Good afternoon and welcome to the Ilika plc results investor presentation. Throughout the recorded presentation, investors will be in listener only mode. Questions are encouraged and they can be submitted at any time by the Q&A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can view all the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO Graeme Purdy. Good afternoon to you, sir.
Thank you very much for the introduction and many thanks to everybody that has elected to share the next 45 minutes or so with Jason and myself to have a run through Ilika's annual results, covering the financial year that ended at the end of April this year. Many thanks and let's kick off. Apologies for those of you who have followed the company for quite some time now. The background to the company and our mission will be absolutely crystal clear to you. At least I hope it is. However, there may be some new viewers and some new attendees who are not familiar with the story so far. Please bear with us. I will go through that at speed, and then we'll focus on some of the breaking news, some of the updates that are happening sort of in real time, really, as we give this presentation.
We'll deal with any questions at the end to mop up. First of all, Ilika at a glance. We are entirely focused on the development of solid-state batteries. That's what we'll be speaking about. We've got two product lines. First of all, our Stereax miniature batteries used primarily for active implantable medical devices and ultimately for wireless sensors or industrial IoT. On the other hand, we've got our Goliath large format cells, which are targeted at the automotive industry and cordless consumer appliances. These two product lines have got, as you'll have seen, very diverse end markets, but are in very rapidly growing sectors. We have an asset-light business model, which we'll go into in a bit more detail. Actually, our products are already proven on processes that, in particular for Goliath, have worked at the gigafactory equipment scale.
We've had a long track record in developing new products, and we have a patent portfolio of 78 patents now, and the company is ready for commercialization. We are operating from an asset base which has been developed by sustained capital investment, with a combination of commercial funding, grant funding, and equity funding totaling GBP 55 million. The whole premise for Stereax batteries is that actually they save costs for surgical intervention for the medical devices for which they have been developed. We have a reduced surgery time. You're able to put the batteries close to the point of therapy. They've got a long life in the body, and they're powerful enough to be able to power a Bluetooth radio chip, which is absolutely essential for transporting the information from the patient through to a device to be able to upload it so that the consultant surgeon can access it.
For Goliath, it is a large format battery, which is of great interest to OEMs and tier ones in the automotive sector. Principally, the attraction is a lower production cost and a safety profile that allows all sorts of benefits that we'll go into in more detail as we go through the presentation. Excuse this, I'm just trying to shake off a bit of a cold. In terms of highlights that we've seen so far this year, the Stereax highlights that we've got for Stereax are shown in blue at the top of this slide, and the Goliath highlights are shown in green on the bottom half. The big news for Stereax is that we've had equipment that's been commissioned at Cirtec Medical and brought online.
In the second half, we've got lots to look forward to in terms of completion of the ongoing engineering lots at the Cirtec Medical facility, and then commencement of product production, the M300 minimum viable product and validation of that product that will allow us to commence customer delivery towards the end of 2025. With Goliath, we've had scale-up validation at U.K. BIC, which is the partner manufacturing facility here in the U.K., which is a national facility that we can access. That has allowed us to demonstrate an industrially scaled process and validate that. We've also had validation from third parties of our P1 prototypes that we've issued to customers for their testing.
In the second half, we can look forward to a completion of a test program for our 10 Ah P1.5s, which are 5x larger than the P1 prototypes that we issued for customer validation this time last year in the summer. We'll be releasing those prototypes for customer evaluation later on in half two. That will be a great segue into building and testing our 50 Ah P2 prototypes and the release of them to customers at the end of the year. How do we make money out of this? We have our asset-light business model, which is a licensing model demonstrated on industrially relevant equipment. Ilika, you can see, is at the center of that business model.
We generate IP that can be licensed either to manufacturing partners, so often tier one companies, or OEMs who will put their own brand on the integrated product and sell it to customers. We often work together, in particular with OEMs, through grant support and engineering fees in order to develop the product. Ultimately, in return for transferring the IP, we receive license fees and royalties. This, we believe, gives us a capital-efficient business model with a good return on investment and rapid industry adoption. Let's talk a bit about Stereax and some of the applications that we've got there. We have a range of very exciting new applications, going from orthopedics all the way through to orthodontics.
