TIDMIKA

RNS Number : 6534A

Ilika plc

23 January 2020

Ilika plc

('Ilika,' the 'Company,' or the 'Group')

Half-year Report

Ilika (AIM: IKA), a pioneer in solid-state battery technology, announces its unaudited half yearly report for the six months ended 31 October 2019.

Operating Highlights:

Ilika has continued to develop and commercialise its thin-film miniature solid-state batteries for powering wireless sensors, as well as progressing its development of large format Goliath cells for electric vehicles (EV).

-- Launched the latest of the Company's miniature batteries, the Stereax(R) M50 in April 2019, designed for medical implants

-- Continued the commercialisation of its Stereax(R) batteries for industrial wireless sensors, which is the Company's second significant addressable market opportunity and part of the industrial Internet of Things ecosystem

-- Executed other demonstration deployments including wind turbines, rail networks and environmental pollution monitors and process control

-- Third Goliath alliance, project "Granite", launched in September 2019 and led by Jaguar Land Rover. This project is supported by grant funding from the UK Government's Faraday Battery Challenge.

   --    Total grant support offered to Ilika for its Goliath programme to date is GBP5m 

-- In September 2019 the Company opened its new large format battery facility, the Goliath pilot line, to support its portfolio of industrial collaborations.

Financial Summary:

   --    Total revenue for the period GBP1.5m (H1 2018: GBP1.0m) 
   --    Loss per share 1p (H1 2018: 1p per share) 
   --    EBITDA loss GBP1.0m (H1 2018: GBP1.3m) 
   --    Cash balance at period end GBP1.9m (H1 2018: GBP5.8m) with GBP0.7m banked post period end 

Post period end:

-- Awarded the Green Economy Classification by the London Stock Exchange, recognising its contribution to a more sustainable economy.

Commenting on the results Graeme Purdy, CEO of Ilika, said: "The first half of this financial year has seen us increase the utilisation of the production capacity of our Stereax(R) pilot line in response to commercial demand, positioning us for the scale-up of miniature battery production. In parallel, we have demonstrated our ability to act in an agile manner by rapidly completing our new pilot line for Goliath cells. We look forward to sustained momentum through the rest of this year and beyond."

 
 Ilika plc 
  Graeme Purdy, Chief Executive 
  Steve Boydell, Finance Director                            +44 (0)23 8011 1400 
 
 Liberum Capital Limited (Nomad 
  and Broker) 
  Andrew Godber, Cameron Duncan, 
  William Hall                                              +44 (0) 20 3100 2000 
 
 Walbrook PR Ltd                     +44 (0)20 7933 8780 or ilika@walbrookpr.com 
 Lianne Cawthorne                                       Mob: +44 (0)7584 391 303 
 Nick Rome                                              Mob: +44 (0)7748 325 236 
 

Joint Chairman's and CEO's Statement

Review of Period

Principal Activities

Ilika has continued to pursue its strategy of developing and commercialising its cutting-edge solid-state batteries for a wide range of applications. Our mission is to own the critical design and manufacturing intellectual property (IP), manufacture and sell solid-state batteries in low to medium volumes and license our IP for high volume manufacture. Our batteries use ceramic-based lithium-ion technology that is inherently safe and stable in manufacture and usage and offers high performance which differentiates our products from existing batteries.

Introduction to Stereax(R) solid-state battery technology

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 traditional lithium-ion batteries, including the following:

   --    Non-flammable, which eliminates the need for containment packaging 
   --    6x faster charging 

-- 2x increased energy density, making them half the volume and weight for a given electrical charge

   --    10x longer storage without loss of charge. 

Ilika has developed a roadmap and family of battery products, ranging from miniature solid-state devices designed for powering wireless sensor applications to large format cells for automotive power.

