Ann: Investor Webinar - H1/FY2023 Results, page-12

The overall impression I received from the presentation was certainly a positive one.

Essentially that we are currently experiencing the implications of a major and unusual low in bedding purchases in North America (and presumably elsewhere but that has not yet become relevant to us) and that has resulted in what would otherwise be a current level of profitability.

The most interesting, and to my mind significant, statement from Blackburn came near the start of his presentation. This was a redefinition of the company.

The company is now a ‘materials company’.

It had previously defined itself as a company that ‘provides chemistry’ to others.

I have in previous posts described the company as essentially an R&D laboratory that services the needs of specific customers. In doing so they were working with those customers and assisting them in fitting the Alexium ‘chemistry’ into the technology of their individual products.

The change, as I see it, is that Alexium now sees itself as getting involved directly with that technology itself. That is, a vertical technological integration.

Alexium will now be actively involved in textile, and other, technologies. The direct experience in producing the Eclipsys vests and the Military uniforms has obviously led to this as the initial footsteps, and has done so by necessity.

Although broadening an innovative technological base can have associated with it potential increased technological risk it is also accompanied by substantial potential benefit.

I am reminded of a former life where I was involved in international coal markets. Where BHP dominated the world coking coal trade and held all the best coking coal deposits and mines in Australia. The reason was very simple. They made steel (and consequently coke.) They knew exactly how the coals would be used technically and consequently what their value was. The other miners simply mined and shipped coal and were dependent on their international steel producer customers in assessing the true value of their coal to them.

If my reading of the shift with Alexium is correct this will mean that they will not only have a better knowledge of the value of their products for customers but will also be able to identify a broader range of uses.

In practice I expect, in the shorter term anyhow, this will represent essentially a broadening of the “R&D” activity such that it will involve substantially increased ‘pilot plant’ type activities at the site incorporating the various ranges of technologies involved in use of the ‘chemistry’ and, as such, far less need to be dependent upon the equivalent pilot plant facilities of its customers.

In general I think we have a larger company than we had before. Essentially perceptually.

But that should lead to a faster transition of the technologies into the marketplace, and importantly, the identification of a broader range of potential products.

Well, hopefully anyway.

poorinvestor