Orthopedics are applications like knee and hip replacements, where you can put a sensor into the device that measures the movement of the replacement after the surgical intervention and helps the physiotherapist train and coach the patient for optimal recovery. Neuromodulation is all about putting stimuli into the peripheral nervous system in order to deal with pain, in particular chronic pain in the lower back, and offset pain signals. It can deal with involuntary muscle spasms that you might get from conditions like Parkinson's by offsetting those signals through the peripheral nervous system. Sensors is a more straightforward application whereby you're often measuring things like blood pressure and oxygen concentration. You can put these tiny little sensors into critical parts of the cardiovascular system and give a trend of data which is enhanced relative to intermittent measurements that you might otherwise get in the hospital.
We've got ophthalmic applications, often related to contact lenses. Of course, there's very few batteries that you would be able to use for this. You'd need to be able to implant the batteries into a contact lens, and you can then monitor all sorts of conditions by measuring signals in the tears on the surface of the eye, for instance. Finally, orthodontic applications where you can put these batteries into aligners and also mouth guards and monitor compliance as well as picking up biomarkers. What do these batteries look like? There's a little photograph of the Stereax M300. This is a tiny little millimeter scale battery with a standard lithium-ion voltage and a capacity of 300 µA. Very strong pulse current with a 10C charge rate, which basically means that you could charge the entire battery in six minutes and a cycle life of over a thousand cycles.
The big, you know, attractive thing is a small footprint combined with it being ultra thin and able to withstand these high power applications, which is particularly important for Bluetooth chip data communications. Ultimately, it's about saving money, saving money because of reduced surgery time and the ability of the surgeon to go in there quickly and not have an extended use of an operating theater. In terms of our partnership, we've put in place this partnership with Cirtec Medical, which has been extremely successful. We have spent quite some time trying to identify the right type of partner for this, and Cirtec has a strategic focus on active implantable medical devices, which is just what we want. They are a contract manufacturing organization that has very strong business development connections into all of the OEMs that we're interested in doing business with.
It's quite a substantial organization, as you can see here, with over 500 employees. The resources required in order to implement our processes. We've made fantastic progress with them over the past year, with all of our user acceptance tests successfully concluded, engineering lots now being processed, and the batch production of our M300s expected to commence later on this calendar year. That's going to start generating revenue for us in terms of wafer processing revenue, as well as the revenue that comes through from the licensing agreement based on profit share, and then in due course, royalties from revenues once commercial volumes are achieved. We think that this relationship really gives us very strong industry validation, medical manufacturing at scale, and also, in fact, also the benefit of business development scale and access to customers.
Cirtec are active in the sector, often appear at trade shows, and we're doing a lot of co-marketing with them in order to increase awareness of the availability of this solution. Jason, over to you to talk a bit about how the revenues are going to stack up from this rollout.
Yeah, just talking briefly about how we expect revenue to build over a longer term period, and probably to pre-answer a question that I'm sure we'll get in the Q&A or have had in previous time. There are no numbers on the chart to give definitive numbers. We're tightly regulated as a listed company and therefore not able to give specific forward guidance on such a long-range looking forecast. This is more used to give an indicative view of how the revenues will build in terms of the different revenue streams rather than specific numbers, just because I know that's a question that we often get when showing similar charts. In terms of the Stereax product line, we envisage there being a number of different revenue streams coming through as that builds over time.
While we've signed the contract with Cirtec Medical and have transferred the majority of the equipment sent over to the U.S. for them to utilize that in their manufacturing facility, we have actually retained the cathode deposition process here in the U.K. at our site down just outside of Southampton. That is one of the most proprietary parts of the whole Stereax production process. We've really done that for two reasons. One, it gives us good control of that IP in the early days of the relationship to make sure that we retain an element of control there over and above the contract and what control the contract gives us. Also, it was the most difficult part of the process to get correct. We didn't want to disturb that and potentially set back the timelines to getting back into producing product and product into the hands of customers.
We will continue to operate that as a traditional subcontractor in a manufacturing relationship. Cirtec Medical will give us a purchase order, we will produce for them, and we will receive payment for that. We expect to see that starting in the second half of this year. Tangible income coming through that you'll be able to easily identify as we get to our half-year results or beyond through the calendar year. We expect to see that continuing on for a period of time, although we eventually expect that as volume ramps up, we will see Cirtec Medical installing their own equipment set for the same production process in the U.S. as demand outstrips our capacity here in the U.K.. Over and above that, the medtech sector is very much driven by what's called non-reoccurring engineering or NRE.
