Audited Full Year Results

EnSilica PLC

05 November 2024

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:

EnSilica plc

Ian Lankshear, Chief Executive Officer

Kristoff Rademan, Chief Financial Officer

www.ensilica.com

via Vigo Consulting

+44 (0)20 7390 0233

Allenby Capital Limited, Nominated Adviser & Joint Broker

Jeremy Porter / Vivek Bhardwaj (Corporate Finance)

Joscelin Pinnington / Tony Quirke (Sales & Corporate Broking)

+44 (0)20 3328 5656

info@allenbycapital.com

Singer Capital Markets, Joint Broker

Rick Thompson / Asha Chotai

+44 (0)20 7496 3000

Vigo Consulting (Investor & Financial Public Relations)

Jeremy Garcia / Kendall Hill

+44 (0)20 7390 0233 ensilica@vigoconsulting.com

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-16-0-in-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:

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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.

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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.

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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

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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.

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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

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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

2024

2023

Note

£'000

Revenue

Cost of sales

25,266

(16,267)

20,476

(12,306)

Gross profit

Other operating income

8,999

8,170

Administrative expenses

(8,165)

(7,352)

Total administration expenses

(8,165)

(7,352)

Operating profit Interest income Interest expense

872

(925)

825

(785)

(Loss)/profit before taxation

Taxation

(52)

(130)

1,745

(Loss)/profit for the year

(182)

1,792

Other comprehensive (expense) for the year

Currency translation differences

(68)

(50)

Total comprehensive (expense)/income for the year

(250)

1,742

(Loss)/profit for the year attributable to:

Owners of the Company Non-controlling interests

(182)

1,792

(182)

1,792

Total comprehensive (expense) for the year attributable to:

Owners of the Company Non-controlling interests

(68)

(50)

(68)

(50)

Basic earnings per share (pence) Diluted earnings per share (pence)

(0.23)

2.36

2.30

Adjusted Basic earnings per share (pence) 10

Adjusted Diluted earnings per share (pence) 10

(0.23)

2.47

2.41

Consolidated Statement of Financial Position
For the year ended 31 May 2024

		2024	2023
	Note	£'000	£'000
Assets Non-current assets Property, plant and equipment Intangible assets	11 12	2,997 18,565	2,566 12,433
Total non-current assets		21,562	14,999
Current assets
Inventories	13	753	304
Trade and other receivables	14	8,390	7,025
Corporation tax recoverable		1,349	2,064
Cash and cash equivalents	15	5,156	3,095
Total current assets		15,648	12,488
Total assets		37,210	27,487
Current liabilities
Borrowings	16	(1,717)	(883)
Lease liabilities	17	(199)	(171)
Trade and other payables	18	(7,118)	(4,723)
Total current liabilities		(9,034)	(5,777)
Non-current liabilities
Borrowings 16		(2,298)	(3,284)
Lease liabilities 17		(1,904)	(2,104)
Provisions 19		(206)	(199)
Deferred tax 20		(1,365)	(160)
Total non-current liabilities		(5,773)	(5,747)
Total liabilities		(14,807)	(11,524)
Net assets		22,403	15,963
Equity
Issued share capital 21		153	137
Share premium account		14,957	8,752
Currency differences reserve		(117)	(49)
Retained earnings		7,410	7,123
Equity attributable to owners of the Company		22,403	15,963
Non-controlling interests		-	-
Total equity		22,403	15,963

The financial statements were approved by the Board of Directors and authorised for issue on 4 November 2024 and signed on its behalf by:

Ian Lankshear Kristoff Rademan

Chief Executive Officer Chief Financial Officer Company registration number: 04220106

Consolidated Statement of Changes in Equity
For the year ended 31 May 2024

	Share capital	Share premium account	Currency translation reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000
At 31 May 2022	134	6,900	1	5,118	12,153
Comprehensive income for the year to 31 May 2023 Profit for the year	-	-	-	1,792	1,792
Other comprehensive expense	-	-	(50)	-	(50)
Total comprehensive income for the year	-	-	(50)	1,792	1,742
Share based payment	-	-	-	213	213
Issue of share capital	3	2,015	-	-	2,018
Costs of share issue	-	(163)	-	-	(163)
At 31 May 2023	137	8,752	(49)	7,123	15,963

