ANNUAL REPORT
AND ACCOUNTS 2019
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POWERING
THE FUTURE
ILIKA IS A
PIONEER IN
SOLID STATE
BATTERY
TECHNOLOGY
01
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HIGHlIGHTS
FINaNcIal HIGHlIGHTS
Turnover up 26 percent to
£2.6m
(2018: £2.1m)
Reduced loss after tax for the year
£2.3m
(2018: £2.9m)
Loss per share
2.4p
(2018: 3.7p)
Cash, cash equivalents and bank deposits of
£4.0m
(2018: £2.8m)
Raised
c.£4.1m
at a price of 20p per share in July 2018
STR aTEGIc RE pORT
01 Highlights
Ilika at a glance
02
04 chairman’s statement
06 chief Executive’s review
12 Strategy in action | Miniature medical implant
14 Strategy in action | Rail track condition monitoring
16 Strategy in action | Goliath programme
18 cEO Q&a innovation and technology
22 Financial review
23 principal risks and uncertainties
cORpOR aTE GOVERNaNc E
24 Board of Directors
26 corporate governance statement
28 Report of the audit committee
29 Directors’ remuneration report
32 Directors’ report
33 Statement of Directors’ responsibilities
Independent auditors’ report
FINaNcIal STaTEMENTS
34
37 consolidated statement of comprehensive income
38 consolidated balance sheet
39 consolidated cash flow statement
40 consolidated statement of changes in equity
41 Notes to the consolidated financial statements
53 company balance sheet of Ilika plc
54 company cash flow statement
55 company statement of changes in equity
56 Notes to the company financial statements
58 corporate directory
OpERaTIONal HIGHlIGHTS
• Implementation of Stereax® development programmes
with five commercial partners:
1. combining with lightricity photovoltaic technology
for high-value asset tagging
2. Deploying with Titan Wind Energy, in condition
monitoring devices for wind turbines
3. Developing and deploying track monitoring devices
with Network Rail
4. Demonstrating an autonomous smart sensor card for
environmental sensing
– launch of M50 cells, mm-scale new product for MedTech
– Demonstration of ability of p180 to withstand rapid
ramps to high temperatures for industrial applications
• Establishing a Stereax® manufacturing collaboration with
Semefab to enable lower cost industrial production
• commencing Goliath large format cell programme:
– Securing £4.2m of granting funding from the Faraday
Battery challenge to develop large format solid state
cells for automotive applications
– commencing the powerDrive line collaboration with
5. Developing batteries for miniature medical implants
Honda and Ricardo to develop rapidly charging batteries
with a leading bioelectronics company
• Stereax® achieving significant technical development
milestones with:
– Record energy density from ultra-thin cells for
– Starting the MoSESS collaboration led by Mclaren
automotive to power high-performance vehicles
• appointment of keith Jackson as chairman, and Monika
Biddulph and Jeremy Millard as Non-Executive Directors
medical implants
– Development of photolithographic method to produce
custom cells compatible with semiconductor
manufacturing processes
ANNUAL REPORT AND ACCOUNTS 2019
02
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IlIka aT
a GlaNcE
pRINcIpal
acTIVITIES
Ilika plc is the holding company for
Ilika Technologies limited, a pioneer
in solid state battery technology.
Ilika has developed ground-breaking
solid state battery technology
(Stereax®). The Stereax® roadmap
commenced with miniature batteries
designed to meet the demands of
powering wireless devices, referred
to as ‘the Internet of Things (‘IoT’)’
and has been extended to include
large format cells for automotive.
PRODUCTS
STEREaX®M50
The healthcare sector, or MedTech, is changing
to embrace the interconnectivity of the IoT for
more proactive patient health management.
This has created a demand for remote patient
monitoring, with devices needed to monitor and
report vital data to central healthcare providers.
IoT healthcare sector revenues are forecast to be
around $300 billion by 2020.
STEREaX®M250
The Stereax® M250 contains no liquid or polymer
components and, like all Ilika solid state batteries,
has no free lithium, either in the charged or
discharged state, making it moisture resistant
and appropriate for medical applications. Its low
self-discharge allows it to be trickle-charged by
an energy harvesting source such as vibration or
a photovoltaic (‘pV’) panel. Its high peak current
enables the transmission of data using protocols
such as Bluetooth low Energy. The combination
of energy harvester, transmitter, sensor and the
M250 is ideal for integration into small, ‘fit and
forget’ autonomous sensor devices with multiple
applications including smart homes, vehicles and
medical devices. The M250 is provided on a rigid
substrate (650 µm), though thinner substrates
may also be used.
STEREaX®p180
The Stereax® p180 features similar benefits to the
M250 in terms of energy density and fit for life
performance, but with the additional capability
of operating across a very wide temperature
range, from -40°c to +150°c. This wide operating
temperature range arises from Ilika’s patented
material innovation technology, which enables
designers in an array of industries to develop new
products that were previously not possible with
legacy battery technology.
GOlIaTH
Ilika’s Goliath technology is a solid state lithium
battery with the potential to transform the
performance and safety of electric and plug-in
hybrid electric vehicles (‘EVs’ and ‘pHEVs’).
APPLICATIONS
SENSORS: In vitro surface patches
medication doses or specific point
to sense body vital signs, skin
stimulation and environment
monitoring (e.g. mc10).
IMplaNTaBlES: In vivo sensors
for cardiac monitoring (e.g.
Medtronic), fluid flow and
temperature.
DRUG DElIVERY: patches
implantables, deliver long-term
of efficacy drugs (Replenish).
OpHTHalMIcS: Smart contact
lenses (e.g. Google, Samsung),
cataract correction, tear glucose
monitoring and drug delivery.
NEUROSTIMUlaTORS:
Stimulating organs, nerves,
vessels or delivering medication
(e.g. Setpoint Medical).
INDUSTRIal IOT, aUTOMOTIVE
list of temperatures which sensors
aND SMaRT HOMES
may be typically exposed to in
Deployment of sensor nodes are
required for:
various industries:
• Typical drilling: 150°c
• Full automation: ‘smart factories’,
• Deep drilling: 200°c
• Textile industry: 100°c
• automotive (engines): 250°c
• plastic packaging: 150°c
• Tarmac transport and storage:
150°c
for machine to machine
connection with creation of
data (Big Data) to analyse
performance of high temperature
machines and improve
production results
• Testing: For example, in the
automotive industry, strain and
temperature gauges to monitor
engines and chassis
• Failure detection: Sensors
providing information (e.g.
temperature or vibration) to
create early warning systems
when machines are showing signs
of failure
• asset monitoring
• Supply chain traceability
• Defence and security applications
The major benefits of solid state
batteries are:
• Non-flammable solid electrolyte
• Much faster charging times
(under 10 minutes)
• Increased energy density >500
Wh/kg and >1400 Wh/l in line
with Uk autocouncil targets
• Increased life cycle of up to
10 years
ANNUAL REPORT AND ACCOUNTS 2019 PRODUCTS
STEREaX®M50
The healthcare sector, or MedTech, is changing
to embrace the interconnectivity of the IoT for
more proactive patient health management.
This has created a demand for remote patient
monitoring, with devices needed to monitor and
report vital data to central healthcare providers.
IoT healthcare sector revenues are forecast to be
around $300 billion by 2020.
STEREaX®M250
The Stereax® M250 contains no liquid or polymer
components and, like all Ilika solid state batteries,
has no free lithium, either in the charged or
discharged state, making it moisture resistant
and appropriate for medical applications. Its low
self-discharge allows it to be trickle-charged by
an energy harvesting source such as vibration or
a photovoltaic (‘pV’) panel. Its high peak current
enables the transmission of data using protocols
such as Bluetooth low Energy. The combination
of energy harvester, transmitter, sensor and the
M250 is ideal for integration into small, ‘fit and
forget’ autonomous sensor devices with multiple
applications including smart homes, vehicles and
medical devices. The M250 is provided on a rigid
substrate (650 µm), though thinner substrates
may also be used.
STEREaX®p180
The Stereax® p180 features similar benefits to the
M250 in terms of energy density and fit for life
performance, but with the additional capability
of operating across a very wide temperature
range, from -40°c to +150°c. This wide operating
temperature range arises from Ilika’s patented
material innovation technology, which enables
designers in an array of industries to develop new
products that were previously not possible with
legacy battery technology.
GOlIaTH
Ilika’s Goliath technology is a solid state lithium
battery with the potential to transform the
performance and safety of electric and plug-in
hybrid electric vehicles (‘EVs’ and ‘pHEVs’).
03
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APPLICATIONS
SENSORS: In vitro surface patches
to sense body vital signs, skin
stimulation and environment
monitoring (e.g. mc10).
IMplaNTaBlES: In vivo sensors
for cardiac monitoring (e.g.
Medtronic), fluid flow and
temperature.
DRUG DElIVERY: patches
implantables, deliver long-term
medication doses or specific point
of efficacy drugs (Replenish).
OpHTHalMIcS: Smart contact
lenses (e.g. Google, Samsung),
cataract correction, tear glucose
monitoring and drug delivery.
NEUROSTIMUlaTORS:
Stimulating organs, nerves,
vessels or delivering medication
(e.g. Setpoint Medical).
list of temperatures which sensors
may be typically exposed to in
various industries:
• Typical drilling: 150°c
• Deep drilling: 200°c
• Textile industry: 100°c
• automotive (engines): 250°c
• plastic packaging: 150°c
• Tarmac transport and storage:
150°c
INDUSTRIal IOT, aUTOMOTIVE
aND SMaRT HOMES
Deployment of sensor nodes are
required for:
• Full automation: ‘smart factories’,
for machine to machine
connection with creation of
data (Big Data) to analyse
performance of high temperature
machines and improve
production results
• Testing: For example, in the
automotive industry, strain and
temperature gauges to monitor
engines and chassis
• Failure detection: Sensors
providing information (e.g.
temperature or vibration) to
create early warning systems
when machines are showing signs
of failure
• asset monitoring
• Supply chain traceability
• Defence and security applications
The major benefits of solid state
batteries are:
• Non-flammable solid electrolyte
• Much faster charging times
(under 10 minutes)
• Increased energy density >500
Wh/kg and >1400 Wh/l in line
with Uk autocouncil targets
• Increased life cycle of up to
10 years
ANNUAL REPORT AND ACCOUNTS 2019 04
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cHaIRMaN’S
STaTEMENT
OUR FOcUS
FOR THE YEaR
IS ON SOlID
STaTE BaTTERY
TEcHNOlOGY
I am delighted to write my first
chairman’s statement following
a positive year for Ilika.
/
I would like to thank my fellow Board
members for enabling my transition
to chairman and, following the
retirements of Mike Inglis and prof. Sir
William Wakeham, I am delighted to
have welcomed both Jeremy Millard
and Monika Biddulph to the Board
as Non-Executive Directors. Both
Jeremy and Monika bring a wealth of
experience and augment an already
strong Board. Jeremy has a strategic
advisory and corporate governance
background and Monika has
commercial and technical expertise
in Intellectual property (‘Ip’) licensing
from her roles at aRM Holdings plc.
