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RNS Number : 6601V Haydale Graphene Industries PLC 15 December 2021
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
.
For immediate release 15 December 2021
Haydale Graphene Industries plc
('Haydale', the 'Company', or the 'Group')
Haydale (AIM: HAYD), the global advanced materials group, is pleased to
announce its full year results for the year ended 30 June 2021 ("FY21").
Operational Highlights:
- Good progress made on delivering the Group's commercial strategy and,
in a challenging trading environment the Group has delivered a robust trading
performance;
- Culmination of the three-year wearable technology program with the
English Institute of Sport which has produced heated garments worn by medal
winners at Tokyo;
- Sale of an HT200 Plasma Reactor to 401 Tech Bridge, Rhode Island, US
to support its ambition to accelerate the commercial adoption of new materials
within their innovation ecosystem;
- Sale of elastomers to Bolfex for its premium shoe range and post year
end commenced paid for feasibility projects with several premium leisure
footwear manufacturers;
- Two year contract for the sale of Silicon Carbide ("SiC") whiskers
agreed with Qinhuangdao ENO High-Tech Material Development Co., Ltd in China
and secured SIC sales to a further four companies in China in FY21;
- First sales and positive progress on the commercial roll out of
CeramycGuard™ - currently working closely with a number of UK water
utilities, other water facility management companies and more general civil
engineering contractors;
- Ordered a larger HT1400 plasma reactor to deliver a significant
increase in Haydale's functionalisation capacity, to allow production to move
to an industrial level in 2022;
- Focused development of our patented HDPlas(®) process with key
achievements including:
• developed advanced nano enhanced SynerG SuperTough 3D filament; and
• refined next generation functionalised biomedical sensor inks
incorporating improved analyte detection through the incorporation of
compatible functional groups to enhance the accuracy of diagnosis.
Summary of Results:
Jun-21 Jun-20
£'m £'m
Revenue 2.90 2.95 -2%
Gross Profit 1.98 2.06 -4%
Gross Profit Margin 68% 70% -3%
Other Operating Income 0.58 0.76 -24%
Adjusted Administrative Expenses 1 (#_ftn1) - 4.72 - 5.36 12%
Adjusted Operating Loss - 2.17 - 2.54 15%
Statutory Loss from Operations - 3.56 - 4.23 16%
Statutory Loss After Taxation - 3.41 - 4.02 15%
Cash Outflow from Operations -1.58 -3.32 52%
Cash at Year End 1.64 0.82 100%
Financial Highlights
- Despite a challenging trading environment revenue fell by just 2%
and gross profit margins remained resilient at 68% (FY20: 70%);
- On a pre IFRS 16 basis a further £0.701 million of cost savings
achieved - £2.43 million of cost savings realised over the last three years;
- Reduction in Adjusted operating loss of £0.37 million to £2.17
million (FY20: £2.54 million); and
- Cash outflow from operations reduced by £1.74 million (52%) to
£1.58 million (FY20: £3.32 million).
Post Period End Highlights:
- On 20 September 2021, the Company raised £5.10 million (gross)
through the placing, retail offer and subscription of 85,055,893 new Ordinary
Shares at 6.00 pence per share;
- Filing of a joint patent with Airbus for the lightning strike
electrical pre-preg. This technology has the potential to reduce the weight
and environmental impact of a commercial airliner; and
- Signing of a memorandum of understanding with Viritech for the
development of Type IV structural hydrogen tanks
Commenting on the results David Banks, Non-executive Chairman of Haydale,
said:
'The Board is encouraged by the very positive response from across several
different industry sectors to our new products and technologies, which gives
us confidence in our medium to long-term outlook. However, we are yet to see
any sustained recovery in our Aerospace business and so we continue to be
cautious with respect to short-term revenue. Haydale's proprietary technology
now has the potential to deliver material change across many sectors in ways
that our customers are increasingly recognising as important in their search
for more environmentally friendly materials. As a result, Haydale is expanding
the Group's capacity to functionalise nano and other materials and continues
to invest in product development critical to our future success.'
- Ends -
For further information:
Haydale Graphene Industries plc
Keith Broadbent, CEO Tel: +44 (0) 1269 842 946
Investor Relations www.haydale.com (http://www.haydale.com)
Arden Partners plc (Nominated Adviser & Broker)
Paul Shackleton/ Elliot Mustoe Tel: +44 (0) 20 7614 5900
Notes to Editors
Haydale is a global technologies group and service provider that facilitates
the integration of graphene and other nanomaterials into the next generation
of industrial materials and commercial technologies. With expertise in
graphene, other nanomaterials and Silicon Carbide, Haydale is able to deliver
improvements in electrical, thermal and mechanical properties, Haydale has
been granted patents for its technologies in Europe, USA, Australia, Japan and
China and operates from five sites in the UK, USA and the Far East. For more
information please visit: www.haydale.com (http://www.haydale.com) or Twitter:
@haydalegraphene
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chairs statement
Introduction
I am pleased to present Haydale Graphene Industries Plc's ("Haydale", the
"Group" or the "Company") full year audited results to 30 June 2021 ("FY21").
Despite the headwinds from the Covid-19 pandemic during the year, the Group
continued to make positive progress in its transition from a research and
development operation to one capable of delivering sustainable commercial
revenues. Whilst demand for the proprietary Silicon Carbide ('SiC') blanks
manufactured at our US facility has remained subdued, the Group saw
encouraging developments in its core nanomaterial business and to meet
potential demand accelerated the investment in its operational and technical
capacity both during FY21 and into the current financial year.
Summary financials
Commercial revenue for FY21 of £2.90 million (FY19: £2.95 million) remained
in line with the prior year which was a robust performance given the subdued
market conditions globally. Gross profit marginally reduced to £1.98
million (FY20: £2.06 million) delivering a gross profit margin of 68.2%
(FY20: 70,0%) broadly in line with prior year. Other operating income for
the year of £0.58 million (FY20: £0.76 million) was lower than the prior
year as the Group's shift away from grant funded to commercial projects
continues. Included within other operating income is further support received
from the US Cares Act.
The focus on reducing costs continued in the year with adjusted administrative
expenses on a pre IFRS 16 basis falling by £0.70 million (11.7%) to £5.29
million (FY20: £5.99 million). Over the last three reporting periods, the
Group has reduced its operating cost base by £2.43 million in total on a like
for like basis. There were no non-recurring restructuring costs in the year
(FY20: £0.06 million). Total Administrative Expenses were £6.11 million
(FY20: £7.05 million).
Loss for the year was £3.41 million (FY20: £4.02 million)
Operational Highlights
Whilst Covid-19 may have provided the backdrop to the past year it has
certainly not defined it for the Group. By focussing on the elements within
our control, the Group has made solid progress towards its longer term goals.
The priorities of focussed investment in our technology, delivery of
commercial revenue and control of operating costs remains central to our
strategy.
Focussed Investment in R&D
Haydale brings together two state of the art technologies - the patented
HDPlas(®) functionalisation process and an understanding of graphene and
other nanomaterials. I was encouraged to see that the Company's expertise in
Hydrogen storage has attracted renewed interest in the past 18 months. In
particular, we have collaborated on the functionalised graphene masterbatch
required to produce lightweight low permeability storage tanks to help unlock
the pathway to hydrogen propulsion. During the year the Company has also
seen demand for the functionalisation of other nanomaterials accelerate and,
in particular, demand for Boron Nitride, where Haydale has been engaged to
functionalise the 'white graphene' to improve its dispersibility into
lubricants to increase heat dissipation from moving parts.
Commercial Development
During the year, the Group made progress in commercialising its core
technology portfolio despite the challenging operating environment. I would
highlight the three-year exclusive agreement with iCraft announced in
September 2020 and in December 2020 we secured our first sale of
functionalised nano-enhanced rubber masterbatch for use in a premium shoe
range. Subsequent to this sale, the Company has been engaged by several
companies in the premium leisure footwear market.
I was also pleased to see the Company broaden its trading footprint with sales
of SiC and blanks to new customers in the Far East and in Europe. We also
extended our distribution agreement for Ceramycguard™ to 2030 and this range
of products continues to attract significant interest from water utilities and
civil engineering operations both in the UK and the Middle East. We achieved
our first sales in the year and anticipate revenue will grow in the current
year.
Cost Restraint
The Group continued to realign its cost base and, during the year, it reduced
its overall headcount whilst continuing to invest in its global sales
presence. The Group also realised other overhead savings and, as noted
above, like-for-like administrative expenses reduced by £0.70 million,
(11.7%) in the year without affecting the operational capacity of the Group.
Impact of Covid-19
The principal trading impact of Covid-19 has been the slowdown in the global
aviation sector which has reduced demand for SiC and the SiC blanks that we
manufacture at our US facility. The immediate impact has been mitigated to
an extent by the continued support of our largest customer which offered this
business unit valuable breathing space. During the year the Group has moved to
reduce medium term exposure to the aviation sector and, as noted above, has
entered new markets for its existing products and by adopting complementary
products such as Ceramycguard™, has accessed new markets and customers.
Within the wider operation, despite an initial slowdown which saw a number of
projects delayed or postponed, business has remained robust. I am pleased to
report that, as the UK moved through the second and third waves, whilst not
'business as normal', projects and contracts progressed according to revised
plans.
At no time during the year were any of the Group's sites closed and the
Company acted in accordance with the latest guidance at each of its locations
Staff
I would like to thank the executive management team who have maintained the momentum of our transition during these unprecedented times. In particular, for ensuring that our facilities continued to operate during the year with minimal interruption and without compromising on the safety and wellbeing of our employees. I would also like to thank our staff who have readily adjusted to rapidly evolving local restrictions and have effectively embraced new technology and ways of working. Their resilience and flexibility have allowed the Group to continue to operate effectively over the past year.
Funding
The Directors believe the business is well placed to benefit from a recovery
in the aviation industry and the wider improvement in the global economy.
During the year we were pleased to be awarded a £1.10 million loan from
Innovate UK and this will allow the business to expand its functionalisation
capacity eight-fold at our Ammanford facility and support increased investment
in our production, sales and marketing resources. At 30 June 2021 we had
drawn down £0.8 million of this facility.
On 20 September 2021, the Company completed an equity placing raising £5.10
million (gross) and I would like to welcome our new shareholders and to thank
our existing shareholders for their continued support at this time.
Outlook
The Board is encouraged by the very positive response from across several
different industry sectors to our new products and technologies, which gives
us confidence in our medium to long-term outlook. However, we are yet to see
any sustained recovery in our Aerospace business and so we continue to be
cautious with respect to short-term revenue. Haydale's proprietary technology
now has the potential to deliver material change across many sectors in ways
that our customers are increasingly recognising as important in their search
for more environmentally friendly materials. As a result, Haydale is expanding
the Group's capacity to functionalise nano and other materials and continues
to invest in product development critical to our future success.
David Banks
Chair
14 December 2021
STRATEGIC REPORT
The directors present their Strategic Report for the year-ended 30 June 2021.
Principal Activities
Haydale brings together the cutting-edge technology of the patented HDPlas(®)
process with our engineering expertise to functionalise graphene and other
nanomaterials. Our technology has the potential to deliver benefits across a
multitude of sectors helping to increase the technical performance of a wide
range of host materials. The Group's mission is to use our knowledge of
advanced materials and dispersion to be one of the world's foremost creators
of material change, enabling our customers to improve the performance of their
products. The Directors believe the Company is well placed to be in the
forefront of nano advanced materials and dispersion and to become a world
leader in the creation of material change through understanding the potential
of those materials.
Whilst the majority of the Group's revenues to date have been generated by our
US operation, at the core of our product offering and underpinning the Group's
future prospects and value, is Haydale's patented HDPlas(®) functionalisation
process which improves the dispersibility of some inert nanomaterials.
Functionalisation allows Haydale to tailor advanced materials to enhance the
properties of our customers' products. The process is cost effective and
environmentally friendly and our capacity to produce commercial levels of
functionalised nanomaterials underpins our business model and sets us apart
from our direct competition in this space. Specifically, we have the
engineering expertise to:
· functionalise nanomaterials that go into resins and composites to
deliver enhanced electrical, mechanical (strength) and thermal performance;
· formulate proprietary nanomaterial-based inks and coatings for
the print and sensor markets, including biomedical and piezo resistive inks
and sensors and the PATit anti-counterfeiting eco system; and
· compound functionalised nanomaterials into a range of elastomers
to enable customers to use nanomaterials in elastomeric products.
Our US facility is projected to be our bridgehead into the dynamic North
American market for our technology. We also manufacture unique, proprietary
silicon carbide ("SiC") fibres and whiskers that strengthen ceramics and
produce highly wear resistant ceramic 'blanks' for use in the aerospace
industry and for abrasion resistant coatings.
At the 30 June 2021, the Group has the following operational activities in its
five facilities.
Haydale subsidiary Location Principal activities
Haydale Limited Ammanford, Wales Specialist functionalisation and main manufacturing facility producing inks,
resins, and masterbatches to be used in composites and polymers for direct
sales to customers and for transfer to other Group sites.
Haydale Composite Solutions Limited ("HCS") Loughborough, England Sales of masterbatch and pre-preg composites, elastomers and other
nanomaterials and the provision of advanced consulting and test services to
various parties including the EU and UK national institutions via R&D
grants.
Haydale Technologies (Korea) Limited ("HTK") Seoul, South Korea Dedicated sales office servicing the fast-moving Korean and other APAC
markets.
Haydale Technologies (Thailand) Company Limited ("HTT") Bangkok, Thailand Ink and masterbatch development focused on commercial applications with plasma
functionalisation facilities. Services the APAC region.
Haydale Technologies, Inc. ("HTI") and its wholly owned subsidiary Haydale Greer, SC, USA Sales office servicing the North American market, developing the European and
Ceramic Technologies LLC Chinese markets and manufactures and sells SiC microfibres and whiskers,
ceramic blends and ceramic blanks to the cutting tool and coatings industries
The Group safeguards its nanomaterials business across these sites and the
territories in which it operates through the use of patents which protect its
intellectual property. It holds licences where that intellectual property is
for operational reasons with a third party. Haydale currently has a
portfolio of patents that are variously recognised in the following
territories - US, UK, Europe, China, Japan and Australia. Haydale works
closely with its patent advisors, Mewburn Ellis LLP, and maintains a rolling
programme of patent applications. In the past year the Company has had four
patents granted across three different patent families including a patent in
the US for clothing incorporating a printed heater incorporating graphene ink,
one application has been allowed and is close to grant and four new
applications have been filed.
Revenue Model
The Group's revenue model is based on the following strands:
· Sale of plasma reactors with appropriate licencing for use of the
patented HDPlas® functionalisation process;
· Sale of functionalised material in powder, masterbatch or
pre-preg format;
· Sale of SiC microfibres and whiskers, ceramic blends and ceramic
blanks to the aerospace cutting tool and coatings industries;
· Sale of own brand and third-party products which clearly align
with our product or customer base; and
· Consultancy work with respect to testing the potential
enhancements that our product range and engineering acumen may bring to
customer applications.
Commercial Operations
The financial year-ended 30 June 2021 ("FY21") has taken place against the
backdrop of the Covid-19 pandemic which, whilst restraining revenue, has acted
as a catalyst to further deliver on the strategic priorities that the Company
has previously set out. Notwithstanding the challenges raised by the
pandemic in several of our key markets, the Group has delivered a resilient
performance in the year and, by focussing on elements within our control, made
solid strategic progress towards the Group's commercial goals.
The Group continues to transform itself from a research and development
organisation to a manufacturing business focussed on commercialising its
portfolio of technology and securing profitable outcomes. During the year
the Company has ordered a larger plasma reactor and ancillary equipment that
should deliver a significant increase in our functionalisation capacity and
provide the tools to move production to an industrial level.
UK & Europe
One of the early ramifications of the UK's response to Covid-19 was the
temporary closure of both commercial and academic research facilities.
However, despite the unfamiliar challenges of collaborating during the UK's
and other territories lockdowns, we experienced an increased appetite from
existing and new customers to investigate the benefits that our nanomaterial
science can bring to their products, and we saw an acceleration in both
serious enquiries and the commencement of new commercial projects during the
latter part of the year.
The UK division made meaningful progress towards commercialising its
proprietary technology. Functionalised product sales increased by 30% over
the prior year and project and other consultancy revenues (excluding reactor
sales) grew by 122% on a like for like basis. This increase judged alongside
the sales pipeline gives ground for cautious optimism that, despite the impact
of the pandemic and the knock-on effects as Government stimulus programmes are
unwound, momentum will be maintained.
Sales & Consultancy Work
In March 2020 Haydale announced that it would be cooperating with the English
Institute of Sport ("EIS") and the Welsh Centre for Printing and Coating
("WCPC") to deliver a range of advanced wearable technology sport apparel for
elite athletes. The initial plan had been to produce performance garments
for a range of sports in readiness for the Tokyo Olympic Games in 2020. The
project was put on hold with the delay in the Games but, in combination with
the other supply chain partners, Haydale delivered garments to several Team GB
competitors for use at the rescheduled Games. The garments benefit from
temperature regulated panels, designed using Haydale's printed functionalised
graphene ink, and the Group is now in discussions with a potential customer
who can access the wider commercial market.
The four-year agreement with DLYB(( 2 (#_ftn2) )), which commenced in April
2020, allows them to market Haydale's electrically conductive
graphene-enhanced masterbatch in China and Taiwan. The first year of the
contract was reserved for product validation and whilst these tests have taken
longer than scheduled, results continue to be encouraging and, although some
issues persist, we are hopeful of moving to the commercial phase of the
contract during 2022. Although this is later than anticipated, it is not
unusual for the move from research and development to wider commercial
adoption of cutting-edge technology to take longer than predicted.
In December 2020 we secured our first sale to Bolflex of our functionalised
nano-enhanced rubber masterbatch for use in its premium shoe range. The
masterbatch is incorporated into the styrene-butadiene rubber compound used in
its soles and results show improvements against its footwear test standards
with increased tear strength and enhanced abrasion, flex and slip
resistance. Subsequent to this announcement, the Company has been engaged by
several companies in the premium leisure footwear market and is actively
working on feasibility studies to demonstrate that our functionalised
masterbatches offer performance enhancement and a reduced environmental
footprint. Post year-end Haydale has filed for further patent protection in
this area.
Haydale's work with Briggs Automotive Company continues with the use of our
graphene enhanced composites for several of the body panels and for parts of
the tooling line. We were delighted to see that the BAC Mono R won the Track
Car of the Year Award at the prestigious 2021 GQ Car Awards and it is a
privilege to be part of the wider team that is delivering this exceptional
car.
Haydale signed an agreement with Dowty Propellers ("Dowty") in September 2020
for the provision of services for the collaborative development of graphene
and nanomaterial enhanced products for use in Dowty products. The main body of
work completed during the year and, whilst the results were positive, they did
not demonstrate the specific step change in performance hoped for at this
stage. The parties may look at further projects related to the work
performed but these are unlikely to commence until 2022.
Sale of Plasma Reactors
In April 2021 Haydale partnered with 401 Tech Bridge, Rhode Island, US, to
provide a HT200 Plasma Reactor and advanced materials support for their
innovation ecosystem. The HT200 Plasma Reactor will be utilised in the 401
Tech Bridge Advanced Materials and Technology Center, managed by the
University of Rhode Island (URI), to support its ambition to accelerate the
commercial adoption of new materials and support local companies' efforts in
developing next generation products.
This was the first sale of a plasma reactor since the year-ended June 2019 and
was in response to growing interest in the functionalisation capabilities of
our patented HDPlas® reactors. The Directors appraise each approach on
its merits with the guiding tenet that reactor sales must be demonstrably in
the long-term interests of the Company.
Collaboration Agreement with ProMake Limited ("ProMake")
ProMake specialises in design, development and manufacturing of medical
innovations and devices. In November 2020 Haydale signed a memorandum of
understanding with ProMake to formalise the collaboration on, amongst other
areas, conductive and piezo resistive inks and SynerG supertough and
conductive PLA 3D printing filament. Haydale also supported ProMake's
submissions for Lot 2 and Lot 4 of the Public Health England ("PHE") National
Microbiology Framework announced in November 2020. In April 2021 PHE announced
that ProMake was one of the successful bidders for both Lots. In July 2021
the parties signed a new collaboration agreement for Haydale to be the
exclusive supplier of the graphene and other nanomaterials required for the
effective functioning of ProMake's BioPod, a reusable biosensor device, and
also set out Haydale's responsibility for the manufacturing supply of several
elements of their PreVent testing device, which could also potentially utilise
the anti-bacterial qualities of functionalised graphene as one of its
components.
The Directors are keen to have the opportunity to directly assist in the fight
against Covid-19, but given the uncertainty inherent in contracts of this
nature and scale, the Directors are taking a prudent approach to their
investment of time and resource at the present time.
Asia Pacific
Our APAC hub in Thailand and sales office in South Korea continued to make
solid progress in the year towards commercialising Haydale's proprietary
technology. The three-year exclusive agreement with iCraft(( 3 (#_ftn3) )),
to supply six tonnes of functionalised graphene for cosmetic face mask sheets
announced in September 2020 was ahead of schedule at the year end. Haydale
shipped 2.2 tonnes in FY21 against a one tonne commitment and this may lead to
slightly lower volumes in FY22 as the volumes rebalance back to the
contractual requirements. We are also working closely with iCraft to supply
functionalised graphene powder for the manufacture of their graphene nano
platelet enhanced, anti-bacterial, neoprene PPE face masks. As part of the
on-going collaboration between the parties a sole distributor agreement
covering the UK and Europe was concluded in December 2020 and the first
direct-to-consumer sales of iCraft's PPE face masks were secured in January
2021 from Haydale's UK web portal. Whilst sales of PPE face masks have not
met our initial expectations, we believe that highlighting the positive
anti-bacterial and other properties of graphene within wearable garments will
be of value in the medium term.
Haydale has continued to work with IRPC(( 4 (#_ftn4) )) and has been engaged
on several projects during the year, including the Phase II agreement for the
development of transparent graphene and functionalized acetylene black
conductive inks for RFID, NFC and related applications. Our operation has
also forged new contacts within the Thai industrial landscape and is actively
collaborating with a number of well-known international operations who have
shown interest in the potential applications of our product range.
Notwithstanding this progress, APAC revenue in H2 FY21 was below our
expectations. In order to take advantage of the commercial opportunities
available, in May 2021 we appointed our first Director of Sales in Thailand
who came with a strong background in speciality polymer formulations. We are
already seeing the benefits of the focus and experience that this role brings
to our operations.
North America
From March 2020, Covid-19 had a significant impact on forecast revenues at
this division and we saw a marked slowdown in demand for SiC and blanks in the
last quarter of FY20 and during FY21. The global aviation industry remained
grounded by the pandemic for the majority of this reporting period, but
towards the latter end of the year, we observed some signs of a recovery in
business aviation and domestic flying activity and, whilst the pace of this
recovery and the speed with which it will filter through the jet engine supply
chain is uncertain, we did see a small increase in sales of our ceramic
blanks during H2 FY21.
Historically this division has been dependent on SiC whisker sales to two long
term customers and we have seen very different outcomes from these customers
during the year. The business received a commitment from its largest
customer to underpin the SiC whisker volume by increasing its short-term order
patterns during FY21 despite the economic uncertainty and muted demand.
