Applied Graphene Materials plc (LON:AGM), the producer of specialty graphene materials and dispersions, has announced its full year results for the year ended 31 July 2020.
Operational and commercial highlights
· Excellent commercial progress made, with a number of major customer projects advancing throughout the year towards completion and product launch. The impact of coronavirus has caused some delays to customer projects however, our development pipeline continues to grow
· Customer product launch highlights with “Genable® Inside” include:
o Blocksil – introduced Top Coat MT anti-corrosion paint system
· Sales distribution network expansion – AGM has signed a number of significant new distribution agreements
o Maroon Chemicals Group – USA and Canada
o Arpadis – UK, Germany, France, Spain, Portugal and Scandinavia
o Will & Co – Benelux
o Dichem – Greece
· AGM continues to grow its IP portfolio with the progress of several graphene dispersion technology based patents
· Development and launch of the Genable ® 1400 series of dispersions, a cost-effective range of products offering outstanding barrier performance
· Development of production scaling for dispersions manufacture – continuous commitment to build production scale platform for the range of dispersions we manufacture
Financial overview
· Revenue £0.08 million (2019: £0.05 million)
· EBITDA* Loss of £3.08 million (2019: loss of £4.56 million)
· Cash at bank £3.68 million (2019: £6.13 million)
· Basic EPS Loss of 6.4 pence per share (2019: loss of 7.9 pence)
· Adjusted EPS Loss of 6.1 pence per share (2019: loss of 7.9 pence)
* EBITDA comprises loss before interest, tax, exceptional costs, depreciation and amortisation.
Post year end
· AGM has signified its intent to commit to signing up to the UN Global Compact in the near future
· Infinity Wax launched its Graphene QDX detailing polish for the car care market
· Kent Europe GmbH launched its aerosol anti-corrosion primer
· Halo Automotive / EZ Car Care launched its graphene enhanced car wax for car care market
· Launch of Innovation Accelerator programme
· AGM shares commenced trading on the OTCQB Venture Market in the United States
Adrian Potts, Applied Graphene Materials Chief Executive Officer, commented:
“We have seen a solid year of progress despite the global impact of coronavirus. Whilst we have been able to maintain continuity of our long term testing and materials development, we have seen a slowing of customer volumes in our second half of the year. We anticipate this to rebound as restrictions begin to be removed. Our technology platform for graphene nanoplatelet dispersions is ideal for the markets that we operate in and I am confident that we will see long term success in each sector. Our technology is well proven, graphene really works in these applications, and we have the keys to unlocking the performance of this remarkable class of materials.
I am particularly excited about the appointment of high-quality distribution partners for our business. This will enable the presentation of the possibilities of graphene materials to a more comprehensive audience. I see the combination of expanded geographical presence, technical excellence and commercial astuteness through our distributor platform as a recipe for successful engagement with the broad set of opportunities anticipated.
We are starting to see graphene come of age. It is my firm belief that the means of realising the remarkable performance benefits that graphene nanoplatelets have to offer is in the successful integration of these materials into a range of host products to make them even better. Understanding materials technology, dispersion chemistry and end-use application is critical to a successful outcome on a customer-by-customer basis. I believe, in this regard, we are very well placed to reap the benefits of the substantial effort we have put in thus far to develop our product offerings and prove that graphene works in real applications.”
Overview
Excellent progress has been made in the year with customer engagement and technology despite the challenges around coronavirus from early 2020. We have successfully achieved continuity of operations through flexible working and have seen strong customer development, with product evaluation and testing in their formulations being key activities. Following this extended cycle, it is pleasing to see customer product launches as a result of these activities.
The key milestone for commercialisation was the appointment of an extended group of distributors on a much broader geographical platform. The step has been based upon strength of product range, depth of demonstration data for our technology offerings and availability of a supporting network of information for practical customer assistance. We were pleased to welcome Dichem, Will & Co, Maroon Group and Arpadis to the AGM team during the year and we look forward to their growing contribution to our successful commercialisation. Direct commercial progress has been made with a number of customers and we are seeing the output of our work with them in their products that they are progressively bringing to market.
Technology development continues to be largely centred on the coatings industry and the significant potential that graphene dispersions offer to this space to achieve transformational product performance. As we look at adjacencies, new sectors are adopting the potential of our products. We have seen this latterly with increased engagement in the car care and detailing products sector. Liquid and wax based coatings are easily able to accommodate graphene dispersions and we have seen products begin to come to market as a result. We continue to support the all-round realisation of graphene technology by leading in such areas as REACH accreditation whilst maintaining efforts to protect and develop our IP with patent related activity.
