Ilika Plc Annual Report 2016

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FY2016 Annual Report · Ilika Plc

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Pioneering materials
innovation and
solid-state battery
technology

Annual Report and Accounts 2016

About Ilika

Ilika plc pioneers material
innovation and solid-state
battery technology

THE COMPANY
Ilika plc (LON: IKA) is a pioneer in
materials innovation, including in
automotive, aeronautical and
electronic components sectors. Global
brands such as Rolls-Royce and Toyota
have long-term collaborations with
Ilika’s development teams. By applying
that heritage of patented materials
invention, Ilika has developed ground-
breaking solid-state battery
technology to meet the demands of
the Internet of Things (‘IoT’).

MATERIALS
INNOVATION
Ilika’s high throughput technology
enables functional materials to be
made, characterised and tested up to
100 times faster than traditional
techniques. Its robust datasets fully
define the performance of families of
materials. This enhances intellectual
property value, optimises product
performance and reduces time to
market, thereby minimising costs and
maximising the return on your R&D
investment.

STEREAX™ BATTERY
TECHNOLOGY
Miniaturised batteries are a critical
enabler to current and emergent
technologies including wearables,
medical devices and the IoT. Ilika has
been working with solid-state battery
technology since 2008 and offers its
Stereax™ battery technology to
companies who need energy efficient
batteries. These are energy dense
batteries in the smallest possible
footprint, with distinct benefits over
lithium-ion batteries.

Contents

Overview
01 Highlights 2016
02 Battery technology
04 StereaxTM M250
06 Solid-state batteries
07 Development projects

Strategic Report
08 Strategic report
12 Financial review
13 Principal risks and uncertainties

Corporate Governance
14 Board of Directors
16 Directors’ report
17
20 Statement of Directors’ responsibilities
21 Corporate governance statement

Directors’ remuneration report

Financial Statements
23 Independent auditor’s report
24 Consolidated statement of
comprehensive income
25 Consolidated balance sheet
26 Consolidated cash flow statement
27 Consolidated statement of

changes in equity

28 Notes to the consolidated

financial statements

40 Company balance sheet of Ilika plc
41
Company cash flow statement
42 Company statement of
changes in equity
43 Notes to the Company
financial statements
44 Corporate directory

HIGHLIGHTS 2016

Financial highlights

Operational highlights

• Revenues £0.6 million
(2015: £1.1 million)

• Launch of Stereax™ M250 solid-state battery
• Definition of roadmap covering future development pathways for

• Loss for the year £3.5 million

Stereax™

(2015: £2.7 million)

• Loss per share 5.2p (2015: 4.1p)
• Cash, cash equivalents and bank

deposits of £3.0 million
(2015: £6.0 million)

• Continuous improvement in yield and productivity of battery pilot line
• Grant of patents protecting Stereax™ technology
• Defence of patent position for fuel cell catalysts
• Award of grant for smart materials for electronic data storage
• Continuation of success in securing grants for aerospace alloys
• Appointment of Mike Inglis, former Chief Commercial Officer of ARM

Holdings, as Non-Executive Chairman

“ Since my appointment as Non-Executive Chairman

at the Annual General Meeting last September, I
have been very encouraged to see the technical
progress and increased commercial focus at Ilika.
The definition of a clear solid-state battery
roadmap and the launch of the Stereax™ M250
have been important milestones on the road to
commercial success. Underpinning this product
development has been a continued deployment of
Ilika’s high throughput platform on a focused
portfolio of materials development opportunities.
I am looking forward to further progress in the

year to come. ”

Mike Inglis, Chairman
Commenting on the results

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsBATTERY TECHNOLOGY

AT A GLANCE

We have developed a type of lithium-ion battery, which, instead of using the usual
liquid or polymer electrolyte, uses a ceramic ion conductor. This is particularly
important because battery technology is a key challenge in the electronics space,
with the IoT being a key driver of growth in the market and battery technology
development.

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

• Small size in both footprint and

thickness

• Ability to be trickle charged

• Charged only when an energy

harvester can get energy

• Longer life span to match sensors
and microcontroller units (‘MCUs’)

• Support wider temperature

ranges

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SOLID-STATE BATTERY ROADMAP

Performance

Concept

Capacity

Concept

Beagle

Miniaturisation

Concept

Stereax™ M250

April 2016

Future

BUSINESS MODEL FOR STEREAX™ COMMERCIALISATION

3–4 years
Ilika R&D

2–3 years
Partner system
development

20+ years
Multiple applications
development
and sales

Long-term,
global growth
markets

R&D costs

Development
revenue

License
revenue
$

Royalty
revenue
$

Ilika plc | Annual Report and Accounts 2016

APPLICATIONS

STEREAX™ MINIATURISATION BATTERY
APPLICATIONS

Medical wearables and devices
• Millimetre scale batteries for miniature devices
• Bio-compatible and moisture resistant materials
• Non-flammable

STEREAX™ CAPACITY BATTERY
APPLICATIONS

Smart buildings and infrastructure
• 5,000 cycles enabling ‘leave for life’
• Thin profile
• Capacity to operate sensors perpetually
with daily Photovoltaic (‘PV’) recharge

STEREAX™ PERFORMANCE BATTERY
APPLICATIONS

Transport
• Increasing use of sensors in cars as trend towards

autonomous vehicles

• Batteries reduce cabling which is now third heaviest

component averaging 100kg

• Elevated temperatures around engine and brakes

require robust batteries

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsSTEREAX™ M250

Ilika demonstrates the ability of its Stereax™ M250 solid-state
battery to power a real device within the IoT. This device is a
perpetual beacon for smart homes, in other words, an
autonomous sensing device of minimal size which, fixed on a
wall, measures temperature data at regular intervals and
transmits the data using Bluetooth low energy to an app.

“ One of the key challenges for IoT devices is enabling long-life,

energy-efficient power sources. The combination of energy harvesting
and battery technology has been urgently needed to enable small, energy-
efficient solutions that can easily be installed across a wide range of

locations with minimum maintenance. ”

Franco Gonzalez, industry analyst
IDTechEx

ILIKA TRANSFORMS BATTERY TECHNOLOGY FOR IOT

IOT

WHY USE SOLID-
STATE BATTERIES

STEREAX™ M250 BENEFITS
OVER OTHER SOLID-STATE
BATTERIES

1/10

leakage current

longer lifespan
(Stereax™ lasts up
to 10 years)

50%

of the volume for
the same power

100

40%

improvement in
energy density
per footprint

Increased
temperature range to

100˚C

(30˚c higher than existing
products)

No free
lithium

up to

15 billion

sensors are currently
connected to
the Internet

Challenges for IoT
energy source

• Cost
• No cabling
• Availability
• Trickle charging
• Maintenance free
• Ecological implications
• Limited energy resources
• Small size (thickness and

footprint)

Ilika plc | Annual Report and Accounts 2016

General description

The Stereax™ M250 is the first of a
family of solid-state, rechargeable,
thin film batteries developed by Ilika.
It contains no liquid or polymer
components and is the only solid-
state battery available without free
lithium, either in the charged or
discharged state, making it moisture
resistant and appropriate for medical
applications. Its low self-discharge
allows it to be trickle charged by an
energy harvesting source such as
vibration or a PV panel. Its high peak

current enables the transmission
of data using protocols such as
Bluetooth low energy. The
combination of energy harvester,
transmitter, sensor and the M250 is
ideal for integration into small, ‘fit
and forget’ autonomous sensor
devices with multiple applications
including smart homes, vehicles
and medical devices. The M250 is
provided on a rigid substrate
(650 μm) whilst thinner substrates
may also be used.

Stereax™ M250

Expanded construction view

1cm

Features

Applications

• Thin form factor
• All solid-state construction
• Fast charge
• High current pulses
• High energy density per footprint
• Thousands of cycles
• Low self-discharge
• High operating temperatures
• No free lithium: moisture resistant
• Eco-friendly

• Autonomous sensor devices
• Smart homes (HVAC, security,

light)

• Automotive (infotainment, sensors)
• Logistics (asset tracking)
• Medical devices (biometric

monitoring)

• Wearables

Anode current collector

Anode

Electrolyte

Cathode

Cathode current collector

Substrate

PERPETUAL BEACON FOR SMART HOMES POWERED BY STEREAX™ M250

General description

The perpetual beacon harvests solar
energy and is self-sufficient for
power. It measures temperature data
at regular intervals and transmits the
data using Bluetooth low energy to
an app. The app displays
temperature information as well as
the battery’s state of charge and
indicates if heating needs to be
started or stopped. This device
replicates sensors for smart homes,
where the data could be sent to a
hub for automated control. The
beacon’s self-sufficiency, together
with its thin form factor, means that
it can be deployed unobtrusively and
forgotten in a smart building or
smart home.

http://www.ilika.com/battery-technology/
perpetual-beacon-dehttps://youtu.be/
6-qKlR13GUwmonstrator

The perpetual beacon can be placed and forgotten on the wall of a smart home.

