Final Results

RNS Number : 6032D
Ilika plc
08 July 2016
 

ILIKA plc

(The "Company" or the "Group")

 

Final Results

Financial Statements for year ended 30 April 2016

 

Ilika (AIM: 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's 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."

 

Ilika plc

www.ilika.com

Graeme Purdy, Chief Executive

Tel: 023 8011 1400

Steve Boydell, Finance Director

 

 

 

Numis Securities Limited

Tel: 020 7260 1000

Oliver Cardigan / James Black / Paul Gillam

 

 

 

Walbrook PR Ltd

Tel: 020 7933 8780 / ilika@walbrookpr.com

Paul McManus

Mob: 07980 541 893

Natalie Bruce

Mob: 07884 666 994

 

 

STRATEGIC REPORT

 

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.

 

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

 

Revenues

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.

PRINCIPAL RISKS AND UNCERTAINTIES

 

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

Graeme Purdy

Chairman

CEO

                                               

 

7 July 2016

DIRECTORS' REPORT

 

The Directors present their report and the audited financial statements for Ilika plc ('Ilika') and its subsidiary (the 'Group') for the year ended 30th April 2016

 

Details of directors' remuneration and share options are given in the Directors' Remuneration 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 S Boydell (FD and Company Secretary)

Prof. B. E. Hayden (CSO)

Mr G. Purdy (CEO)

 

Non-Executive

Mr J. B. Boyer    (Chairman) (retired 30th September 2015)

Mr M. Inglis (appointed 10th July 2015, appointed Chairman 30th September 2015)

Ms. C Spottiswoode CBE

Prof. Sir W Wakeham

Prof. K Jackson

 

Research and development costs

In accordance with the policy outlined in note 1, the Group incurred research and development expenditure of £2,057,966 in the year (2015: £1,740,173). 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 13 of the financial statements.

 

Dividends

The Directors do not recommend the payment of a dividend.

 

Political donations

The Group made no political donations during the year (2015: Nil).

 

Directors' interests in ordinary shares

The directors, who held office at 30 April 2016, had the following interests in the ordinary shares of the Company:

 

Number of shares


1st May 2015

30th April 2016




G Purdy

589,427

589,427

C Spottiswoode

45,454

45,454

S Boydell

9,090

9,090

M Inglis

-

65,000

W Wakeham

-

-

B Hayden*

-

-

K Jackson

-

-

 

* B Hayden had an interest in preference shares of the Company amounting to 426,300 at 1 May 2015 and at 30 April 2016.

 

Between 30 April 2016 and the date of this report, there has been no change in the interests of directors in shares as disclosed in this report.

 

Substantial shareholdings

On 28 June 2016 the Company had been notified of the following holdings of more than 3% or more of the issued share capital of the Company.

 

Shareholder

No. of ordinary shares

% shareholding

Charles Stanley Group plc

9,863,826

15.0

Henderson Global

9,500,000

14.4

IP Group plc

6,358,779

9.7

Ruffer LLP

6,105,454

9.3

Baillie Gifford & Co.

4,956,616

7.5

Richard Griffiths

2,574,836

3.9

Southampton Asset Management

2,349,900

3.6

Herald Investment Management

2,215,000

3.4

Hargreave Hale

2,063,045

3.1

 

Post balance sheet events

There are no significant post balance sheet events from the 30th April 2016 to the signing of this report.

 

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

 

 

 

 

Steve Boydell

Company Secretary

 

DIRECTORS' REMUNERATION REPORT

 

This report is non-mandatory for AIM-quoted companies and has been produced on a voluntary basis. It includes and complies with the disclosure obligations of the AIM Rules.

 

Remuneration Committee

The Company's remuneration policy is the responsibility of the Remuneration Committee (the 'Committee'), which was established in May 2004. The terms of reference of the Committee are outlined in the Corporate Governance Statement on page 15. The members of the Committee are Mike Inglis (Chairman), Clare Spottiswoode, Prof Keith Jackson and Prof Sir William Wakeham.

 

The Chief Executive Officer and certain executives may be invited to attend meetings of the Committee to assist it with its deliberations, but no executive is present when his or her own remuneration is discussed.

 

Remuneration policy

(i) Executive remuneration

 

The Committee has a duty to establish a remuneration policy which will enable it to attract and retain individuals of the highest calibre to run the Group. Its policy is to ensure that the executive remuneration packages of executive directors and the fee of the Chairman are appropriate given performance, scale of responsibility, experience, and consideration of the remuneration packages for similar executive positions in companies it considers to be comparable. Packages are structured to motivate executives to achieve the highest level of performance in line with the best interests of shareholders. A significant element of the total remuneration package, in the form of bonus and share options, is performance driven.

 

Executive remuneration currently comprises a base salary, an annual performance-related bonus, a long term incentive plan, a pension contribution to the executive director's individual money purchase scheme (at between 8% and 10% of base salary) and critical illness cover. Salaries and benefits were last reviewed in January 2016 with increases taking effect from 1st January 2016, taking into account Group and individual performance, external benchmark information and internal relativities. The Company operates a discretionary bonus scheme for executive directors for delivery of exceptional performance against a series of financial, commercial and technology objectives. The maximum bonus payable for the year to 30th April 2016 was restricted to 50% of CEO base salary, 30% of CSO base salary and 20% of CFO base salary.

