TIDMVRS
RNS Number : 3875M
Versarien PLC
21 January 2021
21 January 2021
Versarien Plc
("Versarien", the "Company" or the "Group")
Interim Results for the six months ended 30 September 2020
Versarien Plc (AIM: VRS), the advanced engineering materials
group, is pleased to announce its interim results for the six
months ended 30 September 2020, a period in which the Company
continued to progress its graphene commercialisation strategy.
Financial Highlights
-- Group revenues reduced to GBP3.12 million (H1 2019: GBP4.38
million), reflecting the impact of COVID-19 on the Group's more
mature businesses
-- Graphene and graphene product sales of GBP0.35 million (H1 2019: GBP0.07 million)
-- Adjusted LBITDA* of GBP1.13 million (H1 2019: GBP0.57 million**)
-- Reported loss before tax of GBP4.34 million (H1 2019: GBP2.14 million)
-- Cash of GBP2.50 million at 30 September 2020 (31 March 2020: GBP1.66 million)
-- Cash received in the period from Lanstead Sharing Agreement
of GBP0.93 million and from Innovate UK of GBP1.96 million
*Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and
Amortisation) excludes exceptional items, share-based payment
charges and other gains/losses)
** The comparative has been restated in accordance with the
adoption of IFRS 16 "Leases"
Operational Highlights
-- Successful launch of graphene enhanced protective face masks
utilising Polygrene(TM) , Versarien's graphene enhanced polymer
-- Awarded GBP5 million Innovate UK loan with first tranche of
GBP1.96 million received for the Company's GSCALE project
-- Project commenced with Rolls Royce and the Graphene
Engineering Innovation Centre to understand and create
technological advances in the aerospace sector utilising CVD
graphene and other 2D materials
-- Commencement of project with the Advanced Propulsion Centre
for reduction of vehicle emissions
-- Formation of the Versarien Graphene Advisory Panel ("VGAP")
-- Board strengthened by the appointment of James Stewart as the
Company's new independent Non-executive Chairman
GSCALE Highlights
-- G - Trials ongoing to achieve capacity greater than 10 tonnes of graphene powder per annum
-- S - Working with partners to develop rail carriage door side
panels; phase 3 tests underway with aerospace partners
-- C - Graphinks(TM) in concrete has demonstrated an almost 40%
improvement to the compressive strength and 25% increased
resistivity
-- A - Infrastructure bridging solutions in course of
development using knowledge gained from rail arch
-- L - GrapheneWear(TM) base layers produced and in course of distribution for wearer trials
-- E - Graphene in tyres shows a 30% increase in tyre rubber
stiffness without degrading wear resistance
Post Period Highlights
-- Independent report by Ankara University confirming that
Versarien's graphene materials significantly inhibit viral
infection and possess anti-viral activity towards SARS-CoV-2
coronavirus
-- Second generation graphene enhanced face mask prototype test
results show a 99.92% anti-viral activity rate against the
SARS-CoV-2 virus
-- Awarded a GBP1.95 million development agreement by the
Defence, Science and Technology Laboratory, a part of the Ministry
of Defence
-- Acquisition of CVD graphene assets and IP from Hanwha
Aerospace Company Limited, South Korea, supported by the second
Lanstead subscription and Sharing Agreement
-- Award of EU Grant of EUR357,000 to Gnanomat for scale-up and
development of electrode materials
-- Appointment of Steve Hodge to the Company's Board as Chief Technology Officer
Neill Ricketts, CEO of Versarien, commented:
"Despite the challenges posed by the COVID-19 pandemic, I am
pleased with the level at which Versarien has continued to operate
and particularly with the progress achieved within the graphene
businesses where we have commenced the sale of our graphene
enhanced face masks, as well as making further progress with a
number of our collaborative projects.
"Following the launch of our face masks, we are excited that
testing carried out by Ankara University has demonstrated that our
hybrid graphene nanomaterials have the potential to provide
protection from COVID-19 in real-world applications, including
clothing and surface treatments. Prototypes for the second
generation face masks have also been tested against SARS-CoV-2 and
demonstrated a 99.92% resistance to the virus.
"With the acquisition of the CVD assets and IP from Hanwha
Aerospace, South Korea, we now have a broad portfolio of graphene
products and technologies that can service the addressable market
available to us, particularly in Asia, and we intend to fully
capitalise on these and other opportunities, such as our GSCALE
collaborations, in the year ahead.
"In addition, we were delighted to announce the formation of the
VGAP, which, thanks to the calibre of its members will play a key
role in advancing our strategy to commercialise the many
opportunities and applications we have. The panel will provide a
platform for the debate and advancement of our graphene technology
and its application both for the present and the future.
"We continue to be greatly appreciative of the support the UK
Government has shown Versarien and its subsidiaries and, as such,
we are proud to have provided essential supplies for the NHS and UK
infrastructure at this crucial time. The employees in our
businesses have been both flexible and supportive during these
difficult times and it is their dedication which continues to
facilitate our progress.
