TIDMAGM
RNS Number : 1260C
Applied Graphene Materials PLC
11 April 2017
11th April 2017
Applied Graphene Materials plc
("Applied Graphene Materials", "the Group" or "the Company")
Interim results for the six months ended 31 January 2017
Applied Graphene Materials, the producer of specialty graphene
materials, is pleased to announce its interim results for the
period ended 31 January 2017.
Operational highlights
-- First graphene production orders received from Century
Composites for inclusion in a range of fishing rods
-- Initial orders from SHD Composites for launch of MTC9800, a
series of graphene enhanced pre-impregnated materials
-- Collaboration with Airbus Space and Defence for satellite
application with adoption expected in 2018
-- Progressing final formulations with James Briggs Ltd for inclusion in aerosol primers
-- Over 110 evaluation samples provided in the period, including 35 to new customers
-- Increased intellectual property and know-how with further
expansion of our graphene nanoplatelet product range
-- Strengthened management and commercial teams across key areas
-- Initiation of modular product capacity expansion to meet anticipated near term demand
Financial overview
-- EBITDA* Loss of GBP2.0 million (2016: loss of GBP2.1
million)
-- Loss before tax Loss of GBP2.1 million (2016: loss of GBP2.3 million)
-- Cash at bank GBP5.6 million (2016: GBP10.2 million)
-- Diluted EPS Loss of 9.3 pence per share (2016: loss of 13.2 pence)
* EBITDA comprises loss on ordinary activities before interest,
tax, exceptional costs, depreciation and amortisation.
Jon Mabbitt, Chief Executive Officer, commented:
"We have made strong progress during the period in the key areas
of graphene formulation know-how and further strengthening of our
commercial pipeline as we pursue volume production orders. In
October we were pleased to announce our first production order and
since then we have received additional production requirements. We
continue to focus on the three core market sectors where we believe
our products can add most value and where we see large scale and
long term commercial opportunity.
Excellent progress has been made on scaling up of the Group's
production facilities to increase manufacturing capacity to meet
demand from early adopters and work is underway to further increase
our capacity over the coming months.
Applied Graphene Materials is wholly focused on graphene
material production and assisting its adoption by end users. We are
differentiated from other producers of graphene by our ability to
cost-effectively produce a tailored portfolio of graphene
nanoplatelets, underpinned by our understanding of how to best
unlock and transfer optimal material enhancements into host
materials."
Ends
Applied Graphene Materials' results presentation, with audio
commentary, will be available on our website at
http://www.appliedgraphenematerials.com by 12th April 2017.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
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 / Nick Owen
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, initially raising GBP11 million.
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
The Board is very pleased to report that Applied Graphene
Materials received its first production order in October 2016 and
since then has continued to expand its customer base and increase
its commercial pipeline. Applied Graphene Materials remains
singularly focused on exploiting the application technology arising
from its proprietary manufacturing processes and graphene
formulation know-how. The formulation expertise is being widely
appreciated by our customers and development partners and our
commitment to extend this capability is enabling us to become one
of the go-to graphene nanoplatelet providers in Europe, the USA and
many parts of Asia. The depth of our customer engagements has
provided sufficient confidence in the prospective demand for our
graphene that we have committed to expanding our capacity in a
modular fashion such that we will be able to satisfy any short term
additional demand.
As the business has continued to develop, the Board has
recognised the need to ensure that critical roles are filled to
ensure that the business has sufficient resources to meet its
customer demands in the coming period. In the six months to 31
January 2017, we have recruited a number of key commercial roles,
further strengthening our industry knowledge and geographical
reach.
In addition, further to the announcement on 25 January 2017, we
are pleased to have welcomed Gareth Jones to the Board as Chief
Financial Officer.
