TIDMHAYD
RNS Number : 6601V
Haydale Graphene Industries PLC
15 December 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
.
For immediate release 15 December 2021
Haydale Graphene Industries plc
('Haydale', the 'Company', or the 'Group')
Haydale (AIM: HAYD), the global advanced materials group, is
pleased to announce its full year results for the year ended 30
June 2021 ("FY21").
Operational Highlights:
- Good progress made on delivering the Group's commercial
strategy and, in a challenging trading environment the Group has
delivered a robust trading performance;
- Culmination of the three-year wearable technology program with
the English Institute of Sport which has produced heated garments
worn by medal winners at Tokyo;
- Sale of an HT200 Plasma Reactor to 401 Tech Bridge, Rhode
Island, US to support its ambition to accelerate the commercial
adoption of new materials within their innovation ecosystem;
- Sale of elastomers to Bolfex for its premium shoe range and
post year end commenced paid for feasibility projects with several
premium leisure footwear manufacturers;
- Two year contract for the sale of Silicon Carbide ("SiC")
whiskers agreed with Qinhuangdao ENO High-Tech Material Development
Co., Ltd in China and secured SIC sales to a further four companies
in China in FY21;
- First sales and positive progress on the commercial roll out
of CeramycGuard(TM) - currently working closely with a number of UK
water utilities, other water facility management companies and more
general civil engineering contractors;
- Ordered a larger HT1400 plasma reactor to deliver a
significant increase in Haydale's functionalisation capacity, to
allow production to move to an industrial level in 2022;
- Focused development of our patented HDPlas(R) process with key achievements including:
-- developed advanced nano enhanced SynerG SuperTough 3D
filament; and
-- refined next generation functionalised biomedical sensor inks
incorporating improved analyte detection through the incorporation
of compatible functional groups to enhance the accuracy of
diagnosis.
Summary of Results:
Jun-21 Jun-20
GBP'm GBP'm
---------------- ----------------
Revenue 2.90 2.95 -2%
Gross Profit 1.98 2.06 -4%
Gross Profit Margin 68% 70% -3%
Other Operating Income 0.58 0.76 -24%
Adjusted Administrative
Expenses [1] - 4.72 - 5.36 12%
Adjusted Operating Loss - 2.17 - 2.54 15%
Statutory Loss from Operations - 3.56 - 4.23 16%
Statutory Loss After Taxation - 3.41 - 4.02 15%
--------------------------------- ---------------- ----------------
Cash Outflow from Operations -1.58 -3.32 52%
Cash at Year End 1.64 0.82 100%
Financial Highlights
- Despite a challenging trading environment revenue fell by just
2% and gross profit margins remained resilient at 68% (FY20:
70%);
- On a pre IFRS 16 basis a further GBP0.701 million of cost
savings achieved - GBP2.43 million of cost savings realised over
the last three years;
- Reduction in Adjusted operating loss of GBP0.37 million to
GBP2.17 million (FY20: GBP2.54 million); and
- Cash outflow from operations reduced by GBP1.74 million (52%)
to GBP1.58 million (FY20: GBP3.32 million).
Post Period End Highlights:
- On 20 September 2021, the Company raised GBP5.10 million
(gross) through the placing, retail offer and subscription of
85,055,893 new Ordinary Shares at 6.00 pence per share;
- Filing of a joint patent with Airbus for the lightning strike
electrical pre-preg. This technology has the potential to reduce
the weight and environmental impact of a commercial airliner;
and
- Signing of a memorandum of understanding with Viritech for the
development of Type IV structural hydrogen tanks
Commenting on the results David Banks, Non-executive Chairman of
Haydale, said:
'The Board is encouraged by the very positive response from
across several different industry sectors to our new products and
technologies, which gives us confidence in our medium to long-term
outlook. However, we are yet to see any sustained recovery in our
Aerospace business and so we continue to be cautious with respect
to short-term revenue. Haydale's proprietary technology now has the
potential to deliver material change across many sectors in ways
that our customers are increasingly recognising as important in
their search for more environmentally friendly materials. As a
result, Haydale is expanding the Group's capacity to functionalise
nano and other materials and continues to invest in product
development critical to our future success.'
- Ends -
For further information:
Haydale Graphene Industries plc
Keith Broadbent, CEO Tel: +44 (0) 1269 842 946
Investor Relations www.haydale.com
Arden Partners plc (Nominated Adviser
& Broker)
Paul Shackleton/ Elliot Mustoe Tel: +44 (0) 20 7614 5900
Notes to Editors
Haydale is a global technologies group and service provider that
facilitates the integration of graphene and other nanomaterials
into the next generation of industrial materials and commercial
technologies. With expertise in graphene, other nanomaterials and
Silicon Carbide, Haydale is able to deliver improvements in
electrical, thermal and mechanical properties, Haydale has been
granted patents for its technologies in Europe, USA, Australia,
Japan and China and operates from five sites in the UK, USA and the
Far East. For more information please visit: www.haydale.com or
Twitter: @haydalegraphene
Follow the link to view original announcement including all
graphs and illustrations:
http://www.rns-pdf.londonstockexchange.com/rns/6601V_1-2021-12-14.pdf
chairs statement
Introduction
I am pleased to present Haydale Graphene Industries Plc's
("Haydale", the "Group" or the "Company") full year audited results
to 30 June 20 21 ("FY 21 ").
Despite the headwinds from the Covid-19 pandemic during the
year, the Group continued to make positive progress in its
transition from a research and development operation to one capable
of delivering sustainable commercial revenues. Whilst demand for
the proprietary Silicon Carbide ('SiC') blanks manufactured at our
US facility has remained subdued, the Group saw encouraging
developments in its core nanomaterial business and to meet
potential demand accelerated the investment in its operational and
technical capacity both during FY21 and into the current financial
year.
Summary financials
Commercial revenue for FY21 of GBP2.90 million (FY19: GBP2.95
million) remained in line with the prior year which was a robust
performance given the subdued market conditions globally. Gross
profit marginally reduced to GBP1.98 million (FY20: GBP2.06
million) delivering a gross profit margin of 68.2% (FY20: 70,0%)
broadly in line with prior year. Other operating income for the
year of GBP0.58 million (FY20: GBP0.76 million) was lower than the
prior year as the Group's shift away from grant funded to
commercial projects continues. Included within other operating
income is further support received from the US Cares Act.
The focus on reducing costs continued in the year with adjusted
administrative expenses on a pre IFRS 16 basis falling by GBP0.70
million (11.7%) to GBP5.29 million (FY20: GBP5.99 million). Over
the last three reporting periods, the Group has reduced its
operating cost base by GBP2.43 million in total on a like for like
basis. There were no non-recurring restructuring costs in the year
(FY20: GBP0.06 million). Total Administrative Expenses were GBP6.11
million (FY20: GBP7.05 million).
Loss for the year was GBP3.41 million (FY20: GBP4.02
million)
Operational Highlights
Whilst Covid-19 may have provided the backdrop to the past year
it has certainly not defined it for the Group. By focussing on the
elements within our control, the Group has made solid progress
towards its longer term goals. The priorities of focussed
investment in our technology, delivery of commercial revenue and
control of operating costs remains central to our strategy.
Focussed Investment in R&D
Haydale brings together two state of the art technologies - the
patented HDPlas(R) functionalisation process and an understanding
of graphene and other nanomaterials. I was encouraged to see that
the Company's expertise in Hydrogen storage has attracted renewed
interest in the past 18 months. In particular, we have collaborated
on the functionalised graphene masterbatch required to produce
lightweight low permeability storage tanks to help unlock the
pathway to hydrogen propulsion. During the year the Company has
also seen demand for the functionalisation of other nanomaterials
accelerate and, in particular, demand for Boron Nitride, where
Haydale has been engaged to functionalise the 'white graphene' to
improve its dispersibility into lubricants to increase heat
dissipation from moving parts.
Commercial Development
During the year, the Group made progress in commercialising its
core technology portfolio despite the challenging operating
environment. I would highlight the three-year exclusive agreement
with iCraft announced in September 2020 and in December 2020 we
secured our first sale of functionalised nano-enhanced rubber
masterbatch for use in a premium shoe range. Subsequent to this
sale, the Company has been engaged by several companies in the
premium leisure footwear market.
I was also pleased to see the Company broaden its trading
footprint with sales of SiC and blanks to new customers in the Far
East and in Europe. We also extended our distribution agreement for
Ceramyc guar d(TM) to 2030 and this range of products continues to
attract significant interest from water utilities and civil
engineering operations both in the UK and the Middle East. We
achieved our first sales in the year and anticipate revenue will
grow in the current year.
Cost Restraint
The Group continued to realign its cost base and, during the
year, it reduced its overall headcount whilst continuing to invest
in its global sales presence . The Group also realised other
overhead savings and, as noted above, like-for-like administrative
expenses reduced by GBP 0.70 million, ( 11.7 %) in the year without
affecting the operational capacity of the Group.
Impact of Covid-19
The principal trading impact of Covid-19 has been the slowdown
in the global aviation sector which has reduced demand for SiC and
the SiC blanks that we manufacture at our US facility. The
immediate impact has been mitigated to an extent by the continued
support of our largest customer which offered this business unit
valuable breathing space. During the year the Group has moved to
reduce medium term exposure to the aviation sector and, as noted
above, has entered new markets for its existing products and by
adopting complementary products such as Ceramyc guar d(TM) , has
accessed new markets and customers.
Within the wider operation, despite an initial slowdown which
saw a number of projects delayed or postponed, business has
remained robust. I am pleased to report that, as the UK moved
through the second and third waves, whilst not 'business as
normal', projects and contracts progres sed according to revised
plan s .
At no time during the year were any of the Group's sites closed
and the Company acted i n accordance with the latest guidance at
each of its locations
Staff
I would like to thank the executive management team who have
maintained the momentum of our transition during these
unprecedented times. In particular, for ensuring that our
facilities continued to operate during the year with minimal
interruption and without compromising on the safety and wellbeing
of our employees. I would also like to thank our staff who have
readily adjusted to rapidly evolving local restrictions and have
effectively embraced new technology and ways of working. Their
resilience and flexibility have allowed the Group to continue to
operate effectively over the past year.
Funding
The Directors believe the business is well placed to benefit
from a recovery in the aviation industry and the wider improvement
in the global economy. During the year we were pleased to be
awarded a GBP1.10 million loan from Innovate UK and this will allow
the business to expand its functionalisation capacity eight-fold at
our Ammanford facility and support increased investment in our
production, sales and marketing resources. At 30 June 2021 we had
drawn down GBP0.8 million of this facility.
On 20 September 2021, the Company completed an equity placing
raising GBP 5.10 million (gross) and I would like to welcome our
new shareholders and to thank our existing shareholders for their
continued support at this time.
Outlook
The Board is encouraged by the very positive response from
across several different industry sectors to our new products and
technologies, which gives us confidence in our medium to long-term
outlook. However, we are yet to see any sustained recovery in our
Aerospace business and so we continue to be cautious with respect
to short-term revenue. Haydale's proprietary technology now has the
potential to deliver material change across many sectors in ways
that our customers are increasingly recognising as important in
their search for more environmentally friendly materials. As a
result, Haydale is expanding the Group's capacity to functionalise
nano and other materials and continues to invest in product
development critical to our future success.
David Banks
Chair
14 December 2021
STRATEGIC REPORT
The directors present their Strategic Report for the year-ended
30 June 2021.
Principal Activities
Haydale brings together the cutting-edge technology of the
patented HDPlas(R) process with our engineering expertise to
functionalise graphene and other nanomaterials. Our technology has
the potential to deliver benefits across a multitude of sectors
helping to increase the technical performance of a wide range of
host materials. The Group's mission is to use our knowledge of
advanced materials and dispersion to be one of the world's foremost
creators of material change, enabling our customers to improve the
performance of their products. The Directors believe the Company is
well placed to be in the forefront of nano advanced materials and
dispersion and to become a world leader in the creation of material
change through understanding the potential of those materials.
Whilst the majority of the Group's revenues to date have been
generated by our US operation, at the core of our product offering
and underpinning the Group's future prospects and value, is
Haydale's patented HDPlas(R) functionalisation process which
improves the dispersibility of some inert nanomaterials.
Functionalisation allows Haydale to tailor advanced materials to
enhance the properties of our customers' products. The process is
cost effective and environmentally friendly and our capacity to
produce commercial levels of functionalised nanomaterials underpins
our business model and sets us apart from our direct competition in
this space. Specifically, we have the engineering expertise to:
-- functionalise nanomaterials that go into resins and
composites to deliver enhanced electrical, mechanical (strength)
and thermal performance;
-- formulate proprietary nanomaterial-based inks and coatings
for the print and sensor markets, including biomedical and piezo
resistive inks and sensors and the PATit anti-counterfeiting eco
system; and
-- compound functionalised nanomaterials into a range of elastomers to enable customers to use nanomaterials in elastomeric products.
Our US facility is projected to be our bridgehead into the
dynamic North American market for our technology. We also
manufacture unique, proprietary silicon carbide ("SiC") fibres and
whiskers that strengthen ceramics and produce highly wear resistant
ceramic 'blanks' for use in the aerospace industry and for abrasion
resistant coatings.
At the 30 June 2021, the Group has the following operational
activities in its five facilities.
Haydale subsidiary Location Principal activities
------------------------------- ------------------- --------------------------------------
Haydale Limited Ammanford, Wales Specialist functionalisation
and main manufacturing facility
producing inks, resins, and
masterbatches to be used
in composites and polymers
for direct sales to customers
and for transfer to other
Group sites.
Haydale Composite Solutions Loughborough, Sales of masterbatch and
Limited ("HCS") England pre-preg composites, elastomers
and other nanomaterials and
the provision of advanced
consulting and test services
to various parties including
the EU and UK national institutions
via R&D grants.
Haydale Technologies Seoul, South Dedicated sales office servicing
(Korea) Limited ("HTK") Korea the fast-moving Korean and
other APAC markets.
Haydale Technologies Bangkok, Thailand Ink and masterbatch development
(Thailand) Company Limited focused on commercial applications
("HTT") with plasma functionalisation
facilities. Services the
APAC region.
Haydale Technologies, Greer, SC, USA Sales office servicing the
Inc. ("HTI") and its North American market, developing
wholly owned subsidiary the European and Chinese
Haydale Ceramic Technologies markets and manufactures
LLC and sells SiC microfibres
and whiskers, ceramic blends
and ceramic blanks to the
cutting tool and coatings
industries
The Group safeguards its nanomaterials business across these
sites and the territories in which it operates through the use of
patents which protect its intellectual property. It holds licences
where that intellectual property is for operational reasons with a
third party. Haydale currently has a portfolio of patents that are
variously recognised in the following territories - US, UK, Europe,
China, Japan and Australia. Haydale works closely with its patent
advisors, Mewburn Ellis LLP, and maintains a rolling programme of
patent applications. In the past year the Company has had four
patents granted across three different patent families including a
patent in the US for clothing incorporating a printed heater
incorporating graphene ink, one application has been allowed and is
close to grant and four new applications have been filed.
Revenue Model
The Group's revenue model is based on the following strands:
-- Sale of plasma reactors with appropriate licencing for use of
the patented HDPlas(R) functionalisation process;
-- Sale of functionalised material in powder, masterbatch or pre-preg format;
-- Sale of SiC microfibres and whiskers, ceramic blends and
ceramic blanks to the aerospace cutting tool and coatings
industries;
-- Sale of own brand and third-party products which clearly
align with our product or customer base; and
-- Consultancy work with respect to testing the potential
enhancements that our product range and engineering acumen may
bring to customer applications.
Commercial Operations
The financial year-ended 30 June 2021 ("FY21") has taken place
against the backdrop of the Covid-19 pandemic which, whilst
restraining revenue, has acted as a catalyst to further deliver on
the strategic priorities that the Company has previously set out.
Notwithstanding the challenges raised by the pandemic in several of
our key markets, the Group has delivered a resilient performance in
the year and, by focussing on elements within our control, made
solid strategic progress towards the Group's commercial goals.
The Group continues to transform itself from a research and
development organisation to a manufacturing business focussed on
commercialising its portfolio of technology and securing profitable
outcomes. During the year the Company has ordered a larger plasma
reactor and ancillary equipment that should deliver a significant
increase in our functionalisation capacity and provide the tools to
move production to an industrial level.
UK & Europe
One of the early ramifications of the UK's response to Covid-19
was the temporary closure of both commercial and academic research
facilities. However, despite the unfamiliar challenges of
collaborating during the UK's and other territories lockdowns, we
experienced an increased appetite from existing and new customers
to investigate the benefits that our nanomaterial science can bring
to their products, and we saw an acceleration in both serious
enquiries and the commencement of new commercial projects during
the latter part of the year.
The UK division made meaningful progress towards commercialising
its proprietary technology. Functionalised product sales increased
by 30% over the prior year and project and other consultancy
revenues (excluding reactor sales) grew by 122% on a like for like
basis. This increase judged alongside the sales pipeline gives
ground for cautious optimism that, despite the impact of the
pandemic and the knock-on effects as Government stimulus programmes
are unwound, momentum will be maintained.
Sales & Consultancy Work
In March 2020 Haydale announced that it would be cooperating
with the English Institute of Sport ("EIS") and the Welsh Centre
for Printing and Coating ("WCPC") to deliver a range of advanced
wearable technology sport apparel for elite athletes. The initial
plan had been to produce performance garments for a range of sports
in readiness for the Tokyo Olympic Games in 2020. The project was
put on hold with the delay in the Games but, in combination with
the other supply chain partners, Haydale delivered garments to
several Team GB competitors for use at the rescheduled Games. The
garments benefit from temperature regulated panels, designed using
Haydale's printed functionalised graphene ink, and the Group is now
in discussions with a potential customer who can access the wider
commercial market.
The four-year agreement with DLYB ([2]) , which commenced in
April 2020, allows them to market Haydale's electrically conductive
graphene-enhanced masterbatch in China and Taiwan. The first year
of the contract was reserved for product validation and whilst
these tests have taken longer than scheduled, results continue to
be encouraging and, although some issues persist, we are hopeful of
moving to the commercial phase of the contract during 2022.
Although this is later than anticipated, it is not unusual for the
move from research and development to wider commercial adoption of
cutting-edge technology to take longer than predicted.
In December 2020 we secured our first sale to Bolflex of our
functionalised nano-enhanced rubber masterbatch for use in its
premium shoe range. The masterbatch is incorporated into the
styrene-butadiene rubber compound used in its soles and results
show improvements against its footwear test standards with
increased tear strength and enhanced abrasion, flex and slip
resistance. Subsequent to this announcement, the Company has been
engaged by several companies in the premium leisure footwear market
and is actively working on feasibility studies to demonstrate that
our functionalised masterbatches offer performance enhancement and
a reduced environmental footprint. Post year-end Haydale has filed
for further patent protection in this area.
Haydale's work with Briggs Automotive Company continues with the
use of our graphene enhanced composites for several of the body
panels and for parts of the tooling line. We were delighted to see
that the BAC Mono R won the Track Car of the Year Award at the
prestigious 2021 GQ Car Awards and it is a privilege to be part of
the wider team that is delivering this exceptional car.
Haydale signed an agreement with Dowty Propellers ("Dowty") in
September 2020 for the provision of services for the collaborative
development of graphene and nanomaterial enhanced products for use
in Dowty products. The main body of work completed during the year
and, whilst the results were positive, they did not demonstrate the
specific step change in performance hoped for at this stage. The
parties may look at further projects related to the work performed
but these are unlikely to commence until 2022.
Sale of Plasma Reactors
In April 2021 Haydale partnered with 401 Tech Bridge, Rhode
Island, US, to provide a HT200 Plasma Reactor and advanced
materials support for their innovation ecosystem. The HT200 Plasma
Reactor will be utilised in the 401 Tech Bridge Advanced Materials
and Technology Center, managed by the University of Rhode Island
(URI), to support its ambition to accelerate the commercial
adoption of new materials and support local companies' efforts in
developing next generation products.
This was the first sale of a plasma reactor since the year-ended
June 2019 and was in response to growing interest in the
functionalisation capabilities of our patented HDPlas(R) reactors.
The Directors appraise each approach on its merits with the guiding
tenet that reactor sales must be demonstrably in the long-term
interests of the Company.
Collaboration Agreement with ProMake Limited ("ProMake")
ProMake specialises in design, development and manufacturing of
medical innovations and devices. In November 2020 Haydale signed a
memorandum of understanding with ProMake to formalise the
collaboration on, amongst other areas, conductive and piezo
resistive inks and SynerG supertough and conductive PLA 3D printing
filament. Haydale also supported ProMake's submissions for Lot 2
and Lot 4 of the Public Health England ("PHE") National
Microbiology Framework announced in November 2020. In April 2021
PHE announced that ProMake was one of the successful bidders for
both Lots. In July 2021 the parties signed a new collaboration
agreement for Haydale to be the exclusive supplier of the graphene
and other nanomaterials required for the effective functioning of
ProMake's BioPod, a reusable biosensor device, and also set out
Haydale's responsibility for the manufacturing supply of several
elements of their PreVent testing device, which could also
potentially utilise the anti-bacterial qualities of functionalised
graphene as one of its components.
The Directors are keen to have the opportunity to directly
assist in the fight against Covid-19, but given the uncertainty
inherent in contracts of this nature and scale, the Directors are
taking a prudent approach to their investment of time and resource
at the present time.
Asia Pacific
Our APAC hub in Thailand and sales office in South Korea
continued to make solid progress in the year towards
commercialising Haydale's proprietary technology. The three-year
exclusive agreement with iCraft ([3]) , to supply six tonnes of
functionalised graphene for cosmetic face mask sheets announced in
September 2020 was ahead of schedule at the year end. Haydale
shipped 2.2 tonnes in FY21 against a one tonne commitment and this
may lead to slightly lower volumes in FY22 as the volumes rebalance
back to the contractual requirements. We are also working closely
with iCraft to supply functionalised graphene powder for the
manufacture of their graphene nano platelet enhanced,
anti-bacterial, neoprene PPE face masks. As part of the on-going
collaboration between the parties a sole distributor agreement
covering the UK and Europe was concluded in December 2020 and the
first direct-to-consumer sales of iCraft's PPE face masks were
secured in January 2021 from Haydale's UK web portal. Whilst sales
of PPE face masks have not met our initial expectations, we believe
that highlighting the positive anti-bacterial and other properties
of graphene within wearable
garments will be of value in the medium term.
Haydale has continued to work with IRPC ([4]) and has been
engaged on several projects during the year, including the Phase II
agreement for the development of transparent graphene and
functionalized acetylene black conductive inks for RFID, NFC and
related applications. Our operation has also forged new contacts
within the Thai industrial landscape and is actively collaborating
with a number of well-known international operations who have shown
interest in the potential applications of our product range.
Notwithstanding this progress, APAC revenue in H2 FY21 was below
our expectations. In order to take advantage of the commercial
opportunities available, in May 2021 we appointed our first
Director of Sales in Thailand who came with a strong background in
speciality polymer formulations. We are already seeing the benefits
of the focus and experience that this role brings to our
operations.
North America
From March 2020, Covid-19 had a significant impact on forecast
revenues at this division and we saw a marked slowdown in demand
for SiC and blanks in the last quarter of FY20 and during FY21. The
global aviation industry remained grounded by the pandemic for the
majority of this reporting period, but towards the latter end of
the year, we observed some signs of a recovery in business aviation
and domestic flying activity and, whilst the pace of this recovery
and the speed with which it will filter through the jet engine
supply chain is uncertain, we did see a small increase in sales of
our ceramic blanks during H2 FY21.
