Ilika plc (LON:IKA) is the topic of conversation when Baden Hill’s Clean-Tech Equities Specialist Dr Tom McColm caught up with DirectorsTalk for an exclusive interview.
Q1: Tom, Ilika opened a UK Stereax manufacturing facility very recently, is this significant and if so, in what way?
A1: In short, the answer is yes, it’s very significant for a number of reasons.
It’s a real key point in the company’s evolution. You may remember way back, it started as a high tech materials R&D company, and it has morphed into a battery manufacturing and supply company and this is a really fundamental point in that journey, it’s literally their first commercial manufacturing facility.
It also gives the city and the financial world real confidence, or hard evidence, that really proper commercial revenues are not that far away now and it’s also good evidence of the management actually executing on its strategy. It said it was going to do this and it has, pretty much on time and budget so yes, very, very significant for those reasons.
Q2: Will the facility manufacturer Stereax in large enough volumes should consumer traction really take off?
A2: It will certainly give large enough volumes for some full niche product launches and it’ll give decent volumes for market seeding for larger opportunities. Any of those larger market opportunities take off then the plan would then be for customers to actually license production either themselves or outsource to a third party manufacturer. For that purpose, the facility would be used as a licensed reference plan.
So, large enough to launch, large enough for niche products and a great license reference for larger volume manufacturing down the road.
Q3: So, what should the market be looking for announcement-wise over the next 12 to 18 months?
A3: Definitely on the Stereax side is just seeing this crack on now, they’ve got it in place, they’re getting it commissioned so we want to hear about orders basically coming off. Some of these niche product launches, some of these market seeding trials and hopefully as well, maybe some new Stereax customers coming on board and doing trials and niche launches themselves.
Q4: The company raised almost £25 million over the summer, what was the main purpose of raising this capital?
A4: This was for the other side of their business which is the Goliath program, which is making larger format solid state bachelors for the EV world. Obviously, this is the huge prizes, it’s much further off from Stereax.
Stereax is where they’re going to start making revenues, but it already has big value and the company raised that capital so they can accelerate and move that Goliath programme forward and get it to a point where they can hopefully really start to extract or realize the value that it potentially has.
Q5: What do you see as the major strategic decisions that are facing Ilika, say in the medium term?
A5: This question sort of follows on from the previous one really, and it’s all around Goliath versus Stereax.
Stereax for certain will be the company’s bread and butter, start generating some revenues and some profits. Goliath is further off and it’s the strategy around how far do they take that, how much money do they invest in it, at what point do they try and take it all the way or at what point would they spin it off or sell it?
So it’s the whole sort of strategy around the Stereax versus Goliath dynamic, if you like, that’s their biggest strategic decision making dynamic.
