THIS ANNOUNCEMENT, INCLUDING THE APPENDIX AND THE INFORMATION IN IT, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN, NEW ZEALAND, SINGAPORE OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED) ("EUWA")) ("UK MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED WITHIN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION (AS DEFINED UNDER UK MAR). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THOSE PERSONS THAT RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION, WHICH IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

14 December 2023

EnSilica plc

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

Placing to raise £1.56 million and

new business update

EnSilica, a leading chip maker of mixed signal ASICs (Application Specific Integrated Circuits), announces that it has conditionally raised approximately £1.56 million (before expenses) by way of a placing (the "Placing") of a total of 3,892,500 new ordinary shares of 0.1p each in the Company ("Ordinary Shares") at a price of 40 pence per new Ordinary Share (the "Issue Price").

Subscribers in the Placing will receive one warrant for every one Ordinary Share subscribed for pursuant to the Placing, with each warrant entitling the holder to acquire one new Ordinary Share at a price of 55 pence at any time in the 18-month period from the date of Admission (as defined below) (the "Warrants").

The Placing and issue of the Warrants utilises substantially all the existing share authorities available to the directors to issue shares for cash on a non-pre-emptive basis, as approved at the Company's annual general meeting held on 28 November 2023.

Allenby Capital Limited ("Allenby Capital") is acting as sole broker in connection with the Placing.

Highlights

·    Equity raise of £1.56 million at 40p per share to finance new business opportunities.

·    With the Company's potential sales pipeline now estimated at US$360 million, the net proceeds of the Placing will be used to support the tender and execution of new and higher levels of activity, including but not limited to:  

o  seeking to secure two material ASIC design and supply contracts;

o  a potential material contract for the "tape-out" and supply of a potentially high volume ASIC;

o  progressing two significant consultancy contracts that could be worth, in aggregate, up to US$7.1 million if scoping studies are successful and proceed to the next stage; and

o  expansion of work for existing contracts to include "tape-out" and wafer supply.

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

"We are delighted that our shareholders have continued to support our growth ambitions as we seek to capitalise on a number of exciting opportunities. We are particularly pleased to be investing in expanding our operational footprint internationally and to further leverage our standing as a leading European mixed signal semiconductor manufacturer."

Details of the Placing and reasons for it are set out further below.

For further information please contact:

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.

Further details of and background to the Placing

Background to the Placing and use of proceeds

EnSilica has continued to consolidate its position as a go-to ASIC partner in the global market during 2023. As announced by EnSilica on 28 November 2023, EnSilica has delivered a resilient performance in the first half of its current financial year, covering the six months to 30 November 2023, due to a combination of continued new business momentum and the execution of a number of significant contracts with several key customers. In this regard, the directors of EnSilica (the "Directors" or the "Board") also noted that, while EnSilica continues to trade in line with market expectations for the financial year ending 31 May 2024, new business generation remains strong with EnSilica's current sales pipeline of opportunities and potential contracts standing at an estimated US$360.0 million of lifetime revenues. This includes EnSilica being in advanced discussions for several significant design and supply contracts.

More broadly, EnSilica has made considerable progress towards the consolidation of its underlying business strategy, increasingly focusing on more lucrative revenue opportunities from design and supply engagements. In this respect, the Board is pleased to highlight that three of its ASICs are now in the supply phase of EnSilica's long-term revenue model and another six ASICs are in the design phase. Most notably, on 22 May 2023, EnSilica announced that it anticipates generating US$40.0 million in revenues over the next six years from the supply of ASICs to be used in a new flagship vehicle by a premium automotive company (the "Automobile ASIC Project").

Notwithstanding EnSilica's near term cashflows continuing to be supported by, inter alia, existing contracts, consultancy engagements and scoping studies, the Company is experiencing an acceleration in new business opportunities that require additional investment and working capital. In light of the active and near-term opportunities, the Board considers it to be in the Company's shareholders' best interests to take advantage of EnSilica's ordinary shares being publicly quoted and to raise funds through the issue of new equity. The Placing will provide funding for the Company to pursue potential new contracts and invest in certain new projects, which may include some of the opportunities highlighted below:

·    Design and supply opportunities

EnSilica is in advanced discussions in relation to two potentially material ASIC design and supply contracts, which will require additional capital expenditure and working capital should these discussions be successful. The first concerns a contract to replace an existing integrated circuit ("IC") used for a high volume industrial application, in a sector where EnSilica has experience in supplying similar ICs, although in lower volumes, to a European-based customer.

