TIDMHAYD
RNS Number : 1252E
Haydale Graphene Industries PLC
02 November 2015
Haydale Graphene Industries plc
("Haydale", the "Group" or the "Company")
Preliminary Results for the Year Ended 30 June 2015
Haydale Graphene Industries plc (AIM: HAYD), the Company focused
on enabling technology for the commercialisation of graphene and
other nano materials, is pleased to announce its preliminary
results for the year ended 30 June 2015.
Operational Highlights (pre and post year-end):
-- Acquisition of EPL Composite Solutions Ltd (renamed Haydale
Composite Solutions Ltd) to provide the Group with an immediate
route to market in the key composite markets;
-- Scale up of functionalisation process confirmed with design,
manufacture and commissioning of our HT200 which, at 8 times the
capacity of our HT60 R&D reactor, can deliver commercial
volumes;
-- Agreements signed with world leading resin companies,
Huntsman Advanced Materials and Scott Bader, to jointly develop
graphene enhanced resins in their respective markets;
-- Sale of HT60 R&D reactor to UK based, Centre of Process
and Innovation ("CPI"), following lengthy public tender
process;
-- Key processing patent granted in China and agreed to be
granted in Europe on 4 November 2015;
-- Roll out of Haydale Centres of Excellence commenced with set
up of Haydale Technologies Inc. in Buffalo, USA and Haydale
Technologies (Korea) Ltd in Seoul, South Korea; and
-- Regular repeat sales of conductive ink to key Korean and Taiwanese customers.
Financial Highlights:
-- Group income up more than 10 fold to GBP1.48 million (2014: GBP0.13 million);
-- Doubling of like-for-like income (Group income excluding HCS)
of GBP0.30 million (2014: GBP0.13 million);
-- Haydale Composite Solutions traded ahead of expectations at income and profit levels;
-- Group adjusted* EBITDA loss of GBP2.38 million (2014: GBP1.96 million loss);
-- Significant capital expenditure of GBP1.18 million (2014: GBP0.15 million);
-- Cash at period end of GBP2.05 million (2014: GBP5.68 million);
* adjusted for share based payment charges and loss on disposal
of property, plant and equipment
Ray Gibbs, CEO at Haydale, commented:
"I am extremely pleased with these results that demonstrate
positive movement in income and setting up the building blocks for
continued commercialisation of graphene and other nano materials
into our core markets of composites and conductive inks. Crucially
we have delivered on a number of the strategic aims we set
ourselves last year when we listed on AIM. The completed tasks are
fundamental to our future growth such as securing a first class
supply chain, establishing representation in the 3 key markets of
Europe, USA and the Far East, conditioning the market and
positioning ourselves strategically as using the enabling
technology to provide industrial solutions, Pleasingly a number of
key strategic collaboration agreements and customer engagement are
already generating sales in our target markets.
By far the most significant event in the year was the
acquisition of EPL Composite Solutions as it was fundamental in
opening the composites market where the specialist expertise of
Gerry Boyce and his team could be brought to bear. The composites
business is fully integrated into the Group, performing ahead of
our expectations and has a number of exciting opportunities in the
pipeline.
The fundraising announced today gives us the financial backing
to invest in staff and infrastructure to exploit the tremendous
opportunity that firstly graphene and then other nano materials
presents. We can now rapidly develop Haydale into a global
business. That we have achieved so much in a relatively short
period of time is down to the dedication and hard work of all our
staff across the group and I would like to take this opportunity to
thank everyone of them.
My aim is to be the leader in functionalised graphenes and other
nano particles, leveraged through IP and best in class commercial
relationships in our defined markets of composites and inks. We
have independent verification that our patented technology works;
we have sales channels and satisfied customers placing repeat
orders and now we have the funds to accelerate our
commercialisation strategy. Haydale is in a very fortunate position
and I am excited with the opportunities we have to deliver value
for our shareholders."
For further information, please contact:
Haydale Graphene Industries +44 (0) 1269 842
plc 946
John Knowles, Chairman
Ray Gibbs, Chief Executive
Officer
Cairn Financial Advisers LLP
(Nomad) +44 (0) 20 7148 7900
Tony Rawlinson
Emma Earl
Cantor Fitzgerald Europe (Broker) +44 (0) 20 7894 7000
David Foreman
David Banks
Will Goode
Hermes Financial PR
+44 (0) 7889 153
628
Trevor Phillips +44 (0) 7979 604
Chris Steele 687
About Haydale
Haydale has developed a patented scalable plasma process to
functionalise graphene and other nanomaterials. This enabling
technology can provide Haydale with a rapid and highly
cost-efficient method of supplying tailored solutions to enhance
applications for both raw material suppliers and product
manufacturers.
Functionalisation is carried out through a low-pressure plasma
process that treats both mined, organic fine powder and other
synthetically produced nanomaterial powders, producing high-quality
few layered graphenes and graphene nanoplatelets. The process can
functionalise with a range of chemical groups, with the level of
functionalisation tailored to the customer's needs. Good dispersion
improves the properties and performance of the host material and
ensures the final product performs as specified.
The Haydale plasma process does not use wet chemistry, nor does
it damage the material being processed; rather, it can clean up any
impurities inherent in the raw material. The technology is a low
energy user and most importantly environmentally friendly. The
Haydale process is an enabling technology, allowing the Company to
work with a raw material producer who seeks to add value to the
base product and tailor the outputs to meet the target applications
of the end user.
Haydale, based in South Wales and housed in a purpose-built
facility for processing and handling nanomaterials, is facilitating
the application of graphenes and other nanomaterials in fields such
as inks, sensors, energy storage, photovoltaics, composites, paints
and coatings.
www.haydale.com
CHAIRMAN'S STATEMENT
I am very pleased to present the Company's first full year
results to 30 June 2015 as a public company. I am also pleased to
report that we have had a very successful year in implementing the
strategy outlined in the 2014 Annual Report and Accounts. The
Haydale team continues to work tirelessly towards making the Group
an acknowledged leader with both producers and end users who
require product enhancements through using graphene and other
advanced nanomaterials. Our commercialisation strategy of engaging
in partnerships and collaborations with world renowned and
strategically important companies is starting to pay off in gaining
early sales particularly of our graphene inks in the Far East and
resin and composite products in Europe. The focus will be to
establish Haydale as a leader in the emerging graphene market and
is already creating opportunities to both license or sell our
plasma technology to functionalise graphene and other nanomaterials
for producers. Added to this we have also made our first successful
acquisition which has given us early access to more customers in
our target resin and composite markets.
Fundraising
The financial year ended 30 June 2015 was an exciting
development phase that has set us on course for significant growth.
