On Friday September 28, Graphene Nanochem released its somewhat uneven interims for the six-month period ending June 30, 2017.
The results showed a loss before tax of £1.7 million (H1 2016, loss of £1.5m) and a loss per share of 1.29p (2016 a loss of 1.43p).But the figures also show a modest gross profit of £ 0.02m (2016 gross loss of £0.05m), an increase in gross revenue from nil to £0.6m and a reduction in liabilities from £17.6m (2016) to £4.6m. Cash and cash equivalent showed little change (£0.5m as against £0.6m)
The figures seem modest, but they need to be seen in the context of a market cap of only £2.17million at today’s share price of 1.37p. (To add to the difficulties of interpretation, the comparable interim figures for 2016 and the final year figures for 2016 have had to be restated in accordance with International Standards of Financial Reporting (IFRS) because the company itself has undergone significant changes)
These are not easy days for Graphene Nanochem, which is headquartered in Malaysia but listed on AIM on 23 January 2013, following the reverse takeover of Biofutures International. The company states that its products, made from renewable sources, are about providing environmentally safe and climate friendly solutions in its chosen field and, where possible, are derived from palm waste oil and residue materials. The problem is that principally the company provides highly specialised chemical support to the oil and gas sector and we all know what has happened to the oil price over the last couple of years.
The resulting difficulties have led to a stern economy drive; the conversion of loans into capital together with the issuance of fresh shares; and negotiations with the company’s trade creditors for the timing of payments to them-valued at £2.6m- to be matched against proceeds from the proposed sale of non-core assets. The debt restructuring exercise the Company has undertaken is now expected to have been successful by the end of 2017.
But there could be hope for a brighter future: in January 2016, as part of their 50/50 joint venture partnership with another Malaysian-based oil and gas outfit, the much larger Scomi group, Graphene Nanochem was successful in securing a first commercial order for its specialised additive, receiving a US $ 118,000 order for Platsurf for trial in an oil well in Turkmenistan. This caused a considerable, if short-lived, increase in the share price. But the impact was understandable. A successful trial could lead to negotiations for further purchase orders from the same client, who has a total of 110 wells in need of rejuvenation.
Although the company is chiefly engaged in the provision of specialised services in the oil and gas sector, it also contains a water division and a polymer division. The latest announcement records that the Group, with its partners, remain focused in bidding for, and developing, small to mid-sized water projects within the US$50m to US$150m project market where there is a niche and the Group’s solutions are economically viable. In addition, 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. This, too, offers hope of further business.
