RCS - EnSilica PLC - Placing and Proposed Admission to Trading on AIM

British American TobaccoAnnouncement

19/05/2022 11:30

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220519:nRSS1096Ma&default-theme=true

RNS Number : 1096M  EnSilica PLC  19 May 2022

NOT FOR RELEASE, DISTRIBUTION, PUBLICATION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, NEW
ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION WHERE
TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF
SUCH JURISDICTION.

This announcement is not an admission document or a prospectus and does not
constitute or form part of, and should not be construed as, an offer to sell
or issue, or a solicitation of any offer to buy or subscribe for, any
securities in any jurisdiction. Prospective investors should not subscribe for
or purchase any securities referred to in this announcement, except on the
basis of the information in the final admission document to be published by
the Company and any supplement thereto, in connection with the placing of its
issued and to be issued ordinary shares and the proposed admission to trading
on AIM.

 

19 May 2022

 

EnSilica plc

 

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

 

Placing and Proposed Admission to trading on AIM

 

EnSilica, a leading designer and supplier of mixed signal ASICs (Application
Specific Integrated Circuit), is pleased to announce its proposed admission to
trading on the AIM market of the London Stock Exchange. Dealings on AIM are
expected to commence at 8.00 a.m. on 24 May 2022, under the ticker ENSI and
ISIN GB00BN7F1618 ("Admission"). Allenby Capital is acting as Nominated
Adviser and Sole Broker to the Company and the placing.

In connection with Admission, EnSilica has raised £6 million through a
placing and subscription of 12,000,000 Ordinary Shares at a price of 50p per
share and will have a market capitalisation of approximately £37.6 million at
the Placing Price.

EnSilica provides an end-to-end service for the design and supply of mixed
signal ASICs, outsourcing certain elements such as the wafer fabrication of
the manufacturing and packaging to third parties - otherwise known as a
Fabless Semiconductor Model.

ASICs are Integrated Circuits or semiconductor chips developed for a
particular use or product rather than for general purpose usage.  ASICs help
differentiate products through optimised hardware making products smaller,
faster, lower power, and/or more secure and can provide novel functionality,
improve supply chain security and protect products from being copied.  The
Company has expertise in designing complex mixed signal ASICs, which combine
digital and analogue functions onto a single chip.

EnSilica has a broad international customer base. EnSilica's customers range
from global corporations and original equipment manufacturers ("OEMs") to
technology start-ups, including automotive Tier 1 suppliers, industrial
enterprises, large software companies and service providers developing
proprietary hardware. EnSilica is an approved supplier to some of the world's
largest automotive and industrial OEMs and Tier 1 suppliers.

The Directors believe that the Group has reached a stage in its development
where it will benefit from a quotation on AIM and that, as well as providing
the Company with the net proceeds of the Fundraising, this will:

·    enhance both transparency and international profile of EnSilica with
existing and potential customers;

·    allow the Company to access equity capital creating flexibility to
fund growth and support potential M&A opportunities;

·    enable EnSilica to attract, recruit and retain key employees who may
be further incentivised through share option schemes ; and

·    create a platform for existing shareholders to participate in the
future growth of the Company.

Key business strengths include:

·    Global business with c. 120 employees

-    EnSilica is headquartered in Oxfordshire and has additional design
centres in Wokingham, Sheffield, Bangalore, India and Porto Alegre in Brazil.

-    The senior management team has in-depth experience covering
commercial, design engineering, IP licensing, fabless production, quality
assurance and operations.

·    ASICs market forecasted to grow 8.2 per cent. through to 2026 and
reach US$27.6 billion

-    ASIC benefits include: i) smaller size; ii) lower power consumption;
iii) greater functionality; iv) improved data security - less exposed to
hackers; v) enhanced IP security - harder to copy than a product populated
with off-the-shelf components; and vi) supply chain resilience due to reduced
risk of components reaching end of life

·    ASICs Design and Supply model - higher margin, longer term revenue
streams

-    Customers pay an upfront fee towards the cost of design, tooling and
test development of the ASIC and then purchase the finished ASICs from
EnSilica or pay a royalty on production of devices

