------------- -------------------- ----------------- ------------ --------- -------
Net book
value
At 31 May
2022 - - 86 8 134 228
------------- --------------------------------- -------------------- ----------------- ------------ --------- -------
Cost
At 1 June 2022 - - 148 126 425 699
Additions 1,825 241 41 423 103 2,633
At 31 May 2023 1,825 241 189 549 528 3,332
--------------------- ------ ----- ----- ------ ------ ------
Depreciation
At 1 June 2022 - - (62) (118) (291) (471)
Charge for the year (183) (24) (35) (79) (81) (402)
At 31 May 2023 (183) (24) (97) (197) (372) (873)
--------------------- ------ ----- ----- ------ ------ ------
Net book value
At 31 May 2023 1,643 217 92 352 156 2,459
--------------------- ------ ----- ----- ------ ------ ------
12. Intangible assets
Development Intellectual
costs Software property Total
Group and Company GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------- -------- ------------ --------
Cost
At 1 June 2020 7,471 - - 7,471
Additions 1,672 123 - 1,795
---------------------------- ----------- --------
At 31 May 2021 9,143 123 - 9,266
--------
Amortisation and impairment
At 1 June 2020 (627) - - (627)
Charge for the year (110) (4) - (114)
Impairment in the year (2,019) - (2,019)
At 31 May 2021 (2,756) (4) - (2,760)
--------
Net book value
At 31 May 2021 6,387 119 - 6,506
Cost
At 1 June 2021 9,143 123 - 9,266
Additions 2,241 - - 2,241
At 31 May 2022 11,384 123 - 11,507
--------
Amortisation and impairment
At 1 June 2021 (2,756) (4) - (2,760)
Charge for the year (148) (23) - (171)
Impairment in the year - - - -
---------------------------- ----------- --------
At 31 May 2022 (2,904) (27) - (2,931)
--------
Net book value
At 31 May 2022 8,480 96 - 8,576
Cost
At 1 June 2022 11,384 123 - 11,507
Additions 4,094 - 39 4,133
At 31 May 2023 15,478 123 39 15,640
Amortisation and impairment
At 1 June 2022 (2,904) (27) - (2,931)
Charge for the year (248) (24) (4) (276)
Impairment in the year - - - -
At 31 May 2023 (3,152) (51) (4) 3,207
Net book value
At 31 May 2023 12,326 72 35 12,433
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 11.50% (2022:10%),
being the cost of capital for the CGU.
13. Investments in subsidiaries
Company 31 May 31 May
2023 2022
GBP'000 'GBP000
Investments in subsidiaries at
1 June 68 -
Investment in EnSilica Do Brasil
Sociedade Unipessoal Limitada - 68
Investment in EnSilica GMBH 21 -
EnSilica India Private Limited - -
Total 89 68
Name Country of Nature of Proportion
incorporation business of Ordinary
shares directly
held
EnSilica India Private Limited
Registered office: No.2064,
2(nd) floor, Siri Iris, 24(th)
Main,
1 st Sector, HSR layout, Semiconductor
Bangalore, 560 102 India design consultants 99.99%
EnSilica ADAS Limited
Registered office: Building
3 115 Olympic Avenue, Milton Semiconductor
Park, Abingdon, Oxfordshire, design consultants
United Kingdom, OX14 4SA UK (dormant) 100.00%
EnSilica Do Brasil Sociedade
Unipessoal Limitada
Registered office: 6681 Av
Ipiranga, Sala 1009 Preio
99,
Partenon, Porto Alegre, Semiconductor
Rio Grande do Sul, Brasil Brazil design consultants 100.00%
EnSilica Germany GMBH
Registered Office: c/o Steuerberaterin Semiconductor
Renate Schnürch, Nymphenburger design sales
Straße 1, 80335 Munich Germany office 100.00%
On 18 July 2022 the company invested 25,000 Euros in
consideration for a 100% interest in the share capital of EnSilica
GMBH, with a registered office situated at EnSilica Germany GmbH,
c/o Steuerberaterin Renate Schnürch, Nymphenburger Straße 1, 80335
Munich
14. Inventories
31 May 2023 31 May 2022
Group and Company GBP'000 GBP'000
Raw materials and consumables 304 215
No impairment losses have been recorded in respect of
inventory in the period.