This year has seen Ilika exploiting
its technical know-how to establish
a multi-million pound programme
for automotive traction batteries,
supported by the Uk Faraday Battery
challenge funding stream, to enable
green transportation. additionally,
Ilika’s micro-battery technology has
now reached record levels of energy
density for perpetual, fit and forget,
power which cannot be addressed
by existing cell technology. This,
together with the improvements
in pilot manufacturing processes
and production rates, as well as
stacking of cells, creates an order of
magnitude more market application
opportunities. along with its
prototype and pilot manufacturing
line, Ilika is forming partnerships
to scale battery manufacture for
industrialisation. The growth in
Ilika’s research and development
project funding is reflected in nearly
30 percent turnover growth and
stronger than expected year-end
cash balance. This strong technical
and commercial progress forms
a solid foundation for continued
progress in the coming year.
KEITH JACKSON
Non-Executive chairman
10 July 2019
//
Perpetual, fit and
forget, power
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INVESTMENT caSE
WHY INVEST?
ONE
Next generation technology with safer, lighter,
longer-lasting, faster-charging batteries
/
TWO
Strong collaborations with blue-chip global
partners with clear routes to market
/
THREE
capital light licence model
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cHIEF EXEcUTIVE’S
REVIEW
SIGNIFIcaNT
TEcHNIcal
pROGRESS
WITH STEREaX®
//
Benefits over
lithium-ion
BUSINESS STRaTEGY
The company’s mission is to
have its Stereax® solid state
batteries integrated into market-
leading products sold by leading
commercialisation partners around
the world. Initially targeting premium
niche markets, the company 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’s revenue model
involves three phases of activity:
a) commercially-funded and grant-
funded development projects;
b) Ip licensing; c) receipt of royalties
when products incorporating Ilika Ip
reach market. Ilika is currently in the
first phase of activity, with its revenue
being generated from a portfolio
of development programmes. The
company has built a pipeline of
licensing opportunities to support
the start of its second phase of
revenue generation.
OpERaTING REVIEW
SOLID STATE BATTERIES
Ilika has been working with solid
state battery technology since 2008
and has developed a type of lithium-
ion battery, which, instead of using
liquid or polymer electrolyte, uses
a ceramic ion conductor.
Ilika’s solid state batteries have a
number of benefits over lithium-ion
batteries, including the following:
• Non-flammable
• 6x faster to charge
• 2x energy density on a
weight basis
• 10x longer storage without loss
of charge
Relative to other miniature batteries,
Ilika Stereax® batteries use patented
materials and processes enabling
superior energy density per
battery footprint, up to 40 percent
improvement on other solid state
solutions. Ilika’s batteries do not
contain any free lithium metal
which makes them more moisture
resistant. additionally, solid state
batteries are expected to be easier to
recycle because, unlike conventional
batteries, they do not contain any
toxic liquids.
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cHIEF EXEcUTIVE’S
REVIEW
STEREAX® TECHNOLOGY
ROADMAP
Ilika elected to focus its initial cell
development on miniature devices
suitable for powering sensors,
sometimes called IoT end-nodes, due
to the size of the opportunity and
speed to market. There are already
up to 15 billion sensors on the planet
and most of them are currently either
hard-wired or powered by disposable
coin cells. Hard-wired sensors are
expensive to install because of the
cost of cabling, but thereafter they
have low maintenance costs. Sensors
powered by disposable batteries
are relatively cheap to install, but
expensive to maintain because of
the cost of the maintenance crews
deployed to replace and dispose
of the batteries at regular intervals.
Ilika’s miniature devices are designed
to be combined with a small energy
harvester (usually pV) to allow them
to be recharged and therefore to
operate for an extended period of
time, usually up to 10 years. This
concept is designed to offer a low
cost of installation compared to hard-
wired devices combined with lower
maintenance costs relative to using
disposable coin cells.
Wireless 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,
depending on the environment in
which they are deployed:
• 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 microcontrollers
• Support wider temperature ranges
BATTERY PRODUCT LAUNCHES
Building on its existing Stereax®
M250 and p180 solid state battery Ip
offerings, Ilika launched its mm-scale
M50 for MedTech this year.
The Stereax® M250 operates in a
temperature range to over 100°c,
30°c higher than other solid state
products. The Stereax® p180 has
the additional benefit of supporting
a temperature up to 150°c. This
higher temperature is required for
many industrial IoT and automotive
end applications enabling always
on, self-charging energy efficient
sensor 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. The
M50 has been produced using a
photolithographic process which
is compatible with semi-conductor
manufacturing processes. It also
allows Ilika to produce custom size
batteries, formed in a variety of
sizes, from a single production wafer.
The process also has the advantage
over contact masks of being able
to create smaller feature sizes of
less than a micron. Examples of
MedTech devices which can benefit
from Stereax® battery technology
are cardiac devices, blood pressure
monitors, neurostimulators, gastric
stimulators, smart contact lenses and
smart dental braces.
BATTERY PRODUCTS UNDER
DEVELOPMENT
The Ilika Stereax® roadmap focuses
on three main areas:
• Miniaturisation. This looks at mm-
scale batteries for small sensor-
driven devices, making them ideal
for medical devices
• Capacity. For the launch of both
the M250 and the p180, Ilika
designed and made wireless
sensor nodes measuring
temperature, humidity and light
intensity. The power requirements
of sensors do 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 capacity of its batteries.
Sensors are typically deployed
in difficult to access locations
where the long life of the device is
paramount for a low total cost of
ownership
• Large format. Solid state batteries
are of great interest to the
automotive industry because
a change in battery capability
is needed to make electric
transportation an everyday reality.
Ilika first started working on
solid state materials through its
collaboration with Toyota in 2008.
Many automotive companies now
have solid state cells on their
electric vehicle roadmap and
Ilika has responded to the rising
number of inbound enquiries by
commencing its large format cell
development programme. This
topic is discussed further below
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STEREAX® ROADMAP
Stereax® P180
Extended temperature
to 150°c
Stereax® M250
Bluetooth low
energy compatible
Stereax® M50
mm-scale
Goliath
high
energy
Goliath
high
power
Goliath
large
format
Extended temperature to 150°c
NB-IoT
compatible
Lorawan
compatible
High-density
for wearables
Sub-mm
Medradio
compatible
High Energy
mm2-scale
LAUNCHED
2019
2020
2021
2022
2023
xEVs,
consumer
electronics
Industrial IoT,
automotive,
smart homes
MedTech
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cHIEF EXEcUTIVE’S
REVIEW
STEREaX®
DEVElOpMENT
aND DEplOYMENT
pROJEcTS
Ilika secured 2 additional microbattery
deployment programmes with original
equipment manufacturer (‘OEM’)
partners during the period, building on 3
ongoing development and deployment
programmes with global OEMs.
INTEGRaTED ENERGY
HaRVESTER aND BaTTERY
In December 2016, the company
commenced a collaborative project
with Sharp laboratories of Europe
(now known as lightricity) to create
an autonomous energy harvesting
power source which involves
combining Ilika’s battery with
lightricity’s pV technology to create a
compact, self-recharging power pack.
This integration project is aligned with
the development track for increasing
the capacity of Stereax® batteries.
Beta prototype samples have been
shared with commercialisation
partners for evaluation.
MINIaTURE MEDIcal IMplaNT
In March 2017, the company
announced a 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.
WIND TURBINE cONDITION
MONITORING
In November 2017, Ilika announced
a partnership to deploy Stereax®
powered devices for the condition
monitoring of wind turbines with
Titan Wind Energy, the largest
manufacturer of wind turbines in
china and the 4th largest globally.
Beta prototype devices are nearing
readiness for trial deployment.
ENVIRONMENTal SENSING
In January 2019, Ilika entered into
a demonstration project to deploy
its Stereax® batteries to power an
autonomous wireless sensor for
environmental sensing and asset
tracking.
RaIl TRack cONDITION
MONITORING
In March 2019, Ilika commenced a
trial deployment of wireless sensors
for monitoring rail infrastructure
with Network Rail. In the initial
deployment, sensors will measure
track strain due to high temperatures.
The ability of Ilika’s batteries to
withstand temperatures of up to
150°c makes them particularly
suitable for deployment in the hostile
trackside environment.
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INNOVaTE Uk FaRaDaY
BaTTERY cHallENGE
Innovate Uk is expecting 50 percent
of vehicle production by 2030 to
be EVs or pHEVs. In July 2017, the
Uk government announced a £246
million commitment over 4 years for
automotive battery development,
covering cell manufacture, modules,
battery pack design and deployment
in vehicles. In November 2017, this
was followed with the announcement
of an £80 million National Battery
Industrialisation centre in Warwick.
Innovate Uk is administering a series
of competitions, designed to promote
battery innovation. In June 2018,
Ilika announced that it had been
offered £4.1 million of grant funding
to participate in collaborations
with Honda, Ricardo, Mclaren and
a123 Batteries. 2 projects are now
under way.
The first, with Honda and Ricardo, is
focused on the development of rapid
charging battery packs. The second,
with Mclaren and a123 Batteries, is
developing battery pack technology
for high performance vehicles. The
characteristics of Ilika’s solid state
batteries are particularly suited to
these use cases.
The development of large format
cells uses a different process to micro
batteries and Ilika is building a lower
cost printing platform, suitable for
printing bulk materials. Work is now
well under way to establish a pre-
pilot line close to its current facility
in Southampton. This line will be
commissioned in Summer 2019. It
is anticipated that a second stage
of scale-up to a pilot line could be
achieved in collaboration with the
National Battery Industrialisation
centre. Ilika will validate its
manufacturing processes on the pilot
line so they can be licensed as proven
to commercial partners, the same
model as is used for Stereax®.
paTENT pOSITION
Building Ilika’s Ip portfolio in solid
state batteries has continued to be
a focus this y ear. Ilika believes its
patents ring fence and protect critical
Ip to avoid competitors working
around a single patent. Ilika now
maintains a portfolio of 11 patent
families in solid state batteries,
of which 3 are jointly owned with
Toyota. This portfolio includes 15
granted patents.
QUalITY MaNaGEMENT SYSTEM
(‘QMS’)
In December 2018, Ilika announced
that the annual independent audit of
its QMS was successful. ISO 9001 is
the world’s most widely recognised
QMS and helps organisations to
meet the expectations and needs
of their customers. The certification
promotes the development of
continual improvement, customer
satisfaction, traceability and
international best practices.
kEY pERFORMaNcE INDIcaTORS
(‘kpIs’)
The Board monitors a small portfolio
of kpIs, which define the progress
being made by the Group. The
technical kpIs benchmark battery
development milestones and patent
applications. commercial kpIs
link the technical development
programmes to the sales pipeline and
engagement of commercialisation
partners. Operational kpIs ensure
that overheads and cash resources
are tightly controlled.
The most important financial kpIs
are the cash position, turnover and
profitability of the Group, which
remain under constant focus and
which are considered in the Financial
Review.
