REG - Haydale Graphene Ind - Final Results
02/12/2024 07:00
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RNS Number : 2665O Haydale Graphene Industries PLC 02 December 2024
Haydale Graphene Industries plc
('Haydale', the 'Company', or the 'Group')
Final Results
Haydale (AIM: HAYD), the global advanced materials group, is pleased to
announce its full year results for the year ended 30 June 2024 ("FY24").
Operational Highlights:
Continued progress with major partners utilising Haydale's nanomaterial plasma
functionalisation technology:
· Saint Gobain are now taking a Haydale plasma functionalised boron
nitride product to market under the brand Adaptiflex(TM);
· Underfloor heating application is now being trialled through a
number of commercial partners who can provide channels to market in both the
new build and retrofit housing market;
· Next stages of water heater projects commissioned by Cadent to
progress towards a market ready product;
· Work with Petronas continuing with positive progress across a
number of project initiatives that could ultimately lead to significant volume
contracts
US operations continued to progress with its diversification into advanced
cutting tool manufacture and distribution:
· Sales infrastructure strengthened in both the US through
manufacture represeting networks and overseas with strategic white labelling
partnerships in both Europe and China;
· Development of a one-stop-shop offering to customers through
sourcing of other complementary tooling to supplement the core Silicon Carbide
offering;
· Whilst the Company has developed a sizeable pipeline of
opportunities which are starting to come through, the timescales to convert
tooling opportunities into sales is continuing to take longer than originally
anticipated.
Post year end and following the securing of an additional £3.1m of funding, a
significantly reconstituted Board has embarked on a full and rigorous review
of all aspects of the business with a view to reprioritising those areas
offering up near term profit enhancement and positive cash generation, whilst
continuing to pursue the most commercially attractive longer term strategic
options. A key objective is to bring forwards the Group's break-even point
compared to the current plan.
Financial Highlights
· Revenue at £4.82 million (FY23: £4.30 million) up by 12% on
prior year underpinned predominantly by a 75% growth in UK revenues.
· Adjusted administrative expenses increased marginally by 1.4% to
£6.35 million (FY23: £6.26 million).
· Adjusted operating loss improved slightly by £0.33 million to
£3.16 million (FY23: £3.49 million).
· £3.1 million fundraising completed post period end.
Commenting on the results Gareth Kaminski-Cook, Executive Chair of Haydale,
said:
"The Board recognises that progress has not proceeded with sufficient pace and
therefore intends to use the recent fundraise as a catalyst for change. As
noted above and in line with our commitment in the fundraise circular, the
reconstituted Board has embarked on a thorough review including cost
restructuring and commercial focus. Our priority is to bring forward the
Group's break-even point and cash generation, and we will be reporting
progress to the market in due course."
For further information:
Haydale Graphene Industries plc
Gareth Kaminski-Cook, Executive Chair Tel: +44 (0) 1269 842 946
Patrick Carter, CFO
www.haydale.com (http://www.haydale.com)
Cavendish Capital Markets Limited (Nominated Adviser & Broker)
Julian Blunt/Edward Whiley, Corporate Finance Tel: +44 (0) 20 7220 0500
Andrew Burdis, ECM
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU) 596 / 2014 WHICH FORMS PART OF UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR").
Notes to Editors
Haydale is an international 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 X: @haydalegraphene
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', ''will'' or the
negative of those, variations or comparable expressions, including references
to assumptions. These forward-looking statements are not based on historical
facts but rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations, performance,
future capital and other expenditures (including the amount, nature and
sources of funding thereof), competitive advantages, business prospects and
opportunities. Such forward looking statements reflect the Directors'
current beliefs and assumptions and are based on information currently
available to the Directors.
A number of factors could cause actual results to differ materially from the
results discussed in the forward-looking statements including risks associated
with vulnerability to general economic and business conditions, competition,
environmental and other regulatory changes, actions by governmental
authorities, the availability of capital markets, reliance on key personnel,
uninsured and underinsured losses and other factors, many of which are beyond
the control of the Company. Although any forward looking statements
contained in this announcement are based upon what the Directors believe to be
reasonable assumptions, the Company cannot assure investors that actual
results will be consistent with such forward looking statements.
Accordingly, readers are cautioned not to place undue reliance on forward
looking statements. Subject to any continuing obligations under applicable
law or any relevant AIM Rule requirements, in providing this information the
Company does not undertake any obligation to publicly update or revise any of
the forward looking statements or to advise of any change in events,
conditions or circumstances on which any such statement is based.
chair's 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 2024 ("FY24").
During the year the Company continued to focus its activities within its two
key product areas, namely functionalised nano-materials and silicon carbide
advanced tooling. Within each, focus has been absolute in terms of pursuit of
projects capable of yielding commercial scale revenues for Haydale in the
shortest possible timeframe. In the letter to shareholders at the time of
the recent fundraising, we explained that because progress had been slower
than anticipated, the reconstituted board would undertake a full and rigorous
review of all aspects of the business with a view to reprioritising those
areas offering up near term profit enhancement and positive cash generation,
whilst continuing to pursue the most commercially attractive longer term
strategic options. This review is now underway.
