Half Yearly Report

RNS Number : 2553V

Ilika plc

10 January 2012

 



Ilika plc

('Ilika,' the 'Company,' or the 'Group')

Interim results for the six months ended 31 October 2011

Ilika (AIM: IKA), the advanced cleantech materials discovery company, announces its unaudited interim results for the six months ended 31 October 2011, a period which witnessed continued progress with new partnerships, contract renewals and increased business development activity in the US and Asia.

Ilika accelerates the discovery of new and patentable materials using its unique high throughput technologies process for identified end uses in the energy, electronics and biomedical sectors.

Financial highlights

§ Revenues up 37.4% to £834,632 (H1/10: £607,271)

§ Total revenue including other operating income up 37.4% to £1,037,871 (H1/10: £755,459)

§ Gross profit up 67.5% to £230,111 (H1/10: £137,345)

§ Operating loss down 17.2% to £1,572,288 (H1/10: £1,899,870)

§ Loss before tax down 17.0% to £1,563,665 (H1/10: £1,883,913)

§ Loss per share down 17.9% to 4.08p (H1/10: 4.97p)

§ Cash, cash equivalents and bank deposits of £1.2m (as at 30 April 2011: £2.8m) with additional cash receipts shortly after the period end of £0.4m.

Operational highlights

§ First electronics customer secured in the US

§ New electronics customers and renewals of contracts with leading electronics manufacturers in Asia

§ Collaboration with Sigma-Aldrich Materials Science to scale up and commercialise hydrogen storage materials

§ Further positive progress with a platinum-lean transport fuel cell in joint development with a major vehicle manufacturer

§ Increased business development activity  is securing opportunities to extend the portfolio pipeline

§ Progress on solid state battery development with Toyota with new materials for Lithium-ion batteries -  joint patents filed and presentations made at 52^nd Battery Symposium in Tokyo

Post-period end events

§ Grant award and Full Manufacturer/Importer's Licence (MIA) award to enable the biomedical division, Altrika, to export its leading allogeneic skin cell product to global markets

§ Altrika contract win with leading life sciences diagnostic equipment manufacturer

§ Toshiba becomes 6^th major Japanese multinational customer

Commenting on the results Ilika's Chairman, Jack Boyer, said: "Ilika is committed to expanding its European activities and also anticipates further business development opportunities in Asia on the back of the region's manufacturing-led recovery. The Company also expects to build on the momentum achieved in the North American market as the scope for materials discovery and development is expected to expand significantly.

"To date the Company has secured further committed revenues and grant income of more than £0.7m which it expects to recognise before the end of the current financial period and will be making further announcements regarding contract renewals and new partnerships in due course. The Board therefore looks forward to the full year with confidence."

For more information contact:

Ilika plc Graeme Purdy, Chief Executive Steve Boydell, Finance Director	[phone]
Nomura Code Securities Limited Phil Walker / Christopher Golden	[phone]
Walbrook PR Ltd	[phone]
Paul McManus (Media Enquiries)	Mob: [phone] or [e-mail]
Paul Cornelius (Investor Enquiries)	Mob: [phone] or [e-mail]

Joint Chairman and Chief Executive's statement

Introduction

Ilika's technology

Ilika's unique high throughput technology (HTT) accelerates the discovery of new and patentable materials for identified end uses within significant and rapidly growing markets. This process enables hundreds of materials to be made in a single, automated, operation and subsequently tested for the necessary properties.

The production of a new material has traditionally been a slow and arduous process, taking between 7 and 10 years from initial discovery through to the first commercial prototype. However, experiments carried out by Ilika's HTT can accelerate new material discovery by 10 to 100 times over  conventional techniques.

Ilika's HTT process has the additional attraction of enabling materials to be rapidly scaled up for commercial application once the requisite chemical and physical properties have been achieved.

Review of period

The six month period, saw commercial revenues and other operating income (grant revenues) increase by over 37% on the prior period. Gross profit improved by approximately 68%, whilst spend on in-house research and development together with administration expenses increased by 3.5% after adjusting for the share based payment charge. The continued investment in equipment capacity during this period has ensured capacity for revenue growth in the coming period.

