REG - Versarien PLC - Interim Results
09/06/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230609:nRSI1783Ca&default-theme=true
RNS Number : 1783C Versarien PLC 09 June 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED. ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN
9 June 2023
Versarien Plc
("Versarien", the "Company" or the "Group")
Interim Results for the six months ended 31 March 2023
Versarien Plc (AIM: VRS), the advanced engineering materials group, announces
its unaudited interim results for the six months ended 31 March 2023.
Financial Summary
● Group revenues of £2.62 million (2022: £3.89 million)
● Graphene revenues of £0.09 million (2022: £0.97 million)
● Adjusted LBITDA* of £2.01 million (2022: £0.31 million)
● Loss before tax of £3.40 million (2022: £2.16 million)
● Cash of £0.76 million as at 31 March 2023 (30 September 2022:
£1.35 million), with placing to raise gross proceeds of £0.53 million post
period end
*Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation)
excludes Exceptional items, Share-based payment charges and other losses)
Turnaround Strategy
As announced on 29 March 2023, the Company has engaged experienced strategy
and turnaround specialist, David Stone, and his firm Prompt Business
Strategies Limited, to aid the Company in developing its strategic plans which
are:
· To maintain and strengthen the Group's scientific teams supported by
grant funding applications
· To use the Group's internally generated know-how in the areas of
construction and textiles to be a manufacturing light operation as Versarien
works with its prospective customers
· As commercial traction develops to licence Versarien's technology,
brands and manufacturing know-how
· To divest non-core activities and Asian assets to reduce the
requirement for funding from the capital markets
Diane Savory, Non-executive Chair of Versarien, commented:
"The period under review was extremely challenging from a financial
perspective, both from a balance sheet point of view and with the decline in
Graphene revenues reflecting the ending of the DSTL development contract.
However, following the Annual General Meeting we have, with the assistance of
David Stone and his team, been developing a strategy that focuses on
maintaining appropriate IP to support our core end-sectors of construction and
textiles whilst reducing cash-outflows to a level that can be supported by
proposed asset sales, marketing of which is in process. We believe this
strategy will ensure a brighter future for Versarien."
For further information please contact:
Versarien Plc
c/o IFC
Diane Savory - Non-executive Chair
Chris Leigh - Chief Financial Officer
Stephen Hodge - Chief Technology Officer
SP Angel Corporate Finance (Nominated Adviser and Joint Broker)
Matthew Johnson +44 (0) 20 3470 0470
Adam Cowl
IFC Advisory Limited (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 recognised graphene company
with a wide portfolio of high-quality verified materials supported by its own
UK based research and development driving recurring revenue growth through its
innovative graphene product applications.
For further information please see: http://www.versarien.com
(http://www.versarien.com)
Chair's Statement
Following the AGM we have, with the assistance of David Stone and his team at
Prompt Strategies Limited, been developing a strategy that focuses on
maintaining appropriate IP to support our commercial goals in our core
end-sectors of construction and textiles, whilst reducing cash-outflows to a
level that can be supported by proposed asset sales.
Our core objectives are:
· to maintain and, as appropriate, strengthen our scientific teams
supported by grant funding applications;
· use our internally generated know-how in the areas of construction
and textiles to be a manufacturing light operation as we work with our
prospective customers; and
· as commercial traction develops to licence our technology, brands and
manufacturing know-how in order to generate revenue and shareholder value.
Historically, the Group has been mainly reliant upon support from the capital
markets, strategic investors, grant funding and loans to provide working
capital to support its operations, both in the UK and abroad, in anticipation
of the graphene sector gaining traction. With such traction not yet having
been achieved, coupled with a diminishing appetite in the capital markets for
small cash consuming technology businesses, the Company has little alternative
but to restructure its business in anticipation of being able to create future
shareholder value. In doing so, there is a fine line to balance between
protecting IP, continuing research and development to maintain commercial
knowledge, and maximising both medium and longer term value, whilst also
generating sufficient working capital for Group purposes.
The strategic focus for the Group is on developing its commercial graphene
applications (Cementene and Graphene Wear), whilst operating from a
significantly reduced cost base that maintains sufficient resource within the
Group to maximise the market opportunity.
