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

5 November 2024

EnSilica plc

("EnSilica", the "Company" or the "Group")

Audited Full Year Results for the Year Ended 31 May 2024

-  Ongoing contract momentum underpins significant demand for EnSilica's services

-  New contracts signed with a lifetime expected value of $65 m post year end

EnSilica (AIM: ENSI), a leading chip maker of mixed signal ASICs (Application Specific Integrated Circuits), announces its audited full year results for the year ended 31 May 2024 ("FY 2024").

Financial Highlights

·    Revenues increased by 23% to £25.3 million (FY 2023: £20.5 million) 

·    EBITDA increased by £0.1 million to £1.7 million (FY 2023: £1.6 million)

·    Gross margin of 36% (FY 2023: 40%) distorted by large tape-out contract

·    Operating profit of £0.9 million generated, an increase of £0.1 million versus the prior year

·    Cash and cash equivalents increased by £2.1 million to £5.2 million (FY 2023: £3.1 million)

·    Successful completion of equity fundraisings totalling £6.5 million (net of expenses) during the year

·    Further organic investment of £6.4 million in Intellectual Property ("IP") assets

External loans refinanced with a £6 million facility with Lloyds unlocking £2.1 million of additional working capital, with an additional £3 million available subject to credit approval

Operational Highlights

·      New lead customer contract for its proprietary satellite broadband chip, valued at £2.5 million

·      €3.8 million contract with a prominent European automotive and industrial semiconductor supplier for the development of a chip incorporating Arm-based technology

·      First IP licence granted to a major semiconductor company of EnSilica PQC and classical Cryptography accelerator

·      ASIC supply contract worth over $7 million in the e-mobility market

Post Year-End Highlights

·      Significant supply-only contract for an Edge AI processing chip, valued at $7 million, with potential supply revenue exceeding $50 million over the first five years of production

·      Second ASIC design and supply win with Siemens for market-leading factory automation products , valued at approximately $2.4 million

·     Contract signed for the development and supply of a high-end ASIC for telecommunications infrastructure with Siae Microelettronica. The contract is expected to be worth in excess of $30 million over a ten-year period

·      Five million automotive ASICs shipped delivering key differentiating features in the chassis control unit of a premium vehicle

·      Fourth ASIC moves into production phase, with the first orders received for industrial ASIC. The total supply value is expected to be worth more than $30 million over seven years

·      Strengthened partnership with TSMC with announcement of EnSilica joining the TSMC Design Centre Alliance partnership programme

·      Contract signed for the development and supply of a controller ASIC for automotive and industrial applications, the contract is expected to be worth in excess of $31 million over a seven-year period

·      Awarded a £2m ASIC design services contract with a prestigious supplier of power and propulsion systems used in the air, at sea, and on land

Outlook

·    The Company has started FY 2025 strongly, with key milestones achieved and new business momentum across target sectors including automotive and industrial. Revenues are expected to be second half weighted as in FY2024.

·    The business has built a strong pipeline with a sizeable order book that continues to underpin management's confidence in the business

·    Whilst the Board is confident of the short-term revenue pipeline, additional external financing may be required should the Company experience further delays in contracted customer receipts

·    Looking ahead, the Board believes the Company is well placed to continue to capitalise on the significant growth opportunity that exists within the semiconductor industry

Ian Lankshear, Chief Executive Officer of EnSilica plc, commented:

"EnSilica performed strongly across the full year period and I am particularly pleased with our continued new supply contract momentum alongside our solid progress developing our IP portfolio.

From both a financial and operational perspective, EnSilica remains well positioned to continue to explore commercial opportunities across the semiconductor supply chain, and, supported by our talented global team, we are focused on increasing our market share in sectors such as healthcare and satellite communications where ASICs are integral components of innovations."

Investor presentation

An online presentation of the annual results will be held today at 2.00 p.m. GMT. The presentation will be hosted on the Investor Meet Company ("IMC") platform.

Investors can sign up to IMC for free and add to meet EnSilica via:

https://www.investormeetcompany.com/ensilica-plc/register-investor

Annual Report and AGM

The Company's annual report and accounts together with notice of the annual general meeting ("AGM") will be posted to shareholders this week and will be made available on the Company's website. 

The Annual General Meeting will be held on 28 November 2024 at 10.00 a.m. at the Company's office at Milton Park Innovation Centre, 99 Park Drive, Milton Park, Abingdon OX14 4RY.