GRAEME PURDY
chief Executive Officer
10 July 2019
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STRaTEGY
IN acTION
CASE STUDY
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MINIATURE MEDICAL IMPLANT
cOllaBOR aTIVE
pROJEcT WITH
BIOElEcTRONIcS
cOMpaNY
//
Ultra-thin profile
Building on the progress made
in this collaboration, in april 2019,
Ilika launched its Stereax® M50 solid
state battery which has a number
of advantages for medical devices:
/
• Ultra-thin profile
• Various footprint shapes including
custom sizes
• potential to withstand autoclave
temperatures
• potential for biocompatibility
and 0 percent toxicity
• No lithium metal at any stage
of cycling
FOR MORE INFORMaTION
WWW.ILIK A .C0M
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STRaTEGY
IN acTION
CASE STUDY
RAIL TRACK CONDITION MONITORING
TRIal
DEplOYMENT
OF WIRElESS
SENSORS
In this 18-month project, self-
powered sensors for monitoring
key parameters affecting the
performance of the railway
infrastructure (load, temperature
and shock) will be developed,
deployed, tested and evaluated.
The sensors will combine Ilika’s
Stereax® solid state battery
technology and a novel ultra-low
power sensor platform that will be
wirelessly connected to Network
Rail’s existing condition monitoring
platform. The self-powered sensors
will be maintenance free and will
generate data 24/7, 365 days
per year.
The self-powered sensors will be
demonstrated on live Network Rail
infrastructure as part of a trial
deployment.
The solid state battery powered
sensors will be the first of this type
developed and tested for the railway
industry. Solid state batteries offer
substantial benefits over currently
used lithium-ion batteries, including;
low leakage currents, compact
design with twice the volumetric
energy density of lithium-ion
batteries, high power density and
cycle life of 5,000 cycles (equivalent
to a 10-year lifespan).
FOR MORE INFORMaTION
WWW.ILIK A .C0M
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STRaTEGY
IN acTION
CASE STUDY
GOLIATH PROGRAMME
INNOVaTE
Uk FaR aDaY
BaTTERY
cHallENGE
//
Collaborations with
Honda, Ricardo, McLaren
and A123 Batteries
In June 2018, Ilika announced that
it had been offered £4.1 million of
grant funding to participate in
collaborations with Honda, Ricardo,
Mclaren and a123 Batteries.
2 projects are now under way.
/
The first, with Honda and Ricardo, is
focused on the development of rapid
charging battery packs. The second,
with Mclaren and a123 Batteries, is
developing battery pack technology
for high performance vehicles. The
characteristics of Ilika’s solid state
batteries are particularly suited to
these use cases.
FOR MORE INFORMaTION
WWW.ILIK A .C0M
ANNUAL REPORT AND ACCOUNTS 2019 17
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ANNUAL REPORT AND ACCOUNTS 2019 18
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cEO Q&A
INNOVaTION aND
TEcHNOlOGY
THE BENEFITS
OF SOlID STaTE
BaTTERIES
GOlIaTH
Q What are the advantages
of solid state battery
(‘SSB’) technology
compared to conventional
lithium-ion batteries (‘lIB’)?
A SSB consist solely of thick
dense films forming the
electrodes and electrolyte
and contain none of the flammable
liquid electrolytes present in
conventional lIB. SSB are therefore
intrinsically safer and will not catch
fire or explode. Due to the lack
of liquid electrolyte, SSB do not
require as much of the packaging
used in lIB to avoid the liquid from
leaking, hence SSB can be made
lighter, with less parasitic packaging
weight. The solid state architecture
also allows dense films to pack more
energy and power to enables long
driving range and fast charging.
Q Despite the advantages
of SSB technology, why
does conventional lIB
technology still dominate the
market? What obstacles are
blocking SSBs for the EV market?
A Early SSB for EV applications
used polymer electrolytes
which needed heating to
60–80°c to make them conduct
lithium-ions, this was not practical
and limited adoption. Ilika’s
electrolyte is a ceramic thin film,
not a polymer and operation can
work at room temperature without
having to heat up the electrolyte.
However, SSB for EVs are still very
much in development; the main
obstacles are technical: finding
solid materials that can conduct
ions as well as liquids; optimising
layer interfaces; finding safe
materials; establishing a robust and
economical production process.
produced using the same
methods and equipment as
Stereax® solid state micro batteries?
Q Will Goliath batteries be
A Vacuum-based SSB
technologies for the
evaporation of thin films
to make microbatteries are not
appropriate for large format EV
batteries in terms of cost and
production rates. printing processes
that allow bulk material deposition
and optimised interface control at
a low cost will be used instead.
technology been production
(pilot) proven?
Q Has the low cost printing
A We used Ilika’s internal
expertise combined with
that of our partners for
the formulation and processing of
ink-based electrode materials. The
scale up to large formats builds
on this experience and expertise
in battery materials optimisation
but is being demonstrated at our
new facility in Southampton.
ANNUAL REPORT AND ACCOUNTS 2019 19
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//
Scale up to large formats
ANNUAL REPORT AND ACCOUNTS 2019 20
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cEO Q&A
INNOVaTION aND
TEcHNOlOGY
to make flexible cells.
printing for mass processing?
on testing roll-to-roll
fabrication techniques
a flexible material as
substrate and roll-to-roll
Q Is it possible to use
A Yes, Ilika is planning
Q What will the energy density
A Our calculations show that
SSB may be produced with
superior energy density values
of the Goliath battery be?
compared to lIB with 550Wh/kg
being targeted. This density level will
be achieved through state-of-the-art
materials and packaging techniques.
able to be charged?
Q How fast will the Goliath be
A We believe that our cell
may be charged in less
than 10 minutes, just
enough time for the driver to
drink a coffee at the services.
this level of integration
with our lead partners.
into packs with a battery
management system planned?
Q Is integration of cells
A Yes, Ilika is working towards
Q Is Goliath SSB operation
A Goliath SSB operates at room
temperature, as opposed to
technologies using polymers
at room temperature? Or
does it need to be heated?
(‘pEO’) which need heating.
network of sensors?
Q Is the body turning into a
A The wireless body area
network (‘WBaN’) – sensors
can be either implanted,
digested or worn by the user
and can all be networked.
This enables the different vital signs
to be looked at together giving
a more holistic view of what is
going on with a patient. like other
networks it has a centralised control
point (normally held externally).
does it work with Stereax®?
can be used to charge
these sensors and how
Q What energy harvesting
A The body offers a range
of energy harvesting
opportunities but a lot of
these are still at the early stage of
development and Stereax® batteries
are more likely going to be recharged
wirelessly. Yet, the movement
of the lungs, the beating of the
heart and temperature gradients
between skin and ambient air are
all areas of development in terms
of human body energy harvesting.
M50 MINIaTURE
battery technology?
in medical applications
that need to consider
Q What are the key areas
A IoT has moved into the
medical space to address
the need for more proactive
patient healthcare. This has created
a demand for remote patient
monitoring with mobile and small
devices enabling data collection to
be shared back to the medical carers.
These devices need to be small
in size, robust, have a low cost of
ownership and provide long battery
life. Implantables (neuro-stimulation,
cardiac rhythm monitoring, leadless
pacemakers, insulin pumps and
blood pressure monitors) or small
on the body devices (contact lenses,
smart dental braces and glucose
sensors) are typical applications for
Stereax® M50. Stereax® batteries can
be used in conjunction with energy
harvesters to power these devices
or they can be charged wirelessly.
be used in digestible
monitoring solutions?
Q can Stereax® batteries
A Stereax® is based on SSB
technology, which has less
risk of leakage, making it
safer to use. In addition, it is likely
that the Stereax® battery will be
packaged inside a small container
with the rest of the electronics,
designers of these devices will need
to have them tested in full package.
ANNUAL REPORT AND ACCOUNTS 2019 21
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the Stereax® M50 – what are
the actual dimensions of it?
Q You talk about the size of
A The Stereax® M50 measures
10.75mm x 3.75mm and
0.6mm thickness. Ilika is
currently developing the technology
to thin Stereax® batteries down to
about 250 µm, and since this is a
mature technology within the semi-
conductor industry, we are expecting
Stereax® batteries to be much thinner
in the next few months. Stereax® M50
is an example of micro batteries that
Ilika can develop and customize for
OEMs. Stereax® micro batteries can
be configured into a variety of shapes
and sizes (mm-scale) dependent
on the need of the end application.
It offers a flexible solution that is
driven by the needs of the end device
rather than the device shape and
size being dictated by the battery.
with such low capacity?
of Stereax® M50 and
what can you power
Q What is the capacity
A The Stereax® M50 has a
capacity of 50 µah, which
is enough to power a small
sensing device which may require
a few µW of average current.
However, we have found that most
implantables will require more
energy than 50 µah per day, and
in general 0.5–1 mah is a sweet
spot for implantables that include
some sensors, some memory
and some communication, and
needs to work for a couple of
days between recharges. Here the
Stereax® M50 can be considered
as the starting block of a larger
battery, constructed for example
by stacking several M50 or similar
batteries with different dimensions.
ANNUAL REPORT AND ACCOUNTS 2019 22
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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 41 to 52. The
consolidated financial statements
are presented under International
Financial Reporting Standards
(‘IFRS’)as adopted by the European
Union (‘EU’). 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
53 to 57.
/
STaTEMENT OF
cOMpREHENSIVE INcOME
TURNOVER
Turnover, all from continuing
activities, for the year ended 30 april
2019 was £2.6 million (2018: £2.1
million). This includes £2.2 million
of grant income recognised from
10 projects that the company has
in progress with Innovate Uk (2018:
£1.3 million from 9 programmes).
Details of the larger programmes
are provided in the Deployment
projects on pages 10 to 11.
More of the company’s activities are
supported by grant or commercial
funding than was the case in
the prior year, with operational
resources more heavily devoted
to the internally funded battery
development programmes.
aDMINISTRaTIVE EXpENSES aND
lOSSES FOR THE pERIOD
administrative costs for the year
were slightly decreased at £3.6
million in 2019 relative to £3.8
million in 2018. This excludes the
share-based payment charge.
combined cost of sales and
administrative expenses were
£5.0 million in the year which is up
from the £4.9 million for 2018 and
is associated with the increased
direct costs as a result of the
increased level of commercial and
grant supported programmes.
The largest component of expenses
is wages and salaries which remained
level at £2.8 million despite an
increase from 40 to 44 staff.
752,546 options lapsed in the year
and 1,834,908 failed to vest due to
market-related performance criteria.
a charge of £162,461 has been
included in the share-based payment
charge for the year in relation to
the options that failed to vest.
The lower share-based payment
charge together with the
improved margin meant that loss
on continuing activities before
tax reduced from £3.3 million in
2018 to £2.7 million in 2019.
STaTEMENT OF FINaNcIal
pOSITION aND caSH FlOWS
at 30 april 2019, net assets
amounted to £5.9 million (2018:
£3.8 million), including net funds of
£4.0 million (2018: £2.8 million).
