Source - LSE Regulatory
RNS Number : 4429S
Ilika plc
09 July 2020
 

ILIKA plc

(The "Company" or the "Group")

 

Full Year Results for the Year Ended 30 April 2020

 

Ilika (AIM: IKA), a pioneer in solid-state battery technology, announces its full-year results for the year ended 30 April 2020 ("FY20").

Operational highlights:

·    Increased commercial demand for evaluation samples of Stereax® miniature solid-state batteries triggering investment in large volume manufacturing capacity

·    Specified and ordered key equipment to support 70x increase in Stereax manufacturing capacity

·    Implemented portfolio of Medtech and IIoT Stereax development and field trial programmes with five commercial partners, including:

High-value asset tagging with Lightricity

Wind turbine monitoring with Titan Wind

Rail network infrastructure monitoring with Network Rail

Environmental sensing with ePeas

Miniature medical implants with multiple med-tech partners

·    Innovated Stereax performance by implementing photolithographic techniques compatible with low-cost industrial manufacturing processes and achieved 10x increase in energy density for ultra-thin cells for medical implants

·    Grew Stereax patent portfolio with a further eight granted patents in five jurisdictions

·    Secured a Goliath large format cell development programme with Jaguar Land Rover, bringing the total grant funding support from the Faraday Battery Challenge to £5.1m over three projects

·    Designed, outfitted and opened a new facility for the pre-pilot development of Goliath cells within nine months

·    Received the Green Economy Classification from the London Stock Exchange for contributing to a more sustainable economy

·    Maintained safe operations complying with COVID-19 Government guidelines without a material impact on the business to date

Financial highlights:

·    Turnover £2.8m (2019: £2.6m)

·    Adjusted EBITDA Loss for the year £2.1m (2019: Adjusted EBITDA loss £2.2m)

·    Loss per share 2.95p (2019: 2.42p)

·    Cash, cash equivalents and bank deposits of £14.8m (2019: £4.0m)

·    Raised net proceeds of c.£14.2m via an over-subscribed placing in March 2020

 

Outlook

With the funding in place for the next stage of development and a roadmap to grow its portfolio of products, the Company remains strongly positioned to take advantage of growing demand for solid state battery solutions. The Company remains well placed to fulfil the strategic objectives laid out at March's oversubscribed fundraise with the proposed transfer of Stereax into a third-party fabrication facility. The shift to the make and sell model and the ability to intensify commercial scale up of Stereax added to further progress with Goliath are expected to deliver significant revenue growth opportunities.

 

Commenting on the results Ilika's Chairman, Keith Jackson, said: "This has been an extraordinary year in more than one way, and I feel enormously proud of the way the team has delivered and taken advantage of challenges. The installation of the Goliath large format battery labs was done at great pace, with very little waste and was accompanied with an overhead saving on premises to give us the facilities we require to progress Goliath. The COVID-19 lockdown did temporarily limit access to our Stereax pilot line and restrict some of our working but the team quickly set up new work processes and used the limited fallow time to investigate and improve the way they work, so on the safe return to the labs they could be even more effective.

 

"At a technical level the team has made great progress on the batteries, particularly with the energy density of Stereax where every increase in density increases the addressable market. Not only have improvements been made, there are options and opportunities to increase the density further and thereby the addressable markets. Finally, the team has worked hard to paint a clear picture of what we do and where we are going as a business to our investors, culminating in the Company's successful placing in March 2020, which underpins the next phase of our growth strategy. The team is now focussed on the scale up of new Stereax capacity and further advancing the technology in Goliath. This will not be without its challenges but with our committed and agile team we are confident of a successful outcome."

 

An investor presentation will be held later today, 9 July 2020, at 4.30pm and will be hosted through the digital platform, Investor Meet Company. Investors can sign up to Investor Meet Company for free and add Ilika plc via the following link:https://www.investormeetcompany.com/ilika-plc/register-investor or for more information please contact Walbrook PR at ilika@walbrookpr.com.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU Regulation No. 596/2014 (the "Market Abuse Regulation"). Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain. If you have any queries on this, then please contact Steve Boydell, Finance Director of the Company (responsible for arranging release of this announcement) on 023 8011 1400.

 

For more information contact:

 

Ilika plc

 

 

www.ilika.com

Graeme Purdy, Chief Executive

Via Walbrook PR

Steve Boydell, Finance Director

 

 

 

Liberum Capital Limited

Tel: 020 3100 2000

Andrew Godber, Cameron Duncan, William Hall, Nikhil Varghese

 

 

 

Walbrook PR Ltd

Tel: 020 7933 8780 / Ilika@walbrookpr.com

Tom Cooper

Mob: 0797 122 1972

Lianne Cawthorne

Mob: 07584 391 303

Nick Rome

Mob: 07748 325 236

 

 

 

STRATEGIC REPORT

 

The Directors present their Strategic Report for the year ended 30th April 2020.

 

Principal Activities

 

Ilika plc is the holding company for Ilika Technologies Limited, a pioneer in solid-state battery technology. The product roadmap commenced with miniature Stereax® 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 "Goliath" cells for consumer electronics and automotive markets.

 

Business Strategy

 

The Group's mission is to rapidly develop leading-edge IP, manufacture and sell solid-state batteries for markets that cannot be addressed with conventional batteries due to their safety, charge rates, energy density and life limits. We will achieve this using ceramic-based lithium-ion technology that is inherently safe in manufacture and usage.

 

The Group's revenue model involves three phases of activity: a) commercially-funded and grant-funded production of small quantities of cells on company-operated pilot lines; b) technology transfer to third-party operated facilities on a contract basis; c) licensing the technology, potentially into a joint venture ('JV'), for large volume production. Ilika is currently in the first phase of activity, with its revenue being generated from a portfolio of development programmes and initial commercial sales from its Stereax pilot line. The Group has commenced its transition into the second phase, funded by a successful equity placing completed in March 2020.

 

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.

 

Addressable Markets

 

After a market analysis, Ilika has elected to focus its Stereax products on two segments:

·    industrial wireless sensors in hostile environments (Industrial Internet of Things, or IIoT)

·    miniature smart Medtech devices

 

Ilika has selected these market segments because they require power sources which favour the unique benefits that Stereax products offer and therefore avoid head-to-head competition with cheaper alternatives that are already mass-produced.

 

Industrial sensors often offer a return on investment for condition monitoring of high value assets or processes. When deployed in remote locations, 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 are 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. Some industrial deployments are in processes that are not possible to connect using cabling and may involve conditions that are not suitable (typically too hot) for using disposable batteries. IIoT applications for Stereax include infrastructure condition monitoring, process monitoring and environmental monitoring.