The second potential contract relates to an ASIC for use in telecommunications infrastructure. Should EnSilica be successful in securing this contract, the NRE (non-recurring engineering) cost is material and will be funded by the customer.  Working capital is required to bridge the milestone payments and significant revenues are expected over the life of the ASIC production.

Furthermore, EnSilica is pleased to have been approached by a US electronics company to potentially execute the "tape-out" and supply of a material ASIC contract. Tape-out starts the manufacturing of the "mask sets" used for the mass production of an ASIC. While this potential contract is anticipated to be low margin for EnSilica and will require some initial working capital, the ASIC has been designed in-house by the customer and the Directors expect that this contract will be comprised of high production volumes. Therefore, the Directors believe that EnSilica will benefit from improved pricing dynamics and margins on this and future ASIC production with semiconductor fabrication plants, as well as strengthening EnSilica's relationship with leading stakeholders in the semiconductor supply chain. In addition, the Directors expect that this contract would help accelerate the growth of EnSilica's presence and future activity in the United States.

·    Anticipated capital expenditure associated with recent business success

In light of the Automobile ASIC Project's forecasted supply revenues increasing from US$25.0 million to US$40.0 million as a result of the ASIC being used in additional models, further testing capacity is required. In order to reduce EnSilica's testing costs and ultimately improve the competitiveness of the Automobile ASIC Project, with further investment EnSilica intends to strengthen its supply chain networks in Asia and increase EnSilica's tooling and engineering resources for this project.

Similarly, after designing an ASIC for use in a communications application, EnSilica is now pleased to be in the position to perform the "tape-out" milestone, marking the commencement of the manufacturing of the mask sets used for the mass production of the advanced node ASIC. The working capital expenditure associated with this will fund the wafer supply. EnSilica will receive royalties on each ASIC supplied.

·    Consultancy opportunities

While design and supply remain at the core of EnSilica's business strategy, EnSilica is in advanced discussions to secure two new consultancy contracts from two customers operating in the avionics and industrial electronics sectors respectively. In both instances, the initial scoping studies are to be financed by the respective customer and one has recently commenced. Should the scoping studies for these projects be successful, design and supply contracts are potentially available for estimated revenues of, in aggregate, US$7.1 million. While the Directors believe that the working capital cycle is anticipated to be relatively short, both contracts are anticipated to require an increase in engineering headcount.

While the Directors consider that discussions on various contracts and opportunities, including those set out above, are advanced or in final stages of negotiations, and expect the Placing funds to help facilitate these, there is no guarantee that such contracts and opportunities will be executed nor as to the final terms or timing.

To support EnSilica's growth, the Company has the opportunity to hire an international engineering team with an economically attractive cost base for semiconductor engineering activity. While not directly reliant on the Placing, EnSilica is keen to add to its existing capacity in order to take advantage of current and future opportunities.

Details of the Placing

The Placing comprises the issue of 3,892,500 new Ordinary Shares (the "Placing Shares") at the Issue Price to conditionally raise £1.56 million before expenses for the Company (approximately £1.42 million after expenses but excluding VAT).

The Placing Shares and any Ordinary Shares issued pursuant to the exercise of Warrants will be issued on a non-pre-emptive basis utilising substantially all the authorities granted to the Board at the Company's annual general meeting held on 28 November 2023. 

When issued, the Placing Shares will represent approximately 4.75 per cent of the enlarged share capital of the Company and will rank pari passu with the existing Ordinary Shares in the Company.

The Issue Price represents a discount of approximately 14 per cent. to the closing mid-market price of an Ordinary Share on 13 December 2023, being the latest practicable date prior to the publication of this announcement.

The Company and Allenby Capital have entered into a placing agreement pursuant to which Allenby Capital has, subject to certain conditions, procured subscribers for the Placing Shares at the Issue Price (the "Placing Agreement"). The Placing Agreement contains provisions entitling Allenby Capital to terminate the Placing (and the arrangements associated with it), at any time prior to  Admission (as defined below) in certain circumstances, including in the event of a material breach of the warranties given in the Placing Agreement, the failure of the Company to comply with its obligations under the Placing Agreement, or the occurrence of a force majeureevent or a material adverse change affecting the financial position or business or prospects of the Company. If this right is exercised, the Placing will not proceed and any monies that have been received in respect of the Placing will be returned to the applicants without interest and Admission will not occur. The Company has agreed to pay Allenby Capital a placing commission and all other costs and expenses of, or in connection with, the Placing.

