REG - Versarien PLC - Audited Results for year ended 30 September 2023
28/03/2024 07:00
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RNS Number : 6078I Versarien PLC 28 March 2024
28 March 2024
Versarien Plc
("Versarien", the "Company" or the "Group")
Audited Results for year ended 30 September 2023
Versarien Plc (AIM: VRS), the advanced engineering materials group, announces
its audited results for the 12 months ended 30 September 2023. The comparative
figures are for the 18 month period ended 30 September 2022.
The Annual Report including the Notice of Annual General Meeting ("AGM") is
now available on the Company's website at www.versarien.com
(http://www.versarien.com) and will be posted to shareholders on 30 March
2024. The AGM is being held on 30 April 2024 at 10.30 am in the offices of
FieldFisher LLP at Riverbank House, 2 Swan Lane, London, EC4R 3TT.
Financial Highlights
• Group revenues from continuing operations of £5.45 million (2022: £11.11
million)*
• Graphene revenues of £0.24 million (2022: £2.15 million)
• Adjusted LBITDA** for continuing operations of £3.01 million (2022: £2.40
million)
• H2 LBITDA** losses halved to £1.00 million from £2.01 million in H1
• Asset impairments of £8.58 million treated as an exceptional cost (2022:
£1.33 million)
• Reported loss before tax from continuing operations of £14.27 million (2022:
£8.32 million)
• Reported loss for the period of £14.18 million (2022: £8.41 million)
• Cash of £0.60 million at 30 September 2023 (30 September 2022: £1.35
million)
• £3.35 million gross raised via equity placings during the period
• £1.47 million gross raised via equity placings post period end
* Excludes discontinued revenues of £nil million (2022: £0.5 million)
** Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation
and excludes Exceptional items, Share-based payment charges and losses)
Partnerships/Commercial Highlights
Construction
• Key demonstration for the use of Cementene(TM) in precast concretes following
trials with Banagher Precast Concrete Limited (Ireland)
• Delivered the first 3D concrete printed headwall to Costain and National
Highways as part of the A30 Chiverton to Carland Cross upgrade in Cornwall
• Continued to be active as part of advisory board of National Highways' Roads
Research Alliance (RRA) alongside more than 20 construction companies through
involvement in the Digital Roads of the Future Partnership
Leisure
• Umbro have launched Spring/Summer and Autumn/Winter 2023 Pro Training Elite
collections integrated with Graphene-Wear(TM)
• Signed a sales agreement with GoToGym covering Colombia, Brazil and United
States of America. GoToGym Brazil have launched active-wear incorporating
Versarien's Graphene-Wear(TM) technology
• Continuing to supply graphene enhanced elastomers to US-based Flux Footwear
LLC, an adaptive footwear company, with royalties in place for the use of
Versarien's Graphene-Wear(TM) trademark
Technology Licencing
• Versarien continues to licence 14 patents to GrapheneLab (Korea) for the
manufacture of chemical vapour deposition (CVD) graphene
Commercial R&D and Grant Funding Highlights
• Commercial R&D contracts were signed with CBMM (Brazil), IRPC Public
Company (Thailand) and a UK aviation company
• Successful on-time delivery of Graphene Flagship Spearhead project led by
Airbus Helicopters (GICE project)
• Gnanomat was awarded a grant from ICEX Trade and Investment for €415,000 to
enable the company to commercialise and launch a new line of conductive inks
• Commenced a 4-year long iCARE (Integrated Assessment and Advanced
Characterisation of Neuro-Nanotoxicity) project (Horizon Europe), studying
graphene in different use cases including graphene enhanced concretes and
elastomers
Operational/Manufacturing Highlights
• As part of cost cutting exercises, the R&D team has been slimmed down
significantly during 2023, to concentrate on its strategic objectives
• The Company has now ceased USA and China sales operations in order to focus on
its European operations whilst maintaining its partnerships in South Korea
Post Period Highlights
• Completed an agreement with MCK Tech (Korea) for the exclusive licence of five
CVD patents.
• Completed a know-how and manufacturing licence agreement with Montana Quimica
LTDA, a Brazilian multinational focussed on the production of paints and wood
finishing products
• Versarien Plc sold its South Korean plant and equipment to MCK Tech (Korea)
for £604,000
Dr Steve Hodge, CEO of Versarien, commented:
"The period was a challenging one for Versarien, but I believe the
restructuring and other actions we have undertaken have resulted in a more
efficient business, which maintains the skilled people and technology to
enable commercial success. It is encouraging to report that our pipeline of
potential income opportunities is growing , albeit development opportunities
are still the largest part, but we are beginning to see signs of more
commercial interest, including licensing. This, together with our reduced cost
base, gives us an increasing level of confidence as we seek to ensure a bright
future for Versarien."