For further information please contact:

The person responsible for arranging release of this announcement on behalf of the Company is Kristoff Rademan, Chief Financial Officer.

About EnSilica

EnSilica is a leading fabless design house focused on custom ASIC design and supply for OEMs and system houses, as well as IC design services for companies with their own design teams. The company has world-class expertise in supplying custom RF, mmWave, mixed signal and digital ICs to its international customers in the automotive, industrial, healthcare and communications markets. The company also offers a broad portfolio of core IP covering cryptography, radar, and communications systems. EnSilica has a track record in delivering high quality solutions to demanding industry standards. The company is headquartered near Oxford, UK and has design centres across the UK and in Bangalore, India and Porto Alegre, Brazil.

Chair's Statement

We have continued to grow in line with, and in some cases  exceeded, the plans that we set out at the time of our IPO, reflecting  the strength of our strategy and the dedication and abilities of all our colleagues globally.

Global demand for ASIC (Application Specific Integrated Circuit) chips is fast-expanding, with the market expected to reach $25 billion by the end of 2030, delivering a CAGR of 5.1% between 2024-20301. While uncertainty has impacted investment decisions  over the prior year and may continue to do so in the near future, we remain confident in the growth prospects of the ASIC market  underpinned  by continued demand from industries at the forefront of modern technology and innovation.

To that end, our business remains firmly focused on targeting four  high-tech growth markets; namely communications, healthcare, automotive and industrial.

Pleasingly, we have continued to attract high-value contracts across these core growth end markets, despite the current macro-economic backdrop. Our Annual Recurring Revenues (ARR)  of chip supply are beginning to feed through to our results and we  expect this to be a permanent feature of the business going forward.  We aim to achieve a return on capital employed (ROCE) in excess of 20%, supported  by  strong  EBITDA margins, as our ARR continues to  grow. In addition, our order book and pipeline continues to expand  and develop while our customer list has similarly advanced.

Across FY24, we secured several supply and contract wins which    have further diversified our revenue streams, reflecting our well-established position as a trusted partner for tier 1 global corporations as well as industrial OEMs and  tech startups. Highlights include a €3.8 million Arm-based technology contract win, and an initial mandate for a high-end telecoms ASIC worth over $30 million.

As Ian Lankshear sets out in his CEO statement, we are managing  to secure contracts in fields where we know we have particular expertise, including analogue design, space communications, and   radio frequency technology. We are also excited by the considerable  amount of potential new business opportunities on the horizon, particularly with the increasing demand for "Edge AI" which we believe provides a significant growth opportunity for EnSilica.

Our aspiration is to be the premier application specific chip maker in Europe and our plans are focused on achieving this  objective. To help realise this ambition, we have negotiated and secured improved relationships with key suppliers in Europe and  delivered high-value contracts with European customers. EnSilica's ASIC design expertise is increasingly capturing the attention of businesses operating outside of Europe, with the Company experiencing strong  interest from US companies in particular. This is  precisely why we established the EnSilica USA Inc. subsidiary which  has already enabled us to form strong relationships with relevant    critical suppliers, while also providing EnSilica with access to a pipeline of additional business opportunities. The new financial year has begun well with a number of new contract wins further fuelling future annual recurring revenues, the designs of which we are already engaged upon.

We are delighted to have completed a number of small equity raises  during the period, and we will continue to ensure the Company  remains adequately financed to support our new business aspirations and continue our progress on delivering the plan we set out at the time of our IPO.

We were also delighted to have Kristoff Rademan join us as Chief Financial Officer in May 2024. With over 20 years' experience working in corporate finance positions across the pharmaceutical and technology spaces, Kristoff has quickly become instrumental in the execution of our growth strategy, and we look forward to seeing  how his know-how will further shape the Company's growth.

After two and a half years with EnSilica, Noel Hurley, Non-Executive Director, has decided that due to other business commitments, he will not be seeking re-election as a director at the Annual General Meeting. I would like to thank Noel for his contribution to the business over this period.

I would also like to thank all our employees for their hard work and commitment throughout the period, as well as our shareholders for their continued excellent support. The Board looks forward to delivering further on our plans to provide valuable investment for all shareholders as we remain focused on continuing, and enhancing, our growth strategy.