 

(ii) Chairman and non-executive Director remuneration

 

The Chairman, Mr Inglis receives a fixed fee of £65,000 per annum. Clare Spottiswoode, Prof Sir William Wakeham and Prof Keith Jackson received a fixed fee of £32,500 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.

 

All remuneration policies will be reviewed regularly to maintain adherence with best market practice as appropriate.

Directors' remuneration

 

The aggregate remuneration received by directors who served during the year ended 30 April 2016 and 2015 was as follows:

 

 

 

Basic

salary

Benefits in kind

 

 

Bonus

Total

Short term benefits

Pension

Total


£

£

£

£

£

£

Year to 30 April 2016







G Purdy

190,000

671

30,000

220,671

30,000

250,671

S Boydell

120,260

423

10,181

130,864

17,181

148,045

B Hayden*

64,000

-

16,095

80,095

-

80,095

M Inglis

54,167

-

-

54,167

-

54,167

J Boyer

25,500

-

-

25,500

-

25,500

K Jackson

32,500

-

-

32,500

-

32,500

W Wakeham

32,500

-

-

32,500

-

32,500

C Spottiswoode

32,500

-

-

32,500

-

32,500


------

------

------

------

------

------


551,427

1,094

56,276

608,797

47,181

655,978


------

------

------

------

------

------








Year to 30 April 2015







G Purdy

176,667

543

24,000

201,210

29,833

231,043

S Boydell

115,000

356

12,000

127,356

17,450

144,806

B Hayden*

60,270

-

12,000

72,270

-

72,270

J Boyer

61,200

-

-

61,200

-

61,200

K Jackson

16,035

-

-

16,035

-

16,035

W Wakeham

31,641

-

-

31,641

-

31,641

C Spottiswoode

31,641

-

-

31,641

-

31,641


------

------

------

------

------

------


492,454

899

48,000

541,353

47,283

588,636


------

------

------

------

------

------

 

*B Hayden is employed by the University of Southampton. The amounts disclosed in the table above relate to payments made directly to B Hayden. The University of Southampton recharged employment costs of £63,171 to the company in the year in respect of B Hayden. (2015: £55,873).      

 

Share based payment charge attributable to directors in the year was £267,301 (2015: £7,080).

 

Benefits in kind include critical illness cover.

 

 

Share options

The share options of the directors are set out below:

 

 

Unapproved

2015

Number

 

Lapsed

 

Granted

2016

Number

Exercise Price

 

Expiry date

G Purdy

136,200

-

-

136,200

80p

 July 2017

G Purdy

1,050,000

-

-

1,050,000

51p

May 2020

G Purdy

-

-

872,727

872,727

1p

September 2025

J Boyer

1,050,000

(1,050,000)

-

-

51p

May 2020

B Hayden

59,300

-

-

59,300

80p

 July 2017

B Hayden

525,000

-

-

525,000

51p

May 2020

B Hayden

177,900

-

-

177,900

81.5p

February 2025

B Hayden

-

-

527,272

527,272

1p

September 2025

S Boydell

117,600

-

-

117,600

51p

May 2020

S Boydell

-

-

274,909

274,909

1p

September 2025

W Wakeham

65,100

-

-

65,100

51p

May 2020

C Spottiswoode

50,100

-

-

50,100

51p

May 2020

M Inglis

-

-

120,000

120,000

68.75p

September 2025

K Jackson

-

-

40,000

40,000

68.75p

September 2025








Approved







G Purdy

26,500

-

-

26,500

80p

May 2017

G Purdy

245,300

-

-

245,300

81.5p

February 2025

S Boydell

90,000

-

-

90,000

80p

December 2019

S Boydell

154,600

-

-

154,600

81.5p

February 2025

 

 

Mr Purdy exercised no options in the year (2015 - 139,500).

 

 

 

 

 

 

Mike Inglis

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 have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union. 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. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market ('AIM').

 

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 IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; and

·     prepare the financial statements on the going concern basis unless it is inappropriate to presume that 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 Group'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 Group'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 and current cash resources, 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

7 July 2016

 

CORPORATE GOVERNANCE STATEMENT

 

The Board is accountable to the Company's shareholders for good corporate governance and it is the objective of the Board to attain a high standard of corporate governance. As an AIM listed company full compliance with the provisions of the UK Corporate Governance Code (the 'Code') is not a formal obligation. The Company has not sought to comply with the full provisions of the Code, however it has sought to adopt the provisions that are appropriate to its size and organisation and establish frameworks for the achievement of this objective. This statement sets out the corporate governance procedures that are in place.

 

Board of directors

The Board of directors (the 'Board') consists of a Non-Executive Chairman, three Executive Directors and three 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 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 which is carried out annually.

 

Board Committees

As appropriate, the Board has delegated certain responsibilities to Board Committees as follows:

 

i)             Audit Committee

The Audit Committee currently comprises Clare Spottiswoode CBE (Chairman), Professor Sir William Wakeham, Professor Keith Jackson and Mike Inglis.

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.

 

ii)            Remuneration Committee

The Remuneration Committee comprised Mike Inglis (Chairman), Clare Spottiswoode CBE Professor Keith Jackson and Professor Sir William Wakeham.

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.

 

iii)          Nomination Committee

The Nomination Committee comprised Mike Inglis (Chairman), Professor Sir William Wakeham, Professor Keith Jackson and Clare Spottiswoode CBE.

 

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.