We have started generating sales and by investing in dedicated
centres of excellence we are opening export growth potential. Your
Board therefore is mindful of the need for continued discrete and
focussed investment to accelerate our progress. This is why we have
announced today a conditional placing for GBP5.6 million, GBP1.0
million of which has been conditionally placed subject to clawback
to satisfy subscriptions under an open offer for GBP1.0 million
("fundraising"). The open offer will allow all existing
shareholders to participate. These funds will be used to continue
to grow the composites and ink operations and increase our plasma
reactor numbers to allow us to swiftly move into overseas locations
and serve our international customers.
I reported last year that a key part of our strategy was to
consider suitable acquisitions where these provide access to sales,
with complementary products in our target markets of inks/coatings,
composites and energy harvesting. This year saw the first
acquisition when on 1 November 2014 we acquired EPL Composite
Solutions Limited, a specialist design, development and
commercialisation house in advanced composite polymer materials.
The consideration comprised a mixture of cash and shares and has
been a great success, with full integration into the Group. Two
business managers have been elevated to directors of the newly
named Haydale Composite Solutions Limited ("HCS"), while the
Managing Director, Gerry Boyce has joined the senior Haydale team
as part of the operating board of Haydale Limited. All of the
post-acquisition income reported in this fiscal year is from
traditional composite work and in this current year we expect to
see sales inroads into graphene and other nanomaterial filled
resins and composites. As the business has performed above the
level set under the earn-out we have agreed a discounted early full
and final settlement with the former shareholders. I'm delighted to
report that Mr Boyce intends to reinvest GBP300,000 of his sale
proceeds into new shares in Haydale
(MORE TO FOLLOW) Dow Jones Newswires
November 02, 2015 02:00 ET (07:00 GMT)
in addition and separate to the fundraising announced today.
There still remains today a lack of market understanding over
the performance of and use of graphene and other new developing 2D
nanomaterials, such as Boron Nitride. Having received positive
verification of the functionalisation process in February 2014 from
the National Physical Laboratory we have particularly sought third
party verification of our claims in the performance improvements we
can make to, for example, epoxy and polyester resins and carbon
fibre structures. Our aim is to use our unique and patented
technology to create understanding and acceptance of graphene and
other nanomaterials by commercialising them as quickly and
effectively as possible.
Our assessment is that the market is eagerly awaiting for the
first substantive application that capitalises on the outstanding
properties of graphene. Our patent has now been approved for grant
which is set for 4 November 2015 at the European Patent Office.
Other territories are expected to follow. Crucially the patent is
for the plasma functionalisation treatment of carbon and other
nanomaterials using our specially fitted plasma reactors. They
provide the enabling technology which delivers those improvements
required for commercialisation. We are well placed in the market
where we have access to a multitude of materials, coupled with a
large variety of chemical functionalisations. This enables us to
deliver the required solution to the end users, and is the Haydale
speciality.
As is normal with a new technology, gaining market acceptance is
often a long and difficult task and there are many challenges to
overcome. We have now set ourselves to meet these barriers to entry
that every new materials replacement offering has. We have
increased our technical team, brought on scaled production
capability, obtained a quality, consistent supply chain and
invested in overseas sales representation to open markets in the
Far East and North America. This progress is further outlined in
the Strategic Report.
Financial results
Income for the year ended 30 June 2015 amounted to GBP1.48
million (2014: GBP0.13 million) of which GBP1.18 million was from
HCS. Adjusted EBITDA (EBITDA adjusted for share-based payment
charges of GBP0.26 million (2014: GBP0.07 million) and loss on
disposal of property, plant and equipment GBP0.02 million (2014:
Nil)) was a loss of GBP2.38 million (2014: GBP1.97 million). Our
cash outflow from operating activities was GBP2.73 million (2014:
GBP2.11 million) and we invested heavily in our reactor capacity
and ink manufacturing capabilities during the year, which totalled
GBP1.18 million (2014: GBP0.15 million). We ended the year with
cash of GBP2.05 million (2014: GBP5.68 million).
Operational highlights
During the year under review, the operational highlights for the
Group can be summarised as follows:
-- A collaboration agreement with Swansea University and its
centre for printing and coating was announced in July 2014,
capitalising on the growing technical and commercial ties of the
parties. This was further strengthened in February 2015 with an
announcement of a 5 year exclusive pipeline agreement for the
commercialisation of research projects. The first being a
diagnostic pressure sensor;
-- In July 2014 we announced two overseas marketing agreements
with focussed agents in the USA with InVentures and the Far East
with planarTECH. Since then we have announced the opening of a USA
operation in New York State and a sales office in Seoul, South
Korea;
-- A long term supply agreement was signed with Danish based
plasma specialists, Tantec A/S. To date they have supplied six HT60
reactors (for supply of R&D quantities) and in March 2015 an
HT200 which, at 8 times the capacity of the HT60, can now deliver
commercial quantities. Accordingly, we have delivered on our target
of scaling up our process;
-- Our ink manufacturing capability was established at the end
of December 2014 and with a capability to make over 75kgs per week
we are starting to seed the market and receive repeat orders;
-- The collaboration with extreme sailing team, Alex Thomson
Racing, in February 2015, brings together our composite, energy and
ink/coatings capabilities in one project to use the "graphenes" in
reducing weight, increasing boat strength, creating barrier films
and managing thermal heat issues;
-- On marketing and promotion we now have a dedicated and
focussed aerospace unit to generate sales and funded research, with
immediate success in the recently announced National Aerospace
Technology Exploitation Programme "lightning strike" grant
award;
-- Being selected in February as a FIReStarter 2015 company was
proof that globally we are being recognised as a future technology
with potential. The 13(th) Annual event took place between 6-9
October in Park City, Utah, USA where we showcased and presented to
a very influential global audience;
-- Significantly we won the extensive tender process to supply
an HT60 reactor to UK based, Centre of Process and Innovation
("CPI"), in June 2015. Delivery is expected in November 2015. The
reactor will be a key enabler for CPI customers in the electronics
and engineering industries and is expected to complement their
state of the art capability for characterisation and formulation of
graphene products;
-- We have made significant progress with our intellectual
property portfolio, announcing in June 2015 the successful
application for grant of a patent in China. Crucially we have now
received the irreversible decision to grant one of our key process
patents through the European Patent Office. This patent is not only
for carbon but critically other nanomaterials. Other countries are
processing the grant applications; and
-- Aside from our collaboration with AMG Mining we have added to
the supply chain capability by announcing collaborations with Talga
Resources (who have a graphite mine in Sweden) and UK based
Versarien plc who, through their subsidiary 2D-Tech, are a producer
of graphene nanoplatelets.
Outlook
The year's results are consistent with our projections and with
market expectations where a significant portion of income has been
derived from the HCS acquisition. We expect revenues to grow
significantly in the current financial year in our global markets.
We have good visibility on HCS orders and the current order book
underpins HCS's projections for the year to 30 June 2016 and is in
excess of the income declared for the 2015 financial year.
Additionally, after over a year of sales and marketing effort we
now have 10 key accounts in South Korea many of which are
significant corporations with, individually, annual sales of many
hundreds of millions of US$. Most are now paying for repeat samples
in assessing product substitution and, with positive initial
results on known programmes, we anticipate the commencement of
strong sales growth from this region.
