REG - Versarien PLC - Final Results <Origin Href="QuoteRef">VRS.L</Origin>
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Versarien PLC
21 July 2015
Press Release 21 July 2015
21 July 2015
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 year ended 31 March 2015.
Highlights
· Group revenues up 69% to £4.98 million (2014: £2.95 million)
· Net assets up 180% to £7.3 million (2014: £2.6 million)
· Cash at 31 March 2015 of £3.5 million (2014: £0.2 million)
· *LBITDA of £277,000 (2014: £232,000)
· Loss before tax £866,000 (2014: £653,000)
· Total Carbide sales of £4.6m (2014: £2.9 million - 9 months)
· Total Carbide EBITDAE rose to £1.12m (2014: £0.47m - 9 months)
· Acquisition of 2-D Tech Limited which has achieved a breakthrough in the cost effective manufacture of high quality graphene
· First product range launch for Versarien Technologies VCu copper foam
· First Distribution deal for Versarien Technologies VCu Copper foam
· Acquisition of heat sink manufacturing business out of administration for a total consideration of £191,000
* LBITDA excludes exceptional items and share based payment charges.
Commenting on the final results, Neill Ricketts, Chief Executive Officer of
Versarien, said: "We are clearly delivering on our stated strategy to
identify, acquire, develop and commercialise disruptive intellectual property
in advanced materials with the milestone of the first distribution agreement
for Versarien technologies copper foam product. We have acquired 2-D Tech
Limited, which has achieved a significant breakthrough in the cost effective
manufacture of high quality graphene and have secured important relationships
to accelerate the commercialisation of this business including a partnership
agreement with the National Graphene Centre at the University of Manchester,
the recognised home of graphene. We are also pleased to have delivered £1.12
million EBITDAE from Total Carbide in our first full year since admission to
AIM demonstrating our ability to run and optimise our established companies
and therefore believe Versarien has an exciting future as we continue to look
for further opportunities to grow the business both organically and by
acquisition."
For further information:
Versarien PlcNeill Ricketts, Chief Executive OfficerChris Leigh, Chief Financial Officer Tel: +44 (0) 1594 888 622www.versarien.com
Panmure Gordon(Nominated Adviser and Broker) Russell Cook / James Greenwood Tel: +44 (0) 20 7886 2500
IFC Advisory(Financial PR and IR)Tim Metcalfe / Graham Herring / Heather Armstrong Tel +44 (0)20 3053 8671
Chairman's Statement
In this, our first full year of trading since being admitted to AIM, I am
pleased to be able to report real progress in the Group's performance.
Versarien comprises an exciting combination of advance materials with high
growth potential with underpinning, profitable manufacturing. I believe this
set of results demonstrates Versarien has the expertise in place to take new
materials and scale up efficient manufacturing for commercial applications.
All of this is in accordance with our stated strategy, details of which are
given in the Strategic Report.
We have completed two acquisitions in the period and the Group is now
organised into three business segments: Thermal Products which develops and
manufactures porous copper and aluminium heat sinks, Hard wear Products which
manufactures tungsten carbide hard wear parts and Graphene Products which is
developing graphene nano-platelets via an exfoliation process.
We are pleased to report sales of £4.98 million, up 69% from the previous
year. Net assets increased 180% to £7.3 million with cash at the year-end of
£3.5 million.
Thermal Products
We have broadened our product offering following the acquisition of the assets
of Custom Systems to include aluminium heat sinks; revenue was up £351,000 as
a result. A new range of air cooled heat sinks was launched and our routes to
market grew through the establishment of distributors in Europe and the US.
Hard wear Products
Hard wear Products reported sales of £4.6m and operating profit of £884,000
during a period of relatively high oil prices. As the oil price has declined
the market for our products has weakened. We have mitigated this by
diversifying our customer base to include new territories and sectors. The
division continues to perform well given the current economic environment and
we continue to look for ways to enhance performance further.
Graphene Products
Following the acquisition of 2-D Tech in May, we have focused on developing
the process licensed through the University of Ulster and part funded by the
University of Manchester (UoM). We continue to collaborate with both of these
leading research institutions. Sales and other income from the division were
£153,000 in the post-acquisition period. Since the year end we have announced
a breakthrough in the scalable manufacture of graphene platelets using a
patented exfoliation process. And we have also announced an agreement to
repay the funding previously provided by UoM in return for a 60% share in the
patent rights and the lesser of 98.4% of sales revenues and 90% of profits
arising from the graphene IP.