 

The MedTech industry is currently experiencing a significant wave of innovation as next-generation devices are being designed that are "smart". This usually involves the acquisition and transfer of data associated with the medical condition the device is designed to improve. This needs a power source and the intrinsically-safe, miniature Stereax cells are well-positioned for this segment. 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.

 

Ilika has experienced substantial interest from automotive companies searching for improved batteries for use in electric vehicles (EV's). Stereax miniature cells are too expensive to be used for vehicle propulsion, so Ilika is developing lower-cost processes for making large format "Goliath" pouch cells. Variants of Goliath cells are also useful for domestic appliances and consumer electronics products. Companies making such devices often have a cordless roadmap, in which products that were historically cabled use batteries to allow the products to be used more flexibly. 

 

Production Technology

 

Stereax batteries are made using Ilika's proprietary vacuum deposition process. Ilika currently operates a pilot line in Southampton which produces evaluation samples 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.

 

In contrast, Goliath batteries are made using a large-scale printing process. This low-cost process leverages Ilika's expertise in solid-state materials, which are formulated into inks, printed to rapidly deposit larger amounts of material and dried into a composite ceramic structures. After a short nine month design and build programme, Ilika opened a pre-pilot facility in September 2019 in Romsey, UK in which this printing process is currently under development.

 

Stereax Development and Deployment Projects

 

Ilika executed a portfolio of Stereax development and deployment programmes with global OEM's during the period, including the following:

 

·    High-value asset tagging with Lightricity

·    Wind turbine monitoring with Titan Wind

·    Rail network infrastructure monitoring with Network Rail

·    Environmental sensing with ePeas

·    Miniature medical implants with multiple med-tech partners

 

Stereax Scale-up

 

In the course of this financial year, Ilika has experienced a gradually increasing demand for evaluation samples of its Stereax cells to the point where utilisation of the pilot line is expected to be dominated by commercial demand in FY21. Given the need to continue to improve the Stereax product line, it is important that sufficient capacity is reserved on the pilot line for development work. This has triggered the need for a transition from pilot line production to 3rd party fab-based manufacturing. Accordingly, Ilika completed an over-subscribed equity placing in March 2020, generating net proceeds of c.£14.2m, of which approximately £8m will be used to finance the establishment of production facilities. In a post-period implementation, Ilika placed the purchase order for the most significant long-lead equipment item, "Tool 1", in May 2020. The remaining equipment required to establish a full production line will be purchased in a phased manner in FY21, with the expectation of installing and qualifying equipment in a 3rd party facility and commencing production in FY22.

 

Goliath Development Projects

 

In July 2017, the UK government announced a £246 million commitment over four 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. Ilika has been successful in securing a total of £5.1m of grant funding to support three collaborations based around its Goliath technology.

 

The first project is being led by Ilika in collaboration with Honda and Ricardo and is focused on the development of rapid charging of battery packs. The second project is being led by McLaren in collaboration with A123 Batteries, with the objective of developing battery pack technology for high performance vehicles. The third project is being led by Jaguar Land Rover and is focused on assessing how Ilika's solid state process capability can be integrated into existing lithium ion production technology.

 

COVID-19 Impact and Response

 

In order to prioritise the safety of our staff, their families and our customers we are ensuring our compliance with UK Government directives to avoid non-essential travel and maximise home-working. Any employees falling into at-risk categories and those showing COVID-19 symptoms are following self-isolation procedures.

 

Throughout the lockdown period, the Company's headquarters in Romsey, UK have remained open for those employees who need access to our Goliath large format cell development facilities. Through the implementation of risk assessments, enhanced cleaning and hygiene procedures and social distancing we have maintained a safe working environment.

 

In March, the Company's Stereax pilot line temporarily closed and subsequently re-opened in June 2020. We are deploying similar practices at the Stereax pilot facility to those we have used successfully at our headquarters. We are continuing to communicate regularly with our Stereax customers to advise them of the measures we have taken and the likely impact on delivery times of evaluation samples. As a result, we have not received any order cancellations and we are currently executing our order back-log.

 

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 15 patent families in solid-state batteries, of which three are jointly owned with Toyota. This portfolio includes 20 granted patents.

 

Quality Management System

In December 2019, 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 2020 was £2.8m (2019: £2.6m). This includes £2.5m of grant income recognised from nine projects that the Company has in progress with Innovate UK (2019: £2.2m from ten programmes). Details of the larger programmes are provided in the Deployment Projects section.

 

More of the Group'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. 

 

Non-grant turnover in the year was £367k (2019: £345k). This year the Group has solely focussed on battery development and so turnover is associated with the supply of battery samples for evaluation by customers. Previously this turnover was associated with a broader range of materials development service contracts which are no longer being undertaken.

 

Administrative expenses and losses for the period

 

Administrative costs for the year increased to £4.4m relative to £3.6m in 2019. This increase is primarily as a result of additional depreciation of property, plant and equipment of £0.7m as a result of the extensive capital expenditure to fit out the Romsey premises which began in early 2019. This excludes the share-based payment charge.

 

Combined cost of sales and administrative expenses were £6.0m in the year which is up from the £5.0m for 2019. The largest component of expenses is wages and salaries which increased from £2.8m to £3.0m. This, alongside the increased depreciation noted above are the primary reasons for this increase to the Group's cost base.

 

The underlying level of loss that is measured by Earnings Before Interest, Tax, Depreciation and Amortisation and Share-based payments (adjusted EBITDA) shows a reduction in loss from £2.2m in 2019 to £2.1m in 2020.

 

Statement of financial position and cash flows

 

At 30th April 2020, current assets amounted to £16.5m (2019: £5.9m), including net funds of £14.8m (2019: £4.0m).

 

The principal elements of the £10.8m increase over the year ended 30 April 2020 in net funds were:

·    Net funds raised in the year by £14.2m from a Placing and Open Offer (2019: £4.1m)

·    Operating cash outflow of £2.1m (2019: £2.2m)

·    Decrease in receivables of £0.2m (2019: increase £0.5m) due to the favourable timing of the Innovate UK programmes quarterly project reviews

·    Decrease in payables of £0.5m (2019: increase of £0.4m) principally due to purchases relating to the establishment of the solid-state battery facility being settled in the year

·    Additions of plant, property and equipment of £0.9m (2019: £1.0m) 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 its 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 contracting specialist patent agents and attorneys with extensive global experience of patenting and licensing.

