INVESTOR PRESENTATION
NOVEMBER 2017
Other Directors
Bryan Dobson – Chairman
• Bryan has over 33 years’ experience in the chemical industry with ICI plc and Croda International
plc
Karl Coleman – Chief Scientific Officer
• Karl invented AGM’s proprietary production process and established the Company in 2010
Sean Christie – NED
• Sean was Group Finance Director of Croda International plc
Mike Townend – NED
• Mike is Chief Investment Officer of IP Group
MANAGEMENT 2
Highly experienced team with track record of value creation in
specialty materials
Jon Mabbitt – Chief Executive Officer
• 30 years’ senior management experience in manufacturing and engineering
• MD of Umeco Composite Structural Materials
• MD of Advanced Composite Group
• BEng in Chemical Engineering
Gareth Jones – Chief Financial Officer
• Chartered Accountant with 27 years’ experience in finance
• Divisional Finance Director at Gardner Denver
• Finance Director of Vireol plc
• BEng in Mining Engineering
SOLELY FOCUSED ON GRAPHENE
OVERVIEW
To establish AGM as a leading global graphene enhanced
material supply company.
• Customer momentum building; initial production orders commenced in October 2016
• Operational scale up of manufacturing based on our unique bottom up manufacturing process
• Creation of significant levels of protected intellectual property and technical know-how in the formatting and
dispersion of graphene
• Strong progress achieved – refining processes / developing scale-up / data generation / commercialising
Progressing through commercial scale-up
Building customer momentum
3
“”
WHY GRAPHENE? 4
“GRAPHENE HAS THE POTENTIAL TO BE THE MOST DISRUPTIVE MATERIAL
OF THE 21ST CENTURY”
Significant challenges to produce, disperse and format for customers
Graphene
Mechanical
100X stronger than steel
Stiffer than diamond
Electrical
60% greater conductivity than copper
Thermal
5X conductivity of Aluminum
Lubricating
Very low surface shear
Impermeable
Vacuum tight to helium gas
Transparent
Circa. 98% optical
transmission
RECENT PROGRESS
• Completion of £9m placing and £0.77m open offer before costs
• Expanded Commercial Pipeline – over 100 active projects
• Focus is now on commercialisation of these
• First production orders received from early adopters
• Repeat orders- Century Composites and SHD Composites
• Final approval underway at Airbus for product qualification on satellites
• IP further secured with patents granted in Japan, Europe, USA and South Korea
• Launch of Structural InkTM – a novel, patented application technique for precision delivery of graphene
• Engineering breakthrough with proven modular scale up and new production line for A-GNP35
5
OPPORTUNITY PIPELINE MATURITY
Agreement on
scope of
sampling and
engagement
Initial testing
and
interpretation of
results
Repeat testing
for consistency
and review of
results
Final product
trials
formulation and
specification
Final
commercial
engagement
Short
approval3 13 10 5 2
Medium
qualification
time
6 29 9 2 1
Long
approval
process
2 5 2 1 0 0
Technology
scouting or
timeframe
unclear
currently
11 7
6
INCREASING MATURITY
IP and Know-how• Patent protection
• Range of graphene
• Formatting knowledge
• Structural Ink™
WHY AGM? 7
Commercial• Extensive databases
• Focus on core markets
• Key partner collaborations
• First production orders
Operational• Bottom up process
• Successful scale up
• Modular capacity expansion
• Consistency of product
Not all graphene is the same
CONTINUED EXPANSION, SIGNIFICANT IP PROGRESS 8
Significant expertise in dispersion is highly valued
by customers and critical to performance
Manufacturing capability
• Programme for increased capacity with a modular production scale-up to better match capacity to demand
• Alternative methods and conditions of manufacture facilitates transfer of material enhancements to end applications in our target markets
• Ongoing investment in complementary and IP protected production techniques to enhance product range
• Significant know-how, understanding and ability built up. Skilled team significantly strengthened
• Patents granted in Japan, USA , South Korea and Europe; patents filed in other geographies
Dispersions/formatting
• Investment in in-house formulation and application expertise
• Portfolio of dispersions formatted for different product markets
• Performance data generated to accelerate customer sampling
ROUTES TO MARKET• Coatings material formulators
• Additives manufacturers
MARKET SIZE• Anti-corrosion coatings £8.1Bn of which primers is £1.3Bn (2013)
MARKET ENHANCEMENTS• Barrier properties – corrosion prevention
• Electrostatic discharge
• Toughening of surfaces
• Reduced surface friction
TARGET MARKET - COATINGS 9
“The detailed understanding that AGM bring of how to get the
most out of their material is impressive” - JBL
COLLABORATION CASE STUDY
COATINGS
• AGM has been collaborating in a 15-month assessment project, funded by Innovate UK, to examine the use of graphene in advanced coatings specifically targeted at increased corrosion protection in primer layers
• Resultant formulations deliver performance improvements without significantly changing material manufacturing and are currently undergoing long-term development testing. This data is being disseminated via conferences, exhibitions and technical journals
• AGM continues working closely with a number of leading, global manufacturers of Marine coatings to establish the role of graphene in zinc-free, chromate-free high performance barrier protection, in response to environmental pressures and regulatory-led restrictions coming into force
10
Superstructure and topside -
high performance cosmetics
Decks - hard wearing and
chemical resistance
Cargo holds - abrasion
resistance
Ballast tanks - corrosion
resistance
Cargo tanks -
chemical resistance
Underwater hull -
fouling control
ROUTES TO MARKET• Formatted materials – pre-impregnated composites
• Infusion systems – bulk resin suppliers
• Adhesive producers
• Fibre interfaces – carbon/glass suppliers
• Elastometrics – seals
• End-users – specifiers and designers
MARKET ENHANCEMENTS• Increased toughness
• Increased stiffness
• Increased strength
• Electrostatic dissipation
• Thermal management
• Reduced weight
TARGET MARKET - COMPOSITES 11
STRUCTURAL
INK TM
MARKET SIZE• Estimated market total €70Bn
• Materials portion €7Bn
WHAT IS IT?• Highly targeted delivery of graphene onto composites
• Combination of two technologies: printing and dispersing graphene
• Accurately applied by printing = greater precision/performance enhancement where you need it
?
WHY NOW?• Patent application filed
• Technical know-how-proven within National Aerospace Technology Programme
• Key partnerships established
?
HOW?• Plan to locate a dedicated facility at Advanced Materials Research Centre in
Sheffield
• Partnerships with key stakeholders
• Customer engagements established
?
STRUCTURAL INK™ 12
A step change in formatting expertise
COLLABORATION CASE STUDY
COMPOSITES
• Delivery of graphene suitably dispersed into resin for intermediate composite material providers, such that the
graphene dispersion can be used directly in existing processes without any material change to production process
• Verified composite material properties at independent test houses
• Engaged with potential end-users to spell out benefits. Century Composites first adopter
• Resultant collaborations to promote pre-impregnated graphene composites into sports goods, automotive and
aerospace markets
13
“We believe our customer base will find numerous applications
for this product in the near term.” SHD
WHAT OUR CUSTOMERS THINK
AGM – PREFERRED GRAPHENE PARTNER TO SHD COMPOSITES
Why is AGM our preferred graphene partner?
• AGM have in-house production of graphene
• Ability to support with volume production
• First class technical support
• Team has vast experience of the composites industry, trusted team members
Source: Nick Smith, Technical Director of SHD Composites
14
?
