TIDMAGM
RNS Number : 9970P
Applied Graphene Materials PLC
16 October 2019
16 October 2019
Applied Graphene Materials plc
("Applied Graphene Materials", "the Group" or "the Company")
Full year results for the year ended 31 July 2019
Applied Graphene Materials, the producer of specialty graphene
materials and dispersions, announces its full year results for the
year ended 31 July 2019.
Operational and commercial highlights
-- Good commercial progress being made, albeit yet to lead to revenue growth due to time to introduce and test
materials rigorously for customer product launch
-- Customer/AGM new product launches:
-- JBL formally launched its Hycote anti-corrosion primer
-- Alltimes launched its Advantage Graphene roof coating product for construction use
-- Applied Nano Surfaces is scaling up production of a low-friction aerosol-based coating product,
Tricolit(R)
-- Thermal adhesive product launched by an independent high performance product specialist
-- AGM's water based application launched in July 2019
-- Two new distributors appointed - CAME in Italy and Carst and Walker in South Africa following full launch of our
Genable(R) standard dispersion product range
-- Strong technical data to demonstrate the efficacy of AGM's graphene dispersions presented at major coatings
industry conferences
-- Manufacturing patent granted in key territory in May 2019
Financial overview
-- Total income GBP0.12 million (2018: GBP0.20 million)
-- EBITDA* Loss of GBP4.83 million (2018: loss of GBP4.54 million)
-- Cash at bank GBP6.13 million (2018: GBP10.44 million)
-- Basic EPS Loss of 7.9 pence per share (2018: loss of 8.2 pence)
-- Adjusted EPS Loss of 7.9 pence per share (2018: loss of 7.5 pence)
* EBITDA comprises loss before interest, tax, exceptional costs,
depreciation and amortisation.
Post year end
-- R&D tax credit of GBP0.62m received in August 2019
further strengthens the Company's cash position
-- On 9 October 2019 the Company entered into a consultation
period with staff to re-align its resources which will reduce
costs
-- The re-alignment will further extend the Company's cash runway
Adrian Potts, Chief Executive Officer, commented:
"This year we have continued to consolidate our industry-leading
IP in the integration of graphene into coatings, in collaboration
with our commercial partners. Our dispersion technology is critical
to building the strong technical foundations that will support the
success and long-term sustainability of our business.
As announced, revenue development this year has been slower to
materialise than expected. The route to launch graphene-enhanced
products takes time to realise full potential, due to the varied
and often lengthy testing processes and the complexity of
effectively transferring graphene's exceptional properties. The
restructuring process we are implementing will re-align our
business to focus on our core dispersion technology and will reduce
our cost base to sustain the business while we focus on achieving
conversion of our pipeline of approximately 100 active engagements,
and in particular our core near term customers, into meaningful
revenues.
Our commercial momentum continues to build, and we have been
pleased to announce progress on a number of partnerships, as well
as product launches by Alltimes Coatings, and James Briggs which
are on schedule for this calendar year. Meanwhile, we are also
progressing a large number of collaborations with customers under
non-disclosure agreements, and look forward to updating the market
on these in due course."
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
Richard Lindley / Justin McKeegan / Mia Gardner
Hudson Sandler +44 (0) 207 796 4133
Charlie Jack / Emily Dillon
Notes to Editors
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. The Group's strategy is
to target commercial applications in three core markets: coatings,
composites and functional materials.
The Group has developed proprietary bottom-up processes which
are capable of producing high purity graphene nanoplatelets using a
continuous process. The manufacturing process is based on
sustainable, readily available raw materials and therefore does 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 this process.
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 was admitted
to AIM in November 2013, raising GBP11 million, and is based at the
Wilton Site on Teesside. In January 2016 the Group raised GBP8.5m
to support its ongoing activities and in October 2017 the Group
raised a further GBP9.8m.
Overview
This year the Company has made key technical progress with our
commercial partners and on strengthening our graphene product
offering. These are important foundations which will ultimately
establish this business commercially for its sustainable future.
Time to develop revenues continues to be significant, due mainly to
the time that it takes to introduce and test materials rigorously
for approval and adoption for eventual customer product launch.
The positive milestone momentum we are experiencing with our
commercial partners gives us confidence in the outlook and
commercialisation of further collaborations currently in our
pipeline. The repeatable demonstration that our graphene
dispersions, when correctly incorporated and used, produce
substantial improvements in barrier performance in coatings,
toughness in composites and thermal/mechanical performance in
adhesives is encouraging - and we have seen this in product
launches through the year as customers transition from testing to
commercially viable products. Alongside these positive steps, we
are seeing solid progress with customers who are still evaluating
our products and going through scale up trials of their own and
demonstrating strong results.
We have also been able to fully launch our own new standardised
products in the year which has enabled us to extend our route to
market via third party distributors. We have purposely selected
technically-based distributors to enable the technical-sell to work
well and provide the best opportunity for success.
Technical progress in the coatings sector has been excellent. We
have further extended our anti-corrosion and barrier technologies
using our graphene nanoplatelet dispersions and established new
water-based coating additives. Achieving the stable distribution of
nanomaterials into water-based dispersions is a major breakthrough
for the industry. We are now able to participate in the significant
water-based coatings market which is expanding as a result of
increasing regulation against environmentally detrimental
solvent-based alternatives. The testing by customers in this sector
tends to be to a shorter timeline, potentially giving our products
a faster route to market. All participation in the coatings market
requires performance data to prove products and to this end we have
invested in further test equipment throughout the year to enable
more efficient running of testing programmes. We have also applied
industry standard accelerated testing methods to enable a faster,
iterative approach to formulating optimised solutions.
Achieving consistent graphene performance in composite materials
is a technical challenge, but we have again seen success in this
area and are starting to gain further traction with two different
product offerings. The direct use of Genable(R) dispersions has
enabled companies like Infinite Composites Technologies to excel
with composite structural integrity in the area of pressure vessel
technology for use in space with NASA, while our Structural Ink
technology has been demonstrated in composite structures for
tooling. .
With specialty products such as our thermal adhesives, it has
proven to be a long pathway to final qualification of the materials
for use on satellites. However, the critical milestone of
qualification is close and we have recently supplied trial
materials for packaging in the final approved format.
