Source - LSE Regulatory
RNS Number : 1553F
Ilika plc
11 July 2019
 

ILIKA plc

(The "Company" or the "Group")

 

Final results

Financial Statements for year ended 30th April 2019

 

Ilika (AIM: IKA) a pioneer in solid-state battery technology, announces its full-year results for the year ended 30 April 2019.

 

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.

5.   Developing batteries for miniature medical implants with a leading bioelectronics company

·    Stereax® achieving significant technical development milestones with:

Record energy density from ultra-thin cells for medical implants

Development of photolithographic method to produce custom cells compatible with semiconductor manufacturing processes

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 Honda and Ricardo to develop rapidly charging batteries

Starting the MoSESS collaboration led by McLaren Automotive to power high-performance vehicles.

·    Appointment of Keith Jackson as Chairman and Dr. Monika Biddulph and Jeremy Millard as Non-Executive Directors

 

Financial highlights:

·    Turnover up 26% to £2.6m (2018: £2.1m)

·    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 20 pence per share in July 2018

 

Commenting on the results Ilika's Chairman, Keith Jackson, said: "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. 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% 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."

 

 

For more information contact:

 

Ilika plc

 

Graeme Purdy, Chief Executive

Tel: 023 8011 1400

Steve Boydell, Finance Director

 

 

 

Liberum Capital Limited

Tel: 020 3100 2000

Andrew Godber, Cameron Duncan, Trystan Cullen, William Hall

 

 

 

Walbrook PR Ltd

Tel: 020 7933 8780 / ilika@walbrookpr.com

Paul Cornelius

 

Nick Rome / Lianne Cawthorne

 

 

 

 

STRATEGIC REPORT

 

The Directors present their Strategic Report for the year ended 30th April 2019.

 

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.

 

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% 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.

 

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 photovoltaic) to allow them to be recharged and therefore to operate for an extended period of time, usually up to ten 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:

 

o          Small size in both footprint and thickness

o          Ability to be trickle charged

o          Charged only when an energy harvester can get energy

o          Longer life span to match those of sensors and microcontrollers

o          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.

 

Stereax Development and Deployment Projects

 

Ilika secured two additional OEM partners during the period, building on three ongoing development and deployment programmes with global OEM's.

 

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 photovoltaic (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 150C makes them particularly suitable for deployment in the hostile trackside environment.

 

Innovate UK Faraday Battery Challenge

Innovate UK is expecting 50% of vehicle production by 2030 to be electric vehicles (EV) or plug-in hybrid vehicles (PHEV). 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 £80m 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 £4.1m of grant funding to participate in collaborations with Honda, Ricardo, McLaren and A123 Batteries. Two projects are now underway.

 

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 underway 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 Industrialization 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 intellectual property portfolio in solid-state batteries has continued to be a focus this year. 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

In December 2018, Ilika announced that the annual independent audit of its Quality Management System (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 KPI's, which define the progress being made by the Group. The technical KPI's benchmark battery development milestones and patent applications. Commercial KPI's link the technical development programmes to the sales pipeline and engagement of commercialisation partners. Operational KPI's 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.

 

 

 

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. The consolidated financial statements are presented under International Financial Reporting Standards as adopted by the European Union. The financial statements of the Company continue to be prepared in accordance with International Financial Reporting Standards as adopted by the EU.

 

Statement of Comprehensive Income

 

Turnover

 

Turnover, all from continuing activities, for the year ended 30th April 2019 was £2.6m (2018: £2.1m). This includes £2.2m of grant income recognised from ten projects that the company has in progress with Innovate UK (2018: £1.3m from nine programmes). Details of the larger programmes are provided in the Deployment Projects above.

 

More of the Company's activities are supported by grant or commercial funding than was the case in the prior year, with operational resources were 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 £3.6m in 2019 relative to £3.8m in 2018.  This excludes the share-based payment charge.

 

Combined cost of sales and administrative expenses were £5.0m in the year which is up from the £4.9m 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 £2.8m 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 £3.3m in 2018 to £2.7m in 2019.

 

Statement of financial position and cash flows

 

At 30th April 2019, net assets amounted to £5.9m (2018: £3.8m), including net funds of £4.0m (2018: £2.8m).

 

The principal elements of the £1.2m increase over the year ended 30 April 2019 in net funds were:

·    Funds raised in the year £4.1m from a Placing and Open Offer (2018: £nil)

·    Operating cash outflow of £2.2m (2018: £2.6m);

·    Increase in receivables of £0.5m (2018: decrease £0.1m) due to the higher number of grants underway at the year end

·    Increase in payables of £0.4m (2018: decrease of £0.1m) due to purchases relating to the establishment of the solid state battery facility.

·    R&D tax credits received of £0.3m (2018: £0.4m)

·    Purchase of plant, property and equipment of £1.0m (2018: £0.3m) which mostly relates to the establishment of the large format solid state battery facility.

 

 

 

 

 

 

 

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.

