Earnings Transcript for ILIKF - Q4 Fiscal Year 2021

Operator: Good afternoon, ladies and gentlemen, and welcome to the Ilika Final Results Investor Presentation. Throughout this presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right hand corner of your screen. Just please simply type in your question and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Invest in the Company dashboard and you'll be sent an email to notify you when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll and if you could give that your very kind attention, I'm sure we'd be most grateful. And I'd now like to hand over to Steve Boydell, CFO, and Graeme Purdy, CEO, from Ilika. Good afternoon to you both.

Graeme Purdy: Afternoon, Mark. Many thanks for the introduction. And many thanks to everyone for having joined this particular webcast. Delighted to have you with us. We're going to talk about our full-year results through the end of April 2021. So, business overview. Ilika is one of the few independent global experts in solid state batteries. You see a picture of our Stereax miniature thin film batteries on the top right of the slide. And on the bottom left, you see a picture of our Goliath pouch cells that are suitable for EVs and consumer appliances. Stereax cells have been particularly designed for medtech applications and also in industrial [Technical Difficulty] real IoT or wireless sensors. The large format Goliath pouch cells are particularly useful for consumer appliances and also ultimately what will be the biggest market for lithium ion cells, the electric vehicle market. So, why are people interested in solid state batteries? If you've been reading about the sector, you can hardly have missed a lot of the interesting news flow around this technology. Well, first of all, they're ultra-compact, so they occupy about half the volume of a standard lithium-ion cell. And this enables a smaller pack design. So, if you had an EV that had the same weight of solid state batteries as a normal EV pack, you would be able to have twice the range. They're also tolerant of higher temperatures. Where normal lithium-ion cell will go up to about 60 degrees C, whereas a solid face cell will tolerate up to 150. And this is really useful not only for industrial markets, where the cell might be close to a particularly high temperature and could be damaged otherwise, but also it allows the designers of electric vehicle battery packs to reduce the amount of parasitic weight associated with the cooling system that would normally keep a lithium ion cell within its normal operating range. So, most EV pack designs at the minute have got quite an extensive cooling system with cooling fluid, pumps, heat exchanger to keep it all within the operating range. But if you can go up to 150, you've got the discretion to reduce the size of that cooling system. And then thirdly, they're very fast charging, so they'll charge six times faster than a normal lithium-ion cell. So, if your normal battery pack would charge in an hour, then with solid state, you can charge in 10 minutes. The other aspect that's becoming increasingly important is the environmental considerations. So, currently, we don't actually as a society recycle very many batteries, about 5% of batteries are recycled. And this is probably due to the fact that it's quite expensive to do so. So, they contain a liquid electrolyte which is toxic, and that has to be drained away before the battery can be stripped of its valuable components. It can't be chucked into a landfill and it also can't be put in an incinerator because the cell would burn too intensely and damage the incinerator tubes. With solid state batteries, you haven't got that toxic and flammable liquid electrolyte, so there's no risk of explosion. And you can also use process technologies that are actually common to, say, the mineral extraction industry or the mining industry. So, effectively, once you've removed the outer packaging of the cells, they can be reduced to a powder. And then, you can put them through standard processes like coprecipitation, in which you can extract the metals and put them back into the supply chain. How do we make money out of batteries? Well, Ilika's Stereax business model, as shown in this slide here, we've been manufacturing and selling batteries from our pilot line for a few years now. Our Stereax cells are made on wafers, are made of glass wafers. We actually carry out the wafer fabrication at our facility here in Southampton in the UK. We actually source the thinning and dicing of the wafers. They come back in and we stack them into batteries and then form them and test them before sending them out to customers. We're on the cusp of moving into a new manufacturing facility. And I'll come back to that in a moment. Last year, we had a very successful placing, in which we raised £15 million gross that allowed us to build our own fab. And in that, we will be continuing to fabricate wafers, although on a larger scale, so we'll be able to access 70 times the capacity that we currently have with our pilot line. We will continue to use the supply chain. So, we'll outsource the wafers for thinning and dicing. But we will form and test these cells before sending them out to customers. But we're not going to continue to build fabs. Actually, the plan for the company is that we license the technology into the larger market. So, once we've exhaust the capacity of our own manufacturing facility, the plan is that we will make the technology available for third party organizations to access it. In terms of the Stereax implementation, I hope very soon that we'll be able to organize an investor visit to come down to our facility, so that we can showcase it in the same way that we showcased our Goliath pre-pilot line back in December of 2019. But if you were to come down and visit it tomorrow morning with me, we'd have a look around and you'd see that the cleanroom itself is substantially complete. And by that, I mean that the walls and ceilings and windows and doors are all in place. And the specialty gases have been routed to the expected site of the equipment items. The air conditioning units are installed. And so, we've got humidity control and also particle control. And the rest of the utility infrastructure is in place. We've got a great team that's being led by Paul Marron, our Tech Transfer & Manufacturing Director. He's drafted in what we sometimes refer to as the Scottish mafia, which are often people who have actually had the industrial training as part of Silicon Glen, where there was a lot of semiconductor investment in the 1990s. While that expertise is still available and we've deployed some fantastic guys in the team that make sure that we've got the right industrial experience to execute on our plans. The key tools, tool 1 and tool 2, are actually going through their factory acceptance tests at the minute. Tool 1 across from California and tool 2 in Switzerland. We've actually been monitoring those factory acceptance tests using video link and have been reassured about the performance of those tools prior to them being created and then sent across to the UK, which will probably be in the next couple of weeks for hook up and commissioning. We'll stabilize the process throughout the remainder of the summer, with a view to starting qualification in Q4. By that, I mean process stabilization, followed by making the first batches of batteries for testing. And then, we expect that product sales of the initial batches will start in Q2 of 2022. So, Steve reliably informs me that we've invested about £2.5 million of the £4 million total CapEx spend on the fab implementation. The remainder will be spent on further tool and equipment sets as we ramp up throughout next year. Of course, the other side of the equation is that we need to balance that investment with adequate commercial progress [Technical Difficulty] continuing to sell evaluation samples to customers that we can supply from our pilot line, while all of this construction has been going on. So, we've given 16 customers samples from the line. And of course, we've extended our commercial reach. We've entered into nearly 50 NDAs with organizations, about equally split actually between industrial Internet of Things and medtech. We expect the front-end sales to come from industrial IoT, and then the back end from medtech. What I mean by that, actually, is that it takes a few years for the medtech accounts and applications to go through their qualification and approval, ready for commercial sales. So, while we are supplying smaller quantities of batteries to the medtech industry, the wireless industrial sensors will be the initial customers. And what's been great, actually, as we've qualified those opportunities and talked to the customers about the size of the markets, the quantity of cells that they're likely to need in the forthcoming years, we've seen that some of them actually, in their own right, would over-utilize the 3,500 wafer capacity that we've got at our facility. And that's great. We expected that to happen. And that will create demand for those licenses that we were talking about in our business model. In terms of the application areas, in industrial IoT, two broad opportunities. One is