Summary financials
Commercial revenue for FY24 of £4.82 million (FY23: £4.30 million) was up by
12% on prior year with the UK nanomaterials business recording a 75% growth in
sales. Gross profit margin was slightly up due to sales mix at 58% (FY23:
56%) resulting in a gross profit of £2.81 million (FY23: £2.39 million).
Other operating income for the year of £0.38 million (FY23: £0.38 million)
was in line with last year. Adjusted administrative expenses increased by
£0.09 million (1.4%) to £6.35 million (FY23: £6.26 million) resulting in an
adjusted operating loss of £3.16 million (FY23: £3.49 million). Total
administrative expenses were £9.15 million (FY23: £8.93 million) as a result
of the above plus a number of additional non-trading items, namely share-based
payments charges of £0.03 million, depreciation and amortisation charges of
£1.51 million and an impairment of US intangible assets of £1.23m. The
loss for the year was £6.11 million (FY23: £6.17 million).
Operational Highlights
The UK operation saw the business partnerships fostered in FY23 develop
positively, with new contracts secured with a number of high-profile blue-chip
customers looking to use our plasma functionalisation service and technology
to improve their own materials and end application performance. In addition,
progress was made on our own heater ink and thermal transfer fluid products
with an expectation that, in conjunction with our partners, some of these may
be market ready early next financial year if not before, across a number of
end applications.
The US operations have seen a period of retrenchment whilst infrastructure
supporting the move up the value chain from SiC powders and into cutting tool
manufacture and distribution has continued to be rolled out. The sales
function has been strengthened which has materially increased the pipeline of
opportunities albeit the sales cycle is proving to be longer than
anticipated. Crucially, the US has signed a number of key agreements that
significantly extend both the tool range it can offer to its customers as well
as increase its geographical reach into Europe and Asia.
Staff
I would like to thank our staff for their outstanding support and commitment,
as their efforts are key to our achieving our aims. I would also like to thank
the executive management team who continue to drive the transition towards a
sustainable commercial operation.
Funding
On 14 November 2024, the Company completed a fundraising of £3.1million
(gross) and I would like to welcome our new shareholders and to thank our
existing shareholders for their continued support.
Outlook
The Company recognises that progress has not proceeded with sufficient pace
and therefore intends to use the recent fundraise as a catalyst for change.
As noted above and in line with our commitment in the fundraise circular, the
reconstituted Board has embarked on a thorough review (the "Review"),
including cost restructuring and commercial focus. Our priority is to bring
forwards the Group's break-even point and cash generation, and we will be
reporting progress to the market in due course.
Gareth Kaminski-Cook
Chair
29 November 2024
STRATEGIC REPORT
FY24 has seen the UK operations, primarily focused on nanomaterials, increase
its revenues by 75% on the back of a growing customer portfolio interested in
its nanomaterial functionalisation services with material progress also made
in the commercialisation of products based particularly on the Group's heating
and cooling related IP. Of particular note, the Group is now engaged in
collaborations with an increasing number of large multinational entities, all
of which have the potential to lead to significant longer-term revenues. US
operations, focused on advanced cutting tools, were strongly underpinned by
SiC powder sales whilst the roll-out of the fundamental infrastructure to
deliver the planned growth in SiC tooling manufacture and distribution
continued apace, albeit the forecast growth in tooling sales has taken longer
to manifest than expected. Across the Group, turnover increased by 12%: the
third year in a row for growth whilst maintaining a gross margin in excess of
50%.
Nanomaterials
The UK operations continued to make significant progress over the year in
progressing commercialisation of its proprietary technology resulting in a 75%
increase in UK revenues overall, driven by a 190% growth in UK service type
revenues. A number of new commercial programmes have been signed with larger,
blue chip profile customers over the last half of FY24 and first quarter of
FY25 for functionalisation services that have the potential to lead on to
significant volume sales subject to product enhancement targets being
achieved.
Patented Plasma Functionalisation Technology
At the core of all our product offerings and underpinning the Group's future
nanomaterial prospects, is Haydale's patented HDPlas(®) plasma
functionalisation process which improves the dispersibility of many
nanomaterials by changing their surface chemistry using a highly tuneable,
repeatable process. Plasma functionalisation allows Haydale to tailor
advanced materials to enhance the properties of its customers' products to
achieve pre-agreed mechanical or conductive performance criteria. The process
is cost effective and environmentally friendly. Specifically, we have the
expertise to:
· functionalise nanomaterials that are blended with resins,
composites and fluids to deliver enhanced electrical, mechanical (strength)
and thermal performance;
· formulate proprietary nanomaterial-based inks for the print and
sensor markets, including biomedical, RFID and piezo resistive inks and
sensors; and
· compound functionalised nanomaterials into a range of elastomers
to enable customers to use nanomaterials in elastomeric products.
The Group safeguards its nanomaterials business across its sites and the
territories in which it operates through the use of patents and trade secret
protocols 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.
