Last checked at 17 Oct 2022 07:00
RNS Number : 0211D EnSilica PLC 17 October 2022 16017 October 2022
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EnSilica plc
("EnSilica", the "Company" or the "Group")
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Auite Full Year Results for the Year Ene 31 May 2022
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Strong operational an financial performance with significant market growth potential
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EnSilica (AIM: ENSI), a leaing mixe signal chipmaker announces full year results for the year ene 31 May 2022 ("FY 22").
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Financial highlights
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183160160 Revenue up 77% to 1631.3 million (FY21: 1638.6 million)
183160160 Ajuste operating profit 1630.70 million (FY21 1630.17 million loss).
183160160 Gross margin 33% (FY21: 23.9%)
183160160 Ajuste EBITDA up significantly to 1631.0 million (FY21: 1630.06 million)
183160160 Cash an cash equivalents at 31 May 2022 of 163.7 million (31 May 2021: 1631.4 million)
183160160 Net cash at 31 May 2022 of 1630.6 million (31 May 2021: Net ebt 1634.7 million)
183160160 Net assets increase at 31 May 2022 by 328% (31 May 2021: ecrease 39%)
183160160 Further investment in IP of 1632.24 million (FY21: 1631.67 million)
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Operational highlights
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183160160 Successfully floate on AIM, a market operate by the Lonon Stock Exchange, in May 2022, raising 1636m million espite macro-economic uncertainty an the onset of conflict in Ukraine.
183160160 Increase in average heacount in the perio to 117 (FY21: 96)
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Post perio-en highlights an outlook
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183160160 Successfully brought a mixe signal automotive ASIC to commercial prouction following the official launch of a new flagship vehicle by a premium automotive company.
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183160160 Appointe a new Vice Presient of Worlwie Sales an entere into non-exclusive Sales Representative Agreements with Quantum Leap Solutions Inc.160 (covering the North America region) an Cear Technologies Limite (covering the UK, Noric regions an Polan).
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183160160 Hire an ASIC implementation team comprising of six engineers an the purchase of relate non-core IP assets from Blu Wireless Technologies Limite.
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183160160160 Aware a significant inustrial ASIC supply project worth in excess of US30 million over 7 years.
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Outlook
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183160160160 EnSilica have starte the current financial year strongly, buoye by our existing contracts which unerpin FY23 momentum.
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183160160160 The Boar firmly believes that the Company is well place to continue to capitalise on the sizeable growth opportunity within the semiconuctor inustry, supporte by a significant orer book an new business pipeline.
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Ian Lankshear, CEO of EnSilica, commente:
"I am elighte to be announcing such a strong set of full year results for EnSilica, our first since floating on AIM.160 2022 has been a truly transformational year for our business as we seek to further capitalise on what we believe is a sizable market opportunity for EnSilica.
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"I' like to personally thank our outstaning team, who collectively, sit firmly at the centre of our success as we continue to support our global blue-chip customer base.
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"Having successfully elivere our FY22 results ahea of market expectations, I am please to report that the Company has starte FY23 well, supporte by existing contracts an ongoing new business momentum."
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Investor Presentation
Management will be hosting a presentation for investors in relation to the Company's results on Monay, 17 October 2022 at 3 p.m. BST.
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The presentation will be hoste on the Investor Meet Company ("IMC") igital platform. Investors can sign-up for free an request to meet EnSilica via:
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https://www.investormeetcompany.com/ensilica-plc/register-investor
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Investors who alreay follow EnSilica on this platform will automatically be invite.
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Annual report an accounts160
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The annual report an accounts for the year ene 31 May 2022 will be poste to shareholers on 24 October 2022 an will be available immeiately thereafter on the Company's website at160www.ensilica.com/investors/.
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Annual General Meeting160160
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The Annual General Meeting of EnSilica plc will be hel on 24 November 2022, notice of which will be sent to shareholers with the annual report an accounts on 24 October 2022.
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For further information please contact:
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Notes to eitors
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EnSilica is a leaing fabless esign house focuse on custom ASIC esign an supply for OEMs an system houses, as well as IC esign services for companies with their own esign teams. The company has worl-class expertise in supplying custom RF, mmWave, mixe signal an igital ICs to its international customers in the automotive, inustrial, healthcare an communications markets. The company also offers a broa portfolio of core IP covering cryptography, raar an communications systems. EnSilica has a track recor in elivering high quality solutions to emaning inustry stanars. The company is heaquartere near Oxfor, UK an has esign centres across the UK an in Inia an Brazil.
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Executive Chair Statement
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Our May 2022 IPO was a significant milestone for our business, an for our team here at EnSilica. The IPO was the culmination of a tremenous perio of organisational an operational change for our business, which is ultimately centre on further capitalising on a sizeable growth opportunity within the semiconuctor inustry. We look forwar to taking avantage of the many benefits that our public quotation brings.
Our listing not only provie the Company with an immeiate growth capital, alongsie creating the flexibility to fun potential MA opportunities. It also enhance both transparency an raise our international profile with existing an potential customers. We strongly believe that this will enable us to attract, recruit an retain key employees going forwar.
Against this positive momentum, I am elighte to report that our maien results for the financial year ening 31 May 2022 exceee market expectations set out at the time of the Company's listing.160 EnSilica elivere revenues for FY 2022 of 1631.3 million (2021: 1638.6 million), a 77% increase on the prior year, an an ajuste EBITDA of approximately 1631.0 million (2021: 1630.06 million), elivering significant year on year growth.
This outstaning performance is the realisation of our unerlying business strategy first aopte in 2016, with the start of irect chip supply to our first automotive customer. Since then, we have seen our financial performance improve, as our earlier customer prouct evelopment manates continue to buil momentum.
Our recent awar of a significant inustrial contract, announce in July 2022, provies further valiation of our operating moel an financial rive. This prestigious customer win, combine with our substantial orer book is irectly attributable to our highly experience team who have worke tirelessly to ensure we remain
best in the business.160 I woul personally like to thank every member of the EnSilica team for their effort, eication, an enthusiasm throughout.
The Boar has been enlarge uring 2022 an we are elighte to welcome our new Non-Executive Directors. We have been able to attract highly experience iniviuals with strong skills an relevant experience to support our strategic ambitions. Alongsie myself, Ian Lankshear, our CEO, was joine by our CFO, Matthew Wethey, as the Executive Directors. Concurrently, four inepenent Non-Executive Directors were appointe Janet Collyer as Senior Non-Executive Director an Chair of the Remuneration Committee, an Davi Tilston as Chair of the Auit Committee, Noel Hurley an Wasim Ahme. We are committe to pursuing excellent Boar performance an we will be reporting on the steps we take to maximise the effectiveness of the Boar on a regular basis.
