REG - Ilika plc - Final Results
11/07/2024 07:00
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RNS Number : 9441V Ilika plc 11 July 2024
ILIKA plc
("Ilika", the "Company", or the "Group")
Full Year Results
Ilika (AIM: IKA), an independent global expert solid-state battery technology,
announces its results for the year ended 30 April 2024 (the "Period").
During the Period, Ilika continued to develop and commercialise its thin-film
Stereax® miniature solid state batteries ("SSBs") for powering implantable
medical devices and industrial wireless sensors in specialist environments,
and significantly progressed the transfer of manufacturing to US-headquartered
Cirtec Medical LLC ("Cirtec"). During the financial year, Ilika also achieved
significant milestones in the development roadmap of its large-format Goliath
cells for electric vehicles ("EV") and cordless appliances.
Operational highlights:
Stereax
· First customer shipments of M300 batteries from UK pilot
manufacturing facility.
· Entered ten-year licensing agreement and technology transfer with
Cirtec.
· Despatched key equipment and substantially completed installation in
the Cirtec facility to enable manufacture of the Stereax cells.
· Continued collaboration with Cirtec to support the development plans
and launch schedules of 21 Stereax customers.
Goliath
· Reached significant development milestones
o Achieved D4 design freeze and Li-ion energy density parity, making strong
progress on the technology roadmap and meeting development milestones on time.
· Strong scale-up progress
o Faraday Battery Challenge: 24-month, £8.2m grant-funded HISTORY project,
with input from BMW and Fortescue WAE.
o Automotive Transformation Fund 16-month, £2.7m grant-supported SiSTEM
project, collaborating with Mpac plc and UK Battery Industrialisation Centre
("UKBIC").
o Welcomed Agratas (Tata Group's global battery business) as a full partner
to the SiSTEM project.
· Production-intent equipment trialled at vendor sites and installed at
pilot facility to provide larger volumes of evaluation cells to customers.
· Bi-lateral 12-month technology collaboration agreement with Agratas,
and agreement outlining potential longer-term collaboration through to
gigafactory implementation.
· Continued interaction with automotive and consumer OEMs globally -
pipeline of evaluation agreements with 17 companies
· Portfolio of 62 granted patents, with 10 new grants in the reporting
period; four additional international filings submitted.
Financial highlights:
· Turnover £2.1m (2023: £0.7m) with other income of £0.5m (2023:
£0.1m) giving a Total Income of £2.6m (2023: £0.8m)
· EBITDA Loss adjusted for share-based payments for the year £4.1m
(2023: £7m)
· Loss per share 3.03p (2023: 4.61p)
· Cash, cash equivalents and longer term bank deposits of £11.9m
(2023: £15.9m)
Post-period end highlights:
· Commenced testing of initial batch of P1 Goliath prototype batteries
in a customer-sponsored programme following the successful completion of
production and in-house testing.
· Successful £2.3 million (gross) fundraising to support the Goliath
roadmap and Stereax commercialisation.
· Completed the delivery of its first batch of P1 Goliath batteries for
customer testing by a tier 1 automotive company.
Outlook:
· Cirtec contract represents most immediate commercialisation
opportunity, allowing fulfilment of order book and creation of further
commercial opportunities.
· Stereax to focus, post US installation, on commissioning activities
and engineering lots to fully qualify the process in readiness for production
of commercial samples, expected in late CY2024.
· Plans to increase commercial collaboration alongside Cirtec in the
year ahead.
· Clear Goliath roadmap: aim to reach the D8 development milestone by
the end of the HISTORY programme grant in Q1 2025, underpinning licencing
opportunities.
· Pre-pilot production facility targets capacity increase to 1.5 MWh/a.
· Commercial interest and government grant support expected to
intensify as the Goliath product continues to mature.
Commenting on the results Ilika's Chief Executive Officer, Graeme Purdy, said,
"We are proud of the further success we have made whilst developing our solid
state battery technology. Both of our product lines, Stereax and Goliath, have
seen significant operational progress as we continue to work towards
commercialisation.
"Our contract with Cirtec is an enormous achievement and represents a
significant opportunity to scale Stereax at pace through a partner that boasts
a strong track record in the commercialisation of miniature medical devices.
We are confident that the partnership positions Ilika well to deliver high
quality, reliable and scalable supplies of Stereax batteries to our customers.
"Meanwhile, the global prospects for EVs, and Goliath, remain promising.
Following the team's achievements we expect to be in the position to
manufacture and deliver fully characterised P1 test pouch cells to customers
in H2 2024. Based on our D4 design freeze, these cells have the potential to
offer significant benefits not attainable with current EV battery technology.
The Board expects both commercial interest and government grant support to
intensify as the Goliath product continues to mature. Discussions with
commercial and grant partners are in progress and the development programmes
are being aligned to the timelines planned for market roll-out by the OEMs
involved. Current estimates are that the UK EV battery market will be worth
ca. £9bn by 2030 and Ilika is positioning its technology to be ready for that
opportunity."
Analyst Briefing
The management team will be hosting a hybrid analyst briefing today at 9.30am.
Analysts who wish to attend should contact Nick Rome at Walbrook PR on
+44(0)20 7933 8780 or email ilika@walbrookpr.com
(mailto:ilika@walbrookpr.com) to register.
Investor Presentation
An investor presentation will be held this afternoon at 4.30pm and will be
hosted through the digital platform, Investor Meet Company. Investors can
sign up to Investor Meet Company for free and add to meet Ilika plc via the
following
link: https://www.investormeetcompany.com/ilika-plc/register-investor
(https://urldefense.proofpoint.com/v2/url?u=https-3A__www.investormeetcompany.com_ilika-2Dplc_register-2Dinvestor&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=1OI9eWQUVfVpxZXWzxX2tPcSAmxw5YMa3-DImHWnbkA&m=22nIVAzynQ78VnYQ8pNvYLoiaC3r3JGnA0Gjs0X1HfI&s=GFcaJdt_WBmGcV6u2cZxJzgNoqqkh-ky8V45ELknGH8&e=)
or for more information please contact Walbrook PR at ilika@walbrookpr.com
(mailto:ilika@walbrookpr.com) .
For more information contact:
Ilika plc www.ilika.com (http://www.ilika.com/)
Graeme Purdy, Chief Executive Via Walbrook PR
Jason Stewart, Chief Financial Officer
Panmure Liberum Limited (Nomad and Joint Broker) Tel: 020 3100 2000
Andrew Godber, John More,
Nikhil Varghese, Josh Borlant
Joh. Berenberg, Gossler & Co. KG (Joint Broker) Tel: 020 3207 8700
Mark Whitmore, Detlir Elezi,
Natasha Ninkov
Walbrook PR Ltd Tel: 020 7933 8780 / Ilika@walbrookpr.com
Nick Rome, Charlotte Edgar, Joe Walker
About Ilika plc - https://www.ilika.com (https://www.ilika.com) .
Ilika specialises in the developing and commercialisation of solid state
batteries. The Company's mission is to rapidly develop leading-edge
IP, manufacture and license solid state batteries for markets that cannot be
addressed with conventional batteries due to their safety, charge rates,
energy density and life limits. The Company achieves this by using
ceramic-based lithium-ion technology that is inherently safe in manufacture
and usage, higher thermal tolerance and easier to recycle which
differentiates our products from existing batteries.
The Company has two product lines. Its Stereax batteries which are designed
for powering miniature medical implants, industrial wireless sensors and
specialist internet of Things (IoT) applications and the Goliath large format
batteries designed for EV cars and cordless appliances.
ILIKA plc
STRATEGIC REPORT
Chairman, Prof. Keith Jackson's statement
This financial year was one of significant operational progress for Ilika as
it continues to develop its solid state battery technology. The Board remains
excited by the opportunity ahead and is confident in the Company's
commercialisation strategy and future potential.
Goliath batteries meeting the Li-ion energy density cannot be understated.
Firstly, the achievement opens the expectation of batteries which can be
developed to outperform conventional batteries for energy density, with the
inherent additional benefits of a wider range of operating temperatures and a
stable chemistry allowing simplification of battery packages. For customers
this creates opportunities for smaller, lighter and higher performance
solutions for vehicle and device applications. Secondly, the intricacies of
solid state battery should not be underestimated. This allows us to build a
wide portfolio of intellectual property including patents, trade secrets and
know how, which protects our business and our investors' commitments. Those
same intricacies make the development and timing of the technology complex.
The team is constantly working on not just its technical understanding but
also on the most effective development and planning processes to deliver
technical advances.
The D4 batteries arrived and met expectations in a timely manner. Our team's
ability and commitment, and their effort and success in creating improved
development processes and controls continue to be excellent. Development of
these batteries is also very much a wider aligned effort and the importance
and value of grant funding from the Faraday Battery Challenge and the
Automotive Transformation Fund is clear. The contribution from our suppliers
and collaboration partners like MPAC and UK BIC and project steering from BMW,
Fortescue WAE and Agratas joining as partner on SiSTEM and the potential
collaboration on a gigafactory ensure our efforts are well aligned with market
requirements.
Regarding Stereax, the Cirtec license agreement shortens and clarifies the
route to market for medical devices. Device companies want a platform with an
integrated battery and Cirtec can do this using our batteries, providing
platforms to end users. These integrated platforms allow for an optimised and
physically minimised solution, essential for medical applications, and fully
exploiting our USPs. While the technology transfer of our equipment to Cirtec
(excluding cathode production) is time consuming and complex given we have
developed so much know-how and IP around the equipment and process, we remain
confident this approach will create the best product opportunities and license
returns for the Company and our shareholders. As always, and as I have come to
expect, the Ilika team has worked tirelessly on the technology and subsequent
equipment transfer, and to train the relevant personnel at Cirtec. The focus
is now on completion of the transfer, producing the platforms and validating
the customer expectations.
Outlook
Ilika's signed contract with Cirtec represents the most immediate
commercialisation opportunity, which will enable fulfilment of the order book
and create further opportunities for commercial engagement. The installation
of Ilika's Stereax manufacturing equipment in Cirtec's US facility is nearing
completion, at which point the focus will shift to the finalisation of
commissioning activities and running engineering lots to fully qualify the
Stereax manufacturing process in readiness for commencement of commercial
sample production for its customers, which is estimated to begin towards the
end of CY2024.
The Company has demonstrated strong progress as a result of its strategy and
has a clear development roadmap for its Goliath cells. MVP aims to reach the
D8 development milestone by the end of the HISTORY programme grant in Q1
CY2025, which will underpin future licencing opportunities.
The Board expects both commercial interest and government grant support to
intensify as the Goliath product continues to mature.
In parallel, Ilika plans to increase the capacity of the Company's existing
pre-pilot production facility using automation and larger scale items of
equipment. It is anticipated that it will reach an installed capacity of 1.5
MWh/a, which will allow Ilika to scale production volumes and mature its
technology to the level required to respond to automotive requests for
quotation ("RFQs") by the end of calendar year 2025.
Jeremy Millard
Director
Principal Activities
Ilika has continued to develop and commercialise its cutting-edge solid state
batteries. The Company's mission is to rapidly develop leading-edge IP, and
manufacture and license solid state batteries for markets that cannot be
addressed with conventional batteries due to their safety, charge rates,
energy density and life limits. It will achieve this using ceramic-based
lithium-ion technology that is inherently safe in manufacture and usage, has
higher thermal tolerance and is easier to recycle, which differentiates
Ilika's products from existing batteries.
Business Strategy
The Group's revenue model involves three phases:
a) Commercially funded and grant-funded development of small quantities of
batteries for customer evaluation on Company-operated pilot lines;
b) Scale-up to mid-scale manufacturing facilities to demonstrate product and
process robustness, while also supporting initial commercialisation; and
c) Commercial collaborations, including licensing the technology, for large
volume production.
Ilika has scaled-up its Stereax technology to a mid-scale manufacturing
facility and initial deliveries of batteries were made in H1 CY 2023.
Ilika has entered into a 10-year agreement for Cirtec Medical LLC to
manufacture Stereax under license. Ilika's Goliath programme is currently in
the first commercial phase, where product development is being supported by
grant-funded programmes and commercial collaborations.
To support Ilika's commitment to ESG, it maintains an ESG Committee with
Board-level leadership. Taking a risk-managed approach, all aspects of the
business incorporate environmental sustainability, social responsibility and
appropriate corporate governance. ESG performance is reported at all levels
within the organisation and monitored at Board level.
Introduction to Solid state Batteries
Ilika has been working with solid state battery technology since 2008 and has
developed a type of lithium-ion battery, which, instead of using liquid or
polymer electrolyte, uses a ceramic ion conductor. Ilika's solid state
batteries have a number of benefits over traditional lithium-ion batteries,
including the following:
· Non-flammable, which eliminates the need for containment packaging;
· Faster charging;
· Increased energy density, reducing their size to up to half the
volume and weight for a given electrical charge;
· Longer storage without loss of charge.
Ilika has developed two product lines:
1) Miniature solid state devices designed for powering wireless sensor
applications (Industrial IOT) and medical devices (Stereax);
2) Large format cells for consumer appliances and automotive power
(Goliath).
Miniature Stereax batteries
Ilika's miniature Stereax cells are differentiated from other solid state
technology through their selection of materials and an efficient, low
temperature evaporation process that is capable of higher manufacturing rates
than other existing solid state routes. This results in the following benefits
relative to previous solid state battery designs:
· Lower cost of manufacture by avoiding use of expensive sputtering
targets;
· Long cycle life through use of a silicon anode;
· Less encapsulation required;
· High temperature resilience.
