Ilika Plc Annual Report 2017

FY2017 Annual Report · Ilika Plc

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PIONEERS IN
SOLID-STATE
BATTERY
TECHNOLOGY
AND
MATERIALS
INNOVATION

A n n u al R e p ort a n d A c c o u nts 2 017

ILIKA IS A
PIONEER IN
SOLID-STATE
BATTERY
TECHNOLOGY
AND MATERIALS
INNOVATION

Ilika plc is the holding company for Ilika Technologies
Limited. Ilika has developed ground-breaking solid-
state battery technology to meet the demands of
the Internet of Things (‘IoT’). 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.

OVERVIEW
01 Highlights 2017
02 At a glance

STRATEGIC REPORT
04 Frequently asked questions
06 Chief Executive’s review
06 Operating review
08 Business strategy
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

39 Company balance sheet of Ilika plc
40 Company cash flow statement
41
42 Notes to the Company financial

Company statement of changes in equity

statements

44 Corporate directory

“ I have been very encouraged by the operational and commercial
progress made at Ilika this year. We followed up the launch of
our first Stereax™ product, the M250, with the launch of a high
temperature battery, the P180, for industrial IoT applications.
Using our Stereax™ pilot line we have been able to supply
samples of our batteries to potential customers and support
the discussions being led by our commercial team around the
globe. The first commercial engagements for Stereax™ have
been secured and I anticipate these, and other interactions, to
lead to closer engagements going forward. I am also pleased to
see revenues tick up this year, which based on our strong current
order book, is a trend I expect to see continuing in 2017/18.”

MIKE INGLIS
CHAIRMAN

OPERATIONAL HIGHLIGHTS
• Launch of Stereax™ P180, extended temperature

range solid-state battery

• Collaboration with a bioelectronics company to
develop Stereax™ for miniature medical implants

• Collaboration with Sharp (now Lightricity) to
integrate Stereax™ solid-state batteries with
photovoltaic technology

• Grant of patents protecting Stereax™ technology
• Award of grant to develop protected anodes for
lithium sulphur batteries with Johnson Matthey
• Award of grant to develop photonic materials for

hard disk drives (‘HDD’) with Seagate

• Collaboration with Toyota Research Institute (‘TRI’) to
identify new advanced battery materials and fuel cell
catalysts that can power future zero-emissions and
carbon-neutral vehicles

• Grant of patents protecting unique High-Throughput

Vapour Deposition method

CASE STUDY
LIGHTRICITY
See page 05

CASE STUDY
MINIATURE MEDICAL
IMPLANTS
See page 07

FINANCIAL HIGHLIGHTS

REVENUES

£1.1m

(2016: £0.6m)

LOSS FOR THE YEAR

£3.5m

(2016: £3.5m)

LOSS PER SHARE

4.8P

(2016: £5.2p)

FUNDRAISING IN A YEAR

£5.8m

CASH, CASH EQUIVALENTS
AND BANK DEPOSITS

£5.4m

(2016: £3.0m)

OVERVIEW02

AT A
GLANCE

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 IoT.

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.

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.

REVENUE BY GEOGRAPHICAL MARKET

NORTH AMERICA

18.9%

(2016: 1.3%)

ASIA

2.0%

(2016: 12.2%)

EUROPE

79.1%

(2016: 86.5%)

Ilika plc | Annual Report and Accounts 2017OVERVIEW

The Stereax™ P180 is a unique
solid-state battery that can
operate and be stored in the
extended temperature range
-40°C to +150°C.

APPLICATIONS

INDUSTRIAL IoT

AUTOMOTIVE

AEROSPACE

INFRASTRUCTURE

– Small unobtrusive

– Autonomous –

– Low temperature

– Easy to fit beacons

beacons

– High temperature

environments

– Retro fitting existing

increased range of
sensing

– Minimal wiring to
decrease weight

equipment

– Constant monitoring

environment

– Fit and forget –

minimal maintenance

– Wide temperature

range

– Minimise cost of

– Stable power sources

ownership

FREQUENTLY
ASKED
QUESTIONS
STEREAX™ P180

Q In what applications could the

Q Can the Stereax™ battery

Q How does Ilika’s solid-state battery

batteries be used?

technology power real devices now?

A The size and performance of the
Stereax™ P180 solid-state battery
make it ideal for applications in
autonomous sensor devices in the
IoT. In particular, its performance at
high temperatures (up to +150°C),
make it appropriate to power end
nodes situated near hot machinery
or engines and exhausts in cars.
At low temperature, such end
nodes may be deployed to monitor
infrastructure such as pipelines or
bridges. For automotive applications,
the Stereax™ P180 may store energy
and combine with supercaps to
power devices on cold mornings.

Q What is the operating temperature

range of the batteries?

A The Stereax™ P180 can work
between -40°C and +150°C.

Q What is the capacity of the P180?

A Performance for the P180 varies
with operating temperature.
Above room temperature and
up to 150°C, the P180 yields 180
µAh, whereas at the other end of
the temperature scale, at -40°C, a
capacity of 160 µAh is achieved.

A To illustrate the ability of the Stereax™
P180 solid-state battery to power
real devices, Ilika has designed and
constructed a demonstrator for
high temperature applications. This
device is a perpetual beacon for
industrial or automotive applications.
It is an autonomous sensing device
of minimal size, which is powered
by a combination of harvested solar
energy from a high efficiency, indoor
PV panel and the Stereax™ P180
solid-state battery. The PV panel
provides energy when solar energy
is available (for example during the
day) and keeps functioning when the
solar energy becomes unavailable, by
discharging the battery. The device
may be placed in contact with hot
surfaces of up to 105°C to replicate
hot machinery or hot engine parts.
A sensor measures temperature
data, which is transmitted through
Bluetooth® to a tablet where
battery characteristics (voltage,
state of charge) are displayed.

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

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 requires stringent
encapsulation. In the Stereax™
P180, the lithium is not free during
storage or cycling; it is ‘alloyed’ in the
cathode or anode and this reduces
the encapsulation requirements.

Q Is the battery voltage similar to
current lithium-ion batteries?

A The output voltage for the

Stereax™ P180 is 3.5V.

Q What materials are used in

the batteries?

A The Stereax™ P180 batteries use

similar cathodes to current lithium
batteries, but uses different materials
for the electrolyte and anode. The
anode in the Stereax™ P180 is
silicon. New materials were selected
to enable the deployment of the
P180 between -40°C and +150°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
the Stereax™ P180 batteries
have a square footprint. The
footprint can be adapted to suit
the end device requirements.

Q How thin can a solid-state

battery be?

A The thickness is dependent on the
thickness of the substrate. For the
Stereax™ P180 battery, we use a
standard 650 µm silicon substrate
and the overall thickness of the
battery is circa 1.0 mm. Tests are
ongoing to use other substrates,
such as 200 µm glass.

