TIDMVRS
RNS Number : 7139V
Versarien PLC
11 August 2020
11 August 2020
Versarien Plc
("Versarien" or the "Company" or the "Group")
Preliminary Results for the year ended 31 March 2020
Versarien Plc (AIM:VRS), the advanced engineering materials
group, is pleased to announce its unaudited results for the year
ended 31 March 2020.
Operational highlights
-- Commercial Partnership Agreement with the Company's textile
sector collaboration partner, MAS Innovation (Private) Limited, to
develop new garments utilising Versarien's graphene ink
materials
-- Awarded EUR350,000 grant to participate in the Graphene
Flagship project, led by Airbus to develop graphene based
thermo-electric ice protection systems to prevent icing on aircraft
surfaces
-- Partnership with Rolls Royce and the University of
Manchester's Graphene Engineering Innovation Centre ("GEIC") using
chemical vapour deposition ("CVD") in wiring for next generation
aerospace engine systems
-- Grant of GBP104,000 from the Advanced Propulsion Centre for
the development of low-carbon technologies to significantly reduce
vehicle emissions
Financial highlights
-- Group revenues of GBP8.3million (2019: GBP9.1 million)
-- Adjusted LBITDA* of GBP0.6 million (2019: GBP1.1 million)**
-- Loss before tax of GBP4.7 million (2019: GBP2.8 million)
after share based payments charge in the year of GBP1.2 million
(2019: GBP0.7 million)
-- Cash at 31 March 2020 of GBP1.7 million (2019: GBP4.3 million)
-- Successful fundraising of GBP6 million gross in March 2020
re-invested into the 24-month sharing agreement with Lanstead
Capital Investors LP ("Lanstead"),a US headquartered institutional
investor, with a currently assessed fair value of GBP7 million
-- Net assets of GBP15.7 million (2019: GBP13.3 million)
* Adjusted LBITDA (Loss before interest, tax, depreciation and
amortisation) excludes exceptional items and share based payment
charges ** IFRS 16,leases, was adopted on 1 April 2019 using the
modified retrospective approach and comparatives are therefore not
restated under this method. The impact of this adoption has
resulted in a reduction in LBITDA of GBP0.7 million in 2020
Post Period highlights
-- Product development agreement signed with J&P Coats
Limited, part of Coats Group plc, to incorporate graphene
nano-platelets and graphene inks into consumer textiles
-- GBP5 million Innovate UK loan awarded in June 2020, with
security arrangements completed, for scale up and product
development related to the GSCALE collaborations
-- Graphene Enhanced Protective Face Masks launched with first
orders received for 120,000 masks.
Commenting, Neill Ricketts, Chief Executive Officer of
Versarien, said:
"Recent times have been dominated by the challenges that the
Covid-19 pandemic have presented on a global basis. However, I am
pleased to report Versarien has continued to operate throughout and
achieved much during lockdown.
"I am particularly grateful for the support of the UK Government
both in its provision of a GBP5 million loan via Innovate UK to
allow us the opportunity to scale up and to expand the reach of our
graphene operations.
"Our global expansion plans have changed direction slightly as
we have decided that progressing into the Chinese market, whilst
significant commercially, must be done on the basis that we are
confident that our IP is protected. We have exciting opportunities
elsewhere, and the change of emphasis in China is not precluding
commercial deals being done; the supply of graphene in masks
manufactured in China being the first example utilising our
graphene technology.
"Monetisation of our technologies is now the focus of the
Company's attention, although we will continue our stated strategy
of acquiring additional IP should suitable opportunities arise.
With a strengthened balance sheet following the Lanstead placing
and the Innovate UK loan, coupled with a particular focus on those
collaborative projects that are expected to deliver commercially in
the near term we are very well positioned to execute this
strategy.
"I would like to take this opportunity to thank our continually
supportive investor base and our employees for their hard work as
we look forward to the future with continued optimism and
confidence."
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.
For further information please contact:
Versarien
Neill Ricketts, CEO
Chris Leigh, CFO +44 (0)1242 269 122
SP Angel Corporate Finance (Nominated Adviser
and Joint Broker)
Ewan Leggat, Soltan Tagiev +44 (0)20 3470 0470
Berenberg (Joint Broker)
Mark Whitmore, Simon Cardron +44 (0)20 3207 7800
Yellow Jersey (Investor Relations)
Charles Goodwin
Georgia Colkin
Henry Wilkinson
Versarien@yellowjerseypr.com +44 (0)20 3004 9512
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 eight subsidiaries operating under two
divisions:
Graphene and Plastics
2-DTech Limited, which specialises in the supply,
characterisation and early stage development of graphene products.
www.2-dtech.com
Cambridge Graphene Ltd, 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 long lifetime for use in electrical vehicles
and portable electronics products. www.gnanomat.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
Versarien Graphene Inc ("VGI") based in Texas, United States of
America, is the distribution arm for the UK's graphene development
technologies.
Beijing Versarien Technology Company Limited ("BVT") is the
wholly owned Chinese foreign entity that will form the base for
expansion activities in China.
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.
www.totalcarbide.com
Chairman's Statement
I am delighted to provide my first statement as Non-executive
Chairman of Versarien. In the short time since my appointment in
June 2020 much has happened at the Company.
We have completed the rigorous process required to achieve the
award of a GBP5 million Innovate UK loan, have redirected our
strategy with regard to China and have strengthened our senior
management with the appointment of Matt Walker.