Miniature Stereax(R) batteries

Ilika's miniature Stereax(R) cells are differentiated from other solid-state technology through its choice of materials and its use of an efficient, low temperature evaporation process that is capable of higher manufacturing rates than other solid-state routes. This results in the following benefits relative to previous solid-state battery designs:

   --    Lower cost of manufacture through avoiding use of expensive sputtering targets 
   --    Long cycle life through use of a silicon anode 
   --    Less encapsulation required 
   --    High temperature resilience 

The unique benefits of Stereax(R) batteries make them particularly useful for medical implants and industrial applications. Miniature Stereax(R) batteries can enable medical devices in a way that is currently not possible with conventional lithium-ion batteries. Their compact, biocompatibility, high energy density, high power characteristics make them useful for a range of medical implant applications covering blood pressure monitoring to neuro-stimulation. Industrial automation, or Industry 4.0 as it is sometimes referred to, requires low maintenance batteries with a long lifetime, sometimes in situations that require them to operate at elevated temperatures above those for which standard lithium-ion batteries are rated (typically 60 degC).

Ilika has continued to work on a portfolio of five collaborative deployment projects during the period:

   1.    Integrated energy harvester and battery for asset tagging 

This is a collaborative project with Lightricity (formerly part of Sharp Laboratories Europe) to create an autonomous energy harvesting power source which involves combining Ilika's battery with Lightricity's photovoltaic (PV) technology to create a compact, self-recharging power pack. Beta prototype samples have been shared with commercialisation partners for evaluation.

   2.    Miniature medical implant 

This project involved the development of a battery for miniature medical implants to provide treatments for serious health conditions, through the body's own nervous system. The programme has been completed and is now awaiting further progress with the other non-battery related technology.

   3.    Wind turbine condition monitoring 

Ilika has been working in a partnership to deploy Stereax(R) powered devices for the condition monitoring of wind turbines with Titan Wind Energy, the largest manufacturer of wind turbines in China and the 4th largest globally. Beta prototype devices are currently undergoing evaluation in a trial deployment.

   4.    Environmental sensing 

This is a demonstration project to deploy Stereax(R) batteries to power an autonomous wireless sensor for environmental sensing and asset tracking.

   5.    Rail track condition monitoring 

In Q1 2019, Ilika commenced a trial deployment of wireless sensors for monitoring rail infrastructure with Network Rail. In the initial deployment, sensors will measure track strain due to high temperatures. The ability of Ilika's batteries to withstand temperatures of up to 150 degC and "fit and forget" life makes them particularly suitable for deployment in the hostile trackside environment.

Stereax(R) Manufacturing Scale-up

Ilika is currently manufacturing Stereax(R) batteries on a pilot line. These batteries are being deployed in the five collaborative programmes described above and are also being sold for customer evaluation. The capacity of the pilot line will be fully allocated to product sales this year and the transfer of larger scale production to a 3(rd) party facility is planned. Once the transfer has been achieved, Ilika's business model will continue to be to sell batteries on an outsourced basis. Ilika will control the supply chain, covering wafer production, thinning, dicing, encapsulation and testing. A further step-up in production capacity with a larger manufacturing partner is expected to be required further into the future, when a licensing model may be more appropriate.

Large Format Goliath batteries

Having been approached by a number of significant commercial partners interested in collaborating with Ilika to develop larger capacity batteries suitable for use in electric powered vehicles, Ilika expanded its product development roadmap in 2018.

In September 2019, Ilika announced the opening of its new large format battery facility, the Goliath pilot line, to support its portfolio of industrial collaborations. On this pilot line, Ilika is developing low cost printing processes suitable for forming batteries several orders of magnitude larger than the miniature Stereax(R) batteries. Also, in September 2019, Ilika announced its third Goliath alliance, project "Granite", which is being led by Jaguar Land Rover. This project is supported by grant funding from the UK Government's Faraday Battery Challenge, bringing the total grant support offered to Ilika for its Goliath programme to GBP5m. The objective of Granite is to develop cost-effective routes for the mass production of Goliath cells. Previously secured grant funding for the two other Goliath projects is supporting work on rapid charging with Honda and Ricardo, as well as battery packs for high performance vehicles with McLaren.

In addition to the programs supported by grant funding, Ilika is also able to carry out commercially funded programs for applications in both the automotive sector and others including aerospace and consumer electronics.

Goliath Manufacturing Scale-up

Using a similar model to the scale-up of Stereax(R), Ilika expects to maximize the production of Goliath batteries on its pilot line. The capacity of the Goliath pilot line has been designed for the demands of Ilika's three collaboration programmes until 2021. The next stage of scale-up will require collaboration with a 3(rd) party facility, such as the open-access Battery Industrialisation Centre currently being built in Coventry.