Summary
We made considerable progress in the last year and this has continued into the
new financial year with a number key strategic achievements.
As announced on the 13 July 2015, Versarien and Haydale Graphene Industries
plc signed a memorandum of understanding to collaborate on and accelerate the
development of their respective graphene projects. This is the latest in a
number of strategic alliances formed by Versarien, others including agreements
with the National Graphene Institute and the Graphene Engineering Innovation
Centre at the University of Manchester.
The UK is one of the leading territories for the development of graphene
solutions. Through collaborations, such as that which we announced recently
with Haydale, the UK market is well positioned to become the global leader in
graphene technology development. Our attendance at the United Kingdom Graphene
Exhibit at Nano Korea earlier this month, along with a number of other UK
based companies, illustrates the high level of development and co-operation in
this space.
As a result, the Board is confident in Versarien's position to capitalise on
the opportunities presented in its key markets, while minimising risk by
pursuing multiple projects and developing a range of innovative materials into
commercially viable products. We look forward with optimism to the coming
year.
I would like to thank the staff and the Board for their hard work during the
year. This coming year will be important for Versarien as it seeks to
commercialise the technologies it has been developing since flotation in June
2013.
Ian Balchin
Non-executive Chairman
Chief Executive's Statement and Strategic Report
Business Overview
Thermal products consists of the porous copper foam product and the metal heat
sink business acquired during the year. We have recently announced the launch
of a range of air cooled heat sink products using VersarienCu.This range is
designed for use in passive cooling applications where space is at a premium
and performance is crucial. Applications include power integrated circuits,
high temperature components and transistors, set top boxes, AP routers, cable
modems and broadband, optical Networks and LED TV and flat panel displays.
Since our financial year end, we have signed a global distribution agreement
with Mouser Inc and a number of European distributors to sell this technology
thus accelerating our routes to market. We also continue to work with a small
number of potential OEM customers on specific projects.
In order to expand our thermal product offering, in February 2015 we acquired
certain assets and business of Custom Systems Limited, a manufacturer of all
manner of extruded aluminum products and heat sinks for the electronics and
computing industries as well as for large machinery and generators.
Graphene Products currently consists of 2D-Tech Limited, which we acquired in
May last year from the University of Manchester. This purchase gave us a
low-cost entry into graphene technology from the home of graphene and mainly
consisted of some shared intellectual property with the Universities of
Manchester and Ulster for graphene production using an exfoliation process,
know how to produce graphene using chemical vapour deposition and a number of
networking opportunities.
On the 11 June 2015, we announced that 2-DTech made a major advance in
graphene platelet production to accelerate potential commercial applications
for graphene and graphene products. 2-DTech has developed its own proprietary
graphene production technique founded upon the shared IP process from
Universities of Ulster and Manchester which offers numerous advantages over
the conventional graphene manufacturing solutions currently on the market.
2-DTech is currently working with a number of clients, from industries as
diverse as military, medical and consumer products, requiring access to high
quality, cost effective graphene and is expecting to form a number of further
partnerships to commercialise this technology in a timely fashion in the near
future.
Hard wear Products currently consists of Total Carbide Limited and our
associate, DV Composite Tooling Limited. Total Carbide was acquired at the
time of flotation and supplies tungsten carbide parts mainly to the oil and
gas industry. Despite the drop in the oil price and subsequent set-backs in
that sector, it has performed exceptionally well. DV Composite Tooling is a
start-up venture with Dimar Limited, an Israeli company supplying tungsten
carbide tools to the woodworking industry. DV will develop and market a new
range of hard wear tooling for the composites industry.
Business model
Versarien seeks to capitalise on innovative IP, transforming it into
commercially viable products 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 that are in
the advanced materials and high value manufacturing sectors and that
outperform conventional materials with superior combinations of functional
properties, such as toughness, hardness, durability, elasticity, strength or
conductivity.
