Tie-up rescues AIM graphene group from all-time low

After four months of testing, the results are in: Applied Graphene Materials has just created a new paint coating six times better than the standard base material. Off the back of this success and in a bid to launch a new product by 2017, a new development tie-up has been agreed with European consumer chemicals business Jason Briggs. Financial benefits should soon follow.

The loss-making group uses its own "bottom-up" process to produce graphene for three core main markets; paint and coatings, composites/polymers, and functional fluids.

Adding to its January tie-up with Sherwin Williams, Applied Graphene Materials has just signed a development agreement with James Briggs, a manufacturer and supplier of aerosol paints and high performance materials.

The pair hope to launch a new high-performance primer with better barrier and corrosion protection by early 2017, which chief financial officer Oliver Lightowlers "very optimistically" reckons could feed into 2017 results.

"This is a positive step towards commercialisation and reaffirms management's success in customer engagement in the paints and coatings industry (recently announced collaboration with Sherwin Williams Protective & Marine Coatings)," says N+1 Singer analyst James Tetley.

The group hasn't disclosed how much it's spent on researching and developing this new graphene product, but the "vast bulk" of the loss-making group's spend is funnelled into product development, said Lightowlers.

The financial year only ended in July, so we haven't got the latest numbers yet, but N+1 Singer has pencilled in a four-fold spike in revenue to £0.5 million and a widening loss of £4.2 million, giving earnings per share of 21p. Losses aren't expected to get any better until 2018, when revenue of £5.9 million should give way to a loss of just £0.2 million.

Inching 1.4% higher to 162p Monday, the news has strengthened the momentum away from the group's 144p bottom support. The shares are still loitering around all-time lows, however, after plummeting two thirds from 2014 highs of 515p.

AGM floated on the market in November 2013 for 155p per share and initially rocketed 230%, however widening losses failed to keep investor appetite.

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