1 https://www.verifiedmarketreports.com/product/asic-chips-market-size-and-forecast/

Mark Hodgkins

Executive Chair

Chief Executive's Review

We are pleased to report another strong set of full year results as a quoted company, which has been supported by our historic investments in supply contracts and growing our Intellectual Property (IP) portfolio. This ongoing financial progress is evidenced with FY24 audited revenue and EBITDA both in line with expectations at £25.3 million (FY23: £20.5 million) and£1.7 million (FY23: £1.6 million) respectively.

EnSilica's transition from a specialist semiconductor service company, which started in 2016, to a fabless ASIC company offering the design and supply of custom chips, is now close to being fully realised. The Company now has four chips in production and over nine in the design pipeline that should deliver long-term recurring supply revenue as they move into production. When combined, our anticipated revenue projections could deliver c.£100 million per annum within the medium term.

We were proud to announce a second design and supply ASIC win with Siemens, the German multinational technology conglomerate in September 2024, further validating the quality of our offering. Siemens incorporates ASICs in various industrial automation systems, and uses these specialised chips to enhance functionality, reduce power consumption, and improve overall system reliability, underpinning its desire to collaborate with innovative companies like EnSilica.

Industrial automation is a focus area for the Company and having Siemens as a customer demonstrates EnSilica's position as a leading ASIC supplier for high-quality, high-integrity digital and mixed signal ASICs.

I would like to express my sincere thanks to all our hardworking and talented staff. Their dedication to innovation and quality is our greatest asset, and their skills have been key to attracting such prestigious customers.

Business Model

EnSilica operates a Fabless Semiconductor Model, providing an end-to-end solution for the development, manufacturing and supply of Integrated Circuits (ICs) from initial scoping and design through to the delivery of products. EnSilica partners with the leading wafer foundries such as TSMC and Global Foundries as well as Outsourced Assembly and Test (OSAT) companies to manufacture our chips. This sits alongside our design consultancy, supporting customers with their own design teams to develop ICs.

EnSilica's focus on ASIC design and supply embeds the Company further into the electronics value chain, which sees customers typically pay the fees towards the costs of design, tooling, and test development of the ASIC, otherwise known as Non-Recurring Engineering costs (NRE). Customers will subsequently purchase the EnSilica designed ASIC or, in some cases, pay royalties to EnSilica for the ASICs that a third party will manufacture on the customer's behalf.

EnSilica will often co-invest in the development of an ASIC alongside the customer, and, depending on the sector, the ASIC can take two to five years to reach full production. At the production stage, revenues can be high, last several years, and generate gross margins in the 35% to 60% range. The gross margin depends on the market and the level of co-funding of the NRE required, as well as the amount of EnSilica's IP present in the finished IC product. A key part of EnSilica's expertise is in scrutinising the potential financial upside of investing in various IC development programmes and choosing the right projects which will result in long-term component supply or royalty revenue for the Company.

In niche areas where the Company identifies strategic market opportunities, the Company invests in its own IP as the basis of a customer-specific ASIC, or if multiple customers have the same requirement for a chip with specific functions, this is referred to as an Applications Specific Standard Part (ASSP). These chips are sold to multiple customers, generating even larger returns. Examples of this include the Company's satellite communications and healthcare vital signs sensor technologies.

In FY24, we introduced a new "Supply Only" model, enabled by our strengthened relationships with key foundries and outsourcing partners. In this model, customers design a significant portion of the chip, while EnSilica typically provides design support during the final stages. This benefits the customer by giving them access to a proven supply chain with leading suppliers and an experienced team to handle the tape-out and production.

EnSilica then manages the foundry interfaces, including the tape-out process, and supplies either silicon wafers or fully packaged and tested chips back to the customer - a process overseen by our specialist silicon operations team.

The Board believes this model will both enhance production margins across EnSilica's ASIC design and supply business through increased wafer volumes, and strengthen the Group's position within the semiconductor supply chain. The Company's recent business wins are a clear indication of the efficacy of this model in securing both revenue and profit growth in the medium term.