That's where customers look at a product that we've manufactured, like the M300, and say, "We like that product. It's very close to what we need for our particular application in terms of cycling time, energy usage, storage, etc. Actually, we'd like something slightly different in form or function." Therefore, they'll pay engineering fees to us to develop a variant of the M300 to suit their particular needs. That's something that Cirtec Medical does today and earns many millions of dollars from that. They've guided us to say, "As we get into production, we would expect to see that coming through." That is very much guided to say, "You should be expecting and planning on this NRE activity to come through." On top of that, the red section then is royalty income.
As Graeme said, in the short term at a lower volume, that's actually a profit share where we take the majority of the profits at agreed price points with Cirtec Medical. That's to make sure that we are recouping quickly some of the investment that we've made to this point on the back of our great investment from our shareholders. At the point that we get to a volume break, that switches over to a traditional royalty on revenue agreement, which is high single digits from the sale of each and every battery. We would expect to see that low to start with as the sale of units will be used for electronic test trials before then going into the approval processes for the various different types of products that Graeme just talked through.
Each of those have different timelines and different requirements, but we would expect to see hundreds of units per customer in the first instance, then moving on to low thousands into tens of thousands as they go through that approval process before really taking off in a sort of hockey stick of demand going through. Finally, on the bottom, we've got additional license fees. We didn't receive a license fee when we entered into the contract with Cirtec Medical. That was because we were taking the opportunity to save a significant many millions pound cost to the business by transferring that at an early stage. We have preserved the right within the contract for additional licenses to be issued either outside the field of medical technology.
There is a secondary market for the Stereax battery in industrial internet of things, or with very high volume applications that may still be in the field of medtech if Cirtec Medical is unwilling to scale the capital because they are the ones required to deploy additional capital for machinery as demand grows. If they're not willing to scale at the speed that we need them to for customer demand, we have the right and ability to go and issue additional licenses to make sure that we don't lose that opportunity and we can maximize the volume of Stereax products going out into the market. Hopefully, that gives a guide as to how we expect those layers to build up. Thank you.
Thanks, Jason. Let's change gear a little bit and talk about Goliath. Record electric vehicle sales in 2024. Certainly, there's been fantastic growth of EV sales here in the U.K. The U.K. is actually Europe's biggest market for EVs. There are still some reasons for not purchasing an EV. In addition to cost, there's concern about the length of time it takes to recharge a battery when that is a need. The driving range, so range anxiety is also a concern. There are also some residual concerns about the risk of battery fires. Actually, solid-state batteries, and in particular, Ilika's Goliath batteries, are a solution to these concerns, which is why most of the automotive companies around the world have got solid-state batteries on their roadmap. The battery benefits to OEMs and suppliers are that you get a lower production cost in solid-state.
You've got a longer cell life, so the cell, when it's cycled, lasts for longer in the product. You've got this enhanced safety, resulting in a lower pack weight and also faster charge times. To try and quantify all of this, we've got a little infographic from Balance Batteries, a company that we've worked with to do some modeling here. They modeled it on a Hyundai Ioniq 5 pack, and they demonstrated that there's a GBP 2,500 saving on the bill of materials for the pack, which translates into a weight saving of 20% and a faster charge time of about 30%. A reduction from 18 minutes- 12 minutes. These then talk directly to some of the concerns that would-be EV drivers have got. That weight saving translates directly into an increase in range, a 20% increase in range.
That reduction in the bill of materials goes a long way towards closing the gap between an equivalent EV and petrol engine-driven vehicle. We've had some validation in the last few months also from an electrification tier one supplying global OEMs. They've taken our P1 prototypes, demonstrated that they perform to specification, and stated really that we're very much in that cohort of leading solid-state battery developers. They're very much working with us through the rest of the journey as we release our further prototypes that are on our roadmap. I'm not going to show this video now. I just wanted to point out its existence, really, that we've got a battery that has got a much more inert response to the nail penetration test. If you look closely at these photographs, you can see that particular test in progress. On the right-hand side, that's a U-CAR 3 response.