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended.
For further information please contact:
Versarien Plc
Dr Stephen Hodge - Chief Executive Officer c/o IFC
Chris Leigh - Chief Financial Officer
SP Angel Corporate Finance (Nominated Adviser and Broker)
Matthew Johnson +44 (0) 20 3470 0470
Adam Cowl
IFC Advisory Limited (Financial PR & Investor Relations)
Tim Metcalfe +44 (0) 20 3934 6630
Zach Cohen
Notes to Editors:
The strategy of Versarien plc (AIM:VRS) is to be a development led advanced
materials company focussed on specific sectors that will lead to a light
manufacturing and licensing model. For further information please
see: http://www.versarien.com (http://www.versarien.com)
NON-EXECUTIVE CHAIR'S STATEMENT
The events of the last 12 months have, to say the least, been extremely
challenging for all Versarien stakeholders as we streamlined the business in
order to navigate the current market traction difficulties and implement a
strategy that will provide a pathway to financial viability.
Just prior to the AGM last year we employed the expertise of turnaround
specialist David Stone and he has continued to work with us since then. Whilst
shareholders will rightly question whether any turnaround has been achieved,
the Board is confident that the Company's IP and technology is commercially
attractive. This is reflected in the increasing number of opportunities the
Company is seeing and the goal of profitability is looking ever more
achievable.
Our current projections are suggesting that this will be in the second half of
next year. In the meantime, we will still need funds to bridge us to the point
that we are cash generative and we have been doing all we can to market the
two mature businesses whilst completing the sale of our South Korean based
plant and equipment.
We have closed down operations in the US and China, reduced employee numbers
in the remaining operations and cut costs where possible and this is reflected
in the reduced operating losses in the second half of the year. Nonetheless we
have had no alternative but to continue to raise equity funds from the stock
market.
Notwithstanding these challenges, I wish to reassure shareholders that we
continue to do all we can to progress the Company and are encouraged by the
opportunities our newly appointed CEO has provided through determination and
hard work. These are described in the CEO report.
I would like to thank all our staff for their continued endeavours and very
much look forward to reporting further progress.
Diane Savory OBE
Non-executive Chair
CHIEF EXECUTIVE OFFICER'S REVIEW
The last 12 months have continued to be turbulent with difficult but necessary
cost-cutting measures being implemented. Following this restructuring we have
maintained a highly skilled and loyal workforce with increased efficiency.
Whilst the Company still faces a number of macro-economic challenges, we are
confident that there are strong commercial and R&D pipelines, including
technology licensing opportunities that give us confidence that we can improve
the Company's position and deliver a bright future.
We have a clear strategy to:
• focus on commercial opportunities in the areas of construction and leisure
• licence Versarien's technology, brands and manufacturing know-how and become a
manufacturing-light operation
• divest non-core activities to reduce the requirement for funding from external
sources
• maintain and strengthen the Group's scientific teams supported by grant
funding applications
TECHNOLOGY BUSINESSES
UK operations
Following the G-SCALE project, we switched focus to readying our manufacturing
and quality control processes for commercialisation. The last 12 months have
continued to be turbulent with difficult but necessary cost-cutting measures
being implemented. Following this restructuring we have maintained a highly
skilled and loyal workforce with increased efficiency.
We have moved 2DT to a Tier 2 membership at the Graphene Engineering
Innovation Centre (GEIC). This has meant downsizing laboratory space and
relocating some equipment to Longhope. This has enabled our production staff
to upskill; we have set up coating stations for both Graphene-Wear(TM)
formulation screen printing for customer trials and set up graphene heater mat
production with associated heater mat assembly and electrothermal testing and
imaging.
Construction
This year we have worked with several partners to continue to prove the
effectiveness of graphene as a powder and as an admixture (Cementene(TM)). In
May 2023 we announced a key demonstration for the use of Cementene(TM) in
precast concretes following trials with Banagher Precast Concrete Limited
(Ireland) that showed we could maintain compression strength whilst removing
~20% of the cement in their standard mix. In line with our global ambitions,
the Cementene(TM) trademark is now granted in USA and South Korea, in addition
to the UK and EU registrations already in place.
