24 March 2021

Applied Graphene Materials plc

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

Interim results for the six months ended 31 January 2021

Applied Graphene Materials, the producer of specialty graphene materials, is pleased to announce its interim results for the six months ended 31 January 2021.

Highlights

Operational highlights

Coatings:

  • Approval for use of a new graphene-enhanced primer with Blocksil, to complement use of its AGM graphene-enhanced Top Coat MT product launched to consumers in January 2020

  • New customer product launches:

    • o A new wax based car care product from EZ Car Care

    • o A new wax based car care product from Infinity Wax

  • Availability of technical data for sustainable water based epoxy technology

  • Blocksil commercial relationship starting to build momentum with orders from RTE, Network Rail and construction industry for Blocksil graphene enhanced products

  • Repeat business from JBL for aerosol based primers

  • Acceleration in customer engagements in the car care sector

  • Growth in total pipeline engagements to 135 (2020: 92) including 10 completed developments (2020: nil) and resulting revenue potential to £3.7 million (2020: £2.9 million)

Composites and functional materials:

  • Positive continuing progress with core composites customer

  • Potential for TP300 product for thermal adhesive and heat-dissipation applications and graphene nanoplatelets ("GNPs") for bearing applications

Distribution:

  • Further distributors added to enhance our regional presence in Turkey (Gobarr) and South Korea (ManHo Polymers) and growth of our customer-facing representation headcount to around 79 including AGM's direct sales team

Strategic highlights:

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

  • In partnership with the EU REACH Graphene Consortium, achieved ECHA accreditation for volume supply of graphene powder (up to 10 tonnes' volume), addressing a significant barrier to deployment at scale

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

  • Continuing IP development

  • Cross-trading of shares in USA on OTCQB from August 2020

  • Extended product platform to address the growing sustainability challenges facing the coatings industry through water based epoxy product technology for low VOC coatings - extending AGM's addressable opportunity. Launched customer products offering enhanced sustainable credentials through use of graphene

Financial overview

  • Revenue - £42,000 (2020: £35,000)

  • Operating expenses reduced by £0.5 million to £1.7 million (2020: £2.2 million)

  • EBITDA* - loss of £1.6 million (2020: loss of £1.9 million)

  • Loss before tax - £1.8 million (2020: loss of £2.3 million)

  • Cash at bank - £2.3 million (2020: £4.3 million) - a further £5.5 million new funding and £0.46 million R&D tax credit was received in February 2021

  • Basic EPS - loss of 3.3 pence per share (2020: loss of 4.0 pence)

  • * EBITDA comprises loss on ordinary activities before interest, tax, exceptional costs, depreciation and amortisation.

COVID-19

Continued focus on maximising the safety of our team members and maintaining business continuity. Activity at our customers' sites is being monitored and we continue to work with them to maintain progress on our joint development projects. Existing customer sales momentum increasing as the impact of COVID-19 recedes.

Adrian Potts, Chief Executive Officer, commented:

"We have made good progress in the period both in our technology development and with specific customers, primarily in the coatings sector. Similarly, our expanded distributor base is generating a growing number of new customer engagements.

Our route to significant revenue is through providing our high-quality graphene nanoplatelets dispersed in a format ready to be incorporated into customer product formulations. We continue to work successfully with our customers on graphene integration through to product testing and product launches and we are now starting to see our customer base launch graphene-enhanced products on a larger scale. All of this progress is key to driving AGM's sales growth, and it is particularly pleasing to see our customers in the coatings sector starting to use graphene-enhanced products in a range of large-scale, real-life applications, resulting in a developing pattern of repeat orders for our graphene products.

Having completed our recent fundraise, the Board considers AGM to be in good shape to develop our revenue prospects in the coming months."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Applied Graphene Materials' results presentation, with audio commentary, is expected to be made available on its website athttp://www.appliedgraphenematerials.comin due course.