Ilika plc | Annual Report and Accounts 2017

Q Can Stereax™ solid-state batteries

Q These solid-state batteries look

great! Where can I purchase some?

A The Stereax™ technology platform is
developed by Ilika, who licenses its
Intellectual Property (‘IP’) portfolio
and know-how to systems and
components Original Equipment
Manufacturers (‘OEMs’) and
manufacturers. This format allows Ilika
to respond to partners’ requirements
more efficiently than manufacturing
standardised product lines, for
an optimal outcome and greater
flexibility in terms of shape, capacity,
life cycle etc. The Stereax™ M250 and
P180 are embodiments of Ilika’s IP,
which illustrates key technological
developments achieved by Ilika.

be integrated with a micro-
controller (‘MCU’)?

A The size and form factor of the
Stereax™ solid-state batteries
mean they are a good match for
integration on chips or in MCU
packages. The low temperature
evaporation process is similar to that
used for Micro-ElectroMechanical
Systems (‘MEMS’) manufacture.

Q What is the scalability
of the technology?

A Ilika’s batteries can be scaled to

larger footprints through production
processes used to produce bulk
glass and photovoltaic panels
(‘PV’). This creates the potential
for large area batteries.

Q Will Stereax™ battery technology
ever be scaled-up large enough
to provide motive power in
electric vehicles?

A The materials used in Stereax™

batteries can be used in large-scale
battery packs like those needed for
electric vehicles. However, Ilika is
currently focused on micro-batteries
for powering wireless sensors. These
micro-batteries are made using
Ilika’s proprietary vapour deposition
process. To be economically viable,
larger batteries would probably
need to be made using bulk
powder processing techniques.

Q Does Ilika have patents protecting

this new technology?

A Ilika currently has 6 patent families
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.

CASE STUDY

COLLABORATION WITH
LIGHTRICITY

Ilika is leading a 2-year project which
will see Ilika’s Stereax™ solid-state
battery technology integrated with
Lightricity’s PV technology to provide
an integrated energy harvesting and
storage solution for wireless sensing.

$346bn

Estimated PV market size in 2020
(Markets and Markets, 2015)

STRATEGIC REPORT
06

CHIEF
EXECUTIVE’S
REVIEW
OPERATING REVIEW

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.

Ilika’s solid-state batteries have several
benefits over currently available
lithium-ion batteries:

– 6x faster to charge
– Energy dense in a small footprint
– 10x lower leakage currents
– Non-flammable
– Can be integrated into Integrated

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

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.

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

– Small size in both footprint and

thickness

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

harvester can get energy

– Longer life span to match those

of sensors and MCUs

– Support wider temperature ranges

Graeme Purdey
CEO

High temperature beacon

Ilika plc | Annual Report and Accounts 201707

CASE STUDY

MINIATURE MEDICAL
IMPLANTS

Ilika is leading a 2-year project to
develop a solid-state battery for
use in miniature medical implants.
Ilika’s Stereax™ batteries have a high
power density, a long battery life and
they can be produced in miniature
form, making them particularly
suitable for these micro-devices.

This programme aims to deliver
key components of bioelectronic
devices, which have the potential
to provide treatments for serious
health conditions, through the
body’s own nervous system.

$513bn

Estimated healthcare revenue for
IoT in 2018 (IDC, 2014)

Battery product launch
In April 2016, Ilika launched its
Stereax™ M250 solid-state battery
IP. This 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. Ilika’s
batteries do not contain any free
lithium, which makes them more
moisture resistant. The Stereax™
M250 operates in a temperature
range to over 100°C, 30°C higher
than existing solid-state products.

In April 2017, Ilika launched the
Stereax™ P180, with the additional
benefits of support for extended
temperature ranges from -40°C up
to +150°C. This range is required for
many Industrial IoT and automotive
end applications enabling always-
on, self-charging energy-efficient
IoT solutions for more demanding
environments. As the trend towards
digitising industrial processes gathers
momentum, there is a growing
requirement for components with
enhanced tolerance to temperature,
moisture and vibration.

STRATEGIC REPORT08

CHIEF
EXECUTIVE’S
REVIEW CONTINUED
BUSINESS STRATEGY

The Company’s strategy is to commercialise the IP that it
has created, and continues to create, in its Stereax™ solid-
state battery programme. The Company has developed
miniature batteries as an enabler for wireless sensors used
in industrial and medical applications.

The Company’s strategy is to
commercialise the IP that it has
created, and continues to create,
in its Stereax™ solid-state battery
programme. The Company has
developed miniature batteries as an
enabler for wireless sensors used in
industrial and medical applications.

The Company’s objective is to
have its batteries 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 uses 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 IP such that
it will benefit from commercialisation
rewards associated with the ultimate
generally adopted technology.

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 across addressable
markets in the automotive,
aeronautical and electronic
components sectors

Development of valuable
products through the
application of functional
materials

PROGRESS IN 2016/17

– Grant of patent protecting HT-PVD

system in Europe, completing
targeted patent coverage

– $1 million contract with the TRI
– Photonic materials development

contract with Seagate

– Battery anode development

contract with Johnson Matthey

– Grant of patents in China and

USA covering Stereax™ deposition
processes

– Grant of patents covering
core-shell catalysts in USA
– 8 new patent applications

published

– Launch of Stereax™ P180 battery,

extending the operating
temperature range of the Stereax™
family of solid-state batteries

Ilika plc | Annual Report and Accounts 201709

StereaxTM P180 batteries
integrated into a BLE beacon

The Company’s revenue model
involves three phases of activity:
a) commercially-funded and grant-
funded development projects; b) IP
licensing; and c) receipt of royalties
when products incorporating
Company IP reach market. The
Company is currently in the first
phase of activity, with its revenue
being generated from development
fees. The Company has built a
pipeline of licensing opportunities
to support the start of its second
phase of revenue generation.

Our business model
– Advanced solid-state technology

developer

– Business model to potentially
yield high margins over time
– Upfront license fee from flexible

licensing models

– Ongoing royalties, based

on a percentage of system
volume shipped

– Technology deployed across

multiple applications

– Long-term, global growth markets

3–4 years

Ilika R&D

2–3 years

Partner system
development

20+ years

Multiple applications
development and sales

R&D costs

Development
revenue

License
revenue

Royalty
revenue

Customers: semi, MEMS, battery,
multiple sector OEMs

STRATEGIC REPORT10

CHIEF
EXECUTIVE’S
REVIEW CONTINUED
BUSINESS STRATEGY continued

Battery roadmap
The Ilika Stereax™ roadmap focuses
on three main areas:

– Performance. The hostile

environment of many industrial
applications requires tolerance
to extended temperature ranges
and vibration. The Stereax™ P180
is the first solid-state battery
to address these needs and its
launch will be supported by
further development in this area.