Our focus is now very much on the monetisation of the graphene
technologies in our portfolio, although we will continue to fill
any product gaps as opportunities arise to do so. An update on the
collaborations that we continue to work on is provided in the Chief
Executive Officer's Report.
Having exercised the backstop arrangement for our joint venture
in China, our intention is to use Beijing Versarien Technology
Limited ("BVT") as the vehicle for channelling sales enquiries back
to the UK for the supply of graphene and/or application products
into China. Additionally, we are also looking at how products that
utilise our graphene can be imported. It is particularly pleasing
to see this in the graphene enhanced mask launch recently
announced.
The Board of BVT has been appointed and consists of Neill
Ricketts, Matt Walker and Bruno Jin, who will also act as General
Manager. Bruno, who has worked with Versarien since 2018, has a
Bachelor of Engineering degree from Nanjing University and studied
at Cambridge University having been awarded a scholarship by the
Cambridge Overseas Trust.
The appointment of Matt Walker, following his two year
secondment from the UK Department for International Trade, brings
with it strategic direction for the Company's global expansion
plans, which it should be noted are focussed far wider than China
and the US. Matt, together with our representative, Rachel Kim,
have been working tirelessly on a number of opportunities in South
Korea. Matt is also currently looking at opportunities in India,
Japan and Singapore.
I am particularly pleased with the support that the UK
Government has provided to the Company, most significantly via
Innovate UK with the provision of a GBP5 million loan, their first
of such magnitude. It is specifically for a project named G SCALE,
(an acronym for Graphene-Seat, Concrete, Arch, Leisure, Elastomer),
covering a number of Versarien's existing collaborations, which is
designed to enable Versarien to significantly increase its
manufacture of quality assured graphene.
Prior to my appointment, the Company completed a GBP6 million
fund raise and sharing agreement with Lanstead, a US headquartered
institutional investor who is now our largest shareholder. Having
spoken directly with Lanstead's principal, I am pleased to report
that he is very supportive of the Company and its strategic
direction. The Versarien team is looking at how it can best advance
in the US where early adoption is proving challenging for all
market participants.
I would like to thank all the staff and the executive directors
for their hard work during the year. The coming year will be
important for Versarien as it seeks to monetise its graphene
technologies and that will be the focus of the Board's
attention.
James Stewart CBE
Non-executive Chairman
Chief Executive Officer's Review and Strategic Report
As stated above, this year has been particularly challenging
with the Covid-19 pandemic taking full force and effect towards the
end of our financial year. As has been reported previously, we are
now concentrating on the major collaboration opportunities and
these are allied to the GBP5 million Innovate UK loan ("the Loan")
awarded to us at the end of June 2020. The Loan particularly
acknowledges the work we are undertaking, the advancements made and
the strategic importance of our 2D materials technology to the UK.
The Loan will help Versarien step up its graphene production
capacity so that we can expedite the commercial adoption of
products utilising graphene enhanced materials.
As we stated would be the case in our announcement on 25
February 2020 the Company intends to use its interim and full year
results announcements to provide updates on the status of the
Company's various collaborations and will not make announcements
between these unless a disclosure obligation arises. I am therefore
pleased to provide an update on our current commercial
collaborations as well as a summary of specific funding.
In order to ensure the appropriate focus of the Company's
resources and to ensure that the monetisation of our technologies
is now the primary focus of the Company's attention we have
segmented our various collaborative projects. Our primary focus is
on those projects that are related to the GSCALE project, whilst
still continuing to progress others that are likely to provide
medium term returns.
Funded projects
Funder Project Amount Duration
Innovate UK GSCALE GBP5,000,000 24 months
------------------------ ------------- ----------
Graphene Flagship Aircraft surface EUR350,000 36 months
de-icing
------------------------ ------------- ----------
Advanced Propulsion Low carbon technologies GBP104,000 18 months
Centre
------------------------ ------------- ----------
GSCALE collaborations:
Start date Description Current status
May-20 Coats Group Plc The agreement will see
the parties work on four
specific projects, which
will focus on two different
manufacturing processes
that use Versarien graphene
nano-platelets and graphene
inks in different consumer
textile applications in
the Apparel and Footwear
sectors. The agreement
follows new research and
testing on yarn extrusion
featuring the Company's
graphene materials at
the Warwick Manufacturing
Group and subsequent discussions
with an existing collaborative
partner of the Company.
------------------------------------- -------------------------------------
Mar-19 Initial order from US company Testing on scale up is
for 12kg of HP-GNP incorporated underway at the customer
into polymer masterbatch test facility in Europe
for down-hole drilling components and the next milestone
is a live drilling test
but is subject to ongoing
restrictions re Covid-19.
------------------------------------- -------------------------------------
Mar-19 Further collaboration with The parties continue to
Chinese Aerospace Company progress through the work
plan created with samples
sent for further testing.
------------------------------------- -------------------------------------
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
and are undergoing further
analysis.
------------------------------------- -------------------------------------
Dec-18 Collaboration with Chinese This longer-term project,
Aerospace Company which is focused on several
materials for different
parts continues at an
R&D level. Progress dependent
upon test results.
------------------------------------- -------------------------------------
Aug-18 Construction materials collaboration Following the launch of
with AECOM the AECOM CNCT Arch at
Network Rail facility
in Bristol, the product
has been subject to further
tests, with positive test
data reported to date.