Historically this division has been dependent on SiC whisker
sales to two long term customers and we have seen very different
outcomes from these customers during the year. The business
received a commitment from its largest customer to underpin the SiC
whisker volume by increasing its short-term order patterns during
FY21 despite the economic uncertainty and muted demand. The support
we have received this year has ameliorated some of the short-term
impact of Covid-19 but will result in significantly reduced orders
in the year-ending June 2022. Importantly this assistance has
offered the business unit valuable breathing space to deliver on
the initiatives detailed below. Unfortunately, we did not receive
similar support from our second largest whisker customer and,
towards the latter part of the year, we regrettably had to seek
legal intervention to try to secure fulfilment of their FY21
revenue obligations of circa GBP450,000 and at this time the matter
is scheduled for an arbitration hearing in 2022.
As the impact of the pandemic became clearer, the Directors took
defensive measures to reduce the overhead base at the US facility
and sought assistance from widely available US federal stimulus
programmes. The leaner cost base mitigated some of the immediate
revenue impact of the pandemic, but the Directors recognised the
need to reduce reliance on the US civilian aviation sector and to
widen the unit's product offering and expand its geographical
footprint. Specifically, the Group identified the European and the
Far Eastern cutting tools market for sales of both SiC whisker and
blanks. We are pleased to report that these plans had a positive
impact on results at this business unit during FY21 and provides a
more robust foundation for this business to move forward in the
current financial year.
European Blanks Sales
In January 2021 we employed an experienced European agent for
the marketing and sale of SiC blanks into parts of the European
market and other contiguous markets. Subsequent to his employment,
we commissioned third party benchmarking tests at the University of
Zwickau to ensure we were able to match or exceed the quality of
finished cutting tools sold by our competitors in the exacting
European market. Positive test results provided assurance to
potential European cutting tool customers and several are looking
to conduct internal trials on our blanks. In an adjoining market we
achieved our first blanks sale outside of the North American market
and, whilst challenges remain we anticipate this business will
expand in the next financial year. Despite positive initial
contacts with a UK engineering tooling supplier for the
distribution of blanks, at this stage we have been unable to secure
any meaningful business in the UK market.
Far Eastern Sales
The Company signed a Memorandum of Understanding ("MoU") with a
Sino-UK facilitator in FY20 and the early promise shown by this
relationship is now being fulfilled. Further to this MoU, in
January 2021 Haydale announced an Agreement with Qinhuangdao ENO
High-Tech Material Development Co., Ltd ("ENO") which allows it to
act as a sales representative for Haydale's ceramic and silicon
carbide products in China (including Hong Kong) and Taiwan for an
initial period of two years ending December 2022. Under the
Agreement, ENO expected to buy a minimum of $300,000 of product
from Haydale within the first year of the agreement but sales have
been slower than anticipated with the pandemic having a similar
impact on demand as we have seen in our other markets. Haydale has
secured sales to a further four companies in China during the year
and is also actively collaborating on several other projects in
China which would extend our market penetration. We remain
encouraged by the strong interest in our SIC whisker and blanks
offering and, notwithstanding the residual effects of Covid-19,
anticipate revenue growing in this area in the current year.
Product Diversification
The Company has also diversified beyond the aviation and cutting
tools sector and has looked to take advantage of the enhanced
properties that SiC microfibres can deliver for surface bonding
technology applications. In July 2020, Haydale was appointed the
exclusive distributor to the UK water infrastructure market for US
based Zirconia Inc for CeramycGuard(TM) ([5]) . In April 2021 the
Company signed an amended agreement that extended the term from 31
December 2023 to 31 December 2030 and allowed Haydale full
distribution rights of CeramycGuard(TM) across all sectors in the
UK. Furthermore, with authorisation, Haydale may now also
distribute to additional territories outside of the US, for all
markets and sectors.
CeramycGuard(TM) is a one stop solution that can be used in new
concrete applications and also renews and restores old or partly
decaying concrete in-situ in certain applications as well as
preventing water loss. This product is an advanced Ceramic Surface
Treatment technology in a new class of inorganic ceramic polymers,
that uses Haydale's SiC microfibre as part of the reinforcement.
Haydale is working closely with a number of UK water utilities,
other water facility management companies and more general civil
engineering contractors who require a solution to concrete
degradation. During the year we secured our first sale of the
product to a UK water utility and in February 2021 Biwater
positively trialled CeramycGuard(TM) at its wastewater treatment
site in Managua, Nicaragua. We believe there is good potential that
this cutting-edge solution could be very important to the UK water
industry as it seeks to meet its obligations under the new AMP-7
five-year plan which started in 2020.We are currently working to
secure DW31 (Clean Water) accreditation in order to significantly
increase the scope of its potential applications.
Haydale has been looking to enter the wider carbide tooling
market with cost effective lower grade SiC blanks that would serve
the automotive and other cutting tool markets. Our supply partner
is still to overcome the operational challenges involved in scaling
production to required commercial levels. We continue to work to
surmount these issues but at the present time we are not
anticipating any revenue from these lower grade tools.
Focussed R&D investment
The HDPlas(R) functionalisation process continues to be the
cornerstone of the Group's offering underpinning its future growth
prospects. During the year, good progress has been made with
several new and different treatments enabling more tuneable and
enhanced offerings to meet customers' requirements. This
manipulation enables a much greater range of graphene and other
nanomaterial treatments and facilitates potential improvements in
dispersal and mechanical strength, electrical conductivity and
thermal conductivity. During the year we have seen demand for the
functionalisation of other nanomaterials accelerate and in
particular for treated Boron Nitride. Boron Nitride shares many of
the same properties as graphene and is commonly known as white
graphite. When used as a lubricant additive it provides a low
coefficient of friction, enhanced wear and high thermal
conductivity for more efficient heat dissipation from moving parts
to prevent seizure. Haydale has been engaged to functionalise Boron
Nitride to improve its dispersibility. Amongst other developments,
Haydale has:
-- Developed advanced nano enhanced SynerG SuperTough 3D
filament, improving the tensile strength by circa 25%, the strain
failure by 45% and the thermal conductivity by a factor of 3.
Haydale also developed SynerG Conductive PLA 3D Printing Filament,
with electrical conductivity in the range of 4.5E+04 to 4.7E+05 .cm
as well as a30% increase in strength and a 3-fold increase in
thermal conductivity. We are anticipate growing sales in the
additive printing sector in FY22.
-- Developed next generation functionalised inks with
resistivity reduced to under 10 ohms. This lower level resistivity
potentially allows graphene functionalised inks to replace silver,
copper and aluminium etch in certain metal antenna elements of the
growing RFID and NFC sectors and provides a cost effective and
environmentally friendly application. Existing 'tags' are generally
single use and as such are consigned to landfill after use whilst
Haydale functionalised inks are manufactured using a clean process
and there is reduced waste to landfill on disposal; and
-- Refined next generation functionalised biomedical sensor inks
incorporating improved analyte detection through the incorporation
of compatible functional groups to enhance the accuracy of
diagnosis. The latest iteration has increase conductivity and
electrochemical response and provides a cost effective and
environmentally friendly alternative to traditional silver based
printed biomedical sensor electrodes, which are also susceptible to
tarnishing. The ink is being tested by a Far Eastern customer and
we are also in discussion with customers in the UK.
The core thread running through our continued investment in
R&D is the focus on creating and maintaining technological
advantage where we see a clear commercial pathway. Whilst the
gestation period for some of these developments, such as lightning
strike protection on commercial aircraft, is defined by long
product life cycles and mission critical safety thresholds, other
developments such as creation of advanced additive printing PLA and
the development of biosensor inks can be delivered to market in a
much shorter time horizon. It remains core to our strategy that we
invest for the long term whilst taking advantage of the numerous
short-term commercial applications presented by our technology.
Patent Developments
Haydale safeguards the intellectual property that arises from
its on-going investment in research and development through patent
protection. The Company maintains a rolling programme of
applications for both new inventions and also seeks to augment and
extend existing patents by including later enhancements. Amongst
other filings, the following are of special note:
-- Joint Patent with Airbus - During the year the Group has
collaborated with Airbus Operations Limited ("Airbus") on the
filing of a joint patent for intellectual properties jointly
developed by the parties under the multi-party NATEP-supported
Graphene Composites Evaluated in Lightning Strike Project
("GraCELS-2"). In August 2021 Airbus filed the joint patent
application. Further to the successful outcome of GraCELS 2, in
October 2019, Haydale launched a range of graphene enhanced
pre-preg material for lightning strike protection utilising
functionalised nanomaterials to improve the electrical conductivity
and reduce the unloaded weight of an airliner cost effectively and
with clear environmental benefits. Haydale's capability in this
area underpinned the DLYB agreement in early 2020 and the
technology underlying the latest patent further enhances the
effectiveness and performance of Haydale' pre-preg range of
materials; and
-- PATit(TM) - Haydale has been granted a European Patent for
PATit(TM), its anti-counterfeit system which uses functionalised
graphene elements incorporated into printing inks to create unique
security and identity code patterns that are machine readable using
capacitive touchscreen technologies. The code can be verified by
using local or hosted software systems. Whilst the potential
applications for PATit(TM) in the verification of OEM products and
the fight against counterfeit goods are significant there are
remaining technical and manufacturing challenges to wider
integration in a product's security eco-system.
Grant Funded Projects
Collaboration on grant funded projects has continued over the
last twelve months with the continued emphasis that only projects
that have a clear commercial pathway or add significantly to the
Group's knowledge bank on applications are undertaken. Adopting
this yardstick and prioritising commercial projects, reduced the
number of grant funded projects that Haydale undertook in the year,
but this has not diminished the importance of this work in support
of the R&D investment made by Haydale. Grants received were
from either UK or European quasi-governmental bodies and 'promoting
the green economy' and 'cleantech' were the overarching themes for
the funding awarded in the year. Haydale's involvement in several
of these projects relates to its long-standing expertise in
Hydrogen storage which has attracted renewed interest in the past
18 months. Amongst other projects awarded in the year, the
following commenced:
-- Carbo4power - a European consortium whose main objective is
to develop a new generation of lightweight, high strength,
multifunctional, digitalized multi-materials for offshore turbine
rotor blades that will increase their operational performance and
durability while reducing the cost of energy production,
maintenance, and their environmental impact. This multi-year
project complements previous development work on the NATEP funded
GraCELS projects; and
-- Advance Propulsion Centre ("APC") Automotive Transformation
Fund - As part of this wide-ranging APC initiative tasked with
exploring the feasibility of low carbon emission technologies,
Haydale will assess the suitability of its promising lightweight,
low-permeability storage tank, to help unlock the pathway to
hydrogen propulsion. The feasibility study will assess the ability
of Haydale's functionalised graphene enhanced materials to decrease
manufacturing time and rejection rate, as well as to provide
uplifts to permeability, toughness, and impact resistance.
This structured approach to development is facilitating the
internal learning experience and creating potential products to fit
with the organic growth momentum at the centre of our strategic
drive.
During the year, amongst others, the Company successfully
completed the Hibar Film and Affinity projects highlighted in last
year's report and it has been encouraged to apply for further funds
to develop the findings from the Hibar Film project.
Increasing Production Capacity at Ammanford
Haydale has consistently increased its capacity to functionalise
graphene ahead of the production curve at its Ammanford facility.
Prior investment permitted Haydale to meet the demands of its
commercial commitments in FY21, especially in respect of demands
placed by the iCraft cosmetic face sheet supply agreement. During
the year the Group increased its investment at its main production
facility and in particular:
-- Ordered a new HT1400 HDPlas(R) reactor in May 2021 which will
increase capacity eight-fold allowing the facility to functionalise
over thirty tonnes per annum of graphene and other nanomaterials
based on a single shift pattern. Whilst we do not foresee any
significant technical challenges to the delivery of larger capacity
reactors, we are not anticipating that the machine will be fully
optimised until 2022.
-- To support the production scale up, post year end we ordered,
amongst other items, ancillary machinery to increase our mixing and
powder handling capacity; and
-- invested GBP0.05 million in a new gas delivery and piping
system to reduce our production changeover times, enhance output
consistency and to further improve on our exacting health and
safety standards.
We anticipate that this investment which is spread over FY21 and
FY22 will meet our production requirements for the foreseeable
future in the UK and more importantly will allow us to
significantly lower the cost performance ratio that has curtailed
more widespread downstream adoption of graphene to date.
Realigning and reducing the Group's cost base
During the year, the Directors have continued to realign the
cost base to ensure that the Group focuses its resources on
achieving its strategic goals. As the Group has reorganised its
operations and streamlined its reporting lines, it has achieved
both a more efficient and effective operating structure and
delivered significant cost savings. The process that started during
FY19 continued during FY21 and adjusted like for like
administrative expenses have reduced by a further GBP0.70 million
(FY20: GBP0.87 million) in the year and by GBP2.4 million (31.4 %)
since FY18.
The main savings have related to the reduction in the workforce
with the principal savings being in the US operation which was
severely affected by the Covid-19 pandemic. Notwithstanding the
overall reduction in headcount in the year we have, yet again,
increased investment in sales resource and commercial support
functions in the UK and Thailand. Outside of the workforce,
continuing cost reductions across all areas of the business
including sub-letting underutilised premises, reducing travel
expenses, and making numerous smaller and, in themselves,
non-material adjustments which taken together have contributed to
controlling spend.
The savings secured have been achieved in a timely but not
hurried timeframe and without doubt in areas such as travel and
subsistence have been artificially reduced by the Covid-19 travel
restrictions imposed by the relevant authorities. Whilst striving
for a leaner cost base, the Company has focussed first on
operational efficiency and then on achieving that in the most
cost-effective manner. This approach has ensured that, despite the
savings achieved, Haydale is now operating in a more flexible,
responsive and productive manner that supports a can-do culture
across the business units. Whilst our focus on cost control will
not diminish, we anticipate in the coming year that overheads will
marginally rise as we seek to meet the operational challenges of
the sales pipeline.
During FY20 and to a lesser extent in FY21, the Company received
limited support from the UK Government through the furlough scheme
and from the US CARES Act via the Employee Retention Credit
programme. The Company has had no UK employees on either full or
part time furlough since October 2020.
FUTURE STRATEGIC DIRECTIONS
Whilst the Covid-19 pandemic has undoubtedly depressed demand
and subdued our revenue expectations for the year, it has not
defined the Group's performance or slackened the progress towards
our goals. Haydale has 39 verified Technical Data Sheets available
(2018 - Nil) and has executed 38 commercial non-disclosure
agreements since the start of the Covid-19 pandemic. The clear
priority remains to commercialise our cutting-edge technology and
the progress we have made during the year and the opportunities
that we are seeing gives us confidence that we are on a steady path
to more widespread adoption of our technology and the benefits,
both performance and environmental, that it brings.
The Directors remain mindful that downside risks that could
impinge on the general recovery persist, and the Group relies,
amongst other factors, on the pace of recovery of the aerospace and
more generally on the wider economy. However, the solid progress
made in our core business during the year continues to reinforce
the Directors' belief that, whilst navigating the new industrial
landscape will remain challenging and forward momentum is unlikely
to be smooth, the Company is moving in the right direction.
FINANCIAL REVIEW
The Financial Review should be read in conjunction with the
consolidated financial statements of the Group and the notes
thereto. The consolidated financial statements are presented under
International Financial Reporting Standards and are set out on
pages 40 to 76. The financial statements of the Company continue to
be prepared in accordance with FRS 101 and are set out on pages 77
to 84.
Statement of Comprehensive Income
In the year under review, the Group's principal areas of income
were sale of plasma reactors; SiC fibres, whiskers and blanks;
Specialty Inks; and graphene enhanced composites. The Group's
revenue for the year-ended 30 June 2021 of GBP2.90 million (FY20:
2.95 million), showed a small decrease of GBP0.05 million on that
of the prior year. This reduction mainly reflected a fall in the
North American and Asia Pacific business units which was not fully
offset by gains in the UK business units.
Other operating income, which is principally grant funded
projects, at GBP0.58 million (FY20: GBP0.76 million) is below
historic levels which reflects the Company' move away from Grant
funded to commercial projects. The Group received GBP0.14 million
(FY20: GBP0.19 million) from the US Small Business Administration
Paycheck Protection Programme ("PPP") and this is included in Other
Operation Income.
The Group's Gross Profit, which excludes Other Operating Income
declined marginally to GBP1.98 million (FY20: GBP2.06 million)
delivering a Gross Profit margin of 68% (FY20: 70%).
The focus on reducing costs continued in the year and Adjusted
Administrative Expenses fell by GBP0.63 million (11.8%) to GBP4.72
million (FY20: GBP5.36 million). On a pre IFRS 16 basis the
comparable figures for Adjusted Administrative Expenses would have
been GBP5.29 million (FY20: GBP5.99 million). Over the last three
reporting periods the Company has reduced its operating cost base
by GBP2.43 million. Pre IFRS 16 Adjusted administrative expenses
exclude non-cash items such as share based payment charges,
depreciation and amortisation as well as one-off restructuring
costs but includes operating lease costs and, as such, gives
visibility of the ongoing cash impact of our operating cost base.
Total administrative expenses for the year were GBP6.11 million
(FY20: GBP7.05 million).
The Loss from Operations was GBP3.56 million (FY20: GBP4.23
million). Finance costs, which include interest payable on the
Group's debt, for the year were GBP0.21 million (FY20: GBP0.18
million).
The Group continued to direct resource to research and
development with the focus for that investment on products and
process that could develop into sustainable and profitable revenue
streams. R&D spend for the year was GBP1.02 million (FY20:
GBP1.05 million ([6]) ), of which GBP0.26 million was capitalized
(FY20: GBP0.25 million). During the year the Group claimed R&D
tax credits of GBP0.36 million (FY20: GBP0.39 million) and it is
expected that this claim will be received during the current
year.
Total comprehensive loss for the year was GBP3.59 million (FY20:
GBP4.23 million). The loss per share for the year was GBP0.01(FY20:
GBP0.01 loss).
Statement of Financial Position and Cashflows
As at 30 June 2021, net assets amounted to GBP6.76 million
(2020: GBP7.45 million), including cash balances of GBP1.64 million
(2020: GBP0.82 million). Other current assets reduced to GBP3.00
million at the year-end (2020: GBP3.32 million) and this was mainly
related to the reduction in inventory of GBP0.39 million at the US
facility during the year. We anticipate inventory levels will
continue to reduce over the next 12 months at the US site. Current
liabilities reduced to GBP2.78 million as at 30 June 2021 (2020:
GBP2.92 million) due principally to the reduction in Trade and
other payables.
The Right of Use Asset in respect of its leased premises
increased to GBP2.58 million (FY20: GBP1.59 million) due to a
renewed lease on our US facility and the Right of Use Liability
which is split between Current and Non-Current Liabilities
similarly increased to GBP2.74 million (FY20: GBP1.65 million).
These movements were non-cash items and did not impact the cash
outflow in the year. The Company will amortise these balances over
the remaining life of the leases which varies across the sites.
The Group's US Pension Obligations of GBP1.03 million (FY20:
GBP1.44 million) reduced in the year due to a combination of
exchange rate gains and positive movements in the plans funding
requirements.
Net cash outflow from operating activities before working
capital movements for the year reduced to GBP2.04 million (2020:
GBP2.58 million), the principal contributing factors being the Loss
before Taxation of GBP3.41 million (2020: GBP4.02 million). Cash
used in Operations reduced by GBP1.74 million in the year to
GBP(1.58) million (FY20: GBP(3.32)) million. The Group received a
R&D tax credit inflow of GBP0.39 million in FY21 (FY20: GBP0.85
million). The prior year figure included payments for the R&D
claims made in both FY18 and FY19. Net cash used in operating
activities reduced to GBP(1.19) million (FY20 GBP(2.48)
million).
Capital expenditure in the year, excluding the IFRS 16
adjustments set out below, was GBP0.22 million (FY20: GBP0.04
million).
Capital Structure and Funding
As at 30 June 2021, the Company had 425,279,798 ordinary shares
in issue (2020: 340,223,848). No options were exercised into
ordinary shares during the year (FY20: none).
The Group repaid borrowings of GBP0.22 million during the year
under review (FY20: GBP0.84 million), which almost wholly related
to the Group's US borrowing facilities which are secured on the
Group's US based tangible assets.
The Company received GBP0.80 million of a GBP1.1 million UKRI
Innovation Loan during the year to support scale up capital
expenditure. The remaining funds are expected to be drawn down in
FY22. The Group's US working capital facility which was secured on
a combination of the fixed assets, inventory and trade receivables
of the US business was fully utilised at the year-end (2020: fully
utilised). The net result was that the Group's total borrowings at
the year-end were GBP1.73 million (2020: GBP1.25 million), of which
GBP0.85 million was in the UK and the balance in the Group's US
subsidiaries. The UKRI Innovation loan a quarterly liquidity
covenant applies until April 2024. There are no financial covenants
extant in respect of the UK bounceback loan of GBP0.05 million
(FY20: GBP0.05 million) or the Group's US borrowings.
Post Balance Sheet Event
On 20 September 2021, the Company raised GBP5.10 million (gross)
through the placing, retail offer and subscription of 85,055,893
new Ordinary Shares at 6.00 pence per share. The funds raised will
be used to fund the general working capital needs of the business,
support the scaling up of manufacturing capacity at the Ammanford
site and drive forward product rollout into the US market.
Key Performance indicators
The Group has historically reported financial metrics such as
revenues, gross profit margin, adjusted operating loss, cash
position and other metrics as its key performance indicators and
these are set out below.
FY21 (GBPm) FY20 (GBPm)
------------- -------------
Revenue 2.90 2.95
Gross profit margin 68% 70%
Adjusted operating loss (2.17) (2.54)
Cash position 1.64 0.82
Borrowings 1.73 1.25
During the year under review, management also used a sales
tracker, a key non-financial performance metric to monitor the
revenue pipeline of the business. The sales tracker monitors the
number of accredited leads and assigns a probability of revenue
realisation to those leads.
SECTION 172(1) STATEMENT
The Directors acknowledge their duty under s.172 of the
Companies Act 2006 ("s172") and consider that they have both
individually and together acted in the way that, in good faith,
would be most likely to promote the success of the Company for the
benefit of its members as a whole, having regard to the matters set
out in s.172.
The Directors have set out the ways in which they look to fulfil
their duties in the year at section 3 of the Chair's Corporate
Governance Statement on page 21.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board considers that the principal risks and uncertainties
facing the Group may be summarised as follows:
Impact of Covid-19 and General Economic Uncertainty
Despite a robust performance, the Covid-19 pandemic has
adversely affected customer demand and subdued Group revenues
during the year under review. The Directors accept that there
remains a varying degree of economic uncertainty in all of the
countries in which it has facilities and in the markets in which it
operates. The Directors are provided with detailed projections that
model future performance and liquidity of the Group and funding
decisions are based on these forecasts.
Health and Safety
Many of the Group's products are advanced materials that are
nano in size and, although there is little actual evidence of any
health risks associated with the handling of the Group's products,
there is a theoretical risk that the Group's products could be a
danger to health if an individual is exposed to and/or
inhales/ingests some of the Group's products. The Group takes
health and safety very seriously and manages the potential health
and safety risk by regular staff training, well maintained
facilities and restricting activities to only certain qualified
individuals. The UK facilities are ISO 9001 and ISO 14001
accredited and the Thailand facility has ISO 9001
accreditation.
Acceptance of the Group's Products
The success of the Group will depend on the market's acceptance
of, and attribution of value to, advanced materials technology
developed by the Group based on successfully mixing and dispersing
raw, mined graphite, synthetically produced graphene and other
nanomaterials into customers' existing products in order to improve
the mechanical, thermal or electrical properties of these
products.
Notwithstanding the technical merits of the processes developed
by the Group, and the extensive market and product research carried
out by management to assess the likelihood of acceptance of the
Group's products, there can be no guarantee that its targeted
customer base for the processes will ultimately purchase the
Group's products.