Commercial progress
During the period, we have continued to expand our pipeline of
commercial opportunities in our three core target market sectors of
coatings, composites and oils and lubricants. In these markets we
see large scale commercial opportunities and believe that our
graphene will add the most value. We are working closely with our
development partners, several of which are leaders in their
respective industries. In addition, whilst remaining focused on our
core target markets, we have identified a limited number of
specific opportunities in niche areas where we believe graphene can
provide multifunctional benefits.
Our focus remains on converting opportunities with existing
commercial partners to production orders, whilst at the same time
establishing new joint development agreements and collaborations.
Importantly, our pipeline of opportunities has grown substantially;
although, given their nature, the vast majority of our customer
engagements remain subject to commercial confidentiality.
The results of our work to date confirm that graphene has the
potential to deliver truly disruptive technologies with
applicability across many market sectors. Applied Graphene
Materials remains focused on those markets and applications where
we believe that the characteristics of our material are best suited
to address customer requirements. In the near term, we are
accessing our core target markets through graphene formulated using
our know-how and formulation techniques, ideally added in a
"plug-and-play" manner to existing customer processes or with
minimum change, which helps to reduce the time to commercial
adoption.
The process of customer acceptance and approval of our products
is dynamic and continues to vary in duration by both market sector
and its intended end use; however, we are seeing good progress. For
example, the initial engagement with Century Composites began one
year prior to the product's adoption in their range of fishing
rods. However, given the initial success, they are now extending
the adoption of our material into other rods. Similarly, our
engagement with Airbus Space and Defence began in late 2015 and,
following 18 months of product development work and data
generation, they are now looking to fully qualify the material so
it can be included in satellites scheduled to be launched in
2018.
Coatings
In the field of paints and coatings, application areas are wide
ranging and include marine, aerospace, automotive, defence,
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 continue
to work closely with a range of customers, including global
leaders, who are looking to include graphene in their existing
formulations to improve barrier properties, particularly in primer
layers. In addition, we are working on certain top coat
applications where electrical performance is beneficial, such as
the reduction of dirt pick up and in cases where barrier properties
can assist with stain resistance. As previously disclosed, we are
working on a joint development with James Briggs Ltd, a highly
innovative formulator and supplier of aerosol paints and high
performance materials across numerous markets. We are currently
progressing final formulations for the intended inclusion of our
graphene nanoplatelets in high performance aerosol paint
primers.
Naturally, the stage of development varies from client to
client, but we are well advanced with several partners who are in
the later stages of incorporation prior to product launch. Graphene
has the ability to provide both performance improvements as well as
potential cost and environmental benefits. Utilising graphene
requires very little addition by weight, due to the extremely high
surface area of the nanoparticles, meaning that the graphene can be
added with relatively little change to the existing coating
formulation. Legislative directives are forcing re-formulation to
remove zinc phosphate and strontium chromate as active ingredients
in existing primers. This is creating a desire from the coatings
industry to seek environmentally acceptable alternatives to these
products. We remain confident that our graphene additives can win a
proportion of this opportunity, providing cost savings and
environmental benefits to the end user.
Composites
Applied Graphene Materials' management team has in-depth
knowledge and strong relationships across the EUR7 billion
composite materials market where we are vigorously pursuing a
multiple channel approach. The main driver for inclusion of
graphene has been to improve the toughening of the resin matrix.
Customer trials with the likes of UWS and Spirit AeroSystems have
also demonstrated encouraging improvements to inter-laminar shear
strength, where the introduction of graphene is acting to knit
together the individual composite layers.
We have successfully supplied sample quantities of our graphene
pre-dispersed in epoxy resins to formulators and are now pushing
forward with both intermediate material supply companies and end
users who are interested in benefiting from these performance
gains. SHD Composites has launched a range of pre-impregnated
(prepreg) products, MTC9800, which are being supplied to potential
users.
During the period, we were pleased to announce our first
production orders with Century Composites who successfully included
graphene impregnated composites into its newly launched carp rod
and the range of rods has now been expanded, leading to further
orders of graphene.
