TIDMGPL
RNS Number : 2471B
Graft Polymer (UK) PLC
30 September 2022
This announcement contains inside information for the purposes
of Article 7 of EU Regulation No. 596/2014, which forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018 (as amended).
30 September 2022
Graft Polymer (UK) Plc
("Graft Polymer", the "Company", and together with its
subsidiaries, the "Group")
Interim Financial Results
Graft Polymer (UK) Plc (LSE: GPL), a business focused on the
development and commercial production of polymer modification
products, biological supplements, and nano-drug delivery systems,
is pleased to announce its interim results for the period ended 30
June 2022.
Highlights
-- Successful admission to trading on the London Stock Exchange
following the Company raising GBP5,000,000 before costs;
-- Cashflow positive operational status achieved through organic
growth at the Company's production facility in Slovenia;
-- Granted a HACCP certificate for production at the Slovenian
facility enabling the Company to enter the B2C market;
-- First large commercial purchase order received since IPO for
50,000 units of ArtemiC(TM) Rescue from MGC Pharmaceuticals;
-- Pre-payments made on tailor-made equipment at lower than
original forecast costs which are expected to be installed in the
coming weeks and will double the Company's production capacity;
and
-- Strong cash reserves and nil debt, net GBP2m net cash in the bank post totalCAPEX spend.
For further information on the Company please visit
www.graftpolymer.com or contact :
Roby Zomer (Chairman) Graft Polymer V ia St Brides Partners
/ Yifat Steuer (FD) (UK) plc
J ames Pope / Andy Thacker Turner Pope Investments Tel: +44 (0)20 3 657 0050
(Broker)
------------------------ -----------------------------------
Catherine Leftley / St Brides Partners graftpolymer@stbridespartners.co.uk
Ana Ribeiro / Max Bennett Ltd,
Financial PR
------------------------ -----------------------------------
Chairman's Statement
I am pleased to present a review of our activities for the six
months to 30 June 2022 for Graft Polymer (UK) Plc ('Graft Polymer'
or the 'Company' or the 'Group'), in possibly the most significant
period in the Company's history to date, following our IPO on the
London Stock Exchange in January this year. The team at Graft
Polymer have been working tirelessly to carry forward the strong
progress made following its successful raise of GBP4.15 million,
achieving a number of key objectives that we set out to do at the
time of the listing.
By way of a reminder of Graft Polymer's business, having
developed a proprietary set of polymer modification technologies,
which uses recycled raw materials and a closed loop system to
reduce plastic waste by up to 50 per cent, our technology can
improve existing products and processing methodologies by enhancing
performance, simplifying manufacturing, reducing material
consumption, widening the choice of feedstocks, and reducing costs.
Our motto, "combine the incompatible", reveals the essence of Graft
Polymer's business; the use of a diverse range of modification
technologies to combine immiscible and incompatible components into
polymer composites.
The progress of the Company's GraftBio division in the period
under review has been particularly successful, having been granted
a Hazard Analysis and Critical Control Point ('HACCP') certificate
at the Slovenian R&D facility which will enable the Group to
enter the B2C market, commercialising its IP for bio/pharma
applications, developing drug carriers for use in the pharma and
the food supplement markets, thereby introducing a further revenue
stream to its business.
Following on from this, post period end, the GraftBio division
received its first large commercial purchase order since IPO for
50,000 units of ArtemiC(TM) Rescue from MGC Pharmaceuticals, to be
sold in the US, a significant milestone for the GraftBio division
and the rest of the Group. Production commenced immediately with
funds expected to be remitted upon delivery of the product in the
coming weeks. The Group anticipates follow on orders in the coming
quarters and the ability for the GraftBio proprietary drug delivery
system division to licence and produce a wide range of products for
pharmaceutical clients, like MGC Pharma, and many other customers
and industries going forward, demonstrates the diverse nature of
our technology.
