Celoxica Holdings Reveals Preliminary Financial Results

3/21/2006 - Celoxica Holdings plc (AIM: CXA), a leading provider of electronic system level design technology for the embedded systems and accelerated computing markets, today announces its maiden preliminary results for the year ended 31 December 2005.

HIGHLIGHTS

Financial:

Operational:

Phil Bishop, CEO, Celoxica, commented, “We enter 2006 with great optimism. The Company has made significant progress during the last year and we have established a solid platform in two growing markets – embedded design (ESL) and accelerated computing. We will continue to invest in developing and commercialising new technology for these markets. In addition, we have invested resources to support our growing number of strategic partners and customers which we believe will enable the Company to continue to grow its revenue in the coming years. We believe that we are extremely well positioned to take advantage of the growth in our two key markets. Trading to date is in line with our expectations and we are confident of a successful outcome for the year.”

About Celoxica
A leader in electronic system level design (ESL), Celoxica is enabling the next generation of advanced electronic products by producing tools, boards, IP and services that turn software into silicon. Celoxica technology raises design abstraction to the algorithm level, accelerating productivity and lowering risk and costs by generating semiconductor hardware directly from C-based software descriptions. Adding to a growing installed base, Celoxica provides the world's most widely used C-based behavioural design and synthesis solutions to companies developing semiconductor products in markets such as consumer electronics, defence and aerospace, automotive, industrial and security. Celoxica is a publicly traded company on the Alternative Investment Market of the London Stock Exchange under the symbol CXA.

CELOXICA HOLDINGS PLC
(“CELOXICA” OR “THE COMPANY”)
Preliminary Results for the year ended 31 December 2005

Chairman’s Statement

Overview
In this, my first Chairman’s Statement since Celoxica became a public company, I am pleased to report that we made good progress in the year. There have been a number of highlights including:

Financial results
The financial results for the Company are encouraging. Turnover increased by 24%, and our operating loss was reduced. Following the IPO our cash position is strong. This progress together with the IPO proceeds will enable the Company to scale the business and capitalise on the market opportunity.

Strategy
The Company has made considerable progress towards its goal of becoming one of the primary global suppliers of electronic system level design technology for the embedded systems and accelerated computing markets. Whilst these markets are currently relatively small, both are expected to experience substantial growth in the coming years. Of particular note is the progress within the accelerated computing market in the Americas where the Company has achieved a number of important design wins. The Company is beginning to generate momentum in this exciting market and we view the future with considerable optimism.

IPO
The Company completed its IPO on AIM on 27 October 2005. The placing raised gross funds of £6.1m (£5.2m net). This provides the necessary financial resources for the Company to expand its commercial and development activities.

Board changes
Following the IPO, Ian Yeoman was appointed a Non-executive Director. Ian brings a wealth of international business, finance and technology experience in a range of companies spanning the aerospace, defence, chemicals and electronics industries. Keith Hopkins resigned from the Board on 25 January 2006 and I would like to thank Keith for his contribution to the Company.

Summary
The Company is developing well and I would like to recognise our employees who, through their commitment, focus and ability have delivered these results and our professional advisors for enabling the Company to achieve a successful flotation. Finally, I would also like to thank our customers and partners for their continued support and our shareholders for their loyalty. Based on our progress to date and our continued momentum, we are confident of success in the future.

Jack Fryer Chairman
Chairman
Celoxica Holdings Plc

Chief Executive’s Review

Overview
During the year, we have continued to make significant progress in the embedded systems and accelerated computing markets. We have built very strong relationships with customers and partners and are expanding our role and importance as a member of the electronics industry value chain. We have invested in the continued development of our product solutions and have targeted a number of emerging market applications that demonstrate the value of these new products.

Strategy
Celoxica’s goal is to become one of the primary global suppliers of electronic system level design technology for the embedded systems and accelerated computing markets. We continue to develop our core technology to strengthen our growth in these markets. We believe that our customers can significantly improve productivity in the design of electronics systems and greatly increase the usability, performance and range of applications made possible by the deployment of Celoxica’s technology.

Market development

The ESL or Embedded Design market
We continue to see a spectrum of opportunity in the ESL market and significant growth is forecast. Gartner Dataquest forecasts that the ESL market will grow from approximately $200 million in 2005 to $1.6 billion by 2009. This growth is being driven by the increasing complexity of semiconductors. This complexity stimulates demand for high productivity design solutions such as those offered by Celoxica. Our solutions can be applied to an extensive range of applications within the embedded space and our focus is directed at the high growth sectors of automotive, communications, consumer, imaging and industrial.

