Ilika plc (AIM:IKA)

CMD 2024

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Apr 23, 2024

Well, a very warm welcome to all of you. Many thanks for choosing to spend the morning hearing about solid-state batteries and participating in the discussion. I am sure it will be lively, and there will be plenty of opportunities to ask questions as we go through the morning. We have got a fun-filled agenda to stimulate everybody today. We are going to kick off with a bit of an overview from myself. Then we are going to go into a presentation of an update of the Stereax part of our business. You guys are actually going to see a world premiere of a video, which has been recorded by our partners over in the U.S., Cirtec, who are going to update you on their view of the market for Stereax, and where we are with the implementation of that. Then we are going to have a bit of a break, have a Q&A, to allow people to ask any questions that they might have about the Stereax business. Then we will move into Goliath in the second part of the morning. We will have a Q&A on that, and a coffee break before we have an EV industry panel, where we have got some experts from the industry, alongside myself, and we will have a bit of a discussion of the dynamics of the industry and some of the challenges that the industry is facing. Then you will have an update on finances from Jason, a final Q&A to wrap up. Then we will have a slap-up gourmet lunch provided by our hosts at Berenberg and a bit of networking, before you can get on your way. First of all, a bit of a recap, for those of you who are perhaps new to the story. First of all, Ilika is a global expert, one of that small cohort of companies that specializes in solid-state batteries. We have got two product lines. On the one hand, we have got our miniature Stereax solid-state batteries, which are designed for miniature medical devices and Industrial Internet of Things or wireless network devices. On the other hand, we have got our Goliath large format cells, which are targeted at the EV industry, and also for cordless consumer appliances. We are differentiated because of our choice of cell chemistry and architecture using a safe, non-flammable oxide electrolyte combined with a silicon anode. A couple of key stats. The company was a spin-out of the University of Southampton back in the day, and we built the company from those initial roots. We have now got a substantial portfolio of 62 granted patents and targeting massive markets. Actually just this morning, we had a trading update. I think our cash balance is slightly ahead of where analysts had suggested we might be, at the end of April, giving us a reasonably strong balance sheet. Maybe a few introductions actually, to make sure that we network as effectively as possible. Not everybody is in the room at the minute, so apologies if it becomes a bit of a squeeze later on. We can always throw out some of the advisors to create a bit of space. But apart from Jason and myself, who you probably know quite well, we have got Keith Jackson, who is going to be arriving shortly. His train is slightly delayed, so he will be with us soon. But we have got Jeremy and Monika, who are the other board members in the second to back row. Do you want to just stick your hands up, guys? There you go. They're hiding at the back. Then we've got Louise and John with us. Guys, just make yourselves known. We're also really delighted to have some delegates from the automotive industry. I saw Julian come in from the APC just a few minutes ago. We're going to have Thomas Bartlett on the panel as well, from the Faraday Battery Challenge. Also actually, not currently in the audience, but he'll be joining shortly, is Tom Ashfield from Agratas. So you'll be able to network with him during the break. Good. So first, a few words on our business model because, of course, there's all sorts of different ways of getting a technology to market, and I want to emphasize that Ilika's got an asset-light business model. Which means that actually we see ourselves as being experts in developing new product and demonstrating that the product can be made in an industrially relevant process, at pilot scale. Then we transfer that knowhow for mass manufacturing to partners who are typically either tier 1 manufacturers, so that means that they sell their product to the big brands, the OEMs, or we license directly to the OEMs. We develop our products with support, not only from those companies, but also from the grant bodies, the government agencies who are responsible for stimulating technical development and creating markets. We get to the point where we have an industrially robust product and process, and we transfer that technology under license to a partner. Last year, you will have seen that we achieved a strong outcome for the Stereax business by licensing with Cirtec, our manufacturing partner, headquartered in the U.S., and we will hear a bit more about that as John goes through his slides on Stereax. Of course, we are engaging with a number of industry players on the Goliath side of the business as well, as we move forward through the remainder of this year. At this point, I am going to hand over to my colleague, John Tinson, who is going to talk to you about the Stereax business. Thank you. Thank you, Graeme. It is actually one of the things you want to do when you are working in a technology company is to be working on something which is globally an issue and then offer up an enabling technology to be part of a solution to that problem. This is Stereax. These are small, tiny batteries. We are aiming them at the medtech sector initially, although IoT will follow on from that. These are some of the issues. Obviously, as a human race, across the world, we are living longer lives, but not necessarily healthier lives. This is putting tremendous pressure onto healthcare systems around the world. We know that. We read it all the time, particularly in the U.K. What can we do about that? These healthcare systems are looking at how can they increase productivity, how can they increase efficacy, and potentially, or not even potentially, in reality, active implantable medical devices are one of the solutions, one of many solutions, but one of the key solutions that these healthcare bodies are thinking about. The question lies, well, if that is a solution, how do I get more of them into the body in a lower cost way, so they could be a more widespread solution? We are aiming at a product here that is the battery that goes in these active implantable medical devices. Just a few things that are treated, you will see later on some of the applications, but in general, quite often related to aging. We have chronic pain. We know about this opioid crisis in America where they thought it was a good idea to hand out drugs as a solution to pain, and then realized this is a really expensive thing to do, ultimately. We have obesity, but you will see later on many other areas of widespread condition that potentially an active implantable medical device is going to be working on. Of course, there are already active implantable medical devices. What is the problem? What are we doing that is disruptive and enabling at Ilika? Most of the devices, many of you may know people, but most of the devices that people carry around in their body have got a large primary battery, which will last X years. Let us take this as a pacemaker as an example. 10 years might be a good time in the body. But very often then has to be explanted to change the battery. In the case of my father, explanting at 90 years old is not a thing that you do lightly. There are some small batteries. You can see there a tiny battery. It is not like we are the first guys to come along and say, "Here is a tiny battery." But these batteries, again, they are using traditional lithium ion technology. One of the issues, or a couple of the issues of that is power, the rate at which you can charge and discharge, but in particular, discharge, because we are trying to power a Bluetooth radio. You need to, if you have got a tiny amount of power, you need to be able to magnify that power in order to give that signal. But also cycle count. These might be only a few hundred cycles, these tiny batteries. If you have got a small amount of power and you want to charge it maybe every few days, and you want to be in the body for 10 to 15 years, you need thousands of cycles. There is a problem with existing small technology that is not being met. That is obviously what a company like Ilika should be addressing, problems that are not met but are widespread. That is what the Stereax battery is aiming to do. We just put it in a bit of a table there. The table being what would Stereax do? What does it do? Well, yes, it is thin and it is small. You can charge it and discharge it because it has got a high power ratio. It is safe because it is solid and it has got a high temperature tolerance. These are all features, but what are they enabling? On the right-hand side, you can see what we really want to do here is increase the rate of implantation. One of the things, electroceuticals is a thing. People are putting impulse generators into the body. But it is slow because actually it is costly to do that. The rate of doing it is dictated by, in America in particular, the actual cost of doing it to the healthcare system. If we can do it quicker and more cheaply, that is going to increase the pickup. That would come from, for example, rather than having to place the object in only one of two spaces in the body that you can currently do that, the buttock space or the heart space. These are the only two areas of the body big enough to take a primary battery. If you could put it subcutaneous or right next to the point of therapy, it will be lower cost and more comfortable for the patient. Increasing the rate of implantation is going to be enabled by something that is very small. Putting the device right next to the point of therapy, it can be uncomfortable to carry something in the buttock space that actually is operating on the vagus nerve. You have got trailing wires going through your body. You have got a fair large object in your body. You do get people requiring explantation because of discomfort. Putting it right next to the point of therapy because it is very, very small is going to increase the efficacy. What about long life? Well, if you can have it in the body for longer periods of time, then you are going to reduce the rate of explantation. It costs multiples more to take a thing out than it does to put it in. A key thing, of course, is to be able to power that Bluetooth radio. Bluetooth radios are now 1 millimeter square, tiny little chips, but they take 2 milliamp to power them. So you need a device that has the ability to do that. So Stereax is this technology. As we can see, traditional technology has some fall shorts, and we are addressing those areas where traditional technology is falling short. It is very large markets. It is not everything. We are not going to do quite a few applications that a large primary battery can only do, because that battery might be hundreds of milliamp hours or at very least tens of milliamp hours. So it requires a different design concept. But we have been talking for 2 or 3 years now to the industry and collecting advance orders, and these are the areas where our technology is enabling. So neuromodulation, I have got a slide later on, many applications in this space. Big market, growing quite fast. This is what we want to be seeing. Cognitive disorders, we are talking about Alzheimer's and a wide range, actually, of cognitive disorders, as well as chronic pain, et cetera. I have got more slides on that, but big and growing fast. Then moving across, just general implanted sensors, just taking data from the body and then relaying it to the doctor so the doctor can see live data coming from the body. That is a more general area. A very large area of orthopedics, knees, hips, shoulders. Then ophthalmic, what we are doing with the eye, very futuristic there, really. Then orthodontic, what are we doing in the mouth? But all of these areas would be better enabled by very small battery technology. You got a picture there of the vagus nerve and a device sitting next to the vagus nerve that will only really happen if the device is very small. Denis, my colleague in product marketing, will be showing you an active device of that kind of size. So here is the device. A nice big picture there, but on the right-hand side, showing reality. It is pretty small. About 3 or 4 years ago, Ilika created its own fab foundry in Chandlers Ford. So there are some pictures there of some of the machinery, which is creating these tiny, small devices. Very much based on semiconductor technology. These are 6-inch glass wafers that we are depositing in a vacuum. We are depositing materials onto those wafers and then singulating them and stacking them. One of the key things, some of you following the story may have heard about various competitors that we have had along the way, and maybe even heard that some of them have fallen to one side along that journey. They typically were not stacking. A key thing in this is it is not enough to simply create a fantastic die and singulate it. You also have to stack it so that you are getting enough energy storage into a small device. So this device here actually is 6 layers. That is a 6-layer battery, nice and sort of expanded for you. These are the production techniques along the way. In the far right-hand side, you are seeing the stack being created. The first device, the M300 device shown there, which is the device that in 2025 Cirtec will be putting commercially onto the market, that's 0.3 of a milliamp. Then we will be expanding upon that, probably up to about a milliamp device in the years after that. But this is the first one that will come to market. So on to Cirtec. You will be hearing from Brad Womble, he's their strategy director, straight after me. There you have a video of him from the U.S. Really a good partnership and a few reasons for that. One is they are big and they have big production facilities, so they are going to address the issue of scale for us. But also look at that capability set on the left-hand side. They do ASICs, for example. Every active device has an ASIC in it. Every active device needs welding and hermetic sealing. These are the skill sets they have at various facilities across the U.S. So companies will be going to them and then also enjoying the fact that they have novel battery technology as well. They even have their own neurostimulation technology platform. So they are not the OEM, they are not selling you the finished device. But if you wanted to create your own impulse generator, you can go to them and their platform. You could put your secret sauce in it, which will be the algorithms and the stimulation codes, et cetera. But the fact that they have created a small device that can be welded and sealed and got its own ASIC, et cetera, you have taken out two or three years of development time. So that's an exciting area. Again, you are going to hear more of that from Brad Womble at Cirtec. Then a picture on the right-hand side of their Lowell facility. So this is the area we have sent our machinery to, currently being installed in a technology transfer program. That's in Lowell, in the Boston area in the East Coast U.S. So this is a very good partnership for us. It is not just simply a manufacturing partnership. They are in the right position in the med tech market to take customers, the big guys, the Medtronic, the Abbott, et cetera, and actually speed up their time to market because of the skill sets that they actually have. So the first of the applications we talked about, neuromodulation. There are about 8 or 9 billion people on the planet. It seems like two-thirds of them have got a problem. I think the answer is they will have a problem at some point in their lives. Sadly, it will not be something that will be necessarily addressed by active implanted medical devices because most of the world cannot afford them. This is obviously largely driven in America and more so coming up in Europe as well. But these conditions are endemic across humanity. We are all going to probably have them at some point in time, and tiny and cheap active implanted medical devices are going to be a solution where the healthcare system can afford that solution. But from our point of view, we are aiming at something which is global and endemic in people around the world. This is pretty exciting, and you can see there's a vagus nerve application there where in the past it would have been a very large primary battery, as I say, in the buttock space or heart space area, and now something much more tiny, potentially right next to the point of therapy. Another thing which is very widespread, of course, is knees, hips, and shoulders, et cetera. The product you see down the bottom has not got our battery in. It's actually a Zimmer Biomet knee implant. Zimmer Biomet have had the idea of what if we captured data from the implant and sent it to the doctor, so that over the first year or two of having your knee, the doctor can check up on pressure points, they can check up on heat. Is there inflammation? Is there pressure? Is your walking condition okay? In actual reality, what they're probably saying is, are you taking the physio treatment that you were told to take? Because the cost of explantation is huge to the industry. It may be only 2% there, but that 2% is a lot of money. If the insurance company can blame it on the patient for not taking the physio, it probably helps them in some way financially. But either way, they want to take data directly from that knee implant, via wireless Bluetooth, to your phone and on from the phone to the doctor. This is actually happening right now. But it's actually quite an uncomfortably large implant because of the battery. So again, an application that would benefit a lot from smaller. It's currently mostly happening in the knee. It would happen in the shoulder and other areas if the implant was smaller, if it could be more comfortable. So, again, a very wide-ranging application. We've got back orders in this field. In fact, all of the application slides I'm showing you are because we've got customers already in that area