TIDMAGM
RNS Number : 3508K
Applied Graphene Materials PLC
10 April 2018
10 April 2018
Applied Graphene Materials plc
("Applied Graphene Materials", "the Group" or "the Company")
Interim results for the six months ended 31 January 2018
Applied Graphene Materials, the producer of specialty graphene
materials, is pleased to announce its interim results for the
period ended 31 January 2018.
Operational highlights
-- Significant commercial progress within the coatings sector with a number of key customers:
o HMG Paints Limited successfully completed real world trials in
conjunction with a key customer;
o James Briggs Limited, in conjunction with Applied Graphene
Material (AGM), is continuing an accelerated product development
programme with a view to early market exploitation of graphene;
and
o good progress with other key accounts governed by strict
confidentiality.
-- Increasing commercial momentum in the composites sector, including:
o Magna Exteriors, a tier 1 automotive supplier, looking to
incorporate AGMs' graphene into products following the successful
launch of the Fenyr supercar;
o further sector penetration of graphene enhanced products into
new markets by SHD Composites Limited; and
o collaboration programme with Airbus Space and Defence has been
extended to incorporate additional applications. Adoption still
anticipated in 2018.
-- Customer launches Graphenics(R) range of oil based products to target customers.
-- Structural Ink(R) programme is making significant progress
with test printing and evaluation ongoing.
-- Launch of Genable(R), a range of products specifically designed for the coatings industry.
-- Further patent applications filed for AGM dispersions.
Financial overview
-- EBITDA* Loss of GBP2.0 million (2017: loss of GBP2.0
million)
-- Loss before tax Loss of GBP2.3 million (2017: loss of GBP2.1 million)
-- Cash at bank GBP12.0 million (2017: GBP5.6 million)
-- Diluted EPS Loss of 6.4 pence per share (2017: loss of 9.3 pence)
-- Completion of placing and open offer raising GBP9.77m (before
expenses) of funds for the business.
-- Successfully secured two separate grants relating to the
development of graphene based products.
* EBITDA comprises loss on ordinary activities before interest,
tax, exceptional costs, depreciation and amortisation.
Jon Mabbitt, Chief Executive Officer, commented:
"In recent months we have seen increased commercial momentum in
our core markets with a number of key collaborations now reaching
the final stages of approval. In particular for coatings, the
combination of our technical expertise, extensive data generation
and the launch of standardised customer ready dispersions under the
Genable(R) brand earlier in the year are supporting potential
commercial adopters to accelerate their product testing and
qualification processes.
Within the composites sector, significant interest is being
shown in Structural Ink(R) and during the current year we expect to
accelerate the technology's commercial programme. Opportunities
within the sector vary immensely, both in application and quantum,
but ultimately the automotive and aerospace industries offer the
greatest long-term potential. As such, the progress made with Magna
Exteriors and with Airbus Space and Defence is particularly
encouraging.
Elsewhere, long-term engagements within the functional materials
sector are beginning to reach the point of commercialisation and
nowhere is this more evident than the collaboration work we have
completed with Puraglobe, as they look to launch a graphene
enhanced product to their key customers.
With solid foundations in place and well-established
collaborations ongoing, the Board remains confident that we have
the right strategy in place for the long-term success of the
business. Whilst the majority of our collaborations have yet to
materialise into top line returns, given the progress that is now
being made on many fronts in our key target sectors, we are
confident that these will soon deliver real growth."
Ends
Applied Graphene Materials' results presentation, with audio
commentary, will be available on our website at
http://www.appliedgraphenematerials.com by 17 April 2018.
For further information, please contact:
Applied Graphene Materials +44 (0) 1642 438 214
Jon Mabbitt, Chief Executive Officer
Gareth Jones, Chief Financial Officer
N+1 Singer +44 (0) 207 496 3000
Richard Lindley / James White
Hudson Sandler +44 (0) 207 796 4133
Charlie Jack / Emily Dillon
Notes to Editors
Applied Graphene Materials was founded by Professor Karl Coleman
in 2010 with its operations and processes based on technology that
he initially developed at Durham University. The Group is based at
the Wilton Site on Teesside and was admitted to AIM in November
2013.
The Group has developed proprietary bottom-up processes which
are capable of producing high purity graphene nanoplatelets using a
continuous process. The manufacturing processes are based on
sustainable, readily available raw materials and therefore do not
rely on the supply of graphite, unlike a number of other graphene
production techniques. Applied Graphene Materials owns the
intellectual property and know-how behind these processes.
Applied Graphene Materials works in partnership with its
customers using its knowledge and expertise to provide bespoke
graphene dispersions and formats to deliver enhancements and
benefits for a wide range of applications.