The unique benefits of Stereax batteries have been optimised for medical
implants and industrial applications. Miniature Stereax batteries can enable
medical devices in a way that is currently not possible with conventional
lithium-ion batteries. Their compact, high-energy density and high-power
characteristics make them useful for a range of medical implant applications
covering blood pressure monitoring to neuro-stimulation.
Stereax Manufacturing Scale-up and Commercialisation
Following substantial completion of Stereax process qualification in CY2022,
Ilika demonstrated it was able to run the complete manufacturing process from
beginning to end and an understanding was gained of process stability and
reproducibility. Product qualification was initiated, and initial samples were
issued to customers.
In August 2023, Ilika announced a 10-year agreement with Cirtec, an
industry-leading strategic outsourcing partner of complex medical devices
including minimally invasive and active implantable devices, to transfer,
under license, Stereax mm-scale battery manufacturing to Cirtec's facility
in Lowell, Massachusetts, US.
Contract headlines include:
· Exclusivity for Cirtec in the field of medical devices designed to
drive full utilisation of Cirtec's installed capacity.
· Profit sharing during the initial period followed by royalty-bearing
manufacturing aligned with industry norms, calculated on individual battery
volumes.
· Retention of the cathode deposition process and back-end battery
formation at Ilika's UK pilot facility as a sub-contract service to Cirtec.
· Transfer of machine sets to the US for Cirtec to operate on loan, to
enable a quicker technology transfer and qualification process.
Ilika is focusing on advanced technology development and IP licensing to
support Cirtec's manufacturing and commercialisation activities. This
partnership will reinforce Cirtec's ongoing activities in system level
miniaturisation for the medical device industry.
Benefits of this partnership to Ilika include:
· Further validation of Stereax's capabilities
· Manufacturing partnership delivering economy of scale and ability to
rapidly ramp production.
· Expanded business development team bringing additional commercial
momentum.
Once the agreement was signed, Ilika shipped its Stereax manufacturing
equipment to Cirtec to enable rapid commencement of operations. The equipment
has now been safely received by Cirtec and installation is substantially
complete. Cirtec is now finalising commissioning of the equipment and shortly
intends to start production of engineering lots. Once the process is
established at the Cirtec facility, batches of products will be produced for
highly accelerated life testing ("HALT") and reliability testing. HALT is
designed to understand the failure modes of the product in case opportunities
can be identified to increase product robustness. Reliability testing involves
creating statistically relevant data sets to underpin the product
specification sheets. Production of costumer samples is expected to commence
by the end of CY2024.
Ilika continues to work with Cirtec to support a portfolio of 21 current
Stereax customers. Demand from applications such as smart orthopedics,
orthodontics, neurostimulation and smart contact lenses has created
opportunities in the medical device sector, which is the sector generating the
strongest demand and accordingly the Company is increasing its commercial
collaboration alongside Cirtec in the year ahead. Commercial ramp up in this
space usually takes three to five years, depending on the regulatory
classification of the device. As demand for Stereax increases over the coming
years, Cirtec intends to expand Stereax production capacity.
Large Format Goliath Batteries
Ilika's Goliath batteries are differentiated from other solid state prototype
cells through the Company's choice of materials, cell architecture and
manufacturing process. The key materials choices to be made by SSB developers
relate to the selection of cathode, electrolyte and anodes. Different
developers have selected distinct combinations of these materials to achieve
an outcome suitable for their target markets. Ilika has chosen materials that
have the potential to enable longer range vehicles with battery packs that
last longer and can be recycled more easily.
Ilika's initial target market for Goliath in automotive is the luxury
performance market, which is less cost-sensitive than higher volume segments
and is willing to pay a premium for the enhanced vehicle range. To address
this market, Ilika is driving forward its Goliath development programme. In
November 2023, Ilika reached a point of maturity it refers to as its D4
development point, which is a design-freeze milestone in the Goliath roadmap
upon which Ilika's first prototype for customer release, P1, is based. The P1
prototype is an intermediate milestone on Ilika's roadmap to its minimum
viable product ("MVP") in 2025. The P1 Goliath prototype is a solid state
pouch cell made from readily available materials including a
lithium-nickel-manganese-cobalt oxide ("NMC") cathode and a silicon anode.
Reaching the D4 development point is an important milestone for the Company,
effectively marking the start of Goliath's productisation journey; it means
that a number of key data sets, including energy density and power density,
have been met while showing that the Company is on track to achieve further
improvements. Given the data sets that are now achievable, the Company is able
to create P1 samples, which comprise multilayer stacks, for sale to OEMs for
testing.
Over the first six months of CY 2024, Ilika has manufactured and tested
batches of pouch cells based on the D4 development point prior to delivering
fully characterised P1 cells to customers in H2 2024.
In parallel, Ilika has continued to progress its roadmap, and in December 2023
it was able to announce it had reached its 2023 stated intermediate technology
development target of parity with lithium-ion energy density.
Ilika is currently in discussions with its customer base for Goliath
batteries, which is primarily automotive OEMs, but also includes Tier 1
automotive suppliers and consumer appliance companies.
Work is continuing on Ilika's roadmap through to MVP, for which the
corresponding D8 development point will be achieved by the end of the HISTORY
project in Q1 2025. The MVP, or P2 prototypes, will be cells meeting
customer-agreed specifications for EVs, underpinning licensing opportunities.
Ilika is currently implementing a plan to increase the capacity of its
existing pre-pilot production facility using automation and larger scale items
of equipment, such as a roll-to-roll coater, to provide larger volumes of
evaluation cells to customers. Ilika is targeting an installed capacity of 1.5
MWh/a to allow it to scale production volumes and mature its technology to the
level required to respond to automotive requests for quotation (RFQ) by the
end of 2025. Ilika's experience working with automotive partners has shown
that the industry expects suppliers to have reached what it defines as
A-Sample readiness to respond to RFQs. Beyond 1.5 MWh/a, at B- and C-Sample
readiness and volumes, Ilika intends to work with manufacturing partners such
as UKBIC to scale to higher levels of production capacity on production-intent
equipment i.e., equipment that could be used for mass production.
Goliath Funding
Ilika has financed its Goliath technology development programme with equity
funding supplemented by grant funding from the Faraday Battery Challenge
("FBC") and the Advanced Propulsion Centre ("APC"). In the first half of the
current financial year, Ilika's development efforts have been supported
specifically by the continuation of the FBC 24-month, £8.2m grant-funded
HISTORY project, steered with input from BMW and Fortescue WAE, to integrate
high silicon content electrodes into Goliath. In parallel, Ilika has been
trialing production-intent equipment at vendor sites and its pilot facility in
the UK. Since October 2023, this scale-up work has been supported by the
Automotive Transformation Fund 16-month, £2.7m grant-supported SiSTEM
project, in which Ilika is collaborating with Mpac plc and UKBIC. Tata Sons
subsidiary Agratas joined the SiSTEM project in April 2024. Ilika and Agratas
also announced that they had entered into a bi-lateral technology
collaboration agreement and a Heads of Terms covering a potential longer-term
collaboration through to gigafactory implementation.
Furthermore, Ilika continues to interact with a portfolio of 17 automotive and
consumer appliance OEMs globally, with a view to intensifying interactions
through both grant-supported and commercially funded collaborations as the
Goliath technology matures.
Geo-political Tensions and Conflicts
Conflicts in Ukraine and the Middle East have created inflationary pressures
across the supply chain, but there is no specific consumable or product from
conflict regions upon which Ilika is particularly reliant. The impact on
global energy pricing and specifically the UK energy market did have the
potential to impact the Stereax pilot facility, which the Board mitigated
through early interaction with Cirtec and the outsourcing activity.
Patent Position
Building Ilika's intellectual property portfolio in solid state batteries has
continued to be a focus this year. Ilika believes its patents ring-fence and
protect critical IP to avoid competitors working around a single patent. Ilika
now maintains a portfolio of 62 granted patents, and holds trade secrets in
solid state batteries.
Quality Management System
Ilika has maintained its certification for ISO 9001:2015, which is the
world's most widely recognized QMS and helps organisations to meet the
expectations and needs of their customers. The certification promotes the
development of continual improvement, customer satisfaction, traceability and
international best practices.
Environmental Management System
The Company has also maintained its ISO 14001:2015 certification, which is
part of a family of standards developed by the International Organisation for
Standardisation. It specifies the requirements for an environmental management
system that an organisation can use to enhance its environmental performance.
The certification confirms that environmental impact is being continuously
monitored and improved.
Environmental, Social & Governance ("ESG")
The Board takes a proactive approach to ESG matters looking to adopt the best
practice and recommendations from the Quoted Companies Alliance ("QCA")
Corporate Governance Code. The Group is committed to achieving a real and
sustainable positive impact on the broader community by adopting
environmentally responsible policies so it can demonstrate a responsible and
balanced approach to corporate governance.
Key performance indicators ("KPIs")
The Board monitors the Group's progress against a set of KPIs. Technical KPIs
benchmark battery development milestones and patent applications. Commercial
KPIs link the technical development programmes to the sales pipeline and
engagement of commercialisation partners. Operational KPIs ensure that
overheads and cash resources are tightly controlled.
The most important financial KPIs are the cash position, turnover and
profitability of the Group, which remain under constant focus and are
considered in the financial review.
Section 172 Statement
Section 172 of the Companies Act 2006 requires Directors to take into
consideration the interests of stakeholders and other matters in their
decision making. The Directors continue to have regard to the interests of the
Group's employees and other stakeholders, the impact of its activities on the
community, the environment and the Group's reputation for good business
conduct, when making decisions. In this context, acting in good faith and
fairly, the Directors consider what is most likely to promote the success of
the Group for its members in the long term. The Board regularly reviews the
Group's principal stakeholders and how it engages with them. This is achieved
through information provided by management and also by direct engagement with
stakeholders themselves.
Why engagement is important Engagement process Strategic decisions in the year
Investors
To communicate and secure support for our long-term strategic objectives AGM, analyst presentations, institutional investor presentations. Use of Decision to hold a Capital Markets Day for investors, prospects and analysts.
effectively and to promote long-term holdings. Investor Meet Company and Directors' Talk platforms to extend reach to retail
investors.
Trading on OTCQX best market to extend coverage to US retail investors. Successful equity placing to support continued collaboration with Cirtec and
to support the grant-assisted development of Goliath through to partner
commercial prototypes (A-Samples).
Employees
To deliver our long-term strategic objectives. To promote our culture, purpose Transparent cascading Key Performance Indicators that link directly to the Issue of EMI stock options.
and values and support their well-being whilst maintaining low turnover and company objectives.
high productivity rates
Twice yearly performance evaluations with objective setting and reviews.
Performance related pay review.
Formal policies and procedures.
Quarterly, all-company, update meetings.
Implementation of private medical insurance.
Community and environment
To ensure activities are socially and environmentally responsible and meet the Promotion of the employee-led "Green Champions", a cross-company working group Maintained ISO accreditations (9001 and 14001). Continued use of electricity
highest standards. to ensure green initiatives are raised and followed through. solely from renewable sources.
Maintained an electric vehicle salary sacrifice scheme.
Undertook carbon offset program to minimise carbon footprint.
Business relationships Engagement process Strategic decisions in the year
To enable balanced decisions which incorporate viewpoints of customers, Attendance at conferences and customer and supplier meetings. 10-year agreement with Cirtec Medical for Stereax manufacturing.
suppliers and regulators and ensure Company's integrity, brand and reputation
are upheld.
Grant-supported SiSTEM collaboration with Mpac, UKBIC and Agratas.
Bi-lateral 12-month technology collaboration agreement with Agratas and Heads
of Terms for potential longer-term collaboration through to gigafactory
implementation.
FINANCIAL REVIEW
The Financial Review should be read in conjunction with the consolidated
financial statements of the Company and Ilika Technologies Limited (together
the 'Group') and the notes thereto on pages 38 to 60. The consolidated
financial statements are presented under international accounting standards in
conformity with the requirements of the Companies Act 2006. The financial
statements of the Company continue to be prepared in accordance with
International Financial Reporting Standards in conformity with the
requirements of the Companies Act 2006 and are set out on pages 61 to 65.
Statement of Comprehensive Income
Turnover
Turnover, all from continuing activities, for the year ended 30(th) April 2024
was £2.1m (2023: £0.7m). This includes £2.1m of grant income recognised
from two projects that the company has in progress with Innovate UK (2023:
£0.7m from four programmes). Non-grant turnover in the year was £0.0m (2023:
£0.0m).
Other Operating Income
The Company has benefitted from Research & Development Expenditure Credit
(RDEC) of £0.5m (2023: £0.1m).
Administrative expenses and losses for the period
Administrative costs for the year reduced from £8.9m in 2023 to £7.4m in
2024. While direct R&D expenditure has reduced to £3.5m (2023: £4.1m).
The implementation of the Stereax Licencing agreement and the reduction in
costs associated with enacting the technology transfer elements of the
contract have enabled a reduction in the operational costs of the Stereax
activity contributing to the reduction in overall expenditure. Staff costs
reduced from £5.2m in 2023 to £4.8m in 2024 reflecting the Stereax licencing
and associated adjustment in staffing levels to support the ongoing needs of
both Stereax and Goliath R&D activities.