Comprehensive income for the year to 31 May 2024 Loss for the year Other comprehensive expense	- -	- -	- (68)	(181) -	(181) (68)
Total comprehensive income for the year	-	-	(68)	(181)	(249)
Share based payment	-	(217)	-	468	251
Issue of share capital	16	6,893	-	-	6,909
Costs of share issue	-	(471)	-	-	(471)
At 31 May 2024	153	14,957	(117)	7,410	22,403

Non-controlling interests hold 0.002% of the issued share capital of the Indian subsidiary, EnSilica India Private Limited in accordance with local requirements and there is a non-controlling interest of £nil at 31 May 2024 (31 May 2023: £nil), further details are disclosed in note 27.

Consolidated Statement of Cash Flows
For the year ended 31 May 2024

		2024	2023
Note		£'000	£'000
Cash flows from operating activities Cash generated from operations A Tax received		2,482 1,788	290 1,512
Net cash generated from operating activities		4,270	1,802
Cash flows from investing activities Purchase of property, plant and equipment Additions to intangible assets Interest received		(927) (6,425) 1	(395) (4,133) 7
Net cash used in investing activities		(7,351)	(4,521)
Cash flows from financing activities
Proceeds from issuance of ordinary shares		6,480	1,855
Interest paid		(925)	(785)
Lease liability payments		(172)	(166)
Proceeds from loans and borrowings		713	-
Repayment of bank loans		(865)	(832)
Net cash generated from financing activities		5,231	72
Net increase/(decrease) in cash and cash equivalents		2,150	(2,647)
Cash and cash equivalents at beginning of year		3,095	5,742
Foreign exchange losses		(89)	-
Cash and cash equivalents at end of year	B	5,156	3,095

Notes to the Consolidated Statement of Cash Flows
For the year ended 31 May 2024

A. Cash generated from operations

	2024	2023
	£'000	£'000
(Loss)/profit for the year	(182)	1,792
Adjustments for:
Depreciation	495	454
Amortisation of intangible assets	322	276
Share based payments	248	213
Net interest costs	924	778
Tax charge/(credit)	130	(1,745)
	1,937	1,768
Working capital movements
Decrease in inventories	(448)	(89)
Increase in trade and other receivables	(997)	(3,770)
Increase in trade and other payables	1,983	2,322
Increase in provisions	7	59
Cash generated from operations	2,482	290

B. Analysis of net debt
	At June 2022 £'000	Cash flow £'000	Non-cash changes £'000	At 31 May 2023 £'000
Loans	(4,966)	832	(33)	(4,167)
Lease liabilities	(193)	363	(2,445)	(2,275)
Liabilities arising from financing activities	(5,159)	1,195	(2,478)	(6,442)
Cash and cash equivalents	5,742	(2,647)	-	3,095
Net debt	583	(1,452)	(2,478)	(3,347)
	At June 2023 £'000	Cash flow £'000	Non-cash changes £'000	At 31 May 2024 £'000

Loans

Lease liabilities

(4,167)

(2,275)

152

172

(4,015)

(2,103)

Liabilities arising from financing activities

Cash and cash equivalents

(6,442)

3,095

324

2,150

(89)

(6118)

5,156

Net debt

(3,347)

2,474

(89)

(962)

Notes to the Consolidated Financial Statements

For the year ended 31 May 2024

1. General information

EnSilica plc is a public limited company incorporated in the United Kingdom, listed on the Alternative Investment Market (AIM) of the London Stock Exchange. The Company is domiciled in the United Kingdom and its registered office is 100 Park Drive, Milton Park, Abingdon, OX14 4RY. The consolidated financial statements comprise the Company and its subsidiaries (together referred to as the 'Group').

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

In July 2022 the Company launched a subsidiary in Munich, Germany that has the purpose of acting as the sales office to further enhance and capitalise on the Group's opportunities.

In October 2023 the Company launched a subsidiary in the USA to service our American markets.

Basis of preparation

The consolidated financial statements of the Company have been prepared in accordance with UK-adopted International Accounting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the Companies Act 2006.

The financial information has been prepared under the historical cost convention unless otherwise specified within these accounting policies. The financial information and the notes to the financial information are presented in thousands of pounds sterling (£'000), the functional and presentation currency of the Group, except where otherwise indicated.

