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Ilika – CEO argues “growing confidence in our licensing model”, but in reality it’s forecasts slashed

By Steve Moore | Friday 17 March 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Self-described “pioneer in materials innovation and solid-state battery technology”, Ilika (IKA) has followed recent “Toyota Funds Collaboration with Ilika” and “Collaboration with Galvani Bioelectronics” announcements with a “Trading update” commencing with that such deals “are resulting in a strong ramp-up of revenue relative to 2015/16”. Good, good… You what? The shares currently down circa 15%, approaching 40p?

The announcement includes that the company’s “stated business aim is to add licensing revenue to the development revenue it currently generates”, but “predicting the timing of when these licenses will generate revenue remains a significant forecasting challenge”.

Uh oh – I think I know where this is going. Yep… “given our proximity to the end of Ilika's current financial year and the duration of negotiations with OEM potential licensees, it seems increasingly likely that revenue from licensing may first have an impact in 2017/18”.

The company seeks to reassure not to worry as “levels of interest are encouraging” - and then repeats already-announced news of work with Galvani (“parent companies, GlaxoSmithKline and Verily (part of the Alphabet group, formerly known as Google)”), Sharp Laboratories of Europe, Seagate and Toyota.

It adds “we expect to start 2017/18 with a record level of revenue commitments amounting to around £1.8m”, with CEO Graeme Purdy arguing it “great to see the upturn in revenues relative to last year allowing us to start 2017/18 with such a strong order book. The number of potential licensees, their level of interest and the diversity of applications is giving us growing confidence in our licensing model”.

Er – your revenue forecasts have just been slashed by more than 50% for this year and circa 40% for next year though Graeme! I’ll review the July-scheduled full-year results statement with interest and, as tends to be the case with self-declared ‘pioneer’, my current stance remains sell/avoid.


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