As a responsible business, we remain focuse on corporate environmental, social, an governance ('ESG') values, in orer to buil a strong, profitable, an sustainable business. We have unertaken to establish critical ESG priorities, opportunities, an risks an will be reporting across these heaings going forwar.
Despite the challenges presente by the broaer macro-economic climate an the fears of a ownturn for the semiconuctor inustry, we continue to service a sizeable orer book an a strong level of enquiries for ASIC's from a variety of sources across automotive, inustrial, healthcare an satellite communications, where we have a longstaning reputation for innovation an excellence.
In this time of isruption of the labour markets an steep labour cost rises, attracting new employees an retaining existing ones is a key focus of our executive team. This is evience with the hiring of our ASIC implementation team, comprising of six skille engineers from Blu Wireless earlier this year. The new team will be locate in EnSilica's new Bristol facility. We are elighte to be welcoming such a skille an experience team to EnSilica, which we believe will form a strong platform to further attract talent in the Bristol area.
Finally, we have starte the current financial year strongly, buoye by our existing contracts which unerpin FY23 momentum. The Boar firmly believes that the Company is well place to continue to capitalise on the sizeable growth opportunity within the semiconuctor inustry, supporte by a significant orer book an new business pipeline.
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Mark Hogkins
Chair
14 October 2022
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Chief Executive Review
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Introuction
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I am elighte to be sharing our first set of results as a newly quote company an more importantly, highlighting what has been a truly transformational year for our business. Not only have we mae significant operational progress, but we have also elivere a strong set of financial results, reflecting the unerlying strength of EnSilica.
Over the last 12 months, we have been eveloping a substantial orer book, which inclues our first mass prouction of our automotive ASICs with a prestige car maker, couple with the successful listing of the business on the Lonon stock market, alongsie celebrating our 21st anniversary.160
Our progress has also been reflecte in our financial performance across FY 2022, with revenues increasing 77% to 1631.3 million (2021: 1638.6 million), alongsie elivering 1631.0 million (2021: 1630.06 million) of ajuste EBITDA, representing a significant year-on-year growth.
Our liste status is alreay benefiting the business, helping us to accelerate our mission to be the premier application specific fabless chipmaker in Europe. Our higher profile position, stronger balance sheet an financial transparency have allowe us to engage with top-tier customers, enabling us to increase our business momentum.
In aition, we have seen a marke improvement in new business opportunities uring the perio, with customers requesting specification phase quotations to cover fune stuies into their ASICs across automotive, inustrial, healthcare an satellite communication sectors, all key growth markets for EnSilica.
To that en, our growth strategy remains unchange from that outline uring our listing, an we will continue to pursue the following business objectives:
167 To leverage EnSilica's strong positions within automotive, inustrial, healthcare an satellite connectivity applications for mixe signal ASICs
167 scale the Company's successful Fabless ASIC Moel to fully exploit revenue opportunities from esign an supply engagements
167 evelop catalogue parts, with two significant stanar platforms alreay at the evice evaluation stage
167 expan EnSilica's offering through consoliation an vertical integration.160
I look forwar to upating all our key stakeholers on our progress as we seek to further evelop the business.
Finally, I woul like to express my sincere thanks to all our highly talente an harworking staff, without whom none of this woul have been possible. We woul also like to thank our customers an investors who have shown confience in us an have contribute to making 2022 a transformational year for EnSilica.
EnSilica's Business Moel
EnSilica operates uner the Fabless Semiconuctor Moel an as a esign consultancy proviing services for Integrate Circuits ("ICs"). The fabless semiconuctor moel provies an en-to-en service for the evelopment, prouction an supply of ICs from initial scoping an esign through to the elivery of proucts.
Uner this moel, fabrication of ICs is outsource to specialise semiconuctor wafer founries, following which the processe wafers are sent for icing, testing an packaging by other thir parties, keeping capital requirements for manufacturing low. EnSilica has a wie network of suppliers, high profile customers an a strong reputation in the market, proviing EnSilica with security of supply.
The move from consultancy to focusing on ASIC esign an supply embes EnSilica further within the electronics value chain. ASIC customers pay an upfront fee towars the costs of esign, tooling an test evelopment of the ASIC, otherwise known as non-recurring engineering costs ("NRE"). Customers subsequently purchase the ASICs that EnSilica supplies or, in some cases, pay royalties to EnSilica for the ASICs that a thir party will manufacture on the customer's behalf.
EnSilica often co-invests in the evelopment of ASICs with the customer an epening on the sector, it takes two to five years to reach full prouction. At the prouction stage, revenues can be high, last several years an generate gross margins circa 3% to 60% range. The gross margin will epen on the market an the level of co-founing funing of the NRE require. Therefore, part of EnSilica's expertise is in assessing whether to procee an invest in a particular IC project resulting in long-term component supply or royalty revenue for the Company.
Key Markets an Growth Drivers
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We continue to evelop a presence across four principal markets where we believe there is significant eman for our services an skills, namely: Satellite Communications, Automotive, Inustrial an Healthcare.
Within the Automotive Sector, significant avancements are now being riven by electronics rather than mechanical changes. This increase usage of electronics has irectly contribute to a heightene eman for semiconuctors within the automotive inustry. 160160160
The potential for semiconuctors in the automotive inustry is vast an inclues electric vehicles, infotainment systems, avance river assist systems, autonomous riving systems, connectivity, safety an security systems.160 IC Insights estimates that the automotive sector will be the strongest growing 2021-2026 CAGR of any of the main semiconuctor en-use segments at 13.4%, which unerpins EnSilica's focus on this en market.
The Company is also focuse on the Satellite Communication Sector, which will continue to play a vital role in interconnecting our new smart worl, especially in remote areas where mobile or Wi-Fi networks are ineffective. In aition, Space semiconuctors will eliver enhance system performance an efficiency by proviing various avantages of stanar components. EnSilica's ability to eliver ASICs, which are ieally place to meet the specific emans of various satellite communication systems, will be funamental to our success in this market in the meium term.
Within the Inustrial Sector, we expect both the evolution an wiesprea inustrial eman for semiconuctors to increase, riven in part by the more wiesprea aoption of pressure an flow sensors, gas sensors an chemical sensors through to precision timers, ultrasonic sensor rivers an movement sensors. IC Insights preicts that the inustrial segment 2021-2026 CAGR will be 8%. The inustrial market also has room for manufacturing optimisation an proactive fault etection through realising the benefits of AI an machine learning, which ASICs are now well place to exploit.
Finally, the Health Wearables Sectorremains of consierable interest to the Company as avancements in AI have mae it possible to etect meical conitions through monitoring evices which range from evices worn on the wrist, sensors on a small patch or even within earbus. Deloitte Global reporte that 27 million consumer health an wellness wearable evices were shippe worlwie in 2021. It is now preicte that 320 million consumer health an wellness wearable evices will ship worlwie in 2022. By 2024, this figure will likely reach nearly 440 million evices. These figures inclue both smartwatches an meical-grae wearables, often prescribe by health care professionals but are increasingly becoming available off the shelf.
