Ilika plc (IKA) Earnings Call Transcript & Summary

Good afternoon. Ladies and gentlemen, welcome to the Ilika plc Post AGM investor presentation, [Operator Instructions]. I'd now like to hand over to Graeme Purdy, CEO.

Thank you, Mark, and thank you, everybody, for taking the time to join this webinar for an update on progress at Ilika. I really appreciate the fact that you're engaging with us. And I already see there's some interesting questions coming in and I look forward to dealing with them towards the end of this presentation. So we're going to have a trawl through our slide deck just to make sure that everybody that has taken the time to join us today is fully up to speed with our progress and understands the history of the company and the mission that we're on. Those of you who have been with us for a while will know already that we're independent global experts in solid-state batteries. And that we've got two product lines. On the one hand, we've got our Stereax miniature cells, which have been designed primarily to power miniature medical devices and industrial IoT. And on the other hand, we've got our large format Goliath cells, which are designed for the automotive industry and also for cordless consumer appliances. Company was founded as a spin-out from the University of Southampton here in the U.K. in 2004. We've now got an impressive portfolio of patents, some of which are granted and others which are applications. So we now have 62 granted patents. So a strong portfolio of IP to protect the know-how in the company and that we're certainly for Goliath addressing the largest battery market in the world, expected to be GBP 280 billion total addressable market by 2030. And at the end of our recent -- our latest financial year on the 30th of April, of this year, 30th of April 2024, we had a healthy cash balance of GBP 12 million. So with me today, I have Jason Stewart, our CFO, and we will be taking you through the slides. I'm not going to linger on this particular slide because actually, there's loads of information on our website, if you want to look at our background. First of all, a resume of our business model. We have an asset-light licensing model which is demonstrated on production intense equipment, which basically means that we don't intend to manufacture our products on a large scale. We see ourselves as a development company which develops products and processes to manufacture those products, and we license that know-how, that IP through to manufacturing partners who are either Tier 1 manufacturers, who sell our products to OEMs or they are OEM partners. And in return for those licenses, we receive license fees and royalties. A good example of a licensing agreement that we already have in place is the one that we have signed up with Cirtec for our Stereax product, and we aim to follow a similar market for the Goliath product line. So why should you bother investing in Ilika? We believe that we've got 5 strong reasons that investors should pay attention to. First of all, we've got this unique solid-state battery technology with a growing patented portfolio across multiple jurisdictions. Secondly, we believe that this asset-light business model and a strong focus on commercialization offers investors the best return on investment that they can get from investing in this sector. We have already an in-house purpose-built set of facilities that help us demonstrates the processes that are required in order to manufacture our products. So our customers can come and see the processes in action. They can see the products being made. And therefore, there is a strong platform for licensing. We already have demonstrated this licensing with the licensing and royalty agreement that we put in place with Cirtec last year to deliver economy of scale for the production of Stereax. And we also have shipped our first batches of prototype Goliath batteries to automotive customers and Tier 1s. And we are engaging with a wider portfolio of companies that are interested in carrying out evaluation trials of that technology. So first of all, a few slides on Stereax. This is really a revolutionary product, which is designed to support this transition from pharmaceuticals, which have been used widely in the 20th century through to electroceuticals, which are becoming increasingly deployed in order to treat patients that are struggling with chronic and acute illnesses. And the advantages of electroceuticals are, first of all, a reduced surgery time. And by using Stereax, you can locate the therapy close to the point of therapy. You get a long life of the product in the body, and therefore, you don't need such frequent repeat surgery. And Stereax technology is actually strong enough to be able to power Bluetooth radio devices. In terms of the advantages of our existing lithium-ion batteries, first of all, you've got this miniature footprint. It's also an ultrathin technology, which makes it easy to implant. We've got a very fast charge profile with high discharge powers, it's a very safe technology without any toxic liquid electrolyte and also -- and not so much for medical, but primarily for IoT applications, the technology has a high temperature tolerance. So actually, over the summer, I've been across to visit Cirtec, our manufacturing partner. You will remember that they are an industry-leading, vertically integrated partner for medical devices and components. They've got a large thin film facility in Lowell in Massachusetts. And we have sent our pilot line manufacturing equipment across to their facility. That's been installed, and commissioning is now well advanced. You see one of the Cirtec engineers with one of our engineers standing in front of one of the key tools that we use for manufacturing, the Stereax batteries that's at their facility in the U.S. We believe that this partnership is a validation of the Stereax product and process. Clearly, there's a lot of technical know-how involved in assessing this process and the value of Stereax. And by having this commercial partnership, we believe that investors have received a strong signal that the technology can be deployed effectively for electroceutical applications, a very credible partner. They are already an established manufacturer and have medical accreditations as well as the scale to be able to meet their customer requirements. It also gives Ilika access to a much larger sales and marketing resource. We are jointly marketing our products. And in fact, there's a couple of shows coming up in the first couple of months of 2025, where we will be marketing Stereax on the Cirtec stand at relevant trade shows. We've also got this focus on AIMD application. So what does that mean? That means Active Implantable Medical Devices. So we've been through some of these applications in previous presentations. So I'm not going to spend a lot of time going through those today. But these are things like neurostimulators which can be a good replacement for pain relief using strong opioids and therefore, avoid some of the societal problems that the use of strong painkillers create. They can be used to assist patients recover from surgery, if they have replacement implants joints. They can also be used for pressure sensors and other sensors that can help manage chronic diseases such as high blood pressure or diabetes and they can also be used externally for things like orthodontic applications, so put into aligners and mass guards. So a wide range of high-value applications. One of the platforms that Cirtec has developed is a neurostimulator platform, which has then integrated by some of their OEM partners into branded devices and the Stereax technology is a really good enabler for miniaturization of that platform going forward. So one of the reasons that we wanted to work together with a U.S.-based manufacturer, is that actually our customer base is very U.S.-centric a lot of the investments in cutting-edge health care technology, in particular, in AIMDs is taking place in North America. And actually, we have 75% of our customer base located in North America, and therefore, putting the supply chain close to that customer base makes a lot of sense. 21 companies and 24 orders in these sectors that we've just been talking about with that pipeline being reinforced by some of the joint marketing that Cirtec is undertaking with us at the moment. So Jason, I'm going to allow you to speak for a few minutes about the makeup of our revenue forecast and the different components that when taken together, gives us that growth trajectory.

