Final Results

RNS Number : 2385E

Ilika plc

06 July 2021

 

ILIKA plc

(The "Company" or the "Group")

Final results

Financial Statements for year ended 30 April 2021

Ilika (AIM: IKA), a pioneer in solid-state battery technology, announces its full-year results for the year ended 30 April 2021.

Operational highlights

Ilika has continued to develop and commercialise its thin-film Stereax® miniature solid-state batteries for powering medical devices and industrial wireless sensors (IIoT) in hostile environments, as well as progressing its development of large-format Goliath cells for electric vehicles (EV) and cordless appliances. Progress includes:

· Achieved substantial progress towards completion of manufacturing facility for Stereax batteries to support 70x increase in production capacity

· Progressed factory acceptance tests for key Stereax manufacturing tools

· Sold Stereax evaluation samples to a portfolio of 16 Medtech and IIOT customers from pilot line

· Strengthened senior management team through appointment of Paul Marron to new position of Technology Transfer and Manufacturing Director, to oversee implementation of the Stereax manufacturing facility

· Continued with the execution of a portfolio of three collaborative projects supported by the UK Government's Faraday Battery Challenge, supported by 5.2m grant funding enabling work on rapid charging with Honda and Ricardo, battery packs for high performance vehicles with McLaren and cost-effective routes for the mass production of Goliath cells with JaguarLandRover

· Signed a framework agreement with the UK Battery Industrialisation Centre (UK-BIC) for the production of Goliath pouch cells, targeting a growth in production 1kWh per week to 5MWh per week by 2024

· Commenced a collaboration with Comau, part of the Fiat Group, to scale up Ilika's existing Goliath pre pilot line and deliver a plant design for a manufacturing line at a facility such as the UK-BIC.

· Grew patent portfolio with a further four granted patents in four jurisdictions

Financial highlights:

· Turnover £2.3m (2020: £2.8m)

· EBITDA Loss adjusted for share based payments for the year £2.3m (2020: £2.1m)

· Loss per share 2.53p (2020: 2.95p)

· Cash, cash equivalents and bank deposits of £9.8m (2020: £14.8m)

Outlook

Ilika has an intensive period of operational implementation ahead of it for the remainder of this financial year and into next year as it deploys the capital it raised in March 2020 to establish a manufacturing facility for Stereax to satisfy the demand from our medical and IoT customers. The technical maturity of Goliath is expected to continue to rise as prototype cell performance continuously improves. Ilika is looking to accelerate its plans for the scale-up of its Goliath technology such that it can reach a point of manufacturing readiness. These plans would require additional financing to realise, with potential sources of financing including additional government grant funding, equity financing and investment from strategic partners. The Board's confidence continues to build in the commercial opportunity for Ilika's technology across the large markets it addresses and this will provide a strong platform for future growth.

Commenting on the results Ilika's Chairman, Keith Jackson, said: "A good development team is used to rising and responding to challenges, minimising impact, and finding new ways to solve problems. The Ilika team has done just that showing agility and calm resourcefulness to make excellent progress in the face of the challenges raised by the COVID pandemic. Setting up the Stereax manufacturing facility has been done with the same fast pace that was achieved last year with the Goliath Pilot line. We are now ready for final delivery and commissioning of the equipment on site. Once installed, we can ramp up the rate of innovation and delivery of products to our customers.

"The Goliath pilot line has been worked hard over the last year to optimise cell chemistry and architecture and, even more importantly, to define the manufacturing processes and methods that are repeatable and commercially viable at scale. We have delivered a number of technical breakthroughs in the year with component performance closing nicely on the design goals. The team is now confident enough to be planning the mid-scale manufacturing of Goliath cells, to validate the manufacturing design and to service potential customers.

"Our technology goals are challenging but they focus on one of the most important and valuable areas for the future of the environment and the way we live. We are well placed to address an exciting market opportunity. We are making good progress technically and structurally in our business and we have a management team which rises to challenges and inspires its staff."

For more information contact: Ilika plc	www.ilika.com
Graeme Purdy, Chief Executive Officer	Via Walbrook PR
Steve Boydell, Finance Director
Liberum Capital Limited (Nomad and Joint Broker)		Tel: [phone]
Andrew Godber, Cameron Duncan, William Hall, Nikhil Varghese
Berenberg (Joint Broker)	Tel: [phone]
Emily Morris, Detlir Elezi, Alamgir Ahmed, Milo Bonser
Walbrook PR Ltd	Tel: [phone] /    [e-mail]
Tom Cooper	Mob: [phone]
Lianne Cawthorne	Mob: [phone]
Nick Rome	Mob: [phone]

 

ILIKA plc

STRATEGIC REPORT

The Directors present their Strategic Report for the year ended 30^th April 2021.

Principal Activities

Ilika has continued to pursue its strategy of developing and commercialising its cutting-edge solid-state batteries. The Company's mission is to rapidly develop leading-edge IP, manufacture and sell solid-state batteries for markets that cannot be addressed with conventional batteries due to their safety, charge rates, energy density and life limits. We will achieve this using ceramic-based lithium-ion technology that is inherently safe in manufacture and usage, which differentiates our products from existing batteries.

Business Strategy

The Group's revenue model involves three phases:

a) commercially-funded and grant-funded development of small quantities of cells for customer evaluation on Company-operated pilot lines;

b) technology transfer to mid-scale manufacturing facilities to support initial commercialisation; and

c) licensing the technology, potentially into a joint venture ('JV'), for large volume production.

Ilika is currently transitioning its Stereax programme from the first phase to the second phase of commercialisation, with revenue being generated from a portfolio of development programmes and initial sales of evaluation samples from its Stereax pilot line. Commercial sales of Stereax are expected to commence in 2022. Ilika's Goliath programme is currently in the first commercial phase, where product development is being supported by grant -funded programmes and commercial collaborations.

Introduction to Solid-State Batteries

Ilika has been working with solid-state battery technology since 2008 and has developed a type of lithium-ion battery, which, instead of using liquid or polymer electrolyte, uses a ceramic ion conductor. Ilika's solid-state batteries have a number of benefits over traditional lithium-ion batteries, including the following:

· Non-flammable, which eliminates the need for containment packaging

· 6 x faster charging

· 2x increased energy density, making them half the volume and weight for a given electrical charge

· 10x longer storage without loss of charge.

Ilika has developed a roadmap and family of battery products, ranging from miniature solid-state devices designed for powering wireless sensor applications (Industrial IOT) and medical devices to large format cells for automotive power.

Miniature Stereax batteries

Ilika's miniature Stereax cells are differentiated from other solid-state technology through their selection of materials and an efficient, low temperature evaporation process that is capable of higher manufacturing rates than other existing solid-state routes. This results in the following benefits relative to previous solid-state battery designs:

· Lower cost of manufacture through avoiding use of expensive sputtering targets 

· Long cycle life through use of a silicon anode

· Less encapsulation required

· High temperature resilience

The unique benefits of Stereax batteries have been optimised for medical implants and industrial applications. Miniature Stereax batteries can enable medical devices in a way that is currently not possible with conventional lithium-ion batteries. Their compact, high energy density, high power characteristics make them useful for a range of medical implant applications covering blood pressure monitoring to neuro-stimulation.

 

Industrial automation, or Industrial Internet of Things (IIoT) as it is sometimes referred to, requires low maintenance batteries with a long lifetime, sometimes in situations that require them to operate at elevated temperatures above those for which standard lithium-ion batteries are rated (typically 60 degC).

Stereax Manufacturing Scale-up and Commercialisation

Ilika is currently manufacturing Stereax batteries on a pilot line. These batteries are being continuously improved for further enhancement of their properties, and also sold for customer evaluation. The ramping demand for Stereax batteries underpinned an over-subscribed 15m ($20m) equity placing, which the Company concluded in March 2020, in order to support the transfer of Stereax to a manufacturing facility, strengthen the balance sheet to meet working capital requirements and provide the option for investing in further growth in Stereax production capability, including implementing a dual source production capability in the future.

In November 2020, the Company concluded its assessment of various Stereax manufacturing options, which included manufacturing wafers of Stereax batteries at 3rd party facilities as an alternative to establishing its own manufacturing operations. Having fully compared the benefits and risks of installing the key equipment needed for Stereax production in different locations around the world, the Company demonstrated that the most efficient and cost-effective solution would be to establish its own manufacturing operation. A suitable facility within 5 miles of Ilika's existing headquarters was quickly identified and a lease secured. Competitive tenders for the construction of a cleanroom within the facility were invited and a principal contractor mobilised.

In order to access the best possible industrial experience and assist with the cultural change required to transition from a technology development to a manufacturing company, Ilika created and filled the new position of Technology Transfer and Manufacturing Director. Ilika appointed Paul Marron to this position and he is currently overseeing implementation of the Stereax manufacturing facility. At the time of writing this report, substantial progress has been made towards cleanroom completion.

