Ilika is in a strong position to commercialise its solid state battery technology
Iliika has been able to make solid state batteries in sheet form as part of its partnership with Toyota. The Japanese firm has the rights to use the phosphates-based materials technology in the vehicle sectors that it covers, including fork lift trucks, and can use the technology in other sectors, including defence.
Around three-fifths of revenues already come from battery-related technology and Ilika could increase those revenues significantly. The focus for the new technology will be the defence sector. Soldiers can carry around 20lbs of batteries to power their equipment - radios, infra red sights, etc. - and Ilika believes that it can replace all those batteries with one single source of power. The Distributed Universal Batteries System (DUBS) will use one power management chip, which could potentially provide more power than the existing batteries and for a longer period of time.
However, Ilika will require a partner to help fund the development. A company with experience in the defence sector would be preferable.
The investment in the Japanese market is showing through in the latest figures and the recent signing up of Toshiba as a customer. Revenues, including grant income, grew 37% to £1.04 million in the six months to October 2011, while the reported loss fell from £1.88 million to £1.56 million. More importantly, the cash outflow from operations rose from £1.02 million to £1.47 million. There was a £400,000 inflow just after the period end, but the cash pile is declining and could be used up in the next twelve months.
At the end of October, Ilika had net cash of £1.21 million, and further outflows will have offset the recent inflow of cash. Edison forecasts net cash of £676,000 at the end of April 2012 and net debt of £2.1 million one year later - based on an outflow of £2.78 million next year. There are warrants exercisable at 51p a share that could raise around £5 million. The hope is that the share price will recover and encourage investors to exercise warrants, which last until 2014, although there is no guarantee that this will happen.
Ilika intends to increase its focus on Germany, which is the European market that it believes has the most potential for its technology.
There should be news of international product trials for Cryoskin in the second half. Later in the year, there will be information on the progress of the commercialisation of hydrogen storage materials with Sigma Aldrich. There should be further news about other products throughout the year.
Committed revenues of £700,000 for the second half mean that Ilika is on its way to full year revenues of £2.9 million, including grants, plus a small reduction on last year's loss of £3.1 million.
Market: AIM
Symbol: IKA
Price: 49.5p
12-month high/low: 59.5p/43.5p
Market cap: £18.1 million