A realignment of our resources was completed in December 2019, to enable a focus on graphene dispersions. As a result, we have a lean operation that is completely centred on the delivery of customer dispersion demand and the development of our technology base to meet our objectives for commercialisation.
An internal sustainability audit has been completed and we are developing the roadmap to prioritise activity in the business where we can make further meaningful progress. Over and above operational excellence, we believe that our products offer a unique proposition as regards sustainability through performance enhancement and, as a result, product life cycle benefits. As such, we are actively engaged with the UN principles for sustainability, the UN Sustainable Development Goals (SDG) and the Global Reporting Initiative (GRI) in a meaningful way to effect long term positive change within our business and our products and through our customer engagements. The Group has signified its intent to commit to signing up to the UN Global Compact in the near future.
As covered in the Financial review, our non-discretionary cash requirements indicate that the Group currently has sufficient cash resources for the next 12 months. Given the Board’s growth plans for the Group, cash flow forecasts for the commercial expansion envisaged by the Board following the launch of new products and significant increase in distribution achieved recently indicate that the Group will need to raise additional funding for its working capital needs as cash would run out in October 2021 based on these forecasts.
COVID-19 impact
Throughout the coronavirus restrictions in UK, we have sought and achieved ways to maintain continuity in the operation of our long-range testing facilities whilst achieving our primary objective of a COVID-19 safe workspace for all employees. I would like to personally record my thanks to all our staff for adopting an entirely new and flexible way of operating, in both embracing working from home whilst maintaining operations in a safe and collaborative manner.
We chose not to furlough staff, and as a result have largely been able to maintain continuity in house to avoid disruption of test plans. The situation has been more challenging externally, however, with many customers furloughing staff and reducing operational activity. Overlaid with this has been restrictions on work practices impacting, for example, practical access to structures which were planned to be refurbished with graphene enhanced protective coatings. An impact on full year revenue therefore resulted, with the second half of our financial year slowing due to customer volumes reducing. The quality of underlying customer enthusiasm remains strong, however, and I remain confident that, as we emerge from lockdown restrictions, we will see a positive upswing in activity and resulting shipments of graphene dispersions to our customers.
Coronavirus specifically impacted our plans to personally follow up previously announced activities in Asia, due to travel restrictions. We are now starting to see signs of opportunity again in this territory and are re-engaged in dialogue regarding the best conduit to this important commercial region.
Commercial progress
General
AGM has seen positive commercial development over the year with direct customer engagements and latterly with the number of exciting announcements we have made covering distributor arrangements for our Genable® range of graphene dispersions. The engagement with technically excellent, commercially focused distributors in a number of geographic regions is central to our commercialisation strategy to bring our easy-to-use graphene dispersion product range into wider adoption. We have a strong product base backed by excellent demonstration data using typical starting point formulations. Coupling this with application know-how and practical formulating experience, our supporting information is a key enabler for our direct customers and those of our new distribution partners to achieve their performance objectives through the use of our graphene nanoplatelet materials.
Our primary commercial exploitation focus for our technology continues to be in the area of protective coatings, whereby transformational gains in barrier and anti-corrosion performance can be repeatably demonstrated with our graphene technology. Our distributors have specialty knowledge in this sector and are well equipped to engage their customer base with our innovative range of dispersed graphene materials. Combining our product range with the level of support we are able to provide, ultimately through our Innovation Accelerator Programme, we believe we have a winning formula. With the continuing push in the coatings sector towards environmentally sound solutions, we firmly believe graphene has a strong part to play, from water-based coatings technology through to life cycle considerations for coatings for harsh applications.
The impact of coronavirus is important to note in our current results. Our H2 2019/20 commercial performance was adversely affected by accessibility of our customers to assets needing refurbishment. As such, demand for their coating products and services stalled, which in turn had an impact on AGM’s commercial output. Despite this, we were able to maintain a commitment to in-house operations, maintaining continuity of our long-range testing programmes to enable readiness for the re-emergence of the industry. Accessibility to projects is starting to pick up again and we anticipate an encouraging increase in commercial activity as the effects of coronavirus are diminished with time.