That's the Ilika solid-state battery, which means a low emission response when you penetrate the battery. Whereas on the left-hand side, that battery is a commercial lithium-ion battery that goes up like a firework. These videos are available on YouTube. If anybody hasn't seen them yet, they're worth looking up. Quite entertaining, and it delivers a very clear differentiator between commercially available lithium-ion batteries and what Ilika can offer with its Goliath battery. The other bit of news that we've had this year has been the successful coating of our electrode electrolyte composites at U.K. BIC. The U.K. BIC is a GBP 130 million facility that is a national facility which is open for collaboration. It has saved Ilika shareholders tens of millions in terms of Ilika not needing to invest in the equipment at industrial scale in order to demonstrate the technology.
By using the equipment, which was really designed for traditional lithium-ion batteries, we've been able to show that the switch in an existing gigafactory to the use of Ilika's technology is pretty straightforward. You see the scale of the stuff that we're working with here. On the left-hand side, bottom left, you can see a large mixer, much bigger actually than the size of the operator. You can just see actually inspecting the impeller of the mixer. Then the coater on the right-hand side where we put down our electrolyte on the electrode-coated web. We're seeing a higher manufacturing yield using this equipment and also the capacity of the batteries under faster charging protocols, so under protocols that might be used in the industry, is higher than we saw actually in the batteries that we produced on our pilot line.
This demonstration of being able to use standard gigafactory industrial equipment, I think, is really important. It reduces manufacturing risk. We've seen a higher yield, which, of course, in turn reduces wastage and cost. The main reason why gigafactory implementations fail is because they're unable to reduce operating costs down to an economically viable level. That's largely because of low yield. I think that was one of the things that plagued the Northvolt implementation, was their ability to produce a high enough yield. When that happens, you end up just burning an awful lot of money operating your facility. We've proven that scalability in an industrial setting, and we've got improved end-user performance. What comes next, guys? What's the exciting stuff that we've got on the horizon? Earlier in 2025, we showed we'd reached that D8 50 Ah capacity.
Those great U.K. big scale-up results have given our partners comfort of the higher yield and superior performance. What's going to come next is that we've got batches of our P1.5 10 Ah cells on test at the minute. They're going to be released to customers that we've got waiting later in the year. They're going to undertake testing and validation of those. That's going to create further demand for prototypes, which we will fulfill through our 1.5 MWh assembly line, our pilot line, which is the equipment that we're making together with MPAC. That will lead into a second round of 50 Ah, what we call our P2 or third-generation customer prototypes towards the end of the year, opening up that commercial discussion window. There will be lots of news flow over the next six months.
Just to reiterate that asset-light scale-up that we've got, Ilika is operating its pre-pilot line, gradually transitioning into the fully automated pilot line that we've got and working together with U.K. BIC to make A samples. We've got a partnership agreement in place with Agritas and, of course, partnering with MPAC to make that assembly equipment. We're going to flip from A samples to B sample production. That won't be done on the Ilika pilot line. That is done on a larger scale production line. It could be done at U.K. BIC, but also equally possible at our partners' facilities.
At that point, they will want to have the comfort of having access to the IP and therefore will likely have taken an option to our technology and then make their larger volume C sample runs on production-capable equipment, production-intent equipment, as people sometimes say, before implementing that in a gigafactory. All of that's done through partnership. Ilika is not in the business of building gigafactories. We are technology developers, and we work together with manufacturing specialists in order to bring the products to market. Jason, maybe a quick trot through revenue buildup again, please.
Yep. Very similar to the Stereax slide earlier, we definitely will expect to see another four layers of income around the Goliath piece, although slightly different in makeup. Starting at the top and running all the way through will be grant funding. As we announced just this week, we've been successful in securing another GBP 1.25 million of grant funding to support production of A sample cells. That's really important as that activity, not just in the initial grant funding that we've got for this, but also in other applications that we will continue to search for both within the U.K. and also wider across into Europe, because that gives us a great opportunity to develop those products along our roadmap. It's non-dilutive funding, so a really good return for our shareholders from that point of view.
It also gives us a really good way to work with those automotives and tier ones because they are also looking to use these grant-funded projects as ways to evaluate technology where they aren't carrying the cost of capital. That grant funding is really important to us, both from a financial sales sense, but also from a relationship management sense. Underneath that, there's a very thin green line there. You can see that's once again non-recurring engineering. We've developed a generic A sample that we think is the best fit and size. Actually, we've done that aligned to the size of manufacturer that the U.K. BIC can take so that it's easy to then demonstrate ourselves at that larger production-intent equipment that the U.K. BIC has that really saves us having to invest in many tens of millions of pounds worth of equipment.
