Full Year Results
ILIKA plc (The "Company")
Financial Statements for year ended 30th April 2011
Ilika (AIM: IKA), the advanced cleantech materials discovery company, is pleased to present its financial statements for the year ended 30th April 2011
Financial highlights:
· Successful AIM IPO on 14th May 2010 raising £5.2 million
· Gross revenues £1.5 million supplemented by £0.4 million of grant income (2010: £1.1 million and £0.2 million respectively)
· Loss Per Share £0.08 (2010: £25.81)
· Investment in high throughput equipment £0.7 million (2010: £0.1 million)
Operational highlights:
· 3 new significant new customer relationships
· Broadening and deepening of existing customer relationships
· Increase in business development resources and activities
· Carbon Trust grant to undertake further research on high performing catalysts for use in fuel cell vehicles.
Post balance sheet events:
· Altrika participates in development of new Stem Cell Collection Service, Oristem®
· Hydrogen Storage Collaboration with Sigma-Aldrich Materials Science
Commenting on the results, Ilika's Chairman Jack Boyer, said:
"In our first year as a quoted company, we have achieved a number of important milestones in the energy, electronics and biomedical areas of our business; expanded our international operations and secured a number of important contracts.
The Company has delivered strong revenue growth in the past year, and we expect to demonstrate the robustness of our key products, particularly in the areas of energy conversion and storage. In addition to achieving growth in the business, we aim to broaden our commercial pipeline and pursue our strategy for delivering full commercial success."
For more information contact:
|
Ilika plc Graeme Purdy, Chief Executive Steve Boydell, Finance Director |
+44 (0) 23 80111400
|
|
Nomura Code Securities Limited Phil Walker / Christopher Golden |
+44 (0) 20 7776 1200
|
|
Pelham Bell Pottinger Archie Berens / Charlotte Offredi |
+44 (0) 20 7861 3232 |
About Ilika
Ilika (AIM: IKA) is an advanced materials company which accelerates the discovery of new and patentable materials using its unique high throughput technologies (''HTT'') process for identified end uses in the energy, electronics and biomedical sectors. This process enables hundreds of scalable materials to be made in a single, automated operation and subsequently tested for key properties.
Traditionally, materials development has been a slow and arduous task, with manual, sequential methods used to make samples of material that are then tested for suitability. On average, it takes between seven and 10 years to move from an initial discovery through to the first commercial prototype. Experiments carried out by the Company can be executed 10 to 100 times faster than using traditional techniques.
The Company focuses on three principal sectors and has a number of active development programmes addressing markets within each sector:
Energy - developing innovative new materials for Lithium-ion batteries for vehicles for Toyota; developing high capacity hydrogen storage materials with Shell Hydrogen and Johnson Matthey through joint development programmes; developing cheaper alternatives to Platinum electrodes for use in fuel cells through a grant-funded project with the Carbon Trust; developing new materials for use in fuel cells for the transport sector for a major vehicle manufacturer; and carrying out in-house research on film photovoltaic solar cells.
Electronics - developing lead-free piezoelectric materials through a joint development programme with CeramTec; and developing phase change memory materials for high capacity memory.
Biomedical - developing polymers to enable the filtering of somatic stem cells from blood with a major global supplier of filters; it has been selling its CryoSkin® and MySkin® products for the treatment of burns and wounds in the UK through a specialist distributor and intends to commence clinical trials of its corneal bandage candidate.
The Group's commercialisation strategy is to enter into joint development or licensing agreements with large multinational companies which are seeking to commercialise products developed using the intellectual property created through jointly-funded programmes. Current commercialisation partners include large multinational companies such as Toyota, Shell, Johnson Matthey and CeramTec. The Company generates revenues from three sources: licensing and milestone payments from joint development programmes; fee for service from contract research projects; and from sales of CryoSkin® and MySkin®.
Further information can be found at www.ilika.com
CHAIRMAN'S REVIEW
Introduction
I am pleased to announce Ilika's results for the financial year ended 30th April 2011 after its first year as a listed AIM company, and to provide an update on the progress we have made in that time. At the time of the IPO, we set ourselves a number of objectives and it is gratifying to report that these have been achieved. Over the course of the year we have enjoyed considerable success, particularly in the energy and biomedical sectors, with both contract renewals with existing customers and new agreements entered into. Our focus has also been on Asia and the United States, where we have significantly increased our business initiatives.
Ilika's Technology
Ilika's unique high throughput technology (HTT) accelerates the discovery of new and patentable materials for identified end uses. This process enables hundreds of materials to be made in a single, automated, operation and subsequently tested for the necessary properties.
The production of a new material has traditionally been a slow and arduous process, taking between 7 and 10 years to move from an initial discovery through to the first commercial prototype. Experiments carried out by Ilika can be executed 10 to 100 times faster than by using conventional techniques.
The Group's primary strategy is to enter into joint development or licensing agreements with large multinational companies seeking to commercialise products developed using the intellectual property created through jointly funded programmes. Current commercialisation partners include Toyota, Shell, Johnson Matthey and CeramTec.
Financial Results
I am pleased to report Ilika has delivered a good set of financial results. Total revenues for the year ending 30th April 2011, increased to approximately £1.5 million, 46% ahead of last year and there has also been a substantial increase in the level of grant funding for in-house R&D, shown as other operating income, which increased to approximately £0.4m, 66% ahead of last year. Loss before tax for the year improved slightly and is in line with expectations. Our cash balances remain strong, totalling £2.8 million at 30th April 2011. At the year end, committed revenues including other operating income for the first half of 2011/2012 exceeded £0.7 million. This compares to a figure of £0.15 million for the first half of 2010/2011.
Review of the Year
Over the last 12 months we have successfully demonstrated our capabilities to a number of world leading multinational corporations, and have seen substantial growth in joint development and contract research revenues. We have embarked on commercial projects with three new customers, whilst continuing to build on our longer standing relationships.
In the energy sector, we renewed and extended the scope of our existing relationship with a major automotive corporation for the development of battery materials. The collaboration reinforces Ilika's position as a globally leading provider of materials expertise for the rapid development of next generation battery materials. We also entered into a contract with the Ministry of Defence for the identification and optimization of next generation thermoelectric materials. These materials have the potential to increase significantly the efficiency of conventional engines and generators through the harvesting of waste heat.
We have also made progress in developing materials and have recently collaborated with Sigma Aldrich to work on the scale-up and commercialisation of next generation hydrogen-storage materials. We firmly believe that this enterprise will become a vital component of the energy industry's efforts to develop consumer-friendly hydrogen storage materials for fuel cell and clean combustion technology.
Good progress has also been made in the electronics sector, when we signed an initial contract with a global electronics manufacturer in February 2011. The contract is to develop high throughput, screening technologies for the identification and optimization of next generation electronic materials, in return for stage payments. In April 2011, we entered into a similar contract with another leading electronics manufacturer, this time to help develop its next generation of battery materials.
Our technical capabilities have received public sector recognition, in the form of grants awarded for the development of a range of materials. In July 2010, a consortium led by Altrika, our healthcare focused subsidiary, was awarded a £153,000 grant for the development of a treatment for full thickness skin wounds. In October 2010, Ilika was awarded an initial research and development grant by the Carbon Trust to undertake the scale up, synthesis and testing of high performing palladium alloy compositions for use in fuel cell vehicles. Palladium alloy electrocatalysts have the potential to be 70% cheaper than platinum catalysts on a cost / performance basis. A further grant of £173k towards this initiative was awarded in April 2011.
Since the financial year end, Ilika's wholly owned subsidiary Altrika made a significant medical breakthrough involving the collection and storage of adult stem cells. The Oristem service offers a new, patented method of harvesting, isolating and storing stem cells from adult blood. It is a welcome move forwards from current forms of stem cell extraction which have been confined to neo-natal stem cells taken from umbilical cords, or more invasive sources such as fat tissue or bone marrow. It also offers a collection system that enables adults to be visited at home for blood samples to be taken.
People
We have an extremely strong and highly experienced executive board at Ilika, including Professor Brian Hayden, our Chief Scientific Officer and a founder of the Company. Alongside Brian sit Dr Werner Braun and Professor Sir William Wakeham, whose wealth of experience will be fundamental in helping Ilika expand both in the UK and overseas. Clare Spottiswoode, who joined the board at the time of the IPO, is also a great asset to the Company particularly in the energy sector as we continue to develop material solutions for this market.
I would like to take this opportunity to thank all of the team at Ilika for their continued energy and hard work and for their commitment to making it a world class company. I would also like to thank our strategic partners, distributors and advisers for their contribution to the development of the Company during the course of the financial year.
Outlook
Over the course of the last year, we have set the way for fully executing our IPO plan set out in 2010, and are on track to deliver future growth. Progress has been made across all three areas of Ilika's activities (energy, electronics and biomedical) and our expansion of business development activities has ensured that there is a broad pipeline of new opportunities ahead.
Our performance to date has met expectations, and we remain on track to deliver our predicted milestones. Ilika is committed to expanding its European and Asian activities and anticipates further business development opportunities in Asia on the back of the region's manufacturing-led recovery. The North American market also offers considerable opportunities for materials discovery and development, and we continue to pursue new opportunities there.
In summary, we look forward to continuing to achieve the goals set out at our IPO and to maintaining the growth that we have achieved thus far in this financial year. I look forward to reporting progress during the coming year and beyond.
Jack Boyer
Chairman
13th July 2011
ILIKA plc
Financial Statements for year ended 30th April 2011
CHIEF EXECUTIVE'S REVIEW
Introduction
In this first full year since Ilika was admitted to AIM, the Company has pursued its strategy of being a partner of choice for the development of new materials designed to solve some of the world's most important needs, particularly in the cleantech sector.
The Company has continued to work with blue-chip partners, which are active in the energy, electronics and biomedical market sectors. The sector-split of revenue generated in the past year has consisted broadly of 70% in energy, 20% in electronics and 10% in biomedical.
Ilika stands out as a compelling enterprise in these markets because of the unique nature of the high throughput techniques which Ilika uses in order to make and test new materials. The high throughput technology platform, originally developed at the University of Southampton, has proven itself to be a versatile and effective method for developing new materials with reproducible and scalable properties. This capability has been further developed over the last year, strengthening the Company's global profile. The Company has continued to attract an international customer base resulting in 83% of its revenues coming from outside the UK.