The principal accounting policies adopted in preparation of the financial information are set out below. The policies have been consistently applied to all periods presented, unless otherwise stated.

Judgements made by the Directors in the application of the accounting policies that have a significant effect on the financial information and estimates with significant risk of material adjustment in the next year are discussed in note 2.

2. Accounting policies

Going concern

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.

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

■ 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;

■ 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.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 May 2024. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

■ Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

■ Exposure, or rights, to variable returns from its involvement with the investee

■ The ability to use its power over the investee to affect its returns generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

■ The contractual arrangement(s) with the other vote holders of the investee

■ Rights arising from other contractual arrangements

■ The Group's voting rights and potential voting rights. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

Critical accounting estimates and judgements

The preparation of the financial information under IFRS requires the use of certain critical accounting assumptions and requires management to exercise its judgement and to make estimates in the process of applying the Company's accounting policies.

Management bases its estimates on historical experience and on various other assumptions that management believes to be reasonable in the circumstances. The key estimates and judgements used in the preparation of this financial information that could result in a material change in the carrying value of assets or liabilities within the next twelve months are as follows:

Intangible assets - capitalisation, impairment and amortisation of development expenditure

Judgement

The capitalisation of development costs is subject to a degree of judgement in respect of the timing when the commercial viability of new technology and know-how is reached, supported by the results of testing and customer trials, and by forecasts for the overall value and timing of sales which may be impacted by other future factors which could impact the assumptions made. In making their judgements, the Directors considered the carrying values that are disclosed in note 12.

Estimation

Amortisation commences once management consider that the asset is available for use, i.e. when it is judged to be in the location and condition necessary for it to be capable of operating in the manner intended by management and the cost is amortised over the estimated useful life of the asset based on experience of and future expected customer product cycles and lives. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments and economic utilisation.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Group. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in Note 12.

Revenue

Estimation

In accordance with the policy on revenue recognition, management are required to judge the percentage of completion of the contract in order to recognise revenues. The overall recognition of revenue will depend upon the nature of the project and whether it is billed on a time and materials basis, or, on a project milestone basis where invoices can only be raised on completion of specific, pre-agreed objectives. The Company maintains complete and accurate records of employees' time and expenditure on each project which is regularly assessed to determine the percentage completion, and thereby whether it is appropriate to recognise revenues.

As it satisfies its performance obligations, the Company recognises revenue and the related contract asset with regards to the milestone- based development contracts. Revenues are recognised on a percentage of completion basis and as such require estimation in terms of the assessment of the correct percentage of completion for that specific contract.

Management judgement is based on a strong track record of successful completion of projects and accurate forecasting of the time required together with the hindsight period available to support the balance sheet date assumptions made.

Adjusting items

The Company has chosen to present an adjusted measure of profit and earnings per share, which excludes certain items which are separately disclosed due to their size, nature or incidence, and are not considered to be part of the normal operating costs of the Company. The Company believes adjusting for these items provides additional useful information to users of the financial statements to enable a better understanding of the Company's underlying financial performance. The classification of items as adjusting requires significant management judgement.

3. Analysis of revenue

The Board continues to define all the Company's trading as operating in the integrated circuit design market and considers all revenue to relate to the same, one operating segment. Revenue is defined as per the accounting policies.

Revenue in respect of the supply of products is recognised at a point in time. Design and related services including income for the use of IP are recognised over the period when services are provided.

	2024	2023
	£'000	£'000
Recognised at a point in time Supply of products	2,926	2,856
Recognised over time
NRE	15,228	8,175
Consultancy design services	7,112	9,400
Licensing related income	-	45
	22,340	17,620
	25,266	20,476
By destination:
UK	2,513	1,831
Rest of Europe	9,863	11,817
Rest of the World	12,890	6,828
Total revenue	25,266	20,476

The nature of the design services and projects is such that there will be significant customers as a proportion of revenue in any one year but that these may be different customers from year to year. Revenue in respect of one customer amounted to £8.8 million representing 35% of the revenue for the year ended 31 May 2024, with only one other customer contributing over 10% of revenue. (2023: two customers amounted to

£5.7 million and £5.4m at 28% and 27% respectively).