around wafer sensing, and this is calibration of processes in the semiconductor industry and MEMS industry. That industry is going through a massive boom at the moment. Actually, there are supply chain restrictions and you'll have read about the shortages of chips for all sorts of applications that have been brought about by extraordinary demand for people wanting to use the appliances that these chips are built into. So, wafer sensing is all about calibrating the processes, so that you increase the yield in those semiconductor fabs, make sure you get as much productivity as is possible from them. And that is fantastic when the demand is as strong as it is right now. And then you've got condition monitoring. So, we've done a field trial with a wind turbine manufacturer and also actually with Network Rail on infrastructure, looking at tracks. And in addition to that, there are opportunities around process equipment in chemical plants, power stations, refineries, applications like this, where the batteries are exposed to elevated temperature. And then, on the miniature medical implants, this is a really fantastic revolution really that's sweeping through the healthcare industry, where manufacturers of implants are looking to move from a passive, largely mechanical, design for their products, all the way through to more smart, data rich product, where the patient gets a much better service from the device that they're fitted with. So, in orthopedics, things like knee implants and hip replacements, where you can put in tracker devices that allow the surgeon to give advice to the patient on how they're doing with the physiotherapy that comes after the surgical intervention. And a big part of the success of those types of those types of replacements is actually driven by the post-operative physiotherapy. So, being able to track that for the months that follow the surgery is really important. Then nerve stimulation as a replacement for chemical-based painkillers. So, as a replacement for the sort of pain relief that people might be prescribed. Sometimes people refer to this as electroceuticals as opposed to pharmaceuticals. And then, sensors for blood pressure monitoring and ophthalmic applications where you put tiny batteries on smart lenses. And of course, it has to be a miniature thin film battery to get a smart lens to work. So, that's Stereax. Let's change gears a little bit and talk about Goliath. I think the last six months have seen unprecedented enthusiasm really for the EV revolution. And predictions for the quantity of EVs that are going to be on the road in the coming years are stronger than ever. We're seeing substantial growth expected in the sales of EVs. Not only that, actually, but solid state batteries are seen as a technology which is the natural successor to lithium ion cells. On the bottom left here, there's a forecast from James Frith, a Bloomberg report on solid state technology that he published a few months ago. And he is predicting by the end of this forecast period that solid state batteries, as shown in green, will be just as widely used as traditional lithium ion cells as shown in blue. So, the sum total of that production is read from the scale on the right hand side. And then, there's another data set actually on this plot too, which is the plus point for solid state. Actually, that's the red line. Traditional lithium ion cells in the light blue. And you can see that, actually, although in the early rollout of solid state that there will be a price premium for solid state associated really with a smaller volume of manufacture of those batteries, ultimately, by the end of the forecast period, you get price parity and solid state will become the most attractively priced, lowest price alternative for users of cell packs. So, there are a number of players, of course, active in this landscape. So, the question is, what's different about what Ilika is doing with Goliath? Well, we're the only company that's actually addressing this problem from the perspective of having functioning, well defined miniature cells. Most of the other players have come at it from the traditional lithium ion starting point and trying to turn that into a solid version of a lithium ion cell. But from Stereax, we've learned how to deploy silicon anode successfully. We know how to manage interface resistances. We're perhaps one of the organizations that's been working the longest in solid state batteries, having worked for 10 years on solid oxide electrolyte. And we know how to design these composite structures that make up solid state batteries. And also actually, we've demonstrated that we can successfully scale manufacturing processes, having started with a pilot line for Stereax and now moving into that facility for mass production of that. And of course, we've retained the flexibility to use best-in-class cathode materials because that market is moving quite quickly. There's lots of innovation ongoing with high nickel compositions for cathodes and high-voltage cathodes. And it's important actually that we can make sure that our battery structures are compatible as with these different chemistries as we move forward. So, we've shown some pretty strong technical progress over the last year with Goliath. Having finished the construction of our pre pilot plant, here in Romsey in record time back in 2019, we put that to Good use and we started building composite A6 battery structures, showed that we could cycle them successfully, and also that we can get a decent conversion efficiency in those cells. We also, this year, have focused on making sure that our baseline manufacturing process is reproducible. And now, we've been able to increase the number of cycles without failure to over 500. And this is expected to increase steadily as this year progresses. In fact, our cycles aren't limited by cell failure at 500. They're continuing to cycle. It's just that it takes quite some time for us to be able to generate that data, given the rate of cycling. So, what does the future look like? Well, we've got about another 18 months of process and technology development ahead of us. For the automotive sector, that will allow us to then make cells available for module pack and BMS integration, BMS being a battery management system. And then, of course, in the automotive sector, they use these so-called mules, which are prototype vehicles, which are then driven around the Nurnberg room at speed to demonstrate that the packs deliver the performance in an automotive cycle that's required, low volume production, and then higher batch production of the vehicles before they're fully tested and validated. And then we flip into TOU [ph] or gigafactory manufacturing. And you can see at the bottom there how we have a series of generations of consumer cells and automotive cells as we go through our technology development curve, with the associated steady improvement in energy capacity, so performance and power performance. And in terms of the scale-up of manufacturing, what we plan to do is, until now, we've been working with partners in the Innovate UK Faraday Battery Challenge funded programs. So, Honda, McLaren and Jaguar Land Rover sharing samples and data with [Technical Difficulty]. There is a need, though, to increase the capacity of that facility. And we plan to do that by increasing it a factor of 10 through automation and higher throughput equipment. We just recently announced a collaboration with Comau, which is the automation part of the Fiat Group. They've got lots of expertise in factory automation and cell production facilities, so cell manufacturing. And they will help us do that increase in automation, but also get us ready for the deployment of the technology at a mega factory scale. So, not a gigafactory, but a megafactory. And that will be at a facility that is similar to the UK Battery Industrialization Center. We have a framework agreement in place with them. And at that point, we'll have reached manufacturing readiness and be ready to transfer into that facility. Once we've started producing cells at a commercial scale and a commercial rate at that facility, we will then flip into a licensing model and transfer the technology to a manufacturing partner for production at gigascale. We think that the initial markets that we will address will actually be in consumer appliances. It's very attractive to be able to think that we'll be showcasing our technology in performance vehicles made by some of the performance car manufacturers. But ultimately, in order to generate significant revenues, we expect actually that we will also be producing consumer cells, which, frankly, fetch a higher price on a dollar per kilowatt hour basis, and therefore also actually a higher margin. We've had some great interactions with companies from the health and beauty sector, so they see some hair straighteners that are fitted with our solid state cells. E-cigarettes, also power tools and cameras, which are some of the biggest markets for consumer appliances right now. Also, those medical sectors that need batteries that are bigger than Stereax is able to fulfill that. So these are our annual results. And so, I'm going to hand over to Steve now, and he is going to talk you through the headline numbers.