Average staff numbers during the year reduced from 72 to 68 which reflects a
reduction in the staff required to support ongoing R&D activities for
Stereax following the Cirtec licencing agreement offset by growth in the
Goliath team as we scale this product line towards commercialisation.
Development costs £0.8m of were capitalised in the year compared to £1m in
2023.The share-based payment charge reduced from £442k in 2023 to £383k in
2024, reflecting the timing of options being issued and the departure of a
number of long standing employees.
The underlying level of loss that is measured by Earnings Before Interest,
Tax, Depreciation and Amortisation and Share-based payments (adjusted EBITDA)
shows a reduction in loss from £7m in 2023 to a loss of £4.1m in 2024.
Statement of financial position and cash flows
At 30(th) April 2024, current assets amounted to £14.8m (2023: £19.1m),
including cash, cash equivalents and bank deposits of £11.9m (2023: £15.9m).
The principal elements of the £4.4m decrease in net assets were:
· Operating cash outflow of £4.1m (2023: £7m);
· Capital expenditure on intangible development costs, plant, property
and equipment of £1.7m (2023: £1.4m) which mostly relates to the
capitalisation of Stereax R&D expenditure;
· Increased recovery of R&D tax claims of £1.7m (2023: £1.4m);
PRINCIPAL RISKS AND UNCERTAINTIES
Commercial risk
The Group is subject to competition from competitors who may develop more
advanced and less expensive alternative technology platforms, both for
existing products and for those products currently under development.
The Group seeks to reduce this risk by continually assessing competitive
technologies and competitors. The Group seeks to commercialise its batteries
through multiple channels to reduce overreliance on individual partners and,
in agreements with partners, it ensures that there are commercialisation
milestones which must be met for the partner to retain the rights to
commercialise the intellectual property.
Financial risk
The Group is reliant on a small number of significant customers, partners and
grant funding bodies. Termination of these agreements or grant polices could
have a material adverse effect on the Group's results or operations or
financial condition. The Group expects to incur further operating losses as
progress on development programmes continue.
The Group seeks to reduce this risk by broadening the number of customers and
partners and thereby reduce reliance on individual significant companies and
by leveraging its IP and resources over multiple projects. The Group applies
for Research and Development tax credits to help mitigate its investment in
these activities.
Intellectual property risk
The Group faces the risk that intellectual property rights necessary to
exploit research and development efforts may not be adequately secured or
defended. The Group's intellectual property may also become obsolete before
the products and services can be fully commercialised.
The Group reduces this risk by contracting specialist patent agents and
attorneys with extensive global experience of patenting and licensing.
Dependence on senior management and key staff
Certain members of staff are considered vital to the successful development of
the business. Failure to continue to attract and retain such highly skilled
individuals could adversely affect operational results.
The Group seeks to reduce this risk by offering appropriate incentives to
staff through competitive salary packages and participation in long-term share
option schemes and a good working environment.
Conflict risk
The ongoing conflicts in Ukraine and the Middle East have created inflationary
pressures across the supply chain, but there is no specific consumable or
product from the regions upon which Ilika is particularly reliant. Current
inflation forecasts have been factored into the forward-looking financial
forecasts.
Environmental, Social and Governance Risks
The Group has developed products which rely on materials and supply chains
which may be impacted by changes in environmental social and governance
factors. Changing regulatory requirements may bring additional cost to the
development and implementation of our products.
The Group seeks to minimise risks by following a proactive approach to all ESG
items, ensuring that we source from appropriate supply chain partners who
match our own ethos and values. The Group engages industry experts to advise
and support our ongoing development and to remain informed on all current and
potential future legislation and governance matters in this sector which may
affect the Group. The global drive for decarbonization and environmentally
supportive technologies may impact the legislative and governance of the Group
however it also represents an opportunity in the legislative driven change and
adoption of EV's providing a growing market for our Goliath product.
By order of the Board
Jeremy Millard Graeme Purdy
Director CEO
10(th) July 2024
ILIKA plc
DIRECTORS' REPORT
Directors
The Directors who served on the board of Ilika during the year and to the date
of this report were as follows:
Executive
Mr G Purdy (CEO)
Mr J Stewart (CFO)
Non-Executive
Prof. K Jackson (Chairman)
Mr. J Millard (Senior Independent Director)
Dr. M. Biddulph
Mrs M Petitt is current Company Secretary.
Research and development costs
In accordance with the policy outlined in note 1, the Group incurred research
and development expenditure of £3,506,193 in the year (2023: £4,131,407). In
addition, amounts totalling £819,254 (2023: £1,027,512) were capitalised in
the year. Commentary on the major activities is given in the Strategic Report.
Financial instruments
The use of financial instruments and financial risk management policies is
covered in the Strategic Report and also in note 15 of the financial
statements.
Future developments
Information on the future developments of the business are included in the
Strategic Report on page 4.
Directors indemnities
The Company has made no qualifying third part indemnity provisions during the
year and no further provisions have been made at the date of this report.
Political Donations
The Company has made no political donations during the period.
Dividends
The Directors do not recommend the payment of a dividend.
Directors' interests in ordinary shares
The directors, who held office at 30(th) April 2024, had the following
interests in the ordinary shares of the Company:
Number of shares
30th April 2023 30th April 2024
G Purdy 782,927 782,927
K Jackson 102,142 102,142
M Biddulph 16,071 16,071
J Millard - -
J Stewart - -
During the year, no Directors exercised options nor sold shares.
Substantial shareholdings
On 20 June 2024 the Company had been notified of the following holdings of
3% or more of the issued share capital of the Company.
Shareholder No. of ordinary shares % shareholding
GPIM 20,440,658 12.22
Charles Schwab, New York (ND) 14,647,156 8.75
Schroder Investment Management 10,281,680 6.15
Janus Henderson Investors 9,917,148 5.93
Hargreaves Lansdown, stockbrokers (EO) 9,910,881 5.92
Baillie Gifford 9,142,197 5.46
Interactive Investor (EO) 8,714,193 5.21
Herald Investment Management 8,578,752 5.13
National Financial Services (EO) 6,505,167 3.89
Post balance sheet events
Following the end of the financial period on 30 April 2024 the Group completed
a fund raise comprised of an institutional placing and open offer resulting in
£2.1m of additional funds net of costs. This transaction was completed on 31
May 2024 with the funds remitted to the Group and the new shares admitted to
trading on the AIM market.
Auditors
All the current directors have taken all the steps that they ought to have
taken to make themselves aware of any information needed by the Company's
Auditors for the purposes of their audit and to establish that the Auditors
are aware of that information. The Directors are not aware of any relevant
audit information of which the Auditors are unaware.
A resolution to re-appoint BDO LLP will be proposed at the next Annual General
Meeting.
By order of the board
Mandy Petitt
Company Secretary
ILIKA plc
DIRECTORS' REMUNERATION REPORT
Remuneration Committee
The Group's remuneration policy is the responsibility of the Remuneration
Committee (the 'Committee'). The terms of reference of the Committee are
outlined in the Corporate Governance Statement on page 20. The Committee
members are Keith Jackson (Chairman), Jeremy Millard and Monika Biddulph, all
of whom are independent non-executive directors. The Chief Executive Officer
and certain executives may be invited to attend Committee meetings to assist
with its deliberations, but no executive is present when their own
remuneration is being discussed.
Remuneration policy
(i) Executive remuneration
The Committee has established a remuneration policy which will enable it to
attract and retain individuals of the highest calibre to run the Group. The
Committee is committed to ensuring that the Group reward framework continues
to align Executive performance with shareholder expectations, as well as with
the customer experience, while ensuring that pay remains competitive to retain
the right talent and aligned to the strategy of the Group over the short and
long term.
The Committee seeks independent validation and recommendations on the
remuneration policy and levels by way of a bi-annual benchmarking exercise
taking into account factors including but not limited to: individual
performance, the individual's experience, regulatory developments and/or any
significant changes in an individual's role and responsibilities.
Components of remuneration Policy
Base Salary
Purpose and link to strategy Operation Maximum Opportunity Performance metrics
Externally competitive base pay allows us to attract and retain high-calibre Reflects the role of the individual within the Company, taking account of Base pay is not capped. Increases to base pay for Directors may be Take into account Group and individual performance, external benchmark
Executives with the skill to develop, lead and deliver the business strategy. responsibilities and experience. Base pay may be reviewed from time to time,
information and internal relativities.
but at no greater frequency than once annually. Any increase to base pay is considered taking into account practice for employees generally across the
subject to approval by the Remuneration Committee and would normally be Company, regulatory requirements, consultation feedback and any relevant
applicable from 1 January. market information.
Pension
The pension provides an important and competitive benefit within the overall Executive Directors are eligible to participate in the group pension scheme . The maximum pension contribution is 10% of base salary. The Company will n/a
remuneration package for Executive Directors. They can make voluntary additional contributions via a salary sacrifice contribute the ERNI benefit from the salary sacrifice arrangement.
arrangement
Annual Incentive Plan (AIP) and Deferred Bonus Plan (DBP)
To motivate Executive Directors to achieve and exceed the business plan, Annual bonus awards are discretionary and are determined by reference to the The maximum award opportunity under the AIP will normally be no more than 100% An annual corporate scorecard based on targets for financial and strategic
rewarding annual financial and strategic targets and adherence to Company Company's performance against a scorecard of financial and strategic goals. of salary in respect of any financial year, including any deferred element. measures is developed for review and agreement at the start of each year by
Values, within the Company's risk appetite. Awards may be made in cash and shares/share-like instruments. 50% of the Award Annual bonus awards can be made up to 100% of total fixed remuneration in the Remuneration Committee. This forms the basis of the bonus pool. These
will be made in shares/share-like instruments. Deferral of part of the annual respect of any financial year, less any other variable remuneration awarded in measures include a combination of financial, technical and strategic goals
bonus is applied in accordance with the requirements of the Remuneration respect of that financial year. aligned to the Company's strategic plan. Financial measures may include, but
Committee . The level of deferral for the Executive Directors is as per the are not restricted to, such measures as underlying income, operating expenses,
Remuneration Committee. Malus and clawback provisions apply to capital expenditure and cash management. Technical measures may include
share/share-like instrument awards, including the deferred elements. development milestones for each of the Stereax and Goliath product lines.
Strategic goals may include commercial engagement, ESG compliance among other
metrics.
Long‑Term Incentive Plan - restricted share unit awards
To incentivise senior management to deliver a sustainable Company, by The Committee will determine the award levels to be granted in respect of any The maximum award opportunity under the LTIP will normally be 100% of base Performance measures for the LTIP are based on development of long term
providing over the longer term value to shareholders, regulatory stability financial year, in compliance with regulatory requirements and the Ilika plc salary in respect of any financial year. shareholder value through share price growth as agreed by the Committee in
and, for customers, employees and other stakeholders, promoting the principles Long Term Incentive Plan 2018 (the "LTIP"), which was adopted by shareholders line with the Company's long term priority of delivering sustainable returns
enshrined in the Company's Values. at the 2018 AGM. Awards will be made in the form of share/share-like to shareholders. Before any part of any LTIP award may vest, the Committee
instruments. Following grant, the award is subject to a three year vesting must be satisfied that the Company's underlying financial performance
period throughout which the overall value will fluctuate dependent on justifies such vesting. This will be assessed by the Remuneration Committee.
performance conditions and/or the value of the Company share price. Malus and Performance measures for LTIP awards may be subject to change to ensure
clawback provisions apply to awards in full and are explained in more detail continued alignment with the business strategy and any future regulatory
in the notes to the policy below. review or requirements.
Benefits
Benefits are provided to attract and retain executives with the appropriate Executive Directors receive a benefits package generally set by reference to Benefits are set taking into account affordability and market practice for n/a
skills to drive the business and to ensure that the overall package is market practice in companies of a similar size and complexity and/or business comparable roles. Costs may vary by provider from year to year. The Committee
competitive in the market. scope. Benefits provided include, private medical insurance, life insurance, keeps the benefits and levels under review. It may remove benefits that
and income protection. Relocation support may be provided if required upon the Executive Directors receive or introduce other benefits if it considers it is
appointment of a new Executive Director. The Committee may periodically amend appropriate to do so.
the benefits available to all employees. The Executive Directors are eligible
to receive such benefits on similar terms to other Senior Executives.
(ii) Chairman and non-executive Director remuneration
The Chairman, Keith Jackson receives a fixed fee of £71,341 per annum. Jeremy
Millard and Monika Biddulph receive a fixed fee of £35,938 per annum. The
fixed fee covers preparation for and attendance at meetings of the full Board
and committees thereof. The Chairman and the executive directors are
responsible for setting the level of non-executive remuneration. The
non-executive directors are also reimbursed for all reasonable expenses
incurred in attending meetings. Non Executive contracts will continue until
terminated by either party.
All remuneration policies will be reviewed regularly using independent
remuneration consultants to maintain adherence with best market practice as
appropriate.
