Interim results

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

Interim results for the six months ended 30 June 2013

SECTION I

Graphene NanoChem (AIM: GRPH), the nanochemicals, performance chemicals and advanced materials company, is pleased to announce its first Interim results following the reverse takeover of Biofutures International plc by Platinum NanoChem Sdn Bhd ("Platinum NanoChem") in March 2013 and the change of name to Graphene NanoChem plc. There are therefore no relevant comparable figures to the same period last year. The results are for the six month period ended 30 June 2013.

Financial Highlights:

· Revenue of £10.1 million

· Loss before interest, tax, depreciation and amortization of £3.1 million

· Loss before tax of £5.4 million

· Healthy cash balance of £24.8 million

· Strong balance sheet with Net Assets of £38.7 million, Net Current Assets of £8.3 million and Net Tangible Assets of £30.1 million

· Balanced portfolio with 51% of revenue from international market denominated in US dollars. As a result of the Malaysian Ringgit strengthening foreign exchange gain is £0.35 million

· Increase in working capital facility with Malaysia Debt Ventures Berhad from £7.3 million to £14.8 million. Total working capital facilities available on hand at 30 June 2013 stand at £17.4 million.

· Restructuring of term loan in August 2013 reducing the outstanding loan amount from £7.4 million to £2.7 million with corresponding reduction in interest payable

Operational Highlights:

· Focus on expanding capacity and improving the operational efficiency of our performance chemicals facility.

· Continued development of our human capital as we continue to build the infrastructure to support our planned 2014 growth.

· Scale up and upgrade of the Performance Chemicals facility on track for the planned shutdown in October and commercial production on 1 February 2014.

· Significant additional contract wins for our second generation biofuels

o addition of Petron Fuel International as a customer for PlatAmber for the domestic market

o doubling of contracted volume for PlatClear in the EU market by our tier-1 oil and gas customer.

· The approval for entry into the higher-margin US biofuels market, which is anticipated to be the world's largest market for biofuels by 2017, from the US Environmental Protection Agency ("EPA") for PlatClear.

· Delay in the deployment of PlatDrill, which is pending the determination and selection of well site by Scomi Group and its customers.

· Forecasts for full year currently unchanged, despite delay, with management giving 31 October deadline for updated guidance.

Commenting on the results, Jespal Deol, Chief Executive Officer, said:

"Graphene NanoChem is a fundamentally strong business and our 2013 focus is on increasing the production capacity and optimizing the margins of our nanochemical business, generating operating cashflow with potentially game-changing upside in our advanced material business. The formulation work on PlatDrill has been completed, although deployment has been delayed pending the well site selection by Scomi Group and its end-customers. We have had positive developments in terms of market growth for PlatClear and PlatAmber, the most significant being the EPA approval for entry into the US market. Graphene NanoChem is also seeking to broaden its existing products portfolio through new process integration and is currently evaluating selective joint venture opportunities, which we hope to announce in the near future.

"The landscape for our nanochemicals business is continuing to evolve and grow and with the building blocks that we are putting in place in 2013, Graphene NanoChem is well poised to take full advantage of upcoming opportunities."

For further information please contact:

Graphene NanoChem

Jespal Deol, Chief Executive Officer

Tel: +603 2282 3080

Panmure Gordon (NOMAD and Broker)

Callum Stewart / Hannah Woodley

Tel: +44 (0) 20 7886 2500

Tom Nicholson

Tel: +65 8614 7553

Buchanan

Mark Edwards / Fiona Henson / Helen Greenwood

Tel: +44 (0) 20 7466 5000

GLOSSARY

SECTION II

Chairman's Statement

I am pleased to report to shareholders on the Company's performance for the six months ended 30 June 2013. These are the first results following the reverse takeover of Biofutures International plc by Platinum NanoChem to form Graphene NanoChem plc. In conjunction with the reverse takeover, the Company raised £32.5 million through a placing of 23.2 million ordinary shares with new investors. The enlarged group's shares were readmitted to the AIM market on 26 March 2013.

