Haydale Graphene Industr... Share Discussion Threads

[p@] 30/12/2019 08:49

Thanks for that Cerrito let's hope now Ray Gibbs has gone ,they can pull this around.

[cerrito] 28/12/2019 17:57

A somewhat delayed AGM report.
A bit of a trek for me to get to Harwell but well worth it for me as a recently joined up shareholder..
Only two other shareholders there - but one was Anthony Best with his 11.39% and who took half of the recent issue and very good that the Board gave ample time to answer our questions and hang around afterwards.
As can be seen in the RNS, 76m of the 340m shares voted ie a turnout of 22 pc. All passed easily except for the re election of the NED Roger Humm who only got 64pc. I did not gather what he had done to blot his copybook.
This voter turnout was what I would have expected given the shareholder base. Note that the only institution with 3% plus is Quilter with their 12.56 % and of course it does rather raise the question in my mind as to whether the £250k pa approx the AIM listing costs them is worth it. The Chairman pointed out that the current regulatory climate - both formal and informal - does not encourage institutions to invest in companies the size of Hayd. Point also made that the larger companies with whom they are doing business feel more comfortable doing business with listed companies. Incidentally good for them that despite their small size and not terribly robust financial position they are supplying mission critical kit to such large companies.Also if you look at the Director's report in their analysis they have done something useful which I have never seen before - namely split out the beneficial ownership from in whose name the shares are registered. It, for me, would be good if other companies followed suit.

There were several things I wanted to get out of the meeting. One was to get a feel of their short term cash flow and if I agreed with the Hardman view that they could get through to June 2021 without a further equity raise. This is a difficult area as of course the BOD also had to be very circumspect. One issue is that they do not have a very clear visibility of revenue and difficult to predict demand given that this involves the adaption of new technology. Suffice it to say that they do not currently have any capex requirements and indeed the US operation has substantial spare capacity. I queried as how realistic it was that Hardman had forecast no working capital increase despite increased sales. I did not get a clear answer to this although noted that they would be able to use their inventory more efficiently and indeed they do have high inventory levels at the moment. They confirmed my reading that as per note 10 of the accounts they forecast a 30 pc increase in sales in the ceramics business in each of 19/20 and 20/21. I forgot to ask about any renewal of the facility with the Development Bank of Wales and indeed the repayment of this by the end of April 2020 places a further strain. Given that the interest rate is 11pc let's hope they do not need to refinance it. It seems a high rate for a bank wholly owned by the Welsh Government to charge. If their US operation picks up they may well be able to reopen discussions on the US1.5m sale and leaseback of the machinery.
Another factor on their cash flow is the reduction on their operating cash burn. Incidentally this is not reflected in the AR as note 7 shows that average numbers of personnel and that total personnel costs were higher in 18 /19 than 17/18. That said, Admin and R&D expenses in H2 of 18/19 were a good deal lower than in the previous three half years and it will be interesting to see what the figure is for this current half year.Also they seem to have lots of facilities - ie the 3 in the UK including Loughborough which apparently has shrunk in size as well as the overseas ones. They have also recruited a global sales force that - and this was repeated more than once- are cross selling all the products.
It was also emphasised that the key thing had been a change in mentality in terms of spending cash and that all expenditure had to be justified. My sense was that before the arrival of the recently departed CFO there had been very little cash control. Interesting that the new CFO, who came across very well, flew economy when he went to the US.
FWIW the Going Concern statement covering the period to 9/20 was reasonably robust.

