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Applied Graphene (AGM)

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Wednesday 13 October, 2021

Applied Graphene

Full year results for the year ended 31 July 2021

RNS Number : 8675O
Applied Graphene Materials PLC
13 October 2021
 

 

 

 

13 October 2021

Applied Graphene Materials plc

("Applied Graphene Materials", "the Group" or "the Company")

Full year results for the year ended 31 July 2021

Applied Graphene Materials (LSE:AGM), the producer of specialty graphene materials and dispersions, announces its full year results for the year ended 31 July 2021.

 

Operational and commercial highlights:

 

· 40 products available to distributors (2020: 27)

· 19 customer products launched (2020: 8)

· 181 projects in sales pipeline (2020: 109)

Coatings:

· Approval for use of a new graphene-enhanced primer with Blocksil, to complement use of its AGM graphene-enhanced Top Coat MT product launched to consumers in January 2020.  This system is being used with Network Rail and RTE

· Strong customer uptake expected from products being developed with Stanvac and a leading floor coatings manufacturer

· New customer product launches:

Two new wax based car care product from EZ Car Care

Two new wax based car care product from Infinity Wax

Two new wax based car care products from Constellation Chemicals

Tru-Tension launched new detailing spray product

· AGM product launches:

a ground-breaking new range of eco-friendly graphene nanoplatelet dispersions that will enable paints, coatings and composite materials customers to improve the sustainability of their product formulations in response to growing market pressures

Launch of Innovation Accelerator programme

· Scale up validation testing is due to commence with the UK Environment Agency at sites in the UK whereby our formulated products will be tested on structure applications for environmental exposure. A longer-range environmental exposure plan has also been started with French environmental testing site, Institut de la Corrosion. 

· Growth in total pipeline engagements to 200 (2020: 117) including 19 completed developments (2020: 8) and resulting revenue potential to £3.7 million (2020: £3.6 million)

Composites and functional materials:

· Positive continuing progress with core composites customer

· Potential for TP300 product for thermal adhesive and heat-dissipation applications

Distribution:

· Further distributors added to enhance our regional presence in Turkey (Gobarr) and South Korea (ManHo Polymers) and growth of our customer-facing representation headcount to around 89 including AGM's direct sales team

Strategic highlights:

· Fundraise of £5.5 million (net) announced in January 2021 and successfully completed in February 2021, extending the Group's cash runway beyond 31 January 2023

· In partnership with the EU REACH Graphene Consortium, achieved ECHA accreditation for volume supply of graphene powder (up to 10 tonnes' volume), addressing a significant barrier to deployment at scale. Central regulatory workstream with EPA for USA market

· Green energy applications identified as a new area of opportunity for our platform dispersion and application technology with initial focus on hydrogen/battery applications

· Branding refresh completed together with new website and improved communications platform

· Continuing IP development

· Cross-trading of shares in USA on OTCQX Best Market in USA from July 2021

 Post year end

· Four new customer product launches were announced on 20 September 2021 - one of which was before 31 July 2021 and is included in the numbers above

 

· Joined the Graphene Engineering and Innovation Centre (GEIC) at the University of Manchester as an associated Tier II Partner through the special conditions offered exclusively through The Graphene Council

 

 

 Adrian Potts, Chief Executive Officer, commented:

 

 

 

 

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

 

Singer Capital Markets                                                                                                    +44 (0) 207 496 3000

Peter Steel / Amanda Gray

 

Allenby Capital Limited (Joint Broker)              +44 (0) 203 328 5656

Nick Athanas / Liz Kirchner (Corporate Finance)

Matt Butlin / Kelly Gardiner (Sales and Corporate Broking)

 

Hudson Sandler                                                                                                  +44 (0) 207 796 4133

Nick Lyon / Emily Dillon

 

Notes to Editors

 

Applied Graphene Materials - For the last decade, AGM has been at the forefront of harnessing the possibilities of graphene. Founded originally by Professor Karl Coleman, the Group has grown from an academic idea from Durham University to a world leader in the development and application of graphene nanoplatelet dispersions for customers in the coatings, composites and functional materials sectors. The Group utilises its proprietary bottom-up manufacturing process to produce high purity graphene nanoplatelets. Its expertise in dispersion chemistry enables AGM to create optimised, stable and easy to handle dispersions that customers use in real-world industrial products.

 

AGM's unique approach enables industries to fully realise the potential of graphene in a simple, safe and easy to formulate way. AGM, based at the Wilton Centre on Teesside, was admitted to AIM in November 2013, raising £11 million. The Group successfully raised £8.5m in January 2016 and a further £9.8m in November 2017. Since August 2020, the Group's shares are also listed on OTCQB in the United States and, in January 2021, the Group successfully raised a further £6m gross. As a result of the funding support and their industry leading technology platform, AGM have been able to develop a significant sales distribution network covering Europe, North America and Asia. The Group continues to work closely with industrial partners, and have seen the successful launch of numerous commercial products enhanced by their graphene dispersions.

https://www.appliedgraphenematerials.com/  
 

Chairman's statement

 

Introduction

I am pleased to present the Group's full year results for the year ended 31 July 2021. The last year has been one of disruption and uncertainty but we have come through it strongly. The lockdown and restrictions due to COVID-19 lasted much longer than initially anticipated and our revenue was impacted as our customers were unable to sell their products.

 

The new distributors that we appointed in 2020 have added significantly to our sales opportunity pipeline and we now have 19 launched customer products and 181 applications in the sales pipeline. Car care applications in particular have grown substantially.

 

Financial performance

The Group recorded an EBITDA loss of £3.1 million for the year (2020: loss £3.1 million). Net cash was £6.3 million at 31 July 2021 (2020: £3.7 million). While the loss recorded is in line with the previous year, it continues to reflect the ongoing investment made in supporting our customer base as they incorporate graphene into their products and develop new applications.

 

In February 2021, we completed a fundraise totalling £5.5 million (net of costs) which extends our cash runway beyond 31 January 2023.

 

Highlights

The business has continued to gain further momentum in the year ended 31 July 2021, and since then, with highlights including:

· Eleven new products launched by customers bringing the total to 19

· Thirteen new products available through our distribution channels including the Innovation Accelerator Programme bringing the total to 40

· 181 active projects in the sales pipeline

· Two new distributors added during the year

· Achieved ECHA accreditation for volume supply of graphene powder (up to 10 tonnes' volume)

· Green energy applications identified as a new area of focus for our platform dispersion and application technology with initial focus on hydrogen/battery applications

· Four new customer product launches were announced on 20 September 2021 - one of which was before 31 July 2021 and is included in the numbers above

Our culture

It is essential that we bring together our employees' diverse expertise and work together to meet our customers' expectations. This collaborative approach sits at the heart of our culture.

 

As such, we view our employees as critical stakeholders. We remain committed to ensuring employees receive the required development and training opportunities to enable them to be at the forefront of the graphene market.  We focused on safeguarding our employees during lockdown and have been able to safely continue our operations. We did not furlough any staff and we have encouraged flexible working in line with government guidance.

 

I am proud of the way that our employees have responded to the pandemic and I would like to thank them all for their efforts under such challenging conditions.

 

In every aspect of our business, we seek to operate in compliance with all laws and regulations and want our employees to work in a manner that is professional, ethical and open. Our employees are encouraged to report any activities in breach of these principles through the Group's whistle blowing policy, which includes direct access to the Board's Non-Executive Directors.

 

All of our stakeholders are very important to us and I would like to thank our suppliers and customers for their great support during this period. In particular I would like to thank our investors for their ongoing support and encouragement which was clearly demonstrated by the fundraise that we performed in early 2021.

 

Corporate governance

We continue to fully embrace the Quoted Companies Alliance Corporate Governance Code. Further details regarding our approach to corporate governance are detailed within the Governance report on page 44 of our Annual Report.

 

Sustainability

We take our responsibility to all stakeholders including employees, shareholders, distributors, customers, suppliers and the wider community extremely seriously. We recognise that a focused and balanced approach to sustainability will ultimately benefit all stakeholders and the Group alike.

 

This is evidenced by the continued work we have done this year on the ongoing EU REACH programme, where we provide technical input on the evaluation and assessment of the safe use of graphene in industrial applications. This long period of work resulted in ECHA granting approval for a volume threshold of 1 to 10 tonnes of powder usage per annum of graphene products supplied by individual members of the Graphene REACH registration consortium, of which AGM is a founding member. We continue our commitment to regulatory approvals in other territories.

 

During July 2021 we launched a ground-breaking new range of eco-friendly graphene nanoplatelet dispersions that will enable paints, coatings and composite materials customers to improve the sustainability of their product formulations in response to growing market pressures.

 

We have also developed an internal action plan to address certain aspects of ESG best practice over the next twelve months.

 

Board changes

Mike Townend resigned as a Non-Executive Director during the year. Mike has been a member of the Board since 2014 and the Board thanks him for his contribution to the business.

 

Strategy and outlook

Through sound technical data, we have demonstrated that we have real applications of graphene which satisfy customer needs in the marketplace.  We believe that we have positioned the Group so that it can commercially exploit the technology developed to date.

 

We have a very strong range of products and applications in the coatings sector as well as in adjacent markets where our platform technology can be applied. We are now at an inflection point as we can expand our research and development activities into other areas. We have identified hydrogen storage and battery applications as part of a green energy market with significant potential for graphene application and we already have projects underway. This is very exciting and I look forward to reporting on our progress in future years.

 

The Board remains confident that the Group is ideally placed to achieve long term commercial success against its stated strategy given its IP, know-how, and increasing customer momentum. Our belief that we are becoming a global graphene market leader is stronger than ever and the Board sees Applied Graphene Materials as well placed to meet its ambitions.

 

 

 

Bryan Dobson

Chairman

12 October 2021

 

 

CEO's statement

2021 Overview

AGM has made clear progress this year with both increased levels of customer engagement and technology development, despite the ongoing challenges related to COVID-19. While managing these difficulties, we have launched new and exciting AGM products that offer customers in our core markets a sustainability advantage, and we have seen a promising number of new customer products coming to market. To realise the real benefits of graphene in a finished product, users have to utilise a well dispersed form of graphene. Therefore, our success is firmly based on our dispersion technology and application know-how.

In combination with our own direct sales approach, AGM's distribution partners have increased their customer engagements. This has been supported by AGM's ability to offer standard dispersed products. Two further distributors were added in the period, and we expect to engage further partners in new territories.

The expertise of our global network of distributors is aligned to our core market: The protective coatings sector is where much of our current activity is centered. New nanomaterials introduced to this sector need to demonstrate that they are safe, consistent and easy to integrate. We are therefore focused on proving that our dispersion technology works by backing it up with solid data. Our developed dispersion product offerings also read-across well to other sectors, where liquid-based dispersions are routinely used for the integration of additives.

We have seen particularly strong progress in the car care sub-sector of protective coatings with eight new products introduced to the market since our last annual report. This innovative, fast moving market represents a good long term revenue development opportunity and we anticipate further customer product launches, based on positive testing momentum. Progress within the more traditional Protective Paints and Coatings sector is positive, though the cycle to integrate, test, optimise and approve is inherently longer. Two new anti-corrosion primer products were brought to market by customers.

We have continued to develop our technology platform, focusing on the successful adoption of graphene dispersions in coatings, with good read across into other sectors such as composites, adhesives and inks. We are now well-equipped with a broad platform of dispersion products that incorporate both synthesised and exfoliated graphenes. We provide background guidance on their use and supporting data in exemplar formulations for a broad spectrum of applications, from mid to heavy corrosion environments, chemical resistance applications and beyond.