Versarien has supervised researchers as part of the Digital Roads of the
Future project led by National Highways and Costain, housed at the University
of Cambridge and is proud to be part of the Advisory Board of the Roads
Research Alliance alongside the 20+ other founder members.
In 2023, we continued to deliver on a number of 3DCP projects. We delivered
the first 3D concrete printed headwall to Costain and National Highways as
part of the A30 Chiverton to Carland Cross upgrade in Cornwall. We are
incredibly proud to have built and delivered this first-of-a kind UK highways
structure that has certainly showcased our 3D print team's capabilities while
building project partners' confidence in adopting innovative methods of
construction.
Post period end, in October 2023, Versarien won a public tender contract with
the Office for Product Safety and Standards (OPSS), part of the UK
government's Department for Business and Trade (DBT) to compile a
comprehensive report involving stakeholder reviews to support the UK's
regulation of 3DCP within the existing Construction Products Regulation (CPR).
We have appointed a Head of 3D Construction Printing to continue to be at the
forefront of cutting-edge 3D Construction Printing developments. We welcome
the first international standard (ISO/ASTM 52939 Additive manufacturing for
construction - Qualification principles - Structural and infrastructure
elements), published in December 2023 that will enable us to implement more
robust practices when designing, manufacturing and delivering 3DCP products.
Textiles and footwear
Versarien continues to progress its relationships with a number of clothing
brands. During 2023, Umbro launched Spring/ Summer and Autumn/Winter 2023 Pro
Training Elite collections integrated with Graphene-Wear(TM). Post period, in
January 2024, we signed a sales agreement with GoToGym covering Colombia,
Brazil and United States of America. GoToGym Brazil has launched active-wear
incorporating Versarien's Graphene-Wear(TM) technology.
In footwear, we continue to supply graphene enhanced elastomers to US-based
Flux Footwear LLC, an adaptive footwear company, with royalties in place for
the use of Versarien's Graphene-Wear(TM) trademark.
Following successful product launches we continue to take enquiries from
global sportswear brands for Graphene-Wear(TM) enhanced products.
Grant Funding
In January 2023 we commenced a 4-year long iCARE (Integrated Assessment and
Advanced Characterisation of Neuro-Nanotoxicity) project (Horizon Europe)
studying graphene in different use cases including graphene enhanced concretes
and elastomers. The outputs of this project will be critical in supporting the
use of graphene in a wide array of applications and give confidence to supply
chain partners and consumers.
In September 2023 we successfully completed the Graphene Flagship SpearHead
project GICE led by Airbus. Principal aircraft de-icing/anti-icing components
utilising Versarien graphene heater mats were showcased to the EC reviewers in
Gothenburg in December 2023. These included NACA airfoils, air-inlet scoop and
helicopter rotor blade demonstrators. We continue to seek grant funding to
continue these developments and in areas that align with our commercial focus
areas.
OVERSEAS OPERATIONS
As part of cost cutting exercises the Company has now ceased USA and China
sales operations, in order to focus on our Spanish and South Korean
operations. We will continue to operate from Spain and South Korea, but with a
reduced cost base.
Spain
Gnanomat has continued to test its products in a wide range of markets,
particularly in energy storage with supercapacitors (pseudocapacitors), fuel
cells and zinc/air batteries as well as allied applications such as sensing
and low observability in military applications.
Due to challenging market conditions, a decision was made to impair the
carrying value of goodwill and cost of investment in Gnanomat.
The Company is continuing to work on the INNPRESSME grant project aiming to
create an Open Innovation Test Bed in the area of nanotechnology and advanced
materials. The funds have been used to optimise the pilot plant and gain
access to business opportunities.
Gnanomat has won two significant commercial R&D contracts with CBMM
(Brazil) and IRPC Public Company (Thailand) and continues to apply for grants
to support its progress to commercial revenues.
South Korea
During the period, we saw CVD graphene being used by customers for sensor
development, electrothermal heaters and optoelectronic devices.
Post period end, in March 2024 the CVD plant and equipment was sold to MCK
Tech Co. (Korea) for £604,000 with an exclusive licence agreement for the use
of five patents.
Our objective is to continue to develop a number of CVD graphene-based
products with Korean academic and commercial partners through commercially
funded and Korean national projects.
TECHNOLOGY LICENCING
Finding strategic partners who can support our commercial progress will be
essential as we transition to a manufacturing-light operation in the UK, in
line with the Company's strategy to monetise intellectual property through
licensing.
