Advanced Materials Sector Review - Hybridanhybridan.com/.../2017/08/Advanced-Materials-Sector... · 1 Advanced Materials Market (Product - Ceramics, Glasses, Polymers, Composites,

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Advanced Materials – the building blocks of Tomorrow’s World

Whether we know it or not, advanced materials are a core component in the everyday life of the everyday person. They are the key material in items we often disregard, such as printer inks and lotions, to objects which defy the laws of gravity like the Airbus A380 and London’s Shard. Furthermore, these materials are not only essential to many objects and structures, but, due to their superior qualities, are the key to the advancement of many industries. One such example is the use of carbon fibre which offers five to ten times more rigidness, stiffness, and strength than its aluminium counter-part. As a result of these impressive qualities, motorsport and athletics have improved ten-fold since their mainstream use and new records are broken every year. Valued at £33bn in 2015, the advanced materials industry is a prosperous one with demand and consumption rates increasing, by 2024 this figure is set to change to be worth £79bn1, in due part to the increased population of automotive, aerospace & electronics manufacturers in Asia and the Pacific. To be specific, a key driver for the global automotive market is the push for environmentally friendly transportation, one example being the transition in petrol and diesel to electric cars. Germany aims to have one million electric vehicles on their roads by 2020 and France is to implement a complete ban on the sale of petrol and diesel cars by 2040. This will have a positive impact on the advanced materials industry as the demand for these lighter and stronger materials will grow in the coming years and the technology behind it will continue to improve. Exciting times lie ahead for the advanced materials industry, CeramTec UK Ltd has agreed to buy UK ElectroCeramics from Morgan Advanced Materials (LON:MGAM) for £47m cash. This is will allow Morgan Advanced to focus on their global technology business of scale. Additionally, Versarien (LON:VRS) has purchased an 85% stake in Cambridge Graphene for £0.17m which has since seen Versarien’s shares rally by 20% to trade at 12p. What’s more, Trelleborg Sealing Solutions (STO:TREL-B) has signed an agreement for the acquisition of US-based advanced composite component manufacturer Automated Dynamics. Trelleborg reported £5.82m revenue and EBITDA of £0.45m in FY2016 – these figures are expected to climb with the acquisition providing new potential in multiple industries. Schweiter Technologies (SWX:SWTO), a specialist in advanced composites and textile machinery, has agreed to acquire Athlone Extrusions Ltd, who reported a turnover of £51.63m and pre-tax profit of £5.2m FY2016, which will strengthen their composites division in the group. _________________________________________________________ 1 Advanced Materials Market (Product - Ceramics, Glasses, Polymers, Composites, and Metals & Alloys; Application - Medical Devices, Automotive, Aerospace, Electricals & Electronics, Industrial, and Power) - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2016 - 2024

Advanced Materials Sector Review

25 July 2017

11 November 2017

For analyst certification and other important disclosures, refer to the Disclosure Section

http://www.hybridan.com/

Table of Contents

Applied Graphene Materials PLC (LON:AGM) 3

Autins Group PLC (LON:AUTG) 4

Biome Technologies PLC (LON:BIOM) 5

Bodycote PLC (LON:BOY) 6

Carclo PLC (LON:CAR) 7

Elektron Technology PLC (LON:EKT) 8

European Metals (LON:EMH) 9

Exova Group PLC (now Element Materials Technology) 10

Graphene NanoChem PLC (LON:GRPH) 11

Hardide Industries PLC (LON:HDD) 12

Haydale Graphene Industries PLC (LON:HAYD) 13

Ilika PLC (LON:IKA) 14

Itaconix PLC (LON:ITX) 15

James Cropper PLC (LON:CRPR) 16

Morgan Advanced Materials PLC (LON:MGAM) 17

Nanoco Group PLC (LON:NANO) 18

Oxford Instruments PLC (LON:OXIG) 19

Plastics Capital PLC (LON:PLA) 20

Surface Transforms PLC (LON:SCE) 21

Symphony Environmental Technologies PLC (LON:SYM) 22

Velocity Composites PLC (LON:VEL) 23

Victrex PLC (LON:VCT) 24

Zenyatta Ventures LTD (TSX VENTURE:ZEN) 25

Conclusion 26

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Priced 24th July 2017

Applied Graphene Materials PLC (LON:AGM)

