Ilika (LSE:IKA) — Half-year results for the six months ended 31 October 2020

0:04 Good afternoon, ladies and gentlemen, and welcome to ILIKA PLC's Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Just simply type in your question and press send, and that won't be present on the company's dashboard. The company may not be in a position to answer every question it receives 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

0:34 your Investor Meet company dashboard, and we will send you an email to notify you when they're ready for you guys to 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 attention, that would be very, very helpful for the company. Thank you very much indeed. And I'd now like to hand over to Graham Purdy, CEO and Steve Boydell, CFO of ILIKA. Good afternoon to you both. Thank you, Mark. Good afternoon to everyone. Many thanks for joining us for our half year results update. We're speaking to you live from ILIKA's headquarters in Romsey on the sunny English Riviera. So we're gonna speak to you over the next twenty minutes or so about ILIKA's solid state battery technology.

1:27 And for the avoidance of doubt, we are one of the few independent global experts in this particular field. We were aim listed back in 2010, and we have two parts to the business. We have our Steriax miniature solid state batteries, and then we have our large format Goliath batteries that we're developing with partners from the automotive industry supported by The UK's Faraday Battery Challenge. So apologies for those of you who have been following the company for quite some time. I'm going to go over some of the fundamentals as we go through the slide deck.

2:13 But for those of you who are experts already in our technology, feel free to submit questions into the q and a, and Steve and I will do our best to answer those questions in as much detail as we can.

2:31 So the markets that we're addressing are truly huge. First of all, medtech and industrial sensors are the markets that are particularly suitable for our miniature micro batteries for our stereoc cells, whereas our goliath cells are designed for consumer electronics or perhaps more broadly domestic appliances, such as the handheld vacuum that you see in the picture there, as well as ultimately EVs. So why are people interested in solid state batteries? Well, first of all, they are ultra compact, so my rule of thumb is that they occupy about half the volume of a traditional lithium ion cell, and this is particularly interesting for a millimeter scale medical implants for stereocs.

3:26 But of course, it's also useful for EVs by the time you get to that scale because of the design opportunities it opens up and of course the weight saving that it implies. The high temperature and that they operated up to a 150 degrees c and this really opens up some of those industrial markets where you can't use a traditional lithium ion cell. And they're also fast charging. We actually see charge rates of up to 25 c for our miniature thin film stereo x batteries. I don't think we'll get quite that fast charging rates out of our large format Goliath cells. But our rule of thumb is that we can expect six times faster charging relative to traditional lithium ion. Of course, that's really exciting both for domestic appliances where actually you need to to recharge those devices when you need them. And also for EVs where you could have a recharging experience much closer to the one that we have when we pull up with our ICE powered cars on a forecourt.

4:39 So how do we make money out of this? Well, this is the the business model for our our SteraX Thin Film batteries. We are currently a a battery manufacturing company. In fact, we have a pilot line here in Southampton in The UK where we produce a modest number of batteries per year. In fact, this technology uses wafer based technology for depositing the batteries. So we we talk about wafer production. We actually use a a six inch format for that. We actually outsource the dicing and thinning of those wafers to minimize the amount of substrates that we have to include in the battery packaging.

5:29 We then do our own stacking to to amplify the capacity of the devices, and we do our own battery forming and testing prior to dispatching the cells to customers who've given us a PO. And it's an exciting time for ILIKA because we're scaling up that manufacturing capability where we operate our own wafer fabrication line where I'll come back to that later, but we're in the middle of implementing this strategy this year. We will continue to outsource dicing and thinning to third party companies, and probably also the stacking as well, whereas we will continue to do the forming and the testing of the batteries before dispatch to customers.

6:18 The next stage up, the next scale up for us will be into a licensing model. When we stabilize the manufacturing workflow that we've got for Stereax, we'll be in a position to license that technology through to some of the larger wafer manufacturers, perhaps in the low cost production environments of Asia. And and we'll be able to transfer that technology as a package so that those organizations will manufacture under license. So why now? Well, our pilot line usage for our SteraX products has been ramping up remorselessly.

7:08 What you see here is a plot of the allocation of our pilot line for product sales, which is in dark blue, relative to research and development, so improvement of our products, which is in green. And, of course, it's great news, actually, that demand is ramping like this. Unfortunately, of course, that's squeezing out some of the r and d activities that we need to continue to execute in order to make sure that our product remains cutting edge. And so it's time for us to use this as a springboard to move into manufacturing on a larger scale. And by the end of this calendar year, we expect to have a 70 fold increase in the manufacturing capacity that we have at our disposal.