Directors' remuneration
The aggregate remuneration received by directors who served during the year
ended 30(th) April 2024 and 30(th) April 2023 was as follows:
Basic Benefits in kind Total Pension Total
salary Short term benefits
Bonus
£ £ £ £ £ £
Year to 30th April 2024
G Purdy 214,537 2,504 47,947 264,988 69,549 334,537
J Stewart 135,173 941 5,783 141,897 45,208 187,105
K Jackson 71,341 - - 71,341 - 71,341
J Millard 35,938 - - 35,938 - 35,938
M Biddulph 35,938 - - 35,938 - 35,938
------ ------ ------ ------ ------ ------
492,927 3,445 53,730 550,102 114,757 664,859
------ ------ ------ ------ ------ ------
Year to 30th April 2023
G Purdy 211,238 1,497 106,549 319,284 22,056 341,340
S Boydell* (to July 22) 33,576 204 - 33,780 2,686 36,466
J Stewart (from Jan 23) 51,600 7 13,773 65,380 2,146 67,526
K Jackson 69,424 - - 69,424 - 69,424
J Millard 35,233 - - 35,233 - 35,233
M Biddulph 35,233 - - 35,233 - 35,233
------ ------ ------ ------ ------ ------
436,304 1,708 120,322 558,334 26,888 585,222
------ ------ ------ ------ ------ ------
*S Boydell resigned as Finance Director and Company Secretary leaving the
company in 15 July 2022.
Benefits in kind include critical illness cover and Private medical.
Share options
The share options of the directors are set out below:
Unapproved Type 2023 2024 Exercise Price (p) Min Full Expiry date
Number
Number
Vesting Price (a) Vesting Price (b)
G Purdy Bonus 75,810 75,810 1 N/A N/A Aug-27
G Purdy LTIP 1,127,777 1,127,777 1 27 54 Jan-29
G Purdy Bonus 207,229 207,229 1 N/A N/A Aug-29
G Purdy LTIP 606,014 - 1 51 102 Mar-30
G Purdy Bonus 65,812 65,812 1 N/A N/A Sep-30
G Purdy LTIP 92,536 - 1 336 672 Feb-31
G Purdy Bonus 33,394 33,394 1 N/A N/A Sep-31
G Purdy LTIP 153,541 153,541 1 202.5 405 Feb-32
G Purdy LTIP - 416,954 1 78 156 Jan-33
G Purdy Bonus - 131,005 1 N/A N/A Sep-33
G Purdy LTIP - 492,764 1 66 132 Dec-33
J Stewart Bonus - 15,799 1 N/A N/A Sep-33
J Stewart LTIP - 140,909 1 66 132 Dec-33
Approved Type 2023 2024 Exercise Price Vesting Price (a) Full Vesting Price (b) Expiry date
Number
Number
J Stewart EMI 300,000 300,000 52 52 69.2 Jan-33
J Stewart EMI - 213,636 44 44 58.6 Dec-33
Unapproved Executive Bonus options are granted as specified in the Directors
remuneration policy shown on page 14 to 15 of this report. Bonus options are
awarded in lieu of cash payment and are subject to a one-year vesting period.
Executive bonus options are awarded in relation to the achievement of company
KPI target's in respect of financial performance, technical development for
both Stereax and Goliath products, the creation of new Patents and other
company KPI's. These KPI targets are set by the Board annually.
Unapproved Executive LTIP options are granted as specified in the Directors
remuneration policy shown on page 15 of this report. Options are awarded with
a three year vesting period and the vesting price has been set to support
long-term shareholder returns through the delivery of strategic milestones.
Option awards vest on a straight-line basis between the minimum vesting price
(a) and full vesting price (b).
Approved EMI shares are offered in lieu of LTIP options where the individual
has not fully utilised the approved allowance under the HMRC EMI scheme rules.
EMI shares have a three year vesting period and the vesting price has been set
to support long-term shareholder returns through the delivery of strategic
milestones. Option awards vest on a straight-line basis between the minimum
vesting price (a) and full vesting price (b).
A total of 698,550 options lapsed during the year
Share based payment charge attributable to directors in the year was £281,766
(2023: £256,036).
Keith Jackson
Chairman of the Remuneration Committee
Statement of Directors' responsibilities in respect of the Annual Report and
the Financial Statements
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors are required to prepare the
group and company financial statements in accordance with UK adopted
international accounting standards. Under company law the directors must not
approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the group and company and of the
profit or loss of the group and company for that period.
In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance with UK adopted
international accounting standards subject to any material departures
disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the group and the company will continue in
business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company's transactions and disclose with
reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are
published on the company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the company's website is the responsibility of
the directors. The directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein
Going concern
The directors have prepared and reviewed financial forecasts. After due
consideration of these forecasts, current cash resources, and the recently
completed fund raise of £2.1m net of fees, the directors consider that the
Company and the Group have adequate financial resources to continue in
operational existence for the foreseeable future (being a period of at least
twelve months from the date of this report), and for this reason the financial
statements have been prepared on a going concern basis.
By order of the Board
Graeme Purdy
Chief Executive
10(th) July 2024
ILIKA plc
CORPORATE GOVERNANCE STATEMENT
We confirm that our governance structures and practices are in agreement with the provisions of the Quoted Companies Alliance (QCA) Corporate Governance Code (2018) for small and mid-size quoted companies. Our statement of compliance with the 10 principles of the QCA Corporate Governance Code is set out below and on our website: https://www.ilika.com/investors/corporate-governance.
Principle Disclosure
Establish a strategy and business model which promotes long-term value for Business strategy outlined on page 4.
shareholders.
Promote a corporate culture that is based on sound ethical values and See the "Promoting ethical values and behaviours" section in Corporate
behaviours. Governance Statement.
Seek to understand and meet shareholder needs and expectations. See the "Shareholder engagement" section in Corporate Governance Statement.
Take into account wider stakeholder and social responsibilities and their See the "Shareholder engagement" section in Corporate Governance Statement.
implications for long term success. Further information can be found on the Ilika website.
Embed effective risk management, considering both opportunities and threats, See risk management and internal control section in Corporate Governance
throughout the organisation. Statement.
Maintain the board as a well-functioning, balanced team led by the chair. See the "Board of directors" section in Corporate Governance Statement, and
further information in the Nominations Committee report found on pages 25-27
Ensure that between them the directors have the necessary up-to-date See the "Board experience" section in Corporate Governance Statement and
experience, skills and capabilities. further information in the Nominations Committee report found on pages 25-27
Maintain governance structures and processes that are fit for purpose and See the "Board Committees" section in Corporate Governance Statement.
support good decision making by the board.
Evaluate all elements of board performance based on clear and relevant See the "Performance evaluation" section below in Corporate Governance
objectives, seeking continuous improvement. Statement and further information in the Nominations Committee report found on
pages 25-27
Establish a remuneration policy which is supportive of long-term value See Directors Remuneration report including the Directors Remuneration policy
creation and the company's purpose, strategy and Culture found on pages 14 to 18
Communicate how the company is governed by maintaining a dialogue with See the "Shareholder engagement" section in Corporate Governance Statement.
shareholders and other relevant stakeholders.
Shareholder engagement
The Board recognises the importance of communicating with its shareholders and
maintains dialogue with institutional shareholders and analysts, presentations
are made when financial results are announced. The Group retains the services
of a professional financial public relations company, who assist with ensuring
the accurate and timely communication of relevant corporate, financial and
other regulatory news. The Annual General Meeting is the principal forum for
dialogue with private shareholders who are given the opportunity to raise
questions at the meeting, and to meet directors and senior managers of the
business who make themselves available after each meeting. The Company aims
to send out the notice of the Annual General meeting at least 21 working days
before the meeting and publish the results of resolutions (which are usually
voted on by electronic submission prior to the meeting or by show of hands) in
a Regulatory News Statement after the relevant meeting. Shareholders also have
access to the Company's website and interactive Investor Meet Company
web-based presentations.
Meeting the needs and objectives of shareholders
The Board appreciates that the diverse shareholder base of the Group may have
differing objectives for their investment in the business, and therefore the
importance of ensuring that non-executive directors ("NED") have an up to date
understanding of these perspectives is well recognised. Directors will
therefore routinely engage with both institutional and private investors and
will seek out opinions on unusual or potentially controversial matters before
adopting policy changes or tabling shareholder resolutions. The Board will
always review written feedback reports from investors following financial
results "roadshows" and will always consider information received from
institutional voter advisory firms.
Promoting Ethical Values and Behaviours
The Board has primary responsibility for ensuring that the Group operates according to the highest ethical standards. The Directors believe that the main determinant of whether a business behaves ethically and with integrity is the quality of its people. The Directors have responsibility for ensuring that individuals employed by the Group demonstrate the highest levels of integrity. In addition, the Group has a formal Share Dealing Code.
Board of Directors
The Board of directors (the 'Board') consists of a Non-Executive Chairman, two
Executive Directors and two Non-Executive Directors.
The responsibilities of the Non-Executive Chairman and the Chief Executive
Officer are clearly divided. The Chairman is responsible for overseeing the
formulation of the overall strategy of the company, the running of the board,
ensuring that no individual or group dominates the Board's decision making and
ensuring that the non-executive directors are properly briefed on matters.
Prior to each Board meeting, directors are sent an agenda and Board papers for
each agenda item to be discussed. Additional information is provided when
requested by the Board or individual directors.
The Chief Executive Officer has the responsibility for implementing the
strategy of the Board and managing the day to day business activities of the
Group through his chairmanship of the executive committee.
The Non-Executive Directors bring relevant experience from different
backgrounds and receive a fixed fee for their services and reimbursement of
reasonable expenses incurred in attending meetings.
The Senior Non-Executive Director is responsible for providing a sounding
board to the Chair and to act as an intermediary for other directors and
stakeholders outside of the normal channels of communication.
The Board retains full and effective control of the Group. This includes
responsibility for determining the Group's strategy and for approving budgets
and business plans to fulfil this strategy. The full Board ordinarily meets
bi-monthly.
The Company Secretary is responsible to the Board for ensuring that Board
procedures are followed and that the applicable rules and regulations are
complied with. All directors have access to the advice and services of the
Company Secretary, and independent professional advice, if required, at the
Company's expense. Removal of the Company Secretary would be a matter for the
Board.
Performance evaluation
The Board has a process for evaluation of its own performance, based on clear
and relevant objectives to ensure continuous improvement. All members of the
Board engaged freely and openly with the reviews and demonstrated the expected
level of commitment and held the appropriate level of skills, experience and
expertise to guide the business ad represent all stakeholder interests.
Further information on the Board performance evaluation can be found in the
Nominations Committee report on pages 25-27.
Board experience
Keith Jackson - Non-Executive Chairman
Keith has had a wide ranging and successful career in companies varying from
start-ups to multinationals. He founded and grew an automotive control systems
company whose engine control systems are used on millions of vehicles
worldwide. Following the sale of the company to a major OEM, he joined Rolls
Royce Engines PLC where he worked as Chief Technology Officer (CTO) in the
electrical power and control systems group and later became the CTO at Meggitt
PLC.
Keith is now the Non-Executive Chairman Libertine FPE and a Professor at
Sheffield University's Automated Control and Systems Engineering department.
He also advises a number of companies on their technologies and strategy.
Keith is a Fellow of the Society of Automotive Engineers, a previous Rolls
Royce Engineering Fellow and Royal Aeronautical Society Fellow. He is a
Computer Science graduate from University College London.
Graeme Purdy - Chief Executive Officer
Graeme was appointed to head up Ilika in May 2004, just before completion of
the company's seed round of funding. He led the company through two successful
rounds of venture funding before floating the company on AIM in 2010.
Prior to joining Ilika, Graeme was Chief Operating Officer of a
high-technology company in the Netherlands and before that worked
internationally in a variety of technical and commercial roles for Shell.
Graeme holds a Master's degree in Chemical Engineering from Cambridge and an
MBA from INSEAD business school in France. Graeme is a Chartered Engineer and
a Sainsbury Management Fellow.
Jason Stewart - Chief Financial Officer
Jason is a CIMA qualified accountant, senior Finance Director and Executive
joining Ilika in January 2023 bringing significant commercial experience in
the manufacturing sector. Most recently, Jason spent twelve years at Sunseeker
International in various senior roles including Interim CFO where he
successfully managed the company through the COVID-19 crisis, managing costs
and re-establishing production subsequent to the lockdown.
Prior to joining Sunseeker International Jason undertook roles across the
broad spectrum of finance including B&Q Ltd and Kerry Foods Ltd where he
completed his professional training. He brings with him a wealth of knowledge
across financial functions, with particular expertise in project appraisals,
performance management and business development.
Monika Biddulph - Non-Executive Director
Monika has a wide range of experience in both the commercial and technical
aspects of an international technology business. Until 2018, Monika was a
member of the Senior Leadership Team IP Product Groups at Arm Holdings plc,
responsible for driving the execution of the product roadmaps across all lines
of business and central engineering, and previously holding various General
Manager and licensing roles in the business. Currently Monika is also a
Non-Executive Director on the board of Celebrus Technologies Plc AFC Energy
Plc and Power Roll Limited. She was previously NED at Linaro Limited, an open
source software organisation. Monika holds a PhD in Physics from the ETH
Zurich.
Jeremy Millard - Senior Non-Executive Director
After an early career in engineering, Jeremy trained as a chartered accountant
in the late 1990s. Jeremy has over 20 years' investment banking experience and
currently provides corporate finance advice to clients in the science and deep
technology sectors via Iridium Corporate Finance Limited which he founded,
prior to which he held senior roles in a number of corporate finance houses
including heading up the technology practice at Rothschild in London. Jeremy
is currently a Non-Executive Director and Chairman of the audit committee of
UK listed Cambridge Nutritional Sciences plc (AIM: CNSL). Jeremy has
previously held NED roles with private companies Blackbullion Ltd (EdTech) and
CFPro Ltd (specialist accounting services).
