Ensilica (LSE:ENSI) — Final Results for the financial year ended 31 May 2025

0:01 Good afternoon, ladies and gentlemen. Welcome to the ENSILICA PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from ENSILICA PLC. Ian, good afternoon, sir. Good afternoon. Welcome, everyone. Thanks for thanks for joining us for the audited results presentation for the year ending 05/31/2025.

0:55 I mean, this has been a year of strategic progress defined by robust contract conversion, and, you know, we we converted six contracts, and this really shows that we're positioned well in the semiconductor value chain. We we we've also had a great growth of chip supply, But disappointingly, the total revenue is down, and this is due to customer induced delays. Resilience to this is being built up through the strong supply revenue, which means in future years, we won't be so so susceptible to these to to the variation in in revenue. Just the normal disclaimer for the forward looking statements. Please start reading at your leisure.

1:49 Just for those that are not familiar with the with the company, I'm cofounder. I started my career as a sole electronics engineer at PLC, moved into semiconductors in the mid nineties working for Hitachi, and then and then Nokia. I set up in silica in 2001 originally as a a design consultancy. In 2016, we started the transition to be one of a a fabulous ASIC company, and we'll explain more about what that means in the in in the slides and our progress. I'll I'll let Christopher introduce himself. Good afternoon. I'm Christopher Ottoman, chief financial officer. Originally from South Africa, I spent my first formative years working as an auditor with KPMG.

2:42 I then left for the pharma and biotech industry, first working for Alchemist Pharma and then subsequently as group financial controller at Oxford Biomedica PLC, a company listed on the main market of the London Stock Exchange. I've been with ENSILICA now for eighteen months. Thank you. Thanks. So as I mentioned, in silica, we're a fabulous chipmaker. We we we don't have a fab by ourselves. We use the same business model as NVIDIA, Broadcom, Marvel. We focus on mixed signal chips. These are high value, high margin chips.

3:28 These are the same type of chips, the the likes of Cambridge Silicon Radio, Wolfson, Dialogue Semiconductors, Nordic, all all scaled on the back up. So they're highly differentiated silicon silicon chips. I mean, our assets are our people, IP, customers, and suppliers. We have nearly 200 staff in three continent three continents. They're highly skilled team with a track record of developing chips and getting them into to production. And, yeah, chip designing chips and getting them into production is very much a team, you know, a a team sport. It's not about individuals. It's about having competent competent teams.

4:19 IP is also very key in in developing chips. These are blocks that you reuse from from chip to chip. We we have IP which address all of our key markets as well as things like post quantum cryptography IP, which is cryptographic IP that is resistant to attack from quantum computers. So actually, really, the the latest type of cryptographic I IP. We have a global global customer base including, well, yeah, well known companies like Siemens to scale ups like AST space space mobile. Suppliers are important, building strong supplier relationships with wafer fabs such as TSMC and GlobalFoundries, and we have direct relationships with those.

5:14 And and also the the OSATs, which is an outsource assembly and test companies. These are the people that chop up the wafers and and test and and test them. So we we've, you know, direct relationship group with those, which, you know, takes takes time to build. I mean, we're we're focused on the three markets, and I'll talk about those markets as we go through the through through the slides. Our our revenue comes from, you know, designing the chips, and that's either the the chips that we have we have future supply on. That's called the NRE, nonrecurring engineering engineering fees, where we co invest with the customer to design the chip, and we later supply it.

6:01 And then the other areas, consultancy, which which is where we really started the business, and this is is still a still a key area for us. And in that in that model, we, you know, we we don't we don't supply the chip. The the customer looks after the the supply chain. And the supply revenue is is around about selling the chip or royalty a royalty per chip. I mean, one one investor described this as the the easy revenue, and it's a bit like an annuity stream where, you know, good good high margins, good visibility, and we have a reoccurring revenue stream from that. I mean, our business model, it takes two to three years to design the chip where we have the, you know, the NRE revenue.

6:49 And then the markets that we address are all sort of, you know, high value, long lifetime markets where we have seven to ten years of of of chip supply. You build a portfolio of chips and, you know, that that some of those chips will will over deliver, some will some may under deliver, but that's caused natural natural hedging in in there. And I said this portfolio of chips will, you know, protect, yeah, protect us from ups and downs in the in the NRE revenue. A strong IP. I talked about IP at the top, but it's important to have IP.