The support we have received this year has ameliorated some of the short-term
impact of Covid-19 but will result in significantly reduced orders in the
year-ending June 2022. Importantly this assistance has offered the business
unit valuable breathing space to deliver on the initiatives detailed below.
Unfortunately, we did not receive similar support from our second largest
whisker customer and, towards the latter part of the year, we regrettably had
to seek legal intervention to try to secure fulfilment of their FY21 revenue
obligations of circa £450,000 and at this time the matter is scheduled for an
arbitration hearing in 2022.
As the impact of the pandemic became clearer, the Directors took defensive
measures to reduce the overhead base at the US facility and sought assistance
from widely available US federal stimulus programmes. The leaner cost base
mitigated some of the immediate revenue impact of the pandemic, but the
Directors recognised the need to reduce reliance on the US civilian aviation
sector and to widen the unit's product offering and expand its geographical
footprint. Specifically, the Group identified the European and the Far
Eastern cutting tools market for sales of both SiC whisker and blanks. We
are pleased to report that these plans had a positive impact on results at
this business unit during FY21 and provides a more robust foundation for this
business to move forward in the current financial year.
European Blanks Sales
In January 2021 we employed an experienced European agent for the marketing
and sale of SiC blanks into parts of the European market and other contiguous
markets. Subsequent to his employment, we commissioned third party
benchmarking tests at the University of Zwickau to ensure we were able to
match or exceed the quality of finished cutting tools sold by our competitors
in the exacting European market. Positive test results provided assurance to
potential European cutting tool customers and several are looking to conduct
internal trials on our blanks. In an adjoining market we achieved our first
blanks sale outside of the North American market and, whilst challenges remain
we anticipate this business will expand in the next financial year.
Despite positive initial contacts with a UK engineering tooling supplier for
the distribution of blanks, at this stage we have been unable to secure any
meaningful business in the UK market.
Far Eastern Sales
The Company signed a Memorandum of Understanding ("MoU") with a Sino-UK
facilitator in FY20 and the early promise shown by this relationship is now
being fulfilled. Further to this MoU, in January 2021 Haydale announced an
Agreement with Qinhuangdao ENO High-Tech Material Development Co., Ltd ("ENO")
which allows it to act as a sales representative for Haydale's ceramic and
silicon carbide products in China (including Hong Kong) and Taiwan for an
initial period of two years ending December 2022. Under the Agreement, ENO
expected to buy a minimum of $300,000 of product from Haydale within the first
year of the agreement but sales have been slower than anticipated with the
pandemic having a similar impact on demand as we have seen in our other
markets. Haydale has secured sales to a further four companies in China
during the year and is also actively collaborating on several other projects
in China which would extend our market penetration. We remain encouraged by
the strong interest in our SIC whisker and blanks offering and,
notwithstanding the residual effects of Covid-19, anticipate revenue growing
in this area in the current year.
Product Diversification
The Company has also diversified beyond the aviation and cutting tools sector
and has looked to take advantage of the enhanced properties that SiC
microfibres can deliver for surface bonding technology applications. In July
2020, Haydale was appointed the exclusive distributor to the UK water
infrastructure market for US based Zirconia Inc for CeramycGuard™(( 5
(#_ftn5) )). In April 2021 the Company signed an amended agreement that
extended the term from 31 December 2023 to 31 December 2030 and allowed
Haydale full distribution rights of CeramycGuard™ across all sectors in the
UK. Furthermore, with authorisation, Haydale may now also distribute to
additional territories outside of the US, for all markets and sectors.
CeramycGuard™ is a one stop solution that can be used in new concrete
applications and also renews and restores old or partly decaying concrete
in-situ in certain applications as well as preventing water loss. This
product is an advanced Ceramic Surface Treatment technology in a new class of
inorganic ceramic polymers, that uses Haydale's SiC microfibre as part of the
reinforcement. Haydale is working closely with a number of UK water utilities,
other water facility management companies and more general civil engineering
contractors who require a solution to concrete degradation. During the year we
secured our first sale of the product to a UK water utility and in February
2021 Biwater positively trialled CeramycGuard™ at its wastewater treatment
site in Managua, Nicaragua. We believe there is good potential that this
cutting-edge solution could be very important to the UK water industry as it
seeks to meet its obligations under the new AMP-7 five-year plan which started
in 2020.We are currently working to secure DW31 (Clean Water) accreditation in
order to significantly increase the scope of its potential applications.
Haydale has been looking to enter the wider carbide tooling market with cost
effective lower grade SiC blanks that would serve the automotive and other
cutting tool markets. Our supply partner is still to overcome the
operational challenges involved in scaling production to required commercial
levels. We continue to work to surmount these issues but at the present time
we are not anticipating any revenue from these lower grade tools.
Focussed R&D investment
The HDPlas(®) functionalisation process continues to be the cornerstone of
the Group's offering underpinning its future growth prospects. During the
year, good progress has been made with several new and different treatments
enabling more tuneable and enhanced offerings to meet customers' requirements.
This manipulation enables a much greater range of graphene and other
nanomaterial treatments and facilitates potential improvements in dispersal
and mechanical strength, electrical conductivity and thermal conductivity.
During the year we have seen demand for the functionalisation of other
nanomaterials accelerate and in particular for treated Boron Nitride. Boron
Nitride shares many of the same properties as graphene and is commonly known
as white graphite. When used as a lubricant additive it provides a low
coefficient of friction, enhanced wear and high thermal conductivity for more
efficient heat dissipation from moving parts to prevent seizure. Haydale has
been engaged to functionalise Boron Nitride to improve its dispersibility.
Amongst other developments, Haydale has:
· Developed advanced nano enhanced SynerG SuperTough 3D filament,
improving the tensile strength by circa 25%, the strain failure by 45% and the
thermal conductivity by a factor of 3. Haydale also developed SynerG
Conductive PLA 3D Printing Filament, with electrical conductivity in the range
of 4.5E+04 to 4.7E+05 Ω.cm as well as a30% increase in strength and a 3-fold
increase in thermal conductivity. We are anticipate growing sales in the
additive printing sector in FY22.
· Developed next generation functionalised inks with resistivity
reduced to under 10 ohms. This lower level resistivity potentially allows
graphene functionalised inks to replace silver, copper and aluminium etch in
certain metal antenna elements of the growing RFID and NFC sectors and
provides a cost effective and environmentally friendly application. Existing
'tags' are generally single use and as such are consigned to landfill after
use whilst Haydale functionalised inks are manufactured using a clean process
and there is reduced waste to landfill on disposal; and
· Refined next generation functionalised biomedical sensor inks
incorporating improved analyte detection through the incorporation of
compatible functional groups to enhance the accuracy of diagnosis. The
latest iteration has increase conductivity and electrochemical response and
provides a cost effective and environmentally friendly alternative to
traditional silver based printed biomedical sensor electrodes, which are also
susceptible to tarnishing. The ink is being tested by a Far Eastern customer
and we are also in discussion with customers in the UK.
The core thread running through our continued investment in R&D is the
focus on creating and maintaining technological advantage where we see a clear
commercial pathway. Whilst the gestation period for some of these
developments, such as lightning strike protection on commercial aircraft, is
defined by long product life cycles and mission critical safety thresholds,
other developments such as creation of advanced additive printing PLA and the
development of biosensor inks can be delivered to market in a much shorter
time horizon. It remains core to our strategy that we invest for the long
term whilst taking advantage of the numerous short-term commercial
applications presented by our technology.
Patent Developments
Haydale safeguards the intellectual property that arises from its on-going
investment in research and development through patent protection. The
Company maintains a rolling programme of applications for both new inventions
and also seeks to augment and extend existing patents by including later
enhancements. Amongst other filings, the following are of special note:
· Joint Patent with Airbus - During the year the Group has
collaborated with Airbus Operations Limited ("Airbus") on the filing of a
joint patent for intellectual properties jointly developed by the parties
under the multi-party NATEP-supported Graphene Composites Evaluated in
Lightning Strike Project ("GraCELS-2"). In August 2021 Airbus filed the
joint patent application. Further to the successful outcome of GraCELS 2, in
October 2019, Haydale launched a range of graphene enhanced pre-preg material
for lightning strike protection utilising functionalised nanomaterials to
improve the electrical conductivity and reduce the unloaded weight of an
airliner cost effectively and with clear environmental benefits. Haydale's
capability in this area underpinned the DLYB agreement in early 2020 and the
technology underlying the latest patent further enhances the effectiveness and
performance of Haydale' pre-preg range of materials; and
· PATit™ - Haydale has been granted a European Patent for
PATit™, its anti-counterfeit system which uses functionalised graphene
elements incorporated into printing inks to create unique security and
identity code patterns that are machine readable using capacitive touchscreen
technologies. The code can be verified by using local or hosted software
systems. Whilst the potential applications for PATit™ in the verification
of OEM products and the fight against counterfeit goods are significant there
are remaining technical and manufacturing challenges to wider integration in a
product's security eco-system.
Grant Funded Projects
Collaboration on grant funded projects has continued over the last twelve
months with the continued emphasis that only projects that have a clear
commercial pathway or add significantly to the Group's knowledge bank on
applications are undertaken. Adopting this yardstick and prioritising
commercial projects, reduced the number of grant funded projects that Haydale
undertook in the year, but this has not diminished the importance of this work
in support of the R&D investment made by Haydale. Grants received were
from either UK or European quasi-governmental bodies and 'promoting the green
economy' and 'cleantech' were the overarching themes for the funding awarded
in the year. Haydale's involvement in several of these projects relates to
its long-standing expertise in Hydrogen storage which has attracted renewed
interest in the past 18 months. Amongst other projects awarded in the year,
the following commenced:
· Carbo4power - a European consortium whose main objective is to
develop a new generation of lightweight, high strength, multifunctional,
digitalized multi-materials for offshore turbine rotor blades that will
increase their operational performance and durability while reducing the cost
of energy production, maintenance, and their environmental impact. This
multi-year project complements previous development work on the NATEP funded
GraCELS projects; and
· Advance Propulsion Centre ("APC") Automotive Transformation Fund
- As part of this wide-ranging APC initiative tasked with exploring the
feasibility of low carbon emission technologies, Haydale will assess the
suitability of its promising lightweight, low-permeability storage tank, to
help unlock the pathway to hydrogen propulsion. The feasibility study will
assess the ability of Haydale's functionalised graphene enhanced materials to
decrease manufacturing time and rejection rate, as well as to provide uplifts
to permeability, toughness, and impact resistance.
This structured approach to development is facilitating the internal learning
experience and creating potential products to fit with the organic growth
momentum at the centre of our strategic drive.
During the year, amongst others, the Company successfully completed the Hibar
Film and Affinity projects highlighted in last year's report and it has been
encouraged to apply for further funds to develop the findings from the Hibar
Film project.
Increasing Production Capacity at Ammanford
Haydale has consistently increased its capacity to functionalise graphene
ahead of the production curve at its Ammanford facility. Prior investment
permitted Haydale to meet the demands of its commercial commitments in FY21,
especially in respect of demands placed by the iCraft cosmetic face sheet
supply agreement. During the year the Group increased its investment at its
main production facility and in particular:
· Ordered a new HT1400 HDPlas® reactor in May 2021 which will
increase capacity eight-fold allowing the facility to functionalise over
thirty tonnes per annum of graphene and other nanomaterials based on a single
shift pattern. Whilst we do not foresee any significant technical
challenges to the delivery of larger capacity reactors, we are not
anticipating that the machine will be fully optimised until 2022.
· To support the production scale up, post year end we ordered,
amongst other items, ancillary machinery to increase our mixing and powder
handling capacity; and
· invested £0.05 million in a new gas delivery and piping system
to reduce our production changeover times, enhance output consistency and to
further improve on our exacting health and safety standards.
We anticipate that this investment which is spread over FY21 and FY22 will
meet our production requirements for the foreseeable future in the UK and more
importantly will allow us to significantly lower the cost performance ratio
that has curtailed more widespread downstream adoption of graphene to date.
Realigning and reducing the Group's cost base
During the year, the Directors have continued to realign the cost base to
ensure that the Group focuses its resources on achieving its strategic goals.
As the Group has reorganised its operations and streamlined its reporting
lines, it has achieved both a more efficient and effective operating structure
and delivered significant cost savings. The process that started during FY19
continued during FY21 and adjusted like for like administrative expenses have
reduced by a further £0.70 million (FY20: £0.87 million) in the year and by
£2.4 million (31.4 %) since FY18.
The main savings have related to the reduction in the workforce with the
principal savings being in the US operation which was severely affected by the
Covid-19 pandemic. Notwithstanding the overall reduction in headcount in the
year we have, yet again, increased investment in sales resource and commercial
support functions in the UK and Thailand. Outside of the workforce,
continuing cost reductions across all areas of the business including
sub-letting underutilised premises, reducing travel expenses, and making
numerous smaller and, in themselves, non-material adjustments which taken
together have contributed to controlling spend.
The savings secured have been achieved in a timely but not hurried timeframe
and without doubt in areas such as travel and subsistence have been
artificially reduced by the Covid-19 travel restrictions imposed by the
relevant authorities. Whilst striving for a leaner cost base, the Company
has focussed first on operational efficiency and then on achieving that in the
most cost-effective manner. This approach has ensured that, despite the
savings achieved, Haydale is now operating in a more flexible, responsive and
productive manner that supports a can-do culture across the business units.
Whilst our focus on cost control will not diminish, we anticipate in the
coming year that overheads will marginally rise as we seek to meet the
operational challenges of the sales pipeline.
During FY20 and to a lesser extent in FY21, the Company received limited
support from the UK Government through the furlough scheme and from the US
CARES Act via the Employee Retention Credit programme. The Company has had
no UK employees on either full or part time furlough since October 2020.
FUTURE STRATEGIC DIRECTIONS
Whilst the Covid-19 pandemic has undoubtedly depressed demand and subdued our
revenue expectations for the year, it has not defined the Group's performance
or slackened the progress towards our goals. Haydale has 39 verified
Technical Data Sheets available (2018 - Nil) and has executed 38 commercial
non-disclosure agreements since the start of the Covid-19 pandemic. The clear
priority remains to commercialise our cutting-edge technology and the progress
we have made during the year and the opportunities that we are seeing gives us
confidence that we are on a steady path to more widespread adoption of our
technology and the benefits, both performance and environmental, that it
brings.
The Directors remain mindful that downside risks that could impinge on the
general recovery persist, and the Group relies, amongst other factors, on the
pace of recovery of the aerospace and more generally on the wider economy.
However, the solid progress made in our core business during the year
continues to reinforce the Directors' belief that, whilst navigating the new
industrial landscape will remain challenging and forward momentum is unlikely
to be smooth, the Company is moving in the right direction.
FINANCIAL REVIEW
The Financial Review should be read in conjunction with the consolidated
financial statements of the Group and the notes thereto. The consolidated
financial statements are presented under International Financial Reporting
Standards and are set out on pages 40 to 76. The financial statements of the
Company continue to be prepared in accordance with FRS 101 and are set out on
pages 77 to 84.
Statement of Comprehensive Income
In the year under review, the Group's principal areas of income were sale of
plasma reactors; SiC fibres, whiskers and blanks; Specialty Inks; and graphene
enhanced composites. The Group's revenue for the year-ended 30 June 2021 of
£2.90 million (FY20: 2.95 million), showed a small decrease of £0.05 million
on that of the prior year. This reduction mainly reflected a fall in the
North American and Asia Pacific business units which was not fully offset by
gains in the UK( )business units.
Other operating income, which is principally grant funded projects, at £0.58
million (FY20: £0.76 million) is below historic levels which reflects the
Company' move away from Grant funded to commercial projects. The Group
received £0.14 million (FY20: £0.19 million) from the US Small Business
Administration Paycheck Protection Programme ("PPP") and this is included in
Other Operation Income.
The Group's Gross Profit, which excludes Other Operating Income declined
marginally to £1.98 million (FY20: £2.06 million) delivering a Gross Profit
margin of 68% (FY20: 70%).
The focus on reducing costs continued in the year and Adjusted Administrative
Expenses fell by £0.63 million (11.8%) to £4.72 million (FY20: £5.36
million). On a pre IFRS 16 basis the comparable figures for Adjusted
Administrative Expenses would have been £5.29 million (FY20: £5.99
million). Over the last three reporting periods the Company has reduced its
operating cost base by £2.43 million. Pre IFRS 16 Adjusted administrative
expenses exclude non-cash items such as share based payment charges,
depreciation and amortisation as well as one-off restructuring costs but
includes operating lease costs and, as such, gives visibility of the ongoing
cash impact of our operating cost base. Total administrative expenses for the
year were £6.11 million (FY20: £7.05 million).
The Loss from Operations was £3.56 million (FY20: £4.23 million). Finance
costs, which include interest payable on the Group's debt, for the year were
£0.21 million (FY20: £0.18 million).
The Group continued to direct resource to research and development with the
focus for that investment on products and process that could develop into
sustainable and profitable revenue streams. R&D spend for the year was
£1.02 million (FY20: £1.05 million(( 6 (#_ftn6) ))), of which £0.26
million was capitalized (FY20: £0.25 million). During the year the Group
claimed R&D tax credits of £0.36 million (FY20: £0.39 million) and it is
expected that this claim will be received during the current year.
Total comprehensive loss for the year was £3.59 million (FY20: £4.23
million). The loss per share for the year was £0.01(FY20: £0.01 loss).
Statement of Financial Position and Cashflows
As at 30 June 2021, net assets amounted to £6.76 million (2020: £7.45
million), including cash balances of £1.64 million (2020: £0.82
million). Other current assets reduced to £3.00 million at the year-end
(2020: £3.32 million) and this was mainly related to the reduction in
inventory of £0.39 million at the US facility during the year. We
anticipate inventory levels will continue to reduce over the next 12 months at
the US site. Current liabilities reduced to £2.78 million as at 30 June 2021
(2020: £2.92 million) due principally to the reduction in Trade and other
payables.
The Right of Use Asset in respect of its leased premises increased to £2.58
million (FY20: £1.59 million) due to a renewed lease on our US facility and
the Right of Use Liability which is split between Current and Non-Current
Liabilities similarly increased to £2.74 million (FY20: £1.65 million).
These movements were non-cash items and did not impact the cash outflow in the
year. The Company will amortise these balances over the remaining life of
the leases which varies across the sites.
The Group's US Pension Obligations of £1.03 million (FY20: £1.44 million)
reduced in the year due to a combination of exchange rate gains and positive
movements in the plans funding requirements.
Net cash outflow from operating activities before working capital movements
for the year reduced to £2.04 million (2020: £2.58 million), the principal
contributing factors being the Loss before Taxation of £3.41 million (2020:
£4.02 million). Cash used in Operations reduced by £1.74 million in the year
to £(1.58) million (FY20: £(3.32)) million. The Group received a R&D
tax credit inflow of £0.39 million in FY21 (FY20: £0.85 million). The prior
year figure included payments for the R&D claims made in both FY18 and
FY19. Net cash used in operating activities reduced to £(1.19) million
(FY20 £(2.48) million).
Capital expenditure in the year, excluding the IFRS 16 adjustments set out
below, was £0.22 million (FY20: £0.04 million).
Capital Structure and Funding
As at 30 June 2021, the Company had 425,279,798 ordinary shares in issue
(2020: 340,223,848). No options were exercised into ordinary shares during the
year (FY20: none).
The Group repaid borrowings of £0.22 million during the year under review
(FY20: £0.84 million), which almost wholly related to the Group's US
borrowing facilities which are secured on the Group's US based tangible
assets.
The Company received £0.80 million of a £1.1 million UKRI Innovation Loan
during the year to support scale up capital expenditure. The remaining
funds are expected to be drawn down in FY22. The Group's US working capital
facility which was secured on a combination of the fixed assets, inventory and
trade receivables of the US business was fully utilised at the year-end (2020:
fully utilised). The net result was that the Group's total borrowings at the
year-end were £1.73 million (2020: £1.25 million), of which £0.85 million
was in the UK and the balance in the Group's US subsidiaries. The UKRI
Innovation loan a quarterly liquidity covenant applies until April 2024.
There are no financial covenants extant in respect of the UK bounceback loan
of £0.05 million (FY20: £0.05 million) or the Group's US borrowings.
Post Balance Sheet Event
On 20 September 2021, the Company raised £5.10 million (gross) through the
placing, retail offer and subscription of 85,055,893 new Ordinary Shares at
6.00 pence per share. The funds raised will be used to fund the general
working capital needs of the business, support the scaling up of manufacturing
capacity at the Ammanford site and drive forward product rollout into the US
market.
Key Performance indicators
The Group has historically reported financial metrics such as revenues, gross
profit margin, adjusted operating loss, cash position and other metrics as its
key performance indicators and these are set out below.
FY21 (£m) FY20 (£m)
Revenue 2.90 2.95
Gross profit margin 68% 70%
Adjusted operating loss( ) (2.17) (2.54)
Cash position 1.64 0.82
Borrowings 1.73 1.25
During the year under review, management also used a sales tracker, a key
non-financial performance metric to monitor the revenue pipeline of the
business. The sales tracker monitors the number of accredited leads and
assigns a probability of revenue realisation to those leads.
SECTION 172(1) STATEMENT
The Directors acknowledge their duty under s.172 of the Companies Act 2006
("s172") and consider that they have both individually and together acted in
the way that, in good faith, would be most likely to promote the success of
the Company for the benefit of its members as a whole, having regard to the
matters set out in s.172.
The Directors have set out the ways in which they look to fulfil their duties
in the year at section 3 of the Chair's Corporate Governance Statement on page
21.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board considers that the principal risks and uncertainties facing the
Group may be summarised as follows:
Impact of Covid-19 and General Economic Uncertainty
Despite a robust performance, the Covid-19 pandemic has adversely affected
customer demand and subdued Group revenues during the year under review. The
Directors accept that there remains a varying degree of economic uncertainty
in all of the countries in which it has facilities and in the markets in which
it operates. The Directors are provided with detailed projections that
model future performance and liquidity of the Group and funding decisions are
based on these forecasts.
Health and Safety
Many of the Group's products are advanced materials that are nano in size and,
although there is little actual evidence of any health risks associated with
the handling of the Group's products, there is a theoretical risk that the
Group's products could be a danger to health if an individual is exposed to
and/or inhales/ingests some of the Group's products. The Group takes health
and safety very seriously and manages the potential health and safety risk by
regular staff training, well maintained facilities and restricting activities
to only certain qualified individuals. The UK facilities are ISO 9001 and
ISO 14001 accredited and the Thailand facility has ISO 9001 accreditation.
Acceptance of the Group's Products
The success of the Group will depend on the market's acceptance of, and
attribution of value to, advanced materials technology developed by the Group
based on successfully mixing and dispersing raw, mined graphite, synthetically
produced graphene and other nanomaterials into customers' existing products in
order to improve the mechanical, thermal or electrical properties of these
products.
Notwithstanding the technical merits of the processes developed by the Group,
and the extensive market and product research carried out by management to
assess the likelihood of acceptance of the Group's products, there can be no
guarantee that its targeted customer base for the processes will ultimately
purchase the Group's products.
Speed of product adoption
While the Group makes every effort to establish realistic timelines for
customer engagement, testing and purchasing of Haydale's products, there are
often unforeseen delays (by both parties) in forecasting the commencement of
sales. There may be regulatory hurdles to overcome and end-customer risk
aversion in accepting a new nanomaterial enhanced product. Following the
realignment in 2019, the focus on commercial product sales remains an absolute
priority, notwithstanding that the timing and adoption of Haydale's newly
developed product lines remains difficult to predict.
