Sondrel Plc Regulatory News (SND)

The following amendment has been made to the 'Final Results for the Year Ended 31 December 2022' announcement released on 24/05/2023 at 07:00 BST under RNS No 4088A.

Under the Financial Highlights section Adjusted EBITDA should be a loss of £1.1 million.

All other details remain unchanged.

The full amended text is shown below.

Sondrel (Holdings) plc

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

Final Results for the Year Ended 31 December 2022

Strong financial and operational progress; positive outlook

Sondrel (Holdings) plc (AIM:SND), the fabless semiconductor business providing turnkey services in the design and delivery of 'application specific integrated circuits' ("ASICs") and 'system on chips' ("SoCs") for leading global technology brands, is pleased to announce its audited full year results for the year ended 31 December 2022 ("FY 22").

Financial Highlights

· Revenue up 116% to £17.5 million (FY 21: £8.1 million), exceeding pre-pandemic levels

· Record new orders received, with growth of over 130% YoY FY22 £25.6 million (FY21: £10.8 million) and providing strong visibility over FY23 revenue

· ASIC revenues growth of 313% YoY, representing 73% of total revenues (FY 21: 38%)

· Adjusted EBITDA £(1.1) million (FY 21: loss of £2.5 million)

· Adjusted Loss Before Tax (excl amortisation and IPO costs) of £2.6 million (FY 21: loss £3.4 million)*(see note 4)

· Cash balance at year end £4.4 million (FY 21: £(1.2) million)

· Repayment in FY22 of £1.8m of debt (FY21: nil) - Group is now debt free

· Net assets of £8.5million (FY21 £(6.6) million) 

Operational Highlights

· Successful IPO on AIM in October 2022, raising £20 million excl costs

· Record new design orders received in the automotive, Edge AI, mobile, networking, and aerospace markets totalling £25.6 million

· Significant progress made both during 2022 and the start of 2023 in respect of a material turnkey ASIC engagement secured in Q2 2022 for a Tier 1 OEM Automotive customer

· Extended key partner software supply relationships for a further three years

· Expanded US sales operation

Post Period End Highlights

· Maiden post IPO tapeout of an ASIC design for a leading provider of Edge AI Hardware Accelerator solution

· Successful design tapeout for a leading provider of home network devices, estimated to be worth £1.8 million in FY 23

Outlook

· New design wins in line with Board expectations, delivering a strong increase in the pipeline for volume supply

· Strong design pipeline identified for 2023 providing good visibility of future growth

Graham Curren, Chief Executive Officer of Sondrel, commented:

"I am delighted to present our first set of results since our IPO on AIM with the strong increase in revenue clearly demonstrating the significant potential of our full-service ASIC offering. Our focus on end markets that are supported by enduring megatrends, including high performance computing, automotive, artificial intelligence, VR/AR, video analytics, image processing, mobile networking and data centres, means Sondrel is well positioned for material future growth.

"With a strong pipeline of new designs, continued progress on tapeouts and prototyping, and the near-term benefit of production revenues, I am incredibly excited about our future growth prospects and look forward to updating shareholders as we progress to our medium-term target of revenues of over £100 million."

Analyst presentation

There will be an in-person presentation for analysts at 9:30 a.m. (BST) today. If you would like to join, please contact Buchanan at sondrel@buchanan.uk.com

This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation No 596/2014 which is part of English Law by virtue of the European (Withdrawal) Act 2018, as amended. On publication of this announcement via a Regulatory Information Service, this information is considered to be in the public domain.

- Ends -

FOR FURTHER ENQUIRIES:

About Sondrel

Sondrel is a UK-based fabless semiconductor company specialising in high end, complex digital Application Specific Integrated Circuits (ASICs) and System on Chips (SoCs). It provides a full turnkey service in the design, prototyping, testing, packaging and production of ASICs and SoCs.