Early areas of adoption beyond the sports goods sector are
expected to include motorsport, as well as some portion of the
aerospace, automotive, energy and marine sectors. The collaborative
project partially funded by National Aerospace Technology
Exploitation Programme (NATEP) is nearing its initial phase of
completion and has yielded some interesting results which we also
hope to exploit in the near future. Producing tougher, lighter and
more damage tolerant composite structures, through the development
of novel graphene processing and deployment techniques, could lead
to significantly lower operating costs for the aerospace
industry.
Lubricants
In the functional fluids sector we continue to closely support
Puraglobe and Millers Oils, our two publicly disclosed joint
development agreements, to help identify how and where to
incorporate graphene materials into their products.
Due to the high specific surface area and heat and electrical
conductive nature of graphene, we have a number of new engagements
to look at use in lightweight battery applications. We have also
successfully formulated some conductive inks that can be processed
on traditional printing equipment to deliver circuitry. In other
new engagements it is our customers who are identifying where
graphene is proving beneficial and we are solely providing product
support rather than in-depth market knowledge.
Technology and manufacturing
The Group owns the intellectual property for its proprietary
production processes which are protected by existing patents and
patent applications. Using these processes, Applied Graphene
Materials has the ability to produce nanoplatelets to suit the
specific application through our range of manufacturing processes
and formulation know-how. The method of production used to create
graphene nanoplatelets has a significant impact on the graphene's
properties and it is therefore highly advantageous to be able to
tailor the nanoplatelets to optimise the target properties for
specific applications.
Understanding the mechanisms of property translation from
nanoplatelets to bulk properties is essential to being able to
optimally influence the enhancements that can be achieved in end
products. Transferring the benefits of graphene is difficult and
the know-how around formatting graphene, combined with the use of
appropriate techniques for inclusion in the host material, is
absolutely critical. Applied Graphene Materials has a toolbox of
technologies that are utilised in order to optimally format
graphene, and this knowledge base continues to be developed for the
benefit of our commercial partners.
Over the last two years, we have refined and improved our
production processes and made significant 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 areas of demand. This approach is highly flexible and
more capital efficient than the expansion process originally
envisaged. We have established robust control systems and have
proven our ability to scale up the processes without affecting
product quality.
Outlook
Our focus is on putting formatted graphene into our customers'
hands which can be readily adopted into their production processes
and bring performance enhancement benefits. The breadth and depth
of our customer engagements has set the foundations for a long
term, stable and highly attractive business. Significant progress
has been made during the first half and we are confident in
maintaining this momentum. 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
11th April 2017
Financial review
Revenue
Revenue for the period was GBP53,000 (2016: GBP18,000) arising
from the supply of evaluation quantities of graphene to commercial
partners and our first production orders.
Other income
Other income, which comprises grant income, was GBP115,000
(2016: GBP65,000). 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 GBP2,053,000 (2016:
loss of GBP2,326,000) was recognised. The prior year loss includes
exceptional costs of GBP161,000 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 GBP2,108,000 in 2016
to a loss of GBP1,957,000 for the period ended 31 January 2017.
This reduction in losses reflects additional revenue derived from
working with commercial partners, generation of material
performance data and grants, together with the continued close
management of costs.
Exceptional costs
Exceptional costs recognised in the period were GBPnil (2016:
GBP161,000). The prior 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 GBP22,000 (2016:
GBP18,000). The increase in net finance income arises from having
higher cash balances on deposit during the period.
Loss on ordinary activities before tax, exceptional costs and
amortisation (PBTA)
PBTA for the period improved from a loss of GBP2,165,000 in 2016
to a loss of GBP2,053,000 for the period ended 31 January 2017.
This reduction in losses reflects ongoing progress made working
with commercial partners together with the receipt of additional
grant funding. The business has continued to invest in its
production capabilities and business infrastructure, including
headcount, to support the anticipated future growth and development
of the business.
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 9.3 pence per share
(2016: loss of 13.2 pence per share). Adjusted diluted earnings per
share (before exceptional costs) was a loss of 9.3 pence per share
(2016: loss of 12.3 pence per share).