Thank you, Graeme, and good afternoon, everybody. So for those that have followed the company over the last year from our Capital Markets Day earlier on, you will know this graph. But for those new to the Stereax story, let me just talk you through how we would expect the growth profile to develop over the coming years. And what we really want to do here is to provide a better understanding on how the revenue will develop given that the applications are for the most part in the initial adoption in the MedTech sector, which has a longer time to market because it has to go through that certification process for implantation within the body. So on the graph, you can see on the presentation, you can see a number of different layers, which represent different revenue streams coming from the Stereax line of products. At the very bottom, you can see a blue line, which represents the fact that we have retained one of the operations for the process. That's the cathode deposition process. And really, that's the most proprietary part of the process that we have developed. So that's retained here in the U.K. for the moment. so that we can make sure that we continue to manufacture that part of the process to the highest quality to ensure the success of the product. So we will operate that as a subcontract to Cirtec's manufacturing process, and we will derive revenue for that. So we expect that to begin in 2025 as soon as we start commercial battery production, and we would expect that to continue for a couple of years until the volume demand grows such that Cirtec need to have additional equipment sets installed, most likely at their facility to cope with the growing volume of demand on batteries. But we expect that to be commercially derive revenue from battery processing starting next year. On top of that, the R&D section, that you can see is NRE or nonrecurring engineering. And this really is pervasive through the MedTech sector and very much the business model that Cirtec themselves have where they develop a device or a platform in their case, similar to us developing the Stereax M300 battery. And then they work with potential customers do engineering studies and to bespoke that platform to the specific needs of their customer base. And there are significant sums that are paid by the ultimate customer to Cirtec and then in this model would be paid to us Ilika for us to validate the M300 Stereax products for those applications or to look at perhaps bespoke requirements for different formal function of an M300 derivative, which we will be able to sell through manufacturing at Cirtec. So there are quite substantial sums that can be derived from that. And that's what Cirtec do on a day-by-day basis and they have very much guided us to what that shape would be expected to look like. On top of that, you can then see the gray area, that represents the individual battery royalty revenue. So when we have negotiated and agreed the contract with Cirtec really, there are two parts of that. In the early days, it is a profit share, and we take the majority of that profit, reflecting all the effort that has gone in and the support that we've received from our shareholders to get us this far. And then as we get to a volume break, so as demand gets to a certain point, that then flips over into a traditional royalty model where we have high single-digit royalties that will come on every battery sale based on the revenue. And as you can see, that really does grow on an exponential growth as you go out and those pass through their certification lab-based trials into consumer trials moving forward, ultimately into full adoption of those products. And then the final part, those yellow spikes you can see on top our belief that there will be additional opportunities for licensing the Stereax product, either in sectors outside of MedTech or in the fullness of time relicensing to Cirtec. There was no additional -- no initial license granted in terms of a fee when we signed with Cirtec as they have taken on significant cost -- and Graeme touched on it earlier when showing and talking through the photos of the facilities that they've installed. So they have invested multimillion dollars in getting the facility and machine sets up and running over in the U.S. and that's a cost that we didn't have to bear and therefore, has saved investors' money to be utilized in keeping the company going for longer to make sure that we see that commercial success.

