The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so. As usual, we'd like to submit the following poll. If you give that your kind attention, I'm sure the company will be most grateful. I'd now like to hand over to CEO, Graham Purdy. Good afternoon.
Hi, good afternoon, and a very warm welcome to everybody who's online and has chosen to spend the next hour or so with us, listening to our annual results presentation. I'm joined here by Jason Stewart, our CFO, and my name is Graham Purdy. I'm the CEO of Ilika. Good afternoon, everyone. For those of you in any doubt, Ilika is a pioneer in solid-state batteries. We have two product lines. On the one hand, we have our Stereax miniature cells that are primarily used to power miniature medical devices and industrial sensors, sometimes referred to as industrial IoT. And then, on the other hand, we have our Goliath large format cells, which are large enough, when put together in a pack, to power an EV, and the same chemistry can also be applied to cordless consumer appliances.
So Jason and myself will be presenting these slides. Here's the profile of not only us, but the rest of our board and some of our senior management. I'm not gonna go through our CVs today, because actually you can refer to them on our website, where there's lots of detail on our background and profiles. So first of all, let's start with a quick overview of the Ilika business model. We have an asset-light business model, demonstrating our capabilities on production-intent equipment. So the way that that works is that we develop our batteries together with OEM partners, so they're branded manufacturers who sell the products to their customers. And in the early days of our product development, we have grant support, usually from government bodies, as well as engineering fees from those partners.
We share data and prototypes with them, and actually, only last week, we announced some further shipments of Goliath prototypes that we'd shared with partners. And then ultimately, the goal is that they take a license to our technology, and in return, we transfer the IP around the products and the process. And of course, an example of that is a deal that we've done with Cirtec, that we'll come back to later in the presentation. And then they either manufacture the product themselves or work together with manufacturing partners, so tier one suppliers from their supply chain, to be able to provide batteries as part of their offering to their customer base. So what this does is it actually avoids the need for us to build large factories to manufacture our batteries.
We feel that we're experts in the development of not only product, but also process, but that actually, the expertise required for large-scale manufacturing is typically better embedded in our large OEM partners and their supply chain. So we believe that we've got a compelling investment case built around these five pillars. First of all, we have a strong patented portfolio of technology in global jurisdictions, and not only here in Europe, but also in Asia and the U.S. We believe also that this asset-light business model has a strong return on investment without the need for substantial capital investment.
But having said that, we do have an in-house, purpose-built fabrication capability that can demonstrate our process and give licensees comfort that when they take a license to our IP, that they are getting a robust product design and process for manufacturing it. Our licensing and royalty agreement with Cirtec is set to deliver an economy of scale and the ability to ramp production of Stereax batteries, so we're well on the road to commercialization there. And with respect to our Goliath batteries, we've now shipped our first batch of prototypes to an automotive customer, and of course, we're engaged with a wider portfolio of OEMs and tier ones, in commercially sponsored evaluation trials. So let's go into the two different product lines and talk about not only technology progress, but also where we are with commercialization and our plans for the future.
Let's start with Stereax and some trends in global healthcare. So unfortunately, we are seeing an international crisis in obesity, which is leading to increasing concerns about the health and welfare of the world's population. Here in the U.K, one in four adults are living with chronic pain and therefore need pain relief on a long-term basis. In many parts of the developed world, we have a steadily aging demographic, an aging population, which is putting pressure on the healthcare providers. So part of the solutions that are being developed to be able to cope with these trends is the use of smart electronic AIMDs, or active implantable medical devices. They can help address a lot of the issues that these trends in healthcare are creating.
So when you have an AIMD, you need something to power it, and today the battery is actually the largest component. Often, current medical devices use a primary cell, and I don't know if you've ever seen someone with one of these batteries fitted, but they're generally put into the chest or buttocks, and they can be pretty uncomfortable, actually, for the person wearing them. So our suggestion is that we have a small rechargeable cell with a steady power supply to these applications and a long cycle count, i.e., a long lifetime, so that the cell can remain implanted in the patient for the duration of the therapy. So Stereax technology is seen as a bit of a game changer in this medical implant industry.
First of all, because of its small footprint, it offers a reduced surgery time. It can also be located close to the point of therapy. Certainly, it means you don't have long cables from the power source to the device. Because it's got a long cycle life, it can spend a long time in the body, and the user can recharge it at home. We often get asked, actually, you know, "How long does this last between recharges?" But not really because of the limits to the technology, but more because it often makes sense to people to do a daily recharge, right? We're all used to having a daily recharge of our mobile phones. We have a daily routine, where a collar or cuff is put around the site of the implant, and it's recharged for duty.
And the other attraction of Stereax batteries is that they're able to power a Bluetooth communication chip, a radio chip, to be able to upload data onto something like a mobile phone, so that that data can then be relayed to the physician who is supporting the patient. So the big advantages of our Stereax solid-state batteries relative to existing lithium-ion batteries are around the ultra-thin nature of our batteries, making them easier to integrate into devices, the fact that they've got this high discharge power, and perhaps not so much in medical devices, more so in industrial IoT, you've got this high temperature tolerance of a solid-state battery, which means that they can be deployed in locations that normal lithium-ion batteries wouldn't tolerate. So the markets are really exciting, actually.