Board Committees
As appropriate, the Board has delegated certain responsibilities to Board
Committees. These committees are made up of Non Executive Directors to ensure
that they remain independent from the day to day operations of the Company.
The responsibilities of the individual committees are as follows:
i) Audit Committee
The Audit Committee currently comprises Jeremy Millard (Chair), Professor
Keith Jackson and Dr. Monika Biddulph.
The Committee monitors the integrity of the Group's financial statements and
the effectiveness of the audit process. The Committee reviews accounting
policies and material accounting judgements. The Committee also reviews, and
reports on, reports from the Group's auditors relating to the Group's
accounting controls. It makes recommendations to the Board on the appointment
of auditors and the audit fee. It has unrestricted access to the Group's
auditors. The Committee keeps under review the nature and extent of non-audit
services provided by the external auditors in order to ensure that objectivity
and independence are maintained. For further information see the Audit
Committee report which can be found on page 28
ii) Remuneration Committee
The Remuneration Committee comprised Professor Keith Jackson (Chairman),
Jeremy Millard and Dr. Monika Biddulph.
The committee is responsible for making recommendations to the Board on
remuneration policy for Executive Directors and the terms of their service
contracts, with the aim of ensuring that their remuneration, including any
share options and other awards, is based on their own performance and that of
the Group generally. For further information see the Director remuneration
report which can be found on pages 14-18
iii) Nomination Committee
The Nomination Committee comprised Professor Keith Jackson (Chairman), Jeremy
Millard and Dr. Monika Biddulph.
It is responsible for providing a formal, rigorous and transparent procedure
for the appointment of new directors to the board and reviewing the
performance of the board each year. For further information see the
Nominations Committee report which can be found on pages 25-27
Attendance at Board meetings and committees
The Directors are expected to attend all Board committees of which they are a
member and NED's are expected to dedicate a minimum of twelve days per annum
to the Company. During the year the Directors attended the following Board and
committees meetings during the year:
Attendance Board Audit Nomination Remuneration
Mr J Stewart 7/7 - - -
Mr G. Purdy 7/7 - - -
Prof K Jackson 7/7 2/2 1/1 3/3
Jeremy Millard 7/7 2/2 1/1 3/3
Dr. Monika Biddulph 7/7 2/2 1/1 3/3
Risk management and internal control
The Board is responsible for the systems of internal control and for reviewing
their effectiveness. The internal controls are designed to manage rather than
eliminate risk and provide reasonable but not absolute assurance against
material misstatement or loss. The Audit Committee reviews the effectiveness
of these systems primarily by discussion with the external auditor and by
considering the risks potentially affecting the Group.
The Board continues to improve the control of risk within the business through
the appointment of established experts who can bring relevant industry and
subject matter experience to develop better control environments. This has
been accomplished with the recruitment of a Sustainability, Quality and
Business Compliance Director, a Supply Chain Director with multiple years of
advanced and complex supply chains within the automotive industry, a Financial
Controller to provide additional financial review and an Operations Director
once again bringing a lifetime of experience from the automotive area. These
individuals bring developed control and risk management skills to provide
hands on experience to developing the Company and as an additional route for
the NED members of the Board to seek independent verification of the
improvements being made.
The Group maintains both a strategic and business risk register as dynamic
documents and as a route to track the developing risks to the Group. These
risk registers are used to manage and mitigate emerging and established risks
and escalate these to the appropriate level within the business to support a
timely response.
The Board has assessed the risk management activity of the Board and Group to
be appropriate for the business during its current phase of R&D and scale
up development activity.
The Group does not consider it necessary to have an internal audit function
due to the small size of the administration function. Instead there is a
detailed Director review and authorisation of transactions. The annual audit
by the Group auditor, which tests a sample of transactions, did not highlight
any significant system improvements in order to reduce risk.
The Group maintains appropriate insurance cover in respect of actions taken
against the Executive Directors because of their roles, as well as against
material loss or claims of the Group. The insured values and type of cover are
comprehensively reviewed on a periodic basis.
By order of the Board
Jeremy Millard
Director
10(th) July 2024
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has primary responsibility for ensuring that the financial
performance of the Group is properly measured and reported on. It is
responsible for providing oversight of the Company's financial reporting
process, the audit process, the system of internal controls including business
continuity, information technology, the identification and management of
significant risks and the Companies compliance with laws and regulations. Its
terms of reference and its current membership are outlined in the Corporate
Governance Statement on page 21.
The Committee is chaired by an independent director with significant
experience in finance and financial markets. The experience and background of
the individuals who make up the Audit Committee is detailed in the summary of
Board experience on page 22.
The attendance of the individual members of the Audit Committee is detailed in
the summary of Board attendance as detailed on page 23.
Committee independence
The Audit Committee maintains its independence from the Group by being
composed exclusively of Non Executive Directors thus ensuring the Committee's
ability to effectively challenge the operations of the business. The Board is
satisfied that in doing so that the committee is in line with best practice
and that all members are independent.
Matters covered by the Committee
The Committee, which is required to meet at least twice a year, met twice
during the year ended 30 April 2024, with all members present. The Committee
undertakes review of the principal risk matters and is responsible for making
recommendations to the Board in relation to appropriate mitigations and
control measures. The Committee reviews the risk matrix and verifies and
challenges the processes for identifying new and emerging risks and the
appropriateness of the risk severity rating.
The Committee considers the role of the independent auditors, their tenure and
their report in relation to the Audit of Ilika Plc and Ilika Technologies Ltd.
· The Committee reviews the performance of the external auditor and
considers their performance in relation to the requirements of internal and
external stakeholders.
· It considers the appropriateness of the auditor in respect of
objectivity and independence
· The Committee reviews the duration on the audit and time to rotation
of audit partner. BDO LLP were appointed as auditors of Ilika Plc and its
subsidiary companies in 2011 and the audit partner is due for rotation in
2025.
· The Committee gives appropriate consideration to the reappointment of
the external auditor or the needs to tender audit services.
Matters covered during the year ended 30 April 2024:
· July 2023: Audit completion meeting for the 2023 year-end audit,
o Review the financial forecast to support the Group's ability to account on
a going concern basis,
o Review of the auditor's report on the audit, including materiality levels
and any significant matters or specific recommendations from the auditor.
o Review of the annual report and financial statements to ensure they
represents a fair and balance portrayal of the Group's performance.
· January 2024: Half year report completion meeting. Approval of the
release of the Half Year report.
Auditor independence
The auditors supply only audit and assurance related services and do not
provide and non-audit consultation services. Any assurance services provided
are provided on an exceptional basis and reviewed by the Audit & Risk
Committee prior to engagement to ensure adherence to their independence. This
policy safeguards auditor objectivity and independence.
The external auditor may not undertake any work that may compromise its
independence or is otherwise prohibited by any law or regulation.
Payments made to the auditor are detailed in Note 3 to the financial
statements and can be found on page 48.
Internal audit function
The Group does not have an internal audit function, but the Committee
considers that this is appropriate, given the size and relative lack of
complexity of the Group. The Committee keeps this matter under review
annually.
Jeremy Millard
Chair of the Audit Committee
Independent auditor's report to the members of Ilika Plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of
the Group's and of the Parent Company's affairs as at 30 April 2024 and of the
Group's loss for the year then ended;
• the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
• the Parent Company financial statements have been properly
prepared in accordance with UK adopted international accounting standards
and as applied in accordance with the provisions of the Companies Act 2006;
and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of Ilika plc (the 'Parent Company')
and its subsidiaries (the 'Group') for the year ended 30 April 2024 which
comprise the Consolidated statement of comprehensive income, the Consolidated
balance sheet, the Consolidated cash flow statement, the Consolidated
statement of changes in equity, the Company balance sheet, the Company cash
flow statement, the Company statement of changes in equity and notes to the
financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation
is applicable law and UK adopted international accounting standards and, as
regards the Parent Company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are
further described in the
Auditor's responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with
the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC's Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors'
assessment of the Group and the Parent Company's ability to continue to adopt
the going concern basis of accounting included:
· Reviewing Directors' assessment of going concern through analysis of
the Group's cash flow forecast through to July 2025 including assessing and
challenging the assumptions underlying the forecasts by reference to historic
performance and our knowledge of future developments.
· Sensitising the forecasts further to ascertain the levels of revenue
decline and cost increase that would cause a cash shortage at any point in
Directors' post balance sheet assessment period. We also compared the level
of expenditure included in the forecasts and compared this to previous
periods.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and the Parent Company's
ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview
100% (2023: 100%) of Group loss before tax
Coverage 100% (2023: 100%) of Group revenue
100% (2023: 100%) of Group total assets
2024 2023
Capitalisation of development expenditure P P
Key audit matters
Group financial statements as a whole
Materiality
£410,000 (2023: £446,000) based on 2% of net assets (2023: 5% of loss before
tax)
Materiality
Group financial statements as a whole
£410,000 (2023: £446,000) based on 2% of net assets (2023: 5% of loss before
tax)
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
At 30 April 2024 the group had two components whose transactions and balances
are included in the consolidated accounting records. Both components, being
Ilika plc and its subsidiary Ilika Technologies Limited, were considered to be
significant components and were subject to a full scope audit.
All work was carried out by the group audit team.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Capitalisation of development expenditure The group has capitalised development expenditure in relation to their Stereax We considered the conditions under which development costs can be capitalised
battery technology. This is the third full period in which the associated under the accounting standards and checked that these conditions have been met
expenditure has been capitalised having been deemed to meet the criteria in in respect of the Stereax battery technology.
the accounting standards in the previous year.
Please refer to note 7, and accounting policies and key sources of estimation
and uncertainty in note 1.
We discussed with management the Group's processes for identifying the
There are a number of judgements involved in accounting for development relevant development costs. We reviewed the nature of the costs capitalised
expenditure, including whether the activities are appropriate for to check they were in line with our understanding of the work carried out in
capitalisation in accordance with the criteria of the applicable accounting the year.
standard, the allocation of the relevant costs to the Stereax battery project,
and the recoverability of the asset generated.
We agreed a sample of capitalised costs to underlying supporting documentation
to confirm the existence and accuracy of the costs. This included obtaining
Due to the level of judgement, there was also considered to be an inherent time records to corroborate the allocation of employee time spent on the
risk of management bias therefore this was considered to be an area of focus Stereax battery technology and inspecting employee contracts to check that
for our audit. their stated job roles support their involvement in development activities.
Employee costs were also agreed to the underlying payroll records.
We assessed the ability of the asset to generate future economic benefits for
the business, which must at least exceed the carrying value of the intangible
asset. We have corroborated management's assessment to external market
information and expectations.
Key observations:
Based on the audit work performed we consider that development costs have been
capitalised appropriately and in accordance with the Group's accounting policy
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group financial statements Parent company financial statements
2024 2023 2024 2023
£ £ £ £
Materiality 410k 446k 200k 223k
Basis for determining materiality 2% of net assets 5% of loss before tax 49% of Group materiality 50% of Group materiality
Rationale for the benchmark applied We considered 2% of net assets to be a key performance benchmark for the Group We considered 5% of loss before tax to be a key performance benchmark for the Calculated as a percentage of Group materiality due to aggregated Calculated as a percentage of Group materiality due to aggregated
and the users of the financial statements in assessing financial performance. Group and the users of the financial statements in assessing financial consideration of significant component materiality levels. consideration of significant component materiality levels.
performance.
Performance materiality 308k 335k 150k 167k
Basis for determining performance materiality On the basis of our risk assessment, together with our assessment of the On the basis of our risk assessment, together with our assessment of the On the basis of our risk assessment, together with our assessment of the On the basis of our risk assessment, together with our assessment of the
Group's control environment, previous low level of misstatements our judgement Group's control environment, previous low level of misstatements our judgement Group's control environment, previous low level of misstatements our judgement Group's control environment, previous low level of misstatements our judgement
is that performance materiality for the financial statements is that performance materiality for the financial is that performance materiality for the financial is that performance materiality for the financial statements
should be 75% of materiality. statements should be 75% of materiality. statements should be 75% of materiality. should be 75% of materiality.
Rationale for the percentage applied for performance materiality See above See above See above See above
Component materiality
For the purposes of our Group audit opinion, we set materiality for each
significant component of the Group, [apart from the Parent Company whose
materiality is set out above], based on a percentage of 98% (2023: 92%) of
Group materiality dependent on the size and our assessment of the risk of
material misstatement of that component. Component materiality in respect of
Ilika Technologies Limited was £400k (2023: £410k). We further applied
performance materiality levels of 75% (2023: 75%) of the component materiality
to our testing to ensure that the risk of errors exceeding component
materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £16k (2023: £13k). We also agreed to report
differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the financial statements other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during
the course of the audit, we are required by the Companies Act 2006 and ISAs
(UK) to report on certain opinions and matters as described below.
Strategic report and Directors' report In our opinion, based on the work undertaken in the course of the audit:
· the information given in the Strategic report and the Directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the Strategic report and the Directors' report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the Directors'
report.
Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the Parent Company,
or returns adequate for our audit have not been received from branches not
visited by us; or
· the Parent Company financial statements are not in agreement with the
accounting records and returns; or
· certain disclosures of Directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we require
for our audit.