– Capacity. For the launch of

both the M250 and the P180,
Ilika designed and made some
wireless sensor nodes measuring
temperature, humidity and light
intensity. The power requirements
of sensors does vary, depending
on the nature of the sensor. For
example, a motion detector has
a higher power requirement than
a temperature sensor. In order to
be able to power a wider range
of devices, Ilika is increasing the
energy footprint of its batteries.
Increasing the amount of energy
for a given active footprint can
be achieved by utilising Ilika’s
patented stacking feature,
which allows multiple cells to be
stacked on top of one another.

– Miniaturisation. This looks at

progressively smaller footprints
at smaller currents (µAh),
making them ideal for small
sensor driven devices.

Medical
During the year, the Company
announced a 2-year collaborative
project with a well-financed
bioelectronics company to develop
a battery for miniature medical
implants to provide treatments for
serious health conditions, through
the body’s own nervous system. The
programme is supported by Innovate
UK and the Medical Research Council.

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Stereax P180
Extended temp performance
(-40°c to +150°c)

Performance

High energy

SSB intergrated
with solar panel

Capacity

Stereax™ M250
250 μAh, 1cm2

mm-scale

High-energy
mm-scale

Miniaturisation

Future

Materials portfolio activities
Solid-state battery development
accounted for about 60% of
activity in the year, the Company
was also active in the development
of aerospace alloys and materials
for electronics applications.

Sector activity at Ilika

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Integrated energy harvester
and battery
During the year, the Company
announced a 2-year collaborative
project with Sharp Laboratories of
Europe (now known as Lightricity)
to create an autonomous energy
harvesting power source which
will involve the integration of Ilika’s
solid-state battery with Lightricity’s
photovoltaic (‘PV’) technology,
creating the world’s first fully
integrated thin-film power source.
This integration project is aligned with
the development track for increasing
the capacity of Stereax™ batteries.

Patent position
In March 2017, Ilika announced it
had received a granted patent in
the USA for its patent application
supporting solid-state batteries jointly
filed with Toyota Motor Company
in July 2011. This Notice in the USA
followed the successful British grant
in April 2014, the Notice of Grant in
Europe in July 2015 and in China in
September 2015. 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.

Ilika plc | Annual Report and Accounts 2017

Energy materials
In August 2016, Ilika announced that
it is taking part in a 3-year project
to develop protected anodes for
lithium sulphur batteries, led by
Johnson Matthey Plc. This project is
developing an innovative protected
lithium anode approach to discover
new electrolyte composition options
and fabricate a free-standing,
lithium-containing protected anode/
separator for integration into pouch
cells. The novel protected anode will
mitigate a commonly experienced
problem in lithium-sulphur cells, the
so-called polysulphide shuttle effect,
leading to enhanced performance
cells that can be made with existing
cell fabrication methods. The pouch
cells being developed in this project
are high capacity, low-cost batteries
for large-scale renewable energy
storage, and therefore address a
distinct market segment to the
IoT applications for which Ilika’s
Stereax™ batteries are designed

In March 2017, Ilika announced a
$1 million commercially funded
programme with the TRI to develop
game-changing energy materials. The
programme is part of a $35 million
investment by TRI over the next four
years in research that uses artificial
intelligence to accelerate the design
and discovery of advanced materials.
In this initial 1-year collaboration
with the Company, Ilika’s unique
high-throughput platform is being
used to make and test candidate
materials, which have been
identified using simulation, machine
learning and artificial intelligence
strategies. Promising materials will
be further scaled-up by Toyota
and its suppliers for deployment in
its future low-emission vehicles.

Aerospace alloys
Ilika has continued in its 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 started in
September 2015 to develop a new
generation of self-healing alloys
suitable for additive manufacturing
(‘AM’) processes and to develop
a metallic manufacturing process

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

Additionally, Ilika has 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
thermo-efficiency than current alloys.
The alloys are designed to increase
gas turbine performance, reducing
CO2 emissions and noise levels at
take-off. This programme is due to
continue until September 2017.

Electronic materials
The 2-year project with Seagate
and the University of Southampton
(‘UoS’), announced in February 2016,
is providing a demonstration of ‘2D
materials’ for HDD applications. 2D
materials are crystalline materials
consisting of a single layer of
atoms. 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 300µC
for thousands of hours, requiring
extremely robust nanomaterials that
have specific photonic properties
allowing light energy to be conducted

In February 2017, the Company
announced a further 18-month
project with Seagate to develop
photonic materials and processes
for HDD technology. This project
will deliver a process for photonic
material development with
improved data capacity using
engineered materials to enable
heat-assisted magnetic recording
(‘HAMR’). Photonic materials,
engineered with new process
methods, will boost performance
and reliability for HAMR hard
drives, decreasing time to market.

STRATEGIC REPORT12

FINANCIAL
REVIEW

The Financial Review should
be read in conjunction with the
consolidated financial statements of
the Company and Ilika Technologies
Limited (together, the ‘Group’)
and the notes thereto on pages 28
to 38. The consolidated financial
statements are presented under
International Financial Reporting
Standards (‘IFRS’) as adopted by
the European Union. The financial
statements of the Company continue
to be prepared in accordance with
IFRS as adopted by the EU and
are set out on pages 39 to 43.

Statement of comprehensive income
Revenues
Revenue, all from continuing
activities, for the year ended 30 April
2017 was £1.1 million (2016: £0.6
million). This includes £739,000 of
grant income recognised from 6
projects that the Company has in
progress with Innovate UK (2016:
£455,000 from 3 programmes).
Details of the various programmes
are provided in the Materials
portfolio activities on page 11.

More of the Company’s activities are
supported by grant or commercial
funding than was the case in the
prior year, where operational
resources were more heavily
devoted to the internally-funded
battery development programme.

Administrative expenses and losses
for the period
Total administrative costs for the
year were slightly increased at £3.9
million in 2017 relative to £3.8 million
in 2016. This increase is attributable to
the increased spend on research and
development in the year, particularly
associated with the solid-state battery
development programme. Combined
cost of sales and administrative
expenses were £4.3 million in the
year, which is up from the £4.1 million
for 2016 and is associated with the
increased level of commercial and
grant supported programmes.

Options were granted in the year
and, taken together with a full year’s
charge for options that were granted
last year, gave rise to a share-based
payment charge that increased by
around £0.2 million to £0.5 million.
This increased accounting adjustment
meant that loss on continuing
activities before tax remained at
£3.9 million.

Statement of financial position and
cash flows
At 30 April 2017, net assets amounted
to £6.2 million (2016: £3.4 million),
including net funds of £5.4 million
(2016: £3.0 million).