Versarien Technologies operates in the global market for thermal management
technology which is expected to reach $11 billion by the year 2016 and its
potential applications include aerospace, defense, automotive, data
communications, renewable energy, power distribution, transportation and
motorsport. 2-DTech operates in the graphene development market, the total
demand for which is anticipated to be 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. Total Carbide operates in the hard wear
parts market principally for use in oil and gas exploration.
Strategy
· To identify and acquire disruptive intellectual property in advanced
materials and enter into joint development agreements with potential customers
or take to market through distribution channels
· To establish development agreements with world-class organisations
· To commence commercial production
· To maximise cash generation from our mature business to help support
technology development
Key performance indicators
As a Group that consists of mature products supporting the development of
early stage technology products, we concentrate on the following financial
metrics:
2015£'000 2014£'000
Revenue 4,982 2,953
Gross margin percentage 38% 36%
Loss before interest, tax, depreciation, amortisation, exceptional costs and share based charges (277) (232)
Cash generated from mature businesses after capital investment 483 119
Cash utilised by technology businesses after capital investment (1,747) (589)
Cash raised/utilised by parent (including cash acquired and net of loans to technology businesses) 4,580 653
Net Cash raised by the Group 3,316 183
Technology products/processes in development 31 26
Outlook
We continue to look for opportunities to grow the business both organically
and by acquisition whilst keeping costs and cash under control. Research and
development is a fundamental part of our business and the Board's strategy is
to ensure that we now commercialise the sums invested. I would like to thank
all of our hard working employees for their dedication in our fast-moving
businesses and we look forward to the future with much optimism.
Neill Ricketts
Chief Executive Officer
Chief Financial Officer's Review
The share placing in the early part of the financial year raised £5.25 million
net of expenses and allowed the Group to continue to accelerate the production
of copper foam and acquire 2-D Tech, a graphene development business.
Group Results
Versarien's revenue for the year ended 31 March 2015 was £4,982,000 (£2014:
£2,953,000) with operating losses before exceptional costs,
depreciation/amortisation and share based payment charges of £277,000 (2014:
£232,000).
Exceptional costs were £307,000 (2014; £197,000) including £76,000 of
acquisition and potential acquisition costs (2014: £147,000), £69,000 of
initial start-up costs for the associate DV Composite Tooling (2014: £ Nil)
and £162,000 of restructuring costs (2014: £50,000). The restructuring costs
in the current year relate to the anticipated relocation of Total Carbide
following the expected termination of its factory lease in 2016 (2014: £Nil).
The loss before tax for the year was £866,000 (2014: 653,000).
Group net assets at 31 March 2015 were £7.3 million (2014: £2.6million)
following the placing. Cash at the year-end was £3.5 million (2014: £0.2
million) with £0.6m of headroom on its invoice finance facilities (2014:
£0.5million).
Cash outflow from operating activities was £1.1 million (2014:£0.7 million)
including working capital increases of £0.5 million (2014: £0.3 million). The
Group invested £0.2 million, net of cash, in acquisitions (2014: £1.2
million), £0.3 million (2014: £nil) in capitalised development costs and £0.3
million (2014:£Nil) in plant and machinery. The Group raised £5.3 million net
of costs in placing and shares issued from existing options (2014: £2.1
million) and repaid £0.2 million of borrowings (2014: £0.1 million borrowed).
Thermal Products
Revenue for the year for Versarien Technologies was £355,000 (2014: £4,000)
including contribution from the heat-sink business acquired in February 2015,
details of which are in note 6. Operating losses before exceptional items were
£688,000 (2014: £526,000). The business capitalised £250,000 on development
costs.
Hard wear Products
It is very pleasing to report that Total Carbide has had an exceptional year
achieving sales of £4,594,000 (2014: £2,949,000 (9 months)) and returned an
operating profit before exceptional costs of £958,000 (2014: £332,000 (9
months)) representing a 21% return on sales. During the year the costing
system was reviewed which result in an uplift of £85,000 to the stock
valuation. The business generated £882,000 in cash from its operations,
invested £221,000 in new plant and equipment and repaid loans of £178,000.
DV Composite Tooling is a start -up venture with Dimar Limited, an Israeli
company supplying tungsten carbide tools to the woodworking industry. DV is
developing and marketing a new range of hard wear tooling for the composites
industry. It has been recognised as an associated company as Versarien holds
49.9% of the issued share capital. It is at pre-revenue stage and its share of
un-recognised losses for the period since incorporation were £8,000 with
£69,000 incurred as exceptional start-up costs.