Dividend
No dividend has been proposed for the period ended 31 January
2017 (2016: GBPnil).
Cash flow
Net cash used in operations was GBP2,040,000 (2016:
GBP2,122,000). During the period, net working capital utilised
increased by GBP161,000 (2016: reduction of GBP34,000). This
increase principally relates to a reduction in trade creditors and
accruals.
Capital expenditure of GBP272,000 (2016: GBP408,000) 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 GBP145,000 (2016:
GBP8,031,000).
Balance sheet
Net assets have reduced to GBP6,682,000 (2016: GBP10,408,000),
principally reflecting the trading loss for the period.
Cash at bank at 31 January 2017 was GBP5,554,000 (2016:
GBP10,231,000). 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 2016, 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 still at an
early stage of development and the success of the Group will depend
on the acceptance and attribution of value to graphene materials
produced by the business. There can be no guarantee that either
acceptance of graphene or attribution of value will be at
anticipated levels or indeed forthcoming.
-- Early stage of operations - existing capacity and scale up.
The Group has not yet demonstrated its technology at either
nameplate production capacity or increased capacities and is
planning to further scale up its production processes. There can be
no guarantee that scaled-up production processes will be
operational to any anticipated timeframe or budget. Furthermore,
the operation of the Group's production processes following
scale-up involves risks and uncertainties beyond the Group's
control. Failure to operate at either current or increased
nameplate capacities would adversely impact the Group's business
and financial position.
-- 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, 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.
-- Commercialisation, competition and pricing - technological
advances may impede the commercial progress of graphene and may
also result in worldwide production capacity exceeding demand. This
could adversely impact the price of, and demand for, graphene.
There is no guarantee that graphene will become an accepted
material for use on a commercial scale or that demand for graphene
will develop at all. The Group may also be unsuccessful in its
efforts to realise benefits from the commercialisation of graphene.
In such situations, the Group's business and financial position
would be adversely impacted.
-- Adequacy of financial resources - the available funding
required to support the business through to profitability and cash
generation may be insufficient. Currently, it is expected that
additional capital will be required in future to fund the business.
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 may
result in a loss of control and may adversely impact the Group's
ability to operate effectively and to fulfil its contractual
obligations.
-- 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
11th April 2017
Consolidated income statement and statement of comprehensive
income
for the six months ended 31 January 2017
Unaudited Unaudited Audited
6 months 6 months year
to to ended
31 January 31 January 31 July
2017 2016 2016
Note GBP'000 GBP'000 GBP'000
--------------------------------- ---- ---------- ---------- -------
Revenue 5 53 18 75
Other income 115 65 177
--------------------------------- ---- ---------- ---------- -------
168 83 252
Cost of sales (189) (214) (397)
--------------------------------- ---- ---------- ---------- -------
Gross loss (21) (131) (145)
Operating expenses (2,054) (2,213) (4,429)
--------------------------------- ---- ---------- ---------- -------
EBITDA (1,957) (2,108) (4,155)
Exceptional costs - (161) (250)
Depreciation of tangible
fixed assets (118) (75) (169)
Operating loss (2,075) (2,344) (4,574)
Net finance income 22 18 55
--------------------------------- ---- ---------- ---------- -------
PBTA (2,053) (2,165) (4,269)
Exceptional costs - (161) (250)
Loss on ordinary activities
before tax 5 (2,053) (2,326) (4,519)
Tax on loss on ordinary
activities 3 - - 175
--------------------------------- ---- ---------- ---------- -------
Loss for the period attributable
to equity shareholders (2,053) (2,326) (4,344)
Other comprehensive income - - -
--------------------------------- ---- ---------- ---------- -------
Total comprehensive loss (2,053) (2,326) (4,344)