Energy
Most analysts agree that the sources and carriers of energy for transport, domestic and industrial uses are set to become increasingly diverse. For example, in the transport sector, the ubiquitous use of petrol and diesel is being supplemented with compressed natural gas (CNG), liquefied petroleum gas (LPG), biofuel, electricity (stored in batteries) and hydrogen. For these new fuels to be attractive to the customer there are a number of basic conditions that have to be fulfilled: the fuels need to be cheap enough to compete with petrol and diesel; they need to contain sufficient energy within a manageable volume and weight; the conversion of energy from its stored form into vehicle motive power needs to be done easily and economically; and replenishing fuel on-board the vehicle needs to be a straight-forward matter. Meeting the requirements of these basic conditions involves optimising the ability of materials to store and convert energy from one form to another and this is Ilika's focus in the energy market. In particular, Ilika has globally-recognised expertise in developing battery materials and materials for use in both storing hydrogen and converting it into electricity.
Batteries
Electric and hybrid vehicles have gained market share over the past 12 months. For instance, since 1st March 2011 the much-heralded Nissan LEAF has been on sale in the UK, with the first year's production allocation already sold out. Toyota has been broadening the roll-out of its hybrid drive-train concept, building on the success of its Prius and Auris ranges. These mass production vehicles have done much to persuade the motoring public that electric and hybrid vehicles are here to stay and they have created an appetite for sustained performance improvements. For instance, the Nissan LEAF has a range of 175km on the New European Driving Cycle and can be recharged from empty within 8 hours using the on-board charger. This is a good starting point, but clearly this range and recharge time will not satisfy the majority of road users. The best way to improve battery performance is to change the materials from which the battery is made and Ilika's technology can provide unique insights into how this can be achieved. Toyota and Ilika have been working together since 2008 to improve battery materials and current indications are that this effort is set to intensify in the coming period. In April 2011, Ilika announced that it had been successful in attracting a second collaboration partner for next generation battery development. Ilika has every confidence that it will be successful in maintaining its commercial momentum in this rapidly moving field.
Hydrogen
Hydrogen has an intrinsic advantage over batteries as an energy carrier because hydrogen can be processed to yield a higher energy density than is achievable with a battery. In other words, hydrogen can contain more energy than a battery of the same volume. In addition, hydrogen represents an attractive carrier of energy as its combustion or direct conversion to electricity via a fuel cell does not lead to the emission of carbon dioxide. However, hydrogen has not, to date, been as broadly adopted as batteries for energy storage. The main reasons for this are the difficulty in storing hydrogen, which is a light gas under atmospheric conditions, and the expense of methods for converting it to electricity.
The main criteria for hydrogen storage for transport purposes, as outlined by the US Freedom Car Initiative, are to supply enough hydrogen to enable a driving range of approximately 500 km, charge and recharge at near room temperature and provide hydrogen at rates fast enough for operation in automobiles.
Current prototype applications use either very high pressure compressed hydrogen (approx. 700 bar) or cryogenically cooled liquid hydrogen. These methods consume a significant percentage of the energy content in their compression and conversion (15% and 30% respectively) and both raise safety concerns. By contrast, Ilika's storage solution is a solid metal hydride, which exists as a powder stored in a cylinder at moderate pressure (10 bar) and is stable at room temperature. When warmed to moderate temperatures, hydrogen is released for use as fuel.
The target weight percentage of hydrogen stored in such a material for it to be economically viable has been set at 6% by the US Department of Energy. Current commercially-available hydride materials can achieve up to 2.3 weight % of hydrogen. In May 2011, Ilika announced a collaboration with Sigma Aldrich to verify and scale-up hydride materials that can potentially store up to 10 weight % of hydrogen, reversibly. The work with Sigma Aldrich is designed to yield a robust and economically viable industrial process for the mass production of Ilika's material. Sigma Aldrich has negotiated a licence for commercialising the material, driving its initial market adoption.
Once the challenge of overcoming hydrogen storage is met, it can be used directly in a combustion engine to provide automotive power. Alternatively, hydrogen lends itself to being used as a fuel in fuel cells, which electro-catalytically convert hydrogen and oxygen to water and electricity. The current fuel cells used in automotive prototypes use a significant amount of platinum, which is a scarce precious metal. In June 2010 Ilika announced a collaboration with ITRI in order to further develop the cheaper catalyst formulations previously patented by Ilika. This product development project is being supported by the £173,000 grant awarded to Ilika by the Carbon Trust in April 2011. Samples of materials are currently being performance tested by an independent body, with a view to making them available to automotive companies for their assessment within this current financial year.
Thermoelectrics
Thermoelectric materials can be used to generate an electric current from a thermal gradient. As a result, they can be used to convert waste heat into electricity. Potential applications include energy recovery from the exhaust of a vehicle, perhaps feeding into the electrical storage system of a hybrid propulsion system, and also waste heat recovery from a generator set, increasing its efficiency. In October 2010, Ilika announced the award of a thermoelectric project by DSTL, the research arm of the UK's Ministry of Defence (MOD). This project is supporting the company's endeavours in the development of efficient testing methods for screening thermoelectric materials and ultimately in the development of more efficient materials. After initial early adoption for MOD applications, the technology will be made available for a broader commercial roll-out.
Electronics
Piezoelectrics
Since November 2009, Ilika has been working together in a Joint Development Project with Ceramtec, one of the world's leading manufacturers of functional ceramics. Ceramtec's current product line includes piezoelectric devices, which are used for a broad range of sensor and actuator applications in the automotive and aerospace industries. The most commonly used piezoelectric material contains lead in its formulation, which has been banned under the EU's Restriction of Hazardous Substances (RoHS) regulations. Those ceramic manufacturers selling lead-containing ceramics in the EU are doing so under an exemption, pending development of a replacement technology. The objective of the collaboration is to develop a lead-free piezoelectric. The expectation is that adoption of the developed material will be rapid, given the regulatory drivers in place.
Capacitors
One of the unique aspects of the technology platform used by Ilika is its ability to make a broad range of complex oxide structures. These materials are commonly used for a wide range of electronic components, including in capacitors, which are devices for storing electronic charge in many different industrial and consumer electronics applications. This is an expanding area of business for Ilika and is expected to be a significant contributor to revenue in the current financial year.
Biomedical
Ilika operates a wholly-owned subsidiary, Altrika Ltd, which commercialises technology for biologically-functional medical (biomedical) devices.
At its facilities, located in Sheffield, UK, Altrika operates a high throughput lab for the rapid development of biologically active materials as well as a Human Tissue Authority (HTA) approved clean room suite for the production of its Myskin® and Cryoskin® products. The clean room suite is validated to meet Good Manufacturing Practice (GMP) requirements.
Altrika is fully licensed by the HTA for the procurement, testing, processing, distribution and storage of human cells. In addition, Cryoskin® is licensed as a cell therapy by the Medicines and Healthcare products Regulatory Agency (MHRA).
Over the past year, Myskin® and Cryoskin® have been used to successfully treat burns patients at most of the major burns units in the UK. Progress has been made in identifying key opinion leaders and distributors to support the roll out of these products into new jurisdictions, starting in the current financial year.
The $750 million acquisition of Advanced Bio-healing (ABH) by Shire Pharmaceuticals in May 2011 demonstrated the intrinsic appeal of cell therapy in the chronic wounds sector.
In June 2011, Altrika announced the launch of a new service (Oristem) with its partners Pharmacells and Vindon for the processing of adult blood in order to harvest and store adult stem cells. This new service offering leverages the existing facilities and licences which Altrika has in place for handling human cells. Extensive coverage of the launch of the service was published in the Financial Times, Mail on Sunday and Sunday Telegraph. Further extensions of Altrika's cell processing activities are planned in the forthcoming period.
Growth Strategy
In line with the strategy stated this time last year, Ilika has deployed additional business development resources in the US and Asia. In the US, Ilika appointed the JGW Group to represent its interests in acquiring business in the US defence industry. In addition, the Company appointed a full time business development director based in California. In Japan, Ilika has appointed an additional business development resource focussed on Altrika's offerings. These initiatives have broadened Ilika's commercial pipeline, supporting analyst's growth forecasts for the coming period.
Summary
Ilika has delivered strong revenue growth in the past year and expects this trend to continue in the current financial year.
Altrika has proven itself to be a dynamic, innovative business in the rapidly-moving sector of cell therapy. Some recent high profile M&A deals have confirmed the intrinsic value of this sector.
Some important milestones have been achieved in the scale-up of materials protected by the Company's IP portfolio. The forthcoming year will allow the Company to demonstrate the industrial robustness of some of its key products for energy conversion and storage, leading to commercial roll-out.
Graeme Purdy
Chief Executive
13th July 2011
ILIKA plc
Financial Statements for year ended 30th April 2011
FINANCIAL REVIEW
Ilika plc was incorporated on 12th March 2010 with a view to the acquisition of Ilika Technologies Limited and its subsidiary, Altrika Limited, (the "Limited Group") and subsequent AIM listing. The acquisition and subsequent AIM listing occurred on 14th May 2010. The comparative financial information set out in these statements does not constitute the Company's statutory accounts for the period ended 30th April 2010. The accounting policies and the IFRS conversion details are set out in the non-statutory accounts of Ilika Technologies Limited for the year ended 30th April 2010, which is available on the Company's website.
Revenue for the year ended 30th April 2011 was £1.54m (£1.06m for 2009/10), supplemented by £0.36m of grant income (£0.22m for 2009/10).
Revenues relate to the payments made by Ilika's partners for research and development activities. The majority of these payments are associated with the development of materials for applications in energy storage and conversion, but projects in the electronics sector have increased significantly in the year.
Grant funding was received from the Carbon Trust and the Technology Strategy Board ("TSB") to support a number of the Group's programmes for energy conversion, energy storage and biomedical applications.
Administration expenses in the year increased by around £0.25m in comparison to the prior year. This increase is primarily due to the expenses incurred in preparation for listing and the ongoing costs of being a publicly listed company, with amongst other new costs, AIM listing and regulatory fees and the appointments of a nominated adviser and company registrar.
The AIM listing on 14th May 2010, raised £4.4m, after expenses, to enable the Group to follow through its strategy of portfolio scale-up in preparation for a systematic roll-out of products incorporating Ilika's materials over the medium and long term. Investment in equipment in the year was £0.67m (2010: £0.12m ) which has increased the group's high-throughput capacity enabling the expected revenue growth to be achieved. As at 30th April 2011, the Group's cash position was £2.8m.
