TIDMAGM
RNS Number : 2567T
Applied Graphene Materials PLC
24 March 2021
24 March 2021
Applied Graphene Materials plc
("Applied Graphene Materials", "the Group" or "the Company")
Interim results for the six months ended 31 January 2021
Applied Graphene Materials, the producer of specialty graphene
materials, is pleased to announce its interim results for the six
months ended 31 January 2021.
Highlights
Operational highlights
Coatings:
-- Approval for use of a new graphene-enhanced primer with
Blocksil, to complement use of its AGM graphene-enhanced Top Coat
MT product launched to consumers in January 2020
-- New customer product launches:
o A new wax based car care product from EZ Car Care
o A new wax based car care product from Infinity Wax
-- Availability of technical data for sustainable water based epoxy technology
-- Blocksil commercial relationship starting to build momentum
with orders from RTE, Network Rail and construction industry for
Blocksil graphene enhanced products
-- Repeat business from JBL for aerosol based primers
-- Acceleration in customer engagements in the car care sector
-- Growth in total pipeline engagements to 135 (2020: 92)
including 10 completed developments (2020: nil) and resulting
revenue potential to GBP3.7 million (2020: GBP2.9 million)
Composites and functional materials:
-- Positive continuing progress with core composites customer
-- Potential for TP300 product for thermal adhesive and
heat-dissipation applications and graphene nanoplatelets ("GNPs")
for bearing applications
Distribution:
-- Further distributors added to enhance our regional presence
in Turkey (Gobarr) and South Korea (ManHo Polymers) and growth of
our customer-facing representation headcount to around 79 including
AGM's direct sales team
Strategic highlights :
-- Fundraise of GBP5.5 million (net) announced in January 2021
and successfully completed in February 2021, extending the Group's
cash runway well into 2023
-- In partnership with the EU REACH Graphene Consortium,
achieved ECHA accreditation for volume supply of graphene powder
(up to 10 tonnes' volume), addressing a significant barrier to
deployment at scale
-- Branding refresh completed together with new website and improved communications platform
-- Continuing IP development
-- Cross-trading of shares in USA on OTCQB from August 2020
-- Extended product platform to address the growing
sustainability challenges facing the coatings industry through
water based epoxy product technology for low VOC coatings -
extending AGM's addressable opportunity. Launched customer products
offering enhanced sustainable credentials through use of
graphene
Financial overview
-- Revenue - GBP42,000 (2020: GBP35,000)
-- Operating expenses reduced by GBP0.5 million to GBP1.7 million (2020: GBP2.2 million)
-- EBITDA* - loss of GBP1.6 million (2020: loss of GBP1.9 million)
-- Loss before tax - GBP1.8 million (2020: loss of GBP2.3 million)
-- Cash at bank - GBP2.3 million (2020: GBP4.3 million) - a
further GBP5.5 million new funding and GBP0.46 million R&D tax
credit was received in February 2021
-- Basic EPS - loss of 3.3 pence per share (2020: loss of 4.0 pence)
* EBITDA comprises loss on ordinary activities before interest,
tax, exceptional costs, depreciation and amortisation.
COVID-19
Continued focus on maximising the safety of our team members and
maintaining business continuity. Activity at our customers' sites
is being monitored and we continue to work with them to maintain
progress on our joint development projects. Existing customer sales
momentum increasing as the impact of COVID-19 recedes.
Adrian Potts, Chief Executive Officer, commented:
"We have made good progress in the period both in our technology
development and with specific customers, primarily in the coatings
sector. Similarly, our expanded distributor base is generating a
growing number of new customer engagements.
Our route to significant revenue is through providing our
high-quality graphene nanoplatelets dispersed in a format ready to
be incorporated into customer product formulations. We continue to
work successfully with our customers on graphene integration
through to product testing and product launches and we are now
starting to see our customer base launch graphene-enhanced products
on a larger scale. All of this progress is key to driving AGM's
sales growth, and it is particularly pleasing to see our customers
in the coatings sector starting to use graphene-enhanced products
in a range of large-scale, real-life applications, resulting in a
developing pattern of repeat orders for our graphene products.
Having completed our recent fundraise, the Board considers AGM
to be in good shape to develop our revenue prospects in the coming
months."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Applied Graphene Materials' results presentation, with audio
commentary, is expected to be made available on its website at
http://www.appliedgraphenematerials.com in due course.
For further information, please contact:
Applied Graphene Materials
+44 (0) 1642 438 214
Adrian Potts, Chief Executive Officer
David Blain, Chief Financial Officer
N+1 Singer +44 (0) 207 496 3000
Peter Steel / Amanda Gray
Allenby Capital Limited +44 (0) 203 328 5656
Nick Athanas / Liz Kirchner (Corporate Finance)
Matt Butlin / Kelly Gardiner (Sales and Corporate Broking)
Hudson Sandler +44 (0) 207 796 4133
Charlie Jack / Emily Dillon
Notes to Editors
For the last decade, AGM has been at the forefront of harnessing
the possibilities of graphene. Founded originally by Professor Karl
Coleman, the Group has grown from an academic idea from Durham
University to a world leader in the development and application of
graphene nanoplatelet dispersions for customers in the coatings,
composites and functional materials sectors.
The Group utilises its proprietary bottom-up manufacturing
process to produce high purity graphene nanoplatelets. Its
expertise in dispersion chemistry enables AGM to create optimised,
stable and easy to handle dispersions that customers use in
real-world industrial products. AGM's unique approach enables
industries to fully realise the potential of graphene in a simple,
safe and easy to formulate way.
AGM, based at the Wilton Centre on Teesside, was admitted to AIM
in November 2013, raising GBP11 million. The Group successfully
raised GBP8.5m in January 2016 and a further GBP9.8m in November
2017. Since August 2020, the Group's shares are also listed on
OTCQB in the United States and, in January 2021, the Group
successfully raised a further GBP6m gross. As a result of the
funding support and its industry leading technology platform, AGM
has been able to develop a significant sales distribution network
covering Europe, North America and Asia. The Group continues to
work closely with industrial partners, and has seen the successful
launch of numerous commercial products enhanced by its Graphene
Dispersions.
Business review
with Adrian Potts
Overview
Progressing customer engagements despite COVID-19
We made continued commercial progress during the six month
period, despite the continuing challenge of COVID-19 both in the UK
and abroad. A number of customers have reduced staff numbers which
has impacted their development departments, a number of pipeline
projects have been delayed or placed on hold indefinitely and some
customers with already launched graphene-enhanced products have had
difficulty accessing customer assets to be able to deploy their
coatings. That said, we have continued to make good progress with
engagements where possible and have also managed our own business
well to ensure continuity of longer-range test programmes. As a
result, we have seen three successful customer product launches in
the period, namely:
- a new wax based car care product from EZ Car Care;
- a new wax based car care product from Infinity Wax; and
- approval for use of a new graphene-enhanced primer with
Blocksil to complement its graphene-enhanced Top Coat MT product
for a systemised coatings solution.