We are currently in a consultation period with staff regarding
this proposed restructuring. We are focused on the core strengths
of the business of efficient dispersion manufacturing and
development, technical strength and exceptional customer
service.
Commercial progress
The graphene industry continues to develop as it seeks to
integrate the nanoplatelet format of graphene into effective
applications. We believe our strength in dispersion technology is
our unique selling proposition and represents the keys to the
successful technical adoption by customers seeking to realise the
performance benefits which graphene as nanoplatelets has to
offer.
Our technology group continues to focus on the effective
realisation of graphene's remarkable performance characteristics
through its application in coatings and composite materials
technology development. Around three quarters of our activity is in
the coatings space, which we regard as the key area to grow our
revenue going forward. This sits alongside long-standing projects
such as our qualification effort with Airbus Space and Defence with
our thermal paste adhesive formulated products.
In the coatings sector, we have purposely prioritised our focus
on smaller companies to gain commercial traction, whilst continuing
to maintain our engagement with the majors. We find these smaller,
more agile entities, tend to be both hungry for innovation and also
see the opportunity to integrate new technology into their market
offerings in a relatively shorter timeline, notwithstanding that
the product still needs testing iteratively and intensively in
their own formulations. Our end-to-end technical service offering
is a key enabler, often through use of our own facilities.
It clearly takes time to successfully integrate new technology
to enable customer product launches and realise revenues. With
coatings technology, the reality of revenue is directly tied to the
time it takes to integrate graphene materials into complex coatings
chemistries and then for customers to test them over many weeks and
months. It is not uncommon for a test set to last for 3,000 hours
(18 weeks) once a promising customer formulation has been
determined and initially evaluated for a number of weeks prior to
this formal testing process.
The key benefit that customers have in partnering with AGM is
our integrated, end-to-end approach to customer engagement. I
firmly believe we have the keys to this breakthrough technology,
which are as follows:-
- developing a deep understanding of each customer's objectives and formulation;
- ensuring good clarity of the commercial viability of the product offering;
- ensuring the optimal graphene appropriate for purpose is selected;
- dispersing graphene correctly in an easy to use intermediate additive;
- active formulation effort in collaboration with the customer;
- initial testing;
- longer term testing; and
- successful results and product launch to generate revenue streams.
This model of engagement reads across to all sectors that we are
involved in and reflects the depth and quality of activity we have
with each customer that wants to seriously engage with our
innovative graphene technology offerings.
With composite materials technology, we continue to develop the
potential of graphene for mechanical performance enhancements and
are also now seeing positive momentum with our innovative
Structural Ink(R) technology. An outstanding example of mechanical
performance improvements achieved with the addition of graphene has
been seen in the area of mechanical damage limitation following
extreme cyclic of composite parts for the space industry with our
customer Infinite Composite Technologies.
We also remain absolutely committed to specialty materials
development such as the qualification project we have ongoing with
Airbus for thermal adhesives technologies. These materials are now
at a level of maturity to be promoted further afield to other
potential customers in the Space and Defence sector..
We are currently managing around 100 active customer engagements
that we believe have prospects for ultimately generating revenues.
We continue to manage the project count effectively and focus on
those that are most likely to succeed. We selectively consider
newer engagements, when they appear commercially and technically
viable and where we believe there is genuine appetite from the
customer to engage towards a commercially viable product.
Pipeline overview
The number of programs in the pipeline as at 31 July 2019 and
the movements since 31 January 2019 are as follows:
At 31 July Stage of development
2019
Approval Agreement Initial Repeat Final product Final commercial Total
time on scope testing testing trials agreement
of sampling and for consistency formulation
and engagement interpretation and review and
of results of results specification
---------------- ----------------- ----------------- ----------------- ----------------- ------
Short 0 0 1 0 3 4
---------------- ----------------- ----------------- ----------------- ----------------- ------
Medium 12 21 6 4 5 48
---------------- ----------------- ----------------- ----------------- ----------------- ------
Long 5 21 5 3 0 34
---------------- ----------------- ----------------- ----------------- ----------------- ------
Technology
scouting
or time
frame unclear
currently 4 9 2 0 0 15
---------------- ----------------- ----------------- ----------------- ----------------- ------
Total 21 51 14 7 8 101
---------------- ----------------- ----------------- ----------------- ----------------- ------
Change
since 31
January
2019
---------------- ----------------- ----------------- ----------------- ----------------- ------
Short -11 -8 -4 -4 -1 -28
---------------- ----------------- ----------------- ----------------- ----------------- ------
Medium -6 -4 -7 2 2 -13
---------------- ----------------- ----------------- ----------------- ----------------- ------
Long -2 9 4 3 0 14
---------------- ----------------- ----------------- ----------------- ----------------- ------
Technology
scouting
or time
frame unclear
currently -2 8 1 0 0 7
---------------- ----------------- ----------------- ----------------- ----------------- ------
Total -21 5 -6 1 1 -20
---------------- ----------------- ----------------- ----------------- ----------------- ------
As part of our ongoing assessment of these opportunities, the
total number of active engagements has fallen during the last 6
months due to the elimination of early stage projects where success
was deemed less likely allowing us to focus on projects with a
greater chance of success.
Coatings sector
Our teams continue to work closely with customers to realise the
barrier, chemical resistance and anti-corrosion performance
benefits that the impermeable nature of graphene nanoplatelets
offers in coatings formulations. Key to this technology generating
long term success is AGM's unique expertise in dispersing graphene
into the customer's often unique coating chemistry.
Making graphene materials easy for coatings customers to
integrate through achieving appropriate dispersions typically in
matrix resins, solvents and water is foundational to a successful
outcome. The integration of such dispersions is the fundamental
means of enabling the transfer of the particular graphene
characteristics into the customer's host material. Our Genable(R)
range of standard dispersions offers ease of selection and ease of
use and ise supported with substantial data and "how-to" technical
application information. We can also customise dispersions to suit
their specific chemistry needs as required. The launch of the
complete range of Genable(R) dispersions has enabled us to develop
a new route to market through technical distributors. It was
particularly pleasing to be able to sign up CAME (Italy) and Carst
& Walker (South Africa and Australasia), both of whom operate
in the coatings sector and are able to support the technical
approach with novel materials. Whilst still in the early stages of
the relationship, both of the new distributors have made an
encouraging start with samples being issued to a range of potential
new projects. We are also look forward to announcing further
distribution agreements in other territories with the expectation
that these will be an additional route to revenue growth.
