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ILIKA PLC — Annual Report 2015
Jul 10, 2015
7701_10-k_2015-07-10_47facb36-bcff-4d65-9e5d-6b3210fcf11f.html
Annual Report
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RNS Number : 6801S
Ilika plc
10 July 2015
ILIKA plc
(The "Company" or the "Group")
Final Results
Financial Statements for year ended 30 April 2015
Ilika (AIM: IKA), the accelerated materials innovation company, announce its audited full-year results for the year ended 30 April 2015.
Operational highlights:
· Grant of two patents covering methods for producing solid-state batteries
· Twenty-five fold increase in solid-state battery size achieved
· Official opening of pilot line by Rt. Hon Greg Clark MP, in Southampton
· Proof of concept contract win with European partner for development of batteries for WSN
· Commencement of solid-state battery pilot production leading to:
o 20 x larger deposition area of key battery materials
o 5 x increase in materials deposition rate
· Case study information released relating to aerospace alloy development work carried out with Rolls Royce and Boeing
· Board strengthened with the appointment of Keith Jackson, CTO of Meggitt plc, as NED
Financial highlights:
· Revenues up 4% to £1.09m (2014: £1.05m)
· Loss for the year reduced to £2.7m (2014: £2.8m)
· Loss per share reduced to 4.10p (2014: 5.37p)
· Cash, cash equivalents and bank deposits of £6.0m (2014: £7.1m)
Commenting on the results Ilika's Chairman, Jack Boyer, said: "The Company has made substantial progress this year in scaling up its proprietary solid-state battery technology. This operational progress has gone hand-in-hand with commercial discussions with OEM's and supply chain partners interested in integrating Ilika's battery technology into Internet of Things (IoT) devices."
For more information contact:
| # Ilika plc | # www.ilika.com |
| # Graeme Purdy, Chief Executive | # Tel: 023 8011 1400 |
| # Steve Boydell, Finance Director | |
| # Numis Securities Limited | # Tel: 020 7260 1000 |
| # Oliver Cardigan/ Adrian Trimmings / | |
| # James Black | |
| # Walbrook PR Ltd | # Tel: 020 7933 8780 / [email protected] |
| # Lianne Cawthorne (Media Enquiries) | # Mob: 07584 391 303 |
| Paul Cornelius (Investor Enquiries) | # Mob: 07827 879 460 |
STRATEGIC REPORT
The Directors present their Strategic Report for the year ended 30 April 2015.
Principal activities
Ilika plc is the holding company for Ilika Technologies Limited, the advanced materials innovation company. Ilika accelerates the discovery of new and patentable materials using its unique, patent protected, high throughput process for identified end uses in the energy and electronics sectors. This process enables hundreds of scalable materials to be made in a single, automated operation and subsequently tested for key properties. The process can be applied to many market sectors, but Ilika's recent focus has been in the field of solid-state batteries.
Business Strategy
The Company's strategy is to use its processes to discover and commercialise novel materials for integration into products with high value end-markets. In order to ensure a high probability of commercial success, the Company prefers to develop these materials in collaboration with large multinational companies, which have the expertise to bring new end-products to market to address unmet needs in their sectors. On occasion, the Company has joint development programmes, which contribute to competing technologies (for instance, battery versus fuel cell technology). Thereby, the Company aims to create intellectual property such that it will benefit from commercialisation rewards associated with the ultimate generally adopted technology (or technologies). The Company's objective is to have its materials integrated into market-leading products sold by leading commercialisation partners around the world. The Company generally expects these end-products to fit into or create end-markets worth in excess of $1 billion per year, in which the Directors believe a number of the Company's commercialisation partners are positioned to have a leading share.
The Company is pursuing its objectives through the following strategies:
· Developing leading-edge high throughput development processes;
· Partnering with companies committed to developing and globally commercialising jointly developed products;
· Using high throughput processes to invent patentable functional materials; and
· Applying improved functional materials to the development of valuable products.
Operating Review
The Company undertook a number of commercial and grant funded programmes in the year, but a significant part of the research and development effort in the year was focussed on its lead programme, the development of a solid-state battery.
Solid-state batteries
The mass-market commercialisation of solid-state batteries will be a step change in the evolution of battery technology; enabling lighter, non-flammable batteries which contain the same energy in half the volume, while charging up to 6x faster than the highest performance lithium ion incumbents.
The Company has been developing a proprietary solid-state battery chemistry and fabrication process, facilitating the scale-up manufacture of the next generation of solid-state lithium ion batteries. It has used its unique processing abilities to successfully turn a set of optimised high-performance materials into solid-state batteries with the following key advantages:
· A simple fabrication process
· Mechanical stability
· Stackable cells (necessary for building larger capacity batteries)
Battery production progress
In July 2014 the Company announced that it had succeeded in increasing the cross-sectional area and the energy capacity of the cells by more than 25 times the energy capacity of the cells it had previously manufactured on its development workflow. These new cells have similar characteristics, albeit on a larger scale, to the smaller devices. These cells have now been deposited over an area of 64 mm2, which is a footprint suitable for wireless sensor network ('WSN') and wearable applications.
The pilot line for the production of prototype batteries successfully completed its factory acceptance test in September 2014 and was then shipped from the fabricators in Finland to Southampton where it was officially opened by The Rt. Hon Greg Clark MP, Minister for Universities, Science and Cities in November 2014. In March 2015, the Company announced commencement of pilot production of solid-state batteries. At this point, the Company was able to confirm that the rate of deposition of materials, which is a key factor in establishing the price point of the resulting batteries, had been increased 10 fold relative to the rate of deposition of materials previously achieved on the Company's development workflow over an area 20 times larger, therefore delivering a 200 fold productivity increase. Deposition rates of 2 microns/hour, which compare favourably to commercially available solid-state micro-batteries, have already been achieved.
Significant increases in deposition rates are anticipated as the pilot line's capabilities are tested further. Operational parameters of the pilot line are currently being optimised to maximise the yield and performance of the batteries.
Battery patent application progress
In May 2014 Ilika announced that two of its patent applications, filed jointly with Toyota, had been granted in the UK. The patents cover the vapour deposition processes used to produce solid-state batteries directly from the elements. These represent a key part of the family of patents and patent applications covering the complete methodology for producing solid-state batteries.
In March 2015, Communication of Intention to Grant in Europe for one of these patent applications and a Notice of Allowance in the United States for the other, was received.
Other materials development programmes
Superalloys
Another significant area of activity in the year for Ilika has been the development of aerospace alloys.
Gas-turbine engine development for the aerospace industry continues to strive for improved fuel efficiency, reduced emissions and a reduction in noise at take-off. This development effort demands materials, which can tolerate increasingly high operating temperatures while retaining their mechanical strength. Nickel-based superalloys are widely used in gas turbines, however, the scope for further developing them is diminishing and therefore the rate of improvement of aeroengine technology is decreasing. Ilika, the University of Cambridge and Rolls Royce are investigating alternative lightweight alloy systems, which may also be able to operate under high temperatures, handle greater stresses and remain in service for longer.
Key performance indicators ('KPIs')
The board considers that the most important KPIs are technical and operational and relate to the progress of the technical development programmes outlined above leading to the engagement of commercialisation partners.
The most important financial KPIs are the cash position and the operating loss of the Group, which remain under constant focus and which are considered in the financial review.
FINANCIAL REVIEW
The Financial Review should be read in conjunction with the consolidated financial statements of the Company and Ilika Technologies Limited (together the 'Group') and the notes. The consolidated financial statements are presented under International Financial Reporting Standards as adopted by the European Union. The financial statements of the Company continue to be prepared in accordance with International Financial Reporting Standards as adopted by the EU.
Statement of Comprehensive Income
Revenues
Revenue, all from continuing activities, for the year ended 30 April 2015 was up by 4% to £1.09m (2014: £1.05m). This includes £384k of grant income recognised from Innovate UK (2014: £94k), the majority of which relates to work together with the University of Cambridge, Diamond Light Source and Rolls Royce to develop new superalloy compositions for gas turbine engines.
Payments made by the Company's European-based partners for research and development activities increased from 33% of total revenues in 2014 to 40% in 2015 whilst those for US-based and Asian-based partners reduced from 19% and 38% to 13% and 12% respectively.
Administrative expenses and losses for the period
Total administrative costs for the year were slightly increased at £3.59m in 2015 relative to £3.57m in 2014. An accounting adjustment for a share based payment calculation is included within administration expenses. In 2015, because of the granting of a number of new options, there was an increase in the share based payment charge of £0.02m.