 

Attendance at Board meetings and committees

The Directors attended the following Board and committees meetings during the year:

 

Attendance

Board

Audit

Nomination

Remuneration






Mr S. Boydell

6/6

-

-

-

Mr J. B. Boyer

3/3

1/1

1/1

1/1

Prof. B. E. Hayden

6/6

-

-

-

Mr M Inglis

5/5

2/2

-

1/1

Mr G. Purdy

6/6

-

-

-

Ms. C Spottiswoode

6/6

2/2

1/1

2/2

Prof. Sir W Wakeham

6/6

2/2

1/1

2/2

Prof K Jackson

6/6

2/2

1/1

2/2

 

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 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

 

 

 

 

Mike Inglis                                        

Chairman                                                                           

7th July 2016

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ILIKA PLC

 

We have audited the financial statements of Ilika plc for the year ended 30th April 2016 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 parent company balance sheet, the parent company cash flow statement, the parent company statement of changes in equity and the related notes.  The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

 

This report is made solely to the 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 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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Respective responsibilities of directors and auditors

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.  Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).  Those standards require us to comply with the Financial Reporting Council's (FRC's) Ethical Standards for Auditors.

 

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/auditscopeukprivate.

 

Opinion on financial statements

In our opinion:

 

·     the financial statements give a true and fair view of the state of the group's and the parent company's affairs as at 30th April 2016 and of the group's loss for the year then ended;

·     the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

·     the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union 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.

 

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the strategic report and directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements.

 

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where 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.

 

 

 

 

Malcolm Thixton (senior statutory auditor)

For and on behalf of BDO LLP, statutory auditor

Southampton

United Kingdom

Date

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Consolidated statement of comprehensive income

 

 

 

 

Year ended 30th April

 

 

Notes

2016

2015

 

 

 

£

£

 

 

 

 

Revenue

2

605,924 

1,093,978 

Cost of sales

 

(336,281)

(591,044)

 

 

-------

-------

Gross profit

 

269,643 

502,934 

 

 

 

 

Administrative expenses

 

(3,776,950)

(3,555,188)

Share based payment charge

 

(352,291)

(33,648)

 

 

-------

-------

Operating loss

3

(3,859,958)

(3,085,903)

 

 

 

 

Income from short term deposits

 

30,734 

50,557 

 

 

-------

-------

Loss before tax

 

(3,828,864)

(3,035,346)

Taxation

5

357,896 

333,647 

 

 

-------

-------

Loss for period / total comprehensive income attributable to owners of parent

 

(3,470,968)

(2,701,699)

 

 

-------

-------

Loss per share from continuing operations

6

 

 

   Basic

 

(5.23)p

(4.10)p

   Diluted

 

(5.23)p

(4.10)p

 

 

 

 


Consolidated balance sheet

Company number 7187804

 

 

 

As at 30th April

 

 

Notes

2016

2015

 

 

£

£

ASSETS

 

 

 

Non-current assets

 

 

 

   Intangible assets

7

15,595 

30,119 

   Property, plant and equipment

8

399,324 

560,698 

 

 

-------

-------

Total non-current assets

 

414,919 

590,817 

 

 

-------

-------

Current assets

 

 

 

   Trade and other receivables

9

517,695 

496,985 

   Current tax receivable

5

375,000 

304,122 

Other financial assets - bank deposits

 

- 

528,349 

   Cash and cash equivalents

10

2,997,412 

5,479,035 

 

 

-------

-------

Total current assets

 

3,890,107 

6,808,491 

 

 

-------

-------

Total assets

 

4,305,026 

7,399,308 

 

 

-------

-------

 

 

 

 

Issued capital and reserves attributable to owners of parent

 

 

 

   Issued share capital

14

663,911 

663,748 

   Share premium

 

17,470,417 

17,465,442 

   Capital restructuring reserve

 

6,486,077 

6,486,077 

   Retained earnings

 

(21,213,507)

(18,094,830)

 

 

-------

-------

Total equity

 

3,406,898 

6,520,437 

 

 

-------

-------

 

 

 

 

LIABILITIES

 

 

 

Current liabilities

 

 

 

   Trade and other payables

11

748,128 

728,871 

   Provisions

12

150,000 

150,000 

 

 

-------

-------

Total liabilities

 

898,128 

878,871 

 

 

-------

-------

Total equity and liabilities

 

4,305,026 

7,399,308 

 

 

-------

-------

 

The notes on pages 24 to 40 form part of these financial statements

 

These financial statements were approved and authorised for issue by the Board of Directors on 7th July 2016.                             

 

 

 

Mr. M Inglis

Chairman

Consolidated cash flow statement

 

Year ended 30th April

 

 

 

2016

2015

 

 

£

£

Cash flows from operating activities

 

 

 

Loss before taxation continuing operations

 

(3,828,864)

(3,035,346)

Adjustments for:

 

 

 

Amortisation

 

14,524 

12,736 

Depreciation

 

257,274 

324,556 

Equity settled share-based payments

 

352,291 

33,648 

Loss on disposal of plant, property and equipment

 

1,049 

- 

Financial income

 

(30,734)

(50,557)

 

 

-------

-------

Operating cash flow before changes in working capital, interest and taxes

 

(3,234,460)

(2,714,963)

(Increase) / decrease in trade and other receivables

(26,432)

79,918 

Increase in trade and other payables

19,257 

118,124 

 

 

-------

-------

Cash utilised by operations

 

(3,241,635)

(2,516,921)





Tax received

 

287,018 

277,716 

 

 

-------

-------

Net cash flow from operating activities

 