That's why we've taken that particular size for our MVP. Ultimately, the individual automakers that we're discussing will have slightly different needs for their own individual pack and module design to fit their particular vehicles. At the point that we reach that A sample point, we would then be looking to engage with those people that are talking about licensing and say, "Okay, there's a cost associated with varying our standard design for your particular needs," and that would be paid for by them. Underneath that, very similar to the Stereax one, we'd expect there to be royalty payments coming through on the production of batteries that are sold. Once again, we expect that to be very similar in terms of low to medium single-digit percentage on revenue for the battery royalty.
Underneath that, probably slightly different here to the Stereax side of things, but very much tied to that graph that Graeme showed with those A, B, and C samples. The licensing model here would look to secure upfront payment from those automakers when they take a license, probably aligned with those A, B, and C stages in terms of an option at an A and then stage payments as they move through B and C samples so that those payments are aligned with the various stages of scaling up. You can see on the right-hand side there just a breakdown of the people that we're talking to. A number of different applications, not just automotive. Once again, similar to Stereax, there's that secondary market of consumer electronics.
They tend to want to see a more mature product, wait for someone like the auto market to adopt a new product before then coming in and saying, "Actually, now we can look to adopt that into the consumer electronic market." We are already having conversations with those because that P1.5 product that we're talking about, that 10 Ahs, actually is a really interesting energy point for those consumer electronics and also in aerospace and tier one manufacturers as well. A good range there. It's not just in automotive. Once again, from a geographic spread, U.K. and EU obviously interested given the rules of origin and everyone looking to reduce the reliance on Asia for those supply chains. Equally, we've got good interest from the U.S.A. and also, interestingly enough, from Asia itself.
Showing that we are clearly doing something and that our technology is of interest globally, not just locally.
Thank you, Jason. These are our annual results. I think it's only fair that we should dedicate a bit of time to talking about those numbers.
Very briefly, the highlights from the financials: a revenue of GBP 1.1 million. That is down from GBP 2.1 million of direct income year-on-year. We've been talking about this at our half-year results that we expected that because of the timing of those grant-funded projects ended. We had the SystematIC History grant that was running through the prior financial period. Those came to an end about halfway through this financial year just completed. That's why we knew that the revenue was going to be low. An interesting one to pull out there is actually that commercial income, so Goliath income coming through. That was from the first sales of our P1 prototypes. We actually sold those with a cost associated with them to customers to try out and also some commercial collaborations that came on the back of that activity.
That was a good inflection of showing that there is revenue that we can start to generate even at the prototype stage before we get it, and that's really important. Not in the slide in front of you, but for those other people that have taken the time to look at the financial results that were published this morning via RNS, one other point to note is other income has reduced year-on-year as well. We did have GBP 0.5 million the previous year, which related to RDEC. That's an R&D tax credit. We haven't lost that. It's just a change in the tax regime. The U.K. government has changed the way that they apply that. What we've done is we've seen an increase in the R&D tax credit that you see at the bottom of the P&L. Really, that's just a moving of where that sits within the P&L.
It was shown as other income in the year ending April 2024 and now is shown as a tax income at the bottom of the P&L, just in case of any eagle-eyed people out there who'd spotted that and were worried about it. EBITDA loss has increased year-on-year, but really, the driver of that is that changing income on the back of the grant revenue reducing. The costs underlying that have really stabilized. No real change in the cost base. Certainly not seeing an increase in labor costs. Stereax is very stable on the back of the tech transfer to Cirtec Medical, and maybe a small increase on costs on the Goliath side, which really relates to the additional increase in consumption of materials.
As we move from the P1 product to the P1.5 to the P2, we're making a product with many more layers, so that consumes more material as we go through. A small increase on material consumption coming through there. The cash balance was GBP 8 million at the end of the financial year. Thanks to strong support from our institutional investors and a very oversubscribed retail investment round, we were able to secure additional funding that allowed us to step our cash balance up on the back of that fundraise to just over GBP 11 million. You can see on the right of the screen there, just once again, a reminder from when we did that fundraise of how we're going to deploy those funds.
That's to support both the productization of Stereax, so that's that delivery of products, and a larger proportion assigned to Goliath to get us through to that A sample point, through to the next year.