The principal elements of the £1.2
million increase over the year ended
30 april 2019 in net funds were:
• Funds raised in the year £4.1
million from a placing and open
offer (2018: £nil)
• Operating cash outflow of
£2.2 million (2018: £2.6 million)
• Increase in receivables of
£0.5 million (2018: decrease
£0.1 million) due to the higher
number of grants under way at
the year end
• Increase in payables of £0.4 million
(2018: decrease of £0.1 million)
due to purchases relating to the
establishment of the solid state
battery facility
• Research and development tax
credits received of £0.3 million
(2018: £0.4 million)
• purchase of plant, property and
equipment of £1.0 million (2018:
£0.3 million) which mostly relates
to the establishment of the large
format solid state battery facility
ANNUAL REPORT AND ACCOUNTS 2019 23
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pRINcIpal RISkS aND
UNcERTaINTIES
commercial risk
The Group is subject to competition from competitors who may develop more
advanced and less expensive alternative technology platforms, both for existing
materials and for those materials currently under development. The Group is largely
dependent on its partners to commercialise the end-products containing the
Group’s materials.
Financial risk
The Group seeks to reduce this risk by continually assessing competitive technologies
and competitors. The Group seeks to commercialise its batteries and other materials
through multiple channels to reduce over-reliance 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 Ip.
The Group is reliant on a small number of significant customers, partners and grant
funding bodies. Termination of these agreements or grant polices could have a material
adverse effect on the Group’s results or operations or financial condition. The Group
expects to incur further operating losses as progress on development programmes
continue.
The Group seeks to reduce this risk by broadening the number of customers and
partners, and thereby reduce reliance on individual significant companies and by
leveraging its Ip and resources over multiple projects. The Group applies for research
and development tax credits to help mitigate its investment in these activities.
Ip risk
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 I{ may also become
obsolete before the products and services can be fully commercialised.
The Group reduces 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 and a
good working environment.
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. No Brexit detriment has been incurred to date.
The Strategic Report on pages 1–23 is approved by the Board of Directors and signed on behalf of the Board.
KEITH JACKSON
chairman
10 July 2019
GRAEME PURDY
chief Executive Officer
ANNUAL REPORT AND ACCOUNTS 2019
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cORpOR aTE GOVERNaNcE
BOaRD OF DIREcTORS
PROF. KEITH JACKSON
chairman
GRAEME PURDY
chief Executive Officer
PROF. BRIAN HAYDEN
chief Scientific Officer
STEPHEN BOYDELL
Finance 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
2 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 lithium-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.
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.
ANNUAL REPORT AND ACCOUNTS 2019 25
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cORpOR aTE GOVERNaNcE
CLARE SPOTTISWOODE
CBE
Non-Executive Director
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.
JEREMY MILLARD
Non-Executive Director
MONIKA BIDDULPH
Non-Executive Director
Until august 2018, Monika
was a member of the
Senior leadership Team
Ip product Groups at aRM
Holdings plc (‘aRM’),
responsible for driving the
execution of the product
roadmaps across all lines
of business and central
engineering.
In over 20 years at aRM,
Monika held various
General Manager and
licensing roles in the
business. She was
previously a Non-Executive
Director at linaro limited,
an open source software
organisation. Monika holds
a phD in physics from the
ETH Zurich.
Jeremy has nearly 20
years’ investment banking
experience and was
previously a partner at
Smith Square partners
llp where he provided
strategic and corporate
advice to clients in the
science, technology and
telecommunications
sectors, prior to which he
headed up the technology
practice at Rothschild in
london.
Jeremy is currently a
Non-Executive Director
and chairman of the audit
committee of aIM-listed
Idox plc, a Non-Executive
Director of Blackbullion
limited, Omega
Diagnostics and a Director
of Iridium corporate
Finance limited. previous
Directorships over the
last 5 years have included,
Solar communications
Group limited, Solar
communications limited,
Smith Square partners llp
and 6pM Holdings plc.
ANNUAL REPORT AND ACCOUNTS 2019 26
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cORpOR aTE GOVERNaNcE
cORpOR aTE
GOVERNaNcE
STaTEMENT
We confirm that our governance structures and
practices are in agreement with the provisions of
the Quoted companies alliance (‘Qca’) corporate
Governance code for small and mid-size quoted
companies. Our full statement of compliance with the
10 principles of the Qca corporate Governance code
is set out on our website at www.ilika.com/investors/
corporate-governance.
/
BOaRD OF DIREcTORS
The Board of Directors (‘the Board’) consists of a
Non-Executive chairman, 3 Executive Directors and
3 Non-Executive Directors.
The responsibilities of the Non-Executive chairman
and the chief Executive Officer are clearly divided. The
chairman is responsible for overseeing the formulation of
the overall strategy of the company, the running of the
Board, ensuring that no individual or group dominates
the Board’s decision making and ensuring that the Non-
Executive Directors are properly briefed on matters. prior
to each Board meeting, Directors are sent an agenda
and Board papers for each agenda item to be discussed.
additional information is provided when requested by the
Board or individual Directors.
The chief Executive Officer has the responsibility for
implementing the strategy of the Board and managing
the day-to-day business activities of the Group through
his chairmanship of the Executive committee.
The Non-Executive Directors bring relevant experience
from different backgrounds and receive a fixed fee for
their services and reimbursement of reasonable expenses
incurred in attending meetings.
The Board retains full and effective control of the Group.
This includes responsibility for determining the Group’s
strategy and for approving budgets and business plans
to fulfil this strategy. The full Board ordinarily meets
bimonthly.
The company Secretary is responsible to the Board for
ensuring that Board procedures are followed and that
the applicable rules and regulations are complied with.
all Directors have access to the advice and services of
the company Secretary, and independent professional
advice, if required, at the company’s expense. Removal of
the company Secretary would be a matter for the Board.
pERFORMaNcE EValUaTION
The Board has a process for evaluation of its own
performance which is carried out annually.
BOaRD cOMMITTEES
as appropriate, the Board has delegated certain
responsibilities to Board committees as follows:
I) AUDIT COMMITTEE
The audit committee currently comprises clare
Spottiswoode cBE (chair), professor keith Jackson,
Monika Biddulph and Jeremy Millard.
The committee monitors the integrity of the Group’s
financial statements and the effectiveness of the audit
process. The committee reviews accounting policies and
material accounting judgements. The committee also
reviews, and reports on, reports from the Group’s auditors
relating to the Group’s accounting controls. It makes
recommendations to the Board on the appointment of
auditors and the audit fee. It has unrestricted access to
the Group’s auditors. The committee keeps under review
the nature and extent of non-audit services provided by
the external auditors in order to ensure that objectivity
and independence are maintained.
II) REMUNERATION COMMITTEE
The Remuneration committee comprised professor
keith Jackson (chairman), clare Spottiswoode cBE
(Senior Independent Director), Jeremy Millard and
Monika Biddulph.
The committee is responsible for making
recommendations to the Board on remuneration
policy for Executive Directors and the terms of their
service contracts, with the aim of ensuring that their
remuneration, including any share options and other
awards, is based on their own performance and that of
the Group generally.
III) NOMINATION COMMITTEE
The Nomination committee comprised professor keith
Jackson (chairman), clare Spottiswoode cBE (Senior
Independent Director), Jeremy Millard and Monika
Biddulph.
It is responsible for providing a formal, rigorous and
transparent procedure for the appointment of new
Directors to the Board and reviewing the performance of
the Board each year.
ANNUAL REPORT AND ACCOUNTS 2019 27
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cORpOR aTE GOVERNaNcE
ATTENDANCE AT BOARD MEETINGS AND COMMITTEES
The Directors attended the following Board and committee 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
Mr. J. Millard
Ms. M. Biddulph
Board
audit
Nomination
Remuneration
8/8
7/8
5/5
8/8
7/8
4/4
8/8
4/4
2/2
–
–
1/1
–
2/2
1/1
2/2
1/1
1/1
–
–
1/1
–
1/1
1/1
1/1
–
–
–
–
1/1
–
2/2
1/1
2/2
1/1
1/1
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 auditors 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
auditors, which tests a sample of transactions, did not highlight any significant system improvements in order to
reduce risk.
The Group maintains appropriate insurance cover in respect of actions taken against the Executive Directors because
of their roles, as well as against material loss or claims of the Group. The insured values and type of cover are
comprehensively reviewed on a periodic basis.
By order of the Board
KEITH JACKSON
chairman
10 July 2019
ANNUAL REPORT AND ACCOUNTS 2019 28
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cORpOR aTE GOVERNaNcE
REpORT OF THE
aUDIT cOMMITTEE
The audit committee has primary responsibility for
ensuring that the financial performance of the Group
is properly measured and reported on. Its terms of
reference and its current membership are outlined in
the corporate Governance Statement on page 26.
/
MaTTERS cOVERED BY THE cOMMITTEE
The committee, which is required to meet at least twice
a year, met twice during the year ended 30 april 2019,
with all members present, and covered the following
matters:
• September 2018: audit completion meeting for the
2018 year-end audit, including review of the valuation
model to support Ilika plc’s investment in Ilika
Technologies limited, review of the financial forecast
to support the Group’s ability to account on a going
concern basis, review of the auditors’ report on the
audit, and review of the annual Report.
• January 2018: Half-Year Report completion meeting.
approval of the release of the Half-Year Report.
aUDITOR INDEpENDENcE
The auditors do not supply any non-audit services
and this policy safeguards auditor objectivity and
independence.
INTERNal aUDIT FUNcTION
The Group does not have an internal audit function,
but the committee considers that this is appropriate,
given the size and relative lack of complexity of
the Group. The committee keeps this matter under
review annually.
CLARE SPOTTISWOODE
chair of the audit committee
10 July 2019
ANNUAL REPORT AND ACCOUNTS 2019 29
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cORpOR aTE GOVERNaNcE
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 26. The
committee members are prof. keith Jackson (chairman),
clare Spottiswoode, Jeremy Millard and Monika Biddulph,
all of whom are independent Non-Executive Directors.
The chief Executive Officer and certain executives may
be invited to attend committee meetings to assist with its
deliberations, but no executive is present when their own
remuneration is being discussed.
REMUNERaTION pOlIcY
(I) EXECUTIVE REMUNERATION
The committee has a duty to establish a remuneration
policy which will enable it to attract and retain
individuals of the highest calibre to run the Group. Its
policy is to ensure that the executive remuneration
packages of Executive Directors and the fee of the
chairman are appropriate given performance, scale
of responsibility, experience, and consideration of the
remuneration packages for similar executive positions
in companies it considers to be comparable. packages
are structured to motivate executives to achieve the
highest level of performance in line with the best interests
of shareholders. a significant proportion of the total
remuneration package, in the form of bonus and share
options, is performance driven and has been constructed
following consultation with major shareholders.
cOMpONENTS OF REMUNERaTION
component
purpose and link to strategy
Operation
performance metrics
Base salary
To attract and retain talent.
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.
Reflecting the individual’s
role, experience and
performance. Base salaries
are reviewed annually in
January.
Take into account Group and
individual performance,
external benchmark
information and internal
relativities.
n/a
Delivery of exceptional
performance against a series
of financial, commercial and
technology objectives.
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.
long-Term
Incentive plan
– restricted share
unit awards
Incentivise, retain and reward
the Executive Directors for
successfully taking the
company through the next
stage of its growth.
Ilika plc long-Term Incentive
plan 2018 (‘the lTIp’), was
adopted by shareholders at
the 2018 annual General
Meeting.
awards vest to the extent
that challenging share price
targets have been met.