In order to generate further funds for the Group, as previously announced,
marketing of the mature businesses for sale is in process, as is the IP and
assets previously acquired from Hanwha in December 2020. Based on certain
asset sale assumptions our projections suggest that we would have sufficient
resources for a further period of 24 months. However, we are at an early
stage of marketing so nothing is certain in this respect and further
announcements will be made in due course, as appropriate.
In order to generate required funding Versarien has used its placing
authorities from the last two annual general meetings to place new equity at
share prices which have been considerably lower than historic averages. The
asset sales process is underway, but whilst the timing and quantum is not yet
certain, the Company is cautiously optimistic of the outcome.
The specifics of the turnaround strategy are as follows:
· to adopt a manufacturing light approach followed by licencing of
technology manufacturing know-how and brands;
· to reduce research and development infrastructure costs whilst
maintaining or increasing current staffing levels;
· selling the non-core businesses of Total Carbide and AAC Cyroma;
· selling the IP and assets that originated in the acquisition from
Hanwha Aerospace;
· reducing the costs of running the parent company; and
· reducing the manufacturing and infrastructure costs at Longhope
whilst maintaining current staffing levels.
These actions will result in a much-simplified Group with significantly fewer
staff. The appointment of a new CEO will be deferred until the asset sale
process is completed.
Diane Savory OBE
Non-executive Chair
Chief Technology Officer's Review
The current environment remains challenging and the recent announcement of the
UK's National semiconductor strategy was disappointing from a graphene
viewpoint. The potential £1bn investment over the next decade is a start, but
pales in comparison to US and EU pledges of £42bn and £37bn, respectively.
Graphene is mentioned by name only once, yet is seen as an enabling material
by experts in the field for the majority of the quantum technologies that are
promised. Versarien's IP portfolio and CVD assets acquired from Hanwha are
ideally placed to manufacture the highest quality graphene required for our UK
semiconductor industry given the right support and environment, but in the
circumstances, we believe disposing of these assets is strategically the
correct move.
Our R&D team has been slimmed down significantly in recent months both due
to cost cutting to concentrate on our strategic objectives, together with
staff being attracted elsewhere, but I remain highly optimistic in being able
to retain the key people that can help solidify our R&D and
commercialisation efforts. We have continued to gain traction in our focus
markets of construction and textiles, with more trial data to support the
benefits of graphene and the impacts it can have on sustainability, and key
demonstrators with our partners such as Costain, National Highways and most
recently, Banagher. Our Graphene-Wear textile coatings, used in Umbro's Pro
Training Elite kit, continue to gain traction with further seasonal launches
in progress.. Graphene-Wear is being continually developed with other 2D
material based formulations and is proving attractive where multi-colours can
be achieved.
It is interesting to see a very different dynamic within the UK and global
graphene sectors emerging, with first movers going through financial
difficulties, yet other UK private companies gaining from large private
investments. This has certainly provided a more competitive UK graphene
landscape. The UAE's graphene and 2D materials research is also developing
rapidly through the creation of its Research and Innovation Centre for 2D
Materials (RIC-2D). Although Versarien has not yet been awarded any projects
as part of its RIC-2D Fund, we have several discussions ongoing to deliver
Versarien products and technologies to the region, with my invitation to take
part in the 2D Materials Symposium hosted by Khalifa University ("KU") and the
EU's Graphene Flagship project, in May 2023, an opportunity to have wider
discussions with KU academic and commercial teams.
Gnanomat continues to make technological progress. Having successfully
delivered phase 1 of its development contract with a large Thai oil and gas
company it is now in negotiations for further development work estimated at
circa €170,000 to be completed over the next few months for use in
high-performance pseudo-capacitor applications.
Dr Stephen Hodge
Chief Technology Officer
Chief Financial Officer's review
The period under review was extremely challenging from a financial
perspective. The last Annual Report referred to there being a material
uncertainty related to going concern and the need to raise additional funding.
In March 2023 we utilised the remaining authority from the 2022 AGM to issue
10.6 million shares at a price of 3p per share, raising £0.32 million gross,
and in May 2023 we used the authority granted by shareholders at the 2023 AGM
to issue 42.5 million shares at 1.25p per share, raising £0.53 million gross.