The Accelerated Computing market
This market offers Celoxica a potential £1.5 billion opportunity, growing at 30% p.a. (according to IDC). The use of programmable semiconductors for accelerated computing is growing and our technology allows developers to explore co-processor acceleration and hardware off-load within a familiar design environment. Our solutions have already been used in the development of a wide range of accelerated computing applications such as virus checking, real-time image processing and scientific and industrial computing calculations. The wide array of applications within the accelerated computing market is expected to lead to continued rapid growth opportunities.

Partnerships
During the year, the Company developed and expanded its relationships with key partners in the industry. In the semiconductor space we continue to work closely with Altera and Xilinx who are the dominant market leaders in FPGA based programmable semiconductors and we have launched new versions of our products that exploit and utilise the latest FPGA based products from these two key partners. We have also created FPGA based development and acceleration boards. This approach is increasing the demand for our software products and supports our complementary relationships with global Digital Signal Processor leaders such as Texas Instruments and Analog Devices.

Another important partner for us in semiconductors is Toshiba. At the beginning of 2005 we announced that we were providing software support for Toshiba’s Media Embedded Processor (“MeP”), a product that enables microprocessor designers to better integrate the MeP processor into their designs. Within the software market, we partnered Synopsys in order to enable our new Agility Compiler to fully address the ASIC market.

At the hardware board and system level, we have developed board support packages for end system suppliers. As part of our accelerated computing strategy we initiated software support for high-performance computing leaders including Silicon Graphics and Cray, and Sundance in embedded DSP + FPGA. Supporting these hardware solutions unlocks a wider user base for our software design solutions.

Our university program continues to provide a strong mechanism for collaboration with over 600 research and teaching universities worldwide. These institutions provide local customer reference points, potential for commercial opportunity and are great sources of ideas and innovations.

Customers
We have a blue-chip customer base that continues to grow with over 100 customers in all regions of the world including the Americas, Asia Pacific (China, India, Japan, Singapore, South Korea and Taiwan) and Europe. These customers actively use more then 400 software licenses and many more of our hardware development and acceleration products. With this existing customer base we are in position to increase our growth across these geographies. In 2005 we acquired 24 new customers across the Americas, Asia Pacific and Europe.

Products

Software and IP
In 2005 we continued to develop our core ESL design and synthesis product leading to the launch of version 4.1 of the DK Design Suite. We believe that DK 4.1 is the most advanced and customer proven ESL design and synthesis solution on the market with improved performance and integration over past product revisions.

Design tools
Additionally, in the past year we introduced the Agility Compiler (“Agility”). Agility is our vanguard software design tool that supports the electronics industry standard language for higher-level design, SystemC. We feel Agility will enjoy broad market appeal and will increase our total addressable market. Agility was launched in 2005 and has gained customer traction with some strategic design wins.

Programmable boards
In the programmable board market, we have extended our product range. In the past year we have added low-end prototyping solutions and high-end prototyping or acceleration solutions utilising the latest high–end semiconductor devices from our partners Altera, Texas Instruments and Xilinx.

Financials
Our financial performance reflects the success of the Company. Overall we delivered turnover growth of 24% and I am particularly pleased that the Americas increased sales by 71% to £1.5 million. This was due to strong customer wins in both the accelerated computing and embedded ESL markets. I am also pleased that we generated impressive growth in Europe, reflecting the global nature of our business.

Management and staff
We have 57 employees (including 2 executive Directors). Of the 57 employees, 29 (51%) work in the engineering department, 20 (35%) in sales and marketing and 8 (14%) in administration. Headcount has remained flat through 2005 though we will invest in a number of additional sales and engineering heads in the coming year. We rely heavily on the commitment of our staff and through their dedication and attention to detail; we have accomplished a number of significant milestones. I would like to express my appreciation to them for their hard work, enthusiasm and support.

Outlook
We enter 2006 with great optimism. The Company has made significant progress during the last year and we have established a solid platform in two growing markets – embedded design (ESL) and accelerated computing. We will continue to invest in developing and commercialising new technology for these markets. In addition, we have invested resources to support our growing number of strategic partners and customers which we believe will enable the Company to continue to grow its revenue in the coming years. Our two key markets are growing rapidly and we are extremely well positioned to take advantage of this growth. Trading to date is in line with our expectations and we expect a successful outcome for the year.

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