Shareholding
guidelines
To increase shareholder
alignment.
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.
n/a
ANNUAL REPORT AND ACCOUNTS 2019 30
IlIk a plc
cORpOR aTE GOVERNaNcE
DIREcTORS’ REMUNERaTION REpORT
(II) CHAIRMAN AND NON-EXECUTIVE DIRECTOR
REMUNERATION
The chairman, prof. keith Jackson receives a fixed fee of
£65,000 per annum. clare Spottiswoode, Jeremy Millard
and Monika Biddulph receive a fixed fee of £32,988
per annum. The fixed fee covers preparation for, and
attendance at, meetings of the full Board and committees
thereof. The chairman and the Executive Directors
are responsible for setting the level of non-executive
remuneration. The Non-Executive Directors are also
reimbursed for all reasonable expenses incurred in
attending meetings.
all remuneration policies will be reviewed regularly
to maintain adherence with best market practice as
appropriate.
DIREcTORS’ REMUNERaTION
The aggregate remuneration received by Directors who
served during the year ended 30 april 2019 and 30 april
2018 was as follows:
Year to 30 April 2019
G. purdy
S. Boydell
B. Hayden1
M. Inglis
k. Jackson
W. Wakeham
c. Spottiswoode
J. Millard
M. Biddulph
Year to 30 April 2018
G. purdy
S. Boydell
B. Hayden1
M. Inglis
k. Jackson
W. Wakeham
c. Spottiswoode
193,000
127,361
64,960
43,983
43,658
13,745
32,988
19,243
10,996
549,934
193,000
125,405
64,960
65,975
32,988
32,988
32,988
548,304
Basic
salary
£
Benefits
in kind
£
Bonus
£
57,728
15,066
17,838
–
–
–
–
–
–
Total
short-term
benefits
£
251,350
142,839
82,798
43,983
43,658
13,745
32,988
19,243
10,996
622
412
–
–
–
–
–
–
–
1,034
90,632
641,600
622
405
–
–
–
–
–
1,027
25,502
6,630
8,144
–
–
–
–
40,276
219,124
132,440
73,104
65,975
32,988
32,988
32,988
589,607
Pension
£
Total
£
30,300
17,749
–
–
–
–
–
–
–
48,049
30,300
17,592
–
–
–
–
–
47,892
281,650
160,588
82,798
43,983
43,658
13,745
32,988
19,243
10,996
689,649
249,424
150,032
73,104
65,975
32,988
32,988
32,988
637,499
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 £69,972 to the company in the year in respect of B. Hayden (2018: £68,544).
Benefits in kind include critical illness cover.
ANNUAL REPORT AND ACCOUNTS 2019 31
IlIk a plc
cORpOR aTE GOVERNaNcE
SHaRE OpTIONS
The share options of the Directors are set out below:
Unapproved
G. purdy
G. purdy1
G. purdy
G. purdy2
B. Hayden
B. Hayden1
B. Hayden
B. Hayden2
S. Boydell
S. Boydell1
S. Boydell
S. Boydell2
W. Wakeham1
c. Spottiswoode
M. Inglis1
k. Jackson1
Approved
S. Boydell
2018
Number
2019
Number
Exercise price
Expiry date
1,050,000
872,727
145,810
–
525,000
527,272
56,211
–
117,600
274,909
37,846
–
65,100
50,100
120,000
40,000
1,050,000
–
145,810
1,127,777
525,000
–
56,211
712,394
117,600
–
37,846
373,222
–
50,100
–
–
51p
1p
1p
1p
51p
1p
1p
1p
51p
1p
1p
1p
51p
51p
68.75p
68.75p
May 2020
September 2025
august 2027
January 2029
May 2020
September 2025
august 2027
January 2029
May 2020
September 2025
august 2027
January 2029
May 2020
May 2020
September 2025
September 2025
performance
conditions
n/a
n/a
n/a
See note 3
n/a
n/a
n/a
See note 3
n/a
n/a
n/a
See note 3
n/a
n/a
n/a
n/a
90,000
90,000
80p
December 2019
n/a
1 Share options lapsed in the year.
2 Shareholders’ approval to adopt and establish the Ilika plc lTIp 2018 was received at the annual General Meeting in October 2018.
3 These awards will vest on the achievement of the following share price targets, assessed over a three year performance period:
(a) less than 27p – no vesting.
(b) 27p – 25 percent of the shares subject to award will vest.
(c) 36p – 75 percent of the shares subject to award will vest.
(d) 54p – 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 £289,396 (2018: £409,502).
During the year, the committee received independent advice on executive remuneration matters from
FIT Remuneration consultants llp. FIT received £8,813 in fees for these services.
KEITH JACKSON
chair of the Remuneration committee
10 July 2019
ANNUAL REPORT AND ACCOUNTS 2019
32
IlIk a plc
cORpOR aTE GOVERNaNcE
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 2019 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 2 July 2019, the company had been notified of the
following holdings of more than 3 percent or more of the
issued share capital of the company.
Shareholder
Number of
Ordinary Shares
percent
shareholding
GpIM limited
Janus Henderson Group plc
canaccord Genuity Group plc
parkwalk advisors
Baillie Gifford & co.
Herald Investments
14,090,525
13,300,000
11,075,816
8,791,410
7,893,978
5,215,000
14
13
11
9
8
5
pOST BalaNcE SHEET EVENTS
There are no significant post balance sheet events from
the 30 april 2019 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
10 July 2019
NON-EXECUTIVE
prof. k. Jackson (chairman)
Mr. M. Inglis (chairman) (retired 1 January 2019)
Ms. c. Spottiswoode cBE (Senior Independent Director)
prof. Sir W. Wakeham (retired 30 September 2018)
Mr. J. Millard (appointed 1 October 2018)
Ms. M. Biddulph (appointed 16 January 2019)
RESEaRcH aND DEVElOpMENT cOSTS
In accordance with the policy outlined in note 1, the
Group incurred research and development expenditure of
£2,080,264 in the year (2018: £2,009,023). 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 is
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 2019, had the
following interests in the Ordinary Shares of the company:
G. purdy
k. Jackson
c. Spottiswoode
S. Boydell
J. Millard
M. Biddulph
B. Hayden1
Number of shares
1 May 2018
30 april 2019
609,427
20,000
45,454
9,090
n/a
n/a
–
734,427
70,000
45,454
12,000
–
–
–
1 B. Hayden had an interest in preference shares of the company amounting to
426,300 at 1 May 2018 and at 30 april 2019.
ANNUAL REPORT AND ACCOUNTS 2019 33
IlIk a plc
cORpOR aTE GOVERNaNcE
STaTEMENT OF DIREcTORS’ RESpONSIBIlITIES
IN RESpEcT OF THE aNNUal REpORT aND
THE FINaNcIal STaTEMENTS
WEBSITE pUBlIcaTION
The Directors are responsible for ensuring the annual
Report and the Financial Statements are made available
on a website. Financial Statements are published on
the Group’s website in accordance with legislation in
the United kingdom governing the preparation and
dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance
and integrity of the Group’s website is the responsibility
of the Directors. The Directors’ responsibility also extends
to the ongoing integrity of the financial statements
contained therein.
GOING cONcERN
The Directors have prepared and reviewed financial
forecasts. after due consideration of these forecasts
and current cash resources, the Directors consider that
the company and the Group have adequate financial
resources to continue in operational existence for the
foreseeable future (being a period of at least 12 months
from the date of this report), and for this reason the
financial statements have been prepared on a going
concern basis.
By order of the Board
GRAEME PURDY
chief Executive
10 July 2019
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 IFRS
as adopted by the EU. Under company law the Directors
must not approve the financial statements unless they
are satisfied that they give a true and fair view of the
state of affairs of the Group and company and of the
profit or loss of the Group for that period. The Directors
are also required to prepare financial statements in
accordance with the rules of the london Stock Exchange
for companies trading securities on aIM.
In preparing these financial statements, the Directors are
required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether they have been prepared in accordance
with IFRS as adopted by the EU, 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.
ANNUAL REPORT AND ACCOUNTS 2019 34
IlIk a plc
FINaNcIal STaTEMENTS
INDEpENDENT aUDITORS’ REpORT
TO THE MEMBERS OF IlIka plc
OpINION
We have audited the financial statements of Ilika plc (‘the
parent company’) and its subsidiaries (‘the Group’) for
the year ended 30 april 2019 which comprise the
consolidated statement of comprehensive income, the
consolidated balance sheet, the consolidated cash flow
statement, the consolidated statement of changes in
equity, the company balance sheet, the company cash
flow statement, the company statement of changes in
equity and notes to the financial statements, including a
summary of significant accounting policies.
The financial reporting framework that has been applied
in the preparation of the financial statements is applicable
law and IFRS as adopted by the EU and, as regards the
parent company financial statements, as applied in
accordance with the provisions of the companies act
2006.
In our opinion:
• the financial statements give a true and fair view of the
state of the Group’s and of the parent company’s
affairs as at 30 april 2019 and of the Group’s loss for
the year then ended;
• the Group financial statements have been properly
prepared in accordance with IFRS as adopted by the
EU;
• the parent company financial statements have been
properly prepared in accordance with IFRS as adopted
by the EU 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.
BaSIS FOR OpINION
We conducted our audit in accordance with International
Standards on auditing (Uk) (‘ISas (Uk’)) and applicable
law. Our responsibilities under those standards are further
described in the auditors’ responsibilities for the audit of
the financial statements section of our report. We are
independent of the Group and the parent company in
accordance with the ethical requirements that are
relevant to our audit of the financial statements in the Uk,
including the Financial Reporting council (‘FRc’) Ethical
Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis
for our opinion.
cONclUSIONS RElaTING TO GOING cONcERN
We have nothing to report in respect of the following
matters in relation to which the ISas (Uk) require us to
report to you where:
• the Directors’ use of the going concern basis of
accounting in the preparation of the financial
statements is not appropriate; or
• the Directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the Group’s or the
parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at
least 12 months from the date when the financial
statements are authorised for issue.
kEY aUDIT MaTTERS
key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the
overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters.
Key audit matter
How we addressed the matter
Revenue and grant recognition
as set out in the accounting
policies in note 1 to the
financial statements, sales of
research and development
services are recognised in the
accounting period in which
the services are rendered, by
reference to the actual costs
incurred as a proportion of
the total expected cost of the
services to be provided.
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.
With an increased number
of agreements in place at
the year end, and significant
levels of accrued and deferred
income at the year end, there
is considered to be a risk that
income is not recognised in the
correct period and in line with
the Group’s accounting policies.
The audit procedures on these
income streams represented
a significant part of our audit
strategy in terms of the level
of direction and supervision
and allocation of resources.
We have vouched all significant
revenue customers to invoices
raised and signed agreements.
There were no agreements which
had not been completed at the
year end and as such we have
confirmed that all revenues have
been accurately recorded within
the year. We have reviewed
invoices raised both before and
after the year end to ensure that
the revenues were complete and
recorded in the correct period.
We obtained the agreements in
respect of all grant agreements
and recalculated the income to
be received by reference to the
costs incurred by the Group.