The key Stereax production tools, which were ordered in 2020, are currently completing their factory acceptance tests prior to being shipped to site for installation in July 2021, with manufacturing commencing after equipment and process qualification activities in the second half of 2021. This will result in a 70x increase in Stereax production capacity by the end of the 2021 calendar year.

Once the technology transfer into its manufacturing facility has been achieved, Ilika's business model will continue to be to sell batteries, although some parts of the manufacturing workflow will be managed on an outsourced basis. A further step-up in production capacity with a larger manufacturing partner is expected to be required further into the future, when a licensing model may be more appropriate.

Large Format Goliath Batteries

In September 2019, Ilika announced the opening of its new large format battery facility, the Goliath pilot line, in Romsey, UK to support its portfolio of industrial collaborations. On this pilot line, Ilika is developing low-cost printing processes suitable for forming batteries several orders of magnitude larger than miniature Stereax batteries.

Throughout this financial year, Ilika has been executing a portfolio of three collaborative projects supported by the UK Government's Faraday Battery Challenge. The projects are supported by 5.2m grant funding enabling work on rapid charging with Honda and Ricardo, battery packs for high performance vehicles with McLaren and cost-effective routes for the mass production of Goliath cells with JaguarLandRover. Ilika is also engaging with manufacturers of cordless appliances, e.g. vacuum cleaners and beauty products, which can also benefit from some of the unique properties of solid-state batteries. 

Goliath Manufacturing Scale-up

The Company's pilot line in Romsey is capable of producing 1kWh per week. Ilika has plans to scale up its current site to an automated facility producing 10kWh per week by 2022. In September 2020, Ilika announced the signing of a framework agreement with the UK Battery Industrialisation Centre (UKBIC) for the production of Goliath solid state pouch cells. This stage of scale-up will involve Ilika reaching 5 MWh per week in 2024 to satisfy increasing customer demand. The signing of the framework agreement with UKBIC is a significant and important step towards achieving that goal. Following that announcement, Ilika secured a collaboration with Comau, part of the Fiat Group, to scale up Ilika's existing Goliath pre pilot line and deliver a plant design for a manufacturing line at a facility such as the UK-BIC. Discussions with the UK Government and its agencies are on-going regarding further grant funding to support the planned scale-up activities. The Company will also explore other financing options to fund this scale up, which may include investment from strategic partners and/or equity financing.

COVID-19 Impact and Response

In order to prioritise the safety of our staff, their families and our customers we are continuing to comply with UK Government directives. For much of the reporting period, Ilika staff have avoided non-essential travel and maximised home-working. Any employees falling into at-risk categories and those showing COVID-19 symptoms have followed self-isolation procedures.

Throughout the lockdown periods, the Company's headquarters in Romsey, UK have remained open for those employees who needed access to our Goliath large format cell development facilities. Through the implementation of risk assessments, enhanced cleaning and hygiene procedures and social distancing we have maintained a safe working environment.

In March 2020, the Company's Stereax pilot line temporarily closed and subsequently re-opened in June 2020. We are deploying similar practices at this pilot facility to those we have used successfully at our headquarters. We are continuing to communicate regularly with our Stereax customers to advise them of the measures we have taken and the likely impact on delivery times of evaluation samples. As a result, we have not received any order cancellations and we are currently executing our order back-log.

Patent Position

Building Ilika's intellectual property portfolio in solid-state batteries has continued to be a focus this year. Ilika believes its patents ring-fence and protect critical IP to avoid competitors working around a single patent. Ilika now maintains a portfolio of 23 granted patents in solid-state batteries.

Quality Management System

In November 2020, the annual independent audit of its Quality Management System (QMS) was successful. ISO 9001 is the world's most widely recognised QMS and helps organisations to meet the expectations and needs of their customers. The certification promotes the development of continual improvement, customer satisfaction, traceability and international best practices.

Environmental Management System

In March 2021, the company received ISO 14001:2015 certification following an independent audit of its environmental management system. ISO 14001:2015 is part of a family of standards developed by the International Organisation for Standardisation. It specifies the requirements for an environmental management system that an organisation can use to enhance its environmental performance. The certification confirms that environmental impact is being continuously monitored and improved.

 

Key performance indicators ('KPIs')

The Board monitors a small portfolio of KPI's, which define the progress being made by the Group. The technical KPI's benchmark battery development milestones and patent applications. Commercial KPI's link the technical development programmes to the sales pipeline and engagement of commercialisation partners. Operational KPI's ensure that overheads and cash resources are tightly controlled.

The most important financial KPIs are the cash position, turnover and profitability of the Group, which remain under constant focus and which are considered in the financial review.

Section 172 Statement

Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders and other matters in their decision making. The Directors continue to have regard to the interests of the Group's employees and other stakeholders, the impact of its activities on the community, the environment and the Group's reputation for good business conduct, when making decisions. In this context, acting in good faith and fairly, the Directors consider what is most likely to promote the success of the Group for its members in the long term. The Board regularly reviews the Group's principal stakeholders and how it engages with them. This is achieved through information provided by management and also by direct engagement with stakeholders themselves.

During the year, the key decision taken by the Board was to invest in the in-house scale up to volume manufacturing of Stereax batteries to meet the initial commercial demand for applications in industrial condition monitoring and miniature medical devices.

Why engagement is important	Engagement process	Strategic decisions in the year
Investors
To communicate and secure support for our long-term strategic objectives effectively and to promote long-term holdings.	AGM, analyst presentations, institutional investor presentations. Use of Investor Meet Company and Director's Talk platforms to extend reach to retail investors.	Decision to implement its own manufacturing facility from the funds raised from investors in 2020.
Employees
To deliver our long-term strategic objectives. To promote our culture, purpose and values and support their well-being whilst maintaining low turnover and high productivity rates	Transparent cascading Key Performance Measures that link directly to the company objectives. Twice yearly performance evaluations with objective setting and reviews. Formal policies and procedures.	Employee Assistance Programme provided offering various legal, financial and life coaching advice. Maintain most key operations throughout the Covid-19 shutdown by promoting working from home and fully risk-assessed social-distancing policies in the labs and offices.
Community and environment
To ensure activities are socially and environmentally responsible and meet the highest standards.	Creation of a "Green Champions" cross-company working group to ensure green initiatives are raised and followed through.	Achieved ISO 14001 certification. Installed vehicle charging points and switched to electricity supply from renewable sources. Undertaken carbon footprint study

 

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 28 to 45. The consolidated financial statements are presented under International Accounting Standards in conformity with the requirements of the Companies Act 2006. The financial statements of the Company continue to be prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and are set out on pages 46 to 50.

Statement of Comprehensive Income

Turnover

Turnover, all from continuing activities, for the year ended 30^th April 2021 was £2.3m (2020: £2.8m). This includes £2.0m of grant income recognised from seven projects that the company has in progress with Innovate UK (2020: £2.5m from nine programmes).

Non-grant turnover in the year was £0.3m (2020: £0.4m). This year the Group has solely focussed on battery development and so turnover is associated with the supply of battery samples for evaluation by customers.

Administrative expenses and losses for the period

Administrative costs for the year at £4.4m are in line with the £4.4m in 2020.  £0.9m of development costs were capitalised in the year compared to £0.1m in 2020. The  share-based payment charge increased from £0.2m in 2020 to £0.4m in 2021, due to a full year charge associated with the LTIP award from March 2020 and an increased number of employees qualifying for the company's share option scheme.

The underlying level of loss that is measured by Earnings Before Interest, Tax, Depreciation and Amortisation and Share-based payments (adjusted EBITDA) shows an increase in loss from £2.1m in 2020 to £2.3m in 2021.

Statement of financial position and cash flows

At 30^th April 2021, current assets amounted to £12.3m (2020: £16.5m), including net funds of £9.8m (2020: £14.8m).

The principal elements of the £5m decrease over the year ended 30 April 2020 in net funds were:

· Operating cash outflow of £2.3m (2020: £2.1m);

· Capital expenditure on intangible development costs, plant, property and equipment of £2.8m (2020: £1.3m) which mostly relates to the establishment of the new Stereax manufacturing facility.

PRINCIPAL RISKS AND UNCERTAINTIES

Commercial risk

The Group is subject to competition from competitors who may develop more advanced and less expensive alternative technology platforms, both for existing products and for those products currently under development.

The Group seeks to reduce this risk by continually assessing competitive technologies and competitors. The Group seeks to commercialise its batteries through multiple channels to reduce overreliance on individual partners and, in agreements with partners, it ensures that there are commercialisation milestones which must be met for the partner to retain the rights to commercialise the intellectual property.
 

Financial risk

The Group is reliant on a small number of significant customers, partners and grant funding bodies. Termination of these agreements or grant polices could have a material adverse effect on the Group's results or operations or financial condition. The Group expects to incur further operating losses as progress on development programmes continue.

The Group seeks to reduce this risk by broadening the number of customers and partners and thereby reduce reliance on individual significant companies and by leveraging its IP and resources over multiple projects. The Group applies for Research and Development tax credits to help mitigate its investment in these activities.