7:36 It makes you more efficient in the design, but also leads to higher gross margins and allows you to differentiate differentiate your your position. So our ambitions and objectives, I mean, we're we're approaching a really key phase now, one where our supply revenue will support our future investments and overheads before sort of noncash charges. And, you know, we're we're targeting as a company to be cash flow positive on a month by month basis during 2026. You know, our ambition in is to have revenues of 60,000,000 in the in the short term and through well, Crystal Coast decided he'll he's he's show you how you know, an illustration how we can get there just with the current bookings we have. Longer term, we we we have ambitions of greater than a 100,000,000, and certainly, you know, one of our space user terminal side can can exceed exceed that that revenue aspiration.

8:39 You know, our objective is to capitalize on the growing European opportunities driven by the need for geographical resilient supply chain. I mean, you know, some of these geopolitical uncertainties have really played to our favor in terms of European companies wanting European sourced sourced chips. And our our objective is keep attracting qualified and talented engineers to deliver on our growing opportunity pipeline. And we're doing very well there. We've got excellent people, and that they attract good people. I'm pleased to present our financial year twenty twenty five financial results.

9:27 We were disappointed with the outcome of our revenues where we achieved 18,200,000. This is a decrease from the prior year. In financial year twenty four, we had a large take out that did not recur in financial year twenty five. We were expecting to deliver growth, but we're impacted by the edge AI take out moving into financial year twenty six and also the halting of the Sia project, which impacted our revenue generation. We are seeing significant progress in financial year twenty six where we our revenues year year to date are significantly ahead of those achieved in financial year twenty We on 2024.

10:31 We expect expect to a positive small increase in margins in financial year '26, but but not greatly so. It should be more or less the same levels. Included within other income is our audit tax credit. Due to the change from the SME scheme to the new merge scheme, there is a requirement under the financial accounting standards to present the audit tax credit under other income, which we have done. The expected credit loss of 1,800,000 is almost entirely the SEER provision for bad debt, which the company prudently decided to take and also remove SIA from our forecasts.

11:17 We are still in discussions with SIA at present and would hope that the project will restart in financial year '20 well, in 2026, but that does depend on Sia being able to manage its commitments and meet its commitments. We achieved a breakeven EBITDA, which which we are which we are which was a good result considering the the headwinds we we we suffered during the year, but we are looking to significantly improve on that in financial year twenty six. Next slide. So just looking at the revenue split, we were very pleased to announce that chip supply revenues have increased by 97%, almost doubling in financial year twenty five.

12:16 That shows that that our business model is working. Our our chips and supply have increased in in both in volumes and in number of chips, and we're looking to increase that further in financial year twenty six and beyond. As I mentioned before, we were disappointed with the NRE revenues achieved, which is mainly the the tape out in financial year twenty four, which didn't recur, and also the CO revenues, which which weren't generated. Consultancy revenues are slightly down from the prior year. The reason for that is that some of the employees working on consultancy side were pulled into the NRE side, but the consultancy remains a key pillar of our future growth, and we are looking to slowly grow that in future back again to to normal levels.

13:17 Next slide. Balance sheet. So the main balance sheet items, intangible assets increased due to our co investment in in in our customer development in our e project and also our own internal IP, which we then look to use in in future development projects or to license out or achieve royalties on. During the year, we capitalized 5,800,000, and this was offset by amortization and impairment. The impairment is mainly related to the the the SIA asset, which we had to impair at the same time as providing for the intangible. Cash, the movement, Bill explained further in the cash flow statement, and then external loans increased due to the refinancing with Lloyd's Bank of Scotland of the 6,000,000 facility, which increased the loans. And then, of course, we've also repaid some of the balance during the year.

14:22 Next slide. So coming on to cash flow, we achieved an an breakeven EBITDA. We had positive working capital, which was driven by the the the new NRE contracts for which we achieved favorable payment terms, which allowed us to to invoice upfront for the work that was that that that is being performed. The tax credit of 1,200,000 was achieved. This is down from the prior year mainly due to the change in schemes by the government, meaning that the the tax credit wasn't as favorable as it as it's been in prior years. It wasn't really due to a lowering in activity because our activities were at at more or less the same levels.

15:12 Intangibles and CapEx investment, we spoke about 5,800,000 and then 700,000 of IT and manufacturing equipment. And then interest paid more or less the same level. There wasn't a piece of one off interest due to the refinancing, which is not expected to recur in financial year '26, So we should see a lowering of the increased costs. Our cash consumption was 5,300,000. I would point out that 5,100,000 of that was in the first half. And then the second half, that slowed to 200,000. We're not definitely not saying that that will continue exactly at that level, but we will have a goal and have seen a significant decrease in cash consumption across the last few months.

