TIDMVRS

RNS Number : 5951W

Versarien PLC

12 December 2019

12 December 2019

Versarien plc

("Versarien", the "Company" or the "Group")

Interim Results for the six months ended 30 September 2019

Versarien plc (AIM: VRS), the advanced engineering materials group, is pleased to announce its interim results for the six months ended 30 September 2019, a period in which the Company made further progress with its graphene commercialisation strategy.

Financial Highlights

   --    Group revenues of GBP4.38 million (H1 2018: GBP5.22 million) 
   --    Adjusted LBITDA* of GBP0.90 million (H1 2018: GBP0.36 million) 
   --    Loss before tax of GBP2.12 million (H1 2018: GBP0.79 million) 
   --    Cash of GBP2.64 million at 30 September 2019 (30 September 2018: GBP6.07 million) 
   --    Net assets of GBP11.87 million (30 September 2018: GBP12.32 million) 

*Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation) excludes exceptional items and share-based payment charges

Operational Highlights

-- First graphene company in the world to complete the US Graphene Council's "Verified Graphene Producer" programme

-- Continued progress in international expansion, including receiving the first graphene orders in the US and Japan

-- Large-scale industrial prototype to improve rail transportation infrastructure, using Versarien's graphene enhanced polymer technology showcased and successfully in test to date.

-- Successfully incorporated wholly foreign owned enterprise in China (Beijing Versarien Technology Company Limited) with a business license granted by the relevant Chinese authorities

   --    Receipt of EU REACH approval to manufacture up to ten tonnes of graphene per annum 

-- Significant improvement in financial performance compared to H1 2018 for the Group's hard wear and metallic products businesses

Post Period Highlights

-- Commercial partnership agreement signed with the Company's textile sector collaboration partner, MAS Innovation (Private) Limited, the first demonstration of Versarien's graphene commercialisation strategy with a major global partner

-- Further global success with a collaboration agreement signed with Refractory Solutions Insertec S.L.U. a Company headquartered in Spain

-- Non-binding heads of terms signed with Jinan Bo Guan Building Engineering Co., Ltd ("JBG") to form a manufacturing joint venture located in Zhucheng City, Shangdong, providing further opportunities in China in addition to the ongoing discussions and progress with Beijing Institute of Graphene Technology Co. Ltd ("BIGT") and the China International Graphene Industry Union ("CIGIU")

-- Graphene incubation facility being established in Fangshan with CIGIU/BIGT in line with AGM statement and contractual negotiations continuing

Neill Ricketts, CEO of Versarien, commented:

"Over the period under review and subsequently, we have been progressing our business both in the UK and globally. The focus remains on our graphene commercialisation strategy and we are now actively working on 40 mainstream projects with our commercial partners, have a further 24 projects underway and active research ongoing on another 17. We continue to focus on the projects most likely to produce near-term significant revenue streams. These include graphene-enhanced transportation arches, 3D printing of concrete, aircraft interior parts, parts for down hole drilling in the oil and gas sector and graphene enhanced textiles.

"The Company has scaled up its manufacturing capacity to be able to produce three tonnes of graphene per annum and with the award of Graphene REACH registration, we are now in a position to be able to supply product as we near commercialisation. The large-scale industrial prototype arch showcased clearly demonstrates the significant benefits graphene technology can bring. We are also looking at opportunities to secure long term supply agreements with high quality graphite mines.

"Discussions with the Beijing Institute of Graphene Technology Co. Ltd and the China International Graphene Industry Union are still ongoing, aided by having been granted a business license for our Wholly Foreign Owned Enterprise ("WFOE") in China. In line with the AGM statement, we have collaborated with CIGIU/BIGT and have registered the WFOE at the recently publicised Beijing Graphene Industry Innovation Centre Seed Incubation Park. We continue to maintain our primary position which is to ensure, so far as reasonably possible, that we protect our IP and therefore continue to assess other opportunities for factory location which are put to us in addition to any that may be proposed under the BIGT/CIGIU process.

"We have also signed a non-binding term sheet with the intention of setting up manufacturing in Shangdong. under a joint venture between Versarien and Jinan Bo Guan Building Engineering Co., Ltd with controlling ownership residing with Versarien. JBG would, together with associates, be responsible for the construction of a graphene valley park over a three-year period and JBG have expressed an interest in taking a strategic investment stake in Versarien as part of any transaction. Legally binding contracts have yet to be signed and updates on progress will be made in due course.

"As well as progressing our technology base it is pleasing to note that our hard wear and metallic products business has shown a significant increase in profitability on stable sales following the efficiency improvements that were implemented in the last financial year.