Steve Boydell
Finance Director and Company Secretary
13th July 2011
ILIKA plc
Financial Statements for year ended 30th April 2011
Directors' report
The Directors present their report and the audited financial statements for Ilika plc ('Ilika') and its subsidiaries (the 'Group') for the year ended 30th April 2011.
Principal activities
The principal activity of Ilika and the Group is the discovery and development of novel materials for the energy, electronics and biomedical sectors.
Business review
A detailed review of the business, its results and future direction is included in the Chairman and Chief Executive's Statement.
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) appointed 6th May 2010
Prof. B. E. Hayden (CSO) appointed 6th May 2010
Mr G. Purdy (CEO) appointed 6th May 2010
Non-Executive
Mr J. B. Boyer (Chairman) appointed 6th May 2010
Dr. W. Braun appointed 6th May 2010
Ms. C Spottiswoode CBE appointed 6th May 2010
Prof. Sir W Wakeham appointed 6th May 2010
Details of the Directors' remuneration and share options are shown in note 4 of these accounts.
The Group maintained directors' and officers' liability insurance cover throughout the period.
Principal risks and uncertainties
Commercial risk
The Group is subject to competition from competitors who may develop more advanced and less expensive alternative technology platforms, both for existing materials and for those materials currently under development. The Group is largely dependent on its partners to commercialise the end-products containing the Group's materials.
Financial risk
The Group is reliant on a small number of significant customers and partners. Termination of these agreements could have a material adverse affect on the Group's results or operations or financial condition. The Group expects to incur further operating losses as progress on development programmes continue. There can be no assurance that the Group will ever achieve significant revenues or profitability.
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.
Regulatory risk
The Group's materials and products are subject to various European and other legislative and regulatory requirements. Regulatory issues could lead to delays in development which take time and investment to resolve.
Post balance sheet events
There were no significant events of note which have occurred after the year ended 30th April 2011, to the date of this report.
Supplier payment policy
It is the Group's policy to settle debts with its creditors on a timely basis, taking best advantage of the terms and conditions offered by each supplier. As at 30th April 2011, the number of creditor days outstanding for the Group was 21 (2010: 41 days).
Financial instruments
The Group's principal financial instrument comprises cash and this is used to finance the Group's operations. The Group has various other financial instruments such as trade credit facilities that arise directly from its operations. The Group places deposits surplus to short-term working requirements with a range of reputable UK based banks and building societies. These balances are placed at fixed rates of deposit with maturities between one and nine months. See note 17 for IFRS7 disclosure regarding financial instruments.
Results and dividends
The Consolidated Statement of Comprehensive Income for the year is set out on page 18. The Group's loss for the financial year after taxation was £3,047,000 (2010: £3,132,000).
The Directors do not recommend the payment of a dividend.
Charitable and political donations
The Group made no charitable or political donations during the year (2010: Nil).
Research and development costs
In accordance with the policy outlined in note 1, the Group incurred research and development expenditure of £1,167k in the year (2010: £1,145k). Commentary on the major activities is given in the Chairman's report and Chief Executive 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.
Substantial shareholdings
On 30th June 2011 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 |
|
IP Group |
6,637,861 |
18.2 |
|
St Peter Port Capital |
6,018,924 |
16.5 |
|
Nomura International |
6,018,924 |
16.5 |
|
Mackin Holdings Inc |
4,117,647 |
11.3 |
|
Southampton Asset Management |
3,799,900 |
10.4 |
|
Artemis |
2,670,741 |
7.3 |
|
Nortrust Nominees |
1,830,991 |
5.0 |
|
Wyvern |
1,598,039 |
4.4 |
|
Southern Fox |
1,533,186 |
4.2 |
Directors' responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market ('AIM').
In preparing these financial statements, the Directors are required to:
• 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;
• 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.
By order of the Board
Graeme Purdy
Chief Executive
13th July 2011
CORPORATE GOVERNANCE STATEMENT OF ILIKA PLC
The Board is accountable to the Company's shareholders for good corporate governance and it is the objective of the Board to attain a high standard of corporate governance. As an AIM listed company full compliance with The Principles of Good Governance and Code of Best Practice (2006) (the 'Combined Code') is not a formal obligation. The Company has not sought to comply with the full provisions of the Combined Code, however it has sought to adopt the provisions that are appropriate to its size and organisation and establish frameworks for the achievement of this objective. This statement sets out the corporate governance procedures that are in place.
Board of directors
On 6th May 2010 the Board of directors (the 'Board') was appointed and consists of a non-executive Chairman, three executive directors and three non-executive directors.
The responsibilities of the non-executive Chairman and the Chief Executive Officer are clearly divided. The Chairman is responsible for overseeing the running of the board, ensuring that no individual or group dominates the Board's decision making and ensuring that the non-executive directors are properly briefed on matters. Prior to each Board meeting, directors are sent an agenda and Board papers for each agenda item to be discussed. Additional information is provided when requested by the Board or individual directors.
The Chief Executive Officer has the responsibility for implementing the strategy of the Board and managing the day to day business activities of the Group through his chairmanship of the executive committee.
The Non executive directors bring relevant experience from different backgrounds and receive a fixed fee for their services and reimbursement of reasonable expenses incurred in attending meetings.
The Board retains full and effective control of the Group. This includes responsibility for determining the Group's strategy and for approving budgets and business plans to fulfil this strategy. The full Board ordinarily meets bi-monthly.
The Company Secretary is responsible to the Board for ensuring that Board procedures are followed and that the applicable rules and regulations are complied with. All directors have access to the advice and services of the Company Secretary, and independent professional advice, if required, at the Company's expense. Removal of the Company Secretary would be a matter for the Board.
Performance evaluation
The Board has a process for evaluation of its own performance which is carried out annually.
Board Committees
As appropriate, the Board has delegated certain responsibilities to Board Committees as follows:
i) Audit Committee
The Audit Committee currently comprises Clare Spottiswoode CBE (Chairman), Professor Sir William Wakeham and Jack Boyer.
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 currently comprises Dr Werner Braun (Chairman), Clare Spottiswoode CBE and Jack Boyer. It 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 currently comprises Jack Boyer (Chairman), Professor Sir William Wakeham and Dr Werner Braun. 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 |
Remuneration |
|
|
|
|
|
|
Mr S Boydell |
6/6 |
- |
- |
|
Mr J. B. Boyer |
6/6 |
2/2 |
1/1 |
|
Dr. W. Braun |
6/6 |
- |
1/1 |
|
Prof. B. E. Hayden |
5/6 |
- |
- |
|
Mr G. Purdy |
6/6 |
- |
- |
|
Ms. C Spottiswoode |
6/6 |
2/2 |
1/1 |
|
Prof. Sir W Wakeham |
6/6 |
1/2 |
- |
All of the members of the board were appointed on 6th May 2010, at which time the Nomination Committee was appointed. No further appointments of directors have been made since that date and therefore no Nomination Committee meetings were held in the year. The Nomination Committee will convene its first meeting on 13th July 2011 to review the performance of the board since flotation.
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.
Corporate Social responsibility
The Board recognises the growing awareness of social, environmental and ethical matters and it endeavours to take into account the interest of the Group's stakeholders, including its investors, employees, suppliers and business partners, when operating the business.
Employment
The Board recognises its legal responsibility to ensure the well-being, safety and welfare of its employees and maintain a safe and healthy working environment for them and for its visitors. A Health and safety report is reviewed at each Board meeting and policies and procedures are independently reviewed to ensure compliance with best practice.
By order of the Board
Steve Boydell
Finance Director and Company Secretary
13th July 2011
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ILIKA PLC
We have audited the financial statements of Ilika plc for the year ended 30th April 2011 which comprise the consolidated statement of comprehensive income, the consolidated balance sheet, the parent company balance sheet, the consolidated cash flow statement, the parent company cash flow statement, the consolidated statement of changes in equity, the parent company statement of changes in equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company's members, as a body, in accordance with sections Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
· the financial statements give a true and fair view of the state of the Group's and the parent company's affairs as at 30th April 2011 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.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
· the parent company financial statements are not in agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
Kim Hayward (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Southampton
United Kingdom
Date
BDO LLP is a limited liability partnership registered n England and Wales (with registered number OC305127).
Consolidated statement of comprehensive income
|
|
Year ended 30th April |
||
|
|
Notes |
2011 |
2010 |
|
|
|
£ |
£ |
|
|
|
|
|
|
Revenue |
2 |
1,544,766 |
1,060,872 |
|
Cost of sales |
|
(936,511) |
(644,384) |
|
|
|
------- |
------- |
|
Gross profit |
|
608,255 |
416,488 |
|
|
|
|
|
|
Administrative expenses |
|
(4,148,002) |
(3,899,100) |
|
|
|
|
|
|
Other operating income |
5 |
357,014 |
215,000 |
|
|
|
------- |
------- |
|
Operating loss |
3 |
(3,182,733) |
(3,267,612) |
|
|
|
|
|
|
Financial income |
6 |
38,239 |
9,686 |
|
Financial expense |
7 |
(9,458) |
(6,448) |
|
|
|
------- |
------- |
|
Loss before tax |
|
(3,153,952) |
(3,264,374) |
|
Taxation |
8 |
106,468 |
132,823 |
|
|
|
------- |
------- |
|
Loss for period / total comprehensive income attributable to owners of parent |
|
(3,047,484) |
(3,131,551) |
|
|
|
------- |
------- |
|
Loss per share |
9 |
|
|
|
Basic |
|
(0.08) |
(25.81) |
|
Diluted |
|
(0.08) |
(25.81) |
|
|
|
------- |
------- |
|
|
|
|
|
Consolidated balance sheet
|
|
As at 30th April |
||
|
|
Notes |
2011 |
2010 |
|
|
|
£ |
£ |
|
ASSETS |
|
|
|
|
Non current assets |
|
|
|
|
Intangible assets |
10 |
61,794 |
66,738 |
|
Property, plant and equipment |
11 |
2,006,479 |
2,068,129 |
|
|
|
------- |
------- |
|
Total non current assets |
|
2,068,273 |
2,134,867 |
|
|
|
------- |
------- |
|
Current assets |
|
|
|
|
Inventory |
12 |
34,135 |
- |
|
Trade and other receivables |
13 |
748,081 |
614,110 |
|
Current tax receivable |
8 |
122,733 |
132,823 |
|
Other financial assets - bank deposits |
14 |
1,500,000 |
- |
|
Cash and cash equivalents |
15 |
1,303,924 |
792,418 |
|
|
|
------- |
------- |
|
Total current assets |
|
3,708,873 |
1,539,351 |
|
|
|
------- |
------- |
|
Total assets |
|
5,777,146 |
3,674,218 |
|
|
|
------- |
------- |
|
|
|
|
|
|
Issued capital and reserves attributable to owners of parent |
|
|
|
|
Issued share capital |
18 |
383,548 |
121,339 |
|
Share premium |
|
4,169,909 |
- |
|
Capital restructuring reserve |
|
6,486,077 |
6,479,728 |
|
Retained earnings |
|
(6,418,196) |
(3,945,196) |
|
|
|
------- |
------- |
|
Total equity |
|
4,621,338 |
2,655,871 |
|
|
|
------- |
------- |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
16 |
1,125,631 |
1,000,157 |
|
|
|
|
|
|
Non current liabilities |
|
|
|
|
Other payables |
16 |
30,177 |
18,190 |
|
|
|
------- |
------- |
|
Total liabilities |
|
1,155,808 |
1,018,347 |
|
|
|
------- |
------- |
|
Total equity and liabilities |
|
5,777,146 |
3,674,218 |
|
|
|
------- |
------- |
These financial statements were approved and authorised for issue by the Board of Directors on 13th July 2011.