Focused on dispersed graphene formats for larger scale
opportunity
We continue to emphasise that AGM's key differentiator is our
knowledge base around the application of graphene and dispersion
technology which makes it possible to transfer graphene's
outstanding combination of properties into a host material. There
is now growing awareness among our target consuming industries of
the need for appropriate delivery mechanisms to efficiently deploy
graphene in order to achieve an effective enhancement in the
finished customer product. We believe AGM's focus on supplying
graphenes in dispersed formats will meet this need and support a
scale-up of revenue opportunities for AGM.
Customers gaining momentum with protective coatings products in
the market
Good progress has been made in the protective coatings sector
demonstrating the benefits of the addition of graphene
nanoplatelets into exemplar and customer formulations. AGM's
customers are starting to use their graphene-enhanced products for
larger-scale commercial projects. Blocksil has been applying their
Top Coat MT product with RTE for antennae, with Network Rail and
with construction applications. Additionally, a new
graphene-enhanced primer product has been integrated into
Blocksil's product mix to enable a graphene-enhanced primer and top
coat system solution. Alltimes Coatings has been contracted to use
its Advantage Graphene coating on a Wickes commercial building
application. It is pleasing to see James Briggs ("JBL") become a
routine customer of AGM in support of its aerosol-based
graphene-enhanced primer products.
Some delays in customer product launches have been inevitable
and we have seen this with Teal & Mackrill in the development
of its industrial epoxy primer. Our engagement pipeline continues
to be heavily biased towards coatings technologies as the key area
where we anticipate revenue growth. Successful outcomes of
iterative development evaluations resulting in customer product
launches are our conduit to sales growth on a by-customer
basis.
It has been pleasing to see growth in activity in the car care
sub-sector of protective coatings technology. With product formats
being well aligned to AGM dispersion technologies, we are making
good progress with a number of customers in this area.
Expanding distributer network
Distributor activity has increased in the period with the
addition of two new distributors in Turkey and South Korea. These
distributors have now been fully trained and are beginning to
develop a number of business leads for our products and services.
We now have around 79 customer-facing representatives across our
distribution base and including our direct sales team.
Composites and functional products progress
Activity in the composites sector is customer led. Customer
activity represents a broad spectrum of application from carbon
fibre products for space applications to automotive opportunities.
For the composite materials sector, we continue to see success with
Infinite Composites Technologies with repeat materials requirements
for mechanical property enhancements and barrier coatings
application. Other composites customers are completing iterative
testing of either our products or with their customers to prove the
technology in the specific field of application. Some delays in
testing have been apparent, specifically in the areas of composite
tooling and mass transit interior applications.
Activity with Functional materials products continues - we are
making good progress with the testing of our thermal adhesive
product at an undisclosed customer whilst we continue to work with
Airbus to determine how to best utilise our materials in their
application. We are also seeing evaluations of our graphene
dispersions for further applications for bearings and friction
products.
Website
We completed a rebranding of the Company with a new website
platform to enhance accessibility of information and to enable more
effective communications with partners, customers and
investors.
Technology progress
We continue to make strong progress technically and are
developing an extended product platform to address the growing
sustainability challenges facing the coatings industry. This
includes technology for the dispersion of graphene in water-based
coatings as opposed to solvents. We also continue to develop long
range test data to support the adoption of our products in the
protective coatings sector. Our publication of water-based epoxy
technology data represents a milestone for us in the potential for
using graphene for anti-corrosion in low VOC coatings. Another
major milestone during the period was receipt of regulatory
approval through the EU REACH Graphene Consortium. This addresses a
major barrier to large-scale adoption of graphene technology within
the EU, with large volume supplies of graphene powder now permitted
(up to 10 tonnes). In line with our global market reach through our
distribution network, we continue to work with the various
regulatory authorities to attain similar approval to that granted
in EU. ISO standards recently released support a robust approach to
product integration and definition by the end user, which we
further welcome. We are well advanced in our operational planning
for scaled, consistent production of dispersed products and we
expect to procure a spraying capability in 2021 which will enable
us to carry out high-quality test panel preparation as part of our
long range testing and customer support endeavours.
Successful fundraise
We announced a successful fundraising round at the end of
January 2021, approved by shareholders in a general meeting in
February 2021. Over the past two years we have made strong progress
on developing our technology and maturing our dispersed graphene
product platform. We have seen this principally in the area of
development of scaled dispersions which are stable and user
friendly and secondly in the production of exemplar data. Such data
support our claims about graphene nanoplatelets as an enabling
materials technology. Having established this reliable platform and
having seen early customer product launches enabling modest
revenues, further funding was necessary to support the growth of
the revenue roadmap. We were pleased to have been able to raise
GBP6 million gross from the capital market and this gives AGM a
solid cash runway well into 2023. We also announced the changing of
our listing in the OTC market in USA from pink sheets to OTCQB to
enable greater access to investors and have spent significant time
presenting to the USA-based investor community. We are deeply
appreciative of existing and new investors who have put their
confidence in AGM's leadership and provided us with the requisite
financial resources to grow the business.
Commercial progress
Pipeline review
We have seen progressive growth in our pipeline of engagements
over the past 12 months, with an increase from 92 to 135, including
10 completed products. It is also pleasing to see steady growth in
the number of products being launched by our customers, which will
drive our future sales of dispersed graphene materials. We believe
steady, positive progress is being made in the evaluation of our
graphene materials by customers interested in both graphene as a
novel material and in the practical use of the material
technology.
Opportunities by stage of development and pipeline value:
1 2 3 4 5
Repeat
Initial testing Final product
Agreement testing for trials,
on scope and consistency formulation Final
of sampling interpretation and review and commercial
As at and engagement of results of results specification agreement Completed Total Value*
31.01.21 39 54 19 8 5 10 135 GBP3.7m
31.07.20 19 57 18 12 3 6 115 GBP3.6m
31.01.20 12 45 14 13 8 0 92 GBP2.9m
* The value of development stages 1 - 5 is probability weighted.
The value of completed projects is at full sales opportunity
The majority of our activity within the pipeline continues to be
centred upon coatings technology. This represents the best
opportunity for sales success in the near term, arising from our
in-depth technical know-how which supports the sales of our
dispersed graphene materials to the sector. We have seen activity
increase over the past period in the sub-sector of protective
coatings for car care - an exciting adjacency which is both
innovative and fast paced as regards customer adoption of our
materials.
The value of our commercial pipeline has grown progressively, as
has the number of our engagements with potential commercial
partners. The figures presented in the chart represent a factoring
of the total value of the pipeline based on potential for success
based on commercial, technical and regulatory metrics. Completed
projects are included at full expected sales opportunity.
One key metric used in the pipeline is the identification of
potential customer product launches. We currently can identify six
imminent products which we feel are likely to come to market
soon.
Graphene nanoplatelet and dispersion technology
AGM's A-GNP35 graphene nanoplatelet materials continue to
demonstrate excellent performance advantages in customer
engagements. Our nanoplatelet materials, when correctly deployed
into the customer's end formulation, prove to offer a highly
efficient solution to the application of this novel materials
technology.