Stephen Boydell : Thank you, Graham. Yeah, we released our annual results this morning by a regulatory news service at 7am. So, I've tried to distill 50 pages that were released there down to two pages of highlights. The first is turnover, £2.3 million this year relative to £2.8 million last year. Now, that decrease is partially down to an impact from COVID. Some of our grant programs have been extended, so that they've carried forward into this financial year. And we also had an effect of pilot line shut down in the University of Southampton where we have some facilities. That closed in March last year and into June. So, front end of our pilot line sales were impacted by that. There's also another factor, is that our Stereax technology has now matured beyond the R&D funding that historically we've been able to achieve. That's meant that there's less grant revenue available for that. So, the grant revenue that we had is largely associated with the Goliath format cells. So, there are three large programs running – one called PowerDrive Line, one called MoSESS, and one called Granite. And each of those, as I say, was extended into this financial year. We're still investing heavily in the technology. And that's resulted in an increased loss for the year. Some of that's down to an increase in share-based payment charge, which is actually added back when going through reserves. And the other is another non-cash item of an increase in depreciation charges we're continuing to invest in the facilities. So, the overall EBITDA loss was a slight increase to £2.3 million from £2.1 million last year. We, as Graeme mentioned, raised money for the manufacturing facility for Stereax last year. That resulted in an increased number of shares. So, the average loss per share is actually down from £0.029 per share last year to £0.025 per share this year. And we still retain a lot of the cash that we raised at that point on the balance sheet. So, we ended up just under £10 million at the period end. And the next slide, I'll just give a quick overview of how that cash has been spent. So, we started the year with £15 million, which was largely associated with that fundraise last year. We've invested in facilities and in deployment costs of about £2.8 million. There's the operating cash outflow, which has remained relatively constant over the years, about £2 million to £2.5 million, so £2.3 million this year. Small more working capital movement, which is offset by R&D tax credits. We're still eligible for receiving those. In fact, in the development expenditure, we've got – increased slightly in this financial year. And that's the analysis of the cash.