Intellectual property risk

The Group faces the risk that intellectual property rights necessary to exploit research and development efforts may not be adequately secured or defended. The Group's intellectual property may also become obsolete before the products and services can be fully commercialised.

The Group reduces this risk by contracting specialist patent agents and attorneys with extensive global experience of patenting and licensing.

Dependence on senior management and key staff

Certain members of staff are considered vital to the successful development of the business. Failure to continue to attract and retain such highly skilled individuals could adversely affect operational results.

The Group seeks to reduce this risk by offering appropriate incentives to staff through competitive salary packages and participation in long-term share option schemes and a good working environment.

Brexit risk

The Group has reviewed the impact of Brexit on the risks identified above and believes that whilst intellectual property risk will remain largely unaffected, there may be an impact in the future regarding the Group's ability to attract and retain highly skilled individuals.

The Group is alert to and continuously reviewing this potential risk and formulating its response at the appropriate time and no Brexit detriment has been incurred to date.

COVID-19 risk

The Group is not immune to the risks associated with COVID-19.  There are the day-to-day risks to our employees and other stakeholders of working in an environment with a virus present.  The Group are managing these circumstances with risk assessments and method statements to ensure we provide a safe working environment in line with the guidance set out specific to our industry, together with the latest UK Government's guidance.  Further information on the impact of COVID-19 on the Group have been set out in the Operating review.

By order of the Board

Keith Jackson  Graeme Purdy

Chairman  CEO

5^th July 2021
 

ILIKA plc

Financial Statements for year ended 30^th April 2021

DIRECTORS' REPORT

Directors

The Directors who served on the board of Ilika during the year and to the date of this report were as follows:

Executive

Mr S Boydell (FD and Company Secretary)

Prof. B. E. Hayden (CSO)

Mr G. Purdy (CEO)

Non-Executive

Prof. K Jackson (Chairman)

Mr. J Millard (Senior Independent Director)

Ms M. Biddulph

Research and development costs

In accordance with the policy outlined in note 1, the Group incurred research and development expenditure of £2,258,177 in the year (2020: £2,281,702). In addition, amounts totalling £939,709 (2020: £45,943) were capitalised in the year. Commentary on the major activities is given in the Strategic Report.

Financial instruments

The use of financial instruments and financial risk management policies is covered in the Strategic Report and also in note 14 of the financial statements.

Future developments

Information on the future developments of the business are included in the Strategic Report on page 2

Dividends

The Directors do not recommend the payment of a dividend.

Directors' interests in ordinary shares

The directors, who held office at 30^th April 2021, had the following interests in the ordinary shares of the Company:

	Number of shares
	1st May 2020	30th April 2021
G Purdy	774,427	767,927
K Jackson	95,000	95,000
S Boydell	49,846	43,346
J Millard	-	-
M Biddulph	12,500	12,500
B Hayden*	40,000	33,500

* B Hayden had an interest in preference shares of the Company amounting to 426,300 at 1^st May 2020 and at 30^th April 2021.

During the year, B Hayden, G Purdy and S Boydell each sold 6,500 ordinary shares.
 

Substantial shareholdings

On 2^nd July 2021 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
GPIM Limited	13,742,150	9.9
Janus Henderson Group plc	8,565,108	6.2
Schroders plc	7,770,865	5.6
Herald Investments	7,507,283	5.4
Baillie Gifford & Co.	7,170,769	5.2
Parkwalk Advisors	6,946,219	5.0

Post balance sheet events

There are no significant post balance sheet events from the 30^th April 2021 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

 

ILIKA plc

Financial Statements for year ended 30^th April 2021

DIRECTORS' REMUNERATION REPORT

Remuneration Committee

The Group's remuneration policy is the responsibility of the Remuneration Committee (the 'Committee'). The terms of reference of the Committee are outlined in the Corporate Governance Statement on page 15. The Committee members are Prof Keith Jackson (Chairman), Jeremy Millard and Monika Biddulph, all of whom are independent non-executive directors. The Chief Executive Officer and certain executives may be invited to attend Committee meetings to assist with its deliberations, but no executive is present when their own remuneration is being discussed.

Remuneration policy

(i) Executive remuneration

The Committee has 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 proportion of the total remuneration package, in the form of bonus and share options, is performance driven and has been constructed following consultation with major shareholders.

Components of remuneration

Component	Purpose and link to strategy	Operation	Performance metrics
Base salary	To attract and retain talent.	Reflecting individual's role, experience and performance. Base salaries are reviewed annually in January.	Take into account Group and individual performance, external benchmark information and internal relativities
Benefits and Pension	To offer market competitive package	Contribution to the executive director's individual money purchase scheme (at between 8% and 10% of base salary) and critical illness cover	n/a
Short‑Term Incentive Plan - annual performance related bonus	Rewards the achievement of short‑term financial and strategic project milestones	Maximum bonus of base salary: 100% CEO, 60% CSO and 40% CFO.  50% of the bonus is payable in cash and 50% is deferred into shares (using nominal cost options) for one year, subject to continued employment	Delivery of exceptional performance against a series of financial, commercial and technology objectives.
Long‑Term Incentive Plan - restricted share unit awards	Incentivise, retain and reward the executive directors for successfully taking the Company through the next stage of its growth.	Ilika plc Long Term Incentive Plan 2018 (the "LTIP"), was adopted by shareholders at the 2018 AGM Single awards of share options with an exercise price of the nominal value of the shares were made which will vest after three years	Awards vest to the extent that challenging share price targets have been met.
Shareholding guidelines	To increase shareholder alignment	100% of the net of tax share awards which vest must be retained until the following guidelines are met: CEO 300% of salary CSO 250% of salary CFO 150% of salary	n/a

(ii) Chairman and non-executive Director remuneration

The Chairman, Prof Keith Jackson receives a fixed fee of £66,370 per annum. Jeremy Millard and Monika Biddulph receive a fixed fee of £33,684 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^th April 2021 and 30^th April 2020 was as follows:

	Basic salary	Benefits in kind	Bonus	Total Short term benefits	Pension	Total
	£	£	£	£	£	£
Year to 30th April 2021
G Purdy	206,457	708	49,756	256,921	20,646	277,567
S Boydell	136,648	468	16,671	153,788	10,932	164,720
B Hayden*	91,169	139	12,979	104,286	-	104,286
K Jackson	66,107	-	-	66,107	-	66,107
J Millard	33,550	-	-	33,550	-	33,550
M Biddulph	33,550	-	-	33,550	-	33,550
	------	------	------	------	------	------
	567,481	1,315	79,406	648,202	31,578	679,780
	------	------	------	------	------	------
Year to 30th April 2020
G Purdy	204,015	701	40,803	245,519	20,402	265,921
S Boydell	135,032	464	13,504	149,000	11,707	160,707
B Hayden*	65,285	-	9,772	75,057	-	75,057
K Jackson	65,325	-	-	65,325	-	65,325
J Millard	33,153	-	-	33,153	-	33,153
M Biddulph	33,153	-	-	33,153	-	33,153
C Spottiswoode	13,744	-	-	13,744	-	13,744
	------	------	------	------	------	------
	549,707	1,165	64,079	614,951	32,109	647,060
	------	------	------	------	------	------

*B Hayden was 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 £40,323 to the company in the year in respect of B Hayden. (2020: £72,432).

Benefits in kind include critical illness cover.

 

Share options

The share options of the directors are set out below:

Unapproved	2020 Number	2021 Number	Exercise Price	Expiry date	Performance Conditions
G Purdy1	1,050,000	-	51p	May 2020	n/a
G Purdy	105,810	105,810	1p	August 2027	n/a
G Purdy	1,127,777	1,127,777	1p	January 2029	See note 2
G Purdy	207,229	207,229	1p	August 2029	n/a
G Purdy	606,014	606,014	1p	March 2030	See note 3
G Purdy	-	65,812	1p	September 2030	n/a
G Purdy	-	92,536	1p	February 2031	See note 4
B Hayden1	525,000	-	51p	May 2020	n/a
B Hayden	16,211	16,211	1p	August 2027	n/a
B Hayden	712,394	712,394	1p	January 2029	See note 2
B Hayden	60,896	60,896	1p	August 2029	n/a
B Hayden	382,807	382,807	1p	March 2030	See note 3
B Hayden	-	15,763	1p	September 2030	n/a
B Hayden	-	44,494	1p	February 2031	See note 4
S Boydell1	117,600	-	51p	May 2020	n/a
S Boydell	373,222	373,222	1p	January 2029	See note 2
S Boydell	63,822	63,822	1p	August 2029	n/a
S Boydell	196,619	196,619	1p	March 2030	See note 3
S Boydell	-	21,780	1p	September 2030	n/a
S Boydell	-	42,873	1p	February 2031	See note 4

1)  Share options lapsed in the year.