16:02 The net proceeds from financing, it included 1,200,000 of the tail end of the equity raised at the start of the last financial year and then also the net 1,000,000 from refinancing of the loans. We received 2,000,000 of new equity and then repaid about 1,000,000 during the year, which gives us that net. Thank you. Then just to give you an overview of of how the company is doing in terms of the chips that we have in our portfolio, we have five chips in supply. One additional one or or sorry. Two additional ones were added during the year being one industrial one, which is ramping up nicely, one space one for which we've received the first royalties and is expected slowly slowly increase in in in '26 and then really ramp up in in '27.

17:02 We've also got the the the the the other 12 chips in in development, which are scheduled to to take out quite a few of these these during the next the next six to six to twelve months. So they are progressing very nicely. We've got 40,000,000 of contracted NRE from our new contracts, which is being generated between financial year '25 and financial year '27, giving us good visibility over revenues. And then we've got 250,000,000 of lifetime supply values revenues, which is from our existing portfolio. We do not include chips where there isn't final a customer identified yet. So this could increase as we generate new customers for our our current chips in supply.

18:01 Thank you. And then just looking at our growth platform, we we've tried to show an illustration of the potential revenue evolution that the company could experience. This is not meant to be a forecast. This is to give an indication of if the supply revenues continue as for the existing chips as they as they currently are going and the chips in development for which we have customers, if if these are completed successfully and go into chip supply as expected and and and the customer is successful in selling it, then we would expect our our our our future revenues to increase as as shown here.

18:50 Some some of the chips could do worse, some of the chips could do better, and and one of the things that gives us comfort is the fact that we've now got a portfolio of chips, which means we are not wholly reliant on only one or two chips. Also, we we have some potential space chips that are not factored in yet because they don't have a a final customer. And if these are very successful, then we could do even better than than than this illustration suggests. Thank you. Okay. Thanks. That's Chris Ross now. And I'll talk you through the markets, and, you know, one one of those is the space communication sector. A lot of there there's a lot of investment going into the this sector both for both private investment and also through government contracts and government funding.

19:45 So there's you know, it's a it's a high growth sector. I think Starlink can prove that, you know, resilient space connectivity is, you know, it it's a requirement, and everyone is looking for an alternative to to Starlink's service. You know, chips are a key enabler for the space communication sector. They reduce power, size, and that didn't deliver the required performance. Yeah. So it's a bit like saying, you know, they're they're the sort of the picks and shovels of this of this gold rush. So they're they're used in four areas within the space sector. They're used in the in the satellite. It's called the payload, and there are FICs, beamformers processing units.

20:30 They're used in the user terminal, which is the piece of equipment the actual subscriber has to connect to the to connect to the Internet, and there they have millimeter wave chips, digital beam forming chips, modem chips. And then the other area where they're used is the the gateway. This this actually connects the Internet to the satellite. It's sometimes called the ground station, and they tend to be, you know, high performance pipes or optical optical links. And the other important area is that one called position navigation timing. People might know it as GPS or GNSS, and this is around getting, know, positioning and timing information that I mean, the user terminal needs that to so it knows its position and where to point at the satellite, but it's also used in, you know, drones, defense applications, and resilient to jam proof GNSS is is very important now.

21:31 So so here's a sort of list of the, you know, sort of European US constellations. As I everyone's heard of Starlink, but there's lots of other other ones in there. You know, Iris two is the the European the European constellation. There's one from Amazon. And, you know, six months ago, we we only had one of these as a a customer, and now we've actually got feasibility contracts with or chip evaluations going on with with four on here. So real progress has been has has been made. So the you know, talked about the payload, and there's one particular chip in the payload, very complex one called the beam former. And this this goes in the satellites, and the satellite has a phased array, and it controls the the footprint of the coverage as the satellite goes over the as as it goes around the around the earth. So we we had a contract with AST Space mobile back in 2021.

22:38 We did a joint release with them, and we were supporting them in developing their payload ASIC, which gives us sort of tenfold improvement in in processing power. I mean, we've we've built some unique experience and expertise in this and currently have three new feasibility studies for for beam forming ASICs, two with satellite operators and one with a a satellite sort of supplier manufacturer. These engagements, you know, when they progress, will lead to multiyear, multimillion ASIC contracts. I'm not saying that all of those will convert into contracts, but, you know, I I would expect, you know, one one or two of them to to to con convert.