Business review
Overview
In the first six months of this financial year, the business has
made significant operational progress and is in an excellent
position to further capitalise on the strong commercial pipeline it
has built. With over 100 active customer engagements, we are now
making notable progress on multiple collaborations. Following the
first production orders in 2017, SHD Composites has continued to
expand sales of its own products containing graphene into sports
goods, medical components and most recently the automotive sector,
with customers including Magna International, a leading global
automotive supplier. Our relationship with Airbus Space and Defence
has been extended to include a second material qualification and we
expect both products to be used on satellites in outer space, with
first flight applications scheduled for later this year.
The speed of market penetration and timing of product launch are
ultimately dependent on our customers' qualification and adoption
timeframes for products containing graphene. However, as we
continue to see greater market traction we believe our
collaborative approach will support sustainable growth for a
high-margin business.
With the launch of Structural Ink(R) we have a material
technology which we can sell directly to end specifiers. In March,
this was showcased at the JEC World Exhibition in Paris, the
premier composites show attended by over 42,000 visitors from 115
countries, where it was clear that graphene is now consistently
featured in composites innovation. The demonstration equipment
generated significant interest across a spectrum of industries,
from F1 to aerospace and wind energy to sports goods. As we scale
this up further over the next few months, we expect to be in a
position to start selling composite materials printed with graphene
to customer specifications from a pilot plant to customers during
2018.
AGM remains singularly focused on exploiting the application
technology arising from its proprietary manufacturing processes and
graphene formulation know-how. We have continued to invest in our
raw material production facility and in our dispersion methods. To
this end we have extended our patent portfolio based around
specific applications of graphene in corrosion prevention. We have
focused on formatting our products, such that they are more readily
adoptable by our customers, and critically providing the data
sheets to demonstrate their consistency and stability. In February,
we launched a standard range of graphene dispersions called
Genable(R). This is primarily targeted at the coatings industry,
and designed to provide paint chemists with a standardised
consistent product, underpinned with quantified performance data
with which to formulate products containing graphene. This benefit
is already being appreciated by the likes of HMG Paints Limited
(HMG) and James Briggs Limited (JBL) and we believe will facilitate
more rapid adoption of graphene technology in their products.
In November 2017, AGM successfully raised additional investment
of GBP9.77million (before expenses) which will enable the Company
to progress towards financial independence as we commercialise our
offering. This was an important step, and the support from both
existing and new shareholders was recognition of the progress made
to date and demonstrated confidence in our ability to deliver on
our potential.
In February 2018, AGM also announced that I will be stepping
down as CEO of the Company to retire. The search for my successor
is already well advanced and I am confident that, with the strong
operational platform and relationships in place and commercial
momentum steadily building, AGM will continue to deliver on its
strategy. I am pleased to say that the senior management team in
place is highly experienced and supported by a very strong
commercial and technical team, in which we also invested during the
year.
Commercial progress
Within our core target market sectors of coatings, composites
and functional materials, where we see significant opportunity and
where we believe the characteristics of AGM's graphene will deliver
the most desirable enhancements, we have continued to develop our
commercial pipeline. It is here we also believe that our graphene
will add the most value in a non-disruptive manner. We have
identified that a graphene loading level of less than 1% by weight
in a final product delivers the most compelling material
improvements. At extremely low loading levels the customer benefits
from minimal intrusion into the rest of the formulation and can
afford to put graphene into a broader range of applications than
had originally been considered. For us, this means that greater
market opportunities are accessible and pricing levels are more
robust.
Our focus remains on converting opportunities within the
existing pipeline, yet at the same time establishing new joint
development agreements and collaborations within our core markets.
Whilst the vast majority of our customer engagements remain subject
to commercial confidentiality, we are able to share progress being
made by some of the early potential adopters. As we, and our
customers, progressively better understand the mechanisms of
property translation from the nano- to the macro-level, so too can
we both better identify the true potential of graphene. The
properties that graphene possesses will support both the
substitution of existing additives already being used at much
higher loading levels (such as carbon black at 5-30% by weight) and
the delivery of additional functionality without negatively
affecting other properties, such is the benefit of a highly
structured additive with a massive specific surface area.
Coatings
Application areas are wide ranging within the coatings sector
and include marine, aerospace, automotive, industrial and structure
protection. In 2013, the value of the anti-corrosion coatings
market was around GBP8.1 billion worldwide, with primers
representing approximately GBP1.4 billion. We have demonstrated
that the inclusion of graphene into existing formulations
significantly improves barrier properties, particularly within
primer layers and also in hostile environments. Inevitably, once
demonstrated, our customers want to replicate this performance in
their own products to ensure consistency and reliability in their
own specific circumstances, before launching products whose
performance they will warrant. Within our pipeline of existing
engagements there are numerous customers who are undergoing this
type of validation, which in some cases can mean up to 10,000 hours
of protection testing.