Intellectual Property Risk
The Group's success will depend in part on its ability to maintain adequate
protection of its IP portfolio, covering its manufacturing process, additional
processes, products and applications, including in relation to the development
of specific functionalisation of graphene and other nanomaterials for use in
particular applications. The IP on which the Group's business is based is a
combination of granted patents, patent applications and confidential know-how.
Internal procedures and controls are in place to capture and exploit all
generated IP as well as to protect, limit and control disclosure to third
parties and partners. The Group aims to mitigate any risk that any of the
Group's patents will not be held valid if challenged, or that third parties
will claim rights in, or ownership of, the patents and other proprietary
rights held by the Group through general vigilance, regular international IP
searches as well as monitoring activities and regulations for developments in
copyright/intellectual property law and enforcement. The Group retains third
party professional experts to assist.
Information and Communications Technology ("ICT") Risk
The inability to access data for a period of time either due to systems
failures or the unauthorised intervention of malicious parties may severely
impact the Group's ability to conduct its day-to-day business, lead to the
loss of sensitive information or result in loss of funds in a ransomware
attack.
The Group aims to mitigate these threats by maintaining a third-party ICT
support agreement with a respected contractor, ensuring industry standard
cyber security procedures are followed, setting out clear internal procedures
for communicating potential ICT breaches and by providing adequate staff
training on the cyber security risk that all users face. In the event that
these procedures are inadequate the Group maintains a business continuity plan
with our service provider that covers longer term denial of access.
Dependence on Key Personnel
The Group's business, development and prospects are dependent upon the
continued services and performance of its Directors and other key executives.
The experience of the Group's personnel helps provide the Group with a
competitive advantage. The Directors believe that the loss of services of any
existing key executives, for any reason, or failure to attract and retain
necessary additional personnel, could adversely impact on the business,
development, financial condition, results of operations and prospects of the
Group. The Group aims to mitigate this risk by providing well-structured and
competitive reward and benefit packages that ensure our ability to attract and
retain key employees.
By order of the Board
David Banks
Chair
14 December 2021
BOARD OF DIRECTORS
The Haydale board consists of experienced commercial directors from a range of
industries that include engineering, retail, finance and accounting, and
technology. Brief biographies of each of the directors are set out below.
David Doidge Richard Banks, Non-Executive Chair
David Banks started in stockbroking in Birmingham in 1979 with Harris, Allday,
Lea and Brooks before moving to London and becoming an Institutional Salesman
at Panmure Gordon where he was acclaimed in the Automotive, Engineering,
Aerospace and Motor Distributors sectors. He subsequently became a Corporate
Broker advising many companies on their Corporate Structure, Strategy,
Messaging and Presentations. He also raised the Capital for many of these
Companies both at IPO and in Secondary fund raises. David joined Haydale as
Non-executive Chair in July 2017 and was appointed as Interim-executive Chair
on 5 September 2018 and, following the general meeting on the 12 March 2019,
reverted to Non-executive Chair.
David has significant city experience and has advised companies in the
Automotive, Aerospace and Motor Distribution sectors on their corporate
structure, strategy m messaging and presentation. He has experience of
raising capital for growing companies and is responsible for liaison with our
major shareholders.
Keith Broadbent; Chief Executive Officer
Prior to joining Haydale, Keith held a number of senior operational and
commercial positions which covered aerospace, defence, automotive, marine and
medical sectors. His experience includes significant multi-site
responsibilities in both the UK and internationally and he has worked for
Princess Yachts International, Sunseeker, TT Electronics and most recently
Ultra Electronics. Keith has demonstrated a strong track record in the
delivery of budgets, high level customer service and enhancing shareholder
value. Keith joined Haydale in July 2017 and was appointed the Group's Chief
Executive Officer in March 2019.
Keith holds an MBA from Derby University and this, coupled with his customer
contact and manufacturing experience across a number of different sectors
encompassing design, supply chain, manufacture, commercial and financial
elements of business, are a key skill requirement in the ongoing journey
moving Haydale into a market led commercial scale manufacturing organisation
putting people at the centre of the enterprise strategy,
Mark Chapman - Chief Financial Officer
For the last 19 years, Mark held a number of CFO and COO roles within
international companies operating in the med-tech, beverages and consumer
sectors, where he has helped deliver strong improvements in business
sustainability and EBITDA growth. Prior to moving into industry, Mark spent 8
years in professional services firms, including 5 years as a corporate
financier with Deloitte. Before embarking on his career in finance, Mark was a
commissioned officer in the British Army. Mark qualified as a chartered
accountant in 1995 and holds a degree in Economics from the University of
Birmingham. Mark joined Haydale as CFO in November 2019.
Mark brings experience of working in Board positions in international
multi-currency businesses undergoing periods of sustained change. He has a
strong foundation in accountancy supplemented by experience in mergers and
acquisition, corporate restructuring and raising equity and debt finance.
Graham Dudley Eves MA, Non-Executive Director
Graham Eves joined GKN plc in 1967 where he spent 13 years operating across
multiple overseas jurisdictions including, for the last 5 years, setting up
and running a special operation for GKN plc's head office in Switzerland. He
returned to the UK in 1980 to work in venture capital and establish his own
international business consultancy. His main activities covered advising a
range of German, North American and Japanese automotive component/technology
suppliers and he co-founded and was chair of an automotive technology company,
Mechadyne (now part of Rheinmetall Automotiv AG). Graham was a non-executive
director of AB Dynamics plc from flotation until September 2020. He was on the
AIM advisory committee of the London Stock Exchange ("LSE") for 6 years and
has a Master of Arts degree in Modern and Medieval Languages from the
University of Cambridge.
Graham is a Non-Executive Director of Viritech Limited and iVapps (UK)
Limited, Chair of Zero E Technologies, Inc. and a director of Zeus Motors,
Inc. He has an extensive range of international business contacts and years of
experience of negotiating technology licence deals. He is particularly
interested in the challenges of growing and structuring small high technology
companies so that they can find their places on the world stage.
Theresa Wallis Non-Executive Director
Theresa Wallis worked most of her executive career in financial services,
moving into technology commercialisation in 2001. She was with the LSE for
13 years, where from 1995 to 2001 she was COO of AIM, having managed the
market's development and launch. From 2001 to end 2006 she was a principal
executive of ANGLE plc, a venture management and consulting business focusing
on the commercialisation of technology. Since 2001 she has held a number of
non-executive directorships, including LiDCO Group plc where she was
non-executive chair, Veriton Pharma Ltd and the Quoted Companies
Alliance. Prior to joining the LSE, she worked for Hambros Bank and then
Canadian Imperial Bank of Commerce in London. Theresa has a degree in Zoology
from the University of Oxford and a Diploma in Company Direction from the
Institute of Directors.
Theresa has a background in business development and technology
commercialisation alongside her experience of working with AIM and other
companies at a similar stage of development. She brings a range of corporate
governance, business development, financial and commercial experience to the
Company.
Theresa joined the Board of Haydale in June 2020.
DIRECTORS' REPORT
The directors present their report and the audited financial statements for
Haydale Graphene Industries Plc (the "Company"), a public company incorporated
and registered in England and Wales with company number 07228939, and its
subsidiaries (together the "Group") for the year ended 30 June 2021.
There are a number of items required to be included in the Directors' Report
which are covered elsewhere in the annual report. Details of directors'
remuneration and share options are given in the Directors' Remuneration
Report, details of the use of financial instruments and financial risk
management objectives and policies are given in note 22 of the financial
statements and the Strategic Report on pages 5 to 12 covers the following
matters:
· Principal Activities;
· Review of the Business and Future Developments;
· Key Performance Indicators; and
· Research and Development.
Statement of Directors' Responsibilities in respect of the Annual Report and
the Financial Statements
The directors are responsible for preparing the strategic report, the annual
report and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law, the directors have elected to prepare the
Group financial statements in accordance with International Financial
Reporting Standards (IFRSs) in conformity with the requirements of the
Companies Act 2006 and the Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law). Under company law, the directors
must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and Company and
of the profit or loss for the Group for that period. The directors are also
required to prepare financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities on the AIM market.
In preparing these financial statements, the directors are required to:
- Select suitable accounting policies and then apply them
consistently;
- Make judgements and accounting estimates that are reasonable,
relevant, reliable and prudent;
- State whether they have been prepared in accordance with IFRSs in
conformity with the requirements of the Companies Act 2006;
- For the Parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
- Prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and the Company will continue in
business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the Group's
website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Dividends
The directors do not propose the payment of a dividend (2020: nil).
Directors
The following directors have held office since 1 July 2020 and up to the date
of signing the financial statements:
David Banks Graham Eves
Keith Broadbent Theresa Wallis
Mark Chapman
Directors' Interests in Ordinary Shares
The directors had the following interests in ordinary shares of the Company at
the 30 June 2021 and at the date of this report:
Director Number of Shares at 30 June 2021 % of Share Capital Number of Shares at 14 December 2021 % of Share Capital
David Banks 3,098,809 0.73 3,250,000 0.64
Keith Broadbent 785,714 0.18 952,381 0.19
Mark Chapman 560,714 0.13 750,000 0.15
Graham Eves 142,857 0.03 142,857 0.03
Theresa Wallis 428,571 0.10 511,904 0.10
Directors' and Officers' Liability Insurance
Qualifying indemnity insurance cover has been arranged in respect of the
personal liabilities which may be incurred by directors and officers of the
Group during the course of their service with the Group. This insurance has
been in place during the year and on the date of this report.
Post Balance Sheet Event
On 20 September 2021, the Company raised £5.10 million (gross) through the
placing, retail offer and subscription of 85,055,893 new Ordinary Shares at
6.00 pence per share.
Foreign Currency, Interest Rate, Credit and Liquidity Risk
The directors do not consider any of these potential risks to pose a
significant risk to the Group or its operations over the coming year. See note
22, Financial Instruments, for further details.
Going Concern
The Directors have prepared and reviewed detailed financial forecasts of the
Group and, in particular, considered the cash flow requirements for the period
from the date of approval of these financial statements to the end of December
2022. These forecasts sit within the Group's latest estimate and within the
longer-term financial plan, both of which have been updated on a regular
basis. The Directors are also mindful of the impact that the other risks and
uncertainties set out on pages 14 to 15 may have on these estimates and in
particular the speed of adoption of new technology during these uncertain
times.
As part of this review the Directors have considered several scenarios based
on various revenue, cost and funding sensitivities.
Revenue
Various sensitivities have been applied to forecasted revenue including a
stress test scenario which reduces forecasted revenue by circa 72 per cent, to
the point where the Group would breach its available cash resources at 31
December 2022. With respect to this 'stress test' the Group has a
significant proportion of that sensitised revenue within forward orders,
contractual or some other form of customer assurance which have a high degree
of certainty.
Cost Mitigation
The Directors have included some low-level assumptions regarding cost savings
that might be achievable if the forecast fails to meet the forecasted or
sensitised estimates, and these have been phased in gradually over the
12-month period to 31 December 2022.
Customer Solvency
As part of this review the Directors have assessed the solvency of key
customers and their ability to deliver on their contractual or other
commitments on the basis of publicly available information and included the
results of these assessments in our forecasts.
Summary
Therefore, after due consideration of the forecasts prepared, the
sensitivities applied and the Group's current cash resources after the fund
raise in September 2021 and the terms of its debt facilities, the directors
consider that the Company and the Group have adequate financial resources to
continue in operational existence for the foreseeable future (being a period
of at least 12 months from the date of this report), and for this reason the
financial statements have been prepared on the going concern basis.
Disclosure of information to auditors
All of the current directors have taken all the steps that they ought to have
taken to make themselves aware of any information needed by the Company's
auditors for the purposes of their audit and to establish that the auditors
are aware of that information. The directors are not aware of any relevant
audit information of which the auditors are unaware.
Independent auditors
The auditors, Grant Thornton UK LLP have expressed their willingness to
continue in office and a resolution concerning their re-appointment will be
proposed at the annual general meeting.
Statement by the Directors
The Directors consider the annual report and accounts, taken as a whole is
fair, balanced and understandable and provides the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy.
By order of the Board
David Banks
Chair
14 December 2021
CHAIR'S CORPORATE GOVERNANCE STATEMENT
Overview
As Chair of the Board of Directors of Haydale Graphene Industries Plc
("Haydale", the "Group" or the "Company"), it is my responsibility to ensure
that Haydale has both sound corporate governance and an effective Board. This
is achieved by maintaining a corporate governance framework that includes
regular meetings of the Board and its committees, with informative, relevant
and timely information flow. We regularly review our governance processes to
ensure we are constantly improving. The Board members have extensive
experience of managing AIM companies, including knowledge of the AIM Rules and
the Market Abuse Regulations. Haydale adopts the Quoted Companies Alliance
Corporate Governance Code ("QCA Code") and this report follows its structure
and explains how we have applied it. The principal methods of communicating
our application of the QCA Code are this Annual Report and through our
website, at www.haydale.com (http://www.haydale.com) .
The Board believes that corporate governance is more than just a set of
guidelines; we believe that good corporate governance improves long-term
success and performance, whilst reducing or mitigating risks.
Below are the Company's explanations of how it has complied with the 10
principles of the QCA Code during the year.
QCA Principles
1. Establish a strategy and business model which promotes long-term value for
shareholders
The Board has concluded that the highest medium and long-term value can be
delivered to its shareholders by the adoption of a single purpose for the
Company: To use our knowledge of advanced materials and dispersion to be one
of the world's foremost creators of material change, enabling our customers to
improve the performance of their products. To achieve this, the Company aims
to grow organically and, if necessary, by acquisition, to extend the Group's
client base and geographical penetration and use its existing expertise and
global reach to generate commercial opportunities in the high growth advanced
materials industry. Haydale's business model and strategy, together with the
principal risks and uncertainties facing the Group, are set out in the
Strategic Report on pages 5 to 12 of this Annual Report. The Directors
intend that the strategy will deliver shareholder returns initially through
capital appreciation and eventually through distributions via dividends.
2. Seek to understand and meet shareholder needs and expectations
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders.
The Directors meet shareholders and other investors or potential investors
during the year, especially following the announcement of the Annual and
Interim Results. The Company also hosts broker and analyst meetings. David
Banks is the Director appointed as the main point of contact for shareholder
liaison and the Directors ensure that shareholder views are taken into
account. Due to the Covid-19 pandemic, most meetings over the past year with
shareholders and brokers took place via videoconference or, when permitted, by
national and regional regulations and guidance, visits to the main production
site at Ammanford were organised.
The Company intends to have close ongoing relationships with its larger
private shareholders, institutional shareholders and analysts and for them to
have the opportunity to discuss issues and provide feedback at meetings with
the Company. The Company receives reports from its corporate registrar and
from Argus Vickers. In normal years the whole Board attends the Company's
Annual General Meeting ("AGM"), which is regarded as an opportunity to meet,
listen and present to shareholders, all of whom are normally encouraged to
attend. Whilst shareholders were advised not to attend the 2020 AGM, they were
invited to ask questions by email and submit their votes in advance by
proxy. Looking ahead, the Company will continue to monitor and comply with
prevailing guidance when determining if shareholders are able to safely attend
the next AGM and hopes that this will be the case. The outcomes of each of
the AGM votes are announced following the meeting. If there is a resolution
passed at a general meeting with a significant number of votes against, the
Board seeks to understand the reason for the result and, where appropriate,
takes suitable action.
The Company's broker and nominated advisor is briefed regularly and keeps the
Company appraised of market and regulatory developments as they affect the
Company.
3. Take into account wider stakeholder and social responsibilities and their
implications for long-term success
The Board is mindful of its statutory duty under s172 of the Companies Act and
the Directors have acted in a way that they considered, in good faith, to be
most likely to promote the success of the Company for the benefit of its
stakeholders as a whole, and in doing so, had regard amongst other matters to
the:
· Foreseeable or likely consequences of any decision in the long
term;
· interests of the Company's employees at each of its five
facilities;
· need to foster the Company's business relationships with
suppliers, customers and others;
· impact of the Company's operations on the community and the
environment; and
· importance of the Company maintaining a reputation for high
standards of business conduct.
In doing so, the Board recognises the Company is reliant upon the efforts of
the employees of the Company and its collaboration partners, suppliers,
regulators and other stakeholders whether they are identified under s172 or
not. The Board ensures that there is close oversight and contact with its key
resources and relationships and, whilst this has been more challenging during
the year given the Covid-19 pandemic and consequent meeting, travel and other
restrictions, the Company has used video conferencing and other modes of
communication to maintain its efforts in this regard. The following
paragraphs set out how we engage with our stakeholders.
Everyone within the Group is a valued member of the team, and our aim is to
help every individual achieve their full potential. We offer equal
opportunities regardless of race, gender, gender identity or reassignment,
age, disability, religion or sexual orientation. The unfamiliar challenges
raised by Covid-19 have required the Company to adapt its procedures to comply
with national and local guidance in the jurisdictions in which it operates.
Health and safety of our team was prioritised and compliant protocols were
introduced at our sites which all remained operative throughout the year.
Where feasible employees moved to homeworking during the pandemic and for
those who were advised to shelter due to personal or household circumstances
and, where homeworking was not practical, appropriate measures, including use
of the various Government support schemes, were put in place to reduce the
anxiety caused by any protracted time away from the business. Those working
from home were given access to a videoconference facility and communication
with employees was increased to include weekly team calls alongside the normal
business related meetings. The Company is still of a size where the Executive
Directors know all of the team and employees were aware that they were able to
contact the senior leadership directly to ask questions on any topic that
concerned them.
Notwithstanding the demands imposed by the pandemic, the Group has continued
to invest in staff training to ensure that employees have the skills to meet
their responsibilities as part of a modern international operation.
The Company prepares a detailed budget annually which takes into account the
Group's strategy and its available key resources including staffing, working
capital, production capacity and functionalisation capabilities.
In depth analysis and reviews of each business unit's budgeted business plan
are agreed at the start of each financial year, with contributions from all
involved parties which facilitates a two-way communication channel with
agreement on the goals, targets and aspirations of the Company. This provides
each strategic business unit with the opportunity to raise issues and provide
feedback to the Board via the executive members. These feedback processes help
to ensure that the Company can respond to new issues and opportunities that
arise to further the success of the Group.
The Company has close ongoing relationships with a broad range of its
stakeholders and, as set out above, provides them with the opportunity to
raise issues and provide feedback to the Company. The Company seeks regular
feedback from its stakeholders which include employees, industry participants,
such as customers, graphene producers, R&D facilities, including
universities and academic institutions whilst simultaneously embracing
influential movers within the advanced materials industry who may positively
influence perception of the Company. This feedback is generally but not
exclusively received through formal performance reviews (employees) and
informal meetings. Feedback received is reviewed, considered, and, if changes
are required, actioned appropriately. The Company communicates with its
stakeholders and takes account of their feedback in order to develop products
that meet the needs of their customers and that can be supplied reliably, cost
effectively and in line with applicable standards.
The UK is ISO 9001:2015 accredited and the UK and Thailand operations are ISO
14001:2015 accredited. and the Group complies with relevant health and safety
and environmental legislation. Through the employment opportunities it
provides it has a beneficial community effect.
4. Embed effective risk management, considering both opportunities and
threats, throughout the organisation
The Board oversees and reviews the Group's risk management and internal
control mechanisms.
During the year the risk register was regularly reviewed by the senior
management working in conjunction with the site managers. The risk register
sets out the assessed risks and the key actions and processes to mitigate
those risks and the individual or group responsible for ensuring that these
are performed.
The review process involves the review and identification of risks, assessment
to determine the relative likelihood of them impacting the business and the
potential severity of the impact and determination of what needs to be done to
minimise their likelihood and/or mitigate their impact. The risk register
sets out and categorises these risks and outlines the controls and any further
actions required.
During the year particular focus was given to the risks associated with the
Covid-19 pandemic and the growing cybersecurity risk that all organisations
face. As set out below the risk register was considered by the Audit
Committee at its meeting in May 2021. The principal risks and uncertainties to
the business and steps to mitigate them are set out in the Strategic Report in
this Annual Report on pages 14 to 15.
The Board has established appropriate reporting and control mechanisms. The
system of internal control is structured around the risks set out in the risk
register and is designed to address those risks that the Board considers to be
material, to safeguard assets against unauthorised use or disposition and to
maintain proper accounting records which produce reliable financial and
management information.
Further key features of the Company's internal control system include the
following:
· Close management of the business by the executive directors;
· Monthly management accounts information is prepared and reviewed by
the Board, including variances against the annual budget, latest expectations
and prior year;
· There is a schedule of matters reserved for decision by the Board;
· A clearly defined organisational structure is in place, with clearly
delegated authorities, reporting lines and roles;
· Defined levels/limits for authorisation of expenditure and placing of
orders and clearly set out authorisation procedures; and
· Quality management systems are implemented and regularly audited by
an independent third party. The UK operations are Company is ISO 9001:2015
and ISO 14001:2015 certified and the Thailand facility is ISO 14001:2015
5. Maintain the board as a well-functioning, balanced team led by the Chair
The Board comprises two executive directors and three non-executive directors
as follows:
Executives
· Chief Executive Officer: Keith Broadbent;
· Chief Financial Officer: Mark Chapman;
Non-executives
· Non-executive Chair: David Banks;
· Independent Non-executive: Graham Eves; and
· Independent Non-executive: Theresa Wallis.
Biographical details of the Directors can be found here at www.haydale.com
(http://www.haydale-ir.com/content/investors/board.asp) . or in this Annual
Report on pages 16 to 17.
All the Non-Executive Directors are expected to dedicate at least 24 days per
annum to the Company. Mr Broadbent and Mr Chapman are full time. One third
of Board are subject to re-election at each AGM.
Board meetings are open and constructive, with every Director participating
fully. Senior management are also invited to meet with the Board, providing
further insights into the Company's activities and performance. The full Board
had seven regular meetings in the year. Regular board meetings are scheduled
in advance, but the Board also meets as and when required. In order to be
efficient, the Directors meet formally and informally in person, by telephone
or videoconference. This was particularly the case in the last year due to the
Covid 19 restrictions, when all but two of the board meetings took place by
videoconference. Board papers are prepared by the relevant personnel and
circulated to the Board at least 48 hours before meetings, allowing time for
consideration and necessary clarifications before the meetings. Directors are
free to seek any further information they consider necessary.
The Non-executive Directors meet without the presence of the Executive
Directors during the year, and also maintain ongoing communications with
Executives between Board meetings.
During the year ended 30 June 2021, the Company held 21 board meetings (FY20:
20), with each member's attendance as follows:
Number of board meetings attended
Director Scheduled FY21 Ad hoc FY21 Total Total
FY21 FY20
David Banks 7/7 14/14 21/21 20/20
Keith Broadbent 7/7 14/14 21/21 19/20
Graham Eves 7/7 13/14 20/21 16/20
Mark Chapman 7/7 14/14 21/21 14/14
Theresa Wallis 7/7 14/14 21/21 1/1
Attendance at the Company's audit, remuneration and nomination committee
meetings during FY21 and the prior year were as follows:
Number of committee meetings attended
Audit Remuneration Nominations
Committee member FY21 FY20 FY21 FY20 FY21 FY20
David Banks 4/4 3/3 2/2 8/8 - 3/3
Graham Eves 4/4 3/3 2/2 6/8 - 3/3
Theresa Wallis 4/4 1/1 2/2 -/- - -/-
Terms of reference for each of the Board's Committees are published on the
Group's website, The Company believes that the Committees have the necessary
skills and knowledge to discharge their duties effectively.