The Company is one of only a few companies capable of designing and supplying the higher-spec chips built on the most advanced semiconductor technologies, selling into a range of hyper growth end markets such as high-performance computing, automotive, artificial intelligence, VR/AR, video analytics, image processing, mobile networking and data centres. Sondrel designs have enabled products by leading technology brands including Apple (iPhone), Sony (PlayStation), Meta's (Oculus), Samsung, Google and Sony smartphones, JVC (prosumer camcorders), Tesla and Mercedes-Benz cars.

Sondrel is well-established, with a 20-year track record of successful delivery, supported by long standing ecosystem partnerships including Arm, TSMC and Samsung. Headquartered in the UK, Sondrel has a global presence with offices in UK, USA, China, India and Morocco.

For more information please visit: www.ir.sondrel.com.

Chairman's statement

In this first Chairman's Statement since Sondrel became a publicly listed business on 21st October 2022, I would like to begin with words of thanks. Firstly, the international Sondrel team contributed so much to ensure we achieved the IPO, not just in 2022, but over the years since formation, building the company from a start-up to a highly regarded and globally recognised chip design leader. The IPO is already enabling us to attract further talent to continue to drive strong growth. The dedication of our employees no doubt played a significant role in the strong investor interest throughout the IPO process and beyond, and we welcome and appreciate the support shown by all shareholders, both before and after the IPO. The IPO has also resulted in us gaining three extremely talented NEDs whose wise counsel and business acumen is already adding great value to the company.

World events during 2022 clearly affected the business environment. However, as is usually the case with technology-based businesses, Sondrel's target market continued to invest in new designs and to plan further new products. As a consequence, Sondrel's orders increased by 137% during the year to £25.6m and sales revenue by 116% to £17.5m. We secured a number of contracts that will yield material production-based revenues, thus successfully delivering a key, strategic goal. The revenue in respect of these contracts will begin later in 2023, and will then increase in the following years. When undertaking such complex projects, customers occasionally seek changes to meet new requirements. Although all additional work undertaken is reflected in the final project revenue, such changes can result in a milestone payment slipping to the next quarter, as happened to a large automotive design in Q4 2022, totalling £4m, leading to a reduction in year-end cash to £4.4m.

As our customers are based all around the globe, Sondrel's operations have been built to optimally service the leading-edge, technological needs of those customers. Hence, 2022 saw strengthening of our teams, particularly in India and Morocco. We also ensure that our teams have a diverse and inclusive culture, for example our Moroccan team now comprises 27% female engineers. Members of these global teams continued to deliver high quality designs and to enhance our capabilities through R&D programmes that keep us at the forefront of chip design. These programmes and the ongoing upskilling of our teams enable us to target the most advanced chip designs in growth markets such as AI, autonomous driving, networking and video processing.

The Board is mindful of its duty to consider the wider needs of society. In that context, Sondrel has a long track record of connecting with the local communities in which it operates and takes a particular interest in education. We plan to further enhance this commitment in line with the growth of the company. In addition, our expertise in power management greatly assists our customers' drive to reduce energy consumption.

The Board is positive about Sondrel's outlook for the future and is ensuring we undertake robust debates on all key operational and strategic matters to drive sustainable, long-term growth. This perspective is supported by the increased recognition by governments and businesses in diverse sectors, of the critical role advanced semiconductor designs play in the modern world. Hence, despite the current economic challenges, the Board remains confident that Sondrel's core business model and team will deliver success in the years ahead.

Nigel Vaughan

Independent Non-Executive Chairman

23 May 2023

CEO's statement

Introduction

In sharing our first set of results as a newly quoted public company, I am delighted to report that, in what has been a monumental year for our business, we have produced extremely strong results in all key areas. Not only have we made significant operational progress, we have also delivered strong growth, reflecting the underlying strength of Sondrel and our business model. Over the last 12 months, we have developed a substantial order book, coupled with a successful listing on the AIM market of the London Stock Exchange, alongside celebrating our 20th anniversary. I'm especially pleased to see such a strong adoption of our ASIC supply services by customers old and new.