HMG is one of our customers that has completed this verification
work to its satisfaction, and this has resulted in it applying the
finished product to real applications. The product has been
validated in field tests by one of its key customers and it is now
looking to launch the product in the near future. Encouraged by
this success, HMG has gone on to engage with other existing
customers and is in the process of looking to include graphene in
its product range.
AGM and JBL are continuing an accelerated product development
programme with a view to early market exploitation of graphene.
Under the JDA, JBL will incorporate graphene material into existing
paint formulations to deliver higher-performing primers with
improved corrosion protection.
AGM has identified that not only is its graphene able to
decelerate the corrosion of steel substrates, but also that it is
well suited to aluminium and reinforced plastics where moisture
ingress causes deterioration of the fibres. This characteristic is
beginning to open up other areas of the coatings market with
customers where we already have some engagement.
The usefulness of graphene in coatings is not limited to the
primer layer or hostile environments. Due to the mechanical
properties of the material some of our customers are discovering
that they can reduce film thicknesses and still deliver the same
performance. There are multiple benefits to this approach, both in
terms of logistics and material costs. We have also seen that the
electrical conductivity of coatings can be improved by a small
addition of graphene which can deliver benefits in anti-static
applications, such as floor coatings and in the e-coat process,
used widely in the automotive industry.
Composites
The composites market is worth in excess of EUR70 billion per
annum, of which over 50% relates to component materials. AGM's
management team has in-depth knowledge and strong relationships
across the sector where we are vigorously pursuing a multichannel
approach. The main driver for inclusion of graphene has been to
improve the toughening of the resin matrix, and this can be
introduced at various stages. Bulk resin manufacturers are
investigating how their materials can benefit from the addition of
graphene, as are the intermediate material conversion companies
such as prepreggers, resin infusion formulators and pultruders.
SHD Composites Limited has already launched standard prepreg
materials and has been supplying these to end users, ranging from a
manufacturer of orthotics to sports goods suppliers, and very
recently to Magna Exteriors for use on the Fenyr supercar, which
was launched at the Geneva Motor Show in March. Encouraged by the
performance of the material, Magna, a $36 billion revenue, tier 1
automotive supplier, in conjunction with AGM, is now looking to
take the graphene technology further. The aim of the collaboration
team is to build on the baseline mechanical enhancements and
ultimately move towards designing many of graphene's
multifunctional capabilities on joint development programmes.
A report on a demonstrator aircraft wing section containing AGM
graphene by the University of the West of Scotland, which worked in
partnership with Spirit Aerostructures and a sector-leading bulk
resin and carbon fibre company, has demonstrated significant
uplifts in key design parameters of fracture toughness and
interlaminar shear strength. The panels were infused using
aerospace approved processes and properties measured according to
ISO standard testing. The benefits demonstrated will allow
designers to rely on higher material performances and thereby use
less materials in construction, which in turn will lead to weight
savings and construction cost savings. The augmentation of material
properties will benefit all application areas and a Sit-Ski project
was run as a technology demonstrator by the UK's High Value
Manufacturing Catapult, with components being manufactured by the
Advanced Manufacturing Research Centre (AMRC), the Manufacturing
Technology Centre (MTC) and the National Composites Centre (NCC).
The project applied the latest in UK R&D composite know-how,
including the incorporation of AGM graphene, to make the Sit-Ski
faster and lighter and, most crucially, to maximise
performance.
Structural Ink(R) is a patented technique which AGM has
developed for selectively depositing graphene onto composite
materials via traditional printing techniques. This was showcased
at the JEC World show in March and created real interest from
end-users, specifiers and material/equipment suppliers. We are
installing at least one demonstration cell at the AMRC in Sheffield
in the next few months with a view to having production capacity
ready later this year. This will enable us to add graphene to our
customers' existing composite materials and be capable of selling
turn-key equipment packages to customers where demand is greater.
In contrast to being reliant on our customers dictating the timing
of adoption in their products, Structural Ink(R) allows us to sell
product directly to specifiers. We are already working under JDAs
with a number of businesses including Prodrive Composites, which
supplies to the high-end automotive, motorsport, aerospace and
leisure goods sectors, and by placing a demonstration cell at AMRC
we will have the ideal shop window and ready access to AMRC's
impressive membership partners.
Airbus Space and Defence has extended its qualification efforts
of a bespoke material for use on its satellites to include a second
product that can be used in a broader range of production
techniques. Both materials are expected to be used in outer space,
with first flight applications scheduled in the second half of this
year.
On the back of this work we have launched a new
graphene-enhanced thermal paste material - Genable(R) 4400. The new
product will be supplied as a two-part epoxy system and is designed
for use in thermally conductive applications, either directly as a
paste gap-filling system or as a potential base additive to other
formulated systems. Genable(R) 4400 will provide thermal
conductivity and good levels of lap shear strength. We anticipate
applications within formulations for bonding, potting, sealing and
encapsulation for space, electronics and automotive components.