They cover probably five principal areas, and there are different applications within these sectors. We often talk about neuromodulation, which is where these batteries power devices that stimulate, usually in the case of Stereax, the peripheral nervous system, and that can help with chronic pain relief. Also implanted sensors, which is a big market, but there is a trend towards wanting to ensure that sensors can pick up data on an almost continuous basis, rather than relying, say, on quarterly hospital visits. Then orthopedics, and this is where our Stereax batteries are integrated into replacement joints, such as hip, knee, and shoulder joints, and they can give a lot of information that is useful then to patients who are going through physiotherapy. Ophthalmic applications, where these batteries can actually power contact lenses, so smart contact lenses.
And also there's an AR/VR play here. There's some very well-funded organizations that are looking at reducing the size of the AR/VR headsets, and reducing that technology to contact lens size so that it becomes less bulky. And of course, a really thin Stereax battery arranged in a mosaic around the perimeter of a contact lens is a good way to power them. Then orthodontic applications, whereby Stereax cells are integrated into aligners, and can be used to not only monitor the use of aligners but also pick up information on the chemical composition of saliva. So this is what the Stereax batteries look like in terms of their size. You can see them, they're pictured in the middle, alongside some standard tablets and medicine. And you can see how small they are.
That's our M300, which is our minimum viable product. It's a little rechargeable battery with a standard lithium-ion voltage of 3.5 volts and a capacity of 300 microamp hours. So we kicked off our last financial year, so the year that we're reporting on in this presentation, with an agreement with Cirtec, in order to partner Stereax manufacturing. We believe that actually, this validates the Stereax product and the process that we use for manufacturing it. We believe that our shareholders benefit from Cirtec's ability to manufacture the technology at scale. They've got a very sophisticated facility at Lowell, in Massachusetts, where they already make thin film devices, and they have the medical accreditations to be able to deliver the product.
They've also got a very skilled and much larger business development team, and therefore, that partnership gives Ilika access to trade shows, conferences, and a sales and marketing resource that is capable of turbocharging what we're doing. We've got a very close alignment. If you ever see a Cirtec Medical presentation, then they'll often talk about exactly the same applications that we've just been discussing in the application slide that we covered. Also, they've got a, you know, a technology platform that they've developed already for neurostimulation that integrates our Stereax batteries into a technology that is a closer to a full solution than the OEMs might be looking for. So not just a component manufacturer, you know, they've also got aligned and value-added technologies that are very complementary to our offering.
There on the right-hand side, you see a picture, actually, that's taken in the Cirtec facility in Massachusetts. It looks a sort of sepia color because it is, of course, a yellow room. We use a microfabrication process in order to make these batteries, and therefore, the materials are sensitive to normal light, and therefore, you have to use a yellow room environment. And actually, those two guys are standing in front of one of our sputtering machines, which is used for putting down some of the active materials in the batteries. There's not much to see. It looks a bit like a closed cupboard, but actually, that SiSTEM opens up, and you can access the internal deposition through that interface there.
That equipment, the equipment set required to manufacture, Stereax batteries, is now substantially installed. So at the end of last year, we crated up, that equipment, and we shipped it across to the U.S. It's now been largely plumbed in, and, we are shortly going to give an update on, the remaining user acceptance tests, so that we'll be ready to start running our engineering lots. And what we mean by that are wafers of batteries that, are put through the, the whole process really to test the quality of the system and make sure we're getting, the right product at the individual process steps.
That will continue towards the end of the year, and then we'll actually start our first product runs towards the end of 2024, with a view to recommencing the supply of batteries to customers through the Cirtec facility in 2025. In terms of, you know, the order pipeline that we've got, it is fairly U.S.-centric, so three-quarters of our current hopper is based in the U.S., and about a quarter of our inquiries are from Europe. We're interacting with about 21 companies, and we've got 24 orders for initial offtake from the production that will come from Cirtec.
You can see the distribution of those orders on the right-hand side here, with neurostimulation being the first column, and implanted sensors being equally large, both of those accounting for about 20% of the pipeline. And then, other orders covering ophthalmics and orthodontics and orthopedics, as well as some others for industrial IoT. So, Jason, do you want to say a few words about what we can expect in terms of a revenue growth profile for Stereax? You know, we're all keen to know how we're gonna make some money from this technology. So over to you, Jason.
Thank you, Graham. So we have shown this revenue build before, for those that have followed the company for a while. And really, this is to help give some guidance as to how the income from Stereax will start to develop as we move forward through the commercialization that we've now enacted with that Cirtec contract. So really, there are a number of different layers to how we expect the revenue to build through, and partially that's driven by the fact that because these are targeted towards medical devices, there is definitely a certification process that they have to go through within the U.S. or anywhere else, and that depends on the category of device that is, whether that's wearable or implantable.