Mr. J.B. Boyer
Chairman
Consolidated cash flow statement
|
|
Year ended 30 April |
|||
|
|
|
2011 |
2010 |
|
|
|
|
£ |
£ |
|
|
Cash flows from operating activities |
|
|
|
|
|
Loss before tax |
|
(3,153,952) |
(3,264,374) |
|
|
Adjustments for: |
|
|
|
|
|
Amortisation |
|
11,742 |
21,594 |
|
|
Depreciation |
|
731,599 |
764,327 |
|
|
Equity settled share based payments |
|
601,622 |
816,179 |
|
|
Loss /(profit) on disposal of plant, property and equipment |
|
605 |
(183) |
|
|
Loss on disposal of intangible assets |
|
298 |
- |
|
|
Net financial income |
|
(28,782) |
(3,238) |
|
|
|
|
------- |
------- |
|
|
Operating cash flow before changes in working capital, interest and taxes |
|
(1,836,868) |
(1,665,695) |
|
|
Increase in trade and other receivables |
(128,770) |
(297,152) |
||
|
Increase in inventory |
(34,135) |
- |
||
|
Increase in trade and other payables |
103,712 |
151,673 |
||
|
|
|
------- |
------- |
|
|
Cash utilised by operations |
|
(1,896,061) |
(1,811,174) |
|
|
|
|
|
|
|
|
Tax received |
|
116,558 |
150,078 |
|
|
|
|
------- |
------- |
|
|
Net cash flow from operating activities |
|
(1,779,503) |
(1,661,096) |
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Interest received |
|
33,038 |
9,686 |
|
|
Purchase of intangible assets |
|
(7,298) |
(11,078) |
|
|
Sale of property plant and equipment |
1,013 |
1,141 |
||
|
Purchase of property, plant and equipment |
(603,466) |
(121,368) |
||
|
Increase in other financial assets |
|
(1,500,000) |
- |
|
|
|
|
------- |
------- |
|
|
Net cash used in investing activities |
|
(2,076,713) |
(121,619) |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from issuance of ordinary share capital |
|
5,175,611 |
- |
|
|
Share issue costs |
|
(764,282) |
- |
|
|
Capital element of finance leases |
|
(34,149) |
(19,060) |
|
|
Interest element of finance leases |
|
(9,458) |
(6,448) |
|
|
|
|
------- |
------- |
|
|
Net cash from financing activities |
|
4,367,722 |
(25,508) |
|
|
|
|
------- |
------- |
|
|
Net increase/ (decrease) in cash and cash equivalents |
|
511,506 |
(1,808,223) |
|
|
Cash and cash equivalents at the start of the period |
|
792,418 |
2,600,641 |
|
|
|
|
------- |
------- |
|
|
Cash and cash equivalents at the end of the period |
|
1,303,924 |
792,418 |
|
|
|
|
------- |
------- |
|
Consolidated statement of changes in equity
|
|
Share capital |
Share premium account |
Capital restructuring reserve |
Profit and loss account |
Total attributable to equity holders of parent |
|
|
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
As at 30th April 2009 |
121,339 |
- |
5,663,549 |
(813,645) |
4,971,243 |
|
Share based payment |
- |
- |
816,179 |
- |
816,179 |
|
Loss and total comprehensive income |
- |
- |
- |
(3,131,551) |
(3,131,551) |
|
|
------ |
------- |
-------- |
-------- |
-------- |
|
As at 30th April 2010 |
121,339 |
- |
6,479,728 |
(3,945,196) |
2,655,871 |
|
|
|
|
|
|
|
|
Share option exercise |
21,039 |
360 |
(20,789) |
- |
610 |
|
Share based payment |
- |
- |
27,138 |
574,484 |
601,622 |
|
Issue of shares |
241,170 |
4,933,831 |
- |
- |
5,175,001 |
|
Expenses of share issue |
- |
(764,282) |
- |
- |
(764,282) |
|
Loss and total comprehensive income |
- |
- |
- |
(3,047,484) |
(3,047,484) |
|
|
------ |
------- |
-------- |
-------- |
-------- |
|
As at 30th April 2011 |
383,548 |
4,169,909 |
6,486,077 |
(6,418,196) |
4,621,338 |
|
|
------ |
------- |
-------- |
-------- |
-------- |
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.
Profit and loss account
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
The financial statements have been prepared on the basis of the accounting policies which apply for the financial year to 30th April 2011 and in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") adopted by the European Union.
Ilika plc was incorporated on 12th March 2010 and so the comparative financial information set out in these statements does not constitute the Company's statutory accounts for the period ended 30 April 2010 as explained under the capital restructuring section below. The accounting policies and the IFRS conversion details are set out in the non-statutory accounts of Ilika Technologies Limited for the year ended 30th April 2010, which is available on the Company's website.
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 30th April 2011, amounted to £2,803,924. The directors have prepared projected cash flow information for the period ending twelve months from the date of their approval of these financial statements. 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.
Capital restructuring
Ilika plc was incorporated as a vehicle for flotation on AIM in order to acquire, in a share for share exchange, Ilika Technologies Limited. These financial statements consolidate the results and financial position of Ilika Technologies Limited and its subsidiaries, through capital restructuring accounting as required by IFRS 3 Revised "Business Combinations". This means that the Group financial statements account for the share for share exchange as if Ilika Technologies Limited was the acquirer and Ilika plc the acquired entity. As a result of this, the comparative financial information and the financial information up to 30th April 2010 relates to the consolidated financial information of Ilika Technologies Limited.
On 6th May 2010, Ilika plc acquired, in a share for share exchange, Ilika Technologies Limited. As part of the share for share exchange agreement, the share options and warrants in Ilika Technologies Limited were transferred to Ilika plc on the same terms as previously held. There was no change in the fair value of the share options on the date of transfer because the terms of the new share option agreements were the same as the old share options. The warrant reserve in Ilika Technologies Limited was eliminated as a result of the exchange agreement as the warrants had a nil fair value at the date of transfer.
Southampton Asset Management Limited ("SAM") exercised 2,099,900 options immediately prior to admission at an exercise price of £0.01 per share. This amount was in excess of the amount payable under the terms of the original option agreement held in Ilika Technologies Limited and therefore a compensating payment of £20,789, reflecting the additional amount paid by SAM, was made to SAM and charged to the capital restructuring reserve.
Ilika plc was admitted to AIM on 14th May 2010. 10,147,059 ordinary shares were issued for a total consideration of £5,175,001. The premium arising on the issue of these shares was £4,933,831. Total issue costs incurred were £764,282. These costs have been written off against the share premium account.
4,000 options were exercised by option holders after admission at an exercise price of £0.10 per share.
(a) New standards, amendments to standards or interpretations adopted early
In the current year, there were no new or revised standards or interpretations that have been adopted and affected the amounts reported in the financial statements.
(b) New standards, amendments to standards or interpretations not yet applied
The following standards, interpretations and amendments, which have not been applied in these financial statements, will or may have an effect on the Group's future financial statements:
|
International Accounting Standards (IAS/IFRS) |
Effective date for periods commencing
|
|
|
IFRS 1 |
First-time adoption of International Financial Reporting Standards (amendment) |
1 July 2010 |
|
IFRS 1 |
Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (amendments) |
1 July 2011 |
|
IFRS 7 |
Disclosures - Transfers of Financial Assets (amendments) |
1 July 2011 |
|
IFRS 9 |
Financial Instruments |
1 January 2013 |
|
IAS 12 |
Deferred tax: Recovery of Underlying Assets (amendments) |
1 January 2012 |
|
IAS 24 |
Related Party Disclosure (revised) |
1 January 2011 |
|
|
|
|
|
International Financial Reporting Interpretations (IFRIC) |
|
|
|
|
|
|
|
IFRIC 14 |
The limit on a defined benefit asset, minimum funding requirements and their interaction |
1 January 2011 |
|
IFRIC 19 |
Extinguishing Financial Liabilities with Equity Instruments |
1 April 2010 |
No other new standards or amendments are expected to have an effect on the Group.
The following principal accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial information.
Revenue
Revenue comprises the fair value for the sale of goods and services, net of value added tax and is recognised as follows:
Sales of goods
Sales of equipment and skin based products are recognised when products are delivered to a customer, the customer has accepted the products and collectability of the related receivables is reasonably assured.
Sales of services
Sales of research and development services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.
Leases
Where a Group company enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a "finance lease". The asset is recorded in the balance sheet as property, plant and equipment and is depreciated over its estimated useful life or the term of the lease, whichever is shorter. Future instalments under such leases, net of finance charges, are included within creditors. Rentals payable are apportioned between the finance element, which is charged to the consolidated income statement, and the capital element which reduces the outstanding obligation for future instalments. All other leases are accounted for as "operating leases" and the rental charges are charged to the consolidated income statement on a straight line basis over the life of the lease.
Financial income and financial expense
Financial income and financial expense 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-based payments to all employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of market-based and non-market based vesting conditions.
The fair value of market-based options granted by the Group is measured by use of the stochastic valuation model taking into account the following inputs: the exercise price of the option; the life of the option; the market price on the date of grant of the option; the expected volatility of the share price; the dividends expected on the shares; and the risk free interest rate for the life of the option.