Awards with performance conditions will vest on the achievement of the share price targets, assessed over a three year performance period:

2)  (a) Less than 27p - no vesting

(b) 27p  - 25% of the shares subject to award will vest

(c) 36p - 75% of the shares subject to award will vest

(d) 54p - 100% of the shares subject to award will vest

3)  (a) Less than 51p - no vesting

(b) 51p  - 25% of the shares subject to award will vest

(c) 68p - 75% of the shares subject to award will vest

(d) 102p - 100% of the shares subject to award will vest

4)  (a) Less than 336p - no vesting

(b) 336p  - 25% of the shares subject to award will vest

(c) 448p - 75% of the shares subject to award will vest

(d) 672p - 100% of the shares subject to award will vest

Awards will vest between points (b) and (c) and between (c) and (d) on a straight-line basis.

Share based payment charge attributable to directors in the year was £343,733 (2020: £179,984).

Keith Jackson

Chairman of the Remuneration Committee

 

Statement of Directors' responsibilities in respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. 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 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 international accounting standards in conformity with the requirements of the Companies Act 2006, 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. Further details in respect of this and the impact of the COVID-19 pandemic can be found in note 1 of the financial statements.

By order of the Board

Graeme Purdy

Chief Executive

5^th July 2021

 

ILIKA plc

Financial Statements for year ended 30^th April 2021

CORPORATE GOVERNANCE STATEMENT

We confirm that our governance structures and practices are in agreement with the provisions of the Quoted Companies Alliance (QCA) Corporate Governance Code (2018) for small and mid-size quoted companies. Our full statement of compliance with the 10 principles of the QCA Corporate Governance Code is set out on our website at www.ilika.com/investors/corporate-governance

Board of directors

The Board of directors (the 'Board') consists of a Non-Executive Chairman, three Executive Directors and two Non-Executive Directors.

The responsibilities of the Non-Executive Chairman and the Chief Executive Officer are clearly divided. The Chairman is responsible for overseeing the formulation of the overall strategy of the company, the running of the board, ensuring that no individual or group dominates the Board's decision making and ensuring that the non-executive directors are properly briefed on matters. Prior to each Board meeting, directors are sent an agenda and Board papers for each agenda item to be discussed. Additional information is provided when requested by the Board or individual directors.

The Chief Executive Officer has the responsibility for implementing the strategy of the Board and managing the day to day business activities of the Group through his chairmanship of the executive committee.

The Non-Executive Directors bring relevant experience from different backgrounds and receive a fixed fee for their services and reimbursement of reasonable expenses incurred in attending meetings.

The 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 Jeremy Millard (Chair), Professor Keith Jackson and Monika Biddulph.

The Committee monitors the integrity of the Group's financial statements and the effectiveness of the audit process. The Committee reviews accounting policies and material accounting judgements. The Committee also reviews, and reports on, reports from the Group's auditors relating to the Group's accounting controls. It makes recommendations to the Board on the appointment of auditors and the audit fee.  It has unrestricted access to the Group's auditors. The Committee keeps under review the nature and extent of non-audit services provided by the external auditors in order to ensure that objectivity and independence are maintained.

ii)  Remuneration Committee

The Remuneration Committee comprised Professor Keith Jackson (Chairman), Jeremy Millard and Monika Biddulph.

 

The committee is responsible for making recommendations to the Board on remuneration policy for Executive Directors and the terms of their service contracts, with the aim of ensuring that their remuneration, including any share options and other awards, is based on their own performance and that of the Group generally.

iii)  Nomination Committee

The Nomination Committee comprised Professor Keith Jackson (Chairman), Jeremy Millard and Monika Biddulph.

It is responsible for providing a formal, rigorous and transparent procedure for the appointment of new directors to the board and reviewing the performance of the board each year.

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	7/7	-	-	-
Prof. B. E. Hayden	7/7	-	-	-
Mr G. Purdy	7/7	-	-	-
Prof K Jackson	7/7	2/2	1/1	2/2
Jeremy Millard	7/7	2/2	1/1	2/2
Monika Biddulph	7/7	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

Keith Jackson 

Chairman 

5^th July 2021

 

REPORT OF THE AUDIT COMMITTEE

The Audit Committee has primary responsibility for ensuring that the financial performance of the Group is properly measured and reported on. Its terms of reference and its current membership are outlined in the Corporate Governance Statement on page 15.

Matters covered by the Committee

The Committee, which is required to meet at least twice a year, met twice during the year ended 30 April 2021, with all members present, and covered the following matters:

· July 2020: audit completion meeting for the 2020 year-end audit, including review of the valuation model to support Ilika plc's investment in Ilika Technologies Limited, review of the financial forecast to support the Group's ability to account on a going concern basis, review of the auditor's report on the audit, and review of the annual report.

· January 2021: Half year report completion meeting. Approval of the release of the Half Year report.

Auditor independence

The auditors do not supply any non-audit services and this policy safeguards auditor objectivity and independence.

Internal audit function

The Group does not have an internal audit function, but the Committee considers that this is appropriate, given the size and relative lack of complexity of the Group. The Committee keeps this matter under review annually.

Jeremy Millard

Chair of the Audit Committee
 

Independent auditor's report to the members of Ilika plc

Opinion on the financial statements

In our opinion:

· the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 30 April 2021 and of the Group's loss for the year then ended;

· the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006;

· the Parent Company financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the  Companies Act 2006 and as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Ilika plc (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 30 April 2021 which comprise the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Consolidated cash flow statement, the Consolidated statement of changes in equity, the Company balance sheet, the Company cash flow statement, the Company statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006 and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Group and the Parent Company's ability to continue to adopt the going concern basis of accounting included:

· Reviewing management's assessment of going concern through analysis of the Group's cash flow forecast through to July 2022, including assessing and challenging the assumptions underlying the forecasts by reference to historic performance and our knowledge of future developments.

· Sensitising, whilst taking account of the continuing impact of the COVID-19 pandemic, the forecasts further to ascertain the levels of revenue decline that would cause a cash shortage at any point in management's post balance sheet assessment period.  We also compared the level of expenditure included in the forecasts and compared this to previous periods.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the entity's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Overview

Coverage	100% (2020: 100%) of Group profit before tax 100% (2020: 100%) of Group revenue 100% (2020: 100%) of Group total assets
Key audit matters	2021 2020 Revenue recognition P Going concern P Capitalisation of development expenditure P Revenue recognition is no longer deemed to be a key audit matter as a result of the continuing impact of grant income and the continuation of the group's significant contracts.  Going concern is no longer deemed to be a key audit matter as a result of the diminishing influence of the COVID-19 pandemic on the Group's financial position and the significant cash reserves in the Group.
Materiality	Group financial statements as a whole £192k (2020: £159k) based on 5% (2020: 5%) of the loss before tax

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements.  We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.

At 30 April 2021 the group had two components whose transactions and balances are included in the consolidated accounting records. Both components, being Ilika plc and its subsidiary Ilika Technologies Limited, were considered to be significant components and were subject to a full scope audit.

All work was carried out by the group audit team.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter		How the scope of our audit addressed the key audit matter
Capitalisation of development expenditure Please refer to note 7, and accounting policies and key sources of estimation and uncertainty in note 1.	The group has capitalised development expenditure in relation to their Stereax battery technology.  This is the first full period in which the associated expenditure has been capitalised having been deemed to meet the criteria in the accounting standards in the previous year. There are a number of judgements involved in accounting for development expenditure, including whether the activities are appropriate for capitalisation in accordance with the criteria of the applicable accounting standard, the allocation of the relevant costs to the Stereax battery project, and the recoverability of the asset generated. Due to the level of judgement, there was also considered to be an inherent risk of management bias therefore this was considered to be an area of focus for our audit, particularly as this was the first full year in which development costs have been capitalised.	We have considered the conditions under which development costs can be capitalised under the accounting standards and checked that these conditions have been met in respect of the Stereax battery technology. We have discussed with management the Group's processes for identifying the relevant development costs.  We reviewed the nature of the costs capitalised to ensure they were in line with our understanding of the work carried out in the year. We agreed a sample of capitalised costs to underlying supporting documentation to confirm the existence and accuracy of the costs. This included obtaining time records to corroborate the allocation of employee time spent on the Stereax battery technology and inspecting employee contracts to check that their stated job roles support their involvement in development activities.  Employee costs were also agreed to the underlying payroll records. We assessed the ability of the asset to generate future economic benefits for the business, which must at least exceed the carrying value of the intangible asset.  We have corroborated management's assessment to external market information and expectations. Key observations: Based on the audit work performed we consider that development costs have been capitalised appropriately and in accordance with the Group's accounting policy.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.  We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:

 

	Group financial statements		Parent company financial statements
	2021	2020	2021	2020
Materiality	£192k	£159k	£119k	151k
Basis for determining materiality	5% of loss before tax		62% of Group materiality	95% of Group materiality
Rationale for the benchmark applied	We considered 5% of loss before tax to be a key performance benchmark for the Group and the users of the financial statements in assessing financial performance.		Calculated as a percentage of Group materiality due to aggregated consideration of significant component materiality levels.
Performance materiality	£144k	£119k	£89k	£113k
Basis for determining performance materiality	On the basis of our risk assessment, together with our assessment of the Group's control environment and the limited number of known errors historically, our judgement is that performance materiality for the financial statements should be 75% of materiality.		On the basis of our risk assessment, together with our assessment of the Group's control environment and the limited number of known errors historically, our judgement is that performance materiality for the financial statements should be 75% of materiality.