Outside of the unique nature of our graphene materials
manufacturing, AGM's continuing commitment to commercial
realisation lies firmly in four key areas:
- developing a global understanding of the benefits of graphene
for various materials technologies - where graphene materials will
work and (importantly) where they are unlikely to be
successful;
- developing practical know-how on how to use these complex materials in real applications;
- providing a dispersed graphene product range for easy
deployment in suitable host materials; and
- providing test data and know-how in the form of technical
guidance to support adoption and use.
Our core commitment to demonstrating graphene performance
continues to be principally focused on the coatings sector. This is
where we have and continue to demonstrate strong performance
advantage in the areas of barrier performance allied to a
sustainability proposition.
Our knowledge on how to deploy graphene nanoplatelet materials
is critical to the success of our business and broader commercial
realisation in the graphene space. On 4 January 2021, The Graphene
Council, one of the sector's leading associations, published "The
2020 Graphene Survey" of 800 respondents. "Dispersibility" was
recognised in this survey as a key aspect required to be addressed
for the successful use of graphene with c. 50% of respondents
stating that it is "essential" and a further c. 25% saying it is
"important".
We believe AGM is addressing a fundamental user challenge in the
graphene space. This is the ability to effectively incorporate
graphene into customer materials in a way that transfers graphene's
unique enhancement properties into the customer's end product. We
are addressing this through the supply of technically appropriate
dispersions. This will support the long term adoption of these
materials in tandem with consistency of quality and attention to
detail. Our knowledge of the complex chemistries involved ensures
that the correct material form and attributes are present in a
customer's formulation and can contribute effectively to a
customer's success. Our technical team continues to push the
boundaries of dispersion capability and application know-how and to
work to expand the breadth of our product offering.
Having a robust dispersion product range is absolutely key to
adoption of these materials and to enabling our expanded
distributor network to be successful with its customer
engagements.
AGM continues to provide a leading range of dispersed graphenes
marketed under the brand name "G enable(R)", which provides the
formulator with ease of use and integration. This in turn gives the
user confidence to test our materials in their formulations and
achieve our long-range goal of sales of dispersed materials to
support a customer's newly launched product.
Protective coatings sector
Commercial activity in this sector has been impacted by
COVID-19-related issues in two ways:
- firstly, a reduction in reported activity levels in the
industrial coatings sector. This has been manifested in a number of
ways at our level of engagement - from customer staff reductions,
to delays to their customer programmes and access to assets to be
repainted; and
- secondly and latterly, the overlay of customers needing to
manage raw materials availability and pricing challenges in the
general solvents and resins supply chain has led to a number of
developing customers delaying product launches.
That said, within the protective coatings sector, our target has
been to continue to develop a platform of demonstrable performance
gains with our GNPs specific to anti-corrosion benefits in steel
and aluminium coatings. We continue to make great strides forwards
with this, as evidenced with the recent release of technical
application data informing customers of the possibilities for use
of water based technologies containing our graphene nanomaterials.
Progress with specific customers is as follows:-
James Briggs
- We are now starting to see repeat sales develop for
dispersions for the aerosol-based products sector with James Briggs
Ltd. It is pleasing to see the products under the Hycote and
Halfords retail brands start to gain commercial traction with
increasing demand for our graphene dispersed materials. We further
continue in development efforts with JBL for other products with
the anticipation for a broader platform of product launches and an
increased level of business with them.
Blocksil
- Avanti - Access to customer sites during COVID-19 has been
challenging for fulfilment of this previously announced activity on
antennae dish structure refurbishment. Blocksil anticipates
activity on this project to increase as the effects of lockdown are
reduced.
- RTE - A number of antennae towers have been successfully
coated and Blocksil is now anticipating positive progress with a
further 7 structures using its graphene-enhanced products
- Network Rail - Blocksil has been working on a Network Rail
project on the corrosion refurbishment of trackside enclosures. The
performance of the graphene-enhanced products for such application
is ideal. Blocksil reports good progress is being made with initial
units and anticipates growth in this business and demand for
graphene dispersions to feed coatings volumes. Some 200+ units are
anticipated to require work.
- Primer - As indicated at our year end results, further product
development with Blocksil has been ongoing and has resulted in its
approval of a primer product to complement their high-performance
Top Coat MT coating. We are pleased to report that the first such
product formulation has been fully approved by Blocksil and is
being rolled out for use in tandem with the top coat materials.
This represents an important step forwards for AGM in the
development of an integrated solution using graphene in both primer
and top coat materials for further system performance enhancement.
Further development of a yet higher performance epoxy version has
also been approved by the customer and we look forward to
deployment of this material for a growing range of applications in
the near future.
- We anticipate an increase in commercial activity with Blocksil
in the coming months as these projects develop and have been
pleased to be able to supply initial quantities of dispersions to
support these developments.
Alltimes Coatings
- Alltimes continues to promote its Advantage Graphene product,
launched with AGM graphene through its CPD programme to end
specifiers. They have recently achieved success with specification
approval and application of its coatings system on a Wickes
commercial building roof project, and they continue to pursue
further contracted business with the product. Advantage Graphene
offers a substantial improvement in sustainable performance with
extended warranty and thinner application for an efficient
materials technology solution.
- Alltimes Coatings has also been successful in securing
business with The Wilton Centre for refurbishment of buildings
within the complex. Initial work has commenced and this is
anticipated to extend into other areas for a range of building
applications.
Teal & Mackrill
- Product development efforts with Teal & Mackrill have
reached a successful technical conclusion regarding performance
attributes for a new general industrial epoxy primer. The
anticipated release of this innovative primer has, however, been
delayed due to COVID-19-related issues. We see this as a short term
delay and look forward to a successful release of the product in
the near future. In the meantime, a number of industrial
anti-corrosion applications are being pursued with this product
currently with a view to be it being specified for long term
use.
The pipeline of opportunity is heavily weighted towards near
term traction with the protective coatings sector, with 86% of
engagements in the industrial coatings sector, and reflects the
near term opportunities for successful revenue development as a
result of the launch of customer products.
We continue to make positive technical and developmental
progress with the pipeline of customer engagements in the
protective coatings sector and are pleased with the progress
towards AGM's end goal of successful customer product launches and
a positive revenue stream for our graphene dispersions as a result.
Customers evaluating our products currently represent a broad
spectrum within the protective coatings applications sector
including:
- marine applications;
- concrete flooring;
- construction industry;
- automotive;
- chemical resistance;
- aerospace grade aluminium;
- aluminium protection for power grids;
- industrial aluminium chemical resistance; and
- pressure and permeability applications.
Car care sub-sector
We classify the car detailing sector as a sub-group of
protective coatings in that the products offer enhanced paint
protection for vehicles including water damage through to UV
protection. With a format which is typically either liquid or wax
type, the products used in this sector lend themselves well to the
addition of G enable(R) graphene nanoplatelet dispersions. The
sector is also innovation hungry and relatively fast to market.