It is the nature of our industry to be constantly researching
and developing to find the most efficient way to design and develop
products. Whether this is through innovations of the product itself
or through the production facility, where the Group switched to a
two-shift operation to ensure order fulfilment, and with further
investment in production line and laboratory equipment upgrades
planned to maximise output to 6,000 tonnes per annum, doubling the
existing capacity. These upgrades also provide a boon to Graft
Polymer as they have come at a lower than budgeted price. These
planned upgrades will greatly increase the profitability of the
facility and will enable further R&D.
Very importantly with respect to the Company's commercial
operations, the Slovenian manufacturing facility has also recently
achieved cash flow positive status through organic growth alone,
showcasing Graft Polymer's unique position within the industry.
Boasting a very experienced board of directors, Graft Polymer is in
an ideal situation to utilise the board's skills and knowledge to
further augment the Company's growth and achieve the rest of the
goals set out in the prospectus and beyond.
One of the Group's core strategies is the development of its
intellectual property ('IP'). The development of our innovative IP
pipeline is a significant growth driver and recently we have had
seven patents granted in the period, five of which were in the EU,
which boasts some of the strongest IP laws in the world, ensuring
GP's proprietary products are well protected meaning the Group can
continue to innovate and develop new products.
As a reminder of the Company's operations, Graft Polymer has two
main divisions that aim to create maximum value for the company,
boost revenue through diversification, and enhance Graft Polymer's
strong IP strategy.
Polymer Modification
The Company's first division has been very successful since the
Company IPO'd. The polymer division offers a diverse range of
products that combine immiscible and incompatible components
creating unique solutions for the Group's clients. As the Group is
a newly listed company, it offers certain benefits over some of the
more established players in the polymer field such as agility and
flexibility. The Group can create bespoke and niche products for
nearly any market/industry and has a long pipeline of potential
clients with customer trials currently underway that if successful
will offer a good source of revenue as well as repeat custom.
Only six months into trading, the development and manufacturing
facility in Slovenia became cash flow positive representing a key
financial and strategic milestone for the Company, and will, in
turn, allow more extensive R&D into new products further
enhancing profitability and the Group's reputation as a company
that offers a wider and more unique range of products than other
competitors in the market.
GraftBio
The GraftBio division is the second spinout from Graft Polymer
which is targeting pharmaceutical companies with its proprietary
Drug Delivery System ('DDS') that aims to reduce dosage frequency
and mitigate unwanted side effects. The DDS has already been put to
good effect with a successful pre-clinical trial from MGC
Pharmaceuticals Ltd ('MGC Pharma') to treat Glioblastoma multiforme
cells which is a fast-growing and aggressive form of brain
cancer.
Separately Graft Polymer received its first US market commercial
order for 50,000 units of ArtemiC(TM) Rescue, a nutraceutical which
has been used to treat patients suffering from moderate Covid-19
showcasing the wide range of applications GPL's DDS can be used
for.
The GraftBio division is particularly exciting for the Company
as it is expected to be more profitable than the polymer division,
with the belief that it can generate gross margins of around 60 per
cent, furthermore, it is predicted to be less seasonal than the
polymer division which is generally quieter during the summer
period which will create a counterbalance to the workloads and
maximise productivity throughout the year.
The GraftBio division also has a spinoff Bio-Supplement division
which has been made possible through the granting of the HACCP
certificate, which has enabled the Company to enter the lucrative
business-to-Consumer ('B2C') market. The Bio-Supplement division
further diversifies GPL's business and adds another revenue stream
in the particularly lucrative supplement market that has been
valued at US$ 71.81B in 2021 and is projected to grow to US$
128.64B by 2028.
Outlook
Despite the onset of the tragic war in Ukraine and the supply
shortages and supply chain issues that have occurred, the outlook
for Graft Polymer remains largely positive, having reached cashflow
positive at the Slovenian facility through organic growth alone
represents a major milestone and a good anchor point which will
allow GPL to continue its cutting-edge innovation whilst also
having a strong basis of revenue to rely on. In the short-term
production capacity at the Slovenian facility will be expanded
which will nearly double the output and allow more orders to be
fulfilled, further increasing revenue and company awareness.