Plasma Functionalisation as a Service
We continue to secure commercial contracts with third party companies to
plasma functionalise nanomaterial powders sourced by ourselves or provided by
the customer which can then be delivered as powders, inks, masterbatches or
pre-preg formats to meet the client's production requirements. These
engagements normally start out as paid for consultancy projects where we are
given performance targets that the functionalised material needs to meet and
we work with the customer in an iterative fashion to fine-tune the various
production related levers until the output targets are met or exceeded. The
aim is to secure long term supply agreements for the toll manufacturing of the
final plasma functionalised products, and for the larger customers, to lease
reactors that can be deployed lineside and receive a throughput based
royalty.
Customers include graphene manufacturers, who through the HDPlas(®) process,
are able, post production, to extend the range of applications for which their
product is suitable. We also have customers who have an end use materials
improvement focus and require Haydale to source the best nanomaterial for the
application. One major development during FY24 is the higher profile and
larger size of customers we are now seeing approach us for this service as the
use of graphene is filtering into the market at increasing pace (one study
estimates that the graphene market is set to grow from £570m in FY24 to
£5.2bn by 2032, a CAGR of 31.8%). These customers interactions mean we are
indirectly involved in some of the largest growing sectors of the nanomaterial
market including batteries, concrete, composites and tyres. Examples include:
· Saint Gobain, the French industrial conglomerate, have worked
with us since April 2023 to develop their boron nitride powders to be
competitive in new markets and in August 2024 launched a new product to the
market (Adaptiflex™ Boron Nitride Powders) which is enhanced using our
plasma functionalisation process, which we toll manufacture to their order.
· Petronas, the petrochemical giant, continues to work with us on a
number of parallel projects to primarily help them take their own graphene
product, refined from a byproduct of their main petrochemical business, and
functionalise it so it potentially can be recycled into other applications.
· Vittoria are a leading performance bicycle tyre manufacturer with
whom we have developed a graphene enhanced elastomer used in their premium
tyres.
Plasma Functionalised Products Sales:
Heating
Geopolitical events and the UK Government's net zero strategy continue to
bring an impetus for solutions in the energy efficient heating space, where
Haydale has been active for a number of years initially with its range of
off-the-shelf flexible graphene-based functional heater inks that can be
printed roll-to-roll and onto a wide variety of substrates.
Using those heater inks, and in partnership with a number of leading firms, we
have made significant strides in the development of a number of prototype low
power heating applications that can operate from a battery and some of which
are in the final stages of development, the main ones being:
· Underfloor heating: The prototype graphene-based heater sheets
can now be printed roll to roll and then cut to size, so they can easily be
rolled out under the flooring surface and connected to a DC supply. We were
granted a UK patent for this innovation during the year. We are working with
a number of partners to commercialise the ink and underfloor heating product,
including Staircraft, part of Travis Perkins Plc, that fit flooring for many
of the major UK house builders. Separately, we have concluded an agreement to
trial our own underfloor heating solution via a social housing provider in the
Channel Islands.
· Portable hot water & portable radiators: Having taken both
the battery powered portable hot water unit and radiator to prototype stage,
Cadent have now engaged and are paying us for the next phase to commercialise
the prototypes so they can be deployed to their estimated 4 million vulnerable
customers, to whom they have a legal requirement to support in off gas
situations. With the freedom to take these products to the other energy
utilities and into parallel leisure markets, we believe this represents a
significant growth opportunity.
In FY23 we noted that we had developed our own graphene based thermal transfer
fluid for use in heating and cooling systems that gives a much enhanced
performance compared with existing fluids on the market, for which we have
since been granted a UK patent. Work performed with Hydratech, a specialist
heating fluid engineering firm, to finesse the formulation to work with the
necessary additives is almost complete and we have now started the external
validation process to verify the product meets applicable industry standards
before being deployed, initially into Hydratech's customer base.
Sensors
We have a range of off-the-shelf functional inks appropriate for use in
biomedical and other sensor applications that can potentially detect a wide
range of medical conditions. These inks have a high sensitivity and are
therefore able to replace lower grade carbon inks and potentially metallic
based inks in existing sensor products. Our work with a leader in the
glucose monitoring and diabetes management sector, whilst testing
successfully, has had a hiatus due to internal reorganisations within the
customer. We have however sold some product in the market and have other
potential routes for this product, including China. We continue to work on
other sensors including chlorine.
Composites
Our Thermal Tooling product is currently being tested at several UK OEMs in
the Automotive and Aerospace sectors. We are also engaged with a major
international defence company on graphene enhanced composite materials.
Focused research and development
We continue to work on customer-paid and grant-funded projects to develop
plasma functionalised nanomaterial solutions where there is a clear problem
statement and we believe there to be a volume demand at the end of the process
for any product created. We are selective and, before proceeding, require a
clear business case that results in a requirement for plasma functionalised
material for third party applications or intellectual property that vests in
Haydale. Grant funded work has resulted in new patents being granted in the
UK for the graphene based underfloor heating and thermal transfer fluid
products which both have large accessible markets.
Asia Pacific
The performance of the Asian operations was disappointingly at the lower end
of expectation and their future will form part of the Review.