For further information, please contact:

Applied Graphene Materials Adrian Potts, Chief Executive Officer

+44 (0) 1642 438 214

David Blain, Chief Financial Officer N+1 Singer

+44 (0) 207 496 3000

Peter Steel / Amanda Gray Allenby Capital Limited

+44 (0) 203 328 5656

Nick Athanas / Liz Kirchner (Corporate Finance)

Matt Butlin / Kelly Gardiner (Sales and Corporate Broking)

Hudson Sandler

+44 (0) 207 796 4133

Charlie Jack / Emily Dillon

Notes to Editors

For the last decade, AGM has been at the forefront of harnessing the possibilities of graphene. Founded originally by Professor Karl Coleman, the Group has grown from an academic idea from Durham University to a world leader in the development and application of graphene nanoplatelet dispersions for customers in the coatings, composites and functional materials sectors.

The Group utilises its proprietary bottom-up manufacturing process to produce high purity graphene nanoplatelets. Its expertise in dispersion chemistry enables AGM to create optimised, stable and easy to handle dispersions that customers use in real-world industrial products. AGM's unique approach enables industries to fully realise the potential of graphene in a simple, safe and easy to formulate way.

AGM, based at the Wilton Centre on Teesside, was admitted to AIM in November 2013, raising £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 its industry leading technology platform, AGM has been able to develop a significant sales distribution network covering Europe, North America and Asia. The Group continues to work closely with industrial partners, and has seen the successful launch of numerous commercial products enhanced by its Graphene Dispersions.

Business review

with Adrian Potts

Overview

Progressing customer engagements despite COVID-19

We made continued commercial progress during the six month period, despite the continuing challenge of COVID-19 both in the UK and abroad. A number of customers have reduced staff numbers which has impacted their development departments, a number of pipeline projects have been delayed or placed on hold indefinitely and some customers with already launched graphene-enhanced products have had difficulty accessing customer assets to be able to deploy their coatings. That said, we have continued to make good progress with engagements where possible and have also managed our own business well to ensure continuity of longer-range test programmes. As a result, we have seen three successful customer product launches in the period, namely:

  • - a new wax based car care product from EZ Car Care;

  • - a new wax based car care product from Infinity Wax; and

  • - approval for use of a new graphene-enhanced primer with Blocksil to complement its graphene-enhanced Top Coat MT product for a systemised coatings solution.

Focused on dispersed graphene formats for larger scale opportunity

We continue to emphasise that AGM's key differentiator is our knowledge base around the application of graphene and dispersion technology which makes it possible to transfer graphene's outstanding combination of properties into a host material. There is now growing awareness among our target consuming industries of the need for appropriate delivery mechanisms to efficiently deploy graphene in order to achieve an effective enhancement in the finished customer product. We believe AGM's focus on supplying graphenes in dispersed formats will meet this need and support a scale-up of revenue opportunities for AGM.

Customers gaining momentum with protective coatings products in the market

Good progress has been made in the protective coatings sector demonstrating the benefits of the addition of graphene nanoplatelets into exemplar and customer formulations. AGM's customers are starting to use their graphene-enhanced products for larger-scale commercial projects. Blocksil has been applying their Top Coat MT product with RTE for antennae, with Network Rail and with construction applications. Additionally, a new graphene-enhanced primer product has been integrated into Blocksil's product mix to enable a graphene-enhanced primer and top coat system solution. Alltimes Coatings has been contracted to use its Advantage Graphene coating on a Wickes commercial building application. It is pleasing to see James Briggs ("JBL") become a routine customer of AGM in support of its aerosol-based graphene-enhanced primer products.

Some delays in customer product launches have been inevitable and we have seen this with Teal & Mackrill in the development of its industrial epoxy primer. Our engagement pipeline continues to be heavily biased towards coatings technologies as the key area where we anticipate revenue growth. Successful outcomes of iterative development evaluations resulting in customer product launches are our conduit to sales growth on a by-customer basis.

It has been pleasing to see growth in activity in the car care sub-sector of protective coatings technology. With product formats being well aligned to AGM dispersion technologies, we are making good progress with a number of customers in this area.