Depreciation and amortisation charges reduced by 42% to £325k (2014: £557k). This reduction was offset with some one-off costs associated with the recruitment of a new Non-Executive Director to the board and a new business development director for Japan.
Loss on continuing activities before tax is consistent at £3.0m in 2015 (2014: £3.1m) and loss and total comprehensive income and expense for the period has remained at £2.7m for 2015 (2014:£2.8m).
Statement of financial position and cash flows
At 30 April 2015, net assets amounted to £6.5m (2014: £7.8m), including net funds of £6.0m (2014: £7.1m).
The principal elements of the £1.1m decrease over the year ended 30 April 2015 in net funds were:
· Share proceeds (net of costs) of £1.4m (2014: £7.4m)
· Cash used in operations of £2.8m (2014: £2.5m);
· Research and development tax credits received of £0.3m (2014: £0.3m)
Subscription warrants were issued in 2010 with an exercise price of 51p per warrant. During the year 2,617,647 warrants were converted to ordinary shares with proceeds to the Company of £1.3m. The remaining unconverted 15,686 warrants expired on 28 May 2014.
Treasury policy and financial risk management
Credit risk
The Group follows a risk-averse policy of treasury management. Sterling deposits are held with one or more approved UK based financial institutions. The Group's primary treasury objective is to minimise exposure to potential capital losses whilst at the same time securing prevailing market rates.
Interest rate risk
The Group's cash held in current bank accounts is subject to the risk of fluctuating base rates. An element of the Group's financial assets is placed on fixed-term interest deposits.
Currency risk
During the year under review, the Group was exposed to Euro, Japanese Yen and US dollar currency movement as it engages business development staff in each of those territories. Additionally, a small element of expense and capital spend is denominated in these currencies. The Group has arranged for some of its programs, with customers based in these territories, to be denominated in these currencies to hedge against this exposure.
PRINCIPAL RISKS AND UNCERTAINTIES
Commercial risk
The Company 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 Company is largely dependent on its partners to commercialise the end-products containing the Company's materials.
The Company seeks to reduce this risk by continually assessing competitive technologies and competitors. The Company seeks to commercialise materials through multiple channels to reduce overreliance on individual partners and, in agreements with partners, it ensures that there are commercialisation milestones which must be met for the partner to retain the rights to commercialise the materials.
Financial risk
The Company is reliant on a small number of significant customers and partners. Termination of these agreements could have a material adverse effect on the Group's results or operations or financial condition. The Company expects to incur further operating losses as progress on development programmes continue. There can be no assurance that the Company will ever achieve significant revenues or profitability.
The Company seeks to reduce this risk by broadening the number of customers and partners and thereby reduce reliance on individual significant companies. The Company has reduced the level of its operating loss and has significantly reinforced the balance sheet with a substantial capital raise in the year along with additional funding shortly after the year-end.
Intellectual property risk
The Group faces the risk that intellectual property rights necessary to exploit research and development efforts may not be adequately secured or defended. The Group's intellectual property may also become obsolete before the products and services can be fully commercialised.
The Company seeks to reduce this risk by employing in-house staff with extensive global experience of patenting and licensing using commercially available patent searching and landscaping software. External patent agents and attorneys are used to advise on the drafting and filing of patent applications.
Dependence on senior management and key staff
Certain members of staff are considered vital to the successful development of the business. Failure to continue to attract and retain such highly skilled individuals could adversely affect operational results.
The Group seeks to reduce this risk by offering appropriate incentives to staff through competitive salary packages and participation in long-term share option schemes.
By order of the Board
| Jack Boyer | Graeme Purdy |
| Chairman | CEO |
| 9th July 2015 |
DIRECTORS' REPORT
The Directors present their report and the audited financial statements for Ilika plc ('Ilika') and its subsidiary (the 'Group') for the year ended 30 April 2015.
Details of directors' remuneration and share options are given in the Directors' Remuneration Report.
Directors
The Directors who served on the board of Ilika during the year and to the date of this report were as follows:
Executive
Mr S Boydell (FD and Company Secretary)
Prof. B. E. Hayden (CSO)
Mr G. Purdy (CEO)
Non-Executive
Mr J. B. Boyer (Chairman)
Ms. C Spottiswoode CBE
Prof. Sir W Wakeham
Prof. K Jackson (appointed 1st November 2014)
Research and development costs
In accordance with the policy outlined in note 1, the Group incurred research and development expenditure of £1,740,173 in the year (2014: £1,642,152). Commentary on the major activities is given in the Strategic Report.
Financial instruments
The use of financial instruments and financial risk management policies is covered in the Strategic Report and also in note 17 of the financial statements.
Dividends
The Directors do not recommend the payment of a dividend.
Political donations
The Group made no political donations during the year (2014: Nil).
Directors' interests in ordinary shares
The directors, who held office at 30 April 2015, had the following interests in the ordinary shares of the Company:
| Number of shares | ||
| 1st May 2014 | 30th April 2015 | |
| G Purdy | 477,427 | 589,427 |
| J Boyer | 394,009 | 394,009 |
| C Spottiswoode | 45,454 | 45,454 |
| S Boydell | 9,090 | 9,090 |
| W Wakeham | - | - |
| B Hayden* | - | - |
| K Jackson | - | - |
* B Hayden had an interest in preference shares of the Company amounting to 426,300 at 1st May 2014 and at 30th April 2015.
Between 30th April 2015 and the date of this report, there has been no change in the interests of directors in shares as disclosed in this report.
Substantial shareholdings
On 6th July 2015 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 |
| Henderson Global | 9,500,000 | 14.5 |
| Charles Stanley Group plc | 8,734,198 | 13.3 |
| IP Group plc | 6,458,779 | 9.8 |
| Ruffer LLP | 6,105,454 | 9.3 |
| Baillie Gifford & Co. | 4,956,616 | 7.5 |
| Richard Griffiths | 3,936,069 | 6.0 |
| Southampton Asset Management | 2,349,900 | 3.6 |
| Herald Investment Management | 2,250,000 | 3.4 |
| Hargreave Hale | 2,063,045 | 3.1 |
| Mackin Holdings | 2,017,647 | 3.1 |
Post balance sheet events
There are no significant post balance sheet events from the 30th April 2015 to the signing of this report.
Auditors
All the current directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's Auditors for the purposes of their audit and to establish that the Auditors are aware of that information. The Directors are not aware of any relevant audit information of which the Auditors are unaware.
A resolution to re-appoint BDO LLP will be proposed at the next Annual General Meeting.
By order of the board
Steve Boydell
Company Secretary
DIRECTORS' REMUNERATION REPORT
This report is non-mandatory for AIM-quoted companies and has been produced on a voluntary basis. It includes and complies with the disclosure obligations of the AIM Rules.
Remuneration Committee
The Company's remuneration policy is the responsibility of the Remuneration Committee (the 'Committee'), which was established in May 2004. The terms of reference of the Committee are outlined in the Corporate Governance Statement on page 15. The members of the Committee are Jack Boyer (Chairman), Clare Spottiswoode, Prof Keith Jackson and Prof Sir William Wakeham.
The Committee met four times during the year ended 30 April 2015. The Chief Executive Officer and certain executives may be invited to attend meetings of the Committee to assist it with its deliberations, but no executive is present when his or her own remuneration is discussed.
Remuneration policy
(i) Executive remuneration
The Committee has a duty to establish a remuneration policy which will enable it to attract and retain individuals of the highest calibre to run the Group. Its policy is to ensure that the executive remuneration packages of executive directors and the fee of the Chairman are appropriate given performance, scale of responsibility, experience, and consideration of the remuneration packages for similar executive positions in companies it considers to be comparable. Packages are structured to motivate executives to achieve the highest level of performance in line with the best interests of shareholders. A significant element of the total remuneration package, in the form of bonus and share options, is performance driven.
Executive remuneration currently comprises a base salary, an annual performance-related bonus, a pension contribution to the executive director's individual money purchase scheme (at between 8% and 10% of base salary) and critical illness cover. Salaries and benefits were last reviewed in January 2015 with increases taking effect from 1st January 2015, taking into account Group and individual performance, external benchmark information and internal relativities. The Company operates a discretionary bonus scheme for executive directors for delivery of exceptional performance against a series of financial, commercial and technology objectives. The maximum bonus payable for the year to 30th April 2015 was restricted to 50% of CEO base salary, 30% of CSO base salary and 20% of CFO base salary.