It is an exciting period for the Group as it has many
opportunities ahead of it in terms of its new division, cash flow
positive status and large client pipeline. I am very much looking
forward to updating the market with our progress. I would like to
use this opportunity to thank all the team for their hard work and
the considerable progress that has been made since listing.
Roby Zomer
Chairman
29 September 2022
Interim Financial Statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2022
Unaudited Unaudited
Six months Six months
Note to 30 Jun to 30 Jun
2022 2021
GBP'000 GBP'000
--------------------------- ------- ------------ ------------
Continuing operations
Revenue 3 331 226
Cost of sales (177) (82)
--------------------------- ------- ------------ ------------
Gross profit 154 144
Other income 15 1
Operational costs (155) (137)
Administrative
expenses (783) (365)
--------------------------- ------- ------------ ------------
Operating loss 4 (769) (357)
Depreciation (41) (45)
Finance costs (5) (5)
--------------------------- ------- ------------ ------------
Loss before taxation (815) (407)
Income tax - -
--------------------------- ------- ------------ ------------
Loss for the period
from continuing
operations (815) (407)
Total loss for
the period attributable
to equity holders
of the parent
Other comprehensive
(loss)/income - (8)
--------------------------- ------- ------------ ------------
Total comprehensive
loss for the period
attributable to
equity holders
of the parent (815) (415)
=========================== ======= ============ ============
Loss per share
(p) 5 (0.79) (0.58)
=========================== ======= ============ ============
Interim Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL Unaudited Audited
POSITION AS AT 30 June 2022 30 Jun 2022 31 Dec 2021
Note GBP'000 GBP'000
--------------------------------------- -----
Non-current assets
Property, plant and equipment 6 324 310
Intangible assets 7 2,068 2,068
Other non-current assets 13 12
Total non-current assets 2,405 2,390
--------------------------------------- -----
Current assets
Cash and cash equivalents 3,043 598
Trade and other receivables 9 347 142
--------------------------------------- -----
Total current assets 3,390 740
--------------------------------------- ----- ------------- --------------
TOTAL ASSETS 5,795 3,130
======================================= ===== ============= ==============
Equity attributable to owners of
the parent
Issued share capital 12 41 7
Share premium 7,001 942
Shares to be issued - 500
Capital reduction reserve 2,500 2,500
Foreign exchange reserve 3 3
Accumulated losses (3,955) (3,140)
--------------------------------------- ----- ------------- --------------
Total equity 5,590 812
--------------------------------------- ----- ------------- --------------
Non-current liabilities
Other non-current liabilities 27 -
Total non-current liabilities 27 -
Current liabilities
Trade and other payables 10 178 958
Borrowings 11 - 1,360
Total current liabilities 178 2,318
--------------------------------------- ----- -------------
Total liabilities 205 2,318
--------------------------------------- ----- ------------- --------------
TOTAL EQUITY AND LIABILITIES 5,795 3,130
======================================= ===== ============= ==============
Interim Financial Statements
CONSOLIDATED STATEMENT OF CASHFLOWS
For the six months ended 30 June 2022
Unaudited Unaudited
Six months Six months
to 30 Jun to 30 Jun
2022 2021
GBP'000 GBP'000
------------ ------------
Cash flow from operating
activities
Operating loss - continuing
operations (815) (407)
Adjustments for:
Depreciation - property,
plant & equipment 41 40
Depreciation - right of
use asset - 5
Finance charge 1 5
Gain on settlement of CLN's
/ accrued fees through issue
of shares (15) -
Foreign exchange loss 3 -
Changes in working capital:
(Increase) / decrease in
trade and other receivables (205) 10
(Decrease) / increase in
trade and other payables (1,182) 168
Net cash (outflow)/inflow
from operating activities (2,172) (179)
----------------------------------- ------------ ------------
Cash flow from investing
activities
Purchase of property, plant
and equipment (47) -
Net cash outflow from investing
activities (47) -
---------------------------------- ------------ ------------
Cash flows from financing
activities
Payment of lease liability - (16)
Proceeds from borrowings - 150
