REG - Haydale Graphene Ind - Business Review and Appointment of CEO

Haydale Graphene IndustriesAnnouncement

23/12/2024 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241223:nRSW0173Ra&default-theme=true

RNS Number : 0173R  Haydale Graphene Industries PLC  23 December 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU) 596 / 2014 WHICH FORMS PART OF UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR").

 

 

 

Haydale Graphene Industries plc

 

('Haydale' or the 'Group')

 

 

Haydale Announces Completion of Business Review and Appointment of CEO

 

 

 

Ammanford, 23 December 2024 - Haydale (AIM: HAYD), the global advanced
materials group, announces the completion of a comprehensive business review
by its significantly reconstituted Board.

 

As announced in October 2024, following the securing of an additional £3.1m
of funding, the reconstituted Board has embarked on a full and rigorous review
of all aspects of the business with a view to reprioritising those areas
offering up near-term profit enhancement and positive cash generation, whilst
continuing to pursue the most commercially attractive longer term strategic
options.

 

The key points of the review and the Board's conclusions are set out below:

Key Outcomes:

·      Commercial Potential and Proprietary Value: The Board is strongly
of the view that there are significant commercial opportunities for Haydale's
advanced material technologies and core intellectual property portfolio across
a range of markets.

Haydale's proprietary technology serves key global end markets, including
energy, aerospace, automotive, biomedical sensors, batteries, tyres, coatings,
composites, thermoplastics and carbon capture. Growing interest and
participation in these sectors reflect strong demand for Haydale's solutions,
validated by direct customer engagement and the Group's own extensive market
experience.

·      Strategic Focus: The Board has identified that the Group's
efforts and valuable resources are currently spread too thinly, resulting in a
diffusion of focus and reduced operational effectiveness.  The Group has
maintained partnerships that to date have failed to adequately recognise its
expertise and value.

The Board has undertaken a comprehensive analysis of the Group's performance
to identify products and services with the highest profitability, growth
potential, and strategic importance. The Group's highest potential product and
service offerings include those for enabling carbon reduction, including its
underfloor heating, printed transfers and carbon capture products and related
services.  As part of the new strategy, the Group will adopt a more focused
and simplified approach, leveraging its leading technology to commercialise
these products and services.

Furthermore, the strategy will target the most profitable customer segments
and geographic regions. These selected revenue streams will offer strong
diversification across market segments, characterised by robust demand and
significant growth potential.

·      Commercialisation: The Group will allocate capital, technological
resources and talent towards these priority areas. The UK business has been
reorganised to focus primarily on two key business lines: heating ink-based
energy efficiency products and carbon capture.

Heating ink-based energy efficiency products business line

Underfloor heating: The Group has successfully completed its first external
trial installation with a social housing provider in the Channel Islands and
is working with several partners to commercialise the product in the UK,
Europe and North America.

Printed transfers: The Group's development work with Cadent for portable hot
water and radiator products has been successful and we are working to
commercialise these products for their estimated 4 million vulnerable
customers. Through another strategic partnership the Group is seeking to
develop its heating inks into an emergency heating solution for deployment to
households in fuel poverty. The Group is working with several potential
partners to take these products into parallel leisure markets.

Carbon capture business line

The Group has successfully demonstrated through initial trials that its
proprietary technology can enhance the efficiency of existing carbon capture
materials. Through a new business line introduced by the reconstituted Board,
the Group is working with several potential partners to commercialise its
technology in the carbon capture, usage and storage market. Under the UK
Labour government, carbon capture and storage are a central component of the
nation's strategy to achieve net-zero emissions by 2050.

Partnerships

The Group will maintain strategic partnerships with Petronas, Saint Gobain and
certain graphene producers, provided that the commercial arrangements
appropriately reflect and reward the Group's capabilities.  A small portfolio
of incubation projects is being maintained where there is a strong economic
and strategic rationale.

Silicon Carbide Tooling

Over the last few years, the Group has strategically repositioned its US
operations by expanding focus from silicon carbide (SiC) powder sales to the
manufacture and distribution of advanced cutting tools. This transition aimed
to enhance value by moving up the supply chain and capitalising on the growing
demand in sectors such as aerospace and automotive.