-    Significant revenues to EnSilica could occur when chip production is
underway, which can be 2 to 5 years from project initiation

·    Increased investment into IP portfolio

-    IP reduces the time to market of developing an ASIC as well as
providing an additional licensing revenue stream

·    Automotive and Satellite user terminals - both key target markets

-    Integrated circuits content per car are expected to increase from
US$380 in 2017 to more than US$590 in 2025, leading to the automotive
semiconductor segment TAM (total addressable market) growing from US$37.9
billion in 2020 to an estimated US$113.9 billion in 2030

-    In 2018 EnSilica was awarded a €2 million project from the UK Space
Agency to develop an RF Integrated Circuit, 75 per cent. funded by the agency.

-    In addition, EnSilica was recently selected by AST SpaceMobile Inc
(NASDAQ: ASTS) to develop their next generation ASIC for use in the company's
planned space-based cellular broadband network.

·    Three ASICs now in supply phase and pipeline at an all-time high

-    Three ASICs have now been released for production with anticipated
long-term supply revenue

-    A further three chips are now in the design phase

-    EnSilica is currently working on costings with potential customers for
several further potential design and supply projects

Ian Lankshear, Chief Executive Officer of EnSilica commented:

 

"We are delighted to be floating EnSilica on AIM and believe this represents a
major endorsement of our business.  Our quoted status will provide an ideal
platform from which to accelerate a number of growth initiatives which will
ultimately further expand both market reach and customer footprint.

 

Having developed a reputation of excellence and innovation over the past 21
years, we firmly believe our mixed signal and RF design and supply
capabilities are ideally placed to further capitalise on the significant
demand for ASICs across our key markets.

 

We are excited by the numerous opportunities that being a quoted company will
bring and we look forward to further developing EnSilica over the coming
years."

 

 EnSilica plc                                                    Via Vigo Consulting

 Ian Lankshear, Chief Executive Officer                          +44 (0)20 7390 0233

 Matthew Wethey, Chief Financial Officer

 Allenby Capital Limited, Nominated Adviser & Broker             Tel: +44 (0)20 3328 5656

 Jeremy Porter / Vivek Bhardwaj                                  info@allenbycapital.com

 Vigo Consulting (Investor & Financial Public Relations)         +44 (0)20 7390 0233

 Jeremy Garcia / Tara Benniman

 ensilica@vigoconsulting.com (mailto:visum@vigoconsulting.com)

ADDITIONAL INFORMATION

Background and history of the Company

EnSilica was established in 2001 to initially provide consultancy services to
the global semiconductor industry and was primarily involved in helping their
customers design ASICs. EnSilica opened its first office in Wokingham,
Berkshire in 2002 and gained ISO9001 certification in the same year. EnSilica
continued to grow with multiple repeat design services projects and gained
preferred design services supplier status with many companies. Customers
included Nokia, ARM, Panasonic, Sony, Wolfson, Dialog Semiconductor and Tier 2
automotive companies.

The Company developed a number of semiconductor intellectual property designs
which have been licensed to a range of customers. EnSilica's IP technology
focus was on radar signal processing and encryption accelerator hardware,
which has been supplied to many major semiconductor suppliers.

Following the conclusion by EnSilica that India offers the ability to scale
and balance the cost base effectively, in 2012 EnSilica opened an office in
Bangalore. The Indian office supports the UK operations as well as direct
customers in India and internationally.

The high level of industry expertise, knowledge and contacts built up over the
years working with a prominent client list, combined with the more attractive
economics, led to the 2016 decision to pivot from consultancy to an ASIC
design and supply model. Within the ASIC design and supply model EnSilica runs
the end-to-end process through to final chip delivery, which requires upfront
investment, however, delivers longer term and higher margin income streams. To
accelerate this move, in October 2016, EnSilica acquired a team of mixed
signal IC engineers and further intellectual property. Thereon, the Company
made further internal investment and won customers and mandates for
applications for the automotive and industrial sectors, as well as licensing
its radar technology to major Tier 1 and Tier 2 automotive companies.