The principal elements of the
£2.4 million increase over the
year ended 30 April 2017 in net
funds were:

– Funds raised in the year

£5.8 million (2016 £0.0 million)

– Cash used in operations of

£3.6 million (2016: £3.3 million)
– Purchase of plant, property and
equipment of £0.2 million (2016:
£0.1 million)

– Research and development tax
credits received of £0.4 million
(2016: £0.3 million)

On 18 October 2016, gross funds of
£6.3 million were raised from new
and existing institutional shareholders
to strengthen the Group’s balance
sheet and provide additional
working capital during the solid-
state battery commercialisation
process. Expenses of £465,000
were incurred in the placing.

Trade receivables at the year
end increased from £28,000 to
£133,000, due to the start of the
programme with TRI. This balance
was within payment terms and has
been received post year end.

Accrued income at the year end
increased from £117,000 to £371,000.
This is revenue recognised from
the 6 grant funded programmes
with Innovate UK relative to
the 3 programmes last year.

£75,000 of the increase in other
receivables in the year is the funds
placed in a bond account, taking it to
£150,000 to cover the dilapidations
provision shown in note 12.

Treasury policy and financial
risk management
Details of the risks associated with
financial instruments are shown in
note 13 on page 35.

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.

Ilika plc | Annual Report and Accounts 201713

PRINCIPAL RISKS AND UNCERTAINTIES

COMMERCIAL RISK

FINANCIAL RISK

INTELLECTUAL
PROPERTY RISK

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

The Group seeks to reduce this risk by continually assessing competitive
technologies and competitors. The Group 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 Group 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 Group expects to
incur further operating losses as progress on development programmes
continue. There can be no assurance that the Group will ever achieve
significant revenues or profitability.

The Group seeks to reduce this risk by broadening the number of customers
and partners and thereby reducing reliance on individual significant
companies. The Group applies for research and development tax credits to
help mitigate its investment in these activities.

The Group faces the risk that IP rights necessary to exploit research and
development 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 Group seeks to reduce this risk by employing in-house staff with extensive
global experience of patenting and licensing using commercially-available
patent searching and landscaping software. External patent agents and
attorneys are used to advise on the drafting and filing of patent applications.

DEPENDENCE ON
SENIOR MANAGEMENT
AND KEY STAFF

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

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

BREXIT RISK

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

The Group is alert to and continuously reviewing this potential risk and
formulating its response at the appropriate time.

By order of the Board

Mike Inglis
Chairman
11 July 2017

Graeme Purdy
CEO

STRATEGIC REPORT14

BOARD 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

Non-Executive Director

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.

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.

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.

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

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.

Clare’s career started

as an economist with

the Treasury before

establishing her own

software company.

Prof. Sir William Wakeham

Keith has had a wide-ranging

retired as Vice-Chancellor

of the University of

and successful career in

companies varying from

Southampton in September

start-ups to multinationals.

2009. He studied Physics

He founded and grew an

at Exeter University at

automotive control systems

She is perhaps best known

both undergraduate

for her role as Director

and doctoral level.

General of Ofgas between

company whose engine

control systems are used on

millions of vehicles around

1993 and 1998, where she

He is a Fellow, Senior Vice-

the world. Following the sale

oversaw the transformation

President and International

of the Company to a major

of the gas industry from a

Secretary of the Royal

monopoly, which controlled

Academy of Engineering,

car company he joined Rolls-

Royce plc, where he worked

the whole gas supply

a Fellow of the Institution

as Chief Technology Officer

chain, into a deregulated,

of Chemical Engineers, the

in the electrical power and

competitive industry.

Institution of Engineering

control systems group.

Clare was a commissioner

Institute of Physics and

Keith is Chief Technology

and Technology, the

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.

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

from Cambridge and Yale

Universities and

has an honorary

doctorate from Brunel.

CBE for services to industry

He was knighted in

in 1999, she holds degrees

2009 for services to

Chemical Engineering

and Higher Education.

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 201715

MIKE 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

beginning of May 2004,

just before completion

of the Company’s seed

Brian is a founder of Ilika

Having qualified with Deloittes

and holds the Executive role

in 1996, Stephen held a number

of Chief Scientific Officer.

of acquisition, treasury and

He is also professor of

Group reporting roles at

Physical Chemistry at the

both Hays plc, a diversified

Non-Executive Director of

round of funding. He led

University of Southampton,

commercial, logistics and

Advanced Micro Devices

the Company through two

a Fellow of the Royal

Inc and as of 1 September

successful rounds of venture

Society of Chemistry,

personnel group, and then

AGI Media, a global creative

2015 of BT plc. Mike is

also a member of the BT

Technology Committee.

funding before floating the

Fellow of the Institute of

packaging group. He then

Company on AIM in 2010.

Physics and a member of

the International Editorial

become Finance Director of

Healthy Direct, a successful

Prior to joining Ilika, Graeme

Board of Surface Science.

Guernsey-based group of

Formerly, Mike was a

was Chief Operating Officer

companies, producing and

Director and member of the

of a high-technology

Brian is a pioneer of surface

supplying vitamins and

Executive of ARM Holdings

company in the Netherlands

science with a strong track

supplements to the UK market.

for over a decade, serving

and before that worked

record in running successful

He was instrumental in the

as Chief Commercial Officer

internationally in a variety

industrial collaborations

restructuring of that Group

until the end of March

2013, having previously

of technical and commercial

and has published in excess

and its subsequent trade sale

roles for Shell. Graeme

of 100 papers in the fields

to a competitor. He joined Ilika

been EVP & GM Processor

holds a Master’s degree

of surface science, surface

in 2009 as Finance Director

Division and EVP Sales

and Marketing. Before

joining ARM, he worked in

an MBA from INSEAD

from Cambridge and

fundamental aspects of

heterogeneous catalysis

in Chemical Engineering

electrochemistry and

and Company Secretary.

management consultancy

business school in France.

and electro-catalysis.

Stephen studied Economics

at Nottingham University and

is a Fellow of the Institute of

Chartered Accountants.

with AT Kearney and

Graeme is a Chartered

held a number of senior

Engineer and a Sainsbury

operational and marketing

Management Fellow.

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.

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.

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.

CORPORATE GOVERNANCE16

DIRECTORS’ REPORT

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

Between 30 April 2017 and the date of this report, there
has been no change in the interests of Directors in Shares
as disclosed in this report.

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

Substantial Shareholdings
On 28 June 2017 the Company had been notified of the
following holdings of more than 3 percent or more of the
issued Share capital of the Company.

Non-Executive
Mr. M. Inglis (Chairman)
Ms. C. Spottiswoode CBE
Prof. Sir W. Wakeham (Senior Independent Director)
Prof. K. Jackson

Research and development costs
In accordance with the policy outlined in note 1, the Group
incurred research and development expenditure of
£2,110,843 in the year (2016: £2,057,966). Commentary
on the major activities is given in the Strategic Report.