(2,954,617)

(2,239,205)





Cash flows from investing activities

 

 

 

Interest received

 

36,456 

45,958 

Sale of property plant and equipment

- 

1,640 

Purchase of property, plant and equipment

(96,949)

(279,267)

Purchase of intangible assets

 

- 

(42,062)

Decrease in other financial assets

 

528,349 

1,248,418 

 

 

-------

-------

Net cash from investing activities

 

467,856 

974,687 





Cash flows from financing activities

 

 

 

Proceeds from issuance of ordinary share capital

 

5,138 

1,413,586 

 

 

-------

-------

Net cash from financing activities

 

5,138 

1,413,586 

 

 

-------

-------

Net increase in cash and cash equivalents

 

(2,481,623)

149,068 

Cash and cash equivalents at the start of the period

 

5,479,035 

5,329,967 

 

 

-------

-------

Cash and cash equivalents at the end of the period

 

2,997,412 

5,479,035 

 

 

-------

-------

 

Consolidated statement of changes in equity

 

 

Share

capital

Share

premium

account

Capital

restructuring reserve

Retained earnings

Total

attributable to equity holders of parent

 

£

£

£

£

£

 

 

 

 

 

 

As at 30th April 2014

632,660

16,082,944 

6,486,077 

(15,426,779)

7,774,902 

Share-based payment

-

- 

-

33,648

33,648 

Issue of shares

31,088

1,382,498 

-

-

1,413,586 

Loss and total comprehensive income

-

- 

-

(2,701,699)

(2,701,699)

 

------

-------

--------

--------

--------

As at 30th April 2015

663,748

17,465,442 

6,486,077 

(18,094,830)

6,520,437 

Share-based payment

-

- 

-

352,291

352,291 

Issue of shares

163

4,975 

-

-

5,138 

Loss and total comprehensive income

-

- 

-

(3,470,968)

(3,470,968)

 

------

-------

--------

--------

--------

As at 30th April 2016

663,911

17,470,418 

6,486,077 

(21,213,508)

3,406,898 

 

------

-------

--------

--------

--------

 

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 Limited 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.

 

Retained earnings

The retained earnings reserve records the accumulated profits and losses of the Group since inception of the business.

 

Notes to the consolidated financial statements

 

1     Accounting policies

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") adopted by the European Union. 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 individual financial statements of Ilika plc are shown on page 41 to 44.

 

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. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. 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 which, at 30th April 2016, amounted to £2,997,383. After due consideration of these forecasts and current cash resources, 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.

 

The Directors have also considered the likely sales, contracts and announcements that the Company anticipate being able to make over the coming months, the current share price, levels of trading in the Company's shares and past history of raising funds with the Company's Brokers.

 

After taking account of all the above factors the Directors believe that as the market becomes more aware of the Company' 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 adopted early

 

During the period ended 30th April 2016, there were no new or revised standards, amendments to standards or interpretations that have been adopted and affected the amounts reported in the financial statements.

                                                                       

 

The following standards, interpretations and amendments, which have not been applied in these financial statements and have an effective date commencing after 1st May 2016, will or may have an effect on the Group's future financial statements:

 

 

International Accounting Standards (IAS/IFRS)         

 

Effective date for

periods commencing

IFRS 9

Financial Instruments

1 January 2018

IFRS 15

Revenue from Contracts with Customers

1 January 2018

IFRS 16

Leases

1 January 2019

IAS 7

Statement of Cash Flows (Amendments)

1 January 2017

IAS 12

Income Taxes (Amendments)

1 January 2017

 

No other new standards or amendments are expected to have an effect on the Group.

Notes to the consolidated financial statements

 

1     Accounting policies (continued)

Revenue

 

Revenue comprises the fair value for the sale of services, net of value added tax and is recognised as follows:

 

Sales of services

Sales of research and development services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

 

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.

 

 

Financial income

 

Financial income 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-based payments to all employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

The fair value of market-based options granted by the Group is measured by use of the stochastic valuation 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.

 

The fair value of non market-based 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. 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.

 

Research and development expenditure

Expenditure on the research phase is charged to the income statement in the period in which it is incurred. Development expenditure on new products is capitalised only once the criteria specified under IAS 38, Intangible Assets, have been met and it is probable that future economic benefit will flow to the Group. Prior to and during the year ended 30th April 2016, no development expenditure satisfied the necessary conditions of IAS 38.

 

Notes to the consolidated financial statements

 

1     Accounting policies (continued)

Taxation

 

Companies within the group may be entitled to claim special tax allowances 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. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.

 

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.

 

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 the profit and loss account.

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              3 - 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 the profit and loss account.

 

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 (1-3 years).

 

Notes to the consolidated financial statements

 

1     Accounting policies (continued)

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.

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 classified as loans and receivables and carried at amortised cost. 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.

 

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 judgments 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.

 

·      Revenue recognition

The Group's revenue substantially comprised revenues from the provision of research and development services. The contracts set out defined deliverables the achievement of which trigger milestone payments.  Judgement is used to determine the stage of completion and the point at which revenue is recognised.

 

·    Share-based payments

The critical accounting estimates, assumptions and judgements underpinning the valuation of the option awards are disclosed in note 18.

 

·    Taxation

The current tax receivable is the expected tax receivable on the research and development qualifying expenditure for the period using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date, and any adjustments to tax payable in respect of previous years. The ultimate receivable may vary from the amounts provided and is dependent upon negotiations with the relevant tax authorities.