Speed of product adoption
While the Group makes every effort to establish realistic
timelines for customer engagement, testing and purchasing of
Haydale's products, there are often unforeseen delays (by both
parties) in forecasting the commencement of sales. There may be
regulatory hurdles to overcome and end-customer risk aversion in
accepting a new nanomaterial enhanced product. Following the
realignment in 2019, the focus on commercial product sales remains
an absolute priority, notwithstanding that the timing and adoption
of Haydale's newly developed product lines remains difficult to
predict.
Intellectual Property Risk
The Group's success will depend in part on its ability to
maintain adequate protection of its IP portfolio, covering its
manufacturing process, additional processes, products and
applications, including in relation to the development of specific
functionalisation of graphene and other nanomaterials for use in
particular applications. The IP on which the Group's business is
based is a combination of granted patents, patent applications and
confidential know-how.
Internal procedures and controls are in place to capture and
exploit all generated IP as well as to protect, limit and control
disclosure to third parties and partners. The Group aims to
mitigate any risk that any of the Group's patents will not be held
valid if challenged, or that third parties will claim rights in, or
ownership of, the patents and other proprietary rights held by the
Group through general vigilance, regular international IP searches
as well as monitoring activities and regulations for developments
in copyright/intellectual property law and enforcement. The Group
retains third party professional experts to assist.
Information and Communications Technology ("ICT") Risk
The inability to access data for a period of time either due to
systems failures or the unauthorised intervention of malicious
parties may severely impact the Group's ability to conduct its
day-to-day business, lead to the loss of sensitive information or
result in loss of funds in a ransomware attack.
The Group aims to mitigate these threats by maintaining a
third-party ICT support agreement with a respected contractor,
ensuring industry standard cyber security procedures are followed,
setting out clear internal procedures for communicating potential
ICT breaches and by providing adequate staff training on the cyber
security risk that all users face. In the event that these
procedures are inadequate the Group maintains a business continuity
plan with our service provider that covers longer term denial of
access.
Dependence on Key Personnel
The Group's business, development and prospects are dependent
upon the continued services and performance of its Directors and
other key executives. The experience of the Group's personnel helps
provide the Group with a competitive advantage. The Directors
believe that the loss of services of any existing key executives,
for any reason, or failure to attract and retain necessary
additional personnel, could adversely impact on the business,
development, financial condition, results of operations and
prospects of the Group. The Group aims to mitigate this risk by
providing well-structured and competitive reward and benefit
packages that ensure our ability to attract and retain key
employees.
By order of the Board
David Banks
Chair
14 December 2021
BOARD OF DIRECTORS
The Haydale board consists of experienced commercial directors
from a range of industries that include engineering, retail,
finance and accounting, and technology. Brief biographies of each
of the directors are set out below.
David Doidge Richard Banks, Non-Executive Chair
David Banks started in stockbroking in Birmingham in 1979 with
Harris, Allday, Lea and Brooks before moving to London and becoming
an Institutional Salesman at Panmure Gordon where he was acclaimed
in the Automotive, Engineering, Aerospace and Motor Distributors
sectors. He subsequently became a Corporate Broker advising many
companies on their Corporate Structure, Strategy, Messaging and
Presentations. He also raised the Capital for many of these
Companies both at IPO and in Secondary fund raises. David joined
Haydale as Non-executive Chair in July 2017 and was appointed as
Interim-executive Chair on 5 September 2018 and, following the
general meeting on the 12 March 2019, reverted to Non-executive
Chair.
David has significant city experience and has advised companies
in the Automotive, Aerospace and Motor Distribution sectors on
their corporate structure, strategy m messaging and presentation.
He has experience of raising capital for growing companies and is
responsible for liaison with our major shareholders.
Keith Broadbent; Chief Executive Officer
Prior to joining Haydale, Keith held a number of senior
operational and commercial positions which covered aerospace,
defence, automotive, marine and medical sectors. His experience
includes significant multi-site responsibilities in both the UK and
internationally and he has worked for Princess Yachts
International, Sunseeker, TT Electronics and most recently Ultra
Electronics. Keith has demonstrated a strong track record in the
delivery of budgets, high level customer service and enhancing
shareholder value. Keith joined Haydale in July 2017 and was
appointed the Group's Chief Executive Officer in March 2019.
Keith holds an MBA from Derby University and this, coupled with
his customer contact and manufacturing experience across a number
of different sectors encompassing design, supply chain,
manufacture, commercial and financial elements of business, are a
key skill requirement in the ongoing journey moving Haydale into a
market led commercial scale manufacturing organisation putting
people at the centre of the enterprise strategy,
Mark Chapman - Chief Financial Officer
For the last 19 years, Mark held a number of CFO and COO roles
within international companies operating in the med-tech, beverages
and consumer sectors, where he has helped deliver strong
improvements in business sustainability and EBITDA growth. Prior to
moving into industry, Mark spent 8 years in professional services
firms, including 5 years as a corporate financier with Deloitte.
Before embarking on his career in finance, Mark was a commissioned
officer in the British Army. Mark qualified as a chartered
accountant in 1995 and holds a degree in Economics from the
University of Birmingham. Mark joined Haydale as CFO in November
2019.
Mark brings experience of working in Board positions in
international multi-currency businesses undergoing periods of
sustained change. He has a strong foundation in accountancy
supplemented by experience in mergers and acquisition, corporate
restructuring and raising equity and debt finance.
Graham Dudley Eves MA, Non-Executive Director
Graham Eves joined GKN plc in 1967 where he spent 13 years
operating across multiple overseas jurisdictions including, for the
last 5 years, setting up and running a special operation for GKN
plc's head office in Switzerland. He returned to the UK in 1980 to
work in venture capital and establish his own international
business consultancy. His main activities covered advising a range
of German, North American and Japanese automotive
component/technology suppliers and he co-founded and was chair of
an automotive technology company, Mechadyne (now part of
Rheinmetall Automotiv AG). Graham was a non-executive director of
AB Dynamics plc from flotation until September 2020. He was on the
AIM advisory committee of the London Stock Exchange ("LSE") for 6
years and has a Master of Arts degree in Modern and Medieval
Languages from the University of Cambridge.
Graham is a Non-Executive Director of Viritech Limited and
iVapps (UK) Limited, Chair of Zero E Technologies, Inc. and a
director of Zeus Motors, Inc. He has an extensive range of
international business contacts and years of experience of
negotiating technology licence deals. He is particularly interested
in the challenges of growing and structuring small high technology
companies so that they can find their places on the world
stage.
Theresa Wallis Non-Executive Director
Theresa Wallis worked most of her executive career in financial
services, moving into technology commercialisation in 2001. She was
with the LSE for 13 years, where from 1995 to 2001 she was COO of
AIM, having managed the market's development and launch. From 2001
to end 2006 she was a principal executive of ANGLE plc, a venture
management and consulting business focusing on the
commercialisation of technology. Since 2001 she has held a number
of non-executive directorships, including LiDCO Group plc where she
was non-executive chair, Veriton Pharma Ltd and the Quoted
Companies Alliance. Prior to joining the LSE, she worked for
Hambros Bank and then Canadian Imperial Bank of Commerce in London.
Theresa has a degree in Zoology from the University of Oxford and a
Diploma in Company Direction from the Institute of Directors.
Theresa has a background in business development and technology
commercialisation alongside her experience of working with AIM and
other companies at a similar stage of development. She brings a
range of corporate governance, business development, financial and
commercial experience to the Company.
Theresa joined the Board of Haydale in June 2020.
DIRECTORS' REPORT
The directors present their report and the audited financial
statements for Haydale Graphene Industries Plc (the "Company"), a
public company incorporated and registered in England and Wales
with company number 07228939, and its subsidiaries (together the
"Group") for the year ended 30 June 2021.
There are a number of items required to be included in the
Directors' Report which are covered elsewhere in the annual report.
Details of directors' remuneration and share options are given in
the Directors' Remuneration Report, details of the use of financial
instruments and financial risk management objectives and policies
are given in note 22 of the financial statements and the Strategic
Report on pages 5 to 12 covers the following matters:
-- Principal Activities;
-- Review of the Business and Future Developments;
-- Key Performance Indicators; and
-- Research and Development.
Statement of Directors' Responsibilities in respect of the
Annual Report and the Financial Statements
The directors are responsible for preparing the strategic
report, the annual report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the directors
have elected to prepare the Group financial statements in
accordance with International Financial Reporting Standards (IFRSs)
in conformity with the requirements of the Companies Act 2006 and
the Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law, the directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss for the Group for that
period. The directors are also required to prepare financial
statements in accordance with the rules of the London Stock
Exchange for companies trading securities on the AIM market.
In preparing these financial statements, the directors are
required to:
- Select suitable accounting policies and then apply them consistently;
- Make judgements and accounting estimates that are reasonable,
relevant, reliable and prudent;
- State whether they have been prepared in accordance with IFRSs
in conformity with the requirements of the Companies Act 2006;
- For the Parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject to
any material departures disclosed and explained in the financial
statements; and
- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the Group's website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Dividends
The directors do not propose the payment of a dividend (2020:
nil).
Directors
The following directors have held office since 1 July 2020 and
up to the date of signing the financial statements:
David Banks Graham Eves
Keith Broadbent Theresa Wallis
Mark Chapman
Directors' Interests in Ordinary Shares
The directors had the following interests in ordinary shares of
the Company at the 30 June 2021 and at the date of this report:
Director Number of Shares % of Share Number of Shares % of Share
at 30 June Capital at 14 December Capital
2021 2021
------------------ ------------------ ------------ ------------------ ------------
David Banks 3,098,809 0.73 3,250,000 0.64
Keith Broadbent 785,714 0.18 952,381 0.19
Mark Chapman 560,714 0.13 750,000 0.15
Graham Eves 142,857 0.03 142,857 0.03
Theresa Wallis 428,571 0.10 511,904 0.10
Directors' and Officers' Liability Insurance
Qualifying indemnity insurance cover has been arranged in
respect of the personal liabilities which may be incurred by
directors and officers of the Group during the course of their
service with the Group. This insurance has been in place during the
year and on the date of this report.
Post Balance Sheet Event
On 20 September 2021, the Company raised GBP5.10 million (gross)
through the placing, retail offer and subscription of 85,055,893
new Ordinary Shares at 6.00 pence per share.
Foreign Currency, Interest Rate, Credit and Liquidity Risk
The directors do not consider any of these potential risks to
pose a significant risk to the Group or its operations over the
coming year. See note 22, Financial Instruments, for further
details.
Going Concern
The Directors have prepared and reviewed detailed financial
forecasts of the Group and, in particular, considered the cash flow
requirements for the period from the date of approval of these
financial statements to the end of December 2022. These forecasts
sit within the Group's latest estimate and within the longer-term
financial plan, both of which have been updated on a regular basis.
The Directors are also mindful of the impact that the other risks
and uncertainties set out on pages 14 to 15 may have on these
estimates and in particular the speed of adoption of new technology
during these uncertain times.
As part of this review the Directors have considered several
scenarios based on various revenue, cost and funding
sensitivities.
Revenue
Various sensitivities have been applied to forecasted revenue
including a stress test scenario which reduces forecasted revenue
by circa 72 per cent, to the point where the Group would breach its
available cash resources at 31 December 2022. With respect to this
'stress test' the Group has a significant proportion of that
sensitised revenue within forward orders, contractual or some other
form of customer assurance which have a high degree of
certainty.
Cost Mitigation
The Directors have included some low-level assumptions regarding
cost savings that might be achievable if the forecast fails to meet
the forecasted or sensitised estimates, and these have been phased
in gradually over the 12-month period to 31 December 2022.
Customer Solvency
As part of this review the Directors have assessed the solvency
of key customers and their ability to deliver on their contractual
or other commitments on the basis of publicly available information
and included the results of these assessments in our forecasts.
Summary
Therefore, after due consideration of the forecasts prepared,
the sensitivities applied and the Group's current cash resources
after the fund raise in September 2021 and the terms of its debt
facilities, the directors consider that the Company and the Group
have adequate financial resources to continue in operational
existence for the foreseeable future (being a period of at least 12
months from the date of this report), and for this reason the
financial statements have been prepared on the going concern
basis.
Disclosure of information to auditors
All of the current directors have taken all the steps that they
ought to have taken to make themselves aware of any information
needed by the Company's auditors for the purposes of their audit
and to establish that the auditors are aware of that information.
The directors are not aware of any relevant audit information of
which the auditors are unaware.
Independent auditors
The auditors, Grant Thornton UK LLP have expressed their
willingness to continue in office and a resolution concerning their
re-appointment will be proposed at the annual general meeting.
Statement by the Directors
The Directors consider the annual report and accounts, taken as
a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
By order of the Board
David Banks
Chair
14 December 2021
CHAIR'S CORPORATE GOVERNANCE STATEMENT
Overview
As Chair of the Board of Directors of Haydale Graphene
Industries Plc ("Haydale", the "Group" or the "Company"), it is my
responsibility to ensure that Haydale has both sound corporate
governance and an effective Board. This is achieved by maintaining
a corporate governance framework that includes regular meetings of
the Board and its committees, with informative, relevant and timely
information flow. We regularly review our governance processes to
ensure we are constantly improving. The Board members have
extensive experience of managing AIM companies, including knowledge
of the AIM Rules and the Market Abuse Regulations. Haydale adopts
the Quoted Companies Alliance Corporate Governance Code ("QCA
Code") and this report follows its structure and explains how we
have applied it. The principal methods of communicating our
application of the QCA Code are this Annual Report and through our
website, at www.haydale.com.
The Board believes that corporate governance is more than just a
set of guidelines; we believe that good corporate governance
improves long-term success and performance, whilst reducing or
mitigating risks.
Below are the Company's explanations of how it has complied with
the 10 principles of the QCA Code during the year.
QCA Principles
1. Establish a strategy and business model which promotes
long-term value for shareholders
The Board has concluded that the highest medium and long-term
value can be delivered to its shareholders by the adoption of a
single purpose for the Company: To use our knowledge of advanced
materials and dispersion to be one of the world's foremost creators
of material change, enabling our customers to improve the
performance of their products. To achieve this, the Company aims to
grow organically and, if necessary, by acquisition, to extend the
Group's client base and geographical penetration and use its
existing expertise and global reach to generate commercial
opportunities in the high growth advanced materials industry.
Haydale's business model and strategy, together with the principal
risks and uncertainties facing the Group, are set out in the
Strategic Report on pages 5 to 12 of this Annual Report. The
Directors intend that the strategy will deliver shareholder returns
initially through capital appreciation and eventually through
distributions via dividends.
2. Seek to understand and meet shareholder needs and
expectations
The Board is committed to maintaining good communication and
having constructive dialogue with its shareholders.
The Directors meet shareholders and other investors or potential
investors during the year, especially following the announcement of
the Annual and Interim Results. The Company also hosts broker and
analyst meetings. David Banks is the Director appointed as the main
point of contact for shareholder liaison and the Directors ensure
that shareholder views are taken into account. Due to the Covid-19
pandemic, most meetings over the past year with shareholders and
brokers took place via videoconference or, when permitted, by
national and regional regulations and guidance, visits to the main
production site at Ammanford were organised.
The Company intends to have close ongoing relationships with its
larger private shareholders, institutional shareholders and
analysts and for them to have the opportunity to discuss issues and
provide feedback at meetings with the Company. The Company receives
reports from its corporate registrar and from Argus Vickers. In
normal years the whole Board attends the Company's Annual General
Meeting ("AGM"), which is regarded as an opportunity to meet,
listen and present to shareholders, all of whom are normally
encouraged to attend. Whilst shareholders were advised not to
attend the 2020 AGM, they were invited to ask questions by email
and submit their votes in advance by proxy. Looking ahead, the
Company will continue to monitor and comply with prevailing
guidance when determining if shareholders are able to safely attend
the next AGM and hopes that this will be the case. The outcomes of
each of the AGM votes are announced following the meeting. If there
is a resolution passed at a general meeting with a significant
number of votes against, the Board seeks to understand the reason
for the result and, where appropriate, takes suitable action.
The Company's broker and nominated advisor is briefed regularly
and keeps the Company appraised of market and regulatory
developments as they affect the Company.
3. Take into account wider stakeholder and social
responsibilities and their implications for long-term success
The Board is mindful of its statutory duty under s172 of the
Companies Act and the Directors have acted in a way that they
considered, in good faith, to be most likely to promote the success
of the Company for the benefit of its stakeholders as a whole, and
in doing so, had regard amongst other matters to the:
-- Foreseeable or likely consequences of any decision in the long term;
-- interests of the Company's employees at each of its five facilities;
-- need to foster the Company's business relationships with suppliers, customers and others;
-- impact of the Company's operations on the community and the environment; and
-- importance of the Company maintaining a reputation for high standards of business conduct.
In doing so, the Board recognises the Company is reliant upon
the efforts of the employees of the Company and its collaboration
partners, suppliers, regulators and other stakeholders whether they
are identified under s172 or not. The Board ensures that there is
close oversight and contact with its key resources and
relationships and, whilst this has been more challenging during the
year given the Covid-19 pandemic and consequent meeting, travel and
other restrictions, the Company has used video conferencing and
other modes of communication to maintain its efforts in this
regard. The following paragraphs set out how we engage with our
stakeholders.
Everyone within the Group is a valued member of the team, and
our aim is to help every individual achieve their full potential.
We offer equal opportunities regardless of race, gender, gender
identity or reassignment, age, disability, religion or sexual
orientation. The unfamiliar challenges raised by Covid-19 have
required the Company to adapt its procedures to comply with
national and local guidance in the jurisdictions in which it
operates. Health and safety of our team was prioritised and
compliant protocols were introduced at our sites which all remained
operative throughout the year. Where feasible employees moved to
homeworking during the pandemic and for those who were advised to
shelter due to personal or household circumstances and, where
homeworking was not practical, appropriate measures, including use
of the various Government support schemes, were put in place to
reduce the anxiety caused by any protracted time away from the
business. Those working from home were given access to a
videoconference facility and communication with employees was
increased to include weekly team calls alongside the normal
business related meetings. The Company is still of a size where the
Executive Directors know all of the team and employees were aware
that they were able to contact the senior leadership directly to
ask questions on any topic that concerned them.
Notwithstanding the demands imposed by the pandemic, the Group
has continued to invest in staff training to ensure that employees
have the skills to meet their responsibilities as part of a modern
international operation.
The Company prepares a detailed budget annually which takes into
account the Group's strategy and its available key resources
including staffing, working capital, production capacity and
functionalisation capabilities.
In depth analysis and reviews of each business unit's budgeted
business plan are agreed at the start of each financial year, with
contributions from all involved parties which facilitates a two-way
communication channel with agreement on the goals, targets and
aspirations of the Company. This provides each strategic business
unit with the opportunity to raise issues and provide feedback to
the Board via the executive members. These feedback processes help
to ensure that the Company can respond to new issues and
opportunities that arise to further the success of the Group.
The Company has close ongoing relationships with a broad range
of its stakeholders and, as set out above, provides them with the
opportunity to raise issues and provide feedback to the Company.
The Company seeks regular feedback from its stakeholders which
include employees, industry participants, such as customers,
graphene producers, R&D facilities, including universities and
academic institutions whilst simultaneously embracing influential
movers within the advanced materials industry who may positively
influence perception of the Company. This feedback is generally but
not exclusively received through formal performance reviews
(employees) and informal meetings. Feedback received is reviewed,
considered, and, if changes are required, actioned appropriately.
The Company communicates with its stakeholders and takes account of
their feedback in order to develop products that meet the needs of
their customers and that can be supplied reliably, cost effectively
and in line with applicable standards.
The UK is ISO 9001:2015 accredited and the UK and Thailand
operations are ISO 14001:2015 accredited. and the Group complies
with relevant health and safety and environmental legislation.
Through the employment opportunities it provides it has a
beneficial community effect.
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The Board oversees and reviews the Group's risk management and
internal control mechanisms.
During the year the risk register was regularly reviewed by the
senior management working in conjunction with the site managers.
The risk register sets out the assessed risks and the key actions
and processes to mitigate those risks and the individual or group
responsible for ensuring that these are performed.
The review process involves the review and identification of
risks, assessment to determine the relative likelihood of them
impacting the business and the potential severity of the impact and
determination of what needs to be done to minimise their likelihood
and/or mitigate their impact. The risk register sets out and
categorises these risks and outlines the controls and any further
actions required.
During the year particular focus was given to the risks
associated with the Covid-19 pandemic and the growing cybersecurity
risk that all organisations face. As set out below the risk
register was considered by the Audit Committee at its meeting in
May 2021. The principal risks and uncertainties to the business and
steps to mitigate them are set out in the Strategic Report in this
Annual Report on pages 14 to 15.
The Board has established appropriate reporting and control
mechanisms. The system of internal control is structured around the
risks set out in the risk register and is designed to address those
risks that the Board considers to be material, to safeguard assets
against unauthorised use or disposition and to maintain proper
accounting records which produce reliable financial and management
information.
Further key features of the Company's internal control system
include the following:
-- Close management of the business by the executive directors;
-- Monthly management accounts information is prepared and
reviewed by the Board, including variances against the annual
budget, latest expectations and prior year;
-- There is a schedule of matters reserved for decision by the Board;
-- A clearly defined organisational structure is in place, with
clearly delegated authorities, reporting lines and roles;
-- Defined levels/limits for authorisation of expenditure and
placing of orders and clearly set out authorisation procedures;
and
-- Quality management systems are implemented and regularly
audited by an independent third party. The UK operations are
Company is ISO 9001:2015 and ISO 14001:2015 certified and the
Thailand facility is ISO 14001:2015
5. Maintain the board as a well-functioning, balanced team led
by the Chair
The Board comprises two executive directors and three
non-executive directors as follows:
Executives
-- Chief Executive Officer: Keith Broadbent;
-- Chief Financial Officer: Mark Chapman;
Non-executives
-- Non-executive Chair: David Banks;
-- Independent Non-executive: Graham Eves; and
-- Independent Non-executive: Theresa Wallis.
Biographical details of the Directors can be found here at
www.haydale.com. or in this Annual Report on pages 16 to 17.
All the Non-Executive Directors are expected to dedicate at
least 24 days per annum to the Company. Mr Broadbent and Mr Chapman
are full time. One third of Board are subject to re-election at
each AGM.
Board meetings are open and constructive, with every Director
participating fully. Senior management are also invited to meet
with the Board, providing further insights into the Company's
activities and performance. The full Board had seven regular
meetings in the year. Regular board meetings are scheduled in
advance, but the Board also meets as and when required. In order to
be efficient, the Directors meet formally and informally in person,
by telephone or videoconference. This was particularly the case in
the last year due to the Covid 19 restrictions, when all but two of
the board meetings took place by videoconference. Board papers are
prepared by the relevant personnel and circulated to the Board at
least 48 hours before meetings, allowing time for consideration and
necessary clarifications before the meetings. Directors are free to
seek any further information they consider necessary.
The Non-executive Directors meet without the presence of the
Executive Directors during the year, and also maintain ongoing
communications with Executives between Board meetings.
During the year ended 30 June 2021, the Company held 21 board
meetings (FY20: 20), with each member's attendance as follows:
Number of board meetings
attended
------------------------------
Director Scheduled Ad hoc Total Total
FY21 FY21 FY21 FY20
------------------ ----------- ---------- -------- --------
David Banks 7/7 14/14 21/21 20/20
Keith Broadbent 7/7 14/14 21/21 19/20
Graham Eves 7/7 13/14 20/21 16/20
Mark Chapman 7/7 14/14 21/21 14/14
Theresa Wallis 7/7 14/14 21/21 1/1
Attendance at the Company's audit, remuneration and nomination
committee meetings during FY21 and the prior year were as
follows:
Number of committee meetings attended
---------------------------------------------------
Audit Remuneration Nominations
---------------- ---------------- ---------------
Committee member FY21 FY20 FY21 FY20 FY21 FY20
------------------- ------- ------- -------- ------ ------- ------
David Banks 4/4 3/3 2/2 8/8 - 3/3
Graham Eves 4/4 3/3 2/2 6/8 - 3/3
Theresa Wallis 4/4 1/1 2/2 -/- - -/-
Terms of reference for each of the Board's Committees are
published on the Group's website, The Company believes that the
Committees have the necessary skills and knowledge to discharge
their duties effectively.
6. Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
The Company believes that the Directors have an appropriate
breadth and depth of skills, knowledge and experience to fulfil
their roles, reflecting a broad range of personal, commercial and
professional skills across geographies and relevant sectors and
experience of public markets. Details of the Directors' experience
and areas of expertise and the relevant skills each Director brings
to the Board are outlined on pages 16 to 17 of this Annual Report
and on the Company's website.
In addition to their general board responsibilities,
Non-executive Directors are encouraged to be involved in site
visits and meetings, in line with their individual areas of
expertise, though this was curtailed for much of the year due to
Covid 19 restrictions.
The Company has employed the services of ONE Advisory Limited to
provide assistance to the Company in its Company Secretarial and
MAR compliance needs. Matt Wood, a director of ONE Advisory
Limited, is Haydale's Company Secretary.
If required, the Directors are entitled to take independent
legal advice and, if the Board is informed in advance, the cost of
the advice will be reimbursed by the Company.
In addition, the Company is a member of the QCA and as such all
the directors have access to briefings issued by the QCA and also
access briefing, updates and events offered by other professional
advisory firms.
7. Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
We stated last year that every other year the Board expects to
carry out an internal Board and Committee evaluation exercise,
including that of the Chair and individual directors. Subsequent to
the year end the Company commenced its first evaluation exercise
and the results and recommendations of that assessment will be set
out in next year's report. The Chair is leading the evaluation
exercise and a non-executive Director will lead the review of the
performance of the Chair.
Board succession planning is one of the responsibilities of the
Nomination Committee as set out in Principle 9 on page 26. Below
the main Board the CEO seeks board approval for his recommendations
on senior management appointments and changes to the subsidiary
boards. During the year a number of appointments were made to the
subsidiary Boards in the UK.
8. Promote a corporate culture that is based on ethical values
and behaviours
The Board recognises that its decisions regarding strategy and
risk will impact the corporate culture of the Company as a whole
and that this will impact the performance of the Company. The Board
is very aware that the tone and culture set by the Board will
greatly impact all aspects of the Company as a whole and the way
that employees behave.
Our culture acts as the glue that binds our staff around the
world together. Underpinning the Haydale culture is the need for
team work and we expect all employees to:
-- Be an active member of the team ensuring that support and
cooperation is given to other members to assist them in achievement
of Company objectives.
-- Work proactively with colleagues to give a professional and
speedy service to clients/customers.
-- Coordinate activities with other colleagues to ensure the
smooth running of the business and excellent customer service.
-- Participate in the creation of a stable and cohesive team
within the Company and assist all staff to maximise their
contributions to the business.
-- Be adaptable and flexible in respect of work undertaken as
and when the needs of the business dictate.
The Company is working towards the goal of a "one team" shared
culture that supports an open and respectful dialogue with
employees, clients and other stakeholders, and is underpinned by
sound ethical values and behaviours. These values are reinforced at
the regular team and site performance reviews and also at intersite
meetings which, amongst other areas, cover sales, marketing,
technical and health and safety matters.
The Company has implemented a quality system based on the
rigorous standards of BS EN ISO 9001 and 14001 and adherence to
this Quality System is mandatory throughout the Company. All
employees are encouraged to take responsibility for the quality of
their own workmanship and to work with their colleagues towards
maintaining our ISO standards.
To ensure we meet the high standards that we set ourselves
employees are formally appraised each year and clear personal
objectives are set out within personal development plans.
Individual training needs are defined by these reviews and this
training is combined with wider department and group training
initiatives.
The Board attaches great importance to the health and safety of
its employees and stakeholders who handle or use the Group's
products. Health and safety is a standing item on the Board's
agenda, with reports reviewed by the board at each scheduled board
meeting. The Company's Health and Safety policy and the respective
site Health and Safety plans are enforced rigorously and this has
never been more important than in the past year in the face of the
Covid-19 pandemic.
9. Maintain governance structures and processes that are fit for
purpose and support good decision-making by the board
The Board is committed to, and ultimately responsible for, high
standards of corporate governance, and has chosen to adopt the QCA
Corporate Governance Code. We review our corporate governance
arrangements regularly and expect to evolve these over time, in
line with the Company's growth. The Board delegates
responsibilities to committees and individuals as it sees fit, with
the Chair being responsible for the effectiveness of the Board, and
the Executive Directors being accountable for the management of the
Company's business and primary contact with stakeholders.
The Chair is responsible for the leadership of the Board and
ensuring its effectiveness in all aspects of its role. He is also
responsible for creating the right Board dynamic and for ensuring
that all important matters receive adequate time and attention at
Board meetings. He is also the director appointed as the main point
of contact for shareholder liaison. The CEO is responsible for the
day-to-day running of the business as well as developing corporate
strategy while the Non-Executive Directors are tasked with, for
example, constructively challenging the decisions and
recommendations of executive management and satisfying themselves
that the systems of business risk management and internal financial
controls are appropriate.
The Board has adopted appropriate delegations of authority which
sets out matters which are reserved to the Board as summarised
below:
-- The Group's strategy and vision
-- Determining management's performance
-- Board membership and membership of subsidiary boards
-- Approval of major capital expenditure
-- Financial reporting, risk management and internal controls
-- Contracts, including potential acquisitions or investments in new projects or products
-- Corporate governance
-- Approval of annual budgets
-- Approval of annual and interim reports
-- Approval of changes in equity or debt funding
-- Dividend recommendations and policy
The Board delegates certain duties and, where applicable,
authority, to the following three board Committees to assist in
meeting its business objectives whilst ensuring a sound system of
internal control and risk management. The Committees meet
independently of Board meetings.
Audit Committee
The Audit Committee has three members, Theresa Wallis (Chair),
Graham Eves and David Banks. The CFO and external auditors normally
attend meetings by invitation. The Audit Committee is responsible
for assisting the Board in fulfilling its financial and risk
responsibilities. The Audit Committee oversees the financial
reporting, risk management and internal control. The Audit
Committee advises the Board on the appointment and removal of the
external auditor and discusses the nature, scope and results of the
audit with the auditors. The Audit Committee reviews the extent of
non-audit services provided by the auditors and reviews with them
their independence and objectivity. The Audit Committee plans to
meet not less than twice in each financial year.
During the year the Committee met four times. The Committee met
twice in October 2020 to consider the draft report and accounts for
the year ended 30 June 2020, including the key judgements and
estimates including revenue recognition, going concern, carrying
value of intangible assets, and valuation of the defined benefit
pension scheme as well as the independence of the auditors and
their fees. The Committee reviewed the feedback from the auditors
(Grant Thornton UK LLP) as set out in their Audit Findings Report
to the Board at the second meeting.
The third meeting of the Committee was held in February 2021 to
consider the draft interim results and receive updates on the risk
register and the Group's internal control mechanisms.
The fourth meeting of the Committee was held in May 2021. The
meeting considered the terms of engagement between the Company and
Grant Thornton UK LLP as well as the audit plan for the Group. At
this meeting the company also reviewed the risk register.
Due to the Covid-19 restrictions, the first three meetings of
the Committee were held via videoconference. The auditors attended
the October and May meetings by videoconference, with the
Committee, CEO and CFO attending in person at the May meeting.
During the October and May meetings, a discussion took place
between the Audit Committee and the auditors without management
being present.
Remuneration Committee
The Remuneration Committee has three members, David Banks
(Chair), Graham Eves and Theresa Wallis. The members are all
non-executive Directors. Other members of the Board may attend the
Committee's meetings at the request of the Committee Chair.
The remit of the Committee is primarily to ensure that the
executive directors are provided with appropriate remuneration
packages. The Committee reviews the performance of the Executive
Directors and considers matters relating to their terms of
employment and remuneration, including short term bonus and
long-term incentives. The Remuneration Committee also considers the
granting of share options pursuant to the Company's share option
schemes. The Remuneration Committee shall meet not less than twice
a year and will meet on other occasions as and when required.
The Committee met twice during the year.
The Directors' Remuneration Report is on pages 28 to 29.
Nomination Committee
The Nomination Committee has responsibility for evaluating the
structure, size and composition of the Board in order to ensure a
suitable balance of experience, knowledge, skills and independence,
as well as for recommending to the Board the appointment of
Executive and Non-Executive Directors. The Committees' Terms of
Reference may be found on the Company's website.
The Nomination Committee has three members, Graham Eves (Chair),
David Banks and Theresa Wallis. The Committee did not meet during
the year.
As with many small companies, due to financial constraints and
limited human resources, internal opportunities for succession to
board director roles are circumscribed. As noted in the 2020 Annual
Report and Accounts the Committee made two important appointments
in the year ended June 2020 and, as planned, has promoted a period
of stability before looking to further evaluate the success of the
business and any further Board developments that might be
required.
10. Communicate how the company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders
As stated in relation to Principle 2, the Board is committed to
maintaining effective communication and having constructive
dialogue with its shareholders. We communicate through our Interim
and Annual Reports along with Regulatory News Service
announcements. We also use the Company's website for both financial
and general news relevant to shareholders. The Company's AGM
results are available to view on the Company's website and all
resolutions tabled at the Company's 2020 AGM passed
comfortably.
The Company keeps in mind the proportions of direct, nominee and
institutional shareholders, and distributes communications
accordingly.
The latest corporate documents (including Annual Reports and
Notices of AGMs) can be found on the Company's website.
Investors also have access to the latest information about the
Group which is set out on the Company's website at www.haydale.com.
The Company uses electronic communications with shareholders, where
possible, to maximise efficiency.
A summary of the work carried out by the Audit and Nomination
committees during the year is set out in section 9 above. The
Directors' Remuneration Report is on pages 28 to 29.
By order of the Board on 14 December 2021
David Banks
Chair
DIRECTORS' REMUNERATION REPORT
REMUNERATION COMMITTEE
The Company's remuneration policy for executive directors is the
responsibility of the Remuneration Committee. The terms of
reference of the Remuneration Committee are outlined below and, in
the Chair's Corporate Governance Statement on page 26 . The members
of the Remuneration Committee during the year under review were
Graham Eves (Chair ), David Banks and Theresa Wallis . The
provisions of the 2006 Companies Act in respect of the Directors'
Remuneration Report have been applied to this report.
The Remuneration Committee under its terms of reference meets at
least twice per year and is responsible for considering executive
remuneration. Executives may be invited to attend to assist the
Remuneration Committee, but no director or manager of the Company
may be involved in any decisions as to their own remuneration.
Under the terms of reference of the Remuneration Committee, the
remuneration of the Company's non-executive directors (including
the chair of the Board, if a non-executive) is a matter for the
Board.
Directors' remuneration for the year to 30 June 2021 is set out
on page 29 .
The Remuneration Committee terms of reference require it to
determine remuneration packages needed to attract, retain and
motivate executives of the quality required (but to avoid paying
more than is necessary for this purpose) and to ensure that
performance related elements of remuneration are designed to
support alignment with the long-term interests of shareholders and
to give such executives incentives to perform at the highest
levels.
Equity Based Incentive Schemes
The Remuneration Committee believes that equity-based incentive
schemes provide a strong incentive for retaining and attracting
high calibre individuals.
On 13 January 2020, the Company adopted a new EMI share option
scheme ("2020 EMI Scheme") and on 8 July 2020 the Company adopted a
Stock Appreciation Rights Plan ("2020 SAR Scheme") for the Group's
wholly owned US subsidiary, Haydale Technologies Inc. The 2020 EMI
Scheme and the 2020 SAR Scheme are designed to align the interests
of the Directors and other employees with those of shareholders, as
set out below.
In the year ended June 2020, under the 2020 EMI Scheme the
Company granted a total of 19,000,000 options ("2020 EMI Options")
to the Company's executive directors and a further 5,750,000 2020
EMI Options were granted to directors of UK subsidiaries, including
employees who have been appointed as directors of subsidiary
companies during the year. In the year ended June 2021, 3,000,000
options ("2020 SAR Options") were granted to a director of the US
subsidiary of the Company. The 2020 EMI Options and the 2020 SAR
Options (together the "2020 Options") granted have an exercise
price of 2.25p per Ordinary Share and can only be exercised between
the third and tenth anniversary of Grant ("Exercise Period"). The
proportion of the 2020 Options granted that are capable of vesting
is dependent on certain performance conditions being met, with such
performance being directly linked to the Company's share price from
the date of grant to 30 September 2023 as follows:
% of Grant subject
to the Performance
Condition Performance Condition
30% For a period of 15 consecutive dealing days,
commencing after the date of Grant and ending
on or before the 30 September 2021, the closing
price of the Ordinary Shares exceeds 4.0p
(four pence) per Ordinary Share.
--------------------------------------------------
30% For a period of 15 consecutive dealing days,
commencing after the date of Grant and ending
on or before the 30 September 2022, the closing
price of the Ordinary Shares exceeds 8.0p
(eight pence) per Ordinary Share.
--------------------------------------------------
40% For a period of 15 consecutive dealing days,
commencing after the date of Grant and ending
on or before the 30 September 2023, the closing
price of the Ordinary Shares exceeds 16.0p
(sixteen pence) per Ordinary Share.
--------------------------------------------------
Should the Company's closing mid-market share price not meet the
performance conditions specified then the specified percent of the
grant shall lapse. Subsequent to the year end the closing price of
the Ordinary Shares remained above 8p (eight pence) for a period of
15 consecutive days and, therefore, the first and second
performance condition have been met.
DIRECTORS' INTERESTS IN SHARE OPTIONS
The interests of directors of the Company in options over
ordinary shares during the year were as follows:
Director Number Date of Grant First Exercise Exercise Expiry Date
of 2020 Date Price
EMI Options
------------------ -------------- --------------- ---------------- ---------- -------------
David Banks nil
13 January 13 January 12 January
Keith Broadbent 12,000,000 2020 2023 2.25p 2030
13 January 13 January 12 January
Mark Chapman 7,000,000 2020 2023 2.25p 2030
Graham Eves nil
Theresa Wallis nil
No options were exercised by the directors during the year under
review.
The mid-market closing price of the Company's ordinary shares at
30 June 2021 was 8.34p (2020: 2.05p). During the year to 30 June
2021, the mid-market closing price ranged from 2.90p to 8.30p
(2020: 1.04p to 2.10p).
DIRECTORS' REMUNERATION
The aggregate remuneration received by directors who served
during the years ended 30 June 2021 and 30 June 2020 was as
follows:
Year Ended June Year Ended June
2021 2020
-------------------------------- ----------------------------------
Total Total Total Total
Salary/ exc. inc. exc. inc.
GBP,000 Fee Bonus Benefits pension Pension pension pension Pension pension
---------------- --------- ------- ---------- --------- ---------- --------- ---------- ---------- ----------
Executive
Directors
L
Redman-Thomas
([7]) - - - - - - 48 - 48
K Broadbent 191 50 12 253 24 277 232 20 252
M Chapman
([8]) 104 15 12 131 12 143 95 5 100
Non-Executive Directors
D Banks 51 - - 51 - 51 51 - 51
G Eves 28 - - 28 - 28 28 - 28
R Humm ([9]) - - - - - - 28 - 28
T Wallis
([10]) 28 - - 28 - 28 2 - 2
402 65 24 491 36 527 484 25 509
========= ======= ========== ========= ========== ========= ========== ========== ==========
Bonuses are disclosed in the year for which they have been
awarded. Bonuses for FY20 of GBP50,000 for Keith Broadbent and
GBP20,000 for Mark Chapman are included in Total exc. pension.
By order of the Board
David Banks
Chair
14 December 2021
Independent auditor's report to the members of Haydale Graphene
Industries Plc
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Haydale Graphene
Industries Plc (the 'parent company') and its subsidiaries
(the 'group') for the year ended 30 June 2021, which comprise
the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent Statement of Financial Position,
the Consolidated and Parent Statement of Changes in Equity,
the Consolidated Statement of Cash Flows and notes to
the financial statements, including a summary of significant
accounting policies. The financial reporting framework
that has been applied in the preparation of the group
financial statements is applicable law and international
accounting standards in conformity with the requirements
of the Companies Act 2006. The financial reporting framework
that has been applied in the preparation of the parent
company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting
Standard 101 'Reduced Disclosure Framework' (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
* the financial statements give a true and fair view of
the state of the group's and of the parent company's
affairs as at 30 June 2021 and of the group's loss
for the year then ended;
* the group financial statements have been properly
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006;
* the parent company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
* the financial statements have been prepared in
accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
'Auditor's responsibilities for the audit of the financial
statements' section of our report. We are independent of the group
and the parent company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the
directors' use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant
doubt on the group's and the parent company's ability to continue
as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our report to the
related disclosures in the financial statements or, if such
disclosures are inadequate, to modify the auditor's opinion. Our
conclusions are based on the audit evidence obtained up to the date
of our report. However, future events or conditions may cause the
group or the parent company to cease to continue as a going
concern.
A description of our evaluation of management's assessment of
the ability to continue to adopt the going concern basis of
accounting, and the key observations arising with respect to that
evaluation is included in the Key Audit Matters section of our
report.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group's and the parent company's ability to continue as a going
concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
The responsibilities of the directors with respect to going
concern are described in the 'Responsibilities of directors for the
financial statements' section of this report.
Our approach to the audit
Overview of our audit approach
Overall
materiality:
Group:
GBP190,000,
which
represents
approximately
5%
of
the
group's
loss
before
tax.
Parent
company:
GBP150,000,
which
represents
approximately
2%
of
the
parent
company's
total
assets.
-----------------------------------------------------------
Key
audit
matters
for
the
group
were
identified
as
going
concern
and
valuation
of
goodwill.
A
Key
audit
matter
for
the
company
was
identified
as
valuation
of
investments
in
subsidiaries
and
impairment
of
intercompany
receivables.
* Going concern (same as previous year)
* Valuation of goodwill (same as previous year); and
* Valuation of investment in subsidiaries and
intercompany receivables (same as previous year).
Our
auditor's
report
for
the
year
ended
30
June
2020
included
one
key
audit
matter
that
has
not
been
reported
as
a
key
audit
matter
in
our
current
year's
report.
This
relates
to
valuation
of
intangible
assets.
In
the
current
year
the
significant
risk
of
impairment
has
been
pin-pointed
to
the
valuation
of
goodwill
in
the
US
cash
generating
unit
specifically.
-----------------------------------------------------------
We
performed
an
audit
of
the
financial
information
of
the
parent
company
and
the
other
significant
components
using
component
materiality
(full-scope
audit
procedures)
on
Haydale
Limited
('HL'),
Haydale
Composite
Solutions
Limited
('HCS')
and
Haydale
Ceramic
Technologies
LLC
('HCT')
and
an
audit
of
one
or
more
account
balances,
classes
of
transactions
or
disclosures
(specific-scope
audit
procedures)
of
2
further
components
being
Haydale
Technologies
Thailand
Limited
('HTT')
and
Haydale
Technologies
Incorporated
LLC
('HTI')
to
gain
sufficient
appropriate
audit
evidence
at
the
Group
level.
We
performed
analytical
procedures
on
the
financial
information
of
the
remaining
3
components
in
the
Group
during
the
year.
This
approach
is
the
same
as
the
previous
year.
-----------------------------------------------------------
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those that had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
In the graph below, we have presented the key audit matters,
significant risks and other risks relevant to the audit.
How our scope addressed the matter
Key Audit Matter - Group - Group
============================================================ ===============================================================
Going concern In responding to the key audit matter,
We identified Going concern we performed the following audit
as one of the most significant procedures:
assessed risks of material * Obtained management's Base Case and Breakpoint models
misstatement due to error. with the relevant going concern period assessed as
Covid-19 continues to have being to the end of December 2022;
a negative impact on parts
of the business and given
the early-stage development * Assessed the appropriateness of management's
of its graphene-based products, assumptions in relation to revenue through agreeing
it continues to be loss-making. expected sales to supporting documentation such as
Note, this is considered a signed contracts or purchase orders;
risk at both a group and a
company level with the work
performed being the same for * Examined the sensitivity analysis carried out by
both. management on the revenue assumptions in order to
assess the levels of uncertainty inherent in the
forecasts and the impact of sensitivities against the
headroom;
* Confirmed the terms and conditions of any loan
covenants;
* Assessed the likelihood and impact of mitigating
factors identified by reference to supporting
documentation and discussions with management;
* Compared post year-end performance against forecasts;
and
* Assessed the adequacy of related disclosures within
the annual report
Relevant disclosures in the Our results
Annual Report and Accounts Management's Breakpoint model identified
2021 that revenue would need to fall
* Financial statements: Note 1, Going Concern by 7 2 % compared to that recognised
in the year ended 2021 for there
to be a going concern issue. Such
* Directors' Report: page 19 a severe scenario is not considered
plausible by management based on
post year-end performance and expected
future revenues.
Based on our audit work, we are
satisfied that the assumptions made
in management's assessment of the
use of the going concern assumption
in preparation of financial statements
were appropriate. We consider that
the group's disclosure to be in
accordance with IAS 1.
Valuation of goodwill In responding to the key audit matter,
We identified valuation of we performed the following audit
goodwill in relation to Haydale procedures:
Ceramic Technologies LLC ('HCT') * Spoke with management and key operational personnel
as one of the most significant to update our understanding of HCT's performance;
assessed risks of material
misstatement due to error.
HCT specialises in silicon * Examined and sensitised management's value in use
carbide products rather than model underpinning their impairment assessment,
graphene or other nano-materials identifying the key assumptions;
and hence has a different
customer base to other parts
of the group with different * Examined management's model and considered the
opportunities/challenges. accounting policy to ensure compliance with IAS 36
This more mature part of the 'Impairment'
business remains exposed to
the ongoing impact of Covid-19
and continuing losses have * Assessed revenue growth rates in years 1 to 5 along
been recognised in HCT, and with the long-term revenue growth rate and challenged
hence the valuation of goodwill the feasibility of meeting those forecasts, which
is deemed a significant risk. included examining the existing customer base,
HCT is considered to be a existing orders and external market data, such as
single cash-generating unit third party assessments of the global market;
('CGU').
Within the HCT CGU there is
goodwill of GBP1.0m and other * Assessed the discount rate used by management with
assets of GBP6.1m giving rise the assistance of one of our valuation experts; and
to a carrying value of GBP7.1m
for the HCT CGU as a whole.
* Asked management to prepare a Breakpoint model so
that they could identify the changes in circumstances
and/or assumptions that would result in an impairment
and whether those changes were plausible; and
* Assessed the adequacy of related disclosures within
the annual report
Relevant disclosures in the Our results
Annual Report and Accounts Management's key assumption is that
2022 HCT will return to pre-Covid-19
* Financial statements: Note 1 n) Critical accounting levels of revenue (being FY 2019)
estimates and judgements; Note 10, Intangible Assets by 2023. Our assessment and challenge
of revenue growth concluded that
this was a reasonable assumption
but given the sensitivity to forecast
growth rates, one that required
additional disclosure in line with
IAS 36.
Key Audit Matter - Parent How our scope addressed the matter-
company Parent company
========================================================== ===============================================================
Valuation of investment in In responding to the key audit matter,
subsidiaries and intercompany we performed the following audit
receivables procedures:
We identified valuation of * In relation to investments our work we examined and
investment in subsidiaries sensitised management's model underpinning their
and intercompany receivables impairment assessment, identifying the key
as one of the most significant assumptions;
assessed risks of material
misstatement due to error
given the identified risks * Examined management's model and considered the
in relation to Going Concern accounting policy to ensure compliance with IAS 36
and Impairment of goodwill. 'Impairment';
Investments in subsidiaries
amount to GBP1.5m of which
GBP720k relates to HL, GBP413k * Assessed revenue growth rates in years 1 to 5 along
relates to HTI and GBP278k with the long-term revenue growth rate and
relates to HTT, with other challenging on the feasibility of meeting those
smaller balances noted. Intercompany forecasts which included examining the existing
receivables amount to GBP6.2m customer base, existing orders and external market
of which GBP3.9m relates to data, such as third party assessments of the global
HTI, GBP1.2m relates to HL market;
and GBP670k relates to HCT,
with smaller balances noted.