Activity in other target areas has continued apace with composite materials customer-led activity to realise performance gains in their materials systems. It has been encouraging to see the potential product output of the grant-funded NEAT project approaching maturity, for our materials to be tested on a broader platform of composites application opportunities, and for our longer term customers to see repeat success with our graphene materials in their high-performance applications. The efforts with our thermal adhesive products for aerospace applications are finally approaching a successful conclusion with the anticipated qualification for flight applications with two customers.
Our direct customer pipeline continues to mature with a number of projects developing towards customer product launches. This is one of our key success indicators whereby the complete process of product development, customer-specific formulation, testing, iteration and finalisation of product attributes leads to a customer having the confidence to launch a new product and generate revenues from it.
Pipeline overview
The number of programmes in the pipeline as at 31 July 2020 showed a net increase of engagements from 92 to 109 since 31 January 2020 as follows:
At 31 July 2020:
| Approval type | Stage of development | |||||
| 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 | Total | |
| Short | 7 | 18 | 8 | 4 | 2 | 39 |
| Medium | 11 | 24 | 9 | 7 | 1 | 52 |
| Long/unclear | 1 | 15 | 1 | 1 | 0 | 18 |
| Total | 19 | 57 | 18 | 12 | 3 | 109 |
| Completed projects | 6 | |||||
| The movements since 31 January 2020 are as follows: | ||||||
| Approval type | Stage of development | |||||
| 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 | Total | |
| Short | 3 | 6 | 1 | -1 | -4 | 5 |
| Medium | 3 | -3 | 3 | -1 | -1 | 1 |
| Long/unclear | 1 | 9 | 0 | 1 | 0 | 11 |
| Total | 7 | 12 | 4 | -1 | -5 | 17 |
| Completed projects | 6 |
Our direct pipeline enables us to focus on early opportunities and to identify where those will run deep to enable us to truly partner with our customers and realise success. For us, at this stage in our development, “success” is defined as equipping the customer to be able to use our products in a repeatable way and achieve their technical and commercial objectives, thereby equipping them to launch a new product in their respective market and to generate revenues accordingly. The demonstration of early technology adoption is crucial to creating broader opportunities and confidence to realise graphene’s commercial potential. Whilst this cycle can be lengthy at times, the approach is proving to be rewarding with progressive product launches by customers and the resulting revenues this will generate in the longer term.
The majority of engagements are in the protective coatings sector where most of our investment in technology is expended. A large percentage of the coatings engagements are in the general industrial sector of protective coatings systems. We also have active customers looking at our products in a number of adjacent coatings sub-sectors including automotive, aerospace and defence, oil and gas, flooring and marine. It is pleasing to also see a promising number of deeper engagement opportunities in the composites materials sector as our expertise in this area grows and we are able to demonstrate consistent performance gains in real repeat customer systems.
In order to de-risk our revenue opportunity matrix at this stage, we are focused on nearer term, innovative coatings industry participants which are able to turn around engagements quickly. Our aim through the demonstration of our unique technology with these early-stage customers is to prove that graphene nanoplatelets work well in a broad platform of protective coatings products, thus inspiring larger opportunities downstream.
Stage 5 engagements are the closest to completion for greatest maturity of product testing and opportunity of success include Airbus, an undisclosed aerospace company and an undisclosed car care coatings company. Stage 4 engagements include a number of advanced composites materials and coatings activities.
We remain confident in the strong momentum we are achieving towards the completion of a broad set of product integration efforts to meet customer aspirations and revenue prospects.
Coatings sector
We have made strong progress in a number of activities which support product commercialisation. Our focus continues to be the enabling of transformational barrier and anti-corrosion performance in protective coatings through the use of our dispersed graphene nanoplatelets. Three pillars support this effort:
· graphene nanoplatelets of consistent quality which produce consistent results;
· dispersion chemistries and process capability to suit a range of applications and customer opportunities; and
· long range test data and application technology to underpin such opportunities.
AGM has the leading range of dispersed graphenes marketed under the brand name “Genable®”, which provides the formulator with ease of use and integration and which therefore gives the confidence to test our materials in their protective coatings formulations. In addition, the guidance that AGM is able to provide to clients keen to understand the nuances of graphene used in their coatings is exceptional. This assures the best possibilities for successful outcomes.