"We continue to use the cash received from our placing last year to develop application IP through our collaborations, to expand into Europe, the USA, China and South Korea as well as to develop new products such as Biogrene. Together with our accreditation as a verified graphene producer we are confident for the future ahead and look forward to reporting further success over the coming months."

For further information please contact:

 
 Versarien plc 
 Neill Ricketts - Chief Executive Officer    +44 (0) 1242 269122 
 Chris Leigh - Chief Financial Officer 
 
 Canaccord Genuity Group Inc (Nominated 
  Adviser and Joint Broker) 
 Bobbie Hilliam / Emma Gabriel               +44 (0) 20 7523 8000 
 
 Berenberg (Joint Broker) 
 Mark Whitmore 
  Simon Cardron                              +44 (0) 20 3207 7800 
 
 IFC Advisory (Financial PR and IR)          www.investor-focus.co.uk 
 Tim Metcalfe / Graham Herring / Florence 
  Chandler                                   +44 (0) 20 3934 6630 
 

Notes to Editors:

About Versarien

Versarien plc (AIM: VRS), is an advanced engineering materials group. Leveraging proprietary technology, the Group creates innovative engineering solutions for its clients in a diverse range of industries. Versarien has seven subsidiaries operating under two divisions:

Graphene and Plastics

2-DTech Ltd, which specialises in the supply, characterisation and early stage development of graphene products. www.2-dtech.com

AAC Cyroma Limited, which specialises in the supply of vacuum-formed and injection-moulded products to the automotive, construction, utilities and retail industry sectors. Using Versarien's existing graphene manufacturing capabilities, AAC will have the ability to produce graphene-enhanced plastic products. www.aaccyroma.co.uk

Cambridge Graphene Limited, supplies novel inks based on graphene and related materials, using patented processes to develop graphene materials technology.

www.cambridgegraphene.com

Gnanomat S.L. ("GNA"), based in the Parque Cientifico Madrid, Spain, is a company capable of utilising Versarien's graphene products in an environmentally friendly, scalable production process for energy storage devices that offer high power density, fast recharging and very long lifetimes for use in electrical vehicles and portable electronics products. www.gnanomat.com

Versarien Graphene Inc - based in Texas, is the newly incorporated sales business for the UK's graphene products.

Hard Wear and Metallic Products

Versarien Technologies Limited has developed an additive process for creating advanced micro-porous metals targeting the thermal management industry and supplies extruded aluminium. www.versarien-technologies.co.uk

Total Carbide Limited, a leading manufacturer in sintered tungsten carbide for applications in arduous environments such as the oil and gas industry. www.totalcarbide.com

Chief Executive's Statement

Our graphene technology continues to gain significant interest both in the UK and abroad, and for some of our collaborations, we are reaching the end of the testing cycle. Our graphene products are also being tested and developed in new products with existing collaborators, as well as gaining momentum in incorporating graphene into energy storage devices following a full year of Gnanomat S.L being part of the Group.

Our discussions with the Beijing Institute of Graphene Technology Co. Ltd (BIGT) and the China International Graphene Industry Union ("CIGIU") are still ongoing, aided by having been granted a business license for our WFOE in China. In line with the AGM statement, we have collaborated with CIGIU/BIGT and have registered the WFOE at the recently publicised Beijing Graphene Industry Innovation Centre Seed Incubation Park. We continue to maintain our primary position which is to ensure, so far as reasonably possible, that we protect our IP and therefore continue to assess other opportunities for factory location which are put to us in addition to any that may be proposed under the BIGT/CIGIU process.

In addition, we have also signed a non-binding term sheet with the intention of setting up manufacturing in Shangdong under a joint venture between Versarien and Jinan Bo Guan Building Engineering Co., Ltd with controlling ownership residing with Versarien. JBG would, together with associates, be responsible for the construction of a graphene valley park over a three-year period and JBG have expressed an interest in taking a strategic investment stake in Versarien as part of any transaction. Legally binding contracts have yet to be signed and updates on progress will be made in due course.

Whilst progress in China has been slower than we initially anticipated, we are pleased that we have a number of options and any delays have been more than offset by progress elsewhere.

Furthermore, I am pleased to report our more mature businesses have returned improved financial performance.