"Test results from the GSCALE projects have been extremely
encouraging with highlights including almost 40% improvement in
compressive strength in concrete and a 30% increase in tyre rubber
stiffness without degrading wear resistance.
"We remain both determined and confident in meeting our
objective of being the leading global graphene technology business
and we look forward to making significant further commercial
progress in 2021."
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
For further information please contact:
Versarien Plc
Neill Ricketts - Chief Executive Officer +44 (0) 1242 269122
Chris Leigh - Chief Financial Officer
SP Angel Corporate Finance (Nominated
Adviser and Joint Broker)
Matthew Johnson
Ewan Leggat
Adam Cowl +44 (0) 20 3470 0470
Berenberg (Joint Broker)
Mark Whitmore
Simon Cardron +44 (0) 20 3207 7800
Yellow Jersey (Investor Relations) Versarien@yellowjersey.pr.com
Charles Goodwin
Georgia Colkin
Henry Wilkinson +44 (0) 20 3004 9512
Notes to Editors:
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.
For further information please see: http://www.versarien.com
Chairman's Statement
In my first statement in the 2020 Annual Report, following my
appointment in June 2020, I was pleased to highlight the progress
the Company had made in the year then ended, as well as beyond, and
also on its strategic focus on monetisation of the Company's
graphene technology.
In particular, reference was made to the support of the UK
Government which has continued with the GBP1.95 million development
agreement awarded in November 2020. Government support is an
important pillar of our strategy as we continue to lay the
foundations for our international expansion.
The acquisition of the CVD assets and IP from Hanwha Aerospace
Company Limited ("Hanwha") is an important step in ensuring that we
have an appropriate portfolio of graphene products and technologies
that can service the addressable market opportunities in front of
us, particularly in Asia. Versarien Korea Limited has been formed
as a subsidiary and will be the initial platform for
commercialising opportunities in South Korea.
Our wholly owned subsidiary Beijing Versarien Technology Company
Limited ("BVT") in China has been working with the graphene mask
supplier on a number of variants which are now available for
supply. BVT continues to work with companies that fall within the
GSCALE project such as those operating in the concrete and textile
sectors.
Furthermore, I am pleased to report the Company has continued to
operate all its businesses and progress its graphene
commercialisation strategy in these difficult times, together with
providing essential supplies for the NHS and UK infrastructure. We
are utilising the UK Government furlough scheme where required,
homeworking has been implemented where appropriate and those at
work operate in accordance with the COVID-19 safety guidelines.
I would like to thank all our staff for their continued
endeavours without which we would not have been able to make the
progress that we have. Furthermore, I am delighted that Steve
Hodge's commitment has been recognised by his recent appointment to
the Board as Chief Technology Officer. I am confident that we have
the executive team to deliver graphene commercialisation.
James Stewart CBE
Non-executive Chairman
21 January 2021
Chief Executive Officer's Review
Our 2020 Annual Report laid out the steps for executing our
graphene commercialisation strategy including access to high
quality facilities such as the University of Manchester based
Graphene Engineering Innovation Centre ("GEIC"), expanding our
patent portfolio, ensuring that we have appropriate investment in
place and achieving commercial progress. I believe that during the
period under review and more recently we have made significant
advancement in these areas.
Acquisition of graphene assets and intellectual property from
Hanwha
I am particularly pleased that we have, post period end, been
able to close the transaction with Hanwha in South Korea to acquire
its chemical vapour deposition ("CVD") graphene assets and IP. The
acquisition will provide us with access to patented technology and
equipment to produce high quality single and dual layer graphene
that has particular applications in the electronics sector,
together with other areas, including in relation to some of our
existing collaborations, particularly the project with Rolls
Royce.
Based on information provided by Hanwha as part of the sale
process:
-- Its graphene business started in 2009 with a project to
develop technologies for graphene synthesis and in 2010 the SKKU
Samsung Graphene Centre was established. It succeeded in
synthesising 30-inch graphene for the first time. In 2011 the South
Korean Ministry of Trade, Industry and Energy ("MOTIE") launched
the Industry Source Technology Development Project (entitled
"Development of transfer and continuous manufacturing technology
for flexible nano film") to build a system for processing
large-scale films (500mm-level) and a pilot line was built to
produce 15-inch graphene film for transparent electrodes. In 2013
prototype graphene-based touch panels were produced for
cellphones.
-- The same year MOTIE launched a project for the
commercialisation of technology for the synthesis of ultrathin
graphene layers and graphene-based flexible touch panels which was
completed in 2019. The objective was to develop and commercialise
graphene-based transparent electrodes for touch panels thereby
substituting Indium Tin Oxide.
-- In 2015, the South Korean Ministry of Science and ICT
("MSIT") launched a project for the development of equipment and
techniques for non-destructive quality evaluation of large-area
graphene which was completed in September 2020.