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

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

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

Directors’ interests in ordinary shares
The Directors, who held office at 30 April 2017, had the
following interests in the Ordinary Shares of the Company:

Number of Shares

1 May
2016

30 April
2017

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

45,454
9,090

589,427 609,427
45,454
9,090
65,000 115,000
20,000
20,000
–

–
–
–

B. Hayden had an interest in Preference Shares of the Company
amounting to 426,300 at 1 May 2016 and at 30 April 2017.

Shareholder

Henderson Global
Charles Stanley Group plc
Ruffer LLP
IP Group plc
Baillie Gifford & Co.
Parkwalk Advisors
Richard Griffiths
Southampton Asset
Management

Number of
Ordinary Shares

Percent
Shareholding

11,300,000
8,117,094
6,715,999
6,358,779
5,905,706
5,300,000
2,574,836

2,349,900

14.4
10.4
8.6
8.1
7.5
6.8
3.3

3.0

Post balance sheet events
There are no significant post balance sheet events from
30 April 2017 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 201717

DIRECTORS’ REMUNERATION REPORT

Remuneration Committee
The Group’s remuneration policy is the responsibility of the
Remuneration Committee (the ‘Committee’). The terms of
reference of the Committee are outlined in the Corporate
Governance Statement on page 21. The Committee
members are Mike Inglis (Chairman), Clare Spottiswoode,
Prof. Keith Jackson and Prof. Sir William Wakeham, all of
whom are independent Non-Executive Directors.

The Chief Executive Officer and certain Executives may
be invited to attend Committee meetings to assist with
its deliberations, but no Executive is present when their
own remuneration is being discussed.

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

Components of remuneration

Component

Purpose and
link to strategy

Operation

Performance metrics

Base salary

To attract and retain talent. Reflecting individual’s

Benefits and pension

To offer market-
competitive package.

Short-term incentive
plan − annual performance
related bonus

Rewards the achievement
of short-term financial
and strategic project
milestones.

Long-term incentive plan −
restricted share unit awards

Incentivise, retain and
reward the Executive
Directors for successfully
taking the Company
through the next stage
of its growth.

Shareholding guidelines

To increase Shareholder
alignment.

role, experience and
performance. Base salaries
are reviewed annually
in January.

Contribution to the
Executive Director’s
individual money purchase
scheme (at between
8 percent and 10 percent
of base salary) and critical
illness cover.

Maximum bonus of base
salary: 100 percent CEO,
60 percent CSO and 40
percent CFO. 50 percent
of the bonus is payable in
cash and 50 percent is
deferred into Shares (using
nominal cost options) for
one year, subject to
continued employment.

Ilika plc Long Term
Incentive Plan 2015 (the
‘LTIP’), was adopted by
Shareholders at the
2015 AGM.

Single awards of Share
options with an exercise
price of the nominal value
of the Shares were made
which will vest after
3 years.

100 percent of the net of
tax Share awards which
vest must be retained until
the following guidelines
are met:

CEO 300 percent of salary.
CSO 250 percent of salary.
CFO 150 percent of salary.

Take into account
Group and individual
performance, external
benchmark information
and internal relativities.

n/a.

Delivery of exceptional
performance against
a series of financial,
commercial and
technology objectives.

Awards vest to the
extent that challenging
Share price targets have
been met.

n/a.

CORPORATE GOVERNANCE18

DIRECTORS’ REMUNERATION REPORT
CONTINUED

(ii) Chairman and Non-Executive Director remuneration
The Chairman, Mr. Inglis, receives a fixed fee of £65,975
p.a.. Clare Spottiswoode, Prof. Sir William Wakeham and
Prof. Keith Jackson received a fixed fee of £32,988 p.a..
The fixed fee covers preparation for and attendance at
meetings of the full Board and Committees thereof. The
Chairman and the Executive Directors are responsible for
setting the level of Non-Executive remuneration. The
Non-Executive Directors are also reimbursed for all
reasonable expenses incurred in attending meetings.

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

Directors’ remuneration
The aggregate remuneration received by Directors who
served during the year ended 30 April 2017 and 30 April
2016 was as follows:

Year to 30 April 2017
G. Purdy
S. Boydell
B. Hayden1
M. Inglis
K. Jackson
W. Wakeham
C. Spottiswoode

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

Basic
salary
£

Benefits-
in-kind
£

Bonus
£

Total short-
term benefits
£

191,000
123,429
64,320
65,325
32,662
32,662
32,662

542,060

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

551,427

615
399

–
–
–
–

1,014

671
423
–
–
–
–
–
–

1,094

50,250
13,043
19,372
–
–
–
–

82,665

30,000
10,181
16,095
–
–
–
–
–

56,276

241,865
136,871
83,692
65,325
32,662
32,662
32,662

625,739

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

608,797

Pension
£

30,100
17,434
–
–
–
–
–

47,534

30,000
17,181
–
–
–
–
–
–

47,181

Total
£

271,965
154,305
83,692
65,325
32,662
32,662
32,662

673,273

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

655,978

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 £72,859 to the Company in the year in respect of B. Hayden (2016: £63,171).

Benefits-in-kind include critical illness cover.

Ilika plc | Annual Report and Accounts 2017
19

Share options
The Share options of the Directors are set out below:

Unapproved
G. Purdy
G. Purdy
G. Purdy2
B. Hayden
B. Hayden
B. Hayden
B. Hayden2
S. Boydell
S. Boydell2
W. Wakeham
C. Spottiswoode
M. Inglis3
K. Jackson3

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

2016
Number

2017
Number1

Exercise
Price

Expiry
date

Performance
conditions

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

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

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

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

80p
51p
1p
80p
51p
81.5p
1p
51p
1p
51p
51p
68.75p
68.75p

July 2017
May 2020
September 2025
July 2017
May 2020
February 2025
September 2025
May 2020
September 2025
May 2020
May 2020
September 2025
September 2025

80p
81.5p
80p
81.5p

May 2017
February 2025
December 2019
February 2025

n/a
n/a
See note 4
n/a
n/a
See note 4
See note 4
n/a
See note 4
n/a
n/a
See note 4
See note 4

n/a
See note 4
n/a
See note 4

1 There was no movement in the Share options of the Directors in the year.
2 Shareholders’ approval to adopt and establish the Ilika plc LTIP was received at the AGM in September 2015.
3 Shareholders’ approval to grant unapproved Share options to the Non-Executive Directors Mike Inglis and Prof. Keith Jackson was received at the AGM

in September 2015.

4 These awards will vest on the achievement of the following Share price targets, assessed over a 3-year performance period:

(a) Less than 50 percent growth in Share price – no vesting.
(b) 50 percent growth in Share price – 25 percent of the Shares subject to award will vest.
(c) 100 percent growth in Share price – 75 percent of the Shares subject to award will vest.
(d) 200 percent growth in Share price – 100 percent of the Shares subject to award will vest.
Awards will vest between points (b) and (c) and between (c) and (d) on a straight-line basis.

Share-based payment charge attributable to Directors in the year was £428,587 (2016: £267,301).