15. Trade and other receivables
31 May 2023 31 May 2022
Group GBP'000
Current
Trade receivables 3,893 1,541
Other receivables 807 458
Prepayments 483 248
Accrued income 1,842 1,010
Total 7,025 3,257
Analysis of expected credit losses is included in note
22.
Company
31 May 2023 31 May 2022
GBP'000 GBP'000
Current
Trade receivables 3,893 1,297
Other receivables 497 357
Receivable from subsidiary undertakings 271 245
Prepayments 483 245
Accrued income 1,842 1,010
Total 6,985 2,909
Analysis of expected credit losses is included in note 22.
16. Cash and cash equivalents
31 May 2023 31 May 2022
Group GBP'000 GBP'000
Cash at bank and in hand 3,095 5,742
Company
Cash at bank and in hand 2,903 5,655
17. Borrowings
Group and Company 31 May 2023 31 May 2022
GBP'000 GBP'000
Current
Bank loans 883 800
Non-current
Bank loans 3,284 4,166
4,1674
Total 4,167 4,966
A bank loan of GBP1,657,000 (2022: GBP2,068,000) 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 GBP2,662,000 (2022: GBP3,088,000) 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 31 May 2023 of GBP152,000 (2022: GBP189,000) which are
being amortised over the period to the loan repayment dates.
18. Lease liabilities
The Company has entered into lease contracts in respect of
property in the jurisdictions from which it operates, and the use
of equipment which are typically for terms of 3 to 5 years. In
respect of options to extend the initial period these are factored
into the liabilities where the Company plans to use these for a
longer period. For property leases, it is customary for lease
contracts to be reset periodically to market rental rates. Leases
of equipment comprise only fixed payments over the lease terms.
Right of use assets, additions and amortisation are included in
note 11. Interest expenses relating to lease liabilities are
included in note 8.
The amounts relating to leases were
as follows:
31 May 2023 31 May 2022
Group GBP'000 GBP'000
Short term lease expense 257 100
Cash outflow for capitalised leases 169 109
Total cash outflow from leases 426 209
Company
Short term lease expense 233 90
Cash outflow for capitalised leases 130 72
Total cash outflow from leases 363 162
The maturity of lease liabilities were as follows:
31 May 2022
31 May 2023 GBP'000
Group GBP000
Within 1 year 171 88
1-2 years 193 105
2-5 years 1,911 -
Total 2,275 193
Company
Within 1 year 146 40
1-2 years 193 47
2-5 years 1,911 41
Total 2,250 128
19 Trade and other payables
31 May
2023 31
May 2022
Group GBP'000 GBP'000
Current
Trade payables 2,388 919
Taxation and social security 281 227
Other payables 161 75
Accruals 1,293 1,156
Contract liabilities 600 14
Total 4,723 2,391
31 May
2023 31
May 2022
Company GBP'000 GBP'000
Current
Trade payables 3,324 1,620
Taxation and social security 236 200
Other payables - 8
Accruals 1,483 1,018
Contract liabilities 600 14
Total 5,643 2,860
The carrying amounts of trade and other payables are considered
to be the same as their fair values, due to their short-term
nature.
In the year ended 31 May 2023 GBP14,000 of revenue was
recognised in respect of contract liabilities at 31 May 2022 (year
ended 31 May 2022: GBP859,000 in respect of liabilities at 31 May
2021).
20. Provisions
31 May 2023 31 May 2022
At 31 May 2022 140 95
Foreign exchange revaluation (6)
Gratuity redeemed (3) (7)
Provided in year 68 52
Overseas employee provisions 199 140
The provision relates to the liability under the Government of
India Gratuity Act in respect of payments to employees on cessation
of service in respect of death or disability or otherwise after
more than 5 years' service.
21. Deferred tax liabilities
Accelerated
Intangible capital
assets allowances Tax losses Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 May 2021 1,596 64 (173) (313) 1,174
Charge/(credit)
for the year 524 15 - - 539
Debited to equity
in the year - - - - (1,713) (1,713)
At 31 May 2022 2,120 79 (173) (2,026) -
Charge/(credit)
for the year 952 - - (792) 160
At 31 May 2023 3,072 79 (173) (2,818) 160
Deferred tax has been recognised at an average rate of 25%
(2022: 25%).