The Far East is also producing additional strong leads in other
countries, notably Taiwan, where one specific ink manufacturer is
keen to use our product in key applications such as screen printing
our ink in producing a series of bio-medical sensors for customers
with known demand.
We have also now established ourselves in North America. The aim
is to create at least one centre of excellence on the East Coast
and take advantage of a fragmented and largely untapped market. At
least two of our plasma reactors are under consideration in
strategic US locations. Having an R&D reactor will allow us to
promote our technological solution to a significant and expectant
market as a cost effective way to functionalise graphene and other
2D materials in a controlled and reproducible way. We now have a
supply chain and a scalable process to cope with initial demand.
These initiatives, together with other development opportunities
under consideration, lead the Board to believe that the Group is in
a strong position to grow its operations, both at home and
overseas, and to deliver its business plan for the benefit of all
shareholders. In support of these strategic aims we have, since the
year end:
-- Announced the opening of a USA presence, with a subsidiary
company, Haydale Technologies, Inc. and the intention to introduce
initially an R&D reactor into the North American market, based
in New York State;
-- Agreed strategic collaborations with raw material producers
Talga Resources and Versarien plc;
-- Agreed to collaborate with two major resins companies, Scott
Bader and Huntsman, who will supply respectively dedicated
polyester and epoxy resins for HCS to run a series of programs for
enhancement of their thermoset products;
-- Received the first grant award from NATEP in the aerospace
unit, to produce a graphene coating for lightning strike
protection. Key consortium members are Airbus, BAE, GKN and Cobham;
and
-- Received confirmation from the EPO of their decision to grant
key functionalisation process patent number EP2649136B relating to
carbon and other nanomaterials, which will be formally granted on 4
November 2015.
I would like to thank the staff, the Board, and the Group's
external advisers for their hard work over the last year in
positioning the Group for significant growth over the coming
years.
This will be a very important year for Haydale in our drive for
significant sales following the investments made last year in
overseas markets, equipment, and personnel. With the financial
strength provided by our public listing, coupled with support of a
strong Board providing a wealth of experience across a wide skill
spectrum, the Group is confident of having a successful year. I
look forward to positively reporting on the outcomes of our
focus.
John Knowles
Chairman
30 October 2015
STRATEGIC REPORT
The directors present their Strategic Report for the year ended
30 June 2015.
PRINCIPAL ACTIVITIES
(MORE TO FOLLOW) Dow Jones Newswires
November 02, 2015 02:00 ET (07:00 GMT)
Haydale Graphene Industries Plc is the AIM listed company with a
number of subsidiaries, the principal ones being Haydale Limited
("Haydale") and Haydale Composite Solutions Limited (("HCS")
formerly EPL Composite Solutions Limited). Haydale is the main
R&D operation which also sources, handles and processes
nanomaterials with a suite of prototyping and analytical equipment,
to facilitate the commercial application of, initially, graphene
and other carbon materials for customers worldwide.
HCS is a recognised composite R&D and testing house, that
spans the whole development cycle. Based in Loughborough, customers
include significant corporations such as National Grid, SSE,
Eirgrid, Chevron, Anglian Water, Severn Trent Water, Yorkshire
Water and 3M.
HCS has developed a reputation for delivering innovative
solutions in the commercial applications of advanced polymer
composite materials working with global companies over more than 20
years. Its business is focused on a range of market sectors
including pipe lining for the oil, gas and water industries,
infrastructure for electricity and energy sectors plus the marine
and transportation markets. HCS also works with OEMs and end-users
to develop and provide composite solutions with demonstrable clear
technical, economic and environmental benefits over existing
structures currently manufactured in traditional materials such as
steel, aluminium, wood or concrete.
Commercialising Graphene
Since 2013, the Group's management has been working hard on
positioning Haydale as a provider of solution based enabling
technology to commercialise graphene and other nanomaterials. Now
strategically well positioned, Haydale can source the most
appropriate graphene and other nanomaterials feedstock from
suppliers that, in conjunction with its unique proprietary plasma
treatment (known as functionalisation), produces a tailored
customer focussed solution. This enables the nanoparticles (e.g.
graphene) to disperse uniformly in the target material and, most
importantly, uniform dispersion is essential in enabling the
significant properties of graphene and other nanomaterials to be
realised.
Followers of the graphene story will know that it has many
vaunted properties (e.g. increasing strength and stiffness, highly
conductive, impermeable to gases, to name but a few) but as an
inert substance it does not mix readily with other materials.
Furthermore, producing a consistent, commercially available single
layer of graphene (where 3 million sheets stacked together are only
1 millimetre thick) is proving a significant technical challenge
and general observers perceive as not commercially viable
currently. Yet almost every day, new possible applications are
announced as potential new uses. There has been an amazing amount
of hype generated by this material, often arising from passionate
researchers excited by its properties. The challenge is how to
translate these properties measured in the laboratory into
commercial applications, especially as graphene is almost inert.
This is where Haydale comes in with its unique plasma
functionalisation technology.
Haydale is focussed not on the technically challenging single
sheet graphene but stacks of graphene sheets in the range of 5 to
100, generally acknowledged, depending on the stacks of sheets, as
few layered graphene ("FLGs") or graphene nanoplatelets ("GNPs").
Both FLGs and GNPs are generally produced by a number of
manufacturers from organic mined graphite. These materials can be
produced by a 'top down' production method, involving the
exfoliation of mined graphite to produce flakes. Alternatively,
they can be produced by a 'bottom up' method, such as chemical
vapour deposition from a carbon source such as methane. The bottom
up (synthetic) process generally uses an energy consumptive hot
reactor (900 degrees Celsius or more) and with a cost structure
that means the material cannot compete on price with the GNPs from
mined graphite. Hence the need for the synthetically produced
material to find applications that are not competing with the mined
organic GNPs.
Price Performance Conundrum
With many different "graphenes" available in the market place
today, we believe the buyer can easily get confused where prices
can range from $50 to over $2,000 per kg. The temptation is to
plump for the cheapest available, but more often than not, this is
not the best option. Haydale has built up years of experience in
evaluating the market place and we know that all materials are
different and will vary in performance as well as price.
Understanding the price/performance matrix is critical in
evaluating the material that suits the application and is
economically viable. Moreover we know which supplier can produce
scalable, consistent quality product; the key to commercialising
this material.
Consequently, realising the full benefits of nanomaterials and
especially graphene is rarely easy. They need to be optimised for
incorporation into the intermediate material or end use
application. When you get it right, the results can be spectacular.
Our strategy is to get third party verification of the positive
effects on existing materials arising from adding our treated
graphene and other nanomaterials. We have also started to present
these findings at a series of graphene conferences on a world-wide
basis as part of the Haydale marketing strategy and now have a
regular series of speaking engagements arising from invitations to
present.