Applied Graphene Materials PLC (LON:AGM) has developed a proprietary "bottom up" process to produce high specification graphene. The Company’s process is based on sustainable readily available raw materials and therefore does not rely on the supply of graphite. It can produce high purity graphene using a continuous process. The Company provides dispersion and product integration expertise to deliver solutions for a wide range of applications. The Company has scaled up its production facility and is currently engaged with customers across the globe to develop application specific, graphene enhanced materials. Applied Graphene reported an increase in revenues from FY2015 £41k to FY2016 £75km. The Company also reported a total comprehensive expense of £4.34m for FY2016, compared to £3.90m for FY2015. The Company has secured a new patent for a new technology, Structural Ink, which will allow users to increase mechanical toughness, thus improve performance and enable further weight reduction.

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MrktCap Sales Price EPS

EV/Sales P/Sales P/E Debt Minority Interest

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Assets Price

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(£m) (£m) Trailing Trailing Trailing (£m) (£m) (£m) (£m) (£m) Trailing (£m) Book

37.83 0.08 171p -22p 421.73 504.40 -7.77 0.00 0.00 6.20 31.63 -4.16 -7.51 8.51 4.44

Source: London Stock Exchange& Applied Graphene Materials PLC Annual Report 2017

Source: Fidessa 2017

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Autins Group PLC (LON:AUTG)

Autins Group PLC (LON:AUTG) specialises in the design, manufacture, and supply of acoustic and thermal insulation solutions primarily in the automotive sector but with an increasing focus on other sectors, including white goods, power generation, marine, apparel, rail, commercial vehicles, and industrial sectors. The Company report a revenue growth of 3% to £20.4m for FY 30 Sept 2016 compared to 2015. Despite an increase in revenue, the Company reported a fall in profit after tax for the period of 58% from £0.7m to £0.3m. February 2017 saw the resignation of the CEO, with an interim CEO appointed who has now been made permanent in June 2017. The Company’s Neptune products has been awarded its first set of orders across 5 OEMs, 8 vehicles and 67 parts. Beyond this and for the balance of the current year, the Company remain focused on their wider growth plans and their efforts to continue gaining traction with Neptune across the automotive market in Europe.

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Assets Price

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32.38 20.38 146.50p 2.03p 1.43 1.59 72.17 3.11 0.00 6.45 25.05 0.90 32.27 15.72 2.06

Source: London Stock Exchange& Autins Group PLC Annual Report 2017


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Biome Technologies PLC (LON: BIOM)

FY 3

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Assets Price

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4.11 4.59 187.5p -21p 0.56 0.90 -8.93 0.00 0.00 1.54 2.58 0.20 12.88 3.52 1.17

Source: London Stock Exchange& Biome Technologies PLC Annual Report 2017

Biome Technologies PLC (LON: BIOM) is a rapidly growing business specialising in bioplastics. It develops biodegradable natural polymers which is an environmentally friendly replacement for typically oil-based plastic products. Recent demand for its biodegradable coffee cups saw its shares rise in April, however, Biome reported that revenues slid by 6% to £4.5m for FY 31 Dec 2016 from £4.8m for FY 2015. Additionally, the Company reported improved loss before tax of £0.57m for FY 2016 compared to £0.79m in FY 2015. Biome released a trading update for the three months ended 31 March 2017, which showed Group revenues were 34% ahead of the same quarter last year at £1.5m, with both divisions delivering profitable performances. Biome Technologies continues to make progress against the strategy as set out in the Group's full year results in March 2017 and against this background the Board remains confident in the Group's outlook for the remainder of the year.