-- These and other projects have resulted in a total of over 100
patents and patent rights regarding CVD graphene in Korea, the US,
China and Japan and which include synthesis, etching, transfer and
application technology. Addressable markets for this technology
include flexible touch panels, electrochromic heating, OLED
lighting and heating films for electric vehicles.
The assets were acquired for a consideration of 11 million
Versarien Ordinary Shares which at the time of issue represented a
market value of GBP4.3 million. As part of the due diligence, the
equipment was independently valued at GBP0.85 million with an
estimated replacement cost of GBP2.2 million. The value of the
patent portfolio continues to be assessed, both in terms of its
revenue generating opportunities from development and manufacture
and in terms of potential royalties from licensing agreements where
blocking patents may exist.
Completion of the patent transfer process is in progress and we
are evaluating premises options for the plant and equipment whilst
also being in discussions locally for the establishment of
operations and staffing under the umbrella of our newly formed
wholly owned subsidiary incorporated in South Korea, Versarien
Korea Limited.
GSCALE Project
The GSCALE (an acronym for Graphene, Seat, Concrete, Arch,
Leisure, Elastomer) project, which is designed to enable Versarien
to significantly increase its manufacture of quality assured
graphene, is progressing and I am pleased to provide the following
update:
Work Package G (Graphene)
This work package will enable us to scale up capacity for
production to greater than 10 tonnes of graphene powder per year.
We are developing new and improved processing techniques, and
developing and commissioning reliable in-process tests. For the
Graphinks (TM) process, computational fluid dynamics ("CFD")
modelling has been performed on newly designed microchannels.
Complementary experimental work has been performed using pilot
scale rental homogenizers and samples are being analysed prior to a
decision on system purchase.
We are in discussions with our raw material additive
manufacturer regarding scale up and recycling. Trials are ongoing
with our equipment manufacturer overseas to investigate graphene
scale up using larger processing systems.
Our newly appointed CTO, Steve Hodge, has become Chairman of the
Graphene REACH Registration Consortium Technical Working Group
(TWG) and is a representative of Graphene Flagship's ECHA-REACH
Committee.
The European Chemicals Agency (ECHA) has recently accepted an
updated graphene-dossier that now complies with the amended REACH
regulation covering nanomaterials, introduced on 1 January 2020.
Our REACH registration has also now been transferred to UK-REACH
following Brexit.
Work Package S (Seat)
This work package will enable us to develop a dispersion
facility at our factory in Cheltenham involving the dispersion of
graphene in various thermoset systems used in fibre reinforced
polymer composites.
We are working with partners to develop graphene-enhanced
composites for rail interior applications, including a demonstrator
for a rail carriage door side panel. Phase 3 tests are underway
with aerospace supply chain partners for graphene enhanced
composites.
We have continued to widen our knowledge base and have
demonstrated 5% improvement in tensile modulus of even the stiffest
pitch CFRP composites. We are also looking towards bio-derived
composite systems that cannot yet compete mechanically with
traditional epoxy systems and have seen 20% improvements in
mechanical performance using our Nanene(TM) in bio-prepreg based
composites.
Work Package C (Concrete)
This work package involves the use of graphene in a number of
construction related projects with the key objective of working
towards 'Net Zero Carbon' targets. Graphene enhanced concrete could
reduce the quantity of cement used in structures as well as the
volume of aggregates and as such lead to significant CO(2)
footprint savings. Graphene brings improvements to the compressive
strength of the material and durability, improvement to water
permeability and thermal properties to improve speed of
construction. These benefits could also reduce the need for
expensive chemical additives or specialist material coatings.
So far, our use of Graphinks(TM) in concrete has demonstrated an
almost 40% improvement to the compressive strength and 25%
increased resistivity from the base material. A higher resistivity
can help prevent electrolytic corrosion of reinforcement steel bars
used in large concrete structures; combined with improved
resistance to water permeability that we have also witnessed, this
could significantly increase the life of the concrete and the
asset. We are now working towards a number of field demonstrators
in 2021 with several key partners.
We are also part of the ACORN initiative whose primary objective
is to drive acceptance of a new culture in the construction
industry that embraces the concept of using enough material and no
more, in order to enhance sector-wide sustainability and
productivity.
Work Package A (Arch)
This work package involves the use of graphene in a number of
thermoplastic composite related projects. The aim is to use the
knowledge gained in 3D printed graphene for various uses including
technology infrastructure and footbridges.
The next step for this programme is to develop bridging
solutions which will be aided by our new SME Affiliate member
status with the National Composites Centre ("NCC"). The 3D printed
polymer solutions (Additive Manufacturing) will focus on the rail
industry safety and cost awareness by creating lightweight
structures that can be installed in a safer and quicker manner,
thus also reducing the time of costly line closures.
Work Package L (Leisure)
This work package covers integrating graphene into textiles, as
both a coating and integrated as part of filaments and yarns.
