AIM minnow Ilika achieves symbolic milestone

AIM-listed Ilika played host to the Minister for Universities, Science and Cities this week. The Rt Hon Greg Clark MP cut the ribbon as the materials developer opened its pilot production line for prototype solid state batteries in Southampton. It's a symbolic milestone for Ilika, a company we took a shine to in July.

Then, the shares were trading at just 74p. They're now 92p, and if the company fulfils its promise, analyst Nick James at Numis Securities thinks they could be worth 110p.

A series of site acceptance tests to guarantee deposition rates for specified materials needed for solid-state battery production should be done by Christmas. That means pre-production batches of solid-state batteries will be prepared for evaluation by commercial partners next year.

"Commercial interest in this pilot line continues to increase as its operational readiness accelerates," said Ilika chief Graeme Purdy. "We have exciting plans for deploying this technology to address substantial commercial markets."

Mr Purdy told us in July that Ilika had already signed non-disclosure agreements (NDAs) with ten of the big electronics companies. Expect licensing discussions next year, he says.

Ilika's more efficient solid state batteries will most likely be first used in so-called wireless sensor network (WSN) applications used to control lighting and temperature in the home. But in 2016, Ilika will target the $2 billion (£1.16 billion) wearable device market from where it is not such a huge leap to the $23 billion consumer market for smart devices like phones and tablets.

Remember, too, that Ilika has developed a low-cost fuel cell catalyst, which it says is further advanced than solid state batteries. It's received "positive feedback" following tests with Toyota.

Says Numis:

The key driver of value creation in the near term will be further positive progress in commercialising the solid state batteries, with the possibility of securing license agreements in FY16E, which could lead to highly material long term royalty streams. We upgrade TP to 110p from 77p to reflect the further positive progress made.

Purdy also flagged up half-year numbers, which will be little changed from last year. Revenue for the six months ended 31 October 2014 will be flat at £0.6 million and the operating loss is expected to creep up to £1.6 million. Look for cash in the bank of £7.2 million. Expect confirmation on 22 January.

Last month, chairman Jack Boyer decided to call it a day after ten years in the role. A successor is being sought. But there was good news at boardroom level, with the appointment of Keith Jackson as non-executive director. Currently, chief technology officer at aerospace and defence giant Meggitt, Jackson will take his seat in January.

"Keith brings considerable expertise in the industrial commercialisation of control systems to Ilika at a time when the company is preparing for the roll out of its solid state battery technology for wireless sensor networks," said the firm.

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