THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU) 596 / 2014 WHICH FORMS PART OF
UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018
("MAR").
Haydale Graphene Industries
plc
('Haydale' or the 'Group')
Haydale Announces Completion
of Business Review and Appointment of CEO
Ammanford, 23 December 2024 -
Haydale (AIM: HAYD), the global advanced
materials group, announces the completion of a comprehensive
business review by its significantly reconstituted
Board.
As announced in October 2024,
following the securing of an additional £3.1m of funding, the
reconstituted Board has embarked on a full and rigorous review of
all aspects of the business with a view to reprioritising those
areas offering up near-term profit enhancement and positive cash
generation, whilst continuing to pursue the most commercially
attractive longer term strategic options.
The key points of the review and the
Board's conclusions are set out below:
Key
Outcomes:
· Commercial Potential and
Proprietary Value: The Board is
strongly of the view that there are significant commercial
opportunities for Haydale's advanced material technologies and core
intellectual property portfolio across a range of
markets.
Haydale's proprietary technology
serves key global end markets, including energy, aerospace,
automotive, biomedical sensors, batteries, tyres, coatings,
composites, thermoplastics and carbon capture. Growing interest and
participation in these sectors reflect strong demand for Haydale's
solutions, validated by direct customer engagement and the Group's
own extensive market experience.
· Strategic
Focus: The Board has identified that
the Group's efforts and valuable resources are currently spread too
thinly, resulting in a diffusion of focus and reduced operational
effectiveness. The Group has maintained partnerships that to
date have failed to adequately recognise its expertise and
value.
The Board has undertaken a
comprehensive analysis of the Group's performance to identify
products and services with the highest profitability, growth
potential, and strategic importance. The Group's highest potential
product and service offerings include those for enabling carbon
reduction, including its underfloor heating, printed transfers and
carbon capture products and related services. As part of the
new strategy, the Group will adopt a more focused and simplified
approach, leveraging its leading technology to commercialise these
products and services.
Furthermore, the strategy will
target the most profitable customer segments and geographic
regions. These selected revenue streams will offer strong
diversification across market segments, characterised by robust
demand and significant growth potential.
· Commercialisation: The Group
will allocate capital, technological resources and talent towards
these priority areas. The UK business has been reorganised to focus
primarily on two key business lines: heating ink-based energy
efficiency products and carbon capture.
Heating ink-based energy efficiency products business
line
Underfloor heating: The Group
has successfully completed its first external trial installation
with a social housing provider in the Channel Islands and is
working with several partners to commercialise the product in the
UK, Europe and North America.
Printed transfers: The Group's
development work with Cadent for portable hot water and radiator
products has been successful and we are working to commercialise
these products for their estimated 4 million vulnerable customers.
Through another strategic partnership the Group is seeking to
develop its heating inks into an emergency heating solution for
deployment to households in fuel poverty. The Group is working with
several potential partners to take these products into parallel
leisure markets.
Carbon capture business line
The Group has successfully
demonstrated through initial trials that its proprietary technology
can enhance the efficiency of existing carbon capture materials.
Through a new business line introduced by the reconstituted Board,
the Group is working with several potential partners to
commercialise its technology in the carbon capture, usage and
storage market. Under the UK Labour government, carbon capture and
storage are a central component of the nation's strategy to achieve
net-zero emissions by 2050.
Partnerships
The Group will maintain strategic
partnerships with Petronas, Saint Gobain and certain graphene
producers, provided that the commercial arrangements appropriately
reflect and reward the Group's capabilities. A small
portfolio of incubation projects is being maintained where there is
a strong economic and strategic rationale.
Silicon Carbide Tooling
Over the last few years, the Group
has strategically repositioned its US operations by expanding focus
from silicon carbide (SiC) powder sales to the manufacture and
distribution of advanced cutting tools. This transition aimed to
enhance value by moving up the supply chain and capitalising on the
growing demand in sectors such as aerospace and
automotive.