Our progress has also been reflected in our financial performance across FY 2022, with revenues increasing 116% to £17.5 million (2021: £8.1 million), alongside record new orders received, with growth of over 130% YoY.

We are focused on driving the accelerated growth of Sondrel in the coming years. Our business is built upon a small number of high value projects, executed in very close partnership with the likes of ARM, Synopsys and TSMC, and with our suppliers and customers. This approach gives me great confidence that we will be delivering excellent growth over the next couple of years, as we can see strong customer demand from new and repeat customers.

Like every company we have challenges to overcome. Technology in semiconductors moves fast so we need to invest in and accelerate our R&D programme. We need to strive harder to meet and exceed our customers' demands and we need to give our employees a great place to work. Our three goals for 2023 are to ensure robust financial management, delight all of our stakeholders (customers, employees, shareholders and partners), and to achieve operational excellence in every department. Achieving these three objectives is what drives us all forwards.

As we move into 2023, I have enjoyed getting out to see our customers and employees in remote sites in person again. There are many customers and people in the company that I have never met personally, and whilst video conferencing has made a positive contribution to much of communication, there is no substitute for in-person contact. As a distributed company, we also of course need to be aware of the carbon footprint associated with air travel so we expect to be travelling less than a few years' ago, but we still need to see people in person.

The ASIC market and its growth trajectory

Sondrel is a UK founded and headquartered fabless semiconductor business providing turnkey services and the supply of silicon for complex, high end 'application specific integrated circuits' ("ASICs") and 'system on chips' ("SoCs") for leading global technology brands.

Sondrel's capabilities are provided to customers seeking competitive advantage by including customised ASIC devices enabling differentiation of their end products while addressing fast growth technology megatrends.

We are seeing an acceleration in momentum towards digital transformation, with the clear trend to use advanced processes to enable adoption of Artificial Intelligence and Machine Learning based systems. To overcome the technical hurdles of adopting these advanced processes, we foresee that major technology companies will continue to expand their chip design outsourcing in the coming years.

There are certainly headwinds facing the semiconductor industry now. The trade restrictions on China from the USA, the war in Ukraine resulting in Sondrel pulling out of Russia and losing a major customer, the political uncertainty in Israel impacting investment, and the general downturn in VC finance have all had an impact. This is however countered by strong demand from the automotive sector and the adoption of artificial intelligence into almost everything. For Sondrel this has meant a shift in some of our customers and geographical focus and is proceeding well. I am pleased with the progress that we have made, especially in the USA where we are already engaged with a number of customers with strong future silicon volume requirements. Therefore, 2023 will be an important year for us in this market.

Artificial intelligence is the process of building and developing machines to perform tasks that historically have required human intelligence. AI is now regularly being used by individuals and is present in almost every key sector of business including healthcare, financial services, retail and transportation. Large scale uses of AI can be seen in content suggestions on social media, facial and speech recognition, or text editors, with tools such as ChatGPT becoming hugely popular. The growth in the adoption of AI continues to be a tailwind for the semiconductor industry, with high performing, AI-enabled chips needed to deal with the greater capacity required for data manipulation, whilst keeping power consumption and costs under control.

According to Fortune Business Insights, the global AI market is projected to grow from US$387 billion in 2022 to US$1,394 billion by 2029, at a CAGR of 20.1 per cent in the forecast period. ASIC designs in advanced processes will be an important part of enabling that to happen.

Thus, we expect that business opportunities in the global ASIC market will continue, and that Sondrel's business growth will also continue. Moreover, advanced processes will continue to expand as a proportion of our sales. Through these opportunities, Sondrel provides its customers with greater added value, and effectively create competitive advantages through differentiation.

Growth strategy

We have the ambition to grow revenues to over £100 million in the medium term, by focussing on our key strengths to deliver our growth strategy.