It takes a different amount of time to come to market, but that doesn't mean that revenue will not start to flow until they're fully approved. Revenue will start from next year. So we have, as Graham has said, transferred the majority of the machine set over to Cirtec to set up the production process. But we have actually retained one of the key pieces of equipment sets over here in the U.K, and really, that's for two reasons. Firstly, that was the most proprietary piece of equipment, so that really is, for want of a better description, the secret sauce covered by patents and IP. But actually, by holding that in the early days of the relationship, it makes sure that we keep control of that.
And the secondary part is that that was the most difficult part of the process because it is a unique machine set and process that we have developed to get right, and therefore we didn't want to disrupt that in any way and to cause any delays in the deployment and recommencement of the production process. So we've retained that, and we will actually process wafers as part of the manufacturing process as a subcontractor to Cirtec during the early years of the ramp-up. And that can be seen on the graph as that blue section across the bottom. So that will commence when we recommence production for the lots of batteries for onward sale. And that will be towards the end of the financial year that we are currently in, so ending April 2025.
And then go on and build as we go through. Ultimately, that will tail off in a number of years, as we expect. As capacity grows, Cirtec will install their own equipment sets across in the U.S. to take on the higher demands that comes with that. Building on top of that, you can see an orange section of income, and that really is derived from non-recurring engineering. So within the med tech space, there is a very large theme of the end-user consumers, the branded companies wanting to work with the component manufacturers, such as ourselves, to either certify our batteries for their application or to develop a bespoke setup for their particular therapy needs.
And working with Cirtec, who operate in this space already and who derive a significant amount of income themselves from that NRE income stream, we've been able to be guided to say what that looks like, anywhere from GBP hundreds of thousands for just certification of our batteries in an existing process, all the way up into GBP low millions for a brand-new development for a specific application. Building on top of that, we expect the delivery of batteries to commence in the midpoint of next year, and although we expect that to be low volumes to start with, due to the nature of the lab-based trials, pre-clinical trials, clinical trials as they build through, we do expect that we'll start to derive revenue from that.
And under the terms of the contract, that's a profit share to Ilika in the initial part, so the vast majority of that income comes to Ilika. Then as volume increases and we get to a volume breakpoint, flipping into just a traditional royalty fee that we will receive as the volumes really take off, and you can see that growing through quite exponentially. And then the final part of our expected revenue build from the Stereax is in further licensing opportunities. So Graham did touch on earlier that there are secondary market applications in the industrial Internet of Things, the IIoT market, that will open up as we start to see the Stereax batteries produced at a lower price point. That only really comes with volume, so that opens up over time.
But also, we have the ability, under the terms of the contract that we've entered into, that if there are significant volume applications available and Cirtec do not wish to follow those, we have the ability to issue additional licenses and get a license fee for that to make sure that we are in maximizing that market opportunity and not missing out on any sales that may come because of the speed of industrialization that Stereax would have at the Cirtec facility. So that really hopefully gives you a guide as to how that builds with revenue starting in the next calendar year, and then building as we go forward.
Thank you, Jason.
So just before we change gear and talk about Goliath, maybe a quick recap on the progress that we've made with Stereax over the last 12 months. So you'll remember that back in May 2023, we announced our first shipment of M300 batteries to customers. Following that, we entered into a 10-year licensing agreement with Cirtec, and we crated up all of the equipment that we used on our pilot line. We dispatched that through to the U.S. That's now been substantially installed in their facility in Lowell
... We expect to commence engineering lots shortly, so there'll be a bit of news flow later on in the summer as we update you on progress there. And of course, we're working together on the co-marketing. So, any of you who are in the industry, and you come to some of the big med tech events, particularly in the U.S, I hope to see you there, and, we will be sharing the stand with Cirtec, and explaining our value proposition to customers. So let's move on now to Goliath. Of course, this is a very different market. Still solid state batteries, but very different in size. This is really a story where we're seeing regulatory-driven uptake of EVs across the world.
You know, 145 countries have now announced net zero targets, and this covers 90% of global carbon emissions, and of course, within that, transport is the largest emitting sector, so roughly about a quarter of the emissions. There are still some people who are hesitating to buy EVs, and these are the top three reasons why that hesitation is coming into effect. First of all, people worry about the driving range. That's the biggest one. Secondly, people are concerned about the amount of time it takes to recharge battery packs. And then thirdly, there's still some residual concerns about safety, even though EVs actually have now been demonstrated to be extremely safe and comply with all of the standards for vehicles. EV sales momentum is still strong.
There has been perhaps a slowdown in 2023 relative to expectations, but in certain sectors, in particular, the large, sort of SUV-style EVs, are still selling very strongly. Solid-state batteries can address a lot of these anxieties, and I'm gonna come back to some of the reasons why, Goliath batteries are particularly suited to overcoming some of these final hurdles that you've got here. But the first thing I want to emphasize is actually there are a number of solutions that all have pros and cons for addressing this opportunity, and, if you just take an overview of the competitive landscape, you find that companies are approaching the opportunity in different ways. I've split this into a 3-by-3 matrix. There are different ways, of course, of defining the competitive landscape.