Silicon Carbide powders and tooling
SiC advanced cutting tools used to cut very hard metals is, in itself, a $957m
global market and sits at the premium end of the industrial cutting tool
markets. We understand that Haydale are one of only two US based
manufacturers of the SiC whisker that is required to manufacture these
tools. In addition, there are a range of other lower grade advanced cutting
tools used for complementary tasks such as roughing and finishing, including
Cubic Boron Nitride (CBN), Cermets and Carbide based tools, each of which have
their own sizeable markets.
As reported last financial year, in FY23 Haydale established the tooling sales
infrastructure to sell within the US through the establishment of a
manufacturer representative network and tooling catalogue. During FY24,
these initiatives have been supplemented by the implementation of a MRP system
and a tooling sales orientated website to properly support the US sales
function. The Company has also taken steps to reinforce the Manufacturer
Representative network.
However, the major change in FY24 has seen Haydale take the necessary steps to
ensure that it maximises its ability to capture market share by both
increasing its reach into markets outside of the US and extending the range of
advanced cutting tools it can offer customers as a one stop shop thereby
better able to entirely displace competitors from accounts. The key actions
taken were twofold:
Ø Extend the territories serviced by Haydale beyond North America:
o White label distribution agreement with a major European player signed
covering UK and Eire which has led to some sizeable accounts being secured in
FY24H2 and the arrangement being extended to cover the EU with discussions
also ongoing in respect to the USA;
o White label manufacturing and distribution agreement signed in Q1 of FY25
for distribution of SiC tooling into the China market which accounts for circa
22.5% of the global market;
Ø Extend the range of advanced cutting tooling that Haydale can offer to
include CBN (itself a £1.3bn Global market), Cermets and Carbide through
agreements with Asian partners signed in FY24 Q4 and FY25 Q1.
Whilst the SiC tooling business has seen increasing traction on the back of
the steps taken and we are in or awaiting testing with a number of large
company accounts, the timescales to convert opportunities into sales is taking
longer than expected which resulted in revenues being lower than originally
forecast. That said, there is a sizeable pipeline of opportunities which are
being progressed. Given the commodity nature of the products and the limited
number of suppliers, the sales process is believed to be relatively
straightforward being largely determined on price and tool life/performance.
Haydale scores highly on both measures.
Haydale's traditional SiC powder business performed well over FY24 with
significant sales to its repeat customer base, however this will likely mean
that FY25 powder sales will be more subdued. SiC stock is usually
manufactured on a two year cycle and to ensure that we maintain adequate stock
levels, the production line and furnaces were turned on in June 2024 for a
four month campaign which concluded at the end of September.
Other products
There continues to be interest in CeramycGuard™, a one stop solution to
significantly extend the surface life of concrete assets utilising Haydale's
SiC powder and for which Haydale holds the distribution rights for the UK
market. The product is currently undergoing tests on the Thames flood defences
with the Environmental Agency which, if successful, could result in a material
supply contract.
Production Capacity
Haydale's FY22 investment in production capacity for its plasma
functionalisation process and ink production means it has sufficient capacity
to meet its forecasts for the next few years. Should additional capacity be
required, Haydale has a scaling plan to affordably and materially increase its
own internal capacity on relatively short timescales or, depending on
anticipated volumes, arrange for a machine to be leased to a customer and
charge a volume based royalty.
Likewise, there is also more than sufficient capacity for the manufacture of
SiC powder in the US to meet the business plan for the next few years.
Arrangements have been made to secure additional external tooling
manufacturing capacity to support the planned short term growth.
Overheads
There have been some large inflationary pressures in certain areas of the cost
base over the financial year. Whilst we have kept a tight lid on recruitment
during FY24, due to the growth seen in the UK, we have had to strengthen
certain functions towards the end of FY24 and early FY25. Likewise in the
US, with the infrastructure now in place, we have had to make modest increases
to the sales team to support growth.
At the same time, the Group has continued to take selective measures to reduce
costs around the organisation and this will continue as part of the Review.
FUTURE STRATEGIC DIRECTION
As noted above, the US operations have potential for strong growth in the
short term through the manufacture and sale of specialised SiC tooling and
complementary products in all of the key global cutting tool markets. Having
put the necessary infrastructure in place, the focus is now on managing the
networks of US regional manufacturing representatives and distributors (both
in the US and overseas) and supply chain to get the tooling into key end user
sites.
On the nanomaterials front, we believe that with the size and nature of the
customers that are coming to us, the potential for nanomaterials is increasing
apace - however it is recognised that there is a significant time lag for
these projects to progress into being commercial volumes. The focus for the UK
continues to be on building business partnerships that will get its plasma
functionalised nanomaterial solutions into the market, targeting customers
that both recognise and are willing to share the commercial value such
development process can provide either through the fee structure or sharing
the downstream benefits in a more equitable way. It is further believed that
certain of our own strategic products, primarily underfloor heating, can
provide a quick route to revenue at scale and securing the necessary
accreditations, commercial relationships and distribution channels will be
fundamental to this.
Whilst the opportunity for Haydale's technologies as outlined above are
compelling, the Directors are mindful that the Company has to be more focused
in the allocation of resources towards the most profitable and cash generative
near term opportunities.