* Assessed the discount rate used by management with
the assistance of one of our valuation experts;
* Considered alternative sources of evidence in
relation to fair value less costs of disposal by
considering the Group's market capitalisation and
that of other similar listed entities;
* In relation to intercompany receivables the key
balances relate to a GBP3.9m receivable from Haydale
Technologies Incorporated LLC, the parent company of
HCT and a GBP670k receivable from HCT, and hence our
work performed to address the Group risk of valuation
of Goodwill informed our conclusions when considering
the requirements of IFRS 9 'Financial Instruments';
and
* Assessed the adequacy of related disclosures within
the annual report.
Relevant disclosures in the Our results
Annual Report and Accounts Based on our work we concluded that
2021 management's judgement that no impairment
* Financial statements: Note 2, Accounting policies, was required as at 30 June 2021
Note 6 Fixed asset investments, Note 7 debtors. was reasonable.
Our application of materiality
We apply the concept of materiality both in planning and
performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if
any, on the financial statements and in forming the opinion in the
auditor's report.
Materiality was determined as follows:
Materiality Group Parent company
measure
=============== ================================================================ ================================================
Materiality We define materiality as the magnitude of misstatement
for financial in the financial statements that, individually
statements as or in the aggregate, could reasonably be expected
a whole to influence the economic decisions of the users
of these financial statements. We use materiality
in determining the nature, timing and extent of
our audit work.
=============== ==================================================================================================================
Materiality GBP190,000, which is GBP150,000, which is 2% of
threshold approximately 5% of total assets.
loss before tax.
Significant We have used loss before We have used total assets
judgements tax as our materiality as our materiality benchmark.
made benchmark. This is This is consistent with the
by auditor in consistent with the prior year. This benchmark
determining prior year. This benchmark is considered the most appropriate
materiality is considered the most because its principal activity
appropriate because is that of a holding company
this is a key measure (with the largest financial
used by the Directors statement line items being
to report to investors investments and intercompany
on the financial performance balances)
of the Group. Materiality for the current
Materiality for the year is higher than the level
current year is lower that we determined for the
than the level that year ended to reflect an increase
we determined for the in total assets.
year ended 30 June
2020 to reflect the
lower loss before tax.
Performance We set performance materiality at an amount less
materiality than materiality for the financial statements as
used to drive a whole to reduce to an appropriately low level
the extent of the probability that the aggregate of uncorrected
our testing and undetected misstatements exceeds materiality
for the financial statements as a whole.
=============== ==================================================================================================================
Performance GBP140,000, which is GBP110,000, which is 75% of
materiality 75% of financial statement financial statement materiality.
threshold materiality.
Significant The determination of In determining performance
judgements performance materiality materiality, along with those
made involves the exercise significant judgements made
by auditor in of professional judgement. at group level, we considered
determining In determining performance the requirement that the parent
performance materiality, we made company performance materiality
materiality the following significant should be incrementally below
judgments: the group's performance materiality.
* Our risk assessment - based on the results of our
risk assessment procedures, we considered the group'
s
overall control environment to be effective;
* Our experience with auditing the financial statement
of the group in previous years - based on the
identification of few misstatements and management's
attitude to correcting misstatements identified; and
* The number of components within the group and the
extent of audit procedures planned and performed at
these components.
Specific We determine specific materiality for one or more
materiality particular classes of transactions, account balances
or disclosures for which misstatements of lesser
amounts than materiality for the financial statements
as a whole could reasonably be expected to influence
the economic decisions of users taken on the basis
of the financial statements.
=============== ==================================================================================================================
Specific We determined a lower We determined a lower level
materiality level of specific materiality of specific materiality for
for the following areas: the following areas:
* Related party transactions, including Directors * Related party transactions, includin
remuneration and related disclosures g Directors
remuneration and related disclosures
=============== ================================================================ ================================================
Communication We determine a threshold for reporting unadjusted
of differences to the audit committee.
misstatements
to the audit
committee
=============== ==================================================================================================================
Threshold for GBP9,500 and misstatements GBP7,500 and misstatements
communication below that threshold below that threshold that,
that, in our view, in our view, warrant reporting
warrant reporting on on qualitative grounds.
qualitative grounds.
=============== ================================================================ ================================================
The graph below illustrates how performance materiality
interacts with our overall materiality and the tolerance for
potential uncorrected misstatements.
Overall materiality - Group Overall materiality - Parent
company
============================= ==============================
FSM: Financial statements materiality, PM: Performance
materiality, TFPUM: Tolerance for potential uncorrected
misstatements
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding
of the group's and the parent company's business and in particular
matters related to:
Understanding the group, its components, and their environments,
including group-wide controls
-- The engagement team obtained an understanding of the group
and its environment, including group-wide controls, and assessed
the risks of material misstatement at the group level; and
-- The engagement team obtained an understanding of the effect
of the group organisational structure on the scope of the audit,
identifying that the group financial reporting system is
centralised and that there is a use of management experts where
required.
Identifying significant components
-- Significant components were identified through assessing
their relative share of key financial metrics including total
revenue, total expenses, absolute loss before taxation, total
assets and total liabilities.
-- Other components were selected where we determined there to
be a specific risk profile in those components and were included in
the scope of our group reporting work in order to provide
sufficient coverage over the group's results. For these components,
an audit of one or more account balances or class of transactions
(specific scope procedures) was performed.
-- All other components of the group were selected as 'neither
significant nor material' and analytical procedures performed.
Performance of our audit
-- The majority of the year-end audit was conducted remotely due
to Covid-19 restrictions and social distancing requirements. This
was supported through the use of software collaboration platforms
for the secure and timely delivery of requested audit evidence.
-- Despite restrictions, we were still able to physically attend
and observe the year end inventory count in the US and UK.
Type of work to be performed on financial information of parent
and other components (including how it addressed the key audit
matters)
-- Performance of full-scope audits of the financial information
of Haydale Graphene Industries Plc, Haydale Limited, Haydale
Composite Solutions Limited and Haydale Ceramic Solutions.
-- Specific-scope audit procedures were performed for Haydale
Technologies Thailand Limited and Haydale Technologies Incorporated
LLC.
-- Analytical procedures were performed for all other components using group materiality.
Audit approach No. of % coverage % coverage % coverage
components total assets revenue LBT
Full-scope audit 4 97 89 93
============= =============== ============ ============
Specific-scope audit 2 - 5 6
============= =============== ============ ============
Analytical procedures 3 3 6 1
============= =============== ============ ============
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies
Act 2006 is unmodified
In our opinion, based on the work undertaken in the course
of the audit:
* the information given in the strategic report and the
directors' report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
* the strategic report and the directors' report have
been prepared in accordance with applicable legal
requirements.
Matter on which we are required to report under the Companies
Act 2006
In the light of the knowledge and understanding of the group and
the parent company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and the parent company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. Owing to the
inherent limitations of an audit, there is an unavoidable risk that
material misstatements in the financial statements may not be
detected, even though the audit is properly planned and performed
in accordance with ISAs (UK).
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance with
laws and regulations, our procedures included the following: :
-- We enquired of management, the finance team and the Board of
Directors about the Group's and Company's policies and procedures
relating to the identification, evaluation and compliance with laws
and regulations and the detection and response to the risks of
fraud and the establishment of internal controls to mitigate risks
related to fraud or non-compliance with laws and regulations;
-- We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and Company. We
determined that the most significant frameworks that are directly
relevant to specific assertions in the financial statements are
those related financial reporting and taxation laws, being
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union,
international accounting standards in conformity with the
requirements of the Companies Act 2006, Financial Reporting
Standard 101 (for the Company), and the Companies Act 2006. In
addition, we concluded that health and safety laws and regulations
may have an effect on the determination of the amounts and
disclosures in the financial statements ;
-- We enquired of management and the Board of Directors whether
they were aware of any instances of non-compliance with laws and
regulations and whether they had any knowledge of actual, suspected
or alleged fraud;
-- We assessed the susceptibility of the Group's and Company's
financial statements to material misstatement including how fraud
might occur and the risk of management override of controls. Audit
procedures performed by the engagement team included:
- Team communications in respect of potential non-compliance
with laws and regulations and fraud which included the evaluation
of the risk of management override of controls, principally in
relation to the potential bias when considering going concern and
the impairment of goodwill and investments;
- Enquiring of management, the finance team and the Board about
the risks of fraud at the Group and Company and the controls
implemented to address those risks. Assessing the design and
implementation of controls relevant to the audit that management
has in place to prevent and detect fraud, including updating our
understanding of the internal controls over journal entries,
including those related to the posting of non-standard entries used
to record non-recurring, unusual transactions or other non-routine
adjustments;
- Making specific inquiries of each member of the finance team
to ascertain whether they had been subject to undue pressure or had
been asked to make any unusual postings or modifications to reports
used in financial reporting;
- Identifying and testing journal entries selected based on risk profiling;
- Running specific keyword searches (including to related
parties and of those previously connected to related entities) over
the journal entry population to identify descriptions that could
indicate fraudulent activity or management override of controls. In
addition, journal entries by user were evaluated to identify types
of entries posted that were not in line with expectations of their
role. Unusual entries noted from these searches were agreed to
supporting documentation to verify the validity of the posting;
- Planning specific procedures responding to the risk of fraudulent recognition of revenue;
- We also assessed the disclosures within the annual report including principal risks;
- Challenging assumptions and judgements made by management in
its significant accounting estimates (as referenced in the Key
Audit Matters section above); and
- Identifying and testing related party transactions
-- In assessing the potential risks of material misstatement, we
obtained an understanding of the Group's and Company's operations,
including the nature of income sources and of its objectives and
strategies in order to understand the classes of transactions,
account balances, expected financial statement disclosures and
business risks that may result in risks of material
misstatement;
-- These audit procedures were designed to provide reasonable
assurance that the financial statements were free from fraud or
error. However, detecting irregularities that result from fraud is
inherently more difficult than detecting those that result from
error, as those irregularities that result from fraud may involve
collusion, deliberate concealment, forgery or intentional
misrepresentations; and
-- Assessment of the appropriateness of the collective
competence and capabilities of the engagement team included
consideration of the engagement team's understanding of, and
practical experience with, audit engagements of a similar nature
and complexity
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Christopher Smith
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
14 December 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2021
Note Year ended Year ended
30 June 30 June 2020
2021 GBP'000
GBP'000
REVENUE 4 2,903 2,947
Cost of sales (924) (885)
------------ ---------------
Gross profit 1,979 2,062
Other operating income 5 575 756
------------------------------------------------------- --- ------- ------------ ---------------
Adjusted Administrative expenses (4,724) (5,357)
------------ ---------------
Adjusted operating loss (2,170) (2,539)
Adjusting administrative items:
Share based payment income/(expense) (119) 11
Restructuring costs 6 - (63)
Depreciation and amortisation (1,271) (1,640)
------------ ---------------
(1,390) (1,692)
Total trading administrative expenses (6,114) (7,049)
LOSS FROM OPERATIONS (3,560) (4,231)
Total administrative expenses (6,114) (7,049)
LOSS FROM OPERATIONS (3,560) (4,231)
Finance costs (211) (176)
LOSS BEFORE TAXATION 6 (3,771) (4,407)
Taxation 8 363 391
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (3,408) (4,016)
Other comprehensive income:
Items that may be reclassified to profit
or loss:
Exchange differences on translation of
foreign operations (368) 82
Items that will not be reclassified to
profit or loss:
Remeasurements of defined benefit pension
schemes 208 (291)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
FROM CONTINUING OPERATIONS (3,568) (4,225)
Loss for the year attributable to:
Owners of the parent (3,408) (4,016)
Total comprehensive loss attributable
to:
Owners of the parent (3,568) (4,225)
Loss per share attributable to owners
of the Parent
Basic (GBP) 9 (0.01) (0.01)
Diluted (GBP) 9 (0.01) (0.01)
The notes from pages 44 to 74 form part of these financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
Company Registration No. 07228939 Note 30 June 30 June
2021 2020
GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 10 1,341 1,454
Intangible assets 10 1,174 1,145
Property, plant and equipment 11 6,622 6,407
9,137 9,006
Current assets
Inventories 12 1,328 1,712
Trade receivables 13 715 886
Other receivables 14 595 334
Corporation tax 14 364 384
Cash and bank balances 1,644 823
4,646 4,139
TOTAL ASSETS 13,783 13,145
LIABILITIES
Non-current liabilities
Bank loans 20 844 304
Pension Obligation 26 1,026 1,435
Other payables 19 2,370 1,031
4,240 2,770
Current liabilities
Bank loans 20 885 944
Trade and other payables 19 1,719 1,906
Deferred income 15 180 74
2,784 2,924
TOTAL LIABILITIES 7,024 5,694
TOTAL NET ASSETS 6,759 7,451
EQUITY
Capital and reserves attributable to
equity holders of the parent
Share capital 16 8,505 6,804
Share premium account 16 28,820 27,764
Share-based payment reserve 250 131
Foreign exchange reserve (386) (18)
Retained losses (30,430) (27,230)
TOTAL EQUITY 6,759 7,451
The financial statements on pages 40 to 76 were approved and
authorised for issue by the Board of directors on 14 December 2021
and signed on its behalf by:
David Banks Keith Broadbent
Chair Chief Executive Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Share Share Share-based Retained Total Equity
capital premium payment Foreign losses GBP'000
GBP'000 GBP'000 reserve Exchange GBP'000
GBP'000 Reserve
GBP'000
At 1 July 2019 6,354 27,764 828 (100) (23,595) 11,251
Comprehensive Loss for
the year
Loss for the year - - - - (4,016) (4,016)
Other comprehensive
loss - - - 82 (291) (209)
Total Comprehensive
loss 6,354 27,764 828 (18) (27,902) 7,026
Contributions by and
distributions to owners
Recognition of
share-based payments - - (11) - - (11)
Share based payment
charges - lapsed
options - - (686) - 686 -
Issue of ordinary
share capital 450 - - - - 450
Transaction costs
in respect of
share issues - - - - (14) (14)
At 30 June 2020 6,804 27,764 131 (18) (27,230) 7,451
Comprehensive Loss for
the year
Loss for the year - - - - (3,408) (3,408)
Other comprehensive
loss - - - (368) 208 (160)
Total comprehensive
loss 6,804 27,764 131 (386) (30,430) 3,883
Contributions by and
distributions to owners
Recognition of
share-based payments - - 119 - - 119
Issue of ordinary
share capital 1,701 1,276 - - - 2,977
Transaction costs
in respect of
share issues - (220) - - - (220)
At 30 June 2021 8,505 28,820 250 (386) (30,430) 6,759
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
Note Year Year
ended ended
30 June 30 June
2021 2020
GBP'000 GBP'000
Cash flow from operating activities
Loss before taxation (3,408) (4,016)
Adjustments for:-
Amortisation of intangible assets 10 176 129
Depreciation of property, plant and
equipment 11 1,096 1,511
Profit on disposal of plant and equipment 78 -
and F&F
Share-based payment charge 17 119 (11)
Finance costs 211 176
Pension - net interest expense 26 47 24
Taxation (363) (391)
Operating cash flow before working capital
changes (2,044) (2,578)
Decrease/(increase) in inventories 384 (531)
(Increase) in trade and other receivables (90) (111)
Increase/(decrease) in payables and
deferred income 174 (104)
Cash used in operations (1,576) (3,324)
Income tax received 383 847
Net cash used in operating activities (1,193) (2,477)
Cash flow used in investing activities
Purchase of plant and equipment (220) (44)
Capitalised of Intangible Assets (260) (251)
Net cash used in investing activities (480) (295)
Cash flow used in financing activities
Finance costs (95) (94)
Finance costs - right of use asset (116) (82)
Payment of lease liability (591) (631)
Proceeds from issue of share capital 16 2,977 450
Share capital issues costs allocated
against share premium 16 (220) -
New bank loans raised 29 800 50
Repayments of borrowings 29 (219) (835)
Net cash flow from financing activities 2,536 (1,142)
Effects of exchange rates changes (42) 49
Net (decrease) in cash and cash equivalents 821 (3,865)
Cash and cash equivalents at beginning
of the financial year 823 4,688
Cash and cash equivalents at end of
the financial year 1,644 823
Notes to the consolidated financial statements
1. Accounting policies
Basis of preparation
The Group consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards,
International Accounting Standards and Interpretations
(collectively "IFRSs") and with the requirements of the Companies
Act 2006.
The Group's financial statements have been prepared under the
historical cost convention.
The consolidated financial statements are presented in sterling
amounts.
Amounts are rounded to the nearest thousands, unless otherwise
stated.
Under Section 479A of the Companies Act 2006, exemptions from an
audit of the accounts for the financial year ended 30 June 2020
have been taken by Haydale Limited (04790862) and Haydale Composite
Solutions Limited (02675462). As required, the Company guarantees
all outstanding liabilities to which the subsidiary companies
listed above are subject at the end of the financial year, until
they are satisfied in full and the guarantee is enforceable against
the parent undertaking by any person to whom the subsidiary
companies listed above is liable in respect of those
liabilities.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
made up to the reporting date. The Company controls an investee if
all three of the following elements are present: power over the
investee, exposure to variable returns over the investee, and the
ability of the investee to use its power to affect the variable
returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of
control. All intra-group transactions, balances, income and
expenditure are eliminated on consolidation. The consolidated
financial statements have been prepared using the acquisition
method of accounting.
Under the acquisition method, the results of the subsidiaries
acquired or disposed of are included from the date of acquisition
or up to the date of disposal. At the date of acquisition, the fair
values of the subsidiaries' net assets are determined, and these
values are reflected in the Consolidated Financial Information. The
cost of acquisitions is measured at the aggregate of the fair
values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by the Haydale
Graphene Industries Group in exchange for control of the
acquisition. Any excess of the purchase consideration of the
business combination over the fair value of the identifiable assets
and liabilities acquired is recognised as goodwill. Goodwill, if
any, is not amortised, but reviewed for impairment at least
annually. If the consideration is less than the fair value of
assets and liabilities acquired, the difference is recognised
directly in the statement of comprehensive income.
Acquisition-related costs are expensed as incurred.
Going concern
The Group consolidated financial statements are prepared on a
going concern basis which the Directors believe continues to be
appropriate.
As part of this assessment the Directors have considered several
scenarios based on various revenue, cost and funding
sensitivities.
Revenue
Various sensitivities have been applied to forecasted revenue
including a stress test scenario which reduces forecasted revenue
by circa 72 per cent to the point where the Group would breach its
available cash resources at the 31 December 2022. With respect to
this 'stress test' the Group has a significant proportion of that
sensitised revenue within forward orders, contractual or some other
form of customer assurance which have a high degree of
certainty.
Cost Mitigation
The Directors have included some low-level assumptions regarding
cost savings that might be achievable if the forecast fails to meet
the forecasted or sensitised estimates and these have been phased
in gradually over the 12-month period to 31 December 2022.
Customer Solvency
As part of this review the Directors have assessed the solvency
of key customers and their ability to deliver on their contractual
or other commitments on the basis of publicly available information
and included the results of these assessments in our forecasts.
Summary
Therefore, after due consideration of the forecasts prepared,
the sensitivities applied and the Group's current cash resources
after the fund raise in September 2021 and the terms of its debt
facilities the directors consider that the Company and the Group
have adequate financial resources to continue in operational
existence for the foreseeable future (being a period of at least 12
months from the date of this report), and for this reason the
financial statements have been prepared on the going concern
basis.
2. Changes in accounting policies
There are no change of accounting policies during the year.
3. Summary of significant accounting policies
a) Intangible assets
Research and development expenditure
Research expenditure is recognised as an expense when it is
incurred.
Development expenditure is recognised as an expense except that
costs incurred on development projects are capitalised as
intangible assets to the extent that such expenditure is expected
to generate future economic benefits. Development expenditure is
capitalised if, and only if an entity within the Group can
demonstrate all of the following:-
i) its ability to measure reliably the expenditure attributable
to the asset under development;
ii) the product or process is technically and commercially feasible;
iii) its future economic benefits are probable;
iv) its ability to use or sell the developed asset;
v) the availability of adequate technical, financial and other
resources to complete the asset under
development; and
vi) its intention to use or sell the developed asset.
Capitalised development expenditure is measured at cost less
accumulated amortisation and impairment losses, if any. Development
expenditure initially recognised as an expense will not be restated
as an asset in a subsequent period.
Historic capitalised development expenditure is amortised on a
straight-line basis over a period of up to 20 years when the
products or services are ready for sale or use. The maximum 20
years amortisation period is based on UK Patents being 20 years
from the date of filing of the application, under Article 60 of the
European Patent Convention, and, although the Group now has patents
granted in other jurisdictions, the Directors believe that 20 years
is appropriate. New projects will be reviewed on completion, to
determine the useful economic life. In the event that it is no
longer probable that the expected future economic benefits will be
recovered, the development expenditure is written down to its
recoverable amount. Amortisation is included within administrative
expenses.
Acquired intangible assets
An intangible resource acquired with a subsidiary undertaking is
recognised as an intangible asset if it is separable from the
acquired business or arises from contractual or legal rights, is
expected to generate future economic benefits and its fair value
can be measured reliably. Acquired intangible assets (excluding
development expenditure which is in line with the above policy),
including customer relationships, are amortised through the
Consolidated Statement of Comprehensive Income on a straight-line
basis over their estimated economic lives of ten years.
Goodwill
Business combinations are accounted for by applying the purchase
method. The cost of a business combination is a fair value of the
consideration given, liabilities incurred or assumed and of equity
instrument issued. Where control is achieved in stages the cost is
a consideration at the date of each transaction.
Contingent consideration is initially recognised at estimated
amount where the consideration is probable and can be measured
reliably. Where (i) the contingent consideration is not considered
probable or cannot be reliably measured but subsequently becomes
probable or (ii) contingent consideration previously measured is
adjusted, the amounts are recognised as an adjustment to the cost
of the business combination if the remeasurement occurs within a
year of the transaction and relates to information that was
available at the point of acquisition. Otherwise, any
remeasurements of contingent consideration is reflected in the
statement of comprehensive income.
On acquisition of a business, fair values are attributed to the
identifiable assets, liabilities and contingent liabilities unless
the fair value cannot be measured reliably, in which case the value
is incorporated in goodwill. Where the fair value of contingent
liabilities cannot be reliably measured they are disclosed on the
same basis as other contingent liabilities.
Goodwill recognised represents the excess of the fair value and
directly attributable costs of the purchase consideration over the
fair value to the Group's interest in the identifiable net assets,
liabilities and contingent liabilities acquired.
b) Impairment of goodwill and other non-financial assets
The carrying value of goodwill, and the cash-generating unit to
which it relates, is reviewed at the end of each reporting period
for impairment regardless of whether there is an indication that
the asset may be impaired. Other non-financial assets are
considered for indicators of impairment at each reporting date and
full impairment reviews carried out if indicators of impairment
exist. Impairment is measured by comparing the carrying values of
the assets with their recoverable amounts. The recoverable amount
of the assets is the higher of the assets' fair value less costs to
sell and their value-in-use, which is measured by reference to
discounted future cash flow. An impairment loss is recognised in
administrative expenses within the Statement of Comprehensive
Income immediately it is identified.