Opportunities centre on the potential to establish a next
generation of product performance which is advanced from current
nanomaterials technology through the inclusion of graphene. Barrier
performance and longevity of coating are some of the key targets
being aimed for. Having seen early success with product launches
with Infinity Wax and EZ Car Care in the UK with both formats of
product, we have seen a promising increase in activity in the
sector with a number of opportunities with customers taking product
for evaluation.
Post-period we were pleased to see Infinity Wax launch a second
graphene-enhanced product to the market in the form of a
graphene-loaded wax. Thanks to our close engagement with Infinity
Wax on the development of this product, the company as able to
deliver it to the market ahead of schedule.
Such successful outcomes embody our ambition for AGM - the
supply of technically excellent products which work well for our
customers in an easy-to-use format delivered on time and to
expectation.
In the period, a second product from EZ Car Care/Halo Automotive
was launched for alloy wheel applications. This microcrystalline
wax based polish is the result of the continued partnership and a
rigorous testing programme delivered by Halo. The product delivers
extended performance claims, including improved thermal and
chemical resistance to enhance coating durability further for
demanding wheel and exhaust applications. The temperature
resistance made possible through the new graphene nanoplatelet
formulation helps with durability when alloy wheels heat up from
consistent brake use. Combining these attributes with excellent
barrier performance means that water spotting is also less likely
to occur. Again, the positive outcome of a technical product
meeting the needs of the customer has resulted in a successful
product outcome.
We are also anticipating the imminent release of a new customer
product with Constellation Chemicals Ltd. AGM Graphene nanoplatelet
infused Snow Sealant product offers a combination of
hydrophobicity, heat dissipation, gloss and durability.
We look forward to further success with the growing number of
engagements for product developments in this sector.
Distributor update
Combining strong product performance with a standardised product
portfolio of G enable(R) dispersions, we have been successful in
attracting a high-quality group of distributors to represent our
products to predominantly coatings and liquid resin applications
customers. Having completed training for each of these valued
partners, we are starting to see positive progress in terms of
engagements through them, with dispersed products being supplied as
a result. Initially, these are for customer evaluation, but we
remain confident that the model for distribution of a
well-supported product range is the correct one, and that this will
bring revenue success for our distributors and for AGM. Our current
distributors sit predominantly in the industrial coatings supply
chain and have been carefully selected to enable strong technical
service to their customers.
In seeking to develop the distribution conduit to market, we
announced two further geographical engagements in the period - with
Gobarr in Turkey and ManHo Polymers in South Korea. Training has
been completed with these new additions and we are seeing good
initial progress with these partners.
Composites sector
Activity in this sector is largely customer led, given the
unique nature of the type of applications and potential for
graphene to help achieve further performance improvements to what
are already high-performance products. We continue with our focus
to supply high-quality, liquid based dispersions to the market, in
a range of suitable media.
Activity continues with both long-established customers for
prepreg for structural and composite tooling development,
automotive applications, innovative materials engineering
opportunities for space and specific industrial application in the
mass transit sector.
In all cases, we have been able to supply a specific dispersion
to suit the end-use application to our customers to enable ease of
application and incorporation of the graphene into the proposed
end-use formulation. It is the capability of AGM to consistently
achieve this, whether by standard dispersions or custom offerings,
that differentiates AGM.
Successful outcomes in this sector, as with any other, will
result from close collaboration with the customer to integrate
novel graphene material into the end application to support the
production environment. Such relationships as this are highly
prized and are typified by the work AGM has undertaken with
Infinite Composites Technology to demonstrate linerless carbon
fibre pressure vessels for gas storage. The use of graphene as part
of an overall materials engineered solution enables lighter weight,
lower cost and speed of manufacture. Performance vs weight is
critical for space applications - business leader Matt Villereal
notes in a recent article: "Having previously focused only on
storing high-pressure gases, Infinite Composites recently performed
testing with NASA (at the same test site where the Apollo flight
hardware was tested in the 1970s) to demonstrate that the
technology can handle temperatures below negative 300 degrees
Fahrenheit. This cryogenic capability means tanks can store liquid
oxygen, liquid methane, and liquid nitrogen-unlike other composite
materials, which typically become brittle at such low
temperatures." At the demonstrator stage so far, this customer has
high ambition to grow significantly in the $58 billion market from
a low current participation for composites pressure vessels, but
with growth at 25% per annum for composite solutions. Initially
developed for the space sector as a superior lightweight solution,
we see ourselves as well positioned with innovators such as ICT to
achieve long range success with well-engineered composites
solutions.
Some activity within the sector has been delayed due to
COVID-19-related issues, mostly due to ongoing availability of
resources to evaluate the technical solution offered by the
projects. This is the case for participating companies from
products developed with the CTES project and the NEAT project. We
anticipate progress to begin again in the coming months as more
staff are able to safely return to work post lockdown. This is
expected to include the completion of third party testing on
enhanced fire performance materials for interiors applications and
the conclusion of customer evaluation of high-performance composite
tooling solutions.
With a range of application opportunities, we believe that our
dispersion capabilities which offer an appropriate solution to
integrate nanomaterials safely and consistently are key to success
in the industrialisation of graphene-enhanced composite
systems.
Further support to the sector describing the technical
advantages that can be achieved with a well-formulated graphene
product offering was completed with two presentations to The
Society for the Advancement of Material and Process Engineering
(SAMPE) and Composites NL. AGM's enabling graphene technology was
well received at these events.
We look forward to successful outcomes with the growing number
of engagements in this sector.
Functional materials
We continue to work towards product approval for our TP300
heat-dissipative, low density adhesive products with two
customers.
Deployment of TP300 with an undisclosed customer is advancing
well and we anticipate a positive outcome for use of the product in
its application in due course. The end-use project is approaching
customer approval and further material is anticipated to be
required in the next few months for this project. The product is in
a final round of testing specific to application.
We continue to work with Airbus to determine how to best utilise
our materials in its application.
Customer activity in other areas outside of coatings and
composites include the use of graphene for friction and
permeability/barrier combination in bearings, low friction
applications and lubricants. Each of these customer projects
benefits from the use of G enable(R) dispersions customised to suit
the end objectives.
Marketing
Our rebranding effort has been completed with a website redesign
and enhancements to the searchability of our data. The new branding
reflects AGM's positioning at the forefront of harnessing the
possibilities of graphene. Branding has been completed throughout
the range including improvements in product labelling and marketing
collateral. Over the past twelve months, we have made good use of
virtual conference and exhibition opportunities which have led to
positive marketing results. AGM has given presentations at
conferences including the OTC Investor Conference, the SAMPE
Graphene Leadership Summit and the Dutch Composites Association.
The Company plans to present at NACE Corrosion 2021, the American
Coatings Association Technical Conference and the European Coatings
Show and Conference in the coming months.