Component materiality

We set materiality for each significant component of the Group based on a percentage of between 62% and 86% of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component.  Component materiality in respect of Ilika Technologies Limited was £169k. In the audit of the subsidiary entity, we further applied performance materiality levels of 75% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.

Reporting threshold 

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £4k (2020: £3k).  We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

Other information

The directors are responsible for the other information. The other information comprises the information included in the Annual Report and Accounts other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. 

Strategic report and Directors' report

In our opinion, based on the work undertaken in the course of the audit: · the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and · the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: · adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or · the Parent Company financial statements are not in agreement with the accounting records and returns; or · certain disclosures of Directors' remuneration specified by law are not made; or · we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Statement of Directors' responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, includingfraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.

Procedures performed by the group audit team included:

-  We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most significant frameworks which are directly relevant to specific assertions in the financial statements are those that relate to the reporting framework, rules of the London Stock Exchange for companies trading securities on AIM, the Companies Act 2006 and relevant tax compliance regulations.  We understood how the Group is complying with those frameworks by making enquiries of management, those responsible for legal and compliance procedures and the Company Secretary.

-  Discussions with management regarding known or suspected instances of non-compliance with laws and regulations, including gaining an understanding of where they considered there was a susceptibility to fraud;

-  Our audit planning identified fraud risks in relation to management override, the inappropriate or incorrect recognition of revenue and the capitalisation of development expenditure (assessed as a Key Audit Matter above). We obtained an understanding of the processes and controls that the Group has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how management monitors that processes and controls; and Assessing journals entries as part of our planned audit approach, with a particular focus on journal entries to key financial statement areas such as revenue and non-current assets.  We also performed an assessment on the appropriateness of key judgements and estimates, for example the capitalisation of development costs (the risks associated with the capitalisation of development costs has been assessed as a Key Audit Matter above), which are subject to managements' judgement and estimation, and could be subject to potential bias.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities.  This description forms part of our auditor's report.

Use of our report

This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Stephen Le Bas (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

Southampton, UK

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	2021	2020
		£	£
Turnover	2	2,255,688	2,840,648
Revenue		230,453	367,003
UK grants		2,025,235	2,473,645
Cost of sales		(1,271,612)	(1,571,350)
		-------	-------
Gross profit		984,076	1,269,298
Total Administrative expenses
Administrative expenses		(4,405,622)	(4,380,259)
Share based payment charge		(419,591)	(233,786)
		(4,825,213)	(4,614,045)
		-------	-------
Operating loss	3	(3,841,137)	(3,344,747)
Income from short term deposits		14,806	12,406
Interest payable		(9,694)	(10,299)
		-------	-------
Loss before tax		(3,836,025)	(3,342,640)
Taxation	5	308,962	254,734
		-------	-------
Loss for period / total comprehensive income		(3,527,063)	(3,087,906)
		-------	-------
Loss per share from continuing operations	6
Basic		(2.53)p	(2.95)p
Diluted		(2.53)p	(2.95)p

The notes on pages 28 to 45 form part of these financial statements

 

Consolidated balance sheet

Company number 7187804

		As at 30th April
	Notes	2021	2020
		£	£
ASSETS
Non-current assets
Intangible assets	7	1,063,059	66,110
Property, plant and equipment	8	2,305,183	1,670,614
Right to use assets	9	890,421	240,040
		-------	-------
Total non-current assets		4,258,663	1,976,764
		-------	-------
Current assets
Trade and other receivables	10	2,173,597	1,470,664
Current tax receivable	5	330,000	300,000
Other financial assets - bank deposits		769,080	762,200
Cash and cash equivalents	11	8,997,208	13,989,538
		-------	-------
Total current assets		12,269,855	16,522,402
		-------	-------
Total assets		16,528,548	18,499,166
		-------	-------
Issued capital and reserves attributable to owners of parent
Issued share capital	15	1,396,265	1,391,857
Share premium		40,992,933	40,895,709
Capital restructuring reserve		6,486,077	6,486,077
Retained earnings		(34,688,022)	(31,580,550)
		-------	-------
Total equity		14,187,253	17,193,093
		-------	-------
LIABILITIES
Current liabilities
Trade and other payables	12	1,373,210	910,301
Lease liabilities	9	195,524	68,875
		-------	-------
Total current liabilities		1,568,734	979,176
		-------	-------
Non-current liabilities
Lease liabilities	9	632,196	157,227
Provisions	13	140,365	169,670
		-------	-------
Total non-current liabilities		772,561	326,897
		-------	-------
Total liabilities		2,341,295	1,306,073
		-------	-------
Total equity and liabilities		16,528,548	18,499,166
		-------	-------

The notes on pages 28 to 45 form part of these financial statements

These financial statements were approved and authorised for issue by the Board of Directors on 5^th July 2021. 

Mr. K Jackson

Chairman

 

Consolidated cash flow statement

			Year ended 30th April
			2021	2020
			£	£
Cash flows from operating activities
Loss before taxation			(3,836,025)	(3,342,640)
Adjustments for:
Amortisation			14,243	11,700
Depreciation			1,130,862	1,035,907
Equity settled share-based payments			419,591	233,786
Loss on disposal of plant property and equipment			2,089	3,552
Net financial income			(5,112)	(2,107)
			-------	-------
Operating cash flow before changes in working capital, interest and taxes			(2,274,352)	(2,059,802)
Decrease / (increase) in trade and other receivables			(293,067)	60,036
Increase / (decrease) in trade and other payables			173,777	(256,844)
Decrease in provisions			(29,305)	(120,330)
			-------	-------
Cash utilised by operations			(2,422,947)	(2,376,940)
Tax received			278,962	314,734
			-------	-------
Net cash flow used in operating activities			(2,143,985)	(2,062,206)
Cash flows from investing activities
Interest received			14,806	12,406
Purchase of intangible assets			(1,011,192)	(53,995)
Purchase of property, plant and equipment			(1,812,135)	(1,202,855)
Sale of property, plant and equipment			-	12,595
Increase in other financial assets			(6,880)	(410,237)
			-------	-------
Net cash used in investing activities			(2,815,401)	(1,642,086)
Cash flows from financing activities
Proceeds from issuance of ordinary share capital			101,632	15,105,525
Cost of share issue			-	(934,385)
Lease payments			(134,576)	(76,526)
			-------	-------
Net cash from financing activities			(32,944)	14,094,614
			-------	-------
Net (decrease) / increase in cash and cash equivalents			(4,992,330)	10,390,322
Cash and cash equivalents at the start of the period			13,989,538	3,599,216
			-------	-------
Cash and cash equivalents at the end of the period			8,997,208	13,989,538
			-------	-------

The notes on pages 28 to 45 form part of these financial statements.

 

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 2019	1,013,070	27,103,356	6,486,077	(28,726,430)	5,876,073
Share-based payment	-	-	-	233,786	233,786
Issue of shares	378,787	14,726,738	-	-	15,105,525
Cost of share issue	-	(934,385)	-	-	(934,385)
Loss and total comprehensive income	-	-	-	(3,087,906)	(3,087,906)
	------	-------	--------	--------	--------
As at 30th April 2020	1,391,857	40,895,709	6,486,077	(31,580,550)	17,193,093
Share-based payment	-	-	-	419,591	419,591
Issue of shares	4,408	97,224	-	-	101,632
Loss and total comprehensive income	-	-	-	(3,527,063)	(3,527,063)
	------	-------	--------	--------	--------
As at 30th April 2021	1,396,265	40,992,933	6,486,077	(34,688,022)	14,187,253
	------	-------	--------	--------	--------

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.

The notes on pages 28 to 45 form part of these financial statements.

 

Notes to the consolidated financial statements

1  Accounting policies

Basis of preparation

These financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. 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 46 to 50.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company made up to the reporting date. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns over the investee, and the ability of the investee to use its power to affect the variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Going concern

The financial statements have been prepared on a going concern basis which assumes that the Company will have sufficient funds available to enable it to continue to trade for the foreseeable future. In making their assessment that this assumption is correct the Directors have undertaken an in-depth review of the business, its current prospects, and cash resources as set out below.

The directors have prepared and reviewed financial forecasts. The Group meets its day to day working capital requirements through existing cash resources which, at 30th April 2021, amounted to £9,766,288 (2020: £14,751,738). 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.

After taking account of all the above factors the Directors believe that as the market becomes more aware of the Company's prospects and the scale of the opportunities that the Company's technologies create the Company will continue to be able to raise any funds required to enable it to continue to trade and grow towards self-sufficiency.