Graeme Purdy : Thanks, Steve. So, just to wrap up with an outlook, we believe that the company is very strongly positioned to progress the scale up of Stereax through the fab implementation that we just reviewed, and also to mature the Goliath technology with the partners that are working with us through a set of very well defined technical milestones. And of course, both of those technologies will provide us with the opportunity to pursue significant revenue growth going forward.

Operator: Thank you. Graeme, Steve, thank you very much indeed for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the right hand corner of your screen. We'll just let the company take a few moments to review those investor questions submitted already. I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Meet company dashboard. You'll receive an email when that's ready for your review. And I'd also like to remind you that your feedback is important to the company. And immediately after the presentation is ended, we'll redirect you for the opportunity in order the company can really better understand your views and expectations.

Operator: Graeme, Steve, investors had the ability to pre-submit questions, and I propose that we start with those. The first one reads as follows. What initiatives have been taken to market your batteries to medical device and Internet of Things manufacturers? Has anything been tried with rail companies on monitoring wheels and bearings?

Graeme Purdy: We've identified and engaged with specific segments within the industrial IoT and medical device sectors. For industrial IoT, like we were talking about in the presentation, these include wafer sensing applications in the semiconductor industry and condition monitoring of applications like winter vines, process plant and infrastructure. Regarding your specific question on monitoring wheels and bearings in rolling stock, there are other technology solutions, I think, such as large energy harvesters, which are probably better suited for this application. There's quite a lot of energy actually in wheels and bearings when the train is moving. And so, you can harvest that with some quite large devices, which have been successfully deployed in that context.

