Ilika Plc Annual Report 2011

FY2011 Annual Report · Ilika Plc

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Fast-tracking materials
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Ilika plc
Kenneth Dibben House
Enterprise Road
University of Southampton Science Park
Chilworth
Southampton
SO16 7NS
United Kingdom

E info@ilika.com
T +44 (0)23 8011 1400
F +44 (0)23 8011 1401

www.ilika.com

Ilika plc Annual report 2011

Fast-tracking materials discovery

Ilika invents, tests and
selects materials in
the laboratory that can
be selected for scale-
up and everyday
commercial use

where materials

Ilika focuses on three sectors:
Energy
where Ilika assesses
>
materials for their greater capacity
for energy storage and conversion
efficiency, for example in batteries
Electronics
created by Ilika rapidly improve the
performance and efficiency of a
range of electronic components,
such as digital memory devices
and sensors
Bio-medical
subsidiary Altrika has already
successfully commercialised
innovative products for the
treatment of burns

devices where Ilika’s

Ilika plc Annual report 2011

Fast-tracking materials discovery

01 Overview

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Financial highlights:
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Successful AIM IPO on 14 May
2010 raising £5.2 million
Gross revenues £1.5 million
supplemented by £0.4 million of
grant income (2010: £1.1 million
and £0.2 million respectively)
Loss Per Share £0.08
(2010: £25.81)
Investment in high throughput
equipment £0.7 million
(2010: £0.1 million)

Operational highlights:
>

3 new significant new customer
relationships
Broadening and deepening of
existing customer relationships
Increase in business
development resources
and activities
Carbon Trust grant to undertake
further research on high
performing catalysts for use
in fuel cell vehicles

Post balance sheet events:
Altrika participates in
>
development of new Stem Cell
Collection Service, Oristem®
Hydrogen Storage Collaboration
with Sigma-Aldrich Materials
Science

Highlights

Overview
01 Highlights
02 Ilika at a glance
04 Our strategy
06
08 Product sales

Product development

Chairman’s statement
Chief Executive’s review

Business review
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12
16 Board of Directors
18 Financial review

Governance
19 Directors’ report
21
23 Corporate social responsibility statement
25

Corporate governance statement

Independent auditor’s report

Financial statements
26

Consolidated statement of
comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement of
changes in equity
Notes to the consolidated
financial statements
Company balance sheet of IIika plc
Company cash flow statement
Company statement of changes
in equity
Notes to the consolidated
financial statements
Corporate directory

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Ilika plc Annual report 2011

Fast-tracking materials discovery

02 Overview

Ilika’s unique process is far quicker
and more efficient than traditional
materials discovery processes.

Ilika at a glance

Ilika uses high throughput, or
combinatorial, techniques
which involve the rapid
synthesis of a large number
of different structurally
related materials in a few
automated steps.

Energy
We are developing innovative new materials
for lithium-ion batteries, developing high capacity
hydrogen storage materials, developing cheaper
alternatives to platinum electrodes for use in fuel
cells, and carrying out in-house research on film
photovoltaic solar cells.

Ilika can cover a wide range of different market
applications within the energy sector to help customers
advance their materials discovery programmes. The
great breadth and large numbers of samples that
can be synthesised and screened with respect to an
identified capability means that Ilika can optimise
materials in a much shorter timeframe. For hydrogen
storage applications, different compositions can be
characterised with respect to their hydrogen adsorption
and desorption behaviours including their hydrogen
storage capacity and cyclability.

For fuel cell and battery applications, the candidate

materials can be measured for catalytic activity. For the
photovoltaic market, for example, it is possible to screen
materials for greater energy conversion efficiency.

Fast-tracking materials discovery

Ilika plc Annual report 2011

Fast-tracking materials discovery

03 Overview

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Electronics
We are developing lead-free piezoelectric
materials through a joint development
programme with CeramTec; and developing
phase change memory materials for high
capacity memory chips.

We cover a wide range of different market
applications within the electronics sector to help
customers advance their materials discovery
programmes. The fast throughput approach to
materials synthesis coupled with high throughput
characterisation and screening means that Ilika can
optimise materials with respect to a desired property
in a much shorter timeframe. For phase change
memory applications, for example, we can monitor
the phase change behaviour of different alloys such
as GeSbTe as a function of temperature. The optical
and electrical behaviours of interesting compositions
can then be studied in more detail.

Biomedical
We are developing polymers to enable the
filtering of somatic stem cells from blood,
have been selling our Cryoskin and Myskin
products for the treatment of burns and wounds
in the UK and intend to commence clinical trials
of our corneal bandage candidate.

Ilika has developed an extensive library of bio-
functional materials specifically designed to promote
or deter cell binding, enrich specific cell types from
diverse populations and promote cell growth on
tailored surfaces. We are working together with
medical device companies to create valuable
products through the application of cell-specific
functional coatings optimised using our high
throughput techniques. The application areas
in which we are active include:
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Skin Wound care
Cell Replacement for Organ Regeneration
Implants
Diagnostic Devices
Cell Purification

Fast-tracking materials discovery

Ilika plc Annual report 2011

Fast-tracking materials discovery

04 Overview

_Our strategy

The Company’s business
strategy is to use our HTT
process to discover and
commercialise novel materials
for integration into products
with high value end-markets

1. Developing leading-edge high throughput
development processes
We have an established record in successfully
developing and applying leading-edge research
and development technology for the creation
of novel materials. The Group has continued to
build expertise on this foundation, and intends
to continue innovation in this area generating
substantial know-how and trade secrets.
This unique selling point has attracted large
multinational partners to the Group and created
a barrier to entry for potential competitors.

2. Partnering with companies committed
to developing and commercialising jointly
developed products
Our core competence is in the innovation of
novel materials which includes the identification
of demand for new materials and the rapid
execution of experimental programmes to
develop materials to meet that demand.
We operate at the beginning of the product
supply chain and understand that successful
commercialisation requires manufacturing
capabilities, know-how in the integration of
materials into consumer products and retailing
to the mass market. Once we have identified
potential demand for a new material we shortlist
the leading industrial companies in the sector
and seek to attract them into mutually beneficial
joint development programmes.

3. Using high throughput processes to invent
patentable functional materials
We aim to use our HTT process to invent
patentable functional materials. We also use
specialist software to analyse the existing
intellectual property landscape and, in
addition, exchange information with our
commercialisation partners in order to draw up
a project scope that is thought likely to yield a
material or family of materials with a defensible
patent position. The Group has filed a series of
patents covering materials which are potentially
of significant value to target markets, a number
of which are currently being scaled up by its
commercialisation partners.

Ilika plc Annual report 2011

Fast-tracking materials discovery

05 Overview

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Ilika plc Annual report 2011

Fast-tracking materials discovery

06 Overview

_Product development

We understand that successful
commercialisation requires
not only materials innovation,
which is our speciality, but
also manufacturing know-how
and marketing expertise

Once we have identified market demand for
a new material we engage with the leading
industrial companies in the sector to construct
mutually beneficial product development
programmes. Our preferred engagement
framework is one in which Ilika and its partners
collaborate on a shared-risk, shared-reward basis.

This framework usually involves a
commercialisation partner making a financial
contribution towards Ilika’s direct costs and
sharing the potential financial rewards through a
licencing agreement when the resulting product
is commercialised.

At the early stages of a new customer relationship
we may also carry out work on a contract basis,
whereby Ilika receives greater up-front payments
in return for assigning intellectual property rights
to the customer. Most contract relationships
mature into joint development relationships over
the course of time.

Case study
A typical joint development programme is the
one we are running with Ceramtec, a world-
leading manufacturer of technical ceramics. Ilika
and Ceramtec are working together to develop
lead-free piezoelectric materials for use in
sensor and actuator applications, such as those
required to trigger air bags in automobiles.

Ilika plc Annual report 2011

Fast-tracking materials discovery

07 Overview

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Ilika plc Annual report 2011

Fast-tracking materials discovery

08 Overview

_Product sales

For the healthcare market we
have developed breakthrough
biomedical products relying
on expertise which operates
at the boundary between
the established disciplines
of materials science and
cell biology

This expertise is currently not widely found with
larger potential commercialisation partners.
Hence, in order to establish and service the
market, we operate a facility in Sheffield to
manufacture and package cell growth surfaces
as well as to handle the relevant cell lines.

To complement our manufacturing capability, we
have chosen distribution partners with specialist
knowledge of our target markets to bring the
products to market.

Case study
We manufacture our cell therapy products for
burns treatment, MySkin® and CryoSkin®, at our
Sheffield facility. In line with our strategy, we
have appointed a specialist distributor, Sinclair
Pharma, to sell these products on our behalf in
the UK. We have adopted this policy because
Sinclair Pharma can market our products cost-
effectively within their wound-care portfolio.

Ilika plc Annual report 2011

Fast-tracking materials discovery

09 Overview

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Ilika plc Annual report 2011

Fast-tracking materials discovery

10 Business review

Over the last 12 months we
have successfully demonstrated
our capabilities to a number
of world leading multinational
corporations, and have seen
substantial growth in joint
development and contract
research revenues.

Introduction
I am pleased to announce Ilika’s results for the financial
year ended 30 April 2011 after its first year as a listed AIM
company, and to provide an update on the progress we
have made in that time. At the time of the IPO, we set
ourselves a number of objectives and it is gratifying to
report that these have been achieved. Over the course
of the year we have enjoyed considerable success,
particularly in the energy and biomedical sectors, with
both contract renewals with existing customers and new
agreements entered into. Our focus has also been on
Asia and the United States, where we have significantly
increased our business initiatives.

Chairman’s
statement

Jack Boyer
Chairman

Ilika’s technology
Ilika’s unique high throughput technology (‘HTT’)
accelerates the discovery of new and patentable
materials for identified end uses. 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 to move from an initial discovery through to
the first commercial prototype. Experiments carried out
by Ilika can be executed 10 to 100 times faster than by
using conventional techniques.

The Group’s primary strategy is to enter into joint

development or licensing agreements with large
multinational companies seeking to commercialise
products developed using the intellectual property
created through jointly funded programmes. Current
commercialisation partners include Toyota, Shell,
Johnson Matthey and CeramTec.

Financial results
I am pleased to report Ilika has delivered a good set of
financial results. Total revenues for the year ending 30
April 2011, increased to approximately £1.5 million, 46
percent ahead of last year and there has also been
a substantial increase in the level of grant funding for
in-house R&D, shown as other operating income, which
increased to approximately £0.4 million, 66 percent
ahead of last year. Loss before tax for the year improved
slightly and is in line with expectations. Our cash
balances remain strong, totalling £2.8 million at 30 April
2011. At the year end, committed revenues including
other operating income for the first half of 2011/2012
exceeded £0.7 million. This compares to a figure of
£0.15 million for the first half of 2010/2011.

Review of the year
Over the last 12 months we have successfully
demonstrated our capabilities to a number of world
leading multinational corporations, and have seen
substantial growth in joint development and contract
research revenues. We have embarked on commercial

Expanding into growth markets

Ilika plc Annual report 2011

Fast-tracking materials discovery

11 Business review

projects with three new customers, whilst continuing
to build on our longer standing relationships.

In the energy sector, we renewed and extended

the scope of our existing relationship with a major
automotive corporation for the development of
battery materials. The collaboration reinforces
Ilika’s position as a globally leading provider of
materials expertise for the rapid development of
next generation battery materials. We also entered
into a contract with the Ministry of Defence for the
identification and optimisation of next generation
thermoelectric materials. These materials have the
potential to increase significantly the efficiency of
conventional engines and generators through the
harvesting of waste heat.