 

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 overreliance on individual partners and, in agreements with partners, it ensures that there are commercialisation milestones which must be met for the partner to retain the rights to commercialise the intellectual property.

 

Financial risk

 

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 it's IP and resources over multiple projects. The Group applies for Research and Development tax credits to help mitigate its investment in these activities.

 

Intellectual property risk

 

The Group faces the risk that intellectual property rights necessary to exploit research and development efforts may not be adequately secured or defended. The Group's intellectual property may also become obsolete before the products and services can be fully commercialised.

 

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 intellectual property 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 and no Brexit detriment has been incurred to date.

 

 

By order of the Board

 

 

Keith Jackson                                     Graeme Purdy

Chairman                                           CEO

 

10th July 2019

 

Financial Statements for year ended 30th April 2019

 

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:

 

Executive

Mr S Boydell (FD and Company Secretary)

Prof. B. E. Hayden (CSO)

Mr G. Purdy (CEO)

 

Non-Executive

Prof. K Jackson (Chairman)

Mr M. Inglis (Chairman) (retired 1st January 2019)

Ms. C Spottiswoode CBE (Senior Independent Director)

Prof. Sir W Wakeham (retired 30th September 2018)

Mr. J Millard (appointed 1st October 2018)

Ms M. Biddulph (appointed 16th 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 are included in the Strategic Report.

 

Dividends

 

The Directors do not recommend the payment of a dividend.

 

Directors' interests in ordinary shares

 

The directors, who held office at 30th April 2019, had the following interests in the ordinary shares of the Company:

 

Number of shares

 

1st May 2018

30th April 2019

 

 

 

G Purdy

609,427

734,427

K Jackson

20,000

70,000

C Spottiswoode

45,454

45,454

S Boydell

9,090

12,000

J Millard

n/a

-

M Biddulph

n/a

-

B Hayden*

-

-

 

* B Hayden had an interest in preference shares of the Company amounting to 426,300 at 1st May 2018 and at 30th April 2019.

 

 

Between 30th 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.

 

 

 

Substantial shareholdings

 

On 2nd July 2019 the Company had been notified of the following holdings of more than 3% or more of the issued share capital of the Company.

 

Shareholder

No. of ordinary shares

% shareholding

GPIM Limited

14,090,525

14

Janus Henderson Group plc

13,300,000

13

Canaccord Genuity Group plc

11,075,816

11

Parkwalk Advisors

8,791,410

9

Baillie Gifford & Co.

7,893,978

8

Herald Investments

5,215,000

5

 

Post balance sheet events

There are no significant post balance sheet events from the 30th 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 re-appoint BDO LLP will be proposed at the next Annual General Meeting.

 

By order of the board

 

 

 

 

Steve Boydell

Company Secretary

 

 

 

 

 

 

 

 

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. 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.

Reflecting 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

Benefits and Pension

To offer market competitive package

Contribution to the executive director's individual money purchase scheme (at between 8% and 10% of base salary) and critical illness cover

n/a

ShortTerm Incentive Plan - annual

performance related bonus

Rewards the achievement of shortterm financial and strategic project milestones

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

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

LongTerm 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 AGM

Single awards of share options with an exercise price of the nominal value of the shares were made which will vest after three years

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

 

Shareholding guidelines

To increase shareholder alignment

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

CEO 300% of salary

CSO 250% of salary

CFO 150% of salary

n/a

 

 

(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 30th April 2019 and 30th April 2018 was as follows:

 

 

 

Basic

salary

Benefits in kind

 

 

Bonus

Total

Short term benefits

Pension

Total

 

£

£

£

£

£

£

Year to 30th April 2019

 

 

 

 

 

 

G Purdy

193,000

622

57,728

251,350

30,300

281,650

S Boydell

127,361

412

15,066

142,839

17,749

160,588

B Hayden*

64,960

-

17,838

82,798

-

82,798

M Inglis

43,983

-

-

43,983

-

43,983

K Jackson

43,658

-

-

43,658

-

43,658

W Wakeham

13,745

-

-

13,745

-

13,745

C Spottiswoode

32,988

-

-

32,988

-

32,988

J Millard

19,243

-

-

19,243

-

19,243

M Biddulph

10,996

-

-

10,996

-

10,996

 

------

------

------

------

------

------

 

549,934

1,034

90,632

641,600

48,049

689,649

 

------

------

------

------

------

------

Year to 30th April 2018

 

 

 

 

 

 

G Purdy

193,000

622

25,502

219,124

30,300

249,424

S Boydell

125,405

405

6,630

132,440

17,592

150,032

B Hayden*

64,960

-

8,144

73,104

-

73,104

M Inglis

65,975

-

-

65,975

-

65,975

K Jackson

32,988

-

-

32,988

-

32,988

W Wakeham

32,988

-

-

32,988

-

32,988

C Spottiswoode

32,988

-

-

32,988

-

32,988

 

------

------

------

------

------

------

 

548,304

1,027

40,276

589,607

47,892

637,499

 

------

------

------

------

------

------

 

*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.