Looking more broaly at our market, the much-publicise global chip shortage has unoubtely increase the awareness of the multitue of benefits of using custom silicon compare to stanar parts, incluing simplifie an secure supply chains. This has strengthene our turnkey ASIC pipeline to an all-time high. Our next stage of accelerate growth will be riven by the global eman for semiconuctors an our expertise in mixe signal chips, enabling a greener, safer, smarter an more connecte worl.
It took recent chip shortages to cement the "critical" status of the semiconuctor inustry, establishing it as a truly essential inustry. In aition, the COVID-19 panemic has highlighte the importance of access to a local thriving semiconuctor ecosystem. With Asia accounting for 60% of global semiconuctor sales, European an U.S authorities recognise the nee to be less epenent on a hanful of East Asian countries.160 To that en, Europe an the U.S have passe multibillion "Chip Acts" to encourage local semiconuctor esign an prouction capabilities. Our executive an 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 semiconuctor supply chain.
The wafer an other material cost increases have been a key feature of recent chip shortage.160 However, the impact of these semiconuctor shortages on EnSilica has been minimal, given our ability to irectly pass through price increases to our customers. The Company's current bias is towars esign rather than supply, with the latter only increasing uring 2022 an beyon as the pipeline of projects comes to fruition.
Our in-house fabless operations team have worke har to ensure all our customers have chips when require, the increase investment in new founry capacity shoul help ease the supply chain challenges.
Customer Activity
The Company currently manages an existing sales pipeline an orer book of c. 16330 million, extening to 2027, comprising of major inustrial OEMs, automotive suppliers, healthcare evice proviers an satellite communication services.
Key contracts an progress on projects in 2022 inclue:
167 An establishe Automotive ASIC supply customer proviing visibility on expecte orer volumes through to 202/2026 with supply eliveries having commence in Q3 FY 2022 orers forecast for the next 12 months of 2.7 million chips:160
167 Inustrial ASIC about to complete extensive customer fiel trials that will consume 80,000 chips main prouction orer forecast by the en of FY 2023:160
167 Contract with AST Space Mobile a global satellite an communication customer with NRE majority fune by the customer.
167 A significant project for a leaing European inustrial OEM worth in excess of US30 million over seven years with supply revenue forecast to commence at the en of calenar year 2024. Contract was uner a biing process at the en of FY 2022 an contract was signe September 2022 an esign work has commence.
167 Navtech Raar continue to eploy their roa safety Raar in the UK smart motorway systems incorporating EnSilica supplie harware an IP.
167 Major esign services evelopment for avance networking chip in 12nm FinFet Technology sent to founry an the follow-on project commence an160
167 Ka-ban mmWave chip for satellite terminals evelope with support from the European Space Agency is uner evaluation by two terminal suppliers an further relate customer opportunities are progressing.160
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In aition, the Company is also pursuing a number of supply ASICs opportunities across automotive an major healthcare evice manufacturers which are all progressing well.160 Elsewhere, we have a self-fune healthcare 'vital signs' chip uner testing in the laboratory an customer evaluation kit uner preparation.160 Early marketing has commence with interest now being generate from a number of multinational healthcare evice manufacturers.
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Our People
Our highly talente an har-working team has been funamental to our success an remains a key asset for the business. We continue aapting to our post Covi-19 working environment after another year of mostly remote working.160 The combination of travel restrictions an a general shift of our work routine has meant a reuction in ay-to-ay interaction an in some cases, eprive staff of a-hoc creative ialogue. Pleasingly, our people ajuste an, more recently, we have seen a concerte effort by our teams to return to the office, alongsie the return of international travel, which reconnects our UK teams with our subsiiaries in Inia an Brazil.
Over the years, EnSilica successfully hire entire teams from customers, or from our wier network, an quickly integrate them into our business. We starte our Inian office from scratch in 2013 as being new to the Inian market it prove har to recruit, however, more recently our higher profile has enable us to attract new talent.160
Our Abingon base mixe signal an RF team joine us from a customer along with the transfer of some IP assets in 2016. The team quickly integrate an has grown consierably, such that our heaquarters was move from Wokingham to Abingon.160
In 2020 we acquire a team of mixe signal engineers in Sheffiel who were working from a customer this team is fully integrate an contributing well.160 In July 2021, we recruite a team of 12 engineers who have worke together for many years in a Brazilian government backe chip esign house.
This has expane to 20 staff in just over a year an is contributing well across a number of major projects.160 In July 2022, we acquire a small team in Bristol from another customer along with IP assets for avance ASIC implementation.160
Acquiring teams via asset transfer, full acquisition or recruitment of a group of engineers who have been working together with strong leaership is a key part of EnSilica's strategy to expan our engineering capacity an capabilities.
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Outlook
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Having successfully elivere our FY22 results ahea of market expectations, I am please to report that the Company has starte FY23 well, supporte by existing contracts an ongoing new business momentum.
The strong 2022 performance unerpins FY23 momentum supporte by existing contracts an ongoing new business.
The Boar firmly believes that the Company is well place to continue capitalising on the sizable growth opportunity within the semiconuctor inustry.
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Ian Lankshear
Chief Executive Officer
14 October 2022
Chief Financial Officer Review
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A summary of the key financial results for the year an etails relating to its financing position at the year-en are set out in the table below an iscusse in this section. Full etails can be foun in the Consoliate Financial Statements.
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Notable from the table above
The Group achieve a strong set of results for the year ening 31 May 2022, with revenue growth of 77%. to 1631.3 million, compare to 1638.6 million for the prior financial year. This was riven by two customers with combine revenues of 1638.4 million, one being an NRE project with revenue of 163. million representing 36% an 19% of the revenue for the year ene 31 May 2022 an the other a major consultancy contract with revenue of 1632.9 million being 19%. In 2021 revenue from three ifferent customers amounte to 1633.6 million at 19%, 12% an 10% of total revenue.