waiting for the batteries from Cirtec so they can commence. They've had some batteries from us already, but they need more batteries to carry on their journey in development. This is pretty exciting, too. Actually, it's a French company. You've got a brand name there showing the name, Cairdac. We talked about the issue with pacemakers. Pacemakers typically take tens of milliamp hours. You can't resolve them using a battery of Ilika's size. But actually, what this company has said, actually, the body has a fantastic source of energy. It's called the heart. If the heart's not working, you're dead. A pacemaker does not keep your heart going. It just sets the rhythm of your heart. So while the heart's going, it could be the power source. These guys have created a harvesting device that harvests the energy from your heart and charges the pacemaker so they don't need a battery. Fantastic. Well, what if the harvester fails? The FDA has said, well, you need to have a backup, a battery backup. If your harvester fails, you need to give the patient three months to get to hospital to fix the device. So that requires a very small battery because it's three months. It just needs to sit there for 10 or 15 years and kick in at the moment that the harvester fails and just give you enough time to get to hospital. That is a battery of the size of Ilika's. This is unique at the moment. I think only one company in the world is looking at perpetual pacing. That is pretty significant considering people currently, after 10 years, typically have to have their pacemaker battery changed. The idea of perpetual pacemaking is going to be disruptive to the sector. I am sure it will take a long time to get through FDA approval, but it will be disruptive to the sector. The other concept that is pretty enabling is the ability to insert the entire active device via a catheter. That is a pretty big catheter, to be fair, it is only going to go into certain areas of the body. But if you can get this tubular active device into the catheter, again, you are dramatically reducing. It becomes a day patient operation rather than an overnight. There is a big deal between a day patient operation cost-wise and speed-wise versus an overnight where you have taken up a bed. So insertion of active device by catheter, because the device is very small, is an important thing. Here we have one which we like because of time to market. I mean, to be fair, the others, we have got sort of FDA compliance. We are going to have to take the active device through all those compliance steps. Much less so in this case. Still medical. We are still looking at sort of taking biology-based information from your mouth and feeding it back and making assessments about health condition from that. But in this case, by simply putting a mouth guard in, so again, not much compliance in this case. Really, this application is simply waiting for Cirtec to make the first deliveries so that can go forward. You can see the picture and the brand names. Resonant Link there is the company that is setting up the charging. They are a sort of company that charges the battery. Obviously, there is our battery, and then there is the electronics from Lura Health. The nice thing about this one also is Lura Health were already working with Cirtec, so it is a very sort of tidy relationship in this case. Here is one we have got. I think we talked before about eye worn applications. We said that the FAANGs, in particular in West Coast America, were all working on AR/VR applications, the next generation after the contact lens or the contact lens after the glasses, et cetera. That has had to take a bit of a step back. AR/VR by contact lens, it is the battery that is holding that one back, and the battery has to be even more energy dense than we are currently developing. So it is definitely, we have got back orders. They are definitely waiting for us to sort of get there. But in the meantime, actually, there are other applications, more medical orientated, where you can check on diabetic and other conditions using far less battery power. So we see sort of conditions on the right-hand side that will come first, diabetic and intraocular eye pressure and maybe even some slight correction. AR/VR being a little bit further down the line. But there is an Israeli company that we are just going to show you a quick video of that have said, "Well, okay. It's not perfect, but we could actually put the electronics on the eyelid, and that will then talk to the contact lens. We'll just show you a little sequence of that. I think he's looking down quite a lot so you can see the electronics. When he does look up, you don't see as much as you think you're going to see. It's a solution, and again, Ilika batteries on the back order to power that solution. Looking commercially, geographically, not hugely surprising that the vast majority of what we're dealing here is in the U.S. It tends to be where active devices are developed and most of the large companies in the world are, and that's because their insurance-led healthcare system can afford these devices. The rest of it is largely European. As we said before, everything that we've showed you today, we have customers on back order waiting for the Cirtec deliveries to carry on with their developmental journey. Okay. Thank you very much. Thanks, John. Sure. Right. I think we're going to switch now to the Brad Womble video, and he's going to hopefully build on some of the themes that you just heard from John and give you Cirtec's perspective on the market opportunity. Hi, I'm Brad Womble. I work for Cirtec, and I'm responsible for strategy and our platform development projects. We're seeing a lot of change happening from a technology perspective in the healthcare space. A lot of it is taking technology from other industries and figuring out how to use those technologies, in a safe environment in healthcare. I would say that we're seeing an increased need for data. We're also seeing an increased need for sensors to actually start recording different biometric readings from different patients. All of these things require better power management solutions. We're also seeing that not only are we having to pull more data, adding more sensors, better power management solutions, but these are all happening within smaller and smaller form factors. The Stereax technology, in my mind, is something that's really going to help enable the latest smart implantable devices that are coming out in the market. Certainly as those progress into the future, the Stereax technology is going to be crucial for that. In the space of smart implantable devices, I would say the cardiology space, is one area that we're going to see use of that device, whether it's in an implantable cardiac stimulator of some sort. Neurology is also an area within neuromodulation. There's so many different areas within neuromodulation, whether it's deep brain stimulation or whether it's spinal cord stimulation or vagus nerve stimulation. A lot of these devices are getting smaller and smaller, and will need to be recharged more frequently. I would say that that's one of the key areas that we're going to see a lot of opportunities to use a Stereax battery technology. I would say that one other area that would be good, obviously to keep in mind would be some of the maybe less invasive consumer health oriented type solutions where it could be quicker to market, and it could open up the door for other types of applications that aren't even in existence today. That's something to keep a watchful eye on, too. One of the areas that we really see a huge opportunity is really within the smart implantable device space that Cirtec is currently focused on. That's a space that we feel like the Stereax battery could really work well. It's not necessarily the first application that would necessarily make it to market. Smart implantable devices can take years to develop, as you would imagine. However, if there's opportunities for us to explore more sort of, less Class III, more Class II, Class I type consumer health oriented devices, we could definitely see a market entry for Stereax even sooner than some of the smart implantable applications. Just because of the time that it takes to market, it would take less time, say, than a Class III implantable device. Some of the areas that Ilika is already exploring, for instance, around some of the oral health sensing capabilities with respect to saliva. Not just that. It could be other applications within consumer health wearable devices that might use that technology. Definitely, there's opportunities outside of just the implantable space we're talking about where the market entry point could be a lot quicker. I would say certainly the consumer health area would be a key area for us to stay on top of, because we see a lot of advances happening there. We see a lot of new sensors coming into that market that have not been there before. It is definitely an exciting space and possibly one that is moving a little bit quicker than the implantable space. I would say that when I think about ramp-up times in our business, and thinking about ramp-up times in terms of the devices that will use the Stereax technology, these typically could take 1-3 years in order for the devices to reach that full sort of ramp cycle. In some cases, it is because there are predicate devices that are already on the market and the new devices are cannibalizing the old devices. Perhaps it is even a new market where we see just the ramp-up take just a little bit of time for the physicians and the clinicians to actually use these devices. I would say typically 2-3 years for ramp-up time to get to full volumes typically in our business. Now, I definitely think that in some of the other industries, particularly around the consumer health industry, we could see ramp-up times happening a lot quicker. Perhaps within 1-2 years. Regardless, in healthcare, we definitely see ramp-up times that are generally a little longer than other industry types for that particular reason. The way that we think about the addressable market in healthcare in particular that we are focused on with respect to smart technologies, we look at the broader landscape of medical devices worldwide to get an understanding of what that addressable market is. When you are looking at it from that perspective, the total medical device worldwide market is roughly about $550 billion-$600 billion of revenue for all of our OEM or our medical device customers. Now, the addressable market, of course, would be a subset of that. The way we think about that is we look at all of those different devices that are in the medical device universe. What we do is we try to make an estimate in terms of which one of those are smart devices. Not just smart devices, but smart devices that are generally worn by the patient and not necessarily a machine or a device that is plugged in in a hospital setting. From our perspective, there is roughly about $50 billion of revenue of devices that really fit within that landscape in healthcare. That is really the addressable market that we are focused on. We do focus a lot on the neurology, neuromodulation, and cardiology spaces, but really are open to other addressable areas within the healthcare market that represent that $50 billion of target. In a nutshell, it really is a huge addressable market as we see it. Obviously, that addressable market is at the device revenue level, and not necessarily specific to the battery level. From there, one can make some assumptions in terms of if it is a $50 billion market, okay, what does that mean in terms of rechargeable solid-state or Stereax battery technology? From my perspective, the addressable market in healthcare is huge, and it is an awesome opportunity for both us and Ilika in terms of really targeting it. We only think that it is going to be even more smarter solutions in the future. That addressable market, in our minds, is definitely growing, and growing at a rate faster than the overall healthcare market in general. With respect to Stereax and the battery technology in terms of how it relates to the devices that are in development today and will be in production in the future, we work with different batteries of different types, depending upon whether it is rechargeable or non-rechargeable. In a lot of the neuromodulation devices that we have today, we have rechargeable batteries, but we also have primary cells that are not rechargeable. Stereax actually really adds a new application and a new platform for us. One of the reasons why, there are many reasons, but one of the reasons why we think the Stereax technology is really incredible is that it allows us to get to some of the miniaturization on some of these implantable devices that we cannot get to using the existing battery technology that we are used to today. In some cases, we need batteries that are super small, that can fit literally on boards within implantable devices. Stereax is really going to help us enable more of those types of devices to be manufactured in the future. In essence, it really is an enabler for us, and that is one of the reasons why we are extremely attracted to the Stereax technology. Although we have seen other solid-state battery technologies that have been in the healthcare market for a little while, Stereax's technology is one, in our opinion, in terms of miniaturization, being able to get it to the scale that we need, but with also the same battery density, is super helpful, super valuable. It is something that we see as being extremely important in the future. From our perspective, the more that we can see the Stereax technology being incorporated in some of these areas that we are focused on, like the neuromodulation space or the implantable cardiology space, once these technologies are then incorporated and then approved by the FDA, what is exciting to us then is that now there is a precedent, right? We are going to see a lot of other customers that are going to want to leverage that technology and incorporate it into their devices as well. We see sort of a snowball effect happening as Stereax's solid-state battery technology gets incorporated into more of these healthcare implantable technologies. From our perspective, we are working with the right group. There is not anything out there that we have seen that really competes with Stereax, and we are excited to help bring it to the market. What is really interesting in our industry in particular is that competition is not as clearly defined as one might think. In a lot of cases, our customers are actually producing and manufacturing a lot of the products that they currently sell and on the market that we could perhaps produce for them. In a lot of cases, it is really working with our customers, and as we provide them greater solutions, more diverse technological solutions, the easier it is to work with them and to manufacture their products. Direct competition, there are a few groups within the neuromodulation space that we compete with, and then on the cardiology space, which is the market that we are really in tune to. Yes, there is competition in some of those areas, but a lot of the spaces that we are playing in, there is not a massive amount of competition. Really at the end of the day, it is really working with our customers and hopefully providing them the best solutions that allows us to get more business. As has been previously discussed, Ilika and Cirtec are in a long-term relationship, both in terms of a co-marketing agreement, in terms of us working together to sell the technology into the devices that we manufacture, but also from a manufacturing perspective. We have the opportunity, and we are excited about the opportunity to actually manufacture the Stereax battery technology at our Lowell, Massachusetts site. That is super exciting to be able to work both on the marketing side of the fence with Ilika, as well as being able to manufacture this battery technology. The great news about it is that the more that we understand the technology related to these batteries, understanding how the evolution of these batteries will work, it is certainly helpful for us in terms of working with our customers to provide the right custom solutions for their devices. When it comes to technology, we are definitely thinking 5 to 10 years out, as it relates to devices we manufacture. Although we are in all industries, within healthcare, we are definitely focusing on certain ones. Within the neurology space and the cardiology space in particular, there are a lot of smart implantable devices that we work on. The attraction to us in developing a long-term relationship with Ilika is that we can start working on this technology today, and help refine the development of it, thinking about how it is going to work for different types of devices, implantable devices, non-implantable devices. We know that this is technology that is going to be even more important in the future than it is today. From our perspective, this is going to be a long journey that we have with Ilika, and we are excited to work on the new technologies and to see where this advances. We do know that there is only going to be a need for more data. There is only going to be a need for more sensing capabilities, and thus, there is going to be a huge need for power management solutions. For us, it is important to work together in a long-term agreement so that we really are kind of paving the way for the next generation of healthcare devices. Thank you, Brad. My colleague, Denis, has been absolutely begging me to give him five minutes to demonstrate some of our Stereax batteries. As a special concession to him, we've brought him along today, and I hope you'll give him support as he unveils some of the magic of Stereax. Thank you very much, Graeme. I'm going to enjoy this. Okay, as we're waiting for Cirtec to actually integrate our batteries in medical devices, here at Ilika, we've built some little demonstrators to show you what we can do with our batteries. This device mimics an electroceutical device. It's a pill size. Look, it's not much bigger than about 2 centimeters long. It's less than 1 centimeter diameter. That really reflects the miniaturization of those new medical devices that John was talking about. You could see that implanted in the neck, implanted