Graphene Products
As described more fully in note 6, eighty five percent of the issued share
capital of 2D-Tech was acquired for a total consideration of £740,000 in May
2014. Its revenue for the post-acquisition period was £33,000 and it received
£120,000 of grant income. Its operating loss for the period was £240,000.
Bank facilities and going concern
At 31 March 2015 the Group had cash balances totalling £3.5 million and
available invoice discounting facilities of £0.6 million. Since the year-end
it has negotiated further asset funding facilities of up to £1.2 million to
finance plant and machinery additions that may be required to scale up
production facilities.
The Board has prepared forecasts and projections for a period of not less than
twelve months from the approval of this annual report and assessed the key
risks and uncertainties. In the event that trading performance falls below
these forecasts it has a number of options available to it to manage cash
outflow. Consequently, at the time of approving the financial statements, the
Board has concluded that the Group has adequate resources to continue in
operation for the foreseeable future and has therefore continued to adopt the
going concern basis.
Chris Leigh
Chief Financial Officer
Group statement of comprehensive Income
Year ended 31 March 2015
Notes 2015£'000 2014£'000
Continuing operations
Revenue 2 4,982 2,953
Cost of sales (3,089) (1,881)
Gross profit 1,893 1,072
Other operating income 126 98
Operating expenses (including exceptional items) (2,883) (1,811)
Loss from operations before exceptional items (557) (444)
Exceptional items 3 (307) (197)
Loss from operations (864) (641)
Finance charge (2) (12)
Loss before income tax (866) (653)
Income tax - -
Loss for the year (866) (653)
Loss attributable to:
-Owners of the parent company (830) (653)
- Non-controlling interest (36) -
(866) (653)
Loss per share attributable to the equity holders of the Company:
Basic and diluted loss per share 5 (0.80)p (0.85)p
There were no comprehensive gains or losses in the year other than those
included in the Comprehensive Income Statement.
Groupstatement of financial position
As at 31 March 2015
Notes 2015£'000 2014£'000
Assets
Non-current assets
Intangible assets 6 1,502 586
Property, plant and equipment 7 1,423 1,091
Deferred taxation 65 65
2,990 1,742
Current assets
Inventory 1,109 765
Trade and other receivables 1,272 955
Cash and cash equivalents 3,531 215
5,912 1,935
Total assets 8,902 3,677
Equity
Called up share capital 8 1,055 831
Share premium account 8 7,150 1,853
Merger reserve 1,017 1,017
Share-based payment reserve 94 35
Retained earnings (1,967) (1,137)
Equity attributable to owners of the parent company 7,349 2,599
Non-controlling interest (22) -
Total equity 7,327 2,599
Liabilities
Non-current liabilities
Trade and other payables 181 115
Provisions 203 200
Long-term borrowings 13 34
397 349
Current liabilities
Trade and other payables 855 549
Provisions 300 -
Invoice discounting advances - 156
Current portion of long-term borrowings 23 24
1,178 729
Total liabilities 1,575 1,078
Total equity and liabilities 8,902 3,677
Groupstatement of changes in equity
Year ended 31 March 2015
Share capital£'000 Sharepremiumaccount£'000 Mergerreserve£'000 Share-basedpayment reserve£'000 Retained earnings£'000 Non-controllingInterest£'000 Totalequity £'000
At 1 April 2013 (unaudited) 529 - 53 - (484) - 98
Issue of shares 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 831 1,853 1,017 35 (1,137) - 2,599
Issue of shares 224 5,550 - - - - 5,774
Cost of share issue - (253) - - - - (253)
Non controlling interest on acquisition - - - - - 14 14
Loss for the year - - - - (830) (36) (866)
Share-based payments - - - 59 - -- 59
At 31 March 2015 1,055 7,150 1,017 94 (1,967) (22) 7,327
Included within the merger reserve is £53,000 in respect of the merger with
Versarien Technologies Limited and £964,000 in respect of the acquisition of
Total Carbide Limited.