In addition to 14 patents we already licence to GrapheneLab Co Ltd, post
period end, in March 2024, we granted an exclusive licence to MCK Tech, for an
initial period of five years, to use 5 CVD graphene production patents. MCK
Tech is a well-respected company that has developed graphene-based sensors for
healthcare. We look forward to maintaining access to CVD graphene materials
and supporting MCK Tech through collaborative efforts.
We have also entered into a manufacturing licence agreement and a know-how
licence and technical assistance agreement with Montana Química LTDA, a
Brazilian headquartered multinational business focused on the production and
sale of paints, wood preservatives and other wood finishing products including
stains and varnishes. We are very pleased to be partnering with Montana
Química, a leading business in its markets in South America, and look forward
to collaborating closely with them as they bring products enhanced by
Versarien's technology to the market.
MATURE BUSINESSES
We continue to market both Total Carbide Limited and AAC Cyroma Limited as
they are not core to our graphene activities. I am grateful to all staff at
both businesses for their continued support whilst this process is underway.
CURRENT TRADING AND OUTLOOK
Our pipeline of opportunities continues to strengthen which gives us increased
confidence as we seek to achieve profitability from our reduced cost base. We
are seeing more opportunities for our Cementene(TM) product in particular from
which we hope to secure ongoing revenue. We look forward to reporting further
progress in due course.
Dr Stephen Hodge
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REVIEW
These results are for a period of 12 months with the comparatives reflecting
an 18-month period. The aluminium business based at Cheltenham closed last
year and consequently these results are split between continuing and
discontinued operations and the segmental analysis between the technology and
mature businesses.
Group results
Revenues from continuing operations were £5.45 million (2022: £11.11
million). Revenue from graphene was £0.24 million (2022: £2.15 million). The
loss from operations was £13.72 million (2022: £7.69 million). The
comparative figure included a £1.19 million charge in respect of the
valuation of the Lanstead Sharing Agreements.
The adjusted LBITDA for continuing operations was £3.01 million for 12 months
compared to £2.40 million for the prior 18 months and is shown in the table
below. Adjusted LBITDA (which is not a GAAP measure and is not intended as a
substitute for GAAP measures and may not be the same as that used by other
companies) is a measure used by management to reflect the core operating
performance of the underlying businesses rather than the effects of non-core
financial and non-cash expenses. The adjustments to the loss from operations
as disclosed in the Group Statement of Comprehensive Income relate to
depreciation and amortisation, share based payment charges, exceptional items
and losses related to the fair value of the Lanstead sharing agreements.
12 months ended 30 September 2023 18 months ended 30 September 2022
Continuing Operations Discontinued Operations Total Continuing Operations Discontinued Operations Total
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/profit from operations (13,716) - (13,716) (7,693) (130) (7,823)
Depreciation and amortisation 1,410 - 1,410 2,126 41 2,167
Share based payments 530 - 530 1,510 - 1,510
Exceptional items 8,765 - 8,765 463 64 527
Other losses - - - 1,191 - 1,191
Adjusted LBITDA (3,011) - (3,011) (2,403) (25) (2,428)
Exceptional items of £8.77 million in the year (£2022: £0.46 million)
relate to an impairment review of goodwill, capitalised development costs and
tangible assets as a result of the delay in market traction, the Company's
market capitalisation and also to align with the turnaround strategy.
The reported loss before tax for continuing operations was £14.27 million
(2022: £8.32 million). Group net assets at 30 September 2023 were £1.08
million (30 September 2022: £11.6 million) with cash at the period end of
£0.6 million (30 September 2022: £1.4 million).
Net cash used in operating activities was £2.74 million (2022: £3.68
million) with trade and other payables reducing by £0.82 million (2022:
£1.98 million). Investment in development costs and equipment was £0.34
million (2022: £4.66 million) and net principal lease payments were £0.81
million (2022: £0.93 million) giving total cash outflows of £3.89 million
(2022: £9.27 million).
These activities were financed by net funds received from the Lanstead sharing
agreements £nil (2022: £3.53 million), the issue of shares £3.13 million
(£1.92 million) less net loans repaid of £0.1m, (2022: £2.78 million net
loans received) totaling £3.03m.
The deficit of £ 0.86 million (2022: £1.04 million) resulted in a modest
increase on drawings on the invoice finance facilities of £0.10 million
(2022: £0.03 million increase) thus reducing cash at the period-end by £0.76
million (2022: £1.01 million decrease).
Repayment of our GSCALE loan of £5 million is due to commence in 2025.
Technology Businesses
The technology businesses have seen an decrease in revenue from £2.15 million
to £0.24 million driven mainly by the recognised revenues from the DSTL
contract in the prior period. Operating costs for the 12 months, excluding
exceptional items, were £2.83 million compared to £4.50 million for the
prior 18 month period. All development costs not related to construction,
textiles and polygrene thermoplastics have been fully impaired along with
£0.86 million of production plant to align with our light manufacturing
strategy.
Mature Businesses
The mature business segment has seen decreased revenues of 13% on a pro rata
basis, and returned a loss from operations of £0.18 million for 12 months
compared to the previous 18 months profit of £0.03 million. As referred to in
the Chief Executive Officer's report, we continue to market these for sale.
Going Concern
The financial statements have been prepared on a going concern basis and are subject to the matters described in note 1.
Chris Leigh
Chief Financial Officer
Group statement of comprehensive income
For the year ended 30 September 2023
Note 12 months to 18 months to
30 September 30 September
2023 2022
£'000 £'000
Continuing operations
Revenue 2 5,448 11,106
Cost of sales (4,286) (7,739)
Gross profit 1,162 3,367
Other operating income 138 257
Other losses * - (1,191)
Operating expenses (including exceptional items) (15,016) (10,126)
Loss from operations before exceptional items (4,951) (7,230)
Exceptional items 3 (8,765) (463)
Loss from operations 13,716 (7,693)
Finance costs (565) (644)
Finance income 16 14
Loss before income tax (14,265) (8,323)
Income tax 4 86 59
Loss from continuing operations (14,179) (8,264)
(Loss)/Profit from discontinued operations - (141)
Loss for the period (14,179) (8,405)
Loss attributable to:
Owners of the parent company (13,525) (8,069)
Non-controlling interest (654) (336)
(14,179) (8,405)
Loss per share attributable to the equity holders of the Company:
Basic and diluted loss per share
5 (5.49)p (4.16)p
There is no other comprehensive income for the period
* The other losses in the comparative period relate to the fair value
assessment of the Lanstead sharing agreements.
Group statement of financial position
As at 30 September 2023
30 September 30 September
2023 2022
Note £'000 £'000
Assets
Non-current assets
Intangible assets 6 2,763 10,636
Property, plant and equipment 7 3,443 5,861
Deferred taxation - 25
Trade and other receivables 36 38
6,242 16,560
Current assets
Inventory 1,528 2,131
Trade and other receivables 1,409 2,155
Assets held for sale 604 -
Cash and cash equivalents 596 1,351
4,137 5,637
Total assets 10,379 22,197
Equity
Called up share capital 8 3,308 1,941
Share premium account 8 36,724 34,961
Merger reserve 1,256 1,256
Share-based payment reserve 5,289 4,759
Accumulated losses (43,382) (29,694)
Equity attributable to owners of the parent company 3,195 13,223
Non-controlling interest (2,115) (1,624)
Total equity 1,080 11,599
Liabilities
Non-current liabilities
Trade and other payables 501 600
Deferred tax liabilities 6 67
Innovate Loan 5,000 5,000
Long-term borrowings 995 1,595
6,502 7,262
Current liabilities
Trade and other payables 1,479 1,957
Invoice discounting advances 762 660
Current portion of long-term borrowings 556 719
2,797 3,336
Total liabilities 9,299 10,598
Total equity and liabilities 10,379 22,197
Group statement of changes in equity
For year ended 30 September 2023
Share capital Share premium account Merger reserve Share-based payment reserve Accumulated losses Non-controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 March 2021 1,899 33,003 1,256 3,249 (21,625) (1,228) 16,494
Issue of shares 42 1,958 - - - - 2,000
Loss for the period - - - - (8,069) (336) (8,405)
Share-based payments - - - 1,510 - - 1,510
At 30 September 2022 1,941 34,961 1,256 4,759 (29,694) (1,624) 11,599
Re-allocation of minority interest - - - - (163) 163 -
Issue of shares 1,367 1,763 - - - - 3,130
Loss for the period - - - - (13,525) (654) (14,179)
Share-based payments - - - 530 - - 530
At 30 September 2023 3,308 36,724 1,256 5,289 (43,382) (2,115) 1,080
Statement of Group cash flows
For the year ended 30 September 2023
12 months to 18 months to
30 September 30 September
2023 2022
£'000 £'000
Cash flows from operating activities
Cash used in operations (2,377) (3,280)
Interest paid (364) (402)
Net cash used in operating activities (2,741) (3,682)
Cash flows from investing activities
Purchase of intangible assets (149) (2,751)
Purchase of property, plant and equipment (187) (1,910)
Net cash used in investing activities (336) (4,661)
Cash flows from financing activities
Share issue (net of funds deferred per sharing agreement)
3,351 1,926
Share issue costs (221) (10)
Funds received from Innovate UK - 2,740