Whether supplied in Genable® general purpose standard or customised dispersions to suit a particular end use chemistry, AGM works with its customers to ensure that an optimum dispersion of graphene nanoplatelets (GNPs) is achieved in each customer’s coatings formulation. This is the key that enables the best performance gains to be achieved. As we offer a platform of additives for a wide range of coatings opportunities and pursue performance gains in ever harsher environment applications, we continue to pioneer the adoption of graphene nanoplatelets in the coatings space.
We continue to develop our commercialisation through technical excellence and we have recognised the need to stand alongside our customers ever more closely to support the introduction of our innovative technology. We have introduced our “Innovation Accelerator” package through our distributors and directly to customers. Using this menu-driven paid-for service, customers have the opportunity to utilise our technical skills in the evaluation and adoption of graphene into their formulated products and to have them tested in our facilities. Customers can thus fast-track their own development efforts whilst having a reliable nanomaterials partner alongside to help guide the process of adoption. We look forward to customers making use of this service offering to great effect as momentum continues to grow.
Since the launch of the Top Coat MT paint by Blocksil, substantial progress has been made in securing further opportunities to deploy this exceptional material which combines barrier performance with UV resistance and mechanical performance benefits. With extended testing hours now completed, the anti-corrosion performance of this product is outstanding. The addition of AGM’s Genable® graphene nanoplatelet dispersions has further improved Blocksil product performance – taking it from some 5,000 hours in neutral salt spray for the “conventional” non-graphene product to their graphene enhanced coating boasting industry leading performance levels in excess of 10,000 hours. The graphene coating has also been successfully tested to relevant EN and BS standards for fire performance on building materials. Blocksil previously announced the approval of work packages with Avanti plc and the RTE network for refurbishment coating of large communication antennae and satellite communication structures. Despite the coronavirus limiting work crew access to these projects, Blocksil is developing safe working practices to enable increased site access and is confident that the situation continues to improve progressively, resulting in forecastable commercial pull requirements for both these prospects. Further product opportunities also continue to progress thanks to the integrated product development partnership that AGM has with Blocksil. This is leading to more than just the supply of dispersions for its Top Coat product: the development of several new products is reaching the final stages and it is expected that Blocksil will be able to offer an extended graphene enhanced range of products in the near future.
Alltimes Coatings has been active in the presentation of its Continuous Professional Development (CPD) package which enables a clear understanding by architects and specifiers about the performance benefits that graphene can achieve in coatings products. Using its Advantage Graphene product as the primary demonstrator, Alltimes has made strong progress and is now achieving product specification wins. We anticipate further progress with a view to forecastable revenues towards the end of the calendar year for projects in early 2021 using its approved products containing our graphene dispersions. Alltimes views the CPD process as a key milestone to adoption of the Advantage Graphene product for the infrastructure and construction sector. We look forward to projects commencing, creating ongoing and forecastable demand for our dispersed materials technologies. An early, practical technology demonstration of the Advantage Graphene product was successfully completed at the Wilton Centre (where AGM is located), with one of the buildings refurbished with this coating. It is expected that these initial good results will lead to further business opportunities for our materials through Alltimes at the complex of buildings on the Wilton site.
We have a long-standing development engagement with Teal & Mackrill whereby they have assessed our graphene additives in a number of different product formats for a broad range of coatings systems and chemistries. We have drawn the first of these test programmes to a positive conclusion with the anticipated imminent launch of a new specification of epoxy primer product for protective coating applications. This exciting product marks a further milestone in a growing number of customers placing their confidence in the remarkable utility that graphene offers to enable transformational results.
Post period end, it has been pleasing to see further launches of Genable® graphene based aerosol primers with Kent Europe GmbH in Duisberg, Germany. The performance of these aerosol-based primers using graphene dispersions is outstanding compared to the standard primer and we anticipate a strong uptake in product sales in the aerosol primers market.
We have seen significant recent customer product launches in the car care and detailing coatings sector. Genable® graphene nanoplatelet dispersions are a product form with a great fit for this type of market – whether the end product is a solid wax or a liquid sprayable material. Our dispersions have generated significant interest from the sector for graphene to become a new technology leader for automotive paint protection. Utilising the benefits of 2D materials, significant performance advantages are claimed in the industry with these types of detailing products creating a seal, promoting water beading and controlling streaking effects on detailed vehicles. Durability of coating is also an important attribute. We see strong interest in evaluation of our products in this space and are pleased to see positive momentum with a number of direct pipeline customers in Europe and the USA. One early adopter of this technology has been Infinity Wax, which has launched its “QDX graphene” detailing product post period end. An easy-to-use liquid solution for automotive paintwork, the addition of graphene is seen to enhance application, shine, finish, water run-off and durability. A second early graphene based detailing product launch has also been achieved with Halo Automotive Ltd via EZ Car Care in the UK. Other customer developments are continuing apace and we anticipate seeing further product launches in this sector – proof that well-dispersed graphene has an excellent fit and function in innovative coatings applications.