Discussions underway regarding
project delivery/commercialisation.
------------------------------------- -------------------------------------
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. Programme
to resume following lifting
of Covid-19 restrictions.
------------------------------------- -------------------------------------
Jan-18 Agreement with global apparel The parties continue to
manufacturer, MAS Innovation work together on projects
(Private) Limited with brand partners for
sportswear and non-sports
wear as well as pre-production
trials on base layer garments
for own branding. Further
projects underway on PPE
garments with different
material blends that could
provide further unique
benefits.
------------------------------------- -------------------------------------
Priority projects :
Start date Description Current status
Apr-20 Rolls Royce/ GEIC The aim of the collaboration
is to reduce the weight
of electrical components,
improve electrical performance
of 2D materials and increase
resistance to corrosion
of components in future
engine systems.
It also involves the development
of new reel to reel CVD
capabilities applicable
to other sectors
--------------------------------- ----------------------------------
Mar-18 Collaboration with world-leading This longer-term project
aerospace group features work on specific
parts and continues with
WMG and other parties.
--------------------------------- ----------------------------------
Feb-18 Medical technology collaboration Following the return to
at Addenbrooke's hospital work of the global partner,
the parties are now discussing
further supplementary
funded projects.
--------------------------------- ----------------------------------
Feb-18 Agreement with shoemaker, Further project work,
Vivobarefoot including textiles and
leathers has now commenced,
following delays due to
Covid-19.
--------------------------------- ----------------------------------
Dec-17 Agreement with global chemical Project ongoing and awaiting
major further test results.
--------------------------------- ----------------------------------
Nov-17 Collaboration with global Following commercial discussions
consumer goods company to evaluate cost-benefit
value. The customer has
agreed to funded testing
at its R&D centre based
in the UK. The funding
forms part of a new joint
development agreement
agreed between the parties.
--------------------------------- ----------------------------------
Ongoing Projects (non-priority):
Start date Description Current status
Feb-20 Oxford Advanced Surfaces Collaboration to work
on graphene enhanced surfaces
for adhesion and increase
in electrical conductivity
using Versarien 2D materials.
----------------------------------- ---------------------------------
Oct-19 Refractory Materials Collaboration Materials have been supplied
and tests carried out,
the results of which have
been assessed and further
tests are being carried
out.
----------------------------------- ---------------------------------
Jun-18 Commercial agreement with New product development
MediaDevil has focused on the requirements
of private label partners
and further trials of
different eco-friendly
material are on-going.
In addition, Media Devil
are working with the company
on other audio project
will a well know household
brand.
----------------------------------- ---------------------------------
May-18 Consumer goods collaboration The project was put on
for polymer structures in hold by the customer due
plastics to production demands
during Covid-19 with resumption
anticipated later in the
year.
----------------------------------- ---------------------------------
Mar-18 Collaboration with Team We are working on material
Ineos for cycling equipment prototypes with other
partners which we expect
to trial later in 2020.
----------------------------------- ---------------------------------
Gnanomat
Gnanomat has continued to make progress with its objective of
incorporating graphene into energy storage devices.
Recently, some of these nanomaterials have demonstrated not only
their suitability to be integrated into the electrodes of such
devices, but also have demonstrated a significant improvement over
current market standards in tests in industrial prototypes.
Gnanomat believes it has now developed its nanomaterials to a level
that provides approximately three times the energy capacity of
current market reference products and is continuing with further
developments.
These findings have opened the door to prospective customers
that are now partnering with Gnanomat. At present it is working
with companies in the US, Japan and South Korea, among others, to
commercialise its products.
In addition, some of the Gnanomat materials have shown
significant benefits in other energy storage applications, such as
supercapacitors and metal/air batteries.
As a result of the advances achieved and its extensive knowledge
base and manufacturing potential, Gnanomat is able to participate
in a number of different European funding programmes. These include
the Spanish Ministry of Science and Innovation which has granted a
EUR116,000 project to the Company as well as others where
application is progressing.
Versarien Graphene Inc
With the Covid-19 pandemic significantly impacting the US,
contacting and conducting business with customers in the US has
been challenging in recent times. Therefore, the current strategy
is to concentrate on larger corporations, which have a further
forward vision.
A number of NDA's have been signed and technical conference
calls between prospective customers and the UK development staff
held. In addition, trials are ongoing on a project to add graphene
for coatings applications. A tyre manufacturer has also expressed
its recent wish to move forward with testing despite being at the
epicentre of the pandemic.
Gaining traction in the US market is proving challenging, which
appears to be in common with many other US graphene companies and
these challenges are expected to continue until the worst of the
pandemic has abated in the region.
AAC Cyroma
The past 12 months has seen AAC Cyroma focussing on internal
efficiency improvements and new business sales in very challenging
market conditions. Improved planning techniques, factory process
layout changes and scrap reduction activities has resulted in a
reduction in direct labour and raw material costs.
A targeted sales strategy has seen new customers placing regular
schedules orders, for both injection moulded and vacuum formed
work, replacing some lower margin accounts. These include the
manufacture and supply of hospital bed and cot mattress panels,
injection moulded soil sample core boxes, paint masks, electric
vehicle component parts, packaging trays and protective visors for
smart PPE.