23:26 Interestingly, that I know we did we did say this in the in in an RNS where we announced the first royalty payment. One of those one of those contracts, we have a what you might call a chip as a service type model where we get a monthly revenue from from every satellite using the chips in service. And I think that's an indication of the real unique value that we're demonstrating to the satellite operators through our chips that they're they're giving us a piece of their their their their revenue pie. So we're strategically positioned here to capitalize on these opportunities. We've got proven experience in what they call advanced node, mixed signal, and digital beam forming, and we are, you know, one of the few trusted independent European suppliers.

24:16 I mean, just it should be noted that one of our competitors in this area, SatixFi, that we're also doing payload beam forming chips were acquired by m d m d space and, you know, that it it acquired for a pretty sum, and, you know, they they really are now an internal resource of of that company and and not independent anymore. So the the user terminal, I said, you you could think of this a bit like a a sort of a a set top box we could use to pick up satellite TV, but it's a lot more complicated. It's got to both receive and transmit, and the satellite's moving, so it needs a a thing in there called a phased array, you know, which uses a beam former to to track the to track the satellite.

25:15 We we've been working in this area since 2018. We've secured 20,000,000 of funding from lead customers, European Space Agency, and UK Space Agency. We have four chips now which are which are sampling. So we have the physical prototypes of those chips out with customers and three three more in the development, and all of that IP is owned by ENSILICA. So they're what they call ASSP's application specific standard parts. We've got multiple funded engagements with with satellite operators to support the adoption of these these chipsets. You know, we we've got here, you know, the number of chips per per user terminal, different types of chips. We're the only provider who has all all of the key ICs that go into a go into a user terminal.

26:15 And, you know, that that means we can provide a highly differentiated, integrated solution rather than using bits of Lego from other places. So we can add we we've, you know, we've added novel features, and we have a sort of patent pending architecture with strong IP in this area. It accelerates our customers' time to market and gives them better better performance. We are using a yeah. Mainly a European supply chain on this, so, that's very attractive to the European satellite service providers. You know, you you you you know, using our chips rather than chips from, other other other regions. So so the automotive and industrial area, I mean, they're very similar in in ways. They're they're all about high quality longevity of supply.

27:10 It requires cyber security security, functional safety features. And, you know, the combined automotive industrial market is worth, yeah, just over 160,000,000,000. We we we'd say about 5% of of tips are actually a six, you know, so, you know, designed for one for one particular customer. So, really, that's a that's an 8,000,000,000 market. There's a high barrier to entry to getting in in into this into this market, and, you know, we've been working on that for for some for some time. Like, you know, those customers are looking for, you know, high reliability, quality, and a supply chain. So you need to build up those those systems to to supply.

28:00 What you also need, you know, in all of this is you need sort of, you know, carve out your, you know, your key niche in the in this area, And our our niches are around cybersecurity, functional safety, things like motor motor actuator controllers and sense sensor interfaces. So it's, you know, it's it's important to have those, you know, to have those niches, to have the IP which you can reuse from from one chip one chip to the next. And then, you know, we we started off with our first win in 2016 and also those with an industrial then then a win in 2018 with an an automotive one, very highest functional safety rating. And then, you know, recently, we've had a win, two wins with Siemens who are the market the market leader. And we we have major automotive, you know, tier tier ones as our customers, which I said there's a there's a very high barrier to, you know, to get on the customer list of these companies.

29:10 So so simple we we talked about those six projects that we that we converted. I mean, we're working on those and, you know, probably the RNS we released on on Monday, November 3. You know, so we, you know, we're progressing well with those with those projects. And we also have a a new wave of projects which start off with feasibility studies for various chips, both in the space sector and in the in the the the automotive and industrial sector that will that will lead to our next, you know, our next wave wave of design wins. So we're really making we're really making great great progress there.

30:00 So in summary, we had six excellent new NRE design wins during financial year '25, and and and one of the key highlights for me is that that these are progressing as planned with with some of them expected to take out in in this financial year '26 and and after which they'll they'll hopefully go into into production about six to twelve months after that. So so good progress is being made Because of the contracts and and and our success in in our supply chain revenues, we're seeing good visibility of revenues for financial year twenty six and beyond as as as I've mentioned before. We've got a strong pipeline of opportunities.