 

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.

 

Covid-19 risk

 

The Group is not immune to the risks associated with COVID-19. There are the day to day risks to our employees and other stakeholders of working in an environment with a virus present. The Group are managing these circumstances with risk assessments and method statements to ensure we provide a safe working environment in line with the guidance set out specific to our industry, together with the latest UK Government's guidance.  Further information on the impact of Covid-19 on the Group have been set out in the Operating review.

 

By order of the Board

 

Keith Jackson

Graeme Purdy

Chairman

CEO

 

8th July 2020
 

Financial Statements for year ended 30th April 2020

 

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)

Ms. C Spottiswoode CBE (retired 30th September 2019)

Mr. J Millard (Senior Independent Director)

Ms M. Biddulph

 

Research and development costs

 

In accordance with the policy outlined in note 1, the Group incurred research and development expenditure of £2,281,702 in the year (2019: £2,080,264). 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 14 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 2020, had the following interests in the ordinary shares of the Company:

 

Number of shares

 

1st May 2019

30th April 2020

 

 

 

G Purdy

734,427

774,427

K Jackson

70,000

95,000

C Spottiswoode

45,454

n/a

S Boydell

12,000

49,846

J Millard

n/a

-

M Biddulph

n/a

12,500

B Hayden*

-

40,000

 

* B Hayden had an interest in preference shares of the Company amounting to 426,300 at 1st May 2019 and at 30th April 2020.

 

During the year, K Jackson and M Biddulph subscribed to 25,000 and 12,500 shares in the placing respectively. B Hayden and G Purdy exercised 40,000 options and S Boydell exercised 37,846 options.

 

Substantial shareholdings

 

On 2nd July 2020 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

Janus Henderson Group plc

15,199,499

11.0

GPIM Limited

14,265,525

10.3

Canaccord Genuity Group plc

12,432,780

9.0

Parkwalk Advisors

12,237,629

8.8

Herald

7,969,783

5.8

Schroders plc

7,750,000

5.6

Baillie Gifford & Co.

7,170,769

5.2

Amati AIM VCT plc

5,421,169

3.9

 

Post balance sheet events

There are no significant post balance sheet events from the 30th April 2020 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), 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

Short‑Term Incentive Plan - annual

performance related bonus

Rewards the achievement of short‑term 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.

Long‑Term Incentive Plan - restricted share unit awards

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

Ilika plc Long Term Incentive Plan 2018 (the "LTIP"), was adopted by shareholders at the 2018 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 £65,975 per annum. Jeremy Millard and Monika Biddulph receive a fixed fee of £33,483 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 2020 and 30th April 2019 was as follows:

 

 

 

Basic

salary

Benefits in kind

 

 

Bonus

Total

Short term benefits

Pension

Total

 

£

£

£

£

£

£

Year to 30th April 2020

 

 

 

 

 

 

G Purdy

204,015

701

40,803

245,519

20,402

265,921

S Boydell

135,032

464

13,504

149,000

11,707

160,707

B Hayden*

65,285

-

9,772

75,057

-

75,057

K Jackson

65,325

-

-

65,325

-

65,325

J Millard

33,153

-

-

33,153

-

33,153

M Biddulph

33,153

-

-

33,153

-

33,153

C Spottiswoode

13,744

-

-

13,744

-

13,744

 

------

------

------

------

------

------

 

549,707

1,165

64,079

614,951

32,109

647,060

 

------

------

------

------

------

------

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

 

------

------

------

------

------

------

 

*B Hayden is employed by the University of Southampton. The amounts disclosed in the table above relate to payments made directly to B Hayden. The University of Southampton recharged employment costs of £72,432 to the company in the year in respect of B Hayden. (2019: £69,972).

 

Benefits in kind include critical illness cover.

 

Share options

 

The share options of the directors are set out below:

 

Unapproved

2019

Number

2020

Number

Exercise Price

 

Expiry date

Performance Conditions

G Purdy

1,050,000

1,050,000

51p

May 2020

n/a

G Purdy2

145,810

105,810

1p

August 2027

n/a

G Purdy

1,127,777

1,127,777

1p

January 2029

See note 3

G Purdy

-

207,229

1p

August 2029

n/a

G Purdy

-

606,014

1p

March 2030

See Note 4

B Hayden

525,000

525,000

51p

May 2020

n/a

B Hayden2

56,211

16,211

1p

August 2027

n/a

B Hayden

712,394

712,394

1p

January 2029

See note 3

B Hayden

-

60,896

1p

August 2029

n/a

B Hayden

-

382,807

1p

March 2030

See Note 4

S Boydell

117,600

117,600

51p

May 2020

n/a

S Boydell2

37,846

-

1p

August 2027

n/a

S Boydell

373,222

373,222

1p

January 2029

See note 3

S Boydell

-

63,822

1p

August 2029

n/a

S Boydell

-

196,619

1p

March 2030

See Note 4

C Spottiswoode1

50,100

-

51p

May 2020

n/a

 

 

 

 

 

 

 

1)    Share options lapsed in the year.

2)    Exercised in the year

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.

4)    These awards will vest on the achievement of the following share price targets, assessed over a three year performance period:

(a) Less than 51p - no vesting

(b) 51p  - 25% of the shares subject to award will vest

(c) 68p - 75% of the shares subject to award will vest

(d) 102p - 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 £179,984 (2019: £289,396).

 

 

 

 

 

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. Further details in respect of this and the impact of the Covid-19 pandemic can be found in note 1 of the financial statements.

 

By order of the Board

 

Graeme Purdy

Chief Executive

8th July 2020

 

 

 

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 (2018) 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 two 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 Jeremy Millard (Chair), Professor Keith Jackson and Monika Biddulph.

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), 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), 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

8/8

-

-

-

Mr G. Purdy

8/8

-

-

-

Ms. C Spottiswoode

3/3

1/1

-

1/1

Prof K Jackson

8/8

2/2

1/1

2/2

Jeremy Millard

8/8

2/2

1/1

2/2

Monika Biddulph

8/8

2/2

1/1

2/2

 

 

Risk management and internal control

 

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

 

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

 

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

 

By order of the Board

 

 

Keith Jackson                                   

Chairman                                                                           

8th July 2020

 

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 2020, with all members present, and covered the following matters:

 

·    July 2019: audit completion meeting for the 2019 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 2020: Half year report completion meeting. Approval of the release of the Half Year report.

 

On 30 September 2019, Jeremy Millard was appointed chair of the audit committee replacing Clare Spottiswoode who retired from the board.