 

 

 

Share options

 

The share options of the directors are set out below:

 

Unapproved

2018

Number

2019

Number

Exercise Price

 

Expiry date

Performance Conditions

G Purdy

1,050,000

1,050,000

51p

May 2020

n/a

G Purdy1

872,727

-

1p

September 2025

n/a

G Purdy

145,810

145,810

1p

August 2027

n/a

G Purdy2

-

1,127,777

1p

January 2029

See note 3

B Hayden

525,000

525,000

51p

May 2020

n/a

B Hayden1

527,272

-

1p

September 2025

n/a

B Hayden

56,211

56,211

1p

August 2027

n/a

B Hayden2

-

712,394

1p

January 2029

See note 3

S Boydell

117,600

117,600

51p

May 2020

n/a

S Boydell1

274,909

-

1p

September 2025

n/a

S Boydell

37,846

37,846

1p

August 2027

n/a

S Boydell2

-

373,222

1p

January 2029

See note 3

W Wakeham1

65,100

-

51p

May 2020

n/a

C Spottiswoode

50,100

50,100

51p

May 2020

n/a

M Inglis1

120,000

-

68.75p

September 2025

n/a

K Jackson1

40,000

-

68.75p

September 2025

n/a

 

 

 

 

 

 

Approved

 

 

 

 

 

S Boydell

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 Long Term Incentive Plan 2018 (the "LTIP") was received at the AGM 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% of the shares subject to award will vest

(c) 36p - 75% of the shares subject to award will vest

(d) 54p - 100% 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

Chairman of the Remuneration Committee

 

 

 

 

 

 

 

Statement of Directors' responsibilities in respect of the Annual Report and the Financial Statements

 

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

 

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

 

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

 

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

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

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

 

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

 

Website publication

 

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

 

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 twelve 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

10th July 2019

 

 

 

 

 

 

 

 

CORPORATE 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, three Executive Directors and three 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 bi-monthly.

 

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

 

Performance evaluation

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

 

Board Committees

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

 

i)          Audit Committee

The Audit Committee currently comprises Clare Spottiswoode CBE (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.

 

Attendance at Board meetings and committees

 

The Directors attended the following Board and committees meetings during the year:

 

Attendance

Board

Audit

Nomination

Remuneration

 

 

 

 

 

Mr S. Boydell

8/8

-

-

-

Prof. B. E. Hayden

7/8

-

-

-

Mr M Inglis

5/5

1/1

1/1

1/1

Mr G. Purdy

8/8

-

-

-

Ms. C Spottiswoode

7/8

2/2

1/1

2/2

Prof. Sir W Wakeham

4/4

1/1

1/1

1/1

Prof K Jackson

8/8

2/2

1/1

2/2

Jeremy Millard

4/4

1/1

-

1/1

Monika Biddulph

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 auditor and by considering the risks potentially affecting the Group.

 

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

 

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

 

By order of the Board

 

 

Keith Jackson                        

Chairman                                                      

10th July 2019

 

 

  

 

 

 

 

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.

 

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 auditor's 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

 

 

 

 

 

 

 

INDEPENDENT AUDITOR'S 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 International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

 

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 IFRSs as adopted by the European Union;

 

•     the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

 

•     the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

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 Auditor's 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 FRC's 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 twelve 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 judgment, 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, 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 a risk that income is not recognised in the correct period, or before the group is entitled to receive or not 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 confirmed that all revenues have been accurately recorded within the year.  We have reviewed contracts with customers in the year and since the year end to ensure that the revenue has been recorded in the correct period in line with their right to payment for the services provided and the group's accounting policies.

 

We obtained the agreements in respect of all grants received in the year and recalculated the income by reference to the costs incurred by the group.

 

We have also confirmed that the group is entitled to receive these monies in accordance with work done and that submissions made to date have been successfully completed.  We agreed receipts to bank statements and third party confirmations to gain assurance over the accuracy of the submissions and calculations thereon. 

 

We have recalculated the level of accrued or deferred income to be recognised on the balance sheet.

 

Key observations

 

We noted no exceptions through performing these procedures.

 

 

 

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% 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% 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 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% (2018: 75%) 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 that 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 auditor's 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.

 

Responsibilities of directors

 

As explained more fully in the Statement of Directors' responsibilities in respect of the Annual Report and the Financial Statements, 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.