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Bodycote PLC (LON:BOY)

Bodycote PLC (LON:BOY) provides heat treatment and thermal processing services across the globe. It offers further services of metal joining and advanced surface technology protection as well as hot isostatic pressing. The Company reported a growth in revenues from FY2015 £567.2m to FY2016 £600.60m, with an increase profit for the year of 19% to £67m. Bodycote’s hot isostatic pressing facility achieved top aerospace accreditation in May 2017, this site plays a strategic role in new aerospace supply chain programmes for the Company and the Company anticipates the award will lead to growth in the sector. Group revenue for the four months ended 30 April 2017 was £227.0m, 18.0% higher than the same period last year. Aerospace, Defence & Energy business revenues were higher by 10.8%. Automotive & General Industrial business revenues increased by 23.2%. Bodycote's performance in the first four months of the year has been robust and in line with the Board's expectations. Accordingly, the Group's outlook for the year remains unchanged.

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Assets Price

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1,617.8 600.60 849p 35.2p 2.69 2.69 24.12 10.80 0.00 12.00 1,616.6 155.20 10.42 628.30 2.57

Source: London Stock Exchange& Bodycote PLC Annual Report 2017


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Carclo PLC (LON:CAR)

Carclo PLC (LON:CAR) is a technical plastics manufacturer of fine moulded plastic components predominantly used in medical and electrical products. The Company recently released its results for FY 31 March 2017. Revenue increased by 16.2% to £138.3m, allowing for operating profit to more than double from £5.2m to £12m. Profit after tax grew substantially by 265% to £7.98m. There was significant corporate activity also undertaken during the period. The Company continued investment in growth opportunities, both organically through the significant expansion of existing facilities and by acquisition, with the purchase of Precision Tool and Die and FLTC (Europe). With a strong order book and momentum into the new financial year, the Board remains confident that its strategies are working and that we are well placed to increase the Group's profitability through the coming years.

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Assets Price

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126.3 138.30 165.2p 11.50 1.1 0.91 14.37 48.29 0.01 22.27 152.34 17.20 8.86 44.26 2.85

Source: London Stock Exchange& Carclo PLC Annual Report 2017


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Elektron Technology PLC (LON:EKT)

Elektron Technology PLC (LON:EKT) specialises in creating and developing products that connect, monitor, and control in the electronics industry. They supply advanced materials and manufacturing products which help the technology and communications industry to ever expand. The Company has five business prioritised for investment: Bulgin, Checkit, Elektron Eye Technology, Queensgate, and Sheen. FY 31 Jan 2017 showed a slight fall in revenue of 4% to £32.7m driven by difficult trading conditions because of the Brexit vote. The Group made an encouraging start to the new financial year and is seeing increased orders, over the prior year, at Bulgin, which is currently the main profit and cash generator. Checkit continues its discussions with several large users of its services, although the build-up of substantial revenue from this multi-year project is likely to take some time in view of its subscription model and the phasing of the customer adoption process. The three small businesses, Elektron Eye Technology, Queensgate, and Sheen, are progressing in line with management's expectations.

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Assets Price

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24.19 32.70 13p -0.1p 0.71 0.74 -130 1.50 0.00 2.50 23.19 2.20 10.54 12.20 1.98

Source: London Stock Exchange& Elektron Technology PLC Annual Report 2017


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European Metals PLC (LON: EMH)

FY 3

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Assets Price

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61.47 0.01 44p -1.08 7582.01 7989.34 -40.74 0.00 0.00 1.90 59.57 -0.4 -148.93 4.48 7.27

Source: London Stock Exchange& European Metals Holdings Ltd Annual Report 2016

European Metals PLC (LON: EMH) specialises in the mining of lithium and tin in locations across Europe. For the year ended 30 June 2016 the Company reported revenues increasing to £12.6k from FY2015 of £6.9k. It reported a loss for the year for FY2015 of £0.66m to a larger loss of FY2016 £1.59m. However, European Metals has made significant ground and recently passed a major landmark and states that its reserves estimate a total of 34.5m tonnes of ore grading 0.65% lithium oxide in the Czech-Republic. This has secured the Company a US$2.0m interim funding package that will provide the necessary momentum for the project. It is another significant step in the development of the largest lithium resource in Europe for the Company, with European Metals also sitting on an indicated and inferred resource of 656mln tonnes at 0.43%. 30

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Exova Group PLC (now Element Materials Technology)

Exova Group PLC has recently been acquired by Elements Technology Materials which will give them a combined annual revenue of US$700m and serve more than 40,000 customers. The new Element Group will consist of 200 laboratories located in more than 30 countries. The recommended cash acquisition of Exova Group PLC by Element Materials Technology Group to be effect by mean of a Scheme of Arrangement went through on 28 June 2017. A Scheme Shareholder on the register of members of Exova will be entitled to receive 240 pence in cash for each Scheme Share held.