(ii) Chairman and non-executive Director remuneration
The Chairman, Mr Boyer receives a fixed fee of £61,200 per annum and declined any increase in this fee for the year to 31st December 2015. Clare Spottiswoode, Prof Sir William Wakeham and Prof Keith Jackson received a fixed fee of £31,312 per annum for the year to 31st December 2014 and will receive £32,500 per annum for the year to 31st December 2015. The fixed fee covers preparation for and attendance at meetings of the full Board and committees thereof. The Chairman and the executive directors are responsible for setting the level of non-executive remuneration. The non-executive directors are also reimbursed for all reasonable expenses incurred in attending meetings.
All remuneration policies will be reviewed regularly to maintain adherence with best market practice as appropriate.
Directors' remuneration
The aggregate remuneration received by directors who served during the year ended 30th April 2015 and 2014 was as follows:
| Basic salary |
Fees | Benefits in kind | Bonus | Total Short term benefits |
Pension | Total | |
|---|---|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | £ | £ | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Year to 30th April 2015 | |||||||
| G Purdy | 176,667 | - | 543 | 24,000 | 201,210 | 29,833 | 231,043 |
| S Boydell | 115,000 | - | 356 | 12,000 | 127,356 | 17,450 | 144,806 |
| B Hayden* | 60,270 | - | - | 12,000 | 72,270 | - | 72,270 |
| J Boyer | 61,200 | - | - | - | 61,200 | - | 61,200 |
| K Jackson | 16,035 | - | - | - | 16,035 | - | 16,035 |
| W Wakeham | 31,641 | - | - | - | 31,641 | - | 31,641 |
| C Spottiswoode | 31,641 | - | - | - | 31,641 | - | 31,641 |
| ------ | ------ | ------ | ------ | ------ | ------ | ------ | |
| 492,454 | - | 899 | 48,000 | 541,353 | 47,283 | 588,636 | |
| ------ | ------ | ------ | ------ | ------ | ------ | ------ | |
| Year to 30th April 2014 | |||||||
| G Purdy | 158,800 | - | 444 | 25,320 | 184,564 | 28,260 | 212,824 |
| S Boydell | 102,788 | - | 292 | 11,140 | 114,220 | 18,244 | 132,464 |
| B Hayden* | 53,468 | - | - | 5,347 | 58,815 | - | 58,815 |
| J Boyer | 61,200 | - | - | - | 61,200 | - | 61,200 |
| W Braun | - | 5,200 | - | - | 5,200 | - | 5,200 |
| W Wakeham | 30,804 | - | - | - | 30,804 | - | 30,804 |
| C Spottiswoode | 30,804 | - | - | - | 30,804 | - | 30,804 |
| ------ | ------ | ------ | ------ | ------ | ------ | ------ | |
| 437,864 | 5,200 | 736 | 41,807 | 485,607 | 46,504 | 532,111 | |
| ------ | ------ | ------ | ------ | ------ | ------ | ------ |
*B Hayden is employed by the University of Southampton. The amounts disclosed in the table above relate to payments made directly to B Hayden. The University of Southampton recharged employment costs of £55,873 to the company in the year in respect of B Hayden. (2014: £54,327)
Share based payment charge attributable to directors in the year was £7,080 (2014: £nil).
Benefits in kind include critical illness cover.
Share options
The share options of the directors are set out below:
| Unapproved | 2014 Number |
Granted | 2015 Number |
Exercise Price | Expiry date |
|---|---|---|---|---|---|
| G Purdy | 1,050,000 | - | 1,050,000 | 51p | May 2020 |
| --- | --- | --- | --- | --- | --- |
| J Boyer | 1,050,000 | - | 1,050,000 | 51p | May 2020 |
| B Hayden | 525,000 | - | 525,000 | 51p | May 2020 |
| B Hayden | - | 177,900 | 177,900 | 81.5p | February 2025 |
| S Boydell | 117,600 | - | 117,600 | 51p | May 2020 |
| W Wakeham | 65,100 | - | 65,100 | 51p | May 2020 |
| C Spottiswoode | 50,100 | - | 50,100 | 51p | May 2020 |
| Approved | |||||
| G Purdy | - | 245,300 | 245,300 | 81.5p | February 2025 |
| S Boydell | - | 154,600 | 154,600 | 81.5p | February 2025 |
The share options of the directors in Ilika plc exchanged from share options in Ilika Technologies Limited.
| Approved | 2014 Number |
Exercised | 2015 Number |
Exercise price | Expiry date |
|---|---|---|---|---|---|
| G Purdy | 139,500 | 139,500 | - | 10p | 9 June 2015 |
| --- | --- | --- | --- | --- | --- |
| G Purdy | 26,500 | - | 26,500 | 80p | 14 May 2017 |
| S Boydell | 90,000 | - | 90,000 | 80p | 1 December 2019 |
| Unapproved | 2014 Number |
Lapsed | 2015 Number |
Exercise price | Expiry date |
|---|---|---|---|---|---|
| G Purdy | 136,200 | - | 136,200 | 80p | 11 July 2017 |
| --- | --- | --- | --- | --- | --- |
| J Boyer | 540,200 | 540,200 | - | 10p | 29 June 2014 |
| B Hayden | 59,300 | - | 59,300 | 80p | 11 July 2017 |
Mr Purdy exercised 139,500 options in the year (2014 - 594,700).
Jack Boyer
Chairman of the remuneration committee
Statement of Directors' responsibilities in respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group 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; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Group's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Group's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Going concern
The directors have prepared and reviewed financial forecasts. After due consideration of these forecasts and current cash resources, the directors consider that the Company and the Group have adequate financial resources to continue in operational existence for the foreseeable future (being a period of at least twelve months from the date of this report), and for this reason the financial statements have been prepared on a going concern basis.
By order of the Board
Graeme Purdy
Chief Executive
9th July 2015
CORPORATE GOVERNANCE STATEMENT
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 provisions of the UK Corporate Governance Code published in September 2012 (the 'Code') is not a formal obligation. The Company has not sought to comply with the full provisions of the 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
The Board of directors (the 'Board') 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 formulation of the overall strategy of the company, the running of the board, ensuring that no individual or group dominates the Board's decision making and ensuring that the non-executive directors are properly briefed on matters. Prior to each Board meeting, directors are sent an agenda and Board papers for each agenda item to be discussed. Additional information is provided when requested by the Board or individual directors.
The Chief Executive Officer has the responsibility for implementing the strategy of the Board and managing the day to day business activities of the Group through his chairmanship of the executive committee.
The Non-Executive Directors bring relevant experience from different backgrounds and receive a fixed fee for their services and reimbursement of reasonable expenses incurred in attending meetings.
The Board retains full and effective control of the Group. This includes responsibility for determining the Group's strategy and for approving budgets and business plans to fulfil this strategy. The full Board ordinarily meets bi-monthly.
The Company Secretary is responsible to the Board for ensuring that Board procedures are followed and that the applicable rules and regulations are complied with. All directors have access to the advice and services of the Company Secretary, and independent professional advice, if required, at the Company's expense. Removal of the Company Secretary would be a matter for the Board.
Performance evaluation
The Board has a process for evaluation of its own performance which is carried out annually.
Board Committees
As appropriate, the Board has delegated certain responsibilities to Board Committees as follows:
i) Audit Committee
The Audit Committee currently comprises Clare Spottiswoode CBE (Chairman), Professor Sir William Wakeham, Professor Keith Jackson 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 comprised Jack Boyer (Chairman), Clare Spottiswoode CBE Professor Keith Jackson and Professor Sir William Wakeham.
The committee is responsible for making recommendations to the Board on remuneration policy for Executive Directors and the terms of their service contracts, with the aim of ensuring that their remuneration, including any share options and other awards, is based on their own performance and that of the Group generally.
iii) Nomination Committee
The Nomination Committee comprised Jack Boyer (Chairman), Professor Sir William Wakeham, Professor Keith Jackson and Clare Spottiswoode CBE.
It is responsible for providing a formal, rigorous and transparent procedure for the appointment of new directors to the board and reviewing the performance of the board each year.
Attendance at Board meetings and committees
The Directors attended the following Board and committees meetings during the year:
| Attendance | Board | Audit | Nomination | Remuneration |
| Mr S. Boydell | 6/6 | - | - | - |
| Mr J. B. Boyer | 6/6 | 2/2 | 3/3 | 4/4 |
| Prof. B. E. Hayden | 6/6 | - | - | - |
| Mr G. Purdy | 6/6 | - | - | - |
| Ms. C Spottiswoode | 6/6 | 2/2 | 3/3 | 4/4 |
| Prof. Sir W Wakeham | 6/6 | 2/2 | 3/3 | 4/4 |
| Prof K Jackson | 2/2 | 1/1 | 1/1 | 2/2 |
Risk management and internal control
The Board is responsible for the systems of internal control and for reviewing their effectiveness. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. The Audit Committee reviews the effectiveness of these systems primarily by discussion with the external auditor and by considering the risks potentially affecting the Group.