We have vouched receipts to
bank statements and third-
party confirmations to gain
assurance over the accuracy of
the submissions and calculations
thereon. We have considered
the timing of submissions made
for grant monies to be received
and the timing of amounts
received in respect of these
and recalculated the level of
accrued or deferred income to be
recognised on the balance sheet.
ANNUAL REPORT AND ACCOUNTS 2019 35
IlIk a plc
FINaNcIal STaTEMENTS
OUR applIcaTION OF MaTERIalITY
Group materiality: £127,000 (2018: £156,000).
parent company materiality: £116,000 (2018: £148,000).
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable
users that are taken on the basis of the financial
statements.
Our Group materiality, for both the current and prior year,
has been based upon 5 percent of the loss before tax. We
consider the loss before tax to be one of the principal
considerations for stakeholders in assessing the
performance of the Group, particularly as the Group
moves towards future profitability.
Materiality in respect of the audit of the parent company
has been set using a benchmark of 1 percent of total
assets for both the current and prior year. We consider
total assets to be the most appropriate measure for the
basis of materiality as the parent company is a holding
company.
performance materiality is the application of materiality
at the individual account or balance level set at an
amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the
financial statements as a whole. performance materiality
was set at £95,250 (2018: £117,000) which represents 75
percent (2018: 75 percent) of the above materiality levels.
The same percentage has been used for the parent
company with performance materiality set at £87,000
(2018: £111,000). In setting the level of performance
materiality we considered a number of factors including
the expected total value of known and likely
misstatements based on past experience and other
factors.
Materiality for the only subsidiary of the Group was
set at a lower level than that of the Group at £116,000
(2018: £148,000).
We agreed with the audit committee that we would
report to the committee all individual audit differences
identified during the course of our audit in excess of
£2,540 (2018: £3,120). We also agreed to report
differences below these thresholds that, in our view,
warranted reporting on qualitative grounds.
aN OVERVIEW OF THE ScOpE OF OUR aUDIT
The scope of our Group audit was established by
obtaining an understanding of the Group, including its
control environment, and assessing the risks of material
misstatement.
Both components, Ilika plc and Ilika Technologies limited,
are considered significant components and were subject
to a full-scope audits by BDO llp.
OTHER INFORMaTION
The Directors are responsible for the other information.
The other information comprises the information included
in the annual Report, other than the financial statements
and our auditors’ report thereon. Our opinion on the
financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and, in
doing so, consider whether the other information is
materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we
are required to determine whether there is a material
misstatement in the financial statements or a material
misstatement of the other information. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact. We have nothing to report in
this regard.
OpINIONS 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 the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
• the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
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 in relation to which the companies act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
• the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
ANNUAL REPORT AND ACCOUNTS 2019 36
IlIk a plc
FINaNcIal STaTEMENTS
INDEpENDENT aUDITORS’ REpORT
TO THE MEMBERS OF IlIka plc
USE OF OUR REpORT
This report is made solely to the parent company’s
members, as a body, in accordance with chapter 3 of part
16 of the companies act 2006. Our audit work has been
undertaken so that we might state to the parent
company’s members those matters we are required to
state to them in an auditors’ report and for no other
purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the
parent company and the parent company’s members as
a body, for our audit work, for this report, or for the
opinions we have formed.
Malcolm Thixton (Senior Statutory Auditor)
For and on behalf of BDO llp, Statutory auditor
Southampton
United kingdom
10 July 2019
BDO llp is a limited liability partnership registered in
England and Wales (with registered number Oc305127).
RESpONSIBIlITIES OF THE DIREcTORS
as explained more fully in the Statement of Directors’
Responsibilities in respect of the annual Report and the
Financial Statements set out on page 33, the Directors
are responsible for the preparation of the financial
statements and for being satisfied that they give a true
and fair view, and for such internal control as the
Directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group
or the parent company or to cease operations, or have no
realistic alternative but to do so.
aUDITORS’ RESpONSIBIlITIES FOR THE aUDIT OF
THE FINaNcIal STaTEMENTS
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISas (Uk) will always detect a material misstatement
when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
a further description of our responsibilities for the audit
of the financial statements is located on the FRc website
at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditors’ report.
ANNUAL REPORT AND ACCOUNTS 2019 37
IlIk a plc
FINaNcIal STaTEMENTS
cONSOlIDaTED STaTEMENT
OF cOMpREHENSIVE INcOME
Turnover
Revenue
Uk grants
cost of sales
Gross profit
Total 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
Loss per share from continuing operations
Basic
Diluted
Year ended 30 april
2019
£
2018
£
Notes
2
2,589,736
2,051,177
345,307
2,244,429
798,430
1,252,747
(1,388,598)
(1,090,898)
1,201,138
960,279
(3,630,369)
(264,250)
(3,793,686)
(434,382)
3,894,619
4,228,068
(2,693,481)
25,800
(3,267,789)
17,156
(2,667,681)
346,922
(3,250,633)
353,309
(2,320,759)
(2,897,324)
(2.42)p
(2.42)p
(3.67)p
(3.67)p
3
5
6
ANNUAL REPORT AND ACCOUNTS 2019 38
IlIk a plc
FINaNcIal STaTEMENTS
cONSOlIDaTED 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
2019
£
2018
£
7
8
9
5
10
14
23,815
1,728,122
2,453
578,103
1,751,937
580,556
1,542,996
360,000
351,963
3,599,216
1,024,359
330,000
–
2,811,155
5,854,175
4,165,514
7,606,112
4,746,070
1,013,070
27,103,356
6,486,077
789,911
23,179,756
6,486,077
(28,725,868) (26,669,347)
5,876,647
3,786,397
11
12
1,439,465
290,000
809,673
150,000
1,729,465
959,673
7,606,112
4,746,070
The notes on pages 41 to 52 form part of these financial statements
These financial statements were approved and authorised for issue by the Board of Directors on 10 July 2019.
Mr. K. Jackson
chairman
10 July 2019
ANNUAL REPORT AND ACCOUNTS 2019 39
IlIk a plc
FINaNcIal STaTEMENTS
cONSOlIDaTED caSH FlOW STaTEMENT
Cash flows from operating activities
loss before taxation
adjustments for:
amortisation
Depreciation
Equity-settled share-based payments
Financial income
Operating cash flow before changes in working capital, interest and taxes
(Increase)/decrease in trade and other receivables
Increase/(decrease) 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
purchase of intangible assets
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 increase in cash and cash equivalents
cash and cash equivalents at the start of the period
cash and cash equivalents at the end of the period
Year ended 30 april
2019
£
2018
£
(2,667,681)
(3,250,633)
3,621
233,744
264,250
(25,800)
3,282
196,415
434,382
(17,156)
(2,191,866)
(518,637)
357,472
(2,633,710)
92,008
(102,380)
(2.353,031)
316,922
(2,644,082)
353,309
(2,036,109)
(2,290,773)
25,800
(24,983)
(971,443)
(351,963)
17,156
(3,154)
(322,958)
2,900,000
(1,322,589)
2,591,044
4,463,178
(316,419)
4,146,759
–
–
–
788,061
2,811,155
300,271
2,510,884
3,599,216
2,811,155
ANNUAL REPORT AND ACCOUNTS 2019 40
IlIk a plc
FINaNcIal STaTEMENTS
cONSOlIDaTED STaTEMENT
OF cHaNGES IN EQUITY
As at 30 April 2017
Share-based payment
loss and total comprehensive income
As at 30 April 2018
Share-based payment
Issue of shares
cost of share issue
loss and total comprehensive income
Share
premium
account
£
capital
restructuring
reserve
£
Total
attributable to
equity holders
of parent
£
Retained
earnings
£
23,179,756
–
–
23,179,756
–
4,240,019
(316,419)
–
6,486,077 (24,206,405)
434,382
(2,897,324)
–
–
6,249,339
434,382
(2,897,324)
6,486,077 (26,669,347)
264,250
–
–
(2,320,759)
–
–
–
–
3,786,397
264,250
4,463,178
(316,419)
(2,320,759)
Share
capital
£
789,911
–
–
789,911
–
223,159
–
–
As at 30 April 2019
1,013,070
27,103,356
6,486,077 (28,725,856)
5,876,647
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.
ANNUAL REPORT AND ACCOUNTS 2019 41
IlIk a plc
FINaNcIal STaTEMENTS
NOTES TO THE cONSOlIDaTED
FINaNcIal STaTEMENTS
1 accOUNTING pOlIcIES
BASIS OF PREPARATION
These financial statements have been prepared in accordance with IFRS adopted by the EU. The principal accounting
policies adopted in the preparation of the consolidated financial statements are set out below. The policies have been
consistently applied to all of the years presented.
The individual financial statements of Ilika plc are shown on pages 53 to 55.
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 3 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 2019, amounted to £3,951,179. 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’s prospects and the scale of the opportunities that the company’s technologies create, the company will
continue to be able to raise any funds required to enable it to continue to trade and grow towards self-sufficiency.
CHANGES IN ACCOUNTING POLICIES
(a) New standards, amendments to standards or interpretations
IFRS 9 – Financial Instruments
The Group adopted IFRS 9 which addresses the classification, measurement and derecognition of financial assets and
financial liabilities, on 1 May 2018, considering the cumulative impact at this date in assessing whether an adjustment to
opening reserves is required. This standard also had no financial impact on either the current or comparative periods.
IFRS 15 – Revenue from Contracts with Customers
IFRS 15 has replaced IaS 18, effective for accounting periods beginning on or after 1 January 2018. The Group has
transitioned to the new standard through means of the cumulative effect method as at 1 May 2018 (the date of initial
application). No transitional entries were required on the adoption of IFRS 15 at its date of initial application. an
explanation of the accounting treatment adopted for completed contracts in all periods presented, and in future
accounting periods, is set out in the turnover accounting policy below.
The grant income continues to be accounted for under IaS 20.
No other new standards, interpretations and amendments adopted in the year have had a material impact on
the Group.
ANNUAL REPORT AND ACCOUNTS 2019 42
IlIk a plc
FINaNcIal STaTEMENTS
NOTES TO THE cONSOlIDaTED
FINaNcIal STaTEMENTS
1 accOUNTING pOlIcIES CONTINUED
(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 2019, will or may have an effect on the Group’s future financial
statements:
International accounting Standards (IaS/IFRS)
IFRS 16 – leases
Effective date for periods commencing
1 January 2019
Under the provisions of IFRS 16 most leases, including the majority of those previously classified as operating leases,
will be brought onto the statement of financial position, as both a right-of-use asset and a largely offsetting lease
liability. The right-of-use asset and lease liability are both based on the present value of lease payments due over the
term of the lease, with the asset being depreciated and the liability increased for the accretion of interest and reduced
by lease payments.
The Group currently has 3 operating leases as disclosed in note 15. The first is cancellable by the Group on 6 months’
notice and this was served on 31 January 2019. The second is also cancellable by the Group on 6 months’ notice and
ends on 11 October 2020. as these lease commitments are less than 1 year, the Group expects to adopt the practical
expedient not to recognise a right-of-use asset and the associated liability. The third lease has a contractual liability of
£76,526 in the year ended 30 april 2020 and ends in January 2024. Instead of recognising an operating expense for
its operating lease payments, the Group will instead recognise interest on its lease liabilities and amortisation on its
right to use assets.