Functional materials
AGM's collaboration with Puraglobe on the exploitation of
graphene-enhanced sustainable base oils has now reached the point
of commercialisation. Following an extensive development programme
and performance testing, Puraglobe has recently launched its
Graphenics(R) range to target customers and is currently engaged in
several product development projects, the exact applications of
which remain confidential.
Graphenics(R) is targeted at innovative lubricant technology
businesses for applications as broad as gear oil, metal working and
driveline fluids. The products are designed to offer finished
lubricant manufacturers significant benefits by providing greater
protection against friction and wear, which ultimately will extend
the lifecycle of parts and reduce the downtime of equipment. This
synergistic effect leads to savings in manufacturing and production
costs and reduces the demand for replacement parts.
Technology and manufacturing
As a technology business it is vital that we continually look to
develop our understanding and where applicable look to protect any
proprietary knowledge. In September 2017 we were notified that our
European patent application in relation to our manufacturing
process had been approved. Since then we have continued to develop
our understanding in a number of key areas and as a direct result
of this work additional patent applications have been filed,
specifically in relation to the application processes. Utilising
these processes, AGM has the ability to produce nanoplatelets to
suit the specific application through our range of manufacturing
techniques and formulation know-how. This in turn has a significant
impact on the graphene's properties as it enables us to tailor the
product in order to optimise the key properties for the application
in question.
We continue to refine and where appropriate improve our
production processes and continually look to make further progress
on production yields. This has enabled us to design a programme
that will allow us to expand capacity through the addition of
modular units which gives us the potential to better match
production capacity to the anticipated levels of demand. This
approach is highly flexible and more capital efficient than the
expansion process we had originally envisaged. We have established
robust control systems and have proven our ability to scale up the
processes without detriment to product quality.
Outlook
Our primary focus remains the targeting of additional and ever
larger production orders as momentum increases towards
commercialisation. Putting formatted graphene into our customers'
hands which can be readily adopted into their production processes
with minimal disruption and deliver performance enhancement
benefits is a key element in this approach. The manufacturing
excellence and technical know-how we have developed, coupled with
the support philosophy which runs throughout the Company, provides
us with the cornerstones on which commercial success will be built.
We are confident that the business will continue to move forward at
an ever-increasing velocity to exploit the significant commercial
opportunities offered by our target sectors. Our intent remains to
become a global graphene market leader and the Board believes that
Applied Graphene Materials remains well placed to meet its
ambitions.
Jon Mabbitt
Chief Executive Officer
10 April 2018
Financial review
Revenue
Revenue for the period was GBP54,000 (2017: GBP53,000) arising
from the supply of production orders of graphene and evaluation
quantities of graphene to commercial partners.
Other income
Other income, which comprises grant income, was GBP30,000 (2017:
GBP115,000). Grants received related to funding for the development
of new graphene applications, with a small amount for the creation
of new jobs or the purchase of assets.
Loss on ordinary activities before tax
A loss on ordinary activities before tax of GBP2,291,000 (2017:
loss of GBP2,053,000) was recognised. The current year loss
includes exceptional costs of GBP205,000 mainly connected to fees
paid in relation to the issue of new shares.
Loss on ordinary activities before interest, tax, exceptional
costs, depreciation and amortisation (EBITDA)
EBITDA for the Group reduced from a loss of GBP1,957,000 in 2017
to a loss of GBP1,952,000 for the period ended 31 January 2018. The
losses incurred in the period relate to the day to day costs of the
business and include the ongoing costs associated with the
technical input provided to our commercial partners as they look to
evaluate and incorporate graphene into their product lines.
Exceptional costs
Exceptional costs recognised in the period were GBP205,000
(2017: GBPnil). The current year costs principally relate to fees
paid in relation to the issue of new shares in that period.
Net finance income
Net finance income for the period was GBP20,000 (2017:
GBP22,000).
Loss on ordinary activities before tax, exceptional costs and
amortisation (PBTA)
PBTA for the period increased from a loss of GBP2,053,000 in
2017 to a loss of GBP2,086,000 for the period ended 31 January
2018.
Tax
The Group has not recognised any tax assets in respect of
trading losses arising in the current financial year or accumulated
losses in previous financial years. The tax credit recognised in
respect of the previous financial year arises from the receipt of
R&D tax credits. In due course, the Group expects to receive
R&D tax credits in respect of other financial years.
Earnings per share
Diluted earnings per share was a loss of 6.4 pence per share
(2017: loss of 9.3 pence per share). Adjusted diluted earnings per
share (before exceptional costs) was a loss of 5.8 pence per share
(2017: loss of 9.3 pence per share).
Dividend
No dividend has been proposed for the period ended 31 January
2018 (2017: GBPnil).
Cash flow
Net cash used in operations was GBP1,998,000 (2017:
GBP2,040,000). During the period, net working capital utilised
reduced by GBP21,000 (2017: increase of GBP161,000).