Across the top, you've got different types of electrolytes. The electrolytes is the medium in the electrochemical cell that allows the transfer of lithium between the two different electrodes, between the positive and the negative electrode. It transports the lithium ions. On the left-hand side, down the vertical axis, you see the different choices, actually, of anodes. Anode is the negative electrode. You can either have an anode-less design, a lithium metal-based design, or, as is often used with normal lithiu-i on batteries, a silicon-rich anode. Actually, Ilika is at the top left of this matrix here. We have chosen the combination of an oxide electrolyte and a silicon anode, and we're demonstrating effective performance of cells using this approach.
But these different chemistries have an influence on the benefits of the battery to the end users. So first of all, let's talk about the features that result from these choices. If you take a sulfide electrolyte, it is perhaps one of the earliest demonstrated solid-state electrolytes that were discovered. You generally get high ionic conductivity, and it's a malleable material, but the downside is that actually sulfides react easily with oxygen and moisture in the air, and they can release toxic gases in certain circumstances. That makes them expensive to manufacture because you have to manage the environment in which these sulfides are handled, to protect the workforce and to prevent corrosion of equipment.
The oxide electrolyte is more stable in air, but it's actually more difficult to actually make a functioning battery out of an oxide electrolyte because you tend to get quite high interfacial resistances. So you have to use methods to enhance the lithium transfer at the interface between the electrolyte and the electrodes. Some organizations use polymer electrolytes, which have got a high ionic conductivity, but they often need preheating. So there needs to operate at elevated temperature, which can be a bit inconvenient. And then on the anode side, you've got different pros and cons. First of all, lithium metal gives you a fantastic constant cell voltage and a high energy density for the cell, but it is very expensive and actually difficult to handle because, of course, lithium is very reactive and reacts with oxygen and moisture.
Also there's a risk, an enhanced risk of so-called dendrite formation, which can lead to short circuits in the battery. We believe that silicon anodes are the best choice. We believe that they give a longer cell life. They're less expensive than lithium metal, but they can lead to volumetric expansion, which needs to be carefully managed. And the anode-less design is cheaper than, of course, the lithium anode, and gives a very high energy density in theory, but can lead to a compromise in cell life. So we believe that the combination of a silicon anode with our oxide electrolyte and the electrodes that we've chosen give the performance of NMC, which is nickel manganese cobalt chemistry that you get in car batteries, and the safety of LFP, lithium- ion phosphate.
So in terms of the features of our batteries, it's a non-flammable design without any liquid. You've got competitive performance versus lithium-ion, and we'll come back to that in a second, and a tolerance for higher temperatures. So our batteries, when you take, you know, these different features, we're seeing designs that have a lighter vehicle altogether, a lighter vehicle with the use of these battery packs. It's got a higher cell-to-pack ratio. We're ending up with vehicles that can, are expected to have a longer range, and we've got a technology that's safe to manufacture and easier to use and recycle. So it's been a year of fantastic progress, really, on the Goliath program. We're very excited about some of the results and milestones that we've hit.
You'll probably remember that, on the back of a grant-funded program that kicked off in Q1 of 2023, that we've been able to develop our technology very rapidly. We hit our D4 development milestone in November of last year, which we were then able to freeze into a prototype that we call P1, that just last week, we announced we had sent to customers for them to ship. We achieved lithium ion energy density parity, which means that our batteries have got the same amount of gravimetric energy density as a standard lithium ion battery. And we've also done a lot of work on making sure that our process is production ready. So we've demonstrated roll-to-roll coating of our architecture in-house.
And we've also entered into a program to design and build an assembly line with a company called Mpac, which is also listed on the stock exchange here in the U.K, and UK BIC, which is the Battery Industrialization Center. Also, you know, we're very excited about the 12-month collaboration agreement we've got with the Tata Sons company, Agratas, which of course, is building a substantial gigafactory here in the U.K, in Somerset. Ultimately, that will be a 40 GWh per year facility, and it's, you know, a real pleasure to be working with them so that they can evaluate our technology with a view to potentially scaling that up within the context of some of their investments in manufacturing. So in terms of, you know, where we sit on our technology roadmap, I've mentioned achieving that D4 development milestone.
That then relates directly to the P1 prototypes that we have successfully made and tested in-house. And on the back of that testing, we were confident enough to start releasing these batteries to customers for their own evaluation. We've actually announced a couple of interactions. Those of you who follow our news flow will have seen that one of our customers has sponsored a testing program at our facilities here at Ilika. They said: Look, you're set up to test these batteries. We have some slightly different tests we'd like to do in addition to the data that you've shared with us through your own tests. And so, they are paying for us to supervise those tests and share the findings.