The Group continues to focus on improving the revenue split between NRE an Consultancy. Since 31 May 2021, NRE has grown from 29.7% to 40.9% of total revenue in the year ene 31 May 2022. The Company maintains a level of consultancy work as to provie reliable income but going forwar management will focus on the higher returns of esign an supply work. Supply revenue from prior NRE work is beginning to flow through an the pipeline of NRE work which supports future supply revenues is strong. The esign an supply work typically involves 1 to 2 years of evelopment before prouction. Some of the Group's early esign contract work is now beginning to generate supply revenues. Three ASICs have been release for prouction an a further four EnSilica ASICs are at the esign stage. Furthermore, EnSilica is working on costings with clients for several aitional projects an the CEO report above sets out some of those projects. Given the significant potential project opportunities that have been presente, couple with the strong relationships alreay establishe, the Directors are confient that the Group is in a goo position to a to its existing pipeline in the near future an to grow the revenue base of the business
The Group was able to improve its gross margin percentage by unertaking higher margin projects an increasing the utilization of the increasing number of engineers. Margins ha been suppresse in FY2021 ue to COVID causing a postponement or cancellation of projects an the Group unertaking lower margin work to maintain its workforce uring the panemic. As a result the Group was able to increase its gross margins by 9.1% from 23.9% in FY2021 to 33% in the current year.
After the impact of aministrative expenses which at 1634.3 million were 1631.8 million higher than in FY 2021, operating profit excluing IPO costs an impairment of intangible assets for the year to May 2022 was 1630.87 million higher than the previous year (1630.2 million loss).
In both FY 2020 an FY 2021 there were impairments of intangible assets. These impairment reviews wrote own historic IP an capitalize cost where future income streams were not forecast. The Group still retains the IP an shoul future events mean that income was forecast to be receive then the intangible asset coul be reinstate. The impairment review for the current year supporte the balance sheet value an no impairment was recognize.160
Once the impact of epreciation an amortisation was inclue the Ajuste EBITDA for the year to May 2022 was 1631.0 million higher than in the previous year (2021: 1630.06 million).
The reuction in net ebt of 163.3 million at the en of May 2022 was mainly ue to the net 1636.3 million from procees from issuing new orinary shares, an 1632.0 million of tax receive in relation to RD tax creits from FY21 an FY20 less 1632. million use in investing activities.
Following the aition of 1632.2 million evelopment costs an an amortisation charge of 1630.148 million intangible assets were 1638.6 million at the en of May 2022.
The Group increase the average number of employees uring the year by 21 heas, of these 19 were research, evelopment an technical heas. The majority of these are base in Brazil.
Financial items of note uring the year other than those set out above
These are the first set of financial statements that have been prepare uner IFRS. The main areas where this has impacte our financial statements are ue to IFRS 16 Leases, Deferre Tax, IFRS 1 Revenue from Contracts with Customers, reclassifications an cash flow statements.
167 Uner IFRS 16 in relation to operating lease contracts we have recognise a right to use asset with a carrying value at 31 May 2021 of 1630.27 million an a financial liability with a carrying value of 1630.296 million at 31 May 2021. Lease rentals of 1630.082 million, uner FRS102, in 2021 have been replace by a epreciation charge of 1630.067 million an a financing charge of 1630.011 million.
167 A eferre tax asset has been recognise in relation to EMI share options.160 This was offset by recognising a eferre tax asset cause by tax losses create by employees exercising options.
167 Uner IFRS 1 amounts inclue in trae ebtors that were not ue at the balance sheet ate an relate to eferre income are exclue from trae ebtors an eferre income. An ajustment of 1630. 677 million has been mae at 31 May 2021.
167 There has been a reclassification of assets subject to hire purchase an finance leases with a net book value of 1630.17 million at 31 May 2021 which have been reclassifie to right-of-use assets in accorance with IFRS 16.
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The Group ha two bank loans totalling 163.0 million at the en of the current year an 163.8 million at the en of the previous year, these loans were the main reason for the interest charge of 1630.6 million in both years.
Due to the nature of the work carrie out by our engineers we are able to claim RD tax creits. In the current year the amount recoverable from HMRC is of 1631.67 million for FY22, this was 1631.0 million for the year ene 31 May 2021.
The opening corporation tax recoverable ebtor of 1632.2 million in relation to FY21 an FY20 was receive in the year. The Closing corporation tax recoverable ebtor of 1631.67 million is in relation to FY22.
Funraising, IPO an capital reorganisation
By a loan note instrument ate 23 December, the Company create up to 1631. million convertible, reeemable loan notes for the purpose of raising working capital prior to the IPO. A total of 1631.37 million Convertible Loan Notes were issue to subscribers incluing to each of the executive Directors. The Convertible Loan Notes ha a maturity ate of 9 January 2023 an they entitle the holer to an interest rate of 10 per cent. per annum an to convert automatically into new Orinary Shares at a iscount of 12 per cent. to the Placing Price. The Convertible Loan Notes Issue was complete in February 2022.
A requirement of being liste on AIM is to have a single class of shares. As a result of the amission, a capital reorganisation was implemente. New B Orinary, new C Orinary Shares an new D Orinary Shares were issue an allotte following the exercise of options over such shares by the relevant option holers. Together with the existing A Orinary Shares an B Orinary Shares these ifferent classes of Orinary Shares were converte into 60,000,004 Orinary Shares. 3,231,80 new Orinary Shares were issue to holers of the Convertible Loan Notes an through a placing an subscription 12,000,000 new Orinary shares were issue at a price of 0p per share. This resulte in a total of 7,231,809 Orinary shares with voting rights.160
On 24 May 2022 EnSilica plc was liste on the AIM sector of the Lonon Stock exchange. The issue of share capital because of the convertible loan notes an the IPO was 1637.4 million. IPO expenses of 1630.7 million have been charge to the Income Statement reflecting the listing an 1630. million have been charge to the share premium account in relation to the fun raising.
Going Concern
As part of its normal business practice, the Group regularly prepares both annual an longer-term plans which are base on the irectors' expectations. The assumptions aroun project sales, staffing an purchases are base on management's expectations an are consistent with the Group's experience since June 2022. The possible continuing an future impact of the Russia/Ukraine war on the Group an the current economic environment, which is likely to create problems for global supply chains an negatively impact eman, has been consiere in the preparation of the financial statements
As at 31 May 2022 the Group financing arrangements consiste of a loan of 1633.1 million from SME Alternate Financing an a Coronavirus Business Interruption Loan (CBIL) for 1632.1 million use to mitigate elays cause by Covi-19. The Group hel a cash balance of 163.7 million at that ate.160 160
The Directors are satisfie that the Group has aequate resources to continue in business for the foreseeable future (being a minimum perio of 12 months from the ate of signing the balance sheet), an accoringly continue to aopt the going concern basis in preparing the accounts.
Matthew Wethey
Chief Financial Officer
14 October 2022
Consoliate Statement of Comprehensive Income
For the year ene 31 May 2022
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Consoliate Statement of Financial Position
As at 31 May 2022
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Consoliate Statement of Changes in Equity
For the year ene 31 May 2022
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Non-controlling interests hol 0.002% of the issue share capital of160 the Inian subsiiary, EnSilica Inia Private Limite in accorance with local requirements an there is a non-controlling interest of 163nil at 31 May 2022 (31 May 2021:163nil), further etails are isclose in note 28.