Technology, regulatory and manufacturing status
Our technology roadmap continues to focus on dispersion know-how
on a developing basis to satisfy a wider range of graphene
applications. It is the capability to utilise graphene nanoplatelet
materials in a dispersed format which we believe is critical to
success. The separation of nanomaterials into a well-dispersed
array in the finished product maximises the effectiveness of the
materials for a wide range of performance objectives. This is the
case whether considering tortuosity through coating layers for
enhanced barrier performance, anti-corrosion and chemical
resistance, conductivity aspects, or indeed mechanical performance
gains.
We remain committed to delivering our current systems in growing
volumes and to developing new methods for dispersing graphenes into
different media to achieve these objectives as a means of creating
a revenue stream through the ongoing sale of dispersed
materials.
Regarding our application roadmap, c. 86% of all current
activity is in support of a successful completion and demonstration
of performance advantages in coatings technology. The output from
this is:
- dispersed product formulations with the required attributes
for successful deployment at scale; and
- exemplar data to demonstrate the potential of the technology.
The introduction of GNPs, latterly with the efficient G enable
(R) 1250 water based systems, offers a significant increase in
corrosion performance as measured by average creep. The use of this
innovation is expected to help meet corrosion performance
requirements for hidden and visible steel work in medium risk
environments with low VOC products. The generation of such enabling
data is key to the successful deployment of graphene in the
coatings space in order to demonstrate the possibilities. We look
forward to ongoing engagements with current and new customers in
the water-based coatings technology space. The use of water-based
technology is also feeding our elastomer technology development
programme
Further technology platform work continues to wrap up the
development of exemplar data for extreme environments with our
CX-type formulation offering. We are further progressing maximising
the opportunity for engagement with the coatings sector and beyond
through the development of a range-extending platform using bio
based solvents and resins and exempt solvents.
Data development is currently also addressing the area of
chemical resistance with an extensive programme progressing well.
This is anticipated to result in further exemplar data to support
the use of graphene in areas such as pipeline applications through
to chemical storage facilities (using both coatings and composites)
and waste water treatment.
Longer range innovation includes partnerships with Northumbria
and Durham Universities looking at broader opportunities for the
effective processing and use of graphene.
Investigative battery technology using our graphene materials is
also developing via a targeted approach using our coatings
technology and detailed know-how in the application of graphene. A
number of work streams are ongoing looking at next generation
battery potential.
We continue our approach to IP protection through patent
applications and trademark registration - particularly as we
develop our distributor base. A number of patent applications are
in process currently at various examination and review stages.
Pursuing regulatory approval for graphene as a novel materials
technology is seen by the Board as a critical objective to overcome
the barrier to entry for volume use of graphene dispersions. As
such, the Company places significant emphasis upon addressing the
developing regulatory requirements related to deployment of
nanomaterials such as high-aspect ratio graphenes.
The most notable regulatory outcome in the period was the
successful feedback from ECHA regarding approval for the supply of
larger volumes of graphene for graphene consortium members. This
allows each consortium member to supply up to ten tonnes of powder
in products within the EU. Further detailed review is anticipated
over the coming couple of years with ECHA, but it was pleasing to
be able to report this major milestone for AGM, for the Graphene
Consortium and for the graphene industry at large.
Effort has continued apace in regulatory aspects to support the
development of distributors in each of their territories to support
the volume deployment of our graphene materials in those regions.
This includes Turkish REACH, K-REACH for Korea, UK REACH and
engagement with the USA regulatory bodies. A significant effort is
ongoing with USA approval in order support volume sales
opportunities and Maroon Group as our distribution partner, and
this has resulted in appointment of a specialist contractor to
support our engagement with the Environmental Protection Agency
(EPA). We continue to carry out safe use assessment and risk
analysis for use of our materials in a range of settings. We are of
the firm belief that supply of our materials in a dispersed format
supports the safe deployment of 2D high-aspect ratio materials
through encapsulation, and that, therefore, the provision of a
broad ranging dispersion product offering is the best way forward
to developing volume revenues in the longer term.
We welcome the issuing of further ISO standards recently which
provide further guidance on the characterisation of materials in
the graphene space and which will support a robust approach to
product integration and definition by the end user.
Operational aspects
Following our recent successful fundraise, we now have the cash
reserves to address a number of areas to enable further revenue
growth, including:
- spray booth capability - the intent to in house our technical
spraying for coatings to ensure quality and consistency as well as
cost management;
- headcount to service customer growth and product demand;
- further capacity enhancements - especially for dispersions; and
- we will continue to manage cash prudently
We look forward to announcing further development of these
projects in the coming months.
Sustainability
The sustainability dialogue surrounding AGM's products and
services falls into two areas:
- operational excellence internally through policies and procedures; and
- sustainable solutions for our customers and their extended clients.
We are seeing increasing external interest in our products from
a sustainability perspective - from the aforementioned release of
our water based technology to the significantly increased
durability and longevity that graphene enhanced products can give.
We see this in a number of areas:
- composite materials products which have enhanced fracture
toughness in the matrix resin and thus higher performance and
greater potential durability. The ability to engineer materials
more effectively with graphene is being realised, as exemplified
with our customer Infinite Composites Technologies; and
- coatings technologies which are more efficient and as a result
offer good sustainability credentials. Through the extensive
technology development with Alltimes Coatings, this is realised in
a number of areas:
o overall reduction in cost of ownership through the use of a
graphene-enhanced coatings product. Corrosion in its many forms is
estimated to cost the global economy substantially per annum due to
damage to steel buildings and infrastructure;
o extending the period of protection for a metal structure and
cladding is a target to create a more sustainable future,
especially for a finite resource such as metal, the ore for which
has to be mined;
o extended warranty for the Advantage Graphene product - with
graphene forming a higher performance barrier between the metal and
the outside elements that cause and speed up rust, Advantage
Graphene has exceptionally longer life expectancy than traditional
roof coatings. In this case, a 30 year product warranty is offered;
and
o due to its thin 2D structure, graphene layers are
significantly thinner than some single lamina flake materials found
in a standard roof coating. Graphene is a highly efficient
additive, enabling thinner coatings.
Coupling such benefits with the work we have ongoing with
sustainable dispersion products such as bio based materials and
water based technology, we see significant opportunity to engage
with customers as they grapple with increasing environmental
pressure and look to develop opportunity for sustainable
options.
Internally, we continue to develop our operational excellence.
We have a focus on quality and improvement in all aspect of the
business.
Staffing through COVID-19
The Board has consistently sought to employ the safest working
practice through the COVID-19 pandemic and has considered carefully
how best to balance the continuity of long range testing we
typically perform with the safety and wellbeing of our employees.
Throughout the pandemic, we have been able to maintain continuity
through careful organisation and working from home as appropriate.
As previously announced, we have not utilised the UK Government's
furlough scheme. The Board believes that as the effects of the
pandemic subside and vaccination becomes more widespread, AGM will
emerge in a strong position as an organisation.
Board composition
Mike Townend has indicated that he wishes to step down as a
Non-Executive Director from the AGM Board with effect from 25 March
2021. This change is in line with the developed strategy for IP
Group plc and IP Group will not be replacing Mike. In the meantime,
I wish to record my thanks to Mike for his resolute guidance and
input as part of the Board team to help steer AGM to the position
of being the leading technology provider that it is today. It has
been an absolute pleasure working together with Mike and I wish him
well in the future.