The Placing is not being underwritten by Allenby Capital or any other person.

Details of the Warrants

Subscribers in the Placing will receive one Warrant for every one Ordinary Share subscribed for pursuant to the Placing, with each Warrant entitling the holder to acquire one new Ordinary Share at a price of 55 pence at any time in the 18-month period from the date of Admission (as defined below).  Therefore, a total of 3,892,500 Warrants will be issued to subscribe for 3,892,500 new Ordinary Shares. If all the Warrants are exercised in full EnSilica will receive gross proceeds of a further approximately £2.14 million.    

The Warrants may be exercised in whole or in part, provided that any partial exercise of Warrants by a holder shall be for a minimum aggregate exercise price of £10,000 or, if less, the balance of the relevant holder's Warrants then outstanding. The Warrants are not secured and are non-transferable by the holders without the prior consent of the Company. The Warrants will be in certificated form and none of the Warrants will be admitted to trading on AIM or any other stock exchange.

Change to significant shareholdings in the Company

As a result of the issue of the Placing Shares, the shareholding of Ian Lankshear, CEO of the Company, will be diluted on Admission to approximately 19.56 per cent. (the number of Ordinary Shares he holds will remain the same at 16,040,358) and the shareholding of Richard Hamer (a co-founder and employee of EnSilica), will be diluted on Admission to approximately 8.71 per cent. (the number of Ordinary Shares he holds will remain the same at 7,144,990).

Admission to AIM

Application has been made to London Stock Exchange plc for the Placing Shares to be admitted to trading on AIM ("Admission"). It is currently anticipated that Admission will become effective and that dealings in the Placing Shares will commence on AIM at 8.00 a.m. on or around 19 December 2023.

Total voting rights

On Admission, the Company will have 82,007,658 ordinary shares of 0.1p each in issue, each with one voting right. There are no shares held in treasury. Therefore, upon Admission, the Company's total number of ordinary shares in issue and voting rights will be 82,007,658 and this figure may be used by shareholders from Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

IMPORTANT NOTICES

Notice to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended and as this is applied in the United Kingdom ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II and Regulation (EU) No 600/2014 of the European Parliament, as they form part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors who do not need a guaranteed income or capital protection and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). The Ordinary Shares are not appropriate for a target market of investors whose objectives include no capital loss.  Notwithstanding the Target Market Assessment, distributors should note that: the price of the Ordinary Shares may decline and investors could lose all or part of their investment; the Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital projection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Allenby Capital will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the shares and determining appropriate distribution channels.

Forward Looking Statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' beliefs or current expectations. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Investors should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.

Notice to overseas persons

This announcement does not constitute, or form part of, a prospectus relating to the Company, nor does it constitute or contain any invitation or offer to any person, or any public offer, to subscribe for, purchase or otherwise acquire any shares in the Company or advise persons to do so in any jurisdiction, nor shall it, or any part of it form the basis of or be relied on in connection with any contract or as an inducement to enter into any contract or commitment with the Company.

This announcement is not for release, publication or distribution, in whole or in part, directly or indirectly, in or into Australia, Canada, Japan or the Republic of South Africa or any jurisdiction into which the publication or distribution would be unlawful. This announcement is for information purposes only and does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire shares in the capital of the Company in  Australia, Canada, Japan, New Zealand, the Republic of South Africa or any jurisdiction in which such offer or solicitation would be unlawful or require preparation of any prospectus or other offer documentation or would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction.  Persons into whose possession this announcement comes are required by the Company to inform themselves about, and to observe, such restrictions.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

General

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) or any previous announcement made by the Company is incorporated into, or forms part of, this announcement.

Allenby Capital, which is authorised and regulated by the FCA in the United Kingdom, is acting as Nominated Adviser and Broker to the Company in connection with the Placing. Allenby Capital will not be responsible to any person other than the Company for providing the protections afforded to clients of Allenby Capital or for providing advice to any other person in connection with the Placing. Allenby Capital has not authorised the contents of, or any part of, this announcement, and no liability whatsoever is accepted by Allenby Capital for the accuracy of any information or opinions contained in this announcement or for the omission of any material information, save that nothing shall limit the liability of Allenby Capital for its own fraud.