8:00 So what are the areas, what are the industries that are wanting to buy these Sterex miniature batteries from us? Well, actually, they they split into these two categories. So on the one hand, industrial IoT. So these are really wireless sensors for for measuring data in different environments, often hostile environments. This is, first of all, wafer sensing. So, you know, the whole electronics industry uses wafers for making new products like new, you know, silicon chips and other components. And these products are are deposited in vacuum chambers, vacuum deposition chambers that need to be calibrated to run at exactly the right temperature to optimize the process.

8:57 If they are run at the wrong temperature, then you get reductions in yield. So having the right process conditions can have a very significant economic impact. And, course, it's really quite difficult to to run cables onto a wafer. Actually, it's much better if you can measure the temperature directly on wafer. And so these thin miniature batteries are are really perfect for being able to power the sensors inside the chambers. Other condition monitoring examples include other, you know, industrial hostile environments like wind turbines. We we've already had a successful field trial, which we we we communicated last year. Process equipment like chemical plants, power stations, refineries, oil and gas facilities where often you have, you know, elevated temperatures that batteries need to deal with.

9:52 And then infrastructure, you know, the the Western world has got a lot of infrastructure that's starting to age and needs to be monitored, things like railway tracks and and bridges, etcetera. And then on the the medical side, there there is an entire revolution that is engulfing the the medical device industry, which is all about turning devices into smart devices. So historically, a lot of implants have been mechanical devices, but actually there's an increasing demand for them to transmit data about how effective they are operating. So one example is orthopedics. You know, there's a huge number of hip replacements and knee replacements around the world, and often the success of those replacements is driven by, the physiotherapy that happens after the surgical procedure.

10:49 So are the patients being active enough? Are they doing their exercises? And by putting in a smart sensor into these implants, you can get a lot of information, particularly during those critical, you know, first few months after discharge from hospital to make sure that the patients are getting the most out of those implants. Then nerve stimulation, you know, this is the great hope really of the healthcare industry that we can start to replace chemical based pharmaceuticals with electrocyticles or bioelectronics, you know, to to deal with some of the world's biggest disease problems. So diseases that are pretty diverse ranging from arthritis through to diabetes.

11:35 Then sensors, so measuring things like, you know, glucose concentration in the blood and and also, you know, blood pressure. And then ophthalmic applications where you need miniature batteries to deal with eye conditions.

11:53 So this is what the, you know, the the numbers of the scale up look like. We're able to produce currently on our pilot line about 1,500 devices a year. You know, we're we're looking for that 70 fold increase as we move towards the end of this calendar year through the fab that we're building here in The UK, and then beyond that into the mass markets with large scale licensed production.

12:23 So here's a bit of detail about our fab implementation timetable. You know, the the major tools that we're installing are the enigmatically titled tool one and tool two, which are basically the key deposition equipment that we're using in order to make these batteries. Tool one is coming from California in The US. Actually, I was just on the phone to the the fabricators on Tuesday evening. That's making great progress. And then tool two is coming from Switzerland. They are both about to have the the factory acceptance tests in the next month or so, which is where we test the basic functionality of those tools. They'll then be delivered for installation by the time that we have completed our fab site preparation, which is an activity that we'll be doing over the next three months. We're about to conclude the lease negotiations for a facility and build our clean room inside of that facility, so like a a building inside a building.

13:31 We'll then hook up that equipment and commission it. And in quarter four of this calendar year, we'll start our product qualification, which will take us through into 2022 so that we'll be ready for product sales in the course of calendar year '22.

13:55 So there you go. There's a summary of those activities. We've also crucially appointed a new technology transfer director, Paul Moron, who joined us with a great track record in the aerospace and semiconductor industry back in September, and he is now running the team for the implementation of that process and spearheading the tendering for the outfitting contract of the clean room.

14:29 So let's change gear a little bit, literally, and and talk about Goliath, our large format batteries. We've currently got three programs that we're running with UK automotive partners. First one being power drive line. That's with Honda and Ricardo, and that's focused on the rapid charging of vehicles. Then we've got a program that's being led by McLaren, which is called Moses, and that's all about using solid state cells in performance vehicles. And that's actually also including a one two three systems, which is a a US headquartered Chinese owned battery company. And, you know, the the performance vehicle market is really important for us because I see that as, you know, the the leading edge of automotive deployments.

15:27 And I expect that when we first get to market in automotive, it'll be through the types of vehicles that companies like McLaren and their competitors design and and commercialize.