In respect of assets other than goodwill, and when there is a
change in the estimates used to determine the recoverable amount, a
subsequent increase in the recoverable amount of an asset is
treated as a reversal of the previous impairment loss and is
recognised to the extent of the carrying amount of the asset that
would have been determined (net of amortisation and depreciation)
had no impairment loss been recognised. The reversal is recognised
in profit or loss immediately.
c) Revenue
To determine whether to recognise revenue, the Group follows a
five step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue arises mainly as:
i) Goods (including Reactor sales)
Revenue represents sales to external customers at invoiced
amounts less value added tax or local taxes on sales. Revenue is
recognised at the point where control is considered to pass to the
customer typically on delivery or customer acceptance, and all
performance obligations have been fulfilled. In all instances the
transaction price is agreed with the customer prior to transfer of
goods on a stand-alone basis.
ii) Services
Engineering design and research revenue is recognised on the
percentage of completion method unless the outcome of the contract
cannot be reliably determined, in which case contract revenue is
only recognised to the extent of contract costs incurred that are
recoverable. Foreseeable losses, if any, are provided for in full
as and when it can be reasonably ascertained that the contract will
result in a loss.
The group recognises revenue over time based upon the percentage
of completion input method, whereby the stage of completion is
determined based on the proportion of contract costs incurred
compared to total estimated costs. In all cases, the total
transaction price for a contract is allocated amongst the various
performance obligations based on their relative stand-alone
prices.
At each reporting period, receivables are recognised for
revenues yet to be invoiced or settled to the extent that it is
highly probable that there will not be a significant reversal of
the amounts accrued in the future.
Where invoices are raised to the client in excess of the value
of the consideration recognised as revenue based on the stage of
completion, deferred income balances are recorded that represent
unfulfilled performance obligations. These performance obligations
are expected to be fulfilled within a year of the reporting
date.
d) Financial instruments
i) Financial assets
Financial assets and financial liabilities are recognised in the
group balance sheet when the group becomes a party to the
contractual provisions of the instrument. Financial assets are
classified as either fair value through profit or loss, fair value
through other comprehensive income, or amortised cost.
Classification and subsequent re-measurement depends on the group's
business model for managing the financial asset and its cash flow
characteristics. The Group has financial assets in the categories
of amortised cost only. The Group does not have financial assets at
fair value through other comprehensive income or fair value through
profit or loss. Detailed disclosures are set out in note 22.
ii) Amortised cost
These assets arise principally from the provision of goods and
services to customers (such as loans and trade receivables), but
also incorporate other types of financial assets where the
objective is to hold these assets in order to collect contractual
cash flows and the contractual cash flows are solely payments of
principal and interest. They are initially recognised at fair value
once the Group's right to consideration is unconditional and are
subsequently carried at amortised cost using the effective interest
rate method, less provision for impairment.
Impairment provisions for trade receivables are recognised based
on the simplified approach within IFRS 9 using the lifetime
expected credit losses. During this process, the probability of the
non-payment of trade receivables is assessed. This probability is
then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the
trade receivables. For trade receivables, such provisions are
recorded in a separate provision account with the loss being
recognised in the income statement. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
Impairment provisions for other receivables are recognised based
on a forward-looking expected credit loss model. The methodology
used to determine the amount of the provision is based on whether
at each reporting date, there has been a significant increase in
credit risk since initial recognition of the financial asset. For
those financial assets where the credit risk has not increased
significantly since initial recognition, twelve month expected
credit losses along with gross interest income are recognised. For
those for which credit risk has increased significantly, lifetime
expected credit losses along with the gross interest income are
recognised. For those that are determined to be credit impaired,
lifetime expected credit losses along with interest income on a net
basis are recognised.
iii) Financial liabilities:
Financial liabilities are comprised of trade and other payables,
borrowings and other short-term monetary liabilities, which are
recognised at amortised cost.
Trade payables, other payables and other short-term monetary
liabilities, are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest
method.
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest method.
Fees paid on the establishment of loan facilities are recognised
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw-down occurs. To the extent there
is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalised as a pre-payment for
liquidity services and amortised over the period of the facility to
which it relates.
e) Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses, if any. The cost of
an item of property, plant and equipment initially recognised
includes its purchase price and any cost that is directly
attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended
by management.
Depreciation is calculated under the straight-line method to
write off the depreciable amount of the assets over their estimated
useful lives. The principal annual rates used for this purpose
are:-
Leasehold improvements 10-20% per annum straight line
Plant and machinery 15-33% per annum straight line
US Plant and machinery Time in use
Furniture and fittings 20-33% per annum straight line
Motor vehicles 33% per annum straight line
The depreciation method, useful lives and residual values are
reviewed, and adjusted if appropriate, at the end of each reporting
period to ensure that the amounts, method and periods of
depreciation are consistent with previous estimates and the
expected pattern of consumption of the future economic benefits
embodied in the items of the property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when the cost
is incurred and it is probable that the future economic benefits
associated with the asset will flow to the Group and the cost of
the asset can be measured reliably. The carrying amount of parts
that are replaced is derecognised. The costs of the day-to-day
servicing of property, plant and equipment are recognised in profit
or loss as incurred. Cost also comprises the initial estimate of
dismantling and removing the asset and restoring the site on which
it is located for which the Group is obligated to incur when the
asset is acquired, if applicable.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected from its
use or disposal. The gain or loss on retirement or disposal is
determined as the difference between any sales proceeds and the
carrying amounts of the asset and is recognised in the Statement of
Comprehensive Income within administrative expenses.
f) Income taxes
The charge for taxation is based on the loss for the period and
takes into account deferred taxation.
Current tax is measured at amounts expected to be paid using the
tax rates and laws that have been enacted by the balance sheet
date. The substantively enacted rate has been used for deferred tax
balances, which are recognised in respect of all timing differences
that have been originated but not reversed by the reporting date,
except that the recognition of deferred tax assets is limited to
the extent that the Company anticipates making sufficient taxable
profits in the future to absorb the reversal of the underlying
timing differences.
The Group receives research and development tax credits for the
work it performs in the field of nano-technology. Using the SME and
large company schemes, these credits generate cash reimbursement in
exchange for the sacrifice of applicable losses, such tax credits
are recognised in income tax within the Statement of Comprehensive
Income, in the period in which they relate.
g) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances,
deposits with financial institutions and short-term, highly liquid
investments that are readily convertible to known amounts of cash,
are subject to an insignificant risk of changes in value and have
maturities of 3 months or less from inception.
h) Inventories
Inventories are recorded at the lower of cost and net realisable
value. Cost represents materials, direct labour, other direct costs
and related production overheads, and is determined on the
First-In-First-Out (FIFO) method. Net realisable value is based on
estimated selling price, less further costs expected to be incurred
to completion and disposal. Provision is made for slow-moving,
obsolete and defective inventories where appropriate.
The value of inventories used in the fulfilment of commercial or
developmental programmes are charged to cost of sales in the
Statement of Comprehensive Income on an accruals basis.
i) Employee benefits
i) Short-term benefits
Wages, salaries, paid annual leave and sick leave, bonuses and
non-monetary benefits are accrued in the period in which the
associated services are rendered by employees of the Group.
ii) Defined contribution plans
The Group's contributions to defined contribution plans are
recognised in profit or loss in the period to which they relate.
Once the contributions have been paid, the Group has no further
liability in respect of the defined contribution plans.
iii) Defined Benefit Pension plans
The group accounts for its defined benefit pension scheme such
that the net pension scheme position is reported on the balance
sheet with actuarial gains and losses being recognised directly in
equity through the statement of comprehensive income. A number of
key assumptions have been made in calculating the fair value of the
group's defined benefit pension scheme which affect the balance
sheet position and the group's reserves and income statement. Refer
to note 26 of the notes to the consolidated accounts for a summary
of the main assumptions and sensitivities. Actual outcomes may
differ materially from the assumptions used and may result in
volatility in the net pension scheme position.
j) Provisions
Provisions are recognised when the Group has a present or
constructive obligation as a result of past events, when it is
probable that an outflow of resources embodying economic benefits
will be required to settle the obligation, and when a reliable
estimate of the amount can be made. Provisions are reviewed at the
end of each financial reporting period and adjusted to reflect the
current best estimate. Where the effect of the time value of money
is material, the provision is the present value of the estimated
expenditure required to settle the obligation.
k) Government grants
Revenue grants are accounted for under the accruals model, with
grants being recognised within Other operating income on a
systematic basis over the period in which the group recognised the
related costs for which the grant is intended to compensate. Grants
received in advance of the income being recognised in the Statement
of Comprehensive Income are included in grant creditors.
When grant income is received for capital expenditure, it is
held as deferred income on the balance sheet and released on a
straight line basis over the useful economic life of the asset to
which it relates. All income relating to government grants is
included as 'Other operating income' within the Statement of
Comprehensive Income.
l) Share-based payment arrangements
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. Details regarding the
determination of the fair value of equity-settled share-based
transactions are set out in note 17 to the Consolidated Financial
Statements.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, with a corresponding increase in
equity. At the end of each reporting period, the Group revises its
estimate of the number of equity instruments expected to vest. The
impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to
other reserves.
m) Leases
Leased assets
For any new contract entered into on or after 1 July 2019, the
Group considers whether a contract is, or contains a lease. A lease
is defined as 'a contract, that conveys the right to use an asset
for a period of time in exchange for consideration'. To apply this
definition the Group assesses whether the contract meets all three
key criteria which are whether;
-- The contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
Group.
-- The Group has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of
the contract.
-- The Group has the right to direct the use of the identified
asset throughout the period of use. The Group assesses whether it
has the right to direct 'how and for what purpose' the asset is
used throughout the period of use.
Measurement and recognition of lease as a lessee
At lease commencement date, the Group recognises a right-of-use
asset and a lease liability on the balance sheet. The right-of-use
asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs
incurred by the Group, an estimate of any costs to dismantle and
remove the asset at the end of the lease, and any lease payment
made in advance of the lease commencement date (net of any
incentives received).
The Group depreciates the right-of-use assets on a straight line
basis from the lease commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease
term. The Group also assesses the right-of-use asset for impairment
when such indicators exist.
At the commencement date, the Group measures the lease liability
at the present value of the lease payment unpaid at that date,
discounted using the interest rate implicit in the lease if that
rate is readily available or the Group's incremental borrowing
rate.
Lease payments included in the measurement of the lease
liability are made up of fixed payments, variable payments based on
an index or rate, amounts expected to be payable under a residual
value guarantee and payments arising from options reasonably
certain to be exercised.
Subsequent to initial measurement, the liability will be
reducing for payment made and increased for interest. It is
remeasured to reflect any reassessment or modification, or if there
are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding
adjustment is reflected in the right-of-use asset, or profit and
loss if the right-of-use asset is already reduced to zero.
Measurement and recognition of lease as a lessor
The Group leases out elements of plant and machinery. The Group
has classified these leases as operating leases. The Group is not
required to make any adjustments on transition to IFRS 16 for
leases in which it acts as a lessor.
The Group has applied IFRS 15 Revenue from Contracts with
customers to allocate consideration in the contract to each lease
and non-lease components.
n) Transactions and balances in foreign currencies
Transactions in foreign currencies are converted into the
respective functional currencies on initial recognition, using the
exchange rates approximating those ruling at the transaction dates.
Monetary assets and liabilities at the end of the reporting period
are translated at the rates ruling as of that date. Non-monetary
assets and liabilities are translated using exchange rates that
existed when the values were determined. All exchange differences
are recognised in profit or loss.
Overseas operations which have a functional currency different
to the group presentation currency have been translated using the
monthly average exchange rate for consolidation into the statement
of comprehensive income. The amounts included in the group
statement of financial position, have been translated at the
exchange rate ruling at the statement date. All resulting exchange
differences are reported in other comprehensive income.
o) Critical accounting estimates and judgements
The preparation of financial information in conformity with
IFRSs requires the use of certain critical accounting estimates. It
also requires the directors of the Group to exercise their
judgement in the process of applying the accounting policies which
are detailed below. These judgements are continually evaluated by
the directors and management and are based on historical experience
and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The key estimates and underlying assumptions concerning the
future and other key sources of estimation uncertainty at the
statement of financial position date, that have a significant risk
of causing material adjustment to the carrying amounts of assets
and liabilities within the next financial period are reviewed on an
ongoing basis. Revision to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Defined Benefit Pension Scheme (estimate)
In determining the pension valuation movement and the defined
benefit obligation of the Group's pension scheme, a number of
assumptions are used in order to produce a valuation, which is
sensitive to changes in the assumptions. These assumptions include
an appropriate discount rate, the levels of salary increases, price
inflations and mortality rates. Further details are included in
note 26, including sensitivity analysis.
Impairment of non-financial assets (judgement)
The carrying value of goodwill, and the cash generating units
(CGUs) to which it relates, is assessed annually for impairment
through comparing the recoverable amount to the CGU's carrying
value. The value in use calculations require estimates in relation
to uncertain items, including management's expectations of future
revenue growth, operating costs, profit margins, operating
cashflows and the discount rate applied.
Future cash flows used in the value in use calculations are
based on our latest five-year financial plans reviewed by the
Board. Expectations about future growth reflect expectations of
growth in the markets applicable to the Group. The future cashflows
are discounted using a pre-tax discount rate that reflects current
market assessments of the time value of money. The discount rate
used is adjusted for the specific risk to the group, including the
countries to which cash flows will be generated. Further details
are included in note 10, including sensitivity analysis.
Useful economic lives of tangible and intangible assets
(judgement)
The annual depreciation charge for tangible assets is sensitive
to change in the estimated useful economic lives and residual
values of the assets. The useful economic lives and residual values
are re-assessed annually. They are amended where necessary to
reflect current estimates, based on technological advancement,
future investments, economic utilisation and the physical condition
of the assets. See note 11 for the carrying amounts of the property
plant and equipment, and the depreciation accounting policy for the
useful economic lives for each class of assets.
p) Alternative Performance Measures
Disclosure has been adjusted in the Statement of Comprehensive
Income. Adjusted Administrative expenses have excluded Share based
payment charges and depreciation as these are non-cash items. We
believe removing these balances better reflects the performance of
the Group and provides more meaningful information to the user of
the Financial Statements.
4. Segment analysis
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker (which is
the Chief Executive Officer and Chief Financial Officer) as defined
in IFRS 8, in order to allocate resources to the segment and to
assess its performance.
For management purposes, the Group is organised into the
following reportable regions:
-- UK & Europe (focussing on functionalisation of nano
materials, high performance ink & master batches and the
composites market in Europe;
-- North America (focussing on SiC & blank products for tooling); and
-- Asia Pacific (focusing on Ink sales to the Asian markets)
2021 UK & Europe North America Asia Pacific Adjustments, Central Consolidated
GBP'000 GBP'000 GBP'000 & Eliminations GBP'000
GBP'000
REVENUE 923 1,679 301 - 2,903
Cost of sales (311) (379) (234) - (924)
Gross profit 612 1,300 67 - 1,979
Other operating income 427 148 - - 575
Adjusted
administrative
expenses (1,725) (1,328) (404) (1,267) (4,724)
-------------- ---------------- --------------- ---------------------- ---------------
Adjusted operating
loss (686) 120 (337) (1,267) (2,170)
Administrative
expenses
----------------------- -------------- ---------------- --------------- ---------------------- ---------------
Share based
payment expense (38) (30) (3) (48) (119)
Depreciation &
amortisation (376) (679) (67) (149) (1,271)
(414) (709) (70) (197) (1,390)
----------------------- -------------- ---------------- --------------- ----------------------
Total administrative
expenses (2,139) (2,037) (474) (1,464) (6,114)
OPERATING LOSS (1,100) (589) (407) (1,464) (3,560)
Finance costs (211)
LOSS BEFORE TAXATION (3,771)
Taxation 363
LOSS AFTER TAXATION (3,408)
Additions to non-current
assets 473 1,667 17 - 2,157
Segment assets 3,473 7,398 404 2,508 13,783
Segment liabilities (1,727) (4,697) (194) (406) (7,024)
2020 UK & Europe North America Asia Pacific Adjustments, Consolidated
GBP'000 GBP'000 GBP'000 Central & GBP'000
Eliminations
GBP'000
REVENUE 357 2,169 421 - 2,947
Cost of sales (119) (517) (249) - (885)
Gross profit 238 1,652 172 - 2,062
Other operating
income 550 206 - - 756
Adjusted
administrative
expenses (1,689) (1,687) (587) (1,394) (5,357)
Adjusted operating
loss (901) 171 (415) (1,394) (2,539)
Administrative
expenses
--------------------- -------------- -------------------- --------------- -------------------- ---------------
Share based
payment
expense 6 (8) 13 - 11
Depreciation &
Amortisation (411) (868) (229) (132) (1,640)
Restructuring
costs - - (63) - (63)
-------------- -------------------- --------------- -------------------- ---------------
(405) (876) (279) (132) (1,692)
--------------------- -------------- -------------------- --------------- -------------------- ---------------
(2,094) (2,563) (866) (1,526) (7,049)
OPERATING LOSS (1,306) (705) (694) (1,526) (4,231)
Finance costs (176)
LOSS BEFORE TAXATION (4,407)
Taxation 391
LOSS AFTER TAXATION (4,016)
Additions to
non-current assets 291 - 4 - 295
Segment assets 2,486 7,573 567 2,519 13,145
Segment liabilities (698) (4,173) (239) (584) (5,694)
Geographical information
All revenues of the Group are derived from its principal
activities as set out on page 5. The Group's revenue from external
customers by geographical location are detailed below.
2021 2020
GBP'000 GBP'000
By destination
United Kingdom 370 278
Europe 104 378
United States of America 739 597
China 135 2
Thailand 136 345
South Korea 165 198
Japan 1,207 1,113
Rest of the World 47 36
2,903 2,947
During 2021, GBP1.2 million (42%) (2020: GBP1.1 million (37%))
of the Group's revenue depended on a single customer. During 2021
GBP0.41 million (14%) (2020: GBP0.35 million (12%)) of the Group's
revenue depended on a second single customer.
All amounts shown as other operating income within the Statement
of Comprehensive Income are generated within and from the United
Kingdom, EU and the US. These amounts include income earned as part
of a number of grant funded projects in the United Kingdom and EU
and a government grant in the US.
Revenue from goods (including Reactor sales) was GBP2.43 million
(84%) of the Group's revenue (2020: GBP2.45 million or 83%) and
revenue from services was GBP0.34 million (12%) (2020: GBP0.40
million or 14%).
Dis-aggregation of revenues
The split of revenue by 2021 2020
type: GBP'000 GBP'000
Services 338 406
Reactor sales (Goods) 403 -
Reactor rental 134 89
Goods 2,028 2,452
2,903 2,947
2021 UK & Europe North America Asia Pacific TOTAL
GBP'000 GBP'000 GBP'000 GBP'000
Services 231 - 107 338
Reactor sales (Goods) 403 - - 403
Reactor rental 134 - - 134
Goods 155 1,679 194 2,028
923 1,679 301 2,903
2020 UK & Europe North America Asia Pacific TOTAL
GBP'000 GBP'000 GBP'000 GBP'000
Services 104 - 302 406
Reactor rental 89 - - 89
Goods 164 2,169 119 2,452
357 2,169 421 2,947
Services and reactor rental revenues are recognised over time,
whereas goods and reactor sales are recognised at a point in
time.
The group acquired the following non-current assets during the
year, split by geographical location as detailed below:
Non-current asset additions
2021 2020
GBP'000 GBP'000
By destination
United Kingdom 473 291
United States of 1,667 -
America
Thailand 17 4
2,157 295
The carrying value of the group's non-current assets split by
geographical location are detailed below:
2021 2020
GBP'000 GBP'000
By destination
United Kingdom 3,271 3,564
United States of America 5,749 5,257
Thailand 116 184
South Korea 1 1
9,137 9,006
5. Other Operating Income
2021 2020
GBP'000 GBP'000
Grant Income 427 550
Federal Support Schemes 148 206
575 756
There are no unfulfilled conditions attached to the above
income.
6. Loss before taxation
Loss before taxation is arrived at after charging:
2021 2020
GBP'000 GBP'000
Amortisation of other intangibles 176 129
Restructuring costs - 63
Depreciation of property, plant and equipment 1,096 1,511
Foreign Exchange (44) (9)
Operating lease rental : plant and machinery 1 2
The service fees of the Group's auditor, Grant Thornton UK LLP,
are analysed below:
Fees payable to the Company's auditor
for the audit of the Group's financial
statements 72 67
Fees payable to the Company's auditor
and its associates for other services:
Taxation related compliance services 12 40
84 107
7. Employees
The average number of employees during the year, including
executive directors, was:
2021 2020
No. No.
Administration 22 23
Research, development and
production 32 40
54 63
Staff costs for all employees, including executive directors,
consist of:
2021 2020
GBP'000 GBP'000
Wages and salaries 2,509 3,243
Social security costs 271 287
Defined contribution pension
costs 172 170
Defined benefit pension
costs 47 24
Share-based payment (income)/expense 119 (11)
3,118 3,713
Directors' remuneration
2021 2020
GBP'000 GBP'000
Short-term employee benefits
and fees 491 484
Post-retirement benefits 36 25
527 509
The total amount payable to the highest paid director in respect
of emoluments was GBP253,000 (2020: GBP232,000), excluding pension
costs of GBP24,000 (2020: GBP20,000). Further details on Directors
Remuneration can be found in the Director Remuneration Report on
page 28.
8. Income tax
Current tax credit 2021 2020
GBP'000 GBP'000
Total income tax credits:
* for the financial year 363 384
* under provision in the previous financial year - 7
_________ _________
Total Current Tax 363 391
The reason for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the United
Kingdom applied to the losses for the year are as follows:
2021 2020
GBP'000 GBP'000
Loss for the year (3,408) (4,016)
Income tax credit (363) (391)
Loss before income taxes (3,771) (4,407)
Tax using the Group's domestic tax rates
of 19% (2020 - 19%) 717 837
Expenses not deductible for tax purposes 216 (143)
Different tax rates applied in overseas
jurisdictions (2) 24
R&D enhancement 340 259
R&D costs capitalised 49 45
Surrender for R&D tax credit (446) (109)
Adjustment for over provision in comparative
year - 7
Movement in unrecognised losses carried
forward (494) (492)
Movement in unrecognised fixed asset
temporary differences (17) (37)
Total tax credit 363 391
Changes in tax rates and factors affecting the future tax
charge
The main rate of corporation tax for UK companies is currently
19%.
The Group has tax losses that are available indefinitely for the
UK and a maximum of 20 years for the US to be offset against future
taxable profits of the companies approximately amounting to
GBP23.68 million (2020: GBP23.96 million) including GBP4.12 million
(2020: GBP4.16 million) of fixed asset timing differences. No tax
losses are expected to expire within the next 15 years. The group
currently expects to be able to utilise its US tax losses in the
foreseeable future and a deferred tax asset has been recognised in
respect of these tax losses up to the value of the timing
difference of fixed assets and therefore no overall deferred tax
asset has been created.
9. Loss per share
The calculations of loss per share are based on the following
losses and number of shares:
2021 2020
GBP'000 GBP'000
Loss after tax attributable
to owners of Haydale Graphene
Industries Plc (3,408) (4,016)
Weighted average number
of shares:
* Basic and Diluted 408,967,698 331,162,204
Loss per share:
Basic (GBP) and Diluted
(GBP) (0.01) (0.01)
The loss attributable to ordinary shareholders and weighted
average number of ordinary shares for the purpose of calculating
the diluted earnings per ordinary share are identical to those used
for basic earnings per share. This is because the exercise of share
options would have the effect of reducing the loss per ordinary
share and is therefore not dilutive under the terms of IAS 33. At
30 June 2021, there were 39,734,928 (2020: 34,248,583) options and
warrants outstanding as detailed in note 17. All of the options are
potentially dilutive.
Post year end 85,055,893 of new Ordinary Shares were issued on
20(th) September 2021, these Ordinary Shares are dilutive.
1,000,000 warrants were also issued on 2(nd) August 2021 and are
potentially dilutive.