 

Auditor's 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 auditor's 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 Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 

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 auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the 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

 

Date: 10th July 2019

 

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

 

 

Consolidated statement of comprehensive income

 

 

 

 

Year ended 30th April

 

Notes

2019

2018

 

 

 

£

£

 

 

 

 

Turnover

2

2,589,736 

2,051,177 

 

 

 

 

Revenue

 

345,307 

798,430 

UK grants

 

2,244,429 

1,252,747 

 

 

 

 

Cost of sales

 

(1,388,598)

(1,090,898)

 

 

-------

-------

Gross profit

 

1,201,138 

960,279 

 

 

 

 

Total Administrative expenses

 

 

 

Administrative expenses

 

(3,630,369)

(3,793,686)

Share based payment charge

 

(264,250)

(434,382)

 

 

3,894,619 

4,228,068 

 

 

-------

-------

Operating loss

3

(2,693,481)

(3,267,789)

 

 

 

 

Income from short term deposits

 

25,800 

17,156 

 

 

-------

-------

Loss before tax

 

(2,667,681)

(3,250,633)

Taxation

5

346,922 

353,309 

 

 

-------

-------

Loss for period / total comprehensive income

 

(2,320,759)

(2,897,324)

 

 

-------

-------

Loss per share from continuing operations

6

 

 

   Basic

 

(2.42)p

(3.67)p

   Diluted

 

(2.42)p

(3.67)p

 

 

 

 

Consolidated balance sheet

Company number 7187804

 

 

 

As at 30th April

 

Notes

2019

2018

 

 

£

£

ASSETS

 

 

 

Non-current assets

 

 

 

   Intangible assets

7

23,815 

2,453 

   Property, plant and equipment

8

1,728,122 

578,103 

 

 

-------

-------

Total non-current assets

 

1,751,937 

580,556 

 

 

-------

-------

Current assets

 

 

 

   Trade and other receivables

9

1,542,996 

1,024,359 

   Current tax receivable

5

360,000 

330,000 

Other financial assets - bank deposits

 

351,963 

-  

   Cash and cash equivalents

10

3,599,216 

2,811,155 

 

 

-------

-------

Total current assets

 

5,854,175 

4,165,514 

 

 

-------

-------

Total assets

 

7,606,112 

4,746,070 

 

 

-------

-------

 

 

 

 

Issued capital and reserves attributable to owners of parent

 

 

 

   Issued share capital

14

1,013,070 

789,911 

   Share premium

 

27,103,356 

23,179,756 

   Capital restructuring reserve

 

6,486,077 

6,486,077 

   Retained earnings

 

(28,725,868)

(26,669,347)

 

 

-------

-------

Total equity

 

5,876,647  

3,786,397 

 

 

-------

-------

 

 

 

 

LIABILITIES

 

 

 

Current liabilities

 

 

 

   Trade and other payables

11

1,439,465 

809,673 

   Provisions

12

290,000 

150,000 

 

 

-------

-------

Total liabilities

 

1,729,465 

959,673 

 

 

-------

-------

Total equity and liabilities

 

7,606,112 

4,746,070 

 

 

-------

-------

 

The notes form part of these financial statements

 

These financial statements were approved and authorised for issue by the Board of Directors on 10th July 2019.

 

Mr. K Jackson

Chairman

Consolidated cash flow statement

 

Year ended 30th April

 

 

2019

2018

 

 

£

£

Cash flows from operating activities

 

 

 

Loss before taxation

 

(2,667,681)

(3,250,633)

Adjustments for:

 

 

 

Amortisation

 

3,621

3,282

Depreciation

 

233,744

196,415

Equity settled share-based payments

 

264,250

434,382

Financial income

 

(25,800)

(17,156)

 

 

-------

-------

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

 

(2,191,866)

(2,633,710)

(Increase)/decrease in trade and other receivables

(518,637)

92,008 

Increase / (decrease) in trade and other payables

357,472 

(102,380)

 

 

-------

-------

Cash utilised by operations

 

(2.353,031)

(2,644,082)

 

 

 

 

Tax received

 

316,922 

353,309 

 

 

-------

-------

Net cash flow used in operating activities

 

(2,036,109)

(2,290,773)

 

 

 

 

Cash flows from investing activities

 

 

 

Interest received

 

25,800 

17,156 

Purchase of intangible assets

(24,983)

(3,154)

Purchase of property, plant and equipment

(971,443)

(322,958)

(Increase)/ decrease in other financial assets

 

(351,963)

2,900,000 

 

 

-------

-------

Net cash (used in)/ from investing activities

 

(1,322,589) 

2,591,044 

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from issuance of ordinary share capital

 

4,463,178 

Cost of share issue

 

(316,419)

 

 

-------

-------

Net cash from financing activities

 

4,146,759 

 

 

-------

-------

Net increase in cash and cash equivalents

 

788,061 

300,271 

Cash and cash equivalents at the start of the period

 

2,811,155 

2,510,884 

 

 

-------

-------

Cash and cash equivalents at the end of the period

 

3,599,216 

2,811,155 

 

 

-------

-------

         

 

 

 

 

Consolidated statement of changes in equity

 

 

Share

capital

Share

premium

account

Capital

restructuring reserve

Retained earnings

Total

attributable to equity holders of parent

 

£

£

£

£

£

 

 

 

 

 

 

As at 30th April 2017

789,911

23,179,756

6,486,077 

(24,206,405)

6,249,339

Share-based payment

-

-

-

434,382 

434,382

Loss and total comprehensive income

-

-

-

(2,897,324)

(2,897,324)

 

------

-------

--------

--------

--------

As at 30th April 2018

789,911

23,179,756

6,486,077 

(26,669,347)

3,786,397 

Share-based payment

-

-

-

264,250 

264,250

Issue of shares

223,159

4,240,019

-

-

4,463,178 

Cost of share issue

-

(316,419)

-

-

(316,419)

Loss and total comprehensive income

-

-

-

(2,320,759)

(2,320,759)

 

------

-------

--------

--------

--------

As at 30th 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.

