IP Group Plc : Ilika plc - Interim results for the six months ended 31 October 2011

Ilika plc - Interim results for the six months ended 31 October 2011

10 Jan 2012

Ilika (AIM: IKA), the advanced cleantech materials discovery company, announces its unaudited interim results for the six months ended 31 October 2011, a period which witnessed continued progress with new partnerships, contract renewals and increased business development activity in the US and Asia.

Ilika accelerates the discovery of new and patentable materials using its unique high throughput technologies process for identified end uses in the energy, electronics and biomedical sectors.

Financial highlights

• Revenues up 37.4% to £834,632 (H1/10: £607,271)
• Gross profit up 67.5% to £230,111 (H1/10: £137,345)
• Operating loss down 17.2% to £1,572,288 (H1/10: £1,899,870)
• Loss before tax down 17.0% to £1,563,665 (H1/10: £1,883,913)
• Loss per share down 17.9% to 4.08p (H1/10: 4.97p)
• Cash, cash equivalents and bank deposits of £1.2m (as at 30 April 2011: £2.8m) with additional cash receipts shortly after the period end of £0.4m.

Operational highlights

• First electronics customer secured in the US
• New electronics customers and renewals of contracts with leading electronics manufacturers in Asia
• Collaboration with Sigma-Aldrich Materials Science to scale up and commercialise hydrogen storage materials
• Further positive progress with a platinum-lean transport fuel cell in joint development with a major vehicle manufacturer
• Increased business development activity  is securing opportunities to extend the portfolio pipeline
• Progress on solid state battery development with Toyota with new materials for Lithium-ion batteries -  joint patents filed and presentations made at 52nd Battery Symposium in Tokyo

Post-period end events

• Grant award and Full Manufacturer/Importer's Licence (MIA) award to enable the biomedical division, Altrika, to export its leading allogeneic skin cell product to global markets
• Altrika contract win with leading life sciences diagnostic equipment manufacturer
• Toshiba becomes 6th major Japanese multinational customer

Commenting on the results Ilika's Chairman, Jack Boyer, said: "Ilika is committed to expanding its European activities and also anticipates further business development opportunities in Asia on the back of the region's manufacturing-led recovery. The Company also expects to build on the momentum achieved in the North American market as the scope for materials discovery and development is expected to expand significantly.

"To date the Company has secured further committed revenues and grant income of more than £0.7m which it expects to recognise before the end of the current financial period and will be making further announcements regarding contract renewals and new partnerships in due course. The Board therefore looks forward to the full year with confidence."

For more information contact:

Ilika plc
Graeme Purdy, Chief Executive
Steve Boydell, Finance Director
[phone]

Nomura Code Securities Limited
Phil Walker / Christopher Golden
[phone]

Walbrook PR Ltd
[phone]
Paul McManus (Media Enquiries)
Mob: [phone] or [e-mail]
Paul Cornelius (Investor Enquiries)
Mob: [phone] or [e-mail]

Joint Chairman and Chief Executive's statement

Introduction

Ilika's technology
Ilika's unique high throughput technology (HTT) accelerates the discovery of new and patentable materials for identified end uses within significant and rapidly growing markets. This process enables hundreds of materials to be made in a single, automated, operation and subsequently tested for the necessary properties.

The production of a new material has traditionally been a slow and arduous process, taking between 7 and 10 years from initial discovery through to the first commercial prototype. However, experiments carried out by Ilika's HTT can accelerate new material discovery by 10 to 100 times over  conventional techniques.

Ilika's HTT process has the additional attraction of enabling materials to be rapidly scaled up for commercial application once the requisite chemical and physical properties have been achieved.

Review of period

The six month period, saw commercial revenues and other operating income (grant revenues) increase by over 37% on the prior period. Gross profit improved by approximately 68%, whilst spend on in-house research and development together with administration expenses increased by 3.5% after adjusting for the share based payment charge. The continued investment in equipment capacity during this period has ensured capacity for revenue growth in the coming period.

Asian markets continue to offer huge opportunities to Ilika and the extension of the relationship with Japan's Blue Rise Partners, announced last year, has yielded a number of significant contract wins across all three sectors of the business.

We were very pleased to be invited to deliver a presentation to the 52nd Battery Symposium in Tokyo on our work with Toyota to develop innovative new materials for lithium-ion batteries for use in next generation electric vehicles and plug-in hybrid electric vehicles.

The presentation was delivered by Professor Brian Hayden, Chief Scientific Officer of Ilika and his colleagues, in conjunction with Toyota Motor Corp, and was entitled "High throughput methods to accelerate the discovery and optimization of materials for lithium-ion batteries".

Ilika has been working with Toyota since February 2008 and data published in the presentation demonstrated how our high throughput methods have produced very high quality electrolytes with substantially higher conductivity than had previously been observed. This data has been underpinned by patent applications jointly held by Ilika and Toyota.

In September, the Company announced its first electronics contract in the US and the development of new business opportunities in the North American electronics, aerospace and defence sectors continues to be a key area of focus for the Company.

Altrika Limited ("Altrika"), the Group's biomedical subsidiary, has seen a steady increase in the demand for its products and research services as well as attracting significant grant income to continue the development of its innovative burns treatment products.

Post-period end, we announced on 18 November 2011 that Altrika was awarded a Full Manufacturer/Importer's Licence (MIA) by the UK Medicines and Healthcare products Regulatory Agency (MHRA). This licence will allow us to export our leading allogeneic skin cell product, Cryoskin®, to global markets outside the EU where there is a significant need to treat burns and other serious skin wounds.

In addition, on 5 December 2011 we announced that a consortium, led by Altrika, had been awarded a £452k research and development grant from the UK government-backed Technology Strategy Board (TSB) through its Regenerative Medicine Tools & Technologies competition. The programme will develop a cell label capable of being used in vivo for cell therapy applications and it will be applied to Altrika's Cryoskin® allogeneic keratinocyte treatment for burns, allowing clinicians to image cells which have been applied to a wound, providing instant feedback on consistency and likely efficacy of application. The consortium includes the University of Edinburgh, Barts and the London School of Medicine and Dentistry as the clinical partner and Roslin Cellab which will be expanding the use of this label into other areas of cell therapy-based R&D.

At the same time we also announced that Altrika had won a contract, with agreed stage payments, with a world leading life sciences diagnostic equipment manufacturer to demonstrate Altrika's high throughput, polymer screening technologies for the identification and optimisation of the next generation of polymer filters.

We would also like to take this opportunity to thank the Board for its continued guidance and the Company's committed team for their hard work and commitment to making Ilika a world class company. We would, in addition, like to thank our strategic partners, distributors, shareholders and advisers for their contribution to the development of the Company.

Outlook

Since the period end the Company has continued to see strong progress across all three areas of its activities.

In particular, Ilika is committed to expanding its European activities and anticipates further business development opportunities in Asia on the back of the region's manufacturing-led recovery. The Company also expects to build on the momentum achieved in the North American market as the scope for materials discovery and development is expected to expand significantly.

The continued investment in business development activities has created a broad pipeline of opportunities in the European, US and Asian markets which will help the Company achieve its strong growth targets and it is pleasing to note that the size of the contracts in the pipeline is increasing. The Company continues to manage its cash flows with reference to the expected revenues of the contracts it secures, and the milestone payments negotiated. Historically, the Company has been successful in achieving its forecasts and the board are confident that they will continue to do so.

To date the Company has further committed revenues and grant income of approximately £0.7m which it expects to recognise before the end of the current financial period and will be making further announcements in due course. The Board therefore looks forward to the full year with confidence.