Graphene Nanochem Regulatory News (GRPH)

Graphene NanoChem PLC

29 September 2017

For Immediate Release 29 September 2017

Graphene NanoChem PLC

("Graphene NanoChem", the "Company" or the "Group")

Unaudited Interim results for the six months ended 30 June 2017

Graphene NanoChem (AIM: GRPH), the international provider of nanotechnology performance enhancing solutions for global industries, is pleased to announce its unaudited interim results for the six months ended 30 June 2017.

Financial Highlights

· Gross revenue increased to £0.6m (2016: nil)

· Gross profit of £0.02m (2016: Gross loss £0.05m)

· Loss before tax of £1.7m (2016: £1.5m)

· Loss per share of 1.29p per share (2016: 1.43p)

· 2016 comparative figures restated as explained below

· Cash and cash equivalents at the end of the period was £0.5m (2016: £0.6m)

· Current assets £0.6m (2016: £1.3m) and current liabilities £4.6m (2016: £17.6m)

· The Group is managing its working capital prudently in order to continue trading as a going concern and, amongst others, is in negotiations with its trade creditors valued at £2.6m (2016: £4.7m) for timing of payment to be matched against proceeds from the proposed sale of non-core assets

· Current cash and cash equivalents approximately £0.3m

Operational Highlights

· The Group continues to leverage on its 50/50 joint venture with the Scomi Group ("Scomi") within the oilfield chemicals business and received a US$118,800 commercial order for PlatSurf for trial in one oil well in Turkmenistan. The client has rejuvenation needs for 110 oil wells and, upon a successful trial, the Group shall commence negotiations for further purchase orders.

· The Group, in partnership with Scomi, continues to bid for small to midsized water treatment projects within the US$50m - US$150m project capex market segment.

· In the second quarter of 2017, the Group's enhanced polymer material was approved and successfully used to convert and modify a warehouse building for a tier 1 international aerospace company.

· The Group has issued 85,188,539 new ordinary shares to Darwin Capital Limited in connection with the conversion of all Loan Notes under Tranche 1 and Tranche 2 and as the date of this announcement, the Group has 201,725,075 ordinary shares in issue.

· The debt restructuring exercise the Company has undertaken is now expected to be unconditional by the year end 2017, post completion of the administrative process and other conditions precedent, including non-core assets sales, as previously announced.

Jespal Deol, Chief Executive Officer of Graphene NanoChem, commented:

"I am pleased to announce that the Group has remained focused and we continue to make progress in business reorganization and debt rationalization through the proposed sale of our non-core assets. The prolonged lower oil prices has continued to negatively impact Group sales within the oilfield chemicals division, nevertheless, we see encouraging signs in our efforts to leverage our intellectual property within the water and polymer divisions. We continue to prioritize partnerships within these divisions for future growth.

I would like to thank the staff of Graphene NanoChem for their dedication and professionalism during this period and look forward to continued progress in the second half of the year."

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

About Graphene NanoChem

Graphene Nanochem plc is a graphene commercialisation company that designs, formulates and markets a range of graphene‐enhanced applications, from chemicals to performance materials, with improved performance characteristics when compared to conventional products. The Group is strategically focused in the oil and gas sector as its first commercialisation platform and has successfully completed an integrated suite of enhanced oil recovery applications to meet industry demand for cost effective high performance solutions, achieving market breakthrough in 2014. With that, the Group is now moving onto its next phase of development of market building and executing long term growth opportunities in the oil and gas industry and now in the water treatment business.

Headquartered in Malaysia, Graphene Nanochem was admitted to the AIM of the London Stock Exchange on 26 March 2013, following the reverse acquisition of Biofutures International plc, and trades under the symbol GRPH.L.

To find out more, please visit www.graphenenanochem.com.

Chief Executive Officer's Statement

Graphene Nanochem Business

On the back of the Oilfield Chemical solutions value proposition, the Group has in partnership with the Scomi Group achieved field successes in the commercial rollout of its Oilfield chemicals solutions. The Group received a US$118,800 commercial order for PlatSurf for trial in one oil well in Turkmenistan. The client has rejuvenation needs for 110 oil wells and, upon a successful trial, the Group shall commence negotiations for further purchase orders.

The prolonged industry downturn in the Oil & Gas sector has impacted all industry players, the Scomi Group being no exception. Contract deferment and project postponement have become the norm as Oil & Gas companies continue to remain cautious on exploration and production. The Group continues to promote the value proposition of its products and is optimistic for further uptake in an upswing in the industry.

The Groups Water Division was setup as part of its diversification strategy and the solutions provided is the second application of its technology platform. The Group, with its partners, remain focused in bidding for and developing small to mid-sized projects within the US$50m to US$150m project capex market segment where there is a niche and the Group's solutions are economically viable. Target areas remain in the treatment of produced and industrial water, sewage water and clean drinking water.

The third commercial application of the Group's technology platform is in the area of Enhanced Materials, which sits within the Polymer Division of the Group. The Group has developed an enhanced polymer for the use in Building Materials that provides enhances strength and durability. In the 2nd quarter of 2017, the Group's enhanced polymer material was approved and successfully used to convert and modify a warehouse building for a tier 1 international aerospace company. The Group will continue to pursue partnerships within this division for future growth.

On 23rd December 2016, Darwin Capital Limited entered into an agreement with the Company to subscribe for up to £2.50m Senior Unsecured Zero Coupon Convertible Loan Notes with detachable Warrants to support working capital requirements of the Group and as part of Tranche 1 subscribed to £0.75m of the Loan Notes and 1,016,949 Warrants. During the period, Darwin Capital Limited further subscribed in Tranche 2 to £1.0m of the Loan Notes and 1,355,932 Warrants. The Group has issued 85,188,539 new ordinary shares to Darwin Capital Limited in connection with the conversion of all Loan Notes under Tranche 1 and Tranche 2 and as the date of this announcement, the Group has 201,725,075 ordinary shares in issue with 2,372,881 Warrants outstanding.