Growth Strategy

Our growth strategy remains unchanged as we continue to pursue the following business objectives:

■    leverage EnSilica's strong positions and IPR within satellite communications, industrial, automotive and healthcare applications for digital and mixed signal ASICs;

■    scale the Company's successful Fabless ASIC Model to fully exploit revenue opportunities from design and supply engagements;

■    capitalise on the growing need for custom Edge AI and enhanced associated cybersecurity requirements which will necessitate many industrial, automotive and communication chips to be re-designed; and

■    to develop ASSPs, based upon customer demand and leveraging the funding available from lead customers, the European Space Agency and various semiconductor stimuli. EnSilica currently has two significant platforms at the device evaluation stage

IP Strategy

IP remains the cornerstone of EnSilica's growth strategy and is pivotal in the competitive landscape of fabless semiconductor companies. Our IP framework not only accelerates time to market and mitigates risks but also enhances our profit margins in the longer term. EnSilica's IP portfolio encompasses patents, copyrighted materials, application know-how, and design flow and methodology expertise.

A patent grants exclusive rights to an invention, whether a product or a process, offering a novel solution to a technical problem. Given that many of our innovations are embedded within microchip circuits, detecting patent infringements can be challenging. Our patent strategy is focused on securing UK patents, which will leverage the UK Patent Box relief to reduce our corporation tax liability on profits on patented products to 10%.

EnSilica develops reusable IP building blocks tailored to our target markets, enhancing our competitiveness in ASIC development bids. These building blocks reduce risk, time to market, and third-party costs. We also market our IP through various online catalogues, showcasing our capabilities and attracting ASIC enquiries. Additionally, non-competing semiconductor companies can licence our IP for use in their own chips, creating an additional revenue stream.

By leveraging our extensive IP portfolio, the Company continues to deliver innovative solutions that meet the specific needs of the markets we address, thereby maintaining our competitive edge.

Our Markets

The Semiconductor Industry Association is currently projecting annual global sales will grow to $611.2 billion in 2024, which would be the industry's highest-ever annual sales total and is expected to grow further in 2025 to $687.4 billion2. In addition, innovation across the automotive, industrial and consumer electronics sectors are fuelling projections for the industry to reach $1 trillion in sales by 20303.

EnSilica remains focused on four principal markets where there are significant global growth opportunities: satellite communications, industrial, automotive, and healthcare.

2       https://www.semiconductors.org/global-semiconductor-sales-increase-15-8-year-to-year-in-april-new-industry-forecast-projects- market-growth-of-16in-2024/

3       The semiconductor decade: A trillion-dollar industry | McKinsey

Satellite Communications

The satellite communications sector is undergoing transformative changes, driven by new standards and increased funding, presenting significant opportunities for EnSilica to expand its already sizeable footprint in this high-growth sector.

The industry is increasingly becoming standards-based, with the integration of Non-Terrestrial Networks (NTN) into the 5G standards marking a pivotal shift. 5G NTN extends 5G technology to include satellite communication, providing global connectivity to remote areas and, enabling seamless and reliable communication on a global scale. The 5G NTN market4 is estimated to be worth $7.2 billion in 2024 and is projected to reach $31.7 billion by 2029 at a Compound Annual Growth Rate (CAGR) of 34.7% during the forecast period.

Next-generation Low Earth Orbit (LEO) constellations are set to revolutionise satellite communication, with OneWeb already deploying 634 satellites, and are designed to provide global coverage and enhanced resilience, supporting applications from disaster response to high-speed connectivity in remote areas.

The UK Space Agency has announced substantial funding to support the LEO satellite communications industry. With£160 million allocated for innovative projects for Connectivity Low-Earth Orbit (C-LEO), this funding will supercharge the UK's LEO satellite communications capabilities. EnSilica has already benefited from €7 million of funded projects targeted at developing chips for the next generation of user terminals.

Phased array technology is becoming increasingly important in satellite communication, particularly in user terminals. For example, Starlink's user terminals utilise sophisticated phased-array antennas which electronically track fast-moving satellites. These phased-array antennas often incorporate hundreds of mmWave RF (radio frequency) chips and dozens of beamformer chips to achieve high-speed, reliable connectivity. EnSilica's strong IP and know-how in mmWave RF and beamforming technologies position us as a key player in this space, enabling us to deliver cutting-edge solutions that meet the demanding requirements of modern satellite communication systems.

EnSilica is actively contributing to advancements in satellite communication through strategic partnerships and innovative projects. Notably, EnSilica has been selected by AST SpaceMobile to develop the next-generation ASIC for its planned space-based cellular broadband network which aims to eliminate connectivity gaps and bring cellular broadband to around half of the world's population that still remains unconnected. This collaboration highlights EnSilica's expertise in delivering state-of-the-art performance and power efficiency.