Notes to the consolidated financial statements

 

2     Segment reporting

The Group operates in one area of activity, namely the production, design and development of high throughput methods of material synthesis, characterisation and screening. The Group has materials development programmes addressing a wide range of applications including the solid state battery, aerospace alloys and electronic materials.

 

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.

 

 

Revenue

2016

2015

 

£

£

Analysis by geographical market:

 

By destination

 

 

   Asia

74,162 

125,875 

   Europe

23,355 

441,219 

   North America

7,702 

142,351 

  UK Grants

500,705 

384,533 

 

-------

-------

 

605,924 

1,093,978 

 

-------

-------

 

 

 

A number of customers individually account for more than 10% of the total turnover of the Group. The revenues from these companies are indicated below:

 

Revenue

2016

2015

 

£

£

 

 

 

Customer 1

500,705 

384,533 

Customer 2

74,150 

247,200 

Customer 3

- 

189,052 

Customers less than 10%

31,069 

273,193 


--------

--------

 

605,924 

1,093,978 

 

-------

-------

 

Notes to the consolidated financial statements

 

3    Operating loss

 

 

2016

2015

This is arrived at after charging:

£

£




Research and development expenditure in the year

2,057,966 

1,740,173

Depreciation

257,274 

324,556

Amortisation of intangible assets

14,524 

12,736

Auditors remuneration:

Fees payable to the Group's auditor for the audit of the Group's      accounts

 

19,700 

 

19,700

Fees payable to the Group's auditor for other services:

-  The Audit of the Group's subsidiaries

-  All other services

 

6,800 

21,518 

 

6,800

-

Operating lease rentals

204,578 

202,964

Share-based payment

352,291 

33,648

Foreign exchange differences

3,616 

5,123

 

-------

-------

 

4     Employees

 

The average number of employees during the year, including executive directors, was:

 

 

2016

2015

 

Number

Number

Administration

8

8

Materials synthesis

27

23

 

------

------

 

35

31

 

------

------

Staff costs for all employees, including executive directors, consist of:

 

 

2016

2015

 

£

£

 

 

 

Wages and salaries

1,813,849

1,641,465

Social security costs

183,594

153,801

Share-based payment expense

337,291

18,648

Pension costs

119,664

98,206


-------

-------

 

2,454,438

1,912,120

 

--------

--------


Notes to the consolidated financial statements

 

4     Employees (continued)

 

The total remuneration of the Directors of the Group was as follows:

 

 

 

2016

2015

 

£

£

 

 

 

Wages and salaries

607,703

541,353

Pension costs

47,181

47,283

 

-------

-------

Directors' emoluments

654,884

588,636

 

 

 

Social security costs

77,420

60,858

Share-based payment expense

267,301

7,080

 

-------

-------

Key management personnel

999,605

656,574

 

--------

--------

The Directors represent key management personnel and further details are given in the Directors' Remuneration Report on pages 11 to 13.

 

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 30th April

 

 

2016

2015

 

£

£

 

 

 

Current tax on loss for the year

329,473

304,122

Adjustments to prior period

28,423

29,525

 

             ------

             ------

 

357,896

333,647

 

------

------

(b) Factors affecting current tax charge

 

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 20% (2015: 21%). The differences are reconciled below:

 

 

2016

2015

 

£

£

 

 

 

Loss on ordinary activities before tax

(3,828,864)

(3,035,346) 

 

------

------

Loss on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK of 20% (2015: 21%)

 

(765,773)

 

(637,423) 

Effects of:

 

 

Expenses not deductible for corporation tax

71,179 

8,022  

R&D relief

(329,473)

(304,122) 

Origination of unrecognised tax losses

694,594 

629,401  

Under provision in previous years

(28,423)

(29,525) 

 

------

------

Total tax credit for the year

(357,896)

(333,647) 

 

------

------

 

 

 

 

Notes to the consolidated financial statements

 

5     Taxation (continued)

Unrecognised deferred taxation

 

There are tax losses available for carry forward against future trading profits of approximately £17,009,000 (2015: £15,290,000). A deferred tax asset in respect of these losses of approximately £3,062,000 (2015: £3,058,000) has not been recognised in the accounts, as the full utilisation of these losses in the foreseeable future is uncertain.

 

6     Loss per share

Earnings 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 earnings, being loss after tax, are as follows:

 

 

2016

2015

 

No.

No.




Weighted average number of equity shares

66,378,114

65,895,078

 

--------

--------




 

£

£

Earnings, being loss after tax

(3,470,968)

(2,701,699)

 

--------

--------




 

Pence

Pence

Loss per share

(5.23)

(4.10)

 

------

------

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for basic earnings 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 30th April 2016 there were 6,988,112 options outstanding (2015: 5,414,848) as detailed in notes 14 and 18.