And then also last week, we announced that we sent a batch of batteries, to another customer who actually wants to do their own in-house testing, so they've got quite a sophisticated setup, of their facility that allows them to review the performance of the cells and feed back to us. Then in December, of course, we hit that lithium-ion energy density equivalence, and now we're moving through a number of D points, D5 through D8, finding that that is progressing very nicely. We've got a lot of safety testing that we're doing at the moment, and we expect to be able to share, some of that information, as we generate more data throughout the summer. And then by the time we get to Q1 next year, we've got our D8, followed by what we call our MVP, Minimum Viable Product.
This will be a generic A sample, and we'll also be able to release that to customers for their evaluation. Okay, so that's the technology development plan. Well, what does our scale-up plan look like? But remember, our mission is to actually scale up to the point where a customer will feel confident enough to take a license to implement the technology in their own facilities. So we're not trying to push this all the way through to our own gigafactories. In fact, what we want to do is manufacture our generic A samples, and you see them again at the same time point in 2025. We wanna see them manufactured on our Ilika pilot line, and that's actually what that roll-to-roll coater is. That's part of the pilot facility that we have here in the U.K.
and also the assembly line that we are manufacturing together with Mpac will be part of that same pilot line process flow that will be installed at our own facilities. And that will give us a capacity of about 1.5 MWh per year of capability, which will be enough to provide samples to the customers that are interested in validating and verifying what we've manufactured. Then we will give OEM partners and Tier One partners the opportunity to take an early license to the technology, so that they can manufacture B samples in their own scale-up facility, also C samples, and then transfer that into a full-size gigafactory.
So in contrast, actually, to the pipeline, the commercial pipeline for Stereax, most of the demand for our Goliath product comes from European OEMs. So actually, about 70% of the demand comes from Europe, 12% from the U.S, and actually, the remainder, so 18%, from Asia. The majority is indeed automotive, so 82%, but there is some interest from non-automotive, and these typically are, you know, consumer appliance manufacturers who are interested in the technology for handheld vacuum cleaners and for beauty products like hair straighteners, et cetera. So they have a shorter time to market, but they require a different form factor to our central R&D program.
So, typically, you know, we would interact with these organizations at a point in time where we've achieved our MVP for automotive, and then undertake specific engineering programs on behalf of other users of the technology. So we've got a nice portfolio of about 17 interested parties there. Then in terms of the first sector that we want to deploy this technology in, it's really the higher end of the high volume performance vehicles. We believe that in order to ensure that our products can be rapidly adopted, we need to have customers who are not too price sensitive, because although longer term, the Goliath technology will have a price point that makes it attractive to a broad range of sectors, initially, it'll be manufactured at a relatively modest scale.
As the supply chain organizes itself to be able to provide all of the materials at a lower price point, you know, we need to make sure that our customers are not too price sensitive. We're not trying to compete on cost with some of the commoditized batteries that may be coming out of Asia. Just to reassure you, most of the analysts who are covering the sector are suggesting that solid state will become increasingly important as a percentage of the overall vehicle fleet. In terms of funding and grant funding, this continues to be really important for us. We have been fortunate enough to have received non-dilutive grant funding from the Faraday Battery Challenge for the past five years or so.
We are just in the middle of our so-called Goliath program, which is the program that's helping us drive through some of those technology development points that I talked about earlier. And in parallel with that, we've received funding from the Automotive Transformation Fund, which is managed by the Advanced Propulsion Center. Our latest program is the Stereax program, and that's the one that is supporting the design and fabrication of our production line, our assembly line, that we're doing together with Mpac. Looking forward into next year, when those programs will be complete, we are applying for additional APC funding, which you see on the far right-hand side here, to support really the journey through to A sample and pack development and cell integration.
And, we're, you know, very happy to be working with some of the organizations that you see listed down at the bottom there. I mean, currently, BMW Group and also WAE are supervising the Goliath program, so they're giving us plenty of guidance there. Agratas, of course, have recently joined the Stereax program that we're working on with UKBIC and Mpac. So Jason, over to you to talk about how we turn all of this endeavor into revenue.
Thank you, Graham. So a very similar build, again, to the Stereax. So we do believe that there will be multiple layers to the revenue generation for the Goliath product line. You can see at the very bottom, grant funding, we've done, as Graham has just talked through, very well over the years in securing that, and there is a lot of governmental support in the U.K. for the EV, process and development of technology within the U.K. We expect that to continue through with the APC program that Graham talked about, so that application going in, in the latter half of this year, then hopefully with an award and that project starting, in the first half of next year, and continuing for a number of years, and then further grant funding beyond that.
Then on top of that, you will see, once again, a small orange section, very similar, again, to Stereax in terms of commercial collaboration or engineering fees. So along the journey of Goliath, while we are talking primarily around the automotive sector, as that is certainly the world's biggest battery market, and certainly that's where the demand is, there are opportunities for other markets. Consumer electronics is one where we have a number of discussions that have commenced. So as we progress, there will be opportunities to take variants of the Goliath product that are more suited, and to undertake engineering activity, which would be chargeable, so generating revenue to suit those particular applications.
