Ilika plc (AIM: IKA), a pioneer in solid-state battery technology, has announced its unaudited half yearly report for the six months ended 31 October 2020, during which the Company has continued to make strong progress with the implementation of its Stereax commercialisation plans, and set out a clear pathway to increased production, revenue generation and cash flow break even.
Operating Highlights
Ilika has continued to develop and commercialise its thin-film Stereax® miniature solid-state batteries for powering medical devices and industrial wireless sensors (IIoT) in hostile environments, as well as progressing its development of large-format Goliath cells for electric vehicles (EV) and cordless appliances.
· Continued engagement with portfolio of Stereax customers from the IIoT and medical device sectors
· Completion of an over-subscribed £15m ($20m) equity placing, providing working capital to support operations until the Company reaches cash flow break even
· Signed a framework agreement with the UK Battery Industrialisation Centre (UKBIC) for the production of Goliath solid-state pouch cells, targeting growth production 1kWh per week to 5 MWh per week by 2024
· Executed a portfolio of three collaborative projects supported by the UK Government’s Faraday Battery Challenge, supported by £5.2m grant funding enabling work on rapid charging with Honda and Ricardo, battery packs for high performance vehicles with McLaren and cost-effective routes for the mass production of Goliath cells with JaguarLandRover
Financial Summary
· Total revenue for the period £1.3m (H1 2019: £1.5m)
· Loss per share 1p (H1 2019: 1p loss per share)
· EBITDA loss £1.0m (H1 2019: £1.0m loss)
· Cash balance at period end £12.4m (H1 2019: £1.9m)
Post Period end
· Concluded its assessment of various Stereax manufacturing options, demonstrating that the most efficient and cost-effective solution will be to establish its own manufacturing operation
· Confirmed that the key Stereax production tools, which are on order, are expected to be installed during May-July 2021, with manufacturing commencing after equipment and process qualification activities in the second half of 2021
o This will result in a 70x increase in Stereax production capacity by the end of the 2021 calendar year
Commenting on the results Graeme Purdy, CEO of Ilika, said: “Despite unprecedented disruption to the Company’s supply chain and operations in the first half of this financial year, we have continued to make strong progress with the implementation of our Stereax commercialisation plans. Although demand for Stereax is outstripping our current ability to supply from the pilot line, we are continuing to engage with customers to ensure we understand how demand can be extended, and ramped up further over the coming years. It has also been exciting to contribute to the relentless improvement in performance of our Goliath large format cells and to engage with the UK Battery Industrialisation Centre to plan their scale-up.”
Joint Chairman’s and CEO’s Statement
Review of Period
Principal Activities
Ilika has continued to pursue its strategy of developing and commercialising its cutting-edge solid-state batteries. The Company’s mission is to rapidly develop leading-edge IP, manufacture and sell solid-state batteries for markets that cannot be addressed with conventional batteries due to their safety, charge rates, energy density and life limits. We will achieve this using ceramic-based lithium-ion technology that is inherently safe in manufacture and usage, which differentiates our products from existing batteries.
Introduction to solid-state battery technology
The company has been working with solid-state battery technology since 2008 and has developed a type of lithium-ion battery, which, instead of using liquid or polymer electrolyte, uses a ceramic ion conductor. Ilika’s solid-state batteries have a number of benefits over traditional lithium-ion batteries, including the following:
· Non-flammable, which eliminates the need for containment packaging
· 6 x faster charging
· 2x increased energy density, making them half the volume and weight for a given electrical charge
· 10x longer storage without loss of charge.
The company has developed a roadmap and family of battery products, ranging from miniature solid-state devices designed for powering wireless sensor applications and medical devices to large format cells for automotive power.