--------------------------------- ---- ---------- ---------- -------
Earnings per share (pence
per share)
Basic 6 (9.3) (13.2) (22.0)
Diluted 6 (9.3) (13.2) (22.0)
--------------------------------- ---- ---------- ---------- -------
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 2017
Share Share Merger Retained Unaudited
capital premium reserve earnings total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------- ------- ------- -------- ---------
As at 31 July
2015 340 10,309 1,231 (7,290) 4,590
Comprehensive
loss - - - (2,326) (2,326)
IFRS 2 share
based payments - - - 113 113
Issue of shares
(net) 97 7,934 - - 8,031
As at 31 January
2016 437 18,243 1,231 (9,503) 10,408
Comprehensive
loss - - - (2,018) (2,018)
IFRS 2 share
based payments - - - 122 122
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
----------------- ------- ------- ------- -------- ---------
Consolidated balance sheet
as at 31 January 2017
Unaudited Unaudited Audited
31 January 31 January 31 July
2017 2016 2016
Note GBP'000 GBP'000 GBP'000
--------------------------------- ---- ---------- ---------- --------
Assets
Non-current assets
Intangible assets 97 - 97
Property, plant and equipment 1,575 1,064 1,503
1,672 1,064 1,600
--------------------------------- ---- ---------- ---------- --------
Current assets
Inventories 38 40 38
Trade and other receivables 234 158 209
Cash deposits - 5,589 1,500
Cash 5,554 4,642 6,202
--------------------------------- ---- ---------- ---------- --------
5,826 10,429 7,949
--------------------------------- ---- ---------- ---------- --------
Liabilities
Current liabilities
Trade and other payables (816) (1,085) (1,037)
(816) (1,085) (1,037)
--------------------------------- ---- ---------- ---------- --------
Non-current liabilities
Provisions for other liabilities -
and charges - -
--------------------------------- ---- ---------- ---------- --------
- - -
--------------------------------- ---- ---------- ---------- --------
Net assets 6,682 10,408 8,512
--------------------------------- ---- ---------- ---------- --------
Shareholders' equity
Called up share capital 8 442 437 437
Share premium account 18,383 18,243 18,243
Merger reserve 1,231 1,231 1,231
Retained earnings (13,374) (9,503) (11,399)
--------------------------------- ---- ---------- ---------- --------
Equity shareholders' funds 6,682 10,408 8,512
--------------------------------- ---- ---------- ---------- --------
Consolidated cash flow statement
for the six months ended 31 January 2017
Unaudited Unaudited Audited
6 months 6 months year
to to ended
31 January 31 January 31 July
2017 2016 2016
Note GBP'000 GBP'000 GBP'000
---------------------------------- ---- ---------- ---------- -------
Operating activities
Net cash used in operations 7 (2,040) (2,122) (4,184)
Net finance income 19 21 44
Tax received - - 189
---------------------------------- ---- ---------- ---------- -------
Net cash used in operating
activities (2,021) (2,101) (3,951)
---------------------------------- ---- ---------- ---------- -------
Investing activities
Purchase of intangible assets - - (97)
Purchase of property, plant
and equipment (272) (408) (990)
Net cash used in investing
activities (272) (408) (1,087)
---------------------------------- ---- ---------- ---------- -------
Financing activities
Net proceeds from issue of
Ordinary shares 145 8,031 8,031
Net cash generated from financing
activities 145 8,031 8,031
---------------------------------- ---- ---------- ---------- -------
Net increase/(decrease) in
net cash and cash deposits (2,148) 5,522 2,993
Net cash and cash deposits
at 31 July 2016 7,702 4,709 4,709
Net cash and cash deposits
at 31 January 2017 5,554 10,231 7,702
---------------------------------- ---- ---------- ---------- -------
Net cash and cash deposits
include:
---------------------------------- ---- ---------- ---------- -------
Cash deposits (maturity greater
than three months) - 5,589 1,500
Cash (maturity less than three
months) 5,554 4,642 6,202
---------------------------------- ---- ---------- ---------- -------
Net cash and cash deposits
at 31 January 2017 5,554 10,231 7,702
---------------------------------- ---- ---------- ---------- -------
Notes to the Interim Report
for the six months ended 31 January 2017
1 General information
The principal activity of Applied Graphene Materials plc is the
manufacture of, 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 11
April 2017.