The Group does not consider it necessary to have an internal audit function due to the small size of the administration function. Instead there is a detailed Director review and authorisation of transactions. The annual audit by the Group auditor, which tests a sample of transactions, did not highlight any significant system improvements in order to reduce risk.
The Group maintains appropriate insurance cover in respect of actions taken against the Executive Directors because of their roles, as well as against material loss or claims of the Group. The insured values and type of cover are comprehensively reviewed on a periodic basis.
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
Jack Boyer
Chairman
9h July 2015
CORPORATE AND SOCIAL RESPONSIBILITY STATEMENT
Ilika continues to approach its responsibilities to corporate social responsibility (CSR) in a co-ordinated and committed way and applies a positive and systematic approach to environmental and social issues that impact on our business whilst at the same time delivering good value for the Company and continued benefit for society. We aim to include CSR in all aspects of our business.
Overall responsibility for developing and implementing our CSR policies and for reviewing their effectiveness lies ultimately with the Ilika Board. Regular and consistent reviews of the scope of the Company strategy ensures we remain focussed on the material issues for the business. The CSR policy and procedures are reviewed by the management team regularly and are communicated to all employees. Strong communication ensures all there is both upward and downward flow of information and ideas. The management team report to the board regularly to ensure the board are fully apprised of the status of the Company's efforts in this area.
The Main areas of CSR at Ilika are:
1. Health and safety
It is of paramount importance that, as a company, we ensure the well-being, safety and welfare of our employees and those who are affected by our business and to maintain a safe and healthy working environment. Health and Safety has direct positive benefits for the company and a commitment to a high level of safety makes good business sense. As a business function, health & safety must continually progress and adapt to change.
At Ilika, Health and safety is considered at the highest level in the Company with the ultimate responsibility resting with the Board. Health and safety is an agenda item at each Board meeting and a full report is presented annually. Our Policies and procedures are independently reviewed by experts to ensure compliance with not only legislation but also best practice.
2. Environment and sustainability
Ilika is committed to achieving a real and sustainable positive impact on the broader community by adopting environmentally responsible policies. We believe it is essential that both as a Company and as individuals we operate in an environmentally conscious manner. Our objective is to minimise the impact of our business activity on the environment wherever possible. This includes ensuring our suppliers do likewise: we actively seek collaborations with those who are similarly aware of and active in this field.
Ilika has implemented many changes within the business in furtherance of our policies and continues to review and monitor progress against our own targets and to creatively consider new initiatives. Our on-going objectives are to consider environmental issues in all of our decision making processes; to evaluate future energy usage to see how we can use low energy systems and to fundamentally reduce our impact on the environment and ask our employees, suppliers and customers do likewise.
3. Employee rights
Ilika adheres to legislation relating to employment rights and equal opportunities, with particular reference to non-discrimination on the basis of ethnic origin, religion, gender, age, marital status, disability or sexual orientation. However, Ilika's policies go beyond the legal requirements and the company acknowledges its moral rights to provide a safe and dignified working environment.
We maintain the highest level of integrity with regard to employees, customers and all others with whom we interact. We recognise the value that our employees create for the business and our commitment to training and personal development, together with remuneration policies, are designed to reward achievement and emphasise the importance of retaining staff.
Ilika will not tolerate discrimination, bullying or any other kind of harassment within our business community. The concept of 'mutual respect' is one of our guiding principles. Employees are expected to abide by Company rules and to be honest and considerate in their various roles.
Internal procedures have been established to report grievances or alleged inappropriate behaviour to other individuals or organisations. We treat dishonest actions and accusations seriously; this may result in disciplinary action in accordance with company rules and disciplinary procedures.
4. Ethics and values
Ilika supports the principles of the Universal Declaration of Human Rights. This means we support freedom from torture, unjustified imprisonment without fair trial and any other oppression. In addition, we support the right of any individual to have freedom of expression and religion, political representation or in respect of any other matter. Accordingly, we will not support or work with organisations which fail to uphold basic human rights or are involved in the manufacture or transfer to an oppressive regime or are involved in the manufacture of equipment used in the violation of human rights. Neither will we work with organisations which are involved in the funding or carrying out of terrorist activities.
Ilika will not provide support or work with organisations which do not conform to the most widely accepted standards for minimum labour rights or which do not cover the use of under-age or forced labour.
Ilika does not give or receive any bribes, extra contractual gratuities, inducements, facilitation fees or similar payments. Any gifts, whether in cash or kind, received by employees or the company in the course of normally accepted business entertainment are accepted subject to the prior written approval of the management. We do not donate (including sponsorship, subscriptions or provision of employee time or facilities) to any political party or similar organisation.
5. Contribution to society
Ilika accepts and acknowledges that we have a corporate responsibility towards society not only by paying taxes and creating and maintaining jobs but also by using our unique research skills to develop knowledge, skills and products which will ultimately benefit society.
We actively support and encourage the study of science at all levels from pre-GCSE through to post-doctoral level. We have an active Outreach department and participate in many activities designed to encourage and support the study of science.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ILIKA PLC
We have audited the financial statements of Ilika plc for the year ended 30 April 2015 which comprise the consolidated balance sheet, the parent company balance sheet, the consolidated statement of comprehensive income, the consolidated cash flow statement, the parent company cash flow statement, the consolidated statement of changes in equity and 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 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 Financial Reporting Council's (FRC'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 FRC's website at www.frc.org.uk/auditscopeukprivate.
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 30 April 2015 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 strategic report and 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.
Malcolm Thixton (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Southampton
United Kingdom
Date
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Consolidated statement of comprehensive income
| Year ended 30th April | |||
| Notes | 2015 | 2014 | |
| £ | £ | ||
| Revenue | 2 | 1,093,978 | 1,049,879 |
| Cost of sales | (591,044) | (586,869) | |
| ------- | ------- | ||
| Gross profit | 502,934 | 463,010 | |
| Administrative expenses | (3,588,837) | (3,569,696) | |
| Other operating income | 5 | - | 810 |
| ------- | ------- | ||
| Operating loss | 3 | (3,085,903) | (3,105,876) |
| Financial income | 6 | 50,557 | 22,131 |
| Financial expense | 7 | - | (1,513) |
| ------- | ------- | ||
| Loss before tax | (3,035,346) | (3,085,258) | |
| Taxation | 8 | 333,647 | 287,171 |
| ------- | ------- | ||
| Loss for period / total comprehensive income attributable to owners of parent | (2,701,699) | (2,798,087) | |
| ------- | ------- | ||
| Loss per share from continuing operations | 9 | ||
| Basic | (4.10)p | (5.37)p | |
| Diluted | (4.10)p | (5.37)p | |
Consolidated balance sheet
Company number 7187804
| As at 30th April | |||
| Notes | 2015 | 2014 | |
| £ | £ | ||
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 10 | 30,119 | 793 |
| Property, plant and equipment | 11 | 560,698 | 607,627 |
| ------- | ------- | ||
| Total non-current assets | 590,817 | 608,420 | |
| ------- | ------- | ||
| Current assets | |||
| Trade and other receivables | 12 | 496,985 | 572,304 |
| Current tax receivable | 8 | 304,122 | 248,191 |
| Other financial assets - bank deposits | 13 | 528,349 | 1,776,767 |
| Cash and cash equivalents | 14 | 5,479,035 | 5,329,967 |
| ------- | ------- | ||
| Total current assets | 6,808,491 | 7,927,229 | |
| ------- | ------- | ||
| Total assets | 7,399,308 | 8,535,649 | |
| ------- | ------- | ||
| Issued capital and reserves attributable to owners of parent | |||
| Issued share capital | 18 | 663,748 | 632,660 |
| Share premium | 17,465,442 | 16,082,944 | |
| Capital restructuring reserve | 6,486,077 | 6,486,077 | |
| Retained earnings | (18,094,830) | (15,426,779) | |
| ------- | ------- | ||
| Total equity | 6,520,437 | 7,774,902 | |
| ------- | ------- | ||
| LIABILITIES | |||
| Current liabilities | |||
| Trade and other payables | 15 | 728,871 | 610,747 |
| Provisions | 16 | 150,000 | 150,000 |
| ------- | ------- | ||
| Total liabilities | 878,871 | 760,747 | |
| ------- | ------- | ||
| Total equity and liabilities | 7,399,308 | 8,535,649 | |
| ------- | ------- |
The notes on pages 26 to 43 form part of these financial statements
These financial statements were approved and authorised for issue by the Board of Directors on 9th July 2015.