Operator: The next question reads as follows what is the current energy density of your Goliath cells? And how do you plan to get above 400 watt hours per kilogram?

Graeme Purdy: Solid state battery technology generally is currently in the development phase and has an energy density below the state-of-the-art lithium ion cells. The best ones can deliver in the order of 280 watt hours per kilo. However, we eventually expect to be able to exceed the 400 watt hours per kilo as we move up the technology S curve. We expect to intercept and move beyond lithium ion as early as next year in 2022. And this will involve optimizing relative thicknesses of the layers and formulation of the cell electrodes, as well eventually as mechanical stacking and bipolar designs.

Operator: The next question reads as follows. Tesla Model 3, Model S have a range of approximately 300 miles. What approximate range improvement would you anticipate if the Goliath battery was used?

Graeme Purdy: Solid state pack designs are expected to deliver about twice the gravimetric energy density of traditional lithium ion, which means that the same weight of pack will give you twice the driving range.

Operator: I guess the final pre-submitted question, if I may, reads as follows. Could you provide details on your selected chemistry and processes? Particularly in relation to other key competitors such as Solid Power, what is your competitive advantage?

Graeme Purdy: We use an oxide-based solid state electrolyte and we use silicon as the anode. The chemistry of some of our competitors' technologies is not fully disclosed. So, the QuantumScape solid state electrolyte is not generally known. However, they do use an anode-less design, which involves the plating of lithium metal on the surface of the negative current electrode during charging. Solar Power are understood to be using a sulfide based electrolyte. They were originally using a lithium anode. But they recently announced that they intend to switch to Silicon [indiscernible]. I'd say that our competitive advantage stems from our knowledge of successfully making miniature Stereax batteries. And that leads to an understanding of how to deploy a silicon anode, as well as managing interface resistances, how to design composite structures and scale up the manufacturing processes.

Operator: Graeme, Steve, obviously, if I could just ask you now if you'd be so kind just to open up the Q&A tab. Obviously, you'll see a number of questions there from investors. And thank you to all of those investors that have taken time to submit questions this afternoon. If I could hand back to you, Graeme and Steve, and if I could ask you to read out the questions and where appropriate give response and then I'll pick up from you as you finish.

Graeme Purdy: We've got a question from Raymond F. He says what's the endurance [Technical Difficulty] number of cycles compared with conventional lithium ion. I'd say conventional lithium ion cells typically can deliver about 1000 cycles. And there is an expectation that solid state will improve on that, up to about 3,000. We currently see that level of cycling performance from Stereax. And as we further develop Goliath, we expect to get it to about that level. A question from Paul R. He says other companies like QuantumScape and Solid Power have massively increased disclosure regarding the technical performance of their technology. Can Ilika share more information on Goliath technical performance? This might reduce speculation and share price volatility.

Graeme Purdy: There's the front end of some technical information that we have disclosed in the presentation today. And we will continue to do that as our technology matures. And as more and more information comes into the public domain, hopefully, that will give investors more comfort about the maturity of the technology. And we've got a question from Adrian. Who are your competitors in IoT and medtech? I would say that there's a number of different solutions actually to providing power in IoT. I would like to argue that, actually, we've chosen applications that are particularly suited to the robustness of our solid state cells. So, we typically try and choose hostile environments in which to deploy our Stereax cells to avoid any head-on cost comparison with standard lithium ion button cells that might be used in IoT. Effectively, if you can currently use a coin cell in order to power your sensor, then you probably should do because they're at a lower price point than our Stereax cells. And then, in medtech, there are incumbent medtech battery manufacturers, the likes of Greatbatch and an EaglePicher that are well known for making cells for these applications. There is a lower limit to the size of these cells, below which you tend to get more [indiscernible] than active materials. And this is the sweet spot that we play in, so we make sure that actually the miniature devices are the ones that we're targeting. There's another question from Adrian here. He says, do you foresee a potential shortage of raw materials for EV batteries that might slow down their adoption? I think my view on this is that, actually, there is an abundance of elements like lithium in the Earth's crust. There are substantial reserves around the world. At the moment, some of the less expensive reserves and most accessible reserves are being exploited first. You hear about the high altitude evaporite deposits in places like Bolivia and Chile. And there are substantial mining investments being made globally in extracting lithium. So, I don't see that as being a problem. Historically, cobalt has been a mineral of concern because the deposits of cobalt are concentrated in the DRC, and there's been some concern about human rights abuses, in particular child labor, from artisan mines. There are some very big and reputable mining companies that are now active in the DRC that can give provenance certificates to demonstrate that no children are being exploited in the mining of the cobalt that's put into the supply chain. So, that's being increasingly well regulated. And also, actually, a number of cathode developers are moving away from cobalt-rich formulations and move into materials that have a much smaller component of that in them. So, solutions like the eLNO materials that Johnson Matthey are developing. Paul says, has Goliath been subject to any external OEM testing. So, yeah, we've been working together with Honda and McLaren and JLR on those three Innovate UK funded programs. And as part of those programs, those OEMs have been given samples of Goliath cells and have put them through a rigorous evaluation. Adrian says, generally knowing what you know now, what might you have done differently or better in the last couple of years? That's like sort of note to my teenage self, isn't it? I would say I wouldn't actually have probably changed the decisions that we've made around Stereax, although perhaps given the benefit of hindsight with COVID, I might have chosen to manufacture Stereax ourselves from an earlier point in time. We spent quite a bit of time last year and in the run up to last year looking at different third-party manufacturing facilities, thinking about how we might outsource that manufacturing. I think if we'd committed to our own manufacturing facility earlier, we would have been further advanced. But then again, sometimes it's a bit easy to have 20/20 hindsight. Steve, would you add anything to that? Any decision you think you would have done differently?

Stephen Boydell: Clearly one that we would have potentially accelerated, albeit that had we done that we wouldn't have got a facility that we've got currently, which actually only came available at the start of this year. So I think could have gone either way.

Graeme Purdy: Jonathan says, appreciate these things can't be rushed. But how does your timeframe to manufacturing and gigafactory meet with end user demand and competing tech? Well, I think it's true actually that if we could manufacture solid state cells in a gigafactory now, we could definitely sell them. There's a massive demand for solid state and the benefits that offers. I think we're going as fast as actually our capital constraints will allow. And I think we're looking to see how quickly we can scale up. I think the plan that we've got now is the low risk plan for investors, which will get us to that end goal as quickly as can be realistically done. Adrian's got another few questions here. So, let's have a look. First one is, who do you consider as competitors, the EVs? Well, I think there's a leading cohort of solid state battery developers in a sort of global competitive landscape. In terms of the independent EV developers, you would probably put QuantumScape and Solid Power, as well as SolidEnergy or SES as they're sometimes referred to, ProLogium in Taiwan, Ionic Materials in the US, and sometimes Hydro-Québec get included. So, that's a Canadian based technology provider. And, of course, then you've got the large incumbent battery manufacturers who are also active in the sector. So, Chinese companies like CATL, LG Chem in Korea, and also Panasonic, of course, and Samsung. Next one from Adrian says, how long will your cash last? And when might you expect to undertake another fundraising? Steve, do you want take that one?

Stephen Boydell: Our accounts, as I say, were released this morning. In there, we've got just less than £10 million on the balance sheet. As part of the audit sign-off, we're satisfied ourselves that we'll be sufficiently financed for at least a year from the date of the [indiscernible] accounts. So, that gives you one benchmark. On the fundraising side, we've certainly raised sufficient capital with the fund raised last year for the scale up of Stereax. We are looking at Goliath scale-up plans. And that will be a mixture of grant revenues from Innovate UK, potential strategic partners, and also in the mix, potentially shareholders as well. The next question again from Adrian is, who are your largest shareholders? More details about our significant shareholders, i.e. those over 3%, are shown on our website in the Investors section. They're also in the accounts release that came out this morning. But Ill just give you some of the sort of household names. We've got – all have got around 5% or 6%. You've got Baillie Gifford & Co., Herald Investments, Schroders PLC, Janus Henderson group, and Parkwalk Advisors who are part of the IP Group. So, each of those are around 5% or 6%, might I say.

Graeme Purdy: GPIM is the largest shareholder.

Stephen Boydell: Who've got just under 10%.