Cash position

The cash balance at period end was GBP1.9m (H1 2018: GBP5.8m) with GBP0.7m banked post period end. In the second half of the year Ilika expects a materially lower cash outflow. Capex will be lower; a tax credit has been received and working capital should improve. Grants of GBP1.1m are due in the period and revenue from Stereax product sales will continue to grow. Thereafter the continued expansion of Ilika will require additional financing which the directors anticipate may be a combination of grants, product sales, licences and external capital.

Green Economy Classification & Mark

Post period end, in October 2019 the Company was awarded the Green Economy Classification and Mark. This is a new initiative launched by the London Stock Exchange Group (LSEG) identifying London-listed companies and funds that generate over 50% of total annual revenues that contribute to the global green economy.

The creation of this Green Economy Mark allows greater visibility for investors that are interested in Green Economy activities and recognises those companies that are contributing to a greener more sustainable economy.

Outlook

Ilika intends to intensify the commercial scale up of its miniature Stereax(R) technology, through investments with a 3(rd) party manufacturing facility. Further technical progress is also expected with Goliath, including the evaluation of cell data by Ilika's collaboration partners. In the second half of the current financial year, Ilika expects to continue to deliver revenue growth relative to the previous year as its funded Goliath development programmes proceed and commercial revenues from Stereax(R) sales have a positive impact.

Graeme Purdy, CEO

Keith Jackson, Chairman

Ilika plc

Consolidated statement of comprehensive income for the six months ended 31 October 2019

 
                                                  Unaudited       Unaudited        Audited 
                                                  Six months      Six months         Year 
                                                    ended           ended           ended 
                                                 31 Oct 2019     31 Oct 2018     30 Apr 2019 
                                        Notes        GBP             GBP             GBP 
-------------------------------------  ------  --------------  --------------  -------------- 
 
 Turnover                                           1,460,639       1,010,896       2,589,736 
-------------------------------------  ------  --------------  --------------  -------------- 
 Revenue                                              212,823         283,382         345,307 
 UK grants                                          1,247,816         727,514       2,244,429 
-------------------------------------  ------  --------------  --------------  -------------- 
 
 Cost of sales                                      (782,115)       (559,554)     (1,388,598) 
 
 Gross profit                                         678,524         451,342       1,201,138 
 Administrative expenses 
-------------------------------------  ------  --------------  --------------  -------------- 
 Administrative expenses                          (2,132,354)     (1,800,128)     (3,630,369) 
 Share-based payment charge                         (119,348)       (180,164)       (264,250) 
-------------------------------------  ------  --------------  --------------  -------------- 
                                                    2,251,702       1,980,292       3,894,619 
                                               -------------- 
 
 Operating loss                                   (1,573,178)     (1,528,950)     (2,693,481) 
 
 Financial income                                       8,386           8,880          25,800 
 Financial expense                                    (6,432)               -               - 
                                               --------------  --------------  -------------- 
 
 Loss before tax                                  (1,571,224)     (1,520,070)     (2,667,681) 
 Taxation                                             139,734         171,922         346,922 
 
 Loss for period/total comprehensive 
  income attributable to owners 
  of parent                                       (1,431,490)     (1,348,148)     (2,320,759) 
 
 Loss per share 
 Basic and diluted                        2            (0.01)          (0.01)          (0.02) 
                                               --------------  --------------  -------------- 
 

The results from the periods shown above are derived entirely from continuing operations.

Consolidated balance sheet as at 31 October 2019

 
                                                 Unaudited      Unaudited       Audited 
                                                 Six months     Six months        Year 
                                                    ended          ended          ended 
                                                 31 Oct 2019    31 Oct 2018      30 Apr 
                                                                                  2019 
                                       Notes        GBP            GBP            GBP 
------------------------------------  -------  -------------  -------------  ------------- 
 ASSETS 
 Non-current assets 
 Intangible assets                                    21,466          2,453         23,815 
 Property, plant and equipment                     2,186,502        509,390      1,728,122 
                                               -------------  -------------  ------------- 
 
 Total non-current assets                          2,207,968        511,843      1,751,937 
                                               -------------  -------------  ------------- 
 