Grant and Project Funding
With the advent of the Graphene Flagship in Europe making
available EUR100 million a year for 10 years into graphene
research, the level of R&D projects has escalated in Europe and
now the Far East has reacted with significant research monies being
invested in this area. Haydale is not a manufacturer of raw
graphene, rather we are a solutions provider focussed on the early
adoption and commercialisation of graphene. We have an enabling
technology utilising a unique functionalisation process on
nanomaterials, specifically graphene, as a means of delivering
improved product performance. We have the capability now to source
and use, both organic and synthetically produced flake graphene,
and to modify the surface of the graphene with specific chemical
functional groups tailored to the requirements of the end user's
application. This process is known as functionalisation. Applying
the correct functionalisation has two immediate benefits, namely,
the promotion of:
-- homogeneous dispersion in a solution (i.e. avoiding agglomeration); and
-- chemical interaction or bonding with a substrate or matrix.
Functionalisation is carried out through a low temperature
plasma process of under 100 degrees Celsius that treats both
organic mined fine powder and other synthetically produced
nanomaterial powders producing high quality FLGs and GNPs. The
process can functionalise with a wide range of chemical groups,
where the concentration of chemicals can be tailored to the
customer needs. Good dispersion improves the properties and
performance of the host material and ensures it delivers to the
desired specification.
There continues to be significant government and institutional
funding aimed at applications for graphene. We are working and are
in discussions with several large multi-national corporations and
universities to create "intermediate products" such as conductive
inks, epoxy composites and coatings.
The general use of nanoparticles is well accepted in the
pharmaceutical, cosmetic and chemical industries. Adopting a new
material such as graphene however takes time, requiring sampling,
testing and evaluation. Often this is done in conjunction with
collaboration partners, primarily end users who are willing to
consider new innovative materials in seeking a competitive
advantage. Our approach has been to work with the material
suppliers and/or the end user to develop intermediate products that
the manufacturer can use to improve a product offering. Our market
focus is targeted on sectors where we consider early adoption of
new innovative materials is commonplace. Often, take up of a new
material is hampered by conservatism coupled with the perceived
need to invest significant sums in new plant and equipment and
discard the existing machinery. We consider that the markets that
we have focussed on, namely, composites, inks/coatings and
speciality energy harvesting have less inbuilt inertia to change
and are early adopters of such new materials. Their processing does
not normally require capital equipment change.
Critically our focus is to develop every day applications in
non-regulated markets as adoption generally does not need long term
testing certification. This approach should enable HCS especially
to quickly get GNP-loaded intermediate products into the
market.
OPERATING REVIEW
In the year under review, and in the four months post year-end,
the Company has made significant progress in building its human
resources, production and sales capability. The objective has been
to underpin the strategic markets we are focussed on to deliver the
growth required to move to an operating profit and, as highlighted
in the Chairman's Statement, within the past year, Haydale has
signed a series of distribution and partnership agreements to help
achieve this goal.
R&D Materials and the Supply Chain
(MORE TO FOLLOW) Dow Jones Newswires
November 02, 2015 02:00 ET (07:00 GMT)
Access to the right nanomaterials is crucial to being able to
offer the ultimate customer focussed solution. We have an exclusive
distribution arrangement and a supply contract with AMG Mining AG
("AMG") for certain of their graphite materials and they have
formed the base of our material offering. However we have evaluated
and qualified many different suppliers to provide us with a broad
range of materials to choose from which will best suit the end
users' application. These include Australian based Talga Resources
and in the UK, 2D Tech - a subsidiary of UK based Versarien plc.
Others are under evaluation to provide the broadest materials base
to draw from. All have to be able to demonstrate continuity of
supply and consistency of product which are critical components in
the supply chain.
Inks and Coatings
Having tested the market for some time with a conductive
"graphene" based ink, the agreement with the Welsh Centre for
Printing and Coating (WCPC), signed in July 2014, has enabled us to
now market a commercially available conductive ink currently
produced at our Ammanford facility. At our current single shift
capacity and pricing we can generate income of over GBP10,000 per
week. In particular the Far East market is receptive to our screen
based printable ink. We have now repeat sampled a range of
distributors and printers, where the application appears to be
specifically suitable for the bio-medical sensor market. WCPC are
investigating the exploitation of functionalised graphene, and
other carbon nanomaterials developed by Haydale, in areas such as
wearable technology, sports apparel, barrier coatings and 3D
printing.
Composites
The composite market, at over $90bn p.a., is significant and
represents one of our most immediate sales opportunities. Through
our newly formed collaborations with Huntsman and Scott Bader, two
of the world's leading resin manufacturers, we anticipate that
their ready formed distribution networks will be the sales channel
for the expected resulting next generation of performance resins
enhanced with our GNPs. An advanced composite typically consists of
50% long fibre reinforcement and 50% polymer resin. The role of the
long fibres is to provide the strength, stiffness and impact
resistance in the structure while the polymer resin is to provide
environmental resistance and to transfer external loads into the
fibres. Traditionally, the polymer resin is usually discounted when
determining the strength and stiffness of a composite material,
being largely seen as the glue that binds the fibres together and
gives the material its shape.
We believe that, for the first time, with the advent of
Haydale's functionalised GNPs, HCS has the ability to radically
change and influence the polymer resin properties by the addition
of functionalised graphene. It has been demonstrated that by adding
functionalised graphene and other nanofillers, HCS can dramatically
improve the resin properties of mechanical, thermal conductivity,
electrical conductivity and physical properties. This offers
improved polymer resins and hence the composite.
Adding functionalised graphene will particularly enhance the
mechanical properties of the resin including, strength, stiffness,
fatigue and impact. This will enable designers to design lighter
weight composite structures across a wide range of industries
including marine, rail and wind energy. Lighter weight structures
means removing some of the reinforcement layers which not only
reduces the materials cost but significantly reduces the cost of
production as composite production techniques are largely manual.
Assuming that HCS can, for example, treble the stiffness of the
resin from 3 GPa (gigapascals) to 10 GPa then we could potentially
reduce the weight of a glass fibre reinforced resin structure by as
much as 15% with a similar saving in cost. All through the addition
of some functionalised nanomaterials at loadings of often 2% or
lower. HCS is also involved in adding functionalised graphene into
the epoxy adhesive. This will enable designers to design lighter
weight structures requiring less adhesives and smaller bonding
areas. If adhesives can be improved in one or more of these areas
then joints can be designed with thinner adhesive glue lines or
smaller bonded areas thereby reducing weight and cost.
We are focussed on further developing our composite offerings
and seeking more industrial partners, who can design, develop and
commercialise advanced polymer composite materials on a global
basis. In a number of instances we have commenced confidential
commercial discussions. With the right partners, we believe that
the Haydale nanomaterials will show demonstrable clear technical,
economic and environmental benefits over existing structures
currently manufactured in traditional materials such as steel,
aluminium, wood or concrete.