By leveraging advancements in 5G NTN, next-generation LEO constellations, and capitalising on increased funding from the UK Space Agency and lead customers, EnSilica is well-positioned to seize opportunities in the satellite communication market and while remaining at the forefront of technological innovation.

Industrial and Automotive

The global industrial semiconductors market was valued at$78.6 billion in 2023 and is projected to reach $208.1 billion by 2031. Meanwhile the automotive semiconductor market was worth $78.3 billion in 2023, a figure expected to increase to $130 billion by 2030. Both sectors share similar quality and functional safety requirements, making our mixed signal and digital expertise in high demand. The industrial sector is increasingly adopting advanced semiconductor solutions to enhance automation, efficiency, and connectivity, and the automotive sector continues to be driven by innovation and a shift to electric vehicles (EVs), infotainment systems, advanced driver assist systems, autonomous driving systems, connectivity, safety, and security systems.

Edge AI is revolutionising both the industrial and automotive landscapes by enabling real-time data processing and decision- making at the edge of the network. This shift reduces latency, enhances security, and improves operational efficiency. In industrial applications, Edge AI supports intelligent, autonomous systems, while in automotive applications, it enhances safety and operational efficiency.

The advent of quantum computing poses a significant threat to current cryptographic standards, necessitating the standardisation of Post-Quantum Cryptography (PQC)5. EnSilica has proactively addressed this challenge by incorporating PQC accelerators into our eSi-Crypto range of hardware IP. These accelerators are designed to withstand quantum attacks, ensuring the security of both industrial and automotive systems in the quantum era. Our leadership in PQC technology not only enhances the security of our solutions but also provides a competitive edge in the market.

By leveraging our experience in the industrial and automotive sectors along with Edge AI and PQC, EnSilica is well-positioned to capitalise on the growth in these areas. Notably, EnSilica has developed an ASIC for a high-end vehicle, which started production in June 2022. This project is estimated to generate $40 million in revenue over six years - a significant achievement highlighting our capability to deliver cutting-edge solutions for premium automotive applications.

4      https://www.marketsandmarkets.com/Market-Reports/5g-ntn-market-186116188.html

5      https://www.nist.gov/news-events/news/2024/08/nist-releases-first-3-finalized-post-quantum-encryption-standards

Healthcare

Advancements in AI have made it possible to detect medical conditions through a range of monitoring devices, from wrist-worn devices and small patch sensors to earbuds and rings. Accompanying this increase in prescribed medical grade wearable devices is a growing demand for consumer health and wellness wearable devices; the number of devices shipped worldwide is estimated to reach 640 million by 2027. Semiconductors are essential components of these increasingly popular devices. Reflecting this growing demand, the semiconductor in healthcare market size was valued at $7.47 billion in 2024 and is projected to reach $12.82 billion by 2029, growing at a CAGR of 11.4% during this period6.

EnSilica has developed key IPR for healthcare wearable devices, including a vital sign sensors IC offering accurate sensor interfaces with very low power consumption. This IC is being evaluated by a number of customers and the Directors believe that this will lead to either a standard part sold to many customers as an ASSP or various customised versions of the IC optimised for specific customers. However, a restriction on the current availability of capital to invest has slowed down the pace at which EnSilica can market and hence commercially exploit this technology.

Semiconductor Supply Chain and Geopolitical Changes

Geopolitical tensions, particularly between the US and China, have continued to complicate the global semiconductor supply chain. The US continues with export controls on semiconductor technology to China, prompting many countries to secure their own supply chains and reduce dependency on foreign sources. Additionally, tensions between China and Taiwan, a major semiconductor hub, add to the uncertainty.

In response, there has been a push towards the localisation of semiconductor supply chains. Companies are investing in local manufacturing and exploring alternative supply routes to mitigate risks. This trend is expected to continue as nations seek to bolster their semiconductor industries.

As demand for advanced semiconductor solutions increases, the need for skilled professionals in design, manufacturing, and R&D becomes more critical, making talent shortages a key concern. EnSilica is investing in talent development and retention strategies to actively bring in new talent in our operational locations.