10. Intangible assets
Customer Development Goodwill Total
Relationships expenditure GBP'000 GBP'000
GBP'000 GBP'000
Cost
At 1 July 2019 1,154 1,815 2,087 5,056
Additions - 250 1 251
FX translation - 1 - 1
At 1 July 2020 1,154 2,066 2,088 5,308
Additions - 260 - 260
FX translation (133) (7) (113) (253)
---------------- -------------- ----------- -----------
At 30 June 2021 1,021 2,319 1,975 5,315
Accumulated amortisation
At 1 July 2019 546 1,399 634 2,579
Charge for the
period 87 42 - 129
FX translation - 1 - 1
At 1 July 2020 633 1,442 634 2,709
Charge for the
year 87 89 - 176
FX translation (83) (2) - (85)
---------------- -------------- ----------- -----------
At 30 June 2021 637 1,529 634 2,800
Net book value
At 30 June 2021 384 790 1,341 2,515
At 30 June 2020 521 624 1,454 2,599
At 30 June 2019 608 416 1,453 2,477
All of the above Development expenditure is currently in
use.
Goodwill
Goodwill arose on the acquisition of Haydale Ltd on 21 May 2010
(GBP24,000). On the 9 September 2016, goodwill of GBP327,151 arose
on the acquisition of Innophene Co. Ltd (now Haydale Technologies
Thailand ("HTT")). Goodwill arose on the acquisition of HCT
(formerly ACM) on the 13(TH) October 2016 of GBP1,102,620.
Customer Relationships
The Customer relationships intangible asset arose on the fair
value of assets on the acquisition of HCT (formerly ACM) on the 13
October 2016 amounting to GBP868,676.
Development costs
Development costs brought forward are made up of three areas.
The first relates to the fair value of assets on the acquisition of
Haydale Ltd on 21 May 2010 for development of nano-technology
projects, where it is anticipated that the costs will be recovered
through future commercial activity. The second relates to
capitalised patent costs that were acquired as part of the
acquisition of Innophene Co Ltd. (now HTT) in 2015. The third
relates to the development of nano enhanced products within Haydale
Limited, HCS and HTT.
Development expenditure of GBP260,000 was capitalised during the
year in accordance with IAS 38 in connection with the Group's
expenditure with the development of nano enhanced products
(including inks, epoxy resins, rubbers and composites), where the
Directors believe that future economic benefit is probable (2020:
GBP251,000). Capitalised development expenditure is not amortised
until the products or services are ready for sale or use.
Amortisation
Capitalised development costs are amortised over the estimated
useful life of between 5 and 20 years. The amortisation charge is
recognised in administrative expenses.
The Customer relationships intangible is amortised over the
estimated useful life of 10 years. The amortisation charge is
recognised in administrative expenses.
Goodwill impairment
Goodwill acquired in a business combination is allocated at
acquisition to the CGUs that are expected to benefit from that
business combination. Following the acquisitions of HCS, HCT and
HTT, the Group is operating a number of different CGUs and
therefore HCS and ACM goodwill has been considered against the
future forecast trading outcomes of HCT, HCS and HTT as separate
CGU's.
An analysis of the pre-tax discount rates used and the goodwill
balance as at the year-end by principal CGU's is shown below:
2021 2020 2021 2020
% % GBP'000 GBP'000
Haydale & HCS 10% 10% 23 23
HCT 12% 12% 975 1,103
HTT 10% 10% 341 327
The Group tests goodwill at least annually for impairment or
more frequently if there are indications that goodwill might be
impaired.
The recoverable amounts of the CGUs are determined from
value-in-use calculations. The key assumptions for the value-in-use
are those regarding the discount rates, the growth rates and
expected changes to cash flows during the period for which
management have detailed plans. The Directors estimate discount
rates using pre-tax rates that reflect current market assessments
of the time value of money and the risks specific to the CGUs.
Pre-tax discount rates, derived from the Group's post-tax
weighted average cost of capital of 10% to12% (2020: 10% to 12%),
have been used to discount projected cash flows.
The impairment calculations for the current year have been
derived from the five year forecasts (the "Forecasts") that have
been approved by the Board.
The HCT model assumes that its turnover is in in line with the
Forecasts and then reduces to 2% growth in perpetuity. The growth
rates used are based on management's internally estimated growth
forecasts which are predicated on a recovery in the aerospace
industry during FY22 and FY23. This anticipated rebound would lead
to a recovery in the whisker sales and allow for growth in the
blank sales at this facility such that by June 2023 the CGU had at
least recovered to its pre pandemic trading position. As noted in
the Chairs Report on page 4 we are yet to see any sustained
recovery in our Aerospace business and, given this, we will
continue to review the carrying value of Goodwill in this CGU in
the event that the expected bounce back does not occur in the
timeframes anticipated. As part of the impairment sensitivity
analysis, a break point discounted cashflow was prepared based on
revenue increasing by 75% over the two year period ending June 2023
to coincide with the recovery in aerospace at which point it would
have returned to pre pandemic trading levels and increasing by 2%
per annum thereafter. Margins were forecast to be at historic
levels for the year ended June 2023 and to maintain that level
thereafter. The carrying value of the HCT CGU is GBP7.1m which
consists of Goodwill, Customer Relations, PPE and Right of Use
Assets.
The HTT model assumes that its turnover is in line with the
Forecasts and then reduces to 2% growth into perpetuity. The growth
rates used are based on management's internally estimated growth
forecasts which take into account current and future product
commercialisation. As part of the impairment sensitivity analysis,
management reduced the anticipated turnover and gross profit levels
by 25%, which still resulted in no requirement to impair.
Following this review, the Directors have determined there is no
impairment charge which should be recognised against the intangible
assets of the Group for the year ended 30 June 2021.
11. Property, plant and equipment
Leasehold Plant and Fixtures Motor vehicles Assets under Total
and leasehold machinery and fittings GBP'000 construction GBP'000
improvements GBP'000 GBP'000 GBP,000
GBP'000
Cost
At 1 July 2019 635 7,575 522 30 31 8,793
Transition to IFRS
16 2,207 - - - - 2,207
Additions - 34 10 - - 44
FX translation - 126 10 1 1 138
At 1 July 2020 2,842 7,735 542 31 32 11,182
Additions 1,677 198 22 - - 1,897
FX translation (207) (514) (53) (2) (3) (779)
Disposals (108) (225) (11) - - (344)
Transfer - 29 - - (29) -
At 30 June 2021 4,204 7,223 500 29 - 11,956
Accumulated depreciation
At 1 July 2019 309 2,662 251 15 - 3,237
Charge for the
year 684 765 56 6 - 1,511
FX translation 1 23 4 (1) 27
At 1 July 2020 994 3,450 311 20 - 4,775
Charge for the
year 598 444 48 6 - 1,096
FX Translation (122) (118) (32) 1 - (271)
Disposals (32) (226) (8) - - (266)
At 30 June 2021 1,438 3,550 319 27 - 5,334
Net book value
At 30 June 2021 2,766 3,673 181 2 - 6,622
At 30 June 2020 1,848 4,285 231 11 32 6,407
At 30 June 2019 326 4,913 271 15 31 5,556
Including in the net carrying amount of Property, plant and
equipment are right-of-use assets as follows:
30 June 30 June
2021 2020
GBP'000 GBP'000
Leasehold and leasehold improvements
cost 3,576 2,207
Leasehold and leasehold improvements
depreciation (993) (613)
Leasehold and leasehold improvement
NBV 2,583 1,594
========= =========
12. Inventories
2021 2020
GBP'000 GBP'000
Raw materials 167 242
Work in progress 261 125
Finished goods 900 1,345
1,328 1,712
The total value of inventories recognised in cost of sales
during the year was GBP915,580 (2020: GBP885,471). Raw materials
and finished goods comprise of SiC, blanks, functionalised carbon,
chemicals and associated raw materials. Work in progress comprises
recoverable costs on long-term contracts.
13. Trade receivables
2021 2020
GBP'000 GBP'000
Trade receivables 715 886
14. Other receivables
2021 2020
GBP'000 GBP'000
Other receivables 299 137
Prepayments and accrued
income 227 197
Lease Asset 69 -
595 334
2021 2020
GBP'000 GBP'000
Corporation tax 364 384
15. Deferred income
Deferred income is recognised for both capital and revenue
grants from governments and other funding parties and released as
income in accordance with the relevant conditions of the grant
concerned. All income will be recognised within one year.
2021 2020
GBP'000 GBP'000
Commercial Deferred
Income 180 74
As at 30 June 2021, deferred income of GBP30,769 (2020:
GBP30,769) arose in relation to the rental of a reactor, which had
been invoiced during the year for a full year's rental charge. The
charge is being released over the course of the year. The remaining
deferred income relates to grant income which will be recognised in
the profit and loss within a year.
16. Share capital and share premium
Number of Share capital Share premium Total
shares GBP'000 GBP'000 GBP'000
No.
At 1 July 2019 317,723,848 6,354 27,764 34,118
Issue of GBP0.02 ordinary
shares 22,500,000 450 - 450
At 30 June 2020 340,223,848 6,804 27,764 34,568
Issue of GBP0.02 ordinary
shares 85,055,950 1,701 1,056 2,757
At 30 June 2021 425,279,798 8,505 28,820 37,325
On the 9(th) September 2020, the Company issued 85,055,950 new
ordinary shares of 2p each.
Issue costs amounting to GBP220,000 have been charged to the
share premium account during the year (2020: GBP14,000 charged to
the profit and loss).
17. Share-based payment transactions
Options
The Company operates both an approved EMI share option scheme
and an unapproved share option scheme for the benefit of employees
and directors of the Group. The exercise price of the unapproved
options is equal to the mid-market price of the shares on the date
of grant. The exercise price of the 2020 EMI options granted on 13
January 2020 was 2.25p per Ordinary Share (being a 19.7 % premium
to the closing mid-market price of the Company's Ordinary Shares on
10 January 2020, the last trading day before the grant). The
options vest either one year or three years from the date of grant.
The options are accounted for as equity settled share based payment
transactions. The following table which illustrates the number and
weighted average exercise prices (WAEP) of, and movements in, share
options during the year:
2021 2020
Number of
options WAEP Number of options WAEP
No. Pence No. Pence
Balance at beginning of year 34,181,185 23.00 2,504,691 62.00
Granted 7,100,000 2.25 34,100,000 2.25
Lapsed (1,500,000) 2.25 (1,591,960) 113.00
Forfeited (46,257) 154.70 (831,546) 113.00
Balance at end of year 39,734,928 2.39 34,181,185 23.00
============= ======== =================== ========
At 30 June 2021, there were options outstanding over 39,734,928
un-issued ordinary shares, equivalent to 9% of the issued share
capital as follows:
Number of shares Exercise price Earliest exercise date Latest
exercise date
Unapproved scheme
19 May 2016 4,665 171.50p 19 May 2019 19 May 2026
14 October 2016 6,759 198.14p 14 October 2019 14 October 2026
26 June 2017 7,495 178.50p 27 June 2020 27 June 2027
15 December 2017 16,009 125.50p 15 December 2020 15 December 2027
8 July 2020 7,000,000 2.25p 8 July 2023 8 July 2030
Approved EMI scheme
13 January 2020 32,700,000 2.25p 13 January 2023 13 January 2030
39,734,928
==================
The estimated fair value was calculated by applying a Monte
Carlo option pricing model.
Type of Number of Share Fair Award Risk Expected Performance
award shares price at value life free volatility conditions
date of per (years) rate rate
grant option (%) (%)
(p) (p)
19 May 2016 Unapproved 4,665 172.00 101.00 10 0.62 51 None
14 October
2016 Unapproved 6,759 198.00 113.00 10 0.50 49 None
26 June
2017 Unapproved 7,495 179.00 179.00 10 0.50 34 None
15 December
2017 Unapproved 16,009 126.00 55.00 10 0.50 51 None
8 July 2020 Unapproved 7,000,000 3.65 0.63 10 0.50 80.5 See below
13 January
2020 EMI 32,700,000 1.88 1.56 10 0.50 80.5 See below
39,734,928
============
Should the Company's closing mid-market share price reach and
remain at or above GBP0.04 for at least 15 consecutive trading
days, commencing after the grant date and ending on or before 30
September 2021, 30% of share options are capable of exercise.
Should the Company's closing mid-market share price reach and
remain at or above GBP0.08 for at least 15 consecutive trading
days, commencing after the grant date and ending on or before 30
September 2022, an additional 30% of share options are capable of
exercise.
Should the Company's closing mid-market share price reach and
remain at or above GBP0.16 for at least 15 consecutive trading
days, commencing after the grant date and ending on or before 30
September 2023, the final 40% of share options are capable of
exercise.
The weighted average remaining contractual life of share options
outstanding at 30 June 2021 is 8.5 years (2020: 9.5 years). The
charge for the year for share-based payment amounted to GBP0.12
million (2020: GBP(0.01) million).
Warrants
2021 2020
Number of warrants Weighted Number of warrants Weighted average
No. average exercise No. exercise price Pence
price
Pence
Balance at beginning of
year 67,398 208.00 107,398 208.00
Lapsed - - (40,000) 208.00
Balance at end of year 67,398 208.00 67,398 208.00
None of the warrants outstanding at 30 June 2021 are to
employees or have performance conditions attached. The same pricing
model was used for calculating the cost of warrants to the Group as
was used for calculating the cost of the options to the Group.
The weighted average remaining contractual life of warrants
outstanding at 30 June 2021 is 0.04 years (2020: 0.72 years). The
charge for the year for share-based payment amounted to GBP7,258
(2020: GBP11,410).
18. Reserves
Share capital
The share capital represents the nominal value of the equity
shares in issue.
Share premium account
The share premium account represents the amount received on the
issue of ordinary shares in excess of their nominal value, less any
costs associated with the issuance of the shares, and is
non-distributable.
Share-based payment reserve
The share-based payment reserve comprises the cumulative expense
representing the extent to which the vesting period of share
options has passed and management's best estimate of the
achievement or otherwise of non-market conditions and the number of
equity instruments that will ultimately vest.
Retained earnings
The retained profits and losses reserves comprise the cumulative
effect of all other net gains, losses and transactions with owners
(e.g. dividends) not recognised elsewhere.
Foreign Exchange
The foreign exchange reserve comprises of translation
differences arising from the translation of the overseas subsidiary
results into pound sterling.
19. Trade and other payables
Current Liabilities Non-Current Liabilities
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Current Liabilities
Trade payables 677 410 - -
Tax and social security 101 181 - -
Lease liability 365 617 2,370 1,031
Accruals and other creditors 576 698 - -
1,719 1,906 2,370 1,031
20. Bank loans
2021 2020
GBP'000 GBP'000
Bank loans 1,729 1,248
The borrowings are repayable
as follows:-
* within one year 885 944
* in the second year 9 265
* in the third to fifth years inclusive 835 39
1,729 1,248
The Group's borrowings are denominated in US dollars and Pounds
Sterling. The directors consider that there is no material
difference between the fair value and carrying value of the Group's
borrowings.
2021 2020
Average interest rates paid 3.2% 7.9%
In October 2016, a five year bank loan of $1,720,000 (equivalent
to approximately GBP1.4 million at the time) was drawn by HTI, the
Company's US holding company, secured on the fixed assets of HTI
and its newly acquired operating subsidiary, HCT. This loan carries
an interest rate of 4% and is repayable in equal instalments. HTI
also had a working capital facility of up to $900,000 which was
secured on a combination of the fixed assets, inventory and trade
receivables of the US business and this was fully utilised at the
year end (FY20: Fully Utilised). The rate of interest of this was
fixed at 5.25%.
In June 2020, as part of the Government Bounce Back Loan scheme,
HCS entered into a six year loan agreement with Natwest for
GBP50,000. The loan has a repayment holiday and does not accrue
interest during the first 12 month. Following the initial 12 months
interest will be charged at 2.5% p.a. and is repaid in equal
instalments over the remaining period.
In March 2021, HCS secured a five year loan of GBP1,100,000 from
Innovate Loans UK Limited. At the year end the Company had drawn
down GBP800,000 of this facility. It is anticipated that the full
amount will be drawn by 31 March 2022. The loan has a repayment
holiday until March 2024 and is fully repayable by March 2026. For
the initial 36 months interest will be charged at 3.7% p.a. and for
the final 24 months interest with be charged at 10.7%. There are no
penalties for early repayment.
21. Related party disclosures
Balances and transactions between Haydale Graphene Industries
Plc and its subsidiaries are eliminated on consolidation and are
not disclosed in this note. Balances and transactions between the
Group and other related parties are disclosed below.
Remuneration of directors and key management personnel
The remuneration of the Directors of the Company is set out
below in aggregate for each of the categories specified in IAS 24
'Related Party Disclosures'.
2021 2020
GBP'000 GBP'000
Short-term employee benefits
and fees 491 484
Social security costs 65 50
Post-retirement benefits 36 25
592 559
Other transactions - Group and parent company
Fees totalling GBP15,856 (2020: GBP13,500) were paid to the
Evesco International Business for support during the fund raise. Mr
G Eves served as a director of the company during the year and is a
director of Evesco International Business Services. At 30 June
2021, the balance owed to Evesco International Business Services
was GBPNil (2020: GBPNil).
Other transactions - Group
Other related party transactions during the year under review
are shown in the table below:
2021 2020
GBP'000 GBP'000
Services Received
QM Holdings 402 468
During the year an amount of GBP401,870 was paid to QM Holdings
in respect of property rent (2020: GBP468,000). QM Holdings is
owned by Thomas Quantrille and Marvin Murrell who are officers of
HCT. The balance outstanding to QM Holdings at the year-end was
GBP28,971 (2020: GBP40,163).
22. Financial instruments
The Group's activities are exposed to a variety of market risk
(including foreign currency risk and interest rate risk), credit
risk and liquidity risk. The Group's overall financial risk
management policy focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the
Group's financial performance.
a) Financial risk management policies
The Group's policies in respect of the major areas of treasury
activity are as follows:
i) Market risk
Foreign currency risk
The Group is exposed to foreign currency risk on transactions
and balances that are denominated in currencies other than Pounds
Sterling. The currencies giving rise to this risk are primarily the
United States Dollar and the Euro. Foreign currency risk is
monitored closely on an ongoing basis to ensure that the net
exposure is at an acceptable level. The Group maintains the ability
to provide a natural hedge wherever possible by matching the cash
inflows (revenue stream) and cash outflows used for purposes such
as operational expenditure in the respective currencies.
The carrying amounts of the Group's foreign currency denominated
monetary assets and liabilities at the end of each reporting period
were as follows:
United States Euro Total
Dollar GBP'000 GBP'000
GBP'000
2021
Financial assets 287 52 339
Financial liabilities 4 370 374
2020
Financial assets 952 47 999
Financial liabilities 111 1 112
Foreign currency sensitivity analysis
The following table details the sensitivity analysis to possible
changes in the relative values of foreign currencies to which the
Group is exposed as at the end of the respective financial periods,
with all other variables held constant:
Effects on loss after taxation 2021 Increase/ 2020 Increase/
/ equity (decrease) (decrease)
GBP'000 GBP'000
United States Dollar:
- strengthened by 10% 31 93
- weakened by 10% (26) (76)
Euro:
- strengthened by 10% (45) 6
- weakened by 10% 29 (5)
ii) Interest rate risk
The Group's exposure to interest rate risk arises mainly from
interest-bearing financial assets. The Group's policy is to obtain
the most favourable interest rates available, while ensuring no
risk to capital. Any surplus funds will be placed with licensed
financial institutions to generate interest income. The current
loan and credit facilities maintain a fixed rate of interest.
Interest rate risk sensitivity analysis
A 100 basis points strengthening or weakening of the interest
rate as at the end of each financial period would have an
immaterial impact on loss after taxation and / or net assets. This
assumes that all other variables remain constant.
b) Credit risk
The Group's exposure to credit risk, or the risk of third
parties defaulting, arises mainly from trade and other receivables.
The Group manages its exposure to credit risk by the application of
credit approvals, credit limits and monitoring procedures on an
ongoing basis. For other financial assets (including cash and bank
equivalents), the Group minimises credit risk by dealing
exclusively with high credit rating financial institutions.
The Group establishes an allowance for impairment that
represents its expected credit losses in respect of the trade and
other receivables as appropriate. The main components of this
allowance are a specific loss component that relates to
individually significant exposures, and a collective loss component
established for groups of similar assets in respect of losses that
are expected but not yet identified. Impairment is estimated by
management based on prior experience, current market and third
party intelligence while considering the current economic
environment.
Credit risk concentration profile
To date, modest sales have meant that the credit risk profile of
the Group has tended to focus on a handful of customers only. As
such, no meaningful analysis can be drawn from the customer profile
of the receivables outstanding at each period end under review.
Exposure to credit risk
As the Group does not hold any collateral, the maximum exposure
to credit risk is represented by the carrying amount of the
financial assets at the end of each financial period.
The exposure of credit risk for trade receivables by
geographical region as at the year-end is as follows:
2021 2020
GBP'000 GBP'000
United Kingdom 9 28
Europe 9 181
North America 360 115
Rest of the world 337 562
715 886
Maturity analysis
The ageing analysis of the Group's trade receivables as at the
year-end is as follows:
2021 2020
GBP'000 GBP'000
Not past due 677 834
Past due:
* less than 3 months 38 41
* between 3 and 6 months - 11
Gross amount 715 886
At the end of each financial period, trade receivables that are
individually impaired were those in significant financial
difficulties and have defaulted on payments. These receivables are
not secured by any collateral or credit enhancement.
Collective impairment allowances, are determined based on
estimated irrecoverable amount from the sale of goods and services,
determined by reference to past default experience. Impairment
provision is not material and therefore has not been recognised in
either the current or prior year.
Trade receivables that are past due but not impaired
The Group believes that no impairment allowance is necessary in
respect of these trade receivables. They are substantially
companies with good collection track record and no recent history
of default, further this also applies to any trade receivables held
at year end which are not past due.
iii) Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group exposure
to liquidity risk arises primarily from mismatches of the maturity
of financial assets and liabilities.
The Group maintains a level of cash and cash equivalents and
bank facilities deemed adequate by management to ensure as far as
possible, that it will have sufficient liquidity to meet its
liabilities when they fall due.
All of the financial liabilities of the Group are due within one
year, with the exception of certain long-term bank loans - see note
20.
Maturity analysis
The ageing analysis of the Group's non-derivative financial
liabilities as at the year-end is as follows:
2021 Under 1 1 to 2 Yrs 3+ Yrs Total
Yr GBP'000 GBP'000 GBP'000
GBP'000
Trade payables 677 - - 677
Secured bank loan 876 - 803 1,679
Unsecured bank loan 9 9 32 50
Lease liability 365 359 2,011 2,735
Total 1,927 368 2,846 5,141
2020 Under 1 1 to 2 Yrs 3+ Yrs Total
Yr GBP'000 GBP'000 GBP'000
GBP'000
Trade payables 410 - - 410
Secured bank loan 943 255 - 1,198
Unsecured bank loan 1 9 40 50
Lease liability 617 617 414 1,648
Total 1,971 881 454 3,306
c) Capital risk management
The Group defines capital as the total equity of the Group. The
Group's objectives when managing capital are to safeguard the
Group's ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital. In order to maintain or adjust the capital structure,
Haydale Graphene Industries PLC may issue new shares or sell assets
to reduce debt.
d) Classification of financial instruments (at amortised cost and fair value)
2021 2020
GBP'000 GBP'000
Financial assets
Trade receivables 715 886
Other receivables 368 137
Cash and bank balances 1,644 823
Financial Assets (at amortised
cost) 2,727 1,846
Financial liabilities
Bank loans 1,729 1,248
Trade payables 677 410
Lease Liability 2,735 1,648
Financial Liabilities (at amortised
cost) 5,141 3,306
There is no difference between the fair value and book value for
the assets and liabilities.
e) Fair value of financial instruments
The Group has no financial assets or liabilities carried at fair
values at the end of each reporting date.