Continued transition in business model

Sondrel has transitioned its business model to provide a full turnkey ASIC design and supply service for its customers, which includes contracting for the testing and production of ASICs in addition to the previously offered design and production consulting. Although the testing, packaging, and other capital-intensive engineering functions necessary for production of an ASIC will continue to be outsourced to third parties, Sondrel will provide the product engineering and will manage the complex manufacturing process by engaging the various third parties directly. We believe that developing both the commercial and technical relationships with customers will enable the Group to generate significantly more revenue in the medium term, whilst remaining within the value chain throughout the ASIC production life. We expect that turnkey design and supply contracts will allow the Group to address more opportunities in parallel than has historically been the case and therefore to scale revenues more rapidly. This is due to the different elements of the production phase being subcontracted on a managed basis to specialist third party providers and foundries as well as increasing the engineering headcount.

Increase opportunities in the US and Europe

Sondrel has identified the US and Europe as key markets. We are pleased that we have very strong support from our key partners in the US with whom we are working to create valuable solutions for our mutual customers and we are focusing on growing the sales and technical support team in the US throughout 2023.

Strong relationships with key industry participants

Sondrel has established highly valuable relationships with many participants in the semiconductor industry. Sondrel is a recognised trading partner with some of the world's largest chip companies and foundries, namely:

• one of only 21 global Approved Design Partners of Arm;

• a Design Centre Alliance Partner of TSMC, the world's largest provider of advanced silicon IC's.

• one of only 3 Samsung Foundry SAFE™ Design Service Partners outside of Asia. Samsung Foundry began production of the first 3 nanometre SoC in June 2022; and

• an approved partner of Global Foundries.

These relationships, together with IP, EDA, test and packaging companies, are vital to deliver a compelling turnkey design and supply solution.

These organisations include leading OSAT organisations (such as Synergie-CAD, Amkor and ASE), IP vendors (such as Synopsys, Siemens, Arm and Arteris) and EDA vendors (such as Synopsys, Arteris and Siemens).

Sondrel's key strengths and advantages

We believe that Sondrel has several key strengths and advantages that are important to the success of the business:

1. Sondrel has already delivered designs at 5 nanometres and is now working on 3 nanometre process nodes. This level of engineering capability is limited to Sondrel and a small number of Asian competitors and positions Sondrel to benefit from the megatrends driving the increasing use of ASICs globally and the production of system solutions utilising increasingly complex design geometries.

2. Sondrel provides leading edge ASIC designs to a global customer base in advanced end markets with significant structural growth drivers including high performance computing, automotive, artificial intelligence, VR/AR, video analytics, image processing mobile networking and data centres.

3. Sondrel has a team of over 140 engineers that are located in design centres globally. This enables Sondrel to be one of only a handful of companies worldwide with the scale, capability and strength of industry relationships to deliver projects in leading technologies.

4. From concept to delivered ASICs, Sondrel is able to act as a single counterparty to its customers as a provider of a full turnkey service in the design, prototyping, testing, packaging and production of ASICs and SoCs. Sondrel is able to provide customers with the ability to de-risk the design of ASICs through the use of Sondrel's "Architecting the Future" Intellectual Property.

5. Sondrel has a clear organic growth strategy focused on increasing its engineering headcount and investing in IP development to further enhance its competitive position, accelerating its growth in key geographies including the USA and Europe.

6. Sondrel has a proven and experienced founder-led management team.

Customer Activity

The group continues to have a very strong pipeline of revenue opportunities providing good visibility of future growth. Customers cover multiple markets, including major industrial OEMs, automotive suppliers, and satellite communication services.

Key contracts and progress on projects in 2022 include:

An ASIC for a leading edge AI Hardware Accelerator manufacturer. Based on production volumes and product lifetime currently projected by the Customer, revenues for Sondrel associated with the production and supply of the manufactured Project ASIC would be worth in excess of US$20million to the Company over three years. The Project design contract was awarded to the Company in late 2021 and was fully funded by the customer. Project production and supply are expected to begin at the end of calendar year 2023.

