Haydale Graphene Industries (LON: HAYD) has raised £5m from a placing and subscription at 0.5p/share and providing a retail offer of up to £1m for individual investors.
The directors have subscribed for eight million shares in total. The share price slumped 22.6% to 0.6p. The par value of the shares will have to be changed from 2p to 0.1p in order for the share issue to happen.
Just over one year ago, Haydale Graphene Industries raised £5m at 2p a share and an open offer at the same price was oversubscribed and raised £510,000.
That fundraising helped to finance additional manufacturing capacity, which should be enough to get to breakeven once the efficiency of the reactor is optimised. Cash was £1.38m at the end of June 2023.
The latest cash raising will fund working capital, while the company puts together partnerships to build up revenues, although more cash will be required before cash is generated from operations to fund the business. Additional debt or equity will be needed.
Retail offer
The retail offer opened on 15 September and closes at 12pm on 22 September.
Authorised intermediaries include AJ Bell, Redmayne Bentley and Shore Capital, while others including Interactive Investor are awaiting confirmation. Thebookbuild is being handled by Cavendish and the website showing intermediaries is HAYDALE GRAPHENE INDUSTRIES PLC Authorised Brokers – BookBuild.
Strategy
Haydale Graphene Industries has focused on five markets: functionalised nanomaterials for third party applications, heating inks and fluids; sensor devices, composites and silicon carbide tooling.
Deals have been made but projects have been delayed. Cash outflow from operating activities is estimated at £4.7m in the year to June 2023 and it could be similar this year. That is before any tax credits. There should still be a small net cash position at the end of June 2024.
The company is still a long way away from breakeven. The forecast for the year to June 2025 is revenues of £9.9m, EBITDA loss of £1m and a pre-tax loss of £2.4m.
If revenues are better than expected then breakeven could be achieved earlier, but it is in the nature of these things that there are delays. Operational gearing means that when breakeven is achieved a significant proportion of revenues should fall through to profit.
This is still a highly speculative investment and the requirement for further funds should make potential applicants for the retail offer cautious.