Energy Harvesting
We are working on several potential strategic alliances in this
complex market. Our team of energy experts have identified a number
of specialist sectors for exploitation, where our novel materials
and functionalisation can make a difference. One area showing
promise is in the super capacitor sector, which requires a rapid
delivery of concentrated energy. In the laboratory, we have
demonstrated that by adding FLG loaded pastes, we have improved the
performance of a super capacitor. We would expect to make
significant progress in this sector over the coming year, which is
likely to include the work done by target partners in the energy
market, including key university knowledge and testing
facilities.
Sales strategy
Korea has become a key market for us as, over the last 18
months, we have developed at least 10 key customers who are
supplying the two dominant electronics giants in South Korea. A
number of sales opportunities are therefore being discussed in
providing materials that improve thermal and electrical properties
of thermoplastic and thermoset based composites. The recent opening
of our dedicated sales and marketing office in Seoul is critical in
demonstrating commitment to the market and in responding swiftly to
customers' requests; for Korea generally moves quickly in bringing
products to market.
The North American market is generally untapped and of equal
importance to both Europe and the Far East. The imminent despatch
of one of our HT60 R&D reactors to our subsidiary, Haydale
Technologies Inc. in Buffalo will start to open sales and
collaboration opportunities in what we perceive as a fragmented
market offering significant sales opportunities. We intend to add
reactors into other areas of strategic importance in the USA that
opens up more collaboration possibilities.
Europe - The announcement of the European Patent Office's
decision to grant us one of our key functionalisation process
patents on 4 November 2015 in Europe strengthens our offering in a
sizeable market. AMG, our GNP supply partner, is a key channel for
European sales and processing of volume related sales from their
site in Hauzenberg, Bavaria. Our intention is to establish a
Haydale centre of excellence in that region to service mainland
Europe's demand for functionalised nano materials. We are looking
for AMG to help establish key accounts across Europe especially as
they have significant customer reach through sales of their
existing graphitic materials.
The sale of one of our HT60 reactors, through a competitive
tender process, to the CPI in Sedgefield was achieved before the
grant of a patent and was an important step for us is establishing
a second UK processing base. The CPI has acknowledged that our
reactor has bridged a technology gap in their offering which we
consider to be a significant endorsement of our process. The CPI is
expected to be ready to receive the reactor in November and we will
immediately commission it on site. The aim is to work closely with
the CPI and, although they are not a commercial producer, they are
targeting customers requiring specific speciality coatings. The
expectation is to produce for customers a product ready for
commercialisation, and one which will incorporate the use of our
technology.
We continue to invest in personnel to capitalise on the
increasing momentum achieved over the last year and to exploit our
growing technical reputation. Aiming to vigorously pursue our
commercialisation strategy, over the next few months we expect to
recruit an experienced Commercial Director to drive forward the
Group's sales efforts. This is now a real and urgent need for the
Group and we have opened discussions with potential candidates.
Our ink expertise is increasing over time and has been enhanced
by the grant funded work carried out on bio medical sensors with
prestigious partners such as the Fraunhofer Group. We are making
significant inroads into the market with an offering aimed at
replacing carbon inks and (where possible) metal-based products.
Sales traction, especially in the Far East, is looking very
promising as our graphene ink is environmentally friendly,
recyclable and proven to consistently print to a high standard.
Nevertheless, we are mindful that our standard ink offering
requires reformulation to meet specific customer needs and our
in-house manufacturing capability, backed up by the formulation
expertise of the WCPC, enables a rapid response to our customer
needs.
Funded and Private Venture Projects
Sampling of the functionalised materials continues as a means to
engage with industrial corporations and manufacturers and to enter
collaborations and consortia on dedicated projects. Some of these
are grant funded projects while others are important in their own
right and hence financed through our own resources. During the year
under review, we have secured focussed and important grant funded
work from which our future income will be over GBP450,000. We will
continue to seek this important source of funded work especially as
the outcome is always to demonstrate a commercial product
application.
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In parallel with the above we are taking a collaborative
research approach to developing added value applications in
regulated markets such as aerospace and defence. This is because we
are developing products that require a significant long term
testing and approvals - typically 10 years for primary aircraft
structures approval before they would be specified on an aircraft.
Therefore, the proposal is to seek shared funding from the OEMs and
grant funding where appropriate to help de-risk the project both
technically and financially. An example of this approach has been
the announcement by the UK government providing grant aided support
to Haydale, Airbus, BAE systems, GKN aerospace, Cobham and SHD to
develop graphene enhanced carbon fibre composite materials for
lightning strike protection on aircraft. A second example is a
discrete internally funded feasibility project on the improvements
for lubrication systems in adding HDPlas(R) GNPs and other carbon
particles.
In addition, although relatively small, we have been included in
a UK defence contract feasibility study to develop a prototype
coating for a novel hydrophone under water system. A positive
outcome in this project, which is scheduled for completion in the
current financial year, could lead to significant additional work.
The defence sector is an area that we consider has important
potential for the range of products we are starting to develop.
Operations and Technical
We now have an established processing and treatment facility in
Ammanford capable of processing tonnes of graphene per year exactly
to the customers' specification. Haydale has developed a
proprietary scalable plasma process on which the European Patent
Office will be granting a patent on 4 November 2015. Importantly,
this patent offers not only the opportunity to exploit the
"graphene" market but other non-carbon based 2D materials. We see
this as an area of equal importance to graphene for the future
growth of Haydale.
In the year under review, headcount increased from 15 to 32
principally due to the acquisition of EPL. As at the end of October
2015, the staff numbers have increased further to 47 and we
anticipate that this will increase to over 60 by the end of 2016.
We still rely on consultants for discrete projects, utilising their
specialist experience in specific areas and in some cases opening
sales avenues.
Space to house the growth in personnel in Ammanford is now being
actively considered as a priority. Local rented space is available
and we anticipate refurbishing and updating it over the coming
months in order to house thenew recruits and new functionalisation
equipment. In addition, last year, as part of our expansion plans,
we rented new space on the same site as our main facility to house
our ink manufacturing capabilities
We now require a property of the same size again to relocate
staff and increase the production floor area. There will be cost
implications for fit out and infrastructure costs which have been
factored into the current year's budget.
One of our key operational challenges is being able to exploit
the high numbers of enquiries we receive and focusing our resources
on our key target markets of composites, inks and coatings. We are
actively looking at adding to our technical, research and
development personnel to ensure we convert the high levels of
interest into sales potential. Our efforts in this regard are not
constrained to only the UK and include lower cost, but highly
technical regions such as the Far East.
Licensing
While there are no licensing agreements currently in place,
licensing remains a key part of our sales strategy for those
partners with whom we want to work. In order to exploit our granted
process patent there is a need for us to create a number of centres
of excellence across our key geographic markets that we control and
run. These centres will service and supply the local market with
intermediate products (such as inks and resins) and it is
anticipated that each centre will operate an HT60 and an HT200 to
allow the full suite of R&D and commercial supply to be
achieved. Other third party licences are under consideration and,
whilst there can be no guarantee at this stage that agreements will
be completed, we anticipate that the terms of licensing agreements
will be in line with the Board's expectations.