Multiple other coatings engagements are at various stages of testing and development in wide-ranging areas from steel coatings for harsh corrosion environments for a range of applications, aluminium corrosion for aerospace, concrete coatings for floor applications to barrier coatings for PPE. We see a broad spectrum of opportunity and continue the enabling of customers to bring new and innovative products to market, which in turn creates revenue streams for AGM’s Genable® graphene dispersion systems.
With good customer traction in the coatings sector and a mature, standard easy-to-use product range, we have underpinned our commercialisation strategy with the announcement of a number of high-quality distributor engagements for our Genable® range of products. We believe we are the first graphene company to have an extensive network of distributors, with some 60 customer-facing representatives including our direct sales team. This represents a major milestone in our commercial evolution on a broad geographic basis. Having strong commercial and technical distributor arrangements is key to our success and I look forward to the commercial results of these partners. Our business model reflects this well, namely:
o develop graphene material process technology;
o develop easy-to-use, stable dispersion technology as a standard product range and key enabler for adoption;
o prove the performance of our materials technology and define the methodology for use;
o develop a technically capable, commercially focused distribution platform to take product to market in an accelerated manner; and
o develop revenue streams.
Composites sector
Enhancing the all-round performance of what are already “high-performance advanced materials”, employing, for example, carbon fibre in composite structures, is always something of a challenge. Within the realm of “composites”, we see there are areas where graphene can have a positive influence. Our focal point therefore continues to be enhancing the performance of the resin matrix element and this aligns well with our approach to liquid resin technologies as a key access point for a proposed graphene addition. Our efforts have been centred (as with the coatings sector) on the supply of dispersed graphenes that provide the means to incorporate the material effectively into a customer’s matrix resin mix and from there into the corresponding composite formulation. Whether in traditional prepreg formats or sheet moulding compound (SMC) or fibre tow-placement processes, the correct application of graphene into the resin matrix is critical to success. This is where AGM’s expertise shines, and our graphene materials have demonstrated repeated performance improvements in the area of fracture toughness in composite matrix resins. In a number of our customer-led projects, we have also seen further metrics enhanced, with graphene additions providing a broader performance gain in these materials.
Infinite Composites Technologies (ICT) continues to achieve ground-breaking performance for its linerless Type V pressure vessel technology aligned with NASA programmes. The long-term objective is for incorporation of ICT products and technology into space vehicle platforms. ICT continues to make excellent progress in the demonstration of its carbon composite pressure vessel products using AGM’s graphene dispersions. These are applied in two distinct areas – the composite matrix to enhance mechanical performance and fatigue life of the vessels and also in a coatings format. AGM’s graphene technology has thus been put to excellent multi-functional use in this application. There is not much more demanding a test than the cyclic pressure and temperature evaluation of cryogenic pressure vessels to replicate life cycles of such structures in space applications. The materials and structures incorporating the graphene materials have been tested to withstand extreme -300F temperatures and 600psi pressure cycles. Analysis of the composite indicated that the addition of GNPs eliminates nearly all microfractures in resin samples after exposure to the cryogenic environment – an outstanding result combining the best of the materials technology employed to achieve lightweight, high-performance, long life products.
Following the completion of the innovative grant-funded NEAT project, an AGM customer in the UK prepreg manufacturing sector is actively engaged in the development of enhanced fire performance materials for the mass-transit interiors sector – materials that could be used in everyday applications in trains and aircraft for seats and cabin liners. Our engagement has enabled a nanotechnology product development to be completed with improvements in mechanical and fire performance. Combining the benefits of novel resin technology with nanomaterials has produced a product with outstanding fire performance, part finish and peel strength.