FINANCIAL REVIEW
Statement of Comprehensive Income
In the year under review, the Group's principal areas of income were sales of
specialty inks, fluids and graphene enhanced composites and associated
consultancy services from the UK and APAC operations and sale of SiC fibres,
whiskers, particulate, blanks and tooling from the US operation. The Group's
revenue for the year ended 30 June 2024 of £4.82 million (FY23: £4.30
million) represents a 12% increase compared with the previous year. Revenue
derived from product sales was consistent with prior year.
The Group's Gross Profit, which excludes Other Operating Income, was £2.81
million (FY23: £2.39 million) delivering a Gross Profit margin of 58% (FY23:
56%) which is slightly higher due to sales mix.
Other operating income, which is principally grant funded projects, was £0.38
million (FY23: £0.38 million) consistent with prior year.
Adjusted administrative expenses increased by £0.09 million (1.4%) to
£6.35million (FY23: £6.26 million) reflecting inflationary rises partially
offset by cost savings resulting in an adjusted operating loss of £3.16
million (FY23: £3.49 million). Total administrative expenses for the year
were £9.17 million (FY23: £8.93 million) which, in addition to the above,
reflects a significant reduction in non-cash related share-based payment
expenses of £0.56 million primarily related to the expiry of the FY22
warrants. FY24 total administrative expenses also included a non-cash charge
of £1.23 million related to an impairment of the historic intangible assets
associated with the US powders business (FY23: £0.53 million relating to an
impairment of fixed assets held in the US).
The Loss from Operations was £5.96 million (FY23: £6.17 million). Finance
costs, which include interest payable on the Group's debt, for the year were
£0.39 million (FY23: £0.41 million).
The Group continued to direct resources to research and development with the
focus for that investment on products and processes that could develop into
sustainable and profitable revenue streams. R&D spend for the year was
£1.39 million(1) (FY23: £1.52 million(( 1 (#_ftn1) ))), of which £0.50
million was capitalised (FY23: £0.42 million). During the year the Group
claimed R&D tax credits of £0.24 million (FY23: £0.40 million) which has
largely reduced due to changes in the scheme and it is expected that this
claim will be received during the current financial year.
Total comprehensive loss for the year, was £5.80 million (FY23: £5.80
million) which in FY24 included £1.23 million (FY23: £0.53m related to
tangible assets) of one off charges relating to impairment of intangible
assets.
The loss per share for the year was 0.4 pence (FY23: 0.8 pence).
Statement of Financial Position and Cashflows
As at 30 June 2024, net assets amounted to £5.68 million (2023: £6.97
million), including cash balances of £1.72 million (2023: £1.38 million).
Other current assets marginally increased to £3.39 million at the year-end
(2023: £3.15 million) with modest reductions across most areas offset by an
increase in trade debtors of £0.52 million reflecting a large year end sale
in the US. Current liabilities increased slightly to £2.38 million (2023:
£2.01 million) principally due to an increase in trade and other payables.
The Right of Use Asset in respect of its leased assets decreased to £1.79
million (FY23: £2.20 million) due to the continuing run out of lease
agreements and reduction in the number of discrete property leases as part of
planned cost savings. The Lease Liability, which is split between Current and
Non-Current Liabilities, similarly decreased to £2.01 million (FY23: £2.44
million) as a result of the lease payments made throughout 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 £0.30 million (FY23: £0.58 million)
has reduced in the year due to a combination of positive movements on
investments, exchange and discount rate movements and contributions made.
Net cash outflow from operating activities before working capital movements
for the year reduced to £3.35 million (FY23: £3.67 million), the principal
contributing factors being the Loss after Taxation of £6.11 million (FY23:
£6.17 million). Cash used in Operations decreased by £0.73 million in the
year to £3.36 million (FY23: £4.09 million). The Group received an R&D
tax credit inflow of £0.40 million in the year (FY23: £0.43 million). Net
cash used in operating activities decreased to £2.96 million (FY23 £3.66
million).
Capital expenditure in the year, excluding the IFRS 16 adjustments, was £0.02
million (FY23: £0.20 million). The Group invested in a scanning electron
microscope, acquired under lease arrangements, for the nanomaterial business,
to be able to bring certain analysis services in house to improve quality
control and reduce time taken to meet customer requirements.
Capital Structure and Funding
At 30 June 2024 the Company had 1,798,462,051 ordinary shares in issue (2023:
785,852,475). No options were exercised into ordinary shares during the year
(FY23: Nil).
The Group's total borrowings at the year-end were £1.41 million (2023: £1.37
million), of which £1.23 million was in the UK and the balance in the Group's
US subsidiaries. The UKRI Innovation loan has a quarterly liquidity covenant
with which the Group has been in full compliance through the reporting
period. There are no financial covenants extant in respect of the UK bounce
back loan of £0.02 million (FY23: £0.03 million) or the Group's US
borrowings.
Post Balance Sheet Event
On 14 November 2024, the Company raised £3.1 million (gross) through a £2.6m
placing, retail offer and subscription of 1,960,633,907 new Ordinary Shares at
0.1326 pence per share and the issue of a £500,000 convertible loan note with
a 10% coupon and 5 year tenor. The funds raised will be principally used to
fund the general working capital needs of the business. As part of this
process, the Company's share capital was restructured to in effect reduce the
nominal value of each ordinary share from 0.1 pence to 0.01 pence.