The Group's non-current assets comprising investments, tangible and intangible fixed assets and the net assets by geographical location are:

		31 May 2024		31 May 2023
	Non-current assets	Net assets	Non-current assets	Net assets
	£'000	£'000	£'000	£'000
United Kingdom	21,501	21,621	14,892	14,967
India	3	1,304	34	1,199
Brazil	58	(27)	73	67
Germany	-	(495)	-	(270)
	21,562	22,403	14,999	15,963

4. Alternative performance measures

Certain items are included in normal operating costs of the business, but are significant cash and non-cash expenses that are separately disclosed because of their size, nature or incidence. It is the Company's view that excluding them from operating profit gives a better representation of the underlying performance of the business in the year.

The Company's primary results measure, which is considered by the Directors of EnSilica plc to better represent the underlying and continuing performance of the Company, is 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.

	2024 £'000	2023 £'000
Operating profit before interest	872	825
Adjusted Operating profit before interest Depreciation Amortisation of intangible assets	872 495 322	910 454 276
Adjusted EBITDA	1,689	1,640

5. Operating profit

The operating profit is stated after charging:

	2024 £'000	2023 £'000
Depreciation of property, plant and equipment	177	164
Depreciation of right-of-use assets	318	290
Amortisation of intangible assets	322	276
Cost of inventory sold	1,815	1,863
Research and development costs	2,738	4,603
Share based payments	248	213
Foreign exchange losses	76	50
Research and development expenditure credit	-	(8)
Total government grants received	-	(8)

Development expenditure was also capitalised in each year as disclosed in note 12.

Auditor's remuneration:

Audit of the Company and Company financial statements - current year

- previous year Non-audit services

(2)

Total Fees payable to the Company's auditor

111

6. Information regarding directors and employees

Employees

The aggregate remuneration of employees comprised:

2024

£'000

2023

£'000

Wages and salaries Social security costs Other pension costs

Share based payments

9,207

938

1,259

248

8,727

989

1,042

213

Total

11,652

10,971

Average number of employees

The monthly average number of employees in the year was:

2024

£'000

2023

£'000

Administration Marketing

Research, development and technical

146

Total

168

Directors' remuneration

2024

£'000

2023

£'000

Directors' remuneration - aggregate emoluments

Company pension contributions in respect of 3 (2023:3) directors Share based payments

460

136

825

146

644

1,037

Remuneration of the highest paid director Company pension contributions

Share based payments

225

231

307

251

Key management is defined as those persons having authority and responsibility for planning, directing, and controlling the activities of the Company, and was considered to be only the executive directors with compensation as disclosed above.

7. Interest Income

2024

£'000

2023

£'000

Bank interest receivable

8. Interest expense

2024

£'000

2023

£'000

Interest on bank and other borrowings Lease liability financing charges

Other interest

682

219

565

201

925

785

9. Taxation on profit

2024

£'000

2023

£'000

Current taxation

UK corporation tax credit Foreign tax charge

1,258

(183)

2,064

(159)

1,075

1,905

Deferred taxation

Origination and reversal of timing differences

1,205

160

Tax (charge)/credit on profit

(130)

1,745

Factors affecting the tax credit for the year

The tax credit on the profit/(loss) for the year differs from applying the standard rate of corporation tax in the UK of 25% (2023: 20%). The differences are reconciled below:

	2024 £'000	2023 £'000
(Loss)/profit before taxation	(52)	47
Corporation tax at standard rate (2024:25%, 2023 20%)	13	9
Factors affecting charge for the year:
Disallowable expenses	304	164
Allowances and enhanced deductions	(1,320)	(966)
Research and development allowances	(1,555)	(1,940)
Reduced rate on surrender of R&D losses for tax credit	1,539	762
RDEC expenditure credit	(249)	(62)
Foreign tax charges	183	85
Deferred tax	1,205	160
Share options	62	43
Tax charge/(credit)on profit/(loss)	130	(1,745)

10. Earnings per share

	2024 £'000	2023 £'000
(Loss)/profit used in calculating EPS (£'000)	(182)	1,792
Number of shares for basic EPS ('000s)	80,747	75,833
Basic earnings per share (pence)	(0.23)	2.36
Number of shares for diluted EPS ('000s)	80,747	77,874
Diluted earnings per share (pence)	(0.23)	2.30

