9 Oct 2019 14:00
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
9 October 2019
Applied Graphene Materials plc
("Applied Graphene Materials", "AGM", the "Company" or "the Group")
Operational update
Applied Graphene Materials (LSE: AGM), the producer of specialty graphene materials and dispersions, provides an operational update ahead of the publication of its preliminary results on 16 October 2019 in respect of the year ended 31 July 2019.
AGM is to re-align its resources around its efficient dispersion and application technology to better support the product development of those customers that present the nearest-term revenue opportunities, in order to focus on growing sales. This re-alignment will reduce the Company's operating cost base, extend AGM's cash runway to at least two years and place the Company in a better position to deliver new products to the market place.
Background
This year, the Company has made important technical progress with its commercial partners and has strengthened its graphene dispersion product offerings which enable relative ease of use of graphene materials by customers. The Board believes that AGM remains extremely well positioned in its focused sectors as a result of its strong IP and compelling graphene application and integration technology. AGM's customer collaborations have continued to progress and gain momentum. However, it continues to take time to test products and build significant revenues. Further information on progress with customers will be included in the full year results.
Experience over recent years has clearly demonstrated that AGM's core expertise is in dispersion and application know-how to integrate the performance benefits of graphene nanoplatelets in an effective way in customer products. The Board has therefore decided to focus its resources and activities around meeting customer opportunities through the dispersion and end-use application of graphene as the best means of revenue growth.
As a result, today, the Board is entering a period of consultation with its employees with a view to implementing a re-alignment of its operations towards dispersion and application know-how and customer support. The Company will focus its resources on growing revenues from its significant pipeline of approximately 100 active engagements.
The Group will largely maintain its resources in its business development and technical teams to support customers in product development, rigorous testing and customer engagement whilst streamlining its manufacturing operations.
Financial impact (subject to consultation)
The cash operating cost base of the Company of £4.3m (unaudited) in the year to 31 July 2019 is expected to fall by circa £0.9m and £1.1m for the years ending 31 July 2020 and 2021, respectively. The cost of implementation of these changes is circa £0.2m. These actions will extend the Company's cash run-way to at least Q4 2021.
Unaudited draft preliminary results for the year ended 31 July 2019
As noted above, the Company will announce its results on 16 October 2019. Unaudited revenues and other income for the year were £0.12m with an unaudited EBITDA loss of £4.6m.
The Group had net cash of £6.1m as at 31 July 2019 and it received an R&D tax credit of £0.6m in August 2019.
Commenting on the proposed re-alignment, Adrian Potts, Chief Executive said:
"Our absolute priority and focus remains to support our commercial partners in successfully incorporating graphene, achieving product launches and growing revenues. We have built an exceptional technology base around dispersion know-how and practical end-use of our products. The Board strongly believes that AGM is well placed in graphene and target market sectors and is confident that, with the reduced cost base and existing cash resources, the Company will have sufficient time to significantly grow revenues in the emerging graphene market.
I personally thank all of those employees that will be affected by this process for their hard work over the years and their valuable contribution to the Company."
For further information please contact:
Applied Graphene Materials
+44 (0) 1642 438 214
Adrian Potts, Chief Executive Officer
David Blain, Chief Financial Officer
N+1 Singer
+44 (0) 207 496 3000
Richard Lindley / Justin McKeegan / Mia Gardner
Hudson Sandler
+44 (0) 207 796 4133
Charlie Jack / Emily Dillon
Notes to Editors:
About Applied Graphene Materials
Applied Graphene Materials works in partnership with its customers using its knowledge and expertise to provide bespoke graphene dispersions and formats to deliver enhancements and benefits for a wide range of applications. The Group's strategy is to target commercial application in three core markets: coatings, composites and polymers and functional fluids.
The Group has developed proprietary bottom-up processes capable of producing high purity graphene nanoplatelets using a continuous process. The manufacturing processes are based on sustainable, readily available raw materials and therefore do not rely on the supply of graphite, unlike most other graphene production techniques. Applied Graphene Materials owns the intellectual property and know-how behind these processes.
Applied Graphene Materials was founded by Professor Karl Coleman in 2010 with its operations and processes based on technology that he initially developed at Durham University. The Group was admitted to AIM in November 2013, raising £11 million, and is based at the Wilton Site on Teesside.