Ilika “well-funded to get through and into commercialisation of Stereax and to fund Goliath” says Baden Hill (LON:IKA)


Ilika plc (LON:IKA) is the topic of conversation when Baden Hill Partners’ Clean Tech Equities Specialist Dr Tom McColm caught up with DirectorsTalk for an exclusive interview.

Q1: Ilika announced its interims this morning, what do you see as the key takeaways from the results?

A1: I’d say that the key takeaways from their results are firstly, I wouldn’t be looking at the commercial performance right now i.e. revenue, EBITDA etc, they’re still on that journey. We think 2023 is going to be a real big commercial breakthrough year when they start moving into their full commercialisation situation.

So, bearing that in mind, the real key thing to look at is the cash position and thanks to the very buoyant battery markets and that they took advantage of in the summer, they did a very significant equity raise that £25 million and we forecast they’re going to still have £20 million plus on the balance sheet at the end of this financial year in April.

They’re very well-funded to get themselves through and into commercialisation of their Stereax programme and to fund their Goliath programme to the point where it will really have some value.

So, not too much focus on the commercial numbers and cash position very strong.

Q2: Now, in terms of RNS announcements then, what should investors and potential new investors be looking out for over the next 12 months or so?

A2: I would be looking out for things around this Stereax programme, that is going to be the first revenue/profit generation centre for the company. They’ve invested, on time and budget built their manufacturing facility, that’s going to produce enough batteries for them to properly seed markets with their OEM customers in MedTech and Industrial IoT.

The RNS’s we want to be looking out for are that transition and traction really happening in terms of these OEM customers taking out significant trial programmes, follow on all programmes, new customers coming on board and the capacity of that facility moving up towards full capacity as they go through the year.

So, announcements around Stereax, Stereax ramp up, Stereax trial programmes, Stereax new customers because that’s going to be what really sustains the company through this next year/two years.

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Q3: How do you see the company’s high level strategy with regards to the micro battery Stereax programme and the larger format Goliath program? How do you see that evolving over the next 12 to 24 months?

A3: That’s a very interesting question. I think as we’ve just been speaking about, the key engine of the company will be the Stereax programme and that will hopefully move forward as I alluded to, answering the last question.

With regard to the Goliath program, which is the larger format EV programme, that won’t be moving into profitability, proper revenue generation soon. So, what hopefully will happen there is that will move up the TRL scale to a point where it will really have some value and potentially attract the interest of much larger battery players in the EV or automotive companies and potentially that part of the business could end up, I think, getting sold off hopefully for a decent number.

Q4: What’s your take on the overall larger format global battery market currently and going forward?

A4: The first thing to say is it’s absolutely booming and all forecast that there’s going to be huge increase in the number of batteries deployed both in the transport and energy storage sectors.

What’s also becoming clearer is that the incumbent lithium-ion batteries that are very good for smaller formats, up to consumer electronics scale, really isn’t perfect for these larger format batteries in transport, heavy transport, big renewable storage because of the safety and the supply chain issues around it.

I think what we’re going to see is slowly alternative battery platforms will account for a lot of that huge market growth and a lot of those technologies at this stage will be still lower down the TRL/MRL scales at prototype pre-prototype stages.

Batteries at that stage that don’t have these supply chain and safety issues, I think, we’re going to see those coming through strongly as we go forward and, obviously, solid state lithium batteries is one of those formats, particularly on the safety side and that’s what Ilika are developing.

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