Statement of Group cash flows
Year ended 31 March 2015
Notes Group2015£'000 Group2014£'000
Cash flows from operating activities
Cash used in operations 9 (1,119) (715)
Interest (paid)/received (2) (12)
Net cash used in operating activities (1,121) (727)
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired) (154) (1,175)
Purchase of intangible assets (277) (18)
Purchase of property, plant and equipment (255) (33)
Net cash used in investing activities (686) (1,226)
Cash flows from financing activities
Share issue 5,553 2,650
Flotation/share issue costs (252) (581)
Repayment of finance leases (22) (89)
Invoice discounting loan (repayment)/proceeds (156) 156
Net cash generated from financing activities 5,123 2,136
Increase in cash and cash equivalents 3,316 183
Cash and cash equivalents at beginning of year 215 32
Cash and cash equivalents at end of year 3,531 215
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 periods ended 31 March 2015
or 31 March 2014. The financial information for the year ended 31 March 2015
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.
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. Segmental reporting
The Directors regard the Group's reportable segments of business to be the
development and manufacture of Thermal Products ("Thermal Products"),
manufacturing of tungsten carbide ("Hard Wear Products"), the development and
manufacture of graphene ("Graphene Products") and holding company activities
("Central Activities"). The business has no significant geographical aspect.
Costs are allocated to the appropriate segment as they arise with central
overheads apportioned on the basis of time spent by central staff on
subsidiary affairs. This segmentation is consistent with internal reports to
the chief operating decision maker for use in assessing business performance
and allocating Group resources. The chief operating decision maker is the
Chief Executive of the Group and the activity of each segment is explained in
the Chief Executive's Statement and Strategic Report
The segment analysis for the period ended 31 March 2015 is as follows:
Central£'000 GrapheneProducts£'000 Thermal Products£'000 Hard WearProducts£'000 Intra groupadjustments£'000 Total£'000
Revenue from services - 33 355 4,594 - 4,982
Gross (loss)/profit - (3) 60 1,841 (5) 1,893
Other operating income - 120 6 - - 126
Operating expenses (768) (357) (773) (957) (28) (2,883)
(Loss)/profit from operations (768) (240) (707) 884 (33) (864)
Finance income/(charge) 11 - (10) (3) - (2)
(Loss)/profit before tax (757) (240) (717) 881 (33) (866)
Total assets 8,064 228 1,150 3,688 (4,228) 8,902
Total liabilities (347) (375) (1,782) (679) 1,608 (1,575)
Net assets/net (liabilities) 7,717 (147) (632) 3,009 (2,620) 7,327
Capital expenditure 4 2 27 222 - 255
Depreciation/amortisation 0 10 29 157 25 221
The segment analysis for the period ended 31 March 2014 is as follows:
Central£'000 GrapheneProducts£'000 Thermal Products£'000 Hard WearProducts£'000 Intra groupadjustments£'000 Total£'000
Revenue from services - - 4 2,949 - 2,953
Gross (loss)/profit - - (25) 1,097 - 1,072
Other operating income 30 - 68 - - 98
Operating expenses (389) - (619) (784) (19) (1,811)
(Loss)/profit from operations (359) - (576) 313 (19) (641)
Finance charge - - (10) (2) - (12)
(Loss)/profit before tax (359) - (586) 311 (19) (653)
Total assets 3,438 - 258 2,953 (2,972) 3,677
Total liabilities (114) - (173) (864) 73 (1,078)
Net assets/net (liabilities) 3,324 - 85 2,089 (2,899) 2,599
Capital expenditure 1 - 29 21 - 51
Depreciation/amortisation - - 34 140 20 194
Geographical information
The Group's revenue from external customers and information about its segment
assets by geographical location are detailed below:
Revenue from external customers Non-current assets
2015£'000 2014£'000 2015£'000 2014£'000
United Kingdom 3,454 2,378 2,990 1,742
Rest of Europe 818 515 - -
North America 11 3 - -
Other 699 57 - -
4,982 2,953 2,990 1,742
3. Exceptional items
2015£'000 2014£'000
Restructuring costs 162 50
Acquisition costs 76 147
Associate start up costs 69 -
307 197
Exceptional costs include £76,000 of acquisition and potential acquisition
costs (2014: £147,000), £69,000 of initial start-up costs for the joint
venture DV Composite Tooling (2014: £ Nil) and £162,000 of restructuring costs
(2014: £50,000). The restructuring costs in the current year relate to the
impending relocation of Total Carbide following the expected termination of
its factory lease in 2016 (2014: £Nil).