 

 

 

 

 

 

Notes to the consolidated financial statements

 

1     Accounting policies

Basis of preparation

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

 

The individual financial statements of Ilika plc are shown in this announcement.

 

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company made up to the reporting date. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns over the investee, and the ability of the investee to use its power to affect the variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

 

Going concern

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

 

The directors have prepared and reviewed financial forecasts. The Group meets its day to day working capital requirements through existing cash resources which, at 30th 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 twelve months from the date of this report), and for this reason the financial statements have been prepared on a going concern basis.

 

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

 

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

 

Changes in accounting policies

 

(a) New standards, amendments to standards or interpretations

 

IFRS 9 - Financial Instruments

The Group adopted IFRS 9 which addresses the classification, measurement and derecognition of financial assets and financial liabilities, on 1st 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 1st January 2018. The Group has transitioned to the new standard through means of the cumulative effect method as at 1st 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.

 

(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 1st May 2019, will or may have an effect on the Group's future financial statements:

 

 

Effective date for

International Accounting Standards (IAS/IFRS)

periods commencing

IFRS 16 Leases

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 three operating leases as disclosed in note 15. The first is cancellable by the Group on six months' notice and this was served on 31st January 2019. The second is also cancellable by the Group on six months' notice and ends on 11th October 2020.  As these lease commitments are less than one 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 30th 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.

 

Research and development expenditure

 

Research expenditure is recognised as an expense when it is incurred.

 

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

i.      Its ability to measure reliably the expenditure attributable to the asset under development;

ii.     The product or process is technically and commercially feasible;

iii.    Its future economic benefits are probable;

iv.    Its ability to use or sell the developed asset;

v.     The availability of adequate technical, financial and other resources to complete the asset under development; and

vi.    Its intention is to use or sell the developed asset.

Prior to and during the year ended 30th 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 (eg 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

lease term

Plant, machinery and equipment

2 - 5 years

Fixtures & fittings

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 cashflows 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.

 

Intangible assets

 

Computer software

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

 

Intellectual property

 

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

 

Financial instruments

 

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. The Group's financial assets are all carried at amortised cost. Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS9 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 judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

The directors do not believe there to be any estimates or judgements that have a significant impact on the Group's Financial statements.

 

2.   Segment reporting

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

 

For management purposes, the Group is analysed by the geographical location of its customer base and business development directors have been appointed to cover the group's three territories of focus, Asia, North America and Europe (with the UK further split out below).

 

 

Year ended 30th April

Turnover

2019

2018

 

£

£

Analysis by geographical market:

 

By destination

 

 

   Asia

66,230

38,241

   Europe

134,302

   North America

3,163

565,887

   UK

2,520,343

1,312,747

 

-------- 

------ 

 

2,589,736 

2,051,177

 

-------

-------

 

 

 

A number of customers individually account for more than 10% of the total turnover of the Group. The turnover from these companies are indicated below:

 

 

Year ended 30th April

Turnover

2019

2018

 

£

£

 

 

 

UK Grants

2,244,429

1,252,747 

Customer 1

3,163

565,887 

Customers less than 10%

342,144

232,543 

 

--------

-------

 

2,589,736

2,051,177 

 

-------

-------

 

3. Operating loss

 

Year ended 30th April

 

2019

2018

This is arrived at after charging:

£

£

 

 

 

Research and development expenditure in the year

2,080,264 

2,009,023 

Depreciation

233,744 

196,415 

Amortisation of intangible assets

3,621 

3,282 

Auditors remuneration:

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

 

23,200 

 

22,200 

Fees payable to the Group's auditor for other services:

-  The Audit of the Group's subsidiaries

 

6,800

 

6,800

Operating lease rentals

227,638

207,511

Share-based payment

264,250

434,382

 

-------

-------

 

 

 

4.   Employees

 

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

 

 

Year ended 30th April

 

2019

2018

 

Number

Number

Administration

5

6

Materials synthesis

39

34

 

------

------

 

44

40

 

------

------

 

Staff costs for all employees, including executive directors, consist of:

 

Year ended 30th April

 

2019

2018

 

£

£

 

 

 

Wages and salaries

2,182,710

2,055,959

Social security costs

244,577

225,480

Share-based payment expense

264,250

434,382

Pension costs

149,601

150,120

 

-------

-------

 

2,841,138

2,865,941 

 

--------

--------

 

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

 

 

Year ended 30th April

 

2019

2018

 

£

£

 

 

 

Wages and salaries

641,600

589,607

Pension costs

48,049

47,892

 

-------

-------

Directors' emoluments

689,649

637,499

 

 

 

Social security costs

81,946

75,072

Share-based payment expense

222,535

409,502

 

-------

-------

Key management personnel

994,130

1,122,073

 

--------

--------

The Directors represent key management personnel and further details are given in the Directors' Remuneration Report.