15:41 And then Granite is the third program that's also supported by the Faraday Battery Challenge via Innovate UK, and that's being led by Jaguar Land Rover. And that's all about making sure that the technology for solid state manufacturing is as compatible as possible with existing lithium ion cell production. Because for rapid adoption and for moving down the cost curve as quickly as possible, it's really important that actually we reduce the barriers for adoption given the large amount of capital that's being invested in traditional lithium ion battery manufacturing processes. Then at the bottom there, we've got a box called the the lead partner framework, and this is really to allow companies who operate outside of the remit of the Faraday battery challenge to engage with us on a commercial basis

16:42 to talk about developing cells for their applications. And and in particular, this is useful for engaging with cells for consumer electronics and also domestic appliance manufacturers who, you know, will have a different format for the cells that they want to use. But this is a really important sector for us, and and I actually think that we will get to market with our technology in domestic appliances before we get to market in automotive simply because, you know, the the number of cells that you need in order to address a market launch opportunity in domestic appliances is less. The price point that you have to reach isn't quite as low. And also the degree of testing or or rather more strictly, the the volume of testing that you need isn't quite as demanding in domestic appliances as it is for automotive.

17:44 And, you know, the reason why solid state is of such interest for EVs is, you know, most countries have got targets that their industry bodies set for what battery packs have to deliver. The UK is no exception. It has The UK Auto Council, which is a a group that advises government policy. There are targets for 2025 that have been set, and actually, you need solid state in order to meet those targets. It's just not possible for standard lithium ion cells, to meet those industry expectations. So we've secured just over £5,000,000 of, funding from the the Faraday Battery Challenge, which is supporting those three projects that we were looking at before. And we've also used that funding to outfit and open what we call our prepilot facility, which we did last year.

18:43 And, you know, that was opened in September 2019. We had our capital markets day. Some of you may have attended that at the end of of twenty nineteen. And, actually, frankly, you wouldn't really recognize the facility relative to the pristine condition that it was in then because we we've used it pretty intensively. You know, we make prototypes at a rate of about a kilowatt hour a week. You see

19:12 some of the the substrates on the left hand side and that rack there and and some of the cells ready for processing at the top. And and a typical pouch cell that we produce being held up by one of our engineers. And we, you know, we've shared those samples with the automotive partners that have just been listing in previous slides. And, you know, we've we've demonstrated significant improvements in the capacity and and cycle life and and also power density of those cells over the course of the last year. You know, there's still further development that's needed. And actually, at at this point, I should emphasize, a couple of things. First of all, we use a different process for making these pouch cells than we use for making our stereoc cells. So the stereoc cells are made using a vacuum deposition process, and and that process is great for making miniature batteries,

20:10 but actually, it's totally uneconomic for making large format pouch cells. So we switched to a printing process, and actually, can see one of our small scale printing stations in the background in that image on the left hand side, and that allows us to make cells of the format that's being shown there in a cost effective manner. So it's a screen printing process that we use for depositing the materials in bulk.

20:42 And the that that's allowed us to to make a significant volume of cells for testing. The the difference in technology maturity though is also important to understand. So our our thin film steriac cells are at a a technology readiness level that's about a TRL of seven. And I I use this scale. This is a scale that that NASA came up with back when they were making the the space shuttle, because actually they wanted to to be able to evaluate how mature and robust the technologies that they were being offered really were. And and so they've got the scale that goes from, you know, TRL one through the TRL nine.

21:30 TRL one is really, you know, a sort of academic breakthrough in a university lab. And TRL nine is the opposite end of the scale where it's a commodity that you can order over the Internet and it arrives the next day. TRL for SteraX is at about seven, and and what that means is that we make it reproducibly on our pilot line, and it's been used in evaluation devices. So field trials, like, for instance, the wind turbine trial that we did with that device. And when we get into, you know, the the manufactured line that so the the the The UK fab that I was talking about earlier, we'll move into a TRL of eight. Where we are with these pouch cells is that we're at a a TRL of about three, which means that, you know, we've we've got proof of concept.

22:23 We're making these cells on a line, but actually we're improving the performance of these cells so that they are acceptable for the application. And once we've put them into a battery module and a pack and and tested that under automotive duty conditions, then we move into TRL four. So consumer electronics, just to emphasize, you know, cordless roadmaps for new products are really driving battery adoption here. These are things like, you know, handheld vacuum cleaners. We've probably all got a battery powered vacuum cleaner, but also beauty products. Big demand, you know, for things like hair straighteners and hair dryers and and hair curlers and things.

23:13 The compact nature of solid state is is really attractive there. The fact you can charge these packs rapidly and that they've got a a long cycle life. So what does the manufacturing scale up route look like for Goliath?