Mr. J.B. Boyer
Chairman
Consolidated cash flow statement
| Year ended 30th April | ||||
| 2015 | 2014 | |||
| £ | £ | |||
| Cash flows from operating activities | ||||
| Loss before taxation continuing operations | (3,035,346) | (3,085,258) | ||
| Adjustments for: | ||||
| Amortisation | 12,736 | 8,632 | ||
| Depreciation | 324,556 | 556,795 | ||
| Equity settled share-based payments | 33,648 | 15,000 | ||
| Loss on disposal of plant, property and equipment | - | (145) | ||
| Net financial income | (50,557) | (20,618) | ||
| ------- | ------- | |||
| Operating cash flow before changes in working capital, interest and taxes | (2,714,963) | (2,525,594) | ||
| Decrease in trade and other receivables | 79,918 | 5,200 | ||
| Increase in trade and other payables | 118,124 | 116,560 | ||
| ------- | ------- | |||
| Cash utilised by operations | (2,516,921) | (2,403,834) | ||
| Tax received | 277,716 | 269,266 | ||
| ------- | ------- | |||
| Net cash flow from operating activities | (2,239,205) | (2,134,568) | ||
| Cash flows from investing activities | ||||
| Interest received | 45,958 | 29,390 | ||
| Sale of property plant and equipment | 1,640 | 2,450 | ||
| Purchase of property, plant and equipment | (279,267) | (61,021) | ||
| Purchase of intangible assets | (42,062) | - | ||
| Decrease / (Increase) in other financial assets | 1,248,418 | (321,675) | ||
| ------- | ------- | |||
| Net cash from / (used in) investing activities | 974,687 | (350,856) | ||
| Cash flows from financing activities | ||||
| Proceeds from issuance of ordinary share capital | 1,413,586 | 7,716,912 | ||
| Share issue costs | - | (300,434) | ||
| Capital element of finance leases | - | (7,544) | ||
| Interest element of finance leases | - | (1,513) | ||
| ------- | ------- | |||
| Net cash from financing activities | 1,413,586 | 7,407,421 | ||
| ------- | ------- | |||
| Net increase in cash and cash equivalents | 149,068 | 4,921,997 | ||
| Cash and cash equivalents at the start of the period | 5,329,967 | 407,970 | ||
| ------- | ------- | |||
| Cash and cash equivalents at the end of the period | 5,479,035 | 5,329,967 | ||
| ------- | ------- | |||
Consolidated statement of changes in equity
| Share capital |
Share premium account |
Capital restructuring reserve |
Retained earnings | Total attributable to equity holders of parent |
|
|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | |
| --- | --- | --- | --- | --- | --- |
| --- | --- | --- | --- | --- | --- |
| As at 30th April 2013 | 475,354 | 8,823,770 | 6,486,077 | (12,643,692) | 3,141,509 |
| Share-based payment | - | - | - | 15,000 | 15,000 |
| Issue of shares | 157,306 | 7,559,607 | - | - | 7,716,913 |
| Expenses of share issue | - | (300,433) | - | - | (300,433) |
| Loss and total comprehensive income | - | - | - | (2,798,087) | (2,798,087) |
| ------ | ------- | -------- | -------- | -------- | |
| As at 30th April 2014 | 632,660 | 16,082,944 | 6,486,077 | (15,426,779) | 7,774,902 |
| Share-based payment | - | - | - | 33,648 | 33,648 |
| Issue of shares | 31,088 | 1,382,498 | - | - | 1,413,586 |
| Loss and total comprehensive income | - | - | - | (2,701,699) | (2,701,699) |
| ------ | ------- | -------- | -------- | -------- | |
| As at 30th April 2015 | 663,748 | 17,465,442 | 6,486,077 | (18,094,830) | 6,520,437 |
Share capital
The share capital represents the nominal value of the equity shares in issue.
Share premium account
When shares are issued, any premium paid above the nominal value is credited to the share premium reserve.
Capital restructuring reserve
The capital restructuring reserve arises on the accounting for the share for share exchange. It represents the difference between the value of the issued equity instruments of Ilika Technologies Limited immediately before the share for share exchange and the equity instruments of Ilika plc along with the shares issued to effect the share for share exchange.
Retained earnings
The retained earnings reserve records the accumulated profits and losses of the Group since inception of the business.
Notes to the consolidated financial statements
1 Accounting policies
Basis of preparation
The financial statements have been prepared on the basis of the accounting policies which apply for the financial year to 30th April 2015 and in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") adopted by the European Union.
The individual financial statements of Ilika plc are shown on page 44 to 49.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company made up to the reporting date. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
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 2015, amounted to £6,007,383. 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.
(a) New standards, amendments to standards or interpretations adopted early
During the period ended 30th April 2015, there were no new or revised standards, amendments to 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 9 | Financial Instruments | 1 January 2018 |
| IFRS 10 | Consolidated Financial Statements | 1 January 2016 |
| IFRS 11 | Joint Arrangements | 1 January 2016 |
| IFRS 12 | Disclosure of Interests in Other Entities | 1 January 2016 |
| IFRS 14 | Regulatory Deferral Accounts | 1 January 2016 |
| IFRS 15 | Revenue from Contracts with Customers | 1 January 2017 |
| IFRIC 21 | Levies | 17 June 2014 |
| IAS 16 | Property, Plant and Equipment | 1 January 2016 |
| IAS 19 | Employee Benefits | 1 July 2014 |
| IAS 27 | Consolidated and Separate Financial Statements | 1 January 2016 |
| IAS 28 | Investments in Associates and Joint Ventures | 1 January 2016 |
| IAS 38 | Intangible Assets | 1 January 2016 |
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 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.
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.
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 2015, 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 realisation 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 less their estimated residual value. The estimated useful lives are as follows:
| Leasehold improvements | lease term |
| Plant, machinery and equipment | 3 - 5 years |
| Fixtures & fittings | 3 - 5 years |
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 at the present value of the future expected cashflows associated with the impaired asset.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the income statement.
Intangible assets
Computer software
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised to administrative expenses using the straight line method over their estimated useful lives (1-3 years).
Intellectual property
Acquired intellectual property is included at cost and is amortised to administrative expenses on a straight-line basis over its useful economic life of 15 years.
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.
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.
· Revenue recognition
The Group's revenue substantially comprised revenues from the provision of research and development services. The contracts 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 research and development qualifying 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 analysed by the geographical location of its customer base and business development directors have been appointed to cover the group's three territories of focus, Asia, North America and Europe. Previously, segmentation analysis was provided by the market categories, Energy, Electronics and Biomedical. The disposal of the wound care business and the subsequent reorganisation meant that this segmentation basis was no longer appropriate.
The Group's activities originate from the production, design and development of high throughput methods of material synthesis, characterisation and screening. The Group has materials development programmes for a wide range of applications including in the battery, fuel cell and hydrogen storage sectors.
| Year ended 30th April | ||
| Turnover | 2015 | 2014 |
| £ | £ | |
| Analysis by geographical market: | ||
| By destination | ||
| Asia | 125,875 | 406,585 |
| Europe | 441,219 | 347,751 |
| North America | 142,351 | 201,764 |
| UK Grants | 384,533 | 93,779 |
| ------- | ------- | |
| 1,093,978 | 1,049,879 | |
| ------- | ------- | |
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:
| Year ended 30th April | ||
| Turnover | 2015 | 2014 |
| £ | £ | |
| Customer 1 | 384,533 | 332,218 |
| Customer 2 | 247,200 | 108,597 |
| Customer 3 | 189,052 | 107,900 |
| Customers less than 10% | 273,193 | 501,164 |
| -------- | -------- | |
| 1,093,978 | 1,049,879 | |
| ------- | ------- |
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 22. 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: | 2015 | 2014 |
| £ | £ | |
| Research and development expenditure in the year | 1,740,173 | 1,642,152 |
| Depreciation | 324,556 | 556,795 |
| Amortisation of intangible assets | 12,736 | 8,632 |
| Auditors remuneration: Fees payable to the Group's auditor for the audit of the Group's accounts |
19,700 | 19,700 |
| Fees payable to the Group's auditor for other services: - The Audit of the Group's subsidiaries |
6,800 | 6,800 |
| Operating lease rentals | 202,964 | 201,784 |
| Share-based payment | 33,648 | 15,000 |
| Foreign exchange differences | 5,123 | 3,281 |
| ------- | ------- |
4 Employees
The average number of employees during the year, including executive directors, was:
| Year ended 30th April | ||
| 2015 | 2014 | |
| Number | Number | |
| Administration | 8 | 8 |
| Materials synthesis | 23 | 26 |
| ------ | ------ | |
| 31 | 34 | |
| ------ | ------ |
Staff costs for all employees, including executive directors, consist of:
| Year ended 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Wages and salaries | 1,641,465 | 1,603,975 |
| Social security costs | 153,801 | 137,254 |
| Share-based payment expense | 18,648 | - |
| Pension costs | 98,206 | 102,441 |
| ------- | ------- | |
| 1,912,120 | 1,843,670 | |
| -------- | -------- |
| The total remuneration of the Directors of the Group was as follows: | ||
| Year ended 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Wages and salaries | 541,353 | 485,607 |
| Pension costs | 47,283 | 46,504 |
| ------- | ------- | |
| Directors' emoluments | 588,636 | 532,111 |
| Social security costs | 60,858 | 59,688 |
| Share-based payment expense | 7,080 | - |
| ------- | ------- | |
| Key management personnel | 656,574 | 591,799 |
| -------- | -------- |
The Directors represent key management personnel and further details are given in the Directors' Remuneration Report on pages 11 to 13.