30:48 There's about 400,000,000 at the moment in the sales and opportunities pipeline. We won't win all of that, but hopefully, we we will win a a portion of that. Our supply revenue is building strongly, doubling this year, and we hope to see significant growth again in financial year twenty six. And we've got strong relationships with major semiconductor fabs and o six companies. Thank you. Perfect, guys. If I may just jump back in there. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation, along with a copy of the slides and the published q and a, can all be accessed via your investor dashboards.

31:43 Guys, as you can see there, we have received a number of questions throughout your presentation this afternoon. And thank you to all of those on the call for taking the time to submit their questions. But Ian, Christophe, at this point, I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that'd be great. Thank you. Thank you. So running on to the questions. First one, is there any particular reason why the the new joint broker has not yet issued a research note? We expect the research note will be published by the end of this week to to coincide with our our year end results. Can you please update us on developments relating to the new satellite user terminal chips and their potential in terms of value to the company?

32:34 Okay. I mean, I I covered the the progress on that on the user terminal chips. So as I said, you know, there there's good progress there. We've got those four chips with samples being released and the evaluations going on. I mean, in terms of the value, I mean, we're I I don't think the real value of the design win is reflected in our illustration there, but, you know, user terminals are sold in the the hundreds of thousands to many millions. You know, Starlink has 8,000,000 subscribers. So it yeah. One design win itself could be in the in in the hundreds of millions. But, you know, we're we're we're looking to get you know, I I showed those constellations there. You know, we're we're looking to get some design ins in those in those constellations.

33:24 What expectations do you have for the p q PQC three in one IQ block in terms of value to the company? Does the company plan to see further opportunities in the quantum computing space? Okay. I mean, just to be clear, so post quantum cryptography is is not quantum computers. What it is, it's a cryptography which is resistant to attack by quantum computers. So the the three in one IP was designed to be a very low area, so it could be deployed in both, know, mature a six as well as as as well as using the latest node. It's it's you may have noted we we licensed that original PQC in five nanometers.

34:09 So we see this as a basic building block. Every chip needs strong cyber security to stop it being hacked, and, you know, that's driven by the cyber resilience act and lots of ledger stations. So, you know, we, you know, we we've got a great piece of IP there that we we see deploying in, you know, in lots of chips, including our satellite communications chips. Provided all criteria are met in terms of margins and creditworthiness of the customer, does the company have the scope within the next twelve months to take on a contract in excess of a £100,000,000? The answer is yes. Normally, the structure of the contract would be something like, you know, fifteen to twenty million would be the NRE development income, and probably 80 to 85 would be the supply.

35:03 We've done this level of contracts before. So, yes, we would be able to do another one of these contracts. So what benefits to date have been gained since joining the TSMC Design Center Alliance? Okay. Okay. So, I mean, in terms of that, we've, you know, we we've done joint joint marketing, including going to TSMC symposiums, which is only opened to TSMC to TSMC partners. We get enhanced support from them as well as well as, you know, actually being listed on their their website. So we've had referrals coming in through that that program. There's also a lot of prestige that goes with it.

35:53 I mean, TSMC do a very strong audit on on your IT facilities and the security of that as well as make sure that, you know, they take references with customers. So, you know, just the prestige that go through that is is is worth it. What benefits can be expected from the strategic partnership with Codecip? Do you envisage forming similar relationships with other companies from now on? Okay. So so Coda SIP have quite a unique piece of our IP. They have a a risk five, which is a top top of processor core IP that uses a Cherry a Cherry instruction set, which is is something that both the UK government and US government have been promoting because of its strength in cybersecurity and reducing memory leakages. So we we see that as a, you know, a building block for developing the the hardware security element with with within our chip.

37:01 We we also have a similar partnership with with ARM. You can go to ARM's website, and you can find information on in on in silica there. And we have, you know, less formal partnerships with with many of the other IP providers such as Cadence and Synopsys. Can you please update us on the partnership with Oreo with regards to future supply of chips and expected revenue flows? Okay. So so just just for the audience. So so Oregal Networks are a UK based, well funded startup. They're doing photonic switches, and, you know, we announced we're we're developing their chip. I can't, you know, I I can't say anything about their their their volumes, but I expect I expect them to be very successful. They've got a very a very strong management team with a good track record and some very good people funding them. So very exciting there.