Net proceeds from issue
of shares 4,660 -
Net cash inflow from financing
activities 4,660 134
----------------------------------- ------------ ------------
Net (decrease)/increase
in cash and cash equivalents 2,441 (45)
Cash and cash equivalents
at beginning of period 598 209
Foreign exchange impact
on cash 4 (10)
Cash and cash equivalents
at the end of the period 3,043 154
----------------------------------- ------------ ------------
Interim Financial Statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months Shares Capital Foreign
ended 30 June Share to be Share Reduction Exchange Accum-ulated Total
2022 Capital Issued Premium Reserve Reserve Losses Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2021 7 - 942 2,500 (12) (1,895) 1,542
Loss for the period - - - - - (407) (407)
Other comprehensive
income - - - - (8) - (8)
-------------------------- --------- -------- --------- ----------- ---------- ------------- --------
Total comprehensive
loss for the period - - - - (8) (407) (415)
Balance at 30
Jun 2021 - (unaudited) 7 - 942 2,500 (20) (2,302) 1,127
-------------------------- --------- -------- --------- ----------- ---------- ------------- --------
At 1 January
2022 7 500 942 2,500 3 (3,140) 812
Loss for the period - - - - - (815) (815)
Other comprehensive
loss - - - - - - -
-------------------------- --------- -------- --------- ----------- ---------- ------------- --------
Total comprehensive
loss for the period - - - - - - (815)
-------------------------- --------- -------- --------- ----------- ---------- ------------- --------
Shares issued
during the period 34 (500) 6,399 - - - 5,933
Share issue costs - - (340) - - - (340)
-------------------------- --------- -------- --------- ----------- ---------- ------------- --------
Total 34 (500) 6,059 - - - 5,593
Balance at 30
June 2022 - (unaudited) 41 - 7,001 2,500 3 (3,955) 5,590
========================== ========= ======== ========= =========== ========== ============= ========
Interim Financial Statements
NOTES TO THE INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2022
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements of Graft
Polymer (UK) plc (the "Company") and its subsidiaries (together the
"Group") for the six-month period ended 30 June 2022 have been
prepared in accordance with Accounting Standard IAS 34 Interim
Financial Reporting.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the
period ended 31 December 2021, which was prepared in accordance
with UK adopted International Accounting Standards (IFRS) and the
Companies Act 2006, and any public announcements made by Graft
Polymer (UK) plc during the interim reporting period and since.
These condensed consolidated interim financial statements do not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2021 prepared under IFRS have been filed
with the Registrar of Companies. The auditor's report on those
financial statements was unqualified and did not contain a
statement under Section 498(2) of the Companies Act 2006.
These condensed interim financial statements are prepared in GBP
to the nearest GBP'000.
The condensed consolidated interim financial statements have not
been audited.
1.1 GOING CONCERN
The interim financial statement have been prepared on a going
concern basis, which assumes that the Group will continue in
operational existence for the foreseeable future.
Taking into account the cash reserves at period end and having
reviewed the forecasts for the coming 12 months, the Directors
believe the Group has sufficient resources to meet its obligations
for a period of at least 12 months from the date of approval of
these financial statements.
Taking these matters into consideration, the Directors consider
that the continued adoption of the going concern basis is
appropriate and the Interim Financial Information does not reflect
any adjustments that would be required if they were to be prepared
other than on a going concern basis.
1.2 CRITICAL ACCOUNTING ESTIMATES
The preparation of condensed Interim Financial Statements
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, income and
expenses, and disclosure of contingent assets and liabilities at
the end of the reporting period.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the financial statements for
the period ended 31 December 2021, with the nature and amounts of
such estimates have not changed significantly during the interim
period.