Thank you, Jason. So now at this point, we're going to change gear and talk about our Goliath product line. First of all, there are some reasons actually that people often cite for not purchasing an electric vehicle. We shouldn't hide from the fact that, that sector has experienced some headwinds over the last 6 months or so. Some of the EV manufacturing companies have posted results, which are perhaps not as strong as they were expecting 1 or 2 years ago. And the key reasons that people cite are, first of all, well, current EVs got a limit to driving range. Secondly, actually, it takes too long to recharge batteries. And thirdly, there are some residual safety concerns about having battery packs in the vehicle. And Goliath technology can address a lot of these challenges. The second chart that you see on this particular slide here demonstrates that despite some of these headwinds -- but actually, sales momentum is still strong. And in particular, it's still strong in the larger EV sectors, let's call them the higher end or luxury sector within the EV market that Ilika is addressing with its Goliath batteries. So let's talk a bit more about some of the advantages of Goliath batteries and how they might affect these dynamics. So the first thing to understand actually about solid-state batteries is that not all solid-state batteries are created equal. And solid-state has become an umbrella that people used to talk about cutting-edge technologies, which generally use different types of electrolytes in order to create the battery. There are different choices that you can make around the materials that go into a battery, not only the electrolyte but also the anode, and depending on which choices you make, you end up with batteries with different performance characteristics. So first of all, the electrolyte. So this is the material in the battery that allows the lithium ions to move backwards and forwards between the positive and the negative electrodes. You can have oxide electrolytes, sulfide-based electrolytes and also polymer electrolyte. And each of these approaches actually confers different physical advantages to the battery. The sulfide electrolytes are often used because they have a high ionic conductivity and they're quite malleable so you can get a contact between the electrode but the downside is that they react easily with oxygen and moisture and can give off toxic gases. So that can make them expensive to manufacture. In contrast, the oxide electrolytes that Ilika users are stable in there, but it is more difficult to actually manage that interfacial resistance, and that's where a lot of the effort in developing our batteries has gone into in the last few years. There's also the option of using polymer electrolytes for the high ionic conductivity, but they often need to be preheated to elevated temperatures to work effectively. Then there are choices around the anode. We actually use a silicon anode at Ilika combined with oxide electrolyte. And we find that, that gives us the advantages of a long cell life and they're less expensive to manufacture than using a lithium anode. And of course, the cost of batteries is just as important as some of those other factors that we were talking about earlier. The lithium anodes that are sometimes used by our competitors do give a constant cell voltage and high energy density, but they are expensive and they can give rise to dendrites, which are effectively short circuits in batteries. And the results of the anode-less design, which can give a very high energy density, but there is often a cell life compromise with that and the results of a volumetric expansion challenge to deal with. In terms of the addressable market, the automotive battery market is the largest in the world. Really large total addressable market. And the particular sector that we're targeting is a high-volume performance vehicles going into high-performance specialized vehicles. We believe that this market is less cost sensitive, which is important when you first launch a new technology because it hasn't been commoditized. And clearly, for mass market, economy vehicles and new technology is often not a great fit. Solid-state batteries are really the only game in town in terms of next-generation automotive batteries, just about every automotive company has got solid state on their road map. And that's because of some of the advantages that we'll talk about in a moment and the fact that actually, you can end up with a vehicle that addresses some of those key concerns that consumers have got about EVs. So Goliath has got some unique features. First of all, our struck line is that we get the performance of NMC with the safety of LFP. So a couple of acronyms there. NMC and LFP are those different types of cathode that you can use in a battery. So NMC is nickel manganese cobalt, LFP is lithium iron phosphate. And the reason that people use NMC is that it's a high energy density material that can give you really great energy dense cells. On the other hand, LFP has got less energy density, but it is inherently safer. And in fact, also is -- or can be cheaper. So a lot of the mass market vehicles in China would use an LFP cathode, whereas most of the performance EVs that we see here in Europe and in the U.S. use an NMC-based cathode. The downside of NMC is that it does have a slightly higher safety risk in terms of its use with a liquid electrolyte. And therefore, that's our strap line that we can round those safety concerns associated with intrinsic cell safety and still get the performance that NMC offers. So we have a nonflammable feature that has no liquid in it. I'm going to come back to this actually in a moment and talk about some of our latest test data, which is really quite compelling. We've got a competitive performance versus lithium-ion last year, at the end of 2023 when we announced lithium-ion parity, we demonstrated we could meet the energy density that people expect from lithium-ion and that we're now exceeding that. And we can also operate at higher temperatures. So it gives the pack design and the ability to reduce the parasitic weight and volume of the cooling systems that you need in order to keep the pack within its normal operating zone. So when you take some of these features and engineer them into a vehicle, you get a lighter vehicle with a higher cell-to-pack ratio. And what that means is that actually, you end up with a vehicle with a longer range because you know what, you need less energy in order to drive a lighter vehicle over the same distance or put that the other way around. If you have the same amount of energy, you can drive a lighter vehicle a greater distance. And also, we've got a battery technology that's safe in manufacture use and can be easily recycled. So at this point, we're going to have a little interlude from slides, and Mark is going to help me show a video. We're just going to put that on a little loop, so we show a couple of times. This was some news flow that we sent out last month. So it's news that has been released since our annual results, which is when we last spoke about 8 weeks ago. And what you're going to see actually is on the left-hand side, you're going to see a