We have also made progress in developing

materials and have recently collaborated with
Sigma Aldrich to work on the scale-up and
commercialisation of next generation hydrogen
storage materials. We firmly believe that this
enterprise will become a vital component of the
energy industry’s efforts to develop consumer-friendly
hydrogen storage materials for fuel cell and clean
combustion technology.

Good progress has also been made in the
electronics sector, when we signed an initial contract
with a global electronics manufacturer in February
2011. The contract is to develop high throughput,
screening technologies for the identification and
optimisation of next generation electronic materials,
in return for stage payments. In April 2011, we
entered into a similar contract with another leading
electronics manufacturer, this time to help develop its
next generation of battery materials.

Our technical capabilities have received public
sector recognition, in the form of grants awarded for
the development of a range of materials. In July 2010,
a consortium led by Altrika, our healthcare focused
subsidiary, was awarded a £153,000 grant for the
development of a treatment for full thickness skin
wounds. In October 2010, Ilika was awarded an initial
research and development grant by the Carbon Trust
to undertake the scale up, synthesis and testing of
high performing palladium alloy compositions for use
in fuel cell vehicles. Palladium alloy electrocatalysts
have the potential to be 70 percent cheaper than
platinum catalysts on a cost/performance basis. A
further grant of £173,000 towards this initiative was
awarded in April 2011.

Since the financial year end, Ilika’s wholly

owned subsidiary Altrika made a significant medical
breakthrough involving the collection and storage
of adult stem cells. The Oristem® service offers a
new, patented method of harvesting, isolating and
storing stem cells from adult blood. It is a welcome
move forwards from current forms of stem cell
extraction which have been confined to neo-natal

stem cells taken from umbilical cords, or more invasive
sources such as fat tissue or bone marrow. It also offers
a collection system that enables adults to be visited at
home for blood samples to be taken.

People
We have an extremely strong and highly experienced
Executive Board at Ilika, including Professor Brian
Hayden, our Chief Scientific Officer and a founder of
the Company. Alongside Brian sit Dr. Werner Braun
and Professor Sir William Wakeham, whose wealth of
experience will be fundamental in helping Ilika expand
both in the UK and overseas. Clare Spottiswoode, who
joined the Board at the time of the IPO, is also a great
asset to the Company particularly in the energy sector as
we continue to develop material solutions for this market.
I would like to take this opportunity to thank all of
the team at Ilika for their continued energy and hard
work and for their commitment to making it a world
class company. I would also like to thank our strategic
partners, distributors and advisers for their contribution to
the development of the Company during the course of
the financial year.

Outlook
Over the course of the last year, we have set the way for
fully executing our IPO plan set out in 2010, and are on
track to deliver future growth. Progress has been made
across all 3 areas of Ilika’s activities (energy, electronics
and biomedical) and our expansion of business
development activities has ensured that there is a broad
pipeline of new opportunities ahead.

Our performance to date has met expectations, and

we remain on track to deliver our predicted milestones.
Ilika is committed to expanding its European and Asian
activities and anticipates further business development
opportunities in Asia on the back of the region’s
manufacturing-led recovery. The North American market
also offers considerable opportunities for materials
discovery and development, and we continue to pursue
new opportunities there.

In summary, we look forward to continuing to
achieve the goals set out at our IPO and to maintaining
the growth that we have achieved thus far in this
financial year. I look forward to reporting progress during
the coming year and beyond.

Jack Boyer
Chairman
13 July 2011

Expanding into growth markets

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Ilika plc Annual report 2011

Fast-tracking materials discovery

12 Business review

The forthcoming year will allow
the Company to demonstrate
the industrial robustness of some
of its key products for energy
conversion and storage, leading
to commercial roll-out.

Chief Executive’s
review

Graeme Purdy
Chief Executive

Introduction
In this first full year since Ilika was admitted to the London
Stock Exchange, the Company has pursued its strategy
of being a partner of choice for the development of new
materials designed to solve some of the world’s most
important needs, particularly in the cleantech sector.

The Company has continued to work with blue-chip
partners, which are active in the energy, electronics and
biomedical market sectors. The sector-split of revenue
generated in the past year has consisted broadly of
70 percent in energy, 20 percent in electronics and 10
percent in biomedical.

Ilika stands out as a compelling enterprise in

these markets because of the unique nature of the
high throughput techniques which Ilika uses in order
to make and test new materials. The high throughput
technology platform, originally developed at the University
of Southampton, has proven itself to be a versatile and
effective method for developing new materials with
reproducible and scalable properties. This capability has
been further developed over the last year, strengthening
the Company’s global profile. The Company has continued
to attract an international customer base resulting in 83
percent of its revenues coming from outside the UK.

Energy
Most analysts agree that the sources and carriers of
energy for transport, domestic and industrial uses are
set to become increasingly diverse. For example, in
the transport sector, the ubiquitous use of petrol and
diesel is being supplemented with compressed natural
gas (‘CNG’), liquefied petroleum gas (‘LPG’), biofuel,
electricity (stored in batteries) and hydrogen. For these
new fuels to be attractive to the customer there are a
number of basic conditions that have to be fulfilled: the
fuels need to be cheap enough to compete with petrol
and diesel; they need to contain sufficient energy within
a manageable volume and weight; the conversion of
energy from its stored form into vehicle motive power
needs to be done easily and economically and finally,
replenishing fuel on-board the vehicle needs to be a
straightforward matter. Meeting the requirements of
these basic conditions involves optimising the ability of
materials to store and convert energy from one form
to another and this is Ilika’s focus in the energy market.
In particular, Ilika has globally-recognised expertise in
developing battery materials and materials for use in
both storing hydrogen and converting it into electricity.

Batteries
Electric and hybrid vehicles have gained market share
over the past 12 months. For instance, since 1 March
2011 the much-heralded Nissan LEAF has been on sale in
the UK, with the first year’s production allocation already
sold out. Toyota has been broadening the roll-out of its
hybrid drive-train concept, building on the success of its
Prius and Auris ranges. These mass production vehicles

Addressing key unmet needs

Ilika plc Annual report 2011

Fast-tracking materials discovery

13 Business review

have done much to persuade the motoring public that
electric and hybrid vehicles are here to stay and they
have created an appetite for sustained performance
improvements. For instance, the Nissan LEAF has a range
of 175km on the New European Driving Cycle and can be
recharged from empty within 8 hours using the on-board
charger. This is a good starting point, but clearly this range
and recharge time will not satisfy the majority of road
users. The best way to improve battery performance is
to change the materials from which the battery is made
and Ilika’s technology can provide unique insights into
how this can be achieved. Toyota and Ilika have been
working together since 2008 to improve battery materials
and current indications are that this effort is set to intensify
in the coming period. In April 2011 Ilika announced that it
had been successful in attracting a second collaboration
partner for next generation battery development. Ilika has
every confidence that it will be successful in maintaining
its commercial momentum in this rapidly moving field.

Hydrogen
Hydrogen has an intrinsic advantage over batteries as
an energy carrier because hydrogen can be processed
to yield a higher energy density than is achievable with
a battery. In other words, hydrogen can contain more
energy than a battery of the same volume. In addition,
hydrogen represents an attractive carrier of energy as
its combustion or direct conversion to electricity via a
fuel cell does not lead to the emission of carbon dioxide.
However, hydrogen has not, to date, been as broadly
adopted as batteries for energy storage. The main
reasons for this are the difficulty in storing hydrogen,
which is a light gas under atmospheric conditions, and
the expense of methods for converting it to electricity.
The main criteria for hydrogen storage for transport
purposes, as outlined by the US Freedom Car Initiative,
are to supply enough hydrogen to enable a driving
range of approximately 500km, charge and recharge at
near room temperature and provide hydrogen at rates
fast enough for operation in automobiles.

Current prototype applications use either very high

pressure compressed hydrogen (approx. 700 bar) or
cryogenically cooled liquid hydrogen. These methods
consume a significant percentage of the energy content
in their compression and conversion (15 percent and 30
percent respectively) and both raise safety concerns.
By contrast, Ilika’s storage solution is a solid metal
hydride, which exists as a powder stored in a cylinder
at moderate pressure (10 bar) and is stable at room
temperature. When warmed to moderate temperatures,
hydrogen is released for use as fuel.

The target weight percentage of hydrogen stored in

such a material for it to be economically viable has been
set at 6 percent by the US Department of Energy. Current
commercially-available hydride materials can achieve
up to 2.3 weight percent of hydrogen. In May 2011 Ilika
announced a collaboration with Sigma Aldrich to verify
and scale-up hydride materials that can potentially
store up to 10 weight percent of hydrogen, reversibly.
The work with Sigma Aldrich is designed to yield a robust
and economically viable industrial process for the
mass production of Ilika’s material. Sigma Aldrich has
negotiated a licence for commercialising the material,
driving its initial market adoption.

Addressing key unmet needs

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Ilika plc Annual report 2011

Fast-tracking materials discovery

14 Business review

The Company has continued to
attract an international customer
base resulting in 83 percent of its
revenues coming from outside
the UK.

Chief Executive’s
review continued

Once the challenge of overcoming hydrogen storage is
met, it can be used directly in a combustion engine to
provide automotive power. Alternatively, hydrogen lends
itself to being used as a fuel in fuel cells, which electro-
catalytically convert hydrogen and oxygen to water
and electricity. The current fuel cells used in automotive
prototypes use a significant amount of platinum,
which is a scarce precious metal. In June 2010 Ilika
announced a collaboration with ITRI in order to further
develop the cheaper catalyst formulations previously
patented by Ilika. This product development project
is being supported by the £173,000 grant awarded
to Ilika by the Carbon Trust in April 2011. Samples of
materials are currently being performance tested by an
independent body, with a view to making them available
to automotive companies for their assessment within this
current financial year.

Thermoelectrics
Thermoelectric materials can be used to generate an
electric current from a thermal gradient. As a result,
they can be used to convert waste heat into electricity.
Potential applications include energy recovery from
the exhaust of a vehicle, perhaps feeding into the
electrical storage system of a hybrid propulsion system,
and also waste heat recovery from a generator set,
increasing its efficiency. In October 2010 Ilika announced
the award of a thermoelectric project by DSTL, the
research arm of the UK’s Ministry of Defence (‘MOD’).
This project is supporting the Company’s endeavours
in the development of efficient testing methods for
screening thermoelectric materials and ultimately in the
development of more efficient materials. After initial early
adoption for MOD applications, the technology will be
made available for a broader commercial roll-out.

Electronics
Piezoelectrics
Since November 2009 Ilika has been working together in
a Joint Development Project with Ceramtec, one of the
world’s leading manufacturers of functional ceramics.
Ceramtec’s current product line includes piezoelectric
devices, which are used for a broad range of sensor and
actuator applications in the automotive and aerospace
industries. The most commonly used piezoelectric material
contains lead in its formulation, which has been banned
under the EU’s Restriction of Hazardous Substances
(‘RoHS’) regulations. Those ceramic manufacturers selling
lead-containing ceramics in the EU are doing so under
an exemption, pending development of a replacement
technology. The objective of the collaboration is to
develop a lead-free piezoelectric. The expectation is that
adoption of the developed material will be rapid, given
the regulatory drivers in place.

Capacitors
One of the unique aspects of the technology platform
used by Ilika is its ability to make a broad range of complex
oxide structures. These materials are commonly used
for a wide range of electronic components, including in
capacitors, which are devices for storing an electronic
charge in many different industrial and consumer
electronics applications. This is an expanding area of
business for Ilika and is expected to be a significant
contributor to revenue in the current financial year.

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Ilika plc Annual report 2011

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15 Business review

Biomedical
Ilika operates a wholly-owned subsidiary, Altrika Ltd, which
commercialises technology for biologically-functional
medical (biomedical) devices.