22. Financial Instruments
Financial risk management
The determination of financial risk management policies and the
treasury function is managed by the CFO. Policies are set to reduce
risk as far as possible without unduly affecting the operating
effectiveness of the Company.
The Company's activities expose it to a variety of financial
risks, the most significant being credit risk, liquidity risk and
interest rate risk together with a degree of foreign currency risk
as discussed below.
Categories of financial instruments
The Group has the below categories of financial instruments:
Recognised at amortised cost 31 May 2023 31 May 2023
GBP'000 GBP'000
Cash and bank balances 3,095 5,742
Trade receivables - net 3,893 1,541
Accrued income 1,842 1,010
Other receivables 807 457
Total financial assets 9,637 8,750
Trade payables 2,388 919
Other payables 1,454 1,231
Bank loans 4,167 4,966
Total financial liabilities 8,009 7,116
There were no assets or liabilities at 31 May 2023 or 2022 that
were recognised and measured at fair value in the financial
information
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss for the
Company. Financial instruments, which potentially subject the
Company to concentration of credit risk, consist primarily of cash
and cash equivalents, trade accounts receivable and accrued
income.
The Company places its cash and cash equivalents with major
financial institutions, which management assesses to be of
high-credit quality in order to limit the exposure of each cash
deposit to a minimal level.
Trade receivables
Trade accounts receivable are derived primarily from design
income and have 0-45 day payment terms, most commonly 30 days. The
largest customer accounts for 31% of the balance at 31 May 2023
(2022: 25%) of the trade receivable balance as a result of the
invoices relating to design projects with a significant element
being in advance of the design services being carried out. Credit
risk with respect to accounts receivable is otherwise dispersed
across a number of customers. Collateral is not required for
accounts receivable. The credit worthiness of customers with
balances in trade receivables not yet due has been assessed as
high.
The ageing of trade receivables according to their original due
date is detailed below:
31 May 2023 31 May 2022
GBP'000 GBP'000
Not yet due 3,452 1,179
1-30 days past due date 454 229
Over 30 days past due date (13) 133
Total 3,893 1,541
The expected credit loss on balances is considered immaterial.
Other receivables and accrued income are considered to bear
similar risks to trade receivables. Hence any expected credit loss
on other financial assets is considered to be immaterial.
Liquidity risk
The Company funds its business through bank and other loans and
from cash generated from operations including the payment terms
with customers to fund larger design projects. Details of the
Company's borrowings are discussed in note 17. The Company monitors
and manages cash within its banking facilities to mitigate any
liquidity risk it may face. The following table shows the Company's
contractual maturities of financial liabilities based on
undiscounted cash flows including interest charges and the earliest
date on which the Company is obliged to make repayment:
Less than one 1-2 years 2-5 years More than 5 Total
year GBP'000 GBP'000 years GBP'000
At 31 May 2022 GBP'000 GBP'000
Trade and other
payables 2,151 - - - 2,151
Bank loans 1,383 1,390 3,722 396 6,891
Lease liabilities 98 71 54 - 223
Total 3,632 1,461 3,776 396 9,265
Less than one More than 5
year 1-2 years 2-5 years years Total
At 31 May 2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other
payables 2,388 - - - 2,388
Bank loans 1,390 1,390 3,327 - 6,107
Lease liabilities 389 398 1,197 1,408 3,392
Total 4,167 1,788 4,524 1,408 11,887
Interest rate risk
The bank loan of GBP1.657 million is subject to interest at
rates of 8% over SONIA if this exceeds 10%. A 1% increase in
interest rates would therefore have a GBP16,570 impact per annum on
finance costs at current base rates.
The other bank loan bears interest at a fixed rate of 13%. A 1%
increase in interest rates would therefore have had no impact on
finance costs at current base rates.
Currency risk
The Company operates from the UK with sterling being its
functional currency and has a degree of exposure to foreign
currency risk, with this predominantly being income and expenses in
US dollars together with Indian rupees in respect of both income
and operational activity in the Indian subsidiary. The impact of a
10% fluctuation in all foreign exchange rates moving in the same
direction against GBP has been assessed to be an overall impact of
approximately GBP99,000 as mitigated by some matching of income and
expenses together with the relatively short payment terms for
accounts receivable (including the USD balance at 31 May 2023).