Very good. Thank you, Jason. I think it just remains really to wrap up the presentation of the slides, and then we'll go across into Q&A. Just really to reiterate some of the key messages about the Ilika investment case. We've got a really strong and growing patented portfolio in all of the key jurisdictions for our technology across Europe, North America, and Asia. We're diversified across two markets with a near-term route to commercialization for Stereax. Execution risk for the company is reduced. We've got our own in-house fabrication facilities, our pilot line, that can demonstrate the processes work and will underpin the partnerships so that we can validate our scale-up plans. We've also got a licensing and royalty agreement already in place with Cirtec Medical to deliver that manufacturing economy of scale and the ability to ramp Stereax.
Of course, our first batch of prototype Goliath batteries has been shipped. We've engaged with a wide portfolio of interested OEMs and tier ones, and we've got commercially sponsored evaluation trials underway. This week, we were fortunate enough to be able to announce an additional grant as part of the U.K. government's Drive 35 initiative. We have a grant managed by the Advanced Propulsion Center and Innovate U.K. of GBP 1.25 million to really underpin the production of our P2 prototypes to make a contribution towards the cost of the materials and execution at U.K. BIC to be able to produce those, working also together with HSSMI. Many thanks for listening to this set of slides. Thanks for bearing with us, and we'll now move across to the questions.
That's great. Graeme, Jason, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions, and you can do so just by using the Q&A tab that's situated on the top right corner of your screen. Just while the company takes a few moments to view the questions that have been submitted today, I'd like to remind you that the recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboards. As you can see, we have received a number of questions, both pre-submitted and throughout today's live presentation. What I'll do is I'll hand back to you now to read out the questions, and I'll pick up from you at the end.
Thank you.
I guess I'll do my best to read these out and try and save Graeme's voice a little bit as he's suffering, but please do Graeme jump in with any additional comments. A pre-submitted question here: with Volkswagen and BMW recently exiting their partnership with Northvolt and shifting their focus towards Asian suppliers like Samsung SDI, I noticed that Ilika is not mentioned in these discussions. Undoubtedly, just as you have, I wonder if this opens up a potential opportunity to engage with these automakers. I have a number of questions. Could you provide an update on the current state of communication and engagement with major European automotive manufacturers? There are other questions, which I'll get to in a second. As with many of the automakers, they like to do things under an NDA, so we can't necessarily provide names.
As we said earlier, we're talking to all of the major automakers, and in fact, part of that engagement is us being sought out and invited to come and speak to them. It's not just us trying to push down a closed door. In many instances, we've engaged with the automakers in Europe and the U.S. and are being invited to come and present to them and keep discussions alive. They're very interested in what we're doing and keen to see the whole range of the solid-state battery market, not just where it has been happening in the U.S., where some of them may have investments. Ilika is of special interest as we are one of the few, if not one of the only, European-based solid-state batteries still in existence.
Second part to the question: are you observing concrete interest from major manufacturers, both in Europe and international, in Ilika's strategic direction and operational model? As I said, lots of interest there across the board, and they absolutely understand our licensing model. The discussions around them working with their established partners give them a lot of faith rather than trying to contract a small startup company like Ilika to not only develop the technology, but also to try and build a gigafactory and to deliver the high yields that are needed to make a product viable. That's where Northvolt ran into trouble trying to achieve the yields to make a commercial product viable. Third part of the question: can you share insight into Ilika's plans and objectives in strengthening partnerships with automakers? Both with those discussions that we have at conferences or invitations to go and speak.
As I said earlier, those grant-funded projects actually make really great opportunities for us to work with those automakers as they want to use that grant funding themselves to take our batteries and eventually put them into packs and into more modules to go into new cars and run them around tracks. As well as just the ongoing discussions we have, those grant-funded projects are really, really important for developing those relationships as we go forward. We will continue to seek those out both in the U.K. and Europe. The last part of the question is: is Ilika still on track to achieve its ambition of becoming a leader in solid-state battery technology within the EV industry? Graeme, I'll let you answer that.