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsSOLID-STATE BATTERIES

Q. What benefits do solid-state
batteries have over existing
lithium-ion batteries?

A. The major benefits of solid-state
batteries derive from the solid
electrolyte. Conventional lithium-
ion batteries use an organic
solvent which is flammable and
has a relatively short useful life.

Performance benefits include:
• Faster charging (6x faster)
Increased energy density
•
(2x energy for the same volume)
Increased cycle life (up to 10 years,
compared to 2)

•

• Low leakage currents (nanoamps)
• Non flammability

Q. Is the battery voltage similar

to current lithium-ion batteries?

A. The output voltage for the

Stereax™ M250 is 3.5V.

Q. What applications could the

batteries be used in?

A. The size and performance of the

Stereax™ M250 solid-state battery
make it ideal for applications in
autonomous sensor devices in the
IoT. Its low self-discharge allows it
to be trickle charged by an energy
harvesting source such as vibration
or a PV panel. Its high peak current
enables the transmission of data
using protocols such as Bluetooth
low energy. The combination of
energy harvester, transmitter,
sensor and the M250 is ideal for
integration into small, ‘fit and
forget’ autonomous sensor devices
with multiple applications
including, smart homes (HVAC,
light, security), automotive
(infotainment, sensors), logistics
(asset tracking) and medical
devices (biometric monitoring).

Q. How thin can a solid-state

battery be?

Q. Can the battery power

real devices?

A. The Stereax™ M250 battery is less

than 750 μm thick. We use a
standard 650 μm silicon substrate
but tests are ongoing to use other
substrates such as 200 μm glass
so overall battery thickness could
be less than 350 μm.

A. Ilika has demonstrated the ability
of its Stereax™ M250 solid-state
battery to power a perpetual
beacon which replicates sensors
deployed in smart homes for
managing heating and cooling
systems.

Q. What is the operating

temperature range of the
batteries?

A. The Stereax™ M250 can work
between -20°C and 100°C

Q. Are solid-state batteries limited to
the same cylindrical (prismatic)
format as conventional batteries
such as AA or AAA format?

A. Solid-state batteries are flat and our
Stereax™ M250 batteries have a
square footprint. The footprint can
be adapted to suit the end device
requirements.

Q. What is the scalability of

the technology?

A. Ilika’s batteries can be scaled to

larger footprints using production
processes used to produce bulk
glass and photo-voltaic sheets.
This creates the potential for large
area batteries.

Q. How does Ilika’s solid-state

battery differ from other solid-
state batteries?

A. The main difference is the

combination of materials. Other
solid-state batteries use ‘free
lithium’ which is highly reactive with
moisture and air, and hence require
stringent encapsulation. In the
Stereax™ M250, the lithium is not
free during storage or cycling; it is
‘alloyed’ in the cathode or anode
and this reduces the encapsulation
requirements. The combination of
material and synthesis method
enable a 40 percent energy
improvement per footprint and
an increased operating
temperature range.

Q. Does Ilika have patents

protecting this new technology?

A. Ilika currently has 5 patents which

cover 3 main areas: the
composition of the materials in the
battery; the process to make the
battery; and the cell architecture
of the battery.

Q. What materials are used in

the batteries?

A. The Stereax™ M250 batteries use

similar cathodes to current lithium
batteries but we use different
materials for the electrolyte and
anode. The anode in the Stereax™
M250 is silicon.

Q&A

Ilika plc | Annual Report and Accounts 2016Overview

Strategic Report

Corporate Governance

Financial Statements

DEVELOPMENT PROJECTS

SUPERALLOYS WITH ROLLS-ROYCE

Gas turbine engine development
for the aerospace industry continues
to strive for improved fuel efficiency,
reduced emissions and a reduction
in noise at take off. This development
effort demands materials, which can
tolerate increasingly high operating
temperatures while retaining their
mechanical strength. Nickel-based
superalloys are widely used in gas
turbines and much effort has
previously gone into understanding
the relationship between
composition, microstructure and
properties. However, the scope for
further developing nickel-based

alloys is diminishing and therefore
the rate of improvement of aero
engine technology is decreasing.
There is, therefore, an opportunity
to investigate alternative lightweight
alloy systems, which may also be
able to operate under high
temperatures, handle greater
stresses and remain in service for
longer. Ilika is working together
with Dr. Howard Stone’s group at
Cambridge University, Diamond
Light Source and Rolls-Royce in
a programme supported by
Innovate UK.

SELF-HEALING ALLOYS WITH BAE SYSTEMS AND GKN

Ilika is working along with BAE
Systems, GKN, Reliance Precision
engineering and the University of
Sheffield in a project supported by
the Aerospace Technology Institute
and Innovate UK to develop a new
generation of self-healing alloys
suitable for additive manufacturing
(‘AM’) processes. The aim is to
develop a metallic manufacturing
process that takes advantage of the

flexibility of AM and the precision
of subtractive manufacturing.
This will pave the way for the
manufacture of novel components
with critical feature tolerances,
meeting the challenges faced in
the design of mechanisms for the
aerospace industry with lower
weight, structural integrity and
functional performance.

SMART MATERIALS WITH SEAGATE

Q&A

This ‘Nanomaterials for Smart Data
Storage’ project is to provide a
demonstration of ‘2D materials’ for
Seagate’s Heat-Assisted Magnetic
Recording (‘HAMR’) Hard Disk Drive
(‘HDD’) applications. 2D materials,
sometimes referred to as single layer
materials, are crystalline materials
consisting of a single layer of atoms.
In this project, materials with
superior nanophotonic (the
interaction of nanometer-scale
objects with light) properties are
being developed to achieve
improved hard drive performance
and reliability. These materials must
operate at temperatures of up to
300°C for thousands of hours,

requiring extremely robust
nanomaterials that have specific
photonic properties allowing light
energy to be conducted. HAMR is
the next generation of HDD
technology under development at
Seagate. When buying a laptop,
consumers have to make the
decision between getting either a
Solid-State Drive (‘SSD’) or HDD as
the storage component. Even
though the price of SSDs have been
falling, HDDs remain significantly
cheaper per unit of memory. Ilika
is working together with Seagate
and the University of Southampton
in a programme supported by
Innovate UK.

Ilika plc | Annual Report and Accounts 2016

STRATEGIC REPORT

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

OUR STRATEGY

Innovation

Develop
collaboratively with
large multinational
companies through
jointly funded
programmes

Materials

Functional materials
made, characterised
and tested much faster
than traditional
techniques

Solid-state batteries

Energy dense
batteries in the
smallest possible
footprint address the
key challenge
for IoT

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

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

expects these end-products to fit
into or create end-markets worth in
excess of $1 billion per year, in which
the Directors believe a number of the
Company’s commercialisation
partners are positioned to have a
leading share.

The Company is pursuing its
objectives through the following
strategies:
• Developing leading-edge high
throughput development
processes

• Partnering with companies

committed to developing and
globally commercialising jointly
developed products

• Using high throughput processes
to invent patentable functional
materials

• Development of valuable products

through the application of
functional materials

Ilika plc | Annual Report and Accounts 2016Operating review

Solid-state batteries
Ilika has been working with solid-
state battery technology since
2008 and has developed a type of
lithium-ion battery, which, instead of
using liquid or polymer electrolyte,
uses a ceramic ion conductor,
making it particularly suitable for
micro-battery applications. Battery
technology is a key challenge in the
electronics sector, with the IoT being
a key driver of growth and battery
technology development.

thickness

• Ability to be trickle charged
• Charged only when an energy

harvester can get energy

• Longer life span to match those of

sensors and MCUs

• Support wider temperature ranges

Ilika’s solid-state batteries have
several benefits over currently
available lithium-ion batteries:
• 6x faster to charge
• Energy dense in a small footprint
•
• Non-flammable
• Can be integrated into integrated

10x lower leakage currents

circuit (‘IC’) components to reduce
end device size

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

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

Battery roadmap
The Ilika Stereax™ roadmap focuses
on 3 main battery requirements:
miniaturisation; capacity in a small
footprint; and increased
performance. The miniaturisation
roadmap looks at increasingly
smaller footprints at smaller currents
(µAh), making them ideal for small
sensor driven devices. The capacity
roadmap increases the amount of
energy for a given active footprint
by utilising Ilika’s patented stacking
feature, which allows multiple cells
to be stacked on top of one another.
The performance roadmap focuses
on higher energy density solutions
that have additional requirements
such as extended temperature range
support.