6. Ensure that between them the Directors have the necessary up-to-date
experience, skills and capabilities
The Company believes that the Directors have an appropriate breadth and depth
of skills, knowledge and experience to fulfil their roles, reflecting a broad
range of personal, commercial and professional skills across geographies and
relevant sectors and experience of public markets. Details of the Directors'
experience and areas of expertise and the relevant skills each Director brings
to the Board are outlined on pages 16 to 17 of this Annual Report and on the
Company's website.
In addition to their general board responsibilities, Non-executive Directors
are encouraged to be involved in site visits and meetings, in line with their
individual areas of expertise, though this was curtailed for much of the year
due to Covid 19 restrictions.
The Company has employed the services of ONE Advisory Limited to provide
assistance to the Company in its Company Secretarial and MAR compliance needs.
Matt Wood, a director of ONE Advisory Limited, is Haydale's Company Secretary.
If required, the Directors are entitled to take independent legal advice and,
if the Board is informed in advance, the cost of the advice will be reimbursed
by the Company.
In addition, the Company is a member of the QCA and as such all the directors
have access to briefings issued by the QCA and also access briefing, updates
and events offered by other professional advisory firms.
7. Evaluate board performance based on clear and relevant objectives, seeking
continuous improvement
We stated last year that every other year the Board expects to carry out an
internal Board and Committee evaluation exercise, including that of the Chair
and individual directors. Subsequent to the year end the Company commenced its
first evaluation exercise and the results and recommendations of that
assessment will be set out in next year's report. The Chair is leading the
evaluation exercise and a non-executive Director will lead the review of the
performance of the Chair.
Board succession planning is one of the responsibilities of the Nomination
Committee as set out in Principle 9 on page 26. Below the main Board the CEO
seeks board approval for his recommendations on senior management appointments
and changes to the subsidiary boards. During the year a number of
appointments were made to the subsidiary Boards in the UK.
8. Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that its decisions regarding strategy and risk will
impact the corporate culture of the Company as a whole and that this will
impact the performance of the Company. The Board is very aware that the tone
and culture set by the Board will greatly impact all aspects of the Company as
a whole and the way that employees behave.
Our culture acts as the glue that binds our staff around the world together.
Underpinning the Haydale culture is the need for team work and we expect all
employees to:
· Be an active member of the team ensuring that support and cooperation
is given to other members to assist them in achievement of Company objectives.
· Work proactively with colleagues to give a professional and speedy
service to clients/customers.
· Coordinate activities with other colleagues to ensure the smooth
running of the business and excellent customer service.
· Participate in the creation of a stable and cohesive team within the
Company and assist all staff to maximise their contributions to the business.
· Be adaptable and flexible in respect of work undertaken as and when
the needs of the business dictate.
The Company is working towards the goal of a "one team" shared culture that
supports an open and respectful dialogue with employees, clients and other
stakeholders, and is underpinned by sound ethical values and behaviours.
These values are reinforced at the regular team and site performance
reviews and also at intersite meetings which, amongst other areas, cover
sales, marketing, technical and health and safety matters.
The Company has implemented a quality system based on the rigorous standards
of BS EN ISO 9001 and 14001 and adherence to this Quality System is mandatory
throughout the Company. All employees are encouraged to take responsibility
for the quality of their own workmanship and to work with their colleagues
towards maintaining our ISO standards.
To ensure we meet the high standards that we set ourselves employees are
formally appraised each year and clear personal objectives are set out within
personal development plans. Individual training needs are defined by these
reviews and this training is combined with wider department and group training
initiatives.
The Board attaches great importance to the health and safety of its employees
and stakeholders who handle or use the Group's products. Health and safety
is a standing item on the Board's agenda, with reports reviewed by the board
at each scheduled board meeting. The Company's Health and Safety policy and
the respective site Health and Safety plans are enforced rigorously and this
has never been more important than in the past year in the face of the
Covid-19 pandemic.
9. Maintain governance structures and processes that are fit for purpose and
support good decision-making by the board
The Board is committed to, and ultimately responsible for, high standards of
corporate governance, and has chosen to adopt the QCA Corporate Governance
Code. We review our corporate governance arrangements regularly and expect to
evolve these over time, in line with the Company's growth. The Board delegates
responsibilities to committees and individuals as it sees fit, with the Chair
being responsible for the effectiveness of the Board, and the Executive
Directors being accountable for the management of the Company's business and
primary contact with stakeholders.
The Chair is responsible for the leadership of the Board and ensuring its
effectiveness in all aspects of its role. He is also responsible for creating
the right Board dynamic and for ensuring that all important matters receive
adequate time and attention at Board meetings. He is also the director
appointed as the main point of contact for shareholder liaison. The CEO is
responsible for the day-to-day running of the business as well as developing
corporate strategy while the Non-Executive Directors are tasked with, for
example, constructively challenging the decisions and recommendations of
executive management and satisfying themselves that the systems of business
risk management and internal financial controls are appropriate.
The Board has adopted appropriate delegations of authority which sets out
matters which are reserved to the Board as summarised below:
· The Group's strategy and vision
· Determining management's performance
· Board membership and membership of subsidiary boards
· Approval of major capital expenditure
· Financial reporting, risk management and internal controls
· Contracts, including potential acquisitions or investments in new
projects or products
· Corporate governance
· Approval of annual budgets
· Approval of annual and interim reports
· Approval of changes in equity or debt funding
· Dividend recommendations and policy
The Board delegates certain duties and, where applicable, authority, to the
following three board Committees to assist in meeting its business objectives
whilst ensuring a sound system of internal control and risk management. The
Committees meet independently of Board meetings.
Audit Committee
The Audit Committee has three members, Theresa Wallis (Chair), Graham Eves and
David Banks. The CFO and external auditors normally attend meetings by
invitation. The Audit Committee is responsible for assisting the Board in
fulfilling its financial and risk responsibilities. The Audit Committee
oversees the financial reporting, risk management and internal control. The
Audit Committee advises the Board on the appointment and removal of the
external auditor and discusses the nature, scope and results of the audit with
the auditors. The Audit Committee reviews the extent of non-audit services
provided by the auditors and reviews with them their independence and
objectivity. The Audit Committee plans to meet not less than twice in each
financial year.
During the year the Committee met four times. The Committee met twice in
October 2020 to consider the draft report and accounts for the year ended 30
June 2020, including the key judgements and estimates including revenue
recognition, going concern, carrying value of intangible assets, and valuation
of the defined benefit pension scheme as well as the independence of the
auditors and their fees. The Committee reviewed the feedback from the
auditors (Grant Thornton UK LLP) as set out in their Audit Findings Report to
the Board at the second meeting.
The third meeting of the Committee was held in February 2021 to consider the
draft interim results and receive updates on the risk register and the Group's
internal control mechanisms.
The fourth meeting of the Committee was held in May 2021. The meeting
considered the terms of engagement between the Company and Grant Thornton UK
LLP as well as the audit plan for the Group. At this meeting the company
also reviewed the risk register.
Due to the Covid-19 restrictions, the first three meetings of the Committee
were held via videoconference. The auditors attended the October and May
meetings by videoconference, with the Committee, CEO and CFO attending in
person at the May meeting. During the October and May meetings, a discussion
took place between the Audit Committee and the auditors without management
being present.
Remuneration Committee
The Remuneration Committee has three members, David Banks (Chair), Graham Eves
and Theresa Wallis. The members are all non-executive Directors. Other members
of the Board may attend the Committee's meetings at the request of the
Committee Chair.
The remit of the Committee is primarily to ensure that the executive directors
are provided with appropriate remuneration packages. The Committee reviews the
performance of the Executive Directors and considers matters relating to their
terms of employment and remuneration, including short term bonus and long-term
incentives. The Remuneration Committee also considers the granting of share
options pursuant to the Company's share option schemes. The Remuneration
Committee shall meet not less than twice a year and will meet on other
occasions as and when required.
The Committee met twice during the year.
The Directors' Remuneration Report is on pages 28 to 29.
Nomination Committee
The Nomination Committee has responsibility for evaluating the structure, size
and composition of the Board in order to ensure a suitable balance of
experience, knowledge, skills and independence, as well as for recommending to
the Board the appointment of Executive and Non-Executive Directors. The
Committees' Terms of Reference may be found on the Company's website.
The Nomination Committee has three members, Graham Eves (Chair), David Banks
and Theresa Wallis. The Committee did not meet during the year.
As with many small companies, due to financial constraints and limited human
resources, internal opportunities for succession to board director roles are
circumscribed. As noted in the 2020 Annual Report and Accounts the Committee
made two important appointments in the year ended June 2020 and, as planned,
has promoted a period of stability before looking to further evaluate the
success of the business and any further Board developments that might be
required.
10. Communicate how the company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders
As stated in relation to Principle 2, the Board is committed to maintaining
effective communication and having constructive dialogue with its
shareholders. We communicate through our Interim and Annual Reports along with
Regulatory News Service announcements. We also use the Company's website for
both financial and general news relevant to shareholders. The Company's AGM
results are available to view on the Company's website and all resolutions
tabled at the Company's 2020 AGM passed comfortably.
The Company keeps in mind the proportions of direct, nominee and institutional
shareholders, and distributes communications accordingly.
The latest corporate documents (including Annual Reports and Notices of AGMs)
can be found on the Company's website.
Investors also have access to the latest information about the Group which is
set out on the Company's website at www.haydale.com. The Company uses
electronic communications with shareholders, where possible, to maximise
efficiency.
A summary of the work carried out by the Audit and Nomination committees
during the year is set out in section 9 above. The Directors' Remuneration
Report is on pages 28 to 29.
By order of the Board on 14 December 2021
David Banks
Chair
DIRECTORS' REMUNERATION REPORT
REMUNERATION COMMITTEE
The Company's remuneration policy for executive directors is the
responsibility of the Remuneration Committee. The terms of reference of
the Remuneration Committee are outlined below and, in the Chair's Corporate
Governance Statement on page 26. The members of the Remuneration Committee
during the year under review were Graham Eves (Chair), David Banks and Theresa
Wallis. The provisions of the 2006 Companies Act in respect of the Directors'
Remuneration Report have been applied to this report.
The Remuneration Committee under its terms of reference meets at least twice
per year and is responsible for considering executive remuneration. Executives
may be invited to attend to assist the Remuneration Committee, but no director
or manager of the Company may be involved in any decisions as to their own
remuneration.
Under the terms of reference of the Remuneration Committee, the remuneration
of the Company's non-executive directors (including the chair of the Board, if
a non-executive) is a matter for the Board.
Directors' remuneration for the year to 30 June 2021 is set out on page 29.
The Remuneration Committee terms of reference require it to determine
remuneration packages needed to attract, retain and motivate executives of the
quality required (but to avoid paying more than is necessary for this purpose)
and to ensure that performance related elements of remuneration are designed
to support alignment with the long-term interests of shareholders and to give
such executives incentives to perform at the highest levels.
Equity Based Incentive Schemes
The Remuneration Committee believes that equity-based incentive schemes
provide a strong incentive for retaining and attracting high calibre
individuals.
On 13 January 2020, the Company adopted a new EMI share option scheme ("2020
EMI Scheme") and on 8 July 2020 the Company adopted a Stock Appreciation
Rights Plan ("2020 SAR Scheme") for the Group's wholly owned US subsidiary,
Haydale Technologies Inc. The 2020 EMI Scheme and the 2020 SAR Scheme are
designed to align the interests of the Directors and other employees with
those of shareholders, as set out below.
In the year ended June 2020, under the 2020 EMI Scheme the Company granted a
total of 19,000,000 options ("2020 EMI Options") to the Company's executive
directors and a further 5,750,000 2020 EMI Options were granted to directors
of UK subsidiaries, including employees who have been appointed as directors
of subsidiary companies during the year. In the year ended June 2021,
3,000,000 options ("2020 SAR Options") were granted to a director of the US
subsidiary of the Company. The 2020 EMI Options and the 2020 SAR Options
(together the "2020 Options") granted have an exercise price of 2.25p per
Ordinary Share and can only be exercised between the third and tenth
anniversary of Grant ("Exercise Period"). The proportion of the 2020 Options
granted that are capable of vesting is dependent on certain performance
conditions being met, with such performance being directly linked to the
Company's share price from the date of grant to 30 September 2023 as follows:
% of Grant subject to the Performance Condition
Performance Condition
30% For a period of 15 consecutive dealing days, commencing after the date of
Grant and ending on or before the 30 September 2021, the closing price of the
Ordinary Shares exceeds 4.0p (four pence) per Ordinary Share.
30% For a period of 15 consecutive dealing days, commencing after the date of
Grant and ending on or before the 30 September 2022, the closing price of the
Ordinary Shares exceeds 8.0p (eight pence) per Ordinary Share.
40% For a period of 15 consecutive dealing days, commencing after the date of
Grant and ending on or before the 30 September 2023, the closing price of the
Ordinary Shares exceeds 16.0p (sixteen pence) per Ordinary Share.
Should the Company's closing mid-market share price not meet the performance
conditions specified then the specified percent of the grant shall lapse.
Subsequent to the year end the closing price of the Ordinary Shares remained
above 8p (eight pence) for a period of 15 consecutive days and, therefore, the
first and second performance condition have been met.
DIRECTORS' INTERESTS IN SHARE OPTIONS
The interests of directors of the Company in options over ordinary shares
during the year were as follows:
Director Number of 2020 EMI Options Date of Grant First Exercise Date Exercise Price Expiry Date
David Banks nil
Keith Broadbent 12,000,000 13 January 2020 13 January 2023 2.25p 12 January 2030
Mark Chapman 7,000,000 13 January 2020 13 January 2023 2.25p 12 January 2030
Graham Eves nil
Theresa Wallis nil
No options were exercised by the directors during the year under review.
The mid-market closing price of the Company's ordinary shares at 30 June 2021
was 8.34p (2020: 2.05p). During the year to 30 June 2021, the mid-market
closing price ranged from 2.90p to 8.30p (2020: 1.04p to 2.10p).
DIRECTORS' REMUNERATION
The aggregate remuneration received by directors who served during the years
ended 30 June 2021 and 30 June 2020 was as follows:
Year Ended June 2021 Year Ended June 2020
£,000 Salary/ Fee Bonus Benefits Total exc. pension Total inc. pension Total exc. pension Total inc. pension
Pension Pension
Executive Directors
L Redman-Thomas(( 7 (#_ftn7) )) - - - - - - 48 - 48
K Broadbent 191 50 12 253 24 277 232 20 252
M Chapman(( 8 (#_ftn8) )) 104 15 12 131 12 143 95 5 100
Non-Executive Directors
D Banks 51 - - 51 - 51 51 - 51
G Eves 28 - - 28 - 28 28 - 28
R Humm(( 9 (#_ftn9) )) - - - - - - 28 - 28
T Wallis(( 10 (#_ftn10) )) 28 - - 28 - 28 2 - 2
402 65 24 491 36 527 484 25 509
Bonuses are disclosed in the year for which they have been awarded. Bonuses
for FY20 of £50,000 for Keith Broadbent and £20,000 for Mark Chapman are
included in Total exc. pension.
By order of the Board
David Banks
Chair
14 December 2021
Independent auditor's report to the members of Haydale Graphene Industries Plc
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Haydale Graphene Industries Plc
(the 'parent company') and its subsidiaries (the 'group') for the year ended
30 June 2021, which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and Parent Statement of Financial Position, the
Consolidated and Parent Statement of Changes in Equity, the Consolidated
Statement of Cash Flows and notes to the financial statements, including a
summary of significant accounting policies. The financial reporting framework
that has been applied in the preparation of the group financial statements is
applicable law and international accounting standards in conformity with the
requirements of the Companies Act 2006. The financial reporting framework that
has been applied in the preparation of the parent company financial statements
is applicable law and United Kingdom Accounting Standards, including Financial
Reporting Standard 101 'Reduced Disclosure Framework' (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
· the financial statements give a true and fair view of the state of
the group's and of the parent company's affairs as at 30 June 2021 and of the
group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006;
· the parent company financial statements have been properly prepared
in accordance with United Kingdom Generally Accepted Accounting Practice; and
· the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the 'Auditor's responsibilities for the
audit of the financial statements' section of our report. We are independent
of the group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the directors' use
of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the group's and the parent
company's ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our report
to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify the auditor's opinion. Our conclusions are based on
the audit evidence obtained up to the date of our report. However, future
events or conditions may cause the group or the parent company to cease to
continue as a going concern.
A description of our evaluation of management's assessment of the ability to
continue to adopt the going concern basis of accounting, and the key
observations arising with respect to that evaluation is included in the Key
Audit Matters section of our report.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's and the parent
company's ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
The responsibilities of the directors with respect to going concern are
described in the 'Responsibilities of directors for the financial statements'
section of this report.
Our approach to the audit
Overview of our audit approach
Overall materiality:
Group: £190,000, which represents approximately 5% of the group's loss before
tax.
Parent company: £150,000, which represents approximately 2% of the parent
company's total assets.
Key audit matters for the group were identified as going concern and valuation
of goodwill. A Key audit matter for the company was identified as valuation of
investments in subsidiaries and impairment of intercompany receivables.
· Going concern (same as previous year)
· Valuation of goodwill (same as previous year); and
· Valuation of investment in subsidiaries and intercompany
receivables (same as previous year).
Our auditor's report for the year ended 30 June 2020 included one key audit
matter that has not been reported as a key audit matter in our current year's
report. This relates to valuation of intangible assets. In the current year
the significant risk of impairment has been pin-pointed to the valuation of
goodwill in the US cash generating unit specifically.
We performed an audit of the financial information of the parent company and
the other significant components using component materiality (full-scope audit
procedures) on Haydale Limited ('HL'), Haydale Composite Solutions Limited
('HCS') and Haydale Ceramic Technologies LLC ('HCT') and an audit of one or
more account balances, classes of transactions or disclosures (specific-scope
audit procedures) of 2 further components being Haydale Technologies Thailand
Limited ('HTT') and Haydale Technologies Incorporated LLC ('HTI') to gain
sufficient appropriate audit evidence at the Group level. We performed
analytical procedures on the financial information of the remaining 3
components in the Group during the year. This approach is the same as the
previous year.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those that had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
In the graph below, we have presented the key audit matters, significant risks
and other risks relevant to the audit.
Key Audit Matter - Group How our scope addressed the matter - Group
Going concern In responding to the key audit matter, we performed the following audit
procedures:
We identified Going concern as one of the most significant assessed risks of
material misstatement due to error. · Obtained management's Base Case and Breakpoint models with the
relevant going concern period assessed as being to the end of December 2022;
Covid-19 continues to have a negative impact on parts of the business and
given the early-stage development of its graphene-based products, it continues · Assessed the appropriateness of management's assumptions in relation
to be loss-making. to revenue through agreeing expected sales to supporting documentation such as
signed contracts or purchase orders;
Note, this is considered a risk at both a group and a company level with the
work performed being the same for both. · Examined the sensitivity analysis carried out by management on the
revenue assumptions in order to assess the levels of uncertainty inherent in
the forecasts and the impact of sensitivities against the headroom;
· Confirmed the terms and conditions of any loan covenants;
· Assessed the likelihood and impact of mitigating factors identified
by reference to supporting documentation and discussions with management;
· Compared post year-end performance against forecasts; and
· Assessed the adequacy of related disclosures within the annual report
Relevant disclosures in the Annual Report and Accounts 2021 Our results
· Financial statements: Note 1, Going Concern Management's Breakpoint model identified that revenue would need to fall by
72% compared to that recognised in the year ended 2021 for there to be a going
· Directors' Report: page 19 concern issue. Such a severe scenario is not considered plausible by
management based on post year-end performance and expected future revenues.
Based on our audit work, we are satisfied that the assumptions made in
management's assessment of the use of the going concern assumption in
preparation of financial statements were appropriate. We consider that the
group's disclosure to be in accordance with IAS 1.
Valuation of goodwill In responding to the key audit matter, we performed the following audit
procedures:
We identified valuation of goodwill in relation to Haydale Ceramic
Technologies LLC ('HCT') as one of the most significant assessed risks of · Spoke with management and key operational personnel to update our
material misstatement due to error. understanding of HCT's performance;
HCT specialises in silicon carbide products rather than graphene or other · Examined and sensitised management's value in use model underpinning
nano-materials and hence has a different customer base to other parts of the their impairment assessment, identifying the key assumptions;
group with different opportunities/challenges. This more mature part of the
business remains exposed to the ongoing impact of Covid-19 and continuing · Examined management's model and considered the accounting policy to
losses have been recognised in HCT, and hence the valuation of goodwill is ensure compliance with IAS 36 'Impairment'
deemed a significant risk. HCT is considered to be a single cash-generating
unit ('CGU'). · Assessed revenue growth rates in years 1 to 5 along with the
long-term revenue growth rate and challenged the feasibility of meeting those
Within the HCT CGU there is goodwill of £1.0m and other assets of £6.1m forecasts, which included examining the existing customer base, existing
giving rise to a carrying value of £7.1m for the HCT CGU as a whole. orders and external market data, such as third party assessments of the global
market;
· Assessed the discount rate used by management with the assistance of
one of our valuation experts; and
· Asked management to prepare a Breakpoint model so that they could
identify the changes in circumstances and/or assumptions that would result in
an impairment and whether those changes were plausible; and
· Assessed the adequacy of related disclosures within the annual report
Relevant disclosures in the Annual Report and Accounts 2022 Our results
· Financial statements: Note 1 n) Critical accounting estimates and Management's key assumption is that HCT will return to pre-Covid-19 levels of
judgements; Note 10, Intangible Assets revenue (being FY 2019) by 2023. Our assessment and challenge of revenue
growth concluded that this was a reasonable assumption but given the
sensitivity to forecast growth rates, one that required additional disclosure
in line with IAS 36.
Key Audit Matter - Parent company How our scope addressed the matter- Parent company
Valuation of investment in subsidiaries and intercompany receivables In responding to the key audit matter, we performed the following audit
procedures:
We identified valuation of investment in subsidiaries and intercompany
receivables as one of the most significant assessed risks of material · In relation to investments our work we examined and sensitised
misstatement due to error given the identified risks in relation to Going management's model underpinning their impairment assessment, identifying the
Concern and Impairment of goodwill. key assumptions;
Investments in subsidiaries amount to £1.5m of which £720k relates to HL, · Examined management's model and considered the accounting policy to
£413k relates to HTI and £278k relates to HTT, with other smaller balances ensure compliance with IAS 36 'Impairment';
noted. Intercompany receivables amount to £6.2m of which £3.9m relates to
HTI, £1.2m relates to HL and £670k relates to HCT, with smaller balances · Assessed revenue growth rates in years 1 to 5 along with the
noted. long-term revenue growth rate and challenging on the feasibility of meeting
those forecasts which included examining the existing customer base, existing
orders and external market data, such as third party assessments of the global
market;
· Assessed the discount rate used by management with the assistance of
one of our valuation experts;
· Considered alternative sources of evidence in relation to fair value
less costs of disposal by considering the Group's market capitalisation and
that of other similar listed entities;
· In relation to intercompany receivables the key balances relate to a
£3.9m receivable from Haydale Technologies Incorporated LLC, the parent
company of HCT and a £670k receivable from HCT, and hence our work performed
to address the Group risk of valuation of Goodwill informed our conclusions
when considering the requirements of IFRS 9 'Financial Instruments'; and
· Assessed the adequacy of related disclosures within the annual
report.