Capital expenditure of GBP132,000 (2017: GBP272,000) has been
incurred in the period mainly relating to the development of the
production process and related production assets. Net proceeds
arising from the issue of shares totalled GBP9,369,000 (2017:
GBP145,000).
Balance sheet
Net assets have increased to GBP13,284,000 (2017: GBP6,682,000),
principally reflecting the cash generated from the issue of shares
offset by the trading loss for the period.
Cash at bank at 31 January 2018 was GBP11,961,000 (2017:
GBP5,554,000). Monies are on deposit with a small number of
financial institutions for time periods ranging between instant
access and up to one year in maturity.
Accounting policies
The Group's consolidated financial information has been prepared
in accordance with International Financial Reporting Standards as
adopted in the EU. The Group's significant accounting policies,
which are consistent with those set out in the audited financial
statements for the year ended 31 July 2017, have been applied
consistently throughout the period.
Principal risks and uncertainties
Risk management forms an integral part of the business planning
and review cycle. The Directors believe the following risks to be
the most significant for potential investors. However, the risks
listed do not necessarily comprise all of those associated with an
investment in the Group and are not set out in any specific order
or priority. Additional risks and uncertainties not currently known
to the Directors, or which the Directors currently deem not to be
significant, may also have an adverse effect on the Group and the
information set out below does not purport to be an exhaustive
summary of the risks affecting the Group. The Group's performance
could be affected by changes in market or economic conditions and
in legal, regulatory or tax requirements.
Broadly, risks are categorised into seven types: strategic and
planning; financial and IT; operational and quality; technical; SHE
and regulatory; commercial and reputation; and people. Significant
risks facing the Group include:
-- Acceptance of the Group's products - early stage of
operations and acceptance of graphene. The Group is at an early
stage of development and the success of the Group will depend on
the acceptance and attribution of value to graphene produced by the
business. Timescales to the successful development of applications
for graphene are significantly determined by the product
development cycle of customers. There can be no guarantee that
either acceptance of graphene or attribution of value will be
forthcoming.
-- Intellectual property - the Group's business is based on a
combination of patent applications and know-how. The Group's
success will depend in part on its ability to maintain adequate
protection of its intellectual property and know-how. There is no
certainty that patent applications will be granted, that such
applications and know-how will be a source of competitive advantage
to the Group, or that others have not developed similar or better
applications or know-how. Significant costs may be incurred in
asserting intellectual property rights and there is no certainty
that intellectual property could not become known in a manner (for
example, cyber-attack) which may provide the Group with no
recourse.
-- Adequacy of financial resources - the available funding
required to support the business through to profitability and cash
generation may be insufficient. The Group may be unable to access
additional debt or equity capital, or to raise funds on acceptable
terms. In the event that the resources available to the Group are
inadequate then this could have a materially adverse impact on the
implementation of the Group's strategy, its business, financial
condition and operations.
-- Financial, operational and management information systems -
the efficient operation and management of the Group depends on the
proper operation and performance of financial, operational and
management information systems. Any failure in such systems via a
cyber-attack may result in a loss of control and adversely impact
the Group's ability to operate effectively.
-- Safety, health and environment - the Group's operations are
subject to numerous safety, health and environmental (SHE) and
regulatory requirements, both in the UK and overseas, which are
likely to become more complicated, stringent and onerous as the
Group grows or as time passes. Failure to comply in any way with
SHE or regulatory requirements could result in the Group being
unable to manufacture or supply graphene, incurring significant
costs and liabilities, or being subject to claims and lawsuits
which could adversely affect its operations and financial
condition. Graphene is also a relatively new material with a
limited number of studies having been undertaken into its effects
on biological systems. If evidence emerges that graphene has a
deleterious effect, then this may adversely impact the Group's
business and financial position.
-- Key personnel - the Group has in place an experienced and
motivated senior management team and is beginning to build strength
in depth. If the Group is unable to attract and retain suitably
skilled and qualified people, then the Group's performance and
prospects may be adversely impacted. The loss of one or more key
personnel could have an adverse impact on the Group's operations,
reputation, relationships and future prospects.
Cautionary statement
The Business and Financial reviews have been prepared for the
shareholders of the Company, as a body, and no other persons. Their
purpose is to assist shareholders of the Company in assessing the
strategies adopted by the Group and the potential for those
strategies to succeed, and for no other purpose. The Business and
Financial reviews contain forward-looking statements that are
subject to risk factors associated with, amongst other things, the
economic and business circumstances occurring from time to time in
the sectors and markets in which the Group operates. It is believed
that the expectations reflected in these statements are reasonable
but they may be affected by a wide range of variables which could
cause actual results to differ materially from those currently
anticipated. No assurances can be given that the forward-looking
statements in the Business and Financial reviews will be realised.