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Assets Price

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n/a 328.60 m/a n/a n/a n/a n/a 201.80 0.00 52.40 n/a 64.5 n/a 346.80 n/a

Source: London Stock Exchange& Exova Group PLC Annual Report 2016


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Graphene NanoChem PLC (LON: GRPH)

FY 3

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Assets Price

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2.91 0.26 2p -6.86p 87.52 11.28 -0.29 20.30 0.00 0.63 22.58 -16.50 -1.37 -15.95 -0.18

Source: London Stock Exchange& Graphene NanoChem PLC Annual Report 2017

Graphene NanoChem PLC (LON: GRPH) is a nanotechnology commercialisation Company that designs and manufactures products and solutions involving nanotechnology from chemicals through to performance materials. The Company reported an increase of 333% in revenues for the 12 months ended 31 December 2016 to £0.26m. Moreover, the total comprehensive loss narrowed to £8.34m (2015: £33.28m) as well as loss per share to 7.16p per share (2015: 28.56p). The Company has recently completed a pilot project for a warehouse conversion and building modification assignment in the aerospace industry in Malaysia. Furthermore, Graphene NanoChem announced in May 2017 that it had received two purchase orders worth US$0.58m for its smart fluid PlatDrill R, which they say is a good step forward.


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Hardide Industries PLC (LON:HDD)

Hardide Industries PLC (LON:HDD) is a manufacturer of advanced tungsten carbide coatings that increase the life of critical parts which operate in abrasive, erosive, corrosive, and chemically aggressive environments. The Company reported a fall in revenues from FY2015 £3.00m to FY2016 £2.14m, due to the downturn in the oil and gas sector. LBITDA increased from FY2015 £0.3m to FY2016 £1.3m, however the six-months to 31 March 2017 has been a period of steady progress for Hardide as they continue to operate in a market that has seen significant difficulties over the last few years. This has translated into total revenues for the period 59% ahead of the first half of 2016 and 27% ahead of the second half. Hardide received Nadcap accreditation in June 2017 for its coatings which will result in the expansion of its business in the aerospace sector and provide its advanced tungsten carbide-based coatings to any of the aerospace prime contractors and/or their supply chains worldwide. With promising signs of recovery in the oil and gas market, particularly in the North American onshore sector where the rig count is now 116% greater than a year ago, the Board's outlook remains positive and they expect the trading performance for the full financial year to be in line with market expectations.

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Assets Price

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27.26 2.14 1.72 -0.10 11.80 12.72 -17.2 0.00 0.00 1.97 25.27 -1.05 -24.09 4.38 6.22

Source: London Stock Exchange& Hardide Industries PLC Annual Report 2017


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Haydale Graphene Industries PLC (LON: HAYD)

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Assets Price

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34.19 1.92 174.5p -26p 16.41 17.78 -6.71 0.27 -0.04 2.86 31.55 -3.36 -9.39 6.60 5.18

Source: London Stock Exchange& Haydale Graphene Industries PLC Annual Report 2016

Haydale Graphene Industries PLC (LON: HAYD) is an advanced metals Company that facilitates the integration of nanomaterials into commercial technologies and industrial materials. It specialises in graphene, silicon carbide and other nanomaterials. Group income was up 30% year on year to £1.9m (2015: £1.4), but adjusted EBITDA losses widening to £3.36m (2015: £2.38m) with investment in R&D increasing to £0.94m (2015 £0.56m). The Board also announced that total income for the financial year ended 30 June 2017 is expected to be in line with current market expectations, which represents a doubling when compared with the prior financial year. Cash as at 30 June 2017 stood at approximately £2.0m (31 December 2016: £1.1m). At the year end, the Group's order book, being product sales orders and consulting contracts to be fulfilled over the next 3.5 years, stood at approximately £5.4m, which is at record levels for Haydale and provides good visibility on the Group's future income.


