The Board of Haydale, the global advanced materials group, announces that the Group’s consolidated revenues for the year ended 30 June 2018 (‘FY-2018′) (excluding grant income of approximately £0.85 million), is expected to be in the region of 15 to 20 per cent above the £3.0 million revenue generated by the Group in FY-2017. As a result of this lower than expected revenue, the Group’s loss before taxation for FY-2018 is now expected to be below expectations, but broadly in line with last year. Cash at 31 May 2018 was £5.6 million.
The Group has made significant progress during the year, however it has been difficult to predict the rate at which its patented state-of-the-art technologies will gain commercial traction at scale. The business has suffered in the second half of FY-2018 from a combination of timing differences of recognising revenue before the financial year end, longer than anticipated lead times by customers to reach commercial volumes and, to a lesser extent, by unfavourable currency movements.
In particular, approximately £0.3 million relates to shipment of contracted sales of the Group’s high gross margin SiC fibres due at the end of June 2018, which is now expected in the first quarter of the next financial year. Similarly, the sale and in-situ commissioning of a HT60 functionalisation reactor to a petrochemical customer in Thailand will not be fully completed by the end of June 2018 and therefore only a portion of the revenue associated with this contract can be recognised in the current financial year.
In the Far East, the Group is selling and supplying ever-increasing quantities of graphene and other specialty inks for sampling, testing and evaluation, to an increasing number of customers, which gives the Board confidence that long-term commercial sales contracts will be achieved with a diverse range of sales accounts. The Board had anticipated securing a major contract to supply a company in Taiwan with bespoke graphene inks for the manufacture of test strips for the diabetes medical market; this will now not be achieved during the current financial year, but the Group remains in discussions with them over both existing and future development products.
Finally, as stated in the announcement of 25 May 2018, the Group experienced supply chain constraints which has limited sales of the Group’s SiC cutting tool blanks in the second half of FY-2018, but the Board has addressed and resolved the issue by investing in its own production capabilities in its US facilities. This initiative will also increase the SiC gross margin.
Ray Gibbs, CEO, has informed the Company of his intention to resign from the Board, in order to concentrate on Haydale’s business development in the UK and abroad. He will remain in position until a suitable candidate has been identified and an orderly transition can be arranged.
David Banks, Chairman of Haydale, commented: Whilst the Group has made strong operational progress in H2-2018, it has been disappointing in terms of the Group’s sales, especially the longer than expected lead times for adoption by our customers of our graphene and SiC products. We remain confident, however, that this is primarily a timing issue and that many of these expected forecast sales should now be recognised in FY-2019.
Our cash position at the end of May remained robust at £5.6 million and this, coupled with ongoing positive customer engagement, provides us with confidence that we remained well placed to execute our strategic growth objectives.
We are splitting the roles of business development and Chief Executive in order to allow Ray to focus on the time-consuming role of winning mandates in a range of industries and geographies for which he is well connected. The business has reached the point in its growth where the management team needs to be expanded, and I look forward to welcoming new high calibre candidates to the board during the summer.”