The net underlying
foreign currency balances,
comprising overseas
assets
and liabilities, cash, USD Euro INR Total
receivables and payables GBP'000 GBP'000 GBP'000 GBP'000
in the UK, in the
Company statement
of financial position
by underlying currency
at the year-end were:
At 31 May 2021 1,644 892 605 3,141
At 31 May 2022 1,453 352 388 2,193
At 31 May 2023 2,612 1,482 352 4,446
Capital management
The Company's capital comprises share capital and retained
earnings. The Company's objectives when maintaining capital
are:
To safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders and to provide an
adequate return to shareholders by pricing products and services
commensurately with the level of risk.
The capital structure of the Company consists of shareholders
equity as set out in the consolidated statement of changes in
equity. The longer term funding requirements for development have
been financed from term bank debt. All working capital requirements
are financed from existing cash resources.
The Company sets the amount of capital it requires in proportion
to risk in conjunction with the retained earnings. The Company
manages its capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or
adjust the capital structure, the Company may adjust the amount of
dividends paid to shareholders, return capital to shareholders,
issue new shares, or sell assets to reduce debt.
23. Share capital
At 31 May At 31 May
2023 2022
Allotted, called up and fully paid GBP'000 GBP'000
1,700,000 A ordinary shares of GBP0.001 - -
each
273,000 B ordinary shares of GBP0.001 - -
each
78,115,158 (2022:75,231,809) ordinary
shares of GBP0.001 each 78 75
59,190 (2022: 59,190) Deferred shares
of GBP1.00 each 59 59
137 134
On 14 March 2023, t he Company announced a retail offer to
existing shareholders to raise GBP2.0 million before expenses via a
placing of 2,857,143 new Ordinary shares. The new Ordinary shares
are credited as being fully paid, rank pari passu and carry rights
to dividends, distribution of capital upon winding up and the right
to receive notice of, attend, speak and vote at a general
meeting.
Subsequently, on 15 March 2023, t he Company announced a
supplementary retail offer to raise up to GBP0.5 million before
expenses via a placing at 70 pence per new Ordinary share. The
results of the offer led to the issuance of 26,206 new Ordinary
shares, raising GBP18,344.20 before expenses. The new Ordinary
shares are credited as being fully paid, rank pari passu and carry
rights to dividends, distribution of capital upon winding up and
the right to receive notice of, attend, speak and vote at a general
meeting.
24. Share based payment
In the previous year, options were granted in May 2022 to
directors and employees under the new 2022 LTIP scheme over
6,461,500 ordinary shares at an exercise price of GBP0.50 per
share. These are subject to performance conditions in respect of
earnings per share for the year ending 31 May 2025. The share based
payment charges for these options was calculated at a fair value of
18 pence each using a Black Scholes share pricing model with 50%
volatility, 2% risk free rate and 3.5 year vesting period
assumptions.
Options were also granted in May 2022 over 200,000 ordinary
shares to non-executive directors at an exercise price of GBP0.50
subject only to a 4 year vesting period. A fair value of 19 pence
per share has been calculated using a Black Scholes share pricing
model with 50% volatility, 2% risk free rate and 4 year vesting
period assumptions.
In the current year options were granted in December 2022 to
employees under the new 2022 LTIP scheme over 395,800 ordinary
shares at an exercise price of GBP0.895 subject to a 2.5 year
vesting period. These are subject to performance conditions in
respect of earnings per share for the year ending 31 May 2025 where
the percentage of the amount of option that will vest depends on
the following sliding scale:
Earnings per share Options to vest
Less than 2p 0%
2p 25%
Greater than 2p but less than
5p 25 to 75% pro rate
75 to 100% pro
Between 5-6.5p rate
Greater than 6.5p 100%
The options have an expiry on the tenth anniversary of the date
of the grant.
The share based payment charges for these options have been
calculated at a fair value of 29 pence each using a Black Scholes
share pricing model with 50% volatility, 4% risk free rate and
vesting period assumptions of between 2.5 and 3 years.
A separate scheme operates in respect of the non-executive
directors that are not subject to a performance period and will
vest 33.33% on the second anniversary of the date of the grant and
66.67% on the fourth anniversary of the date of the grant, with a
similar 10 year lifespan from date of grant.