Graphene and Plastic Products

We are pleased to provide an update on our graphene and other 2D materials collaborations:

 
 Start date                Description                           Current status 
 Oct 17       Collaboration with Israel Aerospace      The project, which is long-term, 
               Industries                               forms part of continuing 
                                                        development work in CFRP 
                                                        composites with GEIC and 
                                                        WMG. There are multiple phases 
                                                        of work to be carried out 
                                                        with different 2D materials 
                                                        and other additives. 
-----------                                           ------------------------------------ 
 Nov 17       Collaboration with global consumer       Following initial blow moulding 
               goods company                            test results, the project 
                                                        was subject to some delay 
                                                        due to customer R&D moving 
                                                        from Europe to the UK. The 
                                                        parties are now engaged in 
                                                        commercial discussions to 
                                                        evaluate cost-benefit value. 
-----------                                           ------------------------------------ 
 Dec 17       Agreement with global chemical           Following positive test results 
               major                                    the collaborator is providing 
                                                        funding for a wider study 
                                                        into barrier development. 
                                                        Further discussions have 
                                                        also taken place for wider 
                                                        collaboration on other products, 
                                                        including bottles and recycling 
                                                        streams. 
-----------                                           ------------------------------------ 
 Jan 18       Agreement with global apparel            Following the announcement 
               manufacturer, MAS Innovation             of the Letter of Intent in 
               (Private) Limited                        July 2019, the companies 
                                                        have now signed a Commercial 
                                                        Partner Agreement. The agreement 
                                                        allows for the parties to 
                                                        secure additional commercial 
                                                        deals from a number of third 
                                                        parties, who have expressed 
                                                        interest following trials. 
                                                        The companies have developed 
                                                        several different prototype 
                                                        garments using the company's 
                                                        Graphinks material. Development 
                                                        work has now commenced on 
                                                        infused yarns with graphene. 
-----------                                           ------------------------------------ 
 Feb 18       Agreement with shoemaker, Vivobarefoot   Production relocation caused 
                                                        temporary delay to the project. 
                                                        Since, positive progress 
                                                        is being made with initial 
                                                        formulations created and 
                                                        successfully tested. Scale-up 
                                                        formulations are being trialled, 
                                                        which offer the opportunity 
                                                        for the company to create 
                                                        a complete material solution. 
                                                        Further project work on textiles 
                                                        and leathers has now commenced 
                                                        in conjunction with additional 
                                                        parties. 
-----------                                           ------------------------------------ 
 Feb 18       Medical technology collaboration         Following 18 months of initial 
               at Addenbrooke's hospital                trials, the companies are 
                                                        now in negotiations for the 
                                                        commercialising of new products 
                                                        in the wound dressing sector. 
-----------                                           ------------------------------------ 
 Mar 18       Collaboration with Team Ineos            Project held up due to change 
               (formerly Team Sky) for cycling          of sponsor. The parties are 
               equipment                                currently discussing new 
                                                        projects, with textile development 
                                                        part of the discussion. 
-----------                                           ------------------------------------ 
 Mar 18       Collaboration with world-leading         This longer-term project 
               aerospace group                          features work on specific 
                                                        parts and continues with 
                                                        WMG and other parties. 
-----------                                           ------------------------------------ 
 Apr 18       Agreement with Luxus                     Active supply chain partner, 
                                                        who is working with us on 
                                                        various projects. 
-----------                                           ------------------------------------ 
 May 18       Consumer goods collaboration             Further phases of tests are 
               for polymer structures in plastics       now on-going, which features 
                                                        new product design and use 
                                                        different bio-polymers. 
-----------                                           ------------------------------------ 
 Jun 18       Commercial agreement with MediaDevil     Due to demand from customers, 
                                                        we are working on new phone 
                                                        cases which feature graphene 
                                                        in bio-polymers trademarked 
                                                        as "Biogrene". New batches 
                                                        of materials are currently 
                                                        being compounded and will 
                                                        be sent to production factories 
                                                        shortly. 
-----------                                           ------------------------------------ 
 Jun 18       Agreement with Arrow Greentech           The parties are negotiating 
                                                        a joint development agreement 
                                                        for the development and marketing 
                                                        of the water-soluble films. 
                                                        The companies continue to 
                                                        test a number of other products 
                                                        for the securities sector. 
-----------                                           ------------------------------------ 
 Jul 18       Collaboration with ZapGo Limited         Progress continues to be 
                                                        made on testing, with the 
                                                        companies now moving on to 
                                                        fourth phase testing. 
-----------                                           ------------------------------------ 
 Aug 18       Sporting goods collaboration             New Polygrene blend being 
                                                        formulated for trial at customer 
                                                        factory. In addition, the 
                                                        companies are collaborating 
                                                        on other shoe development 
                                                        and garments. 
-----------                                           ------------------------------------ 
 Aug 18       Collaboration with Axia Materials,       The project, which involved 
               South Korea                              a consortium of companies 
                                                        has been postponed as a result 
                                                        of consortium funding difficulties 
-----------                                           ------------------------------------ 
 Aug 18       Construction materials collaboration     Following the launch of the 
               with AECOM                               AECOM CNCT Arch at Network 
                                                        Rail facility in Bristol, 
                                                        the product has been subject 
                                                        to further tests, with positive 
                                                        test data reported to date. 
-----------                                           ------------------------------------ 
 Oct 18       Collaboration with Advanced              Testing at customer facilities 
               Insulation                               is ongoing. 
-----------                                           ------------------------------------ 
 Dec 18       Collaboration with Chinese Aerospace     This longer-term project, 
               Company                                  which is focused on several 
                                                        materials for different parts 
                                                        continues at an R&D level. 
-----------                                           ------------------------------------ 
 Dec 18       MOU China Railway                        The project, which involves 
                                                        GEIC and other civil engineering 
                                                        parties, continues to progress 
                                                        well. The testing features 
                                                        trials with various grades 
                                                        of construction materials 
                                                        for different construction 
                                                        applications. 
-----------                                           ------------------------------------ 
 Dec 18       LOI/MOU Tungshu Optoelectronics          The multiple projects identified 
                                                        progress at different levels 
                                                        due to longer-term and medium 
                                                        terms needs. Testing on inks 
                                                        show highly useful properties 
                                                        for new generation household 
                                                        heating applications. 
-----------                                           ------------------------------------ 
 March 19     Further collaboration with Chinese       The parties continue to progress 
               Aerospace Company                        through the work plan created. 
-----------                                           ------------------------------------ 
 May 19            Collaboration agreement with        Tests on sample materials 
                            BP Polymers                 continue at an R&D level. 
-----------                                           ------------------------------------ 
 Oct 19       Refractory Materials Collaboration       New project with work plans 
                                                        being developed between the 
                                                        parties. 
-----------                                           ------------------------------------ 
 