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Consoliate Statement of Cash Flows
For the year ene 31 May 2022
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Notes
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1.160 General information160160160160160160160160160160160160160 Basis of preparation
The consoliate financial statements of the Group have been prepare in accorance with UK-aopte International Accounting Reporting Stanars (IAS) as issue by the International Accounting Stanars Boar (IASB) an the Companies Act 2006.
The financial information has been prepare uner the historical cost convention unless otherwise specifie within these accounting policies. The financial information an the notes to the financial information are presente in thousans of pouns sterling ('163'000'), the functional an presentation currency of the Group, except where otherwise inicate.
The principal accounting policies aopte in preparation of the financial information are set out below. The policies have been consistently applie to all perios presente, unless otherwise state.
Jugements mae by the Directors in the application of the accounting policies that have a significant effect on the financial information an estimates with significant risk of material ajustment in the next year are iscusse in note 2.
2.160 Accounting policies
First-time aoption of IFRS
These financial statements, for the year ene 31 May 2022, are the first the Group has prepare in accorance with IAS. For perios up to an incluing the year ene 31 May 2021, the Group prepare its financial statements in accorance with UK Generally Accepte Accounting Practice (FRS 102).
Accoringly, the Group has prepare financial statements which comply with UK-aopte IAS applicable for the year ene 31 May 2022, together with the comparative ata as at an for the year ene 31 May 2021, as escribe in the accounting policies. In preparing these financial statements, the Group's opening statement of financial position was prepare as at 1 June 2020, the Group's ate of transition to IAS. Note 27 explains the principal ajustments mae by the group in stating its IFRS statement of financial position as at 1 June 2020 an its previously publishe UK GAAP financial statements as at an for the year ene 31 May 2021.
160
Estimates
The estimates at 31 May 2022 are consistent with those mae for the same ates in accorance with UK GAAP therefore no ajustments are necessary on conversion.
160
First-time aoption of IFRS reconciliations
On conversion to UK-aopte IFRS, an ajustment was require to capitalise various right of use assets, an to incorporate corresponing lease liabilities into the balance sheet. Rental charges previously expense were remove an replace by epreciation an finance interest charges.
There have been no ajustments to the Group's opening position on transition to UK-aopte IFRS from UK GAAP apart from the changes note above as at 1 June 2020.
Note 27 to the financial statements inclues the reconciliation of equity an the income statements from UK GAAP to UK-aopte IFRS for the comparative perio to 31 May 2021.
160
Disclosure exemptions aopte
IFRS 1 First-Time Aoption of International Reporting Stanars allows first-time aopters certain exemptions from retrospective application of certain IFRS.
The Group has applie the following exemptions:
183160160160160160 The Group has applie the transitional provision in IFRIC 4 Determining Whether an Arrangement Contains a Lease an has assesse all arrangements base upon the conitions in place as at the ate of transition.
183160160160160160 The Group has applie the transitional provisions in IAS 23 Borrowing Costs an capitalise borrowing costs relating to all qualifying assets after the ate of transition. Similarly, the Group has not restate for borrowing costs capitalize uner UK GAAP on qualifying assets prior to the ate of transition to UK-aopte IFRS.
160
Going concern
160
As part of its normal business practice, the Group regularly prepares both annual an longer-term plans which are base on the irectors' expectations. The assumptions aroun project sales, staffing an purchases are base on management's expectations an are consistent with the Group's experience since June 2022. As at 31 May 2022 the Group financing arrangements consiste of a loan of 1633.1 million from SME Alternate Financing an a Coronavirus Business Interruption Loan (CBIL) for 1632.1 million use to mitigate elays cause by Covi-19. The Group hel a cash balance of 163.7 million at that ate. The possible continuing an future impact of the Russia/Ukraine war on the Group an the current economic environment, which is likely to create problems for global supply chains an negatively impact eman, has been consiere in the preparation of the financial statements.
The Directors are satisfie that the Group has aequate resources to continue in business for the foreseeable future (being a minimum perio of 12 months from the ate of signing the balance sheet), an accoringly continue to aopt the going concern basis in preparing the accounts.
160
Consoliation
The financial information inclues the results of EnSilica plc an its subsiiary unertakings. The results of the subsiiary unertakings are inclue from the ate that effective control passe to the company. All subsiiaries were incorporate by the Company with no traing prior to their inclusion in the Group.
Revenue, profits an balances between group companies are eliminate on consoliation.
Where necessary, ajustments are mae to the financial statements of subsiiaries to bring the accounting policies use into line with those use by the Group. All intra-group assets an liabilities, equity, income, expenses an cash flows relating to transactions between the members of the Group are eliminate in full on consoliation.
160
Revenue recognition
Revenue, in accorance with IFRS1 is recognise at an amount that reflects the consieration to which the group expects to be entitle in exchange for transferring control of goos or services to a customer. Revenue is measure at the fair value of the consieration receive, excluing iscounts, rebates, VAT an other sales taxes or uty.
The following principles are applie to each area of revenue as set out below:
183160160160160160 Ientify the contract with a customer
183160160160160160 Ientify the performance obligations in the contract
183160160160160160 Determine the transaction price
183160160160160160 Allocate the transaction price to the performance obligations in the contract
183160160160160160 Recognise revenue when the group satisfies performance obligations
160
Services
Design services are provie specifically for each customer an may be either consultancy services only in respect of IC esign or esign services as part of a esign an supply moel involving a contract for the initial non-recurring engineering costs of evelopment (NRE). When the outcome of a contract can be measure reliably, the Group recognises both income an costs by reference to the percentage of completion of the contract as this is consiere the most appropriate measurement of performance of the obligations. If the outcome cannot be reliably measure, all costs are expense, an revenue is only recognise to the extent that it is probable that costs are recoverable.
160
Sale of goos
Revenue from the sale of goos is recognise when control over the goos has passe to the buyer, usually on ispatch of the goos when the amount of revenue can be measure reliably an it is probable that the economic benefits associate with the transaction will flow to the entity160 as the Group fulfils its performance obligation.
Licensing an similar income
Income in respect of a licensing arrangement for the use of IP is recognise on a straight line basis over the perio of the agreement or where typically linke to the elivery of esign services, recognise by reference to the unerlying arrangement an elivery of services.160
Invoicing of revenue is unertaken in accorance with the terms of the agreement with the customer.160 If amounts recognise in respect of revenue for complete performance obligations have not been invoice at the financial position ate, accrue income is recognise. When an invoice is ue for payment at the statement of financial position ate but the associate performance obligations have not been fulfille the amounts ue are recognise as trae receivables an a eferre income contract liability is recognise for the value of the performance obligations that have not been provie.