At its facilities, located in Sheffield, UK, Altrika operates

a high throughput lab for the rapid development of
biologically active materials as well as a Human Tissue
Authority (‘HTA’) approved clean room suite for the
production of its Myskin® and Cryoskin® products. The
clean room suite is validated to meet Good Manufacturing
Practice (‘GMP’) requirements. Altrika is fully licenced
by the HTA for the procurement, testing, processing,
distribution and storage of human cells. In addition,
Cryoskin® is licenced as a cell therapy by the Medicines
and Healthcare products Regulatory Agency (‘MHRA’).

Over the past year, Myskin® and Cryoskin® have been

used to successfully treat burns patients at most of the
major burns units in the UK. Progress has been made in
identifying key opinion leaders and distributors to support
the roll out of these products into new jurisdictions, starting
in the current financial year.

The $750 million acquisition of Advanced Bio-
healing (‘ABH’) by Shire Pharmaceuticals in May 2011
demonstrated the intrinsic appeal of cell therapy in the
chronic wounds sector.

In June 2011 Altrika announced the launch of a
new service (Oristem®) with its partners Pharmacells
and Vindon for the processing of adult blood in order to
harvest and store adult stem cells. This new service offering
leverages the existing facilities and licences which Altrika
has in place for handling human cells. Extensive coverage
of the launch of the service was published in the Financial
Times, Mail on Sunday and Sunday Telegraph. Further
extensions of Altrika’s cell processing activities are planned
in the forthcoming period.

Growth strategy
In line with the strategy stated this time last year, Ilika has
deployed additional business development resources in
the US and Asia. In the US, Ilika appointed the JGW Group
to represent its interests in acquiring business in the US
defence industry. In addition, the Company appointed a
full time business development director based in California.
In Japan, Ilika has appointed an additional business
development resource focused on Altrika’s offerings. These
initiatives have broadened Ilika’s commercial pipeline,
supporting analyst’s growth forecasts for the coming period.

Summary
Ilika has delivered strong revenue growth in the past
year and expects this trend to continue in the current
financial year. Altrika has proven itself to be a dynamic,
innovative business in the rapidly-moving sector of cell
therapy. Some recent high profile M&A deals have
confirmed the intrinsic value of this sector.

Some important milestones have been achieved in
the scale-up of materials protected by the Company’s IP
portfolio. The forthcoming year will allow the Company to
demonstrate the industrial robustness of some of its key
products for energy conversion and storage, leading to
commercial roll-out.

Graeme Purdy
Chief Executive
13 July 2011

Ilika plc Annual report 2011

Fast-tracking materials discovery

16 Business review

Board of Directors

1. Jack Boyer
Chairman
Mr. Boyer joined Ilika as Chairman in 2004. He previously
founded and was the CEO of Trident Components
Group, a £280 million revenue pan-European
engineering group. He has worked in investment banking
at Goldman Sachs, management consulting at Bain &
Co and been the CEO of manufacturing companies.
Mr. Boyer was educated at Stanford University
(B.A. Hons), the London School of Economics (M.Sc.)
and INSEAD (MBA). He currently leads the University
of Southampton’s corporate spin-out and intellectual
property exploitation activities as Chair of Southampton
Asset Management and is Chairman of early-stage
companies involved in emerging technologies.

Mr. Boyer is a Board member of the User Panel of

the Engineering and Physical Sciences Research
Council (‘EPSRC’) and a Trustee of environmental and
educational non-profit organisations.

2. Graeme Purdy
Chief Executive Officer
Graeme was appointed to head-up the Company from
the beginning of May 2004, just before completion of
the Company’s seed round of funding.

Prior to joining Ilika, Graeme was Chief Operating

Officer of a high-technology company in the
Netherlands and before that worked internationally
in a variety of technical and commercial roles for
Shell. Graeme holds a Master’s degree in Chemical
Engineering from Cambridge and an MBA from INSEAD
business school in France.

3. Professor Brian Hayden
Chief Scientific Officer
Brian is currently on secondment to Ilika from the
University of Southampton, where he is professor of
Physical Chemistry. He is a pioneer of surface science
and has a strong track record in running successful
industrial collaborations. Brian has published in excess
of 100 papers in the fields of surface science, surface
electrochemistry and fundamental aspects of
heterogeneous catalysis and electrocatalysis. He is a
Fellow of the Royal Society of Chemistry and regular
speaker at conferences.

4. Stephen Boydell
Finance Director
Stephen qualified as a Chartered Accountant with
Deloittes in 1996, he held a number of positions at Hays
plc and then AGI Media before becoming Finance
Director of a successful Guernsey based group of
companies. He was instrumental in the restructuring
of that group and the subsequent successful sale
to a competitor. Stephen studied Economics at
Nottingham University.

5. Dr. Werner Braun
Non-Executive Director
Having received a PhD in plasma and laser physics from
the Technical University in Munich for research work
performed at the Max Planck Institute for Plasma Physics,
Dr. Braun initially worked for Messer Griesheim before
joining Biotronik as VP of Marketing and Sales.

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Ilika plc Annual report 2011

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17 Business review

Over a period of 14 years, Dr. Braun played a key

role in growing Biotronik from an early stage company
to a global provider of medical devices for use in
cardiology and cardiosurgery. Following spells as
General Manager of Chiron Adatomed and VP of
Marketing and Sales for Medtronic Europe, Middle East
and Africa, Dr. Braun returned to Biotronik in 2001 to
become Managing Director, further developing the
company’s market expansion to become Europe’s
largest privately-held medical device company in
the cardiovascular arena.

6. Clare Spottiswoode CBE
Non-Executive Director
Ms. Spottiswoode’s career started as an economist
with the Treasury before establishing her own software
company. She is perhaps best known for her role
as Director General of Ofgas between 1993 and 1998
where she oversaw the transformation of the gas industry
from a monopoly, which controlled the whole gas supply
chain, into a deregulated, competitive industry.

In November 2006 she was appointed as the

Policyholder Advocate for Aviva, and is responsible
for ensuring that around 1 million With-Profits
policyholders receive a fair share of the £5-6 billion
inherited estate. The deal has now been completed
and policyholders received around 70 percent of the
estate, which was more than double the only previous
reattribution settlement. Ms. Spottiswoode currently
chairs Gas Strategies Limited which has done a recent
management buy-out from Standard and Poors, and is a
Non-Executive Director of Energy Solutions, a US Nuclear
waste company and Tullow Oil, a FTSE50 Company.

Awarded a CBE for services to industry in 1999, she
holds degrees from Cambridge and Yale Universities in
Maths and Economics and has an honorary doctorate
from Brunel.

7. Professor Sir William Wakeham
Non-Executive Director
Professor Sir William Wakeham retired as Vice-Chancellor
of the University of Southampton in September 2009
after 8 years in that position. He studied Physics at Exeter
University at both undergraduate and doctoral level.
In 1971 he took up a lectureship in the Chemical
Engineering Department at Imperial College London
and became Head of Department in 1988. By 1999 he
was Pro-Rector (Research), Deputy Rector and Pro-
Rector (Resources) at Imperial College. He oversaw the
College’s merger with a series of medical schools and
stimulated its entrepreneurial activities.

He is a Fellow of the Royal Academy of Engineering
and its International Secretary, a Fellow of the Institution
of Chemical Engineers, the Institution of Engineering
and Technology, and the Institute of Physics. He holds
a higher doctorate from Exeter University, and honorary
degrees from Lisbon University, Exeter and Southampton
Solent University and is a Fellow of Imperial College
London. He is a Council Member of the Engineering
and Physical Sciences Research Council and Chair of
Its Audit Committee. He was knighted in the Queen’s
Birthday Honours 2009 for services to Chemical
Engineering and Higher Education.

Ilika plc Annual report 2011

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18 Business review

Financial
review

Stephen Boydell
Finance Director

Ilika plc was incorporated on 12 March 2010 with a view
to the acquisition of Ilika Technologies Limited and its
subsidiary, Altrika Limited, (‘the Limited Group’) and
subsequent AIM listing. The acquisition and subsequent
AIM listing occurred on 14 May 2010. The comparative
financial information set out in these statements does
not constitute the Company’s statutory accounts for the
period ended 30 April 2010. The accounting policies
and the IFRS conversion details are set out in the non-
statutory accounts of Ilika Technologies Limited for the
year ended 30 April 2010, which is available on the
Company’s website.

Revenue for the year ended 30 April 2011 was

£1.54 million (£1.06 million for 2009/10), supplemented by
£0.36 million of grant income (£0.22 million for 2009/10).
Revenues relate to the payments made by Ilika’s
partners for research and development activities. The
majority of these payments are associated with the
development of materials for applications in energy
storage and conversion, but projects in the electronics
sector have increased significantly in the year.

Grant funding was received from the Carbon Trust

and the Technology Strategy Board (‘TSB’) to support
a number of the Group’s programmes for energy
conversion, energy storage and biomedical applications.
Administration expenses in the year increased

by around £0.25 million in comparison to the year to
30 April 2010. This increase is primarily due to the
expenses incurred in preparation for listing and the
ongoing costs of being a publicly listed company, with
amongst other new costs, stock exchange listing and
regulatory fees and the appointments of nominated
advisors and company registrars.

The AIM listing on 14 May 2010, raised £4.4 million,
after expenses, to enable the Group to follow through
its strategy of portfolio scale-up in preparation for a
systematic roll-out of products incorporating Ilika’s
materials over the medium and long term. Investment
in equipment in the year was £0.67 million (£0.12 million
for 2009/10) which has increased the Group’s high-
throughput capacity enabling the expected revenue
growth to be achieved. As at 30 April 2011, the Group’s
cash position was £2.8 million.

Steve Boydell
Finance Director and Company Secretary
13 July 2011

Ilika plc Annual report 2011

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19 Governance

Directors’ report

The Directors present their report and the audited
financial statements for Ilika plc (‘Ilika’) and its
subsidiaries (‘the Group’) for the year ended
30 April 2011.

Principal activities
The principal activity of Ilika and the Group is the
discovery and development of novel materials for the
energy, electronics and biomedical sectors.

Business review
A detailed review of the business, its results and future
direction is included in the Chairman and Chief
Executive’s Statement.

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)
appointed 6 May 2010.
Prof. B.E. Hayden (CSO) appointed 6 May 2010.
Mr. G. Purdy (CEO) appointed 6 May 2010.

Non-Executive
Mr. J.B. Boyer (Chairman) appointed 6 May 2010.
Dr. W. Braun appointed 6 May 2010.
Ms. C. Spottiswoode CBE appointed 6 May 2010.
Prof. Sir W. Wakeham appointed 6 May 2010.

Details of the Directors’ remuneration and share
options are shown in note 4 of these accounts.

The Group maintained Directors’ and officers’ liability
insurance cover throughout the period.

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
materials and for those materials currently under
development. The Group is largely dependent on
its partners to commercialise the end-products
containing the Group’s materials.

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

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.

Regulatory risk
The Group’s materials and products are subject to
various European and other legislative and regulatory
requirements. Regulatory issues could lead to delays
in development which take time and investment
to resolve.

Post balance sheet events
There were no significant events of note which have
occurred after the year ended 30 April 2011, to the
date of this report.

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Supplier payment policy
It is the Group’s policy to settle debts with its creditors
on a timely basis, taking best advantage of the terms
and conditions offered by each supplier. As at 30 April
2011, the number of creditor days outstanding for the
Group was 21 (2010: 41 days).

Financial instruments
The Group’s principal financial instrument comprises
cash and this is used to finance the Group’s operations.
The Group has various other financial instruments
such as trade credit facilities that arise directly from its
operations. The Group places deposits surplus to short-
term working requirements with a range of reputable UK
based banks and building societies. These balances
are placed at fixed rates of deposit with maturities
between 1 and 9 months. See note 17 for IFRS7
disclosure regarding financial instruments.