Thank you, Jason. Yeah, I would say don't just take our word for it. Take our customers' word for it. We did publish a validation earlier this year that said that in their opinion, Ilika is in that cohort of leading solid-state battery developers. I'd say we're very much not only on track, but we are a leader in the industry. You can also see from our invited appearances at various trade conferences and trade shows around the world that we are recognized as being a thought leader and a technology leader in this sector. For instance, I spoke just last week at the Battery Cells and Systems Show in Birmingham in the U.K.. Earlier in the year, I spoke at the Berlin Automotive Mastermind Show. There's plenty of that information on LinkedIn and other social media platforms.
Yeah, very much, I would say, up there with some of the leading developers.
Question here is: what's the MPAC installed line for if the new grant-funded project is to produce A samples? The MPAC line is the equipment on which we would produce those A samples. The new grant-funded project is to support the cost itself of producing the batteries. As you would expect, the material, as we are producing more and more cells to go into that test program to validate, can get quite expensive. That's where the grant funding supports, both in the labor and in the materials needed. The MPAC equipment set or other equipment that we have access to is there to be able to manufacture that equipment. It's the cells themselves, so the materials that that grant-funded project is supporting.
We have a competitive question, which is: where would you say Goliath development is relative to the QuantumScape QSE5? Can the company move fast enough to secure market share for Goliath? First of all, I would say, look, that we have prototypes that are being evaluated by our customer base. We are being encouraged to interact with organizations who have strong links to QuantumScape, but nevertheless are looking to interact with a broader number of developers in the market, including ourselves. My view is that actually the market will continue to be open for innovative solutions. It is not the type of situation where you have one technology that is going to dominate the market because we know from the existing situation that actually there is a diversity of material and chemistry solutions out there. It will not just be one technology that suits all applications.
There will continue to be opportunities even after a first mover advantage has been captured. Having said that, I see no evidence that we would not be a first mover. In fact, the maturity of some of our prototypes is very encouraging.
I've read that over 60% of the share capital is held by just nine individuals. Do these shareholders have any connection with each other? Have you had any assurances that they will not sell in the next few years? Have the directors any plan to increase the percentage of their currently small shareholding? For those that have read or at least looked at the published accounts, there is a table there of those holding over 3%. I would point out that those are funds, not individuals that are holding. Actually, those funds represent many thousands, potentially even tens of thousands of individual investors who've invested into the funds to aggregate their money, who then ultimately invest in Ilika. That represents a very broad range of individuals through those nine institutions that are represented in that table.
We have a very longstanding relationship with a number of those that have held the company for many years. In fact, Graeme and I have regular engagement with them, having met some of them over the last few days, and we'll continue to do so to give them regular updates. We've had very strong positive feedback from them. Through the recent round of funding, several of them increased the size of their holding, showing even more faith in the work that we're doing and belief in the company. That's a really good validation of the thoughts that they have on the work that we are doing and hopefully the success we'll be able to bring and deliver back for the company and all of our shareholders.
As to the director shareholding, both Graeme, myself, and some of the non-exec directors participated in the recent round of funding, once again showing our own commitment to the company and our journey ahead.
There's a technical question here. The M300 has a 50% depth of discharge. Does Ilika aim to improve on this in future iterations? I should clarify this, actually. The M300 can be fully discharged. We're just quoting a number of cycles on a 50% depth of discharge because, actually, for the application, that's what's often used in the field. Generally, the advice is not to deep discharge medical device batteries. Some of them have a health-critical performance, and therefore, you tend to just have a less deep discharge to prevent any critical health situations developing. The reality is that M300s are very robust and can be fully discharged and then recharged. There's a question here that says that one of the listeners is surprised that production won't start in earnest for another four years, so 2029. I guess this relates to Goliath.
Are you confident that you can hold your technology lead over this period? Yeah, I mean, it isn't different for anybody else in the sector. This is a realistic ramp-up rate for transferring technology into a manufacturing plant. Actually, there aren't any solid-state battery manufacturers that are at full commercial scale yet. That's just a realistic timeframe for the transfer of technology from where it is currently on an automated pilot line through to full production. I don't think that where we are in terms of full commercial implementation is in any way a disadvantage relative to other technology alternatives.
It's also worth noting that certainly on the automotive side, the benefits that we've talked about really come at a vehicle level, not just at a battery level. The coordination of introduction of solid-state batteries needs to happen along with the development of the model range change in the automotive. That has to be time tied to make sure that the car companies can take all the advantage of the benefits that come with solid-state and can then remove that additional weight that Graeme talked about when taking the Balance Batteries study on the savings with the Ioniq 5 and apply it to their own vehicle platform. Once again, that automotive development cycle has an impact on the time to market to make sure that the two are aligned.