 

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.

 

 

 

 

 

Jeremy Millard

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 2020 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 2020 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 our audit addressed the matter

 

Grant income recognition

 

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 a large 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 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. As such, we considered this area to be a key audit matter.

 

 

 

 

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 as submitted to the relevant governing body and in agreement with their own internal project costings.

 

We also confirmed that the group is entitled to receive these monies in accordance the grant contracts 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 recalculated the level of accrued or deferred income to be recognised on the balance sheet in relation to all grants by comparing the amounts due in respect of costs incurred to amounts subsequently submitted and received

 

Key observations

 

We noted no exceptions through performing these procedures.

 

 

Going concern

 

In light of the Covid-19 pandemic and the resultant economic uncertainty, as described in the going concern accounting policy, we considered the ability of the Group to operate with its current recourses and continue as a going concern in this environment to be a Key Audit Matter.

 

Management have prepared forecasts for a period in excess of 12 months from the date of signing which show that the Group can continue to operate within its existing cash resources.  These forecasts include the anticipated impact of Covid-19.  Further information is included in the going concern accounting policy in note 1 of the financial statements.

 

 

 

 

Our procedures included reviewing management's assessment of going concern through analysis of the group's cash flow forecast through to July 2021 and beyond, including assessing and challenging the assumptions underlying the forecasts.

 

As part of this process, and taking account of the Covid-19 pandemic, we sensitised the forecasts further to ascertain the levels of revenue decline that would cause a cash shortage at any point in management's post balance sheet assessment period.  We also compared the level of expenditure included in the forecasts and compared this to previous periods.

 

We considered the adequacy of the disclosures in the financial statements.

 

 

Our application of materiality

 

Group materiality: £159,000 (2019: £127,000).

 

Parent company materiality: £151,000 (2019: £116,000).

 

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 however this has been capped at 95% of group materiality. 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 £119,250 (2019: £95,250) which represents 75% (2019: 75%) of the above materiality levels. The same percentage has been used for the parent company with performance materiality set at £113,250 (2019: £87,000). 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 £151,000 (2019 - £116,000).

 

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 £3,180 (2019: £2,540). 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 set out on page 14, 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/auditorsresponsibilitiesThis 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.

 

 

 

 

Stephen Le Bas (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

Southampton

United Kingdom

 

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

 

 

 

Consolidated statement of comprehensive income

 

 

 

 

Year ended 30th April

 

Notes

2020

2019

 

 

 

£

£

 

 

 

 

Turnover

2

2,840,648 

2,589,736 

 

 

 

 

Revenue

 

367,003 

345,307 

UK grants

 

2,473,645 

2,244,429 

 

 

 

 

Cost of sales

 

(1,571,350)

(1,388,598)

 

 

-------

-------

Gross profit

 

1,269,298 

1,201,138 

 

 

 

 

Total Administrative expenses

 

 

 

Administrative expenses

 

(4,380,259)

(3,630,369)

Share based payment charge

 

(233,786)

(264,250)

 

 

(4,614,045)

(3,894,619)

 

 

-------

-------

Operating loss

3

(3,344,747)

(2,693,481)

 

 

 

 

Income from short term deposits

 

12,406 

25,800 

Interest payable

 

(10,299)

-

 

 

-------

-------

Loss before tax

 

(3,342,640)

(2,667,681)

Taxation

5

254,734 

346,922 

 

 

-------

-------

Loss for period / total comprehensive income

 

(3,087,906)

(2,320,759)

 

 

-------

-------

Loss per share from continuing operations

6

 

 

   Basic

 

(2.95)p

(2.42)p

   Diluted

 

(2.95)p

(2.42)p

 

 

 

 

 

Consolidated balance sheet

Company number 7187804

 

As at 30th April

 

Notes

2020

2019

 

 

£

£

ASSETS

 

 

 

Non-current assets

 

 

 

   Intangible assets

7

66,110 

23,815 

   Property, plant and equipment

8

1,670,614 

1,728,122 

   Right to use assets

9

240,040 

 

 

-------

-------

Total non-current assets

 

1,976,764 

1,751,937 

 

 

-------

-------

Current assets

 

 

 

   Trade and other receivables

10

1,470,664 

1,542,996 

   Current tax receivable

5

300,000 

360,000 

Other financial assets - bank deposits

 

762,200 

351,963 

   Cash and cash equivalents

11

13,989,538 

3,599,216 

 

 

-------

-------

Total current assets

 

16,522,402 

5,854,175 

 

 

-------

-------

Total assets

 

18,489,166 

7,606,112 

 

 

-------

-------

Issued capital and reserves attributable to owners of parent

 

 

   Issued share capital

15

1,391,857 

1,013,070 

   Share premium

 

40,895,709 

27,103,356 

   Capital restructuring reserve

 

6,486,077 

6,486,077 

   Retained earnings

 

(31,580,550)

(28,725,856)

 

 

-------

-------

Total equity

 

17,193,093  

5,876,647  

 

 

-------

-------

LIABILITIES

 

 

 

Current liabilities

 

 

 

   Trade and other payables

12

910,301 

1,439,465 

Lease liabilities

9

68,875 

 

 

-------

-------

Total current liabilities

 

979,176 

1,439,465 

 

 

-------

-------

Non-current liabilities

 

 

 

Lease liabilities

9

157,227 

   Provisions

13

169,670 

290,000 

 

 

-------

-------

Total non-current liabilities

 

326,897 

290,000 

 

 

-------

-------

Total liabilities

 

1,306,073 

1,729,465 

 

 

-------

-------

Total equity and liabilities

 

17,193,093  

7,606,112 

 

 

-------

-------

The notes form part of these financial statements

 

These financial statements were approved and authorised for issue by the Board of Directors on 8th July 2020.                             

