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 could 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 where it's appropriate to do so before we begin i'd like to submit the following poll and I'd now like to hand you over to Graeme Purdy, CEO, good afternoon sir.

Thank you, Lily, and welcome to everybody who's chosen to attend this IMC session. This is ILICA's annual results for the year that finished at the end of April 26. And I'm joined here by our CFO, Jason, who, despite appearances, is actually sitting next to me. He's looking at the screen on his own laptop. So we are both at the same table. So we will now go into the slides and we will trot through and if you have any questions as Lily said please submit them into the Q&A chat and we will do our best to answer those for you. so those of you who've been following the company for some time now will know that we've got two product lines they're both solid state batteries on the one hand we've got our large format goliath batteries which have been designed for evs and consumer appliances and on the other hand We've got our Steriax miniature solid-state batteries which have been designed for active implantable miniature devices and they are principally for medical applications as well as for Internet of Things or wireless sensors. So let's have a trot through some of the activities, some of the milestones that we've delivered over the past year. I'll start with Goliath that's shown at the top there. We've secured significant grant funding from the Battery Innovation Programme and also the Advanced Propulsion Centre here in the UK. So we've effectively doubled up on the deployment of shareholder equity for our R&D program by accessing this grant funding. We have been working on prototype development with Jaguar Land Rover and also Agritas. We have a technology collaboration agreement with them. We've completed the automation of our megawatt-hour pilot line that we use for making these cells and sharing them with customers. We've also sent out batches of these cells to OEMs and Tier 1 companies. for them to evaluate and give us feedback and we've had some early feedback actually from a defence agency that advises the Ministry of Defence here in the UK on the safety and suitability of batteries and that was a very positive validation and also we've announced that we're collaborating with that well-known folding bike brand Brompton for their e-bike range and that program has just started on Steriax we have commenced production of our m300 batteries we've initiated delivery of the Thank you very much. and you'll see actually in our accounts that we've recognized the modest amount of a hundred thousand pounds in the last financial year and of course this is expected to grow in the year that we are now progressing. so just a quick review of our business model for those of you that are not familiar with it so we have an asset light business model which means that we license our technology we've already licensed our Steriax technology through to Certec Medical and in return for that we receive a profit share and royalties that's what's shown in green at the bottom of this graphic as well as revenue from the electrode sales which we were just talking about and then in blue for Goliath we receive grant support for the development of this technology and then in due course we will be licensing it and also receiving engineering fees in fact some of those fees have already started because we sell a prototype product the the 10 amp hour prototypes that we released Just before Christmas and also the technology collaboration agreement that we've got These are fee paying arrangements and then that flips into a royalty bearing license So we've been successful in securing a top-up round of funding just last month and actually that's enabled some of these strategic imperatives over the next 12 to 18 months. First of all for Steriax, we're continuing to support Certex marketing efforts. They are of course very active, particularly in the US, selling to their customers and we can Peggy Back of their marketing efforts to actually make sure that the word on Stereax is getting out and of course there's some technical sales support that's required as part of that commercialization. The next thing that you'll see actually is an integration of our batteries into the Certec demonstrator, the Certec technology platform. That's one of the real advantages actually of working with them is that they not only and so on. Product Sales to buy Certec rather than buy the final commercialization of the product by the end customer. In terms of Goliath, we've got an opportunity to hit some early commercialization, which we're very excited about, because what's happened is that when we sent out those 10 amp hour prototypes to a range of evaluation partners, some of them were non-automotive. Remember that those prototypes were really sent out not because they were the final product, but because they were an important milestone on our EV roadmap. but some of those organizations actually viewed a 10 amp hour cell as being adequate for their applications in particular in the defense sector and for e-bikes too actually the Brompton's another example of where this 10 amp hour cell format is directly relevant to their product line and so based on the feedback that we've got from those evaluations We have decided that we're going to take that prototype and turn it into a product and of course you need a larger amount of testing and validation certification in order to do that and that's part of this MVP delivery. and hand in hand with that we've got a series of commercialization agreements that we're talking about with non-automotive organizations so we expect to be able to