Relating to coatings, our objective is to solidify in-house
know-how on the formulations of Graphinks(TM) already developed, to
complete ongoing tests for graphene enhanced textiles (anti-viral,
anti-bacterial, anti-odour properties) for personal protective
equipment (PPE) and sportswear products. W e have commenced
trademarking GrapheneWear(TM) and have a range of base-layers that
were launched in late 2020, produced by MAS Innovate (Private)
Limited ("MAS"), Sri Lanka. Samples will be distributed shortly to
a number of end customers for testing.
Relating to textile yarns, the aim is to develop quality
control/assurance procedures and the commercialisation of
Polygrene(TM) compounds and masterbatches in a range of polymers
including polypropylenes, polyesters and polyamides/nylons. So far
we have achieved commercialisation of graphene face masks utilising
Polygrene(TM) , and we have converted Polygrene(TM) polypropylene
masterbatches to non-woven mats and chopped fibres on a pilot
scale. We also have pilot scale polyester monofilament
fibre-spinning trials ongoing following successful compound
development in collaboration with Warwick Manufacturing Group
("WMG").
Overall, we have solidified and extended our global supply chain
partners (formulators, converters and end customers) that now
includes Coats Group PLC, in addition to MAS.
Work Package E (Elastomers)
This work package aims to develop large-scale graphene-enhanced
elastomer masterbatches. Initially this was for two key sectors,
oil & gas and automotive tyres, but has been expanded to other
sectors including shoes where we continue to develop and optimise
sole formulations for a well-known end customer.
In oil & gas we have produced an 80 kg graphene/rubber
masterbatch to support large scale compounding trials at a customer
site in the US. In tyres, initial tests which have been undertaken
indicate that we can increase the modulus (stiffness) of the tyre
rubber compound by 30%. This increase in stiffness is achieved with
no increase in tyre hardness which means that while rolling
resistance is decreased, there is no loss of grip that would be
associated with a harder tyre. If these results can be maintained
or even improved at scale up, this project could lead to the
production of tyres specifically aimed at the electric vehicle
market.
Other Projects
The award of the product development agreement for GBP1.95
million by the Defence, Science and Technology Laboratory ("DSTL"),
a part of the Ministry of Defence, in November 2020, demonstrates
the support we are receiving from UK Government and acknowledges
the quality of our products and technical ability. The agreement
involves developing graphene loaded polymer composites for certain
defence related applications and is due for completion by 31 March
2022.
The collaboration with Rolls Royce and the GEIC to investigate
the growth of CVD grown graphene on copper wires is ongoing. The
surface of copper wires is an oxide rich region, that plays no part
in electrical conduction and which becomes significant as the wire
gauge gets smaller and smaller. Graphene enables the copper surface
to remain oxide-free after the growth process, allowing for reduced
weight and higher current-carrying capacity.
Significant progress has been made optimising growth conditions
for uniform multi-layer graphene on copper wires in a batch
process. High temperature exposure leads to excessive oxidation of
copper, however, minimal oxidation to graphene coated copper wires
is observed when quantitatively assessed by Raman spectroscopy that
can monitor the presence of both graphene and copper oxide peaks
simultaneously. Two and four point DC resistivity measurements have
shown early indications of reduced contact resistances for graphene
coated copper wires, a sign that graphene could offer great
potential in the design of future aircraft.
Despite the difficult US climate, we continue to work on
opportunities in the US including masks, products for a leading
manufacturer of premium consumer/industrial paint for coatings and
tyres.
In Spain, Gnanomat has continued to make progress and has been
awarded a EUR357,000 grant by the European Union ("EU"). This
funding forms part of a total grant of over EUR14 million awarded
to INN-PRESSME, a consortium project of which Gnanomat is a
member.
Through this grant and project, Gnanomat will acquire and
integrate new industrial equipment into the existing pilot plant
and be involved in the development of electrode materials for
supercapacitors, in collaboration with industrial partners such as
CIDETEC and Skeleton Technologies, who are both involved in the
development of energy storage technologies.
Additionally, Gnanomat nanomaterials are currently being tested
with leading supercapacitor companies and have shown excellent
functionality as a catalyst in energy storage systems such as
metal/air batteries resulting in the company filing a new patent
application. It has also launched a commercial channel to provide
advance material products at small scale for R&D purposes.
Gnanomat's technology has also been key to producing the
graphene nanoplatelet batches doped with different metal oxide
nanoparticles utilised in the testing by Ankara University to
ascertain whether these materials can inactivate the SARS-CoV-2
coronavirus.
In China, work has been ongoing with our partner producing
graphene enhanced face masks and we are now able to supply coloured
adult masks and children's masks. Testing of a second generation
graphene enhanced face mask prototype has been conducted in China
at the Analytical and Testing Centre of Capital Regions ("ATCCR")
and the test results recently received show a 99.92% anti-viral
activity rate against the SARS-CoV-2 virus.