benchmark test from a normal lithium-ion battery. And on the right-hand side, you're going to see the same test carried out on a Goliath battery. So Mark, do you want to run this? And I'm just going to give you a bit of a voice over on top of the video. Here we go. So you see that you've got a cage on the left-hand side, that is suddenly full of an explosion. And that's what happens when you put a nail through a lithium-ion battery. So please don't do this at home. You might have seen Bear Grylls stick a knife in the lithium-ion battery on one of those Desert Island shows they use that to light a fire and really, it's quite spectacular. It's a bit of a firework. In contrast, and look at it again, on the right-hand side, there's a Goliath battery with the same nail being put through it. Again, in a cage, cage wasn't required, actually, in this instance, because there is nothing happening in that video is the most boring video that you will watch today and that is great from our perspective because it shows that the Goliath technology is intrinsically safe. And what does this mean for pack designers? Well, imagine that you are designing a new EV. You've got cells that you can buy commercially on the left-hand side, well, you need to make sure you put them in a pack that keeps them safe in the event that you inadvertently drive into a lamp post. Actually, the industry has a name for that. That's the pole test. All EVs have to survive the pole test. And you can understand why, right? You don't want to fire work going out from the car if you've hit that lamppost. And of course, EVs are intrinsically safe. Don't worry if you are the owner of an EV, but the reason that they are safe is that they have engineered mechanical safety and cooling systems into the pack to avoid this type of nail penetration, whereas if you've got a Goliath battery that you see on the right-hand side, you don't need all of that mechanical reinforcement because the battery isn't going to explode. If you inadvertently drive into that lamp post, the battery is safe. And so you can avoid all of that weight in the vehicle. And of course, over the last 50 years, we've seen the automotive industry systematically invest in reducing the weight of vehicles relative to their power to make them go faster, make them more economic. And this is exactly that type of light weighting opportunity that you've got for EVs. We all know how bulky EVs are and actually by engineering that out of the cells, you've got massive impact on the design of the vehicle. Hope you enjoyed that. We're back on our slides now. And here, you see actually some of the great progress we've made with Goliath over the last 18 months or so. we've had -- first of all, a significant grant awarded to us by the Faraday Battery Challenge, the [ GBP 8.2 ] million HISTORY program. and we are still executing that program. That runs for about another 6 months, and it's really helping to support the development of our Goliath technology. We've carried out trials of scale-up equipment vendors, and that has then translated into scale-up equipment that we have installed at our facility, and I hope to offer you the opportunity to come and see our [ roll-to-roll ] coater and some of our other equipment shortly at our facility. So that you can see how we have invested some of the shareholder equity that we have raised over the past few years. We also achieved of course technical milestones, right, with our D4 milestone last year and our lithium-ion parity just before Christmas in 2023. We've got a fantastic program running at the moment with Mpac, where we're designing and building an assembly line to automate the manufacture of our Goliath batteries at pilot scale that's expected to run until the end of Q1 next year. And that safety test that we've just done was done together with the Faraday institution safe battery project. You'll have seen actually the University of Oxford and also University College London being mentioned in those recent results that we shared. And very excitingly and Agratas is becoming a household name actually, as they continue to invest in the Gigafactory that they're building in Bridgewater in Somerset. Set to become the U.K.'s largest Gigafactory. We have a 12-month collaboration agreement in place with them to evaluate our technology and other customers that have commenced testing those Goliath batteries for performance. So lots of exciting news flow to keep everybody engaged over the last 18 months, and we expect that to continue going into 2025. And this is the road map that we're executing. So you saw that D4 milestone, which translated into a set of P1 prototypes that we shared with our customers, lithium-ion equivalence following shortly thereafter. Actually, we're just finalizing some of those intermediate D points between D4 and where we'll get to with D8 in Q1 next year. So there will be some more news flow to look forward to as we demonstrate some of the other characteristics actually, of our batteries. And there's other aspects such as safety, but also cycle life and also power density, which are important in order to get us through to that minimum viable product or a sample in the second half of 2025. And just to reiterate what our scale-up plan and business model looks like, we are currently operating on our pre-pilot line. We have actually installed a lot of the modules for a full pilot line, which will allow us to make our minimum viable product or A samples as they're signposted here. The rest of the scale up really belongs to the works that we do with OEMs. So scale up prior to implementation into a Gigafactory really is the capital that OEMs invest in order to make B and C samples. So these are actually the same cells as A samples, but made, first of all, on production intense equipment at B sample scale and then in larger volume by the time you get through to C samples. And from Ilika's perspective, our licensing opportunities really kicked off from the beginning of 2025 onwards once we've demonstrated that D8 and A sample capability. Most of the demand for Goliath is coming from Europe. We now got those 17 companies, principally automotive companies. So automotive and Tier 1 manufacturers, 82% of our pipeline there, with the remaining 18% being consumer appliances. 70% of that demand being from Europe and I include the U.K. and Europe and some demand from North America, but also quite encouragingly, remaining demand from Asia. U.K. grant funding has been really important to support our journey. It's enabled interaction with a lot of the companies that you see highlighted at the foot this slide. As I mentioned, we've still got support for our HISTORY program. So of that GBP 8.2 million program, GBP 2.8 million comes to -- looking to support our Goliath program and is also covering some of our partner costs. We've also got the SiSTEM grant, which is provided by the automotive transformation fund managed by the Advanced Propulsion Center or APC. And we expect that this grant support will continue as we move into A sample production pack development and cell integration. So next, Jason, would you like to talk a bit more about how we build up our revenue projection for Goliath please.