2. SEGEMENT REPORTING
The following information is given about the Group's reportable
segments:
The Chief Operating Decision Maker is the Board of Directors.
The Board reviews the Group's internal reporting in order to assess
performance of the Group. Management has determined the operating
segment based on the reports reviewed by the Board.
The Board considers that during the six month period ended 30
June 2022 the Group operated in the single business segment of
polymer development and production.
3. REVENUE
6 Mths 6 Mths
to 30 to 30
Jun 2022 Jun 2021
GBP'000 GBP'000
---------------- ---------- ----------
Sales revenue 331 226
331 226
---------- ----------
4. OPERATING LOSS
Operating loss from continued operations is stated after
(charging) / crediting:
6 Mths 6 Mths
to 30 to 30
Jun 2022 Jun 2021
GBP'000 GBP'000
------------------------------------ ---------- ----------
Operating costs (155) (204)
Director and employee costs (324) (142)
Professional and consulting fees (277) (194)
Travel expenses (2) (2)
Corporate and administrative costs (145) (7)
Other expenses (35) (20)
---------- ----------
(938) (569)
---------- ----------
5. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is
calculated by dividing the profit or loss for the period by the
weighted average number of ordinary shares in issue during the
period.
Six months Six months
to 30 Jun to 30 Jun
2022 (unaudited) 2021 (unaudited)
----------------------------------------- ------------------ ------------------
Loss for the period from continuing
operations - GBP '000s (815) (407)
Weighted number of ordinary shares in
issue 102,967,002 70,000,000
------------------------------------------ ------------------ ------------------
Basic and diluted earnings per share
from continuing operations - pence (0.79) (0.58)
------------------------------------------ ------------------ ------------------
There is no difference between the diluted loss per share and
the basic loss per share presented. Share options and warrants
could potentially dilute basic earnings per share in the future.
These were not included in the calculation and no diluted earnings
per share presented as the Group is loss making and additional
equity instruments are anti-dilutive for the periods presented.
6. PROPERTY, PLANT AND EQUIPMENT
Plant & Total
Equipment GBP'000
GBP'000
------------------------------------------ ----------- ---- ---------
Cost
At 1 June 2021 - (audited) 550 550
Additions 1 1
Exchange impact (14) (14)
----------- ---------
At 31 December 2021 - (audited) 537 537
Additions 47 47
Exchange impact 15 15
----------- ---------
At 30 June 2022 - (unaudited) 599 599
----------- ---------
Depreciation
At 1 June 2021 (186) (186)
Charge for the year (46) (46)
Exchange impact 5 5
----------- ---------
At 31 December 2021 - (audited) (227) (227)
Charge for the period (41) (41)
Exchange impact (7) (7)
----------- ---------
At 30 June 2022 - (unaudited) (275) (275)
----------- ---------
Net book value at 31 December 2021
(audited) 310 310
----------- ---------
Net book value at 30 June 2022
(unaudited) 324 324
----------- ---------
7. INTANGIBLE ASSETS
30 June
2022
31 Dec
(unaudited) 2021 (audited)
GBP'000 GBP'000
------------------- ---- -------------- ----------------
Opening balance 2,068 2,068
Additions - -
-------------- ----------------
2,068 2,068
-------------- ----------------
At each period / year end, the Directors assess the intangible
assets for any indicators of impairment and have concluded no
presence of such indicators, hence concluded that no impairment
charge was necessary during the year (31 Dec 2021: GBPnil).