With increased government and private sector investment in semiconductor manufacturing and R&D, the industry is keeping pace with growing demand. EnSilica is committed to leveraging our expertise and strategic partnerships to ensure a resilient supply chain for our customers.

6            Semiconductor In Healthcare Market Size & Share Analysis - Industry Research Report - Growth Trends (mordorintelligence.com)

Customer Activity

FY24 has been a strong period of growth and operational development for EnSilica, driven by our unwavering commitment to delivering innovative and high-quality solutions to our customers. Our customer-centric approach has enabled us to forge deeper relationships and expand our footprint across our chosen high-growth markets.

Key highlights include;

■    announced a second ASIC design and supply win with Siemens to be used in market leading factory automation products;

■    first production orders for an Arm-based industrial ASIC for a leading European OEM with production revenues estimated to exceed $30 million over the next seven years;

■    entered into a design and supply agreement for a high-end telecommunications infrastructure ASIC for Siae Microelettronica. The contract is forecast to be worth in excess of $30 million over a ten-year period;

■    secured a follow-on contract with an existing Europe-based customer valued at approximately $2.4 million;

■    signed a new lead customer contract for its proprietary satellite broadband chip, valued at £2.5 million;

■    awarded a £2 million ASIC design services contract with a prestigious supplier of power and propulsion systems used in the air, at sea, and on land;

■    awarded a significant supply-only contract for an Edge AI processing chip, valued at $7 million, with potential supply revenue exceeding $50 million over the first five years of production;

■    secured a sensor ASIC supply contract worth over $7 million in the e-mobility market;

■    secured a €3.8 million contract with a prominent European automotive and industrial semiconductor supplier for the development of a chip incorporating Arm-based technology;

■    first IP licence granted to a major semiconductor company of EnSilica PQC and classical Cryptography accelerator for use in a 5nm networking chip;

■    entered into a development and supply contract for a controller ASIC used in automotive and industrial applications, the contract is expected to be worth in excess of $31 million over a seven-year period.

Our People

Our team continue to deliver some of the most complex semiconductor engineering projects in the industry. This includes developing innovative advanced node RF designs that very few teams outside the semiconductor multinationals could deliver.

The Company remains focused on retaining and attracting the best new talent in all its operating locations. In the UK, we are actively working with the UK Electronics Skills Foundation (UKESF) to offer undergraduate scholarships and in Brazil and India we are tapping into the universities to identify the most talented graduates. Examples of this in FY24 includes:

■  Vasiliki Xiradaki, a UKESF scholar who was awarded the STEM Pioneer Rising Star at the Women Leaders in Engineering awards and gained a First-Class honours degree. Vasiliki joined EnSilica UK staff in September 2024; and

■  Tulio Pereira Bitencourt, who is now part of EnSilica Brazil staff and had his master degree work selected Best Master Thesis in Microelectronics in Brazil awarded by the Society of Microelectronics of Brazil.

Board

The Company was pleased to announce that Kristoff Rademan was appointed Chief Financial Officer and director of the Company in May 2024. Kristoff has already made an immediate contribution to the business, and we look forward to further leveraging his vast experience in executive finance roles at innovation-led companies.

Outlook

Having successfully delivered our FY24 results in line with market expectations, I am pleased to report that the Company has started FY25 well with a number of high-value contract wins and strong supply revenues.

EnSilica's sales and marketing initiatives have significantly increased its market visibility, resulting in higher-value opportunities and a robust pipeline of new business. The Company has continued to invest in its R&D initiatives such as PQC and satellite communication technology with support from the UK Space Agency.

EnSilica remains committed to its mission of being a trusted IC partner for its customers and the Company's strategic focus on its chosen high-growth markets, coupled with its strong existing foothold, positions it well to capitalise on future opportunities. EnSilica will continue to prioritise customer satisfaction and strive to exceed expectations through innovation, quality, and reliability.

This strategic report has been approved by the Board of Directors and signed on its behalf by:

Ian Lankshear

Chief Executive Officer

Chief Financial Officer's Review

FY24 has seen continued success for the Group with growth again achieved in revenues, EBITDA and Operating Profits. The Group has achieved increased revenues and profits through new contracts won in competitive tendering processes. Contract wins during FY24 included a $20 million tape-out and supply contract with a US electronics manufacturer, a $7 million design and supply contract for the e-mobility market, a €2.5 million supply contract win for our satellite broadband chip, as well as a $2.4 million follow on contract for the development of an advanced networking ASIC.