Following extensive and rigorous testing, James Briggs Ltd (JBL)
formally launched its Hycote anti-corrosion automotive aerosol
primer at the Automechanika trade event earlier in 2019. As a
zinc-free primer system, the paint has positive environmental and
performance features. We anticipate a sales ramp up through both
their distribution channels and direct retail selling in the
current financial year. Initial production orders have been
fulfilled to support early inventory.
In July 2019, coatings innovator Alltimes Coatings Ltd (Stroud,
UK) launched its Advantage Graphene roof coating product for
construction use. The Advantage Graphene system is the result of
extensive product development and a rigorous testing programme and
has ultimately produced a liquid roof coating system that delivers
an industry-leading level of anti-corrosion performance and life
expectancy. AGM's graphene technology has also helped enhance other
key coating performance attributes and ultimately provides building
contractors and owners with a cost-effective solution. Due to its
exceptional corrosion resistance performance, Advantage Graphene is
being offered with an unparalleled, industry leading 30-year
product warranty, extended from 20 years with Alltimes Coatings'
previous product. As part of the promotion of this new technology,
one of the buildings at the Wilton site where AGM is located is to
have its roof repainted with the Alltimes Advantage Graphene paint
- an early practical demonstration of the material in use.
We continue our intensive customer technical support across a
large number of engagements in order to accelerate the number of
products our customers can bring to market to create revenue for
them and AGM.
Further product launches are anticipated from UK coatings
innovators Blocksil Ltd (Lichfield, UK) and HMG. Blocksil has
developed a new product, 'Graphene Enhanced Top Coat MT', a
ground-breaking high performance, anti-corrosion coating for
applications across a broad range of harsh industrial environments.
The new graphene-loaded coatings system delivers leading mechanical
and physical properties in a single coat. Graphene Enhanced Top
Coat MT is sustainable, VOC free and easily applied. Retaining full
flexibility and adhesion, the enhanced product delivers excellent
UV resistance alongside improved levels of toughness and fire
resistance. Blocksil is actively engaged with end users and
specifiers across industries with high value assets and
infrastructure operating under harsh environmental conditions.
We continue our active engagement with HMG, collaboratively
formulating and testing a new graphene enhanced product for the
protective coatings sector. Again, this uses graphene's property of
impermeability and AGM's dispersion technology to deliver the
possibilities of enhanced product performance. Testing should run
out to early 2020 and we look forward to a positive outcome and
product launch accordingly.
We are collaborating with a significant number of further
coatings companies involved in assessing the performance of our
dispersions in their coatings systems. The level of testing and
evaluation ranges from initial formulating through to full scale up
trials on the production shop of a USA-based customer working on
mitigation of aluminium corrosion. Real world use of our graphene
dispersions has thus demonstrated that the materials can be added,
mixed, sprayed and used practically, repeatedly and consistently
which is vital proof of feasibility for customers seeking to
confidently introduce this new platform technology.
Away from the world of anti-corrosion, we have qualified our
A-GNP10 nanoplatelets, supplied through a customised dispersion for
Applied Nano Surfaces (Uppsala, Sweden) for their innovative
graphene-fortified low friction coatings Tricolit(R)-GO. This
coating features low friction and high abrasion resistance and is
an aerosolised product. ANS Tricolit(R)-GO is part of the ANS
Tricolit(R) range of thermoset surface coatings serving to reduce
friction and wear. Materials can be sprayed, dipped or brushed and
are suitable for treatment of nonferrous materials which cannot be
tribo-conditioned. We are finalising scale up plans now that
materials are ready to be promoted.
Product development continued apace in the year to support
further adjacent opportunities in the coatings sector and to
broaden the scope of our product range. We launched our innovative
acrylic water-based technology to meet the expectations of the
evolving environmental pressure on the coatings industry applicable
to Direct-to-Metal (DTM) applications. We see water-based coating
development remaining a focus for coatings industry formulators,
with tightening of regulations brought in to lessen the detrimental
impact that solvent-based coatings have on both worker health and
the environment. Water-based coatings tend to inherently need
improved anti-corrosion performance, and we believe this new
product range has the potential to extend anti-corrosion
performance, enabling broader industrial protective coating appeal.
We are delighted to have presented this significant technological
progress to our customers, reaffirming AGM as the leader in the
development of cutting-edge graphene applications tailored to add
significant value for paints and coatings manufacturers. We see
good potential with a number of engagements with this new product
package.
The market for coatings in the anti-corrosion general industrial
sub-sector, is substantial and we see good opportunity to develop
revenues through:-
- Continuing proof of concept;
- Continuing product launches from successful customer adoption;
- Continuing presentations of our products and their positive advantages; and
- Continuing in depth customer engagement to enable realisation.
Composites sector
Very low density, outstanding specific performance, and
durability are key attributes necessary for the composite materials
sector. The inclusion of graphene can improve these fundamentals
without adding significant weight. As with the coatings industry,
the real challenge to success is in creating a discrete array of
nanoplatelets within the host material to enable the realisation of
the performance of the graphene that has been added. AGM's
dispersion technology using either our standard Genable(R)
dispersions or a customised offering often in a specific matrix
resin or such as a printable format, again provides the key to
successful outcomes in the end product, with the combination of
performance described above being achieved.
Recent traction with our products, and typical of the technical
success we aspire to, is with USA-based customer Infinite
Composites Technologies. AGM and Infinite Composite Technologies
have a long-standing relationship in the development of innovative
composite material for pressure vessel technology incorporating
graphene technology. Working closely together to initially
investigate the potential application of AGM's graphene materials,
the technology has been progressively developed to its current
advanced state.