Key Performance Indicators
The Group has historically reported financial metrics of revenues, gross
profit margin, adjusted operating loss, cash position and other metrics as its
key performance indicators and these are set out below.
FY24 (£m) FY23 (£m)
Revenue 4.82 4.30
Gross profit margin 58% 56%
Adjusted operating loss (3.16) (3.49)
Cash position 1.72 1.38
Borrowings 1.41 1.37
During the year under review, management also used a UK sales tracker, as a
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. For the US
business, specific tooling related pipeline analysis has also been introduced
to monitor the health and progress of opportunities through the sales funnel.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2024
Year ended Year ended
30 June 2024 30 June 2023
Note £'000 £'000
REVENUE 3 4,820 4,301
Cost of sales (2,008) (1,911)
Gross profit 2,812 2,390
Other operating income 376 377
Adjusted administrative expenses (6,346) (6,260)
Adjusted operating loss (3,158) (3,493)
Adjusting administrative items:
Share based payment expense (25) (589)
Depreciation and amortisation (1,514) (1,552)
Restructure costs (34) (531)
Impairment (1,227) (2,672)
(2,800) (2,672)
Total administrative expenses (9,146) (8,932)
LOSS FROM OPERATIONS (5,958) (6,165)
Finance costs (393) (407)
LOSS BEFORE TAXATION 4 (6,351) (6,572)
Taxation 241 407
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (6,110) (6,165)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations 52 (341)
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension schemes 261 702
TOTAL COMPREHENSIVE LOSS FOR THE YEAR FROM CONTINUING OPERATIONS
(5,797) (5,804)
Loss for the year attributable to:
Owners of the parent (6,110) (6,165)
Total comprehensive loss attributable to:
Owners of the parent (5,797) (5,804)
Loss per share attributable to owners of the Parent
Basic (pence) 5 (0.40) (0.80)
Diluted (pence) 5 (0.40) (0.80)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2024
Company Registration No. 07228939 Note 30 June 30 June
2024 2023
£'000 £'000
ASSETS
Non-current assets
Goodwill - 1,059
Intangible assets 1,338 1,386
Property, plant and equipment 4,867 5,915
6,205 8,360
Current assets
Inventories 1,670 1,733
Trade receivables 1,088 564
Other receivables 376 446
Corporation tax 251 406
Cash and bank balances 1,717 1,378
5,102 4,527
TOTAL ASSETS 11,307 12,887
LIABILITIES
Non-current liabilities
Bank loans 6 (1,392) (1,363)
Pension Obligation (304) (577)
Other payables (1,558) (1,962)
(3,254) (3,902)
Current liabilities
Bank loans 6 (14) (11)
Trade and other payables (2,186) (1,899)
Deferred income (178) (103)
(2,378) (2,013)
TOTAL LIABILITIES (5,632) (5,915)
TOTAL NET ASSETS 5,675 6,972
EQUITY
Capital and reserves attributable to equity holders of the parent
Share capital 16,730 15,717
Share premium account 35,374 31,912
Share-based payment reserve 408 833
Foreign exchange reserve (301) (353)
Retained losses (46,536) (41,137)
TOTAL EQUITY 5,675 6,972
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2024
Share-based payment reserve
£'000 Foreign Exchange Reserve
Share Share premium £'000 Retained losses Total Equity
capital £'000 £'000 £'000
£'000
At 30 June 2022 10,207 31,912 244 (12) (35,303) 7,048
Comprehensive loss for the year
Loss for the year - - - - (6,165) (6,165)
Other comprehensive income/(loss) - - - (341) 702 361
10,207 31,912 244 (353) (40,766) 1,244
Contributions by and distributions to owners
Recognition of share-based payments - - 39 - - 39
Share based payment charges - lapsed options - - (45) - 45 -
Issue of ordinary share capital 1,702 3,401 - - - 5,103
Transaction costs in respect of share issues - (309) - - - (309)
At 30 June 2023 15,717 31,912 833 (353) (41,137) 6,972
Comprehensive loss for the year
Loss for the year - - - - (6,110) (6,110)
Other comprehensive income/(loss) - - - 52 261 313
15,717 31,912 833 (301) (46,986) 1,175
Recognition of share-based payments - - 25 - - 25
Share based payment charges - lapsed warrants - - (450) - 450 -
Issue of ordinary share capital 1,013 4,050 - - - 5,063
Share issue cost - (588) - - - (588)
At 30 June 2024 16,730 35,374 408 (301) (46,536) 5,675
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2024
Year Year
ended ended
30 June 30 June
2024 2023
£'000 £'000
Cash flow from operating activities
Loss after taxation (6,110) (6,165)
Adjustments for:-
Amortisation and impairment of intangible assets 1,614 335
Depreciation and impairment of property, plant and equipment 1,128 1,747
Share-based payment charge 25 589
Finance costs 393 407
Pension: employer contribution (161) (180)
Taxation (241) (407)
Operating cash flow before working capital changes (3,352) (3,674)
Decrease/(increase) in inventories 63 (218)
(Increase)/decrease in trade and other receivables (454) 304
Increase/(decrease) in payables and deferred income 383 (503)
Cash used in operations (3,360) (4,091)
Income tax received 397 427
Net cash used in operating activities (2,963) (3,664)
Cash flow used in investing activities
Purchase of plant and equipment (16) (203)
Purchase of intangible assets (503) (421)
Net cash used in investing activities (519) (624)
Cash flow from financing activities
Finance costs (174) (209)
Finance costs - lease liability (95) (116)
Payment of lease liability 42 (261)
Proceeds from issue of share capital (446) 5,510
Share capital issues costs 5,063 (371)
New bank loans raised (588) -
Repayments of borrowings (10) (53)
Net cash flow from financing activities 3,792 4,500
Net increase in cash and cash equivalents 310 212
Effects of exchange rates changes 29 (20)
Cash and cash equivalents at beginning of the financial year 1,378 1,186
Cash and cash equivalents at end of the financial year 1,717 1,378
Abbreviated notes to the final results statement
1. General information
Haydale Graphene Industries plc is a public limited company incorporated and
domiciled in England and Wales and quoted on the AIM Market, hence there is no
ultimate controlling party.