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Ilika PLC (LON: IKA)

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Assets Price

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26.66 1.05 34p -4.84p 23.00 25.39 -7.02 0.00 0.00 2.51 24.15 -3.73 -6.47 6.25 4.27

Source: London Stock Exchange& Ilika PLC Annual Report 2017

Ilika PLC (LON: IKA) develops advanced materials for the automotive, aeronautical, and electronic component sectors. It has strong working-ties with Rolls-Royce and Toyota. The Company reported an increase in revenue of 73.4% from £0.6m to £1.05m for the year ended 30 April 2017, this allowed for a gross profit of £0.476m (FY2016: £0.269m) but an increase loss before tax of £3.9m compared to FY2016 £3.8m. Ilika has also recently announced the renewal and strengthening of its long-standing relationship with Toyota. This has been triggered by the award of a contract by the Toyota Research Institute in the USA. The first commercial engagements for Stereax have been secured and these, and other interactions, could lead to closer engagements going forward. Revenues ticked up this year, which based on their strong current order book, is a trend that can be expected to be seen continuing in 2017/18.


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Itaconix PLC (LON:ITX)

Itaconix PLC (LON:ITX) is a designer and manufacturer of speciality polymers such as itaconic acid. The Company reported revenue had increased from £27k to £285k for the year ended December 2016, however, the loss for the year increased from £1.7m to £5.1m. Itaconix has had refinancing of £5.8m from previous investors, such as Neil Woodford, to give it a boost in supplying these polymers to the growing global itaconic market. Given the Group's established product portfolio and evolving sales and marketing focus, its need for new product development is becoming more defined and targeted to customer requirements. Accordingly, it is now appropriate to resize the R&D team, which will result in operational efficiencies. Whilst the full financial effect of these changes will not be achieved immediately, with the net cash impact being broadly neutral in 2017, the positive net cash impact is expected to be approximately £1m per annum from 2018.

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15.74 0.29 20.50 -7.30 24.39 55.23 -2.81 0.00 0.00 8.79 6.95 -4.94 -1.41 14.45 1.09

Source: London Stock Exchange& Itaconix PLC Annual Report 2017


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James Cropper PLC (LON:CRPR)

James Cropper PLC (LON:CRPR) is a world leading manufacturer of distinctive and technically advanced paper products made from cotton, wood, and carbon fibre. The Company report a 5% increase in revenue for the year ended 1 April 2017 from £87.9m to £92.4m allowing for a profit before tax increase of 43% from £3.9m to £5.6m. The Company has developed new advancements in lightweight composite fuel pipe assemblies for aircraft, this has achieved its aim to significantly reduce the weight of aircraft. During the year James Cropper experienced healthy sales growth across both the Paper and Technical Fibre Products businesses. The impact of foreign exchange movements has also been favourable to its export business. This year has represented something of a watershed for the Group. They have built on prior successes and are beginning to deliver. An important element of this has been lifting margins to a level that is stronger and more reliable, albeit still with room for improvement.

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Assets Price

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159.03 92.36 1,677.5p 50p 1.8 1.72 33.55 9.29 0.00 1.92 169.39 9.17 18.15 21.89 7.27

Source: London Stock Exchange& James Cropper PLC Annual Report 2017


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Morgan Advanced Materials PLC (LON: MGAM)

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851.83 989.20 294.1 18.30 1.11 0.86 16.07 364.90 6.20 122.40 1,100.53 147.40 7.47 164.70 5.17

Source: London Stock Exchange& Morgan Advanced Materials PLC Annual Report 2017

Morgan Advanced Materials PLC (LON: MGAM) is a world leader in advanced materials science engineering ceramics, carbon, and composites. It reports a year on year revenue growth from FY2015 £911m to FY2016 £989m and an increase in profit for the period of 54% FY2016 to £58.5m. Morgan has developed a comprehensive carbon brush solution for its nuclear industry to resolve the issues associated with this product currently on the market with anticipation of success in China as its reliance on nuclear energy grows. Trading conditions in the period since the full year are in line with management expectations. The book to bill ratio for the Group in the first quarter of 2017 was slightly ahead of the equivalent period last year. Looking forward, management expectations for the half and full year remain unchanged.