Graphene enhanced injection moulded products, ranging from
packaging trays, construction products and consumer goods, have
been successfully moulded using AAC Cyroma's injection moulding
technology utilising a variety of different polymer grades. These
products are being tested in conjunction with our partners for live
applications and AAC Cyroma continues to work with new partners
looking at opportunities whereby graphene-enhanced products can
offer product differentiation and structural improvements.
Hard Wear and Metallic Products
Over the past few years Total Carbide has sought to move away
from its dependency on the oil and gas sector which it had done
reasonably successfully. However, with low oil prices that part of
the business which still remains has been badly affected and
accelerated the need for the business to diversify.
For example, after two years of tests and development work with
an award winning, Norwegian high- tech company, Total Carbide has
succeeded in securing orders for the manufacture of parts which
reduce the inflow of water or gas in oil wells. It is expected that
this will account for approaching up to 10% of future revenues.
Breakthrough technology designed to cut the weight of rockets is
being carried out at Westcott and Total Carbide has been working on
technology to transform the throat nozzles, which provide the right
amount of thrust to propel rockets and satellites.
Currently its throat nozzles are made from heavy tungsten alloys
to provide sufficient strength and heat and wear resistance. The
addition of Hexotene into a heat resistant ceramic will be used to
provide a more lightweight solution. The project is part-funded by
the Space Research and Innovation Network for Technology (SPRINT)
programme which will help with testing of the new material.
Versarien Technologies' restructuring at the start of the
financial year saw it reduce its less profitable business in order
to create space at the Cheltenham site to support the graphene
scale up that is now made possible by the award of the Innovate UK
loan.
Key performance indicators
As a Group that consists of mature products supporting the
development of early stage technology products, we concentrate on
the following financial metrics:
2020 2019
GBP'000 GBP'000
Group revenue 8,281 9,140
--------- ---------
Gross margin percentage 24% 27%
--------- ---------
Loss before interest, tax, depreciation, amortisation,
exceptional costs and share based charges (646) (1,134)
--------- ---------
Cash used by Graphene and Plastic Products (2,685) (1,305)
--------- ---------
Cash used/generated by Hard Wear and Metallic
Products 608 (266)
--------- ---------
Cash raised/(utilised) by parent (before loans
to/from subsidiaries) (558) 3,567
--------- ---------
Net Cash raised and generated/(used) by the
Group (2,635) 1,996
--------- ---------
Current trading and outlook
The current financial year has seen a slow start for the mature
businesses with some staff furloughed, some working from home and
some working at our factory locations. With the lifting of
restrictions, we are beginning to see some indication of our
markets recovering, but continue to monitor costs carefully.
The future for the technology businesses looks exciting with the
new product launch of the graphene enhanced masks, final testing of
Gnanomat products by prospective customers and opportunities for
expansion abroad.
The opportunity afforded to us by the Innovate UK loan to scale
up our processes will be a main focus for the business going
forward as we seek to monetise the opportunities we have.
We remain confident of the future benefits that graphene can
bring to society and our shareholders.
Neill Ricketts
Chief Executive Officer
Financial Review
Versarien's revenue for the year ended 31 March 2020 was GBP8.3
million (2019: GBP9.1 million) with operating losses before
exceptional costs, depreciation, amortisation and share based
payment charges of GBP0.6 million (2019: GBP1.1 million).
Exceptional costs were GBP1.6 million (2019: GBP0.4 million)
which arose mainly through impairment of goodwill in AAC Cyroma
Limited and Total Carbide Limited totalling GBP0.9m, principally as
a result of the Covid 19 related recovery scenarios (2019: GBPNil)
and China expansion costs of GBP0.5m (2019: GBP0.3m). The loss
before tax for the year was GBP4.7 million (2019: GBP2.8 million),
after share based payment charges of GBP1.2 million (2019: GBP0.7
million).
Prior to the year end the Company entered into a GBP6 million
subscription agreement with Lanstead, together with a related
sharing agreement (the "Sharing Agreement"). 15,000,000 new
ordinary shares of 1 pence each were issued at a price of 40 pence
per share raising gross proceeds of GBP6 million.
The GBP6 million gross proceeds of the subscription were pledged
by the Company pursuant to the Sharing Agreement with Lanstead. The
Sharing Agreement entitles the Company to receive back those
proceeds on a pro rata monthly basis over a period of 24 months,
subject to adjustment upwards or downwards each month depending on
the Company's share price at the time by reference to an average
benchmark price of 53.33p.
In accordance with IFRS 13, the sharing agreement has been
valued as at 31 March 2020 using the Monte Carlo (or multiple
probability simulation) pricing model which has resulted in a
valuation of GBP6,987,000. Consequently, and in accordance with
IFRS 13, a gain of GBP987,000 has been accounted for as other gains
in the Group Statement of Comprehensive Income.
The key assumptions in the valuation model, based on a 20-day
average price for each month of the 24 months of the Lanstead
sharing agreement were:
-- Observed return volatility over 5 years of 76%
-- Annual drift factor 21.2%
-- 50,000 simulated observations
-- Average share price over the 24 months generated from the model of GBP0.62
One strand of our strategy is to look for global expansion
opportunities and our initial target had been China where, as noted
above, we have spent GBP0.5 million including legal fees and
secondment fees from the UK Government. Whilst the strategy for
China expansion has changed due to a number of factors we have
nevertheless made progress as evidenced by the product launch of
graphene enhanced face masks accompanied by first orders of 120,000
in volume. Adjusted LBITDA for the graphene businesses was GBP1.9
million (pre IFRS 16 GBP2.1 million) (2019: GBP1.1 million).
Our plastics business, AAC Cyroma has returned revenues of
GBP3.8 million (2019: GBP4.7 million) and EBITDA of GBP0.4 million
(pre IFRS 16 GBP0.2 million) (2019: GBP0.2 million).
Our mature Hard Wear and Metallic businesses have provided
stability to support the development of the emerging businesses,
with Total Carbide returning revenues of GBP3.4 million (2019:
GBP3.2million) and EBITDA of GBP0.6 million (pre IFRS 16 GBP0.4
million) (2019: GBP0.5 million) and Versarien Technologies
similarly returning revenues of GBP0.9 million (2019: GBP1.2
million) and adjusted LBITDA of GBPnil million (pre IFRS 16 GBP0.1
million) (2019 GBP0.1 million).
Group net assets at 31 March 2020 were GBP15.7 million (2019:
GBP13.3 million) at the year end the Group had cash of GBP1.7m
(2019: GBP4.3 million), with GBP1.2 million (2019: GBP0.6 million)
drawn under the invoice finance facilities. As at period end the
Company had GBP0.3 million of headroom in its invoice finance
facilities (2019: GBP0.6 million). Together with the Lanstead
sharing agreement and the Innovate UK loan, the Directors consider
this sufficient for our current activities over the coming twelve
months having made certain assumptions, further details of which
are detailed below.
Cash outflow from operating activities was GBP1.5 million (2019:
GBP1.7 million). The Group invested GBPnil in acquisitions (2019:
GBP0.7 million), GBP0.4 million (2019: GBP0.4 million) in
capitalised development costs, and GBP0.3 million (2019: GBP0.5
million) in plant and machinery.
Going concern
The financial statements, which are not yet audited, have been
prepared on a going concern basis, which the Directors believe to
be appropriate for the following reasons:
-- The Group meets its day-to-day working capital requirements
through careful cash management and the use of its invoice
discounting facilities;
-- As at 31 March 2020, the Group had cash balances totalling
GBP1.7 million with GBP0.3million of headroom on its invoice
discounting facilities;
-- The Group was awarded a GBP5 million loan by Innovate UK to fund certain of its activities;
-- The Group receives monthly settlements from its sharing
agreement with Lanstead, the quantum of which is dependent upon
share price;
The Directors have prepared detailed projections of expected
future cash flows for a period of twelve months from the date of
issue of this preliminary statement. These show that the Group is
expected to have sufficient cash available to meet its obligations
as they fall due for the foreseeable future (at least twelve
months).
These projections contain certain assumptions about the sales
performance as a result of the Covid 19 pandemic. There is
therefore a risk that trading performance could be below
expectations. The projections also contain certain assumptions with
regards to the share price and the funds that will flow under the
sharing agreement with Lanstead and there is also a risk that the
share price could be below expectations. Both of these scenarios
could lead to a requirement to take mitigating action
Such actions could include raising more cash via an equity
placing (there is a track record of successful placings) or, in the
absence of a funding round, cost reduction in the Group. The
Directors' have prepared sensitised projections for these scenarios
which indicate that sufficient cash reserves would exist for the
foreseeable future(at least twelve months) without any additional
fundraising.
Other factors that have been taken into account in the
Directors' assessment of going concern include:
-- The expectation that the placing authority for up to 15% of
the existing share capital without pre-emption rights will be
renewed at the Annual General Meeting;
-- The continuation and adequacy of bank facilities and
-- That there are a number of mitigating actions the Group could
implement, such as reducing the funds spent on development of its
technologies and overheads to concentrate on GSCALE
opportunities.
After due consideration, the Directors have concluded that there
is a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future (at
least twelve months). For this reason, they continue to adopt the
going concern basis in preparing the consolidated financial
statements.
Chris Leigh
Chief Financial Officer
Group statement of comprehensive Income (unaudited)
Year ended 31 March 2020
2020 2019
Notes GBP'000 GBP'000
-------------------------------------------------- ----- --------- ---------
Continuing operations
Revenue 2 8,281 9,140
Cost of sales (6,334) (6,706)
-------------------------------------------------- ----- --------- ---------
Gross profit 1,947 2,434
Other operating income 5 148
Other gains 987 -
Operating expenses (including exceptional items) (7,487) (5,345)
-------------------------------------------------- ----- --------- ---------
Loss from operations before exceptional items (2,941) (2,343)
Exceptional items 3 (1,607) (420)
-------------------------------------------------- ----- --------- ---------
Loss from operations (4,548) (2,763)
Finance costs (160) (69)
Finance income 5 3
-------------------------------------------------- ----- --------- ---------
Loss before income tax (4,703) (2,829)
Income tax 49 117
-------------------------------------------------- ----- --------- ---------
Loss for the year (4,654) (2,712)
-------------------------------------------------- ----- --------- ---------
Loss attributable to:
- Owners of the parent company (4,148) (2,473)
- Non-controlling interest (506) (239)
-------------------------------------------------- ----- --------- ---------
(4,654) (2,712)
-------------------------------------------------- ----- --------- ---------
Loss per share attributable to the equity holders
of the Company:
Basic and diluted loss per share 5 (2.69)p (1.64)p
-------------------------------------------------- ----- --------- ---------
There is no other comprehensive income for the year.