23:31 We're currently in this prepilot facility. I talked about the one kilowatt hour a week. We'll probably, you know, increase the capacity of this existing footprint that we've got here to about 10 kilowatt hours a week over the next, couple of years, the next eighteen months, and that will allow us to to produce more pouch cells for evaluation. But what we announced back in September 2020 was that we would scale up into a facility that would give us about five megawatt hours per week.

24:05 Ideally, with the UK BIC, which is the battery industrialization center, which is based in Coventry here in The UK. And that will actually allow us to support our first commercial launch. So that's the attraction of going for something like domestic appliances. You know, we can make enough batteries in that facility to be able to support product launch. And then by the we'll probably be able to support one or two performance cars, performance vehicles from that facility. But then by the time we need to support mass market vehicle adoption, well, then you need to get to gigafactory scale. And rather than build our own gigafactory, which is quite capital intensive, you know, my rule of thumb is that you need about 750,000,000 US to build one gigawatt hour a year.

24:58 We will partner with an existing cell manufacturing company and probably an OEM, much in the same way that here in in The UK, you know, the the Sunderland facility was built as a JV between Nissan and AESC back in the day, now of course owned by Envision. So we're not gonna try and do that ourselves. We will make a contribution of this technology as an equity in kind contribution towards the JV.

25:36 So there's a picture of one of the engineers at the BIC having a look at our our pouch cell format in front of one of the big drying lines that's already installed in that facility. The UK BIC is, you know, a publicly funded facility. It it cost about a £135,000,000 to build and is an open access facility for UK industry to be able to run production lines initially in in phase one of traditional lithium ion cells, but in phase two, that will be extended to solid state. And as The UK, if not Europe's leading solid state cell developer, you know, we'll be working hand in hand with that facility for that commercial rollout that I was talking about.

26:28 Right. Well, these are our half year results. So at this stage, I'm going to let Steve Boydell, our FD, talk you through the numbers in the next couple of slides. Thank you, Graham. So we released our half year report this morning, and this is a summary distillation of that. They're exactly in line with the trading update that we we gave on the November 11.

26:54 So turnover for the the six month period was 1,300,000 relative to 1,500,000 last year. So clearly, a slight shortfall there, and that's down to the government mandated shutdown of research facilities at universities, which is where our pilot line is currently housed in the University of Southampton. So that was shut for three months, and that's obviously had an impact on our ability to service the orders that we have.

27:22 We've kept tight control of our costs such that our EBITDA loss for the period remains steady at 1,000,000. Clearly, we've got an increase in cash and balance sheet at the year end relative to last year due to the 14,200,000 net equity raise that we did back in April. On the next slide, we just show the use of our funds in in the six month period, starting with just under 15,000,000. The CapEx there is for the initial deposits for some of the key equipment that we were showing earlier. So we have deposits on those key equipment for manufacturing, plus a little bit associated with the Goliath programs, working cash outflow very much in line with our EBITDA and a small working capital movement showing us left as 12,400,000 on balance sheets at the end of October.

28:21 I'll shoot back to you, Graham. Thanks, Steve. So just to wrap up, our focus is on the commercial scale up of our SteraX miniature batteries through the implementation of that fab that I was describing. And in parallel, we'll be maturing our Goliath technology working together with those automotive partners through, you know, well defined programs supported by the Faraday Battery Challenge. And of course, they will allow us to pursue significant revenue growth opportunities in the coming years. Many thanks for listening to our presentation this afternoon. So I think we're going to move over to Q and A shortly. Definitely. Thank you very much indeed, Graham. Thank you very much indeed, Steve. Ladies and please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. I just want the company to take a few moments to review those questions submitted today. I'd like to remind you that a copy of the recording, along with a copy of the slides and the published Q and A, can be accessed via your Investor Meet company dashboard, and we'll send you an e mail to notify you when that is ready. And

29:27 I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. And if you could allocate just a small bit of time to do that, that would be very, very beneficial and helpful to the company. Just Graham, obviously, we've got over 100 investors on today's call. And obviously, you've had significant questions coming through in the Q and A tab. We did receive a number of questions that were presubmitted by investors, which I know you very kindly, in anticipation of these numbers, provided some written responses, which we will obviously make available when we publish the responses. But perhaps I could ask you to just go on to the Q and A tab on the right hand side of your screen as well. And perhaps if I could ask you to read out the question, perhaps who it's from, and where appropriate to give a response, and we'll manage the next twenty or so minutes in that manner, that's okay with you.