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Results and dividends
The Consolidated Statement of Comprehensive
Income for the year is set out on page 26. The Group’s
loss for the financial year after taxation was £3,047,000
(2010: £3,132,000).

The Directors do not recommend the payment of
a dividend.

Charitable and political donations
The Group made no charitable or political donations
during the year (2010: Nil).

Research and development costs
In accordance with the policy outlined in note 1,
the Group incurred research and development
expenditure of £1,167,000 in the year (2010: £1,145,000).
Commentary on the major activities is given in the
Chairman’s Report and Chief Executive 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.

Ilika plc Annual report 2011

Fast-tracking materials discovery

20 Governance

Directors’ report

A resolution to reappoint BDO LLP will be proposed at
the next Annual General Meeting.

In preparing these financial statements, the Directors
are required to:

Substantial shareholdings
On 30 June 2011 the Company had been notified of
the following holdings of more than 3 percent or more
of the issued share capital of the Company.

Shareholder

IP Group
St Peter Port Capital
Nomura International
Mackin Holdings Inc
Southampton Asset

Management

Artemis
Nortrust Nominees
Wyvern
Southern Fox

No. of
Ordinary
Shares

Percent
shareholding

6,637,861
6,018,924
6,018,924
4,117,647

3,799,900
2,670,741
1,830,991
1,598,039
1,533,186

18.2
16.5
16.5
11.3

10.4
7.3
5.0
4.4
4.2

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

Company law requires the Directors to prepare
financial statements for each financial year. Under that
law the Directors have elected to prepare the Group
and Company financial statements in accordance
with International Financial Reporting Standards
(‘IFRSs’) as adopted by the European Union. Under
company law the Directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss of the
Group and Company for that period. The Directors
are also required to prepare financial statements
in accordance with the rules of the London Stock
Exchange for companies trading securities on the
Alternative Investment Market (‘AIM’).

select suitable accounting policies and then
apply them consistently;
make judgements and accounting estimates that
are reasonable and prudent;
state whether they have been prepared in
accordance with IFRSs as adopted by the European
Union, subject to any material departures disclosed
and explained in the financial statements; and
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business.

The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the
financial statements comply with the requirements of
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

Website publication
The Directors are responsible for ensuring the annual
report and the financial statements are made
available on a website. Financial statements are
published on the Group’s website in accordance
with legislation in the United Kingdom governing the
preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Group’s website
is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of
the financial statements contained therein.

By order of the Board

Graeme Purdy
Chief Executive
13 July 2011

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Ilika plc Annual report 2011

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21 Governance

Corporate governance statement

The Board is accountable to the Company’s
shareholders for good corporate governance
and it is the objective of the Board to attain a high
standard of corporate governance. As an AIM-quoted
company full compliance with The Principles of Good
Governance and Code of Best Practice (2006) (‘the
Combined Code’) is not a formal obligation. The
Company has not sought to comply with the full
provisions of the Combined Code, however it has
sought to adopt the provisions that are appropriate
to its size and organisation and establish frameworks
for the achievement of this objective. This statement
sets out the corporate governance procedures that
are in place.

Board of Directors
On 6 May 2010 the Board of Directors (‘the Board’) was
appointed and consists of a Non-Executive Chairman,
3 Executive Directors and 3 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
running of the Board, ensuring that no individual or
group dominates the Board’s decision making and
ensuring that the Non-Executive Directors are properly
briefed on matters. Prior to each Board meeting,
Directors are sent an agenda and Board papers
for each agenda item to be discussed. Additional
information is provided when requested by the Board
or individual Directors.

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

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

The Board retains full and effective control of the
Group. This includes responsibility for determining
the Group’s strategy and for approving budgets and
business plans to fulfil this strategy. The full Board
ordinarily meets bi-monthly.

The Company Secretary is responsible to the Board for
ensuring that Board procedures are followed and that
the applicable rules and regulations are complied
with. All Directors have access to the advice and
services of the Company Secretary, and independent
professional advice, if required, at the Company’s
expense. Removal of the Company Secretary would
be a matter for the Board.

Performance evaluation
The Board has a process for evaluation of its own
performance which is carried out annually.

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

i) Audit Committee
The Audit Committee currently comprises Clare
Spottiswoode CBE (Chairman), Professor Sir William
Wakeham and Jack Boyer.

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 currently comprises
Dr. Werner Braun (Chairman), Clare Spottiswoode
CBE and Jack Boyer. It 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 currently comprises Jack
Boyer (Chairman), Professor Sir William Wakeham
and Dr. Werner Braun. 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

Remuneration

Mr. S. Boydell
Mr. J.B. Boyer
Dr. W. Braun
Prof. B.E. Hayden
Mr. G. Purdy
Ms. C. Spottiswoode
Prof. Sir W. Wakeham

6/6
6/6
6/6
5/6
6/6
6/6
6/6

–
2/2
–
–
–
2/2
1/2

–
1/1
1/1
–
–
1/1
–

All of the members of the Board were appointed on 6
May 2010, at which time the Nomination Committee
was appointed. No further appointments of Directors
have been made since that date and therefore no
Nomination Committee meetings were held in the
year. The Nomination Committee will convene its first
meeting on 13 July 2011 to review the performance of
the Board since flotation.

Ilika plc Annual report 2011

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22 Governance

Corporate governance statement

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.

Corporate social responsibility
The Board recognises the growing awareness of social,
environmental and ethical matters and it endeavours
to take into account the interest of the Group’s
stakeholders, including its investors, employees,
suppliers and business partners, when operating
the business.

Employment
The Board recognises its legal responsibility to ensure
the well-being, safety and welfare of its employees
and maintain a safe and healthy working environment
for them and for its visitors. A Health and safety report
is reviewed at each Board meeting and policies and
procedures are independently reviewed to ensure
compliance with best practice.

By order of the Board

Steve Boydell
Finance Director and Company Secretary
13 July 2011

Ilika plc Annual report 2011

Fast-tracking materials discovery

23 Governance

Corporate social responsibility statement

Ilika recognises the importance of approaching its
responsibilities to corporate social responsibility (‘CSR’)
in a co-ordinated and committed fashion and we aim
to ensure our approach to creating business growth
manages environmental and social issues whilst
delivering value for the Company and continued
benefit for society. This statement acknowledges our
ambition to include CSR in all parts of our business.

Overall responsibility for developing and implementing
our CSR policies on social, ethical and environmental
matters and for reviewing their effectiveness lies
ultimately with the Ilika Board. The Board will regularly
review the scope of the Company strategy and report
regularly to stakeholders to ensure we remain focused
on the material issues for the business.

Ilika’s policies and procedures, including those
relating to social, environmental, health and safety,
employment and ethical matters, are reviewed by the
management team regularly and are communicated
to all employees through the staff handbook, email
communications and regular company meetings. The
management team will report to the Board every 6
months to ensure that the Board are fully apprised of
the status of the Company’s efforts in this area.

The Main areas of CSR at Ilika are:

>
>
>
>
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Health and Safety.
Environment and sustainability.
Employee rights.
Values and ethics.
Contribution to society.

Health and Safety
We recognise our responsibility to ensure the well-
being, safety and welfare of our employees and to
maintain a safe and healthy working environment
for all of our employees and visitors. We understand
that health and safety has positive benefits for the
Company and that a commitment to a high level
of safety makes good business sense. As a business
function, health and safety must continually progress
and adapt to change.

Health and safety is considered at the highest level
in the Company with the ultimate responsibility resting
with the Board. Update reports are presented to
the Board at each Board meeting and a full report
is presented annually. Policies and procedures
are independently reviewed to ensure compliance
with best practice and with the relevant health and
safety legislation.

Environment and sustainability
Ilika is committed to achieving a real and sustainable
positive impact on the broader community by
adopting environmentally responsible policies. We
believe that it is essential that both as a Company and
as individuals we should operate in an environmentally
conscious manner. Our objective is to minimise the
impact of our business activity on the environment
wherever possible. This includes ensuring that
our suppliers do likewise and that we proactively
encourage others with whom we interact to consider
environmental matters.

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We recognise our impact on the environment
comes from:

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Electricity to heat, cool and power laboratory and
office equipment.
Gas for heating.
Business travel by air, road and rail.
Water in laboratories and offices used for a variety
of purposes.
Resources such as paper.
Waste including paper, plastic, chemicals and other
laboratory waste and consumable IT equipment.

Our objectives are to:

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Consider environmental issues in all of our decision
making processes.
Evaluate future energy usage to see how we can
use low energy systems.
Advise staff on the efficient use of energy and
other utilities.
Avoid unnecessary travel on business by the use of
video conferencing and telephone communication
where possible.
Use the most environmentally friendly mode of
transport, where necessary, consistent with
business needs.
Encourage use of bicycles by offering our
employees access to the HMRC Workcycle scheme
Reduce overall the resources we use.
Promoting waste minimisation by recycling or
finding other uses of by-products whenever
economically viable.
Reduce our letters and correspondence by using
alternative electronic mechanisms.
Using either recycled or FSC paper for all hard copy
correspondence, wherever possible.
Consider environmental criteria when choosing
services and goods.
Develop relationships with suppliers and contractors
so that we all recognise our environmental
responsibilities.
Fundamentally Ilika will reduce its impact on the
environment and ask that its employees, suppliers
and customers do likewise.

Ilika plc Annual report 2011

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24 Governance

Corporate social responsibility statement

Ilika will not provide support or work with organisations
which do not conform to the most widely accepted
standards for minimum labour rights or which do not
cover the use of under-age or forced labour.

Ilika does not give or receive any bribes, extra
contractual gratuities, inducements, facilitation fees
or similar payments. Any gifts, whether in cash or kind,
received by employees or the Company in the course
of normally accepted business entertainment are
accepted subject to the prior written approval of
the management.

Ilika does not donate (including sponsorship,
subscriptions or provision of employee time or facilities)
to any political party or similar organisation.

Contribution to society
Ilika accepts and acknowledges that we have a
corporate responsibility towards society not only by
paying taxes and creating and maintaining jobs but
also by using our unique research skills to develop
knowledge, skills and products which will ultimately
benefit society.

Ilika actively supports and encourages the study of
science at all levels from pre GCSE through to degree
level. We do this by sponsoring posters, hosting annual
visits by groups of A level students and offering 6
month and 12 month placements to Masters students.

Employee rights
Ilika adheres to all legislation relating to employment
rights and equal opportunities, with particular
reference to non-discrimination on the basis of ethnic
origin, religion, gender, age, marital status, disability
or sexual orientation. However, Ilika’s policies go
beyond the legal requirements and the Company
acknowledges its moral rights to provide a safe and
dignified working environment.

We ensure that we maintain the highest level of
integrity with regard to employees, customers and all
others with whom we interact. We recognise the value
that our employees create for the business and our
commitment to training and personal development,
together with remuneration policies, are designed to
reward achievement and emphasise the importance
of retaining staff.

Ilika will not tolerate discrimination, bullying or
any other kind of harassment within our business
community. The concept of ’mutual respect’ will be
one of our guiding principles. Employees are expected
to abide by Company rules and to be honest and
considerate in their various roles.

Internal procedures have been established to report
grievances or suspected inappropriate behaviour to
other individuals or organisations. Equally the Company
will treat dishonest actions and accusations seriously;
this may result in disciplinary action in accordance with
company rules and disciplinary procedures.

Ethics and values
Ilika supports the principles of the Universal Declaration
of Human Rights through its business practices
This means that it supports freedom from torture,
unjustified imprisonment without fair trial and any
other oppression. In addition, Ilika supports the right
of any individual to have freedom of expression and
religion, political representation or in respect of any
other matter. Accordingly, Ilika will not support or work
with organisations which fail to uphold basic human
rights within their influence, which are involved in the
manufacture or transfer to an oppressive regime, or
are involved in the manufacture of equipment used
in the violation of human rights. Neither will Ilika work
with organisations which are involved in the funding or
carrying out of terrorist activities.