The fair value of non market-based options granted by the Group is measured by use of the Black-Scholes pricing model taking into account the following inputs: the exercise price of the option; the life of the option; the market price on the date of grant of the option; the expected volatility of the share price; the dividends expected on the shares; and the risk free interest rate for the life of the option. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
Research and development expenditure
Expenditure on the research phase is charged to the income statement in the period in which it is incurred. Development expenditure on new products is capitalised only once the criteria specified under IAS 38, Intangible Assets, have been met. Prior to and during the year ended 30th April 2011, no development expenditure satisfied the necessary conditions of IAS 38.
Taxation
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 realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet 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 the income statement.
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 profit and loss statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:
Leasehold improvements lease term
Plant, machinery and equipment 3 - 5 years
Fixtures & fittings 3 - 5 years
Inventory
Inventory comprises the Group's cell bank from which the Cryoskin® product is derived. Inventory is valued at the lower of cost and net realisable value. Consumable stock items have been written off as an expense in the year incurred.
Impairment
The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the income statement.
Intangible assets
Computer software
Acquired computer software licenses are capitalized 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 (one to three years).
Intellectual property
Acquired intellectual property is included at cost and is amortised to administrative expenses on a straight-line basis over its useful economic life of 15 years.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. The Group's financial assets are all classified as loans and receivables and carried at amortised cost. The Group's financial liabilities are all classified as 'other' liabilities which are carried at amortised cost. Cash and cash equivalents comprise cash balances and call deposits.
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. Grant revenue is disclosed within other operating income.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call with the bank.
Key sources of estimation uncertainty
The preparation of the Group's financial statements, in accordance with IAS 1, Presentation of Financial Statements, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities 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.
· Depreciation of property, plant and equipment
Depreciation is provided in the consolidated financial statements so as to write-down the respective assets to their residual values over their estimated useful lives and as such, the selection of the estimated useful lives and the expected residual values of the assets requires the use of estimates and judgements. Details of the estimated useful lives are as shown above in the policy note for depreciation.
· Amortisation lives
Intangible assets are recorded at their fair value at acquisition date and are amortised on a straight-line basis over their estimated useful economic lives from the time they are available for use. Any change in the estimated useful economic lives could affect the future results of the Group; however, no changes were made in the year.
· Revenue recognition
The Group's revenue substantially comprised revenues from the provision of research and development services. The contacts set out defined deliverables the achievement of which trigger milestone payments. Judgement is used to determine the stage of completion and the point at which revenue is recognised.
· Share based payments
The critical accounting estimates, assumptions and judgements underpinning the valuation of the option awards are disclosed in note 22.
· Taxation
The current tax receivable is the expected tax receivable on the expenditure for the period using the tax rates and laws that have been enacted or substantially enacted at the balance sheet date, and any adjustments to tax payable in respect of previous years. The ultimate receivable may vary from the amounts provided and is dependent upon negotiations with the relevant tax authorities.
2 Segment reporting
IFRS 8 requires the Group to report on operating segments on the same basis as that used by the chief operating decision maker to assess the performance of the business segments and to allocate resources accordingly. For management purposes, the Group is organised by market category and operational information is presented to the chief operating decision maker in the following market categories; Energy, Electronics, Biomedical and Products and recharges.
The Group's activities originate from the production, design and development of high throughput methods of material synthesis, characterisation and screening. The Group has commercialised skin based products, details of which are given below.
Energy
The Group has materials development programmes in the battery, fuel cell and hydrogen storage sectors.
Electronics
The Group's technology can be applied to a wide range of electronic materials. The Group is initially focusing on piezoelectric and memory materials.
Biomedical
In 2009, the Group incorporated a subsidiary to handle all of its biomedical products and development programmes. The biomedical business is built on the Group's biopolymer technology.
Details of the revenues from external customers by operating segment are given below:
|
|
Year ended 30th April |
|
|
Turnover |
2011 |
2010 |
|
|
£ |
£ |
|
Analysis by class of business: |
|
|
|
Energy |
1,101,448 |
869,977 |
|
Electronics |
291,546 |
42,000 |
|
Biomedical |
151,772 |
148,895 |
|
|
------- |
------- |
|
|
1,544,766 |
1,060,872 |
|
|
------- |
------- |
|
|
Year ended 30th April |
|
|
Turnover |
2011 |
2010 |
|
|
£ |
£ |
|
Analysis by geographical market: |
|
|
|
By destination |
|
|
|
Belgium |
155,117 |
179,381 |
|
United Kingdom |
259,184 |
89,435 |
|
Germany |
84,015 |
42,000 |
|
Japan |
1,028,450 |
689,556 |
|
North America |
18,000 |
60,500 |
|
|
------- |
------- |
|
|
1,544,766 |
1,060,872 |
|
|
------- |
------- |
|
Analysed as: |
|
|
|
|
|
|
|
Rendering of services |
1,479,526 |
972,477 |
|
Sales of goods |
65,240 |
88,395 |
|
|
------- |
------- |
|
|
1,544,766 |
1,060,872 |
|
|
------- |
------- |
In the period to 30th April 2011, the Biomedical class of business turnover can be analysed as £65,240 for sale of skin based products and £86,482 for research and development services. All revenues associated with the energy and electronics class of business are for research and development services.
A number of customers individually account for more than 10% of the total turnover of the Group. The revenues from these companies are indicated below on a segment basis:
|
|
Year ended 30th April |
|
|
Turnover |
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Customer 1 |
820,919 |
689,556 |
|
Customer 2 |
155,117 |
180,421 |
|
Customers less than 10% |
125,412 |
- |
|
|
-------- |
------- |
|
Energy Total |
1,101,448 |
869,977 |
|
|
|
|
|
Customer 3 |
174,457 |
- |
|
Customers less than 10% |
117,089 |
42,000 |
|
|
-------- |
------- |
|
Electronics Total |
291,546 |
42,000 |
|
|
|
|
|
Customers less than 10% |
151,772 |
148,895 |
|
|
-------- |
------- |
|
Biomedical total |
151,772 |
148,895 |
|
|
|
|
|
|
-------- |
------- |
|
|
1,544,766 |
1,060,872 |
|
|
-------- |
------- |
The chief operating decision maker only reviews turnover by operating segment then reviews expenses and profit on an aggregate basis. Therefore the segmental loss before tax information, along with the segmental total assets and liabilities information has not been split out in this note.
The loss before tax per the management accounts is the same as the loss before tax on the consolidated statement of comprehensive income with the exception of the share based payment expense which is only calculated as a year end adjustment. For details of the calculation see note 20. The total assets and liabilities per the management accounts are the same as the consolidated balance sheet with the exception of the period end tax adjustment.
3 Operating loss
|
|
Year ended 30th April |
|
|
This is arrived at after charging: |
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Research and development expenditure in the year |
1,166,761 |
1,145,360 |
|
Depreciation |
731,599 |
764,327 |
|
Amortisation of intangible assets |
11,742 |
21,594 |
|
Auditors remuneration: Fees payable to the Group's auditor for the audit of the Group's accounts |
15,000 |
4,750 |
|
Fees payable to the Group's auditor for other services: - The Audit of the Group's subsidiaries - Other assurance services - interim review - Tax services - Reporting accountant fees in relation to the flotation and other non recurring services |
5,000 10,000 6,745
118,420 |
2,500 - 9,555
23,718 |
|
Operating lease rentals |
174,000 |
174,119 |
|
Share based payment charge |
601,622 |
816,179 |
|
Foreign exchange differences |
617 |
- |
|
|
------- |
------- |
4 Employees
The average number of employees during the year, including executive directors, was:
|
|
Year ended 30th April |
|
|
|
2011 |
2010 |
|
|
Number |
Number |
|
Administration |
9 |
9 |
|
Materials synthesis |
21 |
17 |
|
|
------ |
------ |
|
|
30 |
26 |
|
|
------ |
------ |
Staff costs for all employees, including executive directors, consist of:
|
|
Year ended 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
Wages and salaries |
1,577,637 |
1,235,823 |
|
Social security costs |
138,896 |
129,426 |
|
Share based payment expense |
601,622 |
816,179 |
|
Pension costs |
94,480 |
76,741 |
|
|
------- |
------- |
|
|
2,412,635 |
2,258,169 |
|
|
-------- |
-------- |
The directors costs consist of:
|
|
Basic salary |
Fees |
Benefits in kind |
Bonus |
Total Short term benefits |
Pension |
Share based payment expense |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
Year to 30th April 2011 |
|
|
|
|
|
|
|
|
|
G Purdy |
150,197 |
- |
418 |
24,000 |
174,615 |
27,707 |
199,366 |
401,688 |
|
S Boydell |
92,722 |
- |
267 |
10,500 |
103,489 |
20,101 |
29,879 |
153,469 |
|
B Hayden |
50,000 |
- |
- |
- |
50,000 |
- |
99,167 |
149,167 |
|
J Boyer |
59,835 |
- |
- |
- |
59,835 |
- |
200,633 |
260,468 |
|
W Braun |
27,417 |
2,500 |
- |
- |
29,917 |
- |
13,244 |
43,161 |
|
W Wakeham |
29,917 |
- |
- |
- |
29,917 |
- |
12,509 |
42,426 |
|
C Spottiswoode |
29,637 |
- |
- |
- |
29,637 |
- |
10,880 |
40,517 |
|
|
- |
- |
- |
- |
- |
- |
2,278 |
2,278 |
|
|
- |
- |
- |
- |
- |
- |
736 |
736 |
|
|
------ |
------ |
------ |
------ |
------ |
------ |
------ |
------ |
|
|
439,725 |
2,500 |
685 |
34,500 |
477,410 |
47,808 |
568,692 |
1,093,910 |
|
|
------ |
------ |
------ |
------ |
------ |
------ |
------ |
------ |
|
|
|
|
|
|
|
|
|
|
|
Year to 30th April 2010 |
|
|
|
|
|
|
|
|
|
G Purdy |
122,760 |
- |
365 |
36,828 |
159,953 |
12,276 |
154,292 |
326,521 |
|
A Marrocco |
14,841 |
- |
65 |
- |
14,906 |
1,228 |
90,824 |
106,958 |
|
S Boydell |
46,836 |
- |
71 |
9,373 |
56,280 |
3,832 |
- |
60,112 |
|
J Boyer |
40,920 |
- |
- |
- |
40,920 |
- |
199,946 |
240,866 |
|
W Braun |
20,460 |
- |
- |
- |
20,460 |
- |
26,371 |
46,831 |
|
K Seifert |
- |
- |
- |
- |
- |
- |
26,371 |
26,371 |
|
R Penning De Vries |
- |
24,510 |
- |
- |
24,510 |
- |
- |
24,510 |
|
W Wakeham |
10,230 |
- |
- |
- |
10,230 |
- |
- |
10,230 |
|
B Hayden |
2,917 |
31,739 |
- |
- |
34,656 |
- |
56,698 |
91,354 |
|
|
------ |
------ |
------ |
------ |
------ |
------ |
------ |
------ |
|
|
258,964 |
56,249 |
501 |
46,201 |
361,915 |
17,336 |
554,502 |
933,753 |
|
|
------ |
------ |
------ |
------ |
------ |
------ |
------ |
------ |
Benefits in kind include critical illness cover.