Yes, of course. So very similar to the builds that you saw with Stereax albeit some slightly different shapes. The expectation for Goliath will be that it will once again be a multilayer story for how that develops and builds through. So very similar, we expect there to be the ongoing grant funding that we already received, but expectations are that we will continue to work with both the Faraday Battery Challenge and the APC here in the U.K. to access future funding to support that scale-up activity and commercialization. So you can see that on the bottom there as that blue level running all the way through into the future. And as Graeme said, with that HISTORY and SiSTEM grants that have been really strong for us over the past year. And I will touch on those again in the financial summary at the -- towards the end. And we also expect that there will be similar to the Stereax product once again, some elements of NRE, some nonrecurring engineering or commercial collaboration. So once again, this is working with partners on the Goliath side to understand their specific requirements and either undertake studies or bespoke work around the Goliath cells to make sure that they meet their particular needs and a fit for purpose for their particular vehicle and application process. We expect that will then lead us into and Graeme said on those graphs in terms of that work through to A sample and then the scale-up through B and C sample into licensing discussions. So really starting to talk with those automotives and Tier 1s from 2025. So from next year onwards, we'll be entering those discussions, and we would expect that to then come with an upfront license fee. That would see us through then until we saw the final part of the puzzle being the buildup of actual royalty revenue once again, very similar to the Stereax growth story as those come through once again, somewhat similar to Stereax in terms of the time for actual battery royalty revenue. It's not as simple as just completing the license. Those batteries then have to be manufactured. EV Vehicle platform has to be designed and the supply chain has to filled with both batteries and vehicles before ultimately you would see them on the full court in the fullness of time. So once again, very similar to the Stereax buildup, multilayered, but as with Stereax, we expect revenue to continue from both sides in the current year and into 2025. Staying with me then. ESG, environmental, social governance is really important to us at Ilika, and that's not just because it's part of our core ethics as a business. And we have -- many of our staff are very, very passionate about this, but it's appropriate that we are good governance of the business on your behalf as shareholders and investors, but also to make sure that we are ahead of regulations, where we need to be. So looking to the future to make sure that we are compliant in all ways and looking to what extra regulation is coming down the track, so we can ensure that we have adopted what policies we need to in good and proper time, but also to make sure that we can support that commercialization. So ISO 14001 and 9001 put us in a really good, strong standpoint for working with medical device manufacturers, who need to be certifying that things are produced in the right way. So our documentation from that perspective has been really helpful in that tech transfer process and ensuring that we had all the documentation ready to do that. And also more recently with the Goliath customers that have undertaken the cell testing, we found that being able to articulate all of our supply chain, our modern slavery position, the sources of minerals that there's no conflict minerals has been really important because onboarding with some of these Tier 1 or automotive suppliers is quite an intensive process. They need to make sure for their own compliance and regulations that all of their supply chain, of which we would be one, are compliance. So that comes with quite a long winded process, and we're going through that with the people that we're already working with and we'll continue to do so. So our own ESG processes standards in great stead for making sure that we can make that process as smooth as possible as we go forward with future interactions.