VGAP
I am delighted with the composition of the Versarien Graphene
Advisory Panel ("VGAP") which brings together some of the most
eminent and knowledgeable people in the graphene sector. It is
chaired by our Non-executive Director, Professor Iain Gray and
includes James Baker (CEO of Graphene @Manchester), Dr. Branson
Belle (senior scientist at SINTEF Norway), Professor Andrea Ferrari
(Founded and directs the Cambridge Graphene Centre), Dr Kari Hjelt
(The Graphene Flagships' Head of Innovation), Professor Tony
McNally (Head of Nanocomposites Research at the Warwick
Manufacturing Group) and Jacqui Murray (Deputy director of the
Faraday Battery Challenge).
The formation of the VGAP and the calibre of its members is key
to advancing our strategy to commercialise the many opportunities
and applications we have. It will also provide a platform for the
debate and advancement of our graphene technology and its
application both for the present and the future.
Mature businesses
The mature businesses have experienced lower revenues as a
result of the pandemic, but have remained operational whilst
keeping strict control of costs and using the Government furlough
scheme where appropriate.
Current trading and outlook
The latest national lockdown will continue to create a
challenging environment for our more mature businesses. However,
the opportunities afforded by GSCALE, the DSTL development
agreement and South Korean CVD graphene assets, together with the
many collaboration agreements provide the opportunities to pursue
our goal of graphene commercialisation both in the UK and
abroad.
We remain both determined and confident in meeting our objective
of being the leading global graphene technology business and we
look forward to making further significant commercial progress in
2021.
Neill Ricketts
Chief Executive Officer
21 January 2021
Chief Financial Officer's review
Group Results
Versarien's revenue for the six months ended 30 September 2020
was GBP3.12 million (H1 2019: GBP4.38 million), down by GBP1.26
million as the effects of the pandemic impacted our customer base
in the mature businesses in both business segments. However, sales
of graphene enhanced masks added an additional GBP0.33 million of
revenues in H1 2020.
The loss from operations was GBP4.28 million (H1 2019: GBP2.06
million). This was after charging GBP1.82 million in respect of the
six-monthly valuation of the first Lanstead Sharing Agreement,
which if valued as of 19 January 2021 would be a charge of
GBP15,000. Due to the nature of the agreement, the balance sheet
valuation is sensitive to movement in the Company's share
price.
The adjusted LBITDA for the period is calculated as follows:
Six months ended Restated Six months
30 September 2020 ended
GBP'000 30 September 2019
GBP'000
Loss from operations (4,275) (2,060)
------------------- --------------------
Depreciation and Amortisation 552 564
------------------- --------------------
Share based payments 597 596
------------------- --------------------
Exceptional items 178 327
------------------- --------------------
Other gains/(losses) 1,817 -
------------------- --------------------
Adjusted LBITDA (1,131) (573)
------------------- --------------------
Exceptional costs were incurred in the period of GBP0.18 million
(2019: GBP0.33 million), which mostly relate to the costs incurred
for expansion into China and the acquisition of the CVD graphene
assets from Hanwha. The reported loss before tax for the period was
GBP4.34 million (H1 2019: GBP2.14 million).
Group net assets at 30 September 2020 were GBP11.92 million (31
March 2020: GBP15.66 million), with cash at the period end of
GBP2.51 million (31 March 2020: GBP1.66 million). Cash outflow from
operating activities was GBP0.68 million (H1 2020: GBP0.76
million). The Group capitalised GBP0.17 million (H1 2019: GBP0.17
million) in development costs during the period.
As a result of careful working capital management total cash
outflow for the period (being net cash used in operating
activities, net cash used in investing activities and principal
payment of leases under IFRS 16) totalled GBP1.4 million; an
average of GBP233,000 per month. During the period four instalments
of the Lanstead Sharing Agreement were received totalling
GBP925,000; an average of GBP231,000 per month which enabled us to
preserve our operating cash position as the Sharing Agreement
proceeds are received. The monthly proceeds from the Sharing
Agreement are based upon the 20-day volume weighted average price
("VWAP)" of Versarien's share price which during the period was
below the average benchmark price. As at 20 January 2021 the share
price is above the benchmark price of 53.33 pence.
Graphene and Plastic Products
This segment generated revenue, predominantly from the plastics
business, of GBP1.69 million (H1 2019: GBP1.85 million), returning
an LBITDA before exceptional items, of GBP0.73 million (H1 2019:
adjusted loss GBP0.77 million). The segment capitalised development
costs of GBP0.13 million (H1 2019: GBP0.15 million) as work
continued on developing specific applications using graphene. Cash
used by the business segment was GBP1.19 million.
Hard Wear and Metallic Products
Revenue for the period was GBP1.43 million (H1 2019: GBP2.52
million), with an EBITDA before exceptional items of GBP0.05
million (H1 2019: adjusted GBP0.53 million). The segment used
GBP0.06 million in cash in the period.