38:01 And we're, you know, really pleased to be supporting a UK a UK startup like that. How many contracts are you expecting to announce before the end of financial '26? We are still targeting three to four contracts. We've signed a number of feasibility studies, which we are working on at the moment, and we expect that some of those will turn into into longer term partnerships and contracts. We're also looking at other contracts with potential customers. In which niche area of the EV market does ENSILICA operate?

38:46 What is the current demand for these chips, and can we expect to see any contract signed in financial year 2026? Okay. So, I mean, anything for the automotive sector now has to be EV compatible. So so EVs themselves, you know, they they they they often require redesigning of redesigning of the chips because of the different the different voltage levels and all also that, you know, EVs have a different set of actuators and motors in there, not just to drive the drive chain, but, you know, for for things like the cooling system and other other things. So our focus in in in in this area is around things motor actuated controllers called Hitchbridge Hitchbridge controllers, but also sort of sensors.

39:38 So, you know, I I I would expect to see another another automotive design win, which is several will be EV related because everything is, yeah, is is going in that that direction. What is the growth in employee numbers over the past twelve months in both technical and admin categories? Oh, okay. So on the the technical side, we've added twenty twenty eight, which takes us to a 185. On the admin side, we've added two, which takes us to 14. And then, you know, you you may have seen we took on a team in in Budapest. I mean, that was 18 altogether, which was was, you know, one one one admin and the rest engineers. Very skilled engineers with functional safety and automotive expertise, you know, very relate related to EV. And we we also took on a team in Cambridge with millimeter wave millimeter wave IC expertise to support the work on the the user the user terminals. And all all those people are busy on funded projects.

40:57 What is ENSILICA EDAS Limited? ENSILICA EDAS Limited is a dormant subsidiary that was set up a number of years ago. It it's it's currently dormant as we mentioned, and you may activate it in future. But at the moment, it's expected to stay stay like that. Double bubbler, thirsty. Thanks again to all ENSILICA staff for their hard work in financial year '25. Thank you. As well as the very positive progress and new contracts update on Monday this week. My question is, there has been speculation in that British firms cannot be involved in the EU's Iris two project even as subcontractors. Does this correlate with your understanding?

41:44 So, yeah, the it's a the it's an EU project, and we, you know, we would come in as a component provider and not a prime. So there there there's nothing that to produce a a non EU component going into that. So I mean, as as it's a as it happens that, you know, we we as I mentioned, we focus on a European based supply chain for for our chips as much as we can, which really, you know, would put them put them ahead of, say, US or Asian based. I mean, particularly with with US based technology, you know, there there's a thing called ITAR, but they don't really want those ITAR components in there. But, you know, we're we're class to say, I think it's a class b subcomponent.

42:32 So, you know, we see we stand a a good chance of getting a design slot in in the iris to constellation of of some form, user terminals or beamformers, etcetera. What is the growth in employee numbers over the past twelve months in both technical and admin categories? I think we've done that. Yeah. Have we done that? Oh, yeah. Yes. Yeah. Okay. Sorry. Oh, yeah. Yeah. K. How rigorous is your valuation of future chip sales? So, effectively, we when we sign a contract with a customer, we look at customer forecast where the customer has a history of successfully bringing bringing online chips.

43:26 We would and and products, we would take that that customer's valuation Where the customer is is is newer or a start up, we may adjust those those forecasts downwards in order to take that into consideration. And every half year and year end, we reassess those future forecasts and and assess whether, you know, there there's a need to impair the asset or whether the volumes are still are still appropriate. What proportion of your revenues come from end to end ASIC services, I. E, design through to supply?

44:15 I think that would be the that would be both the NRE and the NRE and the supply. So probably currently about two thirds, I would say, are coming from those areas, whereas the third is just pure consultancy. Obviously, in future, we're looking to really increase the the the supply and also partly the NRE side, so those proportions are expected to grow. Why did you favor and select Budapest as your new design center? Okay. I I mean, we've we've been looking for a place in one of the EU 27 countries and, you know, with a with a good cost base and talented people, and we we were lucky to to actually find a group of engineers. So that that was it. But, you know, it'd be it'd be something that'd been on our radar for some time, and, you know, we've very pleased to have take taken on this taken on this team.

45:21 What is the latest situation with SIA? I think what is causing the delay in chip development if they have funding available. So SIA is undergoing a restructuring based on based on correspondence that we received from them. They're actually making really good progress on that, and I think they're looking to get new investment into into the group and and have have signed, I believe, or or almost signed an agreement relating to that. That doesn't impact the the the the the project and the grant funding as as the question alluded to, that the the grant covers the largest portion of that. But I think they do need to complete their restructuring and and get all their affairs in order before the the the European or the Italian government will allow them to to access the funds and progress the project.