 

 

Mr. K Jackson

Chairman

 

Consolidated cash flow statement

 

Year ended 30th April

 

 

2020

2019

 

 

£

£

Cash flows from operating activities

 

 

 

Loss before taxation

 

(3,342,640)

(2,667,681)

Adjustments for:

 

 

 

Amortisation

 

11,700

3,621

Depreciation

 

1,035,907

233,744

Equity settled share-based payments

 

233,786

264,250

Loss on disposal of plant property and equipment

 

3,552

Financial expense/(income)

 

(2,107)

(25,800)

 

 

-------

-------

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

 

(2,059,802)

(2,191,866)

Decrease / (increase) in trade and other receivables

60,036 

(518,637)

(Decrease)/ increase in trade and other payables

(256,844)

357,472 

Decrease in provisions

(120,330)

 

 

-------

-------

Cash utilised by operations

 

(2,376,940)

(2,353,031)

 

 

 

 

Tax received

 

314,734 

316,922 

 

 

-------

-------

Net cash flow used in operating activities

 

(2,062,206)

(2,036,109)

 

 

 

 

Cash flows from investing activities

 

 

 

Interest received

 

12,406 

25,800 

Purchase of intangible assets

(53,995)

(24,983)

Purchase of property, plant and equipment

(1,202,855)

(971,443)

Sale of property, plant and equipment

12,595 

Increase in other financial assets

 

(410,237)

(351,963)

 

 

-------

-------

Net cash used in investing activities

 

(1,642,086) 

(1,322,589) 

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from issuance of ordinary share capital

 

15,105,525 

4,463,178 

Cost of share issue

 

(934,385)

(316,419)

Lease payments

 

(76,526)

-

 

 

-------

-------

Net cash from financing activities

 

14,094,614

4,146,759 

 

 

-------

-------

Net increase in cash and cash equivalents

 

10,390,322 

788,061 

Cash and cash equivalents at the start of the period

 

3,599,216 

2,811,155 

 

 

-------

-------

Cash and cash equivalents at the end of the period

 

13,989,538 

3,599,216 

 

 

-------

-------

         

 

 

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 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

Adjustment in respect of adoption of IFRS 16

-

-

 

-

 

(574)

 

(574)

 

------

-------

--------

--------

--------

As at 30th April 2019 (restated)

1,013,070

27,103,356

6,486,077 

(28,726,430)

5,876,073

Share-based payment

-

-

-

233,786

233,786

Issue of shares

378,787

14,726,738

-

-

15,105,525

Cost of share issue

-

(934,385)

-

-

(934,385)

Loss and total comprehensive income

-

(3,087,906)

(3,087,906)

 

------

-------

--------

--------

--------

As at 30th April 2020

1,391,857

40,895,709

6,486,077 

(31,580,550)

17,193,093

 

------

-------

--------

--------

--------

 

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 below.

 

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.

 

In February 2020 the Company saw the emergence of Covid-19 and the impact of the subsequent lockdown on the Company's onsite operations.  This has led to delays and a slowdown in the Company's production, research and development activities and associated income. The Company has continued to operate on a reduced basis throughout with reduced staffing, ensuring that it follows Government guidance.  Government support has been sought where required with the Job Retention Scheme used to cover the reductions in headcount. 

 

The directors have prepared and reviewed financial forecasts, including the anticipated impact of Covid-19. The Group meets its day to day working capital requirements through existing cash resources which, at 30th April 2020, amounted to £14,751,738 (2019: £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.

 

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

 

Changes in accounting policies

 

(a) New standards, amendments to standards or interpretations

 

IFRS 16 - Leases

The Group adopted IFRS 16 with effect from 1 May 2019 and the accounting policy is detailed in note 9.  This has resulted in the lease for the property from which the group trades being brought onto the Balance Sheet, as both a right-of-use asset and a 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.

 

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

                                 

There are no new standards, interpretations or amendments not yet applied which the directors anticipate will have a material impact on the Group.

 

Turnover

 

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

 

Sales of goods

Sales of Stereax batteries are recognised upon delivery to the customer at which point they have an obligation to pay in full and as such control is considered to transfer at that point.  Invoices are raised at the point purchase orders are made and subsequently upon delivery.

Sales of services

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 products and services to be provided. The group has an enforceable right to payment over the period of the contract. Invoices are raised on despatch of goods or 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. At each period end the directors re-assess the impact of non-market conditions and adjust the estimated share-based payment appropriately.

 

The fair value of 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. Where required market-based vesting and other conditions are also considered in determining the fair value of new options granted in the year. 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 the year ended 30th April 2020, no development expenditure satisfied all of these conditions. £45,943 of development expenditure has been capitalised in the year as a result of the conditions being met in respect of the Stereax battery project and the sales made in the year.  This capitalisation commenced in April 2020.

 

Taxation

 

Companies within the group may be entitled to claim special tax allowances under the SME scheme 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. Where companies are loss-making the company claims tax credits on their surrenderable losses, with an appropriate receivable recognised.  A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.

 

Tax credits claimed under the RDEC scheme are accounted for under IAS 20 as government grants in line with the accounting policy noted above.

 

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.

 

Leases

 

All leases are accounted for by recognising a right-of-use asset and a lease liability except for leases of low value assets and leases with a duration of twelve months or less.

 

IFRS 16 was adopted on 1 May 2019 without restatement of comparative figures. For an explanation of the transitional requirements that were applied as at 1 May 2019, see note 9. The following policies apply subsequent to the date of initial application.

 

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

 

On initial recognition, the carrying value of the lease liability also includes: amounts expected to be payable under any residual value guarantee; the exercise price of any purchase option granted in favour of the group if it is reasonably certain to exercise that option; and any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

 

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: lease payments made at or before commencement of the lease, initial direct costs incurred, and the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset.

 

Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

 

 

 

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.

 

Development expenditure

 

Development expenditure is capitalised at cost and is amortised to administrative expenses on a straight-line basis over its useful economic life of 10 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 solid-state batteries. 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

2020

2019

 

£

£

Analysis by geographical market:

 

By destination

 

 

   Asia

12,831

66,230

   Europe

69,870

   North America

68,530

3,163

   UK

2,689,417

2,520,343

 

-------- 

-------- 

 

2,840,648

2,589,736 

 

-------

-------

 

 

 

 

An analysis of turnover by type, demonstrating the changing focus of management from sales of services to sales of goods, is as follows:

 

 

Year ended 30th April

Turnover

2020

2019

 

£

£

 

 

 

Goods

367,003

Services

345,307

UK Grants

2,473,645

2,244,429

 

-------- 

-------- 

 

2,840,648

2,589,736 

 

-------

-------

 

Customers might 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

2020

2019

 

£

£

 

 

 

UK Grants

2,473,645

2,244,429

Customers less than 10%

367,003

345,307

 

--------

--------

 

2,840,648

2,589,736

 

-------

-------

 

 

 

 

3 Operating loss

 

Year ended 30th April

 

2020

2019

This is arrived at after charging:

£

£

 

 

 

Research and development expenditure in the year

2,281,702 

2,080,264 

Depreciation of property, plant and equipment

971,896 

233,744 

Depreciation of right-of-use assets

64,011

Amortisation of intangible assets

11,700 

3,621 

Auditors remuneration:

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

 

24,200 

 

23,200 

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

The Audit of the Group's subsidiaries

 

7,800

 

6,800

Short term lease expenses

123,422

Operating lease rentals

-

227,638

Share-based payment

233,786

264,250

 

-------

-------

 

 

4       Employees

 

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

 

 

Year ended 30th April

 

2020

2019

 

Number

Number

Administration

4

5

Materials synthesis

41

39

 

------

------

 

45

44

 

------

------

 

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

 

Year ended 30th April

 

2020

2019

 

£

£

 

 

 

Wages and salaries

2,348,026

2,182,710

Social security costs

276,758

244,577

Share-based payment expense

233,786

264,250

Pension costs

154,518

149,601

 

-------

-------

 

3,013,088

2,841,138

 

--------

--------

 

 

 

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

 

 

Year ended 30th April

 

2020

2019

 

£

£

 

 

 

Wages and salaries

614,951

641,600

Pension costs

32,109

48,049

 

-------

-------

Directors' emoluments

647,060

689,649

 

 

 

Social security costs

80,443

81,946

Share-based payment expense

179,984

222,535

 

-------

-------

Key management personnel

907,487

994,130

 

--------

--------

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

 

2020

2019

 

£

£

 

 

 

R&D tax credits

300,000

360,000

Adjustments to prior period

(45,266)

(13,078)

 

             ------

             ------

 

254,734 

346,922 

 

------

------  

 (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:

 

 

2020

2019

 

£

£

 

 

 

Loss on ordinary activities before tax

(3,342,640)

(2,667,681)

 

------

------

Loss on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK of 19% (2019: 19%)

 

(635,645)

 

(506,871)

Effects of:

 

 

Expenses not deductible for corporation tax

44,741 

50,390 

R&D relief

(130,815)

(147,139)

Origination of unrecognised tax losses

421,219 

243,620 

Adjustments to prior period

45,266 

13,078 

 

------

------

Total tax credit for the year

(254,734)

(346,922)

 

------

------

 Unrecognised deferred taxation

 

There are tax losses available for carry forward against future trading profits of approximately £25,981,000 (2019: £23,810,000). A deferred tax asset in respect of these losses of approximately £4,936,000 (2019: £4,048,000) 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

 

2020

2019

 

No.

No.

 

 

 

Weighted average number of equity shares

104,645,940

95,789,335

 

--------

--------

 

 

 

 

£

£

Earnings, being loss after tax

(3,087,906)

(2,320,759)

 

--------

--------

 

 

 

 

Pence

Pence

Loss per share

(2.95)

(2.42)

 

------

------

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 2020, there were 9,199,082 options outstanding (2019: 7,583,438) as detailed in notes 15 and 18.

 

 

 

 

7       Intangible assets

 

Development expenditure

Software

licences

Intellectual property

Total  

 

£

£

£

£ 

Cost

 

 

 

 

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 

Additions

45,943

8,052

-

53,995 

 

------

------

------

------

As at 30th April 2020

45,943

63,092

75,000

184,035

 

 

 

 

 

Amortisation

 

 

 

 

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

Provided for the year

-

11,700 

-

11,700

 

------

------

------

------

As at 30th April 2020

-

42,925

75,000

117,925

 

 

 

 

 

Net book value

 

 

 

 

As at 30th April 2018

-

2,453 

-

2,453 

 

-------

------

-------

------

As at 30th April 2019

-

23,815 

-

23,815 

 

-------

------

-------

------

As at 30th April 2020

45,943

20,167

-

66,110

 

-------

------

-------

------

 

The amortisation charge of £11,700 (2019: £3,621) 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 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 

Additions

47,918 

870,737

11,880

930,535 

Disposals

(601,474)

(2,387,503)

(119,904)

(3,108,881)

 

------

-------

------

-------

As at 30th April 2020

47,918

4,684,189

61,339

4,793,446 

 

------

-------

------

-------

Depreciation

 

 

 

 

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 

Provided for the year

15,598

953,064  

3,234

971,896

Disposals

(597,922)

(2,374,908)

(119,904)

(3,092,734)

 

------

-------

------

-------

As at 30th April 2020

6,687

3,065,415

50,730

3,122,832

 

------

-------

------

-------

 

 

 

 

 

Net book value

 

 

 

 

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

 

------

-------

------

-------

As at 30th April 2020

41,231

1,618,774

10,609

1,670,614

 

------

-------

------

-------

 

There are £109,500 commitments for capital expenditure contracted but not provided for (2019 - £nil)

 

 

 

 

9    Leases

The Group has an operating lease for its premises in Romsey, Southampton.  Under IFRS 16, which was adopted on 1 May 2019, this operating lease is accounted for by recognising a right-of-use asset and a lease liability.  The cumulative transitional impact is recognised by way of an adjustment to the opening balance of retained earnings. There has been no restatement of the comparative figures.  For an explanation of the transitional requirements applied as at 1 May 2019 see note 19.

 

The lease liability has been measured at the present value of the contractual payments due to the lessor over the lease term using an incremental borrowing rate of 4%, which is the Group's estimate of the discount rate applicable to a property lease. The lease term has been determined to be 5 years, as this is the non-cancellable period before the Group has the option of a break. There is no reasonable certainty that the lease will continue beyond this point.

 

The right-of-use asset has been initially measured at the amount of the lease liability. Subsequent to initial measurement the lease liability increases as a result of interest charged at a constant rate on the balance outstanding and are reduced for any lease payments made. Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease

 

Right-of-use assets

Land and buildings

 

 

£

Cost

 

 

As at 1st May 2019

 

320,053

 

 

------

As at 30th April 2020

 

320,053

 

 

------

Depreciation

 

 

As at 1st May 2019

 

16,002

Provided for the year

 

64,011

 

 

------

As at 30th April 2020

 

80,013

 

 

------

Net book value

 

 

As at 1st May 2019

 

304,051

 

 

------

As at 30th April 2020

 

240,040

 

 

------

 

 

 

Lease liabilities

Land and buildings

 

 

£

As at 1st May 2019

 

292,329

Cashflows:

 

 

Lease payments

 

(76,526)

Non-cash items:

 

 

Interest expense

 

10,299

 

 

------

As at 30th April 2020

 

226,102

 

 

------

 

 

 

Maturity analysis of lease payments as at 30 April 2020:

 

 

 

£

0-3 months

 

19,131

3-12 months

 

57,394

 

 

------

Due in less than one year

 

76,525

1-2 years

 

60,583

2-5 years

 

105,397

 

 

------

Lease payments

 

242,505

 

 

------

 

10     Trade and other receivables

 

As at 30th April

 

2020

2019

 

£

£

 

 

 

Trade receivables

16,072

24,094

Prepayments

236,976

317,625

Other receivables

335,960

476,016

Accrued income

881,656

725,261

 

------

------

 

1,470,664

1,542,996

 

------

------

 

The ageing of trade receivables is as follows:

 

As at 30th April

 

2020

2019

 

£

£

 

 

 

0-29 days

30-59 days

16,072

24,094 

 

------

------

 

16,072

24,094 

 

------

------

 

Included in other receivables is an amount of £150,000 (2019: £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 13). The bond relates to the dilapidations costs which were due at the end of the Company's property lease. These works were largely complete as at 30th April 2020.