Key Performance Indicators ("KPIs")
The Board consider there are a number of important KPIs which
are non-financial, such as: the nature and size of development
projects, the ability to convert non-disclosure agreements to
development project discussions and commercial contracts.
Performance against these non-financial KPIs is in line with the
Board's expectations for the year under review.
Important financial KPIs are the cash position and the operating
loss of the Group. At 30 June 2015, cash and deposit balances
amounted to GBP2.05 million (2014: GBP5.68 million) and were in
line with budgets. The adjusted EBITDA loss for the year ended 30
June 2015 of GBP2.38 million (2014: GBP1.96 million loss) was also
in line with the budgeted loss for the year.
The Group has also continued to put in place additional
infrastructure to capitalise on the momentum that the business has
achieved and to enable the longer term potential of the business to
be realised.
Acquisitions
In November 2014, the Company acquired the entire issued share
capital of EPL Composite Solutions Ltd (subsequently renamed as
Haydale Composite Solutions Limited ("HCS")), specialists in the
design, development and commercialisation of advanced composite
polymer materials both in the UK and overseas ("Acquisition").
Maximum consideration for the Acquisition was GBP1.19 million,
comprising GBP0.4 million initial in cash payment, with the balance
of GBP0.79 million payable conditional upon the performance of HCS
in the period from acquisition to 30 June 2016 ("Contingent
Consideration"). Haydale also assumed GBP0.19 million of HCS
directors' loans.
HCS's trading in the 8 month period under review was ahead of
expectations at both the income and profit levels and, pleasingly,
all of HCS's income in the period was non-graphene related - being
primarily delivery against an historical order book of advanced
composite projects. Most encouraging, HCS's current order book,
which will be delivered in the current and next financial years,
does include exciting graphene-related composite projects and is in
excess of HCS's income for the period ended 30 June 2015.
It is against this strong trading and the benefits anticipated
of having Gerry Boyce and his team at HCS integrated fully into the
Haydale Group at the earliest opportunity that has led to the
Board's decision to enter into an early settlement agreement with
the vendors of HCS, of which Gerry Boyce represented 90%
("Vendors"). Accordingly, Haydale has agreed to reduce the
Contingent Consideration payable to a maximum of GBP0.77 million,
of which GBP0.65 million will be payable in cash to the Vendors,
(which is expected to be paid following the General Meeting), with
the balance due on receipt by HCS of certain of its outstanding
debtors.
We are delighted that Gerry Boyce intends to reinvest GBP0.30
million of his consideration due to him in new ordinary shares in
the Company. We believe this is the strongest possible endorsement
of the Group's potential.
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 as adopted by the
European Union. The financial statements of the Company continue to
be prepared in accordance with UK Generally Accepted Accounting
Practice.
Statement of Comprehensive Income
In the year under review, the Group primarily focussed on
scaling up its functionalisation capacity and enhancing its
processes, conditioning the market and its potential customer base
on the Group's functionalisation capabilities, developing its
routes to market, particularly in the composite and inks markets,
enhancing its IP portfolio and identifying and entering
collaboration agreements with intermediate customers, all with a
view to commencing a sales and marketing push following the Group's
admission to AIM in April 2014. Accordingly, income for the year
increased more than 10 fold to GBP1.48 million (2014: GBP0.13
million), GBP1.18 million of which was the eight month contribution
from HCS. As described elsewhere in this report, the Group's income
is derived from both grant funded projects and third party sales.
In the year to 30 June 2015, the Group's income generated from
grant funded projects totalled GBP0.83 million (2014: GBP0.11
million) and arose where a consortium of, often world renowned and
strategically important international companies collaborate to
develop new products with viable market needs. Both Haydale and HCS
are running grant programmes which typically last for 12 to 24
months and the Group secured a further GBP0.45 million of new
projects in the year under review.
R&D expenditure for the year increased to GBP0.56 million
(2014: GBP0.42 million), with salaries for technicians, lab
assistants and scientific personnel, as in 2014, accounting for the
majority of the spend. The Group's other administrative costs for
the year totalled GBP3.66 million (2014: GBP1.42 million), GBP0.91
million of which related to HCS's administration costs (2014:
GBPnil). The loss from operations of GBP3.01 million (2014: GBP2.20
million loss), included non-cash items of GBP0.63 million (2014:
GBP0.24 million). The loss per share improved marginally to GBP0.25
(2014: GBP0.28).
Statement of Financial Position and Cashflows
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As at 30 June 2015, net assets amounted to GBP4.29 million
(2014: GBP6.80 million), including cash balances of GBP2.05 million
(2014: GBP5.68 million). As part of the funding structure for the
Acquisition, the Company secured a three year, GBP0.50 million
repayment loan from its bankers. As at the year end, the Group had
repaid GBP0.07 million of the loan.
Net cash outflow from operating activities for the year was
GBP2.73 million (2014: GBP2.11 million), the principal contributing
factor being the operating loss of GBP3.01 million.
Capital Structure and Funding
As at 30 June 2015, the Company had 11,446,446 ordinary shares
in issue (2014: 11,247,823), which number is unchanged at the date
of this report. In November 2014, pursuant to the Acquisition,
Gerry Boyce acquired 198,623 new ordinary shares in the Company. No
further shares were issued during the year under review.