through arteries in your lungs, actually. That's the size aspect. It has got one of our early prototype of the Stereax M300. Some of you at the front are probably more lucky than those at the back, but there is a couple of LEDs flashing. I don't know if you could see that earlier. That is powered by the battery, the Stereax battery, indeed. Why are we flashing LEDs? It's nothing to do with any medical condition or therapy. It's just that it represents a very similar energy requirement as a medical device. A medical device would provide electrical pulses to a nerve or something like that, and LEDs is very similar. For those at the back who can't see very much, I'm going to leave the device here at the front, and if you want to talk to me during the break, I can show you this again. Thank you. Thanks, Denis. That was great. Right. I think we're pretty much ready for our Stereax audience Q&A. If anybody has any burning questions that they'd like to ask after that tsunami of information, please put your hands up, and we'll give you the opportunity to ask a question. Should we sit at the back? Yeah, why not, actually, since you guys are probably in the firing line. Louise, why don't you join John? That's great. Denis as well, please. That's great. Any questions from the floor? Colin. Thanks. Colin Smith from Capital Access Group. Obviously, there's a lot of development going on. You've talked about all of the applications you've shown today having customers. Could you talk a little bit about when Cirtec actually expects to be able to supply batteries for those customer requirements? Yes. Indeed. The guidance that we've given analysts that are covering us is that actually, by the end of this year, we should have completed the commissioning and qualification of the equipment that we sent across to the U.S., and that they will start production of the initial batches of our batteries in 2025. As you've heard from Brad, they expect that the ramp-up of production volumes will take between one and three years. It is a bit driven by the uptake of the actual devices themselves. Things like the orthodontic applications, they have a faster FDA approval pathway than, say, an active implantable medical device that may be, say, a neurostimulator. Something like an aligner, something that measures the alignment of teeth, could get to market pretty quickly, whereas a neurostimulator has probably got three or four years of FDA approval ahead of it. And just to clarify that actually, it is the OEM that is in charge of the FDA approval process rather than either Cirtec or Ilika. So we get audited by the OEMs, but actually the burden of the approval process falls with the OEM that markets the product. A couple of questions just following on from that. Is there much of a retrofit opportunity? If there is, what gets the FDA approval if the device has the approval? Can you get an approval just for the cell? The second question, just the comments on the video about primary battery applications. Do you tweak your technology for a primary application where perhaps cell life is not the dominant factor? Cycle life, sorry, is not the dominant factor. Graeme, you like I will step in on that? Absolutely. Well done, John. Thank you for volunteering. Yes. We like the retrofit. It is called a 510. What that means is they have already got the device through the FDA, so the efficacy of the actual treatment is because that is actually the bigger thing for the FDA is it an effective treatment? The second thing, is it safe? Well, actually, I am sure it is not that way around. If the device actually already is approved for that particular application, but you want to change the battery, it has got a faster route, called a 510, where you are making an application to substitute the battery, which we look for those because it is going to be a faster route for us to market. I forgot the second question. Primary batteries, primary applications. Yeah, it is interesting. When we are sitting in front of designers, we are trying to change their entire mindset because they have got this sort of image of In fact, mostly what they do is they design some electronics, and then they find the battery big enough to power it. What we say to them is, "It is too late by that time for us. You have to think of the battery and design the electronics around it." Which they find very unusual. But after we have met them enough times, they do get the idea that let us start with what the battery can do and then put the electronics around it. But what that will give you is many years in the body. Yeah, it is a new way of thinking for quite a few designers. Hi there, James Carmichael from Berenberg. Just a couple. Quickly, I wonder if you could maybe give us a bit more detail on the exclusivity you have got with Cirtec and maybe any other sort of target markets that you are looking at with Stereax. Then secondly, I guess following on from the commentary around ramp-up on volumes, hard, I guess, to look this far out, but what might that mean in terms of revenue growth for Ilika? Very good. Well, we've already informed the market that actually it is a limited exclusivity that we have granted to Cirtec. The reason that we've done that is actually to make sure that the equipment set that Cirtec has deployed is fully utilized, because that will train the equipment and fill the equipment capacity to the point that we can start to drive down unit costs of production, and therefore enhance the profit margin that we get from the product. In the instance that one of the applications that we have in our pipeline, and as John was alluding to actually in his presentation, that one of those applications with, say, a FAANG, so a large, let's say, largely consumer electronics-oriented organization, might drive volumes to beyond the capacity of what Cirtec has really set up to deal with, then there is the opportunity for us to issue further licenses to be able to accommodate that demand. So you can imagine if there is a mass market device that is rolled out and the numbers end up being in the millions very rapidly, then yeah, it may well be that a different supply chain solution is more suitable in order to address that demand. In terms of level of revenue in forecasts and what this initial interaction could be worth for Ilika, we've discussed with analysts, including yourself, James, that we might expect that level of revenue to reach $10 million-$15 million US, so that's Ilika revenue that comes out of this initial relationship. Simon. Thanks a lot. Simon Fickling at Liberum. Following on from James' question, Are Cirtec, so Cirtec's initial capacity, will it just be the machines that you're sort of transferring through the tech transfer, or is there quite a sort of lump of initial CapEx for them to get up to this kind of nameplate, the initial slug of capacity? Yeah. Cirtec actually is in the middle of a clean room expansion in order to accommodate the equipment that we have sent across. We have actually, principally sent across the equipment that is used to make the batteries from the cathode onwards. Sorry, I am getting a bit technical here, but the cathode is the positive electrode in the battery, and that is the layer that we put down first on the substrate, which happens to be a glass wafer. We send those across to Cirtec for further processing, so they put down the other layers, including the electrolyte and the anode, and the current collectors, and the encapsulation. All of that is done with the equipment set that we have relocated, that we have transferred, plus accessing the equipment set that Cirtec currently have installed at their facility. The Lowell facility in Massachusetts is a thin film facility, and what that means is that they have got the microfabrication capability that we need in order to make those tiny little batteries that Denis was showcasing. So there is a lot of synergy with the skill set that is already at Cirtec, and that gives them the capability to be able to build on the initial production capacity that we have transferred. Okay. If I can ask a follow-up, you mentioned Lura, as an example, and I imagine that was one of the 15 or 20 that you presented a couple of years ago. What has happened, so your existing customers that you had developed in-house, have you passed those largely over to Cirtec to then progress, and I am sure in a lot of cases they will have existing relationships. Or are any of those you are still directly in touch with and developing aside from the Cirtec relationship? Yeah, good question. John, do you want to handle that one and maybe talk a bit about some of the co-marketing that we have done? Yeah, we are actually keeping, not keeping, but we are keeping the relationship with those customers because rather than ask them to replace all the orders, what will happen is Cirtec will deliver the batteries to us and then we will deliver them to the particular named OEM in the first instance, so the first round of clearing out that backlog will be via us. We are also holding pretty much monthly calls to hand across customers in a relationship sense. Then there is a guy called Will Pitkin, who is the U.S. sales director. We work very closely at conferences, exhibitions, and in general, to just make sure that we are touching all the right people at the right time. It is a co-marketing thing, but I do not want us to go back to a medical device company and say, "Can you replace that order?" because sometimes that can go wrong where they just do not. Thanks a lot. When do you think you are going to get the first FDA approval to be able to become a commercial operation? I say it is not us that gets the approval. No, I get that. No, no. Yeah. Okay. When does our first prospect pass that period? It is clear to us that a lot of them have actually got their devices going through already, and therefore it will be 510s rather than FDA approvals, which can be done in one to two years. So from the minute they finish, well, they will have finished their development, got the product to market, got the FDA approval on that particular thing, and then they will come back for a 510 using our battery, which can be done in about a year and a half. Still quite a lot of money for them to do it, but they can do it in a year and a half. Really, the key thing is to get Cirtec getting those batteries out, and then probably a year and a half to two years after that. But bear in mind that for us, from Ilika's selfish perspective, actually our sales start before the FDA approval because we have to sell batteries in order to support that approval process. Although the mass market, of course, comes after that, it may well be that tens of thousands of batteries are required in order to get that approval in the first instance. You get the approval and then there is 18 months between substantial commercialization. You have just got a pre-commercial sales rep. Perhaps if we back up then, when do you think it is probable that your customers will get their first approvals that we can then add 18 months to? Yeah, I think they will start applying when they start receiving the batteries that are commercial, down a commercial line. They will start their application for the 510s. As I say, it can be a year to get that application through. So each one will be slightly different. They will have their own slightly different story. But I am saying how quick it can be, a 510 can be done in a year. And they can start when they start receiving the batteries from Cirtec. Okay. Then there will be, as I say, the non-FDA ones, like the mouth guard thing where they just simply just go. There is almost no regulation on that one at all. It is realistic the middle of 2028 is the earliest. For what? There will be sales from- For commercial ramping of sales. Well, our commercial ramp will start next year when Cirtec start delivering batteries to customers. They need the batteries to even go through the approvals. Those are for research. No, they are for approval. So you have to go through preclinical, clinical trials, and then initial launch after that. Yeah. Okay. Thanks. Yeah. Of course. Hi there. Morning. Sam Thomas from Rodial. I just had a quick question on the TAM side of things. If I am right, and if I heard it correctly, I think, Brad talked about a $550 billion-$600 billion market, which then sort of whittles down to $50 billion for the sort of smart device side of things. If I heard him correctly, is that on the revenue side for these medical devices? When we are thinking about the TAM for Ilika, it should be based off the cost base of that. You should be thinking along the COGS line as a TAM. I think on my slide, you had a current penetration of active implanted medical devices, about GBP 6 billion. That was up on my slide, growing at 18% CAGR. Probably, moving into that space. He was describing the space, a GBP 50 billion space, of which active devices are increasing at 18% per year. As you say, we would then be a component, in that device, probably the most expensive component, I imagine, but a component in that device. Yeah. Okay. That is helpful. That was actually going to be my follow-up. Could you give us an idea of what proportion of the cost base the battery accounts for within sort of a medical device? I appreciate it is probably a broad range, but anything you can give us on that would be useful. Think at a low hundreds. If you wanted to buy a battery now from one of the EaglePicher or one of the medical battery guys, they're low hundreds of USD. There's a point here about how enabling you might be, as well. If you are significantly enabling to that particular application, you might not just charge the market rate. You might charge the fact that you are very enabling to that particular application. But, yeah, these batteries are typically low hundreds of USD. There's actually, probably, we're missing something on the revenue side here, where there's a lot of requirement for bespokeness, I guess. If you go to the big battery companies who currently supply the medical device industry, they're charging NRE quite often to either prove that their battery is correct for that particular application, or in terms of conducting specific tests that show that it'll be correct for that application, or in some way modifying the battery. Some of our revenue is expected to come from that non-recurring engineering as well as from unit sales in those early days. A lot of people that we speak to say, "Yeah, it's fantastic, but I just want it eight layers high or something." That will be an opportunity for us to charge non-recurring engineering in the early days. Fantastic. Right. Well, many thanks for all of those questions. All very relevant. Let's change gear a little bit and talk about Goliath. Louise, if you could come and take the podium. Over to you. Thank you. Okay. I'm going to talk a bit about our Goliath product line and, just go through our journey so far and where we're taking it next. A number of countries are targeting net zero emissions. At the moment, there's over 19 governments that have targeted net zero by 2050. The European Union has also banned the sale of internal combustion engines by 2035. Transport continues to be one of the largest emitting sectors, that's of greenhouse gases, that's equivalent to 26% in the U.K. The adoption of electric vehicles is going to play an important role in this transition. EV sales momentum remains strong. Although there's been a slowdown in terms of year-on-year percentage growth, overall in 2024, projected sales are expected to continue to grow. But as, I guess, in future where sales momentum transfers from being policy-driven to product-driven, it's one of the main obstacles we'll be overcoming some of the reasons why consumers remain hesitant to buying an electric vehicle, with one of the top reasons being the limited driving range. So there exists really a good strong market for the Goliath battery technology. So what is it about the Goliath technology that will allow us to alleviate some of the consumer's anxieties? So we'll be, by removing the liquid electrolyte and making the cells non-flammable. We'll also be making sure that we maintain competitive performance versus current lithium-ion technology and have the ability to operate over a wider temperature range. With these features, we can target a number of benefits. So by providing a safer cell that can also work over a wider temperature range, allows us to optimize the cell-to-pack ratio by removing some of the pack level engineering. It also perhaps allows some additional space to accommodate cells, in turn, delivering a lighter vehicle, which enables us to have a longer range for the technology. So here we're just looking at the solid-state battery market forecast, where solid-state battery market share is expected to increase to around 45% in 2035. So Goliath is targeting the luxury performance market. This is less cost sensitive than some of the larger volume segments, and that equates to a total addressable market of 183 gigawatt hours per annum. So there exists a fast-growing market for the Goliath technology. So I'm just going to talk through some of our progress to date. In 2023, we were awarded the HISTORY program. That was an GBP 8.2 million total project value. The project is focused on the incorporation of a silicon anode within the Goliath technology to enable automotive cell level performance. We're over halfway through the project at the moment, and we're making good progress with our partners. Towards the end of last year, we also achieved our lithium-ion parity and D4 performance milestone, which I'll talk about in a bit more detail in the next slides. Whilst focusing on the technology, we've also been looking ahead to our manufacturing processes. We've also conducted a number of trials at equipment vendors to de-risk some of the scale-up activities on our roadmap, and that's resulted in the successful delivery of our roll-to-roll coater, which we've now installed and completed commissioning. We're also working on the design, or completed the design of our automated assembly line for stacking of cell electrodes, and that's due for delivery towards the end of this year. So we've really been pushing forward and hit a number of milestones, and we're working hard to continue to meet our technical milestones to enable the delivery of our MVP