Relevant disclosures in the Annual Report and Accounts 2021 Our results
· Financial statements: Note 2, Accounting policies, Note 6 Fixed asset Based on our work we concluded that management's judgement that no impairment
investments, Note 7 debtors. was required as at 30 June 2021 was reasonable.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit,
and in evaluating the effect of identified misstatements on the audit and of
uncorrected misstatements, if any, on the financial statements and in forming
the opinion in the auditor's report.
Materiality was determined as follows:
Materiality measure Group Parent company
Materiality for financial statements as a whole We define materiality as the magnitude of misstatement in the financial
statements that, individually or in the aggregate, could reasonably be
expected to influence the economic decisions of the users of these financial
statements. We use materiality in determining the nature, timing and extent of
our audit work.
Materiality threshold £190,000, which is approximately 5% of loss before tax. £150,000, which is 2% of total assets.
Significant judgements made by auditor in determining materiality We have used loss before tax as our materiality benchmark. This is consistent We have used total assets as our materiality benchmark. This is consistent
with the prior year. This benchmark is considered the most appropriate because with the prior year. This benchmark is considered the most appropriate
this is a key measure used by the Directors to report to investors on the because its principal activity is that of a holding company (with the largest
financial performance of the Group. financial statement line items being investments and intercompany balances)
Materiality for the current year is lower than the level that we determined Materiality for the current year is higher than the level that we determined
for the year ended 30 June 2020 to reflect the lower loss before tax. for the year ended to reflect an increase in total assets.
Performance materiality used to drive the extent of our testing We set performance materiality at an amount less than materiality for the
financial statements as a whole to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole.
Performance materiality threshold £140,000, which is 75% of financial statement materiality. £110,000, which is 75% of financial statement materiality.
Significant judgements made by auditor in determining performance materiality The determination of performance materiality involves the exercise of In determining performance materiality, along with those significant
professional judgement. In determining performance materiality, we made the judgements made at group level, we considered the requirement that the parent
following significant judgments: company performance materiality should be incrementally below the group's
performance materiality.
· Our risk assessment - based on the results of our risk assessment
procedures, we considered the group's overall control environment to be
effective;
· Our experience with auditing the financial statement of the group
in previous years - based on the identification of few misstatements and
management's attitude to correcting misstatements identified; and
· The number of components within the group and the extent of audit
procedures planned and performed at these components.
Specific materiality We determine specific materiality for one or more particular classes of
transactions, account balances or disclosures for which misstatements of
lesser amounts than materiality for the financial statements as a whole could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Specific materiality We determined a lower level of specific materiality for the following areas: We determined a lower level of specific materiality for the following areas:
· Related party transactions, including Directors remuneration and · Related party transactions, including Directors remuneration and
related disclosures related disclosures
Communication of misstatements to the audit committee We determine a threshold for reporting unadjusted differences to the audit
committee.
Threshold for communication £9,500 and misstatements below that threshold that, in our view, warrant £7,500 and misstatements below that threshold that, in our view, warrant
reporting on qualitative grounds. reporting on qualitative grounds.
The graph below illustrates how performance materiality interacts with our
overall materiality and the tolerance for potential uncorrected misstatements.
Overall materiality - Group Overall materiality - Parent company
FSM: Financial statements materiality, PM: Performance materiality, TFPUM:
Tolerance for potential uncorrected misstatements
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding of the group's
and the parent company's business and in particular matters related to:
Understanding the group, its components, and their environments, including group-wide controls (https://gtuksp.gtukint.com/audit/aop/Pages/AE%207-9-3%20Risk%20assessment%20and%20planning%20in%20group%20audits.aspx#AE-7-9-3-3)
· The engagement team obtained an understanding of the group and
its environment, including group-wide controls, and assessed the risks of
material misstatement at the group level; and
· The engagement team obtained an understanding of the effect of
the group organisational structure on the scope of the audit, identifying that
the group financial reporting system is centralised and that there is a use of
management experts where required.
Identifying significant components
· Significant components were identified through assessing their
relative share of key financial metrics including total revenue, total
expenses, absolute loss before taxation, total assets and total liabilities.
· Other components were selected where we determined there to be a
specific risk profile in those components and were included in the scope of
our group reporting work in order to provide sufficient coverage over the
group's results. For these components, an audit of one or more account
balances or class of transactions (specific scope procedures) was performed.
· All other components of the group were selected as 'neither
significant nor material' and analytical procedures performed.
Performance of our audit
· The majority of the year-end audit was conducted remotely due to
Covid-19 restrictions and social distancing requirements. This was supported
through the use of software collaboration platforms for the secure and timely
delivery of requested audit evidence.
· Despite restrictions, we were still able to physically attend and
observe the year end inventory count in the US and UK.
Type of work to be performed on financial information of parent and other (https://gtuksp.gtukint.com/audit/aop/Pages/AE%207-9-3%20Risk%20assessment%20and%20planning%20in%20group%20audits.aspx#AE-7-9-3-4-2)
components (including how it addressed the key audit matters)
· Performance of full-scope audits of the financial information of
Haydale Graphene Industries Plc, Haydale Limited, Haydale Composite Solutions
Limited and Haydale Ceramic Solutions.
· Specific-scope audit procedures were performed for Haydale
Technologies Thailand Limited and Haydale Technologies Incorporated LLC.
· Analytical procedures were performed for all other components using
group materiality.
Audit approach No. of components % coverage total assets % coverage revenue % coverage LBT
Full-scope audit 4 97 89 93
Specific-scope audit 2 - 5 6
Analytical procedures 3 3 6 1
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent
company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent company,
or returns adequate for our audit have not been received from branches not
visited by us; or
· the parent company financial statements are not in agreement with the
accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we require
for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's and the parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(https://www.frc.org.uk/auditors/audit-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor%e2%80%99s-responsibilities-for)
. This description forms part of our auditor's report.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. Owing to the inherent limitations of an audit, there is an
unavoidable risk that material misstatements in the financial statements may
not be detected, even though the audit is properly planned and performed in
accordance with ISAs (UK).
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and regulations,
our procedures included the following::
· We enquired of management, the finance team and the Board of
Directors about the Group's and Company's policies and procedures relating to
the identification, evaluation and compliance with laws and regulations and
the detection and response to the risks of fraud and the establishment of
internal controls to mitigate risks related to fraud or non-compliance with
laws and regulations;
· We obtained an understanding of the legal and regulatory frameworks
that are applicable to the Group and Company. We determined that the most
significant frameworks that are directly relevant to specific assertions in
the financial statements are those related financial reporting and taxation
laws, being international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union,
international accounting standards in conformity with the requirements of the
Companies Act 2006, Financial Reporting Standard 101 (for the Company), and
the Companies Act 2006. In addition, we concluded that health and safety laws
and regulations may have an effect on the determination of the amounts and
disclosures in the financial statements;
· We enquired of management and the Board of Directors whether they
were aware of any instances of non-compliance with laws and regulations and
whether they had any knowledge of actual, suspected or alleged fraud;
· We assessed the susceptibility of the Group's and Company's financial
statements to material misstatement including how fraud might occur and the
risk of management override of controls. Audit procedures performed by the
engagement team included:
- Team communications in respect of potential non-compliance with laws
and regulations and fraud which included the evaluation of the risk of
management override of controls, principally in relation to the potential bias
when considering going concern and the impairment of goodwill and investments;
- Enquiring of management, the finance team and the Board about the
risks of fraud at the Group and Company and the controls implemented to
address those risks. Assessing the design and implementation of controls
relevant to the audit that management has in place to prevent and detect
fraud, including updating our understanding of the internal controls over
journal entries, including those related to the posting of non-standard
entries used to record non-recurring, unusual transactions or other
non-routine adjustments;
- Making specific inquiries of each member of the finance team to
ascertain whether they had been subject to undue pressure or had been asked to
make any unusual postings or modifications to reports used in financial
reporting;
- Identifying and testing journal entries selected based on risk
profiling;
- Running specific keyword searches (including to related parties and of
those previously connected to related entities) over the journal entry
population to identify descriptions that could indicate fraudulent activity or
management override of controls. In addition, journal entries by user were
evaluated to identify types of entries posted that were not in line with
expectations of their role. Unusual entries noted from these searches were
agreed to supporting documentation to verify the validity of the posting;
- Planning specific procedures responding to the risk of fraudulent
recognition of revenue;
- We also assessed the disclosures within the annual report including
principal risks;
- Challenging assumptions and judgements made by management in its
significant accounting estimates (as referenced in the Key Audit Matters
section above); and
- Identifying and testing related party transactions
· In assessing the potential risks of material misstatement, we
obtained an understanding of the Group's and Company's operations, including
the nature of income sources and of its objectives and strategies in order to
understand the classes of transactions, account balances, expected financial
statement disclosures and business risks that may result in risks of material
misstatement;
· These audit procedures were designed to provide reasonable assurance
that the financial statements were free from fraud or error. However,
detecting irregularities that result from fraud is inherently more difficult
than detecting those that result from error, as those irregularities that
result from fraud may involve collusion, deliberate concealment, forgery or
intentional misrepresentations; and
· Assessment of the appropriateness of the collective competence and
capabilities of the engagement team included consideration of the engagement
team's understanding of, and practical experience with, audit engagements of a
similar nature and complexity
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Christopher Smith
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
14 December 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2021
Year ended Year ended
30 June 2021 30 June 2020
Note £'000 £'000
REVENUE 4 2,903 2,947
Cost of sales (924) (885)
Gross profit 1,979 2,062
Other operating income 5 575 756
Adjusted Administrative expenses (4,724) (5,357)
Adjusted operating loss (2,170) (2,539)
Adjusting administrative items:
Share based payment income/(expense) (119) 11
Restructuring costs 6 - (63)
Depreciation and amortisation (1,271) (1,640)
(1,390) (1,692)
Total trading administrative expenses (6,114) (7,049)
LOSS FROM OPERATIONS (3,560) (4,231)
Total administrative expenses (6,114) (7,049)
LOSS FROM OPERATIONS (3,560) (4,231)
Finance costs (211) (176)
LOSS BEFORE TAXATION 6 (3,771) (4,407)
Taxation 8 363 391
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (3,408) (4,016)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations (368) 82
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension schemes 208 (291)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR FROM CONTINUING OPERATIONS
(3,568) (4,225)
Loss for the year attributable to:
Owners of the parent (3,408) (4,016)
Total comprehensive loss attributable to:
Owners of the parent (3,568) (4,225)
Loss per share attributable to owners of the Parent
Basic (£) 9 (0.01) (0.01)
Diluted (£) 9 (0.01) (0.01)
Total trading administrative expenses
(6,114)
(7,049)
LOSS FROM OPERATIONS
(3,560)
(4,231)
Total administrative expenses
(6,114)
(7,049)
LOSS FROM OPERATIONS
(3,560)
(4,231)
Finance costs
(211)
(176)
LOSS BEFORE TAXATION
6
(3,771)
(4,407)
Taxation
8
363
391
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS
(3,408)
(4,016)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
(368)
82
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension schemes
208
(291)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR FROM CONTINUING OPERATIONS
(3,568)
(4,225)
Loss for the year attributable to:
Owners of the parent
(3,408)
(4,016)
Total comprehensive loss attributable to:
Owners of the parent
(3,568)
(4,225)
Loss per share attributable to owners of the Parent
Basic (£)
9
(0.01)
(0.01)
Diluted (£)
9
(0.01)
(0.01)
The notes from pages 44 to 74 form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
Company Registration No. 07228939 30 June 30 June
2021 2020
Note £'000 £'000
ASSETS
Non-current assets
Goodwill 10 1,341 1,454
Intangible assets 10 1,174 1,145
Property, plant and equipment 11 6,622 6,407
9,137 9,006
Current assets
Inventories 12 1,328 1,712
Trade receivables 13 715 886
Other receivables 14 595 334
Corporation tax 14 364 384
Cash and bank balances 1,644 823
4,646 4,139
TOTAL ASSETS 13,783 13,145
LIABILITIES
Non-current liabilities
Bank loans 20 844 304
Pension Obligation 26 1,026 1,435
Other payables 19 2,370 1,031
4,240 2,770
Current liabilities
Bank loans 20 885 944
Trade and other payables 19 1,719 1,906
Deferred income 15 180 74
2,784 2,924
TOTAL LIABILITIES 7,024 5,694
TOTAL NET ASSETS 6,759 7,451
EQUITY
Capital and reserves attributable to equity holders of the parent
Share capital 16 8,505 6,804
Share premium account 16 28,820 27,764
Share-based payment reserve 250 131
Foreign exchange reserve (386) (18)
Retained losses (30,430) (27,230)
TOTAL EQUITY 6,759 7,451
The financial statements on pages 40 to 76 were approved and authorised for
issue by the Board of directors on 14 December 2021 and signed on its behalf
by:
David Banks Keith Broadbent
Chair Chief Executive Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Share-based payment reserve
£'000 Foreign Exchange Reserve
Share Share premium £'000 Retained losses Total Equity
capital £'000 £'000 £'000
£'000
At 1 July 2019 6,354 27,764 828 (100) (23,595) 11,251
Comprehensive Loss for the year
Loss for the year - - - - (4,016) (4,016)
Other comprehensive loss - - - 82 (291) (209)
Total Comprehensive loss 6,354 27,764 828 (18) (27,902) 7,026
Contributions by and distributions to owners
Recognition of share-based payments - - (11) - - (11)
Share based payment charges - lapsed options - - (686) - 686 -
Issue of ordinary share capital 450 - - - - 450
Transaction costs in respect of share issues - - - - (14) (14)
At 30 June 2020 6,804 27,764 131 (18) (27,230) 7,451
Comprehensive Loss for the year
Loss for the year - - - - (3,408) (3,408)
Other comprehensive loss - - - (368) 208 (160)
Total comprehensive loss 6,804 27,764 131 (386) (30,430) 3,883
Contributions by and distributions to owners
Recognition of share-based payments - - 119 - - 119
Issue of ordinary share capital 1,701 1,276 - - - 2,977
Transaction costs in respect of share issues - (220) - - - (220)
At 30 June 2021 8,505 28,820 250 (386) (30,430) 6,759
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
Year Year
ended ended
30 June 30 June
2021 2020
£'000 £'000
Note
Cash flow from operating activities
Loss before taxation (3,408) (4,016)
Adjustments for:-
Amortisation of intangible assets 10 176 129
Depreciation of property, plant and equipment 11 1,096 1,511
Profit on disposal of plant and equipment and F&F 78 -
Share-based payment charge 17 119 (11)
Finance costs 211 176
Pension - net interest expense 26 47 24
Taxation (363) (391)
Operating cash flow before working capital changes (2,044) (2,578)
Decrease/(increase) in inventories 384 (531)
(Increase) in trade and other receivables (90) (111)
Increase/(decrease) in payables and deferred income 174 (104)
Cash used in operations (1,576) (3,324)
Income tax received 383 847
Net cash used in operating activities (1,193) (2,477)
Cash flow used in investing activities
Purchase of plant and equipment (220) (44)
Capitalised of Intangible Assets (260) (251)
Net cash used in investing activities (480) (295)
Cash flow used in financing activities
Finance costs (95) (94)
Finance costs - right of use asset (116) (82)
Payment of lease liability (591) (631)
Proceeds from issue of share capital 16 2,977 450
Share capital issues costs allocated against share premium 16 (220) -
New bank loans raised 29 800 50
Repayments of borrowings 29 (219) (835)
Net cash flow from financing activities 2,536 (1,142)
Effects of exchange rates changes (42) 49
Net (decrease) in cash and cash equivalents 821 (3,865)
Cash and cash equivalents at beginning of the financial year 823 4,688
Cash and cash equivalents at end of the financial year 1,644 823
Notes to the consolidated financial statements
1. Accounting policies
Basis of preparation
The Group consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards, International Accounting
Standards and Interpretations (collectively "IFRSs") and with the requirements
of the Companies Act 2006.
The Group's financial statements have been prepared under the historical cost
convention.
The consolidated financial statements are presented in sterling amounts.
Amounts are rounded to the nearest thousands, unless otherwise stated.
Under Section 479A of the Companies Act 2006, exemptions from an audit of the
accounts for the financial year ended 30 June 2020 have been taken by Haydale
Limited (04790862) and Haydale Composite Solutions Limited (02675462). As
required, the Company guarantees all outstanding liabilities to which the
subsidiary companies listed above are subject at the end of the financial
year, until they are satisfied in full and the guarantee is enforceable
against the parent undertaking by any person to whom the subsidiary companies
listed above is liable in respect of those liabilities.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company made up to the reporting
date. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
over the investee, and the ability of the investee to use its power to affect
the variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control. All
intra-group transactions, balances, income and expenditure are eliminated on
consolidation. The consolidated financial statements have been prepared using
the acquisition method of accounting.
Under the acquisition method, the results of the subsidiaries acquired or
disposed of are included from the date of acquisition or up to the date of
disposal. At the date of acquisition, the fair values of the subsidiaries'
net assets are determined, and these values are reflected in the Consolidated
Financial Information. The cost of acquisitions is measured at the aggregate
of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by the Haydale Graphene
Industries Group in exchange for control of the acquisition. Any excess of
the purchase consideration of the business combination over the fair value of
the identifiable assets and liabilities acquired is recognised as goodwill.
Goodwill, if any, is not amortised, but reviewed for impairment at least
annually. If the consideration is less than the fair value of assets and
liabilities acquired, the difference is recognised directly in the statement
of comprehensive income. Acquisition-related costs are expensed as incurred.
Going concern
The Group consolidated financial statements are prepared on a going concern
basis which the Directors believe continues to be appropriate.
As part of this assessment the Directors have considered several scenarios
based on various revenue, cost and funding sensitivities.
Revenue
Various sensitivities have been applied to forecasted revenue including a
stress test scenario which reduces forecasted revenue by circa 72 per cent to
the point where the Group would breach its available cash resources at the 31
December 2022. With respect to this 'stress test' the Group has a
significant proportion of that sensitised revenue within forward orders,
contractual or some other form of customer assurance which have a high degree
of certainty.
Cost Mitigation
The Directors have included some low-level assumptions regarding cost savings
that might be achievable if the forecast fails to meet the forecasted or
sensitised estimates and these have been phased in gradually over the 12-month
period to 31 December 2022.
Customer Solvency
As part of this review the Directors have assessed the solvency of key
customers and their ability to deliver on their contractual or other
commitments on the basis of publicly available information and included the
results of these assessments in our forecasts.
Summary
Therefore, after due consideration of the forecasts prepared, the
sensitivities applied and the Group's current cash resources after the fund
raise in September 2021 and the terms of its debt facilities the directors
consider that the Company and the Group have adequate financial resources to
continue in operational existence for the foreseeable future (being a period
of at least 12 months from the date of this report), and for this reason the
financial statements have been prepared on the going concern basis.
2. Changes in accounting policies
There are no change of accounting policies during the year.
3. Summary of significant accounting policies
a) Intangible assets
Research and development expenditure
Research expenditure is recognised as an expense when it is incurred.
Development expenditure is recognised as an expense except that costs incurred
on development projects are capitalised as intangible assets to the extent
that such expenditure is expected to generate future economic benefits.
Development expenditure is capitalised if, and only if an entity within the
Group can demonstrate all of the following:-
i) its ability to measure reliably the expenditure
attributable to the asset under development;
ii) the product or process is technically and
commercially feasible;
iii) its future economic benefits are probable;
iv) its ability to use or sell the developed asset;
v) the availability of adequate technical, financial and
other resources to complete the asset under
development; and
vi) its intention to use or sell the developed asset.
Capitalised development expenditure is measured at cost less accumulated
amortisation and impairment losses, if any. Development expenditure
initially recognised as an expense will not be restated as an asset in a
subsequent period.
Historic capitalised development expenditure is amortised on a straight-line
basis over a period of up to 20 years when the products or services are ready
for sale or use. The maximum 20 years amortisation period is based on UK
Patents being 20 years from the date of filing of the application, under
Article 60 of the European Patent Convention, and, although the Group now has
patents granted in other jurisdictions, the Directors believe that 20 years is
appropriate. New projects will be reviewed on completion, to determine the
useful economic life. In the event that it is no longer probable that the
expected future economic benefits will be recovered, the development
expenditure is written down to its recoverable amount. Amortisation is
included within administrative expenses.
Acquired intangible assets
An intangible resource acquired with a subsidiary undertaking is recognised as
an intangible asset if it is separable from the acquired business or arises
from contractual or legal rights, is expected to generate future economic
benefits and its fair value can be measured reliably. Acquired intangible
assets (excluding development expenditure which is in line with the above
policy), including customer relationships, are amortised through the
Consolidated Statement of Comprehensive Income on a straight-line basis over
their estimated economic lives of ten years.
Goodwill
Business combinations are accounted for by applying the purchase method. The
cost of a business combination is a fair value of the consideration given,
liabilities incurred or assumed and of equity instrument issued. Where control
is achieved in stages the cost is a consideration at the date of each
transaction.
Contingent consideration is initially recognised at estimated amount where the
consideration is probable and can be measured reliably. Where (i) the
contingent consideration is not considered probable or cannot be reliably
measured but subsequently becomes probable or (ii) contingent consideration
previously measured is adjusted, the amounts are recognised as an adjustment
to the cost of the business combination if the remeasurement occurs within a
year of the transaction and relates to information that was available at the
point of acquisition. Otherwise, any remeasurements of contingent
consideration is reflected in the statement of comprehensive income.
On acquisition of a business, fair values are attributed to the identifiable
assets, liabilities and contingent liabilities unless the fair value cannot be
measured reliably, in which case the value is incorporated in goodwill.
Where the fair value of contingent liabilities cannot be reliably measured
they are disclosed on the same basis as other contingent liabilities.
Goodwill recognised represents the excess of the fair value and directly
attributable costs of the purchase consideration over the fair value to the
Group's interest in the identifiable net assets, liabilities and contingent
liabilities acquired.
b) Impairment of goodwill and other non-financial assets
The carrying value of goodwill, and the cash-generating unit to which it
relates, is reviewed at the end of each reporting period for impairment
regardless of whether there is an indication that the asset may be impaired.
Other non-financial assets are considered for indicators of impairment at each
reporting date and full impairment reviews carried out if indicators of
impairment exist. Impairment is measured by comparing the carrying values of
the assets with their recoverable amounts. The recoverable amount of the
assets is the higher of the assets' fair value less costs to sell and their
value-in-use, which is measured by reference to discounted future cash flow.
An impairment loss is recognised in administrative expenses within the
Statement of Comprehensive Income immediately it is identified.
In respect of assets other than goodwill, and when there is a change in the
estimates used to determine the recoverable amount, a subsequent increase in
the recoverable amount of an asset is treated as a reversal of the previous
impairment loss and is recognised to the extent of the carrying amount of the
asset that would have been determined (net of amortisation and depreciation)
had no impairment loss been recognised. The reversal is recognised in profit
or loss immediately.
c) Revenue
To determine whether to recognise revenue, the Group follows a five step
process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are
satisfied.