Graeme Purdy: Yeah, we should definitely mention them, given how loyal and supportive they've been over the years. And, Steve, we've got a question, actually, that's had an additional vote. So, that's John B. What's the largest addressable application Ilika has identified for Stereax so far? And how big is that market? This is a very interesting question. And I think the answer is probably in the medtech sector, I would say that it is the orthopedic application that I was chatting about as we went through the slides earlier. Of course, there are a huge number of hip and knee replacements around the world, not least in the US, which is the biggest market for medtech sales, and that would easily consume our entire installed capacity at the Stereax fab. So, that could very well be a licensing opportunity going into the future. Adam C. Any more grants from the UK government? So, we announced the collaboration that we've got with Comau, which is actually our latest grant. That was £0.5 million funding. We've sort of graduated a bit from Innovate UK and our technology is becoming more mature. I think the APC or the Advanced Propulsion Center has been particularly supportive actually of our efforts to scale up to a larger commercial scale. And we expect that we'll do some further support for them as we move through increased capacity of our facilities and into, for instance, the UK BIC and beyond. Next question from Peter. He says, how does Ilika Goliath technology stack up against the Nissan battery technology to be built in the UK? And will Goliath EV still two or three years away in R&D – sorry, with Goliath EV still two or three years away in R&D there is the possibility that others may beat Ilika to the EV price! Right. So, the situation with Nissan, of course, is that they get their battery supply from the AESC Envision facility. So, it used to be owned by AESC, which is a Japanese battery manufacturer, but they were bought by a Chinese company Envision. Historically, that company has imported pre-formed electrodes, so cathodes and anodes, in rolls from where they're manufactured overseas and as assembled cells, and then sent those packs across to the Nissan factory. That is traditional lithium ion capability. So, this is what we'd call [Technical Difficulty] technology. So, the Goliath technology is really the next generation relative to that. And that is the type of technology that most analysts in the sector expect will be replaced by Goliath when it matures. So, that's not – we're not really in a race with the technology that's going to be deployed in that factory. That Envision AESC factory is very much a factory that's being built for immediate demand of EVs, rather than being on the same development timeline as our technology. Amos says, what's the business relationship between Ilika and Faraday [indiscernible]? So, we have worked with the Faraday Battery Challenge. We've had £5 million worth of funding from that organization, which of course is really a government-funded organization. So, we're in constant dialogue with them, and the APC and base, and looking for ways in which we can continue to align our business interests with government strategy.

Stephen Boydell: The next one is from Sam M. You indicated in today's RNS that you might need equity financing to scale up the line. If you do, in fact, raise more equity, will you give route PG open offer for existing investors to participate? Yeah, we always value the private investors that maintain the majority of the liquidity in our share price. And so, we have historically always made an open offer available. And we foresee that that will be the case in the future as well.

Graeme Purdy: A question from Simon. How do you view your market cap versus QuantumScape? I think the short answer is smaller. I think I don't know where we are today. But generally, my rule of thumb is that we're between 2% and 3% of QuantumScape's market capitalization. So, seems like a bit of a bargain at prevailing prices. Jonathan says, what has caused you to wish to accelerate the Goliath program and what's involved and how much will it cost? I think it is a bit of a global race. I don't think you have to be first to market in order to capture significant value. But I think you have to continue to be in that leading cohort. And so, we're looking at ways, as Steve mentioned earlier, to make sure that that program remains adequately funded and we're able to meet the demands of our customer base and provide them with samples and confidence actually that the technology is going to continue to mature at a rate which will support their product rollouts in the coming year. Adrian says, if all goes to plan, in which year do you expect to first receive revenue from EV batteries? So, I think, Stephen, I'll do a double lift on this. We assume that we will secure the funding that allows us to complete the development of our Goliath technology. And if that goes to plan and we can transfer technology into a mega factory, like the BIC, then we would expect to start generating significant revenue from that facility in 2025, right, Steve?

Stephen Boydell: Even in the development phase, we will be looking to sell those samples for evaluation throughout that development period. So, it's significant revenues admittedly when you get to the mega scale, but we will be selling at a significant premium the prototypes that we will be having for those.

Graeme Purdy: Christopher M says, how much shareholder capital will you require to execute this plan and when is the crunch point for cash? Steve, do you want to handle that?

Stephen Boydell: Yes. As we said, the Stereax part of the business is funded. We can see that through, so that they will be generating cash and providing [Technical Difficulty] business. For the Goliath side, we'll obviously only undertake a program once we've got it funded. We've got the funds continuing for the moment from Innovate UK. We're looking to renew those. And as we mentioned earlier, potentially a significant strategic shareholder and so potential shareholder funds as well.