23. Capital commitments
The Group had the following capital commitments in the
respective years:
2021 2020
GBP'000 GBP'000
Authorised by the directors
but not contracted for 317 50
24. Ultimate controlling party
The Directors do not consider any one shareholder, individually
or acting in consort with others, to have ultimate control of the
Group.
25. Lease arrangements
The amounts of minimum lease payments under non-cancellable
operating leases are as follows:
2021 2021 2020 2020
Land and Plant and Land and Plant and
buildings machinery buildings machinery
GBP'000 GBP'000 GBP'000 GBP'000
* within one year - 1 - 1
* within two to five years - 2 - 3
Aggregate amounts payable - 3 - 4
Payments recognised as an expense under these leases were as
follows:
2021 2021 2020 2020
Land and Plant and Land and Plant and
buildings machinery buildings machinery
GBP'000 GBP'000 GBP'000 GBP'000
Operating lease expense - 1 - 1
Leases pertain to the office and unit contracts for the three UK
facilities of in aggregate GBP0.16 million. Of the GBP0.16 million,
certain leases are cancellable with three months' notice.
Within the minimum lease payments for plant and machinery is the
cost relating the general office equipment.
26. Defined Benefit Pension Scheme
HCT operated a defined benefit pension scheme. The scheme was
closed in November 2006 for any new participants.
Contributions of Nil were made to the scheme during the year
ended 30 June 2021 (2020: Nil).
Included in the loss before tax during the year:
2021 2020
(GBP'000) (GBP'000)
Net Interest Expense 47 24
=========== ===========
Included in other comprehensive income during the year:
2021 2020
(GBP'000) (GBP'000)
Actuarial loss / (gain) from
demographic assumptions 208 292
The following table sets forth the pension plan's funded status
as of 30 June:
2021 2020
(GBP'000) (GBP'000)
Accumulated benefit obligation (3,834) (4,275)
Projected Benefit obligation (3,834) (4,275)
Plan assets at
fair value 2,808 2,840
----------- -----------
Funded Status (1,026) (1,435)
----------- -----------
Accrued Pension
Cost (1,026) (1,435)
=========== ===========
Net amount recognised in the consolidated balance sheet as of 30
June, consisted of the following:
2021 2020
(GBP'000) (GBP'000)
Non-current Liabilities (1,026) (1,435)
=========== ===========
The discount rate is based on the yield curve of government
bonds in the applicable region adjusted with a credit spread of one
of the two highest ratings given by a recognized ratings agency.
Future cash outflows of the plans are then related with the yield
curve. The average is the discount rate. The weighted average
assumptions used to develop the actuarial present value of benefit
obligations and net periodic benefit costs for the pension plan are
as follows for the year ended 30 June 2021:
Discount rate for periodic benefit costs 2.75%
Discount rate for benefit obligations 2.75%
Rate of increase in compensation levels 3.50%
Investment return rate 3.00%
Mortality Assumptions are as follows:
Longevity at retirement age (current & future 2021 2020
pensioners)
- Males 20.4 years 22.6 years
- Females 22.3 years 25.0 years
Plan Assets
Pension assets are managed by an outside investment manager and
are rebalanced periodically. The Company establishes policies and
strategies and regularly monitors performance of the assets,
including the selection of investment managers, setting long-term
strategic targets, and monitoring asset allocations. Target
allocation ranges are guidelines, not limitations, subject to
variation from time-to-time or as circumstances warrant, and
occasionally, the Company may approve allocations above or below a
target range.
The pension plan's investment strategy with respect to pension
assets is to invest the assets in accordance with ERISA and
fiduciary standards. The long-term primary objective for the
pension plan assets are to protect the assets from erosion of
purchasing power and to provide a reasonable amount of long-term
growth of capital, without undue exposure to risk. Currently, the
strategic targets are 45% for equity securities, 50% for debt
securities, and no more than 5% for other categories.
The fair value of the Company's pension plan assets valued at 30
June 2021, by asset category were as follows:
Fair Value Measurements
at
30 June 2021 using
Total Carrying Assets/Liabilities Level 1 Level 2
Measured
at
Description Amount Fair Value Inputs Inputs
GBP,000 GBP,000 GBP,000 GBP,000
---------------- ---------------- -------------------- ------------- ------------
Cash 141 141 141 -
Corporate
Equities 1,596 1,596 1,596 -
Fixed Income:
US Government 14 14 - 14
Municipal 1 1 - 1
Corporate
debt 942 942 - 942
Mutual Funds 114 114 114 -
2,808 2,808 1,851 957
All corporate equities are quoted securities.
The changes in the fair value of the Company's pension plan
assets for the year ending 30 June 2021, were as follows:
2021 2020
GBP,000 GBP,000
Opening Balance 2,840 2,875
Contributions - -
Distributions (217) (245)
Earnings 111 177
Net realised gain 449 20
Administrative expenses (64) (66)
Foreign exchange gain/(loss) (311) 79
---------
Balance at Year End 2,808 2,840
Cash Flows
The Company expects benefits paid for the next five fiscal years
and the five years thereafter as follows:
2021 2020
GBP,000 GBP,000
2022 247 266
2023 245 274
2024 250 272
2025 249 276
2026 249 275
Thereafter 1,270 1,411
---------
2,510 2,774
The company's pension plan asset allocations by asset category
were as follows as of 30 June 2021:
Asset Category
Cash 5%
Equity Mutual Funds 57%
Fixed Income 34%
Other 4%
Plan Obligations
2021 2020
GBP'000 GBP'000
Benefit Obligation at 01 July 4,275 3,960
Foreign exchange movement (452) 114
Interest cost 109 136
Actuarial loss 120 310
Benefits paid (218) (245)
_____ _____
Benefit Obligation at 30 June 3,834 4,275
Fair Value of Plan Assets at 01 July 2,840 2,875
Foreign Exchange movement (311) 79
Actual Return on plan assets 449 19
Interest Income 47 112
Employer contributions - -
Benefits paid (217) (245)
_____ _____
Fair Value of Plan Assets at 30 June 2,808 2,840
Funded Status at 30 June (1,026) (1,435)
Defined benefit obligation - sensitivity analysis.
The impact to the value of the defined benefit obligation of a
reasonably possible change to one actuarial assumption, holding all
other assumption constant, is presented in the table below:
Reasonably Defined Benefit Obligation
(GBP'000)
Actuarial Assumption Possible Change Increase Decrease
----------------------- ----------------- -------------- --------------
Discount Rate (+/- 0.25%) (91) 95
Mortality Rate (+/-1.00%) 12 (12)
HCT also has a defined contribution plan under Section 401(k) of
the Internal Revenue Code which provides for voluntary
participation. All employees who have completed one hour of service
are eligible to participate in this plan beginning the first pay
period of the month following the date an hour of service is first
performed. Participants may contribute on a pre-tax basis from 1%
to 60%, in 1% increments, of their annual base salary. Company
contributions under the plan are required to be equal to 100% of
that portion of participant contributions which do not exceed 6% of
the participant's annual base compensation rate. Participants are
immediately vested in their voluntary contributions plus actual
earnings and Company contributions. The Company contributions for
the year ended 30 June 2021, were GBP47,000 (2020: GBP24,000).
27. Taxes
Deferred tax is calculated in full on temporary differences under
the liability method. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply in the period
in which the liability is settled or the asset realised, based
on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
The movement on the deferred tax account is as shown below:
2021 2020
GBP'000 GBP'000
At 1 July - -
Recognised in profit and
loss:
Tax expense - 7
Recognised in other
comprehensive
income:
Movement due to changes in
exchange
rates - (7)
At 30 June - -
=========== =========
Deferred tax assets have been recognised in respect of tax losses
and other temporary differences giving rise to deferred tax assets
where the directors believe it is probable that these assets will
be recovered.
Detail of the deferred tax liability, amounts recognised in profit and loss and amounts recognised in
other
comprehensive income are as follows:
(Charged)/
credited
to profit
Asset Liability Net or loss
2021 2021 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000
Employee pension liabilities 215 - 215 (86)
Available losses 494 - 494 (142)
Fixed assets - (709) (709) 228
Net tax assets/(liabilities) 709 (709) - -
=========== =========== ========= ============
(Charged)/
credited
to profit
Asset Liability Net or loss
2020 2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000
Employee pension liabilities 301 - 301 73
Available losses 636 - 636 (30)
Business combinations - (937) (937) (43)
Net tax assets/(liabilities) 937 (937) - -
=========== =========== ========= ============
A deferred tax asset has not been recognised for the following:
2021
GBP'000
Accelerated capital allowances (49)
Unused tax losses 23,677
23,628
================
The unused tax losses can be carried forward indefinitely in the UK and up to a maximum of 20 years in the US.
28. Post Balance Sheet Event
On 20 September 2021 the Group successfully raised GBP5.10
million (gross) of new funds before costs via a placing, retail
offer and subscription of new ordinary shares in the Company.
29. Reconciliation of liability movement as a result of financing activities
Non-current Current Total
Loans and loans and GBP'000
borrowings borrowings
GBP'000 GBP'000
At 1st July 2019 388 1,568 1,956
Interest accruing in period 14 30 44
New loans in year - 50 50
Loan repayments in year - (835) (835)
Lease Liability transaction
to IFRS 16 1,648 559 2,207
Lease Liability repayments in
year - (559) (559)
Effect of foreign exchange 9 24 33
Loans classified as non-current
at 30 June 2019 becoming current
during year. (107) 107 -
Loans classified as non-current
at 30 June 2019 becoming current
during year. (617) 617 -
At 30th June 2020 1,335 1,561 2,896
Interest accruing in period 3 15 18
New loan in year 800 - 800
Loan repayments in year - (219) (219)
Lease Liability addition 1,647 - 1,647
Lease Liability repayments in
year - (561) (561)
Effect of foreign exchange (117) (117)
Loans classified as non-current
at 30 June 2020 becoming current
during year. (263) 263 -
Lease Liability classified as
non-current at 1 July 2020 becoming
current during year (308) 308 -
At 30th June 2021 3,214 1,250 4,464
PARENT COMPANY REPORT Note 2021 2020
Company Registration No. 07228939 GBP'000 GBP'000
Fixed assets
Property, plant and equipment 27 129
Investments 6 1,497 1,299
1,524 1,428
Current assets
Debtors 7 6,393 5,297
Cash at bank and in hand 283 323
6,676 5,620
Creditors: amounts falling due within
one year 8 (408) (584)
NET CURRENT ASSETS 6,268 5,036
TOTAL ASSETS LESS CURRENT LIABILITIES 7,792 6,464
Creditors: amounts falling due after more - -
than one year
NET ASSETS 7,792 6,464
Capital and reserves
Called up share capital 9 8,505 6,804
Share premium account 9 28,820 27,764
Profit and loss account (29,533) (28,104)
SHAREHOLDER'S FUNDS 7,792 6,464
As permitted by section 408 of the Companies Act 2006, the
Company's profit and loss account has not been included in these
financial statements. The loss of the Company for the year ended 30
June 2021 was GBP1,533,000 (2020: GBP5,720,000).
The financial statements on pages 79 to 84 were approved and
authorised for issue by the Board of directors on 14 December 2021
and signed on its behalf by:
David Banks Keith Broadbent
Chair Chief Executive Officer
Share Share Profit and Total
capital Premium loss account Equity
GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2019 6,354 27,764 (22,215) 11,903
Comprehensive Income
for the year
Loss for the year - - (5,720) (5,720)
Contributions by and
distributions to owners
Recognition of share-based
payments - - (155) (155)
Issue of ordinary share
capital, net of transaction
costs 450 - - 450
Share issue costs - - (14) (14)
At 30 June 2020 and 1
July 2020 6,804 27,764 (28,104) 6,464
Comprehensive Income
for the year
Loss for the year - - (1,533) (1,533)
Contributions by and
distributions to owners
Recognition of share-based
payments - - 104 104
Issue of ordinary share
capital 1,701 1,276 - 2,977
Share issue costs - (220) - (220)
At 30 June 2021 8,505 28,820 (29,533) 7,792
1. Basis of preparation
The parent company financial statements of Haydale Graphene
Industries Plc, a public company incorporated and registered in
England and Wales under the Companies Act 2016 with company number
07228939 which is limited by shares, have been prepared in
accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework. The principal accounting policies adopted in the
preparation of the financial statements are set out below. The
policies have been consistently applied to the years presented,
unless otherwise stated.
The financial statements have been prepared on a historical cost
basis. The presentation currency used is sterling and amounts have
been presented in round ("GBP000's").
Disclosure exemptions adopted
In preparing these financial statements the company has taken
advantage of all disclosure exemptions conferred by FRS101.
Therefore these financial statements do not include:
- certain comparative information as otherwise required by IFRS;
- certain disclosures regarding the company's capital;
- a statement of cash flows;
- the effect of future accounting standards not yet adopted;
- the disclosure of the remuneration of key management personnel; and
- disclosure of related party transactions with other wholly
owned members of the group headed by
Haydale Graphene Industries Plc.
In addition, all in accordance with FRS 101, further disclosure
exemptions have been adopted because equivalent disclosures are
included in the consolidated financial statements of Haydale
Graphene Industries Plc. These financial statements do not include
certain disclosures in respect of:
- Share based payments;
- Business combinations; and
- Financial Instruments
2. Accounting policies
With the exception of the adoption of IFRS 16 discussed further
below, the following accounting policies have been applied
consistently in dealing with items which are considered material to
the company's financial statements:
Investment in subsidiary undertakings
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
Investments in subsidiary undertakings where the company has
control are stated at cost less any provision for impairment.
Financial assets
Impairment of financial assets
The Company assesses at each balance sheet date whether a
financial asset or group of financial assets is impaired.
Assets carried at amortised cost
These assets arise principally from the provision of services
and advancing of monies to the company's subsidiaries, but also
incorporate other types of financial assets where the objective is
to hold these assets in order to collect contractual cash flows and
the contractual cash flows are solely payments of principal and
interest. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
The Company's financial assets measured at amortised cost
comprise intercompany receivables, trade and other receivables and
cash and cash equivalents in the consolidated statement of
financial position.
The intercompany receivables are interest-free loans that are
repayable on demand. In applying IFRS 9 to these balances, the
company assesses the ability of the debtor subsidiary to repay the
loan on demand at each reporting date. A loan is considered to be
in default where there is evidence that the borrower has
insufficient liquid assets to repay the loan on demand. This is
assessed with reference to key liquidity and solvency ratios. Where
the borrowing subsidiary has sufficient liquid assets to repay the
loan immediately, meaning the risk of default is very low, the loan
is considered to be in Stage 1 of the expected credit loss model,
meaning that there is deemed to have been no significant increase
in credit risk. However, should the borrowing subsidiary not have
sufficient liquid assets to repay the loan on demand, the loan is
considered to be at Stage 3 of the expected credit loss model and
credit impaired. Where a loan is deemed to be credit impaired, an
expected credit loss provision is recognised based on a 'repay over
time' approach applying a discounted cashflow analysis.
Cash and cash equivalents includes cash in hand for the purpose
of the statement of cash flows - bank overdrafts. Bank overdrafts
are shown within loans and borrowings in current liabilities.
Share-based payments
When the company grants options over equity instruments directly
to the employees of a subsidiary undertaking, the effect of the
share-based payment is capitalised as part of the investment in the
subsidiary as a capital contribution, with a corresponding increase
in equity.
Depreciation
Depreciation is provided to write off cost, less estimated
residual values, of all tangible fixed assets, evenly over their
expected useful lives. It is calculated at the following rates:
Furniture and fittings 33% per annum straight line
Computer equipment 33% per annum straight line
Impairment
The need for any fixed asset impairment write-down is assessed
by comparison of the carrying value of the asset against the higher
of realisable value and value in use.
Taxation
The charge for taxation is based on the loss for the period and
takes into account taxation deferred.
Current tax is measured at amounts expected to be paid using the
tax rates and laws that have been enacted by the balance sheet
date. The substantively enacted rate has been used for deferred tax
balances, which are recognised in respect of all timing differences
that have been originated but not reversed by the reporting date,
except that the recognition of deferred tax assets is limited to
the extent that the Company anticipates making sufficient taxable
profits in the future to absorb the reversal of the underlying
timing differences.
Foreign Currency
Foreign currency transactions are translated at the rates ruling
when they occurred. Foreign currency monetary assets and
liabilities are translated at the rate of exchange ruling at the
balance sheet date. Any differences are taken to the profit and
loss account.
Critical accounting judgements and estimation uncertainty
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and
the accompanying disclosures, and the disclosure of contingent
liabilities, at the end of the reporting period. However,
uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount
of the assets or liabilities affected in future periods.
The key sources of estimation uncertainty that have a
significant effect on the amounts recognised in the financial
statements include estimation, where applicable, for items relating
to revenue recognition and impairment of receivables.
Impairment of Investments
The company considers the impairment of investments on an annual
basis. An estimate of the values of investments is calculated on a
discounted cash flow basis. Our value in use calculations require
estimates in relation to uncertain items, including management's
expectations of future revenue growth, operating costs, profit
margins, operating cashflows and the discount rate applied.
Future cash flows used in the value in use calculations are
based on our latest Board approved five-year financial plans.
Expectations about future growth reflect expectations of growth in
the markets applicable to the group. The future cashflows are
discounted using a pre-tax discount rate that reflects current
market assessments of the time value of money. The impairment of
investments has been considered under note 10 of the consolidated
financial statements.
Impairment of debtors
The company applies the expected credit loss model under IFRS 9
in assessing the impairment of receivables. As intercompany
receivables are repayable on demand, the debtor is considered to be
in default if they would be unable to repay the balance at the
reporting date. In such circumstances, the receivables are impaired
to the extent that the debtor company is not considered able to
repay the receivable if it were to be recalled at the balance sheet
date. Where a loan is deemed to be credit impaired, an expected
credit loss provision is recognised based on a 'repay over time'
approach applying a discounted cashflow analysis.
3. Audit Fees
The audit fees of the parent company have been disclosed within
note 6 of the consolidated financial statements, which form part of
these financial statements.
4. Employees
The average number of employees during the year, including
executive directors, was:
2021 2020
No. No.
Administration 9 9
___ ___
Staff costs for all employees, including executive directors,
consist of:
2021 2020
GBP000 GBP000
Wages and Salaries 642 716
Social Security Costs 79 86
Pension Costs 53 44
Share based payment (income)/expense 48 (40)
_________ _________
822 806
_________ _________
5. Directors' remuneration
In respect of directors' remuneration, the disclosures required
by Schedule 5 to the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 are included in the
detailed disclosures in the audited Group accounts in Note 7, which
are ascribed as forming part of these financial statements.
6. Fixed asset investments
Investment
GBP'000
Cost
At 1 July 2020 1,299
Additions 198
At 30 June 2021 1,497
The impairment reviews have been carried out on the same basis
as those applied to goodwill and intangibles of the Group (see note
10 in the Group accounts for further detail).
The undertakings in which the company's interest at the period
end is 20% or more are as follows:
Name of subsidiary company Country of Proportion Nature of
of
incorporation ordinary business
share
or registration capital
held
Haydale Ltd England & 100% R&D, sales and distribution
Wales
Haydale Composite Solutions England & 100% R&D, sales and distribution
Limited Wales
Haydale Composites Ltd England & 100% Dormant
Wales
EPL Composites Limited England & 100% Dormant
Wales
Haydale Technologies Korea South Korea 100% Sales and distribution
Co., Ltd
Haydale Technologies Incorporated North America 100% R&D, sales and distribution
LLC
Haydale Technologies Thailand Thailand 100% R&D, sales and distribution
Ltd
Haydale Ceramic Technologies North America 100% Sales and distribution
LLC
Haydale Composites Ltd & EPL Composite Limited are exempt
from audit in accordance with the Companies Act 2006, as a result
of them remaining dormant throughout the current and previous
financial years.
Haydale Technologies Korea Co., Ltd is exempt from audit.
Subsidiary Registered office
Haydale Ltd Clos Fferws, Parc Hendre, Capel Hendre,
Ammanford, Carmarthenshire, SA18 3BL
Haydale Composites Ltd Clos Fferws, Parc Hendre, Capel Hendre,
Ammanford, Carmarthenshire, SA18 3BL
EPL Composites Ltd Clos Fferws, Parc Hendre, Capel Hendre,
Ammanford, Carmarthenshire, SA18 3BL
Haydale Composite Solutions Unit 10 Charnwood Business Park, North
Limited Road, Loughborough, Leicestershire,
LE11 1QJ
Haydale Technologies 16F, Gangnam Bldg. 396, Seocho-daero,
Korea Co., Ltd Seocho-gu, Seoul 137-857, South Korea
Haydale Technologies Room 510 - 515, Tower D, 5th Floor,
Thailand Ltd Thailand Science Park Phahon Yothin
Road, Luang District, Pathum Thani
Province, 12120, Thailand
Haydale Technologies 1446 South Buncombe Road, Greer, South
Incorporated LLC Carolina. 29651, USA
Haydale Ceramic Technologies 1446 South Buncombe Road, Greer, South
LLC Carolina. 29651, USA
7. Debtors
2021 2020
GBP'000 GBP'000
Amounts owed by group
companies 6,217 5,164
Corporation tax 76 95
Other debtors 91 16
Prepayments and accrued
income 9 22
6,393 5,297
During the year an impairment provision of Nil (2020: GBP1.42
million) was recognised in relation to Intercompany balances.
Loans to subsidiary organisations are denominated in their local
currency in line with IAS21, for consolidation purposes these loans
are classified as part of the net investment in the subsidiary and
foreign exchange movements on these balances are recorded through
the Other Comprehensive Income.
Amounts owed by group companies are in foreign currencies,
predominately USD and Thai Baht a 10% movement in the exchange rate
would result in a gain of GBP1.14m or a loss of GBP0.93m.
8. Creditors: amounts falling due within one year
2021 2020
GBP'000 GBP'000
Trade creditors 19 79
Other creditors including tax
and social security 46 84
Accruals and deferred income 343 421
408 584
9. Share capital and share premium
Number of Share capital Share premium Total
shares GBP'000 GBP'000 GBP'000
No.
At 1 July 2020 340,223,848 6,804 27,764 34,568
Issue of GBP0.02 ordinary
shares 85,055,950 1,701 1,056 2,757
At 30 June 2021 425,279,798 8,505 28,820 37,325
During the year, the Company issued 85,055,950 new ordinary
shares of 2p each during September 2020. There were GBP220,000
issue costs associated with the new ordinary share issue.
10. Ultimate controlling party
The Directors do not consider any one shareholder, individually
or acting in consort with others,
to have ultimate control of the Company.
11. Related party transactions
The Company is exempt from disclosing transactions with wholly
owned subsidiaries within the Group. Other related party
transactions are included within those given in note 21 of the
consolidated financial statements.
[1] On a pre IFRS 16 basis Adjusted Admin Expenses for the year
including lease costs would have been GBP5.29 million (FY20:
GBP5.99 million).
[2] Dalian YiBang Technology Company Limited ('DLYB') has been
at the forefront of introducing and servicing high-end imported
products for 15 years in China, which included the introduction of
copper mesh for the purpose of lightning strike protection in both
aerospace and wind energy sectors.
[3] iCraft, based in South Korea, is a global technology company
with interests in security and network solutions as well as the
health and beauty sector.
[4] IRPC Public Company Limited ("IRPC") is a Thai Public
SET-listed Petroleum and Petrochemical company. It is a subsidiary
of PTT Group,
[5] Previously CeramycShield(TM)
6 Based on calculations submitted to HMRC for the R&D tax
credit.
[7] Resigned on 24 November 2019
[8] Appointed on 21 November 2019.
[9] Resigned on 10 June 2020
[10] Appointed on 10 June 2020
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