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

Introducing: Stereax™

http://www.ilika.com/news/videos

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsSTRATEGIC REPORT CONTINUED

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

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

Aerospace alloys
In September 2015, Ilika announced
that it had been awarded the lead
role in a £2.15 million, 3-year Innovate
UK grant funded project with BAE
Systems, GKN, Reliance Precision
Engineering and the University of
Sheffield.

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

In addition, Ilika continued in its
role leading a £1.33 million 3-year
Innovate UK funded project with
Rolls-Royce, Diamond Light Source
and the University of Cambridge
to develop new superalloy
compositions for gas turbine engines
with better thermal efficiency than
current alloys. The alloys are
designed to increase gas turbine
performance, reducing CO2
emissions and noise levels at
take-off.

Electronic materials
In February 2016, Ilika announced
that it is taking part in a 2-year
project with Seagate and the
University of Southampton (‘UoS’),
which has been awarded a £374,000
grant by Innovate UK. £194,000 of
the grant will be used to fund project
activities at Ilika.

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

The objective of this project is to
provide a demonstration of ‘2D
materials’ for HDD applications.
2D materials, sometimes referred to
as single layer materials, are
crystalline materials consisting of a
single layer of atoms. In this project,
materials with superior nanophotonic
properties are being developed
to achieve improved hard drive
performance and reliability.
These materials must operate at
temperatures of up to 300oC for
thousands of hours, requiring
extremely robust nanomaterials
that have specific photonic
properties allowing light energy to
be conducted.

Ilika plc | Annual Report and Accounts 2016

Key performance indicators (‘KPIs’)
The Board considers that the most
important KPIs are technical
and operational and relate to the
sales pipeline and engagement
of commercialisation partners
resulting from the progress of the
technical development programmes
outlined above.

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

Patent position
In January 2014, 3 international
patent applications from the
portfolio were filed under the
Patent Co-operation Treaty based
upon earlier British priority
applications. These were published
in July 2015 and are progressing
through the international patent
examination process.

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

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsFINANCIAL REVIEW

The Financial Review should be
read in conjunction with the
consolidated financial statements
of the Company and Ilika
Technologies Limited (together the
‘Group’) and the notes thereto on
pages 28 to 29. The consolidated
financial statements are presented
under International Financial
Reporting Standards as adopted by
the European Union. The financial
statements of the Company continue
to be prepared in accordance with
International Financial Reporting
Standards as adopted by the EU
and are set out on page 43.

Statement of comprehensive
income
Revenue
Revenue, all from continuing
activities, for the year ended 30 April
2016 was £0.6 million (2015: £1.1
million). This includes £450,000 of
grant income recognised from
Innovate UK (2015: £384,000), the
majority of which relates to work
together with the University of
Cambridge, Diamond Light Source
and Rolls-Royce to develop new
superalloy compositions for gas
turbine engines.

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

Administrative expenses and losses
for the period
Total administrative costs for the
year were slightly increased at
£3.8 million in 2016 relative to
£3.6 million in 2015. This increase is
attributable to the increased spend
on R&D in the year, particularly
associated with the solid-state
battery development programme.

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

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

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

Statement of financial position and
cash flows
At 30 April 2016, net assets
amounted to £3.4 million (2015:
£6.5 million), including net funds of
£3.0 million (2015: £6.0 million).

The principal elements of the
£3.1 million decrease over the year
ended 30 April 2016 in net funds
were:
• Cash used in operations of

£3.3 million (2015: £2.5 million)

• Purchase of plant, property

and equipment of £0.1 million
(2015: £0.3 million)

• R&D tax credits received of

£0.3 million (2015: £0.3 million)

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

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

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

Ilika plc | Annual Report and Accounts 2016PRINCIPAL RISKS AND UNCERTAINTIES

COMMERCIAL RISK

FINANCIAL RISK

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

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

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

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

INTELLECTUAL
PROPERTY RISK

The Group faces the risk that IP rights necessary to exploit R&D efforts
may not be adequately secured or defended. The Group’s IP may also
become obsolete before the products and services can be fully
commercialised.

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

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

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

DEPENDENCE
ON SENIOR
MANAGEMENT
AND KEY STAFF

By order of the Board

Mike Inglis
Chairman
7 July 2016

Graeme Purdy
Chief Executive Officer

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsBOARD OF DIRECTORS

Mike Inglis
Chairman (independent)

Graeme Purdy
Chief Executive Officer

Prof. Brian Hayden
Chief Scientific Officer

Stephen Boydell
Finance Director

Clare Spottiswoode CBE

Prof. Sir William Wakeham

Prof. Keith Jackson

Non-Executive Director

Graeme was appointed
to head-up Ilika from the
beginning of May 2004, just
before completion of the
company’s seed round of
funding. He led the company
through two successful
rounds of venture funding
before floating the company
on AIM in 2010.

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.
Graeme is a Chartered
Engineer and a Sainsbury
Management Fellow.

Brian is a founder of Ilika and
holds the executive role of
Chief Scientific Officer. He
is also professor of Physical
Chemistry at the University of
Southampton, a Fellow of the
Royal Society of Chemistry,
Fellow of the Institute of
Physics, and a member of the
International Editorial Board
of Surface Science.

Brian is a pioneer of surface
science with a strong track
record in running successful
industrial collaborations
and has published in excess
of 100 papers in the fields
of surface science, surface
electrochemistry and
fundamental aspects of
heterogeneous catalysis and
electro-catalysis.

Having qualified with
Deloittes in 1996, Stephen
held a number of acquisition,
treasury and group reporting
roles at both Hays plc, a
diversified commercial,
logistics and personnel
group, and then AGI
Media, a global creative
packaging group. He then
become Finance Director of
Healthy Direct, a successful
Guernsey-based group of
companies, producing and
supplying vitamins and
supplements to the UK
market. He was instrumental
in the restructuring of that
group and its subsequent
trade sale to a competitor.
He joined Ilika in 2009
as Finance Director and
Company Secretary.

He is also the author of over 12
active patents including new
catalysts and materials for
low temperature fuel cells and
solid-state Li-ion batteries.

Stephen studied Economics
at Nottingham University and
is a Fellow of the Institute of
Chartered Accountants.

Clare’s career started as an

Prof. Sir William Wakeham

Keith has had a wide ranging

economist with the Treasury

retired as Vice-Chancellor

before establishing her own

of the University of

and successful career in

companies varying from

software company.

Southampton in September

start-ups to multinationals.

2009. He studied Physics

He founded and grew an

She is perhaps best known

at Exeter University at

automotive control systems

for her role as Director

both undergraduate and

company whose engine

General of Ofgas between

doctoral level.

1993 and 1998 where she

control systems are used on

millions of vehicles around

oversaw the transformation

He is a Fellow, Senior Vice-

the world. Following the sale

of the gas industry from a

President and International

of the company to a major

monopoly, which controlled

Secretary of the Royal

the whole gas supply

chain, into a deregulated,

competitive industry.

Academy of Engineering,

a Fellow of the Institution

car company he joined Rolls-

Royce plc where he worked

as Chief Technology Officer

of Chemical Engineers, the

in the electrical power and

Institution of Engineering and

control systems group.

Clare was a commissioner

Technology, the Institute of

Physics and the Portuguese

Keith is Chief Technology

on the Independent

Commission on Banking

Chaired by John Vickers,

and currently chairs Gas

Strategies Group Limited

Academy of Engineering.

He is a Visiting Professor at

Imperial College London,

Exeter and Lisbon, Chair

and Flowgroup plc. She is

of Exeter Science Park

also a non-executive director

Limited and Trustee of Royal

technology strategy and

of G4S plc and EnQuest plc.

Anniversary Trust.