Ilika plc Annual report 2011

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25 Governance

Independent auditor’s report to the
members of Ilika plc

Opinion on other matters prescribed by the
Companies Act 2006
In our opinion the information given in the Directors’
report for the financial year for which the financial
statements are prepared is consistent with the
financial statements.

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Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:

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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.

Kim Hayward (senior statutory auditor)

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For and on behalf of

BDO LLP, statutory auditor
Southampton
United Kingdom
13 July 2011

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

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We have audited the financial statements of Ilika
plc for the year ended 30 April 2011 which comprise
the consolidated statement of comprehensive
income, the consolidated balance sheet, the parent
company balance sheet, the consolidated cash
flow statement, the parent company cash flow
statement, the consolidated statement of changes in
equity, the parent company statement of changes in
equity and the related notes. The financial reporting
framework that has been applied in their preparation
is applicable law and International Financial Reporting
Standards (‘IFRSs’) as adopted by the European
Union and, as regards the parent company financial
statements, as applied in accordance with the
provisions of the Companies Act 2006.

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

Respective responsibilities of Directors and auditors
As explained more fully in the statement of Directors’
responsibilities, the Directors are responsible for
the preparation of the financial statements and for
being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the
financial statements in accordance with applicable
law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the
Auditing Practices Board’s (‘APB’s’) Ethical Standards
for Auditors.

Scope of the audit of the financial statements
A description of the scope of an audit of financial
statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.

Opinion on financial statements
In our opinion:

the financial statements give a true and fair view of
the state of the Group’s and the parent company’s
affairs as at 30 April 2011 and of the Group’s loss for
the year then ended;
the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union;
the parent company financial statements have
been properly prepared in accordance with IFRSs
as adopted by the European Union and as applied
in accordance with the provisions of the Companies
Act 2006; and
the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.

Ilika plc Annual report 2011

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26 Financial statements

Consolidated statement of
comprehensive income

Revenue
Cost of sales

Gross profit
Administrative expenses
Other operating income

Operating loss
Financial income
Financial expense

Loss before tax
Taxation
Loss for period/total comprehensive income attributable to

owners of parent

Loss per share
Basic
Diluted

Notes

3
6
7

Year ended 30 April

2011
£

2010
£

1,544,766
(936,511)

1,060,872
(644,384)

608,255

416,488
(4,148,002) (3,899,100)
215,000

357,014

(3,182,733)
38,239
(9,458)

(3,267,612)
9,686
(6,448)

(3,153,952) (3,264,374)
132,823

106,468

(3,047,484)

(3,131,551)

(0.08)
(0.08)

(25.81)
(25.81)

Ilika plc Annual report 2011

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27 Financial statements

Consolidated balance sheet

ASSETS
Non-current assets
Intangible assets
Property, plant and equipment

Total non-current assets

Current assets
Inventory
Trade and other receivables
Current tax receivable
Other financial assets – bank deposits
Cash and cash equivalents

Total current assets

Total assets

Issued capital and reserves attributable to owners of parent
Issued share capital
Share premium
Capital restructuring reserve
Retained earnings

Total equity

LIABILITIES
Current liabilities
Trade and other payables

Non current liabilities
Other payables

Total liabilities

Total equity and liabilities

Notes

As at 30 April

2011
£

2010
£

10
11

61,794
2,006,479

66,738
2,068,129

2,068,273

2,134,867

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8
14
15

34,135
748,081
122,733
1,500,000
1,303,924

–
614,110
132,823
–
792,418

3,708,873

1,539,351

5,777,146

3,674,218

383,548
4,169,909
6,486,077
(6,418,196)

121,339
–
6,479,728
(3,945,196)

4,621,338

2,655,871

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1,125,631

1,000,157

30,177

18,190

1,155,808

1,018,347

5,777,146

3,674,218

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These financial statements were approved and authorised for issue by the Board of Directors on 13 July 2011.

Mr. J.B. Boyer
Chairman

Ilika plc Annual report 2011

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28 Financial statements

Consolidated cash flow statement

Cash flows from operating activities
Loss before tax
Adjustments for:
Amortisation
Depreciation
Equity-settled share-based payments
Loss/(profit) on disposal of property, plant and equipment
Loss on disposal of intangible assets
Net financial income

Operating cash flow before changes in working capital, interest and taxes
Increase in trade and other receivables
Increase in inventory
Increase in trade and other payables

Cash utilised by operations
Tax received

Net cash flow from operating activities

Cash flows from investing activities
Interest received
Purchase of intangible assets
Sale of property, plant and equipment
Purchase of property, plant and equipment
Increase in other financial assets

Net cash used in investing activities

Cash flows from financing activities
Proceeds from issuance of Ordinary Share capital
Share issue costs
Capital element of finance leases
Interest element of finance leases

Net cash from financing activities

Net increase/(decrease) 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

Year ended 30 April

2011
£

2010
£

(3,153,952) (3,264,374)

11,742
731,599
601,622
605
298
(28,782)

21,594
764,327
816,179
(183)
–
(3,238)

(1,836,868) (1,665,695)
(297,152)
–
151,673

(128,770)
(34,135)
103,712

(1,896,061)
116,558

(1,811,174)
150,078

(1,779,503) (1,661,096)

33,038
(7,298)
1,013
(603,466)
(1,500,000)

9,686
(11,078)
1,141
(121,368)
–

(2,076,713)

(121,619)

5,175,611
(764,282)
(34,149)
(9,458)

–
–
(19,060)
(6,448)

4,367,722

(25,508)

511,506 (1,808,223)
792,418
2,600,641

1,303,924

792,418

Ilika plc Annual report 2011

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29 Financial statements

Consolidated statement of
changes in equity

As at 30 April 2009
Share-based payment
Loss and total comprehensive income

As at 30 April 2010
Share option exercise
Share-based payment
Issue of shares
Expenses of share issue
Loss and total comprehensive income

Share
capital
£

121,339
–
–

121,339
21,039
–
241,170
–
–

Share
premium
account
£

–
–
–

Capital
restructuring
reserve
£

5,663,549
816,179
–

Profit
and loss
account
£

Total
attributable to
equity holders
of parent
£

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(813,645)
–
(3,131,551)

4,971,243
816,179
(3,131,551)

–
360
–
4,933,831
(764,282)
–

6,479,728
(20,789)
27,138
–
–
–

(3,945,196) 2,655,871
610
601,622
5,175,001
(764,282)
(3,047,484) (3,047,484)

–
574,484
–
–

As at 30 April 2011

383,548

4,169,909 6,486,077

(6,418,196) 4,621,338

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.

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

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30 Financial statements

Notes to the consolidated
financial statements

1 Accounting policies
Basis of preparation
The financial statements have been prepared on the basis of the accounting policies which apply for the
financial year to 30 April 2011 and in accordance with the recognition and measurement criteria of IFRS
adopted by the European Union.

Ilika plc was incorporated on 12 March 2010 and so the comparative financial information set out in these
statements does not constitute the Company’s statutory accounts for the period ended 30 April 2010 as
explained under the capital restructuring section below. The accounting policies and the IFRS conversion details
are set out in the non-statutory accounts of Ilika Technologies Limited for the year ended 30 April 2010, which is
available on the Company’s website.

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 30 April 2011, amounted to £2,803,924. The Directors have prepared projected cash flow information
for the period ending 12 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.

Capital restructuring
Ilika plc was incorporated as a vehicle for flotation on AIM in order to acquire, in a share for share exchange,
Ilika Technologies Limited. These financial statements consolidate the results and financial position of Ilika
Technologies Limited and its subsidiaries, through capital restructuring accounting as required by IFRS 3 Revised
‘Business Combinations’. This means that the Group financial statements account for the share for share
exchange as if Ilika Technologies Limited was the acquirer and Ilika plc the acquired entity. As a result of this, the
comparative financial information and the financial information up to 30 April 2010 relates to the consolidated
financial information of Ilika Technologies Limited.

On 6 May 2010, Ilika plc acquired, in a share for share exchange, Ilika Technologies Limited. As part of the share
for share exchange agreement, the share options and warrants in Ilika Technologies Limited were transferred to
Ilika plc on the same terms as previously held. There was no change in the fair value of the share options on the
date of transfer because the terms of the new share option agreements were the same as the old share options.
The warrant reserve in Ilika Technologies Limited was eliminated as a result of the exchange agreement as the
warrants had a nil fair value at the date of transfer.

Southampton Asset Management Limited (‘SAM’) exercised 2,099,900 options immediately prior to admission at
an exercise price of £0.01 per share. This amount was in excess of the amount payable under the terms of the
original option agreement held in Ilika Technologies Limited and therefore a compensating payment of £20,789,
reflecting the additional amount paid by SAM, was made to SAM and charged to the capital restructuring reserve.

Ilika plc was admitted to AIM on 14 May 2010. 10,147,059 Ordinary Shares were issued for a total consideration
of £5,175,001. The premium arising on the issue of these shares was £4,933,831. Total issue costs incurred were
£764,282. These costs have been written off against the share premium account.

4,000 options were exercised by option holders after admission at an exercise price of £0.10 per share.

(a) New standards, amendments to standards or interpretations adopted early
In the current year, there were no new or revised standards or interpretations that have been adopted and
affected the amounts reported in the financial statements.

(b) New standards, amendments to standards or interpretations not yet applied
The following standards, interpretations and amendments, which have not been applied in these financial
statements, will or may have an effect on the Group’s future financial statements:

International Accounting Standards (IAS/IFRS)

IFRS 1
IFRS 1

First-time adoption of International Financial Reporting Standards (amendment)
Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters

(amendments)

IFRS 7
IFRS 9
IAS 12
IAS 24

Disclosures – Transfers of Financial Assets (amendments)
Financial Instruments
Deferred tax: Recovery of Underlying Assets (amendments)
Related Party Disclosure (revised)

Effective date for
periods commencing

1 July 2010

1 July 2011
1 July 2011
1 January 2013
1 January 2012
1 January 2011

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31 Financial statements

1 Accounting policies (continued)

International Financial Reporting Interpretations (IFRIC)

IFRIC 14 The limit on a defined benefit asset, minimum funding requirements and

their interaction

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

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

Effective date for
periods commencing

1 January 2011
1 April 2010

The following principal accounting policies have been applied consistently in dealing with items which are
considered material in relation to the financial information.

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

Sales of goods
Sales of equipment and skin based products are recognised when products are delivered to a customer, the
customer has accepted the products and collectability of the related receivables is reasonably assured.

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

Leases
Where a Group Company enters into a lease which entails taking substantially all the risks and rewards of
ownership of an asset, the lease is treated as a ‘finance lease’. The asset is recorded in the balance sheet
as property, plant and equipment and is depreciated over its estimated useful life or the term of the lease,
whichever is shorter. Future instalments under such leases, net of finance charges, are included within creditors.
Rentals payable are apportioned between the finance element, which is charged to the consolidated income
statement, and the capital element which reduces the outstanding obligation for future instalments. All other
leases are accounted for as “operating leases” and the rental charges are charged to the consolidated
income statement on a straight line basis over the life of the lease.

Financial income and financial expense
Financial income and financial expense is recognised in the income statement as it accrues, using the effective
interest method.

Pension and other post retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

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

The fair value of market-based options granted by the Group is measured by use of the stochastic valuation
model taking into account the following inputs: the exercise price of the option; the life of the option; the market
price on the date of grant of the option; the expected volatility of the share price; the dividends expected on the
shares; and the risk free interest rate for the life of the option.