We continue our committed focus on developing regulatory approval for our products in parallel with development activity and integration of new distribution partners. We believe that by producing dispersions we help to manage the safe handling of nanomaterials, during both customer formulating and product manufacture through to management of disposal of product.

Efforts are continuing apace to add further to our IP portfolio. We are committed to further increasing our dispersion manufacturing capacity to meet anticipated demand resulting from successful sales of our customers' products. We have put significant effort into the development of dispersions to extend our product scope to now include exfoliated graphene products.

Having become leaders in the dispersion of a broad range of graphene types, we are in a strong position to extrapolate our coatings and dispersions technology platform further. Key areas we are now focused on further developing are thermal conductive materials for battery technologies and dispersions for use in batteries, to support demand from the growing EV industry, along with addressing a number of potential applications for graphene in hydrogen power.

Sustainability is emphasised with our external product offerings, in particular addressing alternative dispersion media to reduce Volatile Organic Compounds (VOC) and graphene additives to potentially reduce toxic materials in a range of applications including coatings, composites and car care consumer products. We launched a new and exciting eco-friendly product range in the year which will build upon our water-based dispersions offering. The addition of graphene also offers the opportunity to enhance product life cycles, which is attractive for customers looking to improve the long term sustainability of their products.

Commercial progress

General

AGM's sector-leading innovation in both graphene nanoplatelet dispersion and application know-how enable us to drive forward our commercial engagement. Our expertise has substantially expanded to include exfoliated graphene products. AGM offers the missing pieces of the end-to-end challenge often found when seeking to use graphene nanoplatelets, namely:

Know-how on the challenge of correctly dispersing graphene nanoplatelets

Practical, innovative additive solutions

Application know-how - proven performance gains in real exemplar systems backed with practical data and use advice

Working with both synthesised and exfoliated products

Ability to walk with the customer through their integration using a range of work packages as appropriate to need. Paid-for Innovation Accelerator packages are also available to customers to fast-track development

 

Our approach enables a greater potential for successful outcomes and avoids the disappointment around the great possibilities with graphene not being fully realised due to poor execution, lack of know-how, or Environmental Health and Safety (EHS) concerns.  Standardising our dispersed product range has been a key focus to afford end-users a reliable, repeatable product range. 74% of product shipped in the year was from our standard product range. Where customers have more challenging formulating applications to resolve, our dispersion know-how to determine the most appropriate graphene and dispersion formulation for a particular end-use is outstanding. As such, we also work with customers to provide customised dispersions to suit their needs.

 

For distributors, having a standard easy-and-safe to use product portfolio is important to enable them to develop solid traction in engagement with our products with confidence. The number of pipeline opportunities has grown accordingly, with distributors handling routine enquires about our products and deploying good levels of technical support.

 

Revenue for the year at £123,000 showed a positive upwards trend compared to the prior two years, though remained modest due to ongoing customer engagement delays due to COVID-19.

 

With activity with our customers constrained, we have focused on driving in-house technical developments through our technology group. Our expertise in dispersing our own synthesised graphenes has now been fully applied to other exfoliated products to enable a broader applicability of graphene nanoplatelets of various forms. As such, we are confidently able to offer a breadth of products using both synthesised and exfoliated graphenes to suit the end application and customer need.

 

Addressing the customer need for a more eco-friendly and sustainable approach to product formulating, we have also recently developed and launched a new product range which encompasses biobased, eco-friendly and zero VOC solvent systems. This range of materials is designed to help the formulator utilise the benefits of graphene materials, but within the context of using a platform of ecofriendly resins and solvents. With this new Genable 1700 product range to complement our established water-based dispersions products, these represent an excellent platform technology to enable formulator flexibility where demand for sustainable solutions is prevalent.

 

AGM's core market continues to be the protective coatings sectors, where graphene nanoplatelet technology in the correct dispersions format has the potential to create higher performance products with higher added value for the customer. Long range testing in support of the protective coatings sector continues to be a core theme of our technology development activity, with good progress being made in exemplar applications testing for chemical resistance for flooring, chemical transport and storage applications through to harsh corrosion environments typified in offshore installations. The know-how which goes with this development activity is invaluable in guiding customer integration of our nanoplatelets dispersions to excellent effect.  We use this platform dispersion technology to good effect to read across to sectors such as composites and other liquid matrix products.

 

AGM's future revenue prospects firmly sit with volume uptake of our customers' products which contain our graphene dispersions. Once launched and established, we expect to achieve consistent repeat order volumes for dispersions for use in a growing number of launched products. Our route to sustained revenue growth is through continuous customer-facing development to enable new end-users to both realise the performance benefits of graphene dispersions in their products, and to do it in a safe and effective manner. As such, our efforts in regulatory approval for our graphene dispersions have become a central workstream, running in parallel with (rather than trailing) technology development programmes.

 

Revenues in the twelve months were generated from three key application areas: Protective coatings, Composites including Elastomers and Car Care. The impact of COVID-19 was, we believe, significant in terms of take-up rate and volumes, and the impact on development efforts in customer facilities. With a solid recovery in the coatings industry anticipated and improving projections for composites activity, we anticipate progressive revenue growth in our core sectors.

 

Pipeline overview

Increased customer activity is reflected in our pipeline of development opportunities. We have seen positive growth in the overall numbers of customers who have taken product to evaluate in the period from 109 to 181. As at 31 July 2021, this was as follows:

 

 

Agreement on scope of sampling and engagement

Initial testing and interpretation of results

Repeat testing for consistency and review of results

Final product trials, formulation and specification

Final commercial agreement

Launched

Total

31/07/21

79

70

15

9

8

19

200

31/07/20

19

57

18

12

3

8

117

31/07/19

12

45

14

13

8

5

97

Positive progress has been made, particularly with our distribution partners who have proved effective in engaging with customer opportunities, offering AGM's dispersed graphene product range. This has, of course, taken time to establish, but the results reflect positive momentum with this conduit to market - approximately 41% of engagements are now being handled by distributors. AGM's distributors for the most part operate within the supply chain for coatings, and this represents good alignment with our strategic approach to maximise traction in this sector. As well as working closely with individual customers to introduce graphene dispersions, our distributor engagements are followed through with strong Technical Support to ensure the correct technical solution is achieved with those customers. This, in turn, is anticipated to lead to product launches by our collective customers and volume demand for our dispersed products.

Protective Coatings continues to be the primary area for customer engagement, with some 65% of activity in this sector. Typical engagement is broad ranging from industrial coatings, flooring and heavier corrosion and chemical resistant applications.

 

Agreement on scope of sampling and engagement

Initial testing and interpretation of results

Repeat testing for consistency and review of results

Final product trials, formulation and specification

Final commercial agreement

Launched

Total

Coatings

51

51

11

4

2

6

125

Composites

5

2

1

1

1

3

13

Functional materials

9

1

2

-

1

2

15

Car care

14

16

1

4

4

8

47

Total

79

70

15

9

8

19

200

As is normal with the introduction of new technology, lead time for product evaluation, testing, optimisation and the final path to product launch can be extended. This is especially true in the protective coating sector where the time to complete even accelerated testing can be significant. By contrast, a subsector of the Protective Coatings market where we have seen particularly strong traction in the period is with Car Care products. The benefit in this sector is that new customers tend to have a relatively short formulation and test cycle, resulting in quicker-to-market opportunities. Within the pipeline, some 40 further product engagements were from the car care sector as at the end of July 2021.

Although the number of pipeline engagements increased in the period, factored valuation of the current pipeline remained static at a total of £3.7m including launched products reflecting a more conservative approach applied to distributor engagements in their earlier stages, given the extra steps involved in the route to a successful product launch with a customer through a distributor.

Distribution

AGM announced the following Distributor appointments in the 12 month period ended 31 July 2021:

Gobarr (Turkey)

-  ManHo Polymer (Sth Korea)

 

These additions give AGM improved regional coverage. Our next target areas for representation development are in South America and India, with announcements anticipated in due course. We believe that we have the correct strategy to work through technically capable distributors with a range of well supported innovative standard dispersion products. Objectives for what has been the first year for many of these partners have been broadly met and we look forward to acceleration of engagement in the future. 

 

Protective Coatings Sector

Our core focus has been the combination of developing robust dispersion products which will enable liquid system-based end-users to deploy our products easily, consistently, and safely to good effect. The protective coatings sector is our strategic focus whereby:

-  We have developed a broad dispersion technology suitable for the industry with good read across to liquid-formulation adjacencies such as composites, inks, elastomers etc

-  We have demonstrated the practical utility of graphene nanoplatelets in starting point formulations to excellent effect

-  We have developed compelling data to demonstrate the performance advantages that graphene can achieve in a well-formulated coatings system to demonstrate that graphene works

-  We have generated solid, practical guidance for customers to help them integrate our dispersion additives into their coatings formulations

-  We actively use the coatings sector experience to read across to other potentials.

 

Key performance gains have been demonstrated for barrier and anti-corrosion performance in coatings through the introduction of graphene nanoplatelet materials via a dispersed product format. AGM goes the extra mile to use exemplar starting formulations to test and demonstrate the utility of graphene used in practical coatings solutions. Through the past twelve months, we have completed work to further demonstrate graphene's potential in increasingly harsh coatings application areas. 

 

Highlights of key customer engagements within the Protective Coatings sector with a focus on anti-corrosion benefits are as follows:

 

· The introduction of a new primer product by Blocksil to complement their Top Coat MT product. This system is being used to good effect on refurbishment of UK Network Rail trackside enclosures. Expectation is for this product to significantly increase in volume, along with their Top Coat MT with post-COVID-19 business volume recovery with Blocksil. Activity with RTE antennae has begun with coatings applications completed on three structures.

· Development of Teal & Mackrill's graphene enhanced primer is progressing, focus has now turned to completing the external certification for this product.

· JBL - dispersion volume run rate has been steady to supply their range of aerosol-based graphene coatings, including white-label products. The development of further product applications is anticipated to yield a broader set of products in the aerosol coatings space. 

· Stanvac is a new customer win with the development of a coatings application combining electrical conductivity with barrier protection. This Indian customer is in the final stages of customer field trials with their product and it is anticipated that volume demand for graphene dispersions will ensue upon finalisation of their customer approvals.

 

· Positive progress with a leading floor coatings manufacturer in the field of protective barrier floor coatings for concrete using the well-defined barrier performance attributes of graphene nanoplatelets. We anticipate strong uptake of this product once launched to market.

· The successful development of an aluminium anti-corrosion coating system at a coatings customer.

· The launch of AGM's innovative Genable 1700 eco-friendly product range to service sustainability objectives with our customers.  

· We also anticipate launch of an exemplar finished epoxy primer formulation for use with customers who wish to fast-track potential of a graphene enhanced product. Work is completed in this area and product is available as an option as part of the customer engagement process.

 

Car Care

Customer engagements continue apace in this sector with a strong focus on water-based and specific solvent-based dispersions to suit typical detailing and wax product formats. AGM has a strong product portfolio suited to this sector. In car care products, graphene offers performance benefits such as UV protection, corrosion protection and changes to water shedding, leading to longer lasting aesthetics.

 

Six customer products containing our graphene dispersions have been announced as launched in this sector in the period, including Infinity Wax QDX detailing and car wax products, Halo Autocare wheel wax product, two car care products from Constellation Chemicals and a bike detailer from Tru-Tension. Four product launches have also been announced post-period, with three products from one customer and one product from another client which was launched before 31 July 2021. Pipeline engagements in this sector are strong and we anticipate several further customer product launches soon with a number of customers in the final stages of product testing. 