The unapproved share options of the directors under the "Ilika plc Executive Share Option Scheme 2010" are set out below:
|
|
|
2011 Number |
|
G Purdy |
|
1,800,000 |
|
J Boyer |
|
1,800,000 |
|
B Hayden |
|
900,000 |
|
S Boydell |
|
205,200 |
|
W Braun |
|
115,200 |
|
W Wakeham |
|
115,200 |
|
C Spottiswoode |
|
100,200 |
The approved share options of the directors in Ilika plc exchanged from share options in Ilika Technologies Limited. For further details see note 22.
|
|
|
2011 Number |
|
G Purdy |
|
760,700 |
|
S Boydell |
|
90,000 |
The unapproved share options of the directors in Ilika plc exchanged from share options in Ilika Technologies Limited. For further details see note 22.
|
|
|
2011 Number |
|
G Purdy |
|
136,200 |
|
J Boyer |
|
540,200 |
|
W Braun |
|
20,000 |
|
B Hayden |
|
59,300 |
No options have lapsed in the period.
5 Other operating income
|
|
Year ended 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Grant income |
356,867 |
210,457 |
|
Sundry other income |
147 |
4,543 |
|
|
------ |
------ |
|
|
357,014 |
215,000 |
|
|
------ |
------ |
6 Financial income
|
|
Year ended 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Income from short term deposits |
38,001 |
9,686 |
|
|
------ |
------ |
|
|
|
|
7 Financial expense
|
|
Year ended 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
Interest on: |
|
|
|
Finance leases |
9,458 |
6,448 |
|
|
------ |
------ |
8 Taxation
(a) Tax on profit 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 |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Current tax on loss for the year |
(122,733) |
(132,823) |
|
Adjustments to prior period |
16,265 |
- |
|
|
------ |
------ |
|
|
106,468 |
(132,823) |
|
|
------ |
------ |
(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 28%. The differences are reconciled below:
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Loss on ordinary activities before tax |
(3,153,952) |
(3,264,374) |
|
|
------ |
------ |
|
Loss on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK of 28% |
(883,107) |
(914,025) |
|
Effects of: |
|
|
|
Expenses not deductible for corporation tax |
29,576 |
13,348 |
|
Other temporary differences not recognised |
169,138 |
191,332 |
|
Plant, property and equipment temporary differences not recognised |
32,318 |
228,589 |
|
R&D relief |
(2,619) |
5,583 |
|
Origination of unrecognised tax losses |
531,961 |
342,350 |
|
Under provision in previous years |
16,265 |
- |
|
|
------ |
------ |
|
Total tax credit for the year |
(106,468) |
(132,823) |
|
|
------ |
------ |
|
|
|
|
Unrecognised deferred taxation
There are tax losses available for carry forward against future trading profits of approximately £8,269,000 (2010: £6,228,000). A deferred tax asset in respect of these losses of approximately £1,710,000 (2010: £1,736,000) has not been recognised in the accounts, as the full utilisation of these losses in the foreseeable future is uncertain.
9 Earnings 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 profit after tax, are as follows:
|
|
Year ended 30th April |
|
|
|
2011 |
2010 |
|
|
No. |
No. |
|
|
|
|
|
Weighted average number of equity shares |
38,354,759 |
121,339 |
|
|
-------- |
------ |
|
|
|
|
|
|
£ |
£ |
|
Earnings, being profit after tax |
(3,047,484) |
(3,131,551) |
|
|
-------- |
-------- |
|
|
|
|
|
|
£ |
£ |
|
Loss per share |
(0.08) |
(25.81) |
|
|
------ |
------ |
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 under the terms of IAS 33. At 30th April 2011 there were 18,338,316 options outstanding (2010: 46,049 options outstanding) as detailed in notes 18 and 22. Following the share for share exchange, there is no effect on the earnings per share.
10 Intangible assets
|
|
|
Software licences |
Intellectual property |
Total |
|
|
|
£ |
£ |
£ |
|
Cost |
|
|
|
|
|
As at 30th April 2009 |
|
22,808 |
75,000 |
97,808 |
|
Additions |
|
11,078 |
- |
11,078 |
|
|
|
------ |
------ |
------ |
|
As at 30th April 2010 |
|
33,886 |
75,000 |
108,886 |
|
Additions |
|
7,298 |
- |
7,298 |
|
Disposals |
|
(18,824) |
- |
(18,824) |
|
|
|
------ |
------ |
------ |
|
As at 30th April 2011 |
|
22,360 |
75,000 |
97,360 |
|
|
|
------ |
------ |
------ |
|
Amortisation |
|
|
|
|
|
As at 30th April 2009 |
|
6,804 |
8,750 |
24,846 |
|
Provided for the year |
|
16,594 |
5,000 |
21,594 |
|
|
|
------ |
------ |
------ |
|
As at 30th April 2010 |
|
23,398 |
18,750 |
42,148 |
|
Provided for the year |
|
6,742 |
5,000 |
11,742 |
|
Disposals |
|
(18,324) |
- |
(18,324) |
|
|
|
------ |
------ |
------ |
|
As at 30th April 2011 |
|
11,816 |
23,750 |
33,566 |
|
|
|
------ |
------ |
------ |
|
Net book value |
|
|
|
|
|
As at 30th April 2010 |
|
10,488 |
56,250 |
66,738 |
|
|
|
------ |
------ |
------ |
|
As at 30th April 2011 |
|
10,544 |
51,250 |
61,794 |
|
|
|
------ |
------ |
------ |
|
|
|
|
|
|
The amortisation charge of £11,742 (2010: £21,594) is included within administrative expenses
11 Property, plant and equipment
|
|
Leasehold improvements |
Plant, machinery and equipment |
Fixtures and fittings |
Total |
|
|
£ |
£ |
£ |
£ |
|
Cost |
|
|
|
|
|
As at 30th April 2009 |
351,667 |
3,071,608 |
158,032 |
3,581,307 |
|
Additions |
20,000 |
100,235 |
1,133 |
121,368 |
|
Disposals |
- |
(1,568) |
- |
(1,568) |
|
|
------ |
------- |
------ |
------- |
|
As at 30th April 2010 |
371,667 |
3,170,275 |
159,165 |
3,701,107 |
|
Additions |
16,232 |
648,161 |
6,972 |
671,365 |
|
Disposals |
- |
(69,251) |
- |
(69,251) |
|
|
------ |
------- |
------ |
------- |
|
As at 30th April 2011 |
387,899 |
3,749,185 |
166,137 |
4,303,221 |
|
|
------ |
------- |
------ |
------- |
|
Depreciation |
|
|
|
|
|
As at 30th April 2009 |
262,069 |
544,336 |
62,856 |
869,261 |
|
Provided for the year |
95,310 |
633,303 |
35,714 |
764,627 |
|
Disposals |
- |
(610) |
- |
(610) |
|
|
------ |
------- |
------ |
------- |
|
As at 30th April 2010 |
357,379 |
1,177,029 |
98,570 |
1,632,978 |
|
Provided for the year |
16,154 |
683,224 |
32,221 |
731,599 |
|
Disposals |
- |
(67,835) |
- |
(67,835) |
|
|
------ |
------- |
------ |
------- |
|
As at 30th April 2011 |
373,533 |
1,792,418 |
130,791 |
2,296,742 |
|
|
------ |
------- |
------ |
------- |
|
Net book value |
|
|
|
|
|
As at 30th April 2010 |
14,288 |
1,993,246 |
60,595 |
2,068,129 |
|
|
------ |
------- |
------ |
------- |
|
As at 30th April 2011 |
14,366 |
1,956,767 |
35,346 |
2,006,479 |
|
|
------ |
------- |
------ |
------- |
The net book value of fixtures and fittings includes an amount of £7,187 (2010 - £15,812) and plant, machinery and equipment includes an amount of £68,622 (2010 - £20,871) in respect of assets held under finance lease contracts.
Commitments for capital expenditure
|
|
Year ended 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Contracted but not provided for |
43,771 |
- |
|
|
------ |
------ |
12 Inventory
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Inventory |
34,135 |
- |
|
|
------ |
------ |
Inventory comprises the Group's cell bank from which the Cryoskin® product is derived.
13 Trade and other receivables
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Trade receivables |
68,052 |
87,891 |
|
Prepayments and accrued income |
445,642 |
368,888 |
|
Other receivables |
234,387 |
157,331 |
|
|
------ |
------ |
|
|
748,081 |
614,110 |
|
|
------ |
------ |
14 Other financial assets - bank deposits
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
Amounts receivable within one year: |
|
|
|
Sterling fixed rate deposits of greater than three months' maturity at inception |
1,500,000 |
- |
|
|
-------- |
------ |
15 Cash and cash equivalents
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Current bank accounts |
184,201 |
492,418 |
|
Short term deposits |
1,119,723 |
300,000 |
|
|
-------- |
------ |
|
|
1,303,924 |
792,418 |
|
|
-------- |
------ |
16 Trade and other payables
Current
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Trade payables |
217,672 |
328,281 |
|
Other payables |
19,700 |
3,584 |
|
Other taxes and social security costs |
42,205 |
33,143 |
|
Lease purchase agreements |
40,823 |
19,060 |
|
Accruals and deferred income |
805,231 |
616,089 |
|
|
-------- |
-------- |
|
|
1,125,631 |
1,000,157 |
|
|
-------- |
-------- |
Non current
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Lease purchase agreements |
30,177 |
18,190 |
|
|
------ |
------ |
Lease purchase agreements
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
Amounts payable |
|
|
|
Within one year |
40,823 |
19,060 |
|
In one year to two years |
22,633 |
18,190 |
|
In two years to five years |
7,544 |
- |
|
|
------ |
------ |
|
|
71,000 |
37,250 |
|
|
------ |
------ |
Lease purchase agreements are secured on the related assets and carry interest at fixed rates. The total amount payable under leases as at 30th April 2011 was £87,738 (2010: £50,982)
17 Financial instruments
The Group's principal financial instruments comprise, lease financing arrangements, cash and short-term
deposits as well as other various items arising from its operations such as trade receivables and trade payables which are shown in the table below. The main purpose of these instruments is to finance the Group's working capital requirements as well as funding its capital expenditure programmes. The Group does not enter into derivative transactions such as interest rate swaps or forward exchange contracts.