No other new standards or amendments are expected to have an effect on the Group.
TURNOVER
Turnover 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 the actual costs incurred as a proportion of the total expected cost of the services to be
provided. The Group has an enforceable right to payment over the period of the contract. Invoices are raised at agreed
milestones with timing differences recognised within accrued or deferred income.
Government grants
Grants that compensate the Group for expenses incurred are recognised in the income statement on a systematic
basis in the same periods in which the expenses are recognised. Submissions are made for pre-arranged time periods
with timing differences recognised within accrued or deferred income.
FINANCIAL INCOME
Income from short-term deposits is recognised in the income statement as it accrues, using the effective interest
method.
PENSION AND OTHER POST-RETIREMENT BENEFITS
payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
SHARE-BASED PAYMENT TRANSACTIONS
The Group issues equity-settled share options to all employees. Equity-settled share options are measured at fair value
at the date of grant. The fair value determined at the grant date of the equity-settled share options is expensed on a
straight-line basis over the vesting period, 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.
ANNUAL REPORT AND ACCOUNTS 2019 43
IlIk a plc
FINaNcIal STaTEMENTS
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.
vi. Its intention is to use or sell the developed asset.
prior to and during the year ended 30 april 2019, 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.
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
2–5 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 profit or loss.
ANNUAL REPORT AND ACCOUNTS 2019
44
IlIk a plc
FINaNcIal STaTEMENTS
NOTES TO THE cONSOlIDaTED
FINaNcIal STaTEMENTS
1 accOUNTING pOlIcIES CONTINUED
INTANGIBLE ASSETS
computer software
acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the
specific software. These costs are amortised to administrative expenses using the straight-line method over their
estimated useful lives (1–3 years).
IP
acquired Ip 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 carried at amortised cost.
Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using a
provision matrix in the determination of the lifetime expected credit losses. The Group’s financial liabilities are all
classified as ‘other’ liabilities which are carried at amortised cost. cash and cash equivalents comprise cash balances
and call deposits. Deposits of over 3 months’ maturity, judged at inception, are classified as other financial assets.
PROVISIONS
provisions are made where an event has taken place that gives the Group a legal or constructive obligation that
probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of
the obligation.
provisions are either charged as an expense to income statement or capitalised within property, plant and equipment
in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance
sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are made, they are charged to the provision carried in the balance sheet.
KEY SOURCES OF ESTIMATION AND UNCERTAINTY
The preparation of the Group’s financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, revenues and expenses at the date of the Group’s financial
statements. The Group’s estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
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 (with the Uk further split out below).
Turnover
analysis by geographical market:
By destination
asia
Europe
North america
Uk
Year ended 30 april
2019
£
2018
£
66,230
–
3,163
2,520,343
38,241
134,302
565,887
1,312,747
2,589,736
2,051,177
ANNUAL REPORT AND ACCOUNTS 2019 45
IlIk a plc
FINaNcIal STaTEMENTS
a number of customers individually account for more than 10 percent of the total turnover of the Group. The turnovers
from these companies are indicated below:
Turnover
Uk Grants
customer 1
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
auditors’ remuneration:
Fees payable to the Group’s auditors for the audit of the Group’s accounts
Fees payable to the Group’s auditors for other services:
The audit of the Group’s subsidiaries
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
Year ended 30 april
2019
£
2018
£
2,244,429
3,163
342,144
1,252,747
565,887
232,543
2,589,736
2,051,177
Year ended 30 april
2019
£
2018
£
2,080,264
233,744
3,621
2,009,023
196,415
3,282
23,200
22,200
6,800
227,638
264,250
6,800
207,511
434,382
Year ended 30 april
2019
Number
2018
Number
5
39
44
6
34
40
Year ended 30 april
2019
£
2018
£
2,182,710
244,577
264,250
149,601
2,055,959
225,480
434,382
150,120
2,841,138
2,865,941
Year ended 30 april
2019
£
2018
£
641,600
48,049
689,649
81,946
222,535
589,607
47,892
637,499
75,072
409,502
994,130
1,122,073
The Directors represent key management personnel and further details are given in the Directors’ Remuneration
Report on pages 29 to 31.
ANNUAL REPORT AND ACCOUNTS 2019 46
IlIk a plc
FINaNcIal STaTEMENTS
NOTES TO THE cONSOlIDaTED
FINaNcIal STaTEMENTS
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:
R&D tax credits
adjustments to prior period
Year ended 30 april
2019
£
2018
£
360,000
(13,078)
330,000
23,309
346,922
353,309
(B) FACTORS AFFECTING CURRENT TAX CHARGE
The tax assessed on the loss on ordinary activities for the period is different to the standard rate of corporation tax in
the Uk of 19 percent (2018: 19 percent). The differences are reconciled below:
loss on ordinary activities before tax
2019
£
2018
£
(2,667,681)
(3,120,313)
loss on ordinary activities before tax multiplied by the standard rate of corporation tax in
(506,871)
(592,859)
the Uk of 19 percent (2018: 19 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
50,390
(360,000)
456,481
13,078
57,772
(330,000)
535,087
(23,309)
(346,922)
(353,309)
Unrecognised deferred taxation
There are tax losses available for carry forward against future trading profits of approximately £23,810,000
(2018: £21,529,000). a deferred tax asset in respect of these losses of approximately £4,048,000 (2018: £3,660,000)
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:
Weighted average number of equity shares
Earnings, being loss after tax
loss per share
Year ended 30 april
2019
Number
2018
Number
95,789,335
78,991,110
£
£
(2,320,759)
(2,897,324)
Pence
(2.42)
pence
(3.67)
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 2019, there were 7,583,438 options outstanding (2018: 6,727,499) as detailed in notes 14
and 18.
ANNUAL REPORT AND ACCOUNTS 2019 47
IlIk a plc
FINaNcIal STaTEMENTS
7 INTaNGIBlE aSSETS
Cost
As at 30 April 2017
additions
As at 30 April 2018
additions
Disposals
As at 30 April 2019
Amortisation
As at 30 April 2017
provided for the year
As at 30 April 2018
provided for the year
Disposals
As at 30 April 2019
Net book value
As at 30 April 2017
As at 30 April 2018
As at 30 April 2019
Software
licences
£
39,043
3,154
42,197
24,983
(12,140)
55,040
36,462
3,282
39,744
3,621
(12,140)
Ip
£
Total
£
75,000
–
75,000
–
–
75,000
75,000
–
75,000
–
–
114,043
3,154
117,197
24,983
(12,140)
130,040
111,462
3,282
114,744
3,621
(12,140)
31,225
75,000
106,225
2,581
2,453
23,815
–
–
–
2,581
2,453
23,815
The amortisation charge of £3,621 (2018: £3,282) is included within administrative expenses.
8 pROpERTY, plaNT aND EQUIpMENT
Cost
As at 30 April 2017
additions
Disposals
As at 30 April 2018
additions
As at 30 April 2019
Depreciation
As at 30 April 2017
provided for the year
Disposals
As at 30 April 2018
provided for the year
As at 30 April 2019
Net book value
As at 30 April 2017
As at 30 April 2018
As at 30 April 2019
leasehold
improvements
£
plant,
machinery and
equipment
£
Fixtures and
fittings
£
Total
£
567,500
33,974
–
601,474
–
4,541,790
287,969
(11,939)
4,817,820
1,383,135
167,720
1,015
–
168,735
628
5,277,010
322,958
(11,939)
5,588,029
1,383,763
601,474
6,200,955
169,363
6,831,792
567,500
8,144
–
575,644
13,367
4,094,176
185,482
(11,939)
4,267,719
219,540
163,774
2,789
–
166,563
837
4,825,450
196,415
(11,939)
5,009,926
233,744
589,011
4,487,259
167,400
5,243,670
–
447,614
25,830
550,101
3,946
2,172
451,560
578,103
12,463
1,713,696
1,963
1,728,122
There are no commitments for capital expenditure contracted but not provided for (2018: £nil)
ANNUAL REPORT AND ACCOUNTS 2019 48
IlIk a plc
FINaNcIal STaTEMENTS
NOTES TO THE cONSOlIDaTED
FINaNcIal STaTEMENTS
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
2019
£
2018
£
24,094
317,625
476,016
725,261
5,163
337,887
242,097
439,212
1,542,996
1,024,359
as at 30 april
2019
£
–
24,094
24,094
2018
£
5,163
–
5,163
Included in other receivables is an amount of £150,000 (2018: £150,000) which represents cash held in a separate
bank account used as security against a bond provided by the company’s bankers (refer to note 12). The bond relates
to the potential dilapidations costs due at the end of the company’s property lease.
The accrued income of £725,261 (2018: £439,212) relates to performance obligations satisfied but not invoiced, all of
which is due to be settled within the next 12 months. The increase in accrued income is due to the level of grants under
way at the current and prior year end.
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 and deferred income
The ageing of financial liabilities is as follows:
0–29 days
30–59 days
60–89 days
90+ days
as at 30 april
2019
£
2018
£
833,326
2,765,890
435,108
2,376,047
3,599,216
2,811,155
as at 30 april
2019
£
2018
£
699,330
36,183
56,928
647,024
269,191
24,927
51,372
464,183
1,439,465
809,673
as at 30 april
2019
£
2018
£
1,203,615
36,794
14,770
127,358
1,382,537
482,162
133,788
17,404
124,947
758,301
Within accruals and deferred income is deferred income of £171,499 (2018: £nil) that represent unfulfilled performance
obligations on grants to be satisfied in the next 12 months.
ANNUAL REPORT AND ACCOUNTS 2019 49
IlIk a plc
FINaNcIal STaTEMENTS
12 pROVISIONS
as at 1 May 2018
additions
as at 30 april 2019
leasehold
dilapidations
£
150,000
140,000
290,000
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. The additions in the year are in respect of work carried out at the new
leased premises in the year.
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 1 year. cash balances are placed on deposit for varying periods with reputable
banking institutions to ensure there is limited risk of capital loss. The Group does not maintain an overdraft facility.
INTEREST RATE RISK
The main risk arising from the Group’s financial instruments is interest rate risk. The Group placed deposits surplus to
short-term working capital requirements with a variety of reputable Uk-based banks. These balances are placed at
floating rates of interest and deposits have maturities of 1 to 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 2019 had a weighted average period to maturity of 35 days (2018: 28 days) and a weighted average
annualised rate of interest of 0.8 percent. (2018: 0.6 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 2019 by approximately £26,000 (2018: £17,000).
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 2019 by approximately £30,000 (2018: £30,000).
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.