 

Composite Materials

Positive progress has been made with materials supply to Infinite Composites Technologies for their manufacturing and development of innovative Type V linerless pressure vessels for launch vehicle and satellite applications, fulfilling various funded project requirements. It is very pleasing to also note that ICT has increased demand for pressure tanks for a number of new projects in the areas of racecar applications and additional projects for hypersonic and hydrogen-powered aircraft. This represents an important diversification into new areas for hydrogen technologies and propulsion applications. With the emerging opportunity in hydrogen technology and pressure vessels forming an integral part of this, we see solid opportunities in the area of graphene-enhanced composites pressure vessels in tandem with ICT's innovative technologies. 

 

Modest sales of graphene dispersions were made to SHD Composites to feed their prepreg manufacturing demand for their MTC9810 product. As reported last year, output from the NEAT project has progressed, although much slower than anticipated due to limited resources to complete the work at the customer. We await feedback from the customer in due course. We continue to develop data to support customer development through a test programme with The Graphene Council. through the University of Maine's Advanced Structures and Composites Centre. Composite materials evaluation is also progressing with other composites customers using our graphene dispersions.

 

We anticipate continuing supply to an unnamed elastomer-based customer where our water-based graphene dispersions are used to good effect for enhanced product performance.

 

Functional Products

Thermal paste adhesive activity has been progressing with a customer for aerospace applications. The product is reported to fulfill the requirements of low-density and high thermal conductivity in an adhesive format and is reported to be close to completion of approval for use. 

 

Ink products containing graphene nanoplatelets have been used previously to focus on a specific mechanical application in composites. We have broadened the platform for such inks and are now focused on formats we have developed for printable conductives as a new potential revenue stream. 

Technology, regulatory and manufacturing status

Technology

To further enhance customer service capabilities and technology development activities, we are in the process of integrating coatings spray booth capabilities on site. A grant to support this effort was secured from Tees Valley, for which AGM is highly appreciative.

 

Progress with our protective coatings platform technology workstream has been extensive. Our development cycle has successfully enabled us to increase our support for customers seeking to engage with graphene in their product innovation. We have excellent solutions to meet the need for solvent based coatings formulations requiring enhanced corrosion and barrier performance across a broad spectrum of applications. This includes general industrial applications in the C3 category through to heavy corrosion applications under C4, C5 and even CX ratings. The in-house work to not just develop dispersions suitable for such formulations but to demonstrate these with practical testing and data generation sets AGM apart in this field.

 

Chemical resistance testing has resulted in exciting potential for graphenes in an expanded portfolio of protective coatings applications including floor coatings, chemical transport applications and storage application coatings. We look forward to further customer engagement in this field following the generation of supportive test data for a range of applications.

 

Effort to tackle the challenges of dispersing 2D high aspect ratio materials into water-based additives have been addressed and we have products to meet sustainability objectives. We have further extended this with our eco-friendly product launch. Further work has successfully continued to develop improvements in the area of coatings adhesion when using water-based systems with graphene additions.

 

Work continues to benchmark a range of graphene nanoplatelets against other commonly used additives in the coatings industry. A high % use of conventional additives such as glass flake can be effectively replaced with very low % loadings of graphene, leading to formulator flexibility and in some cases, coating cost reduction.  Investigative efforts also continue in the use of hybrid blends of graphenes to optimise performance in coatings applications. It is testament to our formulating capabilities that we are now able to offer combinations of products in custom dispersions to suit a broad spectrum of end-use opportunities. We anticipate several further product launches around these various subjects with a view to maximising the revenue opportunity with each customer's potential in the sector.

 

To further back up the data we generate from accelerated testing, we are now committed to proof of effectiveness in real world testing in several applications. Scale up testing is due to commence with the UK Environment Agency at sites in the Northeast of UK whereby our formulated products will be tested on structures for longer term environmental exposure. A longer-range environment test plan has also been started with French environmental site, Institut de la Corrosion.  We also have primers being actively tested in a freshwater environment on the steel hull of a narrowboat. All of this combined activity is foundational to prove that our technology solutions provide real, sustainable opportunities for AGM's graphene products to be confidently adopted.

 

Good progress has been made in the formulating and printing demonstration of conductive inks. These materials have a range of application from textiles to composites and beyond. Useful levels of electrical conductivity have been achieved on a consistent basis and I am pleased with progress in this area. I look forward to further exploitation of this potential.

 

A program of work is ongoing with experts at Grafine Ltd, based at the Graphene Engineering Innovation Centre at the University of Manchester, to develop textile coating applications using graphene for a range of end-uses. Harnessing the properties of graphene for coating barrier performance is anticipated as the major gain in this area, although other properties such as abrasion resistance (durability), thermal conductivity and electrical conductivity are also attractive attributes of graphene which may contribute to future textile performance.

 

Regarding dissemination of data, our ability to attend technical conferences has been badly impacted in the twelve month period due to event cancellations. Technical presentations on our innovative coatings technologies were made to the American Coatings Association conference 2021 covering Innovative water-based solutions for coatings and to the European Coatings Show conference 2021 with a presentation on the enhanced performance of CX high corrosion environment coatings.

 

Regulatory

As reported in January 2021, Regulatory approval was granted for up to 10 tonnes of graphene powder for each of the REACH Consortium partners. This represented a major step forward for the regulatory adoption of graphene as a material in the EU. Effort continues to progress the UK equivalent post-Brexit.

 

Considerable effort has been and continues to be spent to pursue securing regulatory approval in the USA through the Environmental Protection Agency (EPA). Our initial objective has been the regulatory approval of our AGNP-35 product, using a low volume exemption approach.  Work continues in this area with ongoing dialogue with the EPA with the aim of securing a volume commercial position to service our customers keen to work with our synthesised graphene. In the meantime, we are progressing US engagements with accepted products. Approvals in other regions are being approached as we expand our distributor base.

 

AGM also announced through the year that we had joined the NanoTechnology Industries Association (NIA) to further assist in regulatory matter related to the volume adoption of nanomaterials technologies. We also continue with supporting dialogue through The Graphene Council who are strongly supporting positive progress in the area of regulatory acceptance of graphene nanoplatelets for commercial volume activity.

 

IP

Our efforts continue in this area to add IP value to the business. Patent activity in the period has included good progress on a number of our patent applications and dealing with examiner questions and comments. Trademark approval for the Genable brand was granted in Canada, China, Japan, Republic of Korea and Turkey.

 

Manufacturing

Our volume capacity programme has been fully focused on the development of dispersion methodologies, to both expand scale and accommodate the integration of exfoliated graphene materials into our dispersion products range.

 

With the clear appreciation that "graphene nanoplatelets" are not a single material and have diverse characteristics, each type of material demands significant and separate attention to detail in integrating it into useful media. Considerable time has been spent developing stabilised, repeatable quality dispersions with A-GNP45 exfoliated product. We have been particularly successful in this area, as recognised with our Genable 1400 product range, and latterly the development of our Genable 1700 ecofriendly product family. The latter product set incorporates both A-GNP35 synthesised graphene and A-GNP45 exfoliated product, to provide maximum flexibility and broad reach for customer selection. It is a testament to our technology team that both types of manufactured graphenes are now offered as standard product dispersions through our sales conduit.  Further work continues to bring other suppliers into the mix.

 

Further planned phased development of the dispersions capacity is currently ongoing to enable meeting the anticipated future needs of our customers for the next 24 months. This step by step approach enables us to maximise potential revenue whilst managing cash resources effectively.   

 

Technology roadmap

As technology leaders in the development and application of graphene nanoplatelet dispersions, our roadmap for further innovation with graphene is anticipated to develop in a number of areas as follows:

-  Continued development of our strategically central protective coatings technology platform in key identified areas of opportunity. This will continue the theme of appropriately formatting graphene nanoplatelets in fit-for-purpose dispersions which are able to serve the needs of emerging opportunities as well as enabling read-across to other adjacencies

-  Completion of work in elastomeric coating technology followed by direct product offerings

-  Sustainability project evaluating graphene in erosion coatings with focus on wind energy applications in collaboration with Northumbria University

-  A focus on battery technology in key areas:

Extrapolation of development of our excellent thermally conductive products to meet the specific needs of heat dissipation with lithium-ion batteries and beyond

Working with Universities, development of graphene based battery solutions (in the area of Lithium Titanate and Silicon Lithium solutions)

Activity at Warwick Manufacturing Group (WMG) on dielectric materials

-  Development of graphene materials applications for hydrogen fuel cell technology to meet the anticipated growth in this technology as it matures.

-  Extrapolation of use of graphene in composite pressure tank applications for storage of liquid-phase hydrogen. Anticipated need for pressure vessels is high and we see good opportunity in this area to develop composites integrating graphene.

 

Engagement with the GEIC

Following our recent announcement, it is clear that AGM has enabling technology and capability to offer graphene end-users who are keen to understand the practical mechanisms for successfully deploying graphene nanoplatelets in protective coatings, car care products, composite matrix systems, elastomers, inks and other matrices. We now believe that having spent time aggressively developing our technology platform to a suitable technology readiness level, the time is right to join the substantive activity with the Graphene Engineering and Innovation Centre (GEIC) in Manchester, UK. 

 

AGM has joined the GEIC at the University of Manchester as an associated Tier II Partner through the special conditions offered exclusively through The Graphene Council (TGC), and we look forward to further accelerated engagement and to the positive benefits of being part of the larger graphene community in UK.

 

Sustainability

The review of the positive benefits that graphene addition can bring to product life cycle benefits remains central to our efforts in pursuing sustainable technology offerings for the protective coatings industry. The use of graphene to enhance barrier performance, achieve improved anti-corrosion capabilities, extend the life of coatings and reduce the asset maintenance schedule and use of replacement coatings is, we believe, a powerful sustainability offering. We believe this will be realised by the protective coatings industry as pace gathers for the increase in water-based technology, the reduction of VOCs and the push for more sustainable materials technologies on a global basis. Demonstration of graphene as a material that really works in this space through progressive customer product launches is also a key metric for our success and promotion of graphene as a positive solution in the industry. 

 

Water-based dispersions using a range of graphene types are available to meet the needs of the sustainability objectives of a number of customers and potential future engagements. Our recently launched eco-friendly dispersions range further enhances the opportunity to introduce sustainable products into formulating efforts in the form of bio-based resins, solvent free resins, low VOC solvents and VOC exempt materials.

 

Our review of our ESG standards and approach to sustainability continues both with our product development and in-house operations.

 

A key area of focus for us is in servicing our customers with the best quality of service possible as well as meeting the sustainability expectations that they have of their supply chain. The in-housing of packing and dispatch functions will also enable better control of process and also affords the opportunity to employ full use of recycled product packaging. We anticipate this change will be completed in the next six months.

 

Further initiatives are planned to limit our carbon footprint, as we measure and determine the best opportunities for progress to be made. This is anticipated to include our suppliers as well as in-house activity. We have a continued push to update our employment policies and train our staff in developing awareness.

 

Update on COVID-19 impact

Throughout the fiscal year, we have maintained best working practices within the AGM facility to ensure all staff continue to be kept as safe as possible. In line with the impact on the chemicals industry and the coatings industry, we have seen markedly slower than desirable activity levels with customers. This has been seen in two key areas; firstly a reduction in overall development activity within customer organisations which has inevitably delayed progress on evaluation of our products and secondly continuing limited access to assets for coating application. This has, in turn, led to a slower development of customer products containing our graphene materials and slower commercialisation of customer products already launched. With a slow but progressive recovery in the industry, we anticipate growing pace in the use of our products going forwards - both in testing them and in using them.