Funds received from sharing agreements - 3,537
Paymentof CBILS (99) 41
Principal payment of leases under IFRS 16 (811) (928)
Invoice discounting loan (repayments)/proceeds 102 29
Net cash generated from financing activities 2,322 7,335
(Decrease)/increase in cash and cash equivalents (755) (1,008)
Cash and cash equivalents at beginning of period 1,351 2,359
Cash and cash equivalents at end of period 596 1,351
Note to the statement of Group cash flows
For the year ended 30 September 2023
12 months to 18 months to
30 September 30 September
2023 2022
£'000 £'000
Loss before tax (including discontinued operations) (14,265) (8,464)
Adjustments for:
Share-based payments 530 1,510
Depreciation 1,108 1,677
Amortisation 302 490
Disposal of tangible assets 181 292
Impairment of tangible assets 861 -
Impairment of intangible assets 7,720 1,331
Finance cost/(income) 549 630
Loss/(gain) on FV movement of sharing agreement - 1,191
R&D tax credit repayment 86 59
*Decrease/(increase) in trade and other receivables and investments 771 301
(Increase)/decrease in inventories 603 (317)
(Decrease)/increase in trade and other payables (823) (1,980)
Cash flows from operating activities (2,377) (3,280)
Notes to the final results
For the 12 months ended 30 September 2023
1. Basis of preparation
The Group consolidated financial statements have been prepared in accordance
with UK-adopted, International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
The Group's financial statements have been prepared on a going concern basis
under the historical cost convention
However, whilst the Company continues to develop and seek to commercialise its graphene technology it remains reliant upon the capital markets and/or asset sales to continue as a going concern up until such time as it generates sufficient revenues to cover its costs. It has therefore taken the following steps in the last twelve months:
· It has reduced its cost base by closing down operations in the US and China.
· It has reduced its employee base from 93 employees to 64 employees.
· It is seeking to sell its mature businesses which employ 42 staff which would leave 22 staff in its core technology business.
The Directors have prepared detailed projections of expected future cash flows for a period of twelve months from the date of issue of these results and have made the following assumptions in support of adopting the going concern basis in preparation of these financial statements:
· Versarien's shareholders will continue to give authority to the Directors to issue sufficient shares without pre-emption rights to enable the Company to raise cash on the capital markets. With the Company's low market capitalisation this is likely to require a staged approach until such time as the value of the Company increases. Consequently, there is no certainty as to timing or quantum, but the Company has a history of raising capital on a regular basis. The Company is expected to meet the criteria for EIS/VCT investment which potentially widens the capital pool it may access.
· The Company will be able to sell its mature businesses having already sold its Korean plant with receipts due on a staged basis.
Following the recent issue of 492 million shares at 0.125p per share, the
Company has a bank balance of £0.8 million and headroom on its invoice
discounting facilities of £0.1 million totalling £0.9 million. This together
with the expected receipts of £0.5 million from the sale of the South Korean
plant and equipment are expected to provide working capital until the fourth
quarter of the calendar year. In making their going concern assessment, and
the Directors have forecast that sufficient additional funding will be raised
to enable the group and parent company to meet liabilities as they fall due
for a period of at least 12 months from the date of approval of the financial
statements.
The notice of Annual General Meeting contains resolutions which are
anticipated to be sufficient for further working capital needs and which will
be used if the Company is unable to realise cash from the sale of its mature
businesses.
After due consideration, the Directors have concluded that it is appropriate
to prepare the financial statements on a going concern basis subject to
raising the required funds either through asset sales and/or raising
sufficient equity.
However, as there is no certainty as to the completion of the matters noted
above, this represents a material uncertainty that may cast significant doubt
on the Group and Parent Company's ability to continue as a going concern and
therefore it may be unable to realise its assets and discharge its liabilities
in the normal course of business. The financial statements do not include the
adjustments that would result if the Group was unable to continue as a going
concern.
