Applied Graphene Materials plc (LON:AGM), the producer of specialty graphene materials and dispersions, announced today 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:
o Two new wax based car care product from EZ Car Care
o Two new wax based car care product from Infinity Wax
o Two new wax based car care products from Constellation Chemicals
o Tru-Tension launched new detailing spray product
· AGM product launches:
o 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
o 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, Applied Graphene Materials Chief Executive Officer, commented:
“AGM has achieved solid progress in the year. We have continued to announce important customer product launches and have further strengthened our leading technology platform, which will support accelerated commercial momentum. We have also launched a unique range of eco-friendly graphene products to meet growing demand for sustainable additives. Technology development is now addressing potential in the green energy sector using our graphene dispersion know-how.
We have been pleased to see repeat orders and additional graphene-enhanced products launched by existing customers, and we have announced several new customers, including eight in the fast-moving car care sector.
We are working with regulators to remove barriers to large-scale supply of graphene in different jurisdictions in anticipation of future higher-volume market demand, and we continue work to protect our industry-leading IP.
While, to some extent, COVID-19 lockdowns have restrained the pace of graphene testing and adoption by some of our commercial partners, we expect this impact to lessen in 2022. Our commercial pipeline of engagements is strong and expanding, and AGM is in solid shape to accelerate growth to meet customer demand.”
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