 

I would like to record my thanks to all our staff for their diligence in working through the more restricted working practices than anyone would normally like and for dealing respectfully with colleagues on site to minimise the COVID-19 risk to our business.

 

Cash position

Cash used in operations during the year totaled £3,019,000 and was £446,000 lower than the prior year. We received a further R&D tax credit in the year of £461,000 (2020: £1,316,000). In February 2021 AGM successfully completed a further fundraise of £5.5 million net of costs to further support ongoing working capital requirements in pursuit of commercial development of the business.

 

The Board would like to note its thanks to all investors in our business for their outstanding level of continuing support. As covered in the Financial review, our non-discretionary cash requirements indicate that the Group currently has sufficient cash resources for the next twelve months and beyond 31 January 2023. This includes consideration of the uncertainties related to revenue development delays because of the COVID-19 pandemic. 

Outlook

AGM is in solid shape as we look to accelerate revenue growth arising from developing demand for customer products which contain our graphene dispersions. The effort that has gone in to establishing our solid technology foundation is exemplary and our Genable product range has been expanded accordingly. The number of customer product launches following evaluation and integration of our products has increased in the year as a result.  We have further expanded the scope for customers to have a choice when they look at graphene as a potential materials solution by using traditional dispersion media or innovative, sustainable product offerings. We are expanding our dispersion manufacturing capacity to meet the ongoing expected volumes from our customer engagements. I am particularly pleased with the effort to integrate exfoliated graphene materials into our product range to provide broader scope in materials selection for customers to consider.

We continue the important work to achieve regulatory approval for this class of nanomaterials and see this commitment as essential to customer volume increases in the medium and long term.

Our distributor platform is doing well, representing AGM and our product range, and we have seen a positive increase in activity. We anticipate solid growth in the coming year whilst supporting our partners well with high levels of technical advice and guidance on product use.

We are very excited about the opportunities in hydrogen and battery applications as both these emerging markets could be very large and we see strong potential for the application of our graphene products in these areas.

The commercial pipeline of engagements is strong and growing, representing many customers evaluating our products at various stages of development. This gives the Board confidence that AGM is well positioned with a combination of technical excellence, product portfolio, cash position and commercial approach to meet our ambitions of successful revenue growth and enterprise value in the coming year. 

 

Adrian Potts   

Chief Executive Officer 

12 October 2021

 

 

Financial review

 

Revenue

Revenue for the year was £123,000 (2020: £83,000) arising from the supply of production orders and evaluation quantities of graphene to commercial partners. Some revenue has been delayed due to the COVID-19 pandemic primarily due to our customers having not been able to access their customers' sites. Despite this, revenues in H2 2021 were 192% of H1 2021 and 97% of the sales for the whole of the prior year. Although these remain relatively small numbers, we are encouraged by this growth in H2 2021.

 

Cost of sales

Cost of sales of £363,000 (2020: £215,000) 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 £181,000 (2020: £156,000). Once the Group receives more recurring production orders, graphene inventories will be recognised as stock at manufacturing cost.

 

Operating expenses

Operating expenses of £3,319,000 fell by £247,000 compared to the prior year costs of £3,566,000. There were no exceptional costs incurred in 2021 whereas an exceptional cost of £168,000 was incurred in 2020 in relation to the realignment of the cost base. Reductions in staff costs, travel and depreciation charges of £303,000 were offset by increases in research and development costs, professional fees and other costs totalling £182,000. The share based payment charge increased by £46,000 compared to the previous year.

 

Earnings on ordinary activities before interest, tax, exceptional costs, depreciation and amortisation (EBITDA)

Adjusted EBITDA for the Group increased from a loss of £3,084,000 in 2020 to a loss of £3,150,000 for the year ended 31 July 2021. The loss incurred reflects the ongoing costs of developing new products, working with commercial partners and the significant efforts undertaken to support those customers.

 

Exceptional costs

Exceptional costs recognised in the year were £nil (2020: £168,000). The costs in 2020 were incurred as a result of redundancy costs arising from the implementation of the realignment of the cost base. 

 

Net finance expense

Net finance expense for the year was £6,000 (2020: income of £33,000) reflecting reducing cash balances and a reduction in associated finance income.

 

Loss on ordinary activities before tax

The loss on ordinary activities before tax was £3,565,000 (2020: loss of £3,665,000).

 

Tax

The Group has not recognised any deferred 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 £391,000 is in relation to R&D tax credits due for 2021 which is £85,000 lower than the previous year as a result of the reduction of costs incurred following the realignment of the cost base.

 

Earnings per share

Basic earnings per share was a loss of 5.6 pence per share (2020: loss of 6.4 pence per share). Adjusted basic earnings per share (before exceptional costs) was a loss of 5.6 pence per share (2020: loss of 6.1 pence per share). 

 

Dividend

No dividend has been proposed for the year ended 31 July 2021 (2020: £nil).

 

Cash flow

Net cash used in operations was £3,019,000 (2020: £3,465,000). The change in net cash used in operations was largely due to the change in net working capital utilised. During the year, net working capital utilised increased by £99,000 (2020: decrease of £199,000). R&D tax credits received during the year amounted to £461,000 (2020: £1,316,000), being the credit for the year ended 31 July 2020. The prior year included two years of R&D tax credits. In 2020, following the realignment of the cost base, four Board members volunteered to defer payments of their salaries/fees (totalling £80,000) until the Group had further extended its cash runway. These deferred costs were paid during 2021. Capital expenditure incurred in the year was £218,000 (2020: £342,000).

 

During February 2021, the Company completed a fundraise by issuing 14,634,166 new Ordinary shares of 2 pence each at a price of 41 pence, thereby raising £5,552,000 net of costs.

 

Statement of financial position

Net assets have increased to £7,695,000 (2020: £5,285,000), principally reflecting the trading loss for the year more than offset by the issue of new shares as noted above.

 

The Group has cash at bank at 31 July 2021 of £6,308,000 (2020: £3,685,000). 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.

 

Other than as noted above, the value and composition of the Group balance sheet is unchanged/consistent year on year.

 

As noted in the "Critical accounting estimates and judgments" section of the accounting policies, impairment testing was carried out for all non-current assets and no impairment was noted as the market value of the Group exceeds its net assets.

 

Parent Company Statement of financial position(unconsolidated)

The key matter impacting both the financial performance and position of the Company during the year ended 31 July 2021 relates to the impact of the IFRS 9 and IAS 36 impairment reviews undertaken during the year.

 

On 13 October 2020, the Company approved the conversion of loans receivable from Applied Graphene Materials UK Limited with a value before impairment provisions of £29,014,529 into equity. The Company then subsequently approved the proposal to reduce Applied Graphene Materials UK Limited's share premium account.  The consolidated net assets of the Group and the net assets of the Company are unchanged as a result of the conversion of the loans receivable from Applied Graphene Materials UK Limited and are unchanged as a result of the proposal to reduce Applied Graphene Materials UK Limited's share premium account. The transactions were and are being carried out to strengthen the balance sheet of the subsidiary company. 

 

Prior year credit losses and impairment provisions of £22 million were reversed following the conversion of the loan to equity. At 31 July 2021, the Directors concluded that impairment provisions totalling £20 million in relation to the cost of investment in the subsidiary company were necessary (2020: £nil) to reduce the net assets of the company to the market value of its shares as set out in note 9.

 

No other significant transactions or movements in balances have occurred during the year ended 31 July 2021, consistent with the Parent Company's principal activity as a holding company.

 

Accounting policies

The Group's consolidated financial information has been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.  The 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 2021, 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 eco-friendly graphene dispersions and the new products launched by customers. The increased level of commercial products and engagements provides the Directors with a reasonable basis on which to form the view that the Group continues to demonstrate meaningful progress.

As a group developing new applications for recently discovered materials, the Directors are mindful that there is an ongoing need to monitor overheads and costs associated with delivering the commercialisation programme and raise additional working capital on an ad hoc basis to support the Group's activities. As described on page 80 of its Annual Report, the Group raised £5.5m of additional funds in February 2021. The Group has no bank facilities and has been meeting (and will continue to meet) its working capital requirements from cash resources.

 

At 31 July 2021, the Company and the Group had cash reserves of £6.1 million and £6.3 million respectively. The Directors have prepared cash flow forecasts which show that the Group has sufficient cash on hand to satisfy the continued development of the business until at least 31 January 2023 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.

On the basis of these forecasts covering the period to 31 January 2023 and the resources currently on hand, the Directors have a reasonable expectation 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. Therefore, the financial statements have been prepared on a going concern basis.

 

Principal risks and uncertainties

The principal risks and uncertainties facing the Group are set out within the Strategic report of the Annual Report on pages 33 to 35 of AGM's Annual Report.

 

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 Strategic report, containing the Business and Financial reviews, contains 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 Strategic report will be realised. The forward-looking statements reflect the knowledge and information available at the date of preparation.

 

 

David Blain

Chief Financial Officer

12 October 2021
 

 

Consolidated income statement and statement of comprehensive income

for the year ended 31 July 2021

 

 

 

 

2021

2020

 

 

Note

£'000

£'000

 

Revenue

1

123

83

 

Cost of sales

 

(363)

(215)

 

Gross loss

 

(240)

(132)

 

 

 

 

 

 

Operating expenses

 

(3,319)

(3,566)

 

EBITDA

 

(3,150)

(3,084)

 

Exceptional costs

2

-

(168)

 

Depreciation of property, plant and equipment

8

(409)

(446)

 

Operating loss

2

(3,559)

(3,698)

 

Finance expense

4

(9)

(8)

 

Finance income

4

3

41

 

Loss before tax

 

(3,565)

(3,665)

 

Tax credit

5

391

476

 

Loss for the year attributable to equity shareholders

 

(3,174)

(3,189)

 

Other comprehensive income

 

-

-

 

Total comprehensive expense

 

(3,174)

(3,189)

 

Loss per share (pence per share)

 

 

 

 

Basic and diluted

6

(5.6)

(6.4)

 

Adjusted

6

(5.6)

(6.1)

 

EBITDA comprises earnings before finance income, tax, exceptional costs and depreciation.
 