After the period end we announced that Infinite Composites has
successfully incorporated AGM's Graphene Nanoplatelets into two
resin systems for cryogenic pressure vessels being considered for
use in multiple NASA spaceflight missions, including Materials on
the International Space Station Experiments (MISSE), Artemis, and
Lunar Gateway. The addition of AGM's graphene nanoplatelets (GNPs)
has enabled the tanks to complete their first liquid oxygen loading
test at -300 F pressurised to 600 psi. Analysis of the composite
indicated that the addition of GNPs eliminated nearly all
microfractures in resin samples after exposure to the cryogenic
environment versus the control samples. These results using AGM's
graphene in real composites applications subject to extreme testing
further underpin the performance and value of the use of GNPs for
the effective management of attributes such as fracture toughness
and robustness of composite structures for long-term durability.
Whether into resin formulation directly for winding processing of
pressure tanks or direct integration into composite prepregs, AGM's
dispersion technology offers an appropriate solution that is easy
to integrate into the resin mixing stage of the customer's
process.
AGM's Structural Ink(R) technology platform as a means of
selectively printing high quality formulated ink-based graphene
where it is needed continues to demonstrate significant performance
uplifts in composite fracture toughness. We are starting to see the
benefits from the equipment investment we made last year for
further product optimisation and process scale up. We are able to
print graphene with high precision at very low added weight to
enhance the interlaminar performance of composite structures. With
potential application initially in sports and leisure applications
where toughness is important, we are also investigating how to
broaden the scope of applicability to other materials and sectors -
building on, for example, the printing work completed in the
Composites Tooling Engineering Services (CTES) tooling project
discussed below.
CTES and Nano Enhanced Aerospace Interiors (NEAT) projects
funded under the National Aerospace Technology Exploitation
Programme (NATEP) were completed in the year and yielded positive
results.
CTES, with industrial partners AGM, CTES Ltd, SHD Composites Ltd
and GKN Aerospace investigated the use of graphene in composite
tooling applications where carbon or glass fibre prepregs are used
to create forming and curing fixtures for composite part
manufacturing. Accuracy, quality of surface finish and longevity
are key attributes required for composite tooling forming/curing
fixtures used in the industry. The use of graphene inks printed
into the tooling laminate as well as graphene in the prepreg
structure have demonstrated enhanced performance for tooling
applications and we anticipate further demonstration of this
technology in the near future, again using graphene both in the
prepreg and with using printing methods. Broader dissemination of
the team's developments are now underway.
The 18 month NEAT project with partners Composites Evolution Ltd
and Coventive Composites has yielded a prepreg product that can be
used in aircraft interiors with enhanced mechanical performance as
well as critical fire, smoke and toxicity performance. The customer
is at the early stage of field trialling these innovative materials
with end-users with a view to demonstrating a balance of
performance advantage, optimised design, improved processing and
enhanced surface finish.
Functional materials
As previously noted, the qualification of thermal paste adhesive
product TP300 continues with Airbus Space and Defence, with
anticipated completion and initial revenues now anticipated in
calendar H1 2020. Following the four years of development effort,
we are now offing materials engineers in the Space and Defence
industries two unique thermally conductive epoxy paste adhesive
systems, AGM TP300 and TP400. These novel epoxy adhesive systems
exhibit high levels of thermal conductivity (3 and 6 W/mK
respectively), combined with excellent mechanical, adhesive and
outgassing performance. Most significantly, these properties are
achieved with cured resin density as low as 40% that of competitive
conventional conductive adhesive systems on the market. TP300 and
TP400 are therefore highly versatile, providing end users with
significant savings in both mass and cost. The format of the
materials makes them ideal for structural bonding and gap filling
adhesive needs where payload weight is critical.
In April 2019, an independent high-performance product
specialist launched a graphene filled epoxy system which offers
high thermal conductivity and low density. This product is ideal
for bonding flat surfaces and where contact pressure can be
applied. The product advantages are:
* High thermal conductivity * Low co-efficient of thermal expansion
* Wide service temperature range
* High compressive strength
* Thick non-drip consistency
* Superior dimensional stability
Technological and manufacturing capabilities
We launched the Genable(R) standard dispersions product range
during the early part of the year as a result of sustained
formulating effort. This enabling technology, backed by testing
data, means that customers can integrate our products with
confidence into their complex formulations.
Our formulations team completed development of new stabilised
water-based dispersion chemistry to meet the trend for improved
environmentally friendly products in the coatings industry.
Water-based formulating is a complex process in the dispersion of
graphenes and I am pleased with the progress our technical team has
made in overcoming this challenge to support this market
opportunity. Initially with acrylics chemistry for opportunities
such as the DTM (Direct-to-metal) coatings market, we look forward
to the imminent further release of epoxy versions to enable a
fuller dialogue with customers keen to assess our materials in this
format.
We continue with the product development cycle to address the
challenges of harsher environmental conditions and therefore more
rigorous testing in the C4 / C5 categories (factories and bridges
over water) for barrier technology. The testing regime is
substantial, involving multi-faceted evaluation, but I am convinced
that the quality of work and end results based on current
performance will enable a strong opportunity to ensure a positive
customer experience with our products and deliver revenue bearing
engagements.
In recognition of the performance that the Genable(R) 3000
series product makes to anti-corrosion performance on steel
coatings, AGM's product was nominated as a finalist in the
Materials Performance Corrosion Innovation Awards for 2019, a
programme run in parallel with the USA-based National Association
of Corrosion Engineers (NACE). The product enables coatings
performance enhancements in applications subject to high humidity
and aggressive atmosphere, including inshore areas of medium to
high salinity
Aware of the need to see products through to end product
integration in a safe and reliable manner, AGM also made a
substantial commitment to evaluate the performance of
nano-materials in various coatings configurations to review the
associated environmental, health and safety considerations. The
results are positive thus far and again reflect the professional
approach to address the regulatory requirements we are taking in
the adoption of this class of materials technology into a coatings
industry that is relatively conservative. We continue to be leaders
in the EU REACH consortium dealing with graphene nano-materials
regulatory issues, having regular input to the evolving
landscape.
Patent filings and IP protection continued in the year as we
seek to protect the know-how we have generated.