Continuing effort in the composites market has also yielded promising materials performance advantage in the automotive sector. Utilising graphene dispersions from AGM, a major supplier to the sector has been able to demonstrate improvements in a number of different mechanical performance attributes including tensile strength and modulus, flexural strength and modulus plus all-important impact performance. This represents positive directional improvement in key mechanical properties of composites systems without detriment in other characteristics. All said, a positive outcome and the engagement continues in order to optimise the performance of this materials system.
Demonstration effort on the previously announced successful manufacture of the grant-funded CTES project targeting the composite tooling sector has progressed more slowly due to COVID-19 accessibility issues. Project partner SHD Composites continues to promote the material technology borne out of the CTES project, against which we have recently been able to supply further materials. Two customers are currently evaluating the material and its utility for high-performance composite tooling applications.
With AGM’s dispersed graphenes offered in a range of media to suit the end-use chemistry, there is clear progress being made in end-user integration of graphene into a broader range of composite materials applications. This is a key enabler in creating consistent graphene enhanced materials and yet again underlines the use of AGM’s world leading dispersion and application technology to meet such innovation challenges.
Functional materials
Efforts with Airbus to achieve full qualification status for our TP300 thermal paste adhesive are at the stage of the final test data dossier preparation. This will be followed by reporting review and eventual sign-off of the approval for the product. Completion is anticipated in calendar Q4 2020. Sign-off will allow TP300 to be supplied to production applications. The challenges to get this product approval completed have been significant based upon the demanding spaceflight application, which should not be understated. However, once approved, we remain confident that the consistency and performance of TP300 will provide further opportunities for engagement with future Airbus build programmes.
Further similar engagement has been strong for AGM TP300 product with an undisclosed aerospace company. With a similar qualification and approval programme underway, we are confident that the pull from this customer to resolve technical matters quickly will establish a product with excellent utility for the aerospace company’s’s needs. The programme of work is at an advanced iterative stage and we look forward to a positive outcome with the undisclosed aerospace company,, enabling integration of TP300 into its structure’s build plans.
Technology, regulatory and manufacturing status
Our technology platform development continues apace, predominantly in the coatings application sector. Work includes the further development of the exciting range of graphene dispersions for practical application in a broader number of liquid systems. Based upon the solid expertise of dispersion formulation capability and application know-how, we see further opportunities in a number of adjacencies to the protective coatings space. The chemical resistant coatings sector has some unique challenges, but graphene nanoplatelets have the potential to play a significant part in future coatings innovations. Addressable areas include concrete coatings, barrier coatings for oil and gas industries through to applications in water treatment plants. Such coatings all lend themselves to inclusion of our dispersed product offering. We continue to test our products for applications such as these to build reliable representative data and anticipate further announcements covering both the promising utility of graphene in this space and commercial opportunities as a result of these efforts. As usual, AGM’s commitment is to complete the hard miles to demonstrate the technological viability of our products in our target markets as a key enabler to customer engagement. The generation of proven typical product data to support specific opportunities is a continuing commitment that we make to secure future business opportunities. Our Innovation Accelerator Programme allows customers the opportunity to utilise our skills and expertise in a practical manner with a schedule of test capabilities to support individual objectives.
We also continue to see promising opportunities in the conductive interface materials space, especially in conjunction with our coatings expertise. The broader technology opportunity such as coatings for batteries lends itself well to our type of materials offering, and as such we continue to pursue engagements in this space.
Our Structural Ink product offers unique graphene placement opportunities through a combination of ink formulations and printing know-how. Adaption of this technology to broader printing possibilities is an area of interest for further product iteration in the coatings industry.
Graphene nanoplatelet powder manufacturing technology is a key enabler in our business. Our A-GNP35 product continues to offer remarkable, efficient performance gains in barrier and protective coatings applications in finished formulations. As such, the transformational results we are routinely able to demonstrate in coatings technology can be achieved with low disruption to the formulator’s efforts. We continue to see the key to adoption of this innovative technology as ease-of-use dispersions of our graphene product offerings.
Dispersion manufacturing is often a multi-step process involving a number of different pieces of equipment. The know-how related to formulating both standard and custom dispersions is the key attribute of the business for the supply of consistent products that work repeatedly in their end-use applications. This is our focus and we envisage further scaling of the capability to meet rising demand over time.