Outlook
The Board is pleased with the continuing progress we have made
to further develop AGM's dispersed GNP technology platform and the
potential to extend this to adjacencies applicable to the coatings
sector. Solid progress has been made with coatings customers, and
it is positive that we are now starting to see repeat business with
a number of these long range engagements. Progress with
customer-led projects in composites and functional materials is
continuing, although not without technical challenges.
AGM continues to make excellent progress in the development of a
distributor based conduit to market for its products and services
and is able to offer its distribution partners exceptional customer
service in determining the optimum product to meet a customer's
application challenge.
The Board is especially pleased with the approval by ECHA of an
increased powder volume for EU supply. This has addressed a major
barrier to adoption of this new technology in the region and we
continue to support regulatory approval efforts in other regions
globally to help our new distributors grow our sales.
New funding successfully secured in January 2021 gives the
business a cash runway well into 2023, and gives us every
opportunity to push forward in developing a solid platform of sales
from AGM's unique product and technology offering.
Adrian Potts
Chief Executive Officer
24 March 2021
Financial review
with David Blain
Revenue
Revenue for the period was GBP42,000 (2020: GBP35,000) arising
from the supply of production orders of graphene and evaluation
quantities of graphene to commercial partners. Revenues increased
compared to the prior year despite the disruption to trading caused
by COVID-19 throughout the period.
Operating costs
Operating costs for the period were GBP1,688,000 (2020:
GBP2,196,000). The reduction in costs of GBP508,000 includes the
reduction of staff costs of GBP281,000 following the re-alignment
of operations completed in 2019 and the cost of implementing the
re-alignment of GBP168,000, which was incurred in the previous
period.
Loss on ordinary activities before tax
A loss on ordinary activities before tax of GBP1,794,000 (2020:
loss of GBP2,278,000) was recognised.
Loss on ordinary activities before interest, tax, exceptional
costs, depreciation and amortisation (EBITDA)
The EBITDA loss for the Group narrowed to a loss of GBP1,578,000
for the six month period ended 31 January 2021 (2020: loss of
GBP1,900,000). The losses incurred in the period relate to the day
to day costs of the business and include the ongoing costs
associated with research and development of new applications of
graphene together with the technical input provided to our
commercial partners as they look to evaluate and incorporate
graphene into their product lines. The EBITDA loss for the period
under review was GBP322,000 less than the previous period,
primarily due to staff costs falling by GBP281,000 following the
re-alignment of resources completed towards the end of 2019.
Exceptional costs
Exceptional costs recognised in the period were GBPnil (2020:
GBP168,000). The costs incurred in the prior year related to a
re-alignment of the cost base during that period.
Net finance expense
Net finance expense for the period was GBP2,000 (2020: GBP18,000
income), reflecting the falling cash balances and low interest
rates.
Tax
R&D tax credits for the current year are accrued on a
monthly basis, resulting in a credit of GBP178,000 for the period
(2020: GBP300,000).
Earnings per share
Basic earnings per share was a loss of 3.3 pence per share
(2020: loss of 4.0 pence per share). Adjusted basic earnings per
share (before exceptional costs) was a loss of 3.3 pence per share
(2020: loss of 3.7 pence per share).
Dividend
No dividend has been proposed for the period ended 31 January
2021 (2020: GBPnil).
Cash flow
Net cash used in operations was GBP1,294,000 (2020:
GBP2,274,000).
Capital expenditure of GBP106,000 (2020: GBP157,000) was
incurred in the period mainly relating to the development of
intellectual property assets.
Balance sheet
Net assets reduced to GBP3,828,000 (2020: GBP6,661,000),
principally reflecting the trading loss for the period.
Cash at bank at 31 January 2021 was GBP2,291,000 (2020:
GBP4,329,000). Monies are on deposit with a small number of
financial institutions for time periods ranging between instant
access and up to 95 days in maturity. On 12 February 2021 the Group
announced that its shareholders had approved an issue of new shares
which generated cash of GBP5.5 million net of costs and this cash
has subsequently been received. An R&D tax credit of GBP461,000
was also received during February 2021.
The property lease at Wilton was renewed during the period,
resulting in the recognition of an additional Right of Use ("ROU")
asset of GBP197,000 and a lease liability of GBP197,000.
Accounting policies
The Group's consolidated financial information has been prepared
in accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006. The Group's
significant accounting policies, which are consistent with those
set out in the audited financial statements for the year ended 31
July 2020, 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 risk associated with adequacy of funding has
been significantly reduced following the fundraise in February 2021
as this provides funding well into 2023. The other principal risks
and uncertainties remain unchanged from those set out on pages 28
to 31 of the Annual Report for the year ended 31 July 2020.
Forecasting the timing and quantum of revenues at this stage of
development continues to be a key difficulty faced by the Group as
this is heavily dependent upon the product development cycle of our
customers and, therefore, is not under our control. However, we are
encouraged by the growing number of products that our customers
have launched, the expansion of our distribution through new
appointments in 2020 and the strength of our sales pipeline.
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.