 

The accrued income of £881,656 (2019: £725,261) 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 year end compared to the previous year.

 

 

11     Cash and cash equivalents

 

As at 30th April

 

2020

2019

 

£

£

 

 

 

Current bank accounts

3,989,538

833,326

Short term deposits with less than three months' maturity

10,000,000

2,765,890

 

--------

--------

 

13,989,538

3,599,216

 

--------

--------

 

12        Trade and other payables

 

As at 30th April

 

2020

2019

 

£

£

 

 

 

Trade payables

349,822

699,330 

Other payables

23,738

36,183 

Other taxes and social security costs

74,875

56,928 

Accruals and deferred income

461,866

647,024 

 

--------

--------

 

910,301

1,439,465

 

--------

--------

 

The ageing of financial liabilities is as follows:

 

As at 30th April

 

2020

2019

 

£

£

 

 

 

0-29 days

430,340

1,203,615

30-59 days

201,708

36,794

60-89 days

25,260

14,770

90+ days

178,138

127,358

 

--------

--------

 

835,446

1,382,537

 

--------

--------

 

Within Accruals and deferred income is deferred income of £71,000 (2019: £171,499) that represent unfulfilled performance obligations on grants and product sales to be satisfied in the next twelve months.

 

13     Provisions

 

 

Leasehold

 Dilapidations

 

 

£

 

 

 

As at 1st May 2019

 

290,000

Utilised

 

(120,330)

 

 

------ 

As at 30th April 2020

 

169,670

 

 

--------

 

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 release in the year is in respect of work carried out at to hand back an existing leased premise in the year.

 

 

14     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 and are categorised as floating-rate financial assets. Contracts in place at 30th April 2020 had a weighted average period to maturity of 55 days (2019: 35 days) and a weighted average annualised rate of interest of 0.2%. (2019: 0.8%).

 

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 2020 by approximately £12,000 (2019: £26,000).

 

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 2020 by approximately £15,000 (2019: £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.

 

 

 

15     Share capital

 

As at 30th April

 

2020

2019

 

£

£

Authorised

 

 

138,597,312 (2019: 100,718,600) Ordinary Shares of £0.01 each

1,385,973

1,007,186

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

17,814

17,814

 

------

------

Allotted, called up and fully paid

 

 

138,597,312 (2019: 100,718,600) Ordinary Shares of £0.01 each

1,385,973

1,007,186

588,400 Convertible Preference Shares of £0.01 each

5,884

5,884

 

------

------

 

1,391,857

1,013,070

 

------

------

 

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 Shareholders have the right, at any time, to convert the preference shares held to the same number of Ordinary Shares. There are no further redemption rights.

 

On 26th and 27th March a total of 337,760,866 Ordinary Shares of £0.01 each were issued for a total consideration of £15,104,346 and costs incurred were £934,385.

On 17th September and 1st April, 60,000 and 57,846 options respectively were exercised over Ordinary shares of £0.01 each.

 

Share options

 

Employee related share options are disclosed in note 18.

 

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 £154,518 (2019: £149,601). Included within other creditors is £17,910 (2019: £18,679) relating to outstanding pension contributions.

 

 

 

17  Related party transactions

 

The directors consider that no one party controls the Group.

Details of key management personnel and their compensation are given in note 4 and in the Directors' Remuneration Report on.

 

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 2020, 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

14/05/10

20,300

10 years

£0.51

01/02/12

30,798

10 years

£0.53

 

Unapproved share options:

Date of grant

Number of shares

Period of

 option

Exercise

Price per share

14/05/10

1,782,600

10 years

£0.51

 

 

Black Scholes valuation

 

Weighted Average Exercise Price

Number

 

2020

2019

2020

2019

Outstanding:

£

£

 

 

At start of the period

0.1912

0.2856

5,730,438 

4,806,499 

Granted in the period

0.1461

0.0736

3,287,970 

3,511,393 

Exercised in the period

0.0100

-

(117,846)

Lapsed in the period

0.4774

0.2069

(1,504,380)

(2,587,454)

 

-----

-----

--------

--------

At the end of the period

0.1158

0.1912

7,396,182 

5,730,438  

 

-----

-----

--------

--------

 

The exercise price of options outstanding at the end of the period ranged between £0.01 and £0.53 and their weighted average contractual life was 9.1 years (2019: 8.9 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

 

2020

2019

2020

2019

Outstanding:

£

£

 

 

At start of the period

0.51

0.51

1,853,000

1,921,000

Lapsed during the period

0.51

0.51

(50,100)

(68,000)

 

----

----

---------

---------

At the end of the period

0.51

0.51

1,802,900

1,853,000

 

----

----

---------

---------

 

The exercise price of options outstanding at the end of the period was £0.51 (2019: £0.51) and their weighted average contractual life was 1 year (2019: 2 years).

 

Ilika plc Executive Share Option Scheme 2010

 

At 30th April 2020 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

08/02/18

700,000

10 years

£0.21

24/01/19

1,042,000

10 years

£0.182

09/07/19

338,983

10 years

£0.295

19/03/20

1,371,600

10 years

£0.255

 

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.

 

1,488,380 options lapsed in the year.

 

Ilika plc unapproved share options

 

At 30th April 2020 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

1,782,600

10 years

£0.51

15/08/17

122,021

10 years

£0.01

24/01/19

2,213,393

10 years

£0.01

29/08/19

331,947

10 years

£0.01

26/3/20

1,185,440

10 years

£0.01

26/3/20

60,000

10 years

£0.255

 

66,100 options lapsed in the year and 117,846 options were exercised.

 

There are 1,833,698 options which were capable of being exercised as at 30th April 2020.