2. Significant 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 as adopted by the UK (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.
The financial information contained in this announcement does not constitute
the Group's statutory accounts for the year ended 30 June 2024 but is derived
from those accounts which have been audited and which will be filed with the
Registrar of Companies in due course.
The auditors' report on the Annual Report and Financial Statements for the
year ended 30 June 2024 was unqualified but contain a matter of emphasis in
respect to a material uncertainty relating to going concern. The auditors'
report did not contain a statement under s498(2) or s498(3) of the Companies
Act 2006.
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 the 2024 financial statements to the end of June
2026. 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 in the Annual Report may have on these estimates and in
particular the speed of adoption of new technology. The forecasts may also
substantively change as a result of actions arising out of the Review
As part of this review the directors have considered several scenarios based
on various revenue, cost and funding sensitivities.
Therefore, after due consideration of the forecasts prepared, the Group's
current cash resources after the equity fund raise in November 2024 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 and for this reason the financial statements have
been prepared on the going concern basis.
Whilst the directors believe that the going concern basis is appropriate at
the date of this report, the Board is mindful that, notwithstanding the
actions being taken to refocus the Company's activities pursuant to the
Review, the net proceeds of the fund raise may be insufficient to fund the
cash requirements of the Group through to a position where it is able to fund
itself from its own cashflow within 12 months of the date of this report. The
Board continues to pursue the possibility of securing additional debt
facilities to provide additional liquidity. In the event that such debt
facilities are not available or are unavailable in sufficient quantum it is
very likely that the Group would need to raise additional equity funding. In
the current economic conditions, there is inherent uncertainty over the
whether such future equity or debt funding would be available. Formally,
these circumstances represent a material uncertainty that casts significant
doubt upon the Company and Group's ability to continue as a going concern and
therefore it may be unable to realise its assets and discharge its liabilities
in the normal course of business. Nevertheless, after making enquiries and
considering the uncertainties described above, the Directors have a reasonable
expectation that the Company and Group have adequate resources to continue in
operational existence for the foreseeable future. For these reasons they
continue to adopt the going concern basis of accounting in preparing the
annual financial statements.
3. 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 (focusing on functionalisation of nano
materials, high performance ink & master batches, elastomers and the
composites market in Europe);
· North America (focusing on SiC & blank products for
tooling); and
· Asia Pacific (focusing on sales to the Asian markets)
2024 Adjustments, Central & Eliminations
UK & Europe North America Asia Pacific £'000
£'000 £'000 £'000 Consolidated
£'000
REVENUE 1,375 3,294 151 - 4,820
Cost of sales (722) (1,209) (77) - (2,008)
Gross profit 653 2,085 74 - 2,812
Other operating income 376 - - - 376
Adjusted administrative expenses (2,162) (2,016) (292) (1,876) (6,346)
Adjusted operating loss (1,133) 69 (218) (1,876) (3,158)
Administrative expenses
Share based payment expense (12) (21) (2) 10 (25)
Depreciation & amortisation (702) (658) (27) (127) (1,514)
Restructuring cost (16) - (18) - (34)
Impairment cost - - - (1,227) (1,227)
(730) (679) (47) (1,344) (2,800)
Total administrative expenses (2,892) (2,695) (339) (3,220) (9,146)
OPERATING LOSS (1,863) (610) (265) (3,220) (5,958)
Finance costs (393)
LOSS BEFORE TAXATION (6,351)
Taxation 241
LOSS AFTER TAXATION (6,110)
Additions to non-current assets 650 6 25 - 681
Segment assets 3,958 5,904 230 1,215 11,307
Segment liabilities (2,527) (2,699) (69) (337) (5,632)
2023 Adjustments, Central & Eliminations
UK & Europe North America Asia Pacific £'000
£'000 £'000 £'000 Consolidated
£'000
REVENUE 786 3,190 325 - 4,301
Cost of sales (467) (1,231) (213) - (1,911)
Gross profit 319 1,959 112 - 2,390
Other operating income 377 - - - 377
Adjusted administrative expenses (2,270) (1,836) (538) (1,616) (6,260)
Adjusted operating loss (1,574) 123 (426) (1,616) (3,493)
Administrative expenses
Share based payment expense (34) (43) (1) (511) (589)
Depreciation & amortisation (681) (693) (48) (130) (1,552)
Impairment - (531) - - (531)
(715) (1,267) (49) (641) (2,672)
Total administrative expenses (2,985) (3,103) (587) (2,257) (8,932)
OPERATING LOSS (2,289) (1,144) (475) (2,257) (6,165)
Finance costs (407)
LOSS BEFORE TAXATION (6,572)
Taxation 407
LOSS AFTER TAXATION (6,165)
Additions to non-current assets 658 - 80 - 738
Segment assets 3,607 6,447 312 2,521 12,887
Segment liabilities (2,391) (3,138) (99) (287) (5,915)
Geographical information
All revenues of the Group are derived from its principal activities. The
Group's revenue from external customers by geographical location are detailed
below.