David Blain
Chief Financial Officer
24 March 2021
Consolidated income statement and statement of comprehensive
income
for the six months ended 31 January 2021
Unaudited Unaudited Audited
6 months to 6 months to year ended
31 January 31 January 31 July
2021 2020 2020
Note GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ---- ----------- ----------- ----------
Revenue 5 42 35 83
Cost of sales (146) (135) (215)
-------------------------------------------------------- ---- ----------- ----------- ----------
Gross loss (104) (100) (132)
Operating expenses (1,688) (2,196) (3,566)
-------------------------------------------------------- ---- ----------- ----------- ----------
EBITDA (1,578) (1,900) (3,084)
Exceptional costs - (168) (168)
Depreciation of tangible fixed assets (214) (228) (446)
-------------------------------------------------------- ---- ----------- ----------- ----------
Operating loss (1,792) (2,296) (3,698)
Net finance (expense)/income (2) 18 33
-------------------------------------------------------- ---- ----------- ----------- ----------
Loss on ordinary activities before tax 5 (1,794) (2,278) (3,665)
Tax on loss on ordinary activities 3 178 300 476
-------------------------------------------------------- ---- ----------- ----------- ----------
Loss for the period attributable to equity shareholders (1,616) (1,978) (3,189)
Other comprehensive income - - -
-------------------------------------------------------- ---- ----------- ----------- ----------
Total comprehensive loss (1,616) (1,978) (3,189)
-------------------------------------------------------- ---- ----------- ----------- ----------
Earnings per share (pence per share)
Basic 6 (3.3) (4.0) (6.4)
Adjusted 6 (3.3) (3.7) (6.1)
-------------------------------------------------------- ---- ----------- ----------- ----------
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 2021
Share Share Merger Retained Unaudited
capital premium reserve earnings total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- ------- -------- ---------
As at 31 July 2019 989 27,473 1,231 (21,205) 8,488
Comprehensive loss - - - (1,978) (1,978)
IFRS 2 share based payments - - - 150 150
---------------------------- ------- ------- ------- -------- ---------
As at 31 January 2020 989 27,473 1,231 (23,033) 6,660
Comprehensive loss - - - (1,211) (1,211)
IFRS 2 share based payments - - - (164) (164)
---------------------------- ------- ------- ------- -------- ---------
As at 31 July 2020 989 27,473 1,231 (24,408) 5,285
Comprehensive loss - - - (1,616) (1,616)
Issue of shares (net) 5 87 - - 92
IFRS 2 share based payments - - - 67 67
---------------------------- ------- ------- ------- -------- ---------
As at 31 January 2021 994 27,560 1,231 (25,957) 3,828
---------------------------- ------- ------- ------- -------- ---------
Consolidated balance sheet
as at 31 January 2021
Unaudited Unaudited Audited
31 January 31 January 31 July
2021 2020 2020
Note GBP'000 GBP'000 GBP'000
------------------------------ ---- ---------- ---------- --------
Assets
Non-current assets
Intangible assets 369 211 276
Right-of-use assets 148 99 24
Property, plant and equipment 1,268 1,518 1,396
------------------------------ ---- ---------- ---------- --------
1,785 1,828 1,696
------------------------------ ---- ---------- ---------- --------
Current assets
Inventories 77 69 74
Trade and other receivables 236 221 281
Corporation tax recoverable 662 1,000 482
Cash 2,291 4,329 3,685
------------------------------ ---- ---------- ---------- --------
3,266 5,619 4,522
------------------------------ ---- ---------- ---------- --------
Liabilities
Current liabilities
Trade and other payables (1,075) (688) (908)
Lease liabilities (148) (91) (21)
------------------------------ ---- ---------- ---------- --------
(1,223) (789) (929)
------------------------------ ---- ---------- ---------- --------
Net current assets 2,043 4,840 3,593
------------------------------ ---- ---------- ---------- --------
Non-current liabilities
Lease liabilities - (8) (4)
------------------------------ ---- ---------- ---------- --------
Net assets 3,828 6,660 5,285
------------------------------ ---- ---------- ---------- --------
Shareholders' equity
Called up share capital 8 994 989 989
Share premium account 27,560 27,473 27,473
Merger reserve 1,231 1,231 1,231
Retained earnings (25,957) (23,033) (24,408)
------------------------------ ---- ---------- ---------- --------
Equity shareholders' funds 3,828 6,660 5,285
------------------------------ ---- ---------- ---------- --------
Consolidated cash flow statement
for the six months ended 31 January 2021
Unaudited Unaudited Audited
6 months to 6 months to year ended
31 January 31 January 31 July
2021 2020 2020
Note GBP'000 GBP'000 GBP'000
--------------------------------------------- ---- ----------- ----------- ----------
Operating activities
Net cash used in operations 7 (1,294) (2,274) (3,465)
Finance income 13 2 41
Tax received - 623 1,316
--------------------------------------------- ---- ----------- ----------- ----------
Net cash used in operating activities (1,281) (1,649) (2,108)
--------------------------------------------- ---- ----------- ----------- ----------
Investing activities
Purchase of intangible assets (93) (56) (121)
Purchase of property, plant and equipment (13) (101) (221)
--------------------------------------------- ---- ----------- ----------- ----------
Net cash used in investing activities (106) (157) (342)
--------------------------------------------- ---- ----------- ----------- ----------
Financing activities
Issue of shares (net of costs) 71 - -
Capital element of lease obligations (74) - -
Interest element of lease obligations (4) - -
--------------------------------------------- ---- ----------- ----------- ----------
Net cash generated from financing activities (7) - -
--------------------------------------------- ---- ----------- ----------- ----------
Net decrease in net cash and cash deposits (1,394) (1,806) (2,450)
Opening net cash and cash deposits 3,685 6,135 6,135
--------------------------------------------- ---- ----------- ----------- ----------
Net cash and cash deposits at end of period 2,291 4,329 3,685
--------------------------------------------- ---- ----------- ----------- ----------
Net cash and cash deposits include:
--------------------------------------------- ---- ----------- ----------- ----------
Cash (maturity less than 95 days) 2,291 4,329 3,685
--------------------------------------------- ---- ----------- ----------- ----------
Net cash and cash deposits at end of period 2,291 4,329 3,685
--------------------------------------------- ---- ----------- ----------- ----------
Notes to the Interim Report
for the six months ended 31 January 2021
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 24
March 2021.
2 Basis of accounting
The consolidated interim financial information for the period
ended 31 January 2021 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
Accounting Standards in conformity with the requirements of the
Companies Act 2006 and IFRIC interpretations. 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 2020. These
accounting policies are drawn up in accordance with adopted
International Accounting Standards (IAS) and International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board and adopted by the EU.
AIM-quoted companies are not required to comply with IAS 34
Interim Financial Reporting and accordingly the Company has taken
advantage of this exemption.
Further IFRS or interpretations may be issued that could apply
to the Group's financial statements for the year ending 31 July
2021. 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 2021 and for the six months ended 31
January 2020 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 2020 have been
extracted from the audited financial statements.
New and amended standards adopted by the Group
No new or amended standards have been adopted by the Group in
respect of the interim period ended 31 January 2021.
3 Taxation
The Group has not recognised any tax assets in respect of
trading losses from previous financial years. Research and
development tax credits for the period up to 31 January 2021 have
been accrued after having taken into account the anticipated level
of research and development work carried out in the period.
4 Dividends
No dividend has been proposed for the period ended 31 January
2021 (2020: GBPnil).
5 Segmental analysis
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. The Group has one operating segment: the manufacture,
dispersion and development of applications for graphene. 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. As the business evolves this is
an area that will be assessed on a regular basis and additional
segmental reporting will be provided at the appropriate time.
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 to 6 months to year ended
31 January 31 January 31 July
2021 2020 2020
'm 'm 'm
--------------------------------------------------------------- ----------- ----------- ----------
Weighted average number of shares for basic earnings per share 49.6 49.4 49.4
--------------------------------------------------------------- ----------- ----------- ----------
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
earnings per share reconciles to basic earnings as follows:
Unaudited Unaudited Audited
6 months to 6 months to year ended
31 January 31 January 31 July
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- ----------- ----------
Basic earnings (1,616) (1,978) (3,189)
Exceptional costs - 168 168
---------------------------------------------- ----------- ----------- ----------
Adjusted earnings (1,616) (1,825) (3,021)
---------------------------------------------- ----------- ----------- ----------
Earnings per share (pence per share)
Basic (3.3) (4.0) (6.4)
---------------------------------------------- ----------- ----------- ----------
Adjusted earnings per share (pence per share)
Basic (3.3) (3.7) (6.1)
---------------------------------------------- ----------- ----------- ----------
The Group was loss making for the periods ended 31 January 2021
and 31 January 2020 and also for the year ended 31 July 2020.