8. INVESTMENT
Company subsidiary undertakings
The Group owned interests in the following subsidiary
undertakings, which are included in the consolidated financial
statements:
Business Country Registered
Name Holding Activity of Incorporation Address
30 Jun 31 Dec
2022 2021
---------------- ------- ------- -------------------- ------------------ ---------------------
Emonska Cesta
Graft Polymer Polymer development 8, 1000, Ljubljana,
d.o.o. 100% 100% and production Slovenia Slovenia
---------------- ------- ------- -------------------- ------------------ ---------------------
Eccleston
Holder of Yards, 25
all Group Eccleston
Graft Polymer Intellectual England & Place, London,
IP Limited 100% 100% Property Wales SW1W 9NF
---------------- ------- ------- -------------------- ------------------ ---------------------
9. TRADE AND OTHER RECEIVABLES
30 June
2022
31 Dec 2021
(unaudited) (audited)
GBP'000 GBP'000
--------------------------------------------- ---- -------------- -------------
Trade receivables 25 20
Advanced payments for plant and equipment 152 -
Other taxes and social security 61 99
Other receivables 107 23
-------------- -------------
345 142
-------------- -------------
10. TRADE AND OTHER PAYABLES
30 June
2022
31 Dec 2021
(unaudited) (audited)
GBP'000 GBP'000
------------------ ---- -------------- -------------
Trade payables 67 841
Accruals 72 480
Other payables 39 39
-------------- -------------
178 1,360
-------------- -------------
11. BORROWINGS
30 June
2022
31 Dec 2021
(unaudited) (audited)
GBP'000 GBP'000
------------------------------- ---- --------------- -------------
Convertible note borrowings - 958
- 958
---------------------------------------------------- -------------
30 June
2022
31 Dec 2021
(unaudited) (audited)
GBP'000 GBP'000
----------------------------------- ---- -------------- -------------
Opening balance 958 653
Convertible loans issued - 300
Exchange impact - (3)
Interest (repaid) / accrued (8) 8
Settlement of convertible loans (950)
--------------
Closing balance - 958
-------------- -------------
During the period, the Company completed the Admission to the
London Stock exchange as part of the admission, the entire
outstanding convertible loan note balance of GBP950,000 was
converted through the issue of 7,947,786 Ordinary shares, with the
balance of GBP8,000 in accrued interest settled in cash.
12. SHARE CAPITAL
20 Jun 2022 31 Dec 2021
(unaudited) (audited)
--------------------------------------------- ------------- ------------
Issued and fully paid ordinary shares
with a nominal value of 0.1p (2020: 0.01p)
Number of shares 104,097,299 70,000,000
Nominal value (GBP'000) 41 7
------------- ------------
Change in issued Share Capital and Share Premium:
Number of Share Share
shares capital premium Total
Ordinary shares GBP'000 GBP'000 GBP'000
Balance at 31 May 2021 70,000,000 7 942 949
------------ --------- --------- --------
Balance at 31 December 2021 70,000,000 7 942 949
------------ --------- --------- --------
Shares issued during the 34,097,299
period (1) 34 6,399 6,433
Share issue costs - (340) (340)
Balance at 30 June 2022 104,097,299 41 7,001 7,042
------------ --------- --------- --------
(1) On 6 January 2022, the Group was admitted to the London
Stock Exchange and upon Admission issued the following ordinary
shares:
- 23,255,813 shares we issued at a price of GBP0.215 raising GBP5,000,000 before costs;
- 7,947,785 share were issued in settlement of convertible loan notes; and
- 2,893,701 shares were issued in settlement of accrued fees to
directors and consultants outstanding as at 30 September 2021.
The share premium represents the difference between the nominal
value of the shares issued and the actual amount subscribed less;
the cost of issue of the shares, the value of the bonus share
issue, or any bonus warrant issue.
Capital and reserves
During the previous period, the Company received GBP500,000 in
relation to the subscription of shares for the Company's admission
onto the London Stock Exchange which occurred during the current
period.
During previous periods, the Directors approved a GBP2,500,000
reduction in capital resulting in a transfer being made from share
premium to the capital reduction reserve.
The Group statements of changes in equity are set out on page 4
of this report.
13. EVENTS SUBSEQUENT TO PERIOD END
Other than as disclosed in these financial statement, there have
been no further events subsequent to period end.
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