The forward-looking statements reflect the knowledge and
information available at the date of preparation.
Gareth Jones
Chief Financial Officer
10 April 2018
Consolidated income statement and statement of
comprehensive income
for the six months ended 31 January 2018
Unaudited Unaudited Audited
6 months 6 months year
to to ended
31 January 31 January 31 July
2018 2017 2017
Note GBP'000 GBP'000 GBP'000
--------------------------------- ---- ---------- ---------- -------
Revenue 5 54 53 97
Other income 30 115 168
--------------------------------- ---- ---------- ---------- -------
84 168 265
Cost of sales (120) (189) (385)
--------------------------------- ---- ---------- ---------- -------
Gross loss (36) (21) (120)
Operating expenses (2,275) (2,054) (4,190)
--------------------------------- ---- ---------- ---------- -------
EBITDA (1,952) (1,957) (4,059)
Exceptional costs (205) - -
Depreciation of tangible
fixed assets (154) (118) (251)
Operating loss (2,311) (2,075) (4,310)
Net finance income 20 22 33
--------------------------------- ---- ---------- ---------- -------
PBTA (2,086) (2,053) (4,277)
Exceptional costs (205) - -
Loss on ordinary activities
before tax 5 (2,291) (2,053) (4,277)
Tax on loss on ordinary
activities 3 - - 1,234
--------------------------------- ---- ---------- ---------- -------
Loss for the period attributable
to equity shareholders (2,291) (2,053) (3,043)
Other comprehensive income - - -
--------------------------------- ---- ---------- ---------- -------
Total comprehensive loss (2,291) (2,053) (3,043)
--------------------------------- ---- ---------- ---------- -------
Earnings per share (pence
per share)
Basic 6 (6.4) (9.3) (13.8)
Diluted 6 (6.4) (9.3) (13.8)
--------------------------------- ---- ---------- ---------- -------
EBITDA comprises loss on ordinary activities before interest,
tax, exceptional costs, depreciation and amortisation.
PBTA comprises loss on ordinary activities before tax,
exceptional costs and amortisation.
Consolidated statement of changes in shareholders' equity
for the six months ended 31 January 2018
Share Share Merger Retained Unaudited
capital premium reserve earnings total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- -------- ------- -------- ---------
As at 31 July
2016 437 18,243 1,231 (11,399) 8,512
Comprehensive
loss - - - (2,053) (2,053)
IFRS 2 share
based payments - - - 78 78
Issue of shares
(net) 5 140 - - 145
As at 31 January
2017 442 18,383 1,231 (13,374) 6,682
Comprehensive
loss - - - (990) (990)
IFRS 2 share
based payments - - - 114 114
Issue of shares
(net) 4 258 - - 262
As at 31 July
2017 446 18,641 1,231 (14,250) 6,068
Comprehensive
loss - - - (2,291) (2,291)
IFRS 2 share
based payments - - - 138 138
Issue of shares
(net) 543 8,826 - - 9,369
As at 31 January
2018 989 27,467 1,231 (16,403) 13,284
------------------ -------- -------- ------- -------- ---------
Consolidated balance sheet
as at 31 January 2018
Unaudited Unaudited Audited
31 January 31 January 31 July
2018 2017 2017
Note GBP'000 GBP'000 GBP'000
--------------------------------- ---- ---------- ---------- --------
Assets
Non-current assets
Intangible assets 139 97 138
Property, plant and equipment 1,913 1,575 1,936
2,052 1,672 2,074
--------------------------------- ---- ---------- ---------- --------
Current assets
Inventories 38 38 45
Trade and other receivables 168 234 151
Cash 11,961 5,554 4,708
--------------------------------- ---- ---------- ---------- --------
12,167 5,826 4,904
--------------------------------- ---- ---------- ---------- --------
Liabilities
Current liabilities
Trade and other payables (935) (816) (910)
(935) (816) (910)
--------------------------------- ---- ---------- ---------- --------
Non-current liabilities
Provisions for other liabilities - - -
and charges
--------------------------------- ---- ---------- ---------- --------
- - -
--------------------------------- ---- ---------- ---------- --------
Net assets 13,284 6,682 6,068
--------------------------------- ---- ---------- ---------- --------
Shareholders' equity
Called up share capital 8 989 442 446
Share premium account 27,467 18,383 18,641
Merger reserve 1,231 1,231 1,231
Retained earnings (16,403) (13,374) (14,250)
--------------------------------- ---- ---------- ---------- --------
Equity shareholders' funds 13,284 6,682 6,068
--------------------------------- ---- ---------- ---------- --------
Consolidated cash flow statement
for the six months ended 31 January 2018
Unaudited Unaudited Audited
6 months 6 months year
to to ended
31 January 31 January 31 July
2018 2017 2017
Note GBP'000 GBP'000 GBP'000
---------------------------------- ---- ---------- ---------- -------
Operating activities
Net cash used in operations 7 (1,998) (2,040) (3,962)
Net finance income 15 19 52
Tax received - - 1,234
---------------------------------- ---- ---------- ---------- -------