Miniature Stereax batteries
Ilika’s miniature Stereax cells are differentiated from other solid-state technology through its choice of materials and its use of an efficient, low temperature evaporation process that is capable of higher manufacturing rates than other existing solid-state routes. This results in the following benefits relative to previous solid-state battery designs:
· Lower cost of manufacture through avoiding use of expensive sputtering targets
· Long cycle life through use of a silicon anode
· Less encapsulation required
· High temperature resilience
The unique benefits of Stereax batteries make them particularly useful for medical implants and industrial applications. Miniature Stereax batteries can enable medical devices in a way that is currently not possible with conventional lithium-ion batteries. Their compact, high energy density, high power characteristics make them useful for a range of medical implant applications covering blood pressure monitoring to neuro-stimulation. Industrial automation, or Industrial Internet of Things (IIoT) as it is sometimes referred to, requires low maintenance batteries with a long lifetime, sometimes in situations that require them to operate at elevated temperatures above those for which standard lithium-ion batteries are rated (typically 60 degC).
Stereax® Manufacturing Scale-up and Commercialisation
Ilika is currently manufacturing Stereax® batteries on a pilot line. These batteries are being continuously improved for further enhancement of their properties, and also sold for customer evaluation. Increasing commercial demand for evaluation samples from our growing portfolio of customers continues to place pressure on the utilisation of the Stereax pilot line. The ramping demand for Stereax batteries underpinned an over-subscribed £15m ($20m) equity placing, which the Company concluded in March 2020, in order to support the transfer of Stereax to a manufacturing facility, strengthen the balance sheet to meet working capital requirements and provide the option for investing in further growth in Stereax production capability, including implementing a dual source production capability in the future.
In November 2020, the Company concluded its assessment of various Stereax manufacturing options, which included manufacturing wafers of Stereax batteries at 3rd party facilities as an alternative to establishing its own manufacturing operations. Having fully compared the benefits and risks of installing the key equipment needed for Stereax production in different locations around the world, the Company demonstrated that the most efficient and cost-effective solution will be to establish its own manufacturing operation. We have identified a suitable facility within 5 miles of our headquarters and the lease is currently being finalised.
The key Stereax production tools, which are on order, are expected to be installed during May-July 2021, with manufacturing commencing after equipment and process qualification activities in the second half of 2021. This will result in a 70x increase in Stereax production capacity by the end of the 2021 calendar year.
Once the technology transfer into its manufacturing facility has been achieved, Ilika’s business model will continue to be to sell batteries, although some parts of the manufacturing workflow will be managed on an outsourced basis. A further step-up in production capacity with a larger manufacturing partner is expected to be required further into the future, when a licensing model may be more appropriate.
Large Format Goliath batteries
In September 2019, Ilika announced the opening of its new large format battery facility, the Goliath pilot line, in Romsey, UK to support its portfolio of industrial collaborations. On this pilot line, Ilika is developing low-cost printing processes suitable for forming batteries several orders of magnitude larger than miniature Stereax batteries.
In the first half of this year, Ilika has been executing a portfolio of three collaborative projects supported by the UK Government’s Faraday Battery Challenge. The projects are supported by £5.2m grant funding enabling work on rapid charging with Honda and Ricardo, battery packs for high performance vehicles with McLaren and cost-effective routes for the mass production of Goliath cells with JaguarLandRover. Ilika is also engaging with manufacturers of cordless appliances, e.g. vacuum cleaners and beauty products, which can also benefit from some of the unique properties of solid-state batteries.
Goliath Manufacturing Scale-up
The Company’s pilot line in Romsey is capable of producing 1kWh per week. Ilika has plans to scale up its current site to an automated facility producing 10 kWh per week by 2022. In September 2020, Ilika announced the signing of a framework agreement with the UK Battery Industrialisation Centre (UKBIC) for the production of Goliath solid state pouch cells. This stage of scale-up will involve Ilika reaching 5 MWh per week by 2024 to satisfy increasing customer demand. The signing of the framework agreement with UKBIC is a significant and important step towards achieving that goal. Discussions with the UK Government’s Faraday Battery Challenge are on-going regarding further grant funding to support the planned scale-up activities.
Outlook
Ilika has an intensive period of operational implementation ahead of it for the remainder of this financial year and into next year as it deploys the capital it raised in March 2020 to establish a manufacturing facility for Stereax. The technical maturity of Goliath is expected to continue to rise as prototype cell performance continuously improves. These activities will provide a strong platform for renewed revenue growth in the next financial year.
Graeme Purdy, CEO
Keith Jackson, Chairman
Ilika plc