Despite these strategic initiatives,
the expected growth in the Group's US operations has not
materialised. It has become clear to the reconstituted Board that
the previous management team's confidence in the US business'
ability to convert the pipeline on a timely basis was overly
optimistic and not reflective of the Group's operational
preparedness or knowledge of market conditions. Despite efforts to
improve the performance of the US business, the Board expects the
US business to remain loss-making beyond FY25 and has concluded
that rapid divestment or closure of these operations is in the best
interests of the Company and its shareholders.
The Board is currently finalising
the operational details of this process and will provide an update
to shareholders in due course. Substantial cost savings in FY25
would be realised through the elimination of ongoing operating
losses and associated overheads in the US business, contributing to
the Group's goal of achieving profitability and improved cash flow
in FY25, in order to protect the Group's core business.
Operational Streamlining: The
Group will focus on its core competencies, streamlining operations
to enhance efficiency and significantly reducing costs. Non-core
operations are being wound down on an expedited basis or otherwise
being exited for value. These comprise smaller scale operations
which are not considered material to the Group given the current
circumstances. To support this, the Group's supply chain will be
optimised by aligning procurement, manufacturing, and distribution
processes. Additionally, the Group will simplify operations by
reducing complexity in processes and product offerings, lowering
costs, and enhancing overall efficiency.
The Board has initiated action to
mitigate the current rate of cash burn, including headcount
reduction and other operating cost savings, renegotiation of
underperforming contracts, closure of the subsidiary office in
Thailand and consolidation of the UK offices to a single site at
the Group's South Wales headquarters. Initiatives have been
identified targeting significant and readily available cost
savings.
· Divestment
Plans: As part of the strategic
refocus, the Group intends to divest non-core assets, including the
subsidiary office in South Korea. These actions will
streamline operations and enable the reallocation of resources to
high-growth areas. A separate announcement is being made
shortly in regard to the subsidiary office in South
Korea.
Financial Impact: The Board
will implement these strategic initiatives over the coming months.
The Group anticipates that, whilst risks still remain, these
strategic actions are intended to bring forwards the point at which
the Group can generate sufficient monthly cashflow to sustain
itself, which was previously expected to occur in the second half
of FY26. The Board will be reporting progress to the market in due
course.
Leadership Changes: To position
Haydale for sustainable growth and enhanced shareholder value,
Simon Turek, who joined the board on 21 November 2024 as a
representative of Quidos Technologies Ltd ("Quidos") (an 18.1%
shareholder in the Company and in which Mr Turek has a 49% indirect
beneficial interest), led the business review and designed the new
strategy. The Board has therefore decided to appoint Simon
Turek as Chief Executive Officer, effective 1 January 2025 at which
point Gareth Kaminski-Cook will become Non-Executive
Chairman.
Gareth Kaminski-Cook, acting
Executive Chair of Haydale, commented:
"We are delighted to appoint Simon
as CEO. He has demonstrated strategic insight and leadership during
the business review, culminating in the development of a clear and
actionable plan for the Group's future. The Board has full
confidence that Simon is the right leader to bring forwards the
Group's break-even point and cash generation and act as a catalyst
for change. We welcome his equity alignment in Haydale and
his clear commitment to the business, no better illustrated than in
his family's relocation to South Wales."
Simon Turek, incoming CEO,
commented:
"I am pleased to take on the role of
CEO at Haydale at this pivotal moment. Having worked closely with
the team to develop the Group's new strategy, I look forward to
leading its execution and delivering long-term value for our
shareholders, customers, and employees."
For
further information:
Haydale Graphene Industries plc
Gareth Kaminski-Cook, Executive
Chair
Tel: +44 (0) 1269
842946
Patrick Carter, CFO
www.haydale.com
Cavendish Capital Markets Limited (Nominated Adviser &
Broker)
Julian Blunt / Edward Whiley /
Trisyia Jamaludin, Corporate
Finance Tel: +44 (0) 20
7220 0500
Andrew Burdis, ECM