Corporate News

Trading update and Notice of results

30 January 2020

Haydale (AIM: HAYD), the global advanced materials group, announces the following update on trading for the six months ended 31 December 2019 ("H1-2020") as well as the prospects of the Group for the remainder of the current financial year ending 30 June 2020 ("FY-2020"). The Board also announces the anticipated date of announcement of the Company's unaudited interim results for H1-2020 will be 27 February 2020.

Key Highlights

During  H1-2020 the Company has:

  • launched a graphene-enhanced prepreg material for lightning-strike protection, utilising functionalised nanomaterials to improve electrical conductivity. The material was developed in collaboration with Airbus UK, BAE Systems, GE Aviation and Element Materials Technology Warwick Ltd, within the NATEP-supported GraCELs 2 project;
  • resolved teething issues to commission US blanks line; sufficient early strong demand supports a 7 day double shift pattern from early 2020;
  • taken the decision to close its Taiwan facility and relocate manufacturing and R&D capacities within the Group;
  • raised a further £450,000 via a subscription from two of our larger shareholders;
  • reduced operating costs by circa £900,000/22% over the comparable six months to December 2019.

Asia Pacific Region

As previously announced, the Board has been reviewing the Group's footprint in the APAC region, and has now decided to close the Group's loss-making manufacturing facility in Taiwan and move capacity to its APAC Knowledge Centre in Bangkok, Thailand and Ammanford, UK.

The relocation of the Group's Taiwan operations will lead to a revenue shortfall of approximately £410,000 for H2-2020 but will have a positive effect on Group EBITDA and reduce the Group's cash burn through H2-2020 and into FY-2021.

US Operation

The Group's US business unit, HCT, experienced a softer start to the financial year than anticipated.   Sales of SiC whiskers and blends in H1-2020 were disappointing. The business also experienced some initial teething issues with the new blanks production which delayed commissioning until November 2019. Since then, strong initial demand has given the Directors confidence to move to a double shift pattern from February 2020.  

As a result, HCT's sales for H1-2020 are materially lower than H1-2019. While the Directors are now encouraged by the demand for HCT's blanks, the on-going slowdown in the aerospace industry means that business in H2-2020 will not recover sufficiently in H2-2020 to make up H1-2020's shortfall. 

UK Operation

The UK has made meaningful strides towards commercialising its proprietary technology and to delivering on some of the previously announced collaborations.  

Excluding grant income, the UK operations have shown a small rise in sales on a like-for-like basis however, due to the longer than anticipated lead times, it has fallen short of Directors' expectations for H1-2020.  The Directors expect the year-on-year progress to continue in H2-2020 but the Board does not expect the UK operations to recoup this shortfall in H1-2020 by the end of June 2020.

Financial Outlook

Overall, the Directors are disappointed that the Group's sales for FY-2020 are now expected to be below the market's expectation for the full year, as a result of the weak first half.   However, the Board remains confident that the annualised revenue position at the year-end will demonstrate the significant progress being made by the Group.   

Cost control remains a focus for the Directors and the Group has reduced costs by £900,000/22% over the comparable 6 months to December 2019. 

The Group cash position was £2.7m at 31 December 2019. 

Summary                                                                                                                            

Keith Broadbent, CEO of Haydale, said: "Whilst the decision to close Haydale Taiwan, the later than expected commissioning of the blanks line and the slowdown in the aerospace sector in the US has affected our short-term revenues, the Directors remain committed to delivering the commercial priorities that we have set the Group.  The new global sales team is already delivering positive results with a strong pipeline of profitable opportunities being actively pursued. This progress, together with the significant opportunities and levels of international interest that we have received for our proprietary technology, gives us confidence in the longer-term prospects of the Group."

For further information:

Haydale Graphene Industries plc

 

Keith Broadbent, CEO

Tel: +44 (0) 1269 842 946

Gemma Smith, Head of Marketing

www.haydale.com

 

 

Arden Partners plc (Nominated Adviser & Broker)

 

Ruari McGirr / Paul Shackleton / Ben Cryer

Tel: +44 (0) 20 7614 5900

 

 

Notes to Editors

Haydale is a global technologies and materials group that facilitates the integration of graphene and other nanomaterials into the next generation of commercial technologies and industrial materials.  With expertise in graphene, silicon carbide and other nanomaterials, Haydale is able to deliver improvements in electrical, thermal and mechanical properties, as well as toughness.  Haydale has granted patents for its technologies in Europe, USA, Australia, Japan and China and operates from six sites in the UK, USA and the Far East.

For more information please visit: www.haydale.com

Twitter: @haydalegraphene