The Group has been able to demonstrate this year that it is successfully executing its stated aim of becoming the international "fabless" semi-conductor company of choice for the development and supply of ASICs in satellite communications, industrial, automotive and healthcare applications.

Our cash generated from operations has been supported by equity raises during the year totalling £6.5 million, with funds raised on the back of a number of strong contract wins, as well as the receipt of

£1.8 million as part of the HMRC research and development credit tax programme.

As part of its growth strategy and in conjunction with its customers, the Group continues to co-invest in the development of customer ASICs, as well as its own IP and know-how. As such, the Group has invested a further £6.4 million in supply contracts and IP assets with the expectation of achieving future supply or royalty revenues as a result of this investment.

A summary of the key financial results for the year are set out in the table below:

Revenues

The Group's revenues increased by 23% to £25.3 million (FY23:£20.5 million). This was driven by strong growth in our NRE/Supply revenue streams, particularly our satellite communications division, partly offset by lower revenues in our legacy Consulting stream. The Group continues to focus on developing the revenue derived from NRE/Supply as part of its 'fabless' semiconductor business model while maintaining a level of consultancy work which provides a reliable income stream. Looking ahead the Group will continue to focus on the higher returns of design and supply work, and consultancy income will become a less significant contributor to the business over time.

Chip supply revenue post NRE work incurred in developing the chip remained steady in 2024 but is expected to grow substantially in 2025 as a result of a number of tape-outs which occurred during 2024 and the start of 2025. We now have three ASICs which have been released for supply and we anticipate this increasing during 2025 in line with the Group's forecasts. We continue to target closing two to three new customer design and supply contracts each year which will continue to feed the supply revenues of the Group in future years.

Gross Margin

Gross margins in 2024 have been negatively impacted by a large lower margin tape-out which occurred in the last quarter of FY24 bringing down the gross margin of the Group by 4% from 40% in FY23 to 36% in FY24. Tape-outs represent a key final development stage of NRE projects which are generally lower margin as there are significant third party costs incurred.

Operating Expenses

Operating expenses were 11% higher increasing from £6.6 million in FY23 to £7.3 million in FY24 due to additional staff costs, IT expenditure and inflationary increases.

EBITDA

As a result of the large increase in revenues offset by a corresponding increase in cost of goods and a smaller increase in operating expenses, EBITDA increased by £0.1 million from £1.6 million in FY23 to £1.7 million in FY24.

Profit after tax

Interest expense remained stable at £0.9 million whilst the research and development tax credit decreased by £0.5 million due to a decrease in the rate at which HMRC reimburses eligible R&D expenditure, leading to a smaller claim to be submitted for 2024. The Company also increased the deferred tax liability recognised on its intangible assets leading to a deferred tax charge of £1.3 million. The net impact of the above is a loss after tax of £0.2 million, £1.9 million lower than the prior year.

Headcount

Group headcount has remained stable throughout the period with only minor changes due to employee turnover.

Balance sheet

A summary of the key financial results for the year are set out in the table below.

Cash and cash equivalents

Cash and cash equivalent have increased as a result of the movements as described in the cash flow section below.

Intangible assets

Intangible assets have increased from £12.4 million to £18.6 million at the end of FY24 mainly as a result of additions of £6.4 million as the Group continues to co-invest in the development of customer ASICs as well as its own IP and know-how, offset by amortisation of £0.4 million. We take a critical review of the carrying value of our intangible fixed assets with the Board having overseen a rigorous review of the value, which is supported by forecasted supply revenue streams.

Loans

The Company had bank loans totalling £4.0 million at the end of FY24 (FY23: £4.2 million), one of £2.1 million from SME Alternate Financing, a Coronavirus Business Interruption Loan (CBIL) of

£1.2 million and a loan of £0.7 million (2023: £0) from SPRK Capital.

Cash Flow

The Company generated an EBITDA of £1.7 million and after positive working capital movements and a R&D tax receipt of£1.8 million, generated net cash flow from operations of £4.3 million. The Company made investments in intangibles of £6.4 million, mainly driven by the co-development of customer projects, and spent £0.9 million on mainly manufacturing equipment capital expenditure. Interest paid on loans and leasehold property liabilities amounted to £0.9 million, leading to a cash consumption of £4.0 million.