 

5   Taxation

(a)   Tax on loss from ordinary activities

 

There is no taxation charge due to the losses incurred by the Group during the year. The taxation credit represents R&D tax credit claims as follows:

 

Year ended 30th April

 

2019

2018

 

£

£

 

 

 

R&D tax credits

360,000

330,000

Adjustments to prior period

(13,078)

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% (2018: 19%). The differences are reconciled below:

 

2019

2018

 

£

£

 

 

 

Loss on ordinary activities before tax

(2,667,681)

(3,120,313)

 

------

------

Loss on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK of 19% (2018: 19%)

 

(506,871)

 

(592,859)

Effects of:

 

 

Expenses not deductible for corporation tax

50,390 

57,772 

R&D relief

(360,000)

(330,000)

Origination of unrecognised tax losses

456,481 

535,087 

Under provision in previous years

13,078 

(23,309)

 

------

------

Total tax credit for the year

(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:

 

Year ended 30th April

 

2019

2018

 

No.

No.

 

 

 

Weighted average number of equity shares

95,789,335

78,991,110 

 

--------

--------

 

 

 

 

£

£

Earnings, being loss after tax

(2,320,759)

(2,897,324)

 

--------

--------

 

 

 

 

Pence

Pence

Loss per share

(2.42)

(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 30th April 2019, there were 7,583,438 options outstanding (2018: 6,727,499) as detailed in notes 14 and 18.

 

 

7.    Intangible assets

 

 

Software

licences

Intellectual property

Total  

 

 

£

£

£ 

Cost

 

 

 

 

As at 30th April 2017

 

39,043 

75,000 

114,043 

 

 

 

 

 

Additions

 

3,154 

3,154 

 

 

------

------

------

As at 30th April 2018

 

42,197 

75,000 

117,197 

 

 

 

 

 

Additions

 

24,983

-

24,983 

Disposals

 

(12,140)

-

(12,140)

 

 

------

------

------

As at 30th April 2019

 

55,040 

75,000

130,040 

 

 

 

 

 

Amortisation

 

 

 

 

As at 30th April 2017

 

36,462 

75,000

111,462 

Provided for the year

 

3,282 

3,282 

 

 

------

------

------

As at 30th April 2018

 

39,744 

75,000 

114,744 

Provided for the year

 

3,621 

3,621 

Disposals

 

(12,140)

(12,140)

 

 

------

------

------

As at 30th April 2019

 

31,225 

75,000

106,225

 

 

 

 

 

Net book value

 

 

 

 

As at 30th April 2017

 

2,581 

-

2,581 

 

 

------

-------

------

As at 30th April 2018

 

2,453 

-

2,453 

 

 

------

-------

------

As at 30th April 2019

 

23,815 

-

23,815 

 

 

------

-------

------

 

The amortisation charge of £3,621 (2018: £3,282) is included within administrative expenses.

 

8.    Property, plant and equipment

 

Leasehold

improvements

Plant,

machinery and equipment

Fixtures and fittings

Total

 

£  

£

£ 

£

Cost

 

 

 

 

As at 30th April 2017

567,500 

4,541,790 

167,720

5,277,010 

Additions

33,974 

287,969 

1,015

322,958 

Disposals

(11,939)

-

(11,939)

 

------

-------

------

-------

As at 30th April 2018

601,474 

4,817,820 

168,735

5,588,029 

Additions

1,383,135 

628

1,383,763 

 

------

-------

------

-------

As at 30th April 2019

601,474 

6,200,955

169,363

6,831,792 

 

------

-------

------

-------

Depreciation

 

 

 

 

As at 30th April 2017

567,500 

4,094,176 

163,774

4,825,450 

Provided for the year

8,144 

185,482 

2,789

196,415 

Disposals

(11,939)

-

(11,939)

 

------

-------

------

-------

As at 30th April 2018

575,644 

4,267,719 

166,563

5,009,926 

Provided for the year

13,367 

219,540 

837

233,744 

 

------

-------

------

-------

As at 30th April 2019

589,011

4,487,259  

167,400

5,243,670 

 

------

-------

------

-------

 

 

 

 

 

Net book value

 

 

 

 

As at 30th April 2017

447,614 

3,946

451,560 

 

------

-------

------

-------

As at 30th April 2018

25,830 

550,101 

2,172

578,103 

 

------

-------

------

-------

As at 30th April 2019

12,463 

 1,713,696 

1,963

1,728,122

 

------

-------

------

-------

 

There are no commitments for capital expenditure contracted but not provided for (2018 - £nil)

 

 

 

 

9.   Trade and other receivables

 

As at 30th April

 

2019

2018

 

£

£

 

 

 

Trade receivables

24,094

5,163 

Prepayments

317,625

337,887 

Other receivables

476,016

242,097 

Accrued income

725,261

439,212 

 

------

------

 

1,542,996

1,024,359 

 

------

------

 

 

The ageing of trade receivables is as follows:

 

As at 30th April

 

2019

2018

 

£

£

 

 

 

0-29 days

5,163 

30-59 days

24,094 

 

------

------

 

24,094 

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 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 twelve months. The increase in accrued income is due to the level of grants underway at the current and prior year end.