2 Basis of accounting
The consolidated interim financial information for the period
ended 31 January 2017 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 with 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 2016.
Further IFRS standards or interpretations may be issued that could
apply to the Group's financial statements for the year ending July
2017. 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 the 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 2017 and for the six months ended 31
January 2016 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 2016 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
2017 (2016: 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
2017 2016 2016
'm 'm 'm
---------------------------------- ---------- ---------- -------
Weighted average number of shares
for basic earnings per share 22.1 17.6 19.7
---------------------------------- ---------- ---------- -------
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
2017 2016 2016
GBP'000 GBP'000 GBP'000
---------------------------------------------- ---------- ---------- -------
Basic earnings (2,053) (2,326) (4,344)
Adjustments for taxation - - -
Exceptional costs - 161 250
Adjusted earnings (2,053) (2,165) (4,094)
---------------------------------------------- ---------- ---------- -------
Earnings per share (pence per share)
Basic (9.3) (13.2) (22.0)
Diluted (9.3) (13.2) (22.0)
---------------------------------------------- ---------- ---------- -------
Adjusted earnings per share (pence per share)
Basic (9.3) (12.3) (20.8)
Diluted (9.3) (12.3) (20.8)
---------------------------------------------- ---------- ---------- -------
The Group was loss making for the periods ended 31 January 2017
and 31 January 2016 and also for the year ended 31 July 2016.
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
2017 2016 2016
GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- -------
Loss for the period attributable
to equity shareholders (2,053) (2,326) (4,344)
Tax on loss - - (175)
Net finance income (22) (18) (55)
Depreciation of property, plant
and equipment 118 75 169
Exceptional costs - 161 250
----------------------------------- ---------- ---------- -------
EBITDA (1,957) (2,108) (4,155)
Depreciation of property, plant
and equipment (118) (75) (169)
Exceptional costs - (161) (250)
----------------------------------- ---------- ---------- -------
Operating loss (2,075) (2,344) (4,574)
Depreciation of tangible fixed
assets 118 75 169
IFRS 2 share based payments charge 78 113 235
(Increase)/Decrease in net working
capital (161) 34 (14)
----------------------------------- ---------- ---------- -------
Net cash used within operations (2,040) (2,122) (4,184)
----------------------------------- ---------- ---------- -------
8 Share capital
Unaudited Unaudited
number total
of Ordinary
shares GBP'000
-------------------------------- ----------- ---------
Allotted, called up and fully
paid
At 31 July 2015 Ordinary shares
of 2 pence each 17,014,216 340
Issued on 8 January 2016 4,858,335 97
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
-------------------------------- ----------- ---------
At 31 January 2017 Ordinary
shares of 2 pence each 22,121,857 442
-------------------------------- ----------- ---------
On 8 January 2016, 4,858,335 Ordinary shares of 2 pence each
were issued at a price of GBP1.75 per share to institutional and
other investors.
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.
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
2017 2016 2016
GBP'000 GBP'000 GBP'000
University of Durham (shareholder)
Staff secondment, consultancy and
other fees 22 20 59
Top Technology Limited (controlled
by shareholder)
Non-Executive fees and expenses 8 8 20
Corporate finance fees - 26 26
----------------------------------- ---------- ---------- -------
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
2017 2016 2016
GBP'000 GBP'000 GBP'000
Short term employee benefits (excluding
bonuses) 303 364 732
Payments to third parties 8 8 15
IFRS 2 share based payments charge 78 76 182
389 448 929
---------------------------------------- ---------- ---------- -------
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 28 April 2017. 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 URUBRBWASAAR
(END) Dow Jones Newswires
April 11, 2017 02:00 ET (06:00 GMT)
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