People are now made accountable far more than in the past. Have moved on from bring grant junkies to a proper commercial company. We were told that a whole layer of senior and expensive management had been removed.
We were assured more than once that the teething issues of the new US plant had been put to bed. Also that in the US they are moving up the value chain and also broadening the scope of its business so they have more irons in the fire.
Too bad also that I did not quiz them if they are overstretched - ie look at the Corporate presentation on the website. On one level good they are in so many areas but I do ask myself if they are spreading themselves too thin especially as they are trying to get large companies buy a new technology. A question for next year I guess.
A good discussion on aerospace where they are looking to reduce the amount of copper. The Dreamliner apparently has 3.5 tons of copper.
Also all the new products that have been released since year end ie the two prepeg and the three elastoplast announced in the World Rubber Congress.
Brexit should not be a big issue : note standards are set on a world wide rather than an European wide basis
Questions I should have asked but did not include why the long term order book in the US operation was lower in October 2019 than it had been a year before; also why the cash outflow in the July/October period 2019 so high.Note that at October 31 they had £2.47m of cash compared to £4.7m at June 30 ie in the four months they had consumed £2.2m of cash. This is roughly equal to that of the first half of calendar 2019.
Where does all this leave us?
I got a warm glow and good that people there-support staff and Directors- were upbeat . Certainly the CEO was saying the right things and seemed to get on very well with the Chairman and the New CFO was impressive. That said the key is can they show good results which will boost the share price before they need to do a further fund raise I do not want to be a party pooper but they are trying to get big companies to introduce new manufacturing techniques/materials which takes time.

Barring any big new deals, the next news will be the interims which have come out reasonably early ie Feb 22 last year and March 1 the year before, when we can expect an update on the Asian strategic review,

[diplomat65] 20/12/2019 08:26

Not one comment about yesterdays AGM. Speaks volumes.

[timbo003] 19/12/2019 07:52

It's the AGM today,which I cannot attend due to prior commitments, if anyone does attend, would appreciate any feedback, TIA

[1teepee] 17/12/2019 07:36

Just face the music;)

[meijiman] 12/12/2019 23:04

I have full confidence of the company moving into profit at the EBITDA level by 2050..this is a fantastic investment opportunity.

[1teepee] 12/12/2019 22:21

Just face the music matey

[elimarx] 26/11/2019 20:45

So I took a punt on this stock a few years back (and took them up on the last placing) , and slowly watched my investment dwindling. Im still optimistic now they are out of development and moving into the commercial market that things could improve as graphene products become more mainstream. I am quite fortunate that my portfolio is diverse enough that i can have a few gambles in it, but you know with gambles, some you win and some you loose. Hopefully this still could be a good investment but not a quick one. If you have the stamina and the patience, just hold on for the next 10 years or so and it might just pay.Good luck

[timbo003] 26/11/2019 16:38

Presumably the rise is due to the share subscription (at a premium) and the fact that there are likely to be no nasty surprises in the Annual report (due this week)

AGM is on Dec 19th (near Oxford) which is a bummer as it clashes with the Transense Technology AGM.

[sirrux] 26/11/2019 16:00

What are they working on ... or has Elon Musk suddenly taken an interest in graphene car body panels?

[cerrito] 25/11/2019 20:37

Many question with very good reason the usefulness of being listed on AIM to raise equity capital.
To be fair to AIM, two companies in whom I have shares WAND and HAYD have raised capital today and in both cases at a 20% plus premium to the share price.
True in both cases the amount raised was 6/7% of the pre existing share capital but still fair do's.

[cerrito] 25/11/2019 20:28

Just reread the RNS and see that October end cash was £2.5m compared with £4.7m four months earlier- it today#s raise equals 20/25days cash burn of the last four months.

[cerrito] 25/11/2019 16:05

Great to see that they raised £450k gross-£420 odd? net- at a 25% premium and well done; that said do not want to be a party pooper but this represents about 40 days cash burn in the reduced cash burn figures of H1 and about 20 days cash burn for H2 18.
It does mean that they should be able to get to the post holiday break next summer before needing to raise cash.
Need to consult with my pillow about buying more.

[cerrito] 22/11/2019 18:23

For me, good that a replacement has been found quickly as in its current position HAYD needs a CFO.

[cerrito] 28/10/2019 08:41

Difficult to know what to make of this morning 's news.
In the short term rather a bore and let' s hope the heavy lifting of the cost reductions have been completed.
At least it seems to be civilised and perhaps is no more than a reflection of working life in 2019 Britain.

[cerrito] 23/10/2019 18:42

Thanks for posting that Timbo003.
Obviously good that Hardman show that till end of FY 20/21 they will have ample cash resources and so no need for a fund raise. They make a brave assumption that even with sales forecast to double, there will be no working capital requirement and let us hope that they are right on capex..

Let us hope that they are correct in the gross margin increase for FY 2019/2020 and 2020/2121. If the gross margin was to be at same level as last FY they will end 20/21 with zero cash.
I am surprised that people have significant short positions in such a thinly traded stock.
For me a question of waiting till the interims on Feb 20.