The majority of the Company's growth to date has been funded from retained
earnings. More recently, growth has been funded via unsecured long-term growth
company debt facilities and the proceeds from the issue of £1.38m of
Convertible Loan Notes that convert to ordinary shares on Admission, negating
the need to seek finance from sources such as private equity.

The Company was awarded the Queen's Award for Export Growth in 2018. The
Company also featured in The Sunday Times' SME Exporter 100 List in 2018,
coming in fifth place.

Business model

EnSilica operates under the Fabless Semiconductor Model and, as well as design
and consultancy services for ICs, provides an end-to-end service for
development, production and supply of ICs from initial scoping and design
through to the delivery of product.

Under the Fabless Semiconductor Model, fabrication of ICs is outsourced to
specialised semiconductor wafer foundries, following which the processed
wafers are sent for dicing, testing and packaging by other third parties,
keeping capital requirements for manufacturing low. EnSilica has a wide
network of suppliers as well as a strong reputation in the market which
provides EnSilica with security of supply.

The move from consultancy to focusing on ASIC design and supply embeds
EnSilica further within the electronics value chain. ASIC customers pay an
upfront fee towards the costs of design, tooling and test development of the
ASIC, otherwise known as non-recurring engineering costs ("NRE"). Customers
subsequently purchase the ASICs that EnSilica supplies or, in some cases, pay
royalties to EnSilica for the ASICs that a third party will manufacture on the
customer's behalf.

EnSilica often co-invests in the development of the ASICs with the customer
and depending on the sector, it takes 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 circa 35 to 60 per cent. range. The gross
margin will depend on the market and the level of co-founding funding of the
NRE required. Part of EnSilica's expertise therefore is in the assessment of
whether to proceed and invest in a particular IC project resulting in
long-term component supply or royalty revenue for the Company.

EnSilica's reputation within the semiconductor industry has been reinforced
through its strong network of partners. EnSilica works with a range of
partners to build and maintain an end-to-end best in class supply chain.
Partners include, but are not limited to, foundries (TSMC and Global
Foundries), assembly and testing organisations (AES Technology Holding), IP
vendors (Alphawave, ARM and Rambus) and EDA vendors (Cadence).

 

EnSilica is an Arm® Approved Design Partner. The Arm Approved Design Partner
programme is a global network of design service companies endorsed by Arm. To
secure Arm endorsement, EnSilica demonstrated a track record of success using
Arm IP and successfully completed an audit by Arm.

Strategy

Historically, the majority of EnSilica's revenue was generated from its
consultancy engagements. However, following a shift away from consultancy
engagements to the design and supply model using the Fabless Semiconductor
Model, EnSilica's revenue stream has started to diversify. EnSilica also
benefits from R&D tax credits.

EnSilica intends to leverage the success of the scalability of the design and
supply model and generate the majority of its revenue from full-service design
and supply arrangements rather than its traditional consultancy arrangements.
Although EnSilica has been developing ASICs for many years, it was only
recently in 2020 that first production ASICs, under the Fabless Semiconductor
Model, were shipped. EnSilica intends for ASIC production volumes to increase
significantly over the next three years under the Fabless Semiconductor Model.

EnSilica's long term vision is to be the leading European supplier of choice
for mixed signal ASICs for automotive, industrial, healthcare and satellite
connectivity applications. The Board expects that growth will be fuelled by
the global drive for greener, safer, smarter, connected vehicles and
industrial mixed signal devices. This is expected to be achieved initially
through ASICs but eventually lead to market driven catalogue parts.
Furthermore, the Lower earth orbit satellite broadband market is being
targeted by EnSilica to drive further growth and value in the business through
the supply of mmWave chips. Accordingly, while EnSilica has received various
RFQs/RFIs for ASICs from major global organisations, EnSilica intends to
capitalise on the growth in their key market segments by providing a full
turnkey mixed signal ASIC design, manufacture and supply offering.