 

Notes to the consolidated financial statements

 

7     Intangible assets

 

 

Software

licences

Intellectual property

Total  

 

 

£

£

£ 

Cost

 

 

 

 

As at 30th April 2014

27,918 

75,000

102,918 

Additions

 

42,062 

 -

42,062 

Disposals

 

(15,615)

-

(15,615)

 

 

------

------

------ 

As at 30th April 2015

 

54,365 

75,000

129,365 

Disposals

 

(8,072)

 

(8,072)

 

 

------

------

------

As at 30th April 2016

 

46,293 

75,000

121,293 

 

 

------

------

------

Amortisation

 

 

 

 

As at 30th April 2014

 

27,125 

75,000

102,125 

Provided for the year

 

12,736 

-

12,736 

Disposals

 

(15,615)

-

(15,615)

 

 

------

------

------

As at 30th April 2015

 

24,246 

75,000

99,246 

Provided for the year

 

14,524 

-

14,524 

Disposals

 

(8,072)

-

(8,072)

 

 

------

------

------

As at 30th April 2016

 

30,697 

75,000

105,698 

 

 

------

------

------

Net book value

 

 

 

 

As at 30th April 2014

 

793 

-

793 

 

 

------

------

------

As at 30th April 2015

 

30,119 

-

30,119 

 

 

------

------

------

As at 30th April 2016

 

15,595 

-

15,595 

 

 

------

------

------

 

The amortisation charge of £14,524 (2015: £12,736) is included within administrative expenses.

Notes to the consolidated financial statements

 

8   Property, plant and equipment

 

Leasehold

improvements

Plant,

machinery and equipment

Fixtures and fittings

Total

 

£  

£

£ 

£

Cost

 

 

 

 

As at 30th April 2014

561,750

4,180,326

169,712

4,911,788

Additions

5,750

271,439

2,078

279,267

Disposals

-

(25,688)

-

(25,688)

 

------

-------

------

-------

As at 30th April 2015

567,500

4,426,077

171,790

5,165,367

Additions

-

96,949

-

96,949

Disposals

-

-

(4,265)

(4,265)

 

------

-------

------

-------

As at 30th April 2016

567,500

4,523,026

167,525

5,258,051

 

------

-------

------

-------

Depreciation

 

 

 

 

As at 30th April 2014

501,038

3,654,222

148,901

4,304,161

Provided for the year

66,462

250,981

7,113

324,556

Disposals

-

(24,048)

-

(24,048)

 

------

-------

------

-------

As at 30th April 2015

567,500

3,881,155

156,014

4,604,669

Provided for the year

-

250,492

6,782

257,274

Disposals

-

-

(3,216)

(3,216)

 

------

-------

------

-------

As at 30th April 2016

567,500

4,131,647

159,580

4,858,727

 

------

-------

------

-------

 

 

 

 

 

Net book value

 

 

 

 

As at 30th April 2014

60,712

526,104

20,811

607,627

 

------

-------

------

-------

As at 30th April 2015

- 

544,922

15,776

560,698

 

------

-------

------

-------

As at 30th April 2016

- 

391,379

7,945

399,324

 

------

-------

------

-------

 

 

 

 

 

 

There are no commitments for capital expenditure contracted but not provided for (2015 - £nil)

 

 

 

Notes to the consolidated financial statements

 

9     Trade and other receivables

 

As at 30th April

 

 

2016

2015

 

£

£

 

 

 

Trade receivables

27,976

5,108

Prepayments

215,933

215,921

Other receivables

156,863

168,361

Accrued income

116,923

107,595


------

------

 

517,695

496,985

 

------

------

 

 

The ageing of trade receivables is as follows:

 

As at 30th April

 

 

2016

2015

 

£

£

 

 

 

0-29 days

4,621

1,322

30-59 days

23,355

3,595

60-89 days

-

191

90+ days

-

-


------

------

 

27,976

5,108

 

------

------

 

10   Cash and cash equivalents

 

As at 30th April

 

 

2016

2015

 

£

£

 

 

 

Current bank accounts

127,018

220,843

Short term deposits with less than three months' maturity

2,872,394

5,258,192


--------

--------

 

2,997,412

5,479,035

 

--------

--------

 

 

Notes to the consolidated financial statements

 

11   Trade and other payables

 

As at 30th April

 

 

2016

2015

 

£

£

 

 

 

Trade payables

197,117 

219,567 

Other payables

14,654 

15,845 

Other taxes and social security costs

44,976 

 40,079 

Accruals

491,381 

453,380 


--------

--------

 

748,128 

728,871 

 

--------

--------

 

The ageing of financial liabilities is as follows:

 

As at 30th April

 

 

2016

2015

 

£

£

 

 

 

0-29 days

390,618  

384,869  

30-59 days

61,039  

45,613  

60-89 days

21,495  

20,000  

90+ days

230,000  

238,310  


--------

--------

 

703,125  

688,792  

 

--------

--------

 

 

12   Provisions

 

 

Leasehold

 Dilapidations

 

 

£

 

 

 

As at 1st May 2015 and at 30th April 2016

 

150,000

 

 

------

 

All provisions are due within one year.

 

Leasehold dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of the lease in accordance with the lease terms.

 

Notes to the consolidated financial statements

 

13   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. These transactions are not significant and therefore no forward exchange contracts have been entered into.

 

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 total loans 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. Floating-rate financial assets comprise cash on deposit and cash at bank. Short-term deposits are placed with banks for periods of up to 12 months and are categorised as floating-rate financial assets. Contracts in place at 30th April 2016 had a weighted average period to maturity of 30 days (2015: 32 days) and a weighted average annualised rate of interest of 0.7%. (2015: 0.8%)

 

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 30th April 2016 by approximately £31,000 (2015: £51,000).

 

It is estimated that an increase in base rate by 1 percent would decrease the Group's loss before taxation for the year to 30th April 2016 by approximately £42,000 (2015: £62,000)

 

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. See note 1 for the fundraising that occurred during the year.