in 2025. So this is our technology roadmap. One of the important parameters that we're tracking is the cell energy density in watt-hours per kilo. As I mentioned, we reached our D4 performance point, which was an important milestone, delivering the energy density as well as power characteristics that were required. This was an important milestone, as it was really a design freeze for our P1 prototypes. We have been busy developing our P1 prototypes to enable us to work with selected OEMs and get them into their hands, really for testing and to start that feedback and learning cycle. We also hit our lithium-ion equivalence point at the end of last year of 250 watt-hours per kilo, which was a really great milestone on the way to D8 and our MVP. We are not just looking at the technology, we are also looking at our production and scale-up roadmap. We are targeting a 1.5 megawatt-hour per annum facility that will allow us to deliver A samples to customers. We will be delivering A samples, which is from 2025. From 2026, we are looking at licensing opportunities, although this could happen earlier. We will be looking further ahead to take the scale-up and development process to deliver B and C samples as we continue to develop the product maturity, and that will be in conjunction with an OEM or a tier one supplier. By getting to that first point of having A samples will really allow Ilika to start to enter into RFQs with OEMs, and it is a really important milestone. Working with an automotive OEM is a really important step in terms of to bring the Goliath technology to market. So far, we have interacted with 17 companies at an MTA and NDA level, and at the moment, 70% of our interactions are within Europe. That means that most of the companies that we are interacting with are within Europe. I am just going to talk through a bit of the U.K. grant funding. Since 2018, Goliath has been in receipt of a number of grant funding from the Faraday Battery Challenge, the Faraday Institution, and the Advanced Propulsion Centre. I talked about our HISTORY program earlier. We are working with our partners to incorporate the silicon anode, as well as getting to our D8 milestone, and that resulted in GBP 2.8 million to Ilika. We have also been looking at the industrialization, and at the moment we have got the SiSTEM project, which is active, and we are working with both Mpac and UKBIC. We are working with Mpac to deliver the automated cell assembly and stacking line, which will allow us to deliver the 1.5 megawatt hours per annum capacity to deliver the A samples in 2025. We are also working with UKBIC to allow us to demonstrate the Goliath electrode coatings at gigascale, and that represented a GBP 400,000 grant to Ilika. By the time we finish the HISTORY project and achieve our D8 cell performance, we will have reached the limit, really, of the technology readiness level for the Faraday Battery Challenge. We are looking ahead to the next level to continue our industrialization of the Goliath product. We are already starting to look ahead at an APC-funded program. We expect the total project cost to be in the region of GBP 15 million, but we are still working through some of the planning at the moment and do not have a full breakdown of the costs and what that means for Ilika. We are looking ahead and to make that project submission. To summarize, we have made some really fantastic progress on Goliath, and we are working really hard to continue that journey with the delivery of A samples in 2025. Thank you. Thanks, Louise. Over to Samuel. Yes. Denis gets another moment to shine, and he has a slightly larger demonstrator for our Goliath cells. I think you have two P1 prototypes Right inside that beast. That is right. Right, Denis? I am hoping this is a demonstrator that does not need quite so much explaining. I just need to turn it on, and then there you go. It does work. Whoa. I need an expert in driving, but You can see me. All right. Why I am showing you this is because this device is actually Device. This toy car is powered by one of the Goliath batteries. In fact, two of them. There are Sorry, I am managing a tight corner here. Speed bump. That is right. There are two prototype batteries. Now, I will stop here for a minute to show you what they look like. I can open it later and show you. This is not a real battery, but that is a We have two of them in the These are the energy of a mobile phone battery, more or less. Then you put two of them in parallel, and in series, you get the voltage required to power this Defender toy car. Only the beginning. We really want to be powering much larger cars when we get this device in the end next year. This is an intermediate prototype. Yeah, I think that is all I have to say. I could- What voltage? It is 7.4 volt. Our chemistry provides about 3.6, 3.5, 3.7 volts. You then need two of them in series, and it is about. This prototype is 2 amp hours. I got two of them. This is the prototype that we are discussing evaluation about with OEMs currently. I could carry on playing. I think you have seen me. If you have got any questions, I will just put it back in the garage. Good. Actually, that is a great segue into our Goliath Q&A. John and Louise, if you would like to sit at the front. Taking questions from the floor. Adam. Just on, sorry, just on the density figures you showed in your density targets, I take it that is at the cell level. Yes. When you were talking about essentially you can get more electricity per cell, but also you can get more batteries per car, can you map an equivalent number to give a sort of effective density? What sort of number would that be? So that's one of the things that we're really looking at now with the next program. So for really to take on board some of the unique features that we're targeting with our solid-state battery and to really make the most of them and allow the next generation solid-state batteries to reach their full potential and full capability, there's no point just taking our cell and putting it in what is an existing pack. So we're starting to have some of those disc Well, we've been having those discussions, but really starting to target that now with our next submission to really continue the industrialization. That's what that APC project will be focused on is taking it from the cell level to the pack level, working really closely with the pack engineers to make sure that we can maximize that pack level density and not just, yes, swap something in and out because it won't really make the best of the cell. Thanks. Just I guess, just looking at the S-curve that you showed for Goliath, and it's quite flat, then it gets very steep, and then it gets quite flat again. So what are the sort of, I guess, the biggest challenges you've got on, during that steep section to go from your P1 to your P2 product? I guess maybe a bit of it is what you discussed there, but it's obviously more than just making it bigger. So what are the sort of things you're working on over the next 12 months to get there? Shall I take that one? Yeah. Yeah. Yeah. Well, I think the interesting thing about that S-curve, is you will notice that the lithium-ion equivalent point is quite high up it, and we have achieved that already. That was achieved through increasing the number of layers that we put into one of those pouches. Confusingly, although those pouch cells are called cells, they in fact contain multiple electrochemical cells. Actually, by putting more active material into the pouch design and reducing the relative proportion of parasitic weight associated with packaging, then you get a very steep increase in the energy density of the component, the product that you are making. Then as we go through to D8, actually what we are optimizing there are less the energy density, because that is only one dimension of the overall picture, and more just testing some of the safety aspects of the pouches, optimizing the power density, so the speed at which you can charge the battery and discharge it. Also demonstrating that temperature window. There is some development time in our roadmap associated with that whole test program and, of course, all of the cells that we need to make in order to feed that program. So there is quite a production demand, actually, to run our pilot line and make sure that we have got sufficient evidence, sufficient data, to be able to unleash the creative genius of the pack designers and then start to put the modules and the packs inside much larger vehicles. Gino. Can I just ask, in relation to the OEMs? Please go into the microphone. In relation to the testing work that you are doing with the OEMs and the prototypes, in the same way that Stereax, you are receiving fees for the batteries that you are providing. Are you receiving similar fees for the batteries with the motoring OEMs? Yes. Actually, that pipeline that we talk about. Let us just flash that up again. When we engage with these OEMs, John is very much at the coal face there. Do you want to comment on some of those interactions, John? In some ways, we're following a very similar Stereax model of pitching the price that shows that they have to be serious to want to engage but doesn't put them off. We're not trying to stop things from happening, we're trying to make things happen. We have to make sure that they've talked to their senior management and they're fully engaged, and therefore, the price has to be written around that. It's the same thing. They pay to test. You've got a pipeline there of the major, all the top ones in the world, although maybe less so perhaps in China, but certainly in the States and Europe. We're getting into a pipeline. They've got different points of engagement. Some of them would prefer a slightly more mature item to test. Some of them are happy to test early and learn more earlier. I think we'll just have a continuous drip feed of people moving into that test regime. I think it will look quite similar to Stereax when we actually stand back and look at it in the future. Colin. Just interested to know whether things like the Inflation Reduction Act and the agreed text now on the Net Zero Industry Act makes a difference in terms of your ability to move the whole development process forward on Goliath. Also, in connection with that design, basically, as I understand it, Goliath has essentially been funded through grant funding, whereas most of your, or a lot of your competitors trying to do solid-state EV batteries have got significant investments from auto manufacturers. Could you maybe talk a little bit around that and connect it to the first part of the question? Thank you. Good question. Shall I kick off with that, Jon, and- Yeah You can ride shotgun? I think it is true that the government agencies in the U.K., and thank you, Julian, for coming along today to support us, those agencies have been really instrumental in encouraging us to collaborate, supporting us financially. Of course, I think it is only fair to also mention our loyal shareholders who have put up the rest of the money to match the funding that we have had through grant funding. I think, in terms of deploying capital relative to some of the breathtaking sums, perhaps, that have been deployed through SPAC mechanisms elsewhere in the world, that we have been extremely efficient. With a relatively modest investment in the context of what other technology developers may have put into solid-state batteries, I think the progress that you have seen today and that we have highlighted to the market has been extremely efficient. I think we can be really proud of the technical team for having delivered where we have got to with the resources that we have had available. Our mission going forward, though, is actually because we are the asset-light business model, is to collaborate increasingly more closely with OEM and tier one partners in order to help finance that next stage of the commercial rollout of Goliath. Because the sums involved in manufacturing Goliath batteries at scale are quite eye-watering, frankly, right? The numbers that are in the public domain for the Agratas investment in Bridgwater are that that 40 gigawatt hour per year of capacity will cost £4 billion. I think there is 400 million coming from the U.K. government. That is only 10%, actually, of the investment that is required. Rough numbers, for every 10 gigawatt hours per year of investment in a gigafactory, you need about $500 million. Some of our competitors in the U.S. have said, "Actually, we are going to build an entry-level gigafactory in order to commercialize their technology." Actually, they need those sums that they have raised through SPACs in order to finance that. We do not need that. Actually, we are financing a development program here, and then the technology will be licensed for commercialization, and we will work closely together with those partners in the same way that we are working with Cirtec in order to bring about that commercial outcome that we are looking for. Does that answer your question actually, Colin? It answers quite a bit of it. The other part was just about policy disengagement from China, which seems lock on. Yes Critical mineral material pretty much. Yes. However, that maybe sets in place things for you because it provides a different route to achieving that disengagement. Yes. I think it's a good question and I think regulatory driven uptake of vehicles is really important in order to encourage people to make that, let's say, emotional step from an ICE to an EV. I think that's really been important to get certainly the U.K.'s adoption rates to where they are right now. I hope that will continue going forward because I think that's still needed. In terms of impact on the supply chain, whether we like it or not, most of the raw materials for batteries are still manufactured, certainly refined, in China. You've only got to look at some of the data for mine ownership and refining, particularly of cathode materials, to see what a globally dominating position they have. Clearly, there's some discomfort around the world in terms of our dependence on that supply chain for this industry. Some of the legislation that you have hinted at is enabling the supply chain to start restructuring itself to allow some more independence and diversity of supply. In Europe, we are quite lucky to have two pretty big chemical companies that are active in the supply of cathode materials. Umicore and BASF are very successful and are producing high-quality materials. When you look under the hood, there is probably still some dependence on China, even actually when you go to those front-end suppliers. You are starting to see investment in refining here in Europe as well. I will just also step in, it might help. It really is not going to be a winner takes all situation. There is lots of money going into two or three well-known U.S. solid-state battery developers funded by European car companies. But those European car companies are very happy to talk to us and very happy to cheer us along. A, because there will not simply be a single solution because there are so many different types of car and vehicle that the attributes of one particular battery might lend itself better to a particular type of vehicle. But also because nobody has yet cracked it, however much they might talk about things as if they have. There is no company that I know of that will not talk to us, at a very detailed level as well because they just cannot be sure how it might go. I am old enough and just like many of us are, to have understood how Arm began in the U.K. They began by almost starving themselves to death, which is maybe a traditional British model of how companies develop. But they did not start with huge amounts of funds from the American market or NASDAQ. They funded on a shoestring, and they became what they became, partly because of the efficiency of thought and activity that comes from doing things in a certain way. I am sure if we had lots of money in the bank, we would spend lots of money. That does not mean you are spending it wisely. You are just spending it because you have got it. Our man Jason here would not have that anyway. So we think carefully about how we spend money, but it leads to an efficiency. Great. Thank you. I do not think there are any further questions. Graeme, John, Louise, Denis, thank you very much indeed. That concludes the first half of today's Capital Markets Day. There is coffee and pastries just in the room across, and if I could maybe ask you to come back in about 20 minutes time. Thank you. James, I think it is over to you, sir. Over to me. Okay. Thanks, everyone. Welcome back to the second half of the Capital Markets Day. James Carmichael from Berenberg's Energy and Environment Research Team, and on the panel, happy to have obviously, we know Graeme, CEO of Ilika, Julian Hetherington from the U.K.'s Advanced Propulsion Centre, and Thomas Bartlett from the Faraday Battery Challenge. I think, obviously most of you know Graeme. But maybe it might be worth just putting a bit of context around Julian and Thomas, maybe a quick intro of who you are and what your organizations do might be helpful for the audience. Sure. Yeah. I am Julian Hetherington. I am Automotive Transformation Director at an organization called the Advanced Propulsion Centre. We have been around as an organization since 2013, set up out of a joint initiative between government and the U.K.'s Automotive Council to run a program of research and development funding in the mid to late stage technology readiness level. So helping get things towards industrialization readiness. We have deployed about GBP 1.5 billion of funding over the last 10 years. In 2020, we were asked by government to be the front door and deploy the up to GBP 1 billion Automotive Transformation Fund, which was largely focused on capital investments in establishing manufacturing capacity. So the large battery factories that you have seen in the press have been as a result of the funding that we have deployed on government's behalf. My own background actually is automotive for actually nearly 35 years now. Initially with Ford and then with Jaguar Land Rover, where I was responsible for a variety of programs over my life. And most recently, responsible for globalization programs, so dealing with major capital projects in overseas locations. So