Net proceeds from financing included equity fundraise of £6.5 million, a loan advanced of £0.7 million, and offset by loan and lease liability repayments of £1.0 million. The movement in cash in the year was therefore an increase of £2.1 million.

Financial outlook

The Group expects FY25 revenues to be circa £30 million, with revenues for the year being second half weighted. The Group currently has good visibility of FY25 revenues with about 65% of revenues being from contracted customers or contracts in negotiation, and the remainder to be earned from new contract wins with identified customers.

EnSilica also reiterates its guidance of achieving an EBITDA of circa£5 million in FY25. Gross margins are expected to improve over those achieved in FY24 and tight costs controls will be maintained over operating expenses, with only inflationary growth expected leading to an increased expected EBITDA of circa £5 million.

As outlined in the Going Concern section below, EnSilica expects to require additional external financing should the Company experience further delays in contracted customer receipts.

Going Concern

For the year ended 31 May 2024 the Group generated revenues of £25.3 million and an operating profit of £0.9 million and generated cash flow from operations of £4.3 million. As at 31 May 2024 the Group held cash balances of £5.2 million and the Group's financing arrangements consisted of a loan of £2.1 million from SME Alternate Financing, a Coronavirus Business Interruption Loan (CBIL) for£1.2 million and a £0.7 million loan from SPRK Capital.

In considering the basis of preparation of the Annual Report and Accounts, the Directors have prepared a cash flow forecast for a period of at least 12 months from the date of approval of these financial statements, based in the first instance on the Group's 2025 annual budget, and forecasts for 2026. The Directors have undertaken a rigorous assessment of the forecast and assessed identified downside risks and mitigating actions. Due to the Company's investment in the co-development of ASICs with customers in order to achieve long term future recurring revenues from supply, the Company requires additional financing in the form of loan financing or equity financing, or advance contract payments in order to continue its operations and current capabilities.

The Board review of the detailed cash flow forecast prepared as part of the going concern assessment process identified that the Company would not be able to continue its activities for at least 12 months from the date of approval of these financial statements if the Company could not secure external financing and continue to execute and recover known and expected revenues from existing customers under long-term contracts which are ongoing but still to be delivered, or win new customer contracts for NRE and consultancy revenues.

At the start of November 2024, the Company completed the refinancing of its long-term external debt on more favourable terms for a £3 million term loan and £3 million revolving credit facility which will unlock an additional £2.1 million of cash to fund its working capital requirements.

If the Company is unable to secure the external financing and receipt of the revenues described above, it has assessed that it would not be able to generate sufficient cash flows to support its level of activities beyond the third quarter of FY2025. The above situation gives rise to a material uncertainty, as defined in auditing and accounting standards, related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern and in such circumstances it may therefore be unable to realise its assets and discharge its liabilities in the normal course of business.

However, despite the above uncertainties, the Board has confidence that the accounts should be prepared on a going concern basis for the following reasons:

■    At the start of November 2024, the Company completed the refinancing of its long-term external debt on more favourable terms for a £3 million term loan and £3 million revolving credit facility which will unlock an additional £2.1 million of cash to fund its working capital requirements;

■    the Company's ability to continue to be successful in winning new customers and building its brand as demonstrated by:

■    signing of a substantial development and supply agreement with a telecoms customer, SIAE, with a lifetime value of $30 million;

■    signing of a further design and supply agreement with Siemens, another contract with an established automotive tier 1 with a forecast lifetime value of $31m, and a further £2m services contract with a prestigious supplier of power and propulsion systems;

■    the Company is in the contract negotiation stage for a further 3 design and supply contracts with NRE worth £11.1 million which are expected to be signed by the end of the year, these contracts are supported by significant upfront payments.

■    the Company's history of being able to access capital markets as evidenced by the raising of £5.2 million gross equity in May 2024 and,

■    the Company's ability to control capital expenditure and lower other operational spend, as necessary.

Taking account of the matters described above, the Directors are confident that the Company will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

Financial Risk Management Objectives and Policies

Details of the Company's financial risk management objectives and policies are disclosed in note 22 to the financial statements.

Key performance indicators and risks

We have a range of performance measures to monitor and manage the business, some of which are considered key performance indicators (KPIs).

Kristoff Rademan

Chief Financial Officer

   Consolidated Statement of Comprehensive Income

For the year ended 31 May 2024

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