[knownowt] 23/10/2019 17:52

'Shareprophets' HAS to retain its stance as the rag recommended that its readers short the company at 1.2p which doesn't look too clever just now. Admittedly its still very short term, but one more bit of good news could start to create doubt in the bears' minds. Roll on that day; there's nothing so sweet to a long-term holder's nose as the smell of a burning 'bear'.

[meijiman] 23/10/2019 14:50

The kiss of death...let's hope Investors Chronicle don't take an interest.

[timbo003] 23/10/2019 14:37

Presumably this is the reason for the reversal in the last hour or so:

[michaelmcandrew] 22/10/2019 20:12

ShareProphets are adamant that a cash call is coming.

[timbo003] 22/10/2019 08:43

Lightning strikes on wind turbines can indeed present a problem:



although it seems that not all of the lightning induced problems are quite so dramatic

[cerrito] 22/10/2019 07:57

Yes and congrats to them for this development.
That said, the key is the use of words to commercially develop which reminds us that in the short term it will be a cash drain and it will probably a couple of years before it produces cash.

[diplomat65] 22/10/2019 07:45

Read today's RNS

[cerrito] 18/10/2019 20:02

One way I look at this is how long can they survive with their cash, which as we know was £4.7m at the end of June. I am not quite sure how to treat the corporation tax due of £0.8m. I see that the figure as at 6.18 was £473k and the cash flow statement for 18/19 shows only £76k collected; I also note that the Going Concert Statement does not refer to this tax due as a source of liquidity.

In calendar H1 2019, operating cash flow outflow and capex was £2.2m ; this figure was lower than in the recent past but even so would suggest that this cash balance will only see them through for a year. However to the extent that capex is decreasing and they do make these £1.6mpa cost reduction this should reduce cash outflow further -except of course any requirement for increased working capital that the increase in sales orders will bring in. It appears to me that the best we can hope for is that they do not need another cash raise till after people come back from their summer hols next year.
I welcome comments on these observations.
Good that they have the two orders announced on Tuesday but my feeling is that they will need several more to show that in the short term they can generate a viable business. All the management actions they describe seem eminently sensible but of course impossible for a private investor to know what the results are. Good that they have irons in the fire with the European Space Energy, Goodwood |Motor Festival, The National Physical Laboratory and National Grid but will they generate enough cash to postpone significantly the next fund raising?The figures for H2 of the last financial year do show improvement and this one can have cautious optimism.-cash burn defined by capex and operating cash outflow- in this half was the lowest for the last three half years and revenue and pbt(bar the impairment) also better than recent half years.

The reality for me is that this should be taken over either by a private equity firm or perhaps the company who took 33% or the one 17% of their sales-I guess you guys know who these companies are. They would save the total costs involved with the listing of say £300k and give them the long term and more important patient capital they require. They could get a controlling interest for say 1.6p equal to a total marcap of just over £5m. Once again comments welcome.
I have zero interest in buying more at these prices and will await the AR and perhaps the AGM if in London before deciding whether to cut my losses or hang around.
I look forward to the perspective of those who know the company better.

PS
I see that Digital Look has revenue forecast for this current FY of £5,8m which I would assume covers both sales and other operating income which this last year was £4.3m combined and the company would be right to feel pleased with themselves if they did that.
They have a pre tax loss of £2,8m which would be a good improvement of recent years but does not seem big enough for a rerating of the shares.
I got this from Digital Look. Anyone have any other including crucially to me for cash flow?
PPS
One advantage of having an atomized share register is that it reduces the risk of a big holder wanting to get out and reducing the share price
PPS
I saw the impairment of the UK RPC business, and that one of their reasons for this was the current marcap. First time I have seen this reasoning of the marcap and am mystified by the rationale. No doubt this will be explained in the Auditor’s letter in the AR

[grabster] 15/10/2019 20:28

".. the HO is just off the dual carriage A40 .."

No it isn't. With navigation skills like that, I can see why you would have found attending the agm difficult!


M4, A48.
Dead easy to get to.
(Though I mostly went A483 and Coopers Road)

It's 21 years since I was last in London. Been there only 5 times in 70+ years. There is a world outside that place.