As we progress forward, we would then be looking to issue licenses and receive, you know, potentially quite significant license fees for the issuance of those, which ultimately then secure that partnership with the gigafactories who will ultimately manufacture those batteries. So we expect those licenses to be with the gigafactory and therefore the producers, rather than the automotives themselves, but it potentially would be the automotives who would mandate their supply chain to take on our product to supply their vehicles. Hence why those 17 interactions that Graham talked about with those automotive OEMs are really important because it's their demand for the end product, the end Goliath cell, that really drives that opportunity and licensing.
And then ultimately, royalty revenue coming through exactly the same model as the Stereax set up, as we see that building through, being deployed into the gigafactory and ultimately into vehicles, onto forecourt, and then driving through. So, very much a similar build through. A little bit more lumpy than the Stereax set up, because of the nature of the fees, but certainly building as we go through the next few years. Just to touch on ESG, so it's always been very important to us at Ilika. It's good from an environmental of our own business, our social requirement, and the governance of the company. It's becoming more and more a prerequisite of good business practices.
But also just to bring a very personal example of why we've done this and why we've had a focus on ESG, not just because it's required of us, but also it is a large enabler for us as we start to interact with our potential customers. So these larger OEMs are very much mandated around their own ESG requirements, being bigger companies, and they have to operate in a certain way. So our mode of operation at Ilika has always been to do the best we possibly can to be as compliant over and above our particular requirements, because not only is that good governance ourselves, but that eases the transition through to the adoption of our product at our new potential customer base.
And we have seen that recently, so as we've interacted with the two-tier ones that Graham talked about, that we have supplied, we've had to go through quite intensive discussion and documentation to provide, to show that we are doing exactly the right things in terms of conflict minerals, modern slavery. We've got the right documentation on our ISO backup and sourcing of materials. So it's not just a paper process, it is something that really does underpin the company, our own ethos, and support our interaction with our potential customer base.... And then just to touch on the financials, so very much following the trends that we signposted at the half yearly results.
And for those that attended that we talked about at the Capital Markets Day, which there is a large amount of video from that event on our website. If you haven't seen it, please do go and take a look. There is a wealth of information there. The turnover for the year was GBP 2.1 million, very much driven by that grant funding that Graham touched on. Two projects primarily driving that, the Stereax project and the system project. So each of those have really helped to drive a significant year-on-year increase, so GBP 2.1 million versus GBP 0.7 million. And then we've had other income again of GBP 500,000, and that really is R&D tax credits, so RDEC scheme.
So that is where we are drawing down on government, research and development funding that's available for businesses like ours. So once again, maximizing what we can bring into the company, and that's cash paid to Ilika. So that's a really good result for the year. Probably worth signposting, and we have done this before, that due to the timing of those grant fundings and the way that we've drawn down on those funds, the HISTORY and system projects are fixed pots of money, and we have pulled a lot of that forward due to the timing of activity. So we'll probably see a little bit of a decline as we look at next year, before then, the start of that APC program.
So, a little bit of timing as we go forward into the next year before the next, probably even larger APC project comes on stream towards the end of the financial year, ending April 2025. Costs through the business, leading down to EBITDA loss, are 4.1 million versus 7 million for the prior year. A really good result, underpinned both by that turnover result, but also through cost optimization. So on the back of the Stereax contract with Cirtec, we've been able to take around GBP 1 million to GBP 1.5 million of operational cost out of the business on an annualized basis.
And that really has helped to manage that cost base along with that increased income, just to make sure that we are looking after shareholders' funds, optimizing that capital, to give us as long a runway as we possibly can have. So really, that, that's a great reflection of that ability to look at what we need to do and be agile in utilizing what we have to get the most out of it. And then, in terms of cash balance for the year, just under GBP 12 million at the year-end of April versus 16 million GBP the year before.
But then additionally, we've taken on, as a post-balance sheet event, you would have all been aware that at the end of May, we did a small capital raise to deliver another GBP 2.3 million, gross before cost of raise, to provide us a little bit of cover. And that gives us a good runway for the next couple of years to make sure that we can deliver on all of those roadmap items that Graham talked through, both on the Stereax side, to support that journey to commercialization with Cirtec as we ramp up back into production there, and also as we deliver on those milestone points through to that D8 freeze and the MVP on the Goliath side.
So really, that gives us a good opportunity to see us through as we start to get to those really tangible milestones that really make the commercialization feel it is upon us.
So thank you, Jason, for that run through. I did summarize the key Stereax milestones that we'd achieved this year when we wrapped up the Stereax section earlier. You know, but looking forward, a bit more information on the state of manufacturing readiness will be issued in the course of the summer. And then, of course, we'll have that strong co-marketing trade shows and events through the end of the year and into 2025, with a view to setting us up for more intensive customer interactions and the start of revenue flow for Stereax on a product basis in 2025. Goliath, you know, it's been a fantastic year of delivery really for that program, and, you know, I have to thank our own technology development team for that delivery.