5 Other operating income
| Year ended 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Sundry other income | - | 810 |
| ------ | ------ |
6 Financial income
| Year ended 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Income from short term deposits | 50,558 | 22,131 |
| ------ | ------ |
7 Financial expense
| Year ended 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Interest on: | ||
| Finance leases | - | 1,513 |
| ------ | ------ |
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 | ||
| 2015 | 2014 | |
| £ | £ | |
| Current tax on loss for the year | 304,122 | 248,191 |
| Adjustments to prior period | 29,525 | 38,980 |
| ------ | ------ | |
| 333,647 | 287,171 | |
| ------ | ------ |
(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 21% (2014: 23%). The differences are reconciled below:
| 2015 | 2014 | |
|---|---|---|
| £ | £ | |
| Loss on ordinary activities before tax | (3,035,346) | (3,085,258) |
| ------ | ------ | |
| Loss on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK of 21% (2014: 23%) | (637,423) | (709,609) |
| Effects of: | ||
| Expenses not deductible for corporation tax | 956 | 1,426 |
| R&D relief | (304,122) | (248,191) |
| Origination of unrecognised tax losses | 629,401 | 704,733 |
| Share options | 7,066 | 3,450 |
| Under provision in previous years | (29,525) | (38,980) |
| ------ | ------ | |
| Total tax credit for the year | (333,647) | (287,171) |
| ------ | ------ |
Unrecognised deferred taxation
There are tax losses available for carry forward against future trading profits of approximately £15,290,000 (2014: £13,010,000). A deferred tax asset in respect of these losses of approximately £3,058,000 (2014: £2,602,000) has not been recognised in the accounts, as the full utilisation of these losses in the foreseeable future is uncertain.
9 Loss per share
Earnings per ordinary share have been calculated using the weighted average number of shares in issue during the relevant financial periods. The weighted average number of equity shares in issue and the earnings, being loss after tax, are as follows:
| Year ended 30th April | ||
| 2015 | 2014 | |
| No. | No. | |
| Weighted average number of equity shares | 65,895,078 | 52,153,675 |
| -------- | -------- | |
| £ | £ | |
| Earnings, being loss after tax | (2,701,699) | (2,798,087) |
| -------- | -------- | |
| Pence | Pence | |
| Loss per share | (4.10) | (5.37) |
| ------ | ------ |
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 2015 there were 5,414,848 options outstanding (2014: 6,925,766 options outstanding) as detailed in notes 18 and 22.
10 Intangible assets
| Software licences |
Intellectual property | Total | ||
|---|---|---|---|---|
| £ | £ | £ | ||
| --- | --- | --- | --- | --- |
| Cost | ||||
| As at 30th April 2013 and 2014 | 27,918 | 75,000 | 102,918 | |
| Additions | 42,062 | - | 42,062 | |
| Disposals | (15,615) | - | (15,615) | |
| ------ | ------ | ------ | ||
| As at 30th April 2015 | 54,365 | 75,000 | 129,365 | |
| ------ | ------ | ------ | ||
| Amortisation | ||||
| As at 30th April 2013 | 18,493 | 75,000 | 93,493 | |
| Provided for the year | 8,632 | - | 8,632 | |
| ------ | ------ | ------ | ||
| As at 30th April 2014 | 27,125 | 75,000 | 102,125 | |
| Provided for the year | 12,736 | - | 12,736 | |
| Disposals | (15,615) | - | (15,615) | |
| ------ | ------ | ------ | ||
| As at 30th April 2015 | 24,246 | 75,000 | 99,246 | |
| ------ | ------ | ------ | ||
| Net book value | ||||
| As at 30th April 2013 | 9,425 | - | 9,425 | |
| ------ | ------ | ------ | ||
| As at 30th April 2014 | 793 | - | 793 | |
| ------ | ------ | ------ | ||
| As at 30th April 2015 | 30,119 | - | 30,119 | |
| ------ | ------ | ------ |
The amortisation charge of £12,736 (2014: £8,632) 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 2013 | 552,058 | 4,132,297 | 169,712 | 4,854,067 |
| Additions | 9,692 | 51,329 | - | 61,021 |
| Disposals | - | (3,300) | - | (3,300) |
| ------ | ------- | ------ | ------- | |
| As at 30th April 2014 | 561,750 | 4,180,326 | 169,712 | 4,911,788 |
| Additions | 5,750 | 271,439 | 2,078 | 279,267 |
| Disposals | - | (25,688) | - | (25,688) |
| ------ | ------- | ------ | ------- | |
| As at 30th April 2015 | 567,500 | 4,426,077 | 171,790 | 5,165,367 |
| ------ | ------- | ------ | ------- | |
| Depreciation | ||||
| As at 30th April 2013 | 394,102 | 3,212,928 | 141,331 | 3,748,361 |
| Provided for the year | 106,936 | 442,289 | 7,570 | 556,795 |
| Disposals | - | (995) | - | (995) |
| ------ | ------- | ------ | ------- | |
| As at 30th April 2014 | 501,038 | 3,654,222 | 148,901 | 4,304,161 |
| Provided for the year | 66,462 | 250,981 | 7,113 | 324,556 |
| Disposals | - | (24,048) | - | (24,048) |
| ------ | ------- | ------ | ------- | |
| As at 30th April 2015 | 567,500 | 3,881,155 | 156,014 | 4,604,669 |
| ------ | ------- | ------ | ------- | |
| Net book value | ||||
| As at 30th April 2013 | 157,956 | 919,369 | 28,381 | 1,105,706 |
| ------ | ------- | ------ | ------- | |
| As at 30th April 2014 | 60,712 | 526,104 | 20,811 | 607,627 |
| ------ | ------- | ------ | ------- | |
| As at 30th April 2015 | - | 544,922 | 15,776 | 560,698 |
| ------ | ------- | ------ | ------- | |
There are no commitments for capital expenditure contracted but not provided for (2014 - £nil)
12 Trade and other receivables
| As at 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Trade receivables | 5,108 | 30,450 |
| Prepayments and accrued income | 323,516 | 389,990 |
| Other receivables | 168,361 | 151,864 |
| ------ | ------ | |
| 496,985 | 572,304 | |
| ------ | ------ |
The ageing of trade receivables is as follows:
| As at 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| 0-29 days | 1,322 | 20,123 |
| 30-59 days | 3,595 | - |
| 60-89 days | 191 | 10,327 |
| 90+ days | - | - |
| ------ | ------ | |
| 5,108 | 30,450 | |
| ------ | ------ |
13 Other financial assets - bank deposits
| As at 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Amounts receivable within one year: | ||
| Sterling fixed rate deposits of greater than three months' maturity at inception | 528,349 | 1,776,767 |
| -------- | ------ |
14 Cash and cash equivalents
| As at 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Current bank accounts | 220,843 | 172,392 |
| Short term deposits with less than three months' maturity | 5,258,192 | 5,157,575 |
| -------- | -------- | |
| 5,479,035 | 5,329,967 | |
| -------- | -------- |
15 Trade and other payables
| As at 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Trade payables | 219,567 | 208,135 |
| Other payables | 15,845 | 14,034 |
| Other taxes and social security costs | 40,079 | 37,824 |
| Accruals and deferred income | 453,380 | 350,754 |
| -------- | -------- | |
| 728,871 | 610,747 | |
| -------- | -------- |
The ageing of trade payables is as follows:
| As at 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| 0-29 days | 157,324 | 86,893 |
| 30-59 days | 15,113 | 51,361 |
| 60-89 days | - | 5,162 |
| 90+ days | 47,130 | 64,719 |
| -------- | -------- | |
| 219,567 | 208,135 | |
| -------- | -------- |
16 Provisions
| Leasehold Dilapidations |
||
|---|---|---|
| £ | ||
| --- | --- | --- |
| As at 1st May 2014 and at 30th April 2015 | 150,000 | |
| ------ |
All provisions are due within one year.