 Current assets 
 Trade and other receivables                       1,520,349      1,081,150      1,542,996 
 Current tax receivable                              499,734        185,000        360,000 
 Other financial assets - bank 
  deposits                                           353,831        350,001        351,963 
 Cash and cash equivalents                         1,507,631      5,440,859      3,599,216 
                                                              -------------  ------------- 
 
 Total current assets                              3,881,545      7,057,010      5,854,175 
                                               -------------  -------------  ------------- 
 
 Total assets                                      6,089,513      7,568,853      7,606,112 
                                               -------------  -------------  ------------- 
 
 
 Issued capital and reserves attributable 
  to owners of parent 
 Issued share capital                              1,013,670      1,013,070      1,013,070 
 Share premium                                    27,103,356     27,103,356     27,103,356 
 Capital restructuring reserve                     6,486,077      6,486,077      6,486,077 
 Retained earnings                              (30,043,689)   (27,837,331)   (28,725,856) 
                                               -------------  -------------  ------------- 
 
 Total equity                                      4,559,414      6,765,173      5,876,647 
                                               -------------  -------------  ------------- 
 
 
 LIABILITIES 
 Non-current liabilities                             192,004              -              - 
                                               -------------  -------------  ------------- 
 
 Current liabilities 
 Trade and other payables                          1,048,005        653,680      1,439,465 
 Provisions                                          290,000        150,000        290,000 
                                               -------------  -------------  ------------- 
 
 Total current liabilities                         1,338,005        803,680      1,729,465 
                                                              -------------  ------------- 
 
 Total liabilities                                 1,530,099        803,680      1,729,465 
                                               -------------  -------------  ------------- 
 
 Total equity and liabilities                      6,089,513      7,568,853      7,606,112 
                                               -------------  -------------  ------------- 
 

Consolidated cash flow statement for the six months ended 31 October 2019

 
                                               Unaudited      Unaudited       Audited 
                                               Six months     Six months        Year 
                                                  ended          ended          ended 
                                               31 Oct 2019    31 Oct 2018    30 Apr 2019 
                                                  GBP            GBP            GBP 
-------------------------------------------  -------------  -------------  ------------- 
 Cash flows from operating activities 
 Loss before taxation                          (1,571,224)    (1,520,070)    (2,667,681) 
 Adjustments for: 
 Amortisation                                        5,566            526          3,621 
 Depreciation                                      464,349         91,907        233,744 
 Equity settled share-based payments               119,348        180,164        264,250 
 Net financial income                              (1,954)        (8,880)       (25,800) 
                                             -------------  -------------  ------------- 
 Operating cash flow before changes 
  in working capital, interest and 
  taxes                                          (983,915)    (1,256,353)    (2,191,866) 
 Decrease/(increase) in trade and 
  other 
  receivables                                        3,514       (56,791)      (518,637) 
 Increase /(decrease) in trade and 
  other payables                                 (458,907)      (155,994)       357,472) 
                                             -------------  -------------  ------------- 
 Cash utilised by operations                   (1,439,308)    (1,469,138)    (2,353,031) 
 Tax received                                            -        316,922        316,922 
                                             -------------  -------------  ------------- 
 Net cash flow from operating activities       (1,439,308)    (1,152,216)    (2,036,109) 
 
 Cash flows from investing activities 
 Interest received                                   8,386          8,880         25,800 
 Purchase of intangible assets                     (3,217)              -       (24,983) 
 Purchase of property, plant and equipment       (617,917)       (23,719)      (971,443) 
 Increase in other financial assets                (1,867)      (350,001)      (351,963) 
                                             -------------  -------------  ------------- 
 Net cash used in investing activities           (614,615)      (364,840)    (1,322,589) 
 
 Cash flows from financing activities 
 Proceeds from issuance of ordinary 
  share capital                                        600      4,463,178      4,463,178 
 Cost of share issue                                     -      (316,418)      (316,419) 
 Capital element of finance leases                (31,830)              -              - 
  repaid 
 Interest paid                                     (6,432)              -              - 
                                             -------------  -------------  ------------- 
 Net cash from financing activities               (37,662)      4,146,760      4,146,759 
                                             -------------  -------------  ------------- 
 
 Net (decrease)/ increase in cash 
  and cash equivalents                         (2,091,585)      2,629,704        788,061 
 