Thank you, Jason. And actually, we've got a few numbers just to remind people what our last annual results was?

Thank you. So these were the results for our year ending 30th of April that we announced formally on some of our accounts in July. They very much reflects the strong performance of the business and a great improvement year-on-year. And you can see that reflected all through the P&L. So at a top level of turnover level, we saw that increase to GBP 2.1 million of turnover up from just GBP 700,000 the year before. And that was very much a story of the growth on the back of grant funding. So touched on already with the HISTORY and SiSTEM grants that gave us a great growth from that perspective. But we also saw other income increasing as well, which primarily was to do with the R&D claim support that we claim back from the government, which is classified as other income and that was GBP 0.5 million up from GBP 100,000 a year before. So that took us to a total income of GBP 2.6 million versus GBP 800,000 in the year end in 2023. That turnover, coupled with some strong cost control helped us to reduce the EBITDA loss excluding share-based payments to GBP 4.1 million loss, down from GBP 7 million loss the preceding year. So that grant funding, that increase in turnover was one of the factors that came with that, but also we had a good benefit from the Cirtec contract and planning for outsourcing and moving all of the manufacturing, except for the [ LCO ] cathode deposition across Cirtec that allowed us to gain the benefit of GBP 7 million of annualizing saving coming through the cost base by moving those activities over to Cirtec into [ demand ]. So that was really strong from reducing the EBITDA loss position. And those 2 factors, coupled with really strong cash management around the capital spend, has left us in a cash balance for the year ending [ GBP 0.12 million ]. So just to touch on the capital once again, going back to the grant funding, the SiSTEM grant was a great opportunity for us to still purchase both pieces of capital equipment. We are getting a large automated robotic vacuum machine through that SiSTEM grant process, but we are paying half the cost of that because the grant funding covers the other half and still receiving a further GBP 400,000 on top in grant funding. So really paying just GBP 200,000 for a GBP 1.2 million piece of machinery. So once again, that's a good demonstration of how we are utilizing the facilities and collaborations open to us to shepherd the capital that we've been granted from yourselves as shareholders to best effect. And then once again, thank you to all that participated. We did have a fundraising of GBP 2.3 million before costs, which concluded just in May after the financial year ended, which gives us a little bit more on the balance sheet to help boost that and to put us in a really strong position to meet the hurdles that are in place for future grant funding, where we need to make sure that we are appropriately funded for the tests that are placed on us as we go through those application processes.

Thanks, Jason. So just wrapping up the slides before we transition across into the questions. So first of all, things to look out for. We're going to be scaling Stereax manufacturing through that agreement with Cirtec powered by the joint marketing that we're planning. So very excited really about that, and we expect that thing then results in the initial product-related revenue from Stereax in 2025. And we're going to be maturing that Goliath technology with those partners who are undertaking testing of the batteries. We've got a series of technical milestones as we go through to what we've called our MVP or P2. So that will provide some great news flow to build on that impressive safety performance, which exceeded expectations just last month. And we're going to continue to pursue both commercial revenue and grant support to make sure that we've got the financial momentum that we need through partnering in order to get ready for mass market commercialization. So we believe that we've got really exciting large addressable markets that this technology is designed for, and that will provide a strong platform for future growth of the company. So many thanks for that.

Yes, Graham, let me just jump in there. Thank you very much for both yourself and Jason for updating investors. [Operator Instructions]. Graeme, as you can see, you've had a number of questions, both pre-submitted and live. So thank you to everybody for your engagement. If I may just hand back to you to moderate you through those Q&A, then I'll pick up from you at the end.