 

Consolidated and Company statement of financial position

as at 31 July 2021

 

 

 

Group

2021

Company

2021

Group

2020

Company

2020

 

Note

£'000

£'000

£'000

£'000

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Intangible assets

7

427

-

276

-

Property, plant and equipment

8

1,275

-

1,420

-

Investments

9

-

10,813

-

196

Trade and other receivables

11

-

-

-

6,294

 

 

1,702

10,813

1,696

6,490

Current assets

 

 

 

 

 

Inventories

10

93

-

74

-

Trade and other receivables

11

276

147

281

790

Corporation tax recoverable

 

413

-

482

-

Cash and cash equivalents

 

6,308

6,130

3,685

2,948

 

 

7,090

6,277

4,522

3,738

Total assets

 

8,792

17,090

6,218

10,228

Liabilities

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Lease liabilities

12

-

-

(4)

-

Current liabilities

 

 

 

 

 

Trade and other payables

12

(1,097)

(362)

(929)

(342)

Total liabilities

 

(1,097)

(362)

(933)

(342)

Net current assets

 

5,993

5,915

3,593

3,396

Net assets

 

7,695

16,728

5,285

9,886

Equity

 

 

 

 

 

Called up share capital

14

1,287

1,287

989

989

Share premium account

15

32,727

32,727

27,473

27,473

Merger reserve

16

1,231

-

1,231

-

Retained earnings

 

(27,550)

(17,286)

(24,408)

(18,576)

Total equity

 

7,695

16,728

5,285

9,886

 

 

Consolidated statement of changes in shareholders' equity

for the year ended 31 July 2021

 

 

Called up

Share

 

 

 

 

share

premium

Merger

Retained

Total

 

capital

 account

reserve

earnings

equity

 

£'000

£'000

£'000

£'000

£'000

At 1 August 2019

989

27,473

1,231

(21,205)

8,488

Loss for the year and total comprehensive expense

-

-

-

(3,189)

(3,189)

Transactions with owners in their capacity as owners:

 

 

 

 

 

IFRS 2 share based payments

-

-

-

(14)

(14)

At 31 July 2020

989

27,473

1,231

(24,408)

5,285

Loss for the year and total comprehensive expense

-

-

-

(3,174)

(3,174)

Transactions with owners in their capacity as owners:

 

 

 

 

 

Shares issued during the year

298

5,254

-

-

5,552

IFRS 2 share based payments

-

-

-

32

32

At 31 July 2021

1,287

32,727

1,231

(27,550)

7,695

 

 

Company statement of changes in shareholders' equity

for the year ended 31 July 2021

 

 

Called up

Share

 

 

 

 

share

premium

Retained

Total

 

 

capital

account

earnings

equity

 

 

£'000

£'000

£'000

£'000

 

At 1 August 2019

989

27,473

(13,386)

15,076

 

Loss for the year and total comprehensive expense

-

-

(5,176)

(5,176)

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

IFRS 2 share based payments

-

-

(14)

(14)

 

At 31 July 2020

989

27,473

(18,576)

9,886

 

Loss for the year and total comprehensive income

-

-

1,357

1,357

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

Shares issued during the year

298

5,254

-

5,552

 

IFRS 2 share based payments

-

-

(67)

(67)

 

At 31 July 2021

1,287

32,727

(17,286)

16,728

 

 

 

Consolidated and company cash flow statement

for the year ended 31 July 2021

 

 

 

Group

2021

Company

2021

Group

2020

Company

2020

 

Note

£'000

£'000

£'000

£'000

Operating activities

 

 

 

 

 

Net cash used in operations

19

(3,019)

(827)

(3,465)

(184)

Corporation tax received

 

461

-

1,316

-

Net finance (expense)/income

 

(6)

3

41

40

Net cash used in operating activities

 

(2,564)

(824)

(2,108)

(144)

Investing activities

 

 

 

 

 

Loans advanced to subsidiary undertakings

 

-

-

-

(2,745)

Purchase of intangible assets

 

(151)

-

(121)

-

Purchase of property, plant and equipment

 

(67)

-

(221)

-

Net cash used in investing activities

 

(218)

-

(342)

(2,745)

Financing activities

 

 

 

 

 

Proceeds from the issue of shares (net of expenses)

 

5,552

5,552

-

-

Capital contributions to subsidiary undertakings

 

-

(1,546)

-

-

Capital element of lease obligations

 

(147)

-

-

-

Net cash generated by financing activities

 

5,405

4,006

-

-

Net increase/(decrease) in net cash and cash equivalents

 

2,623

3,182

(2,450)

(2,889)

Net cash and cash equivalents at 31 July 2020

 

3,685

2,948

6,135

5,837

Net cash and cash equivalents at 31 July 2021

 

6,308

6,130

3,685

2,948

 

 

 

 

 

 

Net cash and cash equivalents include:

 

 

 

 

 

Cash (maturity less than 95 days)

 

6,308

6,130

3,685

2,948

Net cash and cash equivalents at 31 July 2021

 

6,308

6,130

3,685

2,948

 

 

 

Group and Company accounting policies

 

For the year ended 31 July 2021

The figures for the years ended 31 July 2021 and 2020 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The figures for the year ended 31 July 2021 have been extracted from the statutory accounts for that year, on which the auditor has issued an unqualified audit report which have yet to be delivered to the Registrar of Companies. The figures for the year ended 31 July 2020 have been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit report containing a material uncertainty in relation to going concern paragraph. No statement has been made by the auditor under Section 498(2) or (3) of the Companies Act 2006 in respect of either of these sets of accounts. This announcement was approved by the board of directors on 12 October 2021 and authorised for issue on 13 October 2021.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board ('IASB') and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together 'IFRS') as endorsed by the European Union. The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 July 2021 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with the International Financial Reporting Standards ('IFRS').

General information

The principal activity of Applied Graphene Materials plc (the Company) is that of a holding company for a group of companies which is involved in the manufacture, dispersion and development of applications for graphene. The Company and the Group operate 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 Company has elected to take the exemption permitted by Section 408 of the Companies Act 2006 not to present the Parent Company's income statement.

New or amended Accounting Standards and Interpretations adopted

The group and company have adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board ('IASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Basis of accounting

The consolidated financial statements of the Group and the financial statements of the parent company have been presented under the historical cost accounting convention, with the exception of share based payments at fair value, and in accordance with international accounting standards in conformity with the Companies Act 2006.

The significant accounting policies set out below have, unless otherwise stated, been applied consistently to all years presented in these financial statements.

The financial statements are prepared in Pounds Sterling, which is also the functional currency. Monetary amounts in the financial statements have been rounded to the nearest £'000.

Going concern

After making enquiries and producing cash flow forecasts covering the period to 31 January 2023, 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 2021, 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 eco-friendly graphene dispersions 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.

As a group developing new applications for recently discovered materials, the Directors are mindful that there is an ongoing need to monitor overheads and costs associated with delivering the commercialisation programme and raise additional working capital on an ad hoc basis to support the Group's activities. As described on pages 29 - 30 of AGM's Annual Report, the Group raised £5.5m of additional funds in February 2021. The Group has no bank facilities and has been meeting its working capital requirements from cash resources.

 

At 31 July 2021, the Company and the Group had cash reserves of £6.1 million and £6.3 million respectively. The Directors have prepared cash flow forecasts covering the period to 31 January 2023 which show that the Group has sufficient cash on hand to satisfy the continued development of the business until at least 31 January 2023 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 will be available.

On the basis of these forecasts prepared covering the period to 31 January 2023 and the resources currently on hand, the Directors have a reasonable expectation 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. Therefore, the financial statements have been prepared on a going concern basis.

Basis of consolidation

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses from intra-group transactions, are eliminated on consolidation.

Foreign currencies

Transactions and balances

Transactions in foreign currencies are recorded at the exchange rates prevailing on the dates of the transactions. Assets and liabilities denominated in foreign currencies are translated into Pounds Sterling at the relevant exchange rates prevailing at the balance sheet date. Exchange gains and losses are taken to the income statement.

Revenue

Revenue is recognised at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of business and is shown net of value-added tax. The Group primarily earns revenues from the sale of graphene based products and dispersions. Revenues are recognised following dispatch.

Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as other income on a systematic basis over the time periods that the costs, which it is intended to compensate, are expensed (including any periods of grant monitoring). Where the grant relates to an asset, it is recognised as deferred income and released in equal amounts over the expected useful life of the related asset (after also taking account of any periods of grant monitoring). Owing to the stage of the Group's development as a business primarily engaged in research, management attributes this income to the Group's principal activities and has presented grant income above the gross profit line in the income statement.

Investments

Investments are stated at cost, less any provisions for impairment, which the Directors consider to be a reasonable approximation to fair value.

Intangible assets

Intangible assets are stated at cost less accumulated amortisation and any impairment losses. Intangible assets, which comprise licences and intellectual property, are amortised to the income statement using the straight line method over the shorter of their estimated useful life and period of contractual rights. The estimated useful life and period of contractual rights is expected to be 20 years.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is charged so as to write off the costs of assets over their estimated useful lives, on the following basis:

Plant and machinery  five to ten years straight line

Fixtures and fittings  five years straight line

Computer equipment  three years straight line

Right-of-use assets  over the life of the lease

Construction in progress  not depreciated

The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying value of the asset and is recognised in the income statement.

Leases

On commencement of a contract which gives the Group the right to use assets for a period of time in exchange for consideration, the Group recognises a right-of-use asset and a lease liability unless the lease qualifies as a "short term" lease (term is twelve months or less with no option to purchase the lease asset) or a "low value" lease (where the underlying asset is £4,000 or less when new).

The lease liability is initially measured at the present value of the lease payments during the lease term discounted using the interest rate implicit in the lease, or the incremental borrowing rate if the interest rate implicit in the lease cannot be readily determined. The lease term is the non-cancellable period of the lease plus extension periods that the Group is reasonably certain to exercise and termination periods that the Group is reasonably certain not to exercise. Lease payments include fixed payments, less any lease incentives receivable, variable lease payments dependent on an index or a rate and any residual value guarantees.

The lease liability is subsequently increased for a constant periodic rate of interest on the remaining balance of the lease liability and reduced for lease payments. Interest on the lease liability is recognised in profit or loss. Variable lease payments are not included in the measurement of the lease liability as they are not dependent on an index or rate and are recognised in profit or loss in the period in which the event or condition that triggers those payments occurs.

Rentals payable under short term or low value operating leases are charged to the income statement on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

Impairment of non-current assets

At each reporting date, the Group and Company review the carrying values of their non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable value of the asset is estimated in order to determine the extent of any impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable value is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable value of an asset (or cash-generating unit) is estimated to be less than its carrying value, the carrying value of the asset (or cash-generating unit) is reduced to its recoverable value. Any impairment loss identified is immediately recognised in the income statement.

Inventories

Inventories are recognised at the lower of cost and net realisable value. Cost is determined using the first in, first out method. Appropriate provisions for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the assets are impaired.

Financial instruments

The Group and Company classify financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through OCI or through profit or loss); and

• those to be measured at amortised cost.

The classification depends on the Group's and Company's business model for managing the financial assets and the contractual terms of the cash flows. All financial instruments are currently measured at amortised cost.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

The Group and Company reclassify debt investments when and only when its business model for managing those assets changes.

Recognition of financial assets and financial liabilities

Financial assets and financial liabilities are recognised on the Group's and Company's balance sheet when they become a party to the contractual provisions of the instrument.

Derecognition of financial assets and financial liabilities

The Group and Company derecognise a financial asset only when the contractual rights to cash flows from the asset expire or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group and Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for the amount it may have to pay. If the Group and Company retain substantially all the risks and rewards of ownership of a transferred financial asset, the Group and Company continue to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

The Group derecognises financial liabilities when the Group's and Company's obligations are discharged or cancelled or have expired.

Measurement

At initial recognition, the Group and Company measure a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Subsequent measurement of debt instruments depends on the Group's and Company's business model for managing the asset and the cash flow characteristics of the asset. Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.

Impairment

The Group and Company assess, on a forward-looking basis, the expected credit losses associated with its debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group and Company apply the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Trade receivables

Trade receivables are initially recognised at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognised at fair value and are subsequently measured at amortised cost less provision for impairment.

Intra-group receivables

Intra-group receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment. Appropriate provisions for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the assets are impaired.

Cash

Cash comprises cash on hand, demand deposits and other short term, highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Cash has a maturity period of 95 days or less which is used to meet working capital requirements. The Directors therefore judge it appropriate to treat these as cash.