We are excited with the progress of our collaborations during and after the period and for those coming to the end of their testing phase. The next stage is to negotiate commercial supply agreements and we are having a number of discussions to achieve this goal. With our increased graphene production capacity, and with our REACH registration in place, we are well positioned to fulfil orders when those agreements progress into orders.

As announced in July 2019 our first Japanese order is progressing well, with ongoing R&D work being conducted at the customer's R&D facility in the US, with the company giving on-going support. Similarly, our US oil & gas customer, whose first order was announced in June 2019, is showing continued advancement. The masterbatch materials were subject to new tests at a scaled-up level, with satisfactory results achieved. Additional development work is underway and further commercial discussions are anticipated in Q1 2020.

Gnanomat continues to develop its energy storage technology and a Spanish patent for it was granted in April 2019 with formal collaboration agreements with potential partners in discussion. Its funding comes, in the main, from Versarien's resources, but it has also been successful in obtaining a grant from the Spanish Ministry of Science and is applying for further grants from the newly formed European Battery Alliance, as well as from other EU sources.

Our plastic products business performed satisfactorily in the period, still generating profits despite a fall in revenue from H1 2018 due, in large part, by challenging market conditions caused by the uncertainty of the current economic climate. Our intention remains to incorporate graphene into our injection-moulded plastics, and we have a number of trials and tests at customer sites and test facilities.

Metallic Products and Hard Wear products

This business segment has reported slightly increased revenue and significantly increased its profitability during the period, compared to H1 2018, following the implementation of efficiency improvements detailed in the results for the year ended 31 March 2019.

Significantly, Total Carbide has signed up to the national SPRINT business innovation programme, which provides funded access to space-related expertise and facilities at The Open University. The project will enable them to reduce the weight and increase the strength of its throat nozzles for rocket and space propulsion systems by adding our product Hexotene into a heat resistant ceramic.

Current trading and outlook

Having access to the funds raised last year has enabled us to make significant progress across our Group companies. Our focus remains on the commercialisation of our graphene and other 2D materials by progressing our strategies for growth simultaneously in various end-user sectors. This has enabled us to make significant steps towards commercialisation of our products.

With the large-scale AECOM prototype having been showcased, it demonstrates the real and near-term possibilities of graphene, and with our position as the first company in the world to receive accreditation for graphene, coupled with the REACH registration, we are in the best possible position to be a major part of the imminent "Graphene Revolution".

Neill Ricketts

Chief Executive Officer

12 December 2019

Chief Financial Officer's review

Group Results

Versarien's revenue for the half-year ended 30 September 2019 was GBP4.38 million (H1 2018: GBP5.22 million).