Chris Leigh
Chief Financial Officer
21 January 2021
Consolidated Interim Financial Statements
Group statement of comprehensive income
For the half year ended 30 September 2020
Restated
*
Six months Six months
ended ended
30 September 30 September
2020 2019
Unaudited Unaudited
Notes GBP'000 GBP'000
-------------------------------------------------- ----- ------------- -------------
Continuing operations
Revenue 2 3,117 4,376
Cost of sales (2,607) (3,157)
-------------------------------------------------- ----- ------------- -------------
Gross profit 510 1,219
Other operating income 74 3
Other gains/(losses) (1,817) -
Operating expenses (including exceptional items) (3,042) (3,282)
-------------------------------------------------- ----- ------------- -------------
Loss from operations before exceptional items (4,097) (1,733)
Exceptional items 3 (178) (327)
-------------------------------------------------- ----- ------------- -------------
Loss from operations (4,275) (2,060)
Finance charge (64) (77)
Loss before income tax (4,339) (2,137)
Income tax 4 - -
-------------------------------------------------- ----- ------------- -------------
Loss for the period (4,339) (2,137)
-------------------------------------------------- ----- ------------- -------------
Loss attributable to:
- Owners of the parent company (4,158) (1,878)
- Non-controlling interest (181) (259)
-------------------------------------------------- ----- ------------- -------------
(4,339) (2,137)
-------------------------------------------------- ----- ------------- -------------
Loss per share attributable to the equity holders
of the Company:
Basic and diluted loss per share 5 (2.45)p (1.22)p
-------------------------------------------------- ----- ------------- -------------
There were no comprehensive gains or losses in the year other
than those included in the Group Statement of Comprehensive
Income.
The other losses in the period relates to the fair value
assessment of the Lanstead Sharing Agreement at the balance sheet
date.
* The prior period results have been restated due to the
recognition of Right of Use Assets as a result of the adoption of
IFRS 16 'Leases', see note 8 for further information
Group statement of financial position
As at 30 September 2020
30 September 31 March
2020 2020
Unaudited Audited
Note GBP'000 GBP'000
---------------------------------------------------- ---- --------------- ----------------
Assets
Non-current assets
Intangible Assets 6 4,842 4,720
Property, plant and equipment 3,808 4,316
Deferred taxation 25 25
Trade and other receivables 1,553 4,295
---------------------------------------------------- ---- --------------- ----------------
10,228 13,356
---------------------------------------------------- ---- --------------- ----------------
Current assets
Inventory 2,010 2,252
Trade and other receivables 4,429 4,817
Current tax 98 157
Cash and cash equivalents 2,506 1,657
---------------------------------------------------- ---- --------------- ----------------
9,043 8,883
---------------------------------------------------- ---- --------------- ----------------
Total assets 19,271 22,239
---------------------------------------------------- ---- --------------- ----------------
Equity
Called up share capital 1,697 1,697
Share premium 25,497 25,497
Merger reserve 1,256 1,256
Share-based payment reserve 2,653 2,056
Accumulated losses (18,004) (13,846)
---------------------------------------------------- ---- --------------- ----------------
Equity attributable to owners of the parent company 13,099 16,660
Non-controlling interest (1,180) (999)
---------------------------------------------------- ---- --------------- ----------------
Total equity 11,919 15,661
---------------------------------------------------- ---- --------------- ----------------
Liabilities
Non-current liabilities
---------------------------------------------------- ---- --------------- ----------------
Trade and other payables 2,941 1,192
Deferred taxation 67 67
Long-term borrowings 376 516
---------------------------------------------------- ---- --------------- ----------------
3,384 1,775
---------------------------------------------------- ---- --------------- ----------------
Current liabilities
Trade and other payables 2,447 2,928
Provisions 97 97
Current tax 617 290
Invoice discounting advances 513 1,156
Current portion of long-term borrowings 294 332
---------------------------------------------------- ---- --------------- ----------------
3,968 4,803
---------------------------------------------------- ---- --------------- ----------------
Total liabilities 7,352 6,578
---------------------------------------------------- ---- --------------- ----------------
Total equity and liabilities 19,271 22,239
---------------------------------------------------- ---- --------------- ----------------
Group statement of changes in equity
For the half year ended 30 September 2020
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 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 (restated
*) - - - - (1,878) (259) (2,137)
Share-based charge - - - 596 - - 596
--------------------------------- -------- -------- ----------- ----------- ----------- ------------ --------
At 30 September 2019 (unaudited) 1,539 19,896 1,256 1,495 (11,576) (752) 11,858
Issue of shares 158 5,601 - - - - 5,759
Loss for the period - - - - (2,270) (247) (2,517)
Share-based payments - - - 561 - - 561
--------------------------------- -------- -------- ----------- ----------- ----------- ------------ --------
At 31 March 2020 (audited) 1,697 25,497 1,256 2,056 (13,846) (999) 15,661
Loss for the period - - - - (4,158) (181) (4,339)
Share-based payments - - - 597 - - 597
--------------------------------- -------- -------- ----------- ----------- ----------- ------------ --------
At 30 September 2020 (unaudited) 1,697 25,497 1,256 2,653 (18,004) (1,180) 11,919
--------------------------------- -------- -------- ----------- ----------- ----------- ------------ --------
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.
