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Ilika plc

ILIKA plc Financial Statements for year ended 30 April 2016

Ilika Plc (LON:IKA), the accelerated materials innovation company, announces its audited full-year results for the year ended 30 April 2016.

Operational highlights

· Launch of StereaxTM M250 solid state battery

· Definition of roadmap covering future development pathways for Stereax

· Continuous improvement in yield and productivity of battery pilot line

· Grant of patents protecting Stereax technology

· Defence of patent position for fuel cell catalysts

· Award of grant for smart materials for electronic data storage

· Continuation of success in securing grants for aerospace alloys

· Appointment of Mike Inglis, former Chief Commercial Officer of ARM Holdings, as Non-Executive Chairman

Financial highlights

· Revenues £0.6m (2015: £1.1m)

· Loss for the year £3.5m (2015: £2.7m)

· Loss per share 5.2p (2015: 4.1p)

· Cash, cash equivalents and bank deposits of £3.0m (2015: £6.0m)


Commenting on the results Ilika Plc Chairman, Mike Inglis, said: “Since my appointment as Non-Executive Chairman at the AGM last September, I have been very encouraged to see the technical progress and increased commercial focus at Ilika. The definition of a clear solid state battery roadmap and the launch of the Stereax M250 have been important milestones on the road to commercial success. Underpinning this product development has been a continued deployment of Ilika’s high throughput platform on a focussed portfolio of materials development opportunities. I am looking forward to further progress in the year to come.”


The Directors present their Strategic Report for the year ended 30 April 2016.

Principal activities

Ilika plc is the holding company for Ilika Technologies Limited, a pioneer in materials innovation and solid state battery technology. Ilika has a unique, patent protected high throughput technology platform which accelerates the discovery of new and patentable materials for identified end uses in the automotive, aeronautical and electronics sectors. Ilika has developed ground-breaking solid state battery technology to meet the demands of the Internet of Things (IoT).

Business Strategy

The Company’s strategy is to use its processes to discover and commercialise novel materials for integration into products with high value end-markets. In order to ensure a high probability of commercial success, the Company prefers to develop these materials in collaboration with large multinational companies, which have the expertise to bring new products to market to address unmet needs in their sectors. The Company aims to create intellectual property (IP) such that it will benefit from commercialisation rewards associated with the ultimate generally adopted technology. The Company’s objective is to have its materials integrated into market-leading products sold by leading commercialisation partners around the world. The Company generally expects these end-products to fit into or create end-markets worth in excess of $1 billion per year, in which the Directors believe a number of the Company’s commercialisation partners are positioned to have a leading share.

The Company is pursuing its objectives through the following strategies:

· Developing leading-edge high throughput development processes;

· Partnering with companies committed to developing and globally commercialising jointly developed products;

· Using high throughput processes to invent patentable functional materials; and

· Development of valuable products through the application of functional materials.

Operating Review

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, making it particularly suitable for micro-battery applications. Battery technology is a key challenge in the electronics sector, with IoT being a key driver of growth and battery technology development.

IoT devices offer a different set of battery challenges compared to other electronic devices. They have similar pressures, such as cost and availability, but they also have some specific requirements:

· Small size in both footprint and thickness

· Ability to be trickle charged

· Charged only when an energy harvester can get energy

· Longer life span to match those of sensors and MCUs

· Support wider temperature ranges

Ilika’s solid state batteries have several benefits over currently available lithium-ion batteries:

· 6x faster to charge

· Energy dense in a small footprint

· 10x lower leakage currents

· Non-flammable

· Can be integrated into IC components to reduce end device size

Battery Product Launch

In April 2016, Ilika launched its Stereax™ M250 solid state battery IP at the IDTechEx exhibition in Berlin. The battery is a miniaturised solid state battery for IoT devices and is designed to address the key challenge of always-on, self-charging and efficient energy. Ilika Stereax™ batteries use patented materials and processes enabling superior energy density per battery footprint, up to 40% improvement on current solid state solutions, and increased temperature range support to over 100°C, 30°C higher than existing solid state products. Ilika’s batteries do not contain any free lithium which makes them more moisture resistant.

Ilika demonstrated the ability of its Stereax™ M250 battery to power a real IoT device. This device is a perpetual beacon for Smart Homes. It is an autonomous sensing device of minimal size which, fixed on a wall, measures temperature data at regular intervals and transmits the data using Bluetooth Low Energy to an app. The app displays temperature information as well as the battery’s state of charge. This device, which is so small it can easily be forgotten, replicates sensors for Smart Homes, where the data could also be sent to a hub for automated heating or air-conditioning control.