Fantastic. Thank you. So first of all, has the agreement with the Cirtec being a success from the perspective of the Board I'd always thought that the Stereax battery would have a significant source of income for Ilika the price point would not have been an issue, but rather the quality and size of the battery being foremost for manufacturers of implants, et cetera. If I'm right in my view of the Stereax battery then the agreement with Cirtec should have quickly brought in significant revenue, right? So I think that's a great question. And as you've heard, we have made very encouraging progress towards implementing the manufacturing process that we need in order to prepare Stereax batteries for market. As I mentioned, that I was just over there last month in August and met with the operations manager of the facility, where Stereax will be manufactured. As we said in our annual results, actually, we have substantially completed the installation of all of the equipment that's required for the back-end processing of those batteries. We have retained the manufacturing, as Jason was explaining of the cathode. So the first active layer of the cells. We'll be doing that here in the U.K. and shipping wafers of cells over to the U.S. for finishing and the other process steps before just doing a quality check after formation of the cells and getting those cells ready for dispatch to customers. So yes, we believe that actually Cirtec has fulfilled their part of the bargain. They are investing in the facility required for manufacturing and commissioning of that equipment is proceeding at pace. There's been a significant investment from Cirtec in that equipment and that infrastructure, and they are very keen to make sure that they achieve an attractive return on that investment. So the next question that I've got here is, is Brian Hayden still working for Ilika as Chief Scientific Officer. And if not, why? Yes. So Brian or Professor Hayden, as he is properly know, was one of the founders of Ilika and was a Professor at the University of Sout Hampton, which is where Ilika was spun out from back in 2004. So Brian has retired from the University now. He is an emeritus professor and has, in fact, retired to the U.S. So we still retain Brian, as a consultant to tackle the occasional scientific challenge that we have. But remember that as a company, Ilika has progressed from being a material science company, which is, in fact, what we were when it was first founded, to being more of a product-oriented manufacturing developing company that is dealing with a number of engineering scale-up challenges rather than scientific challenges at the moment. So I would say that our I mean, thrust is on product optimization rather than fundamental science. And that's why actually we haven't appointed a new Chief Science Officer to the company. So the next question is, are you able to report initial feedback from OEM testing of your prototype batteries. So Yes, this question is about the Goliath batteries. We announced a few months ago that we had shipped our first Goliath prototypes, our P1 prototypes on schedule to a number of companies, who are testing them as well as the testing that we're doing on behalf of some of our other partners. Well, I'm happy to say that actually, the initial testing, that's just been carried out, has demonstrated that those batteries do what they say on the tin to use a well-known advertising phrase. And that feedback has been very positive. We expect to be able to give a bit more detailed feedback in due course. As you can imagine, some of the tests actually take a bit longer to carry out some of the cycling tests actually take months to carry out. But yes, that we've got ongoing interactions with those OEMs and Tier 1 companies. And so far, they're very positive. Next question is -- what is the current energy density achieved? And what is the realistic ultimate objective. Yes. So actually, that chart that we show as part of our presentation, where we demonstrate the movement between D points from D4 through to D8 really tracks that energy density. And the end of last year, we announced energy density parity with lithium-ion cells, which is approximately at about 260-watt hours per kilo on a gravimetric basis. And ultimately, we're expecting to exceed 300-watt hours per kilo, which would make it a very competitive product in terms of energy density. Next question is, can you provide an update on competitors' solid-state battery developments? CATL is claiming energy density of 500-watt hours per kilo is this realistic or PR puff? So competitors are working very hard to get their products ready for market. I think one of the complements actually that Ilika often receives from our partners and shareholders is that of all of the solid-state battery developers in the world, we have probably been the most capital-efficient in terms of deploying capital and getting an outcome that is relevant to the industry. With a relatively small amount of capital raised we've delivered what is generally accepted as being very competitive results. So there are some very well-capitalized competitors in the U.S. who are developing different technologies to ours. You'll be aware of the sulphide electrolytes based technology that solid power is creating and also the anode less solid-state technology that's QuantumScape is developing. These are different technologies, possibly with even different target markets. They are at prototype stage in the same way that we are. And in fact, both of them said that they are licensing their technology to their customer base. And actually, in terms of prototype maturity, I would say that Ilika is still in that leading cohort of tech developers. More difficult to assess is actually the state of play with Chinese developers. So the question mentions CATL, so that's a Chinese headquartered battery manufacturer, in fact, the largest manufacturer of batteries in the world. They've got some great technology that they're developing. But not all of that solid state, 500-watt hours per kilo is caressing the theoretical limits of what lithium-ion battery technology can deliver. I personally haven't tested one of these batteries. But it's important to put the context of some of these claims in the right perspectives and understand how these technologies are being used in vehicles. And actually, you have to take a holistic view of battery technology and how it's engineered into the vehicle. So therefore, cell energy density isn't quite as important as what it looks like at pack level. And that comes back to some of that discussion that we had earlier about safety. Because if you've got an intrinsically safe cell, it means that the weight of the mechanical reinforcement that you need in a battery pack is less, and therefore, the overall energy density of the vehicle is higher. So here's one for you, Jason. Do you want to read out that question and answer it.