 

 

Notes to the consolidated financial statements

 

14   Share capital

 

As at 30th April

 

 

2016

2015

 

£

£

Authorised

 

 

65,802,710 Ordinary Shares of £0.01 each (2015: 65,736,416)

658,027

657,364

1,781,400 Convertible Preference Shares of £0.01 each

17,814

17,814


------

------

Allotted, called up and fully paid



65,802,710 Ordinary Shares of £0.01 each (2015: 65,736,416)

658,027

657,364

588,400 Convertible Preference Shares of £0.01 each (2015: 638,400)

5,884

6,384


------

------


663,911

663,748


------

------

 

Share Rights

 

The ordinary share and preference shares rank pari passu in all respects other than:

 

·      The profits 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 Share holders have the right, at any time, to convert the preference shares held to the same number of Ordinary Shares.

 

On 7th October 2015, 50,000 £0.01 convertible preference shares were converted to £0.01 ordinary shares.

Share options and warrants

 

Employee related share options are disclosed in note 18. In addition to these, there were 107,300 non employee share options over ordinary shares of £0.01 at the year end.

 

16,294 share options were converted into 16,294 £0.01 ordinary shares in the year for a total consideration of £5,138.

 

Notes to the consolidated financial statements

 

15   Operating leases

The group and company had no commitments under non-cancellable operating leases as at the current and preceding reporting date.

16   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 £119,664 (2015: £98,206).

17   Related party transactions

The directors consider that no one party controls the Group.

During the year ended 30th April 2016, the company incurred costs of £238,286 (2015: £245,576) with the University of Southampton in connection with research and development activities. The University of Southampton is the controlling shareholder of Southampton Asset Management Limited, which has a 3.6% interest in the company. At 30th April 2016, the amount unpaid in respect of these costs was £8,295 (2015: £2,765).

The company incurred fees from the University of Southampton in respect of Prof B. Hayden, a director of the company. These amounts are included in the costs shown above. Further details are given in the Directors' Remuneration Report on pages 11 to 13.

Details of key management personnel and their compensation are given in note 4 and in the Directors' Remuneration Report on pages 11 to 13.

18   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.

 

The Group has recognised an expense to the consolidated statement of comprehensive income representing the fair value of outstanding equity-settled share-based payment awards to employees. The fair values were charged to the consolidated statement of total comprehensive income over the relevant vesting periods adjusted to reflect actual and expected vesting levels.

 

The Group has calculated the fair market value of options which had market based performance conditions at the time of grant, using the stochastic valuation model. Options with no market based performance conditions at the time of grant, have been valued using the Black-Scholes model. 

 

Notes to the consolidated financial statements

 

18   Share-based payments expense and share options (continued)

At 30th April 2016, the following 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 option

Exercise

Price per share

14/05/07

156,100

10 years

£0.80

15/01/08

22,400

10 years

£1.00

02/02/09

58,000

10 years

£0.80

01/12/09

90,000

10 years

£0.80

14/05/10

26,100

10 years

£0.51

01/02/12

39,634

10 years

£0.53

 

 

 

 

 

Unapproved share options:

Date of grant

Number of shares

Period of option

Exercise

Price per share

11/07/07

195,500

10 years

£0.80

11/11/08

40,000

10 years

£2.4283

14/05/10

1,897,800

10 years

£0.51

 

 

Black Scholes valuation

Weighted Average Exercise Price

Number


2016

2015

2016

2015

Outstanding:

£

£



At start of the period

0.8341

0.4121

2,188,148

1,693,523 

Granted in the period

0.2567

0.8150

2,867,908

1,521,920 

Exercised in the period

0.2732

0.1038

(13,394)

(423,250)

Lapsed in the period

0.8032

0.1508

(85,750)

(604,045)


-----

-----

--------

--------

At the end of the period

0.5021

0.8341

4,956,912

2,188,148 


-----

-----

--------

--------

 

The exercise price of options outstanding at the end of the period ranged between £0.01 and £2.4283 and their weighted average contractual life was 8.8 years (2015: 7.85 years). These share options are exercisable and must be exercised within 10 years from the date of grant.

 

Stochastic valuation

Weighted Average Exercise Price

Number


2016

2015

2016

2015

Outstanding:

£

£



At start of the period

0.51

0.51

2,989,300

3,057,300

Exercised in the period

0.51

0.51

(2,900)

(68,000)

Lapsed during the period

0.51

0.51

(1,062,500)

-


----

----

---------

---------

At the end of the period

0.51

0.51

1,923,900

2,989,300


----

----

---------

---------

 

The exercise price of options outstanding at the end of the period was £0.51 (2015: £0.51) and their weighted average contractual life was 5 years (2015: 6 years).



Notes to the consolidated financial statements

 

18   Share-based payments expense and share options (continued)

Ilika plc Executive Share Option Scheme 2010

 

At 30th April 2016 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

Exercise

Price per share

14/05/10

26,100

10 years

£0.51

01/02/12

39,634

10 years

£0.53

26/02/15

1,309,470

10 years

£0.815

22/03/16

1,033,000

10 years

£0.59

 

Members of staff in the Group have options in respect of ordinary shares in Ilika plc, which are conditional upon the achievement of a series of financial and commercial milestones.

 

85,750 options lapsed in the year and 13,394 options were exercised.