Marketing our technical expertise
In the year we also made a commitment to disseminate our
technical information to a much wider audience. We presented at
multiple technical conferences including the European Coatings
Show, the National Association of Corrosion Engineers (NACE)
conference in USA etc, and this has created further positive
dialogue at a detailed customer level to enable consideration of
both the benefits of graphene additions and also the key of
"how-to" integrate effectively. This quality of dialogue and
information transfer is key to successful customer adoption of
graphene in the future.
Re-alignment of resources
Whilst the Company has continued to make strong technical
progress with its customers and remains well positioned in its
focused sectors, revenue development takes time to realise in full.
It remains challenging for the Group to predict the timing of
larger-scale commercial orders as a result of the significant
testing processes that AGM and its customers must undertake to
enable long term adoption. During the year, the testing programmes
of some of the Group's customer graphene enhanced products have
been longer than anticipated.
Experience over recent years has clearly demonstrated that AGM's
core expertise is in dispersion and application know-how to
integrate the performance benefits of graphene nanoplatelets in an
effective way in customer products. The Board has therefore decided
to focus its resources and activities around meeting customer
opportunities through the dispersion and end-use application of
graphene as the best means of revenue growth.
As a result, the Board announced it has entered a period of
consultation with its employees with a view to implementing a
re-alignment of its operations towards dispersion and application
know-how and customer support. The Company will focus its resources
on growing revenues from its significant pipeline of approximately
100 active engagements, in particular from its more advanced
customer engagements. The Group will therefore largely maintain its
resources in business development and retain its strength in the
technical team to support customers running product trials and in
longer range product and dispersion technology development, whilst
streamlining manufacturing. The objective here is to maintain an
appropriate level of graphene manufacturing capability whilst
focusing on our core strength of dispersion and application
technology.
The cash operating cost base of the Company of GBP4.3m in the
year to 31 July 2019 is, subject to consultation, expected to fall
by circa GBP0.9m and GBP1.1m for the years ending 31 July 2020 and
2021, respectively. The cost of implementation of these changes is,
subject to consultation, circa GBP0.2m. These actions will extend
the Company's cash run-way to at least Q4 2021.
The Group is well funded, with net cash of GBP6.1m as at 31 July
2019 and it received an R&D tax credit of GBP0.6m in August
2019 in respect of the year ended 31 July 2018.
The Company's absolute priority and focus remains to support its
partners in successfully incorporating graphene nanoplatelets,
achieving product launches and growing revenues.
The Company has built an exceptional technology base and the
re-alignment will by no means impact its technical capabilities,
nor its ability to scale up production at the appropriate time to
meet future demand.
Outlook
The Board believes that AGM is well placed and is confident
that, with the reduced cost base and existing cash resources, the
Company will have sufficient time to significantly grow revenues in
the emerging graphene market.
The technical progress we are making in our customer
collaborations continues to be absolutely critical to our success,
in light of the complexity of transferring graphene's exceptional
enhancement properties into a final customer product, which has
remained a challenge for the industry. AGM remains well positioned
thanks to its solid platform of graphene application and
integration IP in its focused customer sectors.
The Board is encouraged by momentum in our commercial pipeline.
We are seeing positive traction with the launches of
graphene-enhanced products by customers in all three of our
operating sectors.
We look forward to the emerging graphene market developing
further and to delivering on the technical promise with our
products.
Adrian Potts
Chief Executive Officer
16 October 2019
Financial review
Revenue
Revenue for the year was GBP50,000 (2018: GBP77,000) arising
from the supply of production orders and evaluation quantities of
graphene to commercial partners. Sales in the prior year included
GBP46,000 to Airbus, but this fell to nil in this financial year
due to delays in the project.
Other income
Other income, which comprises grant income and RDEC revenue, was
GBP74,000 (2018: GBP126,000). Grants received generally relate to
funding for the development of new graphene applications or the
creation of new jobs.
Cost of sales
Cost of sales of GBP472,000 (2018: GBP250,000) reflects the
costs of producing graphene dispersions. We recognise the cost of
production in the income statement as it is incurred. Cost of sales
includes staff costs of GBP230,000 (2018: GBP187,000). Once the
Group receives more production orders, this graphene will be
recognised as stock.
Operating expenses
Operating expenses of GBP4,554,000 remained in line with the
prior year costs of GBP4,555,000. This reflects an increase in
personnel costs of GBP230,000 and other R&D costs, offset by a
saving in exceptional costs.
Loss on ordinary activities before interest, tax, exceptional
costs, depreciation and amortisation (EBITDA)
EBITDA for the Group increased from a loss of GBP3,984,000 in
2018 to a loss of GBP4,559,000 for the year ended 31 July 2019. The
loss incurred reflects the ongoing costs of working with commercial
partners and the significant efforts undertaken to support those
customers.
Exceptional costs
Exceptional costs recognised in the year were GBPnil (2018:
GBP307,000). The prior year costs principally relate to costs that
were associated to the fundraise that were not specifically in
relation to the issue of new shares (GBP185,000) and the disposal
of licence fees and patents costs relating to a technology no
longer being developed following the introduction of the A-GNP35
production facility (GBP122,000).
Net finance income
Net finance income for the year was GBP67,000 (2018: GBP57,000).
The Group has benefited from interest earned on money raised from
the placing that took place in the prior year.
Loss on ordinary activities before tax
A loss on ordinary activities before tax of GBP4,835,000 (2018:
loss of GBP4,545,000) was recognised. The prior year includes
exceptional costs of GBP307,000 mainly connected to payments made
in relation to the issue of new shares.
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. There remains sufficient
uncertainty that taxable profits will be available against which
deductible temporary differences can be utilised.
The tax credit recognised in the current financial year of
GBP908,000 is in relation to a calculation of R&D tax credits
due for 2019 of GBP700,000 and the balance between the claim for
R&D tax credits for 2018 which was GBP623,000 and the estimate
which was recognised in the prior year of GBP415,000. The credit
recognised in the prior financial year was in relation to the
receipt of R&D tax credits for 2017 and an estimate of R&D
tax credits due for 2018.
Earnings per share
Basic earnings per share was a loss of 7.9 pence per share
(2018: loss of 8.2 pence per share). Basic diluted earnings per
share (before exceptional costs) was a loss of 7.9 pence per share
(2018: loss of 7.5 pence per share).
