Haydale has announced a successful placing and launched an open offer to raise £5.6m net through the issue of 3.75m shares at 160p. Combined with a number of positive developments since the IPO in April 2014, and following solid FY15 results, the company appears well-positioned to continue its progress. Focus on graphene-enhanced inks and composites end-markets appears to us to bring closer commercial success.
Management states that the main placing of 2.9m shares was oversubscribed. Its success marks the rehabilitation of Haydale following the IPO in April 2014. £2.6m of the proceeds will support its working capital requirements. Monies will also be used to invest in increased reactor capacity, which has expanded 15x in the last 18 months, and support development of processing centres of excellence in Korea, Germany and the US. Haydale reported results to 30 June 2015, which include Haydale Composite Solutions (HCS, formerly EPL) bought in November 2014. Excluding HCS, sales more than doubled to £0.3m from £0.13. HCS outperformed expectations, although group adjusted EBITDA loss widened to £2.38m from £1.96m. Haydale had net cash of £2.05m at the year end.
Haydale has secured a key European patent for its plasma-based functionalisation process, which enables the use in end products of nanomaterials such as graphene and graphene-like materials. While development of high-quality single sheet graphene may be some way off, areas targeted by Haydale may be commercialised more readily. It focuses on graphene-enhanced inks and composite resins, although sensors and energy markets may follow. For example, in the last year it has signed agreements with two resin suppliers (one polyester, one epoxy) to develop composite materials using functionalised graphene, which could more than double the strength of the composite and open up high-value markets. The process can be applied by any producer of nanomaterials requiring functionalised enhancement of products. In our view, Haydale’s process is currently unique.
The development of the graphene-related commercial products should be the main driver of sales over the remainder of the decade and may commence in FY16. Revenues should grow rapidly this year, with a full contribution from HCS augmented by the addition of graphene-enhanced product development projects as well as higher grant funding, the start of licensing and nascent commercial sales.