Trade and other payables

Trade and other payables are initially measured at their fair value and are subsequently measured at their amortised cost using the effective interest rate method. This method allocates interest expense over the relevant period by applying the "effective interest rate" to the carrying amount of the liability.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Share based payments

The Group issues share options to certain employees which are measured at fair value and are recognised as an expense in the income statement with a corresponding increase in retained earnings. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted. The options are equity settled.

The fair value of these grants is measured at the date of each grant using an appropriate option pricing model and is recognised over the period during which employees become unconditionally entitled to the awards. At each balance sheet date, the Group revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to retained earnings.

Where share options are awarded to certain employees or subsidiary companies, the expense associated with those share options is recognised as an increase in investments in subsidiaries. Where the parent company recharges the share based payment expense, this is reflected as a reduction in the value of investments in subsidiaries as the recharges arise.

Employee benefits

The Group and Company operate a defined contribution pension scheme. Contributions to the defined contribution pension scheme are charged to the income statement in the financial year to which the contributions relate. The contributions paid by the Group, Company and the employees are invested within the individual pension funds in the month following the month of deduction.

Exceptional costs

Items that are both material and non-recurring and whose significance is sufficient to warrant separate disclosure and identification within the consolidated financial statements are referred to as exceptional costs. Such items are disclosed separately within the financial statements.

Research and development

In accordance with IAS 38, it is the Group's policy to recognise an intangible asset for development of its product once the criteria have been met. Otherwise all costs in the research phase will be recognised in the Group statement of comprehensive income for the period in which they are incurred. Costs that are directly attributable to the development phase of a product are recognised as intangible assets, provided they meet the following recognition requirements:

• completion of the intangible asset is technically feasible so that it will be available for use or sale;

• the Group intends to complete the intangible asset and use or sell it;

• the Group has the ability to use or sell the intangible asset;

• the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits;

• there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• the expenditure attributable to the intangible asset during its development can be measured reliably.

Development costs not meeting these criteria for capitalisation are expensed as incurred. No development costs have been capitalised to date as the criteria for recognition have not been met.

Current and deferred tax

The tax expense or credit represents the sum of the tax currently payable or receivable together with the movement in deferred tax.

The tax currently receivable is based on the taxable loss for the year and includes the benefit of research and development tax credits. Taxable loss differs from the loss before tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items of income or expense that are never taxable or deductible. The Group's receivable for current tax is calculated using tax rates that have been enacted or substantively enacted as at the balance sheet date.

Research and development tax credits for the year are calculated after having taken into account the level of research and development work carried out during the year.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated with reference to rates that are substantively enacted at the balance sheet date and expected to apply in the year when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the related deferred tax is also dealt with as an addition or reduction in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Critical accounting estimates and judgments

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's and Company's accounting policies.

Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group and Company make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.

The significant judgments and estimates set out below have, unless otherwise stated, been applied consistently to all years presented in these financial statements.

Judgments involving estimation - Group

Research and development tax credits

Research and development tax credits for the year ended 31 July 2021 totalling £412,000 (2020: £476,000) have been calculated using estimates consistent with the prior year detailed computation submitted to and approved by HMRC. Estimation is applied in assessing the amount of time and resource allocated to R&D programmes and is used in concluding upon the extent to which the Group's activity will qualify for the enhanced relief. Further disclosures relating to research and development tax credits are included in note 5 to the financial statements.

Impairment of non-current assets

At each reporting date the Directors review the carrying values of the Group's non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. Having completed this review the Directors have concluded that there is no impairment charge during the year (2020: £nil).

In drawing their conclusions on this matter, the Directors have considered the market capitalisation of the Group at 31 July 2021 and note that Group net assets of £7.7 million are substantially below market capitalisation of £16.7 million. On the assumption that market capitalisation is a reliable proxy for fair value, this suggests that there is no impairment within the Group balance sheet. The carrying value of non-current assets totalled £1.7 million (2020: £1.9 million) and is disclosed in notes 7 and 8 to the financial statements.

Deferred tax assets

Deferred tax assets and liabilities require management judgment in determining the amounts to be recognised. In particular, judgment is used when assessing the extent to which deferred tax assets should be recognised with consideration given to the timing and level of future taxable income.

In previous years the Group has not recognised a deferred tax asset in relation to the Group's cumulative tax losses. Having given due consideration to whether it is pertinent to recognise a deferred tax asset the Board, following preparation of detailed short to medium term profit and loss account forecasts, has determined that there has been no substantive change in circumstances and as such has concluded that it is not appropriate to recognise a deferred tax asset at this time. The unprovided asset of £4,463,000 (2020: £3,001,000), as included in note 5 to the financial statements, will only be recognised once it is probable that future taxable profits will be available against which the asset can be utilised.

Capitalisation of development costs

The Group's accounting policy in respect of development costs is set out above. The Directors have exercised their judgment in assessing whether costs incurred during the year meet the conditions set out in IAS 38. Having carefully considered the expenditure in the year and the current state of development of the business, the Directors have concluded that no such costs should be capitalised as there is currently insufficient evidence that any asset will probably generate future economic benefits. This judgment will be reviewed on an ongoing basis.

Research and development costs totalling £1,324,000 (2020: £1,465,000) have been expensed during the year, as disclosed in note 2 to the financial statements.

Judgments involving estimation - Company only

Recoverability of intercompany receivables

Amounts owed by subsidiary undertakings represent cash advances and recharges made to the Company's main subsidiary undertaking. The gross amount due to the Company at 31 July 2021 is £nil (2020: £28.5 million). During the year intercompany loans of £29.0 million were converted into an investment in the subsidiary company and impairment provisions totalling £22.0 million were released.  Capital contributions to the subsidiary since the capitalisation of the loan of £1.5 million at 31 July 2021 have been added to the cost of investment in the subsidiary.

The carrying value of amounts owed by subsidiary undertakings at 31 July 2021 was £nil (2020: £7.0 million) and is disclosed in note 11 to the financial statements.

The capital contributions made in the year ended 31 July 2021 fall outside the scope of IFRS 9 Financial Instruments., In the prior year, as the subsidiary undertaking could not repay the loan at the reporting date, the Company made an assessment of expected credit losses. Having considered multiple scenarios on the manner, timing, quantum and probability of recovery on the receivables, a lifetime expected credit loss (ECL) of £nil (2020: £11.2 million) has been provided.

The calculation of the allowance for lifetime expected credit losses requires a significant degree of estimation and judgment, in particular determining the probability weighted likely outcome for each scenario considered. The Directors' assessment of ECL included repayment through future cash flows over time (which are inherently difficult to forecast for the Company at its current stage of development) and also the amount that could be realised through an immediate sale of the subsidiary undertaking. The Directors' assessment of repayment through future cash flows included a scenario where the loan was not recovered in full.

Impairment of Parent Company net assets

Following the reversal of provisions of £22.0 million against the loan balances that have now been capitalised, the Company's net assets totalled £36.7 million (2020: £14.7 million). This was above the market capitalisation of the Group at 31 July 2021 of £16.7 million (2020: £9.9 million). In accordance with IAS 36, the Directors have considered whether this situation is an indicator of impairment and concluded that an impairment review should be performed at 31 July 2021.

In light of the development of the Group in the period, and the delays encountered in respect of making substantive commercial progress with regard to revenue generation, the Directors concluded that the value in use calculated in accordance with IAS 36 was lower than fair value. This conclusion was in part due to much of the anticipated revenue growth for the Group being in the longer term and the restrictive nature of long term growth assumptions permitted by IAS 36. Accordingly, the Directors have recorded an IAS 36 impairment provision against the Company balance sheet (as part of investments in subsidiary undertakings) reducing the net assets to the market capitalisation at that date of £16.7 million (2020: £9.9 million). The key judgment made by the Directors in this regard relates to the use of market capitalisation as a measure of fair value.

 

 

Notes to the consolidated financial statements

 

1 Segmental information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and in assessing performance. The Group's Chief Executive Officer has been identified as the CODM. The Group has one operating segment: the manufacture, dispersion and development of applications for graphene. Revenue and profits arising from that operating segment are the same as presented on the face of the consolidated income statement and statement of comprehensive income. As the business evolves this is an area that will be assessed on a regular basis and additional segmental reporting will be provided at the appropriate time.

Revenue

During the year ended 31 July 2021, there were three (2020: two) significant customers which generated revenue of £12,000, £32,000 and £18,000 (2020: £22,000 and £9,000).

The Group's revenue by geographic location based on the customer's location is as follows:

 

2021

2020

 

£'000

£'000

UK

82

50

Europe

8

14

Rest of World

33

19

 

123

83

 

2 Operating loss

 

2021

2020

 

£'000

£'000

Operating loss is stated after charging:

 

 

 

 

 

Wages, salaries, social security, pension costs and IFRS 2 share based payments

2,077

2,198

Research and development expense[*]

1,324

1,465

Depreciation of property, plant and equipment

409

446

 

*  Included within research and development expense are staff costs totalling £1,076,000 (2020: £1,219,000) which are also included as part of wages and salaries included above and in note 3.

 

The operating loss is stated after charging exceptional costs of £nil (2020: £168,000) relating to redundancy costs arising from the realignment of the Group's activities and a reduction in costs.

Services provided by the Group's auditors

During the year the Group obtained the following services from its auditors at costs as detailed below:

 

2021

2020

 

£'000

£'000

Audit services

 

 

Fees payable to the Company's auditors for the audit of the Company and consolidated financial statements

24

23

Fees payable to the Company's auditors for the audit of the Company's subsidiaries pursuant to legislation

12

12

 

 

 

 

36

35

 

3 Directors and employees

The aggregate payroll costs of employees, including Directors, were:

 

2021

2020

 

£'000

£'000

Wages and salaries

1,780

1,843

Social security costs

160

236

Other pension costs

105

133

IFRS 2 share based payments

32

(14)

 

2,077

2,198

 

Six (2020: 6) Directors of the Group are employed by the Company, and the Company includes no other employees. The remuneration of each individual (which forms part of these financial statements) is set out in the Remuneration report on page 53 of AGM's Annual Report.

At 31 July 2021 outstanding pension contributions totalling £15,000 (2020: £4,000) are included in other creditors.

 

The average number of persons employed by the Group during the year was:

 

2021

2020

Group

£'000

£'000

Engineering, technical and production

19

20

Other

6

7

Directors

5

6

Average monthly number of employees

30

33

 

4 Net finance expense

 

2021

 

2020

 

£'000

£'000

Interest receivable on bank deposits

3

41

Interest on lease liabilities

(9)

(8)

Net finance (expense)/income

(6)

33

 

5 Tax on loss

 

2021

2020

 

£'000

£'000

Current tax

 

 

Corporation tax:

 

 

Current year

(413)

(476)

Adjustments in respect of prior years

(22)

-

Total current tax

(391)

(476)

Deferred tax

 

 

UK deferred tax

-

-

Adjustments in respect of prior years

-

-

Total deferred tax

-

-

 

(391)

(476)

 

The tax assessed for the year is higher (2020: higher) than the UK corporation tax rate of 19% (2020: 19%). The tax on the Group's loss before tax differs from the theoretical amount that would arise using the weighted average tax rate as follows:

 

2021

2020

 

£'000

£'000

Loss before tax

(3,565)

(3,665)

Tax at the UK corporation tax rate

(677)

(696)

Adjustments in respect of prior periods

22

-

Expenses not deductible for tax purposes

41

289

Income not taxable

(6)

(19)

R&D expenditure

244

351

Movements on unrecognised deferred tax balances

398

75

R&D tax credit provision in respect of prior year

-

-

R&D tax credit provision in respect of current year

(413)

(476)

Other timing differences

-

-

Tax credit for the year

(391)

(476)

 

Other timing differences relate to permanent and temporary timing differences which are not allowable for taxation purposes.