Responsibilities of Directors
As explained more fully in the statement of Directors' responsibilities, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group's and the Parent Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
· Our understanding of the Group and the industry in which it operates;
· Discussion with management and those charged with governance and the
Audit Committee;
· Obtaining and understanding of the Group's policies and procedures
regarding compliance with laws and regulations;
we considered the significant laws and regulations to be the applicable
accounting framework, UK tax legislation and the AIM Listing Rules etc.
The Group is also subject to laws and regulations where the consequence of
non-compliance could have a material effect on the amount or disclosures in
the financial statements, for example through the imposition of fines or
litigations. We identified such laws and regulations to be the health and
safety legislation.
Our procedures in respect of the above included:
· Review of minutes of meetings of those charged with governance for
any instances of non-compliance with laws and regulations;
· Review of correspondence with regulatory and tax authorities for any
instances of non-compliance with laws and regulations;
· Review of financial statement disclosures and agreeing to supporting
documentation;
· Involvement of tax specialists in the audit;
· Review of legal expenditure accounts to understand the nature of
expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to material
misstatement, including fraud. Our risk assessment procedures included:
· Enquiry with management and those charged with governance including
the Audit Committee regarding any known or suspected instances of fraud;
· Obtaining an understanding of the Group's policies and procedures
relating to:
o Detecting and responding to the risks of fraud; and
o Internal controls established to mitigate risks related to fraud.
· Review of minutes of meetings of those charged with governance for
any known or suspected instances of fraud;
· Discussion amongst the engagement team as to how and where fraud
might occur in the financial statements;
· Assessing journal entries as part of our planned approach, with a
particular focus on journal entries to key financial areas such as intangible
assets and journals raised after the year end; and
· Considering significant management judgements, particularly in
relation to the capitalisation of intangible assets.
Based on our risk assessment, we considered the areas most susceptible to
fraud to be capitalisation of development costs and management override.
Our procedures in respect of the above included:
· Testing of the capitalisation of development costs (as detailed in
the KAM above);
· Testing of all material journals raised post year by agreeing to
supporting documentation, and considering if they had any impact on the year
to April 2024;
· Assessing significant estimates made by management for bias.
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members who were all deemed to have
appropriate competence and capabilities and remained alert to any indications
of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we are
to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities
(http://insite.bdo.co.uk/sites/audit/Documents/www.frc.org.uk/auditorsresponsibilities)
. This description forms part of our auditor's report.
Use of our report
This report is made solely to the Parent Company's members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Parent Company's
members those matters we are required to state to them in an auditor's report
and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Parent Company and
the Parent Company's members as a body, for our audit work, for this report,
or for the opinions we have formed.
Stephen Le Bas (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Southampton, UK
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Ilika plc
Consolidated Statement of Comprehensive Income
Year ended 30(th) April
Notes 2024 2023
£000's £000's
Turnover 2 2,090.6 702.0
Revenue 20.1 33.8
UK grants 2,070.5 668.2
Cost of sales (1,081.9) (404.0)
------- -------
Gross profit 1,008.7 298.0
Other Operating income 2 532.4 79.0
Total Administrative expenses
Administrative expenses (7,397.8) (8,932.7)
Share based payment charge (383.1) (441.8)
(7,780.9) (9,374.5)
------- -------
Operating loss 3 (6,239.8) (8,997.5)
Income from short term deposits 507.0 105.7
Interest payable (33.0) (36.6)
------- -------
Loss before tax (5,765.8) (8,928.4)
Taxation 5 952.4 1,632.6
------- -------
Loss for period / total comprehensive expense (4,813.4) (7,296.0)
------- -------
Loss per share from continuing operations 6
Basic (3.03)p (4.61)p
Diluted (3.03)p (4.61)p
The notes below form part of these financial statements.
Ilika plc
Consolidated balance sheet
As at 30(th) April
Notes 2024 2023
ASSETS £000's £000's
Non-current assets
Intangible assets 7 3,721.0 2,943.5
Property, plant and equipment 8 3,758.6 4,263.6
Right to use assets 9 569.6 630.9
------- -------
Total non-current assets 8,049.2 7,838.0
------- -------
Current assets
Trade and other receivables 10 2,304.2 1,938.5
Current tax receivable 5 526.4 1,261.1
Other financial assets - bank deposits 11 4,180.9 772.7
Cash and cash equivalents 12 7,764.4 15,101.0
------- -------
Total current assets 14,775.9 19,073.3
------- -------
Total assets 22,825.1 26,911.3
------- -------
Issued capital and reserves attributable to owners of parent
Issued share capital 16 1,591.4 1,590.6
Share premium 64,953.5 64,936.6
Capital restructuring reserve 6,486.1 6,486.1
Accumulated losses (52,671.4) (48,241.1)
------- -------
Total equity 20,359.6 24,772.2
------- -------
LIABILITIES
Current liabilities
Trade and other payables 13 1,590.7 1,271.1
Lease liabilities 9 288.7 260.8
------- -------
Total current liabilities 1,879.4 1,531.9
------- -------
Non-current liabilities
Lease liabilities 9 336.6 357.7
Provisions 14 249.5 249.5
------- -------
Total non-current liabilities 586.1 607.2
------- -------
Total liabilities 2,465.5 2,139.1
------- -------
Total equity and liabilities 22,825.1 26,911.3
------- -------
The notes below form part of these financial statements.
These financial statements were approved and authorised for issue by the Board
of Directors on 10(th) July
2024.
Mr. J Millard
Director
Ilika plc
Consolidated cash flow statement
Year ended 30(th) April
2024 2023
£000's £000's
Cash flows from operating activities
Loss before taxation (5,765.8) (8,928.4)
Adjustments for:
Amortisation 41.7 42.2
Depreciation 1,694.4 1,552.8
Equity settled share-based payments 383.1 441.8
Loss / (profit) on disposal of plant property and equipment 14.8 (0.8)
Net financial (income) (474.0) (69.1)
------- -------
Operating cash flow before changes in working capital, interest and taxes (4,105.8) (6,961.5)
Increase in trade and other receivables (365.6) (454.0)
Increase / (decrease) in trade and other payables 319.6 (136.3)
Increase in provisions - 9.2
------- -------
Cash utilised by operations (4,151.8) (7,542.6)
Tax received 1,687.1 1,388.1
------- -------
Net cash flow used in operating activities (2,464.7) (6,154.5)
Cash flows from investing activities
Interest received 507.0 105.6
Purchase of intangible assets (819.3) (1,027.5)
Purchase of property, plant and equipment (842.5) (374.0)
Sale of property, plant and equipment 7.8 0.8
Increase in other financial assets - Bank deposits (3,408.2) -
------- -------
Net cash used in investing activities (4,555.2) (1,295.1)
Cash flows from financing activities
Proceeds from issuance of ordinary share capital 17.7 190.0
Cost of share issue - -
Lease payments - capital (301.4) (229.1)
Lease payments - interest (33.0) (36.6)
------- -------
Net cash (used in) financing activities (316.7) (75.7)
------- -------
Net (decrease) in cash and cash equivalents (7,336.6) (7,525.3)
Cash and cash equivalents at the start of the period 15,101.0 22,626.3
------- -------
Cash and cash equivalents at the end of the period 7,764.4 15,101.0
------- -------
The notes below form part of these financial statements.
Ilika plc
Consolidated statement of changes in equity
Share Capital Accumulated losses Total
Share premium restructuring reserve attributable to equity holders of parent
capital account
£000's £000's £000's £000's £000's
As at 30th April 2022 1,582.3 64,754.9 6,486.1 (41,386.9) 31,436.4
Share-based payment - - - 441.8 441.8
Issue of shares 8.3 181.7 - - 190.0
Cost of share issue - - - - -
Loss and total comprehensive expense - - - (7,296.0) (7,296.0)
------ ------- -------- -------- --------
As at 30th April 2023 1,590.6 64,936.6 6,486.1 (48,241.1) 24,772.2
Share-based payment - - - 383.1 383.1
Issue of shares 0.8 16.9 - - 17.7
Cost of share issue - - - - -
Loss and total comprehensive expense - - - (4,813.4) (4,813.4)
------ ------- -------- -------- --------
As at 30th April 2024 1,591.4 64,953.5 6,486.1 (52,671.4) 20,359.6
------ ------- -------- -------- --------
Share capital
The share capital represents the nominal value of the equity shares in issue.
Share premium account
When shares are issued, any premium paid above the nominal value is credited
to the share premium reserve.
Capital restructuring reserve
The capital restructuring reserve arises on the accounting for the share for
share exchange. It represents the difference between the value of the issued
equity instruments of Ilika Technologies Ltd immediately before the share for
share exchange and the equity instruments of Ilika plc along with the shares
issued to effect the share for share exchange.
Accumulated losses
The accumulated losses reserve records the accumulated profits and losses of
the Group since inception of the business.
The notes below form part of these financial statements.
Ilika plc
Notes to the consolidated financial statements
1 Accounting policies
Basis of preparation
These financial statements have been prepared in accordance with UK adopted
international accounting standards. The principal accounting policies adopted
in the preparation of the consolidated financial statements are set out below.
The policies have been consistently applied to all of the years presented. The
figures presented in the financial statements are shown in thousands.
The individual financial statements of Ilika plc are shown on page 61 to 65.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company made up to the reporting
date. The Company controls an investee if all three of the following elements
are present: power over the investee, exposure to variable returns over the
investee, and the ability of the investee to use its power to affect the
variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Going concern
The financial statements have been prepared on a going concern basis which
assumes that the Company will have sufficient funds available to enable it to
continue to trade for the foreseeable future. In making their assessment that
this assumption is correct the Directors have undertaken an in-depth review of
the business, its current prospects, and cash resources as set out below.
The directors have prepared and reviewed financial forecasts. The Group meets
its day to day working capital requirements through existing cash resources,
short and long term bank deposits, which, at 30th April 2024, amounted to
£11,945,282 (2023: £15,873,631). After due consideration of these forecasts
and current cash resources and bank deposits, the directors consider that the
Company and the Group have adequate financial resources to continue in
operational existence for the foreseeable future (being a period of at least
twelve months from the date of this report), and for this reason the financial
statements have been prepared on a going concern basis.
Following the completion of the 2023_24 accounting period the Company
successfully raised an additional £2.3m gross, funds through an equity
placing of ordinary shares to institutional and retail shareholders. This
additional capital further strengthens the balance sheet and underpins the
ongoing support from shareholders.
After taking account of all the above factors the Directors believe that as
the market becomes more aware of the Company's prospects and the scale of the
opportunities that the Company's technologies create the Company will continue
to be able to raise any funds required to enable it to continue to trade and
grow towards self-sufficiency.
Changes in accounting policies
(a) New standards, amendments to standards or interpretations
No new standards, interpretations and amendments adopted in the year have had
a material impact on the Group.
(b) New standards, amendments to standards or interpretations not yet applied
There are no new standards, interpretations or amendments not yet applied
which the directors anticipate will have a material impact on the Group.
Turnover
Turnover comprises the amount of consideration to which the entity expects to
be entitled for the sales of products or services, net of value added tax and
is recognised as follows:
Sales of goods
Sales of Stereax batteries are recognised upon despatch to the customer at
which point they have an obligation to pay in full and as such, control is
considered to transfer at that point. Invoices are raised at the point
purchase orders are made and subsequently upon delivery.
Government grants
Grants that compensate the Group for expenses incurred are recognised in the
income statement on a systematic basis in the same periods in which the
expenses are recognised. Submissions are made for pre-arranged time periods
with timing differences recognised within accrued or deferred income.
Financial income
Income from short term deposits is recognised in the income statement as it
accrues, using the effective interest method.
Pension and other post-retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due.
Share-based payment transactions
The Group issues equity-settled share options to all employees. Equity-settled
share options are measured at fair value at the date of grant. The fair value
determined at the grant date of the equity-settled share options is expensed
on a straight-line basis over the vesting period. At each period end, the
directors re-assess the impact of non-market conditions and adjust the
estimated share-based payment appropriately.
The fair value of options granted by the Group is measured by use of the
Black-Scholes pricing model taking into account the following inputs: the
exercise price of the option; the life of the option; the market price on the
date of grant of the option; the expected volatility of the share price; the
dividends expected on the shares; and the risk free interest rate for the life
of the option. Where required market-based vesting and other conditions are
also considered in determining the fair value of new options granted in the
year. The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability, exercise
restrictions, and behavioural considerations.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in profit or loss.
Research and development expenditure
Research expenditure is recognised as an expense when it is incurred.
Development expenditure is recognised as an expense except that costs incurred
on development projects are capitalised as intangible assets to the extent
that such expenditure is expected to generate future economic benefits.
Development expenditure is capitalised if, and only if, an entity within the
Group can demonstrate all of the following:
i. its ability to measure reliably the expenditure attributable to
the asset under development;
ii. the product or process is technically and commercially feasible;
iii. its future economic benefits are probable;
iv. its ability to use or sell the developed asset;
v. the availability of adequate technical, financial and other
resources to complete the asset under development; and
vi. its intention is to use or sell the developed asset.
During the year, £819,254 (2023: £1,027,512) of development expenditure has
been capitalised in line with IAS 38 as a result of the conditions being met
in respect of the Stereax battery project and the sales made in the year.
This capitalisation had commenced in April 2020.