 Cash and cash equivalents at the 
  start of the period                            3,599,216      2,811,155      2,811,155 
 
 Cash and cash equivalents at the 
  end of the period                              1,507,631      5,440,859      3,599,216 
                                             =============  =============  ============= 
 

Consolidated statement of changes in equity (unaudited)

 
                                        Share premium      Capital 
                               Share       account       restructuring      Retained 
                              capital                       reserve         earnings          Total 
                               GBP           GBP             GBP              GBP             GBP 
-------------------------  ----------  --------------  ---------------  --------------  -------------- 
 As at 30(th) April 
  2018                        789,911      23,179,756        6,486,077    (26,669,347)       3,786,397 
 Issue of shares              223,159       4,240,019                -               -       4,463,178 
 Expenses of share issue            -       (316,419)                -                       (316,419) 
 Share-based payment                -               -                -         180,164         180,164 
 Loss and total 
  comprehensive income              -               -                -     (1,348,148)     (1,348,148) 
 As at 31 October 2018      1,013,070      27,103,356        6,486,077    (27,837,331)       6,765,173 
                           ----------  --------------  ---------------  --------------  -------------- 
 Share-based payment                -               -                -          84,086          84,086 
 Loss and total 
  comprehensive income              -               -                -       (972,611)       (972,611) 
                           ----------  --------------  ---------------  --------------  -------------- 
 As at 30(th) 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               -               -                -         (5,691)         (5,691) 
                           ----------  --------------  ---------------  --------------  -------------- 
 As at 30th April 2019 
  (restated)                1,013,070      27,103,356        6,486,077    (28,731,547)       5,870,956 
                           ----------  --------------  ---------------  --------------  -------------- 
 Issue of shares                  600               -                -               -             600 
 Share-based payment                -               -                -         119,348         119,348 
 Loss and total 
  comprehensive income              -               -                -     (1,431,490)     (1,431,490) 
                           ----------  --------------  ---------------  --------------  -------------- 
 As at 31 October 2019      1,013,670      27,103,356        6,486,077    (30,043,689)       4,559,414 
                           ----------  --------------  ---------------  --------------  -------------- 
 

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 Group since inception of the business.

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.

Notes to the consolidated financial statements

   1.      Accounting policies 

Basis of preparation

The interim financial statements, which are unaudited, have been prepared on the basis of accounting policies consistent with International Financial Reporting Standards ("IFRSs") adopted by the European Union. The accounting policies are the same as applied in the Group's latest financial statements.

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 'Interim Financial Reporting'. Accordingly, whilst the interim financial statements have been prepared in accordance with IFRS they cannot be construed as being in full compliance with IFRS.

The financial information for the year ended 30 April 2019 does not constitute the full statutory accounts for that period. The Annual Report and Accounts for 30 April 2019 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Accounts for 2019 was unqualified and did not include references to any matters which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under Section 498(2) or 498(3) of the Companies Act 2006.

Going concern

The financial statements are prepared on a going concern basis which the directors believe continues to be appropriate. The Group meets its day to day working capital requirements through existing cash resources which, at 31 October 2019, amounted to GBP1.9m supplemented by the GBP0.7m received post period end. The directors have prepared projected cash flow information for the period ending twelve months from the date of their approval of these financial statements. The Board is confident that in the event that they choose to raise further finance this would be achievable based on the future prospects of the business and previous experience in raising equity finance, but acknowledge that this would be dependent on market conditions. On the basis of this cash flow information the directors believe that the Group will be able to continue to trade for the foreseeable future.

   2.      Loss per share 

Loss 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:

 
                                       Unaudited      Unaudited       Audited 
                                       Six months     Six months        Year 
                                          ended          ended          ended 
                                       31 Oct 2019    31 Oct 2018    30 Apr 2019 
                                         Number         Number         Number 
-----------------------------------  -------------  -------------  ------------- 
 
 Weighted average number of equity 
  shares                               101,321,426     90,331,972     95,789,335 
 
                                          GBP            GBP            GBP 
-----------------------------------  -------------  -------------  ------------- 
 
 Loss, being loss after tax            (1,431,490)    (1,348,148)    (2,320,759) 
 
 

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 and warrants would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS 33.

- Ends -

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