160
Employee benefits
The EnSilica Group operates a efine contribution pension scheme. Contributions are recognise in the Statement of Comprehensive Income in the year in which they become payable in accorance with the rules of the scheme.
Short term employee benefits incluing holiay pay are recognise as an expense in the perio in which the service is renere.
160
Share base payment
The Group operates an equity-settle share-base compensation plan in which the Group receives services from employees as consieration for share options. The fair value is establishe at the point of grant using an appropriate pricing moel an then the cost is recognise as an expense in aministrative expenses in the statement of comprehensive income, together with a corresponing increase irectly in equity over the perio in which the services are fulfille. This is the estimate perio to vesting in respect of employees. The cumulative expense recognise for equity-settle transactions at each reporting ate until vesting ate reflects the extent to which the vesting perio has expire an the Group's best estimate of the number of equity instruments that will ultimately vest.
160TaxationThe taxation expense or creit comprises current an eferre tax recognise in the profit for the financial perio or in other comprehensive income or equity if it arises from amounts recognise in other comprehensive income or irectly in equity. Current tax is provie at amounts expecte to be pai (or recovere) in respect of the taxable profits for the perio using tax rates an laws that have been enacte or substantively enacte by the reporting ate.
160
Deferre income tax is provie in full, using the liability metho, on temporary ifferences arising between the tax bases of assets an liabilities an their carrying amounts in the consoliate financial statements. However, eferre tax liabilities are not recognise if they arise from the initial recognition of goowill. Deferre income tax is also not accounte 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. Deferre income tax is etermine using tax rates (an laws) that have been enacte or substantially enacte by the en of the reporting perio an are expecte to apply when the relate eferre income tax asset is realise or the eferre income tax liability is settle.
Deferre tax assets are recognise to the extent that it is regare as more likely than not that they will be recovere.160
Deferre tax assets an liabilities are offset only where there is a legally enforceable right to offset an where the eferre tax balances relate to the same taxation authority.
160
Non-recurring items
The group classifies certain one-off charges or creits that have a material impact on the Group's financial results as 'non-recurring items'. These are isclose separately to provie further unerstaning of the financial performance of the group.
160
Government grants
Grants are accounte uner the accruals moel, an grants of a revenue nature are recognise in the Statement of Comprehensive Income in the same perio as the relate expeniture.160 Government grants relate to the receipt of Coronavirus Job Retention Scheme income, to innovation grants an to the interest free perio on Coronavirus Business Interruption loans.
160
Foreign exchange
Transactions enominate in foreign currencies are translate into sterling at the rates ruling on the ate of the transaction. Monetary assets or liabilities enominate in foreign currencies at the Statement of Financial Position ate are translate at the rate ruling on that ate an all translation ifferences are charge or creite in the Statement of Comprehensive Income.
On consoliation, the results of overseas operations are translate into Sterling at rates approximating to those ruling when the transactions took place.160 All assets an liabilities of overseas operations are translate at the rate ruling at the reporting ate.160 Exchange ifferences arising on translating the opening net assets at opening rate an the results of overseas operations at actual rate are recognise in other comprehensive income an accumulate in a separate equity reserve.
160
Intangible assets - research an evelopment expeniture
Intangible assets are represente by capitalise evelopment costs incluing proprietary intellectual property evelope by the business for both its own use an for licensing to thir parties.160
An internally generate intangible asset arising from evelopment (or the evelopment phase) of an internal project is recognise if, an only if, all of the following have been emonstrate:
160
183160160160160160 It is technically feasible to complete the evelopment such that it will be available for use, sale or licence
183160160160160160 There is an intention to complete the evelopment
183160160160160160 The metho by which probable future economic benefits will be generate is known
183160160160160160 The group is able to sell or use the prouct
183160160160160160 There are aequate technical, financial an other resources require to complete the evelopment
183160160160160160 There are reliable measures that can ientify the expeniture irectly attributable to the project uring its evelopment.
160
The amount recognise is the expeniture incurre from the ate when the project first meets the recognition criteria liste above.160 Where the above criteria are not met, evelopment expeniture is charge to the consoliate income statement in the perio in which it is incurre. The capitalisation of evelopment costs is subject to a egree of jugement in respect of the viability of new technology an know-how, supporte by the results of testing an customer trials an by forecasts for the overall value an timing of sales which may be impacte by other future factors which coul impact the assumptions mae.
Subsequent to initial recognition, internally generate intangible assets are reporte at cost less accumulate amortisation an impairment losses. An impairment review is unertaken annually, an amortisation commences once management consier that the asset is available for use, i.e., when it is juge to be in the location an conition necessary for it to be capable of operating in the manner intene by management an the cost amortise over the estimate useful life of the know-how base on expecte customer prouct cycles an lives. This is typically to 10 years, an the charge is reporte within aministrative expenses in the consoliate statement of comprehensive income.
As part of the impairment review, consieration is also mae regaring the valiity of impairment provisions mae in previous perios, an to whether the provision is still warrante in the perio uner review.
Research expeniture is recognise as an expense in the perio in which it is incurre.
160
Financial assets
160
Financial assets, incluing trae an other receivables, cash an cash equivalent balances are initially recognise at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measure at the present value of the future receipts iscounte at a market rate of interest. Such assets are subsequently carrie at amortise cost using the effective interest metho. Cash an cash equivalents comprise cash hel at bank which is available on eman.The Group applies the IFRS 9 simplifie approach to measuring expecte creit losses using a lifetime expecte creit loss provision for trae receivables.160 The Group measures loss allowances at an amount equal to lifetime expecte creit loss (ECL), which is estimate using past experience of the group's historical creit losses experience over the three year perio prior to the perio en. Historical loss rates are then ajuste for current an forwar-looking information on macroeconomic factors affecting the group'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 expecte creit losses on a collective basis, trae receivables an contract assets are groupe base on similar creit risk an aging.160 The contract assets have similar risk characteristics to the trae receivables for similar types of contracts.
The Group recognises loss allowances for expecte creit losses on financial assets measure at amortise cost to the extent that these are material.160 The Group has etermine that there is no material impact of ECLs on the financial information.
160
Financial liabilities
Financial liabilities, incluing trae an other payables an bank borrowings are initially recognise at transaction price, unless the arrangement constitutes a financing transaction, where the ebt instrument is measure at the present value of the future receipts iscounte at a market rate of interest. Debt instruments are subsequently carrie at amortise cost, using the effective interest rate metho.