The operating loss before exceptional items, depreciation, amortisation and share based payment charges was GBP0.90 million (H1 2018: GBP0.36 million), and includes 6 months of costs associated with Gnanomat S.L., acquired in October 2018, and Versarien Graphene Inc, our Texas based company incorporated in March 2019.

Exceptional costs were incurred in the period of GBP0.33 million, which mostly relate to the costs incurred for expansion into China and the US. The loss before tax for the period was GBP2.12 million (H1 2018: loss GBP0.79 million).

Group net assets at 30 September 2019 were GBP11.87 million (31 March 2019 GBP13.28 million), with cash at the period end of GBP2.64 million (31 March 2019: GBP4.29 million). Cash outflow from operating activities was GBP1.09 million (H1 2018: GBP0.82 million). The Group capitalised GBP0.17 million (H1 2018: GBP0.16 million) principally in development costs and GBP0.13 million (H1 2018: GBP0.11 million) in new plant and equipment.

Graphene and Plastic Products

This segment generated revenue, predominantly from the plastics business, of GBP1.85 million (H1 2018: GBP2.79 million), returning an LBITDA before exceptional items, (which included costs associated with the two new subsidiaries for the period, Gnanomat S.L. and Versarien Graphene Inc), of GBP0.96 million (H1 2018: loss GBP0.28 million). The segment capitalised development costs of GBP0.15 million (H1 2018: GBP0.13 million) as work continued on developing specific applications using graphene. Cash used by the business segment was GBP1.60 million, of which GBP0.12 million was used to acquire new assets.

Hard Wear and Metallic Products

Revenue for the period remained steady at GBP2.52 million (H1 2018: GBP2.43 million), but increased operational efficiencies resulted in a 56% increase in EBITDA before exceptional items to GBP0.39 million (H1 2018: GBP0.25 million). The segment generated GBP0.23 million in cash in the period, compared to GBP0.1 million consumption in H1 2018, which demonstrates the operational improvements which have been made. This business segment has provided a valuable contribution to the Group's performance.

Chris Leigh

Chief Financial Officer

12 December 2019

Group statement of comprehensive income

For the half year ended 30 September 2019

 
                                                              Six months     Six months       Year 
                                                                   ended          ended      ended 
                                                            30 September   30 September   31 March 
                                                                    2019           2018       2019 
                                                               Unaudited      Unaudited    Audited 
                                                    Notes        GBP'000        GBP'000    GBP'000 
--------------------------------------------------  -----  -------------  -------------  --------- 
Continuing operations 
Revenue                                                 2          4,376          5,215      9,140 
Cost of sales                                                    (3,157)        (3,772)    (6,706) 
--------------------------------------------------  -----  -------------  -------------  --------- 
Gross profit                                                       1,219          1,443      2,434 
Other operating income                                                 3              2        148 
Operating expenses (including exceptional items)                 (3,311)        (2,210)    (5,345) 
--------------------------------------------------  -----  -------------  -------------  --------- 
Loss from operations before exceptional items                    (1,762)          (693)    (2,343) 
Exceptional items                                       3          (327)           (72)      (420) 
--------------------------------------------------  -----  -------------  -------------  --------- 
Loss from operations                                             (2,089)          (765)    (2,763) 
Finance charge                                                      (32)           (23)       (66) 
--------------------------------------------------  -----  -------------  -------------  --------- 
Loss before income tax                                           (2,121)          (788)    (2,829) 
Income tax                                                             -             56        117 
--------------------------------------------------  -----  -------------  -------------  --------- 
Loss for the period                                              (2,121)          (732)    (2,712) 
--------------------------------------------------  -----  -------------  -------------  --------- 
Loss attributable to: 
- Owners of the parent company                                   (1,862)          (659)    (2,473) 
- Non-controlling interest                                         (259)           (73)      (239) 
--------------------------------------------------  -----  -------------  -------------  --------- 
                                                                 (2,121)          (732)    (2,712) 
--------------------------------------------------  -----  -------------  -------------  --------- 
Loss per share attributable to the equity holders 
 of the Company: 
Basic and diluted loss per share                        4        (1.21)p        (0.44)p    (1.64)p 
--------------------------------------------------  -----  -------------  -------------  --------- 
 

There were no comprehensive gains or losses in the year other than those included in the Group Statement of Comprehensive Income.