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Nanoco Group PLC (LON: NANO)

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92.31 0.47 38.75 -4.47 174.75 194.75 -8.67 0.03 0.00 9.51 88.83 -11.49 -7.21 18.76 4.92

Source: London Stock Exchange& Nanoco Group PLC Annual Report 2016

Nanoco Group PLC (LON: NANO) provides specialist LCD displays

using its quantum dot technology. This technology enhances the

colouring of LCD screens and allows for manufacturers of LCD

screens to use existing infrastructure for the improved technology.

Nanoco has recently received its first commercial order from leading

global manufacturer Wah Hong Industrial for the supply of Nanoco’s

CFQD® resin which is expected to boost its revenues for the next

financial year. This represents a significant milestone for the Business

and justification of the commercial potential for Nanoco's cadmium-

free quantum dot technology in the international display industry.

The Company is confident that the scale of orders should increase

over the coming months, because of increasing global regulations

restricting the use of cadmium, including the imminent ban by the

European Commission of cadmium in display products,

manufacturers across the world are seeking more sustainable

solutions that still deliver outstanding colour performance.


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Oxford Instruments PLC (LON:OXIG)

Oxford Instruments PLC (LON:OXIG) provide services to the advanced materials market such as industrial analysis, magnetic resonance, and x-ray technology. The Company reported FY 31 March 2017 revenue increase of 9% to £348.5m, and profit before tax increase of 7.1%, but a £25.5m loss before tax (FY2016: £9.7m). This was because of the impairment of non-current assets and other adjusting items of £45.8m, primarily reflecting a deterioration in financial performance from Asylum Research, OI Healthcare and their joint venture, ScientaOmicron. While they have plans that address the weaknesses and issues within all three businesses, the impairment reflects the actions and time required to improve profitability. The focus is on markets with long-term growth drivers where nanotechnology has the potential to address some of the world's most complex and pressing challenges. Fundamental improvements to the Company’s structure, operations and strategy are underway and give the Company a solid platform to return to sustainable growth, at improved margins over the medium-term.

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Assets Price

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617.87 361.60 1,030p 12.3p 2.05 1.71 83.74 150 0.00 27.20 740.67 55.00 13.47 143 4.32

Source: London Stock Exchange & Oxford Instruments PLC Annual Report 2017


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Plastics Capital PLC (LON: PLA)

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41.29 65.79 115.50 11.5 0.87 0.63 10.04 21.24 0.11 5.49 57.15 6.90 8.28 25.84 1.6

Source: London Stock Exchange& Plastics Capital PLC Annual Report 2017

Plastics Capital PLC (LON: PLA) is a specialist plastics product manufacturer which mainly targets niche markets. It is an international Company with numerous acquisitions to thank for its rapid growth over recent years and can boast 45% of sales are exported to 80 different countries around the world. The Company reported audited results for FY 31 March 2017 which showed revenue increasing by 29.5% to £65.7m, EBITDA increasing 17.2% to £6.9m and profit before tax increasing by 7.1% to £4.3m. The Company continues to be highly profitable and cash generative, but trading for FY2018 started marginally below expectations. Plastics Capital remains focussed on implementing key initiatives as this will drive the long-term growth of the Group and on improving day-to-day operational performance. The momentum of the Group as it finished FY2017 was strong and, if sustained, will deliver a strong performance in FY2018.