put letters of intent and of course full commercial agreements in place on the back of those discussions and that will enable us to generate some early revenue close that gap to profitability and give added commercial momentum to the company but we haven't totally forgotten the EV commercialization opportunity we've still got a series of 10 ampere validations of those cells that are in progress it does take a while to complete those tests because cycle life is part of that validation and actually understanding how resilient those batteries are is part of a full spectrum of testing of those cells We are likely to secure some additional grant support for pack integration and other scale up activities and then that will lead into the first option to license so you know before we get to a full license there's likely to be an option phase where a partner takes the technology validates it goes through the BCD sample route that people talk about for automotive Before integrating it into a vehicle design Right, so that's the overview. Let's talk a bit about Steriax in some more detail. There you see the Steriax M300 product beside some pharmaceuticals in the central picture. And on the right hand side, that's actually part of the Certec clean room where we've got some of our equipment installed as part of the microfabrication that Certec carry out there. So that partnership is really designed for growth. There are five end users that we'll talk about in a couple of slides time. A nice portfolio of 16 customers that we're dealing with and we've actually got more orders than we've got customers because some of those customers are big organizations and they have issued us with multiple orders. So that's why we've got 19 as opposed to 16. We've commenced M300 deliveries to those customers and we've started generating those commercial revenues. The actual electrodes are made on wafers and that's why we say it's wafer processing income and that's what we've started to recognize. and that really will lead into the the profit share and then ultimately revenue share once commercialization volumes have been achieved so we believe that this relationship continues to give us industry validation and one of the questions we we often got from end customers well You know this is great technology guys but you know we're a multi-billion dollar company and we expect to sell millions of this product. Can you really scale up? And of course with Certec we've got a convincing scale-up partner. They've got significant multi-million revenues in the US and have been a a trusted commercialization partner for many of these OEMs for many years so there's a lot of credibility associated with that partnership and also they've got a business development scale so they've got a commercial team that has access to the customers that we're dealing with now and of course a portfolio of others too and a strategic alignment in that they're also very keen on commercializing products for active implantable medical devices and this will, we believe, enable faster adoption of StereoX than if we were trying to do it on our own. So for the end customer, this has got many benefits. Reduced surgery time, which actually is the biggest cost driver in getting a medical device. You can implant these tiny little devices close to the point of therapy so you don't have to manage leads that run through the body. They have a long life. you can charge the batteries at home inductively and they are powerful enough to be able to power a bluetooth radio and there you see on the bottom right an example of the m300 integrated into an orthopedic application so this is a knee replacement in this example the implant would measure movement in terms of amplitude and frequency of use and send that data out of the joint through to a physiotherapist which would then coach the patient for the optimum recovery after the surgical intervention so effectively securing better outcomes for the patients So there you see a summary of some of the milestones that we've achieved in 2025 and stuff to look forward to in the future. We've talked about integration in the Certec customer platform and also commencement of royalty payments. and these are the key applications really for stereax there are many potential applications but these are the ones that we believe are the closest fit with what that technology can offer so orthopedic implants like we've just seen that's actually the biggest market lots of knee, hip and shoulder replacements that would benefit from this technology neurostimulation so this is where you Thank you for watching. Implanted sensors to measure blood pressure and also oxygen concentration in blood for patients with COPD Ophthalmic applications where you can measure the chemical composition of tears and help manage different conditions like diabetes and finally orthodontic applications where again it can be a compliance thing to make sure that people are wearing aligners but also monitoring of biomarkers in saliva. and this is how we build up the financial projections for each of these applications the hashed areas are the prototype volumes and then we get through to mass manufactured product volumes so when we build up our financial forecasts to assure ourselves of an attractive return on investment we do that from the bottom up so rather than just saying that we're going to capture a percent of the market we work out what's the volume of production that each of our customers are likely to be able to deliver and this is just one of eight prospects actually for orthodontics orthodontics is the most represented application in our customer base and it is also actually the application where we'll probably get a product to market first because it's relatively