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
Financial Assets |
|
|
|
|
|
|
|
Loans and receivables |
|
|
|
Trade receivables |
68,052 |
87,891 |
|
Accrued income |
303,405 |
88,173 |
|
Other receivables |
234,387 |
157,331 |
|
Current bank accounts |
184,201 |
492,418 |
|
Bank deposits |
1,500,000 |
- |
|
Short term deposits |
1,119,723 |
300,000 |
|
|
-------- |
-------- |
|
Total loans and receivables |
3,409,768 |
1,125,813 |
|
|
-------- |
-------- |
|
Financial Liabilities |
|
|
|
|
|
|
|
Other financial liabilities |
|
|
|
Trade payables |
217,672 |
328,281 |
|
Other payables |
19,700 |
3,582 |
|
Other taxes and social security costs |
42,205 |
- |
|
Lease purchase agreements |
71,000 |
37,250 |
|
Accruals |
358,258 |
547,312 |
|
|
-------- |
-------- |
|
Total other financial liabilities |
708,835 |
916,425 |
|
|
-------- |
-------- |
The risks associated with these 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. These transactions are not significant and therefore no forward exchange contracts have been entered into. It is Group policy not to engage in any speculative trading in financial instruments. Any risk is mitigated by sales transactions being denominated in Sterling.
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. There is no bad debt provision.
Liquidity risk
The Group's policy is to maintain adequate cash resources to meet liabilities as they fall due. With the exception of its hire purchase liabilities, which are disclosed in note 16, all other 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 and building societies. These balances are placed at floating rates of interest and deposits have maturities of one to nine months. The Group's cash and short-term deposits are set out in note 15.
Fixed-rate financial liabilities comprise three finance leases, two of which expire in April 2012 and the third in August 2013. They have a weighted average interest rate of 13.5%. The maturity profile is detailed in note 16. Floating-rate financial assets comprise cash on deposit and cash at bank. Short-term deposits are placed with banks for periods of up to 9 months and are categorised as floating-rate financial assets. Contracts in place at 30 April 2011 had a weighted average period to maturity of 91 days and a weighted average annualised rate of interest of 1.52%.
Interest rate risk sensitivity analysis
It is estimated that a change in base rate to zero would have increased the Group's loss before taxation for the year to 30 April 2011 by approximately £16,000 (2010: £9,000).
It is estimated that an increase in base rate by 1 percent would decrease the Group's loss before taxation for the year to 30 April 2011 by approximately £33,500 (2010: £11,000)
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, other than finance leases, all funding is raised by equity. See note 1 for the fundraising that occurred during the year.
18 Share capital
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
Authorised |
|
|
|
36,573,359 Ordinary Shares of £0.01 each |
365,734 |
1,582 |
|
1,781,400 Convertible Preference Shares of £0.01 each |
17,814 |
238 |
|
|
------ |
------ |
|
Allotted, called up and fully paid |
|
|
|
36,573,359 Ordinary Shares of £0.01 each |
365,734 |
1,035 |
|
1,781,400 Convertible Preference Shares of £0.01 each |
17,814 |
178 |
|
|
------ |
------ |
|
|
383,548 |
1,213 |
|
|
------ |
------ |
The comparative information disclosed above is in respect of the Ilika Technologies Limited as explained in note 1, capital restructuring.
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
o Secondly, the balance of such surplus assets shall belong to and be distributed amongst the holders of the ordinary shares
The preference share holders have the right, at any time, to convert the preference shares held to the same number of ordinary shares.
Share options and warrants
Employee related share options are disclosed in note 22. In addition to these, there were 107,300 non employee share options over ordinary shares of £0.01 at the year end. The Company's brokers also have a warrant to subscribe to 130,100 Ordinary Shares of £0.01.
10,147,059 warrants to subscribe to Ordinary Shares of £0.01 were issued on 14th May 2010 to investors who subscribed to the placing as one warrant for each share subscribed and the Company's brokers were issued with a warrant to subscribe to 392,157 Ordinary Shares of £0.01.
19 Operating leases
The total future minimum rent payable under non-cancellable operating leases is as follows:
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
Property |
|
|
|
Within one year |
10,217 |
- |
|
In one to two years |
- |
50,753 |
|
In two to five years |
366,204 |
471,784 |
|
|
------ |
------ |
|
|
376,421 |
522,537 |
|
|
------ |
------ |
20 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 £94,480. (2010: £76,741).
21 Related party transactions
The directors consider that no one party controls the Group.
During the year ended 30th April 2011, the Group incurred costs of £294,248 (2010: £251,529) with the University of Southampton in connection with research and development activities. The University of Southampton is the controlling shareholder of Southampton Asset Management Limited, which has an interest in the Group. At the 30th April 2011, the amount unpaid in respect of these costs was £8,488. (2010:£15,239).
During the year ended 30th April 2011, the Group incurred costs of £nil (2010:£5,000) with IP Group plc, a shareholder in the Group in connection with non executive recruitment fees. At the 30th April 2011, the amount unpaid in respect of these costs was £nil (2010:£nil).
During the year ended 30th April 2011, the Group paid consultancy fees of £nil (2010:£35,000) directly to Prof. B. Hayden, a director of the Group. At the 30th April 2011, the amount unpaid in respect of these costs was £nil (2010:£nil). The Group also incurred fees from the University of Southampton in respect of Prof B. Hayden. These amounts are included in the £294,248 shown above.
22 Share based payments expense and share options
Share based payment expense
The Group has recognised an expense to the consolidated statement of comprehensive income representing the fair value of outstanding equity-settled share based payment awards to employees.
The Group has calculated the fair market value of options with market based performance conditions using the stochastic valuation model. Previous options with no market based performance conditions have been valued using the Black-Scholes model.
Those fair values were charged to the consolidated statement of total comprehensive income over the relevant vesting periods adjusted to reflect actual and expected vesting levels.
The Group has incentivised and motivated staff through the grant of share options under the Enterprise Management Incentive (EMI) scheme and through unapproved share option schemes.
On 14th May 2010, options in the Ilika Technologies Limited share option scheme were exchanged for options in Ilika plc. 1 option in Ilika Technologies Limited was exchanged for 100 options in Ilika plc with the option price in Ilika plc shares being one one hundredth of the price in Ilika Technologies shares.
Black-Scholes valuation
|
|
Weighted Average Exercise Price |
Number |
||
|
|
2011 |
2010 |
2011 |
2010 |
|
Outstanding: |
£ |
£ |
|
|
|
At start of the period |
34.95 |
33.09 |
22,676 |
21,776 |
|
100 for 1 exchange |
0.3495 |
- |
2,244,944 |
- |
|
Exercised during the period |
0.1000 |
- |
(4,000) |
- |
|
Granted during the period |
- |
80.00 |
- |
900 |
|
|
----- |
----- |
-------- |
-------- |
|
At the end of the period |
0.3499 |
34.95 |
2,263,600 |
22,676 |
|
|
----- |
----- |
-------- |
-------- |
The exercise price of options outstanding at the end of the period ranged between £0.10 and £2.4283 and their weighted average contractual life was 4.9 years (2010: 5.9 years). These share options are exercisable and must be exercised within 10 years from the date of grant.
At 30 April 2011 the following share options were outstanding in respect of the approved share options exchanged:
|
Date of grant |
Number of shares |
Period of option |
Exercise Price per share |
|
19/05/04 |
375,000 |
10 years |
£0.10 |
|
29/06/04 |
219,700 |
10 years |
£0.10 |
|
09/06/05 |
139,500 |
10 years |
£0.10 |
|
30/03/06 |
15,200 |
10 years |
£0.10 |
|
14/05/07 |
156,100 |
10 years |
£0.80 |
|
15/01/08 |
70,400 |
10 years |
£1.00 |
|
02/02/09 |
138,000 |
10 years |
£0.80 |
|
01/12/09 |
90,000 |
10 years |
£0.80 |
4,000 of these options were exercised in the year.
At 30 April 2011 the following share options were outstanding in respect of the unapproved share options exchanged:
|
Date of grant |
Number of shares |
Period of option |
Exercise Price per share |
|
29/06/04 |
273,100 |
10 years |
£0.10 |
|
01/12/05 |
280,000 |
10 years |
£0.10 |
|
08/05/06 |
115,500 |
10 years |
£0.10 |
|
11/07/07 |
195,500 |
10 years |
£0.80 |
|
30/08/07 |
151,600 |
10 years |
£0.10 |
|
11/11/08 |
40,000 |
10 years |
£2.4283 |
No options were exercised in the year.
The following information is relevant in the determination of the fair value of options granted under the equity-settled share based remuneration schemes under the Black-Scholes method.
|
|
|
Year to 30 April |
|
|
|
2010 |
|
Equity-settled: |
|
|
|
|
|
|
|
Weighted average share price at date of grant / £ |
|
49.50 |
|
|
|
|
|
Exercise Price / £ |
|
80 |
|
|
|
|
|
Weighted average contractual life / years |
|
9.7 |
|
|
|
|
|
Expected volatility |
|
30% |
|
Expected dividend yield |
|
0% |
|
Risk free interest rate |
|
0.5% |
The volatility has been based on the annualized average of the standard deviations of the daily historical continuously compounded returns of the share price of three companies listed on the Alternative Investment Market which have a broadly similar technology risk profile to the Group. The risk free rate was assumed to be the yield to maturity on a UK Gilt strip with the term to maturity equal to the expected life of the option.
