Ilika plc

Good afternoon and welcome to the Illica PLC investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses when it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Graham Purdy, CEO. Good afternoon, sir.

Good afternoon. Many thanks to everybody for taking the time to dial into Illica's half-year results presentation. So we're going to have a quick trot through the presentation and apologies to those long-term followers of the company who know some of the backstory here. But I will go over some of the basics just to make sure that for any new investors who are joining this presentation, they get the full picture. And then we'll go into a detailed overview of the principal milestones that the company has hit and things to look forward to in the coming period. And then, of course, we're going to tackle some of the interesting questions that are coming in. And I can see there's quite a collection of questions already. So I look forward to addressing those after we finish going through the slides. So let's crack on. First of all, for the avoidance of doubt. Illica is a solid state battery developer and that's what we're going to be talking about over the coming hour or so. We're going to talk about the state of the market and the state of our technology to address that opportunity. We've got two product lines with different end markets. in rapidly growing sectors in both cases. On the one hand, we've got our Cereax miniature solid-state batteries, which are primarily designed to power active implantable medical devices and also wireless industrial sensors, sometimes called IoT. And then on the other hand, we've got our large format solid state batteries, which have been developed for the automotive industry and also for cordless consumer appliances. We have an asset light business model with these products proven on pilot line and up to gigafactory scale in the case of Goliath on equipment that's relevant to gigafactory deployment. We've got a long track record of R&D with 78 patents now in our portfolio that are granted and more applications coming through. So we're ready for commercialization. And we've also had a significant amount of capital invested in the company to date, not only via grant and commercial funding, but also equity investments to put us in a position to be able to deliver our commercial objectives. In terms of the status of the two product lines, on the one hand, Stereax has been licensed to a manufacturing partner already, a company called Certec Medical, headquartered in the US, and I'll come back to the state of that relationship during the presentation. And on the other hand, our Goliath product line has reached product prototyping stage. So, first of all, a bit of a review of some of the key announcements from the first half of this year. Well, the year started well with a successful equity raise that provided us with a stable platform for running the business with contributions from both existing and new investors. So, many thanks to those of you who participated in that placing and open offer. In terms of Steriax, we qualified the manufacturing process at Certec for Steriax micro batteries. We then followed that up by commencing production for product testing and the initial deliveries to customers. Those batteries were then delivered to customers before the end of the year. That was a post half one event. Actually, you can see a box there of deliveries going to one of our customers, Lura Health, who were actually kind enough to be able to give us a supportive quote on the press release that we issued when that happened in December. And just yesterday, for those of you who follow our news flow on a regular basis, we were able to announce that we'd received the first purchase order for the initial commercial batches of the cathode deliveries. So actually that's the stereax electrodes that we supply to Certec to be able to enable them to make larger volumes of products. So that's an early indicator that volumes of commercial products are starting to ramp up. Focusing now on some of the Goliath milestones that we hit, we started the year without validation of two Ampower Goliath prototypes, which was really great. I'll come back to that in a moment. We secured some grant funding. for Goliath industrial prototyping and also we've got automotive support. We finished commissioning the automated pilot line that we've got at our facility, which is a real strengthening of our ability to make 10 ampere cells, 10 ampere batteries and we initiated the shipping of those prototypes to customers as we'd suggested we would in 2025. So here you see an overview actually of some of those milestones and then some insight into what to expect in terms of further commercial progress in 2026. So on the left-hand side, we've got Stereax Milestones on the top in blue, and we've got Goliath Milestones in green underneath that, and they go from left to right across this plot here. So on Stereax, in terms of following up on the initial delivery of product, the bit in the hashed green box, which covers this year now, 2026, you can see we started in style, actually, by delivering that first milestone. That's the one I've just been mentioning that we started just Yesterday, actually, we announced receipt of the purchase order for those electrodes. The next stage really is going to be an announcement about integrating the Steriax product in the Certec power management offering. So, you know, one