Group statement of financial position

As at 30 September 2019

 
                                                    30 September  30 September  31 March 
                                                            2019          2018      2019 
                                                       Unaudited     Unaudited   Audited 
                                              Note       GBP'000       GBP'000   GBP'000 
--------------------------------------------  ----  ------------  ------------  -------- 
Assets 
Non-current assets 
Intangible Assets                                5         5,447         2,812     5,318 
Property, plant and equipment                              3,068         2,887     3,170 
Deferred taxation                                             25            25        25 
--------------------------------------------  ----  ------------  ------------  -------- 
                                                           8,540         5,724     8,513 
--------------------------------------------  ----  ------------  ------------  -------- 
Current assets 
Inventory                                                  2,260         2,128     2,253 
Trade and other receivables                                2,036         2,400     2,141 
Current tax                                                   86            52       106 
Cash and cash equivalents                                  2,640         6,073     4,292 
--------------------------------------------  ----  ------------  ------------  -------- 
                                                           7,022        10,653     8,792 
--------------------------------------------  ----  ------------  ------------  -------- 
Total assets                                              15,562        16,377    17,305 
--------------------------------------------  ----  ------------  ------------  -------- 
Equity 
Called up share capital                                    1,539         1,522     1,536 
Share premium                                             19,896        17,453    19,776 
Merger reserve                                             1,256         1,256     1,256 
Share-based payment reserve                                1,495           295       899 
Accumulated losses                                      (11,560)       (7,884)   (9,698) 
--------------------------------------------  ----  ------------  ------------  -------- 
Equity attributable to owners of the parent 
 company                                                  12,626        12,642    13,769 
Non-controlling interest                                   (752)         (327)     (493) 
--------------------------------------------  ----  ------------  ------------  -------- 
Total equity                                              11,874        12,315    13,276 
--------------------------------------------  ----  ------------  ------------  -------- 
Liabilities 
Non-current liabilities 
--------------------------------------------  ----  ------------  ------------  -------- 
Trade and other payables                                     400           238       328 
Deferred taxation                                             66            64        69 
Long-term borrowings                                         557           495       708 
--------------------------------------------  ----  ------------  ------------  -------- 
                                                           1,023           797     1,105 
--------------------------------------------  ----  ------------  ------------  -------- 
Current liabilities 
Trade and other payables                                   1,491         1,510     1,528 
Invoice discounting advances                                 416         1,064       603 
Current tax                                                  243           212       257 
Provisions                                                   174            80       174 
Current portion of long-term borrowings                      341           399       362 
--------------------------------------------  ----  ------------  ------------  -------- 
                                                           2,665         3,265     2,924 
--------------------------------------------  ----  ------------  ------------  -------- 
Total liabilities                                          3,688         4,062     4,029 
--------------------------------------------  ----  ------------  ------------  -------- 
Total equity and liabilities                              15,562        16,377    17,305 
--------------------------------------------  ----  ------------  ------------  -------- 
 

Group statement of changes in equity

For the half year ended 30 September 2019

 
                                              Share                   Share-based                       Non- 
                                    Share   premium           Merger      payment  Accumulated   controlling     Total 
                                  capital   account          reserve      reserve       losses      interest    equity 
                                  GBP'000   GBP'000          GBP'000      GBP'000      GBP'000       GBP'000   GBP'000 
-------------------------------  --------  --------  ---------------  -----------  -----------  ------------  -------- 
At 1 April 2018 (audited)           1,486    12,529            1,256          187      (7,225)         (254)     7,979 
Issue of shares, net of issue 
 costs                                 36     4,924                -            -            -             -     4,960 
Loss for the period                     -         -                -            -        (659)          (73)     (732) 
Share-based charge                      -         -                -          108            -             -       108 
-------------------------------  --------  --------  ---------------  -----------  -----------  ------------  -------- 
At 30 September 2018 
 (unaudited)                        1,522    17,453          1,256            295      (7,884)         (327)    12,315 
Issue of shares                        14     2,323                -            -            -             -     2,337 
Loss for the period                     -         -                -            -      (1,814)         (166)   (1,980) 
Share-based payments                    -         -                -          604            -             -       604 
-------------------------------  --------  --------  ---------------  -----------  -----------  ------------  -------- 
At 1 April 2019 (audited)           1,536    19,776          1,256            899      (9,698)         (493)    13,276 
Issue of shares, net of issue 
 costs                                  3       120                -            -            -             -       123 
Loss for the period                     -         -                -            -      (1,862)         (259)   (2,121) 
Share-based payments                    -         -                -          596            -             -       596 
-------------------------------  --------  --------  ---------------  -----------  -----------  ------------  -------- 
At 30 September 2019 
 (unaudited)                        1,539    19,896            1,256        1,495     (11,560)         (752)    11,874 
-------------------------------  --------  --------  ---------------  -----------  -----------  ------------  -------- 
 

Included within the merger reserve is GBP53,000 in respect of the merger with Versarien Technologies Limited and GBP964,000 in respect of the acquisition of Total Carbide Limited and GBP239,000 in respect of the acquisition of AAC Cyroma Limited.

Statement of Group cash flows

For the half year ended 30 September 2019

 
                                                      Six months     Six months       Year 
                                                           ended          ended      ended 
                                                    30 September   30 September   31 March 
                                                            2019           2018       2019 
                                                       Unaudited      Unaudited    Audited 
                                                         GBP'000        GBP'000    GBP'000 
-------------------------------------------------  -------------  -------------  --------- 
Cash flows from operating activities 
Cash used in operations                                  (1,093)          (820)    (1,737) 
Interest paid                                               (32)           (23)       (66) 
Net cash used in operating activities                    (1,125)          (843)    (1,803) 
-------------------------------------------------  -------------  -------------  --------- 
Cash flows from investing activities 
Acquisition of subsidiaries                                    -              -      (673) 
Purchase of intangible assets                              (165)          (159)      (434) 
Purchase of property, plant and equipment                  (126)          (108)      (541) 
-------------------------------------------------  -------------  -------------  --------- 
Net cash used in investing activities                      (291)          (267)    (1,648) 
-------------------------------------------------  -------------  -------------  --------- 
Cash flows from financing activities 
Share issue                                                  123          5,154      5,155 
Share issue costs                                              -          (194)      (200) 
Finance leases net of repayments                           (172)           (20)        156 
Invoice discounting advances                               (187)           (53)      (514) 
-------------------------------------------------  -------------  -------------  --------- 
Net cash generated from financing activities               (236)          4,887      4,597 
-------------------------------------------------  -------------  -------------  --------- 
Increase/(decrease) in cash and cash equivalents         (1,652)          3,777      1,146 
Cash acquired on acquisition of subsidiary                     -              -        850 
Cash and cash equivalents at start of period               4,292          2,296      2,296 
-------------------------------------------------  -------------  -------------  --------- 
Cash and cash equivalents at end of period                 2,640          6,073      4,292 
-------------------------------------------------  -------------  -------------  --------- 
 

Note to the statement of Group cash flows

For the half year ended 30 September 2019

 
                                                     Six months     Six months       Year 
                                                          ended          ended      ended 
                                                   30 September   30 September   31 March 
                                                           2019           2018       2019 
                                                      Unaudited      Unaudited    Audited 
                                                        GBP'000        GBP'000    GBP'000 
------------------------------------------------  -------------  -------------  --------- 
Loss before income tax                                  (2,121)          (788)    (2,829) 
Adjustments for: 
Share-based payments                                        596            108        712 
Depreciation and amortisation                               264            226        497 
Disposal of non-current assets                                -              -          8 
Finance cost                                                 32             23         66 
R&D tax credit repayment                                      -             56        117 
Increase in inventories                                     (7)          (167)      (292) 
Decrease in trade and other receivables                     125             62        424 
Increase/(decrease) in trade and other payables              18          (340)      (440) 
------------------------------------------------  -------------  -------------  --------- 
Cash used in operations                                 (1,093)          (820)    (1,737) 
------------------------------------------------  -------------  -------------  --------- 
 

Notes to the unaudited interim statements

For the half year ended 30 September 2019

1. Basis of preparation

Versarien plc is an AIM quoted company incorporated and domiciled in the United Kingdom under the Companies Act 2006. The Company's registered office and its principal place of business is 2 Chosen View Road, Cheltenham, Gloucestershire, GL51 9LT.

The interim financial statements were prepared by the Directors and approved for issue 12 December 2019. These interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2019 were approved by the Board of Directors on 19 August 2019 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

As permitted, these interim financial statements have been prepared in accordance with UK AIM Rules and IAS 34, "Interim Financial Reporting" as adopted by the European Union. They should be read in conjunction with the annual financial statements for the year ended 31 March 2019, which have been prepared in accordance with IFRS as adopted by the European Union. The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2019, as described in those annual financial statements. Where new standards or amendments to existing standards have become effective during the year, there has been no material impact on the net assets or results of the Group.

These interim financial statements have been prepared on a going concern basis using similar assumptions to those made in the statutory accounts to 31 March 2019.

Certain statements within this report are forward looking. The expectations reflected in these statements are considered reasonable. However, no assurance can be given that they are correct. As these statements involve risks and uncertainties the actual results may differ materially from those expressed or implied by these statements.

The interim financial statements have not been audited.