Dividend
No dividend has been proposed for the year ended 31 July 2019
(2018: GBPnil).
Cash flow
Net cash used in operations was GBP4,184,000 (2018:
GBP4,005,000). During the year, net working capital utilised
reduced by GBP72,000 (2018: increase of GBP12,000).
Balance sheet
Net assets have reduced to GBP8,488,000 (2018: GBP12,121,000),
principally reflecting the trading loss for the year.
The Group is well funded with cash at bank at 31 July 2019 of
GBP6,135,000 (2018: GBP10,443,000). Cash at bank is on deposit with
a small number of financial institutions for time periods ranging
between instant access and up to 95 days in maturity. The R&D
tax credit of GBP623,000 for the year ended 31 July 2018 was
received in August 2019.
Post balance sheet event
As set out in the CEO's statement, the Company has recently
entered into a period of consultation with staff regarding a
realigning of the Company's activities and reduction in costs.
Whilst the full financial effect of these changes will not be
achieved immediately due to the costs of implementation, the cash
operating cost base of the Company of GBP4.3m in the year to 31
July 2019 is forecast to fall by circa GBP0.9m and GBP1.1m for the
years ending 31 July 2020 and 2021 respectively. Subject to
consultation, there is expected to be a cash cost of circa GBP0.2m
to implement the restructuring.
Accounting policies
The Group's consolidated financial information has been prepared
in accordance with International Financial Reporting Standards as
adopted in the EU. The accounting policies used in the consolidated
financial information are consistent with those set out in the
audited financial statements
Going concern
After making enquiries and producing cash flow forecasts, the
Directors have reasonable expectations, as at the date of approving
the financial statements, that the Company and the Group will have
adequate resources to fund the activities of the Company and the
Group for at least twelve months from the date of the approval of
the financial statements. Although the business continued to make
losses throughout the year to July 2019, meaningful commercial
progress has been made during the year with the development of
strong technical data to underpin the product offering, the launch
of new water based coating applications and the new products
launched by customers. The increased level of commercial products
and engagements provides the Directors with reasonable expectations
that the Group continues to demonstrate meaningful progress.
At 31 July 2019, the Company and Group had cash reserves of
GBP5.8m and GBP6.1m respectively. The Directors have prepared
cashflow forecasts which show that the Group has sufficient cash on
hand to satisfy the continued development of the business until at
least 2021 in line with the strategic plan. Furthermore, the
Directors have had regard to the consequence of further delays in
generating revenue beyond the next twelve months and in this
scenario the Directors remain confident that adequate resources are
available for the foreseeable future.
As part of the review process, following the year end, the
Directors announced the implementation of a restructuring of its
operations in order to manage the Group's cash resources
effectively. Further information relating to the restructuring of
the business is included in the Business review, the Financial
review and note 23 to the financial statements.
Principal risks and uncertainties
Risk management forms an integral part of the business planning
and review cycle.
As a business we strive to achieve the right balance between
risk and reward. The Board reviews and updates risks within the
business on a regular basis. Having identified a potential risk
each risk is assessed individually both in terms of likelihood of
occurrence and for the potential financial impact on the business.
A further assessment is then made to ensure that the exposure to
any risk is mitigated wherever feasible.
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 particular 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. In particular, the
Group's performance may be affected by changes in market or
economic conditions and in legal, regulatory and tax
requirements.
Broadly, risks are categorised into seven types: strategic and
planning; financial and IT; operational and quality; technical;
safety, health and environment (SHE) and regulatory; commercial and
reputation; and people. Significant risks facing the Group are
listed below.
-- Consistency of product - as the business begins to supply
graphene in ever larger quantities it is essential that the quality
of the product is maintained. Working with nanomaterials is
extremely technical and if products are not produced to a
consistently high quality there is a risk that the products will
not deliver the potential benefits and customers may look for
alternative suppliers. When the business looks to gear up its
manufacturing capabilities to meet demand, it is essential that
even at higher volumes the quality of material is maintained. In
addition to working under strict operating procedures the business
has implemented a series of quality control measures to ensure
there is no drop off in product quality. Operating and quality
procedures are continually reviewed and where appropriate improved,
in order to ensure the highest quality is maintained at all
times.
-- Intellectual property - the Group's business is based on a
combination of patents granted, 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 provided the Group with no
recourse. The Group takes protection of its intellectual property
very seriously, with information restricted on a need to know
basis. Confidentiality clauses are used extensively throughout the
business in a variety of forms, and key files and documents are
maintained separately in a secure manner.
-- Financial, operational and management information systems -
the efficient operation and management of the Group depends on the
proper operation and performance of financial, operational and
management information systems. Any failure in such systems via a
cyber-attack may result in a loss of control and adversely impact
the Group's ability to operate effectively. The business takes a
multi-faceted approach to ensuring its systems are able to support
the business. This ranges from a series of back-up procedures,
training and physical and virtual defence mechanisms. Regular
reviews are undertaken to assess what additional precautions if any
are required.
-- Safety, health and environment - the Group's operations are
subject to numerous safety, health and environmental 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.
The Group undertakes regular training programmes to ensure best
operating practices are maintained. This is assessed through an
extensive audit programme along with health and safety meetings,
which are held on a monthly basis. Employees who work with the
product in its raw form operate under strict operating procedures
with designated protective clothing at all times. In addition, they
are required to undertake regular health checks.
-- 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 retain and attract 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. In order to both
attract and retain individuals with the necessary skills and
motivation, the Group has a range of incentives and support
processes in place. In addition to a comprehensive financial
package of both short and long term incentives, individuals receive
regular updates in an open and transparent manner, both on an
individual and team basis. Training and development programmes are
tailored to meet the needs and aspirations of the individual.
-- Acceptance of the Group's products - early stage of
operations and acceptance of graphene. The Group is at an early
stage of development and the success of the Group will depend on
the acceptance and attribution of value to graphene produced by the
business. Timescales to the successful development of applications
for graphene are significantly determined by the product
development cycle of customers. There can be no guarantee that
either acceptance of graphene or attribution of value will be
forthcoming. The business remains focused on its core markets and
applications where it believes graphene can offer real benefits as
a high-end additive. In addition to continuing to invest in and
develop in-house expertise, the technical teams look to maintain
close working relationships with customers, to provide technical
support and thereby reduce the time to market.