2024 2023
£'000 £'000
By destination
United Kingdom 965 563
Europe 128 813
United States of America 2,135 1,822
China 261 180
Thailand 66 61
South Korea 84 145
Japan 901 678
Rest of the World 280 39
4,820 4,301
During 2024, £1.23 million (26%) (2023: £0.95 million (22%)) of the Group's
revenue depended on a single customer. During 2024 £0.90 million (19%) (2023:
£0.68 million (16%)) 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.
Dis-aggregation of revenues
The split of revenue by type: 2024 2023
£'000 £'000
Services 899 387
Reactor rental 124 124
Products (Goods) 3,797 3,790
4,820 4,301
North America
2024 UK & Europe £'000 Asia Pacific £'000 Total
£'000 £'000
Services 878 - 21 899
Reactor rental 124 - - 124
Products (Goods) 373 3,294 130 3,797
1,375 3,294 151 4,820
2023 North America
UK & Europe £'000 Asia Pacific Total
£'000 £'000 £'000
Services 303 - 84 387
Reactor rental 124 - - 124
Products (Goods) 359 3,190 241 3,790
786 3,190 325 4,301
Services and reactor rental revenues are recognised over time, whereas goods
and reactor sales are recognised at a point in time.
4. Loss before taxation
Loss before taxation is arrived at after charging:
2024 2023
£'000 £'000
Amortisation of intangibles 387 335
Impairment of intangibles 1,227 -
Depreciation of property, plant and equipment 1,128 1,216
Impairment of tangibles - 531
Foreign Exchange 52 105
Restructuring costs 34 -
The service fees of the Group's auditor, Crowe U.K. LLP are analysed below:
Fees payable to the Company's auditor for the audit of the Group's
financial statements
65 62
There are no other fees payable to the Company's auditors and its associates
for other services (2023: £Nil).
5. Loss per share
The calculations of loss per share are based on the following losses and
number of shares:
2024 2023
£'000 £'000
Loss after tax attributable to owners of Haydale Graphene Industries Plc
(6,110) (6,165)
Weighted average number of shares:
- Basic and Diluted 1,534,906,164 729,239,439
Loss per share:
Basic (pence) and Diluted (pence) (0.40) (0.80)
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 2024, there were 208,750,000 (2023: 242,033,392) options and
warrants outstanding as detailed in note 17. All of the options are
potentially dilutive.
Post year end 1,960,633,907 of new Ordinary Shares were issued on 14 November
2024, these Ordinary Shares are dilutive. As part of this process, the
Company's share capital was restructured to in effect reduce the nominal value
of each ordinary share from 0.1 pence to 0.01 pence.
6. Bank loans
2024 2023
£'000 £'000
Bank loans 1,406 1,374
The borrowings are repayable as follows:-
- within one year 14 11
- in the second year 593 605
- in the third year and above 799 758
1,406 1,374
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.
2024 2023
Average interest rates paid 6.87% 6.85%
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 had a
repayment holiday and did not accrue interest during the first 12 months.
Following the initial 12 months, interest has been charged at 2.5% p.a. and
the loan and interest are repayable 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 fully drawn down this
facility. The loan has a repayment holiday until July 2024 and is fully
repayable by July 2026. Interest will be charged at 7.4% p.a. for the
period of the loan. For the initial 36 months interest will be paid at 3.7%
p.a. and for the final 24 months interest with be paid at 10.7% p.a. There
are no penalties for early repayment. During the year HCS agreed an extension
to the loan period of two years, being an additional year to the repayment
holiday period (to July 2025) and an additional year to the repayment period.
This means the loan will be fully repaid by July 2028.
During the year ended June 2022, the US operation secured a loan through the
COVID-19 Economic Injury Disaster Loan scheme of $200,000. The loan is for a
period of 30 years with a fixed interest rate of 3.75% and deferred repayments
for the first two years. At the year end the balance on the loan was
£173,000.
(#_ftnref1) (1) Based on calculations submitted to HMRC for the R&D tax
credit.
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