Awarded a CBE for services

to industry in 1999, she holds

He was knighted in 2009

degrees from Cambridge

and Yale Universities and

for services to Chemical

Engineering and Higher

has an honorary doctorate

Education.

from Brunel.

Officer at Meggitt PLC,

a global aerospace and

energy components and

systems company where

he is responsible for the

research and technology.

He is also actively involved

on talent development

at Meggitt through its

Fellowship and graduate

programmes.

Keith is a Fellow of the Society

of Automotive Engineers,

a Rolls-Royce Engineering

Fellow and a visiting Professor

at Sheffield University. He is

a graduate from University

College London.

Mike Inglis was appointed
a Non-Executive Director
of Ilika in July 2015 and
Chairman in September
2015. He is currently a
Non-Executive Director of
Advanced Micro Devices Inc
and as of 1 September 2015 of
BT plc. Mike is also a member
of the BT Technology
Committee.

Formerly, Mike was a Director
and member of the Executive
of ARM Holdings for over
a decade serving as Chief
Commercial Officer until the
end of March 2013, having
previously been EVP & GM
Processor Division and EVP
Sales and Marketing. Before
joining ARM, he worked in
management consultancy
with AT Kearney and held a
number of senior operational
and marketing positions at
Motorola. Mike has previously
worked in semi-conductor
sales, marketing, engineering
and consultancy with Texas
Instruments, Fairchild
and BIS Macintosh and
gained his initial industrial
experience with GEC
Telecommunications. He is a
Chartered Engineer and
a Chartered Marketer.

Ilika plc | Annual Report and Accounts 2016Mike Inglis

Graeme Purdy

Chairman (independent)

Chief Executive Officer

Prof. Brian Hayden

Chief Scientific Officer

Stephen Boydell

Finance Director

Clare Spottiswoode CBE
Non-Executive Director

Prof. Sir William Wakeham
Non-Executive Director

Prof. Keith Jackson
Non-Executive Director

Mike Inglis was appointed

a Non-Executive Director

of Ilika in July 2015 and

Chairman in September

2015. He is currently a

Graeme was appointed

to head-up Ilika from the

Brian is a founder of Ilika and

Having qualified with

holds the executive role of

Deloittes in 1996, Stephen

beginning of May 2004, just

Chief Scientific Officer. He

held a number of acquisition,

before completion of the

company’s seed round of

is also professor of Physical

treasury and group reporting

Chemistry at the University of

roles at both Hays plc, a

Non-Executive Director of

funding. He led the company

Southampton, a Fellow of the

diversified commercial,

Advanced Micro Devices Inc

through two successful

Royal Society of Chemistry,

logistics and personnel

and as of 1 September 2015 of

rounds of venture funding

Fellow of the Institute of

group, and then AGI

BT plc. Mike is also a member

before floating the company

Physics, and a member of the

Media, a global creative

of the BT Technology

on AIM in 2010.

International Editorial Board

packaging group. He then

Committee.

Prior to joining Ilika, Graeme

of Surface Science.

become Finance Director of

Healthy Direct, a successful

Formerly, Mike was a Director

was Chief Operating Officer

Brian is a pioneer of surface

Guernsey-based group of

and member of the Executive

of a high-technology

science with a strong track

companies, producing and

of ARM Holdings for over

a decade serving as Chief

company in the Netherlands

record in running successful

supplying vitamins and

and before that worked

industrial collaborations

supplements to the UK

Commercial Officer until the

internationally in a variety of

and has published in excess

market. He was instrumental

end of March 2013, having

technical and commercial

of 100 papers in the fields

in the restructuring of that

previously been EVP & GM

roles for Shell. Graeme holds

of surface science, surface

group and its subsequent

Processor Division and EVP

a Master’s degree in Chemical

electrochemistry and

trade sale to a competitor.

Sales and Marketing. Before

Engineering from Cambridge

fundamental aspects of

He joined Ilika in 2009

joining ARM, he worked in

management consultancy

and an MBA from INSEAD

heterogeneous catalysis and

as Finance Director and

business school in France.

electro-catalysis.

Company Secretary.

with AT Kearney and held a

Graeme is a Chartered

number of senior operational

Engineer and a Sainsbury

He is also the author of over 12

Stephen studied Economics

and marketing positions at

Management Fellow.

active patents including new

at Nottingham University and

catalysts and materials for

is a Fellow of the Institute of

low temperature fuel cells and

Chartered Accountants.

solid-state Li-ion batteries.

Motorola. Mike has previously

worked in semi-conductor

sales, marketing, engineering

and consultancy with Texas

Instruments, Fairchild

and BIS Macintosh and

gained his initial industrial

experience with GEC

Telecommunications. He is a

Chartered Engineer and

a Chartered Marketer.

Clare’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.

Clare was a commissioner
on the Independent
Commission on Banking
Chaired by John Vickers,
and currently chairs Gas
Strategies Group Limited
and Flowgroup plc. She is
also a non-executive director
of G4S plc and EnQuest plc.
Awarded a CBE for services
to industry in 1999, she holds
degrees from Cambridge
and Yale Universities and
has an honorary doctorate
from Brunel.

Prof. Sir William Wakeham
retired as Vice-Chancellor
of the University of
Southampton in September
2009. He studied Physics
at Exeter University at
both undergraduate and
doctoral level.

He is a Fellow, Senior Vice-
President and International
Secretary of the Royal
Academy of Engineering,
a Fellow of the Institution
of Chemical Engineers, the
Institution of Engineering and
Technology, the Institute of
Physics and the Portuguese
Academy of Engineering.
He is a Visiting Professor at
Imperial College London,
Exeter and Lisbon, Chair
of Exeter Science Park
Limited and Trustee of Royal
Anniversary Trust.

He was knighted in 2009
for services to Chemical
Engineering and Higher
Education.

Keith has had a wide ranging
and successful career in
companies varying from
start-ups to multinationals.
He founded and grew an
automotive control systems
company whose engine
control systems are used on
millions of vehicles around
the world. Following the sale
of the company to a major
car company he joined Rolls-
Royce plc where he worked
as Chief Technology Officer
in the electrical power and
control systems group.

Keith is Chief Technology
Officer at Meggitt PLC,
a global aerospace and
energy components and
systems company where
he is responsible for the
technology strategy and
research and technology.
He is also actively involved
on talent development
at Meggitt through its
Fellowship and graduate
programmes.

Keith is a Fellow of the Society
of Automotive Engineers,
a Rolls-Royce Engineering
Fellow and a visiting Professor
at Sheffield University. He is
a graduate from University
College London.

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsDIRECTORS’ REPORT

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

Details of Directors’ remuneration and share options are
given in the Directors’ Remuneration Report.

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

G. Purdy
C. Spottiswoode
S. Boydell
M. Inglis
W. Wakeham
B. Hayden1
K. Jackson

Number of shares

1 May
2015

30 April
2016

589,427 589,427
45,454
45,454
9,090
9,090
– 65,000
–
–
–
–
–
–

Executive
Mr. S. Boydell (FD and Company Secretary)
Prof. B. E. Hayden (CSO)
Mr. G. Purdy (CEO)

Non-Executive
Mr. J. B. Boyer (Chairman) (retired 30 September 2015)
Mr. M. Inglis (appointed 10 July 2015, appointed
Chairman 30 September 2015)
Ms. C. Spottiswoode CBE
Prof. Sir W Wakeham
Prof. K. Jackson

Research and development costs
In accordance with the policy outlined in note 1 of the
consolidated financial statements, the Group incurred
R&D expenditure of £2,057,966 in the year (2015:
£1,740,173). Commentary on the major activities is
given in the Strategic Report.

Financial instruments
The use of financial instruments and financial risk
management policies is covered in the Strategic Report
and also in note 13 of the consolidated financial
statements.

Dividends
The Directors do not recommend the payment of a
dividend.

Political donations
The Group made no political donations during the year
(2015: £nil).

Directors’ interests in Ordinary Shares
The Directors, who held office at 30 April 2016, had the
following interests in the Ordinary Shares of the
Company:

1 B. Hayden had an interest in Preference Shares of the Company amounting

to 426,300 at 1 May 2015 and at 30 April 2016.