46:27 They've indicated that that they should be able to do that in 2026, and we are getting regular updates from them. K. Do you develop proprietary IP as part of revenue generating contracts? Then it says build it and they will come. Yes. Yes. We yeah. I I mean, yes. Yes. We do. I mean, we we've got a large portfolio of IP, and we we often modify that for customer chips, and the the modification of that, you know, still belongs to, you know, to to us. I mean, there are specific cases where we implement something designed by, you know, architected by the customer where, you know, that doesn't go into our IP portfolio. But if every from project to project, we're building up that IP portfolio, which is a snowball effect, makes each project easier, increases the amount of design design reuse.

47:26 What is the latest situation with JLR volumes in automotive? Has the disruption with Nexperia chips created any new opportunities for you? Perhaps if I did the first part and you get the second. So JLR is not a customer of in in silica. We supply chips into the automotive industry, and and we have experienced some disruption. As I I think I mentioned, the we've taken that disruption into consideration into our forecast, and and and those are included in the in the forecast for financial twenty six, so we don't expect any further impact.

48:14 And then just on Yeah. Yeah. I I mean, the the Nexperia one. I mean, Nexperia, you know, my my understanding is they do sort of what they call MOSFETs transistor switches in, you know, in compound semiconductor side. So that's not really our that's not our business. That's not the type of chips we we do. These are, you know, simple power power switches. I mean, I said it. See, it seems to be, you know, some dis disruption, but the these are commodity parts. You don't just get them from Experian. You can, you know, you can get them from Infineon and other other ones. But, obviously, while they're Experian must sell them very very cheaply, and, you know, people need to go out and find other sources and build build additional capacity while this is while this is going on. But as I said, it's not it's not an area where we play.

49:10 What is your current customer revenue concentration, e g top five, and how has it changed in recent years? The honest answer is it it fluctuates year on year mainly because the customers that that for which the chip was in development last year might not still be in development this year if that's completed and and and moved on. What we've seen is that it's diversified a lot in that we don't have one customer that's more than 15% of the of the overall revenues looking at financial year 2025 and then and then also '26.

49:56 So it comes really from a number of sources. Again, that can change if if we win a really large contract, then that could become a larger portion. But what we are seeing is is diversification. K. Debt repayable within one year is 3,860,000. Will this require refinancing? The the answer is no. The the this is this is date that date and leasehold payments that that we will be repaying within within the next in the in the in the next year or so. So we don't expect any refinancing as as a result of that.

50:50 Trade creditors includes 5,900,000 contract liabilities. What does this present and over what period are they payable? So contract liabilities is a term that under IFRS accounting standards was was created, and it's the old deferred income. So so what it entails is this is where we've received money upfront or we've invoiced the customer and received the money upfront, and we need to meet our performance obligations under the contract. So these contract liabilities would be expected to to to unwind over over the next twelve months.

51:42 So, basically, as we do the work, they unwind. And then if we invoice more, then then it goes up again, and then it unwinds. We have seen it an unwind part partially at this point in the financial twenty six year, but it does fluctuate depending on on invoicing and activity. Okay. How fungible are your professional employees? I e, can they work across several projects, and do they or are their skills very specific to a particular technical area or capability? I mean, it it depends on the the type of skills. I mean, we have skills like millimeter wave chip design where people have specific expertise in that, and, you know, that that's the area where they where they focus on. And then we have we we have other areas where people can, you know, on the digital domain where they can work on industrial, automotive, satcoms type stuff. So, you know, the it it it it it's there. So, you know, we we we do have focused people with really, you know, world class expertise in those sort of niche areas and then people with broader expertise to deal with the, you know, the range of projects we get in.

53:04 What is your capitalized r and d investment expectation for 2026? So financial year '25 was 5,800,000. We expect it to be similar in financial year '26. In '25, there was a larger portion of of internal IP that we capitalized relating to a specific project that we're that we're actually currently using on our on our commercial project. We don't currently foresee having something similar in in in in '26. So it but, of course, we see our level of NRE and our co co investment to to to increase. So the two are expected to offset each other, so we expect it to be broadly the same as as as financial year '25.