4. 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.
5. Loss per ordinary share
The calculation of the basic loss per share for the period ended 31 March 2015
and 31 March 2014 is based on the losses attributable to the shareholders of
Versarien plc Group divided by the weighted average number of shares in issue
during the year. The calculation of 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 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 21 March 2015 there were 5,956,000 (2014: 3,943,000)
potential ordinary shares which have been disregarded in the calculation of
diluted earnings per share as they were considered non-dilutive at that date.
Loss attributable to shareholders£'000 Weighted average number of shares'000 Basic loss per sharepence
Year ended 31 March 2015 (830) 103,583 (0.80)
Year ended 31 March 2014 (653) 77,118 (0.85)
6. Intangible assets
Goodwill£'000 Other intangibles£'000 Total£'000
Cost
At 1 April 2013 (unaudited) - 165 165
Acquisition of Total Carbide Limited 354 123 477
Additions - 18 18
At 1 April 2014 354 306 660
Acquisitions 659 28 687
Additions - 277 277
At 31 March 2015 1,013 611 1,624
Accumulated amortisation and impairment
At 1 April 2013 (unaudited) - 32 32
Amortisation charge - 42 42
At 1 April 2014 - 74 74
Amortisation charge - 48 48
At 31 March 2015 - 122 122
Carrying value
At 31 March 2015 1,013 489 1,502
At 31 March 2014 354 232 586
Impairment
Goodwill arising on consolidation represents the excess of the fair value of
the consideration for an acquisition over the fair value of the Group's share
of the net assets of the acquired subsidiary at the date of acquisition and is
reviewed annually for impairment.
Goodwill acquired in a business combination is allocated, at acquisition, to
the business segments ("cash generating units") detailed in note 2 "Segmental
Reporting" as follows:
Opening£'000 Additions£'000 Closing£'000
Hard wear products 354 - 354
Graphene products - 659 659
Thermal products - - -
354 659 1,013
The recoverable amount of all cash generating units has been determined based
on value in use calculations using pre-tax cash flow projections based on
financial projections approved by management covering a five-year period. The
key assumptions to which the value-in-use calculation is most sensitive are
those regarding the discount rates, growth rates and expected changes to
selling prices and costs during the period. The rate used to discount
forecast cash flow is 12%, which was deemed to be the Group's weighted average
cost of capital. Growth rates for mature products is assumed to be 2% and
for embryonic technology products is 75%.
Other intangible assets
31 March 2015£'000 31 March 2014£'000
Customer relationships/order books 108 103
Development costs 346 67
Licence 35 62
Total 489 232
The fair value of customer relationships acquired as part of business
combinations based on the estimated cash flows from major customers over a
five-year period and assumes attrition of 20% per annum and a discount factor
of 19.6%. It is amortised on a straight-line basis over two to five years.
On 1 May 2014 the Company completed the acquisition of 85% of the issued share
capital of 2D-Tech Limited for a consideration of £740,000 comprising cash of
£220,000, 846,153 Ordinary shares at a price of 26 pence per share and a
commitment to fund vendor projects at a maximum cost of £300,000. The
purchase of 2D Tech provided the Group with a low cost entry into graphene
development. Goodwill arising from the transaction represents the opportunity
to participate on the graphene market. Revenues and results of 2D Tech are
disclosed in the segmental analysis at note 2 under "Graphene Products". Had
2D Tech been acquired at the start of the accounting period the revenue for
the business would have increased by £26,000 and losses for the year by
£7,000.
On 2 February 2015 Versarien Technologies acquired out of administration parts
of the business of Custom Systems Limited for an initial cash consideration of
£206,000 revised to £191,000 to expand the company's thermal product offering
including extruded aluminum products and heat sinks for the electronics and
computing industries as well as for large machinery and generators. Included
with the results for the year are revenues of £332,000 and profits of £38,000.
As the business was purchased out of Administration results for the period
from 1 April 2014 to the date of acquisition are not available to disclose the
results of the combined entity had it been purchased at the start of the
financial year.