Taxation
Companies within the group may be entitled to claim special tax allowances
under the SME scheme in relation to qualifying research and development
expenditure (eg R&D tax credits). The group accounts for such allowances
as tax credits, which means that they are recognised when it is probable that
the benefit will flow to the group and that benefit can be reliably
measured. R&D tax credits reduce current tax expense and, to the extent
the amounts due in respect of them are not settled by the balance sheet date,
reduce current tax payable. Where companies are loss-making the company claims
tax credits on their surrenderable losses, with an appropriate receivable
recognised. A deferred tax asset is recognised for unclaimed tax credits
that are carried forward as deferred tax assets.
Tax credits claimed under the RDEC scheme are accounted for under IAS 20 as
government grants in line with the accounting policy noted above.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The amount of deferred tax provided is based on
the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at
the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
Depreciation is charged to the statement of comprehensive income on a
straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment less their estimated residual value. The
estimated useful lives are as follows:
Leasehold improvements lease term
Plant, machinery and equipment 2 - 5 years
Fixtures & fittings 3 - 5 years
Impairment
The carrying amounts of the Group's assets are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such
indication exists, the asset's recoverable amount is estimated at the present
value of the future expected cashflows associated with the impaired asset.
An impairment loss is recognised whenever the carrying amount of an asset
exceeds its recoverable amount.
Impairment losses are recognised in profit or loss.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for leases of low value assets and leases with a duration of
twelve months or less.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
Group's incremental borrowing rate on commencement of the lease is used.
Variable lease payments are only included in the measurement of the lease
liability if they depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also
includes: amounts expected to be payable under any residual value guarantee;
the exercise price of any purchase option granted in favour of the group if it
is reasonably certain to exercise that option; and any penalties payable for
terminating the lease, if the term of the lease has been estimated on the
basis of termination option being exercised.
Right-of-use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for: lease
payments made at or before commencement of the lease, initial direct costs
incurred, and the amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement, lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
Intangible assets
Computer software
Acquired computer software licenses are capitalised on the basis of the costs
incurred to acquire and bring to use the specific software. These costs are
amortised to administrative expenses using the straight line method over their
estimated useful lives (1-5 years).
Intellectual property
Acquired intellectual property is included at cost and is amortised to
administrative expenses on a straight-line basis over its useful economic life
of 15 years.
Development expenditure
Development expenditure is capitalised at cost and is amortised to
administrative expenses on a straight-line basis over its useful economic life
of 10 years.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument. The Group's financial assets are all carried at amortised
cost. Impairment provisions for trade receivables are recognised based on the
simplified approach within IFRS 9 using a provision matrix in the
determination of the lifetime expected credit losses. The Group's financial
liabilities are all classified as 'other' liabilities which are carried at
amortised cost. Cash and cash equivalents comprise cash balances and call
deposits. Deposits of over 3 months' maturity, judged at inception, are
classified as Other Financial Assets.
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash and that are subject to an insignificant risk of changes in
value.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Group are recognised at the proceeds received, net of direct
issue costs.
Provisions
Provisions are made where an event has taken place that gives the Group a
legal or constructive obligation that probably requires settlement by a
transfer of economic benefit, and a reliable estimate can be made of the
amount of the obligation.
Provisions are either charged as an expense to income statement or capitalised
within property, plant and equipment in the year that the Group becomes aware
of the obligation, and are measured at the best estimate at the balance sheet
date of the expenditure required to settle the obligation, taking into account
relevant risks and uncertainties.
When payments are made, they are charged to the provision carried in the
balance sheet.
Key sources of estimation and uncertainty
The preparation of the Group's financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses at the date of the Group's financial
statements. The Group's estimates and judgements are continually evaluated and
are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
Capitalisation of development costs
During the year, costs have been capitalised in respect of the Stereax battery
technology. The directors have determined that the conditions to capitalise
this associated expenditure have been met. Had these costs been considered
research rather than development expenditure then the intangible assets would
be £819,254 lower.
Recoverability of development costs
The directors have considered the recoverability of the capitalised costs by
reference to third party market analysis and the signed contract with Cirtec
and determined that the amounts are recoverable.
2 Segment reporting
The Group operates in one area of activity, namely the production, design and
development of solid-state batteries. For management purposes, the Group is
analysed by the geographical location of its customer base and business
development directors have been appointed to cover the group's three
territories of focus, Asia, North America and Europe (with the UK further
split out below).
Year ended 30(th) April
Turnover 2024 2023
£000's £000's
Analysis by geographical market:
By destination
Asia 5.3 20.4
Europe - -
North America 2.1 0.6
UK 2,083.2 681.0
-------- --------
2,090.6 702.0
------- -------
An analysis of turnover by type, demonstrating the changing focus of
management from sales of services to sales of goods, is as follows:
Year ended 30(th) April
Turnover 2024 2023
£000's £000's
Goods and services 20.1 33.8
UK Grants 2,070.5 668.2
-------- --------
2,090.6 702.0
------- -------
Customers might individually account for more than 10% of the total turnover
of the Group. The turnover from these companies are indicated below:
Year ended 30(th) April
Turnover 2024 2023
£000's £000's
UK Grants 2,070.5 668.2
Customers less than 10% 20.1 33.8
-------- --------
2,090.6 702.0
------- -------
The Company benefitted from the UK Government Research & Development
Expenditure Credit (RDEC) during the year:
Year ended 30(th) April
Other Operating Income 2024 2023
£ £
RDEC 532.4 79.0
-------- --------
532.4 79.0
------- -------
3 Operating loss
Year ended 30(th) April
2024 2023
This is arrived at after charging: £000's £000's
Research and development expenditure in the year 3,506.2 4,131.4
Depreciation of property, plant and equipment 1,324.4 1,292.5
Depreciation of right-of-use assets 369.5 260.3
Amortisation of intangible assets 41.7 42.2
Auditors remuneration:
Fees payable to the Group's auditor for the audit of the Group's 42.2 43.5
accounts
Fees payable to the Group's auditor for other services:
- The Audit of the Group's subsidiaries 9.5 9.8
- Audit assurance services - 4.0
Foreign exchange differences 2.7 10.4
Share-based payment 383.1 441.8
------- -------
4 Employees
The average number of employees during the year, including executive
directors, was:
Year ended 30(th) April
2024 2023
Number Number
Administration 6 6
Materials synthesis 62 66
------ ------
68 72
------ ------
Staff costs for all employees, including executive directors, consist of:
Year ended 30(th) April
2024 2023
£000's £000's
Wages and salaries 3,548.7 4,043.8
Social security costs 380.6 473.3
Share-based payment expense 383.1 441.8
Pension costs 488.5 280.0
------- -------
4,800.9 5,238.9
-------- --------
Included in the above are amounts totaling £752,332 (2023: £935,669) which
have been capitalised.
The total remuneration of the Directors of the Group was as follows:
Year ended 30(th) April
2024 2023
£000's £000's
Wages and salaries 550.1 558.3
Pension costs 114.8 26.9
------- -------
Directors' emoluments 664.9 585.2
Social security costs 71.8 72.7
Share-based payment expense 281.8 256.0
------- -------
Key management personnel 1,018.5 913.9
------- -------
The Directors represent key management personnel and further details, are
given in the Directors' Remuneration Report on page 14. The highest paid
director received remuneration of £334,537 (2023: £341,340) including
pension contributions of £69,549 (2023: £22,056).
5 Taxation
(a) Tax on loss from ordinary activities
There is no taxation charge due to the losses incurred by the Group during the
year. The taxation credit represents R&D tax credit claims as follows:
Year ended 30(th) April
2024 2023
£000's £000's
R&D tax credits 526.4 1,261.1
Adjustments to prior period 426.0 371.5
---- ----
952.4 1,632.6
------ ------
(b) Factors affecting current tax credit
The tax assessed on the loss on ordinary activities for the period is
different to the standard rate of corporation tax in the UK of 19% up to April
2024 and 19% from April 2024 under the Small ring fenced profits rate (2023:
19%). The differences are reconciled below:
2024 2023
£000's £000's
Loss on ordinary activities before tax (5,765.8) (8,928.4)
------ ------
Loss on ordinary activities before tax multiplied by the standard rate of
corporation tax in the UK of 19% (2023: 19%)
(1,095.5) (1,696.4)
Effects of:
Expenses not deductible for corporation tax 96.2 90.7
R&D relief (135.8) (468.0)
Origination of unrecognised tax losses 608.7 812.6
Adjustments to prior period (426.0) (371.5)
------ ------
Total tax credit for the year (952.4) (1,632.6)
------ ------
Unrecognised deferred taxation
There are tax losses available for carry forward against future trading
profits of approximately £42.6m (2023: £40m). A deferred tax asset in
respect of these losses, net of fixed asset timing differences of
approximately £9.6m (2023: £9.1m) has not been recognised in the accounts,
as the full utilisation of these losses in the foreseeable future is
uncertain.
6 Losses per share
Losses per ordinary share have been calculated using the weighted average
number of shares in issue during the relevant financial periods. The weighted
average number of equity shares in issue and the losses, being loss after tax,
are as follows:
Year ended 30(th) April
2024 2023
No. No.
Weighted average number of equity shares 159,036,098 158,395,116
-------- --------
£000's £000's
Losses after tax (4,813.4) (7,295.9)
------- -------
Pence Pence
Loss per share (3.03) (4.61)
------ ------
The loss attributable to ordinary shareholders and weighted average number of
ordinary shares for the purpose of calculating the diluted losses per ordinary
share are identical to those used for basic losses per share. This is because
the exercise of share options would have the effect of reducing the loss per
ordinary share and is therefore not dilutive. At 30(th) April 2024, there were
8,316,157 options outstanding (2023: 6,978,331 ) as detailed in notes 16 and
20.
7 Intangible assets
Development expenditure Software Intellectual property Total
licences
£000's £000's £000's £000's
Cost
As at 30th April 2022 1,793.0 269.9 75.0 2,137.9
Additions 1,027.5 - - 1,027.5
------ ------ ------ ------
As at 30th April 2023 2,820.5 269.9 75.0 3,165.4
Additions 819.2 - - 819.2
------ ------ ------ ------
As at 30th April 2024 3,639.7 269.9 75.0 3,984.6
Amortisation
As at 30(th) April 2022 - 104.7 75.0 179.7
Provided for the year - 42.2 - 42.2
------ ------ ------ ------
As at 30th April 2023 - 146.9 75.0 221.9
Provided for the year - 41.7 - 41.7
------ ------ ------ ------
As at 30th April 2024 - 188.6 75.0 263.6
Net book value
As at 30(th) April 2023 2,820.5 123.0 - 2,943.5
------- ------ ------- ------
As at 30(th) April 2024 3,639.7 81.3 - 3,721.0
------- ------ ------- ------
The amortisation charge of £41,668 (2023: £42,203) is included within
administrative expenses.
Development expenditure has not yet been amortised awaiting full
commercialisation and completion of the technology transfer of the Stereax
business to Cirtec under licence.
8 Property, plant and equipment
Leasehold Plant, Fixtures and fittings Total
improvements machinery and equipment
£000's £000's £000's £000's
Cost
As at 30(th) April 2022 392.4 8,538.1 103.0 9,033.5
Additions 1.4 478.5 3.9 483.8
Disposals - (119.7) - (119.7)
------ ------- ------ -------
As at 30th April 2023 393.8 8,896.9 106.9 9,397.6
Additions 38.9 802.6 1.0 842.5
Disposals - (153.6) - (153.6)
------ ------- ------ -------
As at 30th April 2024 432.7 9,545.9 107.9 10,086.5
------ ------- ------ -------
Depreciation
As at 30(th) April 2022 80.9 3,836.3 44.1 3,961.3
Provided for the year 78.7 1,190.9 22.8 1,292.4
Disposals - (119.7) - (119.7)
------ ------- ------ -------
As at 30th April 2023 159.6 4,907.5 66.9 5,134.0
Provided for the year 81.1 1,230.8 13.0 1,324.9
Disposals - (131.0) - (131.0)
------ ------- ------ -------
As at 30th April 2024 240.7 6,007.3 79.9 6,327.9
------ ------- ------ -------
Net book value
As at 30(th) April 2023 234.2 3,989.4 40.0 4,263.6
------ ------- ------ -------
As at 30(th) April 2024 192.0 3,538.6 28.0 3,758.6
------ ------- ------ -------
At the year end, deposits totaling £414,183 (2023: £223,751) were paid in
respect of property, plant and equipment and are held in prepayments. These
will be transferred once the items have been received. Additionally, the Group
has capital commitments totaling £515,722 (2023: £314,531) as disclosed in
note 18.
9 Leases
The Group has leases for its premises in Romsey and Chandler's Ford and for a
company van. These leases are accounted for by recognising a right-of-use
asset and a lease liability.
The lease liabilities have been measured at the present value of the
contractual payments due to the lessor over the lease terms using an
incremental borrowing rate of between 4% - 7.5%, which is the group's estimate
of the discount rate applicable to a property and an equipment lease. The
lease terms have been determined to be between 3 and 5 years, as this is the
non-cancellable period before the Group has the option of a break. There is no
reasonable certainty that the leases will continue beyond this point.
The right-of-use assets have been initially measured at the amount of the
lease liabilities. Subsequent to initial measurement the lease liabilities
increase as a result of interest charged at a constant rate on the balance
outstanding and are reduced for any lease payments made. Right-of-use assets
are depreciated on a straight-line basis over the remaining term of the
lease.