54:00 Would you please clarify how cash consumption reduced so much in h two financial year twenty five? Has the trend continued into h one FY twenty six? So the cash consumption improvement was mainly driven by new contracts that that we that that that we signed, and then we we we we really started the work and and we're able to invoice a a large upfront for for the work. That's also what's driving the increase in in in contract liabilities that we saw. Also, for example, the r and d tax credit was received in the second half. So and that drove the the real improvement.

54:49 I think I mentioned we we don't expect that it it it it to improve that much during this year across the the twelve months as we will get to the period where these contracts get into their last 15%, and usually, the the the invoicing is then towards the end rather than upfront. So we we we do expect cash consumption to increase again from the point 2,000,000, but not obviously to the levels that we're seeing in the first half of financial year twenty five. How close will the company get to its 6,000,000 credit facility limit in financial year twenty six, and is the company expecting to issue further equity in the short term?

55:40 The company has has drawn down the full 6,000,000 of of the facility that that was available, and we're obviously also repaying repaying the term loan portion of that over over the next, well, three years of which one year is is is is almost complete. There is another 3,000,000 accordion facility depending on meeting certain requirements and and the bank's approval effectively. We as our as our going concern forecast and cash flows indicate, we don't expect to to need to raise further funds to fund our normal operations.

56:31 There may be cases where we would like to to increase the speed at which we move forward some of our key ASSP and strategic projects, and that might require further financing in order to progress those more quickly. But for our normal operations, we don't expect any additional funding at this point. Do you measure customer profitability? The answer is yes, but we do look at it across the the whole period of the contract, including the supply. For the NRE stage, as you will know from the co investment, we need to also invest a portion ourselves.

57:23 And then in the future, we we we get that money back and more in terms of the margins on the supply revenues. What proportion of your business comes from repeat customers? It's a it's a it's a difficult one. It it it again, it differs from year to year, and I I I you know, I'd say we have I mean, most of the service revenue is repeat is repeat customers. And, I mean, obviously, the the supply the supply revenue, we get an order every month. That's repeat. So Yes. So and and then, you know, we we have repeat business from from Siemens in terms of, you know, in in terms of the the ASIC development.

58:20 Yes. And then and then another one or two other ones probably that Yeah. That we can't name at this point. But most of the the the new contracts that that we signed in in financial year '25 are on new customers. Hopefully, they will turn into repeat customers, but it's it's difficult to say at this point. In the latest update, you referred to the number of definition and feasibility studies. Previously, these have not been mentioned prior to announcing NRE supply contracts. Has something changed in your approach, or is this just a different presentation?

59:07 So so, I mean, sometimes we we have the the feasibility study as part of the main contract. So we do it where we go straight on with the feasibility. But in in this case, we had a number of very large feasibility studies, high value ones. We we felt that we should we should announce those, and we actually received the received orders for two of them on the Friday the Friday before before the announcement. So, you know, the these were, you know, a few 100,000 each. So so they were I mean, they were announced there, and I thought the you know, we we thought that the market would would like to know that we've got that next phase of projects projects coming up through these through these studies.

59:55 Probably the last question as we've come on to the hour, is there a concern about China, Taiwan troubles, and how reliant are you on Taiwan's supply? I I mean, TSMC is one of our major major foundries. We we you know, most of the satellite technology stuff, we're actually running running through global foundries that we have a a focus on doing that in in Europe. They will be putting a or they're they're currently building a fab in in Germany to run some of the to run some of the technology nodes. But, you know, they're like like the whole electronic industry, there is a big dependence on the on on Taiwan as they have 80% of the, you know, the the world's advanced node chip chip capacity.

1:00:53 And, Christoph, if I may just jump back in there. Thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review. But, Ian, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great. Okay. Alright. That that I mean, thanks very much. Thanks, everyone, for joining us. Thanks for the the excellent questions. We've got a lot of follower followers there. I mean, I think for for us, it's a really interesting time. We you know, we're we're very, you know, very pleased with the, you know, the fact is we are booking high value ASIC projects and moving those forward into into production and supply.

1:01:44 And, you know, as we said in our IPO in 2022, you know, we're, you know, we're building that portfolio of chips and the supply the supply revenue is coming through. We, you know, in in '24, it doubled. In '25, it doubled. So, you know, that's I mean, that's all that that's all coming through nicely. And, you know, as you were seeing, we're we're addressing some very high growth exciting markets. We're very well positioned to capitalize on them. Thanks. Thanks for your time. Perfect, Ian. Thanks. Perfect, guys. And thank you very much indeed for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations.

1:02:34 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of ENSILICA PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all. Thank you. Thank you.