These results incorporate the results of the Platinum NanoChem group from 26 March 2013 until the 30 June 2013 period end. Revenue in the first half was £10.1 million. Adjusted loss before interest, tax, depreciation and amortization was £2.5 million and the adjusted loss before tax was £4.7 million. These figures have been adjusted for the effect of the goodwill arising from the reverse takeover (£0.1 million) and unrealized foreign exchange loss (£0.6 million). Loss before tax was £5.4 million. Cash and cash equivalents at the period end was £24.8 million and net debt was £8.8 million.

Graphene NanoChem's core business is the Group's revenue generating Performance Chemicals division which the Group intends to continue to expand through volume growth and portfolio diversification. It is the cash generated by this division which we expect to fund the growth of the Group's Advanced Nanomaterials division, as it commercialises its ground-breaking graphene enhanced applications and products. Consequently, we were pleased in August to announce contracts to supply Chevron Malaysia and Petron Fuel International Sdn Bhd with the Group's PlatAmber second-generation biofuel for the Malaysian market. Coupled with sales of PlatAmber and PlatClear (the Group's second-generation biofuel for the EU market) to an existing tier one oil and gas customer, these customer relationships mean that the Group is very well-positioned as a trusted supplier of second-generation biofuels into these rapidly growing markets.

The Group has invested substantial efforts into the launch of its first graphene-enhanced product, PlatDrill, for the drilling fluids market. The formulation work for the use of PlatDrill was completed with Scomi Group in June 2013. The Group had expected to make its first deliveries to Scomi Group in August, but the deployment of the new PlatDrill-incorporated formulation has been delayed, pending the selection of the well site by Scomi Group and its eventual end-customer (a large National Oil Company). The Group is currently in detailed discussions with both Scomi and the end-customer as to the exact timing of the delivery schedule. Subject to the well site for deployment of PlatDrill being confirmed before the end of October, the Directors remain confident of meeting the Group's PlatDrill production target of 5,000 MT by the period end.

As previously announced on 3 June 2013, the Group will be required to close down its Performance Chemicals plant in order to increase its capacity to 120,000MT per annum, to reduce costs, increase the margins of its existing products and to permit diversification into higher-margin performance chemicals. The expansion plan is expected now to begin in mid-October, with production at the enlarged capacity by early 2014. This revised timetable remains on track, with key items already having been delivered.

The expansion of the Group's Graphene production plant from 1MT to 250MT is progressing according to plan. Groundworks at the Group's Senawang facility have begun and we expect production from the first of the new 1MT reactors to come on stream around the year end.

Substantial progress is being made in the applications of the Group's graphene technologies. Recruitment of key scientists and operations staff is going well and we continue to devote substantial efforts to developing the Group's intellectual property portfolio for the advanced nanomaterials business and in evaluating and exploring applications development opportunities.

2013 is a momentous year for the company. With the necessary capital and supply contracts secured, our main focus is on delivery of existing plans, strengthening of our operations, optimizing the growth opportunities in our nanochemicals business whilst continuing to explore application potential for our graphene nanomaterials.

Graphene NanoChem has a tremendous and growing team which I would like to thank for their efforts. The Board would also like to thank shareholders for their support and we look forward to enjoying a constructive and fruitful relationship as the Company continues to grow.

Tan Sri Dato' Sri Abi Musa Asa'ari Mohamed Nor

Chairman

SECTION III

Group Overview

Graphene NanoChem plc is a nanotechnology company that designs, formulates and manufactures a range of performance chemicals and advanced materials that demonstrate improved characteristics when compared to existing products within the chemicals and materials markets.

The first half of the year to 30 June 2013 saw a number of significant developments for the Group. The Group's revenues increased to £10.1 million, primarily driven by the Group's sales of second-generation biofuels to the Malaysian and EU markets. 