 

 

10.  Cash and cash equivalents

 

As at 30th April

 

2019

2018

 

£

£

 

 

 

Current bank accounts

833,326

435,108 

Short term deposits with less than three months' maturity

2,765,890

2,376,047 

 

--------

--------

 

3,599,216

2,811,155 

 

--------

--------

 

 

 

11.  Trade and other payables

 

As at 30th April

 

2019

2018

 

£

£

 

 

 

Trade payables

699,330 

269,191 

Other payables

36,183 

24,927 

Other taxes and social security costs

56,928 

51,372 

Accruals and deferred income

647,024 

464,183 

 

--------

--------

 

1,439,465

809,673 

 

--------

--------

 

The ageing of financial liabilities is as follows:

 

As at 30th April

 

2019

2018

 

£

£

 

 

 

0-29 days

1,203,615

482,162 

30-59 days

36,794

133,788 

60-89 days

14,770

17,404 

90+ days

127,358

124,947 

 

--------

--------

 

1,382,537

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 twelve months.

 

12.  Provisions

 

 

Leasehold

 Dilapidations

 

 

£

 

 

 

As at 1st May 2018

 

150,000

Additions

 

140,000

 

 

------ 

As at 30th April 2019

 

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 one year. Cash balances are placed on deposit for varying periods with reputable banking institutions to ensure there is limited risk of capital loss. The Group does not maintain an overdraft facility. 

 

Interest rate risk

The main risk arising from the Group's financial instruments is interest rate risk. The Group placed deposits surplus to short-term working capital requirements with a variety of reputable UK-based banks. These balances are placed at floating rates of interest and deposits have maturities of one to twelve 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 30th 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%. (2018: 0.6%).

 

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 30th 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 30th 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.

 

 

 

14.  Share capital

 

As at 30th April

 

2019

2018

 

£

£

Authorised

 

 

100,718,600 (2018: 78,402,710) Ordinary Shares of £0.01 each

1,007,186

784,027

1,781,400 Convertible Preference Shares of £0.01 each

17,814

17,814

 

------

------

Allotted, called up and fully paid

 

 

100,718,600 (2018: 78,402,710) Ordinary Shares of £0.01 each

1,007,186

784,027

588,400 Convertible Preference Shares of £0.01 each

5,884

5,884

 

------

------

 

1,013,070

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:

o 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

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

 

The Preference Share holders 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 30th 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:

 

 

2019

2018

 

£

£

Property leases which expire:

 

 

Within one year

65,814 

97,143 

In more than one year but less than five years

362,710 

 

------

------

 

428,524

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.

 

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 30th 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

Number of shares

Period of

 option

Exercise

Price per share

01/12/09

90,000

10 years

£0.80

14/05/10

23,200

10 years

£0.51

01/02/12

30,798

10 years

£0.53

22/03/16

510,880

10 years

£0.59

 

Unapproved share options:

Date of grant

Number of shares

Period of

 option

Exercise

Price per share

14/05/10

1,832,700

10 years

£0.51

 

 

Black Scholes valuation

 

Weighted Average Exercise Price

Number

 

2019

2018

2019

2018

Outstanding:

£

£

 

 

At start of the period

0.2856

0.4930

4,806,499 

5,710,692 

Granted in the period

0.0736

0.1721

3,511,393 

1,266,117 

Lapsed in the period

0.2069

0.7652

(2,587,454)

(2,170,310)

 

-----

-----

--------

--------

At the end of the period

0.1912

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

 

Weighted Average Exercise Price

Number

 

2019

2018

2019

2018

Outstanding:

£

£

 

 

At start of the period

0.51

0.51

1,921,000

1,923,900

Lapsed during the period

0.51

0.51

(68,000)

(2,900)

 

----

----

---------

---------

At the end of the period

0.51

0.51

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).

 

 

Ilika plc Executive Share Option Scheme 2010

 

At 30th April 2019 the following share options were outstanding in respect of the Ilika plc Executive Share Option Scheme 2010:

Date of grant

Number of shares

Period of option

Exercise

Price per share

 

 

 

 

14/05/10

20,300

10 years

£0.51

01/02/12

30,798

10 years

£0.53

22/03/16

510,880

10 years

£0.59

16/03/17

590,000

10 years

£0.485

08/02/18

757,500

10 years

£0.21

24/01/19

1,282,000

10 years

£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 30th April 2019 the following share options were outstanding in respect of Ilika plc unapproved share options:

Date of grant

Number of shares

Period of option

Exercise

Price per share

 

 

 

 

14/05/10

1,832,700

10 years

£0.51

15/08/17

239,867

10 years

£0.01

24/01/19

16,000

10 years

£0.182

24/01/19

2,213,393

10 years

£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 30th April 2019.