Asian markets continue to offer huge opportunities to Ilika and the extension of the relationship with Japan's Blue Rise Partners, announced last year, has yielded a number of significant contract wins across all three sectors of the business.

We were very pleased to be invited to deliver a presentation to the 52^nd Battery Symposium in Tokyo on our work with Toyota to develop innovative new materials for lithium-ion batteries for use in next generation electric vehicles and plug-in hybrid electric vehicles.

The presentation was delivered by Professor Brian Hayden, Chief Scientific Officer of Ilika and his colleagues, in conjunction with Toyota Motor Corp, and was entitled "High throughput methods to accelerate the discovery and optimization of materials for lithium-ion batteries".

Ilika has been working with Toyota since February 2008 and data published in the presentation demonstrated how our high throughput methods have produced very high quality electrolytes with substantially higher conductivity than had previously been observed. This data has been underpinned by patent applications jointly held by Ilika and Toyota.

In September, the Company announced its first electronics contract in the US and the development of new business opportunities in the North American electronics, aerospace and defence sectors continues to be a key area of focus for the Company.

Altrika Limited ("Altrika"), the Group's biomedical subsidiary, has seen a steady increase in the demand for its products and research services as well as attracting significant grant income to continue the development of its innovative burns treatment products.

Post-period end, we announced on 18 November 2011 that Altrika was awarded a Full Manufacturer/Importer's Licence (MIA) by the UK Medicines and Healthcare products Regulatory Agency (MHRA). This licence will allow us to export our leading allogeneic skin cell product, Cryoskin®, to global markets outside the EU where there is a significant need to treat burns and other serious skin wounds.

In addition, on 5 December 2011 we announced that a consortium, led by Altrika, had been awarded a £452k research and development grant from the UK government-backed Technology Strategy Board (TSB) through its Regenerative Medicine Tools & Technologies competition. The programme will develop a cell label capable of being used in vivo for cell therapy applications and it will be applied to Altrika's Cryoskin® allogeneic keratinocyte treatment for burns, allowing clinicians to image cells which have been applied to a wound, providing instant feedback on consistency and likely efficacy of application. The consortium includes the University of Edinburgh, Barts and the London School of Medicine and Dentistry as the clinical partner and Roslin Cellab which will be expanding the use of this label into other areas of cell therapy-based R&D.

At the same time we also announced that Altrika had won a contract, with agreed stage payments, with a world leading life sciences diagnostic equipment manufacturer to demonstrate Altrika's high throughput, polymer screening technologies for the identification and optimisation of the next generation of polymer filters.

We would also like to take this opportunity to thank the Board for its continued guidance and the Company's committed team for their hard work and commitment to making Ilika a world class company. We would, in addition, like to thank our strategic partners, distributors, shareholders and advisers for their contribution to the development of the Company.

Outlook

Since the period end the Company has continued to see strong progress across all three areas of its activities.

In particular, Ilika is committed to expanding its European activities and anticipates further business development opportunities in Asia on the back of the region's manufacturing-led recovery. The Company also expects to build on the momentum achieved in the North American market as the scope for materials discovery and development is expected to expand significantly.

The continued investment in business development activities has created a broad pipeline of opportunities in the European, US and Asian markets which will help the Company achieve its strong growth targets and it is pleasing to note that the size of the contracts in the pipeline is increasing. The Company continues to manage its cash flows with reference to the expected revenues of the contracts it secures, and the milestone payments negotiated. Historically, the Company has been successful in achieving its forecasts and the board are confident that they will continue to do so.

To date the Company has further committed revenues and grant income of approximately £0.7m which it expects to recognise before the end of the current financial period and will be making further announcements in due course. The Board therefore looks forward to the full year with confidence.