Adjusted Earnings per share

	2024 £'000	2023 £'000
Adjusted (Loss)/profit used in calculating EPS (£'000)	(182)	1,877
Number of shares for basic EPS ('000s)	80,747	75,833
Adjusted basic earnings per share (pence)	(0.23)	2.47
Number of shares for diluted EPS ('000s)	80,747	77,874
Adjusted diluted earnings per share (pence)	(0.23)	2.41

As part of the Company's 2022 long term incentive plan, share options over 6,915,549 Ordinary shares and warrants over 3,535,000 Ordinary shares are potentially dilutive to profit.

As the Company made a loss this year and the prior year, there is therefore no difference between the basic loss per ordinary share and the diluted loss per ordinary share in the current period.

11. Property, plant and equipment

Group	Right-of-use property £'000	Leasehold improvements £'000	Office equipment £'000	Right-of-use equipment £'000	Computer equipment £'000	Total £'000
Cost At 1 June 2022	213	-	198	174	455	1,040
Additions	1,825	240	45	423	110	2,643
Exchange adjustments	-	-	(3)	-	(2)	(5)
At 31 May 2023	2,038	240	240	597	563	3,678
Depreciation As at June 2022	(156)	-	(69)	(125)	(308)	(658)
Charge for the year	(211)	(24)	(43)	(79)	(97)	(454)
Exchange adjustments	-	-	-	-	-	-
At 31 May 2023	(367)	(24)	(112)	(204)	(405)	(1,112)
Net book value At 31 May 2023	1,671	216	128	393	158	2,566

Cost
At 1 June 2023	2,038	240	240	597	559	3,674
Additions	-	-	4	640	283	927
Disposals	-	-	-	(126)	-	(126)
Exchange adjustments	-	-	(3)	-	(3)	(6)
At 31 May 2024	2,038	240	241	1,111	839	4,469
Depreciation
As at June 2023	(367)	(24)	(111)	(204)	(404)	(1,110)
Charge for the year	(211)	(18)	(43)	(106)	(115)	(493)
On disposals	-	-	-	126	-	126
Exchange adjustments	-	-	2	1	2	5
At 31 May 2024	(578)	(42)	(152)	(183)	(517)	(1,472)
Net book value At 31 May 2024	1,460	198	89	928	322	2,997

12. Intangible Assets


	Development costs	Software	Intellectual property	Total
Group	£'000	£'000	£'000	£'000
Cost
At 1 June 2021	9,143	123	-	9,266
Additions	2,241	-	-	2,241
At 31 May 2022	11,384	123	-	11,507
Amortisation and impairment
At 1 June 2021	(2,756)	(4)	-	(2,760)
Charge for the year	(148)	(23)	-	(171)
At 31 May 2022	(2,904)	(27)	-	(2,931)
Net book value
At 31 May 2022	8,480	96	-	8,576
Cost
At 1 June 2022	11,384	123	-	11,507
Additions	4,094	-	39	4,133
At 31 May 2023	15,478	123	39	15,640
Amortisation and impairment
At 1 June 2022	(2,904)	(27)	-	(2,931)
Charge for the year	(248)	(24)	(4)	(276)
At 31 May 2023	(3,152)	(51)	(4)	3,207
Net book value
At 31 May 2023	12,326	72	35	12,433

Cost

At 1 June 2023 Additions

15,478

6,425

123

15,640

6,425

At 31 May 2024

21,903

123

22,065

Amortisation and impairment

At 1 June 2023 Charge for the year

(3,152)

(265)

(51)

(24)

(4)

(3,207)

(293)

At 31 May 2024

(3,417)

(75)

(8)

(3,500)

Net book value

At 31 May 2024

18,486

18,565

Capitalised development expenditure relates to developed intellectual property in respect of circuit and chip design. The recoverable amount of a cash generating unit (CGU) is assessed using a value in use model across each individual project that forms the intellectual property that has been capitalised. The value in use for each portion is dependent on the expected life cycle of the CGU using a discount factor of 11.50% (2023:11.5%), being the cost of capital for the CGU.