The gain in the year relates to the fair value assessment of the
Lanstead sharing agreement at the balance sheet date.
Group statement of financial position (unaudited)
As at 31 March 2020
2020 2019
Notes GBP'000 GBP'000
---------------------------------------------------- ----- -------- --------
Assets
Non-current assets
Intangible assets 6 4,720 5,318
Property, plant and equipment 7 4,316 3,170
Deferred taxation 25 25
Trade and other receivables 4,295 -
---------------------------------------------------- ----- -------- --------
13,356 8,513
---------------------------------------------------- ----- -------- --------
Current assets
Inventory 2,252 2,253
Trade and other receivables 4,817 2,141
Current tax 157 106
Cash and cash equivalents 1,657 4,292
---------------------------------------------------- ----- -------- --------
8,883 8,792
---------------------------------------------------- ----- -------- --------
Total assets 22,239 17,305
---------------------------------------------------- ----- -------- --------
Equity
Called up share capital 8 1,697 1,536
Share premium account 8 25,497 19,776
Merger reserve 1,256 1,256
Share-based payment reserve 2,056 899
Retained losses (13,846) (9,698)
Equity attributable to owners of the parent company 16,660 13,769
Non-controlling interest (999) (493)
---------------------------------------------------- ----- -------- --------
Total equity 15,661 13,276
---------------------------------------------------- ----- -------- --------
Liabilities
Non-current liabilities
Trade and other payables 1,192 328
Deferred tax 67 69
Long-term borrowings 516 708
---------------------------------------------------- ----- -------- --------
1,775 1,105
---------------------------------------------------- ----- -------- --------
Current liabilities
Trade and other payables 2,928 1,528
Provisions 97 174
Current tax 290 257
Invoice discounting advances 1,156 603
Current portion of long-term borrowings 332 362
---------------------------------------------------- ----- -------- --------
4,803 2,924
---------------------------------------------------- ----- -------- --------
Total liabilities 6,578 4,029
---------------------------------------------------- ----- -------- --------
Total equity and liabilities 22,239 17,305
---------------------------------------------------- ----- -------- --------
Group statement of changes in equity (unaudited)
Year ended 31 March 2020
Share Share-based
Share premium Merger payment Accumulated Non-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 1,486 12,529 1,256 187 (7,225) (254) 7,979
Issue of shares 50 7,247 - - - - 7,297
Loss for the year - - - - (2,473) (239) (2,712)
Share-based payments - - - 712 - - 712
--------------------- -------- -------- -------- ----------- ----------- ----------------- --------
At 31 March 2019 1,536 19,776 1,256 899 (9,698) (493) 13,276
Issue of shares 161 5,721 - - - - 5,882
Loss for the year - - - - (4,148) (506) (4,654)
Share-based payments - - - 1,157 - - 1,157
--------------------- -------- -------- -------- ----------- ----------- ----------------- --------
At 31 March 2020 1,697 25,497 1,256 2,056 (13,846) (999) 15,661
--------------------- -------- -------- -------- ----------- ----------- ----------------- --------
Statement of Group cash flows (unaudited)
Year ended 31 March 2020
2020 2019
Notes GBP'000 GBP'000
------------------------------------------------- ----- --------- ----------
Cash flows from operating activities
Cash used in operations 9 (1,487) (1,737)
Interest paid (155) (66)
Net cash used in operating activities (1,642) (1,803)
------------------------------------------------- ----- --------- ----------
Cash flows from investing activities
Acquisition of subsidiaries (net of cash
acquired) - (673)
Purchase of intangible assets (351) (434)
Purchase of property, plant and equipment (286) (541)
Net cash used in investing activities (637) (1,648)
------------------------------------------------- ----- --------- ----------
Cash flows from financing activities
Share issue (net of funds deferred per sharing
agreement)* 123 5,155
Share issue costs (241) (200)
Finance leases (net of repayments) - 156
Principal payment of leases under IFRS 16 (791) -
Invoice discounting loan proceeds/(repayments) 553 (514)
------------------------------------------------- ----- --------- ----------
Net cash generated from financing activities (356) 4,597
------------------------------------------------- ----- --------- ----------
Increase/(decrease) in cash and cash equivalents (2,635) 1,146
Cash acquired on acquisition - 850
Cash and cash equivalents at beginning of
year 4,292 2,296
------------------------------------------------- ----- --------- ----------
Cash and cash equivalents at end of year 1,657 4,292
------------------------------------------------- ----- --------- ----------
* As disclosed further in the Financial Review, during the year
15,000,000 shares were issued for cash raising gross proceeds of
GBP6 million which were pledged via a sharing agreement entitling
the Company to receive back those proceeds over a period of 24
months.
Notes to the Financial Statements (unaudited)
1. Basis of preparation
The consolidated financial statements consolidate the results of
the Company and its subsidiaries (together referred to as the
"Group").
The financial information included in this preliminary
announcement does not constitute statutory accounts of the Group
for the years ended 31 March 2020 or 31 March 2019. The financial
information for the year ended 31 March 2019 is derived from
statutory accounts upon which the auditors have reported. Their
report was (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
The auditors work on the statutory accounts of the Group for the
year ended 31 March 2020 is not yet complete.
Both the consolidated financial statements and the Company
financial statements are prepared in accordance with International
Financial Reporting Standards as adopted by the EU ("IFRS").