During the year, the Committee received independent advice on executive remuneration matters from FIT Remuneration
Consultants LLP. FIT received £7,099 in fees for these services.

Mike Inglis
Chairman of the Remuneration Committee

CORPORATE GOVERNANCE

STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

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

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

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

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 UK
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.

– select suitable accounting policies and then apply them

consistently;

By order of the Board

Graeme Purdy
Chief Executive
11 July 2017

– make judgements and accounting estimates that are

reasonable and prudent;

– state whether they have been prepared in accordance
with IFRSs as adopted by the European Union, subject
to any material departures disclosed and explained in
the financial statements; and

– prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.

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

Ilika plc | Annual Report and Accounts 201721

CORPORATE GOVERNANCE STATEMENT

Board of Directors
The Board of Directors (the ‘Board’) consists of a Non-
Executive Chairman, 3 Executive Directors and 3 Non-
Executive Directors.

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

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

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

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

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

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

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

i) Audit Committee
The Audit Committee currently comprises Clare
Spottiswoode CBE (Chairman), Prof. Sir William Wakeham
(Senior Independent Director), Prof. Keith Jackson and
Mike Inglis.

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

ii) Remuneration Committee
The Remuneration Committee comprised Mike Inglis
(Chairman), Clare Spottiswoode, CBE Prof. Keith
Jackson and Prof. Sir William Wakeham (Senior
Independent Director).

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

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

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

CORPORATE GOVERNANCE22

CORPORATE GOVERNANCE STATEMENT
CONTINUED

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

Attendance

Mr. S. Boydell
Prof. B. E. Hayden
Mr. M. Inglis
Mr. G. Purdy
Ms. C. Spottiswoode
Prof. Sir W. Wakeham
Prof. K. Jackson

Board1

Audit

Nomination

Remuneration

8/8
7/8
6/8
8/8
7/8
7/8
7/8

–
–
2/2
–
2/2
2/2
2/2

–
–
1/1
–
1/1
1/1
1/1

–
–
2/2
–
2/2
2/2
2/2

1 One meeting in the year was to formally approve the allotment of the Placing and required only Mr. G Purdy and Mr. S Boydell to attend.

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
11 July 2017

Ilika plc | Annual Report and Accounts 2017

INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ILIKA PLC

Opinion on other matters prescribed by the Companies
Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
– 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; and

– the Strategic Report and Directors’ Report have
been prepared in accordance with applicable
legal requirements.

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the
Group and the Parent Company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report or the
Directors’ Report.

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

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

We have audited the financial statements of Ilika plc
for the year ended 30 April 2017 which comprise the
consolidated statement of comprehensive income, the
consolidated balance sheet, the consolidated cash flow
statement, the consolidated statement of changes in
equity, the Company balance sheet, the Company cash
flow statement, the Company statement of changes in
equity and 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 auditor
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 2017 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.

FINANCIAL STATEMENTS24

CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

Turnover

Revenue
UK grants

Cost of sales

Gross profit
Administrative expenses

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

Year ended 30 April

Notes

2017
£

2016
£

1,050,667

605,924

311,946
738,721

150,931
454,993

(574,272)

(336,281)

476,395

269,643

(3,863,411)
(547,347)

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

4,410,758

4,129,241

(3,934,363)
23,844

(3,859,598)
30,734

(3,910,519)
370,274

(3,828,864)
357,896

(3,540,245)

(3,470,968)

(4.84)p
(4.84)p

(5.23)p
(5.23)p

Ilika plc | Annual Report and Accounts 2017CONSOLIDATED 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

Notes

As at 30 April

2017
£

2016
£

7
8

9
5

2,581
451,560

15,595
399,324

454,141

414,919

1,116,367
330,000
2,900,000
2,510,884

517,695
375,000
–
2,997,412

6,857,251

3,890,107

7,311,392

4,305,026

789,911

663,911
23,179,756 17,470,417
6,486,077
(24,206,405) (21,213,507)

6,486,077

6,249,339

3,406,898

11
12

912,053
150,000

748,128
150,000

1,062,053

898,128

7,311,392

4,305,026

The notes on pages 28 to 38 form part of these financial statements.

These financial statements were approved and authorised for issue by the Board of Directors on 11 July 2017.

Mr. M Inglis
Chairman

FINANCIAL STATEMENTS26

CONSOLIDATED CASH FLOW STATEMENT

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

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
Tax received

Net cash flow used in operating activities

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

Net cash (used in)/from investing activities

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

Net cash from financing activities

Net decrease in cash and cash equivalents
Cash and cash equivalents at the start of the period

Cash and cash equivalents at the end of the period

Year ended 30 April

2017
£

2016
£

(3,910,519)

(3,828,864)

13,014
192,331
547,347
(30,783)
(23,844)

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

(3,212,454)
(598,672)
163,925

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

(3,647,201)
415,274

(3,241,635)
287,018

(3,231,927)

(2,954,617)

23,844
40,129
(253,913)
(2,900,000)

36,456
–
(96,949)
528,349

(3,089,940)

467,856

6,300,000
(464,661)

5,835,339

5,138
–

5,138

(486,528) (2,481,623)
5,479,035
2,997,412

2,510,884

2,997,412

Ilika plc | Annual Report and Accounts 201727

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

As at 30 April 2015
Share-based payment
Issue of Shares
Loss and total comprehensive income

Share
capital
£

Share
premium
account
£

663,748
–
163
–

17,465,442
–
4,975
–

Capital
restructuring
reserve
£

6,486,077
–
–
–

Total
attributable
to equity
holders of
Parent
£

Retained
earnings
£

(18,094,830)
352,291
–
(3,470,968)

6,520,437
352,291
5,138
(3,470,968)

As at 30 April 2016

663,911

17,470,417

6,486,077

(21,213,507)

3,406,898

Share-based payment
Issue of Shares
Cost of Share issue
Loss and total comprehensive income

–
126,000
–
–

–
6,174,000
(464,661)
–

–
–
–
–

547,347
–
–
(3,540,245)

547,347
6,300,000
(464,661)
(3,540,245)

As at 30 April 2017

789,911

23,179,756

6,486,077

(24,206,405)

6,249,339

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.

FINANCIAL STATEMENTS28

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

The individual financial statements of Ilika plc are shown on page 39 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. The Company controls an investee if all three of the following elements are
present: power over the investee; exposure to variable returns over the investee; and the ability of the investee to use its
power to affect the variable returns. Control is reassessed whenever facts and circumstances indicate that there may be
a change in any of these elements of control. All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.

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

The Directors have prepared and reviewed financial forecasts. The Group meets its day-to-day working capital
requirements through existing cash resources which, at 30 April 2017, amounted to £5,410,884. 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 2017, 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 2017, will or may have an effect on the Group’s future financial
statements:

International Accounting Standards
(IAS/IFRS)

IFRS 15

Revenue from Contracts with Customers

Effective date for
periods commencing

1 January 2018

The Directors will assess the impact of IFRS 15, with particular focus on the recognition of revenue over the life of
contracts and projects.