Graeme Purdy: John says, when do you anticipate being profitable? I think that questions probably best answered just by looking at it in the context of the Stereax business because that's the one where we've got most visibility on the intensity of the investment required and the ramp up of revenue associated with product sales. So, Steve, why don't you just remind me what the [indiscernible].

Stephen Boydell: We're ramping up our sales from the Stereax manufacturing line [Technical Difficulty] the first quarter of next year, and then it will be generating as we ramp up. So, probably over an 18 month period, we'll be up to revenues of about £12.5 million from that facility.

Graeme Purdy: And that will generate a cash flow breakeven and profitable point from that point on for that part of the business. Right?

Stephen Boydell: That's right.

Graeme Purdy: Let's have a look. Next one from Richard D. Have any relationships, research as well as financed, with Chinese government? If not, do you envisage any future relationships? We do have an open dialogue with a number of Chinese potential partners. We don't have any contracted partners or Chinese government links at the moment. We have got a business development director who is active for us in China. They've become a globally significant Chinese battery technology developer. And it's important actually that the connections that we've got the enable an open conversation. So, I'm not going to rule that out at the moment. But right now, we don't have any contract relationships. So, Matthew says, you stated that miniature cells are the sweet spot for medical equipment. What percentage of the market does this represent? So, if you mean what percentage of revenue opportunities do this represent? Then it's about half of our revenue opportunities for Stereax that were [Technical Difficulty] to address. And in terms of overall percentage of the medical market, this is a very small percentage, given the colossal sizes of those markets. So, David says, in light of the mentioned disclosure of technical details from the US competitors, how do you see Ilika compared to them in terms of performance and technical readiness? Well, I'd say that technical disclosure isn't totally complete from our competitors. But what information is out there allows us to take comfort that we're still in that leading cohort of solid state EV battery developers. And I expect that – provided that the funding is forthcoming to support Goliath program going forward, then we'll remain in that leading cohort and we'll be able to capture the value that Goliath is reflecting. Do you see Nexeon as a major competitive threat? So, I think the short answer is no. Nexeon is well known to us. We have an open dialogue with them. And they are, of course, a silicon anode developer. They've been marketing their technology into the traditional lithium ion market for a number of years now. And [Technical Difficulty].

Operator: Graeme, I'm mindful that you've been very generous with your time and we are coming up to the hour. For every question you seem to answer, there seems to be another two coming at you. You can, obviously, perhaps take some of these questions and present to you – present them to you offline, but just mindful of time if there was anything perhaps left that you felt that we hadn't covered already and then perhaps I can, as I say, ask you to wrap up and then we'll redirect investors to feedback. And as I said, we'll publish responses to all of these questions where it's appropriate to do so when the meeting is finished.

Graeme Purdy: Very good. Well, maybe one final question perhaps from Adrian, something different here. How easy is it to find the right quality of staff as you expand? I'd say it's not as bad as you might imagine. I think we will continue to have strong links with the University of Southampton here, which has got a fantastic electrochemistry skill set. And there's been a steady stream of graduates that we've been able to employ that have helped propel the company to where it is today. And we've got some great, some great hires from Europe and North America who are continuing to help us move forward. So, I'd say, of all of the challenges that we've got actually getting the right quality of staff is probably not one of the toughest challenges.

Stephen Boydell: Although it has been made slightly more complex with some of the new rules that we have for needing licenses from Europe, so it has made a little bit [indiscernible].

Graeme Purdy: That's true. We have had to apply for a license for visas for some of our most recent hires from Europe. So, it's not quite as easy as it once was.

Operator: Graeme, Steve, thank you very, very much indeed. I know investor feedback is important to you guys. And I will shortly redirect investors to provide you their thoughts and expectations. But I guess before doing so, Graeme, if I could just hand back for a few closing comments, that would be very kind.

Graeme Purdy: Thanks. I'd just like to thank all of the people who have taken the time to join this presentation and submit questions into the Q&A. We really do value the interaction and we value all of our retail investors. And I'd like to wish you all a pleasant evening.

Operator: That's very great. That's very good. Thank you very much indeed to both Graeme and to Steve. [Operator Instructions]. On behalf of the management team of Ilika plc, I'd like to thank you for attending today's presentation. That now concludes today's session. And good afternoon to you all.