30:26 Very good. Well, I'm happy to take it from the top, actually. Should we do that, Mark? Yeah. That'd be brilliant. Thank you very much indeed. Let's have a look. Let's see who is first out of the blocks here. I think that's our friend, John. He said, can you please outline what IP you have in solid state batteries? Yeah. So that that's a key question. You know, we there's quite a lot actually in the public domain now. There are, you know, probably 12 core patent families which have resulted in 25 granted patents around the world. You know, we typically focus on the key jurisdictions in Europe, North America, and Asia.

31:13 And, the the reason I talk about patent families is because, you know, you make an application that turns into a PCT, and then you engage with the the national offices. And those patent examiners normally ask you to adjust your claims. So you end up with slightly different patents from the original application in the different jurisdictions. So, you know, you get a different patent in The US by the USPTO that you might get in Europe through the EPO. And the the patents generally cover materials. So the the materials that we put into actually, generally, the electrolyte because we tend to use commonly available cathode materials.

32:08 Then the the processes that we use to deposit the materials, and you've heard that we use both vacuum deposition approaches for Stereax as well as ink deposition approaches for Goliath. And then thirdly, you know, battery architecture. And there's also quite a bit of know how actually that we keep as trade secrets. So, you know, we choose, like many companies, not to put everything into our patents because there are some things actually that it's quite difficult to patent in particular, you know, process conditions because you can't really police those anyway because they always happen behind chain link fences. So you know, you you keep some of that know how back as trade secrets.

32:57 So I hope that answers that question. Then we got a question from Simon that says, is a US listing in the pipeline to attract further interest and investment? What do you think, Steve? Do wanna answer that one? Yeah. We currently don't have any plans to to list in The US. We do we are attracting US retail customers onto our register, other than getting it through an over the counter shoots product. So basically, the shares are being traded in The US, let's say, on on an over the counter product. Ticker, I n I k f, I mean, that's an unregulated platform, and we and we do recommend that people buy the shares from our London listing on AIM, which is under the ticker I k a.

33:50 But as I say, we have had a lot of US retail interest recently, particularly at the Christmas period, and they they now account for about 12% of our shareholder register. So it's clearly a key area for us to to monitor closely. Very good. So our next question is pouch cell manufacturing is scheduled in The UK big phase two. When do you sorry. This just moved in front of me while I was trying to answer that. When do you envisage actually being in the big? So, yeah, the the plan is actually that we get up to five megawatt hours per week manufacturing capacity by 2024.

34:35 So that will involve investing in equipment to be installed in The UK big in advance to that, you know, in line with with that timing. And we got another question from Paul. He says QS, I guess that's QuantumScape and Solid Power have recently published performance data for their batteries. Can you share similar energy density? And have you tested multilayer Goliath cells? So actually, our our batteries have been shared with automotive development partners in those Faraday battery challenge collaborations. You know, frankly, the performance data for ourselves is still at a a fairly early stage, similar actually to the stage that that QuantumScape are at. A lot of their data actually didn't, you know, result from what I'd say were full cells, but in fact is is half cell data.

35:41 So, you know, we we are in due course in the course of 2021 likely to share some of our full cell data that'll allow a comparison on that basis. And, you know, we are focused on single layer Goliath cells at the minute. We we are not yet making multilayer Goliath cells in the way that solid power have shown with their selected chemistry. Right. Let's have a look. Next one. Have the new rules of origin around UK and EU exports had an impact on your forward looking volume expectations?

36:27 So we'll let Steve answer that one. A lot of our evaluation samples are actually being shipped to The US currently, so they're they're falling outside these new rules of origin. So we are monitoring the impact of these things closely, but as I say, currently, it's not impacting us because a lot of particularly the medical device companies that are trialing our batteries are US based. Very good. Now we've got a question from SS. How do you differentiate ILIKA's solid state technology from quantum scapes? Yeah. So actually, you know, the some of the differences in our technology revolve around the materials choices and the chemistry as well as the device architecture.

37:15 What we've got in common is that both of us are using oxide based electrolytes, although QuantumScape haven't really talked very much about what the nature or composition of their electrolyte is. So they use a an approach that's commonly referred to as lithium free in the cell industry. And what that means is that actually they make a structure that hasn't got an anode when you initially make it. And then when you charge the cell, the lithium plates out between the electrolyte and the current collector and creates a pure lithium metal anode.