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

Substantial shareholdings
As at 28 June 2016, 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

Charles Stanley Group plc
Henderson Global
IP Group plc
Ruffer LLP
Baillie Gifford & Co.
Richard Griffiths
Southampton Asset
Management
Herald Investment
Management
Hargreave Hale

Number of
Ordinary Shares

Percent
shareholding

9,863,826
9,500,000
6,358,779
6,105,454
4,956,616
2,574,836

2,349,900

2,215,000
2,063,045

15.0
14.4
9.7
9.3
7.5
3.9

3.6

3.4
3.1

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

Auditors
All the current Directors have taken all the steps that
they ought to have taken to make themselves aware of
any information needed by the Company’s Auditors for
the purposes of their audit and to establish that the
Auditors are aware of that information. The Directors are
not aware of any relevant audit information of which the
Auditors are unaware.

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

By order of the Board

Steve Boydell
Company Secretary

Ilika plc | Annual Report and Accounts 2016DIRECTORS’ REMUNERATION REPORT

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

Remuneration Committee
The Company’s remuneration policy is the responsibility
of the Remuneration Committee (‘the Committee’),
which was established in May 2004. The terms of
reference of the Committee are outlined in the
Corporate Governance Statement on page 21. The
members of the Committee are Mike Inglis (Chairman),
Clare Spottiswoode, Prof. Keith Jackson and Prof. Sir
William Wakeham.

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

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

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

(ii) Chairman and non-executive Director remuneration
The Chairman, Mike Inglis receives a fixed fee of
£65,000 per annum. Clare Spottiswoode, Prof. Sir
William Wakeham and Prof. Keith Jackson received a
fixed fee of £32,500 per annum. The fixed fee covers
preparation for and attendance at meetings of the full
Board and Committees thereof. The Chairman and the
Executive Directors are responsible for setting the level
of non-executive remuneration. The Non-Executive
Directors are also reimbursed for all reasonable expenses
incurred in attending meetings.

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

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsDIRECTORS’ REMUNERATION REPORT CONTINUED

Directors’ remuneration
The aggregate remuneration received by Directors who served during the years ended 30 April 2016 and 2015 was
as follows:

Year to 30 April 2016
G. Purdy
S. Boydell
B. Hayden1
M. Inglis
J. Boyer
K. Jackson
W. Wakeham
C. Spottiswoode

Year to 30 April 2015
G. Purdy
S. Boydell
B. Hayden1
J. Boyer
K. Jackson
W. Wakeham
C. Spottiswoode

Basic
salary
£

Benefits
in kind
£

Bonus
£

Total short-
term benefits
£

Pension
£

Total
£

190,000
120,260
64,000
54,167
25,500
32,500
32,500
32,500

551,427

176,667
115,000
60,270
61,200
16,035
31,641
31,641

492,454

671
423
–
–
–
–
–
–

30,000
10,181
16,095
–
–
–
–
–

220,671
130,864
80,095
54,167
25,500
32,500
32,500
32,500

30,000
17,181
–
–
–
–
–
–

250,671
148,045
80,095
54,167
25,500
32,500
32,500
32,500

1,094

56,276

608,797

47,181

655,978

543
356
–
–
–
–
–

899

24,000
12,000
12,000
–
–
–
–

201,210
127,356
72,270
61,200
16,035
31,641
31,641

29,833
17,450
–
–
–
–
–

231,043
144,806
72,270
61,200
16,035
31,641
31,641

48,000

541,353

47,283

588,636

1 B. Hayden is employed by the University of Southampton. The amounts disclosed in the table above relate to payments made directly to B. Hayden. The

University of Southampton recharged employment costs of £63,171 to the Company in the year in respect of B. Hayden. (2015: £55,873).

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

Benefits in kind include critical illness cover.

Ilika plc | Annual Report and Accounts 2016Share options
The share options of the Directors are set out below:

2015
Number

Lapsed

Granted

2016
Number

Exercise
price

Expiry
date

Unapproved
G. Purdy
G. Purdy
G. Purdy
J. Boyer
B. Hayden
B. Hayden
B. Hayden
B. Hayden
S. Boydell
S. Boydell
W. Wakeham
C. Spottiswoode
M. Inglis
K. Jackson

Approved
G. Purdy
G. Purdy
S. Boydell
S. Boydell

136,200
1,050,000
–

–
–
–
1,050,000 (1,050,000)
–
–
–
–
–
–
–
–
–
–

59,300
525,000
177,900
–
117,600
–
65,100
50,100
–
–

–
–
872,727
–
–
–
–
527,272
–
274,909
–
–
120,000
40,000

136,200
1,050,000
872,727
–
59,300
525,000
177,900
527,272
117,600
274,909
65,100
50,100
120,000
40,000

80p
51p

51p
80p
51p
81.5p

July 2017
May 2020
1p September 2025
May 2020
July 2017
May 2020
February 2025
1p September 2025
May 2020
1p September 2025
May 2020
May 2020
68.75p September 2025
68.75p September 2025

51p
51p

51p

26,500
245,300
90,000
154,600

–
–
–
–

26,500
245,300
90,000
154,600

80p
81.5p
80p
81.5p

May 2017
February 2025
December 2019
February 2025

Graeme Purdy exercised no options in the year (2015: 139,500).

Mike Inglis
Chairman of the Remuneration Committee

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsSTATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

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

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

In preparing these financial statements, the Directors are
required to:
• select suitable accounting policies and then apply

them consistently;

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

Going concern
The Directors have prepared and reviewed financial
forecasts. After due consideration of these forecasts and
current cash resources, the Directors consider that the
Company and the Group have adequate financial
resources to continue in operational existence for the
foreseeable future (being a period of at least 12 months
from the date of this report), and for this reason the
financial statements have been prepared on a going
concern basis.

• make judgements and accounting estimates that are

reasonable and prudent;

By order of the Board

Graeme Purdy
Chief Executive Officer
7 July 2016

• 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.

Ilika plc | Annual Report and Accounts 2016CORPORATE GOVERNANCE STATEMENT

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

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), Prof. Sir William
Wakeham, Prof. Keith Jackson and Mike Inglis.

Board of Directors
The Board of Directors (‘the Board’) 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 formulation
of the overall strategy of the Company, the running of
the Board, ensuring that no individual or group
dominates the Board’s decision making and ensuring
that the Non-Executive Directors are properly briefed on
matters. Prior to each Board meeting, Directors are sent
an agenda and Board papers for each agenda item to be
discussed. Additional information is provided when
requested by the Board or individual Directors.

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

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

The 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 comprises Mike Inglis
(Chairman), Clare Spottiswoode CBE, Prof. Keith Jackson
and Prof. Sir William Wakeham.

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

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
bimonthly.

(iii) Nomination Committee
The Nomination Committee comprises Mike Inglis
(Chairman), Prof. Sir William Wakeham, Prof. Keith
Jackson and Clare Spottiswoode CBE.

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.

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.

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsCORPORATE GOVERNANCE STATEMENT CONTINUED

Attendance at Board meetings and Committees
The Directors attended the following Board and Committees meetings during the year:

Attendance

S. Boydell
J. Boyer
B. Hayden
M. Inglis
G. Purdy
C. Spottiswoode
W. Wakeham
K. Jackson

Board

Audit

Nomination

Remuneration

6/6
3/3
6/6
5/5
6/6
6/6
6/6
6/6

–
1/1
–
2/2
–
2/2
2/2
2/2

–
1/1
–
–
–
1/1
1/1
1/1

–
1/1
–
1/1
–
2/2
2/2
2/2

Risk management and internal control
The Board is responsible for the systems of internal control and for reviewing their effectiveness. The internal
controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance
against material misstatement or loss. The Audit Committee reviews the effectiveness of these systems primarily
by discussion with the external auditor and by considering the risks potentially affecting the Group.

The Group does not consider it necessary to have an internal audit function due to the small size of the
administration function. Instead there is a detailed Director review and authorisation of transactions. The annual
audit by the Group auditor, which tests a sample of transactions, did not highlight any significant system
improvements in order to reduce risk.

The Group maintains appropriate insurance cover in respect of actions taken against the Executive Directors
because of their roles, as well as against material loss or claims of the Group. The insured values and type of cover
are comprehensively reviewed on a periodic basis.

By order of the Board

Mike Inglis
Chairman
7 July 2016

Ilika plc | Annual Report and Accounts 2016INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ILIKA PLC

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

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

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

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

Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of
the state of the Group’s and the Parent Company’s
affairs as at 30 April 2016 and of the Group’s loss for
the year then ended;

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

• the Parent Company financial statements have been

properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in
accordance with the provisions of the Companies
Act 2006; and

• the financial statements have been prepared in

accordance with the requirements of the Companies
Act 2006.