Ilika plc

Consolidated statement of comprehensive income for the six months ended 31 October 2011

		Unaudited Six months ended 31 Oct 2011	Unaudited Six months ended 31 Oct 2010	Audited Year ended 30 Apr 2011
	Notes	£	£	£
Revenue		834,632	607,271	1,544,766
Cost of sales		(604,521)	(469,926)	(936,511)
Gross profit		230,111	137,345	608,255
Administrative expenses		(2,005,638)	(2,185,403)	(4,148,002)
Other operating income		203,239	148,188	357,014
Operating loss		(1,572,288)	(1,899,870)	(3,182,733)
Financial income		14,108	19,929	38,239
Financial expense		(5,486)	(3,972)	(9,458)
Loss before tax		(1,563,666)	(1,883,913)	(3,153,952)
Taxation		68,378	65,748	106,468
Loss for period / total comprehensive income		(1,495,288)	(1,818,165)	(3,047,484)
Loss per share	2
Basic		(0.04)	(0.05)	(0.08)
Diluted		(0.04)	(0.05)	(0.08)

All amounts relate to continuing activities.

Consolidated balance sheet as at 31 October 2011

		Unaudited Six months ended 31 Oct 2011	Unaudited Six months ended 31 Oct 2010	Audited Year ended 30 Apr 2011
		£	£	£
ASSETS
Non current assets
Intangible assets		69,927	63,629	61,794
Property, plant and equipment		1,691,443	1,894,113	2,006,479
Total non current assets		1,761,370	1,957,742	2,068,273
Current assets
Inventory		34,135	-	34,135
Trade and other receivables		1,032,077	461,321	748,081
Current tax receivable		68,378	198,571	122,733
Other financial assets - bank deposits		701,233	-	1,500,000
Cash and cash equivalents		504,832	4,078,842	1,303,924
Total current assets		2,340,655	4,738,734	3,708,873
Total assets		4,102,025	6,696,476	5,777,146
EQUITY
Issued share capital		383,548	383,548	383,548
Share premium		4,169,909	4,184,930	4,169,909
Capital restructuring reserve		6,486,077	6,486,077	6,486,077
Retained earnings		(7,803,908)	(5,425,696)	(6,418,196)
Total equity		3,235,626	5,628,859	4,621,338
LIABILITIES
Current liabilities
Trade and other payables		847,538	1,019,350	1,125,631
Non current liabilities
Other payables		18,861	48,267	30,177
Total liabilities		866,399	1,067,617	1,155,808
Total equity and liabilities		4,102,025	6,696,476	5,777,146

Consolidated cash flow statement for the six months ended 31 October 2011

		Unaudited Six months ended 31 Oct 2011	Unaudited Six months ended 31 Oct 2010	Audited Year ended 30 Apr 2011
		£	£	£
Cash flows from operating activities
Loss after tax		(1,495,288)	(1,818,165)	(3,047,484)
Adjustments for:
Taxation		(68,378)	(65,748)	(106,468)
Amortisation		8,632	6,104	11,742
Depreciation		415,404	348,747	731,599
Equity settled share based payments		109,576	364,803	601,622
Loss on disposal of plant, property and equipment		-	339	605
Loss on disposal of intangible assets		-	-	298
Net financial income		(8,622)	(15,957)	(28,782)
Operating cash flow before changes in working capital, interest and taxes		(1,038,676)	(1,179,877)	(1,836,868)
Decrease/(increase) in trade and other receivables		(283,996)	162,643	(128,770)
Increase in inventory		-	-	(34,135)
(Decrease)/ increase in trade and other payables		(268,749)	(5,327)	103,712
Cash utilised by operations		(1,591,421)	(1,022,561)	(1,896,061)
Tax received		122,733	-	116,558
Net cash flow from operating activities		(1,468,688)	(1,022,561)	(1,779,503)
Cash flows from investing activities
Interest received		14,293	10,075	33,038
Purchase of intangible assets		(16,765)	(3,602)	(7,298)
Sale of property plant and equipment		-	1,085	1,013
Purchase of property, plant and equipment		(100,367)	(107,649)	(603,466)
Decrease/(Increase) in other financial assets		798,767	-	(1,500,000)
Net cash used in investing activities		695,928	(100,091)	(2,076,713)
Cash flows from financing activities
Proceeds from issuance of ordinary share capital		-	5,175,611	5,175,611
Share issue costs		-	(749,261)	(764,282)
Capital element of finance leases		(20,846)	(13,302)	(34,149)
Interest element of finance leases		(5,486)	(3,972)	(9,458)
Net cash from financing activities		(26,332)	4,409,076	4,367,722
Net (decrease)/ increase in cash and cash equivalents		(799,092)	3,286,424	511,506
Cash and cash equivalents at the start of the period		1,303,924	792,418	792,418
Cash and cash equivalents at the end of the period		504,832	4,078,842	1,303,924