38:07 In fact, our approach is that we use a a silicon anode. You know, the layer of of silicon that you need is actually much thinner than the layer of cathode that you would use in these cells. And we find that the capacity of silicon is, you know, easily enough to accommodate the amount of lithium that you push across the cell when you charge it. We've used this approach because we've successfully used silicon in our Steriax Thin Film Batteries. In fact, in the early days, when we were prototyping those stereax cells, we did test a lithium free or an anode less method because a lot of the early solid state cells that were prototyped in the national labs in The US used that approach.

39:07 But we found that the mechanical strain from that approach led to delamination of the cells over time and and a reduced cycle life. So that's why we favor using silicon. Silicon has been, you know, successfully used by other competitors in the industry, you know, for instance, you know, the the work that Ampreus is doing using silicon anodes. Let's have a look. Next one from Nick t. It says, are there any potential shortages in key commodities used in production that might constrain expansion? Yeah. So that's a good question. And, actually, we spent a lot of time making sure that we don't use anything too exotic, in our materials.

39:56 In fact, as part of that, granite program that I was talking about earlier that we're doing with JLR, we've we've had a specific work stream that's been looking at ensuring we avoid any scarce materials, any scarce commodities that would make the the batteries unaffordable or would, you know, create shortages that would put a break on the mass adoption of ourselves. So that's an important aspect that we're taking into account. What's the next one? Next one is from Paul r. He says, given the recent announcements by EV OEMs, so Toyota and and Neo and GM, about solid state batteries, clearly speed to market is important.

40:49 What can management do to accelerate Goliath plans? Well, you know, actually, I I think we're a pretty agile group here. I think, you know, our state of maturity and readiness is globally competitive. And, you know, we are expecting further resources to be made available by the the Faraday Battery Challenge channel in the coming period. And, you know, as a a company, we're continuously reviewing what collaborations we can enter into, what expertise actually we can acquire from around the world to accelerate our programs. You know, we we realized we haven't got the monopoly on brains and that there are some, you know, really exciting groups that are offering to work with us and, you know, that could really inject some pace into our program.

41:48 So Brian says you use a a silicon anode whereas a lot of other companies using lithium anodes. Are there benefits to the use of silicon? Yeah. So I think that's that's not dissimilar to, you know, the previous question on differentiation. You know, silicon has a massive capacity for absorbing lithium, and we're working with some of the global suppliers of of silicon. And, you know, we're we're seeing some some great performance from using the right amount of of silicon in ourselves. And and we believe that actually using a structured anode as opposed to plating out lithium metal gives you a better control over the stackability, so that's the real word, of of these cells so that when it comes to increasing the capacity of the overall devices to make them, you know, big enough to go into EVs that actually having a a structured anode gives us a benefit in that regard.

42:57 So let's have a look. From Phil h, next question is the EV battery market is projected to be worth 84,000,000,000 in 2025 via both your own manufacturing and also via licensing. What percentage of this market is ILIKA going after? Well, actually, we take a a bottom up approach to forecasting. So what we tend to do is say, you know, who are the partners that we're gonna engage with? What's the off take that we can expect those partners to, you know, to to to buy from us? And, you know, what's the the volume of cells that we can realistically manufacture.

43:45 It's actually a very small percentage of that overall market value even by the end of the decade. You know, we're selling into a very rapidly growing market, and and we take a lot of comfort from that. We're certainly not constrained by market size. And, you know, I actually believe that just about all of the the viable solid state battery offerings that are out there will enjoy a significant percentage of of the market. In due course, think, you know, solid state will take over from the market that is is currently defined by traditional lithium ion cells and and own that market. In the same way that lithium ion has taken over from, you know, some of the traditional battery chemistries like nickel metal hydride and and NyCAD batteries. So I think it's really exciting time for solid state and and we're gonna see, you know, some very large scale adoptions of the technology.

44:55 Just gonna scroll down a bit. So Steve's gonna answer the next one. So a question from Patty k. What are your views on the recent share price volatility? As you scale up your manufacturing, do you expect to see the share price reaching more solid state? So, clearly, yeah, there has been some volatility in our share price over this Christmas period. It's worth going back to earlier in last year when we did our fundraise at 40 p. Once that was completed, the share price gravitated to around a pound where it was effectively capped, and that was because we had a number of our institutional investors who've been invested for a while in ILIKA. We've invested through enterprise incentive schemes and venture capital trusts, which meant that once they'd held the shares for over three years, there were some significant gains that they could realize from the sale of those shares. And effectively, they were selling those shares into into the demand, and there was effectively a cap on the price at a pound.