Revenue arises mainly as:
i) Goods (including Reactor sales)
Revenue represents sales to external customers at invoiced amounts less value
added tax or local taxes on sales. Revenue is recognised at the point where
control is considered to pass to the customer typically on delivery or
customer acceptance, and all performance obligations have been fulfilled. In
all instances the transaction price is agreed with the customer prior to
transfer of goods on a stand-alone basis.
ii) Services
Engineering design and research revenue is recognised on the percentage of
completion method unless the outcome of the contract cannot be reliably
determined, in which case contract revenue is only recognised to the extent of
contract costs incurred that are recoverable. Foreseeable losses, if any, are
provided for in full as and when it can be reasonably ascertained that the
contract will result in a loss.
The group recognises revenue over time based upon the percentage of completion
input method, whereby the stage of completion is determined based on the
proportion of contract costs incurred compared to total estimated costs. In
all cases, the total transaction price for a contract is allocated amongst the
various performance obligations based on their relative stand-alone prices.
At each reporting period, receivables are recognised for revenues yet to be
invoiced or settled to the extent that it is highly probable that there will
not be a significant reversal of the amounts accrued in the future.
Where invoices are raised to the client in excess of the value of the
consideration recognised as revenue based on the stage of completion, deferred
income balances are recorded that represent unfulfilled performance
obligations. These performance obligations are expected to be fulfilled within
a year of the reporting date.
d) Financial instruments
i) Financial assets
Financial assets and financial liabilities are recognised in the group balance
sheet when the group becomes a party to the contractual provisions of the
instrument. Financial assets are classified as either fair value through
profit or loss, fair value through other comprehensive income, or amortised
cost. Classification and subsequent re-measurement depends on the group's
business model for managing the financial asset and its cash flow
characteristics. The Group has financial assets in the categories of amortised
cost only. The Group does not have financial assets at fair value through
other comprehensive income or fair value through profit or loss. Detailed
disclosures are set out in note 22.
ii) Amortised cost
These assets arise principally from the provision of goods and services to
customers (such as loans and trade receivables), but also incorporate other
types of financial assets where the objective is to hold these assets in order
to collect contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognised at fair
value once the Group's right to consideration is unconditional and are
subsequently carried at amortised cost using the effective interest rate
method, less provision for impairment.
Impairment provisions for trade receivables are recognised based on the
simplified approach within IFRS 9 using the lifetime expected credit losses.
During this process, the probability of the non-payment of trade receivables
is assessed. This probability is then multiplied by the amount of the expected
loss arising from default to determine the lifetime expected credit loss for
the trade receivables. For trade receivables, such provisions are recorded in
a separate provision account with the loss being recognised in the income
statement. On confirmation that the trade receivable will not be collectable,
the gross carrying value of the asset is written off against the associated
provision.
Impairment provisions for other receivables are recognised based on a
forward-looking expected credit loss model. The methodology used to determine
the amount of the provision is based on whether at each reporting date, there
has been a significant increase in credit risk since initial recognition of
the financial asset. For those financial assets where the credit risk has not
increased significantly since initial recognition, twelve month expected
credit losses along with gross interest income are recognised. For those for
which credit risk has increased significantly, lifetime expected credit losses
along with the gross interest income are recognised. For those that are
determined to be credit impaired, lifetime expected credit losses along with
interest income on a net basis are recognised.
iii) Financial liabilities:
Financial liabilities are comprised of trade and other payables, borrowings
and other short-term monetary liabilities, which are recognised at amortised
cost.
Trade payables, other payables and other short-term monetary liabilities, are
initially recognised at fair value and subsequently carried at amortised cost
using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings
using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or
all of the facility will be drawn down. In this case, the fee is deferred
until the draw-down occurs. To the extent there is no evidence that it is
probable that some or all of the facility will be drawn down, the fee is
capitalised as a pre-payment for liquidity services and amortised over the
period of the facility to which it relates.
e) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses, if any. The cost of an item of property, plant and
equipment initially recognised includes its purchase price and any cost that
is directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by
management.
Depreciation is calculated under the straight-line method to write off the
depreciable amount of the assets over their estimated useful lives. The
principal annual rates used for this purpose are:-
Leasehold improvements 10-20% per annum straight line
Plant and machinery 15-33%
per annum straight line
US Plant and machinery Time in use
Furniture and fittings 20-33% per annum straight line
Motor vehicles 33% per annum
straight line
The depreciation method, useful lives and residual values are reviewed, and
adjusted if appropriate, at the end of each reporting period to ensure that
the amounts, method and periods of depreciation are consistent with previous
estimates and the expected pattern of consumption of the future economic
benefits embodied in the items of the property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when the cost is incurred and it is
probable that the future economic benefits associated with the asset will flow
to the Group and the cost of the asset can be measured reliably. The carrying
amount of parts that are replaced is derecognised. The costs of the day-to-day
servicing of property, plant and equipment are recognised in profit or loss as
incurred. Cost also comprises the initial estimate of dismantling and removing
the asset and restoring the site on which it is located for which the Group is
obligated to incur when the asset is acquired, if applicable.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. The gain or
loss on retirement or disposal is determined as the difference between any
sales proceeds and the carrying amounts of the asset and is recognised in the
Statement of Comprehensive Income within administrative expenses.
f) Income taxes
The charge for taxation is based on the loss for the period and takes into
account deferred taxation.
Current tax is measured at amounts expected to be paid using the tax rates and
laws that have been enacted by the balance sheet date. The substantively
enacted rate has been used for deferred tax balances, which are recognised in
respect of all timing differences that have been originated but not reversed
by the reporting date, except that the recognition of deferred tax assets is
limited to the extent that the Company anticipates making sufficient taxable
profits in the future to absorb the reversal of the underlying timing
differences.
The Group receives research and development tax credits for the work it
performs in the field of nano-technology. Using the SME and large company
schemes, these credits generate cash reimbursement in exchange for the
sacrifice of applicable losses, such tax credits are recognised in income tax
within the Statement of Comprehensive Income, in the period in which they
relate.
g) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank
balances, deposits with financial institutions and short-term, highly liquid
investments that are readily convertible to known amounts of cash, are subject
to an insignificant risk of changes in value and have maturities of 3 months
or less from inception.
h) Inventories
Inventories are recorded at the lower of cost and net
realisable value. Cost represents materials, direct labour, other direct
costs and related production overheads, and is determined on the
First-In-First-Out (FIFO) method. Net realisable value is based on estimated
selling price, less further costs expected to be incurred to completion and
disposal. Provision is made for slow-moving, obsolete and defective
inventories where appropriate.
The value of inventories used in the fulfilment of commercial or developmental
programmes are charged to cost of sales in the Statement of Comprehensive
Income on an accruals basis.
i) Employee benefits
i) Short-term benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary
benefits are accrued in the period in which the associated
services are rendered by employees of the Group.
ii) Defined contribution plans
The Group's contributions to defined contribution plans are recognised in
profit or loss in the period to which they relate. Once the contributions have
been paid, the Group has no further liability in respect of the defined
contribution plans.
iii) Defined Benefit Pension plans
The group accounts for its defined benefit pension scheme such that the net
pension scheme position is reported on the balance sheet with actuarial gains
and losses being recognised directly in equity through the statement of
comprehensive income. A number of key assumptions have been made in
calculating the fair value of the group's defined benefit pension scheme which
affect the balance sheet position and the group's reserves and income
statement. Refer to note 26 of the notes to the consolidated accounts for a
summary of the main assumptions and sensitivities. Actual outcomes may differ
materially from the assumptions used and may result in volatility in the net
pension scheme position.
j) Provisions
Provisions are recognised when the Group has a present or constructive
obligation as a result of past events, when it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation, and when a reliable estimate of the amount can be made. Provisions
are reviewed at the end of each financial reporting period and adjusted to
reflect the current best estimate. Where the effect of the time value of money
is material, the provision is the present value of the estimated expenditure
required to settle the obligation.
k) Government grants
Revenue grants are accounted for under the accruals model, with grants being
recognised within Other operating income on a systematic basis over the period
in which the group recognised the related costs for which the grant is
intended to compensate. Grants received in advance of the income being
recognised in the Statement of Comprehensive Income are included in grant
creditors.
When grant income is received for capital expenditure, it is held as deferred
income on the balance sheet and released on a straight line basis over the
useful economic life of the asset to which it relates. All income relating to
government grants is included as 'Other operating income' within the Statement
of Comprehensive Income.
l) Share-based payment arrangements
Equity-settled share-based payments to employees and others providing similar
services are measured at the fair value of the equity instruments at the grant
date. Details regarding the determination of the fair value of equity-settled
share-based transactions are set out in note 17 to the Consolidated Financial
Statements.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, with a
corresponding increase in equity. At the end of each reporting period, the
Group revises its estimate of the number of equity instruments expected to
vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to other reserves.
m) Leases
Leased assets
For any new contract entered into on or after 1 July 2019, the Group considers
whether a contract is, or contains a lease. A lease is defined as 'a contract,
that conveys the right to use an asset for a period of time in exchange for
consideration'. To apply this definition the Group assesses whether the
contract meets all three key criteria which are whether;
· The contract contains an identified asset, which is either explicitly
identified in the contract or implicitly specified by being identified at the
time the asset is made available to the Group.
· The Group has the right to obtain substantially all of the economic
benefits from use of the identified asset throughout the period of use,
considering its rights within the defined scope of the contract.
· The Group has the right to direct the use of the identified asset
throughout the period of use. The Group assesses whether it has the right to
direct 'how and for what purpose' the asset is used throughout the period of
use.
Measurement and recognition of lease as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a
lease liability on the balance sheet. The right-of-use asset is measured at
cost, which is made up of the initial measurement of the lease liability, any
initial direct costs incurred by the Group, an estimate of any costs to
dismantle and remove the asset at the end of the lease, and any lease payment
made in advance of the lease commencement date (net of any incentives
received).
The Group depreciates the right-of-use assets on a straight line basis from
the lease commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The Group also assesses
the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the
present value of the lease payment unpaid at that date, discounted using the
interest rate implicit in the lease if that rate is readily available or the
Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up
of fixed payments, variable payments based on an index or rate, amounts
expected to be payable under a residual value guarantee and payments arising
from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reducing for payment
made and increased for interest. It is remeasured to reflect any reassessment
or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is
reflected in the right-of-use asset, or profit and loss if the right-of-use
asset is already reduced to zero.
Measurement and recognition of lease as a lessor
The Group leases out elements of plant and machinery. The Group has classified
these leases as operating leases. The Group is not required to make any
adjustments on transition to IFRS 16 for leases in which it acts as a lessor.
The Group has applied IFRS 15 Revenue from Contracts with customers to
allocate consideration in the contract to each lease and non-lease components.
n) Transactions and balances in foreign currencies
Transactions in foreign currencies are converted into the respective
functional currencies on initial recognition, using the exchange rates
approximating those ruling at the transaction dates. Monetary assets and
liabilities at the end of the reporting period are translated at the rates
ruling as of that date. Non-monetary assets and liabilities are translated
using exchange rates that existed when the values were determined. All
exchange differences are recognised in profit or loss.
Overseas operations which have a functional currency different to the group
presentation currency have been translated using the monthly average exchange
rate for consolidation into the statement of comprehensive income. The amounts
included in the group statement of financial position, have been translated at
the exchange rate ruling at the statement date. All resulting exchange
differences are reported in other comprehensive income.
o) Critical accounting estimates and judgements
The preparation of financial information in conformity with IFRSs requires the
use of certain critical accounting estimates. It also requires the directors
of the Group to exercise their judgement in the process of applying the
accounting policies which are detailed below. These judgements are
continually evaluated by the directors and management and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The key estimates and underlying assumptions concerning the future and other
key sources of estimation uncertainty at the statement of financial position
date, that have a significant risk of causing material adjustment to the
carrying amounts of assets and liabilities within the next financial period
are reviewed on an ongoing basis. Revision to accounting estimates are
recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future periods
if the revision affects both current and future periods.
Defined Benefit Pension Scheme (estimate)
In determining the pension valuation movement and the defined benefit
obligation of the Group's pension scheme, a number of assumptions are used in
order to produce a valuation, which is sensitive to changes in the
assumptions. These assumptions include an appropriate discount rate, the
levels of salary increases, price inflations and mortality rates. Further
details are included in note 26, including sensitivity analysis.
Impairment of non-financial assets (judgement)
The carrying value of goodwill, and the cash generating units (CGUs) to which
it relates, is assessed annually for impairment through comparing the
recoverable amount to the CGU's carrying value. The value in use calculations
require estimates in relation to uncertain items, including management's
expectations of future revenue growth, operating costs, profit margins,
operating cashflows and the discount rate applied.
Future cash flows used in the value in use calculations are based on our
latest five-year financial plans reviewed by the Board. Expectations about
future growth reflect expectations of growth in the markets applicable to the
Group. The future cashflows are discounted using a pre-tax discount rate that
reflects current market assessments of the time value of money. The discount
rate used is adjusted for the specific risk to the group, including the
countries to which cash flows will be generated. Further details are
included in note 10, including sensitivity analysis.
Useful economic lives of tangible and intangible assets (judgement)
The annual depreciation charge for tangible assets is sensitive to change in
the estimated useful economic lives and residual values of the assets. The
useful economic lives and residual values are re-assessed annually. They are
amended where necessary to reflect current estimates, based on technological
advancement, future investments, economic utilisation and the physical
condition of the assets. See note 11 for the carrying amounts of the property
plant and equipment, and the depreciation accounting policy for the useful
economic lives for each class of assets.
p) Alternative Performance Measures
Disclosure has been adjusted in the Statement of Comprehensive Income.
Adjusted Administrative expenses have excluded Share based payment charges and
depreciation as these are non-cash items. We believe removing these balances
better reflects the performance of the Group and provides more meaningful
information to the user of the Financial Statements.
4. Segment analysis
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision maker (which is the Chief Executive Officer and Chief
Financial Officer) as defined in IFRS 8, in order to allocate resources to the
segment and to assess its performance.
For management purposes, the Group is organised into
the following reportable regions:
· UK & Europe (focussing on functionalisation of nano materials,
high performance ink & master batches and the composites market in Europe;
· North America (focussing on SiC & blank products for tooling);
and
· Asia Pacific (focusing on Ink sales to the Asian markets)
2021 Adjustments, Central & Eliminations
UK & Europe North America Asia Pacific £'000
£'000 £'000 £'000 Consolidated
£'000
REVENUE 923 1,679 301 - 2,903
Cost of sales (311) (379) (234) - (924)
Gross profit 612 1,300 67 - 1,979
Other operating income 427 148 - - 575
Adjusted administrative expenses (1,725) (1,328) (404) (1,267) (4,724)
Adjusted operating loss (686) 120 (337) (1,267) (2,170)
Administrative expenses
Share based payment expense (38) (30) (3) (48) (119)
Depreciation & amortisation (376) (679) (67) (149) (1,271)
(414) (709) (70) (197) (1,390)
Total administrative expenses (2,139) (2,037) (474) (1,464) (6,114)
OPERATING LOSS (1,100) (589) (407) (1,464) (3,560)
Finance costs (211)
LOSS BEFORE TAXATION (3,771)
Taxation 363
LOSS AFTER TAXATION (3,408)
Additions to non-current assets 473 1,667 17 - 2,157
Segment assets 3,473 7,398 404 2,508 13,783
Segment liabilities (1,727) (4,697) (194) (406) (7,024)
2020 Adjustments, Central & Eliminations
UK & Europe North America £'000 Asia Pacific £'000
£'000 £'000 Consolidated
£'000
REVENUE 357 2,169 421 - 2,947
Cost of sales (119) (517) (249) - (885)
Gross profit 238 1,652 172 - 2,062
Other operating income 550 206 - - 756
Adjusted administrative expenses (1,689) (1,687) (587) (1,394) (5,357)
Adjusted operating loss (901) 171 (415) (1,394) (2,539)
Administrative expenses
Share based payment expense 6 (8) 13 - 11
Depreciation & Amortisation (411) (868) (229) (132) (1,640)
Restructuring costs - - (63) - (63)
(405) (876) (279) (132) (1,692)
(2,094) (2,563) (866) (1,526) (7,049)
OPERATING LOSS (1,306) (705) (694) (1,526) (4,231)
Finance costs (176)
LOSS BEFORE TAXATION (4,407)
Taxation 391
LOSS AFTER TAXATION (4,016)
Additions to non-current assets 291 - 4 - 295
Segment assets 2,486 7,573 567 2,519 13,145
Segment liabilities (698) (4,173) (239) (584) (5,694)
Geographical information
All revenues of the Group are derived from its principal activities as set out
on page 5. The Group's revenue from external customers by geographical
location are detailed below.
2021 2020
£'000 £'000
By destination
United Kingdom 370 278
Europe 104 378
United States of America 739 597
China 135 2
Thailand 136 345
South Korea 165 198
Japan 1,207 1,113
Rest of the World 47 36
2,903 2,947
During 2021, £1.2 million (42%) (2020: £1.1 million (37%)) of the Group's
revenue depended on a single customer. During 2021 £0.41 million (14%) (2020:
£0.35 million (12%)) of the Group's revenue depended on a second single
customer.
All amounts shown as other operating income within the Statement of
Comprehensive Income are generated within and from the United Kingdom, EU and
the US. These amounts include income earned as part of a number of grant
funded projects in the United Kingdom and EU and a government grant in the
US.
Revenue from goods (including Reactor sales) was £2.43 million (84%) of the
Group's revenue (2020: £2.45 million or 83%) and revenue from services was
£0.34 million (12%) (2020: £0.40 million or 14%).
Dis-aggregation of revenues
The split of revenue by type: 2021 2020
£'000 £'000
Services 338 406
Reactor sales (Goods) 403 -
Reactor rental 134 89
Goods 2,028 2,452
2,903 2,947
North America
2021 UK & Europe £'000 Asia Pacific £'000 TOTAL
£'000 £'000
Services 231 - 107 338
Reactor sales (Goods) 403 - - 403
Reactor rental 134 - - 134
Goods 155 1,679 194 2,028
923 1,679 301 2,903
2020 North America
UK & Europe £'000 Asia Pacific TOTAL
£'000 £'000 £'000
Services 104 - 302 406
Reactor rental 89 - - 89
Goods 164 2,169 119 2,452
357 2,169 421 2,947
Services and reactor rental revenues are recognised over time, whereas goods
and reactor sales are recognised at a point in time.
The group acquired the following non-current assets during the year, split by
geographical location as detailed below:
Non-current asset additions
2021 2020
£'000 £'000
By destination
United Kingdom 473 291
United States of America 1,667 -
Thailand 17 4
2,157 295
The carrying value of the group's non-current assets split by geographical
location are detailed below:
2021 2020
£'000 £'000
By destination
United Kingdom 3,271 3,564
United States of America 5,749 5,257
Thailand 116 184
South Korea 1 1
9,137 9,006
5. Other Operating Income
2021 2020
£'000 £'000
Grant Income 427 550
Federal Support Schemes 148 206
575 756
There are no unfulfilled conditions attached to the above income.
6. Loss before taxation
Loss before taxation is arrived at after charging:
2021 2020
£'000 £'000
Amortisation of other intangibles 176 129
Restructuring costs - 63
Depreciation of property, plant and equipment 1,096 1,511
Foreign Exchange (44) (9)
Operating lease rental : plant and machinery 1 2
The service fees of the Group's auditor, Grant Thornton UK LLP, are analysed
below:
Fees payable to the Company's auditor for the audit of the Group's
financial statements
72 67
Fees payable to the Company's auditor and its associates for other services:
Taxation related compliance services
12 40
84 107
7. Employees
The average number of employees during the year,
including executive directors, was:
2021 2020
No. No.
Administration 22 23
Research, development and production 32 40
54 63
Staff costs for all employees, including executive directors, consist of:
2021 2020
£'000 £'000
Wages and salaries 2,509 3,243
Social security costs 271 287
Defined contribution pension costs 172 170
Defined benefit pension costs 47 24
Share-based payment (income)/expense 119 (11)
3,118 3,713
Directors' remuneration
2021 2020
£'000 £'000
Short-term employee benefits and fees 491 484
Post-retirement benefits 36 25
527 509
The total amount payable to the highest paid director in respect of emoluments
was £253,000 (2020: £232,000), excluding pension costs of £24,000 (2020:
£20,000). Further details on Directors Remuneration can be found in the
Director Remuneration Report on page 28.
8. Income tax
Current tax credit 2021 2020
£'000 £'000
Total income tax credits:
- for the financial year 363 384
- under provision in the previous financial year - 7
_________ _________
Total Current Tax 363 391
The reason for the difference between the actual tax charge for the year and
the standard rate of corporation tax in the United Kingdom applied to the
losses for the year are as follows:
2021 2020
£'000 £'000
Loss for the year (3,408) (4,016)
Income tax credit (363) (391)
Loss before income taxes (3,771) (4,407)
Tax using the Group's domestic tax rates of 19% (2020 - 19%) 717 837
Expenses not deductible for tax purposes 216 (143)
Different tax rates applied in overseas jurisdictions (2) 24
R&D enhancement 340 259
R&D costs capitalised 49 45
Surrender for R&D tax credit (446) (109)
Adjustment for over provision in comparative year - 7
Movement in unrecognised losses carried forward (494) (492)
Movement in unrecognised fixed asset temporary differences (17) (37)
Total tax credit 363 391
Changes in tax rates and factors affecting the future tax charge
The main rate of corporation tax for UK companies is currently 19%.
The Group has tax losses that are available indefinitely for the UK and a
maximum of 20 years for the US to be offset against future taxable profits of
the companies approximately amounting to £23.68 million (2020: £23.96
million) including £4.12 million (2020: £4.16 million) of fixed asset timing
differences. No tax losses are expected to expire within the next 15 years.
The group currently expects to be able to utilise its US tax losses in the
foreseeable future and a deferred tax asset has been recognised in respect of
these tax losses up to the value of the timing difference of fixed assets and
therefore no overall deferred tax asset has been created.
9. Loss per share
The calculations of loss per share are based on the following losses and
number of shares:
2021 2020
£'000 £'000
Loss after tax attributable to owners of Haydale Graphene Industries Plc
(3,408) (4,016)
Weighted average number of shares:
- Basic and Diluted 408,967,698 331,162,204
Loss per share:
Basic (£) and Diluted (£) (0.01) (0.01)
The loss attributable to ordinary shareholders and weighted average number of
ordinary shares for the purpose of calculating the diluted earnings per
ordinary share are identical to those used for basic earnings per share. This
is because the exercise of share options would have the effect of reducing the
loss per ordinary share and is therefore not dilutive under the terms of IAS
33. At 30 June 2021, there were 39,734,928 (2020: 34,248,583) options and
warrants outstanding as detailed in note 17. All of the options are
potentially dilutive.
Post year end 85,055,893 of new Ordinary Shares were issued on 20(th)
September 2021, these Ordinary Shares are dilutive. 1,000,000 warrants were
also issued on 2(nd) August 2021 and are potentially dilutive.