Regulatory approval efforts continue and we are well placed as a key contributor to the graphene consortium for EU REACH. We continue to navigate the complex processes to achieve final regulatory approval for our graphene nanoplatelets, and equally seek to work with the UK authorities as Brexit requirements become clearer. Achieving REACH registration of our products will be a further milestone and validation of the efforts we have made to ensure the safe adoption of graphene nanoplatelet materials in industrial applications. We have carried out further independent studies to demonstrate safe use of graphene in our core market area of sprayable coatings, with this work culminating in an expert workshop under the guidance of the UK HSE.
Efforts in securing IP protection continue and we are pleased to see patent grants coming thorough in various territories for our broad ranging technology. We continue to invest in IP protection and the associated effort to achieve granted patent status.
Realignment of resources
We announced that we had embarked on a realignment of our resources in October 2019 and this was successfully completed by December 2019. The resulting operation is leaner and, most importantly, has strength and depth in the key areas of activity – notably continuing technology development and support of customers’ materials volumes and technical needs, plus manufacturing capability for graphenes and dispersions. In short, we have the correct staff in the correct positions to maximise the emerging opportunities for our materials as we continue the exploitation cycle. I am confident in our ability to deliver on the growth we are targeting.
Sustainability
AGM’s products lend themselves to enhancing the materials they are added to. This is through the remarkable properties that graphene nanoplatelets are able to deliver using our dispersed materials product offerings. The performance gain is not just immediate – there can be a positive impact on life cycle costs for products in the high-performance protective coatings, advanced composites and specialty adhesives sectors. Extended product life cycles manifest themselves principally in graphene enhanced materials that last longer – evidenced, for example, with Alltimes’ Advantage Graphene extended product warranty from 20 to 30 years. The potential benefit for asset owners arising from a reduced maintenance cost burden and increased asset utilisation is significant as a result. We therefore see that graphene has an important and exciting role to play in the opportunities we are pursuing for environmental and sustainability benefits.
In addressing the fundamental shift in the coatings industry to reduce volatile organic compounds (VOCs) and increase the emphasis on water-based coatings chemistries, AGM has developed water-based dispersions specifically to meet this challenge and to make sure our graphenes can be dispersed and incorporated into water-based coatings chemistries. This will ensure that our graphene is aligned to the latest innovation push in the coatings sector as part of meeting significant environmental challenges.
Outside of our product utility, we take our obligations seriously in the way we manage our business and our relationships with all our stakeholders. As a commitment to continuous improvement, we have completed an initial internal assessment of the key principles of the UN Global Compact. These include a review of:
– human rights principles;
– labour principles;
– environmental principles;
– anti-corruption principles; and
– management principles.
Our review has looked at our current policies and relationships with end-to-end stakeholders, and we have sought to identify variances to the expectations of the Global Reporting Initiative (GRI) standard. Additionally, we have sought to integrate the review with the design and intent of the 17 UN Sustainability Development Goals. We anticipate a plan and priorities for action arising from our initial review which would include:
– An employee handbook update with particular emphasis on managing the ongoing social impact of COVID-19 and employee wellbeing;
– a progressive review of specific policies;
– facilitation of a review of the end-to-end supply chain including our suppliers and distribution partners in due course addressing sustainability issues; and
– outline development plan of progressive sustainability goals for the business.
As a further indication of commitment, we intend to sign up to the UN Global Compact.
Outlook
The Board continues to recognise the significant progress that has been made to further develop AGM’s technology platform with a focus on our dispersed graphene nanoplatelets as the principal product offering. These products in turn have enabled continuing development of strong customer relationships, evaluation and testing of our materials and launch of their products to their respective markets.
The business remains in good shape to build on its revenue plan based on reliable products that work in our chosen fields of engagement and an outstanding distribution conduit to market.
The Group has cash at bank at 31 July 2020 of £3.685 million and the Finance review includes further information regarding future cash resources.
With a solid product package to offer to a broad range of customers and an increasing number of customer products coming to market as a result of our technical and commercial engagement, we are encouraged to see proven performance in real applications. We fully intend to accelerate the number of positive outcomes through our newly announced and existing distributor base as a means to securing long range revenue growth.
We continue to engage in the correct areas that need addressing (e.g. REACH accreditation) in order to ensure successful outcomes are achieved. We believe that the key to successful integration of innovative graphene nanoplatelet technology is about the usability of these materials in practical applications and on a repeatable basis. In this regard, we see that the business is in good shape to be able to develop further capacity and capability to service the commercial roadmap we have identified and other adjacencies we are working towards.
Adrian Potts
Chief Executive Officer
14 October 2020