On 1 April 2019, IFRS 16 was adopted using the modified
retrospective approach therefore not restating the
comparatives.
2. Segmental reporting
At 31 March 2020 the Group was organised into two business
segments. Central costs are reported separately.
Information reported to the Group's Chief Executive Officer for
the purposes of resource allocation and assessment of performance
is focused on the two principal business segments of Graphene and
Plastic Products and Hard Wear and Metallic Products and,
accordingly, the Group's reportable segments under IFRS 8 are based
on these activities.
Segment profit/(loss) represents the profit/(loss) earned by
each segment, including a share of central administration costs,
which are allocated on the basis of actual use or pro rata to
sales. This is the measure reported to the Chief Executive Officer
for the purposes of resource allocation and assessment of segment
performance.
The segment analysis for the period ended 31 March 2020 is as
follows:
Graphene Hard Wear
and Plastic and Metallic Intra-group
Central Products Products adjustments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- ------------ -------------- ------------ --------
Revenue - 3,942 4,342 (3) 8,281
-------------------------- -------- ------------ -------------- ------------ --------
Gross profit - 727 1,220 - 1,947
Other operating income - - 5 - 5
Other gains 987 - - - 987
Operating expenses (2,032) (3,449) (1,126) (4) (6,611)
Impairment of Goodwill - (522) (354) - (876)
-------------------------- -------- ------------ -------------- ------------ --------
(Loss) from operations (1,045) (3,244) (255) (4) (4,548)
Finance charge (1) (97) (57) - (155)
-------------------------- -------- ------------ -------------- ------------ --------
(Loss) before tax (1,046) (3,341) (312) (4) (4,703)
-------------------------- -------- ------------ -------------- ------------ --------
Total assets 21,917 6,906 5,509 (12,093) 22,239
Total liabilities (1,523) (11,090) (4,753) 10,788 (6,578)
-------------------------- -------- ------------ -------------- ------------ --------
Net assets/(liabilities) 20,394 (4,184) 756 (1,305) 15,661
-------------------------- -------- ------------ -------------- ------------ --------
Capital expenditure 34 324 279 - 637
Depreciation/amortisation 23 628 458 29 1,138
-------------------------- -------- ------------ -------------- ------------ --------
The segment analysis for the period ended 31 March 2019 is as
follows:
Graphene Hard Wear
and Plastic And Metallic Intra-group
Central Products Products adjustments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- ------------ -------------- ------------ --------
Revenue - 4,729 4,416 (5) 9,140
-------------------------- -------- ------------ -------------- ------------ --------
Gross profit - 1,064 1,370 - 2,434
Other operating income - 144 4 - 148
Operating expenses (1,978) (2,582) (1,274) 489 (5,345)
-------------------------- -------- ------------ -------------- ------------ --------
(Loss) from operations (1,978) (1,374) 100 489 (2,763)
Finance income/(charge) 3 (43) (26) - (66)
-------------------------- -------- ------------ -------------- ------------ --------
(Loss)/profit before tax (1,975) (1,417) 74 489 (2,829)
-------------------------- -------- ------------ -------------- ------------ --------
Total assets 15,510 5,536 4,780 (8,521) 17,305
Total liabilities (1,109) (6,963) (4,068) 8,111 (4,029)
-------------------------- -------- ------------ -------------- ------------ --------
Net assets/(liabilities) 14,401 (1,427) 712 (410) 13,276
-------------------------- -------- ------------ -------------- ------------ --------
Capital expenditure 166 775 34 - 975
Depreciation/amortisation
and impairment 13 245 207 32 497
-------------------------- -------- ------------ -------------- ------------ --------
Geographical information
The Group's revenue from external customers and information
about its segment assets by geographical location are detailed
below:
Revenue from external
customers Non-current assets
----------------------- --------------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
--------------- ----------- ---------- --------- ---------
United Kingdom 6,920 7,577 11,040 6,203
Rest of Europe 831 1,065 2,316 2,310
North America 273 306 - -
Other 257 192 - -
--------------- ----------- ---------- --------- ---------
8,281 9,140 13,356 8,513
--------------- ----------- ---------- --------- ---------
3. Exceptional items
2020 2019
GBP'000 GBP'000
Relocation and restructuring costs 139 59
Costs relating to expansion in China 531 271
Costs relating to setting up of the US subsidiary - 28
Acquisition costs 32 29
Impairment of goodwill relating to subsidiaries (see
note 6) 876 -
Other 29 33
----------------------------------------------------- -------- --------
1,607 420
----------------------------------------------------- -------- --------
4. Dividends
As stated in the Company's AIM Admission Document, the Board
will not be declaring or proposing any dividends until such time as
the commercialisation of its product portfolio has generated
sufficient distributable reserves from which to do so.
5. Loss per ordinary share
The calculation of the basic loss per share for the period ended
31 March 2020 and 31 March 2019 is based on the losses attributable
to the shareholders of Versarien Plc divided by the weighted
average number of shares in issue during the year. The calculation
of diluted loss per share is based on the basic loss per share
adjusted to allow for the issue of shares on the assumed conversion
of all dilutive options. However, in accordance with IAS 33
"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 31 March 2020 there were
14,677,130 (2019: 14,985,100) potential ordinary shares which have
been disregarded in the calculation of diluted loss per share as
they were considered non-dilutive at that date.