13. Inventories

Group and Company

Raw materials and consumables

2024

£'000

753

2023

£'000

304

No impairment losses have been recorded in respect of inventory in the period.

14. Trade and other receivables

Current
Trade receivables	1,743	3,893
Other receivables	1,062	807
Prepayments	1,306	483
Accrued income	4,279	1,842
Total	8,390	7,025

15. Cash and cash equivalents

Group

31 May 2024

£'000

31 May 2023

£'000

Cash at bank and in hand

5,156

3,095

16. Borrowings

2024

£'000

2023

£'000

Current

Bank loans

1,717

883

Non-current

Bank loans

2,298

3,284

Total

4,015

4,167

A bank loan of £1,203,000 (2023: £1,657,000) is secured by fixed and floating charges over the assets of the group and bears interest at rates of 8% over SONIA or 10% if higher. It is repayable in monthly instalments over the period to August 2026. A loan of £2,099,000 (2023: £2,662,000) is unsecured and bears interest at a fixed rate of 13%. It is being repaid by quarterly instalments over the period to October 2027.

A secured loan of £713,000 (2023: £nil) which bears interest at a fixed rate of 16%. It will be repaid on receipt of the R&D tax credit for the period, which is anticipated to be received by the end of 2024.

The loan liabilities are stated net of unamortised loan issue costs as at 31 May 2024 of £119,000 (2023: £152,000) which are being amortised over the period to the loan repayment dates.

17. Lease liabilities

The Company has entered into lease contracts in respect of property in the jurisdictions from which it operates, and the use of equipment which are typically for terms of 3 to 5 years. In respect of options to extend the initial period these are factored into the liabilities where the Company plans to use these for a longer period. For property leases, it is customary for lease contracts to be reset periodically to market rental rates. Leases of equipment comprise only fixed payments over the lease terms.

Right of use assets, additions and amortisation are included in note 11. Interest expenses relating to lease liabilities are included in note 8. The amounts relating to leases were as follows:

2024

£'000

2023

£'000

Interest on finance leases

Cash outflow for capitalised leases

217

172

257

169

Total cash outflow from leases

389

426

Within 1 year	199	171
1-2 years	288	193
2-5 years	1,616	1,911
Total	2,103	2,275

18. Trade and other payables

	2024 £'000	2023 £'000
Current
Trade payables	3,496	2,388
Taxation and social security	943	281
Other payables	170	161
Accruals	1,293	1,293
Contract liabilities	1,216	600
Total	7,118	4,723

The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.

In the year ended 31 May 2024 £600,000 of revenue was recognised in respect of contract liabilities at 31 May 2023 (year ended 31 May 2023:

£14,000 in respect of liabilities at 31 May 2022).

19. Provisions

	2024 £'000	2023 £'000
At 31 May 2023	199	140
Foreign exchange revaluation	(7)	(6)
Gratuity redeemed	(55)	(3)
Provided in year	69	68
Total	206	199

The provision relates to the liability under the Government of India Gratuity Act in respect of payments to employees on cessation of service in respect of death or disability or otherwise after more than 5 years' service.

20. Deferred tax liabilities

		Intangible assets £'000	Accelerated capital allowances £'000		Tax losses £'000			Other £'000		Total £'000
At 31 May 2022		2,120	79		(173)			(2,026)		-
Charge/(credit) for the year		952	-		-			(792)		160
At 31 May 2023 Charge/(credit) for the year	3,072 1,058			79 68		(173) -	(2,818) 79		160 1,205
At 31 May 2024	4,130			147		(173)	(2,739)		1,365

Deferred tax has been recognised at an average rate of 25% (2023: 25%).

21. Share capital

	2024 £'000	2023 £'000
1,700,000 A ordinary shares of £0.001 each	-	-
273,000 B ordinary shares of £0.001 each	-	-
93,468,928 (2023: 78,115,158) ordinary shares of £0.001 each	94	78
59,190 (2022: 59,190) Deferred shares of £1.00 each	59	59
	153	137

On 14 December 2023, the Company announced a placing to existing shareholders to raise £1.56 million before expenses via the issue of 3,892,500 new ordinary shares of 0.1 pence each ("Ordinary Share") at 40 pence per new Ordinary Share.