Trae payables are obligations to pay for goos or services that have been acquire in the orinary course of business from suppliers. Accounts payable are classifie as current liabilities if payment is ue within one year or less. If not, they are presente as non-current liabilities. Trae payables are recognise initially at transaction price an subsequently measure at amortise cost using the effective interest metho.160Financial liabilities are erecognise when the liability is extinguishe, that is when the contractual obligation is ischarge, cancelle or expires.Borrowings are initially state at the fair value of the consieration receive after euction of wholly attributable issue costs. Borrowings are subsequently state at amortise cost using the effective interest metho.160
Leases
160
The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset an a corresponing lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (efine as leases with a lease term of 12 months or less) an leases of low value assets (such as tablets an personal computers, small items of office furniture an telephones). For these leases, the Group 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 lease assets are consume.
The lease liability is initially measure at the present value of the lease payments that are not pai at the commencement ate, iscounte by using the rate implicit in the lease. If this rate cannot be reaily etermine, the Group uses its incremental borrowing rate.
The incremental borrowing rate epens on the term, currency an start ate of the lease an is etermine base on a series of inputs incluing: the risk-free rate base on government bon rates a country-specific risk ajustment a creit risk ajustment base on bon yiels an an entity-specific ajustment when the risk profile of the entity that enters into the lease is ifferent to that of the Group an the lease oes not benefit from a guarantee from the Group.
Lease payments inclue in the measurement of the lease liability comprise:
183160160160160160 Fixe lease payments (incluing in-substance fixe payments), less any lease incentives receivable
183160160160160160 Variable lease payments that epen on an inex or rate, initially measure using the inex or rate at the commencement ate
160
The amount expecte to be payable by the lessee uner resiual value guarantees:
183160160160160160 The exercise price of purchase options, if the lessee is reasonably certain to exercise the options
183160160160160160 Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease
160
The lease liability is presente as a separate line in the consoliate statement of financial position.
The lease liability is subsequently measure by increasing the carrying amount to reflect interest on the lease liability (using the effective interest metho) an by reucing the carrying amount to reflect the lease payments mae.
The Group remeasures the lease liability (an makes a corresponing ajustment to the relate right-of-use asset) whenever:
183160160160160160 The lease term has change 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 remeasure by iscounting the revise lease payments using a revise iscount rate
183160160160160160 The lease payments change ue to changes in an inex or rate or a change in expecte payment uner a guarantee resiual value, in which cases the lease liability is remeasure by iscounting the revise lease payments using an unchange iscount rate (unless the lease payments change is ue to a change in a floating interest rate, in which case a revise iscount rate is use)
183160160160160160 A lease contract is moifie an the lease moification is not accounte for as a separate lease, in which case the lease liability is remeasure base on the lease term of the moifie lease by iscounting the revise lease payments using a revise iscount rate at the effective ate of the moification
160
The Group i not make any such ajustments uring the perios presente.
The right-of-use assets comprise the initial measurement of the corresponing lease liability, lease payments mae at or before the commencement ay, less any lease incentives receive an any initial irect costs. They are subsequently measure at cost less accumulate epreciation an impairment losses.
Whenever the Group incurs an obligation for costs to ismantle an remove a lease asset, restore the site on which it is locate or restore the unerlying asset to the conition require by the terms an conitions of the lease, a provision is recognise an measure uner IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are inclue in the relate right-of-use asset, unless those costs are incurre to prouce inventories.
Right-of-use assets are epreciate over the shorter perio of lease term an useful life of the right-of-use asset. If a lease transfers ownership of the unerlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the relate right-of-use asset is epreciate over the useful life of the unerlying asset. The epreciation starts at the commencement ate of the lease.
The right-of-use assets are presente as a separate line in the consoliate statement of financial position.
The Group applies IAS 36 to etermine whether a right-of-use asset is impaire an accounts for any ientifie impairment loss as escribe in the 'Property, Plant an Equipment' policy.
Variable rents that o not epen on an inex or rate are not inclue in the measurement the lease liability an the right-of-use asset. The relate payments are recognise as an expense in the perio in which the event or conition that triggers those payments occurs an are inclue in the line "Other expenses" in profit or loss.
As a practical expeient, IFRS 16 permits a lessee not to separate non-lease components, an instea account for any lease an associate non-lease components as a single arrangement. The Group has not use this practical expeient. For contracts that contain a lease component an one or more aitional lease or non-lease components, the Group allocates the consieration in the contract to each lease component on the basis of the relative stan-alone price of the lease component an the aggregate stan-alone price of the non-lease components.
160
Property, plant an equipment160
Property, plant an equipment assets are state at cost less epreciation. Cost inclues the original purchase price of the asset an the costs attributable to bringing the asset to its working conition for its intene use. Depreciation is provie on all property, plant an equipment assets at rates calculate to write off the cost of each asset on a straight line basis over its expecte useful life, as follows:160Asset class160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160 Depreciation metho rateLeasehol improvements 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 Over the perio of the leaseComputer Software 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 years straight line on costOffice Equipment160 160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160 4 years straight line on costComputer Equipment 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 3 years straight line on cost160InventoriesInventories are value at the lower of purchase cost an net realisable value, after ue regar for any slow moving items.160 Net realisable value is base on selling price less anticipate costs to completion an selling costs.160 Cost is base on the cost of purchase on a weighte average basis.160 Work in progress an finishe goos inclue labour an attributable overheas.
At each reporting ate, inventories are assesse for impairment.160 If inventory is impaire, the carrying amount is reuce to its net realisable value.160 The impairment loss is recognise immeiately in the Statement of Comprehensive Income.
160
Share capital an reservesFinancial instruments issue by the company are treate as equity only to the extent that they o not meet the efinition of a financial liability. The parent company's orinary shares are classifie as equity instruments.
The cumulative currency ifferences reserve represents translation ifferences in respect of the net assets of overseas subsiiaries.
Retaine earnings comprises opening retaine earnings an total comprehensive income for the year, net of iviens pai.
New or revise accounting stanars an interpretations
At the ate of authorisation of these financial statements, the company has not early aopte the following amenments to Stanars an Interpretations that have been issue but are not yet effective:
160
Critical accounting estimates an jugements
160
The preparation of the financial information uner IFRS requires the use of certain critical accounting assumptions an requires management to exercise its jugement an to make estimates in the process of applying the Group's accounting policies.
160
Management bases its estimates on historical experience an on various other assumptions that management believes to be reasonable in the circumstances. The key estimates an jugements use in the preparation of this financial information that coul result in a material change in the carrying value of assets or liabilities within the next twelve months are as follows:
160
Intangible assets - capitalisation, impairment an amortisation of evelopment expeniture
160
Jugement
The capitalisation of evelopment costs is subject to a egree of jugement in respect of the timing when the commercial viability of new technology an know-how is reache, supporte by the results of testing an customer trials, an by forecasts for the overall value an timing of sales which may be impacte by other future factors which coul impact the assumptions mae. In making their jugements, the Directors consiere the carrying values that are shown in note 12.