 

Ilika plc unapproved share options

 

At 30th April 2016 the following share options were outstanding in respect of Ilika plc unapproved share options:

Date of grant

Number of shares

Period of option

Exercise

Price per share

 

 

 

 

11/07/07

195,500

10 years

£0.80

11/11/08

40,000

10 years

£2.4283

14/05/10

1,897,800

10 years

£0.51

26/02/15

177,900

10 years

£0.815

30/09/15

160,000

10 years

£0.688

30/09/15

1,674,908

10 years

£0.01

 

1,062,500 options lapsed in the year and 2,900 options were exercised.

There are 2,525,534 options which were capable of being exercised as at 30th April 2016.

 

 

2016

2015

 

£

£

Share-based payment expense

 

 

     Black Scholes calculation

352,291    

33,648

 

-----

-----

 

352,291   

33,648

 

------

------


 

Company Balance sheet of Ilika plc

Company number 7187804

 


As at 30th April


 

Notes

2016

£

2015

£

ASSETS




Non current assets




   Investments in subsidiary undertaking

20

121,339

121,339

  Amount due from subsidiary undertaking

23

18,234,670

18,189,471



-------

-------



18,356,009

18,310,810

Current assets




Trade and other receivables

21

2,518

6,218



-------

-------

Total assets


18,358,528

18,317,028



-------

-------

Equity




   Issued share capital


663,911

663,748

   Share premium


17,449,628

17,444,653

   Retained earnings


108,683 

75,276 



-------

-------

 


18,222,222

18,183,677

LIABILITIES




Current liabilities




   Trade and other payables


136,306

133,351



-------

-------

Total liabilities


136,306

133,351



-------

-------

Total equity and liabilities


18,358,528

18,317,028



-------

-------

 

The notes on page 44 form part of these financial statements.

 

These financial statements were approved and authorised for issue by the Board of Directors on 7th July 2016.                             

 

 

 

 

 

Mr. M Inglis

Chairman

 

 

 

 

 

Company cashflow statement

 

Year ended 30th April

 

 

 

2016

2015

 

 

£

£

Cash flows from operating activities

 

 

 

Loss before tax

 

(318,884)

(887)

Adjustments for:

 

 

 

Equity settled share-based payments

 

352,291 

33,648 

 

 

------

------

Operating cash flow before changes in working capital, interest and taxes

 

33,407 

32,761 





Increase in trade and other receivables

(41,500)

(1,463,348)

Increase in trade and other payables

2,955 

17,001 

 

 

------

------

Cash utilised by operations

 

(5,138)

(1,413,586)





Cash flows from financing activities

 

 

 

Proceeds from issuance of ordinary share capital

 

5,138 

1,413,586 

 

 

------

------ 

Net cash from financing activities

 

5,138 

1,413,586 

 

 

------

------

Net increase in cash and cash equivalents

 

-

-

Cash and cash equivalents at the start of the period

 

-

-

 

 

------

------

Cash and cash equivalents at the end of the period

 

-

-

 

 

------

------

Company cashflow statement

 

Company statement of changes in equity

 

 

 

Share

capital

Share

premium

account

 

Retained

earnings

Total

attributable to

 equity holders

 

£

£

£

£

 

 

 

 

 

As at 30th April 2014

632,660

16,062,155 

42,515

16,737,330

Issue of shares

31,088

1,382,498 

-

1,413,586

Share-based payment

-

- 

33,648

33,648

Profit and total comprehensive income

-

- 

(887)

(887)

 

------

------

------

-------

As at 30th April 2015

663,748

17,444,653 

75,276

18,183,677

Issue of shares

163

4,975 

-

5,138

Share-based payment

-

- 

352,291

352,291

Profit and total comprehensive income

-

- 

(318,884)

(318,884)

 

------

------

------

-------

As at 30th April 2016

663,911

17,449,628 

108,683

18,222,222

 

------

------

------

      ------  

 

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.

 

Retained earnings

The retained earnings reserve records the accumulated profits and losses of the Company since inception of the business.



Notes to the financial information

 

19     Accounting polices

 

Basis of preparation

 

These financial statements have been prepared in accordance with International Financial Reporting Standards (''IFRSs'') adopted by the European Union.

 

Taxation, share based payments and financial instruments

 

For the relevant accounting policies please see note 1

 

Investments in subsidiary undertakings

 

Investments in subsidiary undertakings where the Company has control are stated at cost less any provision for impairment.

 

Profit of the parent company for the year

 

No profit and loss account is presented for the Company as permitted by Section 408 of the Companies Act 2006. The Company's loss for the year was £318,884 (2015: loss of £887).

 

20     Investment in subsidiary undertaking

 

Investments in Group undertakings are stated at cost.

 

Ilika plc has a wholly owned subsidiary, Ilika Technologies Limited. Ilika Technologies Limited (Incorporated in the UK) made a loss for the year of £3,152,084 (2015: £2,700,812) and had net liabilities as at 30th April 2015 of £14,683,985 (2015: £11,541,901).            


2016

2015

Shares in Group undertakings (at cost)

£

£




At 1st May 2015 and 30th April 2016

121,339

121,339


------

------

                      

21     Trade and other receivables

2016

2015


£

£




Prepayments

2,518  

6,218 


---         

------

22     Prior year adjustment

 

The amount due from Ilika Technologies Limited was previously shown as a current asset, it has been reclassified to non current assets to reflect the fact that it will be repaid from future revenues that are expected to occur beyond the next twelve months.

23     Amount due from subsidiary undertaking

2016

2015


£

£




Ilika Technologies Limited

18,234,670 

18,189,471 


------

------

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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