25th Mar 2015 07:00
25 March 2015
Applied Graphene Materials plc
("Applied Graphene Materials", "the Group" or "the Company")
Interim results for the six months ended 31 January 2015
Applied Graphene Materials, the producer of specialty graphene materials, is pleased to announce its interim results for the period ended 31 January 2015.
Financial overview
· | EBITDA* | Loss of £1.8 million (2014: loss of £0.8 million) |
· | PBTA** | Loss of £1.8 million (2014: loss of £0.8 million) |
· | Loss before tax | Loss of £1.9 million (2014: loss of £1.2 million) |
· | Cash at bank | £6.6 million (2014: £9.9 million) |
· | Diluted EPS | Loss of 11.3 pence per share (2014: loss of 9.6 pence) |
· | Adjusted diluted EPS | Loss of 10.8 pence per share (2014: loss of 6.5 pence) |
* EBITDA comprises loss on ordinary activities before interest, tax, exceptional costs, depreciation and amortisation
** PBTA comprises loss before tax, exceptional costs and amortisation
Operational highlights
· Record period for customer sampling with accelerating interest
· Early stage customer feedback is encouraging
· Commencement of front end engineering design of larger mk4 production asset
· Over 50 samples provided to customers in the year to date
· Presence established in all target markets
Jon Mabbitt, Chief Executive Officer, commented:
"Over the last six months we have established a global profile for Applied Graphene Materials through our market development activities. We have extended the scope of our customer engagements in our target markets where our existing partnerships are becoming more advanced and we are seeing appetite from further new potential partners.
As we progress towards production orders we have successfully increased production volumes over the period whilst maintaining consistent dispersion quality on a larger scale to ensure the best enhancements for our customers."
Ends
Applied Graphene Materials' results presentation, with audio commentary, is expected to be made available on its website at http://www.appliedgraphenematerials.com by Thursday 26 March 2015.
For further information, please contact:
Applied Graphene Materials | +44 (0) 1642 438 214 |
Jon Mabbitt, Chief Executive Officer |
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Oliver Lightowlers, Chief Financial Officer |
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N+1 Singer | +44 (0) 207 496 3000 |
Shaun Dobson / Richard Lindley |
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Hudson Sandler | +44 (0) 207 796 4133 |
Charlie Jack / Emily Dillon |
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Notes to Editors
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.
The Group has developed a proprietary bottom-up process which is capable of producing high purity graphene nanoplatelets using a continuous process. The manufacturing process is based on sustainable, readily available raw materials and therefore does not rely on the supply of graphite, unlike a number of other graphene production techniques. Applied Graphene Materials owns the intellectual property and know-how behind this process.
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.
Business review
Overview
During the period, we have made significant progress in formatting dispersions to provide the greatest enhancements and performance benefits for our customers. Customer feedback received to date has been encouraging and supports our focus on creating graphene formats that deliver optimal enhancements and performance. We continue to concentrate on those areas where we believe our graphene dispersions can have most impact and, accordingly, to target three principal markets: advanced composites and polymers, functional fluids and coatings.
No other material has the combination of fundamental properties that graphene possesses and we continue to believe that the adoption of graphene will primarily fall into two categories. Firstly, where graphene delivers unique enhancements; secondly, where graphene enables some form of cost saving through material substitution or process simplification. A complete understanding of the supply chain will ensure that we are positioned to capture the value of both opportunities.
Customer relationships and sampling
Applied Graphene Materials has established a global profile. Our focused marketing and sales strategy is paying dividends as we work closely with customers operating in our three target market sectors. We have now resourced a direct presence in each of the international territories where our target customers operate, including establishing a footprint in North America during the period.
As our reputation grows, so do the strength and depth of our customer engagements. Whilst not yet converted into production scale orders, current discussions indicate that we are making good progress towards that stage. Over 50 material samples have been provided in the year to date. This has resulted in further work and repeat sample orders targeted at specific applications and opportunities. The number of customer engagements is increasing and the rate of increase is accelerating, due largely to the efforts of our expanded commercial team and the continuing global appetite to assess such a potentially game-changing material. Unsurprisingly, the majority of our customers want their evaluations to be kept confidential as they seek to capture a competitive lead through the performance enhancements achieved.
Our focus remains on bulk industrial applications where just a small percentage of graphene added into the host material can provide significant property enhancements. Customers in our target market sectors are particularly interested in graphene's mechanical, barrier and lubricating properties. These include the addition of graphene as a barrier coating to protect substrates in harsh environments, the toughening of polymers to reduce gauge thicknesses whilst providing increased impermeability, and enhanced lubrication to reduce wear and increase efficiency in machinery.
The Group adds value through formatting graphene into an easily adopted material for our customers and because of this we are seeing increased acceptance that we believe will lead to early adoption.
Formatting graphene for optimum enhancements
The Group is making significant progress in producing graphene of consistent quality at larger scale whilst formatting graphene into optimal dispersions to deliver maximum benefits to customers. Our unique, proprietary, bottom-up synthesis process results in graphene that possesses a balance of properties that can be translated into a host matrix (such as paint, oil or composite) in even dispersions. Evenness of dispersion is critical for translating property enhancements and it is crucial to maintain an even dispersion across a wide range of operating conditions, including temperature, pressure and chemical environment.
We have listened to our target customers' requirements for supporting data and are currently in the process of generating our own substantial, independently verified database on the properties of our graphene when added to a range of regularly used products in our target market sectors. This will provide our customers with the confidence to commit their resources to evaluate and incorporate our graphene into their host materials and products. Whilst much scientific data is available on individual uses of graphene, producing independent data will be a major milestone towards more widespread adoption and we expect this data to be delivered during the second half of the calendar year.
Manufacturing and scaling up
The synthesis of graphene from a carbon containing precursor is a highly specialised area of process chemistry where the raw materials, materials of construction and process conditions are absolutely critical to the consistency and quality of graphene produced. During the period, the Group has gradually increased the run rates of its existing production assets as we evidence the consistency and quality of production at higher volumes. This activity will continue across the second half of the financial year as ongoing enhancements are made to the Group's manufacturing and dispersion processes.
In order to secure the Group's long term position in this market, we are now also engaged on the further scale-up of our production capacity having commenced preliminary work on the front end engineering design of a larger scale production asset. This expansion will take two years to be fully operational and the Group is keen to ensure delivery is timed to meet the anticipated demand for our graphene. Having learned so much from the two previous scaling-up exercises we are focused on achieving the desired product quality and consistency. The expansion will include capacity to be able to format graphene in the volumes our customers demand. Not only has our internal team been expanded, but we have also engaged with a highly experienced, internationally recognised company who will assist with the engineering design and build.
Outlook
Customer sampling of our graphene is now accelerating. Whilst the precise point at which customer demands turn into production scale orders is customer dependent and therefore remains difficult to predict, the progress that we have made means that we are well placed to be able to respond rapidly to meet customer requirements and to satisfy anticipated demands as they arise.
We remain confident that Applied Graphene Materials will play a leading role in meeting the growing global appetite for graphene.
Jon Mabbitt
Chief Executive Officer
25 March 2015
Financial review
Revenue
Revenue for the period was £13,000 (2014: £2,000) arising from the supply of trial quantities of graphene to commercial partners.
Other income
Other income, which comprises grant income, was £16,000 (2014: £nil). Grants received generally relate to funding received for the creation of new jobs, the purchase of assets or the development of new graphene applications.
Loss on ordinary activities before interest, tax, exceptional costs, depreciation and amortisation (EBITDA)
EBITDA for the Group increased from a loss of £820,000 in 2014 to a loss of £1,816,000 for the period ended 31 January 2015. This increase in losses reflects investments in production and overheads, including headcount and business infrastructure, to support the anticipated future growth and development of the business, both in the periods prior to and since admission to AIM.
Exceptional costs
Exceptional costs recognised in the period were £90,000 (2014: £394,000). These costs principally relate to payments made as compensation for loss of office in the current year whilst the prior year relates to fees paid in connection with the AIM admission.
Net finance income
Net finance income for the period was £36,000 (2014: £10,000). The Group has benefited from bank interest earned on monies placed on deposit since its admission to AIM.
Loss on ordinary activities before tax, exceptional costs and amortisation (PBTA)
PBTA for the period increased from a loss of £822,000 in 2014 to a loss of £1,829,000 for the period ended 31 January 2015. This increase in losses reflects the investments in production and overheads, including headcount and business infrastructure, to support the anticipated future growth and development of the business, both in the periods prior to and since admission to AIM.
Loss on ordinary activities before tax
A loss on ordinary activities before tax of £1,919,000 (2014: loss of £1,216,000) was recognised. This includes exceptional costs connected to payments made as compensation for loss of office of £90,000 in the current year.
Tax
The Group has not recognised any tax assets in respect of trading losses arising in the current financial year or accumulated losses in previous financial years. The tax credit recognised in respect of the previous financial year arises from the receipt of R&D tax credits. In due course, the Group expects to receive R&D tax credits in respect of the current financial year.
Earnings per share
Diluted earnings per share was a loss of 11.3 pence (2014: loss of 9.6 pence). Adjusted diluted earnings per share (before exceptional costs) was a loss of 10.8 pence (2014: loss of 6.5 pence). Earnings per share has been adversely impacted by increases in operating costs previously explained and the issue of new shares as part of the admission to AIM.
Dividend
No dividend has been proposed for the period ended 31 January 2015 (2014: £nil).
Cash flow
Net cash used in operations was £1,662,000 (2014: £872,000). During the period, net working capital utilised reduced by £119,000 (2014: reduction of £320,000). This reduction principally relates to an increase in trade creditors and accruals reflecting growth in the activities of the business.
Capital expenditure of £234,000 (2014: £225,000) has been incurred in the period mainly relating to the purchase of laboratory equipment and the ongoing development of the production process. Net proceeds arising from the issue of shares totalled £13,000 (2014: £10,502,000).
Balance sheet
Net assets have reduced to £6,540,000 (2014: £9,728,000), principally reflecting the trading loss for the period.
Cash at bank at 31 January 2015 was £6,641,000 (2014: £9,882,000). The proceeds from AIM admission have been placed on deposit with a range of financial institutions for time periods ranging between instant access and up to one year in maturity.
Comparative information
In order to comply with IFRS 3, the Group has applied reverse acquisition accounting in the presentation of consolidated shareholders' equity for comparative periods. These comparative periods show the results of the accounting acquirer (Applied Graphene Materials UK Limited) along with the share capital structure of the Parent Company (Applied Graphene Materials plc).
Accounting policies
The Group's consolidated financial information has been prepared in accordance with International Financial Reporting Standards as adopted in the EU. The Group's significant accounting policies, which are consistent with those set out in the audited financial statements for the year ended 31 July 2014, have been applied consistently throughout the period.
During the period, the Group has recognised on its balance sheet inventories of finished goods and raw materials where the value of such items is considered to be significant. In each case, finished goods and raw materials have been recognised at cost. In previous years, values attributable to inventories of finished goods and raw materials were not considered to be significant.
Principal risks and uncertainties
Risk management forms an integral part of the business planning and review cycle. The Directors believe the following risks to be the most significant for potential investors. However, the risks listed do not necessarily comprise all of those associated with an investment in the Group and are not set out in any particular order or priority. Additional risks and uncertainties not currently known to the Directors, or which the Directors currently deem not to be significant, may also have an adverse effect on the Group and the information set out below does not purport to be an exhaustive summary of the risks affecting the Group. In particular, the Group's performance may be affected by changes in market or economic conditions and in legal, regulatory and tax requirements.
Broadly, risks are categorised into seven types: strategic and planning; financial and IT; operational and quality; technical; SHE and regulatory; commercial and reputation; and people. Significant risks facing the Group include:
· | Acceptance of the Group's products - early stage of operations and acceptance of graphene. The Group is at an early stage of development and the success of the Group will depend on the acceptance and attribution of value to graphene produced by the business. There can be no guarantee that either acceptance of graphene or attribution of value will be forthcoming. |
· | Early stage of operations - existing capacity and scale up. The Group has not yet demonstrated its technology at either nameplate production capacity or increased capacities. Failure to operate at either current or increased nameplate capacities would adversely impact the Group's business and financial position. |
· | Intellectual property - the Group's business is based on a combination of patent applications and know-how. The Group's success will depend in part on its ability to maintain adequate protection of its intellectual property and know-how. There is no certainty that patent applications will be granted, such applications and know-how will be a source of competitive advantage to the Group, or that others have not developed similar or better applications or know-how. Significant costs may be incurred in asserting intellectual property rights and there is no certainty that intellectual property could not become known in a manner (for example, cyber attack) which provided the Group with no recourse. |
· | Commercialisation, competition and pricing - technological advances may impede the commercial progress of graphene and may also result in worldwide production capacity exceeding demand. This could adversely impact the price of, or demand for, graphene. There is no guarantee that graphene will become an accepted material for use on a commercial scale or that demand for graphene will develop at all. The Group may also be unsuccessful in its efforts to realise benefits from the commercialisation of graphene. In such situations, the Group's business and financial position would be adversely impacted. |
· | Adequacy of financial resources - the available funding required to support the business through to profitability and cash generation may be insufficient. The Group may also be unable to access additional debt or equity capital, or to raise funds on acceptable terms. In the event that the resources available to the Group are inadequate then this could have a materially adverse impact on the implementation of the Group's strategy, its business, financial condition and operations. |
· | Financial, operational and management information systems - the efficient operation and management of the Group depends on the proper operation and performance of financial, operational and management information systems. Any failure in such systems may result in a loss of control and adversely impact the Group's ability to operate effectively and to fulfil its contractual obligations. |
· | Safety, health and environment - the Group's operations are subject to numerous safety, health and environmental (SHE) requirements which are likely to become more complicated, stringent and onerous as the Group grows or as time passes. Failure to comply in any way with SHE requirements could result in the Group incurring significant costs and liabilities, or being subject to claims and lawsuits which could adversely affect its operations and financial condition. Graphene is also a relatively new material with a limited number of studies having been undertaken into its effects on biological systems. If evidence emerges that graphene has a deleterious effect then this may adversely impact the Group's business and financial position. |
· | Key personnel - the Group has in place an experienced and motivated senior management team and is beginning to build strength in depth. If the Group is unable to attract and retain suitably skilled and qualified people, then the Group's performance and prospects may be adversely impacted. The loss of one or more key personnel could have an adverse impact on the Group's operations, reputation, relationships and future prospects. |
Cautionary statementThe Business and Financial review has been prepared for the shareholders of the Company, as a body, and no other persons. Its purpose is to assist shareholders of the Company to assess the strategies adopted by the Group and the potential for those strategies to succeed and for no other purpose. This Business and Financial review contains forward-looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the sectors and markets in which the Group operates. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. No assurances can be given that the forward-looking statements in this Business and Financial review will be realised. The forward-looking statements reflect the knowledge and information available at the date of preparation.
Oliver Lightowlers
Chief Financial Officer
25 March 2015
Consolidated income statement and statement of comprehensive income
for the six months ended 31 January 2015
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| Unaudited | Unaudited | Audited |
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| 6 months to | 6 months to | year ended |
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| 31 January | 31 January | 31 July |
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| 2015 | 2014 | 2014 |
| Note | £'000 | £'000 | £'000 |
Revenue | 5 | 13 | 2 | 4 |
Other income |
| 16 | - | 14 |
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| 29 | 2 | 18 |
Cost of sales |
| (142) | (41) | (161) |
Gross loss |
| (113) | (39) | (143) |
IFRS 2 share based payments charge |
| (125) | (22) | (58) |
Operating expenses |
| (1,717) | (1,165) | (2,514) |
EBITDA |
| (1,816) | (820) | (2,279) |
Exceptional costs |
| (90) | (394) | (394) |
Depreciation of tangible fixed assets |
| (49) | (12) | (42) |
Operating loss |
| (1,955) | (1,226) | (2,715) |
Net finance income |
| 36 | 10 | 53 |
PBTA |
| (1,829) | (822) | (2,268) |
Exceptional costs |
| (90) | (394) | (394) |
Loss on ordinary activities before tax | 5 | (1,919) | (1,216) | (2,662) |
Tax on loss on ordinary activities | 3 | - | 7 | 10 |
Loss for the period attributable to equity shareholders |
| (1,919) | (1,209) | (2,652) |
Other comprehensive income |
| - | - | - |
Total comprehensive income |
| (1,919) | (1,209) | (2,652) |
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Earnings per share (pence per share) |
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Basic | 6 | (11.3) | (9.6) | (17.9) |
Diluted | 6 | (11.3) | (9.6) | (17.9) |
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EBITDA comprises loss on ordinary activities before interest, tax, exceptional costs, depreciation and amortisation.
PBTA comprises loss on ordinary activities before tax, exceptional costs and amortisation.
Consolidated statement of changes in shareholders' equity
for the six months ended 31 January 2015
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| Share | Share | Merger | Retained | Unaudited |
| capital | premium | reserve | earnings | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 |
As at 31 July 2013 | 196 | - | 1,231 | (1,015) | 412 |
Comprehensive loss | - | - | - | (1,209) | (1,209) |
IFRS 2 share based payments | - | - | - | 85 | 85 |
Merger reserve | - | - | - | - | - |
Issue of shares (net) | 144 | 10,296 | - | - | 10,440 |
As at 31 January 2014 | 340 | 10,296 | 1,231 | (2,139) | 9,728 |
Comprehensive loss | - | - | - | (1,443) | (1,443) |
IFRS 2 share based payments | - | - | - | 36 | 36 |
As at 31 July 2014 | 340 | 10,296 | 1,231 | (3,546) | 8,321 |
Comprehensive loss | - | - | - | (1,919) | (1,919) |
IFRS 2 share based payments | - | - | - | 125 | 125 |
Issue of shares (net) | - | 13 | - | - | 13 |
As at 31 January 2015 | 340 | 10,309 | 1,231 | (5,340) | 6,540 |
In order to comply with IFRS 3, the Group has applied reverse acquisition accounting in the presentation of consolidated shareholders' equity for comparative periods. These comparative periods show the results of the accounting acquirer (Applied Graphene Materials UK Limited) along with the share capital structure of the Parent Company (Applied Graphene Materials plc).
Consolidated balance sheet
as at 31 January 2015
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| Unaudited | Unaudited | Audited |
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| 31 January | 31 January | 31 July |
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| 2015 | 2014 | 2014 |
| Note | £'000 | £'000 | £'000 |
Assets |
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Non-current assets |
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Property, plant and equipment |
| 468 | 224 | 309 |
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| 468 | 224 | 309 |
Current assets |
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Inventories |
| 22 | - | - |
Trade and other receivables |
| 140 | 110 | 121 |
Cash deposits |
| 2,504 | 7,500 | 5,504 |
Cash |
| 4,137 | 2,382 | 2,973 |
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| 6,803 | 9,992 | 8,598 |
Liabilities |
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Current liabilities |
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Trade and other payables |
| (731) | (486) | (586) |
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| (731) | (486) | (586) |
Non-current liabilities |
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Provisions for other liabilities and charges |
| - | (2) | - |
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| - | (2) | - |
Net assets |
| 6,540 | 9,728 | 8,321 |
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Shareholders' equity |
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Called up share capital | 8 | 340 | 340 | 340 |
Share premium account |
| 10,309 | 10,296 | 10,296 |
Merger reserve |
| 1,231 | 1,231 | 1,231 |
Retained earnings |
| (5,340) | (2,139) | (3,546) |
Equity shareholders' funds |
| 6,540 | 9,728 | 8,321 |
Consolidated cash flow statement
for the six months ended 31 January 2015
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| Unaudited | Unaudited | Audited |
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| 6 months to | 6 months to | year ended |
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| 31 January | 31 January | 31 July |
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| 2015 | 2014 | 2014 |
| Note | £'000 | £'000 | £'000 |
Operating activities |
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Net cash used in operations | 7 | (1,662) | (872) | (2,222) |
Net finance income |
| 47 | 10 | 19 |
Tax received |
| - | 7 | 7 |
Net cash used in operating activities |
| (1,615) | (855) | (2,196) |
Investing activities |
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Purchase of property, plant and equipment |
| (234) | (225) | (289) |
Net cash used in investing activities |
| (234) | (225) | (289) |
Financing activities |
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Net proceeds from exercise of warrants |
| - | 130 | 130 |
Net proceeds from issue of Ordinary shares |
| 13 | 10,372 | 10,372 |
Net cash generated from financing activities |
| 13 | 10,502 | 10,502 |
Net (decrease)/ increase in net cash and cash deposits |
| (1,836) | 9,422 | 8,017 |
Net cash and cash deposits at 31 July 2014 |
| 8,477 | 460 | 460 |
Net cash and cash deposits at 31 January 2015 |
| 6,641 | 9,882 | 8,477 |
Net cash and cash deposits include: |
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Cash deposits (maturity greater than three months) |
| 2,504 | 7,500 | 5,504 |
Cash (maturity less than three months) |
| 4,137 | 2,382 | 2,973 |
Net cash and cash deposits at 31 January 2015 |
| 6,641 | 9,882 | 8,477 |
Notes to the Interim Report
for the six months ended 31 January 2015
1 General information
The principal activity of Applied Graphene Materials plc is that of the manufacture of, and development of applications for, graphene. The Group operates principally in the United Kingdom.