Net cash used in operating
activities (1,983) (2,021) (2,676)
---------------------------------- ---- ---------- ---------- -------
Investing activities
Purchase of intangible assets (1) - (41)
Purchase of property, plant
and equipment (132) (272) (684)
Net cash used in investing
activities (133) (272) (725)
---------------------------------- ---- ---------- ---------- -------
Financing activities
Net proceeds from issue of
Ordinary shares 9,369 145 407
Net cash generated from financing
activities 9,369 145 407
---------------------------------- ---- ---------- ---------- -------
Net increase/(decrease) in
net cash and cash deposits 7,253 (2,148) (2,994)
Net cash and cash deposits
at 31 July 2017 4,708 7,702 7,702
Net cash and cash deposits
at 31 January 2018 11,961 5,554 4,708
---------------------------------- ---- ---------- ---------- -------
Net cash and cash deposits
include:
-------------------------------- ------ ----- -----
Cash deposits (maturity greater - -
than three months) -
Cash (maturity less than three
months) 11,961 5,554 4,708
--------------------------------- ------ ----- -----
Net cash and cash deposits
at 31 January 2018 11,961 5,554 4,708
--------------------------------- ------ ----- -----
Notes to the Interim Report
for the six months ended 31 January 2018
1 General information
The principal activity of Applied Graphene Materials plc is the
manufacture, dispersion and development of applications for
graphene. The Group operates principally in the United Kingdom.
The Company is incorporated and domiciled in the United Kingdom
and its registered number is 8708426. The address of the registered
office is The Wilton Centre, Redcar, Cleveland TS10 4RF. The
Company was incorporated on 27 September 2013.
The interim financial information was approved for issue on 10
April 2018.
2 Basis of accounting
The consolidated interim financial information for the period
ended 31 January 2018 has been presented under the historical cost
accounting convention, as modified by financial assets and
liabilities at fair value through the income statement and share
based payments at fair value, and in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European
Union, IFRIC interpretations and those parts of the Companies Act
2006 applicable to companies reporting under IFRS. The consolidated
interim financial information has been prepared on a going concern
basis.
The accounting policies used in the consolidated interim
financial information are consistent with those set out in the
audited financial statements for the year ended 31 July 2017.
Further IFRS standards or interpretations may be issued that could
apply to the Group's financial statements for the year ending July
2018. If any such amendments, new standards or interpretations are
issued, then these may require the consolidated financial
information provided in this report to be changed. The Group will
continue to review its accounting policies in light of emerging
industry consensus on the practical application of IFRS.
The preparation of financial information in conformity with IFRS
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, events or
actions, actual events ultimately may differ from those
estimates.
The consolidated interim financial information does not include
all financial risk management information and disclosures required
in the annual financial statements.
The consolidated interim financial information for the six
months ended 31 January 2018 and for the six months ended 31
January 2017 contained within the Interim Report does not
constitute statutory financial statements within the meaning of
Section 434 of the Companies Act 2006 and is unaudited. The
comparative figures for the year ended 31 July 2017 have been
extracted from the audited financial statements, on which the
Company's auditors have given an unqualified opinion.
3 Taxation
The Group has not recognised any tax assets in respect of
trading losses arising in either the current financial year or
accumulated losses in previous financial years. The tax credit
recognised in respect of the previous financial year arises from
the receipt of R&D tax credits.
4 Dividends
No dividend has been proposed for the period ended 31 January
2018 (2017: GBPnil).
5 Segmental analysis
The Group currently has one operating segment. Operating
segments are defined as components of an enterprise about which
separate financial information is available that is evaluated
regularly by the Chief Operating Decision Maker (CODM) in deciding
how to allocate resources and in assessing performance. The Group's
Chief Executive Officer has been identified as the CODM. Revenue
and profits arising from that operating segment are the same as
presented on the face of the consolidated income statement and
statement of comprehensive income.