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Surface Transforms PLC (LON: SCE)

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14.26 1.36 15.50 -1.44 6.98 10.47 -10.76 0.02 0.00 4.77 9.51 -0.64 -14.86 5.96 2.39

Source: London Stock Exchange& Surface Transforms PLC Annual Report 2016

Surface Transforms PLC (LON: SCE) develops and produces carbon-ceramic materials and is the only UK manufacturer of carbon-ceramic brakes for automotive use. The Company reported that sales for the year were at £702k, lower than expected due to management taking the decision to switch saleable parts into test parts for the extended OEM 3 test programme. However, these sales have not been lost, at 31 May 2017, total firm orders and customer commitments are for sales of £889k in the new financial year, the highest visibility of future sales the Company has ever had. The Company also carried out a Placing in early July 2017 raising £3m at 15.5p. Extended testing however required by OEM 3, together with additional unbudgeted development costs and delays in contracted aerospace revenues, resulted in the Board deciding to raise additional money to maintain R&D momentum and progress potential OEM contracts as well as avoiding any significant working capital constraints.


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Symphony Environmental Technologies PLC (LON: SYM)

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19.71 6.80 12.88 0.10 2.95 2.90 128.8 0.81 0.00 0.44 20.08 0.24 82.31 1.06 18.58

Source: London Stock Exchange& Symphony Environmental PLC Annual Report 2017

Symphony Environmental PLC (LON: SYM) is an advanced plastics manufacturer which specialises in environmentally friendly products. It offers oxo-biodegradable plastics (which allows them to manufacture a bio-degradable shelf life date on its products), protective plastics which offers protection from harmful diseases and bacteria as well as anti-counterfeiting performance plastic – designed to add a unique 60 second tracer to its goods by using one of its portable readers. The Company reported FY 31 Dec 2016 revenues increased by 6.8% to £6.80m, allowing for gross profit to increase by 16.3% to £3.41m and a profit after tax of £0.17m (2015: -£3.33m) because of a substantial reduction in overheads. The Company’s expectations for the short term are that more countries outside Europe will pass legislation in favour of a d2w-type oxo-biodegrading plastic solution, and that other countries who already have legislation will progress their enforcement programs. If these expectations are met, then this should lead to an increase in demand for their d2w products. The Company expects to build on the positive momentum and is optimistic for a successful year ahead, in an environment that is becoming more receptive to its growing range of technologies and products.


2

4

6

8

10

12

14

16

18


Pen

ce

23

Velocity Composites PLC (LON: VEL)

HY

31

Ap

r 1

7




Assets Price

to


30.96 9.23 86.5 0.00 3.30 3.35 n/a 0.00 0.00 0.50 30.46 0.16 185.71 0.63 49.22

Source: London Stock Exchange& Velocity Composites PLC Annual Report 2017

Velocity Composites PLC (LON:VEL) specialises in advanced carbon fibre and ancillary material kits for use in the production of aircraft. Furthermore, it produces engineered vacuum bag material kits, honeycomb, cores potting compounds, and co-bonded materials, process optimisation products, and engages in engineering support services and project implementation. The Company delivers in services which are active in waste reduction, scalability, material efficiency, repeatability, and reduced process times. Interim results for the six months ended 30 April 2017 show strong revenue growth of 31% to £9.3m, gross profit increase of 19% to £1.9m and a profit before tax of -£35k (H1 2016: £97k). The Company commenced production at a new facility in Fareham following approvals from AS9100 and Airbus. Customer and programme pipeline remains strong, with the proceeds from the IPO to be deployed to accelerate the Company's growth strategy to augment the Business Development Team alongside New Product Development, open a R&D Centre and additional satellite facilities near new customers. As a result, the Board remains confident of meeting the market's full year expectations.


75

77

79

81

83

85

87

89

91

93

95

Pen

ce

24

Victrex PLC (LON:VCT)

FY 3

0 S

ep 1

6




Assets Price

to


1,647.04 252.30 1,904 96.7 6.27 6.53 19.69 0.00 0.00 64.00 1,583.04 115.90 13.66 389.10 4.23

Source: London Stock Exchange& Victrex PLC Annual Report 2017

Victrex PLC (LON:VCT) is a key raw material supply and product development Company in the aerospace, automotive, electronics, medical, energy and manufacturing and engineering sectors. The Company reported that revenues had fallen 4% from £263.5m FY2015 to £252.3m FY2016. However, H1 2017 started well with revenues up 12%, gross profit up 12% and PBT up 5% compared to HY2016. The Company continues to be highly cash generative although its growth momentum has continued into H2 and helps to underpin 2017; overall expectations are unchanged. The Company is focused on driving growth, on cost efficiency and making progress in delivering its Polymer & Parts strategy.