Leasehold dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of the lease in accordance with the lease terms.
17 Financial instruments
The risks associated with financial instruments are set out below.
Foreign currency risk
The Group buys goods and services in currencies other than sterling. The Group's non sterling liabilities and cash flows can be affected by movements in exchange rates. 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. All Group payable balances fall due for payment within one year. Cash balances are placed on deposit for varying periods with reputable banking institutions to ensure there is limited risk of capital loss. The Group does not maintain an overdraft facility.
Interest rate risk
The main risk arising from the Group's financial instruments is interest rate risk. The Group placed deposits surplus to short-term working capital requirements with a variety of reputable UK-based banks. These balances are placed at floating rates of interest and deposits have maturities of one to twelve months. The Group's cash and short-term deposits are set out in note 14. Floating-rate financial assets comprise cash on deposit and cash at bank. Short-term deposits are placed with banks for periods of up to 12 months and are categorised as floating-rate financial assets. Contracts in place at 30th April 2015 had a weighted average period to maturity of 32 days and a weighted average annualised rate of interest of 0.81%.
Interest rate risk sensitivity analysis
It is estimated that a change in base rate to zero would have increased the Group's loss before taxation for the year to 30th April 2015 by approximately £31,000 (2014: £20,000).
It is estimated that an increase in base rate by 1 percent would decrease the Group's loss before taxation for the year to 30th April 2015 by approximately £62,000 (2014: £25,000)
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.
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 | ||
| 2015 | 2014 | |
| £ | £ | |
| Financial Assets | ||
| Loans and receivables | ||
| Trade receivables | 5,108 | 30,450 |
| Accrued income | 107,595 | 185,173 |
| Other receivables | 168,361 | 151,864 |
| Current bank accounts | 220,843 | 172,392 |
| Bank deposits | 528,349 | 1,776,767 |
| Short term deposits | 5,258,192 | 5,157,575 |
| -------- | -------- | |
| Total loans and receivables | 6,288,488 | 7,474,221 |
| -------- | -------- | |
| Financial Liabilities | ||
| Other financial liabilities | ||
| Trade payables | 219,567 | 208,135 |
| Other payables | 15,845 | 14,034 |
| Other taxes and social security costs | 40,079 | 37,824 |
| Accruals | 453,380 | 350,754 |
| Provisions | 150,000 | 150,000 |
| -------- | -------- | |
| Total other financial liabilities (see notes 15 and 16) | 878,871 | 760,747 |
| -------- | -------- |
17 Share capital
| As at 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Authorised | ||
| 65,736,416 Ordinary Shares of £0.01 each (2014: 62,240,019) | 657,364 | 622,400 |
| 1,781,400 Convertible Preference Shares of £0.01 each | 17,814 | 17,814 |
| ------ | ------ | |
| Allotted, called up and fully paid | ||
| 65,736,416 Ordinary Shares of £0.01 each (2014: 62,240,019) | 657,364 | 622,400 |
| 638,400 Convertible Preference Shares of £0.01 each (2014: 1,025,900) | 6,384 | 10,259 |
| ------ | ------ | |
| 663,748 | 632,659 | |
| ------ | ------ |
Share Rights
The ordinary share and preference shares rank pari passu in all respects other than:
· The profits which the Group may determine to distribute in respect of any financial period shall be distributed only among the holders of the Ordinary Shares. The Preference Shares shall not entitle the holders of them to any share in such distributions
· On a return of capital or assets on a liquidation, reduction of capital or otherwise the surplus assets of the Group remaining after payment of its obligations shall be applied:
o First, in paying to the holders of the Preference Shares the amount paid thereon, being the amount equal to the par value of the preference shares excluding any premium; and
o Secondly, the balance of such surplus assets shall belong to and be distributed amongst the holders of the Ordinary Shares.
The Preference Share holders have the right, at any time, to convert the preference shares held to the same number of Ordinary Shares.
On 14th July 2014, 2nd January 2015 and 10th March 2015, 250,000, 50,000 and 87,500 respectively, £0.01 convertible preference shares were converted to £0.01 ordinary shares.
On 6th May 2014 and 12th May 2014, 450,000 and 2,167,647 respectively, subscription warrants with an exercise price of 51p per warrant, were converted into ordinary shares.
Share options and warrants
Employee related share options are disclosed in note 23. 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 previous brokers also have a warrant to subscribe to 130,100 Ordinary Shares of £0.01.
491,250 share options were converted into 491,250 £0.01 ordinary shares in the year for a total consideration of £78,618.
10,539,216 warrants to subscribe to Ordinary Shares of £0.01 were issued on 14th May 2010 with an exercise price of £0.51 per warrant and an expiry date of 28th May 2014. During the year ended 30th April 2015, 2,617,647 warrants were exercised and 15,686 expired.
18 Operating leases
The total future minimum rent payable under non-cancellable operating leases is as follows:
| As at 30th April | ||
|---|---|---|
| 2015 | 2014 | |
| --- | --- | --- |
| £ | £ | |
| --- | --- | --- |
| Property leases which expire: | ||
| --- | --- | --- |
| Within one year | - | 70,329 |
| ------ | ------ | |
| - | 70,329 | |
| ------ | ------ |
19 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 £98,206 (2014: £102,441).
20 Related party transactions
The directors consider that no one party controls the Group.
During the year ended 30th April 2015, the company incurred costs of £245,576 (2014: £147,371) 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 company. At 30th April 2015, the amount unpaid in respect of these costs was £2,765 (2014: £nil).
The company incurred fees from the University of Southampton in respect of Prof B. Hayden, a director of the company. These amounts are included in the costs shown above. Further details are given in the Directors' Remuneration Report on pages 11 to 13.
Details of key management personnel and their compensation are given in note 4 and in the Directors' Remuneration Report on pages 11 to 13.
21 Share-based payments expense and share options
Share-based payment expense
The Group has incentivised and motivated staff through the grant of share options under the Enterprise Management Incentive (EMI) scheme and through unapproved share options.
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 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 calculated the fair market value of options which had market based performance conditions at the time of grant, using the stochastic valuation model. Options with no market based performance conditions at the time of grant, have been valued using the Black-Scholes model.
At 30th April 2015, the following options, whose fair values have been fully charged to the consolidated statement of total comprehensive income, were outstanding:
Approved share options:
| Date of grant | Number of shares | Period of option | Exercise Price per share |
| 30/03/06 | 15,200 | 10 years | £0.10 |
| 14/05/07 | 156,100 | 10 years | £0.80 |
| 15/01/08 | 46,400 | 10 years | £1.00 |
| 02/02/09 | 78,000 | 10 years | £0.80 |
| 01/12/09 | 90,000 | 10 years | £0.80 |
| 14/05/10 | 41,500 | 10 years | £0.51 |
| 01/02/12 | 45,028 | 10 years | £0.53 |
139,500 options with an exercise price of £0.10 per share were exercised in the year.
Unapproved share options:
| Date of grant | Number of shares | Period of option | Exercise Price per share |
| 11/07/07 | 195,500 | 10 years | £0.80 |
| 11/11/08 | 40,000 | 10 years | £2.4283 |
| 14/05/10 | 2,947,800 | 10 years | £0.51 |
Black Scholes valuation
| Weighted Average Exercise Price | Number | |||
| 2015 | 2014 | 2015 | 2014 | |
| Outstanding: | £ | £ | ||
| At start of the period | 0.4121 | 0.3436 | 1,693,523 | 2,305,523 |
| Granted in the period | 0.8150 | - | 1,521,920 | - |
| Exercised in the period | 0.1038 | 0.1000 | (423,250) | (594,700) |
| Lapsed in the period | 0.1508 | 0.4969 | (604,045) | (17,300) |
| ----- | ----- | -------- | -------- | |
| At the end of the period | 0.8341 | 0.4121 | 2,188,148 | 1,693,523 |
| ----- | ----- | -------- | -------- |
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 7.85 years (2014: 2.2 years). These share options are exercisable and must be exercised within 10 years from the date of grant.
Stochastic valuation
| Weighted Average Exercise Price | Number | |||
| 2015 | 2014 | 2015 | 2014 | |
| Outstanding: | £ | £ | ||
| At start of the period | 0.51 | 0.51 | 3,057,300 | 3,062,900 |
| Exercised in the period | 0.51 | 0.51 | (68,000) | - |
| Lapsed during the period | 0.51 | 0.51 | - | (5,600) |
| ---- | ---- | --------- | --------- | |
| At the end of the period | 0.51 | 0.51 | 2,989,300 | 3,057,300 |
| ---- | ---- | --------- | --------- |
The exercise price of options outstanding at the end of the period was £0.51 (2014: £0.51) and their weighted average contractual life was 6 years (2014: 7 years).