On 27 February the Company announced a placing to existing shareholders which resulted in a raise of £1.1 million before expenses via the issue of 2,230,000 Ordinary Shares at 50 pence per new Ordinary Share. On 18 March 2024 the Company announced that warrants were exercised at 55 pence per new Ordinary Share, raising a further £0.4m and creating an additional 767,500 new Ordinary Shares. On 4 April 2024 the Company announced that an additional 40,000 warrants were exercised at 55 pence per new Ordinary Share, raising a further £0.02 million.

On 24 May 2024, the Company announced that it had raised gross proceeds of £4.9 million through an equity fundraise at 45 pence per new Ordinary Share. 8,423,770 new Ordinary Shares issued on 28 May 2024, representing £3.8 million with the balance of 2,465,119 new Ordinary Shares issued on 19 June 2024, representing £1.1 million.

22. Share premium

	2024 £'000	2023 £'000
At 1 June	8,752	6,900
Issue of new shares	6,892	2,015
Costs of warrants issued	(217)	-
Expenses relating to share issue	(470)	(163)
Total	14,957	8,752

The net proceeds of the Fundraising are to be used primarily to develop further the Company's depth and strength of offering. As well as providing the Company with funds it will enhance both transparency and the international profile of the Company with customers, allow the Company to access equity capital to fund growth and support potential M&A opportunities, and enable the Company to attract, recruit and retain key employees.

Share issue costs relate to commissions charged and other directly attributable costs of fundraising.

23. Post balance sheet events

The Company has entered into a new debt facility to refinance its existing external loan facilities. The new debt facility provides EnSilica with total funding of up to £9 million. The Facility has been agreed with Lloyds Bank plc, and provides the Company with additional flexibility to underpin ongoing working capital commitments and ensuring that EnSilica can fully capitalise on its existing new business pipeline.

The Facility consists of a three year £3 million repayment term loan facility and a five year £3 million revolving credit facility with an accordion option for an additional £3 million credit facility subject to credit approval by the Lender. The Facility also improves the borrowing costs of the Company with the Facility offering more favourable interest rates in comparison to the Company's legacy external loan facilities. The Facility contains standard representations, warranties, covenants, indemnities and events of default for a debt facility of its type. This includes ordinary course financial covenants.

As a result of a delay to the signature of a large customer contract and related upfront receipt post year end, the Company incurred a breach of its quarterly 12 month cashflow financial covenant under the terms of its loan agreement with SME Alternate Financing. In order to compensate for the negative impact of the delayed receipt on our cashflow, the Company raised £5.2 million in new equity during May and June 2024. No action was taken by the lender and the outstanding balance of the loan has been repaid as part of the £6 million refinancing of its existing external loans.

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EnSilica (ENSI)

Friday, 20th December 2024

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Audited Full Year Results

Business Model

Our Markets

Industrial and Automotive

Semiconductor Supply Chain and Geopolitical Changes

Customer Activity

Our People

Board

Outlook

Revenues

Gross Margin

Operating Expenses

EBITDA

Balance sheet

Cash and cash equivalents

Intangible assets

Loans

Financial Risk Management Objectives and Policies

Key performance indicators and risks

Consolidated Statement of Comprehensive Income

For the year ended 31 May 2024

Consolidated Statement of Financial Position For the year ended 31 May 2024

Consolidated Statement of Changes in Equity For the year ended 31 May 2024

Consolidated Statement of Cash Flows For the year ended 31 May 2024

Notes to the Consolidated Statement of Cash Flows For the year ended 31 May 2024

Notes to the Consolidated Financial Statements

For the year ended 31 May 2024

Basis of preparation

2. Accounting policies

Going concern

Basis of consolidation

Critical accounting estimates and judgements

4. Alternative performance measures

5. Operating profit

Employees

Average number of employees

Directors' remuneration

Factors affecting the tax credit for the year

Adjusted Earnings per share

17. Lease liabilities

23. Post balance sheet events

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Consolidated Statement of Financial Position
For the year ended 31 May 2024

Consolidated Statement of Changes in Equity
For the year ended 31 May 2024

Consolidated Statement of Cash Flows
For the year ended 31 May 2024

Notes to the Consolidated Statement of Cash Flows
For the year ended 31 May 2024