* The prior period results have been restated due to the
recognition of Right of Use Assets as a result of the adoption of
IFRS 16 'Leases', see note 8 for further information
Statement of Group cash flows
For the half year ended 30 September 2020
Restated*
Six months Six months
ended ended
30 September 30 September
2020 2019
Unaudited Unaudited
GBP'000 GBP'000
------------------------------------------------- ------------- -------------
Cash flows from operating activities
Cash used in operations (683) (764)
Interest paid (64) (77)
Net cash used in operating activities (747) (841)
------------------------------------------------- ------------- -------------
Cash flows from investing activities
Purchase of intangible assets (169) (165)
Purchase of property, plant and equipment (1) (126)
------------------------------------------------- ------------- -------------
Net cash used in investing activities (170) (291)
------------------------------------------------- ------------- -------------
Cash flows from financing activities
Share issue - 123
Principal payment of leases under IFRS 16 (480) (456)
Innovate UK loan received 1,964 -
Funds received from Lanstead Sharing Agreement 925 -
Invoice discounting advances (643) (187)
------------------------------------------------- ------------- -------------
Net cash generated from financing activities 1,766 (520)
------------------------------------------------- ------------- -------------
Increase/(decrease) in cash and cash equivalents 849 (1,652)
Cash and cash equivalents at start of period 1,657 4,292
------------------------------------------------- ------------- -------------
Cash and cash equivalents at end of period 2,506 2,640
------------------------------------------------- ------------- -------------
* The prior period results have been restated due to the
recognition of Right of Use Assets as a result of the adoption of
IFRS 16 'Leases', see note 8 for further information
Note to the statement of Group cash flows
For the half year ended 30 September 2020
Restated*
Six months Six months
ended ended
30 September 30 September
2020 2019
Unaudited Unaudited
GBP'000 GBP'000
------------------------------------------------ ------------- -------------
Loss before income tax (4,339) (2,137)
Adjustments for:
Share-based payments 597 596
Depreciation and amortisation 552 564
Disposal of non-current assets 4 -
Finance cost 64 77
Loss on FV movement of share agreement 1,817 -
Decrease/(Increase) in inventories 242 (7)
Decrease in trade and other receivables 447 125
Increase/(decrease) in trade and other payables (67) 18
------------------------------------------------ ------------- -------------
Cash used in operations (683) (764)
------------------------------------------------ ------------- -------------
* The prior period results have been restated due to the
recognition of Right of Use Assets as a result of the adoption of
IFRS 16 'Leases', see note 8 for further information
Notes to the unaudited interim statements
For the half year ended 30 September 2020
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 on 21 January 2021. 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 2020 were approved by the Board of Directors on
10 September 2020 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 2020, 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 2020, 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.
The comparative results have been restated for the adoption of IFRS
16 (see note 8 for further details).
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 2020.
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
2020
Sales - 1,692 1,425 - 3,117
Gross Margin - 295 215 - 510
Other gains/(losses) (1,817) - - - (1,817)
Other operating income - 70 4 - 74
Operating expenses (1,191) (1,443) (399) (9) (3,042)
(Loss)/ profit from
operations (3,008) (1,078) (180) (9) (4,275)
Finance income/(charge) (4) (36) (24) - (64)
-------- ---------- ------------- --------
(Loss)/profit before
tax (3,012) (1,114) (204) (9) (4,339)
------------- ---------- ------------- --------
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
Restated*
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 (987) (1,748) (554) 7 (3,282)
(Loss)/profit from
operations (987) (1,359) 279 7 (2,060)
Finance income/(charge) 1 (49) (29) - (77)
-------- ------------- ---------- ------------- --------
(Loss)/ profit before
tax (986) (1,408) 250 7 (2,137)
------------- ---------- ------------- --------
* The prior period results have been restated due to the
recognition of Right of Use Assets as a result of the adoption of
IFRS 16 'Leases', see note 8 for further information
3. Exceptional items
Six months Six months
ended ended
30 September 30 September
2020 2019
Unaudited Unaudited
GBP'000 GBP'000
-------------------------------------- ------------- -------------
Relocation and restructuring costs 6 17
Costs relating to expansion in China 70 220
Costs relating to setting up of the
US subsidiary - 67
Costs relating to setting up of the
Korean subsidiary 6 -
Costs relating to asset purchase from
Hanwha 85 -
Other 11 23
--------------------------------------- ------------- -------------
178 327
-------------------------------------- ------------- -------------
4. Taxation
The tax charge on the results for the period has been estimated
at GBPnil (2019: GBPnil). At the last year end the Group had
GBP14.7 million of trading losses carried forward to set-off
against future trading profits.