6 Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of shares in issue during each period. The weighted average
number of shares in issue during the period used in the calculation
of basic earnings per share was as follows:
Unaudited Unaudited Audited
6 months 6 months year
to to ended
31 January 31 January 31 July
2018 2017 2017
'm 'm 'm
---------------------------------- ---------- ---------- -------
Weighted average number of shares
for basic earnings per share 36.0 22.1 22.1
---------------------------------- ---------- ---------- -------
Adjusted earnings per share has been calculated so as to exclude
the effect of exceptional costs including related tax charges and
credits. Adjusted earnings used in the calculation of basic and
diluted earnings per share reconciles to basic earnings as
follows:
Unaudited Unaudited Audited
6 months 6 months year
to to ended
31 January 31 January 31 July
2018 2017 2017
GBP'000 GBP'000 GBP'000
---------------------------------------------- ---------- ---------- -------
Basic earnings (2,291) (2,053) (3,043)
Adjustments for taxation - - -
Exceptional costs 205 - -
Adjusted earnings (2,086) (2,053) (3,043)
---------------------------------------------- ---------- ---------- -------
Earnings per share (pence per share)
Basic (6.4) (9.3) (13.8)
Diluted (6.4) (9.3) (13.8)
---------------------------------------------- ---------- ---------- -------
Adjusted earnings per share (pence per share)
Basic (5.8) (9.3) (13.8)
Diluted (5.8) (9.3) (13.8)
---------------------------------------------- ---------- ---------- -------
The Group was loss making for the periods ended 31 January 2018
and 31 January 2017 and also for the year ended 31 July 2017.
Therefore, the dilutive effect of share options has not been taken
account of in the calculation of diluted earnings per share, since
this would decrease the loss per share for each of the periods
reported.
7 Notes to the cash flow statement
Unaudited Unaudited Audited
6 months 6 months year
to to ended
31 January 31 January 31 July
2018 2017 2017
GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- -------
Loss for the period attributable
to equity shareholders (2,291) (2,053) (3,043)
Tax on loss - - (1,234)
Net finance income (20) (22) (33)
Depreciation of property, plant
and equipment 154 118 251
Exceptional costs 205 - -
----------------------------------- ---------- ---------- -------
EBITDA (1,952) (1,957) (4,059)
Depreciation of property, plant
and equipment (154) (118) (251)
Exceptional costs (205) - -
----------------------------------- ---------- ---------- -------
Operating loss (2,311) (2,075) (4,310)
Depreciation of tangible fixed
assets 154 118 251
IFRS 2 share based payments charge 138 78 192
(Increase)/Decrease in net working
capital 21 (161) (95)
----------------------------------- ---------- ---------- -------
Net cash used within operations (1,998) (2,040) (3,962)
----------------------------------- ---------- ---------- -------
8 Share capital
Unaudited Unaudited
number total
of Ordinary
shares GBP'000
-------------------------------- ----------- ---------
Allotted, called up and fully
paid
At 31 July 2016 Ordinary shares
of 2 pence each 21,872,551 437
Issued on 18 August 2016 166,204 3
Issued on 4 November 2016 83,102 2
Issued on 26 May 2017 168,906 4
At 31 July 2017 Ordinary shares
of 2 pence each 22,290,763 446
Issued on 31 October 2017 27,138,617 543
At 31 January 2018 Ordinary
shares of 2 pence each 49,429,380 989
-------------------------------- ----------- ---------
On 18 August 2016, 166,204 Ordinary shares of 2 pence each were
issued at a price of GBP0.583 per share to satisfy the exercise of
EMI share options.
On 4 November 2016, 83,102 Ordinary shares of 2 pence each were
issued at a price of GBP0.583 per share to satisfy the exercise of
EMI share options.
On 26 May 2017, 168,906 Ordinary shares of 2 pence each were
issued at a price of GBP1.55 per share following the exercise of
warrants.
On 31 October 2017, 21,138,617 Ordinary shares of 2 pence each
were issued at a price of GBP0.36 per share to institutional and
other investors.
9 Related party transactions
Transactions between Applied Graphene Materials plc and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
Transactions with shareholders
The following transactions with shareholders of the Group were
recorded, excluding VAT, during the period:
Unaudited Unaudited Audited
6 months 6 months year
to to ended
31 January 31 January 31 July
2018 2017 2017
GBP'000 GBP'000 GBP'000
University of Durham (shareholder)
Staff secondment, consultancy and
other fees 20 22 57
Top Technology Limited (controlled
by shareholder)
Non-Executive fees and expenses 8 8 16
Corporate finance fees 20 - -
----------------------------------- ---------- ---------- -------
Remuneration of key management personnel
The remuneration of the Directors, who are the key management
personnel of the Group, is set out below in aggregate for each of
the categories specified in IAS 24 Related Party Disclosures:
Unaudited Unaudited Audited
6 months 6 months year
to to ended
31 January 31 January 31 July
2018 2017 2017
GBP'000 GBP'000 GBP'000
Short term employee benefits (excluding
bonuses) 338 303 643
Payments to third parties 8 8 15
IFRS 2 share based payments charge 138 78 146
484 389 804
---------------------------------------- ---------- ---------- -------
10 Seasonality
The Group experiences no material variations in performance
arising due to seasonality.
11 Availability of Interim Report
It is anticipated that the Interim Report will be sent to all
shareholders on 27 April 2018. Electronic copies of the report will
also be available on Applied Graphene Materials' website at
www.appliedgraphenematerials.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UKAORWUASRUR
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