Stochastic valuation
|
|
Weighted Average Exercise Price |
Number |
||
|
|
2011 |
2010 |
2011 |
2010 |
|
Outstanding: |
£ |
£ |
|
|
|
At start of the period |
- |
- |
- |
- |
|
Granted during the period |
0.51 |
- |
5,365,400 |
- |
|
Lapsed during the period |
0.51 |
- |
(13,300) |
- |
|
|
---- |
---- |
--------- |
---- |
|
At the end of the period |
0.51 |
- |
5,352,100 |
- |
|
|
---- |
---- |
--------- |
---- |
The exercise price of options outstanding at the end of the period was £0.51 and their weighted average contractual life was 10 years.
Ilika plc Executive Share Option Scheme 2010
At 30 April 2011 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 |
151,300 |
10 years |
£0.51 |
Members of staff in the Group have options in respect of ordinary shares in Ilika plc, conditional upon the achievement of a 10% increase in the Company's share price above that of the TechMARK All share price index over a three year period. 13,300 options lapsed in the year due to employees leaving the Company. At a meeting of the Remuneration Committee on 13th July 2011, it was agreed that the performance criteria applicable to these options be amended to reflect a series of financial and commercial milestones.
Ilika plc unapproved share options
At 30 April 2011 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 |
5,200,800 |
10 years |
£0.51 |
Directors, non-executive directors and founders of the group were granted a total of 5,200,800 options in respect of ordinary shares in Ilika plc. These options vest in 4 tranches. The first Tranche of 825,000 options were granted on the 14th May 2010 with no performance conditions attached. The remaining 3 Tranches of 1,458,600 options are conditional upon the achievement of a 10% increase in the Company's share price above that of the TechMARK All share price index in each of the three years subsequent to the flotation. At a meeting of the Remuneration Committee on 13th July 2011, it was agreed that the performance criteria applicable to the options granted under Tranche 2 should be waived. Furthermore, it was agreed that the performance criteria applicable to the options granted under Tranches 3 and 4 be amended to reflect a series of financial and commercial milestones.
No options were exercised or lapsed in the year.
The following information is relevant in the determination of the fair value of options granted under the equity-settled share based remuneration schemes operated by the Group under the stochastic valuation model.
Expected Term. This is the most likely estimate of the period from grant until the exercise date. For these options, the assumption of an expected term of part way between vesting and lapse for each option/tranche.
Expected Volatility. The normal approach is to look at the historical volatility of the share price over the most recent period that is generally commensurate with the expected award term. However, this approach is not possible here given that the options were granted on the date of the Company's admission to AIM. In such cases, IFRS 2 allows the consideration of the historical volatility of other similar entities to determine a proxy for the Company's volatility. Similar entities, for the purpose of calculating volatility, have been chosen as the constituents of the Company's comparator Index . Volatility for each of these companies has been calculated over both three and six years resulting in median volatilities of 46.7% and 42.3% respectively. A proxy volatility of 45% (being mid way between these two figures) has been used for valuing these options.
Expected Dividend Yield:as the Company does not pay, and is not currently expected to pay any dividends, the dividend yield has been set to zero.
Risk-free Rate: calculated based on UK Gilts with a term commensurate with the expected term.
The charge for the prior period had been calculated on the basis that the Company floated in May 2010.
|
|
2011 |
2010 |
|
|
£ |
£ |
|
Share based payment expense: |
|
|
|
Black Scholes calculation |
27,138 |
813,179 |
|
Stochastic valuation |
574,484 |
- |
|
|
----- |
----- |
|
|
601,622 |
813,179 |
|
|
------ |
------ |
Company Balance sheet of Ilika plc
|
|
|
As at 30th April |
|
|
|
Notes |
2011 £ |
2010 £ |
|
ASSETS |
|
|
|
|
Non current assets |
|
|
|
|
Investments in subsidiary undertaking |
24 |
121,339 |
- |
|
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
25 |
4,378,517 |
- |
|
Cash at bank and cash equivalents |
|
- |
0.01 |
|
|
|
------- |
----- |
|
Total net assets |
|
4,499,856 |
0.01 |
|
|
|
------- |
----- |
|
Equity |
|
|
|
|
Issued share capital |
26 |
383,548 |
0.01 |
|
Share premium |
26 |
4,149,120 |
- |
|
Retained earnings |
26 |
(41,011) |
- |
|
|
|
------- |
----- |
|
LIABILITIES |
|
4,491,657 |
0.01 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
8,199 |
- |
|
|
|
------- |
----- |
|
Total liabilities |
|
8,199 |
- |
|
|
|
------- |
----- |
|
Total equity and liabilities |
|
4,499,856 |
0.01 |
|
|
|
------- |
----- |
The notes on pages 49 to 51 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board of Directors on 13th July 2011.
Mr. J.B. Boyer
Chairman
|
|
Year ended 30th April |
||
|
|
|
2011 |
2010 |
|
|
|
£ |
£ |
|
Cash flows from operating activities |
|
|
|
|
Loss before tax |
|
(642,633) |
- |
|
Adjustments for: |
|
|
|
|
Equity settled share based payments |
|
601,622 |
- |
|
|
|
------ |
------ |
|
Operating cash flow before changes in working capital, interest and taxes |
|
(41,011) |
- |
|
|
|
|
|
|
Increase in trade and other receivables |
(4,378,517) |
- |
|
|
Increase in trade and other payables |
8,199 |
- |
|
|
|
|
------ |
------ |
|
Cash utilised by operations |
|
(4,411,329) |
- |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issuance of ordinary share capital |
|
5,175,611 |
0.01 |
|
Share issue costs |
|
(764,282) |
- |
|
|
|
------ |
------ |
|
Net cash from financing activities |
|
4,411,329 |
0.01 |
|
|
|
------ |
------ |
|
Net increase in cash and cash equivalents |
|
- |
0.01 |
|
Cash and cash equivalents at the start of the period |
|
- |
- |
|
|
|
------ |
------ |
|
Cash and cash equivalents at the end of the period |
|
- |
0.01 |
|
|
|
------ |
------ |
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 2010 |
- |
- |
- |
- |
|
Share exchange with Ilika Technologies |
121,339 |
- |
- |
121,339 |
|
Share option exercise |
21,039 |
(20,429) |
- |
610 |
|
Issue of shares |
241,170 |
4,933,831 |
- |
5,175,001 |
|
Expenses of share issue |
- |
(764,282) |
- |
(764,282) |
|
Share based payment |
- |
|
601,622 |
601,622 |
|
Loss and total comprehensive income |
- |
- |
(642,633) |
(642,633) |
|
|
------ |
------ |
------ |
------- |
|
As at 30th April 2011 |
383,548 |
4,149,120 |
(41,011) |
4,491,657 |
|
|
------ |
------ |
------ |
------- |
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.
Notes to the financial information
23 Accounting polices
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (''IFRSs'') adopted by the European Union.
Ilika plc was incorporated on 12th March 2010.
No directors report has been presented and the directors responsibilities in respect of these financial statements are set out on page 11.
Taxation
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 realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet 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.
Related party transactions
During the year the Company made recharges of costs to Ilika Technologies Limited of £551,325 and to Altrika Limited of £123,187. In addition the funds raised from the flotation of the Company were transferred to Ilika Technologies Limited. The balance outstanding at the 30th April 2011 for Ilika Technologies limited was £4,243,351 and for Altrika Limited was £123,187.
Share based payments
The critical accounting estimates, assumptions and judgements underpinning the valuation of the option awards are disclosed in note 22.
Financial instruments
The accounting policy relating to financial instruments is disclosed in note 1
Profit of the parent company
Loss in the year
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 £642,633 (2010: £nil).
Directors' remuneration
The remuneration of the Directors is disclosed in note 4.
Auditors' remuneration
Auditors' remuneration is disclosed in Note 3.
24 Investment in subsidiary undertaking
Investments in Group undertakings are stated at cost.
On 6th May 2010, Ilika plc acquired, in a share for share exchange, Ilika Technologies Limited. Ilika Technologies Limited (Incorporated in the UK) made a loss for the year of £1,893,139 and had net assets as at 30th April 2011 of £1,030,437.
|
|
2011 |
|
Shares in Group undertakings (at cost) |
£ |
|
|
|
|
At 6th May 2010 and 30th April 2011 |
121,339 |
|
|
------ |
Ilika Technologies Limited has a wholly owned subsidiary, Altrika Limited (Incorporated in the UK) which made a loss for the year of £511,712 and had net liabilities as at 30th April 2011 of £779,319.
25 Trade and other receivables
|
|
As at 30th April |
|
|
|
2011 |
2010 |
|
|
£ |
£ |
|
|
|
|
|
Prepayments |
7,404 |
- |
|
Other debtors |
4,575 |
|
|
Amounts due from subsidiary undertakings |
4,366,538 |
- |
|
|
------ |
------ |
|
|
4,378,517 |
- |
|
|
------ |
------ |
26 Share capital
|
|
As at 30th April |
|
|
|
2011 £ |
2010 £ |
|
Authorised |
|
|
|
36,573,359 Ordinary Shares of £0.01 each (2010: 1 ordinary share of £0.01) |
365,733 |
0.01 |
|
1,781,400 Convertible Preference Shares of £0.01 each (2010: nil) |
17,814 |
- |
|
|
------ |
------ |
|
|
383,547 |
0.01 |
|
|
------ |
------ |
|
Allotted, called up and fully paid |
|
|
|
36,573,359 Ordinary Shares of £0.01 each (2010: 1 ordinary share of £0.01) |
365,733 |
0.01 |
|
1,781,400 Convertible Preference Shares of £0.01 each (2010: nil) |
17,814 |
- |
|
|
------ |
------ |
|
|
383,547 |
0.01 |
|
|
------ |
------ |
On 6th May 2010, the Company issued 10,352,500 Ordinary Shares and 1,781,400 Convertible Preference Shares in consideration for the entire issued share capital of Ilika Technologies on a ratio of 100:1 shares. On 6th May 2010, the Company issued 2,099,900 ordinary shares pursuant to the exercise of a number of the non employee options.
On 14th May 2010, Ilika plc was admitted to AIM. This initial public offering comprised of the issue of 10,147,059 Placing Shares at 51 pence per share together with 10,147,059 Placing Warrants. The net proceeds, after transaction costs, were approximately £4,350,000.
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
o Secondly, the balance of such surplus assets shall belong to and be distributed amongst the holders of the ordinary shares
The preference share holders have the right, at any time, to convert the preference shares held to the same number of ordinary shares.
This information is provided by RNS
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