of the big advantages of working with Certec Medical is that they've got a number of different technology platforms that they offer to their OEM customers, and they're able to offer a full solution to for neurostimulation and integrating our Cereax batteries into that really provides a powerful route to market for that particular component. And then, of course, later in the year, we can expect to announce some initial application design-ins. So this is where the end customers, so our customers and Certex customers, large companies and some of the technology developers that we're working with too, take that platform and perhaps just the Stereax components themselves and then design them into products that are taken to market. On Goliath, having shipped those 10 amp hour prototypes at the end of 2025, of course we're on tenterhooks waiting for some of the feedback from third parties who are testing those prototypes using their own duty cycles and sometimes they are proprietary and we don't get full insight into the test regimes that they get subjected to. And we will have conversations with those potential customers and talk about how we can convert those 10 amp hour prototypes into the initial minimum viable products, which really are A samples in the context of the conversations we're having for the EV and automotive sector. And then we will use that as a springboard for securing a commercial scale-up partner or partner's in the same way that we've done for Stereax with Certec. Just a reminder of our business model here. Illica sits at the center of an asset light licensing model, where we demonstrate our products capabilities and our process on an industrially relevant pilot line. And actually, in the case of Goliath, we work closely together with the UK Battery Industrialization Center, or UKBIC, where they have much larger scale equipment that actually there's a picture of some of that later on in this presentation. And we'll just remind you of the scale that that facility operates at. Very useful that we have access to that here in the UK. But essentially ILICA is an IP generating engine. And that IP, which includes materials, battery architecture know-how and process know-how is licensed to either an OEM or a Tier 1 manufacturing partner, like you see in green and blue circles respectively on this diagram, and in return we receive licensing fees and royalties. And of course, where we're working with a tier one manufacturing partner, they then sell our batteries and perhaps an assembly through to the OEM for final branding and commercialization. So we believe that this is a capital efficient strategy suited for the type of business that we are and supports rapid industrial adoption of our technology. So let's talk in a bit more detail about Stereax. Stereax, as I explained, is for active implantable medical devices primarily. And there are some of the applications, which are really exciting applications, ranging from orthopedics, so, you know, smart hip replacements, knee replacements, shoulder replacements, where you can use this technology to track patients The physiotherapy that a patient undertakes and makes sure that that recovery is as efficient as possible. Neurostimulation or neuromodulation, sometimes actually called nerve stim as well, so stimulation of the peripheral nervous system. You know, the most basic application here is where you actually offset some of the pain that you may get, for instance, lower back pain with a stimulation of the nerves that are involved, and this gives the patient some relief from that pain, but also some very broad applications in cognitive disorders and also strokes and even stimulating some organs. through the vagus nerve. So really exciting applications there. Then some implanted sensors for people who struggle with chronic conditions that need regular monitoring for the health of the patient. They could be oxygen pressure and blood or, you know, some cardiovascular complaints. Often high blood pressure is monitored using these sensors. Then we've got some ophthalmic applications, so various conditions of the eye that can be monitored. And then finally orthodontic, so mouth guards and salivary monitoring applications, such as what we highlighted with Lura Health in our release just before Christmas. So some exciting applications. A lot of the customers actually for these applications are based in the U.S., Some of the largest medical device companies in the world are headquarters in the US and so having a relationship that is based over there for manufacturing the product is a really great fit with that geographic location. And this is what the product looks like. This is our M300. You can see it's a tiny little battery, 300 microamp hours of capacity. You know, the big attraction of that is how small it is and how easily it can be integrated into some of these tiny little implantables. The fact that it's got a long cycle life and also a high pulse current, so it can be used to drive Bluetooth chips and send data from the device outside of the body and to often, frankly, a mobile phone where it is relayed onto a database or an app to manage the health condition. So the big advantage of these cells really is that you can reduce surgery time. And this is absolutely critical to reduce the cost of these implants because most of that cost is driven by time in the operating theater and the time of the surgical team that is carrying out the operation. So