Starting with our D4 development point in November, rapidly followed by our lithium-ion parity demonstration, and then the P1 prototype manufacturing, testing, and delivery through to partners for their validation. So going forward, there's going to be actually more information about the performance of our sales and feedback from those partners, and of course further grant support and commercial partnering as we deliver on that asset light business model that we've got here at Ilika. So many thanks to all of you for taking the time to listen to this presentation. I think we've got six minutes left, actually, a window here. Mark, before you shut us down.
Graham, you take your time. Let me just bring back your cameras up for the Q&A. Just while I give you just a couple of moments to review those questions, I'd just like to remind those on the call that a copy of the slides, the published Q&A, and a recording will be available via Investor Meet Company Dashboard. Graham, as usual, and unexpectedly, you've got plenty of questions from investors there. I'm sure a number of the same theme. If I can turn back to you just to read out those questions, and then I'll pick up from you at the end.
That's brilliant. Thank you, Mark. So actually, for the first one,
... Let me take this one. I've had, I've also had an opportunity to scan ahead, so I do note that, David, you've put a correction in, so I'll pick up both parts of the question at one time. So, David asks here, "Under the best outcome, how many years will Goliath license revenue be earned?" And then there is a clarification that David has sent through later, actually clarifying that to royalty. So I did touch on that earlier. And, we expect to enter into really the window for licensing, so that's the upfront fee, really from next year onwards. So as we get to that MVP, product with Chemistry Freeze, and then, that final P2 product, that really starts to open the window then to have those discussions.
And actually, there's been news in the market today that one of the U.S. competitors, QuantumScape, has licensed their product, admittedly, to one of their own shareholders in PowerCo, which is the BMW Group. But they've done that at that stage where they've reached their MVP product, so before having to go further than that. So really, that does give a lot of validation that firstly, the solid-state batteries are being adopted and being taken seriously by automotives, but also around the timing of it, that actually they aren't waiting to see all the way through to mass manufacturing, that getting to that MVP product period, really is the start of opportunity to have those licensing discussions.
So actually, that's a really positive thing for the market for us to see, coming out as other news from the U.S. today. In terms then moving that into the revenue from the royalty side, which David, is the clarification, really, that's that will start to come as that license is signed. So that will take a little bit of time for that to start to come through, because once that license is signed, it then will take a period of time for the licensee to deploy that into their gigafactory setting and to commence manufacturing. But as we're seeing on the Stereax side, it will start, and we'll start to see some income from samples coming through from the batteries, from as early as we have that MVP product.
Thanks, Jason. The next question we've got here is: Can you say when Stereax will be available on the NHS? So just to clarify, it would be products made by OEMs that have integrated Stereax into their designs that would be released to patients. So it would be, you know, the big device manufacturers who make devices like this, so let's say, you know, for the sake of argument, companies like Medtronic and Boston Scientific, and Abbott, for instance. And, you know, that process for a device validation would probably be led in the U.S. initially, and then, once initial commercialization had taken place, I'm sure the NHS would review the efficacy of those devices and make them available.
So, you know, you might be looking at, say, five years before this type of product might be available in the U.K, through the NHS.
Question here from John: How is Ilika managing the transition from pilot scale to commercial scale production for both Stereax and Goliath batteries? And what are the specific milestones and timelines we can expect to see for full scale commercialization? Well, on the Stereax side, the Cirtec contract and the facility set up there is full scale commercialization. So that facility will operate at commercial scale, not pilot scale, so is much larger in setup than the facility that we had originally set up here in the U.K. So that is very much ready for full scale-up activity once, as Graham said earlier in the presentation, we get through the final stages of the qualification of machinery and then products coming out of that through the latter half of this year into the beginning of next year.
And just to how do we manage that going forward then, the tenets of the license that we've issued is that further growth and further requirement for equipment would be responsibility of Cirtec there. So no further capital required for Ilika to deploy, to support, to support the onward growth as we see that market developing. On the Goliath side, we've already talked about the grant funding that we've got supporting the Mpac stacking machine. So our own pilot scale implementation here in the U.K. for the Goliath batteries, we already have some equipment with the roll-to-roll coater to do that.
We're currently implementing some of our dry room upgrades to be able to handle some of the materials, and then that Mpac stacking assembly rig that will come towards the end of this calendar year will then allow us to increase our production capability as our pilot line up to 1.5 MWh. And that really is what we need to demonstrate through to that A-sample and produce a good quantity of battery to get out into potential customers. But really, as we've said, we're an asset-light model, so we're not looking to really build beyond that from a capacity point of view. That would be the point we'd be looking to license and implement with partners going forward. So once again, that capital requirement for going into those larger facilities then would be on the licensee at that point.