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

Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by
the Parent Company, or returns adequate for our
audit have not been received from branches not
visited by us; or

• the Parent Company financial statements are not in
agreement with the accounting records and returns;
or

• certain disclosures of Directors’ remuneration

specified by law are not made; or

• we have not received all the information and

explanations we require for our audit.

Malcolm Thixton (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Southampton
United Kingdom
7 July 2016

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

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsCONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

Revenue
Cost of sales

Gross profit
Administrative expenses
Share-based payment charge

Operating loss
Income from short-term deposits

Loss before tax
Taxation

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

Loss per share from continuing operations
Basic
Diluted

Notes

Year ended 30 April

2016
£

2015
£

605,924
(336,281)

269,643
(3,776,950)
(352,291)

1,093,978
(591,044)

502,934
(3,555,188)
(33,648)

(3,859,958)
30,734

(3,085,903)
50,557

(3,828,864)
357,896

(3,035,346)
333,647

(3,470,968)

(2,701,699)

(5.23)p
(5.23)p

(4.10)p
(4.10)p

Ilika plc | Annual Report and Accounts 2016CONSOLIDATED BALANCE SHEET
Company number 7187804

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

Total non-current assets

Current assets
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
Provisions

Total liabilities

Total equity and liabilities

As at 30 April

Notes

2016
£

2015
£

7
8

9
5

11
12

15,595
399,324

414,919

30,119
560,698

590,817

517,695
375,000
–
2,997,412

496,985
304,122
528,349
5,479,035

3,890,107

6,808,491

4,305,026

7,399,308

663,911
17,470,417
6,486,077

663,748
17,465,442
6,486,077
(21,213,507) (18,094,830)

3,406,898

6,520,437

748,128
150,000

898,128

728,871
150,000

878,871

4,305,026

7,399,308

The notes on pages 28 to 39 form part of these financial statements.

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

Mike Inglis
Chairman

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsCONSOLIDATED CASH FLOW STATEMENT

Cash flows from operating activities
Loss before taxation on continuing operations
Adjustments for:
Amortisation
Depreciation
Equity-settled share-based payments
Loss on disposal of plant, property and equipment
Financial income

Operating cash flow before changes in working capital, interest and taxes
(Increase)/decrease in trade and other receivables
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
Sale of property, plant and equipment
Purchase of property, plant and equipment
Purchase of intangible assets
Decrease in other financial assets

Net cash from investing activities

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

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

2016
£

2015
£

(3,828,864)

(3,035,346)

14,524
257,274
352,291
1,049
(30,734)

12,736
324,556
33,648
–
(50,557)

(3,234,460)
(26,432)
19,257

(2,714,963)
79,918
118,124

(3,241,635)
287,018

(2,516,921)
277,716

(2,954,617)

(2,239,205)

36,456
–
(96,949)
–
528,349

45,958
1,640
(279,267)
(42,062)
1,248,418

467,856

974,687

5,138

1,413,586

(2,481,623)
5,479,035

149,068
5,329,967

2,997,412

5,479,035

Ilika plc | Annual Report and Accounts 2016CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

As at 30 April 2014
Share-based payment
Issue of shares
Loss and total comprehensive income

Share
capital
£

Share
premium
account
£

Capital
restructuring
reserve
£

Retained
earnings
£

Total attributable
to equity holders
of parent
£

632,660
–
31,088
–

16,082,944
–
1,382,498
–

6,486,077
–
–
–

(15,426,779)
33,648
–
(2,701,699)

7,774,902
33,648
1,413,586
(2,701,699)

As at 30 April 2015

663,748

17,465,442

6,486,077

(18,094,830)

6,520,437

Share-based payment
Issue of shares
Loss and total comprehensive income

–
163
–

–
4,975
–

–
–
–

352,291
–
(3,470,968)

352,291
5,138
(3,470,968)

As at 30 April 2016

663,911

17,470,418

6,486,077

(21,213,508)

3,406,898

Share capital
The share capital represents the nominal value of the equity shares in issue.

Share premium account
When shares are issued, any premium paid above the nominal value is credited to the share premium reserve.

Capital restructuring reserve
The capital restructuring reserve arises on the accounting for the share for share exchange. It represents the
difference between the value of the issued equity instruments of Ilika Technologies Limited immediately before
the share for share exchange and the equity instruments of Ilika plc along with the shares issued to effect the
share for share exchange.

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

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 Accounting policies
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards
(‘IFRSs’) adopted by the European Union. The principal accounting policies adopted in the preparation of the
consolidated financial statements are set out below. The policies have been consistently applied to all of the
years presented.

The individual financial statements of Ilika plc are shown on pages 40 to 43.

Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company made up to the reporting date. Control is achieved where the Company has the
power to govern the financial and operating policies of an investee entity so as to obtain benefits from its
activities. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

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

The Directors have prepared and reviewed financial forecasts. The Group meets its day-to-day working capital
requirements through existing cash resources which, at 30 April 2016, amounted to £2,997,383. After due
consideration of these forecasts and current cash resources, the Directors consider that the Company and the
Group have adequate financial resources to continue in operational existence for the foreseeable future (being a
period of at least 12 months from the date of this report), and for this reason the financial statements have been
prepared on a going concern basis.

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

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

Changes in accounting policies
(a) New standards, amendments to standards or interpretations adopted early
During the period ended 30 April 2016, there were no new or revised standards, amendments to standards or
interpretations that have been adopted and affected the amounts reported in the financial statements.

(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 and have an effective date commencing after 1 May 2016, will or may have an effect on the Group’s
future financial statements:

International Accounting Standards
(IAS/IFRS)

IFRS 9
IFRS 15
IFRS 16
IAS 7
IAS 12

Financial Instruments
Revenue from Contracts with Customers
Leases
Statement of Cash Flows (Amendments)
Income Taxes (Amendments)

Effective date for
periods commencing

1 January 2018
1 January 2018
1 January 2019
1 January 2017
1 January 2017

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

Ilika plc | Annual Report and Accounts 2016Revenue
Revenue comprises the fair value for the sale of services, net of value added tax and is recognised as follows:

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

Government grants
Grants that compensate the Group for expenses incurred are recognised in the income statement on a
systematic basis in the same periods in which the expenses are recognised.

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

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

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

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

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

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

Taxation
Companies within the Group may be entitled to claim special tax allowances in relation to qualifying R&D
expenditure (e.g. R&D tax credits). The Group accounts for such allowances as tax credits, which means that
they are recognised when it is probable that the benefit will flow to the Group and that benefit can be reliably
measured. R&D tax credits reduce current tax expense and, to the extent the amounts due in respect of them
are not settled by the balance sheet date, reduce current tax payable. A deferred tax asset is recognised for
unclaimed tax credits that are carried forward as deferred tax assets.

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

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

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

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

Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items of property, plant and equipment.

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

Leasehold improvements
Plant, machinery and equipment
Fixtures and fittings

lease term
3–5 years
3–5 years

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

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

Intangible assets
Computer software
Acquired computer software 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.
Deposits of over 3 months’ maturity, judged at inception, are classified as other financial assets.

Key sources of estimation and uncertainty
The preparation of the Group’s financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, revenues and expenses at the date of the Group’s
financial statements. The Group’s estimates and judgments are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under
the circumstances.

Revenue recognition
The Group’s revenue substantially comprised revenues from the provision of R&D services. The contracts set out
defined deliverables the achievement of which trigger milestone payments. Judgement is used to determine the
stage of completion and the point at which revenue is recognised.

Ilika plc | Annual Report and Accounts 2016

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

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

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

For management purposes, the Group is analysed by the geographical location of its customer base and
Business Development Directors have been appointed to cover the Group’s 3 territories of focus, Asia, North
America and Europe.