easy to get FDA approval for this application this is a class 2 medical device and there are some drop-in replacements that are particularly a good fit with this particular technology offering So you get this for biomarkers but also things like monitoring sports activities in particular where you might get concussion risk in contact sports like rugby, American football or soccer. Not only for professional athletes, I mean those of you that follow the Six Nations rugby competition will have seen that you get collision monitoring in that event right now but also more broadly in amateur sports and for school kids where you may want to monitor that more closely and clearly the smaller the battery the more comfortable it is for people to wear these particular aligners. Right, let's talk about Goliath. There you see a picture of our 10 amp hour prototype held by one of our engineers in the middle. And then on the right hand side you see actually some of our coating equipment. If you look closely you can see a web, and that's what the industry calls these foils that you put the electrode onto. That's in fact a web with some anode coated on it. So why are people interested in solid-state batteries? Why bother with them? Well, people are actually interested in better batteries and we did some modeling together with Balance batteries, which is a well-known consultancy to the automotive industry and they worked out by taking a goliath battery and putting it into a hyundai ionic 5 that they could get a weight saving of 20 percent and of course if you do that that correlates to a range improvement of 20 percent if you actually keep the the weight of the battery the same or you can have a more compact battery There's also a cost saving. We know that EVs are more expensive relative to their traditional counterparts, so anything you can do to reduce the cost has got a significant benefit in terms of encouraging customer uptake. and also you can charge batteries more rapidly that are goliath solid state batteries here we've taken about a third of the charge time reducing it from 18 minutes down to 12 minutes so some very compelling reasons to adopt solid state batteries and this is what the path to commercialization looks like when we look at some of these milestones with the green boxes around it we are expecting some more prototype validation back from the companies who have received those 10 amp hour cells of course we've built on some of that positive feedback by entering into discussions regarding letters of intent for non-automotive applications and that will of course turn into commercial relationships in short order further grant support to support the automotive roadmap that we've got and then early revenue actually from those 10 amp hour MVP sales so that's really important really I think to demonstrate the commercial traction of this technology and then of course at the end of this the first option to license with an OEM or a tier one counterparty So what does the deal structure look like? Well, look, we've already ticked off the foothills of this particular commercialization model where we've already sold prototypes to companies who are interested in evaluating the batteries. The reason that we don't Thank you very much. sometimes that results in an engineering collaboration we have such a collaboration in place with Agritas which is the sister company to JLR of course both owned by Tata Sons and Agritas of course is the company that's building the UK's largest what will be the UK's largest GigaFactory in Bridgewater in Somerset, not too far away from where Illica is based and we expect that relationships like that will then lead to an option to license through the scale-up process and then when that goes well an upfront license payment and ultimately royalties on the revenue from the sale of those cells. So I probably don't need to convince you as an audience that EVs are here to stay, but of course if you read the media sometimes you might doubt that. Here's a bit of data from the International Energy Agency. um and actually this is global electric vehicle sales that's historical data up to last year and for this year it is a forecast of course we're halfway through this year already so plenty of evidence You see that China remains the country that has adopted the largest number of electric vehicles and continues to buy new EVs, but Europe has also shown significant growth um actually in europe um in 2025 we got 27 percent growth of ev sales the us has shown a drop actually in the number of new ev sales that's a bit of an outlier globally largely due to the removal of incentives that are still in place in many other jurisdictions around the world although of course in China they've been removed and there's still strong growth there the UK is very much in line with the rest of Europe with the larger economies here in Europe and is also showing strong growth and in fact if you look at this chart on the right This is from the OBR, so the Office of Budget Responsibility here in the UK, and at the end of 2025 they were still expecting that by 2035 that the total car stock on the road, so not just new purchases but all of the cars, all of the vehicles that are on the road, the majority of them would be electric. In the first half of 2026, we've actually seen a bit of an acceleration of new vehicle registrations as EVs as a result of higher oil prices, so petrol and diesel prices at the pump through the war in Iran. that's impacted fuel prices here but let's see if that's sustained through the rest of the year. Most analysts think that actually that demand will continue to grow very strongly this year. So part of the feedback, part of the validation that we got as our 10 Ampower batteries were