The auditors' report on the Annual Report and Financial Statements for the
period ended 30 September 2023 was unqualified, did not contain a statement
under s498(2) or s498(3) of the Companies Act 2006 but drew attention to
material uncertainty with regard to going concern as follows:
We draw attention to the going concern section of the accounting policies of
the financial statements which indicates that the group remains reliant upon
the capital markets and/or asset sales to continue as a going concern up until
such time as it generates sufficient revenues to cover its costs, and that
additional funding will need to be raised within 12 months from the date of
approval of the financial statements. The group and parent company expect to
be able to secure this additional funding to enable the group and parent
company to realise their assets and discharge their liabilities in the normal
course of business.
As stated in the going concern section of the accounting policies, these
events and conditions, along with other matters set out in the going concern
section of the accounting policies, indicate that a material uncertainty
exists that may cast significant doubt on the Group and Parent Company's
ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
Given the material uncertainty noted above and our risk assessment, we
considered going concern to be a key audit matter. Our evaluation of the
Directors' assessment of the Group and the Parent Company's ability to
continue to adopt the going concern basis of accounting and in response to the
key audit matter included:
· Obtaining an understanding of how the Directors undertook the
going concern assessment process to determine if we considered it to be
appropriate in the circumstances;
· Challenge of the Directors' going concern assessment, including
the reasonableness of assumptions and downside stress case sensitivities
applied, using our underlying knowledge of the business;
· Testing of the mathematical accuracy, and consideration of the
reasonableness, of the assumptions made and available headroom throughout the
forecast period extending from the date of approval of the financial
statements;
· Consideration of the key sensitivities applied in the cash flow
model pertaining to revenue, grant income and cost base, the continued use of
the finance facilities and management of the Group's and Company's cost base;
· Analysing post year end trading results compared to forecast and
current year to evaluate the accuracy and achievability of forecasts; and
· Assessing the completeness and accuracy of disclosures in
relation to going concern and whether significant judgements have been
appropriately disclosed.
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
The consolidated financial statements are presented in sterling amounts.
Amounts are rounded to the nearest thousands, unless otherwise stated.
The financial information contained in this announcement does not constitute
the Group's statutory accounts for the period ended 30 September 2023 but is
derived from those accounts which have been audited and which will be filed
with the Registrar of Companies in due course.
2. Segmental information
At 30 September 2023, the Group is 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 segment performance is focussed on the two principal business segments of
Technology and Mature Businesses, 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 time spent by central staff on subsidiary affairs. This is the
measure reported to the Chief Executive Officer for the purposes of resource
allocation and assessment of segment performance.
The non-core aluminium operations of Versarien Technologies Limited were
closed in the prior period and are presented below as discontinued operations.
Technology Businesses Mature Businesses Intra-group adjustments Total continuing Operations Discontinued Operations Total
Central
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue - 239 5,209 - 5,448 - 5,448
Gross profit - (560) 1,722 - 1,162 - 1,162
Other operating income - 133 5 - 138 - 138
Other losses - - - - - - -
Operating expenses (15,141) (5,136) (1,903) 7,164 (15,016) - (15,016)
(Loss)/Profit from operations (15,141) (5,563) (176) 7,164 (13,716) - (13,716)
Finance charge 256 (690) (115) - (549) - (549)
Loss before tax (14,885) (6,253) (291) 7,164 (14,265) - (14,265)
Total assets 6,207 5,766 5,392 (6,986) 10,379 - 10,379
Total liabilities (6,557) (25,617) (2,554) 25,429 (9,299) - (9,299)
Net assets/(liabilities) (350) (19,851) 2,838 18,443 1,080 - 1,080
Capital expenditure 87 391 9 - 487 - 487
Depreciation/amortisation and impairment 6,448 3,053 489 - 9,990 - 9,990
The segment analysis for the 18 months ended 30 September 2022 is as follows:
Technology Mature Intra-group Total
Central Businesses Businesses adjustments Continuing operations Discontinued Operations Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue - 2,146 8,960 - 11,106 534 11,640
Gross profit (29) 1,008 2,388 - 3,367 107 3,474
Other operating income - 251 6 - 257 1 258
Other losses (1,191) - - - (1,191) - (1,191)
Operating expenses (14,916) (4,740) (2,365) 11,895 (10,126) (238) (10,364)
(Loss)/Profit from operations (16,136) (3,481) 29 11,895 (7,693) (130) (7,823)
Finance charge 159 (76) (104) (609) (630) (11) (641)
Loss before tax (15,977) (3,557) (75) 11,286 (8,323) (141) (8,464)
Total assets 15,824 9,232 7,319 (10,178) 22,197 - 22,197
Total liabilities (5,853) (22,292) (2,997) 20,544 (10,598) - (10,598)
Net assets/(liabilities) 9,971 (13,060) 4,322 10,366 11,599 - 11,599
Capital expenditure 403 5,005 1,054 - 6,462 - 6,462
Depreciation/amortisation and impairment
566 1,480 993 459 3,498 - 3,498
3. Exceptional items
12 months to 18 months to
30 September 30 September
2023 2022
£'000 £'000
Continuing Operations
Goodwill impairment 3,132 423
Development cost impairment 1,864 908
Patent and trademarks impairment 2,724 -
Tangible asset impairment 861 -
Deferred income related to development cost impairment (238) (660)
Restructuring costs 483 -
(Credit)/charge relating to expansion in Asia - (306)
Acquisition costs - 82
Other (61) 16
8,765 463
Discontinued Operations
Relocation and restructuring costs - 64
4. Taxation
The tax credit for the period of £86,000 (2022: £59,000) relates to an
R&D tax credit. The charge on the results for the period is £nil (2022:
£nil). At the year end the Group had £33.3 million (2022: £25.5 million) of
trading losses carried forward to set-off against future trading profits.