Battery Roadmap

The Ilika Stereax™ roadmap focuses on three main battery requirements: miniaturisation, capacity in a small footprint and increased performance. The miniaturisation roadmap looks at increasingly smaller footprints at smaller currents (µAh), making them ideal for small sensor driven devices. The capacity roadmap increases the amount of energy for a given active footprint by utilising Ilika’s patented stacking feature, which allows multiple cells to be stacked on top of one another. The performance roadmap focuses on higher energy density solutions that have additional requirements such as extended temperature range support.

Pilot Line Operation

Since announcing the commencement of pilot production in March 2015, Ilika has continued to operate the pilot line to produce batteries for demonstration purposes. The technical team has optimised the operational parameters to maximise the yield and performance of the batteries, allowing Ilika to release batches of batteries and performance data for evaluation by commercial partners. In addition, discussions have progressed with potential partners capable of manufacturing full production lines at industrial scale. These discussions have enabled the calculation of early cost estimates for the production of batteries at realistic production volumes.

Patent Position

In September 2015, Ilika announced it had received a Notice of Grant in China for its patent application supporting solid state batteries jointly filed with Toyota Motor Company in July 2011. This Notice in China followed the successful British grant in April 2014 and the Notice of Grant in Europe in July 2015. This joint filing resulted from collaborative work undertaken with Toyota, which commenced in 2008. This patent family is one of the two earliest filings of a growing portfolio of IP exemplifying Ilika’s unique approach to solid state battery production using evaporation sources. The more recent applications in the portfolio contain both jointly-owned and solely owned IP.

Materials Portfolio Activities

Although solid state battery development accounted for about 75% of activity in the year, the Company was also active in the development of aerospace alloys and materials for electronics applications.

Aerospace Alloys

In September 2015, Ilika announced that it had been awarded the lead role in a £2.15m, three year Innovate UK grant funded project with BAE Systems, GKN, Reliance Precision Engineering and the University of Sheffield.

The project aims to develop a new generation of self-healing alloys suitable for additive manufacturing (AM) processes and to develop a metallic manufacturing process that takes advantage of the flexibility of AM and the precision of subtractive manufacturing. This will enable the manufacture of novel components with critical feature tolerances, meeting the challenges faced in the design of mechanisms for the aerospace industry with lower weight, greater structural integrity and enhanced functional performance.

In addition, Ilika continued in its role leading a £1.33 million three year Innovate UK funded project with Rolls Royce, Diamond Light Source and the University of Cambridge to develop new superalloy compositions for gas turbine engines with better thermal efficiency than current alloys. The alloys are designed to increase gas turbine performance, reducing CO2 emissions and noise levels at take-off.

Electronic Materials

In February 2016, Ilika announced that it is taking part in a two-year project with Seagate and the University of Southampton (“UoS”), which has been awarded a £374k grant by Innovate UK. £194k of the grant will be used to fund project activities at Ilika.

Seagate are the market leaders in magnetic recording used in Hard Disk Drive (“HDD”) technology, most commonly used in laptops. UoS has developed world class expertise in the area of nanophotonics, the interaction of nanometer-scale objects with light.

The objective of this project is to provide a demonstration of “2D materials” for HDD applications. 2D materials, sometimes referred to as single layer materials, are crystalline materials consisting of a single layer of atoms. In this project, materials with superior nanophotonic properties are being developed to achieve improved hard drive performance and reliability. These materials must operate at temperatures of up to 300⁰C for thousands of hours, requiring extremely robust nanomaterials that have specific photonic properties allowing light energy to be conducted.

Patent position

In January 2014, three international patent applications from the portfolio were filed under the Patent Co-operation Treaty based upon earlier British priority applications. These were published in July 2015 and are progressing through the international patent examination process.

In August 2015, Ilika announced that the European Patent Office (EPO) had upheld Ilika’s opposition to a fuel cell catalyst patent from Brookhaven Science Associates (BSA). Certain claims of a granted European patent from BSA might have impacted upon Ilika’s freedom to operate its own granted European patent. BSA manages Brookhaven National Laboratory (BNL) on behalf of the United States Department of Energy (US DOE). BNL is a US national laboratory, primarily funded by the Office of Science of the US DOE. Ilika had filed an Opposition against the BSA patent in February 2013 and oral proceedings took place before the Opposition Division in March 2015 at the European Patent Office (EPO) in the Netherlands. As a result of these proceedings, the BSA European patent was revoked. The EPO issued a notice in August 2015 that the opposition proceedings were now terminated with revocation of the patent as the time limit had expired for filing an appeal against the decision to revoke the patent.