The provisional fair value of the assets and liabilities acquired were as
follows:
2D -Tech£'000 Custom Systems£'000 Total
Non-current assets
Intangible assets - 28 28
Property, plant and equipment 126 127 253
126 155 281
Current assets
Inventories 10 36 46
Trade and other receivables 42 - 42
Cash and cash equivalents 257 - 257
309 36 345
Total assets 435 191 626
Current liabilities
Trade and other payables (78) - (78)
Accruals and deferred income (262) - (262)
Total liabilities (340) - (340)
Net assets acquired 95 191 286
Non-controlling interest (14) - (14)
Goodwill 659 - 659
Consideration 740 191 931
Consideration satisfied by:
Shares issued 220 - 220
Cash 220 191 411
Deferred consideration 300 - 300
740 191 931
7. Property, plant and equipment
Group Plant andequipment£'000 Leasehold improvements£'000 Total£'000
Cost
At 1 April 2013 (unaudited) 66 13 79
On acquisition of Total Carbide Limited 5,389 - 5,389
Additions 33 - 33
At 1 April 2014 5,488 13 5,501
Acquisitions 290 - 290
Additions 255 - 255
Disposals (29) (13) (42)
At 31 March 2015 6,004 - 6,004
Accumulated depreciation
At 1 April 2014 (unaudited) 3 7 10
On acquisition of Total Carbide Limited 4,248 - 4,248
Charge for the year 146 6 152
At 1 April 2014 4,397 13 4,410
Acquisitions 37 - 37
Charge for the year 173 - 173
Disposals (26) (13) (39)
At 31 March 2015 4,581 - 4,581
Net book value
At 31 March 2015 1,423 - 1,423
At 31 March 2014 1,091 - 1,091
Plant and equipment includes the following amounts where the Group is a lessee
under finance leases and hire purchase contracts:
Group2015£'000 Group2014£'000
Cost 122 122
Accumulated depreciation (38) (30)
Net book value 84 92
8. Called up share capital and share premium
Number of shares'000 Ordinary shares£'000 Share premium£'000 Total£'000
At 1 April 2013 (unaudited) 52,872 529 - 529
Issue of shares at 12.25 pence per share 30,204 302 2,434 2,736
Expenses of share issue - - (581) (581)
At 1 April 2014 83,076 831 1,853 2,684
Issue of shares at 12.25 pence per share 445 4 50 54
Issue of shares at 26 pence per share 22,000 220 5,500 5,720
Expenses of share issue - - (253) (253)
At 31 March 2015 105,521 1,055 7,150 8,205
In connection with the acquisition of 2DTech Limited, the Company raised
£5,500,000 (before expenses) through the placing of 21,153,847 new Ordinary
Shares at 26 pence per share and issued 846,153 new Ordinary Shares at 26p as
part of the consideration. During the year options to acquire 445,000 Ordinary
Shares at 12.25 pence per share were exercised.
9. Cash flows from operating activities
2015£'000 2014£'000
Loss before tax (866) (653)
Adjustments for:
Share-based payments 59 35
Depreciation 173 152
Amortisation 48 42
Disposal of non-current assets 3 -
Finance cost 2 12
Increase in trade and other receivables (275) (131)
Increase in inventories (298) (61)
(Decrease)/increase in trade and other payables 35 (111)
Cash flows from operating activities (1,119) (715)
10. Post balance sheet events
2DTech Limited has signed an agreement with the University of Manchester and
the University of Ulster to vary the terms of the agreement existing at the
time of the acquisition of 2DTech relating to the production of graphene using
exfoliation methods. Under the terms of the variation 2D Tech has undertaken
to pay £140,000 to the University of Manchester in equal quarterly instalments
over a period of 2 years in return for them forgoing patent and income sharing
rights arising from graphene production. Under a revised agreement with the
University of Ulster, 2D Tech is now entitled to 60% of the patent rights and
the lesser of 98.4% of sales revenues and 90% of profits arising from graphene
production.
11. Report and accounts
Copies of the 2015 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 2015 Annual Report and
Accounts will be available to download from the investor relations section on
the Company's website www.versarien.com.
- Ends -
This information is provided by RNS
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