160
Estimation
Amortisation commences once management consier that the asset is available for use, i.e. when it is juge to be in the location an conition necessary for it to be capable of operating in the manner intene by management an the cost is amortise over the estimate useful life of the know-how base on experience of an future expecte customer prouct cycles an lives. The useful economic lives an resiual values are re-assesse annually. They are amene when necessary to reflect current estimates, base on technological avancement, future investments an economic utilisation.
160
Impairment tests, when reviews inicate that these are applicable, are base on risk ajuste future cash flows iscounte using appropriate iscount rates. These future cash flows are base on forecasts which inclue estimate factors an are inherently jugemental. Future events coul cause the assumptions to change which coul have an averse effect on the future results of the Group
Revenue
Estimation
In accorance with the policy on revenue recognition, management are require to juge the percentage of completion of the contract in orer to recognise both income an costs. The overall recognition of revenue will epen upon the nature of the project an whether it is bille on a time an materials basis, or, on a project milestone basis where invoices can only be raise on completion of specific, pre-agree objectives. The company maintains complete an accurate recors of employees' time an expeniture on each project which is regularly assesse to etermine the percentage completion, an thereby whether it is appropriate to recognise any profits.
160
The level of management jugement is base on a strong track recor of successful completion of projects an accurate forecasting of the time require together with the hinsight perio available to support the balance sheet ate assumptions mae.
160
Ajusting items
The Group has chosen to present an ajuste measure of profit an earnings per share, which exclues certain items which are separately isclose ue to their size, nature or incience, an are not consiere to be part of the normal operating costs of the Group. These costs inclue IPO preparation costs. The Group believes ajusting for these items provies aitional useful information to users of the financial statements to enable a better unerstaning of the Group's unerlying financial performance. The classification of items as ajusting requires significant management jugement.
160
Treatment of costs incurre in relation to the IPO
The ecision of how to split the costs incurre on an equity raise via IPO requires jugement given that, whilst costs incurre on an equity raise shoul be recognise against equity in share premium, costs that relate to a stock market listing shoul be recognise as an expense in the consoliate statement of comprehensive income.
160
3.160 Analysis of revenue
The Boar continues to efine all the Group's traing as operating in the integrate circuit esign market an consiers all revenue to relate to the same, one operating segment.160 Revenue is efine as per the accounting policies.
Revenue in respect of the supply of proucts is recognise at a point in time. Design an relate services incluing income for the use of IP are recognise over the perio when services are provie.
160
160
The nature of the esign services an projects is such that there will be significant customers as a proportion of revenue in any one year but that these may be ifferent customers from year to year. Revenue in respect of two customers amounte to 163.m an 1632.9m representing 36% an 19% of the revenue for the year ene 31 May 2022 (2021: three ifferent customers amounte to 1633.6m at 19%, 12% an 10%).
160
4.160 Alternative performance measures
These items are inclue in normal operating costs of the business, but are significant cash an non-cash expenses that are separately isclose because of their size, nature or incience. It is the Group's view that excluing them from operating profit gives a better representation of the unerlying performance of the business in the year.
The Group's primary results measure, which is consiere by the irectors of EnSilica plc to better represent the unerlying an continuing performance of the Group, is Ajuste EBITDA as set out below. EBITDA is a commonly use measure in which earnings are state before net finance income, amortisation an epreciation as a proxy for cash generate from traing.
160
Impairment of intangible fixe assets
In both FY 2020 an FY 2021 there were impairments of intangible assets which were recognise as exceptional costs. These impairment reviews wrote own historic IP an capitalise cost where future income streams were not forecast.
160
IPO Costs
Attributable costs relating to the IPO performe uring the year have been recognise within the consoliate statement of comprehensive income as an exceptional cost. These costs are exclue from the ajuste results of the Group since the costs are one-off in nature an will not repeat in future years.
160
160
160
160
.160 Operating profit/(loss)
160
160
Development expeniture was also capitalise in each year as shown in note 12.
160
160
160
6.160 Taxation on profit/(loss)
160
Factors affecting the tax creit for the year
The tax creit on the profit/(loss) for the year iffers from applying the stanar rate of corporation tax in the UK of 19% (2021: 19%).160 The ifferences are reconcile below:
The UK government announce on 23 September 2022 the intention to cancel the propose increase in the corporation tax rate from 19% to 2% from April 2023. At the 31 May 2022 the increase in the main rate to 2% remaine enacte an as such is the rate use for calculating eferre tax balances.
7.160 Earnings per share
160
160
Ajuste Earnings per share
160
There are 424,440 of exercisable share options over orinary shares respectively which are potentially ilutive to profit.
160
As part of the company's 2022 long term incentive plan, share options over 6,661,00 Orinary shares an warrants over 40,000 Orinary shares are potentially ilutive to profit.
160
The figures for 2021 have been restate to better reflect the conversion of orinary shares that took place as part of the IPO process in 2022 an shows results as though the share conversion on IPO ha taken place in 2021
160
8.160 Intangible assets
160
160
160
160
Capitalise evelopment expeniture relates to evelope intellectual property in respect of circuit an chip esign.
160
The recoverable amount of a cash generating unit (CGU) is assesse using a value in use moel across each iniviual project that forms the intellectual property that has been capitalise. The value in use for each portion is epenent on the envisage life cycle of the CGU using a iscount factor of 10% (2021:10%), being the cost of capital for the CGU.
160
9.160 Borrowings
160
Group an Company
160
160
A bank loan of 1632,068,000 (2021: 1632,42,000) is secure by fixe an floating charges over the assets of the group an bears interest at rates of 8% over SONIA or 10% if higher. It is repayable in monthly instalments over the perio to August 2026.
160
A loan of 1633,088,000 (2021: 1633,06,000) is unsecure an bears interest at a fixe rate of 13%. It is being repai by quarterly instalments over the perio to October 2027.
160
The loan liabilities are state net of unamortise loan issue costs as at 31 May 2022 of 163189,000 (2021: 163132,000) which are being amortise over the perio to the loan repayment ates.
160
160
10.160 Deferre tax liabilities
160
160
Deferre tax has been recognise at an average rate of 2% (2021: 2%, 2020: 19%).
160
11.160 Share premium
160
Group an Company
160
The issue of share capital from the convertible loan notes an the IPO was 1637.4 million an IPO expenses of 1630. million have been eucte from equity an charge to the share premium account.
160
The net procees of the Funraising are to be use primarily to evelop further the Company's epth an strength of offering. As well as proviing the Company with funs it will enhance both transparency an the international profile of the Company with customers, allow the Company to access equity capital to fun growth an support potential MA opportunities, an enable the Company to attract, recruit an retain key employees.
160
Share issue costs relate to commissions charge an other irectly attributable costs of the funraise exercise.
160
In aition IPO costs of 1630.699 million in relation to the listing have been charge to the Income statement.
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