that is my background. That's great. Hi, everyone. I'm Thomas Bartlett. I'm Deputy Challenge Director for the Faraday Battery Challenge, which is a GBP 610 million government initiative to help grow a U.K. battery supply chain. We fit just before Advanced Propulsion Centre. If you're looking in terms of technology development, we support everything from early stage research to something that we set up called the Faraday Institution, which has invested about GBP 200 million into, I'd say, world-leading research. We've got about 500 researchers, 27 universities generating really good research focused on answering industry problems, and I think that's the key bit for that. But also supporting business innovation, companies like Ilika, who've accessed our programs to get R&D funding to support obviously their journey towards market. But also holistic as well, we cover everything from skills programs where we're developing skill set, manufacturing skill centers, doing international engagement, trying to get companies out into markets, and lots of other things as well. We've also rendered some engagement with investors as well. We also invest quite heavily in capital as well. One of the things that we've done is invest in the UK Battery Industrialisation Centre, which is now north of GBP 200 million investment into gigafactory cell equipment and basically a gigafactory that is open access for UK PLC. Because when you're looking at, I'm sure you'll cover points today, but when you're developing batteries, the capital needed to put the equipment in is expensive. We're trying to de-risk that for U.K. industry, and we've got, I'd say, through that facility, something that is world leading and about three years ahead of its closest competition in terms of the scale it can operate, the equipment that's there, and also its readiness to support businesses in the U.K. As I say, that's where I am. My personal background is I'm a doctor of electrochemistry, worked in a few companies developing battery materials, and also in solid state battery programs for companies. Not Ilika, just a- Not yet. No. I worked there for a few years before joining government. All right. Thank you. I guess, probably guessed from the intros that we're focusing on Goliath here, and I guess we'll dive straight into the first question on EV and the EV markets. I guess there's been a bit of press coverage recently around slowing sales in that space, and I think broadly speaking, coming into the year, the expectation was that growth in EV sales was going to slow through 2024. So maybe just helpful to get a bit of context around whether you think that's a short-term blip or a long-term trend. How concerned should we be maybe, Julian, do you want to start? Yeah, it's a very interesting position to be in, actually, because we've seen, certainly in the first phases of EV adoption, as the technology for conventional lithium-ion cells has started to play out and become more commercially ready, with larger established battery companies, including those supplying the likes of Nissan, for example, and Volkswagen. Sales actually kind of rose quite rapidly, helped by incentives around Europe and in the U.K. In the U.K., focused around plug-in car grants, which disappeared a couple of years ago, and also around company car tax incentives, which still apply today, benefit in kind taxation for quite a significant part of the U.K. market, really helped drive the early adoption of certain types of vehicle. We see a similar sort of picture unfolding around the EU27 as well. If you look over the last couple of years, we've seen EV penetration in the U.K. market for passenger cars get to about 16% or 17%. It might not have escaped your attention that this year is the first year that the zero emission vehicles mandate bites, with a target of 22% of the market for passenger cars being zero emission vehicles. That really means battery electric vehicles. You can also do this with fuel cell vehicles, but there are very few of those on the market. So that's a bit of a gap to close. Next year, of course, that starts to step up again. You've got to get to 28%, and then it starts to ratchet up until you get to 2030, when 80% of the new passenger cars sold in the U.K. must be zero emission. That's putting quite a bit of pressure on the automakers, who frankly had quite a lot of strife through late regulatory definition. The zero emission vehicles mandate was really only finalized in November of last year to be effective in January of this year. The industry needs a longer planning horizon than that. Government's probably not been very fair. But the one thing that government did do was it did take some feedback from industry about how the mandate that was originally consulted upon the year before ought to be written. And actually, they found an accommodation that works for the industry as well. We've seen early adoption, driven by financial incentives. And actually, if you look at the vehicle segments, there's a bit of a story here. If you look at the D segment, which is basically larger passenger vehicles, the more expensive ones, actually, last year, electric vehicles outsold petrol and diesel vehicles 2 to 1. Hybrid vehicles fit in the middle. But if you look at the smaller end of the market, the kind of Ford Fiesta size that they no longer make, actually, petrol cars outsold battery electric vehicles 2 to 1. It was the other way around. And that's a function of two things. Firstly, the availability of models. There are many more models available in the larger passenger car sizes because frankly, they have a greater tolerance for higher price and battery electric vehicles are more expensive today until the cost of the technology starts to come down as volume starts to grow. So it's more easy to sell into that higher price market and still actually have a reasonable return. And they're also typically the vehicles that are incentivized by company car schemes. If you look at the smaller end of the scale, you used to be able to buy a Ford Fiesta or equivalent for about GBP 15,000 or GBP 16,000 not very long ago. Until very recently, the cheapest small electric vehicle you could get was not far off GBP 30,000 for something electric Corsa sized. So that's a major disincentive at that smaller end of the market for people to adopt. And frankly, the car makers aren't making any money at that level either, so they don't want to make them. They're only going to do it under duress or when the cost structure starts to change. What we expected to see was some contraction of the market in the near term until costs start to come down, and the vehicle makers can start to afford to make the smaller vehicles, which is where the mass market is. So that's essentially why the market has almost plateaued over the first few months of this year. But we do fully expect it to recover. The automakers have got no choice. They have to comply with the mandate, which means they're going to have to develop more models that will be more accessible, and they will be deploying technologies that are starting to reduce the cost. So we see this definitely as a transitional thing and not something that is going to upset the trajectory towards 2030. By which we think, according to our latest quarterly demand forecast, which we do every quarter and publish on our website, the U.K. will need about 91 gigawatt hours of batteries for electric vehicles in 2030, which is about 11% or 12% of the total European and U.K. demand combined. I guess maybe just going to Graeme, you're picking out a stat there around the mix of sales at the high-value end of the market, which is obviously where Ilika is targeting. I suppose these sort of short-term blips haven't really had any impact on the conversations you're having with potential customers. That's right. The reality is that when you have a new technology, like solid-state batteries will be, you need to make sure that because it's manufactured at a relatively modest scale relative to the incumbent technology, so normal lithium-ion batteries in this case, that you launch that technology, you commercialize it into a sector that is more price tolerant. Right. For exactly the same reason, actually, that larger luxury vehicles are still outselling from an EV perspective. That will be our initial launch market, and that is the market that most of the OEMs that we're talking about see solid-state batteries playing in, where you can emphasize the unique selling points of the technology, but not worry too much about being competitive with, let's say, commoditized battery alternatives. Great. Thomas, I do not know if there is anything you want to add to any of that around the impact on Yeah. Well, I guess just in terms of the market generally. Not too much, but I think a key thing is, I think actually, I think when you look at some of the demand forecasts that the APC have come out with, which are personally, not to sound like a sycophant, I think really, really good demand forecasts. I think we are actually, I think even globally, we are still looking actually at a bit of an uptick, I think, from 2030. So it is not just a here is a stall. Oh, and there is a correction back to where we were. The future forecast for electric vehicles is still ticking up. So that is something that is not going away. Yeah. It is worth recognizing, actually, now, if you look at despite the Prime Minister's shifting of one of the goalposts from 2030 to 2035, actually, it was almost irrelevant because the zero emission vehicles mandate still ensured the same trajectory of electric vehicle deployment as you get out to 2030 and beyond. But we now have completely aligned targets effectively at the end point in 2035 across the U.K. and the EU 27. Okay. That makes life a bit easier for the automakers. Understood. That makes sense. I guess one thing we're going to need if we're going to do all this is raw materials, and lots of them. I think it was touched on in one of the presentations earlier, but do you get the sense, Graham, that the raw material supply chain is mature enough outside China to get where it needs to get to? I'd say not yet. I think the reality is that Chinese refiners and manufacturers of material are still globally dominant. This isn't a challenge just for this country. It is a global situation. But I would say that the big chemical companies, in particular, as well as some innovative technology developers, are aware of the opportunity. It's clear that this is a growing market, and that there are new materials that need to be developed and supplied as part of the new technologies that are being rolled out. We're seeing international players step into those, often supported by some of the legislation changes that we were discussing earlier on in the morning. China is a real risk in that, if you look at lithium, for example, around 90% of the world's battery-grade lithium carbonate equivalent is processed one way or another in China. Many of the Chinese entities are highly vertically integrated from mine right the way through to refined battery input material, in some cases into batteries themselves. That is a very difficult place to come from because you have no mark to market. At any point, you have always got the opportunity to arbitrage with your own vertically integrated supply chain. The West is fighting back, in different ways. If you look at the U.S., as was raised by one of the questions earlier on, through the U.S. Inflation Reduction Act, you can only access many of those incentives as an app producer or an at-retail level if you do not have materials that come from China for key inputs. That is one way of doing it, but it is expensive and it is risky because you risk having differential pricing, which we are already starting to see for battery materials that are U.S. IRA compliant and materials that are not. Europe and the U.K. have got a slightly different approach, and we are really focusing on building out those supply chains. So we have had a very strong focus, through our programs, in developing out materials that we can source from our own shores, like lithium, where we have got significant reserves in the U.K. actually. Down in the southwest, we have funded a number of projects from companies like Cornish Lithium and Imerys British Lithium, and a bit further north, other companies that are focusing on refining of imported concentrates, specifically with a focus on building supply chain resilience and tilting away a little bit from a single country counterparty risk. That is also the approach that is being taken by the European Union, and they have got things like the Critical Raw Materials Act coming into play as well that is driving that. There is money behind the clock as well to do that. U.K. has got a very strong focus on supply chain resilience, and actually Minister Ghani, who is recently moved from DBT into FCDO, has a very strong personal interest in critical minerals and building supply chain resilience and sponsored a task force, which I was a member, to look at how we build those integrated and more resilient supply chains. She has taken that portfolio with her into her new role. So I think we are doing the right things, but there is some intermediate risk where we are dependent on China. I do not think you get there by playing King Canute, stopping it. You have actually got to try and build your own little supply chains that can help you tilt away, and that means looking right the way through to supply chain partnerships with other territories that do have the raw materials, and then allowing the U.K. to focus on the midstream processing, which is where we can really add a lot of value and where we have a lot of capability in our chemicals processing sector. Places like the northeast and the northwest are really good at chemicals processing, and that is an opportunity that we are going to try and exploit. Is that sort of raw material availability something that comes across your door, I guess? Is it something that people focus on at that early stage of tech development? Yeah, I'd say what we've seen, I think, since Faraday's. We've been investing in early stage and mid stage research now since about 2017. I would say there's a massive change. If you go back to that point, I think people were worried about trying to make good materials, and that's all it really focuses on, small business starting up or even large businesses starting out looking at batteries. Now everybody is going, "No, I'm doing this because of critical mineral supplies, this reason, this reason, energy efficiency," and all the things that you would really hope that companies are focusing on. That's everyone's focus now, and it's something that we actively assess for when we look to support companies. But I think there's a few other things to pick up on. I think in the short term, yes, there's definitely these partnerships and this pulling through of critical minerals and the need for that. But it's also interesting because what you're generally seeing in the industry is a lot of pick and place technology. It's this works in China, we'll bring it through and set it up, because that's trusted processes. To a certain extent, that's what you need to do because there are legislative deadlines. You need to get factories and processes that you know work, and you need to get them set up so that they're IRA compliant and all the rest of it, to support the U.S. and similar things for the EU as well. But in the same way that, the gigafactories, and you might have heard because it's in popular news, like Tesla revolutionizing how you put together a battery cell. That's the same for pretty much all processes when you put together a battery. If you look at cathode materials, normally a blackish powder, various shades of black. Everything's black in batteries. It's the way that's made in China and globally is, they're going to kill me, pretty simple. It's take some things, mix them in a big reactor, filter it through a big filter, and then bake it and grind it a bit as well if you really want to. That's literally it. Very controlled, but those processes, first off, it's batch processing. It's very inefficient. Some of the things we are starting to see come through in a lot of the focus, I think, especially of people looking maybe not at the first phase, but second phase, is actually saying, "Well, we cannot compete with Chinese manufacturing costs, but actually the way the market is going is we need to drive better efficiency of processing. There are loads of efficiency gains for making continuous flow processes. Yeah. Just having constant. Same as there is in every industry. If you automate it, if you make it continuous, you get the cost down. Through that is the things that we are starting to see a really big push of people looking to that process manufacturing costs of how do you make these things smarter, not just at putting cells and batteries together, but also the materials side and everything. This sort of cost squeezing. There is so much room for cost squeezing throughout all of it. That is really important. The second point, I think, is worth saying that we export, I think it is about 80% of the cars we make. We also import a similar amount. Most of the raw materials that are going up in the U.K. are going to be in the shape of cars. Not immediately, but future. That is the same for, I would say, most of Europe. What that means is there is a really, really big focus on how are we going to utilize that. I think some of the future sort of amounts in terms of our critical minerals that could be supplied by recycling are actually really, really high when you look at maybe 10, 15 years. I know that is long term, but in terms of thinking in terms of long-term strategic supply, as soon as those things come online and become economically viable, then we have a huge supply of minerals coming through. I think that is one of the reasons why I think groups like Julian's and others are starting to really focus on what happens to end-of-life vehicles now. Because at the moment, you take end-of-life vehicles, you shred them, then all of that, something called black mass, so it is all of the sort of the shredded bits of the battery, has all of the materials in there that are really high value, gets packaged up and shipped off to China where they refine it and then put it back into the batteries, then you buy them back in again. That is what we definitely need to stop because that is probably, in terms of the U.K., got great lithium reserves. We have actually got some potential other really critical mineral reserves and I think properties in Scotland, but there is going to be a massive amount coming out of recycled vehicles. That is something we have got to keep an eye on as well. That is a really good point, actually. Different car-producing nations around the world are in a very different position. So in the U.K., as Thomas just said, we have got a positive mass balance of battery materials coming in through finished vehicles, so we will have a surplus of recyclate availability over time. If you look at Japan, for example, they are in almost diametrically opposite position because they make a lot of vehicles and export them, but they import virtually no vehicles. So they have very few raw materials themselves. They are importing all their raw materials, then they are exporting them in their finished products. So they have got a huge negative mass balance. So these partnerships, and we do have the critical minerals partnership with Japan and a number of other nations, are going to be really important looking at secondary materials as well as primary materials. It also helps improve the life cycle impact of battery electric vehicles. Good stuff. No, really interesting. I think obviously the solid-state batteries is what I am focusing on today. I will not start with Graeme because I guess I know your view on this one. But in terms of solid-state batteries, what are the benefits maybe, and do you think they can drive adoption of EVs? I remember, without giving too many trade secrets away, I remember a very difficult discussion back in my former employer about a new vehicle architecture and how on earth we were going to package a battery big enough to power the vehicle within the constraints of the vehicle, without making the floor too high or squashing people's head into the roof. That was largely because we were trying to package something that had got cylindrical cells that were all stacked together in a pack. Each of those cylindrical cells was in a module, a small brick-like or shoebox-like module, sometimes a bit bigger. You distribute those in a pack, which has got other containment around it as well. You are basically trying to fit big boxes into small spaces, and they do not work. You have got some interesting things to do with lithium-ion batteries if you are talking about wet cells, conventional cells. Thomas will pontificate about this for a long time if we let him. But basically, lithium-ion cells start to expand when you use them, and when they start to expand, then they degrade and they fail, right? To stop them doing that, you have to contain them. You have to squash them. So cylinders do that nicely. They keep everything held together. But when you try and package them together, you have got lots of gaps in between, so it is not very space efficient. You do not get much surface area for all the volume that you occupy, and then you have got to stick them all together and hold them in a big frame because they are not a structure in themselves. So what is called the cell-to-pack efficiency is quite poor. That is the volume occupied by the pack compared to the volume of the cells themselves. You add cost as well and weight. When you start to go to big format prismatic cells or big pouch cells, you have the opportunity to stack them all together so you get better package efficiency, but you have still got to squash them all to stop them expanding. Things like those pouch cells, they need a lot of physical containment to stop them degrading, so you need strength. The advantage with solid-state cells is that you do not need to contain them in the same way because they do not exhibit the same characteristics. The opportunity afforded by solid-state cells is disruptive on the way that you architect a vehicle platform because you do not need to package so much stuff around the battery. You do not need to worry too much about crash protection from side impact, for example, because the batteries are inherently more safe. They have got no flammable electrolyte sat in the middle of it. You do not have to worry about putting a 6-inch nail through it, which is one of the common tests for batteries, right? You do that with a conventional lithium-ion cell and it is quite entertaining. It is called a thermal event. But with solid-state cells, you do not have that issue. So you get much better cell-to-pack efficiency with solid-state cells and that is where the opportunity comes in terms of volumetric efficiency and energy density and power density. Do you think that is going to help drive adoption, Dr. Thomas? Yeah. I will help with that. Yeah. I think we touched on this a little bit with talking about the different sort of classifications in terms of automotive sector. I think there is sort of two time horizons in this. One of which is that when you look at automakers designing, I would say very much in a large segment, and we are talking very large cars, very expensive cars, where customers have a certain performance requirement, which is, "I want to be able to drive very, very long ranges. I want the performance to be really, really high, and I am not accepting less." The automakers are very, very aware of that. You can't take a Range Rover and say, "Yes, you can drive that, but only 30 miles at a time." "Oh, actually, we're going to step up the acceleration of the new electric Ferrari, because actually, we're trying to protect the battery a bit, so we're going to back off the performance." No, that doesn't sell. When you're looking at those cars, those are, I think Graeme has mentioned, they are the sort of the segments that are looking really at the next generation of batteries, the really high-performance batteries. Because they will sell cars. They can't afford not to. But what they have to do is either go incredibly intensive on that pack engineering that Julian was talking about, trying to squeeze every last little bit of available space, last little bit of maths out. Because the actual cells they can buy are probably the same as everybody else's. They're not massively different. They really are all shades of the same sort of performance. It's all on how they're assembling and packing those in. What solid-state batteries will enable them to do, though, is, as you say, strip a load of that out and allow them to offer that performance that is expected of the customers of the premium price tag. It's one of the reasons why for sort of the next introduction piece, it makes sense both from a volume perspective, but also from a meets customer demand perspective. So very much from those I would say hard to electrify, and the reason I say hard to electrify is they will be, but it's hard to electrify and keep the performance that's expected by the customers. I think that's the real bit where it's going to drive it. As you then walk out in time, I think Julian's touched on solid-state batteries, and the reason that people have been so excited about them for so long is because, yes, you've got the inherent safety, so you can squeeze things out of the performance, which is great, because I think, I always personally say, "No car that is sold with a battery in it is sold not safe." They're all designed to be safe. What the extra inherent safety allows you to do is design out all of the more controls, so you don't need to control the heat as much. You can sort of push it a little bit more. All the software limits that, at the moment, when you charge your car up to 100%, it's not charged up to 100%, it's limited. When you put your four down, you're not getting all of the performance out. It's all limited. All of those things can be rolled back so you can get more performance. But it also comes back to that manufacturing piece, which is really, really important and I think where, especially in the U.K. and in Europe, et cetera, we're used to making technology efficient and making things really well. I think that's a really big point. Once you get away from the conventional battery manufacturing process, which, no matter what way you're going to make a solid-state battery, it's always going to be slightly different. It might be a little bit different, depending on the route you go. You might be able to cut out certain parts of that process, maybe reduce certain times. Or if you are going for really out there solid-state battery technology, you could throw the whole process in the bin and start again. What that does is it gets you off the current track and gets you onto things where you can start having these things in smaller footprints. You can have much less CapEx expenditure into your factories. That is where, when you look at the cost point of solid-state batteries, that is why they are always coming out, in the future, really, really low. That is the point of which then they can appeal to the mass market, is sort of that longer-term duration. There is another factor, actually, that is often overlooked. If you look at the technology that is the internal combustion engine, it is pretty much ubiquitous. It will work in very low temperatures, very high temperatures, high duty cycles, low duty cycles. Conventional lithium-ion batteries have got a bit of a problem in that they do not like being very cold, and they do not like being very hot. One of the advantages of solid-state batteries is they have got a much wider temperature capability. You think about signing off cars that are going to work in Siberia, maybe not at the moment, or even Canada, they have got to work in -40. Batteries do not work at -40. You have to keep them warm, so you have got to keep them plugged in. If you go to the Middle East, they have got to work in at least +40. Some cases, the sign-off is +45 or +50 C. At that kind of temperature, you have not got much leeway before you start to get to thermal runaway position for conventional lithium-ion batteries. It is not so easy to ubiquitously deploy conventional lithium-ion technology in all operating environments, and this is where solid-state technology can extend the operating capability of electric vehicles in some of those more extreme markets. Yeah. People will pay for that. It is a great premium opportunity. Graeme, just I guess earlier on, it was mentioned a few of the competitors are well-funded by OEMs. I think we have seen Nissan mention solid-state batteries more recently. In the conversations you are having with the OEMs, are you seeing them, is sentiment improving, I suppose, that they can realize a lot of these benefits? As someone mentioned earlier, solid state has been around for a long time as a potential technology. Are you sensing that we are much closer? Yeah, absolutely. I think every global OEM and tier one in this industry has got solid state on their roadmap, whether they have an in-house program in order to deliver that. More often, they are looking for collaboration opportunities. Everybody realizes that actually this is the direction of travel, and they have to have a plan in place in order to make it happen. I think perhaps the other point that builds on what Thomas and Julian were saying earlier about recycling of batteries being really important. Solid-state batteries lend themselves to be recycled in a much more straightforward manner. In fact, as part of our current Faraday Battery Challenge program, there is a study, an LCA study, being done by HSSMI, one of the collaborators, working through that whole recycling argument. It is very clear that if you have got a simpler all-solid battery, it is easier in order to extract all of those minerals, those critical minerals you want to put back into the supply chain, if you have got a solid-state construction relative to one that has got a polymer separator in a toxic, potentially flammable liquid electrolyte. You do not have those worries in solid state. Okay. Starting to get conscious of time, but I think we've got a little while left. Last one, I guess. Just thinking about, we've had some high-profile and lower-profile battery companies that haven't worked in the U.K. recently. Maybe from the early stage point of view, what are the unique challenges in terms of making a successful battery company? Yeah, it's Wednesday. Yeah, I mean, we've just a bit of context, we as a challenge, we support about 150 organizations today, about GBP 118 million worth of grants. Those companies have gone on to raise about GBP 780 million so far. We're actually doing quite well growing companies. I'd say at an early stage in the U.K. A study I think we did last year pretty much showed we've got what's the fourth highest enterprise value in Europe. We're really good at growing companies. I'd say what is a struggle for us, and also other people, is that the scale-up stage, is the stage that Ilika is really pushing through right now, is getting that technology from, "I have a great idea," through and staying on that track up to then being able to get to mass market. That is not a battery problem. It's a hard tech problem. It's a, "I don't just make software" problem. It's because it requires quite a lot of patient capital to sit and work through and create prototypes and get out there. That's the same for batteries, it's the same for any sorts of hard tech physical products that are made. I think what the unique I'd say I'll start with the challenges and then get onto some positives, actually. But I think the challenges of batteries is the rate of change. It's the rate of the speed and the fact that everything is standing up really quickly. What we're hearing from companies across the board, and it's great to hear that Ilika are in the door talking to OEMs around solid-state battery technology, is that the barrier to entry to get into an OEM or into a gigafactory's R&D department, which is where everyone starts. You don't start at the purchasing department when you're scaling up new battery technology. You start talking to the R&D people. The barrier to entry used to be, "I've got some technology. Can you test it for me?" That's going back maybe 7, 8 years ago. Now, to even get to that point, to get into the front door, if you have a material, so it's in a cell, you need to be able to provide the material. You also need to provide the data sheets of what that looks like in a representative battery. You also need to know what that battery means at the module and pack level in terms of your value proposition, also what it means at a vehicle level as a value proposition. You have to have that ready and waiting to give to the R&D departments. They have got everybody after them. They really need to know that they can invest their time in talking to your company. Once you are in the door and you have got that position, that is really good and then the problem is, it is a nice problem to have, but it is ramped up. Once you are through the door and you are starting to click through, we have got examples of companies we are supporting in the U.K. that they have gone from, "Oh, yes, can I have a few hundred grams of material, please?" The next month it is, "Can I have 10 kilos, please?" Then in six months' time, it is, "Right. Can I please have 500 kilos?" For a company that is making 100 grams, we ask in six months, "Can you supply half a ton of material?" That is quite a significant ramp-up. That is why, in the U.K., that is why we have built things like the UKBIC, who I know Ilika are collaborating with. It is that battery industrialization center because you can go and when you cannot wait for a whole battery line to come up there to prove your stuff at that sort of scale. You can go and use the open access facilities. We are also doing a similar thing up in the northeast with a material scale-up facility that we are investing in building it now and building all that sort of capability. That is why it is really critical. We have got quite a good growing ecosystem in the U.K. of that open access facilities, is because of that ramp-up scale that you need to hit to sort of keep on track. The positive, and I am pretty short on time, the positive is, though, is unlike quite a lot of hard tech, there is such a legislative deadline, there are such pressures on the OEMs to get the best technology through, that if you can hit all that and you have got a really good technology, it is technology that allows you to get that next step, then you are off. Yeah. You just need to get through the door. Is that similar, I guess, when you are moving into industrialization, to those challenges? Yes, it is. I mean, the big challenge is the scale of the capital cost to industrialize. Yeah. You have got to make sure that what you are industrializing is contemporary and it is competitive. Frankly, the margins on conventional lithium-ion batteries, particularly LFP cells, that are largely produced in China today, is wafer-thin. It is about volume and it is about getting capital cost efficiency. Even at that level, you are still looking at investing at least GBP 100 million per gigawatt hour for industrialization. That is just for cell assembly. When you start to get at smaller scale and more esoteric technologies, then actually you start to spend a lot more than GBP 100 million per gigawatt hour. That is why you see most gigafactories being built in the Western world are many billions, somewhere between $2 billion and $4 billion or $5 billion to industrialize at reasonable scale. The bigger challenge is the link with the vehicle development timeline. Frankly, the vehicles that you will be driving in 2030, you will buy in 2029, are already on the concept drawing board today. It takes about five years to go through a full new architecture development. You start with target cascade, getting down to component-level specification, then you have got to go through a full validation process. As much as we try and do more and more of that using virtual techniques in the simulated domain, you still need some physical testing, particularly with these nascent technologies. That means you have got to provide physical samples that are production representative at a relatively early stage. The challenge for battery companies, this is why we are trying to bridge that gap with government funding, and this is not unique to the U.K. The E.U. are doing it as well with their IPCEI schemes and the U.S. is doing it too, is to make sure that you can support the production of production-like samples at an early stage. Then you have to sit there and wait for them to go through the combined vehicle development testing regimes before you can then get to the point where you commercially source and you have a strike price. You have to be patient. If you try and rush it, if you try and grow too fast without getting all of those samples out at the right time, then you run the risk of running out of cash. You've got to make sure that you've got deep pockets when you start this. But if you're bold and you hold your nerve and the fundamental technology is basically good, there is a ready market at the premium end. Because it's that leading edge where the margins exist, not in the mass market. Mm-hmm. Graham, I guess finally, which sort of challenges are you facing most at the moment? Well, I think, the key to Ilika's success, where perhaps other battery companies may not have covered themselves in glory, is to have a risk-managed approach to the challenges that Thomas and Julian have just outlined, in that we say that we will develop our batteries and get them to A sample. This is the language, the vocabulary of the automotive industry where an A-sample is a cell that has the function that you need to power your application. A B sample is then a battery that has the same specification, but is actually made on a piece of equipment which is industrially relevant. So you could transfer that piece of equipment into a larger scale facility. A C sample is actually where you start to make volume production of cells on that piece of equipment. The idea at Ilika is that we get to A-sample and that is enough so that we can engage in an RFQ process, a request for quotation from an OEM. They can tell us what they like about what we have made and what we need to improve. Actually, we can get qualified for the rest of the commercial procurement process at that point. Then we partner for B samples and C samples and work with the UK Battery Industrialisation Centre and also tier one manufacturers themselves in order to avoid the requirement on Ilika to actually deploy those hundreds of millions of capital that is required. Because actually we believe that through partnership, we can get a more efficient commercialization journey for both Ilika as a developer and also for the tier one and OEM as manufacturers. That is exactly why UKBIC was paid for by government. There you go. Great. Thanks. I think we are up against time now, but thank you, Thomas, Julian, and Graeme. Really interesting discussion and we will hand over. Think to Jason. Thank you. Thank you. Thank you all. I hopefully finish out the CMD with a little bit on finance, and actually picking up a topic of conversation, to start with on the financial aspects, really around grant funding, which is a theme through the finances for the last few years and into this year. Just picking out one of the grants that has been mentioned before by Louise. This is the SiSTEM grant that we have received. This is a 17-month grant program, 2.7 million GBP in total, although funds direct to Ilika are 400,000 GBP. That 2.7 million GBP is spread across the three partners within that process. That is ourselves, UKBIC, and Mpac. Mpac are an automation specialist. Really the benefit and the reason for highlighting this is it is not just about the funding that comes to Ilika for this. This is also through utilizing an innovative way of the grant funding, we can ensure that, through the partnership with Mpac, they can develop an assembly line that we will then bring in to deliver that 1.5 megawatt hour production facility that Louise talked about earlier, to help us on that journey to proving out that A-sample. It is not just about funds that flow directly to Ilika, it is also being able to use the support of the U.K. grant funding landscape to make sure that we can manage that journey and have proper allocation of capital to extend the runway of the business as long as possible. That process runs through towards the end of this year, so we expect to take delivery of that Mpac assembly rig that you can see on the bottom left there on the screen, or a representation of. Ours will be slightly different to that. Towards the end of this year, we will take physical delivery, and then we will qualify that and get that set up through the early part of 2025 so that that is ready to move on to that A-sample production timing. Just along the same timing that you would see with the HISTORY project, which is along the technological development. Once again, supported by U.K. government grant, to really bring along the technology of the cells themselves to the point of our D8 data point. That really is bringing together both that physical ability to produce cells and also the technology to get to the right point where we really see that convergence coming together for the A-sample production. As we have just heard, that is the point when you really start to get to engagement with the automotive sector and can start to put those cells into that pack and start that next journey. Just to give you a different aspect that you would have seen earlier within the presentation in terms of that timeline. This very much talks back to that timeline graph that you saw with Louise. Remember the S curve in terms of our technological development, followed then by the blocks for the automotive A, B, and C sample, just in terms of the manufacturing scale of activity. Through 2018 to 2024, we have had the pre-pilot line. That is very much the research element, so hand manufacturing these elements to get to the point that we are at now. That P1 sample, all handmade in our existing facilities. As we move forward, as I said, with that SiSTEM grant supporting the introduction of the automated pipeline and moving into the ability to start to introduce some of those manufacturing-like processes within our existing facilities. That is really important as we look to engage with the OEMs. They want to be able to see that, as Thomas was saying, it is being able to demonstrate that this thing that you have developed in a lab is capable of being produced on a production line at scale. That is highly important, and that very much is the journey that we have already been on with the Stereax product line. Doing that now with Goliath starts to bring that to fruition, where we get to do that automated production, so that we can demonstrate that with those OEM partners, those 17 interactions that we have got, so they can start to see that that is easily transferable into the supply chain. As we go forward then, as we have talked about with that business model right at the start when Graeme was talking earlier, we are not looking to build a gigafactory. We recognize that Ilika's specialism is in the research and development. There are a number of unfortunate U.K. battery companies that have tried to be master of everything, both develop the technology and build the factory, and unfortunately, over the last year or so, they have fallen by the wayside. It is a very difficult ask. Having come from a manufacturing background, it is a very specialist requirement, once again, as Thomas was saying, to be able to look for those incremental gains and eke those out of your manufacturing base. Through our business model of engaging at that A-sample point and then doing a tech transfer and license agreement with the automotive partners, that allows us to leverage their expertise in manufacturing to make sure that we get the best of both. We will continue to be that technological development, but we do not have that cost piece of trying to scale up to that gigafactory scale, as we heard just a minute ago. Some of those numbers are quite eye-watering and difficult to deploy. That really underpins the financial pieces that we look to from an Ilika perspective. Just in touching then on the financials, if I start with a little bit of history for those that maybe are less au fait with Ilika and our backstory. If we look at the recent past, FY20, so financial year ending April 2020 through to 2023, that is the table you can see on the bottom left of the screen. We have been very strong in receiving grant funding through that R&D and technological development. I should say for the business as a whole, that grant funding has very much been geared towards the Goliath, the automotive sector. The Stereax side of the business has been developed without that grant funding support, predominantly because the main market for that really is outside of the U.K. It is not really particularly applicable to UK PLC, although obviously, over time, the therapies that are developed in the U.S. trickle down across the globe. Ultimately, the markets will still be there. But that early adoption, as John talked to earlier, is all sat within the U.S. market. So limited grant funding. But we have done very well as a business in receiving grant funding to date. So good in the early years, although a little bit of drop off in FY22 just because of the timing of the grant and our own development. But then stepping back up in 2023. And then as we have talked about with the HISTORY and the SiSTEM project, as we go into this financial year, that is really good financial support that we have received, non-diluted funding for the business to support that Goliath roadmap and development. Cost-wise, from a business perspective, as we were more R&D in the early years, obviously limited costs as we were at an EBITDA loss position. But really, as you saw in FY22 and FY23, that cost base increased. That was very much to do with the industrialization of the Stereax product. Once again, with our business model, we had to demonstrate that in production intent equipment and building out that fab facility within the U.K. is not a cheap exercise, but in demonstrating that it was capable of producing those batteries at that microfab scale. That allowed us to then engage with Cirtec, as we heard earlier through John's presentation, and with Brad into that licensing model and for them to adopt. Very much in then doing that and transferring that technology across, that has allowed us to then take that cost back out of the business, to focus then our cost distribution towards the Goliath as we go on that same journey of scaling up into that small scale fabrication to demonstrate the product, then as we go into engaging on a licensing aspect. That really leads us into then our half year results that we had at the end of October. I will just follow that through with the announcement this morning on an update on a couple of those aspects. At the half year, total income was GBP 1.3 million. Going back to last year at GBP 0.7 million of direct grant revenue and total income of GBP 0.8 for the full year. At the half year, we were showing a really strong performance. That very much was to do with both that HiSTORY and that SiSTEM grant income coming through. Although, as you saw from the awards that those represent over the timeline, those are fixed awards, and they are a little bit front-end loaded, so we have seen that slowing down as we have gone into the second half of the year. We have just announced this morning that we expect incomes to be around the GBP 2 million mark as we get to the full year in only a couple of weeks' time. EBITDA loss at the half year was at 1.9, as you can see from the previous half year, a significant reduction on that. As we talked, for those that followed the business at the half year announcements, that was very much on the back of that reduction of the Stereax cost side of the business as we moved the very expensive operation for an inefficient, small scale demonstration facility to the U.S., taking advantage of the IRA and the lower energy prices that we have. Thank you for the Q&A earlier. It makes my job easier to relate it back. That allows us to move that out and take advantage, and Cirtec are best placed to be able to do that small scale manufacturing as they go through that regulatory period because they can deploy their manpower across their other activities, where we were in the U.K. only with one single product line and doing one activity. We couldn't redeploy that manpower or that energy elsewhere if we weren't actually producing something. There is a lot of synergies in that early adoption with Cirtec, and that really allowed us to pull cost out of the business for this year, certainly at the half year, and that has followed through into the second half. Cash balance. At the half year, we were at GBP 13.2 million. As announced this morning, we are expecting to be around GBP 11 million at the full year position, once again, only in a couple of weeks. Very much that is underpinned by that cost reduction that I just talked about on the Stereax side of the business, the great performance in terms of additional revenue from grants, and also the timing of our capital spend. With the SiSTEM piece, that was one of the reasons to talk about that, it is avoiding capital spend, but without delaying the technical progress. One of the reasons why we have been able to maintain that technological process is by having those partnerships and also having the U.K. grant funding. They hold us honest in terms of making sure that we continue to progress as we have done. Quarterly, half yearly reviews where they make us stand up and ensure that we are delivering to those milestones for each of those projects that underpin both the technological development on the HiSTORY side and also the manufacturing scale-up piece on the SiSTEM piece. That really gets us to the expected cash position. Then going into the last bit I want to touch on. While we are not in a position to give specific forward guidance in terms of the revenues, values, certainly to make sure that we stay on the right side of the regulations. For those that followed the half year, what we do want to do is start to give some education in how we expect to see revenue building as we look forward, with both the Stereax, which we talked about at the half year, and I will go through now, and also now as we start to get close to that A-sample piece on the Goliath side. On the Stereax position, there are a number of different revenue streams that we will build through for that business. To help people understand how that comes through and how we expect those layers to develop. Right at the very bottom, for those that can see it, Graeme talked earlier about the transference of the technology, the equipment sent through to Cirtec. He did say that we are retaining the LCO deposition piece. That really is the secret sauce, if you want the most IP protected part of the Stereax battery, and was the most difficult piece to get right when doing that fab setup. We are going to retain that in the short term within the Cirtec relationship, and we will operate that on a subcontract basis. Within the contract, we will be paid for manufacturing, and that will drive revenue at the earliest point as we start to produce those wafers that then go back into the Cirtec supply chain for them to follow through the other activities. That really starts the income flowing, as Graeme said, as we get into 2025 and those volumes start to go from the Cirtec business, that will drive incomes coming through. Building on top of that, and John picked up on it earlier, we have non-reoccurring engineering. This very much has been led by conversations with Cirtec. This is very much that med tech model where they have a product and either the customer, the OEM, is looking for someone to certify that that Stereax battery will work for their application, and they will pay fees for doing that. That is the existing M300 to be certified in their application. Or actually, we like your M300, but we would like it longer, thinner, thicker, slightly more power, slightly different shape to fit our particular application. And once again, they will provide funding through to Ilika for us to change the form and format of the Stereax battery to fit their particular application. We have already had a number of conversations with potential customers and also with Cirtec around how that develops and really relying on the Cirtec experience within that medtech sector to guide us on how that builds and the expected levels. Building then on top of that, the gray sector that you can see there is the revenue that is built into the contract. Graeme talked earlier about the Cirtec contract, and the way that that is defined is a profit share in the early days at low volume. Then as we get to a breakpoint when it really starts to get through, as we expect the certification of products through that FDA process to start happening, it then trips over because of the volume trigger, and then would switch to a normal royalty rate. So that is where you would see that real ramp up as we expect to then get to the point. But in the short term, Stereax, and therefore Ilika, get the lion's share of the profit coming from those very low volume as they are used through that certification process. Then the last point, those yellow spikes that you see on top of there, Graeme talked about this earlier. The contract is exclusive within the medtech sector, but with a couple of carve-outs. So we know that, as Graeme talked about, that there is the opportunity that potentially one of the FAANGs that we may have in our customer base comes along and says, "We want your application, but we need it in much higher volumes, and we need it to be within our application." So we preserve the right for a license to be issued on that. Therefore, we would expect a license income to come from that. Or for outside of medtech, while we would want to push as much volume as we possibly can through the Cirtec manufacturing capability to bring cost point down as quickly as possible, we also recognize that there is a secondary market with Industrial Internet of Things, IIoT. Once we get that cost point starting to come down, some of those applications, once again, will potentially need larger volumes, and we have the right preserved within contract to issue a license outside of the field of medtech. So that really gives us an opportunity to build the various layers and hopefully gives investors, both institutional and retail, a way to help