Deferred tax assets totalling approximately £4,463,000 (2020: £3,001,000) have not been recognised.

 

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:

 

2021

2020

 

million

million

Weighted average number of shares for basic earnings per share

56.4

49.4

 

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. The Group was loss making for the years ended 31 July 2020 and 31 July 2021; therefore, the dilutive effect of share options has not been disclosed since this would decrease the loss per share for each of the years reported.

 

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:

 

2021

2020

 

£'000

£'000

Basic earnings

(3,174)

(3,189)

Exceptional costs

-

168

Adjusted earnings

(3,174)

(3,021)

Loss per share (pence per share)

 

 

Basic and diluted

(5.6)

(6.4)

Adjusted loss per share (pence per share)

 

 

Basic

(5.6)

(6.1)

 

7 Intangible assets

 

Intellectual

 

 

property

Total

Group

£'000

£'000

Cost

 

 

At 1 August 2019

155

155

Additions

121

121

At 31 July 2020

276

276

Additions

151

151

At 31 July 2021

427

427

Accumulated amortisation

 

 

At 1 August 2019

-

-

Charge for the year

-

-

At 31 July 2020

-

-

Charge for the year

-

-

At 31 July 2021

-

-

Net book value

 

 

At 31 July 2021

427

427

At 31 July 2020

276

276

 

The intellectual property is in relation to patent costs. These patents have not yet been granted; therefore, no amortisation has been charged in relation to these for the year. Intellectual property has been reviewed for impairment and no impairment provision is required as all pending patents remain of use to the Group.

The Company had no intangible assets in the year ended 31 July 2020 and the year ended 31 July 2021.

 

8 Property, plant and equipment

 

Fixtures and

Plant and

Computer

 

Right-of-use

Construction in

 

 

fittings

machinery

equipment

assets

progress

Total

Group

£'000

£'000

£'000

£'000

£'000

£'000

Cost

 

 

 

 

 

 

At 1 August 2019

77

2,744

45

-

-

2,866

Right-of-use assets on transition to IFRS 16

-

-

-

174

-

174

Additions

-

34

13

-

-

47

Disposals

-

(2)

(1)

-

-

(3)

At 31 July 2020

77

2,776

57

174

-

3,084

Additions

3

14

10

197

40

264

Disposals

-

-

-

(174)

-

(174)

At 31 July 2021

80

2,790

67

197

40

3,174

Accumulated depreciation

 

 

 

 

 

 

At 1 August 2019

(43)

(1,136)

(42)

-

-

(1,221)

Charge for the year

(11)

(282)

(3)

(150)

-

(446)

Disposals

-

2

1

-

-

3

At 31 July 2020

(54)

(1,416)

(44)

(150)

-

(1,664)

Charge for the year

(9)

(244)

(8)

(148)

-

(409)

Disposals

-

-

-

174

-

174

At 31 July 2021

(63)

(1,660)

(52)

(124)

-

(1,899)

Net book value

 

 

 

 

 

 

At 31 July 2021

17

1,130

15

73

40

1,275

At 31 July 2020

23

1,360

13

24

-

1,420

 

The carrying amount and depreciation of right-of-use assets all relate to property leases.  At 31 July 2021 the Group had capital commitments of £42,000 (2020: £nil).

The Company had no property, plant and equipment in the year ended 31 July 2020 and the year ended 31 July 2021.

 

9 Investments

 

Investment in

 

subsidiaries

Company

 '000

Cost

 

At 1 August 2019

196

IFRS 2 share based payments relating to subsidiary undertakings

(98)

IFRS 2 share based payments recharged to subsidiary undertakings

98

At 31 July 2020

196

Additions to investment in Applied Graphene Materials UK Limited

30,560

IFRS 2 share based payments relating to subsidiary undertakings

(33)

IFRS 2 share based payments recharged to subsidiary undertakings

33

At 31 July 2021

30,756

 

Provision for impairment

 

At 1 August 2019 and 31 July 2020

-

Charge for the year

(19,943)

At 31 July 2021

(19,943)

 

 

Net book value

 

At 31 July 2021

10,813

At 31 July 2020

196

 

At 31 July 2020, the amounts owed by subsidiary undertakings included a loan to Applied Graphene Materials UK Limited for gross amount of £28,332,000. This loan and other intercompany balances of £682,000 were capitalised as investments in the subsidiary during October 2020 and impairments of £11,175,000 under IFRS 9 and £10,863,000 under IAS 36 were reversed. During the year a further £1,546,000 of capital contributions have been made by the Company in Applied Graphene Materials UK Limited and have been recognised as additions to investments.  At 31 July 2021 a provision for impairment of investments of £19,943,000 was recognised as a result of an impairment review.

At 31 July 2021 the Company held more than 20% of the allotted share capital of the following subsidiary undertakings:

 

 

 

Proportion

 

 

Country of

Class of

held by Parent

 

 

incorporation

share capital

Company

Principal activities

Applied Graphene Materials UK Limited, Office 2, Innovation Centre, Wilton Site, Redcar, Cleveland TS10 4RF

England

Ordinary

100%

Research, development and

manufacture of graphene

Applied Graphene Materials Ventures Limited, The Wilton Centre, Redcar, Cleveland TS10 4RF

England

Ordinary

100%

Dormant

Applied Graphene Ventures LLC, The Wilton Centre, Wilton, Redcar, Cleveland TS10 4RF

USA

Ordinary

100%

Dormant

 

10 Inventories

 

2021

2020

Group

£'000

£'000

Finished goods

47

36

Spares

46

38

 

93

74

 

The Directors believe that the carrying value of inventories is exceeded by their net realisable value and so no impairment has been recognised (2020: £nil). The amount of inventories recognised in cost of sales during the year was £43,000 (2020: £6,500).

The Company had no inventories in the year ended 31 July 2020 and the year ended 31 July 2021.

 

11 Trade and other receivables

 

Group

2021

Company

2021

Group

2020

Company

2020

 

£'000

£'000

£'000

£'000

Amounts owed by subsidiary undertakings

-

-

-

6,977

Trade receivables

13

-

16

-

Other receivables

25

8

64

47

Prepayments and accrued income

238

139

201

60

 

276

147

281

7,084

Non-current

-

-

-

6,294

Current

276

147

281

790

 

276

147

281

7,084

 

Contractual payment terms with the Group's customers are typically 30 days. There are no provisions for impairment losses in respect of trade and other receivables.

The Directors believe that the carrying value of trade and other receivables represents their fair value. In determining the recoverability of trade receivables the Group considers any change in the credit quality of the receivable from the date credit was granted up to the reporting date. For details on the Group's credit risk management policies, refer to note 13. The carrying amounts of the Group's receivables are all denominated in Pounds Sterling.

No class of trade and other receivables contains assets which are considered to be impaired. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.

At 31 July 2020, the amounts owed by subsidiary undertakings included a loan to Applied Graphene Materials UK Limited for a gross amount of £28,332,000. This loan and other intercompany balances of £682,000 were capitalised as investments in the subsidiary during October 2020 and impairments of £11,175,000 under IFRS 9 and £10,863,000 under IAS 36 were reversed. During the year a further £1,546,000 of capital contributions have been made by the Company in Applied Graphene Materials UK Limited and have been recognised as additions to investments. 

 

 

12 Trade and other payables

 

Group

2021

Company

2021

Group

2020

Company

2020

Current liabilities

£'000

£'000

£'000

£'000

Trade payables

376

150

202

56

Other tax and social security

52

18

37

17

Accruals and deferred income

578

194

664

269

Lease liabilities

74

-

21

-

Other creditors

17

-

5

-

 

1,097

362

929

342

 

 

Group

2021

Company

2021

Group

2020

Company

2020

Non-current liabilities

£'000

£'000

£'000

£'000

Lease liabilities

-

-

4

-

 

-

-

4

-

 

Trade and other payables principally comprise amounts outstanding for trade purchases and other costs. They are non-interest bearing and are normally settled on 30 to 45 day terms (2020: 30 to 45 days).

The Directors consider that the carrying value of trade and other payables approximates to their fair value due to their short term nature. All trade and other payables are denominated in Pounds Sterling.

The Group has financial risk management policies in place to ensure that all payables are paid within the credit terms and no interest has been charged by any suppliers as a result of late payment of invoices during the year.

Non-current lease liabilities at 31 July 2020 relate to land and buildings leases which expire in one to five years.

 

13 Financial instruments

The Group and Company are exposed to the risks that arise from their use of financial instruments. This note describes the objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

Capital risk management

The Group and Company manages their capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders. The Group and Company are funded principally by equity. The capital structure consists of equity, comprising issued share capital. The Group and Company have no externally imposed capital requirements.

In order to maintain or adjust the capital structure, the Group and Company may return capital to shareholders or issue new shares.

Principal financial instruments

The principal financial instruments used by the Group and Company are as follows:

• trade and other receivables;

• trade and other payables;

• cash; and

• cash deposits.

 

Financial assets

At the reporting date, the Group and Company held the following financial assets which represent the maximum exposure to risk:

 

Group

2021

Company

2021

Group

2020

Company

2020

 

£'000

£'000

£'000

£'000

Cash

6,308

6,130

3,685

2,948

Trade receivables

13

-

16

-

Amounts owed by subsidiary

-

-

-

6,977

Other receivables

25

8

64

47

 

6,346

6,138

3,765

9,972

 

Financial liabilities

At the reporting date, the Group and Company held the following financial liabilities, all of which were classified as other financial liabilities:

 

Group

2021

Company

2021

Group

2020

Company

2020

 

£'000

£'000

£'000

£'000

Trade payables

376

150

202

56

Other payables

669

194

694

269

 

1,045

344

896

325

 

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group or Company. Credit risk arises principally from the cash balances and trade and other receivables. The concentration of the credit risk is considered by counterparty, geography and currency.

The Group and Company give careful consideration to which organisation it uses for its banking services in order to minimise credit risk. The Group and Company have significant concentrations of cash, which have been placed on deposit with four institutions, each of which has a minimum credit rating of A (long term, as assessed by Standard & Poor's). At the year end, the cash and cash deposits at each reporting date were denominated in the following currencies:

 

Group

2021

Company

2021

Group

2020

Company

2020

 

£'000

£'000

£'000

£'000

Pound Sterling

6,262

6,130

3,645

2,948

US Dollar

24

-

29

-

Euro

22

-

11

-

 

6,308

6,130

3,685

2,948

 

The nature of the Group's business and the current stage of its development are such that individual customers can comprise a significant proportion of its trade and other receivables at any point in time. The Group mitigates the associated risk by close monitoring of the receivables.

At 31 July 2021, the Group's trade receivables balance was £13,000 (2020: £16,000).

The carrying amount of financial assets recognised at the year end represents the maximum exposure to credit risk without taking account of the value of any collateral obtained. In the Directors' opinion, there has been no material impairment of any financial assets at any point during the year.

No collateral is held by the Group or Company as security in relation to its financial assets.

Liquidity risk management

Liquidity risk is the risk that the Group or Company will encounter difficulty in meeting its financial obligations as they fall due. Ultimate responsibility for liquidity risk management rests with the Directors. The Directors manage liquidity risk by regularly reviewing cash requirements by reference to short term cash flow forecasts and medium term working capital projections.

At 31 July 2021, the Group and Company had £6,308,000 (2020: £3,685,000) and £6,130,000 (2020: £2,948,000) respectively of cash and cash deposit reserves.