An ASIC design for a leading provider of home network devices. The Project design contract was awarded to the Company in late 2022 and was fully funded by the Customer. The Project is estimated to be worth £1.8 million to Sondrel in 2023, which encompasses the partial design and NPI phases with a view to the ASIC entering production at the start of 2024. Based on production volumes and product lifetime currently projected by the Customer, revenues associated with the production and supply of the ASIC could be worth in excess of US$25 million over five years.

An ASIC design for a leading provider of ASIC controller for mobile phone application. The project design contract was awarded to the Company in early 2022 and was fully funded by the Customer. The Project encompasses the design and NPI phases with a view to the ASIC entering production at the start of 2024. A significant project for a leading European Automotive OEM. The Project design contract was awarded to the Company in mid-2022 and is fully funded by the Customer. Contract was signed July 2022 and design work has commenced. Significant progress has been made in respect of this turnkey ASIC engagement for this Tier 1 OEM Automotive customer - with major project milestones achieved in 2022. As stated at the time of the Group's IPO, Sondrel expects typical production volumes for each contract to deliver revenue of £10m to £100m per annum and the contract with the Tier 1 Automotive customer could deliver production revenue at the upper end of this range.

Major design service developments were undertaken during 2022 and completed designs sent for manufacture, including two advanced networking chips in 5nm FinFet Technology, a satellite communication device in 22nm, and two domain controller MCU's in 7nm for the automotive ADAS market.

Summary and Outlook

Having successfully delivered our FY22 results, I am pleased to report that the Company has started FY23 well, supported by existing contracts and ongoing new business momentum, as evidenced by our maiden post IPO design tape out for a leading provider of Edge AI Hardware Accelerator solutions in January 2023 and the March 2023 tapeout of an ASIC design for a leading provider of home network devices.

The Board firmly believes that the Company is well placed to continue capitalising on the sizeable growth opportunity within the semiconductor industry.

Graham Curren

Chief Executive Officer

23 May 2023

CHIEF FINANCIAL OFFICER'S REVIEW

I am pleased to report on a significant growth in revenue for the group, up 116% to £17.5m

Revenue

The Group has recovered strongly from the impact of the COVID-19 pandemic in 2020 and 2021 in line with the Group's successful transition into a provider of turnkey services, ASIC revenues have increased 313% to £12.8m (FY21: £3.1m) driven by one new and two existing major projects totalling £11.3m. These projects are all within the design phase moving to prototype in 2023 and going to production in later 2023, 2024 and 2025. ASIC revenues now comprise 73% of total revenues

Consultancy revenues have decreased to £4.7m (FY21: £5.0m) as the Group focuses on developing the ASIC business for the future.

Margins

The majority of the Group's direct cost base relates to engineering headcount and software. The Group focussed on retaining engineering resources through the COVID-19 pandemic and in developing further the Group's proprietary Architecting the Future technologies in order to deliver the expected future growth in demand, which has proven to be the case.

During 2022 the revenues in the first half of the year were out of alignment with the Group's operating costs. However, with revenues increasing in the second half of the year gross margins are improving and are expected to return to normal trading levels during 2023.

Administrative expenses (excluding share-based payments, depreciation, amortisation and exceptional items)

Underlying administrative expenses (excluding foreign exchange gains and losses) increased by 18% to £6.0m (FY21: £5.1m) driven predominantly by the increase in sales activity and the increased ongoing costs associated with being a public company.

Foreign exchange

The Group had 70% (2021: 30%) of revenues invoiced in currencies other than GBP, with the Group's cost base predominantly in GBP and USD, this has historically provided a natural hedge to currency exchange risk. However, during 2022 a new Euro contract led to 41% of revenues denominated in Euro and, together with the volatility of the USD during 2022, led to an exchange loss of £0.5m.