The Company is incorporated and domiciled in the United Kingdom and its registered number is 8708426. The address of the registered office is The Wilton Centre, Redcar, Cleveland, TS10 4RF. The Company was incorporated on 27 September 2013.
The interim financial information was approved for issue on 25 March 2015.
2 Basis of accounting
The interim financial information for the period ended 31 January 2015 has been presented under the historical cost accounting convention, as modified by financial assets and liabilities at fair value through the income statement and share based payments at fair value, and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The interim financial information has been prepared on a going concern basis.
The accounting policies used in the interim financial information are consistent with those set out in the audited financial statements for the year ended 31 July 2014. Further IFRS standards or interpretations may be issued that could apply to the Group's financial statements for the year ending July 2015. If any such amendments, new standards or interpretations are issued then these may require the financial information provided in this report to be changed. The Group will continue to review its accounting policies in the light of emerging industry consensus on the practical application of IFRS.
The preparation of financial information in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual events ultimately may differ from those estimates.
The interim financial information does not include all financial risk management information and disclosures required in the annual financial statements.
The interim financial information for the six months ended 31 January 2015 and for the six months ended 31 January 2014 contained within the Interim Report does not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006 and is unaudited. The comparative figures for the year ended 31 July 2014 have been extracted from the audited financial statements.
3 Taxation
The Group has not recognised any tax assets in respect of trading losses arising in either the current financial year or accumulated losses in previous financial years. The tax credit recognised in respect of the previous financial year arises from the receipt of R&D tax credits.
4 Dividends
No dividend has been proposed for the period ended 31 January 2015 (2014: £nil).
5 Segmental analysis
The Group currently has one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and in assessing performance. The Group's Chief Executive Officer has been identified as the CODM. Revenue and profits arising from that operating segment are the same as presented on the face of the consolidated income statement and statement of comprehensive income.
6 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares in issue during each period. The weighted average number of shares in issue during the period used in the calculation of basic earnings per share was as follows:
| Unaudited | Unaudited | Audited |
| 6 months to | 6 months to | year ended |
| 31 January | 31 January | 31 July |
| 2015 | 2014 | 2014 |
| 'm | 'm | 'm |
Weighted average number of shares for basic earnings per share | 17.0 | 12.6 | 14.8 |
Diluted earnings per share is the basic earnings per share adjusted for the effect of the conversion into fully paid shares of the weighted average number of share options outstanding during the period. The weighted average number of shares in issue during the period used in the calculation of diluted earnings per share was as follows:
| Unaudited | Unaudited | Audited |
| 6 months to | 6 months to | year ended |
| 31 January | 31 January | 31 July |
| 2015 | 2014 | 2014 |
| 'm | 'm | 'm |
Weighted average number of shares for diluted earnings per share | 18.1 | 13.3 | 15.8 |
Adjusted earnings per share has been calculated so as to exclude the effect of exceptional costs including related tax charges and credits. Adjusted earnings used in the calculation of basic and diluted earnings per share reconciles to basic earnings as follows:
| Unaudited | Unaudited | Audited |
| 6 months to | 6 months to | year ended |
| 31 January | 31 January | 31 July |
| 2015 | 2014 | 2014 |
| £'000 | £'000 | £'000 |
Basic earnings | (1,919) | (1,209) | (2,652) |
Adjustments for taxation | - | - | - |
Exceptional costs | 90 | 394 | 394 |
Adjusted earnings | (1,829) | (815) | (2,258) |
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Earnings per share (pence per share) |
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Basic | (11.3) | (9.6) | (17.9) |
Diluted | (11.3) | (9.6) | (17.9) |
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Adjusted earnings per share (pence per share) |
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Basic | (10.8) | (6.5) | (15.3) |
Diluted | (10.8) | (6.5) | (15.3) |
The Group was loss making for the periods ended 31 January 2015 and 31 January 2014 and also for the year ended 31 July 2014. Therefore, the dilutive effect of share options has not been taken account of in the calculation of diluted earnings per share, since this would decrease the loss per share for each of the periods reported.