if you've got a small implanted device that can be inserted easily into the body, then you reduce the amount of time that's required in the theater. So this Certec Medical Partnership is really going from strength to strength. Just before Christmas, of course, we shipped those M300s to customers that had largely been made at their Certec facility across in Lowell in Massachusetts. And we're now starting to register those commercial revenues from wafer processing. So that's the positive electrodes that we manufacture here in the UK and we send over to the US. You know, we've got a strong licensing agreement in place there to the mutual benefit of both Certec Medical and ourselves, providing the product at an affordable price to end customers. We believe that this relationship really demonstrates industry validation of the product in the process it gives us really important access to manufacturing scale so that's often the question that we got when we were manufacturing at pilot line scale here in the UK you know these big med tech companies would say great that you've got a pilot line how do we get to the much larger volumes of production that are required and of course we can do that through a company like Sir Tech Medical They've also got a fantastic business development team, and actually one of my colleagues, Denis Pissero, who you might have seen in some of the videos and publicity that we've created, is across in California at the moment with the Certec business development team at the NANS show, the North American Neurostimulation Society, and he is working closely together with them to interact with some of the potential partners and customers who are interested in our neuromodulation capability. There's also a really strong technology focus at Certec that matches our own roadmap. So the two are very closely aligned. And this, of course, is really enabling that fast adoption of the Stereax product. So how does that all translate into revenue that we as a company and your shareholders can benefit from? I'm going to let Jason say a few words about this chart.

Thank you, Graham, and thank you to everyone who's attending today. This is designed just to give a better understanding of how the different layers of revenue will come for the stereo side of the business. So this is purely as an indication rather than any specific numbers, but to help give some explanation for the different layers that we have. So as you can see from the slide, we've got four different layers of income that will feed through. grew on the stereo side of the business. The first of those, Graham's already touched on that, relates to that cathode deposition process. So covered within our contract, we will be providing that on a regular basis, and the contract does stipulate the lead's time for delivery. And that will progress from now onwards. So that gives us a good drumbeat of low tens of thousands of income that will be coming through for each of those batches that we deliver across to feed into that production process as we go forward. And that's a really, really important point for the business as it gives a good baseline of income to start with, even before we start to get products into people's hands and we start to see the really fantastic growth from that. product royalty revenue, which obviously follows on after that. Underneath that in the green section, we do have expectations around non-recurring engineering, so NRE. This is a big element within the MedTech sector, and actually Certech drive a large piece of their own revenue from this and have guidance around what we should be expecting as we work with end customers, either to validate our Cereax batteries in their particular application, And they would pay for that validation and support through their certification process. Or if they have a specific need for a size or shape of a variation of our Stereax MVP to suit their particular application. Obviously, some of these in-body applications have very precise needs in terms of where they can be located and therefore the shape of the device. And that plays back into the strengths of Stereax and how we can adapt to that. Underneath that, obviously, we're expecting royalty to come through as specified within our contract with Certec. In the short term, up to a volume break point, that's actually a profit share, so we will get the larger proportion of any profit that's coming through from those batteries from an agreed price and sales price and cost price that we have within the contract. Unfortunately, that's covered under NDA, so we're not in a position where we can share The precise details of that, but that certainly protects us at those low volume initial orders as they come through to make sure that we are getting a good return back. And then beyond that, at the very bottom, we actually have some carve-outs within the contract to make sure that we can offer the StereoX product to other markets or to very high-volume applications. That means that we won't lose out on any opportunities if they come along. And for any reason at all, Certec are fantastic. not able to scale as quickly as that product demands. We do have the ability to issue additional licenses, and we would expect those to come with upfront license fees that would feed through. So giving lots of different opportunities, but really that revenue starts now with those first purchase orders, as we announced yesterday for the cafe deposition process.