Interactive Investor

Ilika hires ex-ARM chief

10th July 2015 13:11

Lee Wild from interactive investor

AIM-listed materials developer Ilika is at a crucial stage of its evolution. After years spent developing its own chemistry and fabrication process, the firm has begun pilot production of solid-state batteries. Now, it needs to start making money from the technology, which is why the appointment of Mike Inglis, former chief commercial officer of ARM Holdings, is a massive coup for chief executive Graeme Purdy.

Ilika is able to deposit battery materials 10 times faster on silicon wafers 20 times larger, which means deposition rates already in line with existing commercial solid-state devices. Purdy tells Interactive Investor that he's now in "heads of terms" talks with potential licensing partners interested in integrating Ilika's battery technology into Internet of Things (IoT) devices.

"If we get lucky we could sign something this calendar year, but it's more likely to be in 2016," said Purdy. And this is where Inglis's experience will be important.

"We wanted to get the best advice going so that commercialisation agreements would be as strong as could be," Purdy told us. "Mike had a great track record at ARM and we want to move up the learning curve as quickly as possible. We also want to avoid the mistakes that ARM made."

Inglis spent the final 12 months of his 11-year career at ARM as its commercial chief. He joins Ilika as a non-executive director straightaway and will take over from Jack Boyer as chairman at the AGM in September.

"64mm2 prototypes suitable for powering Internet of Things (IoT) devices have already been made, and Ilika has started proof of concept integration programs with a number of prospective OEM roll-out and supply chain partners, with more expected," says Dr Tom McColm at Zeus Capital. "This is currently a c. $10bn market with a 20% CAGR."

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Indeed, IoT cannot be underestimated. "Devices which were science fiction just a year ago are now mass market," says Purdy. And car manufacturers are desperate for weight-saving wireless sensors. Modern cars have about 150 sensors, but they're all attached by cables which are both heavy and expensive. Ilika's technology is vital for wireless sensors in smart buildings and batteries for wearable devices.

Ilika has also carried out alloy development work on high-strength, low-weight super-alloys in aerospace with Rolls Royce and Boeing.

Revenue was flat at £1.09 million in the year ended 30 April and the company narrowed losses slightly to £2.7 million. But the financials have become largely irrelevant at this stage - cash burn has been around £2.5 million a year and Ilika currently has £6 million in the bank.

Zeus Capital predicts sales will double to £2 million in year to April 2016 and Numis Securities pencils in £1.5 million, although it admits that this is "conservative (and beatable)". This reflects the strength of Ilika's pipeline and some uncertainty on adoption rates. Profitability, however, is still some years away.

Ilika shares rose fivefold last year, but have steadily eased back over the past nine months and at 70p look to be heading toward historic support at around 60p. Of course, that could change as we get updates on proof of concept programmes and licensing deals.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.