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

Ilika plc Annual report 2011

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32 Financial statements

Notes to the consolidated
financial statements

1 Accounting policies (continued)
Research and development expenditure
Expenditure on the research phase is charged to the income statement in the period in which it is incurred.
Development expenditure on new products is capitalised only once the criteria specified under IAS 38,
Intangible Assets, have been met. Prior to and during the year ended 30 April 2011, no development expenditure
satisfied the necessary conditions of IAS 38.

Taxation
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 balance sheet date.

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

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

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 profit and loss statement on a straight-line basis over the estimated useful lives of
each part of an item of property, plant and equipment. The estimated useful lives are as follows:

Leasehold improvements
Plant, machinery and equipment
Fixtures & fittings

lease term
3–5 years
3–5 years

Inventory
Inventory comprises the Group’s cell bank from which the Cryoskin® product is derived. Inventory is valued at
the lower of cost and net realisable value. Consumable stock items have been written off as an expense in the
year incurred.

Impairment
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether
there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

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

Intangible assets
Computer software
Acquired computer software licences 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.

Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group
becomes a party to the contractual provisions of the instrument. The Group’s financial assets are all classified
as loans and receivables and carried at amortised cost. The Group’s financial liabilities are all classified as
‘other’ liabilities which are carried at amortised cost. Cash and cash equivalents comprise cash balances
and call deposits.

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33 Financial statements

1 Accounting policies (continued)
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. Grant revenue is disclosed within
other operating income.

Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call with the bank.

Key sources of estimation uncertainty
The preparation of the Group’s financial statements, in accordance with IAS 1, Presentation of Financial
Statements, requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the
date of the Group’s financial statements. The Group’s estimates and judgements are continually evaluated and
are based on historical experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances.

Depreciation of property, plant and equipment
Depreciation is provided in the consolidated financial statements so as to write-down the respective assets
to their residual values over their estimated useful lives and as such, the selection of the estimated useful lives
and the expected residual values of the assets requires the use of estimates and judgements. Details of the
estimated useful lives are as shown above in the policy note for depreciation.
Amortisation lives
Intangible assets are recorded at their fair value at acquisition date and are amortised on a straight-line
basis over their estimated useful economic lives from the time they are available for use. Any change in the
estimated useful economic lives could affect the future results of the Group; however, no changes were
made in the year.
Revenue recognition
The Group’s revenue substantially comprised revenues from the provision of research and development
services. The contacts set out defined deliverables the achievement of which trigger milestone payments.
Judgement is used to determine the stage of completion and the point at which revenue is recognised.
Share-based payments
The critical accounting estimates, assumptions and judgements underpinning the valuation of the option
awards are disclosed in note 22.
Taxation
The current tax receivable is the expected tax receivable on the expenditure for the period using the tax rates
and laws that have been enacted or substantially enacted at the balance sheet date, and any adjustments
to tax payable in respect of previous years. The ultimate receivable may vary from the amounts provided and
is dependent upon negotiations with the relevant tax authorities.

2 Segment reporting
IFRS 8 requires the Group to report on operating segments on the same basis as that used by the chief
operating decision maker to assess the performance of the business segments and to allocate resources
accordingly. For management purposes, the Group is organised by market category and operational
information is presented to the chief operating decision maker in the following market categories; Energy,
Electronics, Biomedical and Products and recharges.

The Group’s activities originate from the production, design and development of high throughput methods of
material synthesis, characterisation and screening. The Group has commercialised skin-based products, details
of which are given below.

Energy
The Group has materials development programmes in the battery, fuel cell and hydrogen storage sectors.

Electronics
The Group’s technology can be applied to a wide range of electronic materials. The Group is initially focusing
on piezoelectric and memory materials.

Biomedical
In 2009, the Group incorporated a subsidiary to handle all of its biomedical products and development
programmes. The biomedical business is built on the Group’s biopolymer technology.

Ilika plc Annual report 2011

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34 Financial statements

Notes to the consolidated
financial statements

2 Segment reporting (continued)
Details of the revenues from external customers by operating segment are given below:

Turnover

Analysis by class of business:

Energy
Electronics
Biomedical

Turnover

Analysis by geographical market:
By destination

Belgium
United Kingdom
Germany
Japan
North America

Analysed as:

Rendering of services
Sales of goods

Year ended 30 April

2011
£

2010
£

1,101,448
291,546
151,772

869,977
42,000
148,895

1,544,766

1,060,872

Year ended 30 April

2011
£

2010
£

155,117
259,184
84,015
1,028,450
18,000

179,381
89,435
42,000
689,556
60,500

1,544,766

1,060,872

1,479,526
65,240

972,477
88,395

1,544,766

1,060,872

In the period to 30 April 2011, the Biomedical class of business turnover can be analysed as £65,240 for sale
of skin based products and £86,482 for research and development services. All revenues associated with the
energy and electronics class of business are for research and development services.

A number of customers individually account for more than 10 percent of the total turnover of the group. The
revenues from these companies are indicated below on a segment basis:

Turnover

Customer 1
Customer 2
Customers less than 10 percent

Energy Total

Customer 3
Customers less than 10 percent

Electronics Total

Customers less than 10 percent

Biomedical total

Year ended 30 April

2011
£

2010
£

820,919
155,117
125,412

1,101,448

174,457
117,089

291,546

151,772

689,556
180,421
–

869,977

–
42,000

42,000

148,895

1,544,766

1,060,872

The chief operating decision maker only reviews turnover by operating segment then reviews expenses and
profit on an aggregate basis. Therefore the segmental loss before tax information, along with the segmental
total assets and liabilities information has not been split out in this note.

The loss before tax per the management accounts is the same as the loss before tax on the consolidated
statement of comprehensive income with the exception of the share-based payment expense which is only
calculated as a year end adjustment. For details of the calculation see note 20. The total assets and liabilities
per the management accounts are the same as the consolidated balance sheet with the exception of the
period end tax adjustment.

Ilika plc Annual report 2011

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35 Financial statements

3 Operating loss

This is arrived at after charging:

Research and development expenditure in the year
Depreciation
Amortisation of intangible assets
Auditors remuneration:
Fees payable to the Group’s auditor for the audit of the Group’s accounts
Fees payable to the Group’s auditor for other services:
– The Audit of the Group’s subsidiaries
– Other assurance services – interim review
– Tax services
– Reporting accountant fees in relation to the flotation and other

non-recurring services
Operating lease rentals
Share-based payment charge
Foreign exchange differences

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

Administration
Materials synthesis

Staff costs for all employees, including Executive Directors, consist of:

Wages and salaries
Social security costs
Share-based payment expense
Pension costs

Year ended 30 April

2011
£

2010
£

1,166,761
731,599
11,742

1,145,360
764,327
21,594

15,000

5,000
10,000
6,745

118,420
174,000
601,622
617

4,750

2,500
–
9,555

23,718
174,119
816,179
–

Year ended 30 April

2011
Number

2010
Number

9
21

9
17

Year ended 30 April

2011
£

2010
£

1,577,637
138,896
601,622
94,480

1,235,823
129,426
816,179
76,741

2,412,635

2,258,169

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Ilika plc Annual report 2011

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36 Financial statements

Notes to the consolidated
financial statements

4 Employees (continued)
The directors costs consist of:

Year to 30 April 2011
G. Purdy
S. Boydell
B. Hayden
J. Boyer
W. Braun
W. Wakeham
C. Spottiswoode

Year to 30 April 2010
G. Purdy
A. Marrocco
S. Boydell
J. Boyer
W. Braun
K. Seifert
R. Penning De Vries
W. Wakeham
B. Hayden

Basic
salary
£

Fees
£

Benefits
in kind
£

Total
short-term
benefits
£

Bonus
£

Pension
£

Share-
based
payment
expense
£

Total
£

150,197
92,722
50,000
59,835
27,417
29,917
29,637
–
–

439,725

122,760
14,841
46,836
40,920
20,460
–
–
10,230
2,917

–
–
–
–
2,500
–
–
–
–

2,500

–
–
–
–
–
–
24,510
–
31,739

258,964

56,249

418
267
–
–
–
–
–
–
–

24,000
174,615
10,500 103,489
50,000
59,835
29,917
29,917
29,637
–
–

–
–
–
–
–
–
–

27,707 199,366 401,688
29,879 153,469
20,101
–
149,167
99,167
– 200,633 260,468
43,161
–
42,426
–
40,517
–
2,278
–
736
–

13,244
12,509
10,880
2,278
736

685

34,500

477,410

47,808 568,692 1,093,910

365
65
71
–
–
–
–
–
–

501

36,828
–
9,373
–
–
–
–
–
–

159,953
14,906
56,280
40,920
20,460
–
24,510
10,230
34,656

12,276 154,292
90,824
1,228
3,832
–
–
–
–
–
–
–

326,521
106,958
60,112
199,946 240,866
46,831
26,371
26,371
26,371
24,510
–
10,230
–
91,354
56,698

46,201

361,915

17,336 554,502

933,753

Benefits in kind include critical illness cover.

The unapproved share options of the Directors under the ‘Ilika plc Executive Share Option Scheme 2010’ are set
out below:

G. Purdy
J. Boyer
B. Hayden
S. Boydell
W. Braun
W. Wakeham
C. Spottiswoode

2011
Number

1,800,000
1,800,000
900,000
205,200
115,200
115,200
100,200

The approved share options of the Directors in Ilika plc exchanged from share options in Ilika Technologies
Limited. For further details see note 22.

G. Purdy
S. Boydell

2011
Number

760,700
90,000

Ilika plc Annual report 2011

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37 Financial statements

4 Employees (continued)
The unapproved share options of the Directors in Ilika plc exchanged from share options in Ilika Technologies
Limited. For further details see note 22.

G. Purdy
J. Boyer
W. Braun
B. Hayden

No options have lapsed in the period.

5 Other operating income

Grant income
Sundry other income

6 Financial income

Income from short-term deposits

7 Financial expense

Interest on:
Finance leases

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Number

136,200
540,200
20,000
59,300

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Year ended 30 April

2011
£

356,867
147

357,014

2010
£

210,457
4,543

215,000

Year ended 30 April

2011
£

38,001

2010
£

9,686

Year ended 30 April

2011
£

2010
£

9,458

6,448

8 Taxation
(a) Tax on profit 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:

Current tax on loss for the year
Adjustments to prior period

Year ended 30 April

2011
£

2010
£

(122,733)
16,265

(132,823)
–

106,468

(132,823)

Ilika plc Annual report 2011

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38 Financial statements

Notes to the consolidated
financial statements

8 Taxation (continued)
(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 28 percent. The differences are reconciled below:

Loss on ordinary activities before tax

Loss on ordinary activities before tax multiplied by the standard rate of corporation

tax in the UK of 28 percent

Effects of:
Expenses not deductible for corporation tax
Other temporary differences not recognised
Property, plant and equipment temporary differences not recognised
R&D relief
Origination of unrecognised tax losses
Under provision in previous years

Total tax credit for the year

2011
£

2010
£

(3,153,952) (3,264,374)

(883,107)

(914,025)

29,576
169,138
32,318
(2,619)
531,961
16,265

13,348
191,332
228,589
5,583
342,350
–

(106,468)

(132,823)

Unrecognised deferred taxation
There are tax losses available for carry forward against future trading profits of approximately £8,269,000 (2010:
£6,228,000). A deferred tax asset in respect of these losses of approximately £1,710,000 (2010: £1,736,000) has
not been recognised in the accounts, as the full utilisation of these losses in the foreseeable future is uncertain.

9 Earnings 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 profit after tax, are as follows:

Weighted average number of equity shares

Earnings, being profit after tax

Loss per share

Year ended 30 April

2011
Number

2010
Number

38,354,759

121,339

(3,047,484)

(3,131,551)

(0.08)

(25.81)

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 under the terms of IAS 33. At 30 April 2011 there were 18,338,316 options
outstanding (2010: 46,049 options outstanding) as detailed in notes 18 and 22. Following the share for share
exchange, there is no effect on the earnings per share.