Diluted loss per share has not been presented above as the effect
of share options issued is anti-dilutive.
7 Notes to the cash flow statement
Unaudited Unaudited Audited
6 months to 6 months to year ended
31 January 31 January 31 July
2021 2020 2020
GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ----------- ----------- ----------
Loss for the period attributable to equity shareholders (1,616) (1,978) (3,189)
Tax on loss (178) (300) (476)
Net finance income 2 (18) (33)
Depreciation of property, plant and equipment 214 228 446
Exceptional costs - 168 168
-------------------------------------------------------- ----------- ----------- ----------
EBITDA (1,578) (1,900) (3,084)
Depreciation of property, plant and equipment (214) (228) (446)
Exceptional costs - (168) (168)
-------------------------------------------------------- ----------- ----------- ----------
Operating loss (1,792) (2,296) (3,698)
Depreciation of tangible fixed assets 214 228 446
IFRS 2 share based payments charge 67 150 (14)
Decrease/(increase) in net working capital 217 (356) (199)
-------------------------------------------------------- ----------- ----------- ----------
Net cash used within operations (1,294) (2,274) (3,465)
-------------------------------------------------------- ----------- ----------- ----------
8 Share capital
Unaudited Unaudited
number of total
Ordinary shares GBP'000
--------------------------------------------------- --------------- ---------
Allotted, called up and fully paid
At 31 July 2019 Ordinary shares of 2 pence each 49,429,380 989
--------------------------------------------------- --------------- ---------
At 31 July 2020 Ordinary shares of 2 pence each 49,429,380 989
New shares issued 274,912 5
--------------------------------------------------- --------------- ---------
At 31 January 2021 Ordinary shares of 2 pence each 49,704,292 994
--------------------------------------------------- --------------- ---------
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 to 6 months to year ended
31 January 31 January 31 July
2021 2020 2020
GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----------- ----------- ----------
University of Durham (shareholder)
Staff secondment, consultancy and other fees - 4 4
--------------------------------------------------- ----------- ----------- ----------
Top Technology Limited (controlled by shareholder)
Non-Executive fees and expenses 8 8 15
Corporate finance fees - - 8
--------------------------------------------------- ----------- ----------- ----------
IP2IPO (shareholder)
Non-Executive Director expenses 8 - 1
--------------------------------------------------- ----------- ----------- ----------
Remuneration of key management personnel
The remuneration of the Directors and 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 to 6 months to year ended
31 January 31 January 31 July
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------------------------- ----------- ----------- ----------
Short term employee benefits (excluding bonuses) 407 373 772
Payments to third parties 8 15 15
IFRS 2 share based payments charge 67 150 (14)
------------------------------------------------- ----------- ----------- ----------
482 538 773
------------------------------------------------- ----------- ----------- ----------
10 Seasonality
The Group experiences no material variations in performance
arising due to seasonality.
11 Post balance sheet events
On 12 February 2021 the Group announced that its shareholders
had approved an issue of 14,634,146 new Ordinary shares of 2 pence
each which generated cash of GBP5.5 million net of costs and this
cash has subsequently been received.
An R&D tax credit of GBP461,000 was received during February
2021.
11 Availability of Interim Report
It is anticipated that the Interim Report will be sent to all
shareholders on 7 April 2021. Electronic copies of the report will
also be available on Applied Graphene Materials' website at
www.appliedgraphenematerials.com.
Glossary of terms
Term Meaning
------------------------- -------------------------------------------------------------------------------------------
Anti-corrosion A type of coating made with neutral or slightly alkaline pigments and a water resisting
vehicle
for use as a primer on steel and other metals to prevent or inhibit corrosion
------------------------- -------------------------------------------------------------------------------------------
Barrier system A method of preventing corrosion by using barrier materials within the coating that
restrict
the movement of water and other chemicals towards the metal surface
------------------------- -------------------------------------------------------------------------------------------
Coat/coating When used as a verb, "coat" means to cover or apply; as a noun, the word signifies the
amount
of finishing material applied to a surface during one or more applications without a drying
period between applications
------------------------- -------------------------------------------------------------------------------------------
Composites A material made up of resin and reinforcement
------------------------- -------------------------------------------------------------------------------------------
Conductive inks An ink that results in a printed object which conducts electricity
------------------------- -------------------------------------------------------------------------------------------
Conductivity - electrical The degree to which a specified material conducts electricity, calculated as the ratio of
the current density in the material to the electric field which causes the flow of current
------------------------- -------------------------------------------------------------------------------------------
Conductivity - thermal The rate at which heat passes through a specified material, expressed as the amount of heat
that flows per unit time through a unit area with a temperature gradient of one degree per
unit distance
------------------------- -------------------------------------------------------------------------------------------
Dispersion A mixture in which very small pieces of one substance are scattered within another
substance
------------------------- -------------------------------------------------------------------------------------------
Elasticity The property of a film that allows it to stretch or otherwise change size or shape and
return
to its original condition without breaking or rupturing
------------------------- -------------------------------------------------------------------------------------------
Fracture toughness Resistance to cracks, crazing or delamination resulting from physical damage
------------------------- -------------------------------------------------------------------------------------------
Functional fluids Sustainable base oil products - enhanced with graphene nanoplatelets - offer exceptional
performance,
and friction and wear protection, especially for lubricants and machining fluids used in
automotive
and industrial applications
------------------------- -------------------------------------------------------------------------------------------
Mechanical Strength, hardness, toughness, elasticity, plasticity, brittleness, ductility and
malleability
are mechanical properties used as measurements of how materials behave under a load
------------------------- -------------------------------------------------------------------------------------------
NATEP National Aerospace Technology Programme
------------------------- -------------------------------------------------------------------------------------------
Polymer A long-chain molecule, consisting of many repeat units
------------------------- -------------------------------------------------------------------------------------------
Prepreg A factory-made combination of reactive resins and reinforcing fibres, plus other necessary
additive chemicals, ready to be moulded
------------------------- -------------------------------------------------------------------------------------------
Primer A substance used as a preparatory coat on wood, metal or canvas, especially to prevent the
absorption of subsequent layers of paint or the development of rust
------------------------- -------------------------------------------------------------------------------------------
Resin system A polymer with indefinite and often high molecular weight and a softening or melting range
that exhibits a tendency to flow when subjected to stress
------------------------- -------------------------------------------------------------------------------------------
Substrate A material which provides the surface on which something is deposited or inscribed
------------------------- -------------------------------------------------------------------------------------------
Thermal paste adhesive A thermally conductive paste applied to mating surfaces to bond them together by surface
attachment
in order to transfer heat across the materials
------------------------- -------------------------------------------------------------------------------------------
Tie coat Paint specifically formulated for situations and conditions to provide a transition from a
primer or undercoat to a finish coat. Tie coats are used to seal the surface of a zinc-rich
primer, to bond generically different types of coatings, or to improve the adhesion of a
succeeding
coating
------------------------- -------------------------------------------------------------------------------------------
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IR UOUARAAUOUUR
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