Adjusted EBITDA and Loss

Adjusted EBITDA (earnings before interest, tax, exceptional items, depreciation and amortisation) is considered by the Board to better represent the ongoing operating performance of the Group as it removes the impact of significant cash and non-cash expenditure items. Adjusted EBITDA improved to a loss of £1.1m (FY21: loss £2.5m). See note 4.

Loss before tax of £6.4 million (2021: Loss £5.5 million) includes significant cash and non-cash expenditure items. These are analysed as follows:

(1) Costs relating to the IPO which are not considered to be trading expenditure

Development costs

Under IFRS 15 development costs of £1.1m associated with the creation of mask sets that will deliver future economic benefits from production revenues were expensed to the profit and loss.

Research and development

Total expenditure on research and development in the year was £8.1m (2021: £7.1m) of which £0.4m (2021: £0.6m) was on internal research and development to increase the engineering differentiation and capability to efficiently deliver new technologies. Research & development costs of £0.2m were capitalised during the year relating to the commencement of an automotive development programme. Costs incurred relating to the development of internal process improvements are not able to be reliably measured and have therefore been expensed through the P&L.

Due to the nature of the work the Group is entitled to claim R&D tax credits. The amount recoverable this year is £1.0m (2021: £0.5m)

Exceptional items

During the year costs expensed to the profit and loss relating to the IPO were £1.4m. In addition, costs relating to the IPO of £1.8m were taken to equity.

Depreciation and amortisation

Depreciation and amortisation of £2.8 m (FY21: £2.5m) principally comprises the amortisation of the intangible software assets.

Interest

The investment in the software asset has led to an additional interest charge under IFRS 16 of £0.8m in 2022.

Taxation

No provision for tax has been made in the period (FY21: £Nil) due to the available tax losses carried forward of £ 1.8m creating a deferred tax asset of £3.2m.

Earnings per share

Loss per share was 0.06 pence (FY21: loss per share 0.11 pence).

Dividend

The Board has determined that no dividend will be paid in the year. The Group is primarily seeking to achieve capital growth for shareholders. It is the Board's intention during the current phase of the Group's development to retain distributable profits from the business to the extent they are generated.

Balance sheet

The Group has strengthened its balance sheet position with net assets at 31 December 2022 of £8.5m (FY21: £(6.6)m).

Intangible assets

The intangible asset of £14.5m (FY21: £9.3m) arises from the recognition of long term right to use software assets and in 2022 the capitalisation of £0.2m of research and development. During 2022 an additional asset of £7.3m was recognised securing software rights to 2025. The amortisation associated with the capitalised asset was £2.4m (FY21: £2.8m).

Cash flow and net debt

At 31 December 2022 the cash balance was £4.4m (FY21: £(1.2)m).

The Group repaid its bank debt post IPO and at the year end a shareholder loan of £0.7m was outstanding (FY21: £2.5m). This loan was repaid post year end leaving the Group debt free.

Two significant customer milestones originally anticipated to be received in Q4 2022, totalling £4m were deferred to 2023, with £1.5m received post year end and £2.5m to be received in the next few months.

Joe Lopez

Chief Financial Officer

23 May 2023

Consolidated statement of profit and loss and other comprehensive income

for the year ended 31 December 2022

All activity in both the current and the prior period relates to continuing operations.

Consolidated statement of financial position

at 31 December 2022

Consolidated statement of financial position

at 31 December 2022 (continued)

The consolidated financial statements were approved and authorised for issue by the Board on 23 May 2023 and were signed on its behalf by:

G S Curren

Director

 Company statement of financial position

at 31 December 2022

The Company has taken advantage of the exemption under S408 of the Companies Act 2006 and has not presented its own profit and loss account in these financial statements. The loss for the year of the Company after tax was £750,185 (2021: profit of £63,942).