Graphene NanoChem's shares were re-admitted to AIM on 26 March 2013 following a placing with institutional investors which raised £32.5 million before expenses. The proceeds of the placing provide the Group with a strong platform to support the rapid growth of its Performance Chemicals business and to take advantage of opportunities to develop the Advanced Nanomaterials business.

Graphene NanoChem operates in two divisions, both incorporating nanotechnology processes to derive a competitive advantage.

Performance Chemicals

The Group's SimPlat Process is currently applied primarily in the production of high performance chemicals for various applications, including second generation biofuels, drilling fluids and surfactants for the oil and gas and consumer markets. Products are sold to customers serving large, global markets with significant performance, regulatory and environmental drivers. In addition, owing to the use of low-cost waste as feedstock, some of the issues faced by the producers of first generation biofuels, namely high prices and volatility of food-grade feedstocks and the negative publicity surrounding the use of food for fuel are less relevant to the Group.

Graphene NanoChem intends to retrofit Biofutures International's existing CPO refining plant in East Malaysia ("East Malaysia Plant") with its SimPlat processes in 2015. Until then, it intends to utilize the East Malaysian Plant to conduct pre-treatment for the Performance Chemicals division or refine CPO for the local market where profitable to do so.

Advanced Nanomaterials

The Group's Catalyx Process enables the production of a family of Graphene nanomaterials including nanoplatelets, nanotubes, nanochips and nanofibres with addressable markets in excess of €2 trillion by 2015.

The Group's near-term strategy is to capitalize on its internal ability to produce low cost, high quality nanomaterials to enhance its performance chemicals products, through improved characteristics and enhanced performance, as well as for development of new applications. Parallel to that, the Group will also continue to strengthen its nanomaterial products portfolio as well as explore and evaluate alternative applications development opportunities including through industry and public partnerships.

Operational Overview

· Second Generation Biofuels

The Group currently markets two types of second generation biofuels:

o PlatAmber is the Group's MS2008:2008 fuel standard compliant biofuel sold in the Malaysian market under the B5 Mandate. The Group has three Tier-One oil & gas customers who between them account for 66% of the Malaysian market's total demand. In the period PlatAmber contributed 49% of the Group's revenue.

o PlatClear is the Group's EU EN14124 and the US ASTM 6751 fuel standards compliant biofuel for the international market. In the period, PlatClear contributed 51% of the Group's revenue. In September the Group secured the US Environmental Protection Agency approval for PlatClear, opening the US market for the Group.

o Margins are in line with current management expectations. In order to meet its contracted delivery requirements for 2013, the Group has postponed the expansion and streamlining of the Performance Chemicals plant and is outsourcing part of its biofuel production to third parties. Consequently, when the capacity expansion and plant optimization programmes are completed (anticipated early in 2014) the Group expects biofuels margins to improve substantially.

o Total volumes sold at the period end were modestly ahead of management expectations.

· PlatDrill

o PlatDrill is the Group's market-ready Graphene enhanced oilfield drilling fluid. It was formulated in conjunction with Scomi Group and the Group had expected to make its first deliveries to Scomi Group in August. However the deployment of the new PlatDrill-incorporated formulation has been delayed, pending the selection of the well site by Scomi Group and its end-customer. The Group is currently in detailed discussions with Scomi Group and the eventual end-customer as to the exact timing of product deployment.

o In the meantime, work is ongoing with Scomi Group on further customization of product formulations incorporating PlatDrill to suit specific requirements of different well sites currently serviced by Scomi Group.

o Subject to the well site for deployment of PlatDrill being confirmed before end of October, the Directors remain confident of meeting the Group's production target of 5,000 MT by the period end.

· CPO Refinery

o The 200,000 tonne CPO refinery located at the Palm Oil Industrial Cluster in Lahad Datu, East Malaysia was part of the original Biofutures International set up, operated through its subsidiary Zurex Corporation Sdn Bhd ("Zurex"). The East Malaysia plant has not been in operation since 2012 due to the non-competitive operating environment for Malaysian palm oil refining.

o The introduction of the new export tax structure for the Malaysian palm oil industry in January 2013 has rendered Malaysia relatively more competitive to Indonesia on the refinery business.

o Pending the planned retrofitting of the East Malaysia Plant in 2015, the Group had intended to operate the East Malaysia Plant as a feedstock pre-treatment facility for its specialty chemicals division or for CPO refining where profitable to do so, following the reverse takeover, in order to generate operating cash flow and to cover the burn rate of Zurex.

o Plans to recommence operations at the East Malaysian Plant have been delayed pending increase of the Bank Rakyat Malaysia Berhad revolving credit facility from £1.6m to £3.8m. The Group is working on securing the increase before the end of 2013.  

o The Group is targeting the commencement of operations at the East Malaysia Plant by the end of October 2013.

· Advanced Nanomaterials

o The focus of the first half of the year for the advanced materials division has been in three key areas: (i) building internal competency through human capital development; (ii) broadening production capability by evaluating new production methods and new catalyst formulations for different types of nanomaterials for potential acquisition or licensing; and (iii) finalising designs and procurement options for the Graphene expansion plant.

o The addition of Dr. Yinan Jin, a chemical synthesis and scaling specialist, in August 2013, to lead the production scale-up of our nanomaterials facility has further strengthened the technical and development capability of the operating team.

o In September 2013, the Group also added Dr. Suraya Rashid and Dr. Shutesh Krishnan, holders of PhDs in Nanotechnology from Imperial College, London and University of Malaya respectively, to the team, to spearhead work on product formulations and applications development for the nanomaterials division.

o The Group is also in discussion with potential joint venture partners in exploring potential applications for its advanced nanomaterials and expects to finalize development arrangements by the end of 2013.

Financial Review

Group revenues in the six months to 30 June 2013 were £10.1 million, of which 82% were derived from sales of second generation biofuels. Biofuels revenue is well balanced, with 51% of sales derived from the international market and the rest from the local market. We expect demand for our second generation biofuels to increase into 2014 as global demand for biofuels increases. In the local market, the Malaysian B5 Biodiesel mandate introduced by the government in 2011 sets a target of a 5 percent blend of biodiesel into diesel to be rolled out nationwide by June 2014, with a planned increase to B10 by 2016.

Gross loss was £0.8 million for the half year ended 30 June 2013. This is mainly due to the delay to the expansion and refurbishment of the existing performance chemicals plant to increase its capacity to 120,000MT per annum. This expansion activity has caused some disruption to production process flows that has resulted in the margin shortfall. However we expect that once the expansion is complete, the plant's expanded production capacity, coupled with the ability to utilize a more optimal mix of raw materials will ensure much improved margins moving in 2014. The introduction of PlatDrill to our portfolio will further contribute to our profitability. This has flowed through to loss before tax of £5.4 million. After adjustment for the effect of the goodwill arising from the reverse takeover and unrealized foreign exchange loss, the loss was £4.7 million.

The Board is not proposing to pay an interim dividend. The recently raised cash will be used to fund growth.

In conjunction with the reverse takeover, on 26 March 2013 the Group raised £32.5 million (before expenses) through the issue of 23.4 million new ordinary shares.

As at 30 June 2013, the Group invested £0.85 million on capital expenditure, primarily for the scaling up and upgrade of its nanochemicals facility.

In February 2013 the Group successfully negotiated with Malaysia Debt Ventures Berhad for an increase in its working capital facility from £7.3 million to £14.8 million. Overall the Group is well financed with existing working capital facilities totalling £17.4 million as at 30 June 2013. The Group maintains an excellent relationship with its bankers and financers and we expect all future working capital or capital expenditure financing needs to be adequately met.

The Group has a strong balance sheet. Cash and cash equivalents at the period end was £24.8 million and net debt stands at £8.8 million. Our key balance sheet ratios are healthy, with Net Assets of £38.7 million, Net Current Assets of £8.3 million, Net Tangible Assets of £30.1 million, a Current Ratio of 1.4 and a Cash Ratio of 1.2. Cash and cash equivalents at date of publication stands at £17.1 million.

Summary and Outlook

The first half was a period of substantial achievements, most notably the reverse takeover and the Group's establishment of a very strong position in the Malaysian biofuels market. This was balanced by the enforced postponement of the performance chemicals expansion and the delay to the commercial production of key new products.

The Directors look forward to the future with confidence. The Group is on the cusp of rolling out the world's first bulk deployment of graphene-enhanced chemicals. The expansion plans for the performance chemicals plant and the graphene plant are well advanced and on track. The Group is pursuing a number of very exciting opportunities for the medium and long term. The second half of 2013 and the first half of 2014 will be crucial for the development of the Company and the Group is keenly focused of delivering the progress that Shareholders are expecting.

SECTION IV

Financial statements

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2013

1 Basis of preparation

These unaudited interim condensed consolidated financial statements (the "interim financial statements") are for the six months ended 30 June 2013. They have been prepared using the recognition and measurement principles of IFRS (as adopted by the 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 consolidated financial statements of the Group for the year ended 31 December 2012.

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 as set out on pages 17 to 20 in the Group's consolidated financial statements for the year ended 31 December 2012. 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 2013 and 30 June 2012 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 2013 and 30 June 2012.

The financial information set out in these interim financial statements are unaudited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

2 Acquisition of Platinum Nanochem Sdn Bhd by Biofutures International plc

Graphene Nanochem plc was formed through the reverse takeover of Platinum Nanochem Sdn Bhd by Biofutures International plc where £32.5 million was raised through a placing of 23.2 million ordinary shares with new investors. The enlarged group's shares were readmitted to the AIM market on 26 March 2013 under the name of Graphene Nanochem plc.

The consolidated financial statements are presented as a continuation of the financial statements of Platinum Nanochem Sdn Bhd. The consideration transferred has been measured at fair value and has been calculated as the deemed cost of the combination based on the number of shares that Platinum Nanochem Sdn Bhd would have to issue to achieve the same ratio of ownership interest that exists in the combined group. The assets and liabilities of Biofutures International plc have been recognised at fair value at the acquisition date. The consideration transferred was not calculated based on the share price of the listed shell at the date of the acquisition as trading in the shares of the listed shell was suspended at that time. All other transaction costs have been treated as post transaction cost in the income statement.

The share capital and share premium at the period end represent the equity structure of the legal parent including the equity instruments issued by the legal parent to effect the transaction. This has been effected by the creation of another reserve to reflect the reverse acquisition.

3 Accounting periods and comparative information

The comparatives represent those of Platinum Nanochem Sdn Bhd to reflect the substance that the legal subsidiary is the acquirer and so the prior-year figures relate only to the legal subsidiary. The comparative IFRS information for Platinum Nanochem Sdn Bhd for the six months to 30 June 2012 and the year to 31 December 2012 has been included. The Company's shares are listed on the AIM market of the London Stock Exchange and the Company applies the Companies Act 2006 when preparing its annual financial statements. The annual financial statements have been prepared under IFRS and the principal accounting policies adopted remain unchanged from those adopted by Biofutures International plc in preparing its financial statements for the year ended 31 December 2012, except for the accounting for the reverse acquisition as detailed above.

4 Income tax

There is no tax charge due to the losses arising in the period.

5 Net exchange differences on translating foreign operations

Income and expenditure for overseas subsidiaries are included based upon monthly 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 2012 £1 = RM 4.745 and at 30 June 2012 £1= RM 4.97).

6 Dividend

The directors do not recommend the payment of a dividend.

7 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).