10. Intangible assets
Customer Development expenditure
Relationships £'000 Goodwill Total
£'000 £'000 £'000
Cost
At 1 July 2019 1,154 1,815 2,087 5,056
Additions - 250 1 251
FX translation - 1 - 1
At 1 July 2020 1,154 2,066 2,088 5,308
Additions - 260 - 260
FX translation (133) (7) (113) (253)
At 30 June 2021 1,021 2,319 1,975 5,315
Accumulated amortisation
At 1 July 2019 546 1,399 634 2,579
Charge for the period 87 42 - 129
FX translation - 1 - 1
At 1 July 2020 633 1,442 634 2,709
Charge for the year 87 89 - 176
FX translation (83) (2) - (85)
At 30 June 2021 637 1,529 634 2,800
Net book value
At 30 June 2021 384 790 1,341 2,515
At 30 June 2020 521 624 1,454 2,599
At 30 June 2019 608 416 1,453 2,477
All of the above Development expenditure is currently in use.
Goodwill
Goodwill arose on the acquisition of Haydale Ltd on 21 May 2010 (£24,000). On
the 9 September 2016, goodwill of £327,151 arose on the acquisition of
Innophene Co. Ltd (now Haydale Technologies Thailand ("HTT")). Goodwill arose
on the acquisition of HCT (formerly ACM) on the 13(TH) October 2016 of
£1,102,620.
Customer Relationships
The Customer relationships intangible asset arose on the fair value of assets
on the acquisition of HCT (formerly ACM) on the 13 October 2016 amounting to
£868,676.
Development costs
Development costs brought forward are made up of three areas. The first
relates to the fair value of assets on the acquisition of Haydale Ltd on 21
May 2010 for development of nano-technology projects, where it is anticipated
that the costs will be recovered through future commercial activity. The
second relates to capitalised patent costs that were acquired as part of the
acquisition of Innophene Co Ltd. (now HTT) in 2015. The third relates to the
development of nano enhanced products within Haydale Limited, HCS and HTT.
Development expenditure of £260,000 was capitalised during the year in
accordance with IAS 38 in connection with the Group's expenditure with the
development of nano enhanced products (including inks, epoxy resins, rubbers
and composites), where the Directors believe that future economic benefit is
probable (2020: £251,000). Capitalised development expenditure is not
amortised until the products or services are ready for sale or use.
Amortisation
Capitalised development costs are amortised over the estimated useful life of
between 5 and 20 years. The amortisation charge is recognised in
administrative expenses.
The Customer relationships intangible is amortised over the estimated useful
life of 10 years. The amortisation charge is recognised in administrative
expenses.
Goodwill impairment
Goodwill acquired in a business combination is allocated at acquisition to the
CGUs that are expected to benefit from that business combination. Following
the acquisitions of HCS, HCT and HTT, the Group is operating a number of
different CGUs and therefore HCS and ACM goodwill has been considered against
the future forecast trading outcomes of HCT, HCS and HTT as separate CGU's.
An analysis of the pre-tax discount rates used and the goodwill balance as at
the year-end by principal CGU's is shown below:
2021 2020 2021 2020
% % £'000 £'000
Haydale & HCS 10% 10% 23 23
HCT 12% 12% 975 1,103
HTT 10% 10% 341 327
The Group tests goodwill at least annually for impairment or more frequently
if there are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value-in-use
calculations. The key assumptions for the value-in-use are those regarding the
discount rates, the growth rates and expected changes to cash flows during the
period for which management have detailed plans. The Directors estimate
discount rates using pre-tax rates that reflect current market assessments of
the time value of money and the risks specific to the CGUs.
Pre-tax discount rates, derived from the Group's post-tax weighted average
cost of capital of 10% to12% (2020: 10% to 12%), have been used to discount
projected cash flows.
The impairment calculations for the current year have been derived from the
five year forecasts (the "Forecasts") that have been approved by the Board.
The HCT model assumes that its turnover is in in line with the Forecasts and
then reduces to 2% growth in perpetuity. The growth rates used are based on
management's internally estimated growth forecasts which are predicated on a
recovery in the aerospace industry during FY22 and FY23. This anticipated
rebound would lead to a recovery in the whisker sales and allow for growth in
the blank sales at this facility such that by June 2023 the CGU had at least
recovered to its pre pandemic trading position. As noted in the Chairs Report
on page 4 we are yet to see any sustained recovery in our Aerospace business
and, given this, we will continue to review the carrying value of Goodwill in
this CGU in the event that the expected bounce back does not occur in the
timeframes anticipated. As part of the impairment sensitivity analysis, a
break point discounted cashflow was prepared based on revenue increasing by
75% over the two year period ending June 2023 to coincide with the recovery in
aerospace at which point it would have returned to pre pandemic trading levels
and increasing by 2% per annum thereafter. Margins were forecast to be at
historic levels for the year ended June 2023 and to maintain that level
thereafter. The carrying value of the HCT CGU is £7.1m which consists of
Goodwill, Customer Relations, PPE and Right of Use Assets.
The HTT model assumes that its turnover is in line with the Forecasts and then
reduces to 2% growth into perpetuity. The growth rates used are based on
management's internally estimated growth forecasts which take into account
current and future product commercialisation. As part of the impairment
sensitivity analysis, management reduced the anticipated turnover and gross
profit levels by 25%, which still resulted in no requirement to impair.
Following this review, the Directors have determined there is no impairment
charge which should be recognised against the intangible assets of the Group
for the year ended 30 June 2021.
11. Property, plant and equipment
Leasehold and leasehold improvements Plant and machinery Fixtures and fittings Motor vehicles Assets under construction
£'000 £'000 £'000 £'000 £,000 Total
£'000
Cost
At 1 July 2019 635 7,575 522 30 31 8,793
Transition to IFRS 16 2,207 - - - - 2,207
Additions - 34 10 - - 44
FX translation - 126 10 1 1 138
At 1 July 2020 2,842 7,735 542 31 32 11,182
Additions 1,677 198 22 - - 1,897
FX translation (207) (514) (53) (2) (3) (779)
Disposals (108) (225) (11) - - (344)
Transfer - 29 - - (29) -
At 30 June 2021 4,204 7,223 500 29 - 11,956
Accumulated depreciation
At 1 July 2019 309 2,662 251 15 - 3,237
Charge for the year 684 765 56 6 - 1,511
FX translation 1 23 4 (1) 27
At 1 July 2020 994 3,450 311 20 - 4,775
Charge for the year 598 444 48 6 - 1,096
FX Translation (122) (118) (32) 1 - (271)
Disposals (32) (226) (8) - - (266)
At 30 June 2021 1,438 3,550 319 27 - 5,334
Net book value
At 30 June 2021 2,766 3,673 181 2 - 6,622
At 30 June 2020 1,848 4,285 231 11 32 6,407
At 30 June 2019 326 4,913 271 15 31 5,556
Including in the net carrying amount of Property, plant and equipment are
right-of-use assets as follows:
30 June 2021 30 June 2020
£'000 £'000
Leasehold and leasehold improvements cost 3,576 2,207
Leasehold and leasehold improvements depreciation (993) (613)
Leasehold and leasehold improvement NBV 2,583 1,594
12. Inventories
2021 2020
£'000 £'000
Raw materials 167 242
Work in progress 261 125
Finished goods 900 1,345
1,328 1,712
The total value of inventories recognised in cost of sales during the year was
£915,580 (2020: £885,471). Raw materials and finished goods comprise of SiC,
blanks, functionalised carbon, chemicals and associated raw materials. Work
in progress comprises recoverable costs on long-term contracts.
13. Trade receivables
2021 2020
£'000 £'000
Trade receivables 715 886
14. Other receivables
2021 2020
£'000 £'000
Other receivables 299 137
Prepayments and accrued income 227 197
Lease Asset 69 -
595 334
2021 2020
£'000 £'000
Corporation tax 364 384
15. Deferred income
Deferred income is recognised for both capital and
revenue grants from governments and other funding parties and released as
income in accordance with the relevant conditions of the grant concerned. All
income will be recognised within one year.
2021 2020
£'000 £'000
Commercial Deferred Income 180 74
As at 30 June 2021, deferred income of £30,769 (2020: £30,769) arose in
relation to the rental of a reactor, which had been invoiced during the year
for a full year's rental charge. The charge is being released over the course
of the year. The remaining deferred income relates to grant income which will
be recognised in the profit and loss within a year.
16. Share capital and share premium
Number of shares Share capital Share premium
No. £'000 £'000 Total
£'000
At 1 July 2019 317,723,848 6,354 27,764 34,118
Issue of £0.02 ordinary shares 22,500,000 450 - 450
At 30 June 2020 340,223,848 6,804 27,764 34,568
Issue of £0.02 ordinary shares 85,055,950 1,701 1,056 2,757
At 30 June 2021 425,279,798 8,505 28,820 37,325
On the 9(th) September 2020, the Company issued 85,055,950 new ordinary shares
of 2p each.
Issue costs amounting to £220,000 have been charged to the share premium
account during the year (2020: £14,000 charged to the profit and loss).
17. Share-based payment transactions
Options
The Company operates both an approved EMI share option scheme and an
unapproved share option scheme for the benefit of employees and directors of
the Group. The exercise price of the unapproved options is equal to the
mid-market price of the shares on the date of grant. The exercise price of the
2020 EMI options granted on 13 January 2020 was 2.25p per Ordinary Share
(being a 19.7 % premium to the closing mid-market price of the Company's
Ordinary Shares on 10 January 2020, the last trading day before the grant).
The options vest either one year or three years from the date of grant. The
options are accounted for as equity settled share based payment transactions.
The following table which illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, share options during the year:
2021 2020
Number of WAEP Number of options WAEP
options
No. Pence No. Pence
Balance at beginning of year 34,181,185 23.00 2,504,691 62.00
Granted 7,100,000 2.25 34,100,000 2.25
Lapsed (1,500,000) 2.25 (1,591,960) 113.00
Forfeited (46,257) 154.70 (831,546) 113.00
Balance at end of year 39,734,928 2.39 34,181,185 23.00
At 30 June 2021, there were options outstanding over 39,734,928 un-issued
ordinary shares, equivalent to 9% of the issued share capital as follows:
Number of shares Exercise price Earliest exercise date Latest
exercise date
Unapproved scheme
19 May 2016 4,665 171.50p 19 May 2019 19 May 2026
14 October 2016 6,759 198.14p 14 October 2019 14 October 2026
26 June 2017 7,495 178.50p 27 June 2020 27 June 2027
15 December 2017 16,009 125.50p 15 December 2020 15 December 2027
8 July 2020 7,000,000 2.25p 8 July 2023 8 July 2030
Approved EMI scheme
13 January 2020 32,700,000 2.25p 13 January 2023 13 January 2030
39,734,928
The estimated fair value was calculated by applying a Monte Carlo option
pricing model.
Type of award Number of shares Share price at date of grant (p) Fair value per option Award life Risk free rate Expected volatility rate Performance conditions
(p) (years) (%) (%)
19 May 2016 Unapproved 4,665 172.00 101.00 10 0.62 51 None
14 October 2016 Unapproved 6,759 198.00 113.00 10 0.50 49 None
26 June 2017 Unapproved 7,495 179.00 179.00 10 0.50 34 None
15 December 2017 Unapproved 16,009 126.00 55.00 10 0.50 51 None
8 July 2020 Unapproved 7,000,000 3.65 0.63 10 0.50 80.5 See below
13 January 2020 EMI 32,700,000 1.88 1.56 10 0.50 80.5 See below
39,734,928
Should the Company's closing mid-market share price reach and remain at or
above £0.04 for at least 15 consecutive trading days, commencing after the
grant date and ending on or before 30 September 2021, 30% of share options are
capable of exercise.
Should the Company's closing mid-market share price reach and remain at or
above £0.08 for at least 15 consecutive trading days, commencing after the
grant date and ending on or before 30 September 2022, an additional 30% of
share options are capable of exercise.
Should the Company's closing mid-market share price reach and remain at or
above £0.16 for at least 15 consecutive trading days, commencing after the
grant date and ending on or before 30 September 2023, the final 40% of share
options are capable of exercise.
The weighted average remaining contractual life of share options outstanding
at 30 June 2021 is 8.5 years (2020: 9.5 years). The charge for the year for
share-based payment amounted to £0.12 million (2020: £(0.01) million).
Warrants
2021 2020
Number of warrants Weighted Number of warrants Weighted average exercise price Pence
No. average exercise price No.
Pence
Balance at beginning of year 67,398 208.00 107,398 208.00
Lapsed - - (40,000) 208.00
Balance at end of year 67,398 208.00 67,398 208.00
None of the warrants outstanding at 30 June 2021 are to employees or have
performance conditions attached. The same pricing model was used for
calculating the cost of warrants to the Group as was used for calculating the
cost of the options to the Group.
The weighted average remaining contractual life of warrants outstanding at 30
June 2021 is 0.04 years (2020: 0.72 years). The charge for the year for
share-based payment amounted to £7,258 (2020: £11,410).
18. Reserves
Share capital
The share capital represents the nominal value of the equity shares in issue.
Share premium account
The share premium account represents the amount received on the issue of
ordinary shares in excess of their nominal value, less any costs associated
with the issuance of the shares, and is non-distributable.
Share-based payment reserve
The share-based payment reserve comprises the cumulative expense representing
the extent to which the vesting period of share options has passed and
management's best estimate of the achievement or otherwise of non-market
conditions and the number of equity instruments that will ultimately vest.
Retained earnings
The retained profits and losses reserves comprise the cumulative effect of all
other net gains, losses and transactions with owners (e.g. dividends) not
recognised elsewhere.
Foreign Exchange
The foreign exchange reserve comprises of translation differences arising from
the translation of the overseas subsidiary results into pound sterling.
19. Trade and other payables
Current Liabilities Non-Current Liabilities
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Current Liabilities
Trade payables 677 410 - -
Tax and social security 101 181 - -
Lease liability 365 617 2,370 1,031
Accruals and other creditors 576 698 - -
1,719 1,906 2,370 1,031
1,719
1,906
2,370
1,031
20. Bank loans
2021 2020
£'000 £'000
Bank loans 1,729 1,248
The borrowings are repayable as follows:-
- within one year 885 944
- in the second year 9 265
- in the third to fifth years inclusive 835 39
1,729 1,248
The Group's borrowings are denominated in US dollars and Pounds Sterling.
The directors consider that there is no material difference between the fair
value and carrying value of the Group's borrowings.
2021 2020
Average interest rates paid 3.2% 7.9%
In October 2016, a five year bank loan of $1,720,000 (equivalent to
approximately £1.4 million at the time) was drawn by HTI, the Company's US
holding company, secured on the fixed assets of HTI and its newly acquired
operating subsidiary, HCT. This loan carries an interest rate of 4% and is
repayable in equal instalments. HTI also had a working capital facility of up
to $900,000 which was secured on a combination of the fixed assets, inventory
and trade receivables of the US business and this was fully utilised at the
year end (FY20: Fully Utilised). The rate of interest of this was fixed at
5.25%.
In June 2020, as part of the Government Bounce Back Loan scheme, HCS entered
into a six year loan agreement with Natwest for £50,000. The loan has a
repayment holiday and does not accrue interest during the first 12 month.
Following the initial 12 months interest will be charged at 2.5% p.a. and is
repaid in equal instalments over the remaining period.
In March 2021, HCS secured a five year loan of £1,100,000 from Innovate Loans
UK Limited. At the year end the Company had drawn down £800,000 of this
facility. It is anticipated that the full amount will be drawn by 31 March
2022. The loan has a repayment holiday until March 2024 and is fully
repayable by March 2026. For the initial 36 months interest will be charged
at 3.7% p.a. and for the final 24 months interest with be charged at 10.7%.
There are no penalties for early repayment.
21. Related party disclosures
Balances and transactions between Haydale Graphene
Industries Plc and its subsidiaries are eliminated on consolidation and are
not disclosed in this note. Balances and transactions between the Group and
other related parties are disclosed below.
Remuneration of directors and key management
personnel
The remuneration of the Directors of the Company is set out below in aggregate
for each of the categories specified in IAS 24 'Related Party Disclosures'.
2021 2020
£'000 £'000
Short-term employee benefits and fees 491 484
Social security costs 65 50
Post-retirement benefits 36 25
592 559
Other transactions - Group and parent company
Fees totalling £15,856 (2020: £13,500) were paid to the Evesco International
Business for support during the fund raise. Mr G Eves served as a director of
the company during the year and is a director of Evesco International Business
Services. At 30 June 2021, the balance owed to Evesco International Business
Services was £Nil (2020: £Nil).
Other transactions - Group
Other related party transactions during the year
under review are shown in the table below:
2021 2020
£'000 £'000
Services Received
QM Holdings 402 468
During the year an amount of £401,870 was paid to QM Holdings in respect of
property rent (2020: £468,000). QM Holdings is owned by Thomas Quantrille
and Marvin Murrell who are officers of HCT. The balance outstanding to QM
Holdings at the year-end was £28,971 (2020: £40,163).
22. Financial instruments
The Group's activities are exposed to a variety of
market risk (including foreign currency risk and interest rate risk), credit
risk and liquidity risk. The Group's overall financial risk management
policy focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group's financial performance.
a) Financial risk management policies
The Group's policies in respect of the major areas of
treasury activity are as follows:
i) Market risk
Foreign currency risk
The Group is exposed to foreign currency risk on transactions and balances
that are denominated in currencies other than Pounds Sterling. The
currencies giving rise to this risk are primarily the United States Dollar and
the Euro. Foreign currency risk is monitored closely on an ongoing basis to
ensure that the net exposure is at an acceptable level. The Group maintains
the ability to provide a natural hedge wherever possible by matching the cash
inflows (revenue stream) and cash outflows used for purposes such as
operational expenditure in the respective currencies.
The carrying amounts of the Group's foreign currency denominated monetary
assets and liabilities at the end of each reporting period were as follows:
United States Dollar
£'000 Euro Total
£'000 £'000
2021
Financial assets 287 52 339
Financial liabilities 4 370 374
2020
Financial assets 952 47 999
Financial liabilities 111 1 112
Foreign currency sensitivity analysis
The following table details the sensitivity analysis to possible changes in
the relative values of foreign currencies to which the Group is exposed as at
the end of the respective financial periods, with all other variables held
constant:
2021 Increase/ 2020 Increase/
(decrease) (decrease)
£'000 £'000
Effects on loss after taxation / equity
United States Dollar:
- strengthened by 10% 31 93
- weakened by 10% (26) (76)
Euro:
- strengthened by 10% (45) 6
- weakened by 10% 29 (5)
ii) Interest rate risk
The Group's exposure to interest rate risk arises mainly from interest-bearing
financial assets. The Group's policy is to obtain the most favourable
interest rates available, while ensuring no risk to capital. Any surplus
funds will be placed with licensed financial institutions to generate interest
income. The current loan and credit facilities maintain a fixed rate of
interest.
Interest rate risk sensitivity analysis
A 100 basis points strengthening or weakening of the interest rate as at the
end of each financial period would have an immaterial impact on loss after
taxation and / or net assets. This assumes that all other variables remain
constant.
b) Credit risk
The Group's exposure to credit risk, or the risk of third parties defaulting,
arises mainly from trade and other receivables. The Group manages its
exposure to credit risk by the application of credit approvals, credit limits
and monitoring procedures on an ongoing basis. For other financial assets
(including cash and bank equivalents), the Group minimises credit risk by
dealing exclusively with high credit rating financial institutions.
The Group establishes an
allowance for impairment that represents its expected credit losses in respect
of the trade and other receivables as appropriate. The main components of
this allowance are a specific loss component that relates to individually
significant exposures, and a collective loss component established for groups
of similar assets in respect of losses that are expected but not yet
identified. Impairment is estimated by management based on prior experience,
current market and third party intelligence while considering the current
economic environment.
Credit risk concentration profile
To date, modest sales have meant that the credit risk
profile of the Group has tended to focus on a handful of customers only. As
such, no meaningful analysis can be drawn from the customer profile of the
receivables outstanding at each period end under review.
Exposure to credit risk
As the Group does not hold any collateral, the
maximum exposure to credit risk is represented by the carrying amount of the
financial assets at the end of each financial period.
The exposure of credit risk for trade receivables by geographical region as at
the year-end is as follows:
2021 2020
£'000 £'000
United Kingdom 9 28
Europe 9 181
North America 360 115
Rest of the world 337 562
715 886
Maturity analysis
The ageing analysis of the Group's trade receivables as at the year-end is as
follows:
2021 2020
£'000 £'000
Not past due 677 834
Past due:
- less than 3 months 38 41
- between 3 and 6 months - 11
Gross amount 715 886
At the end of each financial period, trade receivables that are individually
impaired were those in significant financial difficulties and have defaulted
on payments. These receivables are not secured by any collateral or credit
enhancement.
Collective impairment allowances, are determined based on estimated
irrecoverable amount from the sale of goods and services, determined by
reference to past default experience. Impairment provision is not material and
therefore has not been recognised in either the current or prior year.
Trade receivables that are past due but not impaired
The Group believes that no impairment allowance is necessary in respect of
these trade receivables. They are substantially companies with good
collection track record and no recent history of default, further this also
applies to any trade receivables held at year end which are not past due.
iii) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group exposure to liquidity risk
arises primarily from mismatches of the maturity of financial assets and
liabilities.
The Group maintains a level of cash and cash equivalents and bank facilities
deemed adequate by management to ensure as far as possible, that it will have
sufficient liquidity to meet its liabilities when they fall due.
All of the financial liabilities of the Group are due within one year, with
the exception of certain long-term bank loans - see note 20.
Maturity analysis
The ageing analysis of the Group's non-derivative financial liabilities as at
the year-end is as follows:
2021 Under 1 Yr 1 to 2 Yrs 3+ Yrs Total
£'000 £'000 £'000 £'000
Trade payables 677 - - 677
Secured bank loan 876 - 803 1,679
Unsecured bank loan 9 9 32 50
Lease liability 365 359 2,011 2,735
Total 1,927 368 2,846 5,141
2020 Under 1 Yr 1 to 2 Yrs 3+ Yrs Total
£'000 £'000 £'000 £'000
Trade payables 410 - - 410
Secured bank loan 943 255 - 1,198
Unsecured bank loan 1 9 40 50
Lease liability 617 617 414 1,648
Total 1,971 881 454 3,306
c) Capital risk management
The Group defines capital as the total equity of the Group. The Group's
objectives when managing capital are to safeguard the Group's ability to
continue as a going concern in order to provide returns for shareholders and
benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital. In order to maintain or adjust the capital
structure, Haydale Graphene Industries PLC may issue new shares or sell assets
to reduce debt.
d) Classification of financial instruments (at amortised cost and fair
value)
2021 2020
£'000 £'000
Financial assets
Trade receivables 715 886
Other receivables 368 137
Cash and bank balances 1,644 823
Financial Assets (at amortised cost) 2,727 1,846
Financial liabilities
Bank loans 1,729 1,248
Trade payables 677 410
Lease Liability 2,735 1,648
Financial Liabilities (at amortised cost) 5,141 3,306
There is no difference between the fair value and book value for the assets
and liabilities.
e) Fair value of financial instruments
The Group has no financial assets or liabilities
carried at fair values at the end of each reporting date.
23. Capital commitments
The Group had the following capital commitments in
the respective years:
2021 2020
£'000 £'000
Authorised by the directors but not contracted for 317 50
24. Ultimate controlling party
The Directors do not consider any one shareholder,
individually or acting in consort with others, to have ultimate control of the
Group.