Year ended 30 April

Revenue

Analysis by geographical market:
By destination

Asia
Europe
North America

UK grants

2016
£

2015
£

74,162
23,355
7,702
500,705

125,875
441,219
142,351
384,533

605,924

1,093,978

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:

Revenue

Customer 1
Customer 2
Customer 3
Customers less than 10 percent

3 Operating loss

This is arrived at after charging:

R&D expenditure in the year
Depreciation
Amortisation of intangible assets
Auditor’s 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
– All other services
Operating lease rentals
Share-based payment
Foreign exchange differences

Year ended 30 April

2016
£

500,705
74,150
–
31,069

2015
£

384,533
247,200
189,052
273,193

605,924

1,093,978

Year ended 30 April

2016
£

2,057,966
257,274
14,524

2015
£

1,740,173
324,556
12,736

19,700

6,800
21,518
204,578
352,291
3,616

6,800
–
202,964
33,648
5,123

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

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

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

Wages and salaries
Pension costs

Directors’ emoluments
Social security costs
Share-based payment expense

Key management personnel

Year ended 30 April

2016
Number

2015
Number

8
27

8
23

Year ended 30 April

2016
£

1,813,849
183,594
337,291
119,664

2015
£

1,641,465
153,801
18,648
98,206

2,454,438

1,912,120

Year ended 30 April

2016
£

607,703
47,181

654,884
77,420
267,301

999,605

2015
£

541,353
47,283

588,636
60,858
7,080

656,574

The Directors represent key management personnel and further details are given in the Directors’ Remuneration
Report on pages 17 to 19.

5 Taxation
(a) Tax on loss from ordinary activities
There is no taxation charge due to the losses incurred by the Group during the year. The taxation credit
represents R&D tax credit claims as follows:

Year ended 30 April

Current tax on loss for the year
Adjustments to prior period

2016
£

329,473
28,423

357,896

2015
£

304,122
29,525

333,647

Ilika plc | Annual Report and Accounts 2016(b) Factors affecting current tax charge
The tax assessed on the loss on ordinary activities for the period is different to the standard rate of corporation
tax in the UK of 20 percent (2015: 21 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 20 percent (2015: 21 percent)

Effects of:
Expenses not deductible for corporation tax
R&D relief
Origination of unrecognised tax losses
Under provision in previous years

Total tax credit for the year

2016
£

2015
£

(3,828,864)

(3,035,346)

(765,773)

(637,423)

71,179
(329,473)
694,594
(28,423)

8,022
(304,122)
629,401
(29,525)

(357,896)

(333,647)

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

6 Loss per share
Earnings per Ordinary Share have been calculated using the weighted average number of shares in issue during
the relevant financial periods. The weighted average number of equity shares in issue and the earnings, being
loss after tax, are as follows:

Year ended 30 April

Weighted average number of Equity Shares

Earnings, being loss after tax

Loss per share

2016
Number

2015
Number

66,378,114

65,895,078

(3,470,968)

(2,701,699)

(5.23)

(4.10)

The loss attributable to Ordinary Shareholders and weighted average number of Ordinary Shares for the
purpose of calculating the diluted earnings per Ordinary Share are identical to those used for basic earnings per
share. This is because the exercise of share options would have the effect of reducing the loss per Ordinary
Share and is therefore not dilutive. At 30 April 2016, there were 6,988,112 options outstanding (2015: 5,414,848)
as detailed in notes 14 and 18.

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

7 Intangible assets

Cost
As at 30 April 2014
Additions
Disposals

As at 30 April 2015
Disposals

As at 30 April 2016

Amortisation
As at 30 April 2014
Provided for the year
Disposals

As at 30 April 2015
Provided for the year
Disposals

As at 30 April 2016

Net book value
As at 30 April 2014

As at 30 April 2015

As at 30 April 2016

Software
licences
£

Intellectual
property
£

27,918
42,062
(15,615)

54,365
(8,072)

46,293

27,125
12,736
(15,615)

24,246
14,524
(8,072)

30,697

793

30,119

15,595

75,000
–
–

75,000
–

75,000

75,000
–
–

75,000

–

Total
£

102,918
42,062
(15,615)

129,365
(8,072)

121,293

102,125
12,736
(15,615)

99,246
14,524
(8,072)

105,698

793

30,119

15,595

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

8 Property, plant and equipment

Cost
As at 30 April 2014
Additions
Disposals

As at 30 April 2015
Additions
Disposals

As at 30 April 2016

Depreciation
As at 30 April 2014
Provided for the year
Disposals

As at 30 April 2015
Provided for the year
Disposals

As at 30 April 2016

Net book value
As at 30 April 2014

As at 30 April 2015

As at 30 April 2016

Leasehold
improvements
£

Plant, machinery
and equipment
£

Fixtures and
fittings
£

Total
£

561,750
5,750
–

567,500
–
–

4,180,326
271,439
(25,688)

4,426,077
96,949
–

169,712
2,078
–

171,790
–
(4,265)

4,911,788
279,267
(25,688)

5,165,367
96,949
(4,265)

567,500

4,523,026

167,525

5,258,051

501,038
66,462
–

567,500
–
–

3,654,222
250,981
(24,048)

3,881,155
250,492
–

148,901
7,113
–

156,014
6,782
(3,216)

4,304,161
324,556
(24,048)

4,604,669
257,274
(3,216)

567,500

4,131,647

159,580

4,858,727

60,712

–

526,104

544,922

391,379

20,811

15,776

7,945

607,627

560,698

399,324

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

Ilika plc | Annual Report and Accounts 2016

9 Trade and other receivables

Trade receivables
Prepayments
Other receivables
Accrued income

The ageing of trade receivables is as follows:

0–29 days
30–59 days
60–89 days
90+ days

10 Cash and cash equivalents

Current bank accounts
Short-term deposits with less than 3 months’ maturity

11 Trade and other payables

Trade payables
Other payables
Other taxes and social security costs
Accruals

The ageing of financial liabilities is as follows:

0–29 days
30–59 days
60–89 days
90+ days

12 Provisions

As at 1 May 2015 and at 30 April 2016

All provisions are due within 1 year.

As at 30 April

2016
£

27,976
215,933
156,863
116,923

517,695

2015
£

5,108
215,921
168,361
107,595

496,985

As at 30 April

2016
£

4,621
23,355
–
–

27,976

2015
£

1,322
3,595
191
–

5,108

As at 30 April

2016
£

2015
£

127,018
2,872,394

220,843
5,258,192

2,997,412

5,479,035

As at 30 April

2016
£

197,117
14,654
44,976
491,381

748,128

2015
£

219,567
15,845
40,079
453,380

728,871

As at 30 April

2016
£

390,618
61,039
21,495
230,000

703,125

2015
£

384,869
45,613
20,000
238,310

688,792

Leasehold
dilapidations
£

150,000

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

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

13 Financial instruments
The risks associated with financial instruments are set out below.

Foreign currency risk
The Group buys goods and services in currencies other than Sterling. The Group’s non-Sterling liabilities and
cash flows can be affected by movements in exchange rates. These transactions are not significant and
therefore no forward exchange contracts have been entered into.

Credit risk
The Group’s credit risk is attributable to its trade receivables and banking deposits. The Group places its
deposits with reputable financial institutions to minimise credit risk. The maximum exposure to credit risk for
each period is the amount disclosed above as total loans and receivables. For the periods above there were no
trade receivables which were past due or impaired. Risk is further mitigated through the use of credit limits, but
also through the nature of the customers, who, for the most part, are large multinationals.

Liquidity risk
The Group’s policy is to maintain adequate cash resources to meet liabilities as they fall due. All Group payable
balances fall due for payment within 1 year. Cash balances are placed on deposit for varying periods with
reputable banking institutions to ensure there is limited risk of capital loss. The Group does not maintain an
overdraft facility.

Interest rate risk
The main risk arising from the Group’s financial instruments is interest rate risk. The Group placed deposits
surplus to short-term working capital requirements with a variety of reputable UK-based banks. These balances
are placed at floating rates of interest and deposits have maturities of 1–12 months. The Group’s cash and short-
term deposits are set out in note 11. Floating-rate financial assets comprise cash on deposit and cash at bank.
Short-term deposits are placed with banks for periods of up to 12 months and are categorised as floating-rate
financial assets. Contracts in place at 30 April 2016 had a weighted average period to maturity of 30 days (2015:
32 days) and a weighted average annualised rate of interest of 0.7 percent. (2015: 0.8 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 2016 by approximately £31,000 (2015: £51,000).

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

There is no difference between the book and fair value of financial assets and liabilities.

Capital management
The primary aim of the Group’s capital management is to safeguard the Group’s ability to continue as a going
concern, to support its businesses and maximise shareholder value. The Group monitors its capital structure and
makes adjustments as and when it is deemed necessary and appropriate to do so using such methods as the
issuing of new shares. At present all funding is raised by equity. See note 1 for the fundraising that occurred
during the year.