Despite these strategic initiatives, the expected growth in the Group's US
operations has not materialised. It has become clear to the reconstituted
Board that the previous management team's confidence in the US business'
ability to convert the pipeline on a timely basis was overly optimistic and
not reflective of the Group's operational preparedness or knowledge of market
conditions. Despite efforts to improve the performance of the US business, the
Board expects the US business to remain loss-making beyond FY25 and has
concluded that rapid divestment or closure of these operations is in the best
interests of the Company and its shareholders.

The Board is currently finalising the operational details of this process and
will provide an update to shareholders in due course. Substantial cost savings
in FY25 would be realised through the elimination of ongoing operating losses
and associated overheads in the US business, contributing to the Group's goal
of achieving profitability and improved cash flow in FY25, in order to protect
the Group's core business.

Operational Streamlining: The Group will focus on its core competencies,
streamlining operations to enhance efficiency and significantly reducing
costs. Non-core operations are being wound down on an expedited basis or
otherwise being exited for value. These comprise smaller scale operations
which are not considered material to the Group given the current
circumstances. To support this, the Group's supply chain will be optimised by
aligning procurement, manufacturing, and distribution processes. Additionally,
the Group will simplify operations by reducing complexity in processes and
product offerings, lowering costs, and enhancing overall efficiency.

The Board has initiated action to mitigate the current rate of cash burn,
including headcount reduction and other operating cost savings, renegotiation
of underperforming contracts, closure of the subsidiary office in Thailand and
consolidation of the UK offices to a single site at the Group's South Wales
headquarters. Initiatives have been identified targeting significant and
readily available cost savings.

·      Divestment Plans: As part of the strategic refocus, the Group
intends to divest non-core assets, including the subsidiary office in South
Korea.  These actions will streamline operations and enable the reallocation
of resources to high-growth areas.  A separate announcement is being made
shortly in regard to the subsidiary office in South Korea.

 

Financial Impact: The Board will implement these strategic initiatives over
the coming months. The Group anticipates that, whilst risks still remain,
these strategic actions are intended to bring forwards the point at which the
Group can generate sufficient monthly cashflow to sustain itself, which was
previously expected to occur in the second half of FY26. The Board will be
reporting progress to the market in due course.

Leadership Changes: To position Haydale for sustainable growth and enhanced
shareholder value, Simon Turek, who joined the board on 21 November 2024 as a
representative of Quidos Technologies Ltd ("Quidos") (an 18.1% shareholder in
the Company and in which Mr Turek has a 49% indirect beneficial interest), led
the business review and designed the new strategy.  The Board has therefore
decided to appoint Simon Turek as Chief Executive Officer, effective 1 January
2025 at which point Gareth Kaminski-Cook will become Non-Executive Chairman.

 

Gareth Kaminski-Cook, acting Executive Chair of Haydale, commented:

 

"We are delighted to appoint Simon as CEO. He has demonstrated strategic
insight and leadership during the business review, culminating in the
development of a clear and actionable plan for the Group's future. The Board
has full confidence that Simon is the right leader to bring forwards the
Group's break-even point and cash generation and act as a catalyst for
change.  We welcome his equity alignment in Haydale and his clear commitment
to the business, no better illustrated than in his family's relocation to
South Wales."

 

Simon Turek, incoming CEO, commented:

 

"I am pleased to take on the role of CEO at Haydale at this pivotal moment.
Having worked closely with the team to develop the Group's new strategy, I
look forward to leading its execution and delivering long-term value for our
shareholders, customers, and employees."

 

 

For further information:

Haydale Graphene Industries plc

Gareth Kaminski-Cook, Executive Chair
                       Tel: +44 (0) 1269 842946

Patrick Carter, CFO

www.haydale.com (http://www.haydale.com)

 

Cavendish Capital Markets Limited (Nominated Adviser & Broker)

Julian Blunt / Edward Whiley / Trisyia Jamaludin, Corporate
Finance        Tel: +44 (0) 20 7220 0500

Andrew Burdis, ECM

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDPPGQPPUPCGBU