REG - Versarien PLC - Final Results <Origin Href="QuoteRef">VRS.L</Origin>
06/09/2014 18:41
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Versarien PLC
22 July 2014
Press Release 22 July 2014
22 July 2014
Versarien plc
("Versarien" or the "Company" or the "Group")
Final Results
Versarien Plc (AIM:VRS), the advanced engineering materials group, today
announces its final results for the period ended 31 March 2014.
Business Highlights
· Total Carbide orders received in Q1 2014/15 up 75% to £1.4 million (2013: £0.8 million)
· Total Carbide delivering in excess of 11% operating margin
· VersarienCu has 26 development projects in progress, 3 backed by grant funding of £0.3 million (2013: 14 projects, 3 backed with grants of £0.1 million)
· Acquisition of Total Carbide in June 2013
· 85% of 2-DTech Limited acquired on 1 May 2014 for £0.22 million in cash and 846,153 ordinary shares, thereby adding world class graphene expertise and capability
· £3.0 million raised at Admission to AIM in June 2013 and further placing raised £5.5 million in April 2014
· First VersarienCu development project for Thermacore Europe Limited on track with pre-production parts delivered
· Graphene collaborative projects for 2-DTech starting with The University of Manchester focused on structural composites and thermoplastics
Financial Highlights
· Group revenues of £3.0 million (2013: £Nil)
· Normalised LBITDA(1) of £0.25 million (2013: loss £0.37 million(2))
· Pre-tax loss of £0.65 million (2013: loss £0.41 million(2))
· Non-recurring items include costs of acquiring Total Carbide of £0.15 million and VTL restructuring costs of £0.05 million
· Basic Loss per share of 0.85 pence (2013: loss 0.78 pence(2))
· Net assets of £2.6 million (2013: £0.1million)
· Cash reserves and bank facility headroom of £5.7 million as at 21 July 2014
(1) LBITDA excludes non-recurring or special items.
(2) 2013 figures are unaudited and are provided for illustration only.
Commenting on the final results, Neill Ricketts, Chief Executive Officer of
Versarien, said: "The Group has made substantial progress during the course of
the year combining growth in its core business with exciting acquisition
opportunities. The addition of 2-DTech to our Group since the year end
creates its own compelling opportunities, as well as further enhancing the
copper foam potential. In the current year, we expect to increase our
turnover by commercialising the IP Versarien has whilst maintaining careful
control of costs.
"The Board remains confident, given the quantity and quality of projects from
large OEM customers, that the applications of the technologies that the Group
is developing will, in time, deliver a substantial return on investment for
Versarien's shareholders."
- Ends -
For further information:
Versarien Plc
Neill Ricketts, Chief Executive Officer Tel: +44 (0) 1594 888 622
Chris Leigh, Chief Financial Officer www.versarien.com
Charles Stanley Securities(Nominated Adviser and Broker)
Mark Taylor / Russell Cook Tel: +44 (0) 20 7149 6000
Media enquiries:
Abchurch Communications Limited
Henry Harrison-Topham / Jamie Hooper Tel: +44 (0) 20 7398 7719
jamie.hooper@abchurch-group.com www.abchurch-group.com
Chairman's Statement
Versarien floated on 12 June 2013 and I am pleased to provide this, its maiden
set of annual results. At the period-end, the Group consisted of the parent
company, Versarien plc, and two wholly owned subsidiaries, Versarien
Technologies Limited and Total Carbide Limited, the latter being acquired at
the time of the flotation. On 1 May 2014 the Group acquired 85% of 2-DTech
Limited, a graphene manufacturer and supplier, and completed a share placing
to raise £5.5 million.
Versarien has made substantial progress during the course of 2013/4 combining
growth in its core businesses with exciting acquisition opportunities.
Application test results continue to be positive and we remain in dialogue
with many blue chip companies regarding exploitation in application. The
addition of 2-DTech to our Group creates its own compelling opportunities, as
well as further enhancing the copper foam potential. We look forward to this
year with much optimism.
The Group's IP currently consists of two major strands, VersarienCu, a porous
copper foam with thermal management properties up to ten times more efficient
than currently available products and, since the acquisition of 2-DTech
Limited in May 2014, graphene, which conducts electricity 100 times better
than silicon but is transparent, lightweight, strong yet flexible and
elastic.
The turnover for the period was £3.0 million and its LBITDA before
non-recurring items was £0.25 million. In the current year we expect to
increase turnover through the further commercialisation of the Group's IP. At
the same time management will continue to maintain careful control of costs.
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien
Technologies Limited in a share-for-share exchange prior to flotation.
Consequently, there is not a statutory comparative period and under merger
accounting the comparative financial information relates to Versarien
Technologies Limited until the date of the merger.
Since flotation we have completed our executive team by the appointment of Mr
Chris Leigh as full time Chief Financial Officer. Chris is a finance director
who has both relevant sector knowledge as well as AIM-listed company
experience.
Key to the Group's success will be the recruitment and retention of further
qualified and committed senior staff and we are grateful to all of our
existing staff for the valued contribution they have made.
As stated in the 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.
The Board remains confident, given the quantity and quality of projects from
large OEM customers, that the applications of the technologies that the Group
is developing will, in time, deliver a substantial return on investment for
Versarien's shareholders.
Ian Balchin
Non-Executive Chairman
22 July 2014
Chief Executive's Statement and Strategic Report
Business overview
Versarien Technologies Limited (VTL) holds the exclusive rights to a
patent-protected additive process for creating porous copper foam, which has
multiple potential markets initially targeting electronic equipment and
produces high efficiency heat exchanger material.
Total Carbide Limited (TC) manufactures sintered tungsten carbide primarily
for hardwearing applications in the oil and gas industry.
2-DTech Limited, acquired in May 2014, a spin-out from the University of
Manchester, the birthplace of graphene and home to the Nobel prize winning
academics Geim and Novoselov, specialises in supply of graphene products and
the transfer of fundamental science to applied technology.
Business model
Versarien seeks to capitalise on innovative IP, transforming it into a
commercially viable product that can tackle the technological challenges faced
by modern manufacturers. This requires a number of steps:
· a continual deal flow either by establishing new licence arrangements with research institutions or by identifying embryonic companies in early stages of development whose intellectual property fits with our definition of advanced materials technology;
· applying the management team's experience to developing and commercialising the advanced materials technology;
· providing the plant and equipment to get into production either via its existing production facilities or by funding new facilities; and
· providing working capital facilities either from existing reserves, its public listing or via banking facilities.
Markets and trends
There are a number of companies that provide support and finance to businesses
seeking to commercialise intellectual property or provide finance to spin-out
companies from universities or research institutions, but they tend to cover
many sectors. Versarien concentrates on only those opportunities which are in
the advanced materials and high value manufacturing sectors and which
outperform conventional materials with superior combinations of functional
properties, such as toughness, hardness, durability, elasticity, strength or
conductivity.
VersarienCu operates in the global market for thermal management technology
which is set to grow from US$8 billion in 2011 to US$11 billion by the year
2016 and its potential applications include aerospace, defence, automotive,
data communications, renewable energy, power distribution, transportation and
motorsport.
Total Carbide operates primarily in the oil and gas industry by providing
sintered tungsten carbide parts for directional drilling and equipment used in
oil exploration. There has been significant growth in the exploration of
shale gas and the company has more recently been exporting parts to China.
2-DTech Limited operates in the graphene development market, the total demand
for which is anticipated to increase from circa 40 tonnes per annum currently
to circa 400 tonnes by 2017. Forecasts suggest the market for graphene
products in 2018 will be US$195 million growing to US$1.3 billion by 2023.
Strategy and progress
Our strategy is to identify and acquire disruptive intellectual property in
advanced materials and develop them, partly through technology grant funding,
to a level where we can enter into joint development agreements with
world-class organisations and apply the acquired IP to specific applications
with a view to moving into commercial production.
Versarien floated in June 2013 with one technology, VersarienCu and
immediately after acquired the entire share capital of Total Carbide Limited.
In May 2014, the Group acquired 85% of the share capital of 2-DTech Limited
and is entering into collaboration agreements with the University of
Manchester to identify commercial applications. The Group is in discussions
with a number of other universities regarding licences to produce
complimentary porous metals for thermal management systems.
We have announced our first commercial development agreement with Thermacore
for use in isothermalisation devices key in the Genomics sector. We are in
discussions with the other organisations operating in the data centre
infrastructure market.
Group Financial Results
Versarien's revenue for the year ended 31 March 2014 totalled £2.95 million
with operating losses before non-recurring items of £0.44 million (£0.25
million before depreciation and amortisation). This includes just over nine
months' post-acquisition sales from Total Carbide of £2.94 million and
operating profits for Total Carbide, before non-recurring and special items,
of £0.33 million. Group non-recurring and special costs of £0.20 million
include £0.15 million relating to the acquisition of Total Carbide and £0.05
million restructuring costs.
Group net assets at 31 March 2014 were £2.6 million compared with £0.01
million at 31 March 2013. The flotation raised £3.0 million less expenses of
£0.58 million, net £2.4 million whilst simultaneously acquiring Total Carbide
Limited, the consideration for which was £1.58 million in cash and 5,714,286
in Ordinary shares of 1 pence each at the flotation price of 12.25 pence per
share. The vendors agreed to re-invest £0.35 million of the cash
consideration by taking 2,857,143 shares in the placing. The total holding of
8,571,429 shares issued on Admission were subsequently sold.
Basic and diluted loss per share totalled 0.85 pence. The average number of
shares in issue during the period was 77.1 million.
Subsequent to the year-end the Group raised £5.5 million before expenses by
way of a placing announced on 14 April 2014 and uses invoice finance funding
for its trading operations. Currently, the Group has cash reserves and bank
facility headroom totalling £5.7 million.
On 1 May 2014 Versarien acquired 85% of the issued share capital of 2-DTech
Limited, a developer and producer of graphene, for a total consideration of
£0.44 million. The Group now has three operating subsidiaries and has
strengthened its organisation structure by the appointment of managing
directors to each unit, two of which are internal promotions and one an
external recruit.
Versarien Technologies Limited (VTL)
VTL's revenue for the year was minimal as it continues to progress through its
development cycle. It has doubled its development projects to 26, of which 3
are grant funded. Operating losses before non-recurring items were £0.53
million for the year (2013: £0.40 million).
VTL continues to receive multiple positive test results from a number of key
customers and now has confidence to develop key product ranges that will
provide the seed for supplying modular systems for a variety of applications
including:
· Power Semiconductors;
· High Performance Computing;
· Electric & Hybrid Vehicle Powertrain;
· Renewables; and
· Motorsport.
It will, in addition, continue to progress custom applications and is looking
to improve customer enquiry response times by investing in device test and
characterisation facilities at its new factory in Mitcheldean.
Total Carbide Limited
It is very pleasing to report that the Total Carbide order book continues to
strengthen and has achieved an 11% operating return on sales since
acquisition. We have also successfully introduced a SAP platformed new
Enterprise Resource Planning system, which is being used group-wide. This was
necessitated due to the migration of the legacy systems withdrawn following
the purchase of the business and it is testament to the team effort that this
has been achieved in short order.
Total Carbide is a long established supplier to the oil and gas industry and
has a solid base of blue chip customers, many of whom are now looking to
increase their purchasing spend as a result of the sales initiatives
implemented since the Company was acquired on 12 June 2013. The Total Carbide
team has worked hard to build relationships and develop these prospects into
significant orders for the future.
The Board has also successfully exploited its existing expertise to secure
funding for two materials development programmes at Total Carbide and it is
intended that this strategy can be developed further to bring new derivatives
of tungsten carbide hard metals to market.
2-DTech Limited
Although only acquired post year end, I am pleased to report that the company
has now been integrated into our Group systems and that we have appointed
Nigel Salter, a former divisional technical director at Oxford Instruments, to
manage the business. We are currently examining a number of different
opportunities for commercial production and look forward to reporting these in
due course.
Neill Ricketts
Chief Executive Officer
22 July 2014
Group statement of comprehensive Income
Period ended 31 March 2014
Note 2014£'000 2013£'000(unaudited)
Continuing operations
Revenue 2 2,953 -
Cost of sales (1,881) -
Gross profit 1,072 -
Other operating income 98 74
Operating expenses (1,614) (478)
Loss from operating activities (444) (404)
Non-recurring items (197) -
Finance charge (12) (10)
Loss before income tax (653) (414)
Income tax - -
Loss for the year (653) (414)
Loss per share Pence Pence
Basic and diluted 4 (0.85p) (0.78p)
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien
Technologies Limited in a share-for-share exchange prior to flotation.
Consequently, there is not a statutory comparative period and under merger
accounting the comparative financial information relates to Versarien
Technologies Limited until the date of the merger.
Groupstatement of financial position
Period ended 31 March 2014
Note 2014£'000 2013£'000(unaudited)
Assets
Non-current assets
Goodwill and other intangibles 5 586 133
Property and equipment 7 1,091 69
Deferred taxation 65 -
1,742 202
Current assets
Inventory 765 3
Trade and other receivables 955 110
Cash and cash equivalents 215 32
Current assets 1,935 145
Total assets 3,677 347
Equity
Called up share capital 831 529
Share premium 1,853 -
Merger reserve 1,017 53
Share-based payment reserve 35 -
Retained earnings (1,137) (484)
Equity attributable to shareholders 2,599 98
Liabilities
Non-current liabilities
Trade and other payables 115 134
Provisions 200 -
Long-term borrowings 34 -
349 134
Current liabilities
Trade and other payables 549 115
Invoice discounting advances 156 -
Current portion of long-term borrowings 24 -
729 115
Total liabilities 1,078 249
Total equity and liabilities 3,677 347
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien
Technologies Limited in a share-for-share exchange prior to flotation.
Consequently, there is not a statutory comparative period and under merger
accounting the comparative financial information relates to Versarien
Technologies Limited until the date of the merger.
Groupstatement of changes in equity
Period ended 31 March 2014
Share capital £000 Share premium £000 Merger reserve £000 Share-based payment reserve £000 Retained earnings £000 Total equity £000
At 1 April 2012 (unaudited) - - 85 - (69) 16
Issued in the year - - 497 - - 497
Merger 529 - (529) - - -
Loss for the year - - - - (415) (415)
At 31 March 2013 (unaudited) 529 - 53 - (484) 98
Issueofshares 302 2,434 964 - - 3,700
Cost of share issue - (581) - - - (581)
Loss for the year - - - - (653) (653)
Share-based payments - - - 35 - 35
At 31 March 2014 (audited) 831 1,853 1,017 35 (1,137) 2,599
-
(653)
(653)
Share-based payments
-
-
-
35
-
35
At 31 March 2014
(audited)
831
1,853
1,017
35
(1,137)
2,599
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien
Technologies Limited in a share-for-share exchange prior to flotation.
Consequently, there is not a statutory comparative period and under merger
accounting the comparative financial information relates to Versarien
Technologies Limited until the date of the merger.
Statement of Group cash flows
Period ended 31 March 2014
2014£'000 2013£'000(unaudited)
Cash flows from operating activities
Cash used in operations (715) (422)
Interest paid (12) (10)
Net cash from operating activities (727) (432)
Cash flows from investing activities
Acquisition of subsidiaries (1,175) -
Purchase of intangible non-current assets (18) (52)
Purchase of tangible non-current assets (33) (14)
Sale of tangible non-current assets - 9
Net cash used in investing activities (1,226) (57)
Cash flows from financing activities
Share issue 2,650 496
Flotation costs (581) -
Repayment of finance leases (89) -
Invoice discounting loan 156 -
Net cash generated from financing activities 2,136 496
Net increase in cash and cash equivalents 183 7
Cash and cash equivalents at start of period 32 25
Cash and cash equivalents at end of period 215 32
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien
Technologies Limited in a share-for-share exchange prior to flotation.
Consequently, there is not a statutory comparative period and under merger
accounting the comparative financial information relates to Versarien
Technologies Limited until the date of the merger.
Notes
1 Basis of preparation
The consolidated financial statements consolidate those 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 2014
or 31 March 2013. The financial information for the period ended 31 March
2014 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.
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien
Technologies Limited in a share-for-share exchange prior to flotation.
Consequently, there is not a statutory comparative period and under merger
accounting the comparative financial information relates to Versarien
Technologies Limited until the date of the merger.
Both the consolidated financial statements and the Company financial
statements have been prepared and approved by the directors in accordance with
International Financial Reporting Standards as adopted by the EU ("IFRSs").
2 Operating segments
Business segments
The Group has disclosed below certain information on its revenue by
geographical location. Details regarding total can be found in the statement
of comprehensive income.