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide return to equity holders of the Company and benefits to
other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital. The Group manages this objective
through tight control of its cash resources to meet its forecast
future cash requirements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2015
Year Year
ended ended
30 June 30 June
2015 2014
GBP'000 GBP'000
REVENUE 644 19
Other income 831 110
TOTAL INCOME 1,475 129
Administrative expenses
-------------------------------------------- ---------- ----------
Costs of admission to AIM - (424)
Research and development expenditure (559) (416)
Share based payment expense (258) (67)
Other administrative expenses (3,663) (1,424)
----------------------------------------------- ---------- ----------
(4,480) (2,331)
LOSS FROM OPERATIONS (3,005) (2,202)
Finance costs (24) (14)
LOSS BEFORE TAXATION (3,029) (2,216)
Taxation 140 71
LOSS FOR THE YEAR / TOTAL COMPREHENSIVE
LOSS ATTRIBUTABLE TO OWNERS
OF THE PARENT (2,889) (2,145)
Loss per share attributable
to owners of the Parent
Basic (GBP) (0.25) (0.28)
Diluted (GBP) (0.25) (0.28)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
Company Registration No. 30 June 30 June
07228939 2015 2014
GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 685 51
Intangible assets 775 554
Property, plant and equipment 1,576 527
Investments 117 -
3,153 1,132
Current assets
Inventories 283 22
Trade receivables 257 8
Other receivables 277 244
Corporation tax 129 63
Cash and bank balances 2,049 5,677
2,995 6,014
TOTAL ASSETS 6,148 7,146
LIABILITIES
Non-current liabilities
Provision for contingent 260 -
consideration
Bank loans 270 -
530 -
Current liabilities
Provision for contingent
consideration 510
Bank loans 162 -
Trade and other payables 619 300
Deferred income 26 46
Corporation tax 8 -
1,325 346
TOTAL LIABILITIES 1,855 346
TOTAL NET ASSETS 4,293 6,800
EQUITY
Capital and reserves attributable
to equity holders of the
parent
Share capital 229 225
Share premium account 6,254 6,134
Share-based payment reserve 329 71
Retained (deficit) / profits (2,519) 370
TOTAL EQUITY 4,293 6,800
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2015
Share Share Share-based Retained Total
capital premium payment profits GBP'000
GBP'000 GBP'000 reserve GBP'000
GBP'000
At 1 July 2013 1 3,214 4 (2,227) 992
Total comprehensive
loss for the year - - - (2,145) (2,145)
Recognition of share-based
payments - - 67 - 67
Issue of ordinary
share capital 66 8,443 - - 8,509
Transaction costs
in respect of share
issues - (623) - - (623)
Bonus issue of GBP0.02
ordinary shares 158 (158) - - -
Reduction in share
premium - (4,742) - 4,742 -
At 30 June 2014 225 6,134 71 370 6,800
Total comprehensive
loss for the year - - - (2,889) (2,889)
Recognition of share-based
payments - - 258 - 258
Issue of ordinary
share capital 4 120 - - 124
At 30 June 2015 229 6,254 329 (2,519) 4,293
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2015
Year Year
ended ended
30 June 30 June
2015 2014
GBP'000 GBP'000
Cash flow from operating activities
Loss before taxation (3,029) (2,216)
Adjustments for:-
Amortisation of intangible
assets 64 36
Depreciation of property, plant
and equipment 288 137
Loss on disposal of property, 19 -
plant and equipment
Share-based payment charge 258 67
Finance costs 24 14
Operating cash flow before
working capital changes (2,376) (1,962)
Increase in inventories (98) (2)
Increase in trade and other
receivables (126) (165)
Decrease in payables and deferred
income (210) (51)
Cash used in operations (434) (218)
Income tax received 76 72
Net cash flow from operating
activities (2,734) (2,108)
Cash flow used in investing
activities
Purchase of property, plant
and equipment (1,182) (147)
Proceeds from disposal of property,
plant and equipment - 2
Finance costs (24) (5)
Acquisition of subsidiary (244) -
Net cash flow in investing
activities (1,450) (150)
Cash flow used in financing
activities
Proceeds from issue of share
capital 124 8,425
Share issue costs - (623)
New bank loans raised 500 -
Repayments of borrowings (68) -
Issue of convertible debt - 79
Net cash flow from financing
activities 556 7,881
Net (decrease) / increase in
cash and cash equivalents (3,628) 5,623
Cash and cash equivalents at
beginning of the financial
year 5,677 54
Cash and cash equivalents at
end of the financial year 2,049 5,677
1. General information
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Haydale Graphene Industries Plc (the "Company") and its
subsidiaries (together the "Group") are focussed on enabling
technology for the commercialisation of graphene.
The Company is a public limited company which is listed on AIM
on the London Stock Exchange plc and is incorporated and registered
in England and Wales. The Company's registered office is Clos
Fferws, Parc Hendre, Capel Hendre, Ammanford, Carmarthenshire, SA18
3BL.
2. Group Annual Report and Statutory Accounts
The financial information of the Group set out above does not
constitute "statutory accounts" for the purposes of Section 435 of
the Companies Act 2006. The financial information for the year
ended 30 June 2015 has been extracted from the Group's audited
financial statements which were approved by the Board of directors
on 30 October 2015 and will be delivered to the Registrar of
Companies for England and Wales in due course. The report of the
auditor on these financial statements is unqualified, did not
include any references to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
did not contain a statement under Section 498 (2) or Section 498
(3) of the Companies Act 2006.
3. Basis of preparation and consolidation
Whilst the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards ('IFRSs') as adopted by the European Union, this
announcement does not itself contain sufficient information to
comply with those IFRSs. This financial information has been
prepared in accordance with the accounting policies set out in the
30 June 2015 report and financial statements.
The results of Haydale Composite Solutions Limited since 1
November 2014, the date of acquisition, have been included within
the Consolidated Statement of Comprehensive Income. This eight
month period forms part of an extended fifteen month accounting
period for that entity, whose accounting reference date was
extended to 30 June 2015 to align with the rest of the Group.
4. Recognition of revenue and other income
(i) Goods
Revenue represents sales to external customers at invoiced
amounts less value added tax or local taxes on sales. Revenue is
recognised when the risks and rewards of owning the goods has
passed to the customer which is generally on delivery.
(ii) Services
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 stage of completion is determined based on the proportion of
contract costs incurred compared to total estimated contract
costs.
(iii) Interest income
Interest income is recognised as finance income on an accruals
basis using the effective interest rate method.
(iv) Government grants
Government grants are not recognised until there is a reasonable
assurance that the Group will comply with the conditions attaching
to them and that the grants will be received. Government grants are
treated as deferred income and released to the income statement on
the later of the achievement of the relevant performance criteria,
or their receipt. 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 income' within the Statement of
Comprehensive Income.
5. Segment analysis
All revenues of the Group are derived from its principal
activity, the sale and distribution of nano-technology products or
the delivery of research projects into those same materials. All
assets are located within the United Kingdom and all losses are
generated in that territory. The Group's revenue from external
customers by geographical location are detailed below.
2015 2014
GBP'000 GBP'000
By destination
United Kingdom 409 8
Europe 222 2
North America 11 7
Rest of the
World 2 2
644 19
During 2015, 32% of the Group's revenue depended on a single
customer. During 2015, 25% of the Group's revenue depended on a
second single customer.
Revenue within Europe was predominantly in Ireland (93%).
All amounts shown as other income within the Statement of
Comprehensive Income are generated within and from the United
Kingdom.
Revenue from goods was GBP56,000 or 9% and revenue from services
was GBP588,000 or 91%.
6. Loss before taxation
Loss before taxation is arrived at after charging:
2015 2014
GBP'000 GBP'000
Research and development:
- current period's expenditure 524 380
- amortisation of capitalised expenditure 35 36
Depreciation of property, plant
and equipment 288 137
Loss on disposal of property, plant 19 -
and equipment
Operating lease rentals:
- land and buildings 93 34
- plant and machinery 17 1
7. Loss per share
The calculations of loss per share are based on the following
losses and number of shares:
2015 2014
GBP'000 GBP'000
Loss after tax attributable
to owners of the Haydale
Graphene Industries
PLC Group (2,889) (2,145)
Weighted average number
of shares:
* Basic and Diluted 11,376,248 7,755,175
Loss per share:
* Basic (GBP) and Diluted (GBP) (0.25) (0.28)
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 2015, there were 1,321,655 (2014: 961,215) options and
warrants outstanding.