14 Share capital

Authorised
65,802,710 Ordinary Shares of £0.01 each (2015: 65,736,416)
1,781,400 Convertible Preference Shares of £0.01 each

Allotted, called up and fully paid
65,802,710 Ordinary Shares of £0.01 each (2015: 65,736,416)
588,400 Convertible Preference Shares of £0.01 each (2015: 638,400)

As at 30 April

2016
£

2015
£

658,027
17,814

657,364
17,814

658,027
5,884

663,911

657,364
6,384

663,748

Ilika plc | Annual Report and Accounts 2016Share 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; and

– secondly, the balance of such surplus assets shall belong to, and be distributed amongst, the holders of the

Ordinary Shares.

The Preference Shareholders have the right, at any time, to convert the Preference Shares held to the same
number of Ordinary Shares.

On 7 October 2015, 50,000 £0.01 Convertible Preference Shares were converted to £0.01 Ordinary Shares.

Share options and warrants
Employee related share options are disclosed in note 18. In addition to these, there were 107,300 non-employee
share options over Ordinary Shares of £0.01 at the year end.

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

15 Operating leases
The Group and Company had no commitments under non-cancellable operating leases as at the current and
preceding reporting date.

16 Pensions
The Group operates a defined contribution Group personal pension scheme. The pension cost charge for
the period represents contributions payable by the Group to the scheme and amounted to £119,664 (2015:
£98,206).

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

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

The Company incurred fees from the University of Southampton in respect of Prof. B. Hayden, a Director of the
Company. These amounts are included in the costs shown above. Further details are given in the Directors’
Remuneration Report on pages 17 to 19.

Details of key management personnel and their compensation are given in note 4 and in the Directors’
Remuneration Report on pages 17 to 19.

18 Share-based payments expense and share options
Share-based payment expense
The Group has incentivised and motivated staff through the grant of share options under the Enterprise
Management Incentive (‘EMI’) scheme and through unapproved share options. The Group has recognised an
expense to the consolidated statement of comprehensive income representing the fair value of outstanding
equity-settled share-based payment awards to employees. The fair values were charged to the consolidated
statement of total comprehensive income over the relevant vesting periods adjusted to reflect actual and
expected vesting levels.

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

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

At 30 April 2016, the following options, whose fair values have been fully charged to the consolidated statement
of total comprehensive income, were outstanding:

Approved share options:

Date of grant

14 May 2007
15 January 2008
2 February 2009
1 December 2009
14 May 2010
1 February 2012

Unapproved share options:

Date of grant

11 July 2007
11 November 2008
14 May 2010

Black-Scholes valuation

Outstanding:
At start of the period
Granted in the period
Exercised in the period
Lapsed in the period

At the end of the period

Number
of shares

156,100
22,400
58,000
90,000
26,100
39,634

Period
of option

Exercise price
per share

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

£0.80
£1.00
£0.80
£0.80
£0.51
£0.53

Number
of shares

Period
of option

Exercise price
per share

195,500
40,000
1,897,800

10 years
10 years
10 years

£0.80
£2.4283
£0.51

Weighted average exercise price

Number

2016
£

2015
£

2016

2015

0.8341
0.2567
0.2732
0.8032

0.5021

0.4121
0.8150
0.1038
0.1508

0.8341

2,188,148
2,867,908
(13,394)
(85,750)

1,693,523
1,521,920
(423,250)
(604,045)

4,956,912

2,188,148

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

Stochastic valuation

Outstanding:
At start of the period
Exercised in the period
Lapsed during the period

At the end of the period

Weighted average exercise price

Number

2016
£

0.51
0.51
0.51

0.51

2015
£

0.51
0.51
0.51

0.51

2016

2015

2,989,300
(2,900)
(1,062,500)

3,057,300
(68,000)
–

1,923,900

2,989,300

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

Ilika plc | Annual Report and Accounts 2016Ilika plc Executive Share Option Scheme 2010
At 30 April 2016, the following share options were outstanding in respect of the Ilika plc Executive Share Option
Scheme 2010:

Date of grant

14 May 2010
1 February 2012
26 February 2015
22 March 2016

Number
of shares

Period
of option

Exercise price
per share

26,100
39,634
1,309,470
1,033,000

10 years
10 years
10 years
10 years

£0.51
£0.53
£0.815
£0.59

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

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

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

Date of grant

11 July 2007
11 November 2008
14 May 2010
26 February 2015
30 September 2015
30 September 2015

Number
of shares

Period
of option

Exercise price
per share

195,500
40,000
1,897,800
177,900
160,000
1,674,908

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

£0.80
£2.4283
£0.51
£0.815
£0.688
£0.01

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

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

Share-based payment expense
Black-Scholes calculation

2016
£

2015
£

352,291

33,648

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsCOMPANY BALANCE SHEET OF ILIKA PLC
Company number 7187804

ASSETS
Non-current assets
Investments in subsidiary undertaking
Amount due from subsidiary undertaking

Current assets
Trade and other receivables

Total assets

Equity
Issued share capital
Share premium
Retained earnings

LIABILITIES
Current liabilities
Trade and other payables

Total liabilities

Total equity and liabilities

As at 30 April

Notes

2016
£

2015
£

20
23

121,339
18,234,670

121,339
18,189,471

18,356,009

18,310,810

2,518

6,218

18,358,528

18,317,028

663,911
17,449,628
108,683

663,748
17,444,653
75,276

18,222,222

18,183,677

136,306

133,351

18,358,528

18,317,028

The notes on page 43 form part of these financial statements.

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

Mike Inglis
Chairman

Ilika plc | Annual Report and Accounts 2016COMPANY 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

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

2016
£

2015
£

(318,884)

(887)

352,291

33,648

33,407
(41,500)
2,955

32,761
(1,463,348)
17,001

(5,138)

(1,413,586)

5,138

1,413,586

–
–

–

–
–

–

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial StatementsCOMPANY STATEMENT OF CHANGES IN EQUITY

As at 30 April 2014
Issue of shares
Share-based payment
Profit and total comprehensive income

As at 30 April 2015

Issue of shares
Share-based payment
Profit and total comprehensive income

Share
capital
£

632,660
31,088
–
–

Share
premium
account
£

16,062,155
1,382,498
–
–

Retained
earnings
£

Total attributable
to equity holders
£

42,515
–
33,648
(887)

16,737,330
1,413,586
33,648
(887)

663,748

17,444,653

75,276

18,183,677

163
–
–

4,975
–
–

–
352,291
(318,884)

5,138
352,291
(318,884)

As at 30 April 2016

663,911

17,449,628

108,683

18,222,222

Share capital
The share capital represents the nominal value of the equity shares in issue.

Share premium account
When shares are issued, any premium paid above the nominal value is credited to the share premium reserve.

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

Ilika plc | Annual Report and Accounts 2016
NOTES TO THE COMPANY FINANCIAL STATEMENTS

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

Taxation, share-based payments and financial instruments
For the relevant accounting policies please see note 1.

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

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

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

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

Shares in Group undertakings (at cost)

At 1 May 2015 and 30 April 2016

21 Trade and other receivables

Prepayments

2016
£

2015
£

121,339

2016
£

2,518

2015
£

6,218

22 Prior year adjustment
The amount due from Ilika Technologies Limited was previously shown as a current asset, it has been reclassified
to non-current assets to reflect the fact that it will be repaid from future revenues that are expected to occur
beyond the next 12 months.

23 Amount due from subsidiary undertaking

Ilika Technologies Limited

2016
£

2015
£

18,234,670

18,189,471

Ilika plc | Annual Report and Accounts 2016OverviewStrategic ReportCorporate GovernanceFinancial Statements

CORPORATE DIRECTORY

Company number

7187804

Directors
Executive

Non-Executive

Secretary

Registered office

Website

Social media

Advisers
Independent auditors

Graeme Purdy
Prof. Brian Hayden
Steve Boydell

Mike Inglis (Chairman)
Clare Spottiswoode CBE
Prof. Sir William Wakeham
Prof. Keith Jackson

Steve Boydell

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

www.ilika.com

@ilikaplc

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

Nominated adviser and broker

Registrars

Public relations

Remuneration Consultants

Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT

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

Walbrook PR Limited
4 Lombard Street
London
EC3V 9HD

FIT Remuneration Consultants LLP
5 Fitzhardinge St
London
W1H 6ED

Ilika plc | Annual Report and Accounts 2016Ilika 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