Changes in accounting policies

(a) New standards, amendments to standards or interpretations

No new standards, interpretations and amendments adopted in the year have had a material impact on the Group.

(b) New standards, amendments to standards or interpretations not yet applied

There are no new standards, interpretations or amendments not yet applied which the directors anticipate will have a material impact on the Group.
 

Notes to the consolidated financial statements

1  Accounting policies (continued)

Turnover

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

Sales of goods

Sales of Stereax batteries are recognised upon despatch to the customer at which point they have an obligation to pay in full and as such, control is considered to transfer at that point.  Invoices are raised at the point purchase orders are made and subsequently upon delivery.

Sales of services

Research and development services are recognised in the accounting period in which the services are rendered, by reference to the actual costs incurred as a proportion of the total expected cost of the products and services to be provided. The group has an enforceable right to payment over the period of the contract. Invoices are raised on despatch of goods or at agreed milestones with timing differences recognised within accrued or deferred income.

Government grants

Grants that compensate the Group for expenses incurred are recognised in the income statement on a systematic basis in the same periods in which the expenses are recognised. Submissions are made for pre-arranged time periods with timing differences recognised within accrued or deferred income.

Financial income

Income from short term deposits is recognised in the income statement as it accrues, using the effective interest method.

Pension and other post-retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Share-based payment transactions

The Group issues equity-settled share options to all employees. Equity-settled share options are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share options is expensed on a straight-line basis over the vesting period. At each period end the directors re-assess the impact of non-market conditions and adjust the estimated share-based payment appropriately.

The fair value of options granted by the Group is measured by use of the Black-Scholes pricing model taking into account the following inputs: the exercise price of the option; the life of the option; the market price on the date of grant of the option; the expected volatility of the share price; the dividends expected on the shares; and the risk free interest rate for the life of the option. Where required market-based vesting and other conditions are also considered in determining the fair value of new options granted in the year. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

 

Notes to the consolidated financial statements

1  Accounting policies (continued)

Research and development expenditure

Research expenditure is recognised as an expense when it is incurred.

Development expenditure is recognised as an expense except that costs incurred on development projects are capitalised as intangible assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if, an entity within the Group can demonstrate all of the following:

i.  Its ability to measure reliably the expenditure attributable to the asset under development;

ii.  The product or process is technically and commercially feasible;

iii.  Its future economic benefits are probable;

iv.  Its ability to use or sell the developed asset;

v.  The availability of adequate technical, financial and other resources to complete the asset under development; and

vi.  Its intention is to use or sell the developed asset.

During the year £939,709 (2020: £45,943) of development expenditure has been capitalised in line with IAS 38 as a result of the conditions being met in respect of the Stereax battery project and the sales made in the year.  This capitalisation had commenced in April 2020.

Taxation

Companies within the group may be entitled to claim special tax allowances under the SME scheme in relation to qualifying research and development expenditure (eg R&D tax credits). The group accounts for such allowances as tax credits, which means that they are recognised when it is probable that the benefit will flow to the group and that benefit can be reliably measured.  R&D tax credits reduce current tax expense and, to the extent the amounts due in respect of them are not settled by the balance sheet date, reduce current tax payable. Where companies are loss-making the company claims tax credits on their surrenderable losses, with an appropriate receivable recognised.  A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.

Tax credits claimed under the RDEC scheme are accounted for under IAS 20 as government grants in line with the accounting policy noted above.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Foreign currency

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss.

 

Notes to the consolidated financial statements

1  Accounting policies (continued)

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment less their estimated residual value. The estimated useful lives are as follows:

Leasehold improvements	lease term
Plant, machinery and equipment	2 - 5 years
Fixtures & fittings	3 - 5 years

Impairment

The carrying amounts of the Group's assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated at the present value of the future expected cashflows associated with the impaired asset.

An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in profit or loss.

Leases

All leases are accounted for by recognising a right-of-use asset and a lease liability except for leases of low value assets and leases with a duration of twelve months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

On initial recognition, the carrying value of the lease liability also includes: amounts expected to be payable under any residual value guarantee; the exercise price of any purchase option granted in favour of the group if it is reasonably certain to exercise that option; and any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: lease payments made at or before commencement of the lease, initial direct costs incurred, and the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset.

Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

 

Notes to the consolidated financial statements

1  Accounting policies (continued)

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).

Intellectual property

Acquired intellectual property is included at cost and is amortised to administrative expenses on a straight-line basis over its useful economic life of 15 years.

Development expenditure

Development expenditure is capitalised at cost and is amortised to administrative expenses on a straight-line basis over its useful economic life of 10 years.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. The Group's financial assets are all carried at amortised cost. Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. The Group's financial liabilities are all classified as 'other' liabilities which are carried at amortised cost. Cash and cash equivalents comprise cash balances and call deposits. Deposits of over 3 months' maturity, judged at inception, are classified as Other Financial Assets.

Provisions

Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.

Provisions are either charged as an expense to income statement or capitalised within property, plant and equipment in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.

When payments are made, they are charged to the provision carried in the balance sheet.

Key sources of estimation and uncertainty

The preparation of the Group's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses at the date of the Group's financial statements. The Group's estimates and 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.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Capitalisation of development costs

During the year, costs have been capitalised in respect of the Stereax battery technology. The directors have determined that the conditions to capitalise this associated expenditure have been met. Had these costs been considered research rather than development expenditure then the intangible assets would be £939,709 lower. Furthermore, the directors have considered the recoverability of the capitalised costs by reference to third party market analysis and determined that the amounts are recoverable.

 

Notes to the consolidated financial statements

2  Segment reporting

The Group operates in one area of activity, namely the production, design and development of solid-state batteries. For management purposes, the Group is analysed by the geographical location of its customer base and business development directors have been appointed to cover the group's three territories of focus, Asia, North America and Europe (with the UK further split out below).

	Year ended 30th April
Turnover	2021	2020
	£	£
Analysis by geographical market:
By destination
Asia	4,739	12,831
Europe	15,494	69,870
North America	72,299	68,530
UK	2,163,156	2,689,417
	--------	--------
	2,255,688	2,840,648
	-------	-------

An analysis of turnover by type, demonstrating the changing focus of management from sales of services to sales of goods, is as follows:

	Year ended 30th April
Turnover	2021	2020
	£	£
Goods and services	230,453	367,003
UK Grants	2,025,235	2,473,645
	--------	--------
	2,255,688	2,840,648
	-------	-------

Customers might individually account for more than 10% of the total turnover of the Group. The turnover from these companies are indicated below:

	Year ended 30th April
Turnover	2021	2020
	£	£
UK Grants	2,025,235	2,473,645
Customers less than 10%	230,453	367,003
	--------	--------
	2,255,688	2,840,648
	-------	-------

 

Notes to the consolidated financial statements

3  Operating loss

	Year ended 30th April
	2021	2020
This is arrived at after charging:	£	£
Research and development expenditure in the year	2,258,177	2,281,702
Depreciation of property, plant and equipment	1,054,743	971,896
Depreciation of right-of-use assets	76,119	64,011
Amortisation of intangible assets	14,243	11,700
Auditors remuneration: Fees payable to the Group's auditor for the audit of the Group's  accounts	27,200	24,200
Fees payable to the Group's auditor for other services: -  The Audit of the Group's subsidiaries	7,800	7,800
Short term lease expenses	-	123,422
Share-based payment	419,591	233,786
	-------	-------

4  Employees

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

	Year ended 30th April
	2021	2020
	Number	Number
Administration	5	4
Materials synthesis	46	41
	------	------
	51	45
	------	------

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

	Year ended 30th April
	2021	2020
	£	£
Wages and salaries	2,716,700	2,348,026
Social security costs	302,659	276,758
Share-based payment expense	419,591	233,786
Pension costs	180,402	154,518
	-------	-------
	3,619,352	3,013,088
	--------	--------

Included in the above are amounts totaling £827,452 (2020: £45,943) which have been capitalised.

Notes to the consolidated financial statements

4  Employees (continued)

The total remuneration of the Directors of the Group was as follows:
	Year ended 30th April
	2021	2020
	£	£
Wages and salaries	648,202	614,951
Pension costs	31,578	32,109
	-------	-------
Directors' emoluments	679,780	647,060
Social security costs	82,057	80,443
Share-based payment expense	343,733	179,984
	-------	-------
Key management personnel	1,105,570	907,487
	-------	-------

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
	2021	2020
	£	£
R&D tax credits	330,000	300,000
Adjustments to prior period	(21,038)	(45,266)
	------	------
	308,962	254,734
	------	------

 (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 19% (2020: 19%). The differences are reconciled below:

	2021	2020
	£	£
Loss on ordinary activities before tax	(3,836,025)	(3,342,640)
	------	------
Loss on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK of 19% (2020: 19%)	(729,704)	(635,645)
Effects of:
Expenses not deductible for corporation tax	79,722	44,741
R&D relief	(163,310)	(130,815)
Origination of unrecognised tax losses	483,292	421,219
Adjustments to prior period	21,038	45,266
	------	------
Total tax credit for the year	(308,962)	(254,734)
	------	------

 

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 £30,305,000 (2020: £25,981,000). A deferred tax asset in respect of these losses of approximately £5,758,000 (2020: £4,936,000) 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:

	Year ended 30th April
	2021	2020
	No.	No.
Weighted average number of equity shares	139,273,884	104,645,940
	--------	--------
	£	£
Earnings, being loss after tax	(3,527,063)	(3,087,906)
	-------	-------
	Pence	Pence
Loss per share	(2.53)	(2.95)
	------	------

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 30^th April 2021, there were 7,369,729 options outstanding (2020: 9,199,082) as detailed in notes 15 and 19.