At 31 May 2023 none of the share options had vested, and none
remained exercisable at the year-end date.
A share based payment charge of GBP213,000 (2022: GBP46,000) has
been recognised in the statement of comprehensive income.
Average D options 2022 LTIP Non-executive
Exercise Number scheme options
Price Number Number
Share options outstanding GBP0.001 811,000 - -
at 31 May 2021
Exercised in May 2022 GBP0.001 (718,000) - -
Remaining options aligned
to new ordinary share structure GBP0.001 331,440 - -
Share options granted during
the year GBP0.50 - 6,461,500 200,000
Share options outstanding
at 31 May 2022 GBP0.47 424,440 6,461,500 200,000
Options lapsing in the year GBP0.50 - (373,000)
Share options granted during
the year GBP0.895 - 395,800 -
Share options outstanding
at 31 May 2023 GBP0.49 424,440 6,484,300 200,000
The weighted average exercise price for all options is GBP0.49
at 31 May 2023 (GBP0.47 per share at 31 May 2022) and the average
remaining vesting period was estimated at 2 years at 31 May 2023
(2022: 3 years).
There are also arrangements in place under which employees have
an option to buy existing shares from certain shareholders at
GBP0.50 per share. These will not impact the company nor dilute
shareholdings and are considered outside the scope of share based
payment accounting.
During the previous year, warrants were issued to the listing
advisers over 450,000 ordinary shares at an exercise price of
GBP0.50, exercisable in the 3 years following the date of admission
to AIM. The share based payment of GBP74,000 in respect of the
services was calculated at a fair value of 17 pence per share using
a Black Scholes model with 50% volatility, 2% risk free rate and
immediate vesting period assumption, and relates to expenses that
have been charged to the share premium account with no impact on
the income statement.
The weighted average exercise price for the warrants is GBP0.50
at 31 May 2023.
Exercise price Ordinary shares
Exercisable at 01 June 2022
brought forward 450,000
Warrants issued over Ordinary Nil
shares in year
Exercisable at 31 May 2023 450,000
25. Share premium
31 May 2023 31 May 2022
Group and Company GBP'000 GBP'000
At 1 June 6,900 -
Conversion of loan notes into ordinary shares - 1,419
Issue of new shares 2,015 5,988
Expenses relating to share issue (163) (507)
Total 8,752 6,900
The net proceeds of the Fundraising are to be used primarily to
develop further the Company's depth and strength of offering. As
well as providing the Company with funds it will enhance both
transparency and the international profile of the Company with
customers, allow the Company to access equity capital to fund
growth and support potential M&A opportunities, and enable the
Company to attract, recruit and retain key employees.
Share issue costs relate to commissions charged and other
directly attributable costs of the fundraise exercise.
26. Post balance sheet events
There have been no events since the year end that warrant
specific mention in the Company's financial statements at 31 May
2023.
27. Related party transactions
During the year the company undertook transactions with the
following related parties:
2023 2022
Transactions Balance Transactions Balance
during owing/(owed) during owing/(owed)
the year at the year at
31 May 31 May
GBP'000 2023 GBP'000 2022
Name Services GBP'000 GBP'000
Semiconductor
EnSilica India Private design
Limited services 1,282 Nil 1,428 Nil
Semiconductor
EnSilica Do Brasil Sociedade design
Unipessoal Limitada services 1,187 Nil 614 Nil
Semiconductor
EnSilica GMBH sales services 271 (271) - -
Non-Executive Directors
services prior to Company
appointment:
Hexameter Services Limited Consultancy Nil Nil 14 Nil
services -
D Tilston
Janet Collyer Consultancy Nil Nil 14 Nil
services
Details of Directors' remuneration for services during the year
is separately disclosed as part of the remuneration committee
report.
28. Non-controlling interests
A non-controlling interest exists for the Company's subsidiary
EnSilica India Private Limited, where 1 shareholder holds 1 share
in the Company, representing 0.002% of the issued share
capital.