Expanding distributer network

Distributor activity has increased in the period with the addition of two new distributors in Turkey and South Korea. These distributors have now been fully trained and are beginning to develop a number of business leads for our products and services. We now have around 79 customer-facing representatives across our distribution base and including our direct sales team.

Composites and functional products progress

Activity in the composites sector is customer led. Customer activity represents a broad spectrum of application from carbon fibre products for space applications to automotive opportunities. For the composite materials sector, we continue to see success with Infinite Composites Technologies with repeat materials requirements for mechanical property enhancements and barrier coatings application. Other composites customers are completing iterative testing of either our products or with their customers to prove the technology in the specific field of application. Some delays in testing have been apparent, specifically in the areas of composite tooling and mass transit interior applications.

Activity with Functional materials products continues - we are making good progress with the testing of our thermal adhesive product at an undisclosed customer whilst we continue to work with Airbus to determine how to best utilise our materials in their application. We are also seeing evaluations of our graphene dispersions for further applications for bearings and friction products.

Website

We completed a rebranding of the Company with a new website platform to enhance accessibility of information and to enable more effective communications with partners, customers and investors.

Technology progress

We continue to make strong progress technically and are developing an extended product platform to address the growing sustainability challenges facing the coatings industry. This includes technology for the dispersion of graphene in water-based coatings as opposed to solvents. We also continue to develop long range test data to support the adoption of our products in the protective coatings sector. Our publication of water-based epoxy technology data represents a milestone for us in the potential for using graphene for anti-corrosion in low VOC coatings. Another major milestone during the period was receipt of regulatory approval through the EU REACH Graphene Consortium. This addresses a major barrier to large-scale adoption of graphene technology within the EU, with large volume supplies of graphene powder now permitted (up to 10 tonnes). In line with our global market reach through our distribution network, we continue to work with the various regulatory authorities to attain similar approval to that granted in EU. ISO standards recently released support a robust approach to product integration and definition by the end user, which we further welcome. We are well advanced in our operational planning for scaled, consistent production of dispersed products and we expect to procure a spraying capability in 2021 which will enable us to carry out high-quality test panel preparation as part of our long range testing and customer support endeavours.

Successful fundraise

We announced a successful fundraising round at the end of January 2021, approved by shareholders in a general meeting in February 2021. Over the past two years we have made strong progress on developing our technology and maturing our dispersed graphene product platform. We have seen this principally in the area of development of scaled dispersions which are stable and user friendly and secondly in the production of exemplar data. Such data support our claims about graphene nanoplatelets as an enabling materials technology. Having established this reliable platform and having seen early customer product launches enabling modest revenues, further funding was necessary to support the growth of the revenue roadmap. We were pleased to have been able to raise £6 million gross from the capital market and this gives AGM a solid cash runway well into 2023. We also announced the changing of our listing in the OTC market in USA from pink sheets to OTCQB to enable greater access to investors and have spent significant time presenting to the USA-based investor community. We are deeply appreciative of existing and new investors who have put their confidence in AGM's leadership and provided us with the requisite financial resources to grow the business.

Commercial progress

Pipeline review

We have seen progressive growth in our pipeline of engagements over the past 12 months, with an increase from 92 to 135, including 10 completed products. It is also pleasing to see steady growth in the number of products being launched by our customers, which will drive our future sales of dispersed graphene materials. We believe steady, positive progress is being made in the evaluation of our graphene materials by customers interested in both graphene as a novel material and in the practical use of the material technology.

Opportunities by stage of development and pipeline value:

1

2

3

4

5

Repeat

Final product

Agreement on

Initial testing

testing for

trials,

scope of

and

consistency

formulation

Final

sampling and

interpretation

and review of

and

commercial

As at

engagement

of results

results

specification

agreement

Completed

Total

Value*

31.01.21

39

54

19

8

5

10

135

£3.7m

31.07.20

19

57

18

12

3

6

115

£3.6m

31.01.20

12

45

14

13

8

0

92

£2.9m

* The value of development stages 1 - 5 is probability weighted. The value of completed projects is at full sales opportunity

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Applied Graphene Materials plc published this content on 24 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 March 2021 11:48:04 UTC.