Plant and
Right-of-use assets Land and buildings equipment Total
£000's £000's £000's
Cost
As at 1(st) May 2022 1,046.5 229.2 1,275.7
Additions - - -
------ ------ ------
As at 30(th) April 2023 1,046.5 229.2 1,275.7
Additions 298.0 10.2 308.2
------ ------ ------
As at 30(th) April 2024 1,344.5 239.4 1,583.9
------ ------ ------
Depreciation
As at 1(st) May 2022 365.4 19.2 384.6
Provided for the year 209.3 50.9 260.2
------ ------ ------
As at 30(th) April 2023 574.7 70.1 644.8
Provided for the year 209.3 160.2 369.5
------ ------ ------
As at 30(th) April 2024 784.0 230.3 1,014.3
------ ------ ------
Net book value
As at 30(th) April 2023 471.8 159.1 630.9
------ ------ ------
As at 30(th) April 2024 560.5 9.1 569.6
------ ------ ------
Lease liabilities
2024 2023
£000's £000's
As at 1(st) May 618.5 847.6
Additions 308.2 -
Cashflows:
Lease payments (334.4) (265.7)
Interest expense 33.0 36.6
------ ------
As at 30(th) April 625.3 618.5
------ ------
Maturity analysis of lease payments:
As at 30(th) April
2024 2023
£000's £000's
0-3 months 58.2 57.8
3-12 months 230.5 203.0
------ ------
Due in less than one year 288.7 260.8
1-2 years 194.1 207.7
2-5 years 142.5 150.0
------ ------
Lease payments 625.3 618.5
------ ------
10 Trade and other receivables
As at 30(th) April
2024 2023
£000's £000's
Trade receivables 2.1 19.3
Prepayments 1,144.0 970.1
Other receivables 432.3 481.6
Accrued income 725.8 467.5
------ ------
2,304.2 1,938.5
------ ------
The ageing of trade receivables is as follows:
As at 30(th) April
2023 2023
£ £
0-29 days - 19.3
30+ days 2.1 -
------ ------
The accrued income of £725,778 (2023: £467,495) relates to performance
obligations satisfied but not invoiced, all of which is due to be settled
within the next twelve months. The change in accrued income reflects the level
of grants underway at the current year end compared to the previous year and
the change to the R&D tax credit scheme with additional recovery through
the RDEC element for 23_24 financial year.
11 Other financial assets - bank deposits
As at 30(th) April
2024 2023
£000's £000's
Short term deposits with more than three months' maturity 4,180.9 772.7
-------- --------
12 Cash and cash equivalents
As at 30(th) April
2023 2023
£000's £000's
Current bank accounts 1,010.0 739.5
Short term deposits with less than three months' maturity 6,754.4 14,361.5
-------- --------
7,764.4 15,101.0
-------- --------
13 Trade and other payables
As at 30(th) April
2024 2023
£000's £000's
Trade payables 286.9 294.1
Other payables 39.2 39.0
Other taxes and social security costs 91.5 92.7
Accruals and deferred income 1,173.1 845.3
-------- --------
1,590.7 1,271.1
-------- --------
The ageing of financial liabilities is as follows:
As at 30(th) April
2024 2023
£000's £000's
0-29 days 855.3 680.3
30-59 days 1.5 85.5
60-89 days 630.5 383.2
90+ days 11.9 29.4
-------- --------
1,499.2 1,178.4
-------- --------
Within Accruals and deferred income is deferred income of £11,886 (2023:
£10,000) that represents unfulfilled performance obligations on grants and
product sales to be satisfied in the next twelve months.
14 Provisions
Leasehold
Dilapidations
£000's
As at 1(st) May 2023 249.5
Provided -
------
As at 30(th) April 2024 249.5
--------
Leasehold dilapidations relate to the estimated cost of returning two
leasehold properties to their original state at the end of the lease in
accordance with the lease terms.
15 Financial instruments
The risks associated with financial instruments are set out below.
Foreign currency risk
The Group buys goods and services in currencies other than sterling. The
Group's non sterling liabilities and cash flows can be affected by movements
in exchange rates. Given the low value of non-sterling transactions the Group
considers there to be a low exposure to foreign currency risk. The Group has
denominated some of its sales transactions in non-sterling currencies. The
foreign exchange loss recognised in the accounts in the year to 30(th) April
2024 was £2,661 (2023: £10,436).
Credit risk
The Group's credit risk is attributable to its trade receivables and banking
deposits. The Group places its deposits with reputable financial institutions
to minimise credit risk. The maximum exposure to credit risk for each period
is the amount disclosed above as cash and cash equivalents, banking deposits
and receivables. For the periods above there were no trade receivables which
were past due or impaired. Risk is further mitigated through the use of credit
limits, but also through the nature of the customers, who, for the most part,
are large multinationals.
Liquidity risk
The Group's policy is to maintain adequate cash resources to meet liabilities
as they fall due. All Group payable balances fall due for payment within one
year. Cash balances are placed on deposit for varying periods with reputable
banking institutions to ensure there is limited risk of capital loss. The
Group does not maintain an overdraft facility.
Interest rate risk
The main risk arising from the Group's financial instruments is interest rate
risk. The Group placed deposits surplus to short-term working capital
requirements with a variety of reputable UK-based banks. These balances are
placed at floating rates of interest and deposits have maturities of one to
twelve months. The Group's cash and short-term deposits are set out in note 11
and 12. Floating-rate financial assets comprise cash on deposit and cash at
bank. Short-term deposits are placed with banks and are categorised as
floating-rate financial assets. Contracts in place at 30(th) April 2024 had a
weighted average period to maturity of 45 days (2023: 7 days) and a weighted
average annualised rate of interest of 3.71%. (2023: 2.73%).
Interest rate risk sensitivity analysis
It is estimated that a change in base rate to zero would have increased the
Group's loss before taxation for the year to 30(th) April 2024 by
approximately £507,038 (2023: £105,696).
It is estimated that an increase in base rate by 1 percent would decrease the
Group's loss before taxation for the year to 30(th) April 2024 by
approximately £119,453 (2023: £158,699).
There is no difference between the book and fair value of financial assets and
liabilities.
Capital management
The primary aim of the Group's capital management is to safeguard the Group's
ability to continue as a going concern, to support its businesses and maximise
shareholder value. The Group monitors its capital structure and makes
adjustments as and when it is deemed necessary and appropriate to do so using
such methods as the issuing of new shares. At present all funding is raised by
equity.
16 Share capital
As at 30(th) April
2024 2023
£000's £000's
Authorised
158,975,667 (2023: 158,474,367) Ordinary Shares of £0.01 each 1,589.8 1,584.7
1,355,100 (2023: 1,781,400) Convertible Preference Shares of £0.01 each 13.6 17.8
------ ------
Allotted, called up and fully paid
158,975,667 (2023:158,474,367) Ordinary Shares of £0.01 each 1,589.8 1,584.7
162,100 (2023: 588,400) Convertible Preference Shares of £0.01 each 1.6 5.9
------ ------
1,591.4 1,590.6
------ ------
Share Rights
The ordinary share and preference shares rank pari passu in all respects other
than:
· The losses which the Group may determine to distribute in respect of any
financial period shall be distributed only among the holders of the Ordinary
Shares. The Preference Shares shall not entitle the holders of them to any
share in such distributions.
· On a return of capital or assets on a liquidation, reduction of capital or
otherwise the surplus assets of the Group remaining after payment of its
obligations shall be applied:
o First, in paying to the holders of the Preference Shares the amount paid
thereon, being the amount equal to the par value of the preference shares
excluding any premium; and
o Secondly, the balance of such surplus assets shall belong to and be
distributed amongst the holders of the Ordinary Shares.
The Preference Shareholders have the right, at any time, to convert the
preference shares held to the same number of Ordinary Shares. There are no
further redemption rights.
During the year, a total of 75,000 options over Ordinary Shares of £0.01 each
were exercised for a total consideration of £19,125.
During the year, a total of 426,300 Preference Shares were converted to
Ordinary Shares of £0.01 each.
Share options
Employee related share options are disclosed in note 20.
17 Pensions
The Group operates a defined contribution group personal pension scheme. The
pension cost charge for the period represents contributions payable by the
Group to the scheme and amounted to £495,220 (2023: £280,021). Included
within other creditors is £37,207 (2023: £37,429) relating to outstanding
pension contributions.
18 Capital commitments
At 30(th) April, the group had capital commitments as follows:
2024 2023
£000's £000's
Contracted for but not provided in these financial statements 515.7 314.5
------ ------
19 Related party transactions
The directors consider that no one party controls the Group.
Details of key management personnel and their compensation are given in note 4
and in the Directors' Remuneration Report on pages 14 to 18.
Included within these statements, as shown in note 10 and note 27, are amounts
totalling £91,593 (2023: £127,403) relating to employee share option
exercises which were owed as at April 30 2024.
20 Share-based payments expense and share options
Share-based payment expense
The Group has incentivised and motivated staff through the grant of share
options under the Enterprise Management Incentive (EMI) scheme and through
unapproved share options.
At 30(th) April 2024, the following fully vested options, whose fair values
have been fully charged to the consolidated statement of total comprehensive
income, were outstanding:
Approved share options:
Date of grant Number of shares Period of Vesting Exercise
option date Price per share
08/02/18 78,375 10 years 08/02/21 £0.21
24/01/19 390,500 10 years 18/01/22 £0.182
09/07/19 238,983 10 years 09/07/22 £0.295
19/03/20 677,000 10 years 19/03/23 £0.255
Unapproved share options:
Date of grant Number of shares Period of Exercise
option Vesting Price per share
date
15/08/2017 84,021 10 years 15/08/18 £0.01
24/01/2019 1,840,171 10 years 23/01/22 £0.01
29/08/2019 268,125 10 years 29/08/20 £0.01
26/03/2020 60,000 10 years 19/03/23 £0.01
22/09/2020 81,575 10 years 22/09/21 £0.01
Black Scholes valuation
Weighted Average Exercise Price Number
2024 2023 2024 2023
Outstanding: £ £
At start of the period 0.2213 0.1840 6,978,331 6,673,840
Granted in the period 0.4377 0.3844 2,832,777 1,579,140
Exercised in the period 0.2550 0.2293 (75,000) (828,500)
Lapsed in the period 0.4057 0.2270 (1,419,951) (446,149)
----- ----- -------- --------
At the end of the period 0.2632 0.2213 8,316,157 6,978,331
----- ----- -------- --------
The exercise price of options outstanding at the end of the period ranged
between £0.01 and £0.52 and their weighted average contractual life was 7.3
years (2023: 7.1 years). These share options are exercisable and must be
exercised within 10 years from the date of grant.
Ilika plc Executive Share Option Scheme 2010
At 30(th) April 2024 the following share options were outstanding in respect
of the Ilika plc Executive Share Option Scheme 2010:
Date of grant Number of shares Period of option Vesting Exercise
Date Price per share
08/02/18 78,375 10 years 08/02/21 £0.21
24/01/19 390,500 10 years 18/01/22 £0.182
09/07/19 238,983 10 years 09/07/22 £0.295
19/03/20 677,000 10 years 19/03/23 £0.255
26/01/23 1,104,786 10 years 26/01/26 £0.52
14/12/23 2,032,300 10 years 14/12/26 £0.44
All of the options have been valued using the Black-Scholes methodology, with
an expected volatility rate of between 37.7% and 100%, the interest rate being
the bank of interest base rate at the time of grant and an expected period to
maturity of 3 years.
Members of staff in the Group are awarded options in respect of ordinary
shares in Ilika plc, which are conditional upon the achievement of a series of
financial and commercial milestones.
294,100 options lapsed in the year and 75,000 options were exercised.
Ilika plc unapproved share options
At 30(th) April 2024 the following share options were outstanding in respect
of Ilika plc unapproved share options:
Date of grant Number of shares Period of option Vesting Exercise
Date Price per share
15/08/17 84,021 10 years 15/08/18 £0.01
24/01/19 1,840,171 10 years 23/01/22 £0.01
29/08/19 268,125 10 years 29/08/20 £0.01
26/03/20 60,000 10 years 19/03/23 £0.255
22/09/20 81,575 10 years 22/09/21 £0.01
22/09/21 42,105 10 years 22/09/22 £0.01
07/02/22 197,985 10 years 07/02/25 £0.01
26/01/23 419,754 10 years 26/01/26 £0.01
20/09/23 146,804 10 years 20/09/24 £0.01
14/12/23 653,673 10 years 14/12/26 £0.01
1,125,851 options lapsed in the year and no options were exercised.
There are total of 3,760,855 options from both schemes which were capable of
being exercised as at 30(th) April 2024.
2024 2023
£000's £000's
Share-based payment expense
Black Scholes calculation 383.1 441.8
------ ------
21 Post Balance Sheet Events
Following the end of the financial year on 30 April 2024 the Company completed
a fund raise by way of equity placing, open offer and Director subscriptions
of 8,327,424 new Ordinary shares at £0.28 per share resulting in gross
proceeds of £2.3m
22 Company details
Ilika plc is a public limited company registered in England and Wales with
company number 07187804 and whose registered office is Unit 10a, The
Quadrangle, Premier Way, Romsey, England, SO51 9DL.
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