2. Segmental information

 
                                                        Metallic 
                                           Graphene      and Hard 
                                          and Plastic      Wear     Intra-group 
                               Central     Products      Products    Adjustments    TOTAL 
                                                       ----------  ------------- 
                               GBP'000        GBP'000     GBP'000        GBP'000   GBP'000 
                              --------  -------------  ----------  ------------- 
 Six months to 30 September 
  2019 
 Sales                               -          1,854       2,522              -     4,376 
 Gross Margin                        -            389         830              -     1,219 
 Other operating income              -              -           3              -         3 
 Operating expenses              (964)        (1,480)       (547)              7   (2,984) 
 Exceptional items                (23)          (286)        (18)              -     (327) 
 (Loss)/ profit from 
  operations                     (987)        (1,377)         268              7   (2,089) 
 Finance income/(charge)             1           (23)        (10)              -      (32) 
                              --------                 ----------  -------------  -------- 
 (Loss)/profit before 
  tax                            (986)        (1,400)         258              7   (2,121) 
                                        -------------  ----------  -------------  -------- 
 
 
 
   2. Segmental information 
   (continued) 
                              ------------------------------------------------------------ 
                                                        Metallic 
                                           Graphene      and Hard 
                                          and Plastic      Wear     Intra-group 
                               Central     Products      Products    Adjustments     TOTAL 
                               GBP'000        GBP'000     GBP'000        GBP'000   GBP'000 
 Six months to 30 September 
  2018 
 Sales                               -          2,790       2,425              -     5,215 
 Gross Margin                        -            707         736              -     1,443 
 Other operating income              -              -           2              -         2 
 Operating expenses              (436)        (1,082)       (594)           (26)   (2,138) 
 Exceptional items                (72)              -           -              -      (72) 
 (Loss)/profit from 
  operations                     (508)          (375)         144           (26)     (765) 
 Finance income/(charge)             -            (9)        (14)              -      (23) 
                              --------  -------------  ----------  -------------  -------- 
 (Loss)/ profit before 
  tax                            (508)          (384)         130           (26)     (788) 
                                        -------------  ----------  -------------  -------- 
 
 

3. Exceptional items

 
                                          Six months     Six months 
                                               ended          ended  Year ended 
                                        30 September   30 September    31 March 
                                                2019           2018        2019 
                                           Unaudited      Unaudited     Audited 
                                             GBP'000        GBP'000     GBP'000 
-------------------------------------  -------------  -------------  ---------- 
Acquisition costs                                  -             61          29 
Relocation and restructuring costs                17              -          59 
Costs relating to expansion in China             220              -         271 
Costs relating to setting up of the 
 US subsidiary                                    67              -          28 
Other                                             23             11          33 
-------------------------------------  -------------  -------------  ---------- 
                                                 327             72         420 
-------------------------------------  -------------  -------------  ---------- 
 

4. Loss per share

The loss per share has been calculated by dividing the loss after taxation of GBP1,862,000 (2018: GBP659,000) by the weighted average number of shares in issue of 153,894,000 (2018: 148,859,000 during the period.

The calculation of the diluted earnings per share is based on the basic earnings per share adjusted to allow for the issue of shares on the assumed conversion of all dilutive options. However, in accordance with IAS33 "Earnings per Share", potential Ordinary shares are only considered dilutive when their conversion would decrease the profit per share or increase the loss per share. As at 30 September 2019 there were 14,677,130 (2018: 14,090,422) potential Ordinary shares that have been disregarded in the calculation of diluted earnings per share as they were considered non-dilutive at that date.

5. Intangible assets

 
                                     30 September  30 September  31 March 
                                             2019          2018      2019 
                                        Unaudited     Unaudited   Audited 
                                          GBP'000       GBP'000   GBP'000 
-----------------------------------  ------------  ------------  -------- 
 
Goodwill                                    4,431         2,167     4,431 
Customer relationships/order books             68            87        81 
Development costs                             740           390       600 
Licence                                        45            29        48 
Intellectual property                         163           139       158 
-----------------------------------  ------------  ------------  -------- 
Total                                       5,447         2,812     5,318 
-----------------------------------  ------------  ------------  -------- 
 

6. Dividends

As stated in the 2013 AIM Admission document the Board's objective is to continue to grow the Group's business and it is expected that any surplus cash resources will, in the short to medium term, be re-invested into the research and development of the Group's products. In view of this, no dividend is declared and the Directors will not be recommending a dividend for the foreseeable future. However, the Board intends that the Company will recommend or declare dividends at some future date once they consider it commercially prudent for the Company to do so, bearing in mind its financial position and the capital resources required for its development.

7. Interim Report

This interim announcement is available on the Group's website at www.versarien.com

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR GGGGGPUPBPWG

(END) Dow Jones Newswires

December 12, 2019 02:01 ET (07:01 GMT)

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