The Company financial statements were approved and authorised for issue by the Board on 23 May 2023 and were signed on its behalf by:

G S Curren

Director

Company number: 07275279

Consolidated statement of changes in equity

For the year ended 31 December 2022

Company statement of changes in equity

for the year ended 31 December 2022

Consolidated statement of cash flows

for the year ended 31 December 2022

1. Basis of the announcement

The nancial information of the Group set out above does not constitute statutory accounts for the purposes of Section 435 of the Companies Act 2006. The nancial information for the year ended 31 December 2022 has been extracted from the Group's audited nancial statements which were approved by the Board of directors on 23 May 2023 and delivered to the Registrar of Companies for England and Wales following the Company's 2022 Annual General Meeting. The report of the auditor on the 2022 nancial statements was unmodified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006.

Whilst the nancial information included in this preliminary announcement has been prepared in accordance with UK adopted international accounting standards, in conformity with the requirements of the Companies Act 2006, that are relevant to companies that report under these standards, this announcement does not itself contain sucient information to comply with those standards. This nancial information has been prepared in accordance with the accounting policies set out in the 2022 Annual Report.

The Company is a public limited company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

The principal activity of Sondrel Holdings plc and its subsidiaries is the design and delivery of complex, high end 'application specific integrated circuits' (ASICs) and System on Chips (SoCs). It provides a full turnkey service in the design, prototyping, testing, packaging and production of ASICs and SoCs.

The Group considers there to be only one business segment which is monitored and reported to the Chief Operating Decision Maker ('CODM'), being the Board of Directors. This judgement is based on the fact that the Group provides similar products and services to all its customers, and the key performance indicators monitored by the CODM are total revenue and profit/(loss) for the year.

Revenue from transactions with major customers comprises the following, each percentage reflects a different customer:

Revenue is split geographically as follows (for more information on revenue see note 3):

Non-current assets excluding deferred tax are split as follows:

In the following table, revenue is disaggregated by major products/service lines and primary geographical market. All revenue is recognised over time.

The Group has recognised the following assets and liabilities related to contracts with customers:

Customers are typically invoiced on the basis of milestones set out in the contracts. These milestones do not correspond with the timing of satisfaction of performance obligations. The differences in the timing between the agreed invoicing schedule and the satisfaction of performance obligations result in the recognition of a contract receivable for services performed but not yet invoiced and a contract liability for consideration received but services not yet performed. Invoices are raised at agreed dates throughout the duration of the Projects and monthly in arrears for Consultancy arrangements. Payment is typically due within 30 days of issue of the invoice.

The movement on these balances during 2021 and 2022 was purely the result of the general course of business for the Group. Existing contracts were fulfilled, and new contracts were entered into during these periods.

The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward contract liabilities and how much relates to performance obligations that were satisfied in a prior year:

The following table shows unsatisfied performance obligations resulting from project works continuing into 2023. The largest three balances from individual projects amount to £6.9m, £1.9m and £1.4m:

These amounts are expected to be recognised as revenue as follows: £11,302,466 recognised as revenue in 2023; £321,029 recognised as revenue in 2024.

The Group is applying the practical expedient to not disclose the transaction price relating to the Consultancy performance obligation because the performance obligation is part of a contract that has an original expected duration of one year or less.

These items are included in normal operating costs, however as they are considered significant cash and non-cash expenditure items, they are separately disclosed because of their nature. It is the Group's view that excluding them from the operating loss gives a better representation of the ongoing trading performance of the business in the year.

The Group's primary results measure, which is considered by the Directors of Sondrel (Holdings) plc to better represent the ongoing operating performance of the Group, 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.

(1) Costs relating to the IPO, which are not considered to be trading expenditure.

The standard rate of corporation tax in the UK for the year was 19% (2021: 19%). The differences between the total tax shown above and the amount calculated by applying the standard rate of UK corporation tax to the loss before tax are as follows: