Ilika plc (LON:IKA) is the topic of conversation when Morphose Capital Partners’ Clean-tech Equities Specialist Dr. Tom McColm caught up with DirectorsTalk for an exclusive interview.
Q1: Ilika announced its FY26 results this morning. Tom, what’s your general take on them?
A1: Numbers came in pretty much what the market was expecting, in line, not too much going on. There were probably two points of note in the actual numbers.
First is that the top line did consist this time of a modest component of actual contracted commercial revenue for the supply of Stereax electrodes to their commercialisation partners, Cirtec Medical. It was quite a modest amount, but it’s actually quite a symbolic thing for Ilika, basically, because it’s the first time, we’ve had what I would call proper contracted commercial revenue in their top line, as opposed to product development grant revenue, which the company’s posted before. Although it was modest, it started and it’s set to grow and I think we’ll talk about that just a little later.
The other point of note was the cash position is really relatively strong. The company had over £5 million at April close and they’ve also, since the end of the post period, raised about another gross £4.6 million. So, they’ve got a decent cash balance, and they manage it pretty well for a company that’s developing disruptive deep technology.
So, first commercial revenues and solid cash position being well managed is the take on the numbers.
Q2: So, as you mentioned, great news for Ilika in its first commercial revenue stream and that’s through supply of Stereax electrodes to Cirtec Medical. How do you see this revenue stream developing over time, then?
A2: Now, this is quite an important point of interest from the meeting I’ve just been to. Obviously, the timeline for that growth of Stereax commercial revenues is dictated by the timeline, really, of Cirtec Medical’s device customers in the medical device market trialling, adopting and then getting clearance and then commercially rolling out those products in those high-value markets.
What we think and what the company confirms is the revenues from the sale of the electrodes, which was the hook, will go up certainly in the next 12/24 months several multiples.
We might expect to see the first onset of actual royalty payments from Cirtec to Ilika for putting those batteries in those devices for the trial period so modest but decent for the first, I’d say, 12/24 months.
Post that, when these products actually get to market, that’s when we’ll see this real inflection point and proper significant growth in that Stereax revenue stream from 18/24 months from now onwards.
So it’s small, growing, but it’ll really take off after, say, 24 months, I’d say.
Q3: Switching to Goliath, how is the larger-format programme developing?
A3: Goliath is coming along nicely. There’s really always technology progress getting made there, but it’s attracting more interest from mainstream OEMs, automotive OEMs, and their Tier 1 suppliers.
They commissioned a bit of external research from a battery expert consultancy, Balance Batteries, I think they were called, who concluded their work on Goliath in that an automotive company that incorporated Goliath into their vehicles would see a 20% net weight reduction. This is comparative to incumbent state-of-the-art lithium-ion, something in the region of £2,500 reduction in the bill of pack materials and a reduction in the charging time from 18 to 12 minutes, about a third reduction in charging time.
All three of these things hit the key points that electric vehicle buyers and therefore makers, are really interested in. So, it was quite an encouraging piece of work that helped to increase the interest levels for Goliath.
Also, what Ilika is finding, that we’ll probably touch on in the next question, is that there’s potential interest from some interesting new markets, particularly the defence sector, which is something that Ilika is having a good look at now.
Q4: It does sound like new markets are opening up for Goliath. You just mentioned the defence sector, what are your thoughts?
A4: It’s interesting times in the world, but certainly the way that geopolitics has moved and defence and defence sector spending, Ilika is sitting in quite an interesting position in terms of its technology and the safety and the applicability of it.
Also, the sovereignty of them and the fact it’s UK, European-made batteries is getting quite a bit of interest from the UK defence sector. They’ve run some early trials, I think last year on Goliath, that really came out quite well. Some of the defence agencies on wearing pack power to power battlefield devices. They’re basically safer, as we all know, than incumbent lithium-ion.
Also, Stereax does actually have applications in the defence sector as well and the biggest potential market for Goliath is also, as we’ve probably all been seeing, that warfare is changing and unmanned drones are becoming a big part of it. There are definite applications for Goliath in that market.
So, interesting market for Ilika. They’re definitely having a look at it, and what it could do is open up some early revenue opportunity, early adopters, not that price-sensitive, much more interested in functionality than, you know, the value of it. It’s not great for the world, but an exciting market for Ilika, particularly in the UK.
Q5: So what should investors or shareholders be looking out for from Ilika in the next 12 to 18 months?
A5: I think we’ve touched on it all already, but Stereax, definitely looking for announcements from Ilika on Cirtec Medical, buying more electrodes, getting Cirtec Medical customers completing trials, launching products.
Each one of those events is going to boost the Stereax revenue streams and very important would be the first royalty payments that come in. That won’t be straight away, but hopefully within, maybe within 12 months from Stereax.
On the Goliath side, just more progress on engagement and moving forward with these automotive OEMs and Tier 1 suppliers, maybe signing of some sort of option agreement at some point.
These new markets as well, I mentioned defence, but there’s also e-bikes. There was a recent announcement from Ilika on their partnership. It’s a UK grant-funded partnership with Brompton Bicycles, the folding bikes, for potentially developing a safer kind of battery to go in those bikes.
So, Stereax revenue events, Goliath mainstream automotive progress, and hopefully some exciting new market developments for early-adopter revenue, particularly in defence.