5. Loss per share
The loss per share has been calculated by dividing the loss
after taxation of GBP4,158,000 (2019: GBP1,878,000) by the weighted
average number of shares in issue of 169,682,290 (2019:
153,894,000) 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 2020 there were 14,677,130 (2019: 14,677,130)
potential Ordinary shares that have been disregarded in the
calculation of diluted earnings per share as they were considered
non-dilutive at that date.
6. Intangible assets
30 September 31 March
2020 2020
Unaudited Audited
GBP'000 GBP'000
----------------------------------- ------------ --------
Goodwill 3,555 3,555
Customer relationships/order books 41 54
Development costs 1,028 901
Licence 14 28
Intellectual property 204 182
Total 4,842 4,720
----------------------------------- ------------ --------
7. 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.
8. Restatements to the prior period
The income statement and the statement of cash flow for the six
months to 30 September 2019 have been restated due to the
recognition of Right of Use Assets as a result of the adoption of
IFRS 16 'Leases'. This reinstatement has impacted the following
items:
During 6 month
period GBP'000
Operating expenses :
Operating lease rentals 329
Depreciation (300)
---------------------------------- ----------------
29
Finance charges :
Impact of IFRS 16 lease interest (45)
Total (16)
---------------------------------- ----------------
Reconciliation of profit and loss for the six month period ended
30 September 2019:
Restatements Restated
As previously
stated
GBP'000 GBP'000 GBP'000
------------------------------------------ ------------- ------------ --------
Continuing operations
Revenue 4,376 - 4,376
Cost of sales (3,157) - (3,157)
------------------------------------------ ------------- ------------ --------
Gross profit 1,219 - 1,219
Other operating income 3 - 3
Operating expenses (including exceptional
items) (3,311) 29 (3,282)
------------------------------------------ ------------- ------------ --------
Loss from operations before exceptional
items (1,762) 29 (1,733)
Exceptional items (327) - (327)
------------------------------------------ ------------- ------------ --------
Loss from operations (2,089) 29 (2,060)
Finance charge (32) (45) (77)
Loss before income tax (2,121) (16) (2,137)
Income tax - - -
Loss for the period (2,121) (16) (2,137)
------------------------------------------ ------------- ------------ --------
Reconciliation of statement of cash flows as at 30 September
2019:
As previously
stated Restatements Restated
--------------------------------------------- ------------- ------------ --------
Cash flows from operating activities
Cash used in operations (1,093) 329 (764)
Interest paid (32) (45) (77)
Net cash used in operating activities (1,125) 284 (841)
--------------------------------------------- ------------- ------------ --------
Cash flows from investing activities
Purchase of intangible assets (165) - (165)
Purchase of property, plant and equipment (126) - (126)
--------------------------------------------- ------------- ------------ --------
Net cash used in investing activities (291) - (291)
--------------------------------------------- ------------- ------------ --------
Cash flows from financing activities
Share issue 123 - 123
Finance leases net of repayments (172) 172 -
Principal payment of leases under IFRS
16 - (456) (456)
Invoice discounting advances (187) - (187)
--------------------------------------------- ------------- ------------ --------
Net cash generated from financing activities (236) (284) (520)
--------------------------------------------- ------------- ------------ --------
Increase/(decrease) in cash and cash
equivalents (1,652) - (1,652)
Cash and cash equivalents at start of
period 4,292 - 4,292
--------------------------------------------- ------------- ------------ --------
Cash and cash equivalents at end of
period 2,640 - 2,640
--------------------------------------------- ------------- ------------ --------
As previously
stated Restatements Restated
---------------------------------------- ------------- ------------ --------
Loss before income tax (2,121) (16) (2,137)
Adjustments for:
Share-based payments 596 - 596
Depreciation and amortisation 264 300 564
Finance cost 32 45 77
Increase in inventories (7) - (7)
Decrease in trade and other receivables 125 - 125
Increase/(decrease) in trade and other
payables 18 - 18
---------------------------------------- ------------- ------------ --------
Cash used in operations (1,093) 329 (764)
---------------------------------------- ------------- ------------ --------
9. Post Balance Sheet Events
On 22 December 2020 the Company acquired certain graphene
production related assets and intellectual property from South
Korea based Hanwha Aerospace Company Limited for consideration
comprising 11,000,000 ordinary shares of 1 pence each in the
Company. The consideration is equivalent to GBP4.34 million at the
39.475 pence per Ordinary Share closing mid-market price on 18
December 2020.
10. Interim Report
This interim announcement is available on the Group's website at
www.versarien.com
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END
IR PPUAGGUPGPGU
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