5. Loss per share
The calculation of the basic loss per share for the year ended 30 September
2023 and period ended 30 September 2022 is based on the losses attributable to
the shareholders of Versarien plc divided by the weighted average number of
shares in issue during the period. 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 30 September 2023, there were 12,914,730 (2022: 15,205,850) potential
Ordinary shares, which have been disregarded in the calculation of diluted
loss per share as they were considered non-dilutive at that date.
Attributable to owners of parent company Weighted average number of shares Basic loss per share pence
£'000 '000
12 months ended 30 September 2023 (13,525) 246,401 (5.49)
18 months ended 30 September 2022 (8,069) 194,027 (4.16)
6. Intangible assets
Patents, trademarks and other
Development
Goodwill Costs Intangibles Total
£'000 £'000 £'000 £'000
Cost
At 1 April 2021 4,431 2,965 4,500 11,896
Additions - 2,584 167 2,751
At 30 September 2022 4,431 5,549 4,667 14,647
Additions - - 149 149
At 30 September 2023 4,431 5,549 4,816 14,796
Accumulated amortisation and impairment
At 1 April 2021 876 491 823 2,190
Amortisation charge - 1 489 490
Impairment 423 908 - 1,331
At 30 September 2022 1,299 1,400 1,312 4,011
Amortisation charge - 1 301 302
Impairment 3,132 1,864 2,724 7,220
At 30 September 2023 4,431 3,265 4,337 12,033
Carrying value
At 30 September 2023 - 2,284 479 2,763
At 30 September 2022 3,132 4,149 3,355 10,636
7. Property, plant and equipment
Plant and equipment Leasehold improvements
ROU asset Total
£'000 £'000 £'000 £'000
Cost
At 1 April 2021 6,537 6,288 518 13,343
Additions 1,801 1,776 134 3,711
Disposals (1,742) (30) (84) (1,856)
At 30 September 2022 6,596 8,034 568 15,198
Additions 149 184 4 337
Disposals (883) (192) (35) (1,110)
Transfer of assets held for sale - (1,083) - (1,083)
At 30 September 2023 5,862 6,943 537 13,342
Accumulated depreciation
At 1 April 2021 4,199 4,890 135 9,224
Charge for the year 1,113 455 109 1,677
Disposals (1,505) (27) (32) (1,564)
At 30 September 2022 3,807 5,318 212 9,337
Charge for the period 642 392 74 1,108
Disposals (702) (191) (35) (928)
Transfer of assets held for sale - (479) - (479)
Impairment - 861 - 861
At 30 September 2023 3,747 5,901 251 9,889
Net book value
At 30 September 2023 2,115 1,042 286 3,443
At 31 March 2022 2,789 2,716 356 5,861
8. Called up share capital and share premium
Number of shares Called up share capital Share premium Total
'000 £'000 £'000 £'000
At 1 April 2021 189,8710 1,899 33,003 34,902
Issue of shares 4,280 42 1,958 2,000
At 30 September 2022 194,150 1,941 34,961 36,902
Issue of shares 136,629 1,367 1,763 3,129
At 30 September 2023 330,779 3,308 36,724 40,031
The called up share capital in the table above represents the total number of
authorised, issued and fully paid Ordinary shares with a nominal value of
0.01p per share.
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