Clearly, the Board would have preferred to issue equity at higher share
prices, but the Company's current circumstances have not enabled it to do so.
In the period under review, Group revenues decreased from £3.9 million to
£2.6 million, a reduction of £1.3 million. The mature businesses accounted
for £0.3 million of the reduction, but the main part relates to the
technology businesses where we no longer have the benefit of revenue from the
DSTL development contract.
The loss from operations was £3.13 million (2022: £1.86 million) with the
comparative period having the revenues from the DSTL contract which did not
recur in the current period thus affecting both gross margin and operational
results.
The adjusted LBITDA for continuing operations was £2.01 million compared to
£0.31 million for the comparative period in 2022, calculated as follows:
6 months ended 6 months ended 31 March 2022
31 March 2023
£'000 £'000
(Loss) from operations (3,130) (1,862)
Depreciation and Amortisation 683 713
Share based payments 264 561
Exceptional items 170 (44)
Other losses - 318
Adjusted LBITDA (2,013) (314)
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 reported loss before tax was £3.40 million (2022: £2.16 million). Group
net assets at 31 March 2023 were £10.48 million (30 September 2022: £11.60
million) with cash at the period end of £0.76 million (30 September 2022:
£1.35 million).
Net cash used in operating activities was £1.83 million (2022: £0.96
million) and investment in development costs and equipment was £0.14 million
(2022: £1.70 million), net principal lease payments were £ 0.35 million
(2022: £0.25 million) and CBILS repayments £0.05 million (2022: £0.04
million) giving total cash outflows of £2.37 million (2022: £2.95 million).
These activities were financed by net funds received from the share issues of
£2.02 million (2022:£nil and funds from Innovate UK and sharing agreements
of £nil (2022:£ 2.41 million
The deficit of £0.35 million (2022: £0.54 million) together with reduced
drawings on the invoice finance facilities of £0.24 million (2022: £0.17
million increase) resulted in a cash reduction of £0.59 million (2022: £0.37
million).
Technology Businesses
The Technology Businesses have seen a decrease in revenue to £0.09 million
from £0.97 million in the comparative period following the successful
completion of the DSTL development project. Discussions relating to product
supply are ongoing. Further information is given in note 3, segmental
information.
As stated in the last Annual Report, development costs primarily relating to
the GSCALE project were capitalised with a carrying value of £4.15 million.
Goodwill arising on consolidation of £3.13 million relates to the Technology
Businesses and represents the excess of the fair value of the Group's share of
net assets of acquired subsidiaries at the date of acquisition. It is usually
reviewed annually for impairment but, given the change of strategic direction
a further review has been carried out at the interim stage based on value in
use cash flow forecasts covering a five year period. This review indicates no
impairment is required and a further review will be carried out at the
year-end.
The change in strategy to a much-simplified structure has resulted in a number
of cost savings which are anticipated to flow through in to the second half of
this financial year. We are also looking to reduce the manufacturing footprint
at Longhope following the adoption of the manufacturing light strategy.
Mature Businesses
The mature businesses have seen a revenue decline, principally in AAC but
remain broadly EBITDA positive. The disposal process for both Total Carbide
and AAC Cyroma is in progress.
Going Concern
The interim statements have been prepared on a going concern basis as
described in note 1, basis of preparation.
Chris Leigh
Chief Financial Officer
Consolidated Interim Financial Statements
Group statement of comprehensive income
For the 6 months ended 31 March 2023
31 March 31 March
2023 2022
Unaudited Unaudited
£'000 £'000
Notes
Revenue 3 2,621 3,892
Cost of sales (2,138) (2,499)
Gross profit 483 1,393
Other operating income 57 107
Other losses* - (318)
Operating expenses (including exceptional items) (3,670) (3,044)
Loss from operations before exceptional items (2,960) (1,906)
Exceptional items 4 (170) 44
Loss from operations (3,130) (1,862)
Finance charge (270) (302)
Loss before income tax (3,400) (2,164)
Income Tax 5 - 81
Loss for the period (3,400) (2,083)
Loss attributable to:
- Owners of the parent company (3,199) (2,062)
- Non-controlling interest (201) (21)
(3,400) (2,083)
Loss per share attributable to the equity holders of the Company:
Basic and diluted loss per share 6 (1.55)p (1.06)p
There is no other comprehensive income for the period.