7 Notes to the cash flow statement
| Unaudited | Unaudited | Audited |
| 6 months to | 6 months to | year ended |
| 31 January | 31 January | 31 July |
| 2015 | 2014 | 2014 |
| £'000 | £'000 | £'000 |
Loss for the period attributable to equity shareholders | (1,919) | (1,209) | (2,652) |
Tax on loss | - | (7) | (10) |
Net finance income | (36) | (10) | (53) |
Depreciation of property, plant and equipment | 49 | 12 | 42 |
Exceptional costs | 90 | 394 | 394 |
EBITDA | (1,816) | (820) | (2,279) |
Depreciation of property, plant and equipment | (49) | (12) | (42) |
Exceptional costs | (90) | (394) | (394) |
Operating loss | (1,955) | (1,226) | (2,715) |
Depreciation of tangible fixed assets | 49 | 12 | 42 |
IFRS 2 share based payments charge | 125 | 22 | 58 |
Decrease in net working capital | 119 | 320 | 393 |
Net cash used within operations | (1,662) | (872) | (2,222) |
8 Share capital
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| Unaudited |
| Number | Number | Total |
| of A Ordinary shares | of Ordinary shares | £'000 |
Allotted, called up and fully paid |
|
|
|
At 27 September 2013 on incorporation | - | - | - |
Issued on 27 September 2013 | - | 1 | - |
Share subdivision on 21 October 2013 | - | 49 | - |
Issued on 21 October 2013 | 5,825,001 | 3,968,632 | 196 |
Re-designation of A Ordinary shares | (5,825,001) | 5,825,001 | - |
Issued on 20 November 2013 | - | 7,096,775 | 142 |
Issued on 15 January 2014 | - | 84,453 | 2 |
At 31 July 2014 Ordinary shares of 2 pence each | - | 16,974,911 | 340 |
Issued on 27 January 2015 | - | 39,305 | - |
At 31 January 2015 Ordinary shares of 2 pence each | - | 17,014,216 | 340 |
On 27 January 2015, 39,305 Ordinary shares of 2 pence each were issued at an average price of £0.34 per share to satisfy the exercise of share options.
9 Related party transactions
Transactions between Applied Graphene Materials plc and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Transactions with shareholders
The following transactions with shareholders and companies controlled by former Directors of the Group were recorded, excluding VAT, during the period:
| Unaudited | Unaudited | Audited |
| 6 months to | 6 months to | year ended |
| 31 January | 31 January | 31 July |
| 2015 | 2014 | 2014 |
| £'000 | £'000 | £'000 |
University of Durham (shareholder) |
|
|
|
Staff secondment, consultancy and other fees | 20 | 23 | 49 |
|
|
|
|
IP2IPO Limited (shareholder) |
|
|
|
Recruitment and other fees | - | 20 | 20 |
|
|
|
|
Top Technology Limited (controlled by shareholder) |
|
|
|
Non-Executive fees and expenses | 3 | - | - |
Corporate finance and investment monitoring fees | - | 55 | 58 |
Other costs | - | 3 | 3 |
|
|
|
|
Techtran Group Limited (controlled by shareholder) |
|
|
|
Business support fees | - | 2 | 2 |
|
|
|
|
Loxley Enterprises Limited (controlled by former subsidiary Director) |
|
|
|
Consultancy fees and other costs | - | 8 | 20 |
Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures:
| Unaudited | Unaudited | Audited |
| 6 months to | 6 months to | year ended |
| 31 January | 31 January | 31 July |
| 2015 | 2014 | 2014 |
| £'000 | £'000 | £'000 |
Short term employee benefits (excluding bonuses) | 237 | 192 | 414 |
Payments to third parties | 3 | 7 | 9 |
IFRS 2 share based payments charge | 100 | 22 | 56 |
Compensation for loss of office | 66 | - | - |
| 406 | 221 | 479 |
Remuneration of key management in the prior year includes remuneration paid by subsidiary undertakings.
10 Seasonality
The Group experiences no material variations in performance arising due to seasonality.
11 Availability of Interim Report
The Interim Report will be sent to all shareholders on 13 April 2015. Electronic copies of the report will also be available on Applied Graphene Materials' website at www.appliedgraphenematerials.com.
Related Shares:
AGM.L