So, the next question is: Considering the various grants and funding received from initiatives like the Faraday Battery Challenge and the Automotive Transformation Fund, how are you planning to manage your funding requirements going forward, especially in scaling up production? This relates specifically to Goliath. I think, you know, the advantage of these funding bodies making available match funding through competitions is that we can effectively leverage the R&D expenditure that we need to deploy on a 2-to-1 basis. So effectively, we're making our R&D investments go twice as far than they would do if this funding wasn't available. And, you know, we've had very close discussions with both the Faraday Battery Challenge and the APC, who manage the Automotive Transformation Fund.
In fact, if you haven't taken the time to have a look at the panel discussion from the recent Capital Markets Day that we had back in April, I would recommend you to do that, because Julian Hetherington from the APC, and also Thomas Bartlett from the Faraday Battery Challenge, speak very passionately and clearly about their commitment to this type of technology development and Ilika in particular. So we're getting a lot of support through the U.K. government agencies, and I think that gives us a lot of comfort, actually, that we can be very effective in the deployment of shareholder funds in this remaining journey that we've got from where we are now through to the commencement of licensing and beyond.
A question here: medical and EV sector aside, is there consideration of symbiosis with defense technology sector, whereby particularly Stereax, but also Goliath, could be used, for the burgeoning communication market? So as we have said, both for Stereax and also for Goliath, there are a number of secondary markets that are available to those. Those are not the markets that we're pursuing as our first point of entry, because, obviously, what we're looking to do is, get the most supportive markets to ensure, that we can be adopted and commercialized as quickly as possible. So with Stereax, that is the med tech market, and with Goliath, that is the EV sector.
Those are the ones that have the most support through the just the size of the med tech market in the U.S., and obviously the funding support that we would get here in the U.K. on the EV sector. But there is very much so secondary product lines and markets, and we're, we're open to having those communications. In fact, the smart ophthalmic applications that Graham talked about earlier are around those smart contact lenses. So there are some of the customer base that we are in interaction with and talking to are already looking to do that development route that would support many different applications, whether that be defense or consumer electronics or just the AR/VR revolution that is slowly coming through, albeit currently at large device stage, but helping to miniaturize that.
So, certainly we will continue to explore all markets as they come open, and look for the most appropriate ones to apply the product into.
Yeah, the next question is, how heavy is Goliath relative to lithium-ion? So, actually, that energy density chart that we showed earlier in the presentation gives you a feel for the degree of energy density advantage that Goliath has over incumbent lithium-ion batteries. So at a cell level, you know, we're probably realistically expecting that we might see, you know, 30%-50% improvement in energy density by the time that we get to P2. There is more theoretical upside, but that's what we might expect within that timeframe. But a lot of the advantages, actually, of the reduction in weight come at pack level, because of the higher temperature tolerance of Goliath relative to what lithium-ion batteries can tolerate. In normal lithium-ion batteries, they've got that liquid electrolyte in there, and that starts swelling at elevated temperatures.
And when batteries start to swell, they can burst, and then that's when you end up in trouble, you can end up with a thermal runaway event, if that catches fire. So, with solid-state, you don't have that, sophisticated and heavy cooling system that you get with a normal lithium-ion pack. You've got a weight saving, and also you don't need the same sort of mechanical protection of the Goliath batteries that you might need for normal lithium-ion. You know, an EV using normal lithium-ion, has got pretty substantial steel girders going down the side of the car, so that the car will pass the pole test, and you won't end up with deformation of the pack.
If your pack is intrinsically safe and you're not running the same risk of fire, you can get away with a much lightweight pack design. Therefore, you can see that you can lightweight that pack by as much as 50%, so a pack that's half of the weight, and that's when you start to get the longer range.
Maybe time for one last question if I... Given where we are. So regarding the political background, will Labour policies be better or worse for Ilika or make no difference? We've had some early interaction prior to the election, so we were already talking, as we knew, as some of the green policies, I'm talking about reinstating the EV deadline that the Conservative government had pushed back, would be beneficial toward us. We've got no knowledge that there would be anything that would be negative for us, but potentially further positivity to come, but certainly nothing that would detract against our mission and the progress that we see happening over the next couple of years.
That's great, Graham, Jason, thank you very mu.ch indeed for updating investors. Graham, I don't know if you have any closing words you want to share with us before I redirect investors to give you their feedback?
Well, I just want to thank everybody who's taken time out of their day to listen to this update. I see we have got a few questions left, so, we will answer those, and upload them onto this portal after we've closed down, this particular update. I'd also, you know, like to thank, those of you, and, and there are many of you, who, took up your opportunity to participate in our recent rights offer, and, I can assure you that that funding is being deployed, very judiciously in order to proceed with the roadmap that we've talked about, as we've gone through this presentation. I look forward to updating you again in a few months' time, later in the year.
That's great. Thank you very much indeed, Graham and Jason, for updating investors. If I could just ask investors not to close this session, as we'll now automatically redirect you for the opportunity to provide your feedback. Good afternoon to you all.