ANNUAL REPORT AND ACCOUNTS 2019 50
IlIk a plc
FINaNcIal STaTEMENTS
NOTES TO THE cONSOlIDaTED
FINaNcIal STaTEMENTS
14 SHaRE capITal
Authorised
100,718,600 (2018: 78,402,710) Ordinary Shares of £0.01 each
1,781,400 convertible preference Shares of £0.01 each
Allotted, called up and fully paid
100,718,600 (2018: 78,402,710) Ordinary Shares of £0.01 each
588,400 convertible preference Shares of £0.01 each
as at 30 april
2019
£
2018
£
1,007,186
17,814
784,027
17,814
1,007,186
5,884
1,013,070
784,027
5,884
789,911
SHARE RIGHTS
The Ordinary Share and preference shares rank pari passu in all respects other than:
• The profits which the Group may determine to distribute in respect of any financial period shall be distributed only
among the holders of the Ordinary Shares. The preference Shares shall not entitle the holders of them to any share
in such distributions.
• On a return of capital or assets on a liquidation, reduction of capital or otherwise the surplus assets of the Group
remaining after payment of its obligations shall be applied:
– first, in paying to the holders of the preference Shares the amount paid thereon, being the amount equal to the
par value of the preference shares excluding any premium; 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. There are no further redemption rights.
On 30 July 2018, 22,315,890 Ordinary Shares of £0.01 each were issued for a total consideration of £4,463,178 and
costs incurred were £316,419.
SHARE OPTIONS AND WARRANTS
Employee related share options are disclosed in note 18.
15 OpERaTING lEaSES
The total future minimum rent payable under non-cancellable operating leases is as follows:
property leases which expire:
Within 1 year
In more than 1 year but less than 5 years
2019
£
2018
£
65,814
362,710
428,524
97,143
–
97,143
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 £149,601 (2018: £150,120). Included
within other creditors is £18,679 (2018: £15,679) relating to outstanding pension contributions.
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 29 to 31.
ANNUAL REPORT AND ACCOUNTS 2019 51
IlIk a plc
FINaNcIal STaTEMENTS
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 2019, 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
01/12/09
14/05/10
01/02/12
22/03/16
Unapproved share options:
Date of grant
14/05/10
BLACK-SCHOLES VALUATION
Outstanding:
at start of the period
Granted in the period
lapsed in the period
at the end of the period
Number of
shares
90,000
23,200
30,798
510,880
period of
option
Exercise price
per share
10 years
10 years
10 years
10 years
£0.80
£0.51
£0.53
£0.59
Number of
shares
period of
option
Exercise price
per share
1,832,700
10 years
£0.51
Weighted average exercise price
Number
2019
£
2018
£
2019
2018
0.2856
0.0736
0.2069
0.1912
0.4930
0.1721
0.7652
4,806,499
3,511,393
(2,587,454)
5,710,692
1,266,117
(2,170,310)
0.2856
5,730,438
4,806,499
The exercise price of options outstanding at the end of the period ranged between £0.01 and £0.80 and their
weighted average contractual life was 8.9 years (2018: 8.0 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
lapsed during the period
at the end of the period
Weighted average exercise price
Number
2019
£
0.51
0.51
0.51
2018
£
0.51
0.51
0.51
2019
2018
1,921,000
(68,000)
1,923,900
(2,900)
1,853,000
1,921,000
The exercise price of options outstanding at the end of the period was £0.51 (2018: £0.51) and their weighted average
contractual life was 2 years (2018: 3 years).
ANNUAL REPORT AND ACCOUNTS 2019 52
IlIk a plc
FINaNcIal STaTEMENTS
NOTES TO THE cONSOlIDaTED
FINaNcIal STaTEMENTS
18 SHaRE-BaSED paYMENTS EXpENSE aND SHaRE OpTIONS CONTINUED
ILIKA PLC EXECUTIVE SHARE OPTION SCHEME 2010
at 30 april 2019, the following share options were outstanding in respect of the Ilika plc Executive Share Option
Scheme 2010:
Date of grant
14/05/10
01/02/12
22/03/16
16/03/17
08/02/18
24/01/19
Number of
shares
period of
option
Exercise price
per share
20,300
30,798
510,880
590,000
757,500
1,282,000
10 years
10 years
10 years
10 years
10 years
10 years
£0.51
£0.53
£0.59
£0.485
£0.21
£0.182
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.
700,446 options lapsed in the year.
ILIKA PLC UNAPPROVED SHARE OPTIONS
at 30 april 2019, the following share options were outstanding in respect of Ilika plc unapproved share options:
Date of grant
14/05/10
15/08/17
24/01/19
24/01/19
Number of
shares
period
of option
Exercise price
per share
1,832,700
239,867
16,000
2,213,393
10 years
10 years
10 years
10 years
£0.51
£0.01
£0.182
£0.01
1,955,008 options lapsed in the year and no options were exercised.
There are 1,973,798 options which were capable of being exercised as at 30 april 2019.
Share-based payment expense
Black-Scholes calculation
2019
£
2018
£
264,250
434,382
ANNUAL REPORT AND ACCOUNTS 2019 53
IlIk a plc
FINaNcIal STaTEMENTS
cOMpaNY 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
2019
£
2018
£
21 28,229,684
23
81,229
24,229,684
33,834
28,310,913
24,263,518
22
24,609
10,119
28,335,522
24,273,637
1,013,070
27,082,567
220,697
789,911
23,158,967
181,889
28,316,334
24,130,767
24
19,188
19,188
142,870
142,870
28,335,522
24,273,637
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 £225,442 (2018: loss of £398,797).
The notes on pages 56 to 57 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board of Directors on 10 July 2019.
Mr. K. Jackson
chairman
10 July 2019
ANNUAL REPORT AND ACCOUNTS 2019 54
IlIk a plc
FINaNcIal STaTEMENTS
cOMpaNY caSH FlOW STaTEMENT
Cash flows from operating activities
loss before tax
adjustments for:
Equity settled share-based payments
Operating cash flow before changes in working capital, interest and taxes
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Increase in amounts due from subsidiary undertaking
Cash utilised by operations
Cash flows from investing activities
Investment in subsidiary company
Net cash used in investing activities
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
Year ended 30 april
2019
£
2018
£
(225,442)
(398,797)
264,250
434,382
38,808
(14,490)
(123,682)
(47,395)
(146,759)
(4,000,000)
(4,000,000)
4,463,178
(316,419)
4,146,759
–
–
–
35,585
3,527
(5,278)
(33,834)
–
–
–
–
–
–
–
–
–
ANNUAL REPORT AND ACCOUNTS 2019 55
IlIk a plc
FINaNcIal STaTEMENTS
cOMpaNY STaTEMENT OF cHaNGES IN EQUITY
As at 30 April 2017
Share-based payment
profit and total comprehensive income
As at 30 April 2018
Issue of shares
costs of issue
Share-based payment
profit and total comprehensive income
Share
capital
£
789,911
–
–
789,911
223,159
–
–
–
Share
premium
account
£
Retained
earnings
£
Total
attributable to
equity holders
£
23,158,967
–
–
23,158,967
4,240,019
(316,419)
–
–
146,304
434,382
(398,797)
24,095,182
434,382
(398,477)
181,889
–
–
264,250
(225,442)
24,130,767
4,463,178
(316,419)
264,250
(225,442)
As at 30 April 2019
1,013,070
27,082,567
220,697 28,316,334
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.
ANNUAL REPORT AND ACCOUNTS 2019 56
IlIk a plc
FINaNcIal STaTEMENTS
NOTES TO THE cOMpaNY
FINaNcIal STaTEMENTS
19 accOUNTING pOlIcIES
BASIS OF PREPARATION
These financial statements have been prepared in accordance with IFRS adopted by the EU.
TAXATION, SHARE BASED PAYMENTS AND FINANCIAL INSTRUMENTS
For the relevant accounting policies please see note 1.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Investments in subsidiary undertakings where the company has control are stated at cost less any provision
for impairment.
KEY SOURCES OF ESTIMATION AND UNCERTAINTY
The company holds a significant investment in its subsidiary, Ilika Technologies limited, of £28.2 million (2018:
£24.2 million). In assessing the carrying value of this asset for impairment, the Directors have exercised judgement
in estimating its recoverable amount. The determination of the valuation for this asset is based on the discounted
estimated future cash flows generated from out-licensing transactions. The valuation is derived from a financial model
that evaluates a range of potential outcomes from what are considered the key variables, including the probability of
licensing agreements being signed, the expected licensing terms that will be negotiated and the anticipated revenues
generated as a result. Given the level of headroom indicated by the impairment review, the discount rate assumption is
not considered to be sufficiently sensitive to change to impact the conclusion of the review.
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 29 to 31,
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 £2,095,380 (2018: £2,498,527) and had net assets as at 30 april 2019 of £5,789,934
(2018: £3,885,314).
Shares in Group undertakings (at cost)
at 1 May
additions
at 30 april
2019
£
2018
£
24,229,684
4,000,000
121,339
24,108,345
28,229,684
24,229,684
The registered address of Ilika Technologies limited is kenneth Dibben House, Enterprise Road, University of
Southampton Science park, chilworth, Southampton, SO16 7NS.
During the year, the company converted inter-company debtors of £4,000,000 into Ordinary Shares in its subsidiary,
Ilika Technologies limited
ANNUAL REPORT AND ACCOUNTS 2019 57
IlIk a plc
FINaNcIal STaTEMENTS
22 TRaDE aND OTHER REcEIVaBlES
prepayments
23 aMOUNT DUE FROM SUBSIDIaRY UNDERTakING
Ilika Technologies limited
24 TRaDE aND OTHER paYaBlES
Trade payables
accruals
2019
£
2018
£
18,360
10,119
2019
£
2018
£
81,229
33,834
2019
£
13,124
6,000
19,124
2018
£
26,170
116,700
142,870
25 RElaTED paRTY TRaNSacTIONS
During the year, the company recharged costs totalling £110,182 (2018: £211,618) 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 29 to 31.
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 £81,229 from its subsidiary undertaking, Ilika Technologies
limited. as at 30 april 2019, Ilika Technologies limited had net assets of £5.7 million. 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.
ANNUAL REPORT AND ACCOUNTS 2019 58
IlIk a plc
FINaNcIal STaTEMENTS
cORpOR aTE DIREcTORY
COMPANY NUMBER
7187804
DIRECTORS
Executive
Non-Executive
Graeme purdy
prof. Brian Hayden
Steve Boydell
prof. keith Jackson (chairman)
Jeremy Millard
Monika Biddulph
SECRETARY
Steve Boydell
REGISTERED OFFICE
WEBSITE
ADVISERS
Independent auditors
Nominated adviser and broker
Registrars
public relations
Remuneration consultants
kenneth Dibben House
Enterprise Road
University of Southampton Science park
chilworth
Southampton
SO16 7NS
www.ilika.com
BDO llp
arcadia House
Maritime Walk
Ocean Village
Southampton
SO14 3Tl
liberum capital limited
Ropemaker place
25 Ropemaker Street
london
Ec2Y 9lY
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 Street
london
W1H 6ED
ANNUAL REPORT AND ACCOUNTS 2019 59
IlIk a plc
FINaNcIal STaTEMENTS
NOTES
ANNUAL REPORT AND ACCOUNTS 2019 60
IlIk a plc
FINaNcIal STaTEMENTS
NOTES
ANNUAL REPORT AND ACCOUNTS 2019 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
www.ilika.com
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