45:59 You've seen some TR ones being released where they notified the market of their of their shareholdings such that those shares were effectively all cleared in the market just before Christmas. So effectively, the large sellers in the market were satisfied, and then that was coupled with the the QuantumScape's announcement and the interest in QuantumScape where investors, particularly in The US, were looking for other companies operating in sort of state battery space, and IKA has been one of the few publicly traded companies there and has benefited from US retail excitement, hence the the recent volatility.

46:47 I would expect that volatility to to come down, but there's no way of saying whether that that means a more stable share price. It just hopefully means that we've still got that strong support from both The UK and The US that we currently have. Thanks, Steve. So next one from Edward h. Are you the market leader in small batteries like Sterex? And, you know, I would say that actually the competition the global competition for miniature batteries like Sterex is far less intense than the competition for the development of large format pouch cells.

47:33 So I would say that, you know, we are viewed as being one of the the key parties in that market. Next one from Harish h. Would you consider sorry. Who do you consider to be your main competitor in the market, and and how do you compare to them at this present time? Well, you know, I think it is true to say that for the Goliath, solid state, batteries that there are a lot of people, actively working on this. And and sometimes it's a bit tricky to be absolutely categorically sure about the state of development by different organizations. So, you know, all of the big battery OEMs have got solid state programs, but they play their cards pretty close to their chest. So it's not always possible to say the state of development at companies like Samsung and and Panasonic, LG Chem, cattle because actually a lot of that data isn't really published. They don't really have a need to publish that.

48:43 The the the technology development companies like ILIKA are are sometimes a bit more forthcoming. So, you know, we we get more insights into what's going on at Solid Power and QuantumScape and to some extent, Prologium. So, you know, we were able to monitor progress there. And I'd say, you know, that there isn't one particular main competitor. I think it's a very dynamic market, and I think also demonstrates how attractive the market is that it is such a a vibrant landscape. So next one from Brian e. Toyota is expected to be the first to launch an EV with solid state batteries.

49:30 Does ILIKA still have links with Toyota and any overlap with co owned patents? Yeah. So, you know, the answer to that is that, yeah, we we still have jointly held patents often covering some of the the fundamental materials that are used in electrolytes. And and so we are co managing actually those patents with Toyota. And, you know, we have a an open dialogue with them around the exploitation of those patents. So so, yeah, we we still have links. Next one from Dominic k. What precautions are you taking to secure your technology from either theft or copying by third party countries? Well, you know, we have a an in house patent lawyer who is on secondment to us from a a large patent firm.

50:28 And, you know, her job is to to secure our patents, so to to to harvest the ideas from the technical team and and to file patents on our behalf, but also actually to prosecute them and to monitor other patents around the world to ensure that we've got freedom to operate. And, you know, if we saw a product that was out there that looked like it infringed one of our patents, then, of course, we would make that party aware of the case and take steps to to protect our IP. Another one from Brian e here. It says, how successful has the lead partner framework been in identifying partners? Yeah. So, you know, for Sterex, we've got a a very healthy portfolio of around 16 customers that we are feeding with devices from our pilot line.

51:33 So we feel that that's given us a lot of validation and comfort around the the the commercial demand for the cells that we will produce on that that Steriax manufacturing line. And also, you know, for Goliath, well, we've, of course, engaged with those automotive partners that we consider really to be lead partners as part of that work. And then, you know, we got similar relationships in domestic appliances. Next one from Jonathan H. Steve, do you wanna take this question about our change in strategy, RE, the the fab strategy for Sterex? Yeah.

52:20 So there's a number of factors at play in the decision that we made to manufacture Sterex batteries in house. One of them was the the impact of COVID and travel restrictions. We were talking to fab facilities around the world prior to the epidemic outbreak, but it's meant that if we want to actually physically go and see them during this period, we would have had to do effectively, a month's quarantine, two weeks on the way out and and two weeks on the way back, and that's certainly something we couldn't count on. And the other was when we got down into the detail of detailed negotiations and talking about the the relative costs of installing our equipment in their facility and and paying them for installing them as well as the margin they'd be looking to get from us. It became a it wasn't the capital light option that we hoped it would be, and it was actually more beneficial to manage the process in house.

53:30 So next question from Eric c. Could you talk about your patents that could possibly be used by Honda or Toyota? Is there a chance of revenue to come from them? So, actually, Honda don't have any license from us to use our IP, and actually, we don't have any jointly held IP with Honda. Toyota is is the partner that we've got some jointly held patents. The agreement that we've got is that both parties are free to use that IP for their own purposes. So there is no expectation of revenue from Toyota for using those. Christopher m says, can you quantify the relative improvements of Goliath's pouch performance over the past twelve months? Well, you know, the that's been tracked very closely.