The Group's two revenue streams are separated as follows:
• Manufacturing activities derived from the operations of Total
Carbide Limited; and
• Engineering activities derived from the activities of Versarien
Technologies Limited.
Revenue by activity
2014£'000 2013£'000(unaudited)
Manufacturing 2,949 -
Engineering 4 -
2,953 -
Revenue by geographic location
Revenues Non-current assets
2014£'000 2013£'000(unaudited) 2014£'000 2013£'000(unaudited)
UK 2,378 - 1,742 202
Rest of Europe 515 - - -
North America 3 - - -
Other 57 - - -
Total 2,953 - 1,742 202
3 Dividends
As stated in the 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.
4 Loss per ordinary share
Basic
The calculation of basic earnings per share at 31 March 2014 was based on the
loss attributable to ordinary shareholders of £0.65 million (2013: £0.41
million), and a weighted average number of ordinary shares ranking for
dividend of 77,118,018 (2013: 52,872,000).
2014Pence per share 2013Pence per share
Basic earnings per share (0.85p) (0.78p)
Diluted
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 profit per share or increase the loss per
share. As at 31 March 2014 there were 5.6 million potential ordinary shares
which have been disregarded in the calculation of diluted earnings per share
as they were considered non-dilutive at that date.
5 Goodwill and other intangibles
Goodwill£'000 Otherintangibles£'000 Total£'000
Cost
At 1 April 2013 (unaudited) - 165 165
Acquisition of Total Carbide 354 123 477
Additions - 18 18
At 31 March 2014 354 306 660
Amortisation
At 1 April 2013 (unaudited) - 32 32
Amortisation charge - 42 42
At 31 March 2014 - 74 74
Carrying value at 31 March 2014 354 232 586
Carrying value at 31 March 2013(unaudited) - 133 133
Goodwill arising on consolidation represents the excess of cost of an
acquisition over the fair value of the Group's share of net assets of the
acquired subsidiary at the date of acquisition and is reviewed annually for
impairment.
6. Other intangible assets
31 March 14£000 31 March 13£000
Fair value of intangibles acquired 103 -
Development costs 67 51
Licence 62 82
232 133
On 12 June 2013 the Company acquired the entire share capital of Total Carbide
Limited for a consideration of £2.28 million comprising cash of £1.23 million
and 8,571,429 ordinary shares at the flotation price of 12.25 pence per share.
The provisional fair value of the assets and liabilities of Total Carbide at
the date of acquisition were as follows:
Fair Value£000
Non-current assets
Intangible assets 123
Property, plant and Equipment 1,141
Deferred tax assets 65
1,329
Current assets
Inventories 701
Trade and other receivables 714
Cash and cash equivalents 55
1,470
Total assets 2,799
Non-current liabilities
Obligations under finance leases (92)
Dilapidations provision (200)
(292)
Current liabilities
Trade and other payables (526)
Obligations under finance leases (55)
(581)
Total liabilities (873)
Net assets 1,926
Goodwill 354
Amount paid 2,280
Cash 1,230
Shares 1,050
In accordance with IFRS 3, the Board has reviewed the fair value of the assets
and liabilities using the information available to it since Total Carbide was
acquired. The provisional fair values are being discussed in accordance with
the terms of the share purchase agreement and may therefore change.
7. Property and equipment
Plant andmachinery £'000 Leaseholdimprovements £'000 Total £'000
Cost
Balanceat1April2013 (unaudited) 66 13 79
Acquisition of Total Carbide 5,389 - 5,389
Additions 33 - 33
At31 March2014 5,488 13 5,501
Depreciation
At 1 April 2013 (unaudited) 3 7 10
Acquisition of Total Carbide 4,248 - 4,248
Charge for the period 146 6 152
At31 March2014 4,397 13 4,410
Net book value
At 31 March 14 1,091 - 1,091
At 31 March 13 (unaudited) 63 6 69
8. Report and accounts
Copies of the 2014 Annual Report and Accounts will be posted to shareholders
in early August. Further copies may be obtained by contacting the Company
Secretary at the registered office. In addition, the 2014 Annual Report and
Accounts will be available to download from the investor relations section on
the Company's website www.versarien.com.
- Ends -
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