In line with the broader industry, where major semiconductor manufacturers
have seen growth through consolidation and vertical integration, EnSilica will
seek to expand its offering in a similar fashion where appropriate

Directors

Mark Hodgkins, Executive Chairman

Mark is a qualified Chartered Accountant and a former partner with Grant
Thornton and Ernst & Young. Since leaving Ernst & Young in 2005, he
has served as CEO of several engineering businesses and a private industrial
holding company. Mark is currently CFO of AIM-listed Trackwise Design PLC an
innovative PCB manufacturing company. Mark previously announced that he will
be stepping down from his role as CFO of Trackwise Design PLC in June 2022.
Mark started working with EnSilica in May 2016.

Ian Lankshear, Chief Executive Officer

Ian co-founded EnSilica in 2001. Under his stewardship, the Company has
enjoyed sustained growth based on market leading opportunities, innovation and
export success. Ian has a strong technical and commercial background covering
semiconductors and adjacent markets. Ian's early career was in Radar systems
development for Siemens Plessey Systems. He moved into semiconductor
development in 1996, working for Hitachi and then for Nokia. Ian holds a
First-Class Honours degree in Electrical & Electronics Engineering.

Matthew Wethey, Chief Financial Officer

Matthew is a qualified Chartered Accountant. He has held senior finance roles
at Unipart Group, British American Tobacco PLC, Cosine UK Limited and PV
Crystalox Solar PLC (PVCS). Between 2009 and 2020, Matthew was Chief Financial
Officer and Group Secretary at PVCS, a long-established supplier of
photovoltaic silicon wafers, listed on the main market of the London Stock
Exchange. Matthew started working for EnSilica in July 2021.

David Tilston, Non-Executive Director

David is a Fellow of both the Institute of Chartered Accountants in England
and Wales and the Association of Corporate Treasurers. He has over 30 years'
experience in finance functions within public companies, including at Group
CFO level. His most recent executive positions were as Interim Group CFO of
Northgate plc and before that Interim Group CFO at Consort Medical plc. He is
currently Audit Committee Chairman at AIM listed SDI Group plc and is a member
of the Remuneration and Nomination Committees. David was formerly
non-executive director and Chairman of the Audit Committee and member of the
Remuneration Committee at Sepura plc between 2007 to 2013, having joined the
Board prior to its IPO. He is also Trustee and Treasurer at British Exploring
Society, a youth development charity.

Janet Collyer, Non-Executive Director

Janet is an experienced senior international group director with a proven
strategic and ecosystems management track record in the key commercial and
technology aspects of the semiconductor systems industry. As an engineer by
trade, with a MA in Engineering from the University of Cambridge, Janet spent
30 years working at NASDAQ-listed, Cadence Design Systems - eventually
securing senior account positions and C-Suite level exposure. Janet is
currently a non-executive director at the Aerospace Technology Institute and
the Chair at Machine Discovery Ltd.

Wasim 'Woz' Ahmed, Non-Executive Director

Woz is a seasoned senior executive with an established track record in the
semiconductor industry, spanning strategy, M&A, marketing and business
development. With a BEng (Hons) in Electronics from Kingston University and a
Henley MBA, Woz spent 15 years at Imagination Technologies, latterly as Chief
Strategy Officer and Chief of Staff. He previously held management roles at
Arc and Hitachi. Woz is currently working as a C-level consultant.

Noel Hurley, Non-Executive Director

Noel is a senior executive in the semiconductor business. He has held various
commercial and managerial roles at ARM Ltd including Vice President
responsible for Product Marketing, General Manager of the CPU group as well as
forming and leading ARM's Business segments and Strategy and Incubation
groups. He was a co-founder of XMOS Semiconductors and the COO of healthcare
company Toumaz. Noel also sits on the board of Bodle Technologies as Chair.
Noel holds a BSc in Electrical and Electronic Engineering.

 

This information is provided by Reach, the non-regulatory press release distribution service of RNS, part of the London Stock Exchange. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

Reach is a non-regulatory news service. By using this service an issuer is confirming that the information contained within this announcement is of a non-regulatory nature. Reach announcements are identified with an orange label and the word “Reach” in the source column of the News Explorer pages of London Stock Exchange’s website so that they are distinguished from the RNS UK regulatory service. Other vendors subscribing for Reach press releases may use a different method to distinguish Reach announcements from UK regulatory news.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  NRAALMLTMTBBMTT