So when does our financial modeling show that the company will achieve breakeven and move into profit? So I think question that I'm sure all our investors are interested in. If I take us back to both those revenue build graphs and also the timing that Graeme talked us through from the scale-up and licensing type timing, which he showed in detail on the block time line earlier on. That really takes us to looking at the combination of the growth of the Stereax product that will take a couple of years to get to scale starting to come through from those layers that we talked about and really into that licensing for the Goliath products, so really at the point that, that B and C samples has then reached the point that we can license. That really takes you to the position of around calendar year 2027. So towards the end of that year would be the point that we were seeing our expectations that both of those revenue build graphs would come together and achieve that position. Obviously, it's incompetent as the Board and the company to push hard to achieve those and try and get them as early as we possibly can do.

Very good. Here, we've got one here. So nearly 90% of automotive batteries are made by just 8 Asian companies. So I would agree with that. European players are stalling their Gigafactory plans. Surely, Ilika must look east in order to get a partner to provide the scale, experience and resources to get Goliath into cost-competitive production. So our view on this is that actually, there are still some significant investments that are being made in Europe. Clearly, we've got an automotive industry that is in transition in the U.K. alone pre-COVID, we were making over 1 million diesel engines a year. And as we transition into an EV dominated environment, clearly, we want to make sure that in Europe, we are able to manufacture batteries so that we're not constantly reliant on the import of batteries from Asia. And that investment is certainly ongoing. You know about the Gigafactories that North folks has put in place. Also the large Gigafactory here in the U.K. up in the Northeast that is operated by Envision AESC to supply batteries to the Nissan factory. And in addition, of course, Agratas who have a technology collaboration agreement with us over the next year or so are plowing ahead with the substantial investment in the Gigafactory in Bridgewater. So actually, we feel that there are substantial investments here in the U.K. that are actually providing a commercialization route for our Goliath technology. So in that regard, I think there's still plenty of opportunities. However, we're not ruling out collaboration with companies in Asia. And in fact, Agratas themselves are parented by Tata Sons that's got an increasingly strong footprint in India. And it may well be that we end up partnering with companies elsewhere in Asia as part of that growth.

We touch on one final question, aware of the hour that we're probably just over. So the APC recently announced new funding for various projects. Did Ilika out this time around if not, when can we expect news on this front?. As we talked about earlier, we have 2 grant-funded projects operating at the moment. That's the HISTORY project with the Faraday Battery Challenge and the SiSTEM project, which is already running with the APC. So we need to bring both of those projects to conclusion before we then start the next project. And both of those are scheduled into the first half of next year with HISTORY completing with the D8 Freeze point, which Graeme talked about earlier, just ahead of that minimum viable product that MVP points on the development graph and then the SiSTEM grant ending with the installation of our robotic packing machine to allow us to complete the equipment set for that pre-pilot line to really allow us to build those then MVP has A samples products so that we can get those in the hands of automotive and Tier 1s. But we are constantly in dialogue and discussion with both Faraday Battery Challenge and the APC and working with them to understand what their next application process would be like which competitions are applicable for that next step once those current grant 100 projects are completed and also working with and looking to identify commercial partners to operate alongside us. And all of that alongside the backdrop of the change in government and each of those institutions understanding how their own mandate is renewed and push forward to reinvigorate the support for companies like ourselves as we go forward. So we certainly didn't miss out. We weren't applying for anything at the time because we have those 2 ongoing. But look to news flow in the future as we continue to look for new opportunities, which will obviously bring to the market as soon as we have gone through any application process, hopefully, with some successful results as we then notify everyone about that.

That's great.

Graeme, Jason, Obviously, there's a number of questions if any of those are addressable post today's meeting, we can publish those responses back with the transcriptions. Graeme, Jason, I know investor feedback will be particularly important to you both. I'll shortly redirect everybody on the call, certainly to give you their thoughts and expectations after your presentation. But perhaps before doing so Graeme, I could just ask you for couple of closing comments.

Thanks, Mark. Well, first of all, many thanks to everybody for taking the time to tune in today. Jason and I will go through the other questions. I realize there's a number that we haven't got around to this afternoon. So we will make sure that we answer those. And I look forward to interacting with you all again in the future.

Thank you.

That's great. Graeme, Jason. thank you once again for updating investors. [Operator Instructions]. On behalf of Ilika plc, we'd like to thank you for attending today's presentation and wish you all a good rest of your day.