tested was a piece of testing that we hadn't done before. and this probably wouldn't surprise you but it was actually a Ministry of Defence advisory agency that took our cells and shot them to bits on a firing range and of course that's not part of the standard tests that you would put an automotive battery through so we hadn't done that before. and we actually saw that there was a series of results that were very positive. Batteries, as you know, are used increasingly on the battlefield because of the large amount of electronics that soldiers carry for communication and location determination and intelligence gathering. and you can see actually in that picture a battery pack that a soldier's got there a conformal battery pack really that the soldier's wearing on the vest and these have become a bit of a target because normal lithium-ion batteries when they're hit tend to go up with a small explosion so they can cause more injury than even being shot by a bullet so having ones that are Thank you for watching. And also there's a sovereignty angle here where a lot of defense spending is being accelerated, particularly here in Europe, and countries are wanting to use it to stimulate their own economies and not be reliant on long supply chains from other jurisdictions. and I also wanted to mention the e-bike opportunity with Brompton so this is a piece of grant funding that we've just recently received from the battery innovation program and this is really supporting integration of those 10 ampere cells onto Brompton e-bikes Brompton being the biggest bike manufacturer in the uk the biggest e-bike manufacturer as well and the biggest exporter of e-bikes from the uk and there are some real advantages to using goliath batteries increased energy density and enhanced safety so we're very excited about this application and yeah there's obviously a lot of Demand really for improved e-bike safety you do read about incidents where people have got e-bikes on charge at home and perhaps it's a poor quality battery that ends up causing a fire so there's a lot of scrutiny of e-bikes and also of course you're not allowed to currently put them on aircraft so if you can come up with a safer battery that gives the regulator more comfort that it wouldn't trigger an incident then there are commercial advantages to that.

so these are our annual results at this point I'm going to let Jason talk you through the financials thanks Graeme so just picking up the highlights from the financial reports that we've published out this morning revenue was flat year on year against numbers published last year at 1.1 million pounds although it's important to note from within that as Graeme has already touched on We've got 100,000 of the first revenue started to come through from Sterix and if those eagle-eyed of you that have been watching the R&S announcements that have come out would have noticed that that came at the end of February, beginning of March so really in the year to the end of April we only just managed to get a couple of months of that in at the end of this financial period so we would expect that to build through this financial year as we go forward that's really the start of revenue coming and it's a great inflection point for the company so really we're starting to get revenue from the wafers now as Graeme has said we'll look to see the actual batteries being delivered into that development activity at the customer end grant income continued on so one million pounds from grant income and we would expect to see that continue into future years as Graeme's already said we've got the Brompton activity and there are other applications we have in the process. Grants are not just a great way for us to get non-diluted funding but they're also a fantastic opportunity for us to work with people in the commercial sector so as a battery developer you want to have access to people who are either further up the supply chain and closer to the end use product or the end use product themselves so Brompton is a prime example of doing that and the previous grant funded projects, Primed being the main one that we had in this financial year was a great opportunity to work within the automotive industry with both partners and oversight from people in that industry. The EBITDA loss was £6.2 million versus £5.2 million and that's excluding the share based payments. The reason for that increase was really a ramp up of material. So as we move from 2Ah batteries that we were making a year ago up to 10Ah batteries on the Goliath side, really we're consuming a significant increase in material. as we're feeding into the larger batteries and producing more batteries that are then going into the testing evaluation program both for us and for those customer partners that we've provided those batteries to so that really takes an increase in material coming through to be able to do that and also for anyone who's eagle-eyed and looked through the accounts you'll have seen that up until this year we have been capitalizing some of the development costs of the Steriax activity so that's the final stages of development as we move from an A sample through to a B sample we were capitalising that to create an intangible asset once we started generating that revenue we brought that asset into its useful life so that means that we no longer capitalise cost to that so any of those costs from February onwards that we were experiencing anyway so no difference in cash now falls onto the P&L or the Unincome Statement so no impact from a cash flow perspective but you would see that on the income statement rather than the balance sheet and therefore that makes that loss a little bit larger. That reflects down into that loss per share of four Thank you very much.