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

Ilika plc | Annual Report and Accounts 2017

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

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

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

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

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

Share-based payment transactions
The Group issues equity-settled Share options to all employees. Equity-settled Share options are measured at fair value
at the date of grant. The fair value determined at the grant date of the equity-settled Share options is expensed on a
straight-line basis over the vesting period, 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 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
Research expenditure is recognised as an expense when it is incurred.

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

i. Its ability to measure reliably the expenditure attributable to the asset under development;
ii. The product or process is technically and commercially feasible;
iii. Its future economic benefits are probable;
iv. Its ability to use or sell the developed asset;
v. The availability of adequate technical, financial and other resources to complete the asset under development; and
vi. Its intention is to use or sell the developed asset.

Prior to and during the year ended 30 April 2017, no development expenditure satisfied all of these conditions.

Taxation
Companies within the Group may be entitled to claim special tax allowances in relation to qualifying research and
development 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.

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

FINANCIAL STATEMENTS30

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

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

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

Leasehold improvements
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 licenses are capitalised on the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortised to administrative expenses using the straight-line method over their
estimated useful lives (1–3 years).

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

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.

The Directors do not believe there to be any estimates or judgements that have a significant impact on the Group’s
financial statements.

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

For management purposes, the Group is analysed by the geographical location of its customer base and Business
Development Directors have been appointed to cover the Group’s 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

2017
£

2016
£

21,280
–
197,818
831,569

1,050,667

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

605,924

Ilika plc | Annual Report and Accounts 201731

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:

Year ended 30 April

Revenue

UK grants
Customer 2
Customers less than 10 percent

3 Operating loss

This is arrived at after charging:

Research and development expenditure in the year
Depreciation
Amortisation of intangible assets
Auditor’s remuneration:

2017
£

738,721
197,819
114,127

1,050,667

2016
£

454,993
74,150
76,781

605,924

Year ended 30 April

2017
£

2016
£

2,110,843
192,331
13,014

2,057,966
257,274
14,524

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

20,700

19,700

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

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

6,800
–
207,511
547,347

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

Year ended 30 April

2017
Number

2016
Number

6
32

8
27

Year ended 30 April

2017
£

2016
£

1,954,655
215,648
532,347
139,286

1,813,889
183,594
337,291
119,664

2,841,936

2,454,438

Year ended 30 April

2017
£

624,726
47,534

672,260
80,177
428,587

1,181,024

2016
£

607,703
47,181

654,884
77,420
267,301

999,605

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

FINANCIAL STATEMENTS32

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

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

2017
£

330,000
40,274

370,274

2016
£

329,473
28,423

357,896

(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 (2016: 20 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 (2016: 20 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

2017
£

2016
£

(3,910,519)

(3,828,864)

(778,975)

(765,773)

109,098
(289,726)
629,603
(40,274)

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

(370,274)

(357,896)

Unrecognised deferred taxation
There are tax losses available for carry forward against future trading profits of approximately £19,065,000 (2016:
£17,009,000). A deferred tax asset in respect of these losses of approximately £3,240,000 (2016: £3,062,000) 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

2017
Number

2016
Number

73,122,617 66,378,114

(3,540,245)

(3,470,968)

Pence

(4.84)

Pence

(5.23)

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 2017, there were 7,741,892 options outstanding (2016: 6,988,112) as detailed in notes 14 and 18.

Ilika plc | Annual Report and Accounts 2017

Total
£

129,365
(8,072)
121,293
(7,250)

Software
licences
£

Intellectual
property
£

75,000
–
75,000

54,365
(8,072)
46,293
(7,250)

39,043

24,246
14,524
(8,072)
30,698
13,014
(7,250)

36,462

30,119

15,595

2,581

75,000

121,293

75,000
–
–
75,000
–
–

75,000

–

99,246
14,524
(8,072)
105,698
13,014
(7,250)

111,462

30,119

15,595

2,581

Intangible assets

Cost
As at 30 April 2015
Disposals
As at 30 April 2016
Disposals

As at 30 April 2017

Amortisation
As at 30 April 2015
Provided for the year
Disposals
As at 30 April 2016
Provided for the year
Disposals

As at 30 April 2017

Net book value

As at 30 April 2015

As at 30 April 2016

As at 30 April 2017

The amortisation charge of £13,014 (2016: £14,524) is included within administrative expenses.

8 Property, plant and equipment

Cost
As at 30 April 2015
Additions
Disposals

As at 30 April 2016
Additions
Disposals

As at 30 April 2017

Depreciation
As at 30 April 2015
Provided for the year
Disposals

As at 30 April 2016
Provided for the year
Disposals

As at 30 April 2017

Net book value

As at 30 April 2015

As at 30 April 2016

As at 30 April 2017

Leasehold
improvements
£

Plant, machinery
and equipment
£

Fixtures and
fittings
£

Total
£

567,500
–
–

4,426,077
96,949
–

4,523,026
253,172
(234,408)

171,790
–
(4,265)

167,525
741
(546)

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

5,258,051
253,913
(234,954)

567,500

4,541,790

167,720

5,277,010

567,500
–
–

3,881,155
250,492
–

4,131,647
187,591
(225,062)

156,014
6,782
(3,216)

159,580
4,740
(546)

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

4,858,727
192,331
(225,608)

567,500

4,094,176

163,774

4,825,450

–

544,922

391,379

447,614

15,776

7,945

3,946

560,698

399,324

451,560

There are no commitments for capital expenditure contracted but not provided for (2016: £nil).

FINANCIAL STATEMENTS
34

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

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

As at 30 April

2017
£

133,655
299,032
312,769
370,911

1,116,367

2016
£

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

517,695

As at 30 April

2017
£

67,181
66,474

133,655

2016
£

4,621
23,355

27,976

Included in other receivables is an amount of £150,000 (2016: £75,000), which represents cash held in a separate bank
account used as security against a bond provided by the Company’s bankers (see note 12). The bond relates to the
potential dilapidations costs due at the end of the Company’s property lease.

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 2016 and at 30 April 2017

All provisions are due within one year.

As at 30 April

2017
£

2016
£

238,371
2,272,513

125,018
2,872,394

2,510,884

2,997,412

As at 30 April

2017
£

308,635
28,454
57,768
517,196

2016
£

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

912,053

748,128

As at 30 April

2017
£

562,725
163,854
3,010
124,696

854,285

2016
£

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

703,152

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 201735

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

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

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

Interest rate risk
The main risk arising from the Group’s financial instruments is interest rate risk. The Group placed deposits surplus to
short-term working capital requirements with a variety of reputable UK-based banks. These balances are placed at
floating rates of interest and deposits have maturities of 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 2017 had a weighted average period to maturity of 26 days (2016: 30 days) and a weighted average annualised
rate of interest of 0.6 percent (2016: 0.7 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 2017 by approximately £24,000 (2016: £31,000).