The conditional debt restructuring exercise the Company has successfully undertaken is now expected to now be unconditional by the year end 2017, post completion of the administrative process and other conditions precedent, including the sale of non-core assets, which the Group continues to pursue to completion as a matter of high priority. The debt restructuring goes a long way in re-establishing the building blocks necessary to positively turnaround the Group's financial position that specifically impacts negotiations for identified joint ventures within in the Polymer and Water Divisions, both of which are cornerstones to the longer term success of the Group.

Cash at hand at the end of the period is £0.5m (2016: £0.6m). The Group is managing its working capital prudently and amongst others is in negotiations with its trade creditors valued at £2.6m (2016: £4.7m) for timing of payment to be matched against proceeds from the proposed sale of non-core assets.

Financial Overview

During the 2016 final year audit in line with the reorganization of the Group, the Group has lost control of its wholly owned subsidiaries, namely Platinum Nanochem Sdn Bhd, Platinum Green Chemicals Sdn Bhd and Platinum Nano G Sdn Bhd. In line with the events above, the Group's interim financial statement has been prepared on a deconsolidated basis that includes restating of the 2016 final year figures and the 2016 comparable interim figures in accordance with International Standards of Financial Reporting (IFRS).

After elimination of discontinued operations, the Group revenues for the period increased to £0.6m (2016: nil), the low revenue has been consistent with the prolonged industry downturn in the Oil & Gas sector. The Group with its joint venture partner, the Scomi Group is evaluating and streamlining its product offerings to concentrate on higher margin Oilfield chemicals to offset forecasted lower sales volumes in the near term whilst awaiting a pickup in the industry.

Gross profit for the period increased to £0.02m (gross loss 2016: £0.05) reflecting the low revenues for the period.

Administrative expenses has increased to £0.8m (2016: £0.1), although £0.2m is due to one off expenses incurred as a result of subscription by Darwin Capital Limited to Loan Notes during the period. The operating expenses are in line with the stringent cost cutting measures that has been ongoing as part of the holistic restructuring exercise by the Group.

The Group has a net asset position of negative £16.7m and the Group continues to focus on a partnership strategy in implementing growth plans of the Group as these partnerships enable the Group to leverage the balance sheet of its partners for off balance sheet financing. Current liabilities are £2.6m (2016: £4.7m) with trade creditors consisting of 56% of the amount valued at £2.6m.

Cash and cash equivalents at the end of the period was £0.5m (2016: £0.6m). The Group successfully issued loan notes of £1.0m as part of Tranche 2 of the £2.5m Senior Unsecured Zero Coupon Convertible Loan Notes with detachable Warrants agreement with Darwin Capital Limited during the period to support working capital requirements of the Group.

The Group continues to undertake prudent measures to conserve cash and lower costs in order to continue trading as a going concern.

The total comprehensive loss for the period was £1.7m (2016: £1.7m).

The Group will continue to safeguard capital prudently for the benefit of its stakeholders and strive to achieve its business plan targets with the ultimate aim of increasing shareholder value.

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Unaudited six months ended 30 June 2017

Unaudited six months ended 30 June 2016

Year ended 31 December 2016

Consolidated Statement of Cash Flows

Notes to the Financial Statements

For the six month period ended 30 June 2017

1 Basis of preparation

These unaudited condensed consolidated financial statements (the "interim financial statements") of the Group are for the six months ended 30 June 2017. The interim financial information set out above does not constitute statutory accounts. They have been prepared using the recognition and measurement principles of the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). IFRS include interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC). They do not include all of the information required for full annual financial statements, and should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 December 2016 which were approved by the Board of Directors on 29 June 2017. The report of the auditors on those financial statements was unmodified. These interim financial statements have not been reviewed by the auditors.

The interim financial statements have been prepared under the historical cost convention. These interim financial statements have been prepared in accordance with the accounting policies in the Group's consolidated financial statements for the year ended 31 December 2016. The accounting policies have been applied consistently throughout the Group for the purpose of preparation of the interim financial statements. The financial information contained in these interim financial statements comprises the Group statement of financial position as at 30 June 2017 and 30 June 2016 and the Group statement of comprehensive income, the Group statement of cash flows and the Group statement of changes in equity for the half years ended 30 June 2017 and 30 June 2016.

These interim financial statements are presented in Pounds Sterling ("£") which is the functional and presentation currency of the parent, and rounded to the nearest thousand ("£'000"). The functional currency of the subsidiaries is the Malaysian Ringgit as that is the currency of their primary economic environment. The directors have chosen to present these financial statements in Pounds Sterling due to the international exposure and shareholders of the entity.

2 Income Tax

There was no tax charge due to the losses arising in the period

3 Net exchange differences on translating foreign operations

Income and expenditure for overseas subsidiaries are included based upon average exchange rates to give a fair approximation to the transaction rate. Balance sheet items are included at the exchange rate at the balance sheet date. All other differences are included within the translation reserve, including related goodwill and intangible assets, which are translated at the rate ruling at the balance sheet date (30 June 2017 £1 = RM 5.59010, 31 December 2016 £1 = RM 5.54310 and at 30 June 2016 £1= RM 5.3910).

4 Availability of half yearly report

The Company's half yearly report will be available in soft copy from the investors' section of the Company's website (http://www.graphenenanochem.com).

5 Loss per share

Basic

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

Diluted

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all contracted dilutive potential ordinary shares.

6 Material subsequent events

There are no material event subsequent to the end of the financial period that has not been reflected in the financial statements.