-- 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.
In October 2019, the Group commenced a consultation process with
its staff, with a view to extending the cash runway to at least Q4
2021.
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 to assess 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
16 October 2019
Consolidated income statement and statement of comprehensive
income
for the year ended 31 July 2019
2019 2018
Note GBP'000 GBP'000
----------------------------------------- ---- ------- -------
Revenue 5 50 77
Other income 74 126
----------------------------------------- ---- ------- -------
124 203
Cost of sales (472) (250)
----------------------------------------- ---- ------- -------
Gross loss (348) (47)
Operating expenses (4,554) (4,555)
----------------------------------------- ---- ------- -------
EBITDA (4,559) (3,984)
Exceptional costs - (307)
Depreciation of property, plant and
equipment (343) (311)
----------------------------------------- ---- ------- -------
Operating loss (4,902) (4,602)
Finance income 67 57
----------------------------------------- ---- ------- -------
Loss before tax (4,835) (4,545)
Tax credit 3 908 1,046
----------------------------------------- ---- ------- -------
Loss for the year attributable to equity
shareholders (3,927) (3,499)
Other comprehensive income - -
----------------------------------------- ---- ------- -------
Total comprehensive expense (3,927) (3,499)
----------------------------------------- ---- ------- -------
Earnings per share (pence per share)
Basic 6 (7.9) (8.2)
Diluted 6 (7.9) (8.2)
----------------------------------------- ---- ------- -------
EBITDA comprises loss before interest, tax, exceptional costs
and depreciation.
Consolidated statement of changes in shareholders' equity
as at 31 July 2019
Called
up Share
share premium Merger Accumulated Total
capital account reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- -------- ------- ----------- -------
As at 1 August 2017 446 18,641 1,231 (14,250) 6,068
Loss for the year and total
comprehensive expense - - - (3,499) (3,499)
IFRS 2 share based payments - - - 177 177
Issue of shares (net) 543 8,832 - - 9,375
---------------------------- ------- -------- ------- ----------- -------
As at 31 July 2018 989 27,473 1,231 (17,572) 12,121
Loss for the year and total
comprehensive expense - - - (3,927) (3,927)
IFRS 2 share based payments - - - 294 294
Issue of shares (net) - - - - -
---------------------------- ------- -------- ------- ----------- -------
As at 31 July 2019 989 27,473 1,231 (21,205) 8,488
---------------------------- ------- -------- ------- ----------- -------
Consolidated statement of financial position
as at 31 July 2019
Group Group
2019 2018
Note GBP'000 GBP'000
------------------------------ ---- -------- --------
Assets
Non-current assets
Intangible assets 155 78
Property, plant and equipment 1,645 1,881
Investments - -
Trade & other receivables - -
------------------------------ ---- -------- --------
1,800 1,959
------------------------------ ---- -------- --------
Current assets
Inventories 52 56
Trade and other receivables 171 197
Corporation tax receivable 1,323 415
Cash 6,135 10,443
------------------------------ ---- -------- --------
7,681 11,111
------------------------------ ---- -------- --------
Total assets 9,481 13,070
Liabilities
Current liabilities
Trade and other payables (993) (949)
------------------------------ ---- -------- --------
Total liabilities (993) (949)
------------------------------ ---- -------- --------
Net current assets 6,688 10,162
------------------------------ ---- -------- --------
Net assets 8,488 12,121
------------------------------ ---- -------- --------
Equity
Called up share capital 8 989 989
Share premium account 27,473 27,473
Merger reserve 1,231 1,231
Retained earnings (21,205) (17,572)
------------------------------ ---- -------- --------
Total equity 8,488 12,121
------------------------------ ---- -------- --------
Consolidated cash flow statement
for the year ended 31 July 2019
Group Group
2019 2018
Note GBP'000 GBP'000
-------------------------------------------- ---- ------- -------
Operating activities
Net cash used in operations 7 (4,184) (4,005)
Corporation tax received - 631
Finance income 69 53
-------------------------------------------- ---- ------- -------
Net cash used in operating activities (4,115) (3,321)
-------------------------------------------- ---- ------- -------
Investing activities
Purchase of intangible assets (77) (62)
Purchase of property, plant and equipment (116) (257)
Net cash used in investing activities (193) (319)
-------------------------------------------- ---- ------- -------
Financing activities
Net proceeds from issue of Ordinary
shares - 9,375
-------------------------------------------- ---- ------- -------
Net cash (used in)/generated from financing
activities - 9,375
-------------------------------------------- ---- ------- -------
Net (decrease)/increase in net cash
and cash deposits (4,308) 5,735
Net cash and cash deposits at 31 July
2018 10,443 4,708
-------------------------------------------- ---- ------- -------
Net cash and cash deposits at 31 July
2019 6,135 10,443
-------------------------------------------- ---- ------- -------
Net cash and cash deposits include:
-------------------------------------------- ---- ------- -------
Cash (maturity less than 95 days) 6,135 10,443
-------------------------------------------- ---- ------- -------
Net cash and cash deposits at 31 July
2019 6,135 10,443
-------------------------------------------- ---- ------- -------
Notes to the annual financial results
for the year ended 31 July 2019
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 limited by shares, incorporated and domiciled in
the United Kingdom and its registered number is 08708426. The
address of the registered office is The Wilton Centre, Redcar,
Cleveland, TS10 4RF. The Company was incorporated on 27 September
2013.
The consolidated financial information was approved for issue on
15 October 2019.
2 Basis of accounting
The consolidated financial information for the year ended 31
July 2019 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, IFRS IC
interpretations and those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The consolidated
financial information has been prepared on a going concern
basis.
The consolidated financial information included in this
announcement has been extracted from the audited financial
statements of the Group for the year ended 31 July 2019. The
content of this announcement has been agreed with the Company's
auditors. This announcement of financial results does not
constitute the Group's financial statements. The Group's 2019
Annual report and financial statements, on which the Company's
auditors, RSM UK Audit LLP, have given an unqualified opinion in
accordance with the Companies Act 2006, are to be delivered to the
Registrar of Companies following the Company's Annual General
Meeting.