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Ilika plc Annual report 2011

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39 Financial statements

10 Intangible assets

Cost
As at 30 April 2009
Additions

As at 30 April 2010
Additions
Disposals

As at 30 April 2011

Amortisation
As at 30 April 2009
Provided for the year

As at 30 April 2010
Provided for the year
Disposals

As at 30 April 2011

Net book value
As at 30 April 2010

As at 30 April 2011

Software
licences
£

Intellectual
property
£

22,808
11,078

33,886
7,298
(18,824)

22,360

6,804
16,594

23,398
6,742
(18,324)

11,816

10,488

10,544

75,000
–

75,000
–
–

75,000

8,750
5,000

18,750
5,000
–

23,750

56,250

51,250

Total
£

97,808
11,078

108,886
7,298
(18,824)

97,360

24,846
21,594

42,148
11,742
(18,324)

33,566

66,738

61,794

The amortisation charge of £11,742 (2010: £21,594) is included within administrative expenses

11 Property, plant and equipment

Cost
As at 30 April 2009
Additions
Disposals

As at 30 April 2010
Additions
Disposals

As at 30 April 2011

Depreciation
As at 30 April 2009
Provided for the year
Disposals

As at 30 April 2010
Provided for the year
Disposals

As at 30 April 2011

Net book value
As at 30 April 2010

As at 30 April 2011

Leasehold
improvements
£

Plant,
machinery and
equipment
£

Fixtures and
fittings
£

Total
£

351,667
20,000
–

371,667
16,232
–

3,071,608
100,235
(1,568)

3,170,275
648,161
(69,251)

158,032
1,133
–

159,165
6,972
–

3,581,307
121,368
(1,568)

3,701,107
671,365
(69,251)

387,899

3,749,185

166,137

4,303,221

262,069
95,310
–

357,379
16,154
–

544,336
633,303
(610)

1,177,029
683,224
(67,835)

62,856
35,714
–

98,570
32,221
–

869,261
764,627
(610)

1,632,978
731,599
(67,835)

373,533

1,792,418

130,791

2,296,742

14,288

1,993,246

60,595

2,068,129

14,366

1,956,767

35,346

2,006,479

The net book value of fixtures and fittings includes an amount of £7,187 (2010: £15,812) and plant, machinery and
equipment includes an amount of £68,622 (2010: £20,871) in respect of assets held under finance lease contracts.

Ilika plc Annual report 2011

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40 Financial statements

Notes to the consolidated
financial statements

11 Property, plant and equipment (continued)
Commitments for capital expenditure

Contracted but not provided for

12 Inventory

Inventory

Inventory comprises the Group’s cell bank from which the Cryoskin® product is derived.

13 Trade and other receivables

Trade receivables
Prepayments and accrued income
Other receivables

14 Other financial assets – bank deposits

Year ended 30 April

2011
£

43,771

As at 30 April

2011
£

34,135

2010
£

–

2010
£

–

As at 30 April

2011
£

68,052
445,642
234,387

748,081

2010
£

87,891
368,888
157,331

614,110

Amounts receivable within one year:
Sterling fixed rate deposits of greater than three months’ maturity at inception

1,500,000

As at 30 April

2011
£

2010
£

–

15 Cash and cash equivalents

Current bank accounts
Short-term deposits

16 Trade and other payables
Current

Trade payables
Other payables
Other taxes and social security costs
Lease purchase agreements
Accruals and deferred income

As at 30 April

2011
£

2010
£

184,201
1,119,723

1,303,924

492,418
300,000

792,418

As at 30 April

2011
£

217,672
19,700
42,205
40,823
805,231

2010
£

328,281
3,584
33,143
19,060
616,089

1,125,631

1,000,157

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41 Financial statements

16 Trade and other payables (continued)
Non current

Lease purchase agreements

Amounts payable
Within one year
In 1 year to 2 years
In 2 years to 5 years

As at 30 April

2011
£

2010
£

30,177

18,190

As at 30 April

2011
£

2010
£

40,823
22,633
7,544

71,000

19,060
18,190
–

37,250

Lease purchase agreements are secured on the related assets and carry interest at fixed rates. The total
amount payable under leases as at 30 April 2011 was £87,738 (2010: £50,982)

17 Financial instruments
The Group’s principal financial instruments comprise, lease financing arrangements, cash and short-term
deposits as well as other various items arising from its operations such as trade receivables and trade payables
which are shown in the table below. The main purpose of these instruments is to finance the Group’s working
capital requirements as well as funding its capital expenditure programmes. The Group does not enter into
derivative transactions such as interest rate swaps or forward exchange contracts.

Financial Assets

Loans and receivables
Trade receivables
Accrued income
Other receivables
Current bank accounts
Bank deposits
Short-term deposits

Total loans and receivables

Financial Liabilities

Other financial liabilities
Trade payables
Other payables
Other taxes and social security costs
Lease purchase agreements
Accruals

Total other financial liabilities

As at 30 April

2011
£

2010
£

68,052
303,405
234,387
184,201
1,500,000
1,119,723

87,891
88,173
157,331
492,418
–
300,000

3,409,768

1,125,813

217,672
19,700
42,205
71,000
358,258

708,835

328,281
3,582
–
37,250
547,312

916,425

The risks associated with these financial instruments are set out below.

Foreign currency risk
The Group buys goods and services in currencies other than Sterling. The Group’s non-Sterling liabilities and
cash flows can be affected by movements in exchange rates. These transactions are not significant and
therefore no forward exchange contracts have been entered into. It is Group policy not to engage in any
speculative trading in financial instruments. Any risk is mitigated by sales transactions being denominated
in Sterling.

Ilika plc Annual report 2011

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42 Financial statements

Notes to the consolidated
financial statements

17 Financial instruments (continued)
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. There is no bad debt provision.

Liquidity risk
The Group’s policy is to maintain adequate cash resources to meet liabilities as they fall due. With the exception
of its hire purchase liabilities, which are disclosed in note 16, all other 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 and building
societies. These balances are placed at floating rates of interest and deposits have maturities of one to nine
months. The Group’s cash and short-term deposits are set out in note 15.

Fixed-rate financial liabilities comprise 3 finance leases, 2 of which expire in April 2012 and the 3rd in August
2013. They have a weighted average interest rate of 13.5 percent. The maturity profile is detailed in note 16.
Floating-rate financial assets comprise cash on deposit and cash at bank. Short-term deposits are placed with
banks for periods of up to 9 months and are categorised as floating-rate financial assets. Contracts in place at
30 April 2011 had a weighted average period to maturity of 91 days and a weighted average annualised rate of
interest of 1.52 percent.

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 April 2011 by approximately £16,000 (2010: £9,000).

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 April 2011 by approximately £33,500 (2010: £11,000)

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, other than finance leases, all funding is raised by equity. See note 1 for the
fundraising that occurred during the year.

18 Share capital

Authorised
36,573,359 Ordinary Shares of £0.01 each
1,781,400 Convertible Preference Shares of £0.01 each

Allotted, called up and fully paid
36,573,359 Ordinary Shares of £0.01 each
1,781,400 Convertible Preference Shares of £0.01 each

As at 30 April

2011
£

2010
£

365,734
17,814

383,548

1,582
238

1,035
178

1,213

The comparative information disclosed above is in respect of the Ilika Technologies Limited as explained in
note 1, capital restructuring.

Ilika plc Annual report 2011

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43 Financial statements

18 Share capital (continued)
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:
–

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
Secondly, the balance of such surplus assets shall belong to and be distributed amongst the holders of the
Ordinary Shares

–

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

Share options and warrants
Employee related share options are disclosed in note 22. In addition to these, there were 107,300 non-employee
share options over Ordinary Shares of £0.01 at the year end. The Company’s brokers also have a warrant to
subscribe to 130,100 Ordinary Shares of £0.01.

10,147,059 warrants to subscribe to Ordinary Shares of £0.01 were issued on 14 May 2010 to investors who
subscribed to the placing as one warrant for each share subscribed and the Company’s brokers were issued
with a warrant to subscribe to 392,157 Ordinary Shares of £0.01.

19 Operating leases
The total future minimum rent payable under non-cancellable operating leases is as follows:

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Property
Within 1 year
In 1 to 2 years
In 2 to 5 years

As at 30 April

2011
£

2010
£

10,217
–
366,204

376,421

–
50,753
471,784

522,537

20 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 £94,480. (2010: £76,741).

21 Related party transactions
The Directors consider that no one party controls the Group.

During the year ended 30 April 2011, the Group incurred costs of £294,248 (2010: £251,529) with the University
of Southampton in connection with research and development activities. The University of Southampton is the
controlling shareholder of Southampton Asset Management Limited, which has an interest in the Group. At
30 April 2011, the amount unpaid in respect of these costs was £8,488. (2010: £15,239).

During the year ended 30 April 2011, the Group incurred costs of £nil (2010: £5,000) with IP Group plc, a
shareholder in the Group in connection with non-executive recruitment fees. At 30 April 2011, the amount
unpaid in respect of these costs was £nil (2010: £nil).

During the year ended 30 April 2011, the Group paid consultancy fees of £nil (2010: £35,000) directly to Prof. B.
Hayden, a Director of the Group. At 30 April 2011, the amount unpaid in respect of these costs was £nil (2010:
£nil). The Group also incurred fees from the University of Southampton in respect of Prof. B. Hayden. These
amounts are included in the £294,248 shown above.

Ilika plc Annual report 2011

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44 Financial statements

Notes to the consolidated
financial statements

22 Share-based payments expense and share options
Share-based payment expense
The Group has recognised an expense to the consolidated statement of comprehensive income representing
the fair value of outstanding equity-settled share-based payment awards to employees.

The Group has calculated the fair market value of options with market based performance conditions using the
stochastic valuation model. Previous options with no market based performance conditions have been valued
using the Black-Scholes model.

Those fair values were charged to the consolidated statement of total comprehensive income over the relevant
vesting periods adjusted to reflect actual and expected vesting levels.

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

On 14 May 2010, options in the Ilika Technologies Limited share option scheme were exchanged for options in
Ilika plc. 1 option in Ilika Technologies Limited was exchanged for 100 options in Ilika plc with the option price in
Ilika plc shares being one one hundredth of the price in Ilika Technologies shares.

Black-Scholes valuation

Outstanding:
At start of the period
100 for 1 exchange
Exercised during the period
Granted during the period

At the end of the period

Weighted Average Exercise Price

Number

2011
£

2010
£

2011

2010

34.95
0.3495
0.1000
–

0.3499

33.09
–
–
80.00

22,676
2,244,944
(4,000)
–

34.95

2,263,600

21,776
–
–
900

22,676

The exercise price of options outstanding at the end of the period ranged between £0.10 and £2.4283 and their
weighted average contractual life was 4.9 years (2010: 5.9 years). These share options are exercisable and must
be exercised within 10 years from the date of grant.

At 30 April 2011 the following share options were outstanding in respect of the approved share options exchanged:

Date of grant

19 May 2004
29 June 2004
9 June 2005
30 March 2006
14 May 2007
15 January 2008
2 February 2009
1 December 2009

4,000 of these options were exercised in the year.

Number of
shares

375,000
219,700
139,500
15,200
156,100
70,400
138,000
90,000

Period of
option

Exercise price
per share

10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years

£0.10
£0.10
£0.10
£0.10
£0.80
£1.00
£0.80
£0.80

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45 Financial statements

22 Share-based payments expense and share options (continued)
At 30 April 2011 the following share options were outstanding in respect of the unapproved share options exchanged:

Date of grant

29 June 2004
1 December 2005
8 May 2006
11 July 2007
30 August 2007
11 November 2008

No options were exercised in the year.