Another question here: are you working with Toyota and Honda, and what about using batteries in cell phones? We have a longstanding relationship with Toyota. In fact, those of you who follow our patent portfolio will have spotted that we have some jointly held patents with Toyota that we continue to prosecute relating to solid-state battery materials. The question is, what about using the batteries in cell phones? That is an alternative market. We are currently working on EV batteries because that's where a lot of the funding is available to support the development program. It's very possible that after we have pushed forward with the commercialization of Goliath, that we then say, okay, what about some of these more cost-competitive, lower margin applications in consumer electronics? Can we make a difference there?
We know that there's benefits in vehicles, and in due course, some of those may translate into consumer appliances in particular. The cell phone market is extremely competitive, and that's not a current priority for us, but I wouldn't rule it out in the future.
Are there any plans in the future for Ilika to pay dividends to its investors? That would be a great position for us to be in. Once we are successfully profitable, I will be having long and positive discussions with the Board as to the best way to return investor value back to each of our investors, whether that may be through holding cash and the strength of our balance sheet, forcing up the share price, whether that would be through dividends or through share buyback. We certainly will ensure that we explore all options for returning value to our shareholders as we progress forward and reach that positive inflection point.
There's another question here: it's nearly two years since the Cirtec Medical deal was signed, and progress toward meaningful commercial revenues has been painfully slow. What will accelerate these revenues? We stand by our projection that commercial revenues will be initiated in this calendar year in 2025. Actually, I think in the broad scheme of things, we have transferred our equipment, commissioned it, got it fully operational, and initiated engineering batches as quick as could have been anticipated. I think Cirtec Medical have spared no effort in making sure that that equipment is functional as quickly as possible. I know that the Ilika team is working round the clock to support those activities. We've just had a delegation over in Massachusetts to be able to support those activities further. You know, believe me, we would all like to have the start of that production as quickly as possible.
I think we're bang on track in terms of the guidance that we've been given to make that happen in this calendar year.
Just aware of time, probably time for the last couple of questions, one for each of us, I think, Graeme. So question here: with inflation in the U.K. still high, how are you managing the cost of purchasing materials for large-scale production to keep control of expenditure? That's one I'll take. We have a really developed purchasing team that we deploy, and actually, we have a very experienced individual from the automotive sector that we use in negotiating some of the purchase of these large materials needed in production. We take a very tight view on only ordering for what we need to make sure that we have materials available. That's where these grant-funded projects once again come in. I've already mentioned earlier that the recent primed grant funding of GBP 1.25 million is to support that material and labor piece as we move towards those A samples.
We're looking wherever we can to secure extra income to make sure that we can support the cost given that high inflation environment. Equally, we're very tight with our negotiations in terms of making sure we secure discounts wherever we possibly can and not wasting material. Once again, going back to that information from the U.K. Battery Industrialisation Centre trial on yield, making sure the higher yield we can, the less wasted material. That's all very important for making sure we have a tight control on cost, obviously very close to my heart.
Maybe the final question: is there any concern that competitors might be infringing on any of our patented technology? We employ the services of a patent attorney from Murgitroyd to make sure that not only do we file our own patents and maintain a freedom to operate, but we keep a watching brief on the activities of other companies to make sure that they're not infringing patents that we own. As the industry matures and products are taken to market, we will continue to monitor that. At the moment, I see no reason for us to initiate any claims against other companies. I think not only are we differentiated in terms of our own activities, but we haven't been copied yet. That may well change going forward. We'll keep a watching brief to make sure that the interests of our shareholders are protected in any event. Thank you.
That's great. Graeme, Jason, thank you very much for updating investors today. What I'll do is, Graeme, I'll just ask you for a few closing comments, and then we'll redirect investors for their feedback.
Brilliant. Many thanks for your engagement today. Thanks also for submitting a wide range of interesting questions. I look forward to the opportunity to be able to re-engage in due course and update you on our continued and relentless progress.
That's great. Graeme, Jason, thank you very much for the presentation and for answering so many questions today. Could I please ask investors not to close the session as you will now be automatically redirected to provide your feedback in order that management can better understand your views and expectations? On behalf of the management of Ilika plc, we'd like to thank you for attending today's presentation and good afternoon to you all.