SUMMARY 15
AGM is confident of being a leading graphene manufacturer
Business is gaining significant momentum
• Numerous engagements with many blue chip customer collaborations and strengthened commercial pipeline within core markets
• Initial revenues now achieved with additional repeat orders
• Continued investment in IP for both production and formatting
• Capital equipment investment and scale up providing enhanced manufacturing capability
• Investment in management team enabling greater technical and geographical reach
Next steps
• Increased momentum towards financial sustainability
• Investment will enable the business to remain at the forefront of this emerging industry
16
APPENDICES
SHAREHOLDER STRUCTURE 17
Significant shareholders % %
Directors 4.3%
IP Group 19.1
Herald Investment Management 12.9
Insight 11.8
Ruffer 9.2
Eden Tree Investment 7.6
City Financial 5.1
Baillie Gifford 4.8
Hargreaves Lansdown, Stockbrokers 3.1
Durham University 2.5
77.7%
Other 18.0%
INCOME STATEMENT SUMMARY
• Revenues were derived from first
production orders to supply Century
Composites along with the supply of
evaluation material
• Other income relates to grants
received primarily for the development
of graphene applications
• Lower operating costs arising mainly
from lower exceptional costs relating to
placing and open offer in 2016
18
2017 2016
£'000 £'000
Revenue 97 75
Other income 168 177
265 252
Cost of sales (385) (397)
Gross loss (120) (145)
Operating expenses (4,190) (4,429)
EBITDA (4,059) (4,155)
Exceptional costs - (250)
Depreciation (251) (169)
Operating loss (4,310) (4,574)
Net finance income 33 55
Loss before tax (4,277) (4,519)
Tax on loss 1,234 175
Loss for the period (3,043) (4,344)
Diluted EPS (pence) (13.8) (22.0)
Adjusted diluted EPS (pence) (13.8) (20.8)
CASH FLOW SUMMARY
• Net cash of £5.6m on deposit with
maturity of less than one year
• Increase in depreciation resulting
from additional capital investment in
production capabilities
• Ongoing capital expenditure
programme investment for
development of production
processes and related assets
• Net working capital requirement
increase due to reduction in trade
creditors and accruals
19
2017 2016
£'000 £'000
Operating loss (4,310) (4,574)
Depreciation 251 169
IFRS 2 Share based payments 192 235
Net working capital movement (95) (14)
Cash used in operations (3,962) (4,184)
Interest received 52 44
Tax received 1,234 189
Capital expenditure (725) (1,087)
Free cash flow (3,401) (5,038)
Proceeds from issue of shares 407 8,031
Opening cash at bank 7,702 4,709
Cash at bank 4,708 7,702
UNIQUE, PROPRIETARY BOTTOM-UP PROCESSES
AGM PRODUCTION PROCESSES
Feedstock Production Processing
Liquid Reactor unit
Washing
& drying
Multiple
dispersion
techniques
Solid Reactor unit
• Readily available
• Low cost
• Recyclable
• Scalable
• Continuous
• Scalable • Value-added products
• Ease of handling
Scalable, high-purity, easy to handle, controllable properties
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ALTERNATIVE PRODUCTION TECHNIQUES
DESCRIPTION ADVANTAGES DISADVANTAGES
Top-down Reduced graphene oxide
• Oxidation of graphite
• Sonication / heat to separate layers
• Reduction to graphene nanoplatelets
• Established process • Graphite supply chain –
concentrated in China
• Batch process
• Residual graphite
• Incomplete reduction
Liquid phase exfoliation
• Graphite in solvent
• Sonication to separate layers
• Graphene nanoplatelets
• Can be low temperature • Graphite supply chain –
concentrated in China
• Batch process
• Residual graphite
• Toxic solvents
Bottom-up Chemical vapour deposition
• Deposition of graphene films onto
metal substrates
• Film removed from metal substrate
• Produces films rather than
nanoplatelets
• Different end markets to AGM
• Able to produce large
films with roll-to-roll
approach
• High purity with good
electrical properties
• Expensive due to need
to recover/remove metal
substrate
• High operating
temperature
• Low volume of material
21
INDUSTRY VALIDATION OF MATERIAL PERFORMANCE 22
May 2015 Initial findings of friction and wear reduction from BfB Oil Research, Belgium
May 2015 Positive preliminary findings on graphene reinforced polyurethane coatings, undertaken by PRA
(formerly known as the Paint Research Association) indicating scratch resistance
June 2016 PRA testing demonstrated six-fold improvement in barrier and anti-corrosion properties
October 2016 Full database on the performance of Puraglobe products containing AGM graphene by German
accredited test house, Optimol
October 2016 Composites materials database generated at CTE