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

31 August 2023

Sondrel (Holdings) plc

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

Trading Update and Notice of Results

Sondrel (AIM: SND), the fabless semiconductor business providing turnkey services in the design and delivery of 'application specific integrated circuits' ("ASICs") and 'system on chips' ("SoCs") for leading global technology brands, provides a further update on trading ahead of the publication of the Company's interim results for the six months ended 30 June 2023 ("H1 2023") on 21 September 2023.

During H1 2023 and immediately post period end, the Company continued to deliver live ASIC projects in line with its expectations and, as announced by Sondrel on 3 July 2023, the Company successfully completed the second key milestone in respect of the material turnkey ASIC engagement for a Tier 1 OEM Automotive customer - with corresponding milestone payments received by the Group from the customer. As stated at the time of the Company's IPO, Sondrel expects typical production volumes for each contract to deliver revenue of £10m to £100m per annum and the contract with the Tier 1 OEM Automotive customer could deliver production revenue at the upper end of this range. 

As a result, the Company now expects to report H1 2023 unaudited revenues of £9.3m, a 17% increase over the corresponding H1 2022 period (H1 2022: £8.0m) and adjusted EBITDA of £0.4m (H1 2022: £0.1m).

Since the FY22 year end, the Group has been pleased by the continued positive momentum in the US sales pipeline following the Company's ongoing investment in the region, with significant traction in the US market for Sondrel's proposition, the establishment of an office in Santa Clara, California, and the hiring of a team of experienced sales and engineering personnel in the US. The US sales pipeline now includes more than 15 potential customers, with the opportunities now under evaluation representing design and prototype revenues exceeding $100m over 2 years (excluding potential production related revenues). The Company cautions that the opportunities in the US sales pipeline remain uncontracted at this stage.

Furthermore, customer production volume forecasts for the Group's live ASIC projects in Europe have increased by an aggregate of 78%, from US$95m to US$170m. This, together with the progress made in the US, provides the Company with confidence for FY24 and beyond.

However, and notwithstanding increases in future production volume forecasts by European customers as a result of ongoing confidence in ASIC project end markets, it has also now been confirmed that the chip development and production for three major ASIC customers due to commence in H2 2023 have been delayed by between six and twelve months as a result of increasing inflation and weakening demand in end markets reliant on consumer spending as other sector categories have moved into negative growth. Therefore, their respective production dates, and earlier material design and NPI related revenues that had previously been expected to be delivered in FY23, have now been delayed until FY24. These customers remain fully committed to working with Sondrel to advance their chip designs into production and remain confident that they will be very successful in their respective end markets.

As a result of these project delays, it is now expected that FY23 full-year revenue will be not less than £13m, substantially below current market expectations, with a corresponding impact on FY23 losses.

Notwithstanding project delays by customers, the Group continues to manage cash effectively and to take appropriate actions to ensure it continues to be able to invest in the priority growth areas, especially in the US and in the capabilities required for successful production delivery.  The Company is confident that it has sufficient access to finance for the foreseeable future following its October 2022 IPO.

Notice of Interim Results

The Company will announce its unaudited H1 2023 results on Thursday, 21 September 2023.  There will be an in-person presentation for analysts at 9:30 a.m. (BST) on the day of the announcement at Buchanan's offices at 107 Cheapside, London EC2V 6DN. 

Graham Curren, Chief Executive Officer of Sondrel, commented:

"Whilst it is disappointing that the scheduled production dates for three of our upcoming ASIC projects have moved out, the increased aggregate production volumes for live ASIC projects are clearly positive for Sondrel and we are confident about our revenue and profitability in 2024 and beyond.

"Our increasing traction in the important US market, strong sales pipeline and positive ongoing relationships with our existing ASIC customers provides us with great confidence in our medium-term target to grow revenues to over £100m and we will ensure that we keep updating shareholders as we make progress towards this goal."

About Sondrel

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

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

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

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