 

Notes to the consolidated financial statements

7  Intangible assets

	Development expenditure	Software licences	Intellectual property	Total
	£	£	£	£
Cost
As at 30th April 2019	-	55,040	75,000	130,040
Additions	45,943	8,052	-	53,995
	------	------	------	------
As at 30th April 2020	45,943	63,092	75,000	184,035
Additions	939,709	71,483	-	1,011,192
	------	------	------	------
As at 30th April 2021	985,652	134,575	75,000	1,195,227
Amortisation
As at 30th April 2019	-	31,225	75,000	106,225
Provided for the year	-	11,700	-	11,700
	------	------	------	------
As at 30th April 2020	-	42,925	75,000	117,925
Provided for the year	-	14,243	-	14,243
	------	------	------	------
As at 30th April 2021	-	57,168	75,000	132,168
Net book value
As at 30th April 2020	45,943	20,167	-	66,110
	-------	------	-------	------
As at 30th April 2021	985,652	77,407	-	1,063,059
	-------	------	-------	------

The amortisation charge of £14,243 (2020: £11,700) 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 2019	601,474	6,200,955	169,363	6,831,792
Additions	47,918	870,737	11.880	930,535
Disposals	(601,474)	(2,387,503)	(119,904)	(3,108,881)
	------	-------	------	-------
As at 30th April 2020	47,918	4,684,189	61,339	4,793,446
Additions	30,190	1,649,627	11,583	1,691,400
Disposals	-	(727,567)	(22,611)	(750,178)
	------	-------	------	-------
As at 30th April 2021	78,108	5,606,249	50,311	5,734,668
	------	-------	------	-------
Depreciation
As at 30th April 2019	589,011	4,487,259	167,400	5,243,670
Provided for the year	15,598	953,064	3,234	971,896
Disposals	(597,922)	(2,374,908)	(119,904)	(3,092,734)
	------	-------	------	-------
As at 30th April 2020	6,687	3,065,415	50,730	3,122,832
Provided for the year	13,233	1,036,656	4,854	1,054,743
Disposals	-	(725,479)	(22,611)	(748,090)
	------	-------	------	-------
As at 30th April 2021	19,920	3,376,592	32,973	3,429,485
	------	-------	------	-------
Net book value
As at 30th April 2020	41,231	1,618,774	10,609	1,670,614
	------	-------	------	-------
As at 30th April 2021	58,188	2,229,657	17,338	2,305,183
	------	-------	------	-------

At the year end, deposits totaling £409,866 (2020: £Nil) were paid in respect of property, plant and equipment and are held in prepayments. These will be transferred once the items have been received. Additionally, the company has capital commitments totaling £1,545,742 (2020: £109,500) as disclosed in note 17.

 

Notes to the consolidated financial statements

9  Leases

The Group has operating leases for its premises in Romsey and Chandler's Ford. These operating leases are accounted for by recognising a right-of-use asset and a lease liability. 

The lease liabilities have been measured at the present value of the contractual payments due to the lessor over the lease terms using an incremental borrowing rate of 4%, which is the group's estimate of the discount rate applicable to a property lease. The lease terms have been determined to be 5 years, as this is the non-cancellable period before the Group has the option of a break. There is no reasonable certainty that the leases will continue beyond this point.

The right-of-use assets have been initially measured at the amount of the lease liabilities. Subsequent to initial measurement the lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for any lease payments made. Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease. 

Right-of-use assets	Land and buildings
		£
Cost
As at 1st May 2019 and 2020		320,053
Additions		726,500
		------
As at 30th April 2021		1,046,553
		------
Depreciation
As at 1st May 2019		16,002
Provided for the year		64,011
		------
As at 1st May 2020		80,013
Provided for the year		76,119
		------
As at 30th April 2021		156,132
		------
Net book value
As at 1st May 2020		240,040
		------
As at 30th April 2021		890,421
		------
Lease liabilities	Land and buildings
	2021	2020
	£	£
As at 1st May 2020	226,102	292,329
Additions	726,500	-
Cashflows:
Lease payments	(134,576)	(76,526)
Non-cash items:
Interest expense	9,694	10,219
	------	------
As at 30th April 2021	827,720	226,102
	------	------

 

Notes to the consolidated financial statements

9  Leases (continued)

Maturity analysis of lease payments:
	As at 30th April
	2021	2020
	£	£
0-3 months	57,881	19,131
3-12 months	157,701	57,394
	------	------
Due in less than one year	215,582	76,525
1-2 years	202,829	60,583
2-5 years	483,819	105,397
	------	------
Lease payments	902,230	242,505
	------	------

10  Trade and other receivables

	As at 30th April
	2021	2020
	£	£
Trade receivables	3,808	16,072
Prepayments	729,871	236,976
Other receivables	703,893	335,960
Accrued income	736,025	881,656
	------	------
	2,503,597	1,470,664
	------	------

The ageing of trade receivables is as follows:

	As at 30th April
	2021	2020
	£	£
0-29 days	3,808	-
30-59 days	-	16,072
	------	------
	3,808	16,072
	------	------

Included in other receivables is an amount of £50,000 (2020: £150,000) which represents cash held in a separate bank account used as security against dilapidation costs which were due at the end of one of the Group's property lease. These works were largely complete as at 30^th April 2020.

The accrued income of £736,025 (2020: £881,656) relates to performance obligations satisfied but not invoiced, all of which is due to be settled within the next twelve months. The decrease in accrued income is due to the level of grants underway at the current year end compared to the previous year.

 

Notes to the consolidated financial statements

11  Cash and cash equivalents

	As at 30th April
	2021	2020
	£	£
Current bank accounts	2,989,775	3,989,538
Short term deposits with less than three months' maturity	6,007,433	10,000,000
	--------	--------
	8,997,208	13,989,538
	--------	--------

12  Trade and other payables

	As at 30th April
	2021	2020
	£	£
Trade payables	822,405	349,822
Other payables	32,222	23,738
Other taxes and social security costs	76,493	74,875
Accruals and deferred income	442,090	461,866
	--------	--------
	1,373,210	910,301
	--------	--------

The ageing of financial liabilities is as follows:

	As at 30th April
	2021	2020
	£	£
0-29 days	768,277	430,340
30-59 days	228,490	201,708
60-89 days	52,484	25,260
90+ days	247,466	178,138
	--------	--------
	1,296,717	835,446
	--------	--------

Within Accruals and deferred income is deferred income of £10,000 (2020: £71,000) that represent unfulfilled performance obligations on grants and product sales to be satisfied in the next twelve months.

13  Provisions

		Leasehold  Dilapidations
		£
As at 1st May 2020		169,670
Utilised		(29,305)
		------
As at 30th April 2021		140,365
		--------

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. The release in the year is in respect of work carried out at to hand back an existing leased premise in the year.

 

Notes to the consolidated financial statements

14  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. The Group has denominated some of it sales transactions in non-sterling currencies and has entered into a forward exchange contract to mitigate this risk.

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 and are categorised as floating-rate financial assets. Contracts in place at 30^th April 2021 had a weighted average period to maturity of 70 days (2020: 55 days) and a weighted average annualised rate of interest of 0.08%. (2020: 0.2%).

Interest rate risk sensitivity analysis

It is estimated that a change in base rate to zero would have increased the Group's loss before taxation for the year to 30^th April 2021 by approximately £15,000 (2020: £12,000).

It is estimated that an increase in base rate by 1 percent would decrease the Group's loss before taxation for the year to 30^th April 2021 by approximately £108,000 (2020: £15,000).

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.

 

Notes to the consolidated financial statements

15  Share capital

	As at 30th April
	2021	2020
	£	£
Authorised
139,038,172 (2020: 138,597,312) Ordinary Shares of £0.01 each	1,390,381	1,385,973
1,781,400 Convertible Preference Shares of £0.01 each	17,814	17,814
	------	------
Allotted, called up and fully paid
139,038,172 (2020: 138,597,312) Ordinary Shares of £0.01 each	1,390,381	1,385,973
588,400 Convertible Preference Shares of £0.01 each	5,884	5,884
	------	------
	1,396,265	1,391,857
	------	------

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 Shareholders have the right, at any time, to convert the preference shares held to the same number of Ordinary Shares. There are no further redemption rights.