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 2017 by approximately £45,000 (2016: £42,000).

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.

14 Share capital

Authorised
78,402,710 Ordinary Shares of £0.01 each (2016: 65,802,710)
1,781,400 Convertible Preference Shares of £0.01 each

Allotted, called-up and fully paid
78,402,710 Ordinary Shares of £0.01 each (2016: 65,802,710)
588,400 Convertible Preference Shares of £0.01 each (2016: 588,400)

As at 30 April

2017
£

2016
£

784,027
17,814

658,027
17,814

784,027
5,884

789,911

658,027
5,884

663,911

FINANCIAL STATEMENTS36

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

14 Share capital continued
Share Rights
The Ordinary Shares 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 18 October 2016 12,600,000 Ordinary Shares of £0.01 each were issued for a total consideration of £6,300,000
and total costs incurred were £464,661.

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.

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

Property leases which expire:
Within one year

2017
£

97,143

2016
£

–

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 £139,286 (2016: £119,664).

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

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

Ilika plc | Annual Report and Accounts 2017
37

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.

At 30 April 2017, 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

2017
£

2016
£

2017

2016

0.5021
0.4850
–
0.7384

0.4930

0.8341
0.2567
0.2732
0.8032

4,956,912
906,500
–
(152,720)

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

0.5021

5,710,692

4,956,912

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 8.1 years (2016: 8.8 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

2017
£

0.51
–
–

0.51

2016
£

0.51
0.51
0.51

0.51

2017

2016

1,923,900
–
–

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

1,923,900

The exercise price of options outstanding at the end of the period was £0.51 (2016: £0.51) and their weighted average
contractual life was 4 years (2016: 5 years).

FINANCIAL STATEMENTS38

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED

18 Share-based payments expense and Share options continued
Ilika plc Executive Share Option Scheme 2010
At 30 April 2017 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
16 March 2017

Number of
Shares

Period
of option

Exercise price
per Share

26,100
39,634
1,208,750
981,000
906,500

10 years
10 years
10 years
10 years
10 years

£0.51
£0.53
£0.815
£0.59
£0.485

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.

152,720 options lapsed in the year.

Ilika plc unapproved Share options
At 30 April 2017 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

No options lapsed or were exercised in the year.

There are 2,525,534 options which were capable of being exercised as at 30 April 2017.

Share-based payment expense
Black-Scholes calculation

2017
£

2016
£

547,347

352,291

Ilika plc | Annual Report and Accounts 2017COMPANY 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

Notes

As at 30 April

2017
£

2016
£

21
121,339
23 24,108,345

121,339
18,234,671

24,229,684

18,356,010

13,646

2,518

24,243,330

18,358,528

789,911
23,158,967
146,304

663,911
17,449,628
108,683

24,095,182 18,222,222

148,148

136,306

24,243,330

18,358,528

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 £509,726 (2016: loss of £318,884).

The notes on pages 42 to 43 form part of these financial statements.

These financial statements were approved and authorised for issue by the Board of Directors on 11 July 2017.

Mr. M Inglis
Chairman

FINANCIAL STATEMENTS40

COMPANY CASH FLOW STATEMENT

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

Operating cash flow before changes in working capital, interest and taxes
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Increase in amounts due from subsidiary undertaking

Cash utilised by operations

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

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

As at 30 April

2017
£

2016
£

(509,726)

(318,884)

547,347

352,291

37,621
(11,127)
11,842
(5,873,675)

(5,835,339)

33,407
3,699
2,955
(45,199)

(5,138)

6,300,000
(464,661)

5,835,339

–
–

–

5,138
–

5,138

–
–

–

Ilika plc | Annual Report and Accounts 201741

COMPANY STATEMENT OF CHANGES IN EQUITY

As at 30 April 2015
Issue of Shares
Share-based payment
Profit and total comprehensive income

As at 30 April 2016
Issue of Shares
Costs of issue
Share-based payment
Profit and total comprehensive income

As at 30 April 2017

Share
capital
£

663,748
163
–
–

663,911
126,000
–
–
–

Share
premium
account
£

Retained
earnings
£

Total
attributable to
equity holders
£

17,444,653
4,975
–
–

17,449,628
6,174,000
(464,661)
–
–

75,276
–
352,291
(318,884)

18,183,677
5,138
352,291
(318,884)

108,683 18,222,222
6,300,000
(464,661)
547,347
(509,726)

–
–
547,347
(509,726)

789,911 23,158,967

146,304

24,095,182

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.

FINANCIAL STATEMENTS
42

NOTES TO THE COMPANY FINANCIAL STATEMENTS

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

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

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

20 Directors’ remuneration
The only employees of the Company are the Directors. In respect of Directors’ remuneration, the disclosures required
by Schedule 5 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 are
included in the detailed disclosures in the audited section of the Directors’ remuneration report on pages 17 to 19, which
are ascribed as forming part of these financial statements.

21 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 £3,030,519 (2016: £3,152,084) and had net liabilities as at 30 April 2017 of £17,724,504 (2016:
£14,693,985).

Shares in Group undertakings (at cost)

At 1 May 2016 and 30 April 2017

2017
£

2016
£

121,339

The registered address of Ilika Technologies Limited is Kenneth Dibben House, Enterprise Road, University of
Southampton Science Park, Chilworth, Southampton SO16 7NS.

22 Trade and other receivables

Prepayments

23 Amount due from subsidiary undertaking

Ilika Technologies Limited

24 Trade and other payables

Trade payables
Accruals

2017
£

13,646

2016
£

2,518

2017
£

2016
£

24,108,345

18,234,670

2017
£

32,903
115,245

148,148

2016
£

6,019
130,287

136,306

Ilika plc | Annual Report and Accounts 2017

25 Related party transactions
During the year the Company recharged costs totalling £163,744 (2016: £168,375) to its subsidiary, Ilika Technologies
Limited. Amounts owed to Ilika Technologies Limited are disclosed in note 23.

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

The Directors consider that no one party controls the Company.

26 Financial instruments
Credit risk
The Company’s credit risk is attributable to its receivable of £24,108,345 from its subsidiary undertaking, Ilika
Technologies Limited. As at 30 April 2017, Ilika Technologies Limited had net liabilities of £17,724,504. The Company
makes no allowance for impairment of this balance. Impairment is considered by management based on prior
experience, current market and third-party intelligence, while considering the current economic environment.

FINANCIAL STATEMENTS44

Ilika plc | Annual Report and Accounts 2017

CORPORATE DIRECTORY

Company number

7187804

Directors
Executive

Non-Executive

Secretary

Registered office

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

Website

www.ilika.com

Advisers
Independent auditors

Nominated adviser and broker

Registrars

Public relations

Remuneration consultants

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

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
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