 

 

2019

2018

 

£

£

Share-based payment expense

 

 

     Black Scholes calculation

264,250

434,382

 

------

------

 

 

 

 

 

 

Company Balance sheet of Ilika plc

Company number 7187804

 

 

 

As at 30th April

 

 

Notes

2019

£

2018

£

ASSETS

 

 

 

Non current assets

 

 

 

  Investments in subsidiary undertaking

21

28,229,684

24,229,684

  Amount due from subsidiary undertaking

23

81,229

33,834

 

 

-------

-------

 

 

28,310,913

24,263,518

Current assets

 

 

 

Trade and other receivables

22

24,609

10,119

 

 

-------

-------

Total assets

 

28,335,522

24,273,637

 

 

-------

-------

Equity

 

 

 

  Issued share capital

 

1,013,070

789,911

  Share premium

 

27,082,567

23,158,967

  Retained earnings

 

220,697

181,889

 

 

-------

-------

 

 

28,316,334

24,130,767

LIABILITIES

 

 

 

Current liabilities

 

 

 

   Trade and other payables

24

19,188

142,870

 

 

-------

-------

Total liabilities

 

19,188

142,870

 

 

-------

-------

Total equity and liabilities

 

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 in this announcement form part of these financial statements.

 

These financial statements were approved and authorised for issue by the Board of Directors on 10th July 2019.                             

 

 

 

 

 

Mr. K Jackson

Chairman

 

 

Company cashflow statement 

 

 

 

Year ended 30th April

 

 

2019

2018

 

 

£

£

Cash flows from operating activities

 

 

 

Loss before tax

 

(225,442)

(398,797)

Adjustments for:

 

 

 

Equity settled share-based payments

 

264,250 

434,382 

 

 

------

------

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

 

38,808 

35,585 

 

 

 

 

Decrease/ (increase) in trade and other receivables

(14,490)

3,527 

(Decrease)/ increase in trade and other payables

(123,682)

(5,278)

Increase in amounts due from subsidiary undertaking

(47,395)

(33,834)

 

 

------

------

Cash utilised by operations

 

(146,759)

 

 

 

 

Cash flows from investing activities

 

 

 

Investment in subsidiary company

 

(4,000,000)

 

 

------

------

Net cash used in investing activities

 

(4,000,000)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from issuance of ordinary share capital

 

4,463,178 

Costs of share issue

 

(316,419)

 

 

------

------

Net cash from financing activities

 

4,146,759 

-

 

 

------

------

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

 

-

-

 

 

------

------

 

 

Company statement of changes in equity

 

 

 

Share

capital

Share

premium

account

 

Retained

Earnings

Total

attributable to

equity holders

 

£

£

£

£

 

 

 

 

 

As at 30th April 2017

789,911

23,158,967

146,304 

24,095,182 

 

 

 

 

 

Share-based payment

-

-

434,382 

434,382 

Profit and total comprehensive income

-

-

(398,797)

(398,477)

 

------

--------

------

---------

As at 30th April 2018

789,911

23,158,967

181,889 

24,130,767 

 

 

 

 

 

Issue of shares

223,159

4,240,019

-

4,463,178 

Costs of issue

-

(316,419)

-

(316,419)

Share-based payment

-

-

264,250

264,250 

Profit and total comprehensive income

-

-

(225,442)

(225,442)

 

------

--------

------

---------

As at 30th 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.

 

 

19.     Accounting polices

 

Basis of preparation

 

These financial statements have been prepared in accordance with International Financial Reporting Standards (''IFRSs'') adopted by the European Union.

 

Taxation, share based payments and financial instruments

 

For the relevant accounting policies please see note 1

 

Investments in subsidiary undertakings

 

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

               

Key sources of estimation and uncertainty

 

The company holds a significant investment in its subsidiary, Ilika Technologies Limited, of £28.2m (2018: £24.2m). 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, 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 30th April 2019 of £5,789,934 (2018: £3,885,314).  

 

2019

2018

Shares in Group undertakings (at cost)

£

£

 

 

 

At 1st May

24,229,684

121,339

Additions

4,000,000

24,108,345

 

------

------

At 30th April

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 intercompany debtors of £4,000,000 into ordinary shares in its subsidiary, Ilika Technologies Limited

 

22.     Trade and other receivables

 

2019

2018

 

£

£

 

 

 

Prepayments

18,360

10,119 

 

------

------

23.     Amount due from subsidiary undertaking

 

2019

2018

 

£

£

 

 

 

Ilika Technologies Limited

81,229

33,834

 

------

------

 

24.     Trade and other payables

 

2019

2018

 

£

£

 

 

 

Trade payables

13,124

26,170

Accruals

6,000

116,700

 

------

------

 

19,124

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.

 

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 30th April 2019, Ilika Technologies Limited had net assets of £5.7m. 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.


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