 

 

2020

2019

 

£

£

Share-based payment expense

 

 

     Black Scholes calculation

233,786

264,250

 

------

------

 

19  Effects of changes in accounting policies

 

The Group adopted IFRS 16 with a transition date of 1 May 2019. The Group has chosen not to restate comparatives on adoption and therefore the revised requirements are not reflected in the prior year financial statements and have been processed at their initial date of application at 1 May 2019 and recognised in the opening equity balances.

 

Transition method

 

The Group adopted IFRS 16 using the modified retrospective approach, with the recognition of transitional adjustments on the date of initial application (1 May 2019), without restatement of comparative figures.

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16, the Group has recognised a right-of-use asset and lease liabilities for the lease of its premises. However, the Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases with a lease term of twelve months or less.

 

The following table presents the impact of adopting IFRS 16 on the statement of financial position as at 1 May 2019:

 

 

As originally presented

IFRS 16

1 May 2019

 

        £

                    £

            £

 

 

 

 

Right to use assets

-

304,051

304,051

Lease liabilities

-

(292,329)

(292,329)

Prepayments

46,818 

(12,296)

35,522 

Retained earnings

(28,725,856)

(574)

(28,726,430)

 

------

------

------

 

The following table reconciles the minimum lease commitments disclosed in the Group's 30 April 2019 financial statements to the amount of lease liabilities recognised on 1 May 2019:

 

 

£

Minimum operating lease commitments at 30 April 2019

397,076

Short term leases not recognised under IFRS 16

(65,814)

Effect of discounting using incremental borrowing rate at date of initial application

(38,933)

 

 

------

Lease liability as at 1 May 2019

 

292,329

 

 

------

 

 

 

Company Balance sheet of Ilika plc

Company number 7187804

 

 

 

As at 30th April

 

 

Notes

2020

£

2019

£

ASSETS

 

 

 

Non-current assets

 

 

 

  Investments in subsidiary undertaking

22

38,229,684

28,229,684

  Amount due from subsidiary undertaking

24

4,316,596

81,229

 

 

-------

-------

 

 

42,546,280

28,310,913

Current assets

 

 

 

Trade and other receivables

23

41,007

24,609

 

 

-------

-------

Total assets

 

42,587,287

28,335,522

 

 

-------

-------

Equity

 

 

 

  Issued share capital

 

1,391,857

1,013,070

  Share premium

 

40,874,920

27,082,567

  Retained earnings

 

257,456

220,697

 

 

-------

-------

 

 

42,524,233

28,316,334

LIABILITIES

 

 

 

Current liabilities

 

 

 

   Trade and other payables

25

63,054

19,188

 

 

-------

-------

Total liabilities

 

63,054

19,188

 

 

-------

-------

Total equity and liabilities

 

42,587,287

28,335,522

 

 

-------

-------

 

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 £197,027 (2019: loss of £225,442).

 

The notes form part of these financial statements.

 

These financial statements were approved and authorised for issue by the Board of Directors on 8th July 2020.                             

 

Mr. K Jackson

Chairman

 

 

Year ended 30th April

 

 

2020

2019

 

 

£

£

Cash flows from operating activities

 

 

 

Loss before tax

 

(197,027)

(225,442)

Adjustments for:

 

 

 

Equity settled share-based payments

 

233,786

264,250 

 

 

------

------

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

 

36,759

38,808 

 

 

 

 

Increase in trade and other receivables

(16,398)

(14,490)

Increase/(decrease) in trade and other payables

43,866 

(123,682)

 

 

------

------

Cash generated from/ (utilised by) operations

 

64,227

(99,364)

 

 

 

 

Cash flows from investing activities

 

 

 

Increase in amounts due from subsidiary undertaking

 

(4,235,367)

(47,395)

Investment in subsidiary company

 

(10,000,000)

(4,000,000)

 

 

------

------

Net cash used in investing activities

 

(14,235,367)

(4,047,395)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from issuance of ordinary share capital

 

15,105,525

4,463,178 

Costs of share issue

 

(934,385)

(316,419)

 

 

------

------

Net cash from financing activities

 

14,171,140

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 cashflow statement

 

 

Company statement of changes in equity

 

 

 

Share

capital

Share

premium

account

 

Retained

Earnings

Total

attributable to

equity holders

 

£

£

£

£

 

 

 

 

 

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 

 

 

 

 

 

Issue of shares

378,787

14,726,738

-

15,105,525

Costs of issue

-

(934,385)

-

(934,385)

Share-based payment

-

-

233,786

233,786

Profit and total comprehensive income

-

-

(197,027)

(197,027)

 

------

--------

------

---------

As at 30th April 2020

1,391,857

40,874,920

257,456

42,524,233

 

------

---------

------

---------

 

 

 

 

 

 

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.

 

 

 

 

 

20        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 £38.2m (2019: £28.2m). 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.

 

21        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.

 

22        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 £2,890,816 (2019: £2,095,380) and had net assets as at 30th April 2019 of £12,898,544 (2019: £5,789,934).     

 

2020

2019

Shares in Group undertakings (at cost)

£

£

 

 

 

At 1st May

28,229,684

24,229,684

Additions

10,000,000

4,000,000

 

------

------

At 30th April

38,229,684

28,229,684

 

------

------

                  

The registered address of Ilika Technologies Limited is unit 10a, The Quadrangle, Premier Way, Abbey Industrial Park, Romsey, SO51 9DL.

 

During the year, the company converted intercompany receivables of £10,000,000 into ordinary shares in its subsidiary, Ilika Technologies Limited

 

 

 

 

23        Trade and other receivables

 

2020

2019

 

£

£

 

 

 

Other receivables

22,150

6,249 

Prepayments

18,857

18,360 

 

------

------

 

41,007

24,609

 

------

------

24        Amount due from subsidiary undertaking

 

2020

2019

 

£

£

 

 

 

Ilika Technologies Limited

4,316,596

81,229

 

------

------

 

25        Trade and other payables

 

2020

2019

 

£

£

 

 

 

Trade payables

50,054

13,188

Accruals

13,000

6,000

 

------

------

 

63,054

19,188

 

             

             

 

26        Related party transactions

 

During the year the Company recharged costs totalling £194,592 (2019: £110,182) 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.

                                                                                                                                                                        

27        Financial instruments

 

Credit risk

The Company's credit risk is attributable to its receivable of £4,316,596 from its subsidiary undertaking, Ilika Technologies Limited. As at 30th April 2020, Ilika Technologies Limited had net assets of £12.9m. 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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