Key performance indicators (‘KPIs’)

The board considers that the most important KPIs are technical and operational and relate to the sales pipeline and engagement of commercialisation partners resulting from the progress of the technical development programmes outlined above.

The most important financial KPIs are the cash position and the operating loss of the Group, which remain under constant focus and which are considered in the 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 24 to 40. The consolidated financial statements are presented under International Financial Reporting Standards as adopted by the European Union. The financial statements of the Company continue to be prepared in accordance with International Financial Reporting Standards as adopted by the EU and are set out on pages 41 to 44.

Statement of Comprehensive Income


Revenue, all from continuing activities, for the year ended 30th April 2016 was £0.6m (2015: £1.1m). This includes £450k of grant income recognised from Innovate UK (2015: £384k), the majority of which relates to work together with the University of Cambridge, Diamond Light Source and Rolls Royce to develop new superalloy compositions for gas turbine engines.

The company has committed an increased proportion of its operational resource to the internally funded battery development programme in the year and as a consequence, has generated lower revenue from customers than in the prior year.

Administrative expenses and losses for the period

Total administrative costs for the year were slightly increased at £3.8m in 2016 relative to £3.6m in 2015. This increase is attributable to the increased spend on research and development in the year, particularly associated with the solid state battery development programme.

Combined cost of sales and administrative expenses were £4.1m in the year which is consistent with the £4.1m for 2015.

New options were granted in the year giving rise to a share based payment charge of £0.4m relative to £0.0m in 2015.

Loss on continuing activities before tax increased to £3.9m in 2016 from £3.0m in 2015. £0.5m of this increase is associated with the reduction in revenues and £0.4m is associated with the accounting adjustment share based payment charge.

Statement of financial position and cash flows

At 30 April 2016, net assets amounted to £3.4m (2015: £6.5m), including net funds of £3.0m (2015: £6.0m).

The principal elements of the £3.1m decrease over the year ended 30 April 2016 in net funds were:

· Cash used in operations of £3.3m (2015: £2.5m);

· Purchase of plant, property and equipment of £0.1m (2015: £0.3m);

· Research and development tax credits received of £0.3m (2015: £0.3m).

Treasury policy and financial risk management

Credit risk

The Group follows a risk-averse policy of treasury management. Sterling deposits are held with one or more approved UK based financial institutions. The Group’s primary treasury objective is to minimise exposure to potential capital losses whilst at the same time securing prevailing market rates.

Interest rate risk

The Group’s cash held in current bank accounts is subject to the risk of fluctuating base rates. An element of the Group’s financial assets is placed on fixed-term interest deposits.

Currency risk

During the year under review, the Group was exposed to Euro, Japanese Yen and US dollar currency movement as it engages business development staff in each of those territories. Additionally, a small element of expense and capital spend is denominated in these currencies. The Group has arranged for some of its programs, with customers based in these territories, to be denominated in these currencies to hedge against this exposure.


Commercial risk

The Company is subject to competition from competitors who may develop more advanced and less expensive alternative technology platforms, both for existing materials and for those materials currently under development. The Company is largely dependent on its partners to commercialise the end-products containing the Company’s materials.

The Company seeks to reduce this risk by continually assessing competitive technologies and competitors. The Company seeks to commercialise materials 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 materials.

Financial risk

The Company is reliant on a small number of significant customers and partners. Termination of these agreements could have a material adverse effect on the Group’s results or operations or financial condition. The Company expects to incur further operating losses as progress on development programmes continue. There can be no assurance that the Company will ever achieve significant revenues or profitability.

The Company seeks to reduce this risk by broadening the number of customers and partners and thereby reduce reliance on individual significant companies.

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 Company seeks to reduce this risk by employing in-house staff with extensive global experience of patenting and licensing using commercially available patent searching and landscaping software. External patent agents and attorneys are used to advise on the drafting and filing of patent applications.

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.

By order of the Board

Mike Inglis Chairman

Graeme Purdy CEO Ilika Plc

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