54:24 You know, we we update our board regularly about those improvements. And, actually, we have been plotting those improvements on a log scale until recently. So that means we have seen orders of magnitude improvement in the capacity and and power density of those pouch cells. That degree of improvement is is starting to tail off. We now plot improvements more recently on a linear scale. But, you know, we're starting to see, you know, very important performance gains that are reassuring us that we're going to have a viable product in the foreseeable future.

55:15 So Edward h asked a question similar to the one I've just answered on Toyota. Marius r says, when do you think Goliath will be production ready? So, you know, we've we've talked about getting up to five megawatt hours per week by 2024 in the big, and that's really when, you know, the the commercial markets are addressed. So it's it's that year onwards. John s says, in consumer product area, no mention of mobile phones. Any plans in the area? So we don't actually have any collaborations with mobile phone manufacturers.

56:00 And, actually, that that market is quite cost competitive, and that's not ideal for the launch of a technology. You know, we're we're trying to choose markets where there is less price sensitivity and and frankly, probably slightly smaller volumes. So, you know, we're we're likely to put it into other consumer electronics before it goes into mobile phones. So another question from JB. Given the volume of shares which are traded on a daily basis on the NASDAQ bulletin board on the OTC basis and the level of US investor interest in green tech, will the board consider listing on NASDAQ once Fab one is fully commissioned?

56:48 I suppose Fab one relates to Sterex, and actually a lot of The US retail investor interest is around the the Goliath program and the the automotive batteries. So I think the the trigger to review whether and as that listing would be appropriate would be when we've got performance performance data and further progress technical progress on our device program. Okay. So I'm going to move on a bit now and go down to Graham, just to just to cut in, just to you a few seconds just to carry on reviewing. Obviously, I'm just mindful of of your time.

57:40 Feel free to take as long as you need to to drift through these questions. Some are I I think you have touched on in previous questions. And, of course, if we don't get round to them during the meeting, there's always the option for you to, address them post the meeting as well, and investors will be notified, when they're ready for to be reviewed. So, perhaps feel free to scroll through and, take ones where it's appropriate. I think I'll answer another couple before we wrap up because I can see there's there's still a lot of interest, but we will undertake to to answer all of the questions that have come in and and deal with those. I think the one I'll take now is from Andrew a, who asked, have you considered incorporating graphene in your solid state batteries to improve their performance.

58:33 So, actually, that's not one of the additives that we have selected largely because in fact, we have done some proof of concept work, but we find that graphene, because it's a two d material, doesn't survive some of the processing that we put our batteries through. So it it isn't ideal for us in that regard. And then from Yeah. Let me just select one more that's a bit different.

59:28 Maybe how will IKA get paid for its three Goliath collaborations, and will it be via license fees for ILIKA PLC patented IP? Yeah. So so at the minute, we are getting those collaborations supported by the the Faraday battery challenge. So, actually, that's on a $70.30 basis. So that means that for every £10 that we spend on those programs, then we get £7 back. And we retain all of the IP that is generated, all of the know how that's generated by ourselves in those programs.

1:00:14 And indeed, if somebody wanted to take a license to it, then that would be on commercial terms. Although, you know, our business model is actually to incorporate that IP into our batteries and then to sell the batteries that we manufacture on the basis of the know how that we've accumulated. That's built. Thank you. Thank you. Well, Graham, thank thank you very much indeed for taking such a thorough approach to the Q and A. And thank you to all the investors that have submitted questions, both pre the event and during the event. And as Graham and Steve has said, obviously, we'll review all of these questions. So thank you once again. Graham, perhaps I'll just hand back to you just for a few final words to wrap up. And I know that investor feedback is incredibly valuable and important to you, and then I'll direct investors so they can give you their views.

1:01:08 Well, you know, it's been absolutely fantastic to see the number of people who've shown interest in our presentation today. It's been a very vibrant q and a. Many thanks for all of you who've taken the time to submit those questions. You know, I think we've got a a very well informed retail investor following increasingly in The US, and I look forward to engaging with all of you going forward in the future. And and many thanks for supporting our efforts here at ILIKA. That's brilliant. Thank you very, very much indeed. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback? If you access this meeting via our website, then the feedback page will appear. If you access this from the link sent to you by email, you'll simply be asked to log in to submit your feedback, and ICON it reiterates enough the importance that the company has your views and your expectations.

1:02:05 On behalf of the management team of ILIKA, we would like to thank you very much indeed for attending today's session. That now concludes the presentation, and good afternoon or evening to you all. Thank you once again.