The accounting policies used in the consolidated financial
information are consistent with those set out in the audited
financial statements. If any new IFRS standards or interpretations
are issued then these may impact on the financial statements of the
Group in future years. 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 consolidated 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 amounts, events or actions, actual events
ultimately may differ from those estimates.
The consolidated financial information does not include all
financial risk management information and disclosures required in
the annual financial statements.
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 credits
recognised arise from the actual and anticipated receipt of R&D
tax credits.
4 Dividends
No dividend has been proposed for the year ended 31 July 2019
(2018: 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.
The Group currently has one operating segment, as reported
revenue for the year is not considered to be of sufficient
magnitude to warrant identifying different operating segments. 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.
There were two material customers who generated revenue of
GBP9,000 and GBP5,000 (2018: GBP46,000 and GBP4,000).
The Group's revenue per geographic segment based on the
customer's location is as follows:
2019 2018
GBP'000 GBP'000
--------------- -------- --------
UK 12 54
Europe 18 12
Rest of World 20 11
--------------- -------- --------
50 77
--------------- -------- --------
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 year. The weighted average
number of shares in issue during the year used in the calculation
of basic earnings per share was as follows:
2019 2018
million million
----------------------------------------------------- ------- -------
Weighted average number of shares for basic earnings
per share 49.4 42.7
----------------------------------------------------- ------- -------
Diluted earnings per share is the basic earnings per share
adjusted for the effect of the conversion into fully paid shares of
the weighted average number of share options outstanding during the
year.
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:
2019 2018
GBP'000 GBP'000
---------------------------------------------- ------- -------
Basic earnings (3,927) (3,499)
Exceptional costs - 307
---------------------------------------------- ------- -------
Adjusted earnings (3,927) (3,192)
---------------------------------------------- ------- -------
Earnings per share (pence per share)
Basic (7.9) (8.2)
Diluted (7.9) (8.2)
---------------------------------------------- ------- -------
Adjusted earnings per share (pence per share)
Basic (7.9) (7.5)
Diluted (7.9) (7.5)
---------------------------------------------- ------- -------
The Group was loss making for the years ended 31 July 2018 and
31 July 2019, therefore, the dilutive effect of share options has
not been taken account of in the calculation of diluted earnings
per share or adjusted diluted earnings per share, since this would
decrease the loss per share for each of the years reported.
7 Notes to the cash flow statement
Group Group
2019 2018
GBP'000 GBP'000
------------------------------------------------------ ------- -------
Continuing operations
Loss for the year attributable to equity shareholders (3,927) (3,499)
Tax credit (908) (1,046)
Finance income (67) (57)
Depreciation of property, plant and equipment 343 311
Exceptional costs - 307
------------------------------------------------------ ------- -------
EBITDA (4,559) (3,984)
Depreciation of property, plant and equipment (343) (311)
Exceptional costs - (307)
------------------------------------------------------ ------- -------
Operating loss (4,902) (4,602)
Depreciation of property, plant and equipment 343 311
Disposal of property, plant and equipment 9 -
Disposal of intangible assets - 121
IFRS 2 share based payments 294 177
Impairment of intercompany loan - -
Increase/(decrease) in inventories 4 (10)
(Increase)/decrease in receivables 24 (96)
Increase/(decrease) in payables 44 94
------------------------------------------------------ ------- -------
Net cash used in operations (4,184) (4,005)
------------------------------------------------------ ------- -------
8 Share capital
Number
of Total
Ordinary
shares GBP'000
--------------------------------------------------- ---------- -------
Allotted, called up and fully paid
At 1 August 2018 - Ordinary shares of 2 pence each 49,429,380 989
Issue of shares - -
At 31 July 2019 - Ordinary shares of 2 pence each 49,429,380 989
--------------------------------------------------- ---------- -------
9 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Transactions with shareholders
The following purchases with shareholders and companies
controlled by former Directors of the Group were recorded,
excluding VAT, during the year:
2019 2018
GBP'000 GBP'000
--------------------------------------------------- ------- -------
Durham University (shareholder)
Staff secondment, consultancy and other fees 33 (4)
Top Technology Limited (controlled by shareholder)
Non-Executive Director fees 15 15
IP2IPO (shareholder)
Non-Executive Director expenses 1 1
The following balances were owed by the Group at the end of the
year in respect of the transactions set out above:
2019 2018
GBP'000 GBP'000
----------------------- ------- -------
Durham University 10 10
Top Technology Limited 5 5
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:
2019 2018
GBP'000 GBP'000
------------------------------------------------- ------- -------
Short term employee benefits (excluding bonuses) 746 705
Bonuses 181 100
National insurance contributions 103 82
Pension contributions 47 48
Payments to third parties 15 15
IFRS 2 share based payments 167 84
1,259 1,034
------------------------------------------------- ------- -------
Remuneration of key management includes remuneration paid by
subsidiary undertakings in the current and prior financial
years.
At 31 July 2019, GBP1,000 was owed to Adrian Potts in respect of
business expenses incurred.
10 Seasonality
The Group experiences no material variations in performance
arising due to seasonality.
11 Availability of Annual Report
It is anticipated that the Annual Report will be sent to all
shareholders on 11 November 2019. Electronic copies of the report
and this announcement will also be available on Applied Graphene
Materials' website at www.appliedgraphenematerials.com.
12 Annual General Meeting
The 2019 Annual General Meeting is to be held at The Farndale
Room, The Wilton Centre, Redcar, Cleveland, TS10 4RF on 17 December
2019 at 11.00am.
13 Post balance sheet events
As set out in the CEO's statement, the Company has recently
entered into a period of consultation with staff regarding a
realigning of the Company's activities and reduction in costs.
Whilst the full financial effect of these changes will not be
achieved immediately due to the costs of implementation, the cash
operating cost base of the Company of GBP4.3m in the year to 31
July 2019 is forecast to fall by circa GBP0.9m and GBP1.1m for the
years ending 31 July 2020 and 2021 respectively. Subject to
consultation, there is expected to be a cash cost of circa GBP0.2m
to implement the restructuring.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UVAKRKRARAAA
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