Consolidated statement of changes in equity (unaudited)

	Share capital	Share premium account	Capital restructuring reserve	Profit and loss account	Total
	£	£	£	£	£
As at 30 April 2009	121,339	-	5,663,549	(813,645)	4,971,243
Share based payment	-	-	556,829	-	556,829
Loss and total comprehensive income	-	-	-	(1,715,375)	(1,715,375)
As at 31 October 2009	121,339	-	6,220,378	(2,529,020)	3,812,697
Share based payment	-	-	259,350	-	259,350
Loss and total comprehensive income	-	-	-	(1,416,176)	(1,416,176)
As at 30 April 2010	121,339	-	6,479,728	(3,945,196)	2,655,871
Share option exercise	21,039	360	(20,789)	-	610
Share based  payment	-	-	27,138	337,665	364,803
Issue of shares	241,170	4,933,831	-	-	5,175,001
Expenses of share issue	-	(749,261)	-	-	(749,261)
Loss and total comprehensive income	-	-	-	(1,818,165)	(1,818,165)
As at 31 October 2010	383,548	4,184,930	6,486,077	(5,425,696)	5,628,859
Share based  payment	-	-	-	236,819	236,819
Expenses of share issue	-	(15,021)	-	-	(15,021)
Loss and total comprehensive income	-	-	-	(1,229,319)	(1,229,319)
As at 30 April 2011	383,548	4,169,909	6,486,077	(6,418,196)	4,621,338
Share based  payment	-	-	-	109,576	109,576
Loss and total comprehensive income	-	-	-	(1,495,288)	(1,495,288)
As at 31 October 2011	383,548	4,169,909	6,486,077	(7,803,908)	3,235,626

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.

Profit and loss account

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

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.

 

Notes to the consolidated financial statements

1.      Accounting policies

Basis of preparation

The interim financial statements, which are unaudited, have been prepared on the basis of accounting policies consistent with International Financial Reporting Standards ("IFRSs") adopted by the European Union. The accounting policies are the same as applied in the Group's latest financial statements.

The IFRSs that will be effective in the financial statements for the year to 30 April 2012 are still subject to change and to the issue of additional interpretation(s) and therefore cannot be determined with certainty. Accordingly, the accounting policies for that annual period that are relevant to this interim financial information will be determined only when the IFRS financial statements are prepared at 30 April 2012.

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 'Interim Financial Reporting'. Accordingly, whilst the interim financial statements have been prepared in accordance with IFRS they cannot be construed as being in full compliance with IFRS

The financial information for the year ended 30 April 2011 does not constitute the full statutory accounts for that period. The Annual Report and Accounts for 30 April 2011 have been filed with the Registrar of Companies. The Independent Auditors' Report  on the Annual Report and Accounts for 2011 was unqualified and did not include references to any matters which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under Section 498(2) or 498(3) of the Companies Act 2006.

Going concern

The financial statements are prepared on a going concern basis which the directors believe continues to be appropriate. The Group meets its day to day working capital requirements through existing cash resources which, at 31 October 2011, amounted to £1,206,065. The directors have prepared projected cash flow information for the period ending twelve months from the date of their approval of these financial statements. On the basis of this cash flow information the directors believe that the Group will be able to continue to trade for the foreseeable future.

2.      Loss per share

Loss 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:

	Unaudited Six months ended 31 Oct 2011	Unaudited Six months ended 31 Oct 2010	Audited Year ended 30 Apr 2011
	Number	Number	Number
Weighted average number of equity shares	38,354,759	36,502,106	38,354,759
	£	£	£
Loss, being loss after tax	(1,495,287)	(1,818,165)	(3,131,551)

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 and warrants would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS 33.

INDEPENDENT REVIEW REPORT TO ILIKA PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2011 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity and the related notes 1 to 2.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2011 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

BDO LLP

Chartered Accountants and Registered Auditors

Southampton, United Kingdom

9^th January 2012

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

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