understanding how over time the revenues were built. But ultimately, as we progress through that FDA approval process and the product gets into applications, the predominant revenue will ultimately come from that traditional royalty model. Moving on to then the Goliath side, very similar in terms of layering, in terms of how we would expect to build that up. So once again, cannot give specific guidance, but to help people understand how over time that builds through. In the short term, rather than the manufacturing piece, we have grant income. We've touched already on the income that we have at the minute and the activity we're doing to try and look forward, and engage in the next stage. It would be a great piece for U.K. PLC to be able to be grant funded all the way through from the Faraday R&D start at one end all the way through to the APC, and the next project at the end to see our batteries in pack and mule and driving around a track somewhere. We're looking to engage in that piece, and that would be the next journey from a grant point of view. But we expect that to slowly decline down as we diminish the amount of R&D, and move to more commercialization. Although there will always be an element of the R&D as we look to change the batteries for other applications. We would expect grant funding to continue to support that with new applications as we look to innovate, and that really is at the core of Ilika. Sat on top of that, once again, very similar to the Stereax side of things, non-reoccurring engineering, NRE. We've designed the Goliath battery to be a generic cell that could be used across the board and will be recognized by many automotive customers. But at the same time, they will have their own requirements within their own pack, their own system design. We expect, and once again, in conversation with some of those OEMs about their particular requirements, that funds would flow to us to change the generic design that we have for our Goliath cell into something specific for their own architecture so that it's an easy plug into that automotive. Once again, it's about easing the adoption, but the funds are there to help support that changeover, and we've started a number of those conversations already to understand what that would look like. That's being guided by those conversations with those 17 OEMs that we talked about in the early conversations. Built on top of that, within the licensing model, we'd expect a license issuance fee. From a Goliath point of view, we are planning and modeling on a number of different regional-based manufacturing licenses. We're not trying to assume that we will have global domination, as we've said in a number of the conversations. There will be many different battery chemistries out there for many different applications. We've taken a very prudent view in how we've modeled this to expect to see that coming through. But as we move in, as Louise talked about, again, from that A-sample period through to B-sample, we would expect to be engaging in that licensing opportunity. That would be funds flowing through. With the nature of those licenses being quite lumpy and when they come through, that's why you would expect to see that being spiky before you then get into battery production coming through as the batteries are manufactured. And then the last part on there, once again, would be the royalties flowing from batteries. Very small volumes in the early days as they are proved out in the automotive platform. Then once again, as they go into mass manufacturing within the supply chain ahead of being on the forecourts, you would expect that to ramp up. For both Goliath and Stereax, very similar and very underpinned by the Ilika business model. Hopefully that gives people a better understanding for how to expect the Ilika business model to transpose into funds flow in the future, and to underpin the growth of the business as we go forward. Then I shall just finally touch on ESG to finish out. ESG is very important to us as a company. Obviously, the U.K. is very hot on making sure that everything is compliant and regulation. For Ilika, although we are an AIM-listed company and have maybe not the full regulations applied to some of the FTSE companies, it is highly important to us because we are interacting with those OEMs who are sat in that space. As we already interact with them on this day, as we start to talk to those 17 customers, we are already getting questions about, can you prove your modern slavery statements? Can you talk about conflict minerals within your supply chain? The business model that we have within Ilika is that we want to ease adoption, so very much making it easy to hand across the source of materials to those OEMs so that we have not sourced unique, esoteric minerals that you cannot get from somewhere. We want to make it as easy as possible using the biggest players we possibly can to hand that into the OEMs to make adoption from their perspective as easy as possible. Once again, going back to Thomas and Julian talking about those barriers to entry, we are trying to break that down by taking a look ahead and saying, actually, it is not just about having the killer technology, it is also about thinking about the impact on the supply chain as a whole and how we can ease that through. As well as ensuring that we have great culture within the company and great governance, making sure that we follow those through. That is it for me. I shall hand back to Graeme. You have been very patient. I hope it has been an interesting morning for you all. Just to recap on some of the key messages, perhaps. First of all, you have heard about Stereax, about how we are building scale through that manufacturing partnership with Cirtec. A very compelling piece of video footage, I think from Brad, to give you comfort in that regard. We are maturing the Goliath technology through partnerships and some very well-defined technical milestones, Louise's team delivering on those milestones in spades. We are going to continue pursuing grant support from the government agencies, and also commercial revenue through partnering with some of those tier ones and OEMs. Many thanks for that. We are now going to have an audience Q&A just to wrap up any questions that we may not have answered in the course of the morning. Then we will be able to launch ourselves into that smorgasbord that we have been promised from Berenberg. I think Julian and Thomas have agreed also to field any questions relevant to them. If we have any general questions on the market, we may pull on that resource. If the Ilika guys could sit on the front, you as well, Denis, don't be shy. We can open the floor. Sam, you have the microphone. Sam Hablibram. It is actually more on a financial basis. Just looking at some of those revenue slides that Jason presented, does Ilika have sufficient existing cash runway to get through to cash through break-even? Secondly on that, is there any specific additional U.K. grants that you are looking to access over the coming year or 2? Very good. Jason, I think that is in your bailiwick. Yes, that is for me. We certainly have good cash availability and runway as we look forward for the near-term future. We recognize that as we look across the U.K. battery industry, if we refer back to AMTE Power, perhaps they left it a little bit too late to secure their future, and have suffered as a result of that. Given the market that we have at the minute, given the geopolitical question marks that are out there, we would want to make sure that we are securing funds in the right time when we need to ensure that we have got that runway to make sure that we don't fall foul. As Thomas alluded to, there are many companies who try and get to that commercialization and fail because they haven't planned ahead. Although we have funds through for the future, that good cash position that we talked about at the current point that we expect for the year-end, we want to make sure that we have secured ourselves and don't leave it too late and therefore run into any unintended consequences that the market might throw at us. That was it from a cash point of view. From a grant funding point of view, I think we touched on it there, in both Louise's slides, and when I talked. We have done a great journey through coming through the Faraday Battery Challenge, through to the APC. The next part of that really is seeing our batteries move into a mule and actually getting miles on the clock. Really that would be looking to access grant funding, and very much that's within the APC's gift to be able to support that. They have a number of programs coming up that would support that in partnership with an OEM to actually demonstrate the Goliath factories in action really is that next step to commercialization. That moves us from, that 1.5-megawatt hour, facility allows us to build those batteries to be able to produce enough batteries to then do that scale, and that would be grant funded as well if we're successful in that application. Thomas. Yeah. Just to add to that as well. Turning to last year as well, just to give a bit more color to that grant availability runway. There was announcements around an advanced manufacturing plan by government last year of GBP 4 billion worth of support for advanced manufacturing, about GBP 2 billion of that for battery support. That is, being put into something called Auto 2030, so forcing from 2025 up until 2030, covering, I think it was scale development and also industrialization. That's likely to be elements of the Julian has covered around the ATF capital side of things, but also very much around the later stage R&D and the scale-up R&D. Expecting one is government level support, quite large government level support over the next five years. Obviously, Ilika will be within reach of that. That's underpinned by U.K.'s National Battery Strategy that was published in November, which, specifically calls out solid-state batteries as a great opportunity for U.K. as well. Thank you, Thomas. It's probably also just worth scaling some of the funds or the competitions that we sponsor. As well as the competitions that Ilika have already been successful over the years, into agencies. I'm going to be asking you to finish now. Oh, sorry. Sorry. Sorry, I thought this one was still live. Thank you. Our collaborative R&D programs, the one that Louise referred to, that they're planning to pitch into. We invite applications for projects that range between GBP 10 million and GBP 40 million. We would typically fund about 50% of that. There is plenty of scope for collaborative programs, including Route to Market and other partners, to cover some of the expenditures going forwards with suitable projects. But the caveat is they're always competitions and there is quite stiff competition. Ilika have proven pretty successful at being able to navigate that process in the past. We do have some specific competitions focused on product demonstrators, like our advanced Route to Market demonstrator. It's a competition that's open right now, and we're planning on running another one again next year. That can help with some specific things that help in the validation processes when you're dealing with making samples at sufficient scale to satisfy the requirements of automakers. Hi, it's Oh, much too close. Hi, it's Alex from . I'm going to pick up as well actually on Jason, your slides, about revenue, but maybe it's not actually a question for you. Clearly you've got pretty good visibility on the Stereax outcome because you've got products in the field and you've got a manufacturing partner and you've got the other way down. What does the marketing process look like that allows those lines on a page to become firm contracts? What will I be able to see as an outside party that will give me confidence that those things are happening? Jon, do you want to handle that one? Is it Stereax or Goliath or what? I guess I'm saying that the Stereax, we've got some evidence, right? Because we've got a manufacturing partner. With Goliath, it's still a little bit more ethereal. We get, actually, it's a spookily similar process, really. What is A-sample, this really is the key point at which an OEM can engage, because at that point we've got the evidence of how it operates at system level. We've sort of covered that. At that point, we'd be asking for a license, because when they move from A-sample through a tech transfer to B and to C, they need to license our technology so that they can produce those B and C samples in their facility. They're doing that because they've decided they would like to put it onto a platform, car platform. I think as Julian described, it could be 4 to 5-year journey to do that sort of process. But actually, they need quite a few cars. Initially they need quite a few subcomponents to go through a serious amount of testing. But actually towards the end of that, they need maybe 30 to 50 car loads of battery. They are also going to do a lot of run-through, and whether they make a good battery or a bad battery, they are still paying us a license for the privilege. It adds up to quite a surprisingly large amount of, well, the license plus, I mean, you saw the cascade chart, the license plus the early-stage sampling is still fairly significant amounts of battery going through. Ideally in our view, more than one OEM. That is the journey of an OEM. We are talking to a number of OEMs, we would like to be multiplying that process. Okay, thank you. Secondly, your scale-up to A-sample looks like it is about 30 times scale-up, round numbers, and you want to go again for the next scale-up. How much more risky is that second scale-up? What can you give people that says, "Okay, we know this is going to work"? Yeah. Obviously the money side risk is with the OEM because they are the ones that are doing that transfer in the same way that Cirtec are carrying the risk for the Stereax side. But actually one of the, maybe we have not focused on it enough on the SiSTEM, we talked about the SiSTEM project. There are two things. We are building a machine using a company called Mpac. We talked to you about this logo called the UKBIC. What the UKBIC are doing, they have got this near-gigascale roll-to-roll production line for making sort of cathodes and anodes, and we have got this sort of tiny one and a half megawatt hour line at our facility, there is a big gap between the two. We are already funded under the SiSTEM program to run near-gigascale trials at the UKBIC. Now, you would not necessarily want to do that using your own money, it is one of the problems that a few of the OEMs we are talking about here tried to do that using their own money. Because just turning that line on is about a quarter of a million in the run-through. You basically, to tune the line on the roll-to-roll process simply to get to a point where you are making a few hundred meters of decent cathode, you can easily burn through about a quarter of a million, and you would want to do more than one trial. That element of that SiSTEM project was doing that. Now, that allows us to go back to these OEMs and say, "Yeah, we've got this sort of fairly modest size 1.5 megawatt hour capability at our facility, but here's the data from the near giga trial we ran at the UKBIC on the same material, to prove to you that your scale-up is de-risked. Just a question. Let's say in the best of all possible worlds, your carve-out works or your commercialization of Stereax and MedTech really takes off. What happens if suddenly demand turns out to be millions of batteries, and would you continue to make the cathode material to it? I'm thinking here, what is the relationship with Cirtec, who would presumably have the capability if it's non-MedTech or it's IoT? Yeah. First of all, I think Cirtec would be delighted to make batteries for other market segments. I mean, their stated focus is Cirtec. Actually, strictly the company's called Cirtec Medical, so they are very much focused on that sector. But Brian Highley, their CEO, has told me in no uncertain terms that they are quite keen to sell into other sectors as well if it fits their business model. If we get demand, in particular for consumer electronics applications, where it simply outstrips the scale that Cirtec can manufacture at, and you're looking at a Foxconn or somebody like that to manufacture, then we would probably transfer the cathode manufacturing at that point, in order to have as efficient a manufacturing supply chain as possible. Because this is our first tech transfer with Stereax, we were clearly a little bit conservative in terms of what we transferred. As we explained earlier, we kept the most difficult bit under close control so that we didn't have any disappointment. But clearly, in the future, we should be in a more robust position to be able to transfer that. We don't expect to be manufacturing cathodes forever. We expect to be able to transfer that in due course. Andrew's got a question. Yeah, thanks. At the start of this, you talked about Stereax opportunity with Cirtec being $10 million-$15 million. Is it possible, whatever color you can provide, to connect the chart that you showed with what you said, and also give a sense to the extent you want to, on the gross margin of that income? Yeah. Clearly, the chart that Jason showed is not incompatible with that previous discussion. You can use your imagination perhaps to sketch in what the vertical axis may be. Jason, do you want to speak about the gross margin? Yeah. From a Stereax perspective, when looking at that Cirtec contract, we benchmarked that against generally accepted royalty rates to understand where we were coming out. As we've previously given that information to the market, that's high single digit royalty rate flowing back to Ilika. Although we have built into that, volume breaks to make sure that there's more adoption, and as it extends out into a wider area, that we can make sure that we keep driving adoption through a lower price point, but still increasing the revenue back to Ilika as a company. Well, looks like we're there, guys. Thank you very much for all of your engagement today. It's been a really lively morning. Many thanks to our hosts at Berenberg, and for the support from Liberum in order to make this such a success. Thanks for attending.

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