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Note that this is my interpretation of last night's event. DYOR and this is for entertainment purposes only.

QHL AGM

These are my notes from the QHL AGM. I suspect I saw one or two of you there, even though we didn’t do the HC wink or handshake. You should have a look through the presentation as my notes were taken as Mr Odouard went through that.

I suspect this is not in order but based on the slides and the words of wisdom and elaboration here goes. Note, DYOR as some is what I wrote down is from the MD’s speech and some is my extrapolation on what that could mean:

The RST patent for low cost manufacture, which won a $2.6m Climate Ready Grant from the Fed Govt, has had the US patent awarded. My take on that is the auto industry would be the prime driver on this project and as the US has still (but maybe only just) got the World’s largest auto businesses, then this is where QHL should be.

They said that using carbon nanotubes to pin the layers of carbon together, then the amount of carbon fibre (CF) can be significantly reduced and they talked about a potential price of the same as steel but half the weight. This will be massive f it all comes to fruition as I get the feeling no-one else can pull all this together and the Quickstep process is a significant advantage. But of course, this will be some years out before commercialisation, but in a world of low weight, electric vehicles, this has great upside.

The use of CF in the JSF will reduce the cost of operation by 30% to the users. This means more and more aircraft will be made in CF.

Airbus and Boeing still have 5 to 6 years of full production of CF intensive aircraft on their books, even after the GFC. It was pretty obvious that QHL is pushing hard to get on those programs.

The SBIR grant they won in the US from the Dept of Defence will lead to use of the Quickstep process on the JSF. This is new news and on top of the doors and tail fin, I would say. The trials done in Dayton have been very successful he said. He said that several applications have been qualified during the current phase which should lead to commitments from JSF tier one and two suppliers and substantial funding going forward.

CTRM - all trials have been very successful and a business case has been built on “very large amounts of savings”. They are making a further presentation to Airbus with CTRM in early 2010 and Airbus is pushing hard to bring this technology into the supply chain. This will be a technology transfer (high margin) business where CTRM will be sold equipment and licensed to supply parts I guess.

Eurocopter – A number of parts are being qualified now in the Munich facility. He said they had signed a number of contracts to use Quickstep on new applications. This should lead to production contracts in the near future he said.

The Quickstep machine has been substantially modified, simplified and the costs driven out of it. They only have one fluid tank now, not three and I hope to find out how that works as it looks great. They are in a position to start delivering Quickstep machines from 2010 he said. He didn’t elaborate on the cost savings, I suspect because they are very good and he is trying to keep the margin.

The facility is now fully operational and is the second largest in Australia. I assume the largest is Boeing. JSF production commences early 2012, but they will be making the “building blocks” which are the pre-production proving parts from 4th quarter 2010.

The JSF is the only 5th generation fighter being built, which implies that Australia has no option but to buy it, and in question time it was apparent that a likely positive outcome on that was days away. He said they expected production to reach over 5,000 aircraft and the build rate will be one plane per day!! The contracts with Lockheed Martin, Northrop Grumman and B Ae are all on a cost plus fee basis, so QHL hopefully can’t lose money.

He did say “a lot of other contracts are very likely to follow” and looked extremely comfortable saying so.

Now QHL has been approved and made a supplier by three of the top five aerospace companies in the world, they were seen as bona fide members of the supply chain. The other two are Airbus and Boeing and I suspect it’s only a matter of time until they tick the box. He also said that the contracts they already have were “a tiny speck” of what might come, but that may have been a slight loss in Gallic translation.

Overall I thought the company had made huge progress in the last 12 months. The buzz was great, the potential looks even better. There was no formal word on the cap raising, but it was obvious it is in play and I suspect our guessing will be made irrelevant by the time QHL trades again.

CD