25. Lease arrangements
The amounts of minimum lease payments under
non-cancellable operating leases are as follows:
2021 2021 2020 2020
Land and buildings Plant and machinery Land and buildings Plant and machinery
£'000 £'000 £'000 £'000
- within one year - 1 - 1
- within two to five years - 2 - 3
Aggregate amounts payable - 3 - 4
Payments recognised as an expense under these leases were as follows:
2021 2021 2020 2020
Land and buildings Plant and machinery Land and buildings Plant and machinery
£'000 £'000 £'000 £'000
Operating lease expense - 1 - 1
Leases pertain to the office and unit contracts for the three UK facilities of
in aggregate £0.16 million. Of the £0.16 million, certain leases are
cancellable with three months' notice.
Within the minimum lease payments for plant and machinery is the cost relating
the general office equipment.
26. Defined Benefit Pension Scheme
HCT operated a defined benefit pension scheme. The scheme was closed in
November 2006 for any new participants.
Contributions of Nil were made to the scheme during the year ended 30 June
2021 (2020: Nil).
Included in the loss before tax during the year:
2021 2020
(£'000) (£'000)
Net Interest Expense 47 24
Included in other comprehensive income during the year:
2021 2020
(£'000) (£'000)
Actuarial loss / (gain) from demographic assumptions 208 292
The following table sets forth the pension plan's
funded status as of 30 June:
2021 2020
(£'000) (£'000)
Accumulated benefit obligation (3,834) (4,275)
Projected Benefit obligation (3,834) (4,275)
Plan assets at fair value 2,808 2,840
Funded Status (1,026) (1,435)
Accrued Pension Cost (1,026) (1,435)
Net amount recognised in the consolidated balance sheet as of 30 June,
consisted of the following:
2021 2020
(£'000) (£'000)
Non-current Liabilities (1,026) (1,435)
The discount rate is based on the yield curve of government bonds in the
applicable region adjusted with a credit spread of one of the two highest
ratings given by a recognized ratings agency. Future cash outflows of the
plans are then related with the yield curve. The average is the discount rate.
The weighted average assumptions used to develop the actuarial present value
of benefit obligations and net periodic benefit costs for the pension plan are
as follows for the year ended 30 June 2021:
Discount rate for periodic benefit costs 2.75%
Discount rate for benefit obligations 2.75%
Rate of increase in compensation levels 3.50%
Investment return rate 3.00%
Mortality Assumptions are as follows:
Longevity at retirement age (current & future pensioners) 2021 2020
- Males 20.4 years 22.6 years
- Females 22.3 years 25.0 years
Plan Assets
Pension assets are managed by an outside investment manager and are rebalanced
periodically. The Company establishes policies and strategies and regularly
monitors performance of the assets, including the selection of investment
managers, setting long-term strategic targets, and monitoring asset
allocations. Target allocation ranges are guidelines, not limitations, subject
to variation from time-to-time or as circumstances warrant, and occasionally,
the Company may approve allocations above or below a target range.
The pension plan's investment strategy with respect to pension assets is to
invest the assets in accordance with ERISA and fiduciary standards. The
long-term primary objective for the pension plan assets are to protect the
assets from erosion of purchasing power and to provide a reasonable amount of
long-term growth of capital, without undue exposure to risk. Currently, the
strategic targets are 45% for equity securities, 50% for debt securities, and
no more than 5% for other categories.
The fair value of the Company's pension plan assets valued at 30 June 2021, by
asset category were as follows:
Fair Value Measurements at
30 June 2021 using
Total Carrying Assets/Liabilities Measured at
Level 1 Level 2
Description Amount Fair Value Inputs Inputs
£,000 £,000 £,000 £,000
Cash 141 141 141 -
Corporate Equities 1,596 1,596 1,596 -
Fixed Income:
US Government 14 14 - 14
Municipal 1 1 - 1
Corporate debt 942 942 - 942
Mutual Funds 114 114 114 -
2,808 2,808 1,851 957
All corporate equities are quoted securities.
The changes in the fair value of the Company's pension plan assets for the
year ending 30 June 2021, were as follows:
2021 2020
£,000 £,000
Opening Balance 2,840 2,875
Contributions - -
Distributions (217) (245)
Earnings 111 177
Net realised gain 449 20
Administrative expenses (64) (66)
Foreign exchange gain/(loss) (311) 79
Balance at Year End 2,808 2,840
Cash Flows
The Company expects benefits paid for the next five fiscal years and the five
years thereafter as follows:
2021 2020
£,000 £,000
2022 247 266
2023 245 274
2024 250 272
2025 249 276
2026 249 275
Thereafter 1,270 1,411
2,510 2,774
The company's pension plan asset allocations by asset category were as follows
as of 30 June 2021:
Asset Category
Cash 5%
Equity Mutual Funds 57%
Fixed Income 34%
Other 4%
Plan Obligations
2021 2020
£'000 £'000
Benefit Obligation at 01 July 4,275 3,960
Foreign exchange movement (452) 114
Interest cost 109 136
Actuarial loss 120 310
Benefits paid (218) (245)
_____ _____
Benefit Obligation at 30 June 3,834 4,275
Fair Value of Plan Assets at 01 July 2,840 2,875
Foreign Exchange movement (311) 79
Actual Return on plan assets 449 19
Interest Income 47 112
Employer contributions - -
Benefits paid (217) (245)
_____ _____
Fair Value of Plan Assets at 30 June 2,808 2,840
Funded Status at 30 June (1,026) (1,435)
Defined benefit obligation - sensitivity analysis.
The impact to the value of the defined benefit obligation of a reasonably
possible change to one actuarial assumption, holding all other assumption
constant, is presented in the table below:
Reasonably Defined Benefit Obligation (£'000)
Actuarial Assumption Possible Change Increase Decrease
Discount Rate (+/- 0.25%) (91) 95
Mortality Rate (+/-1.00%) 12 (12)
HCT also has a defined contribution plan under Section 401(k) of the Internal
Revenue Code which provides for voluntary participation. All employees who
have completed one hour of service are eligible to participate in this plan
beginning the first pay period of the month following the date an hour of
service is first performed. Participants may contribute on a pre-tax basis
from 1% to 60%, in 1% increments, of their annual base salary. Company
contributions under the plan are required to be equal to 100% of that portion
of participant contributions which do not exceed 6% of the participant's
annual base compensation rate. Participants are immediately vested in their
voluntary contributions plus actual earnings and Company contributions. The
Company contributions for the year ended 30 June 2021, were £47,000 (2020:
£24,000).
27. Taxes
Deferred tax is calculated in full on temporary differences under the
liability method. Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax laws) that have
been enacted or substantively enacted by the end of the reporting period.
The movement on the deferred tax account is as shown below:
2021 2020
£'000 £'000
At 1 July - -
Recognised in profit and loss:
Tax expense - 7
Recognised in other comprehensive income:
Movement due to changes in exchange rates - (7)
At 30 June - -
Deferred tax assets have been recognised in respect of tax losses and other
temporary differences giving rise to deferred tax assets where the directors
believe it is probable that these assets will be recovered.
Detail of the deferred tax liability, amounts recognised in profit and loss
and amounts recognised in other
comprehensive income are as follows:
(Charged)/
credited
to profit
Asset Liability Net or loss
2021 2021 2021 2021
£'000 £'000 £'000 £'000
Employee pension liabilities 215 - 215 (86)
Available losses 494 - 494 (142)
Fixed assets - (709) (709) 228
Net tax assets/(liabilities) 709 (709) - -
(Charged)/
credited
to profit
Asset Liability Net or loss
2020 2020 2020 2020
£'000 £'000 £'000 £'000
Employee pension liabilities 301 - 301 73
Available losses 636 - 636 (30)
Business combinations - (937) (937) (43)
Net tax assets/(liabilities) 937 (937) - -
A deferred tax asset has not been recognised for the following:
2021
£'000
Accelerated capital allowances (49)
Unused tax losses 23,677
23,628
The unused tax losses can be carried forward indefinitely in the UK and up to
a maximum of 20 years in the US.
28. Post Balance Sheet Event
On 20 September 2021 the Group successfully raised £5.10 million (gross) of
new funds before costs via a placing, retail offer and subscription of new
ordinary shares in the Company.
29. Reconciliation of liability movement as a result of financing
activities
Non-current Current loans and borrowings Total
Loans and £'000 £'000
borrowings
£'000
At 1st July 2019 388 1,568 1,956
Interest accruing in period 14 30 44
New loans in year - 50 50
Loan repayments in year - (835) (835)
Lease Liability transaction to IFRS 16 1,648 559 2,207
Lease Liability repayments in year - (559) (559)
Effect of foreign exchange 9 24 33
Loans classified as non-current at 30 June 2019 becoming current during year. (107) 107 -
Loans classified as non-current at 30 June 2019 becoming current during year. (617) 617 -
At 30th June 2020 1,335 1,561 2,896
Interest accruing in period 3 15 18
New loan in year 800 - 800
Loan repayments in year - (219) (219)
Lease Liability addition 1,647 - 1,647
Lease Liability repayments in year - (561) (561)
Effect of foreign exchange (117) (117)
Loans classified as non-current at 30 June 2020 becoming current during year.
(263) 263 -
Lease Liability classified as non-current at 1 July 2020 becoming current
during year
(308) 308 -
At 30th June 2021 3,214 1,250 4,464
At 30th June 2020
1,335
1,561
2,896
Interest accruing in period
3
15
18
New loan in year
800
-
800
Loan repayments in year
-
(219)
(219)
Lease Liability addition
1,647
-
1,647
Lease Liability repayments in year
-
(561)
(561)
Effect of foreign exchange
(117)
(117)
Loans classified as non-current at 30 June 2020 becoming current during year.
(263)
263
-
Lease Liability classified as non-current at 1 July 2020 becoming current
during year
(308)
308
-
At 30th June 2021
3,214
1,250
4,464
PARENT COMPANY REPORT
Company Registration No. 07228939
2021 2020
Note £'000 £'000
Fixed assets
Property, plant and equipment 27 129
Investments 6 1,497 1,299
1,524 1,428
Current assets
Debtors 7 6,393 5,297
Cash at bank and in hand 283 323
6,676 5,620
Creditors: amounts falling due within one year 8 (408) (584)
NET CURRENT ASSETS 6,268 5,036
TOTAL ASSETS LESS CURRENT LIABILITIES 7,792 6,464
Creditors: amounts falling due after more than one year - -
NET ASSETS 7,792 6,464
Capital and reserves
Called up share capital 9 8,505 6,804
Share premium account 9 28,820 27,764
Profit and loss account (29,533) (28,104)
SHAREHOLDER'S FUNDS 7,792 6,464
As permitted by section 408 of the Companies Act 2006, the Company's profit
and loss account has not been included in these financial statements. The loss
of the Company for the year ended 30 June 2021 was £1,533,000 (2020:
£5,720,000).
The financial statements on pages 79 to 84 were approved and authorised for
issue by the Board of directors on 14 December 2021 and signed on its behalf
by:
David Banks
Keith Broadbent
Chair
Chief Executive Officer
Share Share Profit and loss account Total
capital Premium Equity
£'000
£'000 £'000 £'000
At 1 July 2019 6,354 27,764 (22,215) 11,903
Comprehensive Income for the year
Loss for the year - - (5,720) (5,720)
Contributions by and distributions to owners
Recognition of share-based payments - - (155) (155)
Issue of ordinary share capital, net of transaction costs 450 - - 450
Share issue costs - - (14) (14)
At 30 June 2020 and 1 July 2020 6,804 27,764 (28,104) 6,464
Comprehensive Income for the year
Loss for the year - - (1,533) (1,533)
Contributions by and distributions to owners
Recognition of share-based payments - - 104 104
Issue of ordinary share capital 1,701 1,276 - 2,977
Share issue costs - (220) - (220)
At 30 June 2021 8,505 28,820 (29,533) 7,792
1. Basis of preparation
The parent company financial statements of Haydale Graphene Industries Plc, a
public company incorporated and registered in England and Wales under the
Companies Act 2016 with company number 07228939 which is limited by shares,
have been prepared in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework. The principal accounting policies adopted in the
preparation of the financial statements are set out below. The policies have
been consistently applied to the years presented, unless otherwise stated.
The financial statements have been prepared on a historical cost basis. The
presentation currency used is sterling and amounts have been presented in
round ("£000's").
Disclosure exemptions adopted
In preparing these financial statements the company has taken advantage of all
disclosure exemptions conferred by FRS101. Therefore these financial
statements do not include:
- certain comparative information as otherwise required by IFRS;
- certain disclosures regarding the company's capital;
- a statement of cash flows;
- the effect of future accounting standards not yet adopted;
- the disclosure of the remuneration of key management personnel;
and
- disclosure of related party transactions with other wholly owned
members of the group headed by
Haydale Graphene Industries Plc.
In addition, all in accordance with FRS 101, further disclosure exemptions
have been adopted because equivalent disclosures are included in the
consolidated financial statements of Haydale Graphene Industries Plc. These
financial statements do not include certain disclosures in respect of:
- Share based payments;
- Business combinations; and
- Financial Instruments
2. Accounting policies
With the exception of the adoption of IFRS 16 discussed further below, the
following accounting policies have been applied consistently in dealing with
items which are considered material to the company's financial statements:
Investment in subsidiary undertakings
Where the company has control over an investee, it is classified as a
subsidiary. The company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
Investments in subsidiary undertakings where the company has control are
stated at cost less any provision for impairment.
Financial assets
Impairment of financial assets
The Company assesses at each balance sheet date whether a financial asset
or group of financial assets is impaired.
Assets carried at amortised cost
These assets arise principally from the provision of services and advancing of
monies to the company's subsidiaries, but also incorporate other types of
financial assets where the objective is to hold these assets in order to
collect contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognised at fair
value plus transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
The Company's financial assets measured at amortised cost comprise
intercompany receivables, trade and other receivables and cash and cash
equivalents in the consolidated statement of financial position.
The intercompany receivables are interest-free loans that are repayable on
demand. In applying IFRS 9 to these balances, the company assesses the ability
of the debtor subsidiary to repay the loan on demand at each reporting date. A
loan is considered to be in default where there is evidence that the borrower
has insufficient liquid assets to repay the loan on demand. This is assessed
with reference to key liquidity and solvency ratios. Where the borrowing
subsidiary has sufficient liquid assets to repay the loan immediately, meaning
the risk of default is very low, the loan is considered to be in Stage 1 of
the expected credit loss model, meaning that there is deemed to have been no
significant increase in credit risk. However, should the borrowing subsidiary
not have sufficient liquid assets to repay the loan on demand, the loan is
considered to be at Stage 3 of the expected credit loss model and credit
impaired. Where a loan is deemed to be credit impaired, an expected credit
loss provision is recognised based on a 'repay over time' approach applying a
discounted cashflow analysis.
Cash and cash equivalents includes cash in hand for the purpose of the
statement of cash flows - bank overdrafts. Bank overdrafts are shown within
loans and borrowings in current liabilities.
Share-based payments
When the company grants options over equity instruments directly to the
employees of a subsidiary undertaking, the effect of the share-based payment
is capitalised as part of the investment in the subsidiary as a capital
contribution, with a corresponding increase in equity.
Depreciation
Depreciation is provided to write off cost, less estimated residual values, of
all tangible fixed assets, evenly over their expected useful lives. It is
calculated at the following rates:
Furniture and fittings 33% per annum straight line
Computer equipment 33% per annum straight line
Impairment
The need for any fixed asset impairment write-down is assessed by comparison
of the carrying value of the asset against the higher of realisable value and
value in use.
Taxation
The charge for taxation is based on the loss for the period and takes into
account taxation deferred.
Current tax is measured at amounts expected to be paid using the tax rates and
laws that have been enacted by the balance sheet date. The substantively
enacted rate has been used for deferred tax balances, which are recognised in
respect of all timing differences that have been originated but not reversed
by the reporting date, except that the recognition of deferred tax assets is
limited to the extent that the Company anticipates making sufficient taxable
profits in the future to absorb the reversal of the underlying timing
differences.
Foreign Currency
Foreign currency transactions are translated at the rates ruling when they
occurred. Foreign currency monetary assets and liabilities are translated at
the rate of exchange ruling at the balance sheet date. Any differences are
taken to the profit and loss account.
Critical accounting judgements and estimation uncertainty
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the accompanying disclosures,
and the disclosure of contingent liabilities, at the end of the reporting
period. However, uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amount
of the assets or liabilities affected in future periods.
The key sources of estimation uncertainty that have a significant effect on
the amounts recognised in the financial statements include estimation, where
applicable, for items relating to revenue recognition and impairment of
receivables.
Impairment of Investments
The company considers the impairment of investments on an annual basis. An
estimate of the values of investments is calculated on a discounted cash flow
basis. Our value in use calculations require estimates in relation to
uncertain items, including management's expectations of future revenue growth,
operating costs, profit margins, operating cashflows and the discount rate
applied.
Future cash flows used in the value in use calculations are based on our
latest Board approved five-year financial plans. Expectations about future
growth reflect expectations of growth in the markets applicable to the group.
The future cashflows are discounted using a pre-tax discount rate that
reflects current market assessments of the time value of money. The impairment
of investments has been considered under note 10 of the consolidated financial
statements.
Impairment of debtors
The company applies the expected credit loss model under IFRS 9 in assessing
the impairment of receivables. As intercompany receivables are repayable on
demand, the debtor is considered to be in default if they would be unable to
repay the balance at the reporting date. In such circumstances, the
receivables are impaired to the extent that the debtor company is not
considered able to repay the receivable if it were to be recalled at the
balance sheet date. Where a loan is deemed to be credit impaired, an expected
credit loss provision is recognised based on a 'repay over time' approach
applying a discounted cashflow analysis.
3. Audit Fees
The audit fees of the parent company have been disclosed within note 6 of the
consolidated financial statements, which form part of these financial
statements.
4. Employees
The average number of employees during the year, including executive
directors, was:
2021 2020
No. No.
Administration 9 9
___ ___
Staff costs for all employees, including executive directors, consist
of:
2021 2020
£000 £000
Wages and Salaries 642 716
Social Security Costs 79 86
Pension Costs 53 44
Share based payment (income)/expense 48 (40)
_________ _________
822 806
_________ _________
5. Directors' remuneration
In respect of directors' remuneration, the
disclosures required by Schedule 5 to the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 are included in the detailed
disclosures in the audited Group accounts in Note 7, which are ascribed as
forming part of these financial statements.
6. Fixed asset investments
Investment
£'000
Cost
At 1 July 2020 1,299
Additions 198
At 30 June 2021 1,497
The impairment reviews have been carried out on the same basis as those
applied to goodwill and intangibles of the Group (see note 10 in the Group
accounts for further detail).
The undertakings in which the company's interest at the period end is 20% or
more are as follows:
Name of subsidiary company Country of Proportion of Nature of
incorporation ordinary share business
or registration capital held
Haydale Ltd England & Wales 100% R&D, sales and distribution
Haydale Composite Solutions Limited England & Wales 100% R&D, sales and distribution
Haydale Composites Ltd England & Wales 100% Dormant
EPL Composites Limited England & Wales 100% Dormant
Haydale Technologies Korea Co., Ltd South Korea 100% Sales and distribution
Haydale Technologies Incorporated LLC North America 100% R&D, sales and distribution
Haydale Technologies Thailand Ltd Thailand 100% R&D, sales and distribution
Haydale Ceramic Technologies LLC North America 100% Sales and distribution
Haydale Composites Ltd & EPL Composite Limited are exempt from audit in
accordance with the Companies Act 2006, as a result of them remaining dormant
throughout the current and previous financial years.
Haydale Technologies Korea Co., Ltd is exempt from audit.
Subsidiary Registered office
Haydale Ltd Clos Fferws, Parc Hendre, Capel Hendre, Ammanford, Carmarthenshire, SA18 3BL
Haydale Composites Ltd Clos Fferws, Parc Hendre, Capel Hendre, Ammanford, Carmarthenshire, SA18 3BL
EPL Composites Ltd Clos Fferws, Parc Hendre, Capel Hendre, Ammanford, Carmarthenshire, SA18 3BL
Haydale Composite Solutions Limited Unit 10 Charnwood Business Park, North Road, Loughborough, Leicestershire,
LE11 1QJ
Haydale Technologies Korea Co., Ltd 16F, Gangnam Bldg. 396, Seocho-daero, Seocho-gu,
Seoul 137-857, South Korea
Haydale Technologies Thailand Ltd Room 510 - 515, Tower D, 5th Floor, Thailand Science Park Phahon Yothin Road,
Luang District, Pathum Thani Province, 12120, Thailand
Haydale Technologies Incorporated LLC 1446 South Buncombe Road, Greer, South Carolina. 29651, USA
Haydale Ceramic Technologies LLC 1446 South Buncombe Road, Greer, South Carolina. 29651, USA
7. Debtors
2021 2020
£'000 £'000
Amounts owed by group companies 6,217 5,164
Corporation tax 76 95
Other debtors 91 16
Prepayments and accrued income 9 22
6,393 5,297
During the year an impairment provision of Nil (2020: £1.42 million) was
recognised in relation to Intercompany balances.
Loans to subsidiary organisations are denominated in their local currency in
line with IAS21, for consolidation purposes these loans are classified as part
of the net investment in the subsidiary and foreign exchange movements on
these balances are recorded through the Other Comprehensive Income.
Amounts owed by group companies are in foreign currencies, predominately USD
and Thai Baht a 10% movement in the exchange rate would result in a gain of
£1.14m or a loss of £0.93m.
8. Creditors: amounts falling due within one year
2021 2020
£'000 £'000
Trade creditors 19 79
Other creditors including tax and social security 46 84
Accruals and deferred income 343 421
408 584
9. Share capital and share premium
Number of shares Share capital Share premium
No. £'000 £'000 Total
£'000
At 1 July 2020 340,223,848 6,804 27,764 34,568
Issue of £0.02 ordinary shares 85,055,950 1,701 1,056 2,757
At 30 June 2021 425,279,798 8,505 28,820 37,325
During the year, the Company issued 85,055,950 new ordinary shares of 2p each
during September 2020. There were £220,000 issue costs associated with the
new ordinary share issue.
10. Ultimate controlling party
The Directors do not consider any one shareholder,
individually or acting in consort with others, to have ultimate control
of the Company.
11. Related party transactions
The Company is exempt from disclosing transactions
with wholly owned subsidiaries within the Group. Other related party
transactions are included within those given in note 21 of the consolidated
financial statements.
1 (#_ftnref1) On a pre IFRS 16 basis Adjusted Admin Expenses for the year
including lease costs would have been £5.29 million (FY20: £5.99 million).
2 (#_ftnref2) Dalian YiBang Technology Company Limited ('DLYB') has been at
the forefront of introducing and servicing high-end imported products for 15
years in China, which included the introduction of copper mesh for the purpose
of lightning strike protection in both aerospace and wind energy sectors.
3 (#_ftnref3) iCraft, based in South Korea, is a global technology company
with interests in security and network solutions as well as the health and
beauty sector.
4 (#_ftnref4) IRPC Public Company Limited ("IRPC") is a Thai Public
SET-listed Petroleum and Petrochemical company. It is a subsidiary of PTT
Group,
5 (#_ftnref5) Previously CeramycShield™
6 Based on calculations submitted to HMRC for the R&D tax credit.
7 (#_ftnref7) Resigned on 24 November 2019
8 (#_ftnref8) Appointed on 21 November 2019.
9 (#_ftnref9) Resigned on 10 June 2020
10 (#_ftnref10) Appointed on 10 June 2020
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