On 16^th February 2021, a total of 440,860 options over Ordinary Shares of £0.01 each were exercised for a total consideration of £101,632.

Share options

Employee related share options are disclosed in note 19.

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 £180,402 (2020: £154,518). Included within other creditors is £29,105 (2020: £17,910) relating to outstanding pension contributions.

17  Capital commitments

At 30^th April, the group had capital commitments as follows:

	2021	2020
	£	£
Contracted for but not provided in these financial statements	1,545,742	109,500
	------	------

 

Notes to the consolidated financial statements

18  Related party transactions

The directors consider that no one party controls the Group.

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

19  Share-based payments expense and share options

Share-based payment expense

The Group has incentivised and motivated staff through the grant of share options under the Enterprise Management Incentive (EMI) scheme and through unapproved share options.

At 30^th April 2021, 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
01/02/12	2,512	10 years	£0.53
08/02/18	264,925	10 years	£0.21

Unapproved share options:

Date of grant	Number of shares	Period of  option	Exercise Price per share
15/08/2017	122,021	10 years	£0.01

Black Scholes valuation

	Weighted Average Exercise Price		Number
	2021	2020	2021	2020
Outstanding:	£	£
At start of the period	0.1158	0.1912	7,396,182	5,730,438
Granted in the period	1.1626	0.1461	586,308	3,287,970
Exercised in the period	0.2305	0.0100	(440,860)	(117,846)
Lapsed in the period	0.2364	0.4774	(171,901)	(1,504,380)
	-----	-----	--------	--------
At the end of the period	0.1894	0.1158	7,369,729	7,396,182
	-----	-----	--------	--------

The exercise price of options outstanding at the end of the period ranged between £0.01 and £2.24 and their weighted average contractual life was 8.3 years (2020: 9.1 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
	2021	2020	2021	2020
Outstanding:	£	£
At start of the period	0.51	0.51	1,802,900	1,853,000
Lapsed during the period	0.51	0.51	(1,802,900)	(50,100)
	----	----	---------	---------
At the end of the period	-	0.51	-	1,802,900
	----	----	---------	---------

The exercise price of options outstanding at the end of the period was £Nil (2020: £0.51) and there was no  weighted average contractual life (2020: 1 year).

 

Notes to the consolidated financial statements

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

Ilika plc Executive Share Option Scheme 2010

At 30^th April 2021 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
01/02/12	2,512	10 years	£0.53
08/02/18	264,925	10 years	£0.21
24/01/19	1,012,000	10 years	£0.182
09/07/19	338,983	10 years	£0.295
19/03/20	1,252,200	10 years	£0.255
10/02/21	303,050	10 years	£2.240

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.

192,201 options lapsed in the year and 440,860 options were exercised.

Ilika plc unapproved share options

At 30^th April 2021 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
15/08/17	122,021	10 years	£0.01
24/01/19	2,213,393	10 years	£0.01
29/08/19	331,947	10 years	£0.01
26/03/20	1,185,440	10 years	£0.01
26/03/20	60,000	10 years	£0.255
22/09/20	103,355	10 years	£0.01
10/02/21	179,903	10 years	£0.01

1,782,600 options lapsed in the year.

There are 721,405 options which were capable of being exercised as at 30^th April 2021.

	2021	2020
	£	£
Share-based payment expense
Black Scholes calculation	419,591	233,786
	------	------

 

Company Balance sheet of Ilika plc

Company number 7187804

		As at 30th April
	Notes	2021 £	2020 £
ASSETS
Non-current assets
Investments in subsidiary undertaking	22	43,229,684	38,229,684
Amount due from subsidiary undertaking	24	-	4,316,596
		-------	-------
		43,229,684	42,546,280
Current assets
Trade and other receivables	23	23,391	41,007
		-------	-------
Total assets		43,253,075	42,587,287
		-------	-------
Equity
Issued share capital		1,396,265	1,391,857
Share premium		40,972,144	40,874,920
Retained earnings		296,030	257,456
		-------	-------
		42,664,439	42,524,233
LIABILITIES
Current liabilities
Trade and other payables	25	588,636	63,054
		-------	-------
Total liabilities		588,636	63,054
		-------	-------
Total equity and liabilities		43,253,075	42,587,287
		-------	-------

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 £381,017 (2020: loss of £197,027).

The notes on pages 49 to 50 form part of these financial statements.

These financial statements were approved and authorised for issue by the Board of Directors on 5^th July 2021. 

Mr. K Jackson

Chairman

		Year ended 30th April
		2021	2020
		£	£
Cash flows from operating activities
Loss before tax		(381,017)	(197,027)
Adjustments for:
Equity settled share-based payments		419,591	233,786
		------	------
Operating cash flow before changes in working capital, interest and taxes		38,574	36,759
Decrease / (increase) in trade and other receivables		17,616	(16,398)
Increase/(decrease) in trade and other payables		(47,228)	43,866
		------	------
Cash generated from/ (utilised by) operations		8,962	64,227
Cash flows from investing activities
Decrease / (increase) in amounts due from subsidiary undertaking		4,889,406	(4,235,367)
Investment in subsidiary company		(5,000,000)	(10,000,000)
		------	------
Net cash used in investing activities		(110,594)	(14,235,367)
Cash flows from financing activities
Proceeds from issuance of ordinary share capital		101,632	15,105,525
Costs of share issue		-	(934,385)
		------	------
Net cash from financing activities		101,632	14,171,140
		------	------
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

The notes on pages 49 to 50 form part of these financial statements.

Company statement of changes in equity

	Share capital	Share premium account	Retained Earnings	Total attributable to equity holders
	£	£	£	£
As at 30th April 2019	1,013,070	27,082,567	220,697	28,316,334
Issue of shares	378,787	14,726,738	-	15,105,525
Cost of issue	-	(934,385)	-	(934,385)
Share-based payment	-	-	233,786	233,786
Loss and total comprehensive income	-	-	(197,027)	(197,027)
	------	--------	------	---------
As at 30th April 2020	1,391,857	40,874,920	257,456	42,524,233
Issue of shares	4,408	97,224	-	101,632
Share-based payment	-	-	419,591	419,591
Loss and total comprehensive income	-	-	(381,017)	(381,017)
	------	--------	------	---------
As at 30th April 2021	1,396,265	40,972,144	296,030	42,664,439
	------	---------	------	---------

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.

The notes on pages 49 to 50 form part of these financial statements.

 

Notes to the financial statements

20  Accounting polices

Basis of preparation

These financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

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.

Key sources of estimation and uncertainty

The company holds a significant investment in its subsidiary, Ilika Technologies Limited, of £43.2m (2020: £38.2m). In assessing the carrying value of this asset for impairment, the directors have exercised judgement in estimating its recoverable amount. The determination of the valuation for this asset is based on the discounted estimated future cash flows generated from out-licensing transactions. The valuation is derived from a financial model that evaluates a range of potential outcomes from what are considered the key variables, including the probability of licensing agreements being signed, the expected licensing terms that will be negotiated and the anticipated revenues generated as a result.  Given the level of headroom indicated by the impairment review, the discount rate assumption is not considered to be sufficiently sensitive to change to impact the conclusion of the review.

21  Directors' remuneration

The only employees of the Company are the directors. In respect of directors' remuneration, the disclosures required by Schedule 5 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 are included in the detailed disclosures in the audited section of the Directors' Remuneration Report on pages 11 to 13, which are ascribed as forming part of these financial statements.

22  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 £3,146,046 (2020: £2,890,816) and had net assets as at 30th April 2021 of £14,752,498 (2020: £12,898,544). 

	2021	2020
Shares in Group undertakings (at cost)	£	£
At 1st May	38,229,684	28,229,684
Additions	5,000,000	10,000,000
	------	------
At 30th April	43,229,684	38,229,684
	------	------

The registered address of Ilika Technologies Limited is unit 10a, The Quadrangle, Premier Way, Abbey Industrial Park, Romsey, SO51 9DL.

During the year, the company converted intercompany receivables of £5,000,000 into ordinary shares in its subsidiary, Ilika Technologies Limited.

 

Notes to the financial statements

23  Trade and other receivables

	2021	2020
	£	£
Other receivables	3,369	22,150
Prepayments	20,022	18,857
	------	------
	23,391	41,007
	------	------

24  Amount due from subsidiary undertaking

	2021	2020
	£	£
Ilika Technologies Limited	-	4,316,596
	------	------

25  Trade and other payables

	2021	2020
	£	£
Trade payables	4,272	50,054
Accruals	11,554	13,000
Amount due to subsidiary undertaking	572,810	-
	------	------
	588,636	63,054

26  Related party transactions

During the year the Company recharged costs totalling £206,500 (2020: £194,592) to its subsidiary, Ilika Technologies Limited. Amounts owed to Ilika Technologies Limited are disclosed in note 25 (2020: note 24).

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

The directors consider that no one party controls the Company.

 

END

 

 

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