Ilika plc Executive Share Option Scheme 2010
At 30th April 2015 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 | 41,500 | 10 years | £0.51 |
| 01/02/12 | 45,028 | 10 years | £0.53 |
| 26/02/15 | 1,344,020 | 10 years | £0.815 |
Members of staff in the Group have options in respect of ordinary shares in Ilika plc, which are conditional upon the achievement of a series of financial and commercial milestones.
54,845 options lapsed in the year and 6,650 options were exercised.
Ilika plc unapproved share options
At 30th April 2015 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 | 2,947,800 | 10 years | £0.51 |
| 26/02/15 | 177,900 | 10 years | £0.815 |
65,100 options were exercised in the year. There are 3,655,528 options which were capable of being exercised as at 30th April 2015.
| 2015 | 2014 | |
|---|---|---|
| £ | £ | |
| Share-based payment expense | ||
| Black Scholes calculation | 33,648 | 15,000 |
| ----- | ----- | |
| 33,648 | 15,000 | |
| ------ | ------ |
Company Balance sheet of Ilika plc
Company number 7187804
| As at 30th April | |||
| Notes | 2015 £ |
2014 £ |
|
| ASSETS | |||
| Non current assets | |||
| Investments in subsidiary undertaking | 24 | 121,339 | 121,339 |
| Current assets | |||
| Trade and other receivables | 25 | 18,195,689 | 16,732,341 |
| ------- | ------- | ||
| Total net assets | 18,317,028 | 16,853,680 | |
| ------- | ------- | ||
| Equity | |||
| Issued share capital | 26 | 663,748 | 632,660 |
| Share premium | 17,444,653 | 16,062,155 | |
| Retained earnings | 75,276 | 42,515 | |
| ------- | ------- | ||
| 18,183,677 | 16,737,330 | ||
| LIABILITIES | |||
| Current liabilities | |||
| Trade and other payables | 133,351 | 116,350 | |
| ------- | ------- | ||
| Total liabilities | 133,351 | 116,350 | |
| ------- | ------- | ||
| Total equity and liabilities | 18,317,028 | 16,853,680 | |
| ------- | ------- |
The notes on pages 47 to 49 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board of Directors on 9th July 2015.
Mr. J.B. Boyer
Chairman
| Year ended 30th April | |||
| 2015 | 2014 | ||
| £ | £ | ||
| Cash flows from operating activities | |||
| (Loss) / profit before tax | (887) | 14,453 | |
| Adjustments for: | |||
| Equity settled share-based payments | 33,648 | 15,000 | |
| ------ | ------ | ||
| Operating cash flow before changes in working capital, interest and taxes | 32,761 | 29,453 | |
| Increase in trade and other receivables | (1,463,348) | (7,495,026) | |
| Increase in trade and other payables | 17,001 | 49,093 | |
| ------ | ------ | ||
| Cash utilised by operations | (1,413,586) | (7,416,480) | |
| Cash flows from financing activities | |||
| Proceeds from issuance of ordinary share capital | 1,413,586 | 7,716,913 | |
| Share issue costs | - | (300,433) | |
| ------ | ------ | ||
| Net cash from financing activities | 1,413,586 | 7,416,480 | |
| ------ | ------ | ||
| Net increase in cash and cash equivalents | - | - | |
| Cash and cash equivalents at the start of the period | - | - | |
| ------ | ------ | ||
| Cash and cash equivalents at the end of the period | - | - | |
| ------ | ------ |
Company cashflow statement
Company statement of changes in equity
| Share capital |
Share premium account |
Retained earnings |
Total attributable to equity holders |
|
|---|---|---|---|---|
| £ | £ | £ | £ | |
| --- | --- | --- | --- | --- |
| --- | --- | --- | --- | --- |
| As at 30th April 2013 | 475,354 | 8,802,981 | 13,062 | 9,291,397 |
| --- | --- | --- | --- | --- |
| Issue of shares | 157,306 | 7,559,607 | - | 7,716,913 |
| Expenses of share issue | - | (300,433) | - | (300,433) |
| Share-based payment | - | - | 15,000 | 15,000 |
| Profit and total comprehensive income | - | - | 14,453 | 14,453 |
| ------ | ------ | ------ | ------- | |
| As at 30th April 2014 | 632,660 | 16,062,155 | 42,515 | 16,737,330 |
| Issue of shares | 31,088 | 1,382,498 | - | 1,413,586 |
| Share-based payment | - | - | 33,648 | 33,648 |
| Profit and total comprehensive income | - | - | (887) | (887) |
| ------ | ------ | ------ | ------- | |
| As at 30th April 2015 | 663,748 | 17,444,653 | 75,276 | 18,183,677 |
| ------ | ------ | ------ | ------ |
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.
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.
No directors report has been presented and the directors responsibilities in respect of these financial statements are set out on page 14.
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 realisation 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.
Share-based payments
The critical accounting estimates, assumptions and judgements underpinning the valuation of the option awards are disclosed in note 22.
Investments in subsidiary undertakings
Investments in subsidiary undertakings where the Company has control are stated at cost less any provision for impairment. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from some of its activities.
Financial instruments
The accounting policy relating to financial instruments is disclosed in note 1.
Profit of the parent company
Profit 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 £887 (2014: profit of £14,453).
Directors' remuneration
The remuneration of the Directors is disclosed in the Directors' remuneration report on pages 11 to 13.
Auditors' remuneration
Auditors' remuneration is disclosed in note 3.
24 Investment in subsidiary undertaking
Investments in Group undertakings are stated at cost.
Ilika plc has a wholly owned subsidiary, Ilika Technologies Limited. Ilika Technologies Limited (Incorporated in the UK) made a loss for the year of £2,700,812 (2014: £2,812,409) and had net liabilities as at 30th April 2015 of £11,541,901 (2014: £8,841,089).
| 2015 | 2014 | |
| Shares in Group undertakings (at cost) | £ | £ |
| At 1st May 2014 and 30th April 2015 | 121,339 | 121,339 |
| ------ | ------ |
25 Trade and other receivables
| As at 30th April | ||
| 2015 | 2014 | |
| £ | £ | |
| Prepayments | 6,218 | 594 |
| Other debtors | - | - |
| Amounts due from subsidiary undertakings | 18,189,471 | 16,731,747 |
| ------ | ------ | |
| 18,195,689 | 16,732,341 | |
| ------ | ------ |
26 Share capital
| As at 30th April | ||
| 2015 £ |
2014 £ |
|
| Authorised | ||
| 65,736,416 Ordinary Shares of £0.01 each (2014: 62,240,019) | 657,364 | 622,400 |
| 1,781,400 Convertible Preference Shares of £0.01 each | 17,814 | 17,814 |
| ------ | ------ | |
| Allotted, called up and fully paid | ||
| 65,736,416 Ordinary Shares of £0.01 each (2014: 62,240,019) | 657,364 | 622,400 |
| 638,400 Convertible Preference Shares of £0.01 each (2014: 1,025,900) | 6,384 | 10,260 |
| ------ | ------ | |
| 663,748 | 632,660 | |
| ------ | ------ |
Share Rights
The ordinary share and preference shares rank pari passu in all respects other than:
· The profits which the Group may determine to distribute in respect of any financial period shall be distributed only among the holders of the ordinary shares. The preference shares shall not entitle the holders of them to any share in such distributions
· On a return of capital or assets on a liquidation, reduction of capital or otherwise the surplus assets of the Group remaining after payment of its obligations shall be applied:
o First, in paying to the holders of the preference shares the amount paid thereon, being the amount equal to the par value of the preference shares excluding any premium; and
o Secondly, the balance of such surplus assets shall belong to and be distributed amongst the holders of the ordinary shares
The preference shareholders have the right, at any time, to convert the preference shares held to the same number of ordinary shares.
On 14th July 2014, 2nd January 2015 and 10th March 2015, 250,000, 50,000 and 87,500 respectively, £0.01 convertible preference shares were converted to £0.01 ordinary shares.
On 6th May 2014 and 12th May 2014, 450,000 and 2,167,647 respectively, subscription warrants with an exercise price of 51p per warrant, were converted into ordinary shares.
491,250 share options were converted into 491,250 £0.01 ordinary shares in the year for a total consideration of £78,618.
This information is provided by RNS
The company news service from the London Stock Exchange
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