Loss Weighted
attributable average
to number of Basic loss
shareholders shares per share
GBP'000 GBP'000 pence
Year ended 31 March 2020 (4,148) 153,956 (2.69)
------------- ---------- ----------
Year ended 31 March 2019 (2,473) 151,129 (1.64)
------------- ---------- ----------
6. Intangible assets
Other
Goodwill intangibles Total
GBP'000 GBP'000 GBP'000
---------------------------------------- -------- ------------ -------------
Cost
At 1 April 2018 2,167 1,543 3,710
Additions - 434 434
Disposals - (21) (21)
Acquisitions 2,264 20 2,284
---------------------------------------- -------- ------------ -------------
At 1 April 2019 4,431 1,976 6,407
Additions - 351 351
At 31 March 2020 4,431 2,327 6,758
---------------------------------------- -------- ------------ -------------
Accumulated amortisation and impairment
At 1 April 2018 - 1,032 1,032
Disposals - (13) (13)
Amortisation charge - 70 70
---------------------------------------- -------- ------------ -------------
At 1 April 2019 - 1,089 1,089
Amortisation charge - 73 73
Impairment 876 - 876
At 31 March 2020 876 1,162 2,038
---------------------------------------- -------- ------------ -------------
Carrying value
At 31 March 2020 3,555 1,165 4,720
---------------------------------------- -------- ------------ -------------
At 31 March 2019 4,431 887 5,318
---------------------------------------- -------- ------------ -------------
The impairment of Goodwill in 2020 relates to AAC Cyroma Limited
and Total Carbide Ltd as per exceptional items, note 3.
Other intangible assets
31 March 2020 31 March 2019
GBP'000 GBP'000
----------------------------------- ------------- -------------
Customer relationships/order books 54 81
Development costs 901 600
Licence 28 48
Intellectual property 182 158
----------------------------------- ------------- -------------
Total 1,165 887
----------------------------------- ------------- -------------
7. Property, plant and equipment
ROU asset Plant and Leasehold
equipment improvements Total
Group GBP'000 GBP'000 GBP'000
---------------------------- --------- ---------- ------------- --------
Cost
At 1 April 2018 - 9,247 518 9,765
Additions - 541 - 541
Acquisitions - 76 - 76
Disposals - (2) - (2)
---------------------------- --------- ---------- ------------- --------
At 1 April 2019 - 9,862 518 10,380
Adjustment on transition to
IFRS 16 6,377 (4,453) - 1,924
Additions 160 127 - 287
Disposals - (132) - (132)
At 31 March 2020 6,537 5,404 518 12,459
---------------------------- --------- ---------- ------------- --------
Accumulated depreciation
At 1 April 2018 - 6,735 50 6,785
Charge for the year - 393 34 427
Disposals - (2) - (2)
At 1 April 2019 - 7,126 84 7,210
Adjustment on transition to
IFRS 16 2,567 (2,567) - -
Charge for the year 820 218 27 1,065
Disposals - (132) - (132)
---------------------------- --------- ---------- ------------- --------
At 31 March 2020 3,387 4,645 111 8,143
---------------------------- --------- ---------- ------------- --------
Net book value
At 31 March 2020 3,150 759 407 4,316
---------------------------- --------- ---------- ------------- --------
At 31 March 2019 - 2,736 434 3,170
---------------------------- --------- ---------- ------------- --------
Under IFRS16 the Right of Use assets for the Group are as
follows:
Group 2020
GBP'000
Plant & equipment Buildings Total
----------------- --------- -------
Cost 4,613 1,924 6,537
----------------- --------- -------
Accumulated depreciation (2,788) (599) (3,387)
----------------- --------- -------
Net book value 1,825 1,325 3,150
----------------- --------- -------
In prior year leases under HP were classified as plant and
equipment, however, under IFRS16 they have now been classified as
ROU asset with other leases.
8. Called up share capital and share premium
Number Ordinary Share
of shares shares premium Total
'000 GBP'000 GBP'000 GBP'000
----------------- ---------- -------- -------- --------
At 1 April 2018 148,665 1,486 12,529 14,015
Issue of shares 4,959 50 7,247 7,297
At 31 March 2019 153,624 1,536 19,776 21,312
Issue of shares 16,058 161 5,721 5,882
At 31 March 2020 169,682 1,697 25,497 27,194
----------------- ---------- -------- -------- --------
9. Cash used in operations
2020 2019
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Loss before tax (4,703) (2,829)
Adjustments for:
Share-based payments 1,157 712
Depreciation 1,065 427
Amortisation 73 70
Impairment of Goodwill 876 -
Disposal of non-current assets - 8
R&D tax credit repayment 49 117
Gain on FV movement of share agreement (987) -
Finance cost 155 66
Decrease/(increase) in trade and other receivables (35) 424
Decrease/(increase) in inventories 1 (292)
Decrease in trade and other payables 862 (440)
----------------------------------------------------- -------- --------
Cash flows from operating activities (1,487) (1,737)
----------------------------------------------------- -------- --------
10. Report and accounts
Copies of the 2020 Annual Report and Accounts will be posted to
shareholders in due course once they are finalised and approved.
Further copies may be obtained by contacting the Company Secretary
at the registered office. In addition, the 2020 Annual Report and
Accounts will be available, when published, to download from the
investor relations section on the Company's website
www.versarien.com .
- Ends -
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
FR KKKBQKBKBCFD
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