8. Employees
The average number of employees during the year, including
executive directors, was:
2015 2014
No. No.
Administration 8 4
Research, development
and production 18 6
26 10
Staff costs for all employees, including executive directors,
consist of:
2015 2014
GBP'000 GBP'000
Wages and salaries 985 667
Social security costs 104 74
Pension costs 18 -
Share based payment
expense 258 67
1,365 808
The total amount payable to the highest paid director in respect
of emoluments was GBP126,000 (2014: GBP218,000), including pension
costs of GBP3,000 (2014: GBPnil).
9. Income tax
2015 2014
GBP'000 GBP'000
Total income tax credits:
* for the financial year 128 66
* under provision in the previous financial year 12 5
140 71
A reconciliation of income tax expense applicable to the loss
before taxation at the statutory tax rate to the income tax release
at the effective tax rate of the Group is as follows:
2015 2014
GBP'000 GBP'000
Loss before taxation (3,029) (2,216)
Tax at the applicable statutory
tax rates of 20% (2014 - 20%) 606 443
Tax effects of:
* non-deductible expenses (70) (114)
* capital allowances and other short term differences
not recognised for tax purposes 61 7
* R&D enhancement 107 59
* Surrender for R&D tax credit (49) (40)
* Unrealised tax losses carried forward (527) (289)
* Adjustment to tax credit in respect of previous years 12 5
Income tax release for the financial
year 140 71
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The Group has tax losses that are available indefinitely for
offset against future taxable profits of the companies amounting to
GBP6,214,000 and GBP838,000 of fixed asset timing differences. The
full utilisation of these losses in the foreseeable future is
uncertain as they are liabilities offset by the asset and therefore
no deferred tax asset has been recognised.
The deferred tax not recognised in the Group statement of
financial position is as follows:
2015 2014
GBP'000 GBP'000
Unrecognised deferred tax
asset at the start of the
year 631 346
Tax losses unrecognised in
the year 527 285
Unrecognised deferred tax
asset at the end of the year 1,158 631
10. Intangible assets
Customer Development Goodwill Total
Relationships expenditure GBP'000 GBP'000
GBP'000 GBP'000
Cost
At 1 July 2013 - 700 51 751
Additions - - - -
At 1 July 2014 - 700 51 751
Additions 285 - 634 919
At 30 June 2015 285 700 685 1,670
Accumulated amortisation
At 1 July 2013 - 110 - 110
Charge for the
period - 36 - 36
At 1 July 2014 - 146 - 146
Charge for the
year 29 35 - 64
At 30 June 2015 29 181 - 210
Net book value
At 30 June 2015 256 519 685 1,460
At 30 June 2014 - 554 51 605
At 30 June 2013 - 590 51 641
Goodwill
Goodwill arose on the acquisition of EPL Composite Solutions Ltd
(now Haydale Composite Solutions Limited "HCS") on 1 November 2014
(GBP634,000), Haydale Ltd on 21 May 2010 (GBP24,000) and of the
trade and assets of Intelligent Nano Technology Ltd (GBP27,000) on
12 May 2010.
Customer Relationships
The Customer relationships intangible asset arose on the fair
value of assets on the acquisition of EPL Composite Solutions Ltd
(now Haydale Composite Solutions Limited) on 1 November 2014.
Development costs
Development costs arose on 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.
Amortisation
Capitalised development costs are amortised over the estimated
useful life of 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.
11. Property, plant and equipment
Leasehold Plant Fixtures Motor Total
improvements and machinery and fittings vehicles GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 July 2013 173 500 43 2 718
Additions 25 107 15 - 147
Disposals - (2) (2) - (4)
At 1 July 2014 198 605 56 2 861
Acquired on
acquisition
of subsidiary - 174 - - 174
Additions 61 1,086 35 - 1,182
Disposals - (35) - - (35)
At 30 June 2015 259 1,830 91 2 2,182
Accumulated depreciation
At 1 July 2013 20 158 21 - 199
Charge for the
year 19 104 13 1 137
Disposals - (1) (1) - (2)
At 1 July 2014 39 261 33 1 334
Charge for the
year 24 241 22 1 288
Disposals - (16) - - (16)
At 30 June 2015 63 486 55 2 606
Net book value
At 30 June 2015 196 1,344 36 - 1,576
At 30 June 2014 159 344 23 1 527
At 30 June 2013 153 342 22 2 519
Included within plant and machinery are assets under
construction totalling GBP192,000 (2014: GBPnil).
12. Investments
2015 2014
GBP'000 GBP'000
Available-for-sale investments 117 -
The Group holds 117,263 non-voting GBP1 preference shares in
Arago Technology Limited. This company is not accounted for on an
equity basis as the Group does not have the power to participate in
the company's operating and financial policies, evidenced by the
lack of any direct or indirect involvement at board level and the
non-voting nature of the investment held.
13. Inventories
2015 2014
GBP'000 GBP'000
Raw materials 42 5
Work in progress 229 -
Finished goods 12 17
283 22
Raw materials and finished goods comprise functionalised carbon,
chemicals and associated raw materials. Work in progress comprises
recoverable costs on long-term contracts.
14. Trade receivables
2015 2014
GBP'000 GBP'000
Trade receivables 257 9
Allowance for impairment
losses - (1)
257 8
15. Other receivables
2015 2014
GBP'000 GBP'000
Other receivables 166 167
Prepayments and accrued
income 111 77
277 244
16. Trade and other payables
2015 2014
GBP'000 GBP'000
Trade payables 273 175
Tax and social security 81 36
Accruals and other creditors 265 89
619 300
17. Bank loans
2015 2014
GBP'000 GBP'000
Bank loans 432 -
The borrowings are repayable
as follows:-
162 -
* within one year
162 -
* in the second year
108 -
* in the third to fifth years inclusive
432 -
All borrowings are denominated in pounds sterling. The directors
consider that there is no material difference between the fair
value and carrying value of the group's borrowings.
2015 2014
% %
Average interest rates paid 2 -
The bank loan of GBP500,000 was drawn during the year and
securitised by cash deposits. The loan accrues interest at 1.5%
above the Bank of England base rate and is repayable in equal
instalments over four years.
18. 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.
2015 2014
GBP'000 GBP'000
Grants 26 46
In the year ended 30 June 2015, Haydale Limited received a
business innovation grant totalling GBP33,000, which is being
credited to the statement of comprehensive income in line with the
depreciation of the associated acquired machinery.
In 2014, the deferred income balance of GBP46,000 related to a
development grant received in 2013 totalling GBP114,480. The
revised criterion for this grant was the creation of seven
(originally fifteen) new full-time equivalent employment positions,
the achievement of which was completed during the year ended 30
June 2015.
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