The summarised results of the company are shown below:
2023 2022
GBP'000 GBP'000
Current assets 1,460 1,236
Non-current assets 34 67
Current liabilities (95) (319)
Non-current liabilities (199) (167)
1,200 817
-----
Equity attributable to owners of the Company 1,200 817
Non-controlling interests -
Revenue 1,536 2,251
Expenses 1,108 (1,940)
Profit for the year 428 311
Profit attributable to the owners of the Company 428 311
Profit attributable to the non-controlling - -
interests
Profit for the year 428 311
-----
29. Reserves
Retained earnings
Retained earnings includes all current and prior year retained
profits and losses attributable to the owners of the parent
company.
Currency translation reserve
The currency translation reserve includes all translation
differences that arise from the conversion of the financial
statements of the Company's foreign subsidiary entities into pound
sterling (GBP).
Share premium account
The share premium account includes the amount by which a share
has been issued in excess of its nominal value. The account has
also been used to offset costs in relation the raising of funds via
a share issue (note 25).
Glossary of Terms
5G The fifth generation technology standard for broadband
cellular networks, which cellular phone companies began
to deploy worldwide in 2019.
Analog A type of signal in an electronic circuit that takes on
a continuous range of values rather than only a few discrete
values
ADAS Advanced driver-assistance systems
AGM Annual General Meeting of the Company's shareholders
AI Artificial Intelligence
ASIC An application-specific integrated circuit is an integrated
chip, custom-designed for a specific application
ASSP Applications Specific Standard Part
Beamforming Beamforming or spatial filtering is the technique used
in antenna for directional signal transmission or reception.
This is achieved by combining elements in an array of
elements in such a way that signals at particular angles
experience constructive interference whilst others experience
destructive interference. Beamforming is used in Radar,
5G antenna and satellites, it allows the focusing of one
or more beams to improve the sensitivity of the system.
CAGR Compound Annual Growth Rate, a method of assessing the
average growth of a value over time.
CEO Chief Executive Officer
CFO Chief Financial Officer
Chip Electronic integrated circuit
CMOS complementary metal-oxide semiconductor
Digital A type of signal used to transit information that has
only discrete levels of some parameter ("usual voltage").
DSE Display Screen Equipment
EBIT Earnings before interest and taxes (also known as operating
profit)
EBITDA Earnings before depreciation, amortisation, interest and
taxes
ESG Environmental, Social and Governance
Fabless A company that design and delivers semiconductors by outsourcing
the fabrication ("manufacturing") process.
Foundry A manufacturing plant where silicon wafers are produced.
Group The Company and its subsidiaries
IC Integrated Circuit. An electronic device with numerous
components on a single chip.
IFRS International Financial Reporting Standards
IP Intellectual Property
IPO Initial Public Offering
Ka or A portion of the microwave part of the electromagnetic
Ka-band spectrum defined as frequencies in the range 26.5 to 40
gigahertz (GHz).
KPIs Key performance indicators, a range of indicators to assess
performance, to ensure performance is aligned to strategy
and to ensure continued alignment with shareholder interests.
LTIP Long Term Incentive Plan
Mixed A combination of analog and digital signals being generated,
Signal controlled or modified on the same chip.
mmWave Millimetre wave; the band of radio frequencies in the
electromagnetic spectrum from 30 to 300 gigahertz (GHz)
often used for Satellite, 5G and Radar systems. These
are also microwave frequency bands.
NRE Non-Recurring engineering cost
OEM Original equipment manufacturer; such as car manufacturers
or complex products which include sub-systems from other
suppliers.
OSAT Outsourced semiconductor assembly and test
QCA The Quoted Companies Alliance
R&D Research and development
RF Radio frequency
SIG Special Interest Group
Semiconductor A base material halfway between a conductor and an insulator,
which can be physically altered by mixing in certain atoms.
Semiconductors form the basis for present-day electronics.
SoC System-on-Chip. An integrated circuit with all the necessary
electronic circuits and parts for a given system.
Tape-Out A major milestone in every ASIC project lifecycle representing
the transition between the design phase and the manufacturing
phase. It means the design phase is completed and you
are ready to send out the design files to the Fab for
mask generation and production.
Wafer A slice of silicon from a 4, 5, 6 or 8 inch diameter silicon
bar and used as the foundation on which to build semiconductor
products
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FR FZMGGLLVGFZM
(END) Dow Jones Newswires
October 10, 2023 02:00 ET (06:00 GMT)
Ensilica (LSE:ENSI)
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Ensilica (LSE:ENSI)
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から 5 2023 まで 5 2024