Market risk

The Group's and Company's activities expose them primarily to the financial risks of changes in foreign currency exchange rates and interest rates. During the year, both these risks were considered to have been minimal.

Foreign currency risk management

The Group and Company's exposure to foreign currency risk is limited since the vast majority of its invoicing and the majority of its payments are in Pounds Sterling. There are minimal balances held in foreign currencies at each reporting date and the Group and Company have made no significant payments in foreign currencies other than US Dollar and Euro. Accordingly, no sensitivity analysis has been presented as this is immaterial. As a result of the low level of perceived risk, the Group and Company do not use, or plan to use, any instruments to mitigate foreign exchange risk.

Interest rate risk management

Exposure to interest rate risk is limited since the Group and Company have no debt, and there is little movement on deposit interest rates. Accordingly, no sensitivity analysis has been presented since this is immaterial. As a result of the low level of perceived risk, the Group and Company do not use, or plan to use, any instruments to mitigate interest rate risk.

Maturity of financial assets and liabilities

£1,045,000 (2020: £892,000) and £344,000 (2020: £325,000) of the Group and Company's non-derivative financial liabilities are payable within one year. £nil (2020: £4,000) and £nil (2020: £nil) of the Group and Company's non-derivative financial liabilities are payable after more than one year. All of the Group and Company's non-derivative financial assets at each reporting date are receivable within one year.

 

14 Called up share capital

 

Number of

Total

 

Ordinary shares

£'000

Allotted, called up and fully paid

 

 

At 31 August 2019 and at 31 July 2020 - Ordinary shares of 2 pence each

49,429,380

989

New shares issued during the year

14,909,058

298

At 31 July 2021 - Ordinary shares of 2 pence each

64,338,438

1,287

 

On 3 September 2020, 215,616 Ordinary shares of 2 pence each were issued to satisfy the exercise of share options.  The exercise price of the options was 33 pence.

 

On 23 October 2021, 59,296 Ordinary shares of 2 pence each were issued to satisfy 50% of the bonus earned by David Blain for the year ended 31 July 2020.

 

During February 2021, the Company completed a fundraise by issuing 14,634,146 Ordinary shares of 2 pence each at a price of 41 pence, thereby raising £5,552,000 net of costs.

 

15 Share premium account

 

Total

 

£'000

At 1 August 2019 and at 31 July 2020

27,473

Arising on new shares issued during the year

5,254

At 31 July 2021

32,727

 

The share premium account comprises the excess value recognised from the issue of Ordinary shares for consideration above par value. The cost incurred in issuing the new shares during the year was £448,000.

 

16 Merger reserve

 

£'000

At 1 August 2019 and at 31 July 2020

1,231

At 31 July 2021

1,231

 

The merger reserve is a non-distributable reserve that arose through the application of merger relief to the shares issued in 2013 in connection with the acquisition of Applied Graphene Materials UK Limited.

Retained earnings represent cumulative profit and loss net of distributions to owners.

 

17 Share based payments

The Group operates a number of employee share option schemes, which run over a number of different time periods to reflect when awards have been made to Directors and employees. These schemes include:

• SAYE;

• non-approved executive options; and

• EMI.

The Group's SAYE scheme is open to UK employees of the Group and is not subject to any performance conditions. SAYE takes the form of a monthly savings contract over a three year term, at the end of which participants have the opportunity to acquire shares in the Company at the option price determined at the date of grant.

During the year, the Group has recorded an IFRS 2 charge of £32,000 (2020: credit of £14,000). The majority of the current year charge is derived from three awards made. The fair value of options and significant assumptions used in the calculation of the Group's IFRS 2 charge were as follows:

Grant date

7 May 2020

31 January 2019

31 January 2018

Scheme

EMI/non-approved

EMI/non-approved

EMI/non-approved

Share price at date of grant (£)

£0.095

£0.32

£0.38

Exercise price (£)

£nil

£nil

£nil

Number of participants

20

3

9

Shares under option

1,154,672

901,164

883,810

Vesting period (years)

3

2.8

2.4

Expected volatility (%)

56%

56%

56%

Option life (years)

10

10

10

Expected life (years)

3

3

3

Risk free rate (%)

0.77%

0.77%

0.71%

Expected dividend yield (%)

Nil

Nil

Nil

Fair value per option (£)

£0.095

£0.20

£0.23

Valuation model

Black-Scholes

Monte-Carlo

Monte-Carlo

The expected volatility is based on the historical observed volatility from trading in the Company's shares, over a historical period of time between the date of the grant and the date of exercise. The expected life is the average expected period to exercise. The risk free rate of return is the implied yield on zero coupon UK Government bonds as at each grant date, with a maturity equal to the expected life of the option. Certain awards will only vest in full if specific performance criteria set out in the Remuneration report are met. For non-market based performance criteria, the Directors have made their best estimate of the number of options that will ultimately vest.

A reconciliation of option movements during the year ended 31 July 2021 is shown below:

 

2021

 

2020

 

 

 

Weighted

 

 

Weighted

 

 

 

average

 

 

average

 

 

 

exercise

 

 

exercise

 

 

 

 price

 

 

price

 

 

Number

£

 

Number

£

 

At 1 August 2020

3,993,745

0.13

 

4,022,910

0.14

 

Granted

-

-

 

1,154,672

nil

 

Forfeited and lapsed

(439,052)

nil

 

(1,183,837)

0.02

 

Exercised

(215,616)

0.33

 

-

-

 

 

 

Outstanding at 31 July 2021

3,339,077

0.13

 

3,993,745

0.13

 

Exercisable at 31 July 2021

719,346

0.42

 

934,962

0.39

 

 

The weighted average exercise price of options granted in the year was £nil (2020: £nil). 215,616 options were exercised (2020: none) and no options were cancelled (2020: none) during the year.

Options are exercisable at prices ranging between £nil and £1.55. The contractual life of options is generally ten years, which includes a vesting period with performance conditions (other than for the Group's SAYE scheme, where no performance conditions exist). The performance criterion for the grant on 7 May 2020 to all employees (except senior management) is continuing to be in employment with the Group at 7 May 2023 or the release of the interim results for the period to 31 January 2023 if later.

 

18 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 of the Group were recorded, excluding VAT, during the year:

 

2021

2020

 

£'000

£'000

Durham University (shareholder)

 

 

Staff secondment, consultancy and other fees

-

4

Top Technology Limited (controlled by shareholder)

 

 

Non-Executive Director fees

10

15

Conference attendance fees

-

8

IP2IPO (shareholder)

 

 

Non-Executive Director expenses

-

1

 

The following balances were owed by the Group at the end of the year in respect of the transactions set out above:

 

2021

2020

 

£'000

£'000

Durham University

-

-

Top Technology Limited

-

8

 

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:

 

2021

2020

 

£'000

£'000

Short term employee benefits (excluding bonuses)

741

772

Bonuses

126

164

National Insurance contributions

122

112

Pension contributions

51

63

Payments to third parties

10

15

IFRS 2 share based payments

32

(14)

 

1,082

1,112

 

Remuneration of key management includes remuneration paid by subsidiary undertakings in the current and prior financial years.

 

19 Cash flow statement

Net cash generated from operations

 

Group

2021

Company

2021

Group

2020

Company

2020

 

£'000

£'000

£'000

£'000

Continuing operations

 

 

 

 

(Loss)/profit for the year attributable to equity shareholders

(3,174)

1,357

(3,189)

(5,275)

Tax credit

(391)

-

(476)

-

Net finance expense/(income)

6

(3)

(33)

(32)

Depreciation of property, plant and equipment

409

-

446

-

Exceptional costs

-

-

168

-

EBITDA

(3,150)

1,354

(3,084)

(5,307)

Depreciation of property, plant and equipment

(409)

-

(446)

-

Exceptional costs

-

-

(168)

-

Operating loss

(3,559)

1,354

(3,698)

(5,307)

Depreciation of property, plant and equipment

409

-

446

-

Disposal of property, plant and equipment

-

-

-

-

IFRS 2 share based payments

32

65

(14)

85

Impairment of intercompany loan/investment

-

(2,094)

-

4,783

Increase in inventories

(19)

-

(22)

-

(Increase)/decrease in receivables

(29)

(73)

(117)

154

Increase/(decrease) in payables

147

(79)

(60)

101

Net cash used in operations

(3,019)

(827)

(3,465)

(184)

 

20 Net cash/(debt) reconciliation

 

 

 

 

 

 

 

 

Cash

Leases

Total

Group

 

£'000

£'000

£'000

Net cash/(debt)

 

 

 

 

At 1 August 2019

 

6,135

-

6,135

Transition to IFRS 16

 

-

(174)

(174)

Cash flows

 

(2,450)

149

(2,301)

New leases

 

-

-

-

Net cash/(debt) at 31 July 2020

 

3,685

(25)

3,660

Cash flows

 

2,623

147

3,770

New leases

 

-

(196)

(196)

Net cash/(debt) at 31 July 2021

 

6,308

(74)

6,234

 

 

21 Availability of Annual Report

Copies of the Annual Report and Financial Statements and Notice of Annual General Meeting will be posted to the Group's shareholders on 28 October 2021 and will be made available, along with this announcement, to view from that date on the Group's website at www.appliedgraphenematerials.com. Copies may be obtained from the Company Secretary at the registered office of the Company.

The 2021 Annual General Meeting is to be held at 11am on Tuesday 7 December 2021 at The Wilton Centre, Wilton, Redcar Cleveland, TS10 4RF.

All shareholders are strongly encouraged to submit their votes on the formal business to be transacted using the proxy form enclosed with the Notice of AGM.

The Chairman of the AGM will propose that each resolution, as set out in the Notice of AGM, is voted on via a poll. This means that each shareholder present in person (which shall only be such number of Directors as is sufficient to ensure that the AGM is quorate) or by proxy will have one vote for each share held.

The Company will continue to monitor developments relating to COVID-19. If a situation should arise which necessitates that the arrangements for the AGM be altered, shareholders will be notified promptly via an RNS announcement and the Company's website.

As a result of the ongoing COVID-19 pandemic, the Board of the Company would ask that you do not attend the Meeting in person if you have symptoms that may be caused by COVID-19; if you are waiting for the results of a COVID-19 test; if you have received a positive COVID-19 test result; or if you live with someone with COVID-19 symptoms, or with someone who has tested positive for COVID-19.

 

 

Corporate information

 

Directors

Dr Bryan Dobson

Non-Executive Chairman

Dr Adrian Potts

Chief Executive Officer

David Blain

Chief Financial Officer and Company Secretary

Professor Karl Coleman

Chief Scientific Officer

Sean Christie

Non-Executive Director

Company number

08708426

Registered office

The Wilton Centre

Wilton

Redcar

Cleveland TS10 4RF

Tel: 01642 438214

www.appliedgraphenematerials.com

Independent auditors

RSM UK Audit LLP

5th Floor

Central Square

29 Wellington Street

Leeds LS1 4DL

Solicitors

Squire Patton Boggs

6 Wellington Place

Leeds LS1 4AP

Bankers

HSBC Bank plc

1 Saddler Street

Durham DH1 3NR

Nominated advisor and joint broker

Singer Capital Markets

One Bartholomew Lane

London EC2N 2AX

Joint broker

Allenby Capital Limited

5 St. Helen's Place, London EC3A 6AB

 

Registrar

Link Group

10th Floor

Central Square

29 Wellington Street

Leeds LS1 4DL

 

 

 

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