Number of
shares

273,100
280,000
115,500
195,500
151,600
40,000

Period of
option

Exercise price
per share

10 years
10 years
10 years
10 years
10 years
10 years

£0.10
£0.10
£0.10
£0.80
£0.10
£2.4283

The following information is relevant in the determination of the fair value of options granted under the equity-
settled share-based remuneration schemes under the Black-Scholes method.

Equity-settled:

Weighted average share price at date of grant/£

Exercise Price/£

Weighted average contractual life/years

Expected volatility
Expected dividend yield
Risk free interest rate

Year to
30 April
2010

49.50

9.7

30%
0%
0.5%

The volatility has been based on the annualised average of the standard deviations of the daily historical
continuously compounded returns of the share price of three companies listed on the AIM which have a
broadly similar technology risk profile to the Group. The risk free rate was assumed to be the yield to maturity on
a UK Gilt strip with the term to maturity equal to the expected life of the option.

Stochastic valuation

Outstanding:
At start of the period
Granted during the period
Lapsed during the period

At the end of the period

Weighted average exercise price

Number

2011
£

–
0.51
0.51

0.51

2010
£

2011

2010

–
–
–

–

–
5,365,400
(13,300)

5,352,100

–
–
–

–

The exercise price of options outstanding at the end of the period was £0.51 and their weighted average
contractual life was 10 years.

Ilika plc Executive Share Option Scheme 2010

At 30 April 2011 the following share options were outstanding in respect of the Ilika plc Executive Share Option
Scheme 2010:

Date of grant

14 May 2010

Number of
shares

Period of
option

Exercise price
per share

151,300

10 years

£0.51

Ilika plc Annual report 2011

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46 Financial statements

Notes to the consolidated
financial statements

22 Share-based payments expense and share options (continued)
Members of staff in the Group have options in respect of Ordinary Shares in Ilika plc, conditional upon the
achievement of a 10 percent increase in the Company’s share price above that of the TechMARK All share
price index over a three year period. 13,300 options lapsed in the year due to employees leaving the Company.
At a meeting of the Remuneration Committee on 13 July 2011, it was agreed that the performance criteria
applicable to these options be amended to reflect a series of financial and commercial milestones.

Ilika plc unapproved share options
At 30 April 2011 the following share options were outstanding in respect of Ilika plc unapproved share options:

Date of grant

14 May 2010

Number of
shares

Period of
option

Exercise price
per share

5,200,800

10 years

£0.51

Directors, Non-Executive Directors and founders of the Group were granted a total of 5,200,800 options in
respect of Ordinary Shares in Ilika plc. These options vest in 4 tranches. The first Tranche of 825,000 options were
granted on the 14 May 2010 with no performance conditions attached. The remaining 3 Tranches of 1,458,600
options are conditional upon the achievement of a 10 percent increase in the Company’s share price above
that of the TechMARK All share price index in each of the three years subsequent to the flotation. At a meeting
of the Remuneration Committee on 13 July 2011, it was agreed that the performance criteria applicable to the
options granted under tranche 2 should be waived. Furthermore, it was agreed that the performance criteria
application to the options granted under tranches 3 and 4 be amended to reflect a series of financial and
commercial milestones.

No options were exercised or lapsed in the year.

The following information is relevant in the determination of the fair value of options granted under the equity-
settled share-based remuneration schemes operated by the Group under the stochastic valuation model.

Expected Term. This is the most likely estimate of the period from grant until the exercise date. For these options,
the assumption of an expected term of part way between vesting and lapse for each option/tranche.
Expected Volatility. The normal approach is to look at the historical volatility of the share price over the most
recent period that is generally commensurate with the expected award term. However, this approach is not
possible here given that the options were granted on the date of the Company’s admission to the London
Stock Exchange. In such cases, IFRS 2 allows the consideration of the historical volatility of other similar entities
to determine a proxy for the Company’s volatility. Similar entities, for the purpose of calculating volatility, have
been chosen as the constituents of the Company’s comparator Index. Volatility for each of these companies
has been calculated over both 3 and 6 years resulting in median volatilities of 46.7 percent and 42.3 percent
respectively. A proxy volatility of 45 percent (being midway between these 2 figures) has been used for valuing
these options.
Expected Dividend Yield: as the Company does not pay, and is not currently expected to pay any dividends,
the dividend yield has been set to zero.
Risk-free Rate: calculated based on UK Gilts with a term commensurate with the expected term.

The charge for the prior period had been calculated on the basis that the Group floated in May 2010.

Share-based payment expense:

Black-Scholes calculation
Stochastic valuation

2011
£

2010
£

27,138
574,484

601,622

813,179
–

813,179

Ilika plc Annual report 2011

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47 Financial statements

Company balance sheet of Ilika plc

ASSETS
Non current assets
Investments in subsidiary undertaking

Current assets
Trade and other receivables
Cash at bank and cash equivalents

Total net assets

Equity
Issued share capital
Share premium
Retained earnings

LIABILITIES
Current liabilities
Trade and other payables

Total liabilities

Total equity and liabilities

Notes

As at 30 April

2011
£

2010
£

121,339

–

26
26
26

4,378,517
–

4,499,856

383,548
4,149,120
(41,011)

4,491,657

8,199

–
0.01

0.01

0.01
–
–

0.01

–

4,499,856

0.01

The notes on pages 50 and 51 form part of these financial statements.

These financial statements were approved and authorised for issue by the Board of Directors on 13 July 2011.

Mr. J.B. Boyer
Chairman

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48 Financial statements

Company cash flow statement

Cash flows from operating activities
Loss before tax
Adjustments for:
Equity settled share-based payments

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

Increase in trade and other receivables
Increase in trade and other payables

Cash utilised by operations

Cash flows from financing activities
Proceeds from issuance of Ordinary Share capital
Share issue costs

Net cash from financing activities

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

Year ended 30 April

2011
£

2010
£

(642,633)

601,622

(41,011)

(4,378,517)
8,199

(4,411,329)

5,175,611
(764,282)

4,411,329

–
–

–

–
–

–

0.01
–

0.01

0.01
–

0.01

Ilika plc Annual report 2011

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49 Financial statements

Company statement of changes in equity

As at 30 April 2010
Share exchange with Ilika Technologies
Share option exercise
Issue of shares
Expenses of share issue
Share-based payment
Loss and total comprehensive income

As at 30 April 2011

Share
capital
£

–
121,339
21,039
241,170
–
–
–

Share
premium
account
£

–
–
(20,429)
4,933,831
(764,282)
–
–

Retained
earnings
£

–
–
–
–
–
601,622
(642,633)

Total
attributable
to equity
holders
£

–
121,339
610
5,175,001
(764,282)
601,622
(642,633)

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4,149,120

(41,011)

4,491,657

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.

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Ilika plc Annual report 2011

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50 Financial statements

Notes to the consolidated
financial statements

23 Accounting polices
Basis of preparation
These financial statements have been prepared in accordance with IFRSs adopted by the European Union.

Ilika plc was incorporated on 12 March 2010.

No Directors report has been presented and the Directors responsibilities in respect of these financial statements
are set out on page 20.

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.

Related party transactions
During the year the company made recharges of costs to Ilika Technologies Limited of £551,325 and to Altrika
Limited of £123,187. In addition the funds raised from the flotation of the Company were transferred to Ilika
Technologies Limited. The balances outstanding at 30 April 2011 for Ilika Technologies limited was £4,243,351
and for Altrika Limited was £123,187.

Share-based payments
The critical accounting estimates, assumptions and judgements underpinning the valuation of the option
awards are disclosed in note 22.

Financial instruments
The accounting policy relating to financial instruments is disclosed in note 1.

Profit of the parent company
Loss in the year
No profit and loss account is presented for the Company as permitted by Section 408 of the Companies Act
2006. The Company’s loss for the year was £642,633 (2010: £nil).

Directors’ remuneration
The remuneration of the Directors is disclosed in note 4.

Auditors’ remuneration
Auditors’ remuneration is disclosed in Note 3.

24 Investment in subsidiary undertaking
Investments in Group undertakings are stated at cost.

On 6 May 2010, Ilika plc acquired, in a share for share exchange, Ilika Technologies Limited. Ilika Technologies
Limited (Incorporated in the UK) made a loss for the year of £1,893,139 and had net assets as at 30 April 2011 of
£1,030,437.

Shares in Group undertakings (at cost)

At 6 May 2010 and 30 April 2011

2011
£

121,339

Ilika Technologies Limited has a wholly owned subsidiary, Altrika Limited (Incorporated in the UK) which made a
loss for the year of £511,712 and had net liabilities as at 30 April 2011 of £779,319.

Ilika plc Annual report 2011

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51 Financial statements

25 Trade and other receivables

Prepayments
Other debtors
Amounts due from subsidiary undertakings

26 Share capital

Authorised
36,573,359 Ordinary Shares of £0.01 each (2010: 1 Ordinary Share of £0.01)
1,781,400 Convertible Preference Shares of £0.01 each (2010: nil)

Allotted, called up and fully paid
36,573,359 Ordinary Shares of £0.01 each (2010: 1 Ordinary Share of £0.01)
1,781,400 Convertible Preference Shares of £0.01 each (2010: nil)

As at 30 April

2011
£

2010
£

7,404
4,575
4,366,538

4,378,517

As at 30 April

2011
£

365,733
17,814

383,547

365,733
17,814

383,547

–

2010
£

0.01
–

0.01

0.01
–

0.01

On 6 May 2010, the Company issued 10,352,500 Ordinary Shares and 1,781,400 Convertible Preference Shares in
consideration for the entire issued share capital of Ilika Technologies on a ratio of 100:1 shares. On 6 May 2010, the
Company issued 2,099,900 Ordinary Shares pursuant to the exercise of a number of the non-employee options.

On 14 May 2010, Ilika plc was admitted to AIM. This initial public offering comprised of the issue of 10,147,059
Placing Shares at 51 pence per share together with 10,147,059 Placing Warrants. The net proceeds, after
transaction costs, were approximately £4,350,000.

Share Rights
The Ordinary Share and preference shares rank pari passu in all respects other than:

–

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

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Ilika plc Annual report 2011

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52 Financial statements

Corporate directory

Company number:

7187804

Directors
Executive:

Non-Executive:

Graeme Purdy
Stephen Boydell
Brian Hayden

Jack Boyer (Chairman)
Dr. Werner Braun
Clare Spottiswoode
Prof. William Wakeham

Secretary:

Stephen Boydell

Registered office:

Kenneth Dibben House
Enterprise Road
University of Southampton Science Park
Chilworth
Southampton
SO16 7NS

Website:

www.ilika.com

Advisers
Independent auditors:

Nominated adviser and broker:

Registrars:

Public relations:

BDO LLP
Arcadia House
Maritime Walk
Ocean Village
Southampton
SO14 3TL

Nomura Code Securities Limited
1 Carey Lane
London
EC2V 8AE

Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE

Pelham Bell Pottinger
6th Floor, Holborn Gate
330 High Holborn
London
WC1V 9QD

Ilika plc Annual report 2011

Fast-tracking materials discovery

Ilika invents, tests and
selects materials in
the laboratory that can
be selected for scale-
up and everyday
commercial use

where materials

devices where Ilika’s

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Fast-tracking materials
discovery

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1
1

Ilika plc
Kenneth Dibben House
Enterprise Road
University of Southampton Science Park
Chilworth
Southampton
SO16 7NS
United Kingdom

E info@ilika.com
T +44 (0)23 8011 1400
F +44 (0)23 8011 1401

www.ilika.com

Ilika plc Annual report 2011