1,800.00

1,850.00

1,900.00

1,950.00

2,000.00

2,050.00


ence

25

Zenyatta Ventures LTD (TSXV: ZEN)

FY 3

1 M

ar 1

6

MrktCap Sales Price

($CND) EPS



Assets Price

to

($CND) ($CND) Trailing Trailing Trailing ($CND) ($CND) ($CND) ($CND) ($CND) Trailing ($CND) Book

66.5 0.00 1.1 0.07 n/a n/a 15.71 0.17 0.00 0.17 66.50 -4.19 -15.88 21.45 3.10

Source: Bloomberg Markets& Zenyatta Ventures LTD

Zenyatta Ventures LTD (TSX VENTURE: ZEN) is a mineral development Company based in Thunder Bay, Ontario of which is responsible for the recent discovery of the graphite deposit in North-eastern Ontario. The Company announced in June 2017 a program for a scaled-up production method of the Company's graphite to graphene oxide for applications in water remediation, electrochemical sensors, supercapacitors, and Li-ion batteries. The program is receiving grant funding from the Ontario Centres for Excellence to allow a team of scientists at Lakehead University in Thunder Bay, Ontario, Canada to carry out this advanced nano-material research. The Company made a net loss of CAD4.2m for FY 31 March 2016, with total assets of CAD21.5m, total financial liabilities of CAD91k and cash of CAD169k.

0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

1.25

CA

DSource: Yahoo Finance

26

Advanced Materials generally have superior properties than conventional materials available. They can outperform conventional materials, in terms of their applications. They are materials that are novel or have undergone modifications in existing materials to gain superior performance with respect to one or more characteristics that are essential for the applications under consideration.

The fuzzy edged world of Advanced Materials contributes to many sectors from aerospace to chemical production to electronics – it underpins nearly one third of all UK manufacturing, and the market for value-add materials is set to increase from €100bn in 2008 to €186bn in 2020 and €316bn in 2030. Advanced Materials is a broad church, and attempts to categorise exactly what is and isn’t an advanced material, often fall into the space of “I know it when I see it” rather than following any strict definition or boundaries. These technologies can vary from high-tech sportswear and medical textiles, to mobile phones and jet engines.

The advanced materials sector should continue to generate significant interest from acquirers and investors in 2017 and beyond, given the sector’s attractive growth prospects and strong margins.

The chemicals sector currently trades at 18.09x Price/Earnings, with EV/Sales at 1.05x and EV/EBITDA 11.76x. According to a report by William Blair in 2017, M&A valuations in the speciality materials industry decreased in 2016 to 1.18x EV/Revenue and 9.6x EV/EBITDA compared to 2015 at 1.3x EV/Revenue and 10x EV/EBITDA, though they still remained very healthy. The median since 2005 has stood at 0.77x EV/Revenue and 8.1x EV/EBITDA.

The increased population of automotive, aerospace & electronics manufacturers in Asia and the Pacific has seen this surge in advanced materials. Take for example a key driver for the global automotive market is the push for environmentally friendly transportation, one example being the transition in petrol and diesel to electric cars or lighter and more efficient aeroplanes. This will have a positive impact on the advanced materials industry as the demand for these lighter and stronger materials will grow in the coming years and the technology behind it will continue to improve.

As climate change statistics are continuously rising, there's growing pressure from all areas – consumers, businesses, and governments – to search for more eco-friendly manufacturing techniques. This acts as another opportunity for the advanced materials market because of always advancing technologies that are used for production of advanced materials.

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Advanced Materials Sector Review - Hybridanhybridan.com/.../2017/08/Advanced-Materials-Sector... · 1 Advanced Materials Market (Product - Ceramics, Glasses, Polymers, Composites,