* The other losses relate to the fair value assessment of the Lanstead sharing
agreements at the balance sheet date.
Group statement of financial position
As at 31 March 2023
Note 31 March 30 September
2023 2022
Unaudited Audited
£'000 £'000
Assets
Non-current assets
Intangible Assets 7 10,585 10,636
Property, plant and equipment 5,363 5,861
Deferred taxation 25 25
Trade and other receivables 37 38
16,010 16,560
Current assets
Inventory 1,975 2,131
Trade and other receivables 1,955 2,155
Cash and cash equivalents 762 1,351
4,692 5,637
Total assets 20,702 22,197
Equity
Called up share capital 2,047 1,941
Share premium 36,874 34,961
Merger reserve 1,256 1,256
Share-based payment reserve 5,023 4,759
Accumulated losses (32,893) (29,694)
Equity attributable to owners of the parent company 12,307 13,223
Non-controlling interest (1,825) (1,624)
Total equity 10,482 11,599
Liabilities
Non-current liabilities
Trade and other payables 706 600
Deferred taxation - 67
Innovate Loan 5,000 5,000
Long-term borrowings 1,419 1,595
7,125 7,262
Current liabilities
Trade and other payables 2,183 1,957
Invoice discounting advances 425 660
Current portion of long-term borrowings 487 719
3,095 3,336
Total liabilities 10,220 10,598
Total equity and liabilities 20,702 22,197
Group statement of changes in equity
For 6 months ended 31 March 2023
Share Share Merger Share-based Accumulated Non- Total
capital premium reserve payment losses controlling equity
£'000 account £'000 reserve £'000 interest £'000
£'000 £'000 £'000
At 1 April 2022 (unaudited) 1,941 34,948 1,256 4,405 (26,708) (1,401) 14,441
Issue of shares - 13 - - - - 13
Loss for the period - - - - (2,986) (223) (3,209)
Share-based payments - - - 354 - - 354
At 30 September 2022 (audited) 1,941 34,961 1,256 4,759 (29,694) (1,624) 11,599
Issue of shares 106 1,913 - - - - 2,019
Loss for the period - - - - (3,199) (201) (3,400)
Share-based payments - - - 264 - - 264
At 31 March 2023 (unaudited) 2,047 36,874 1,256 5,023 (32,893) (1,825) 10,482
Statement of Group cash flows
For the 6 months ended 31 March 2023
6 months ended
31 March 6 Months ended
2023 31 March
Unaudited 2022
£'000 Unaudited
£'000
Cash flows from operating activities
Cash used in operations (1,561) (830)
Interest paid (270) (135)
Net cash used in operating activities (1,831) (965)
Cash flows from investing activities
Purchase/capitalisation of intangible assets (98) (1,337)
Purchase of property, plant and equipment (45) (359)
Net cash used in investing activities (143) (1,696)
Cash flows from financing activities
Share issue 2,040 0
Share issue costs (21) 0
Funds received from Innovate UK - 1,030
Funds received from sharing agreements - 1,377
Net funds (paid)/received from CBILS (52) (38)
Principal payment of leases under IFRS 16 (347) (248)
Invoice discounting loan (repayments)/proceeds (235) 173
Net cash generated from financing activities 1,385 2,294
(589) (367)
Increase in cash and cash equivalents
Cash and cash equivalents at start of period 1,351 3,462
Cash and cash equivalents at end of period 762 3,095
Note to the statement of Group cash flows
For the 12 months ended 31 March 2023
6 months ended
31 March 6 months ended
2023 31 March
Unaudited 2022
£'000 Unaudited
£'000
Loss before income tax (3,400) (2,164)
Adjustments for:
Share-based payments 264 561
Depreciation 534 372
Amortisation 149 341
Disposal of tangible assets - (1)
Finance cost 270 302
R&D Tax credit received - 81
Loss on FV movement of share agreement - 318
Increase/(Decrease) in trade and other receivables and investments 200 158
(Increase)/Decrease in inventories 156 (253)
(Decrease)/Increase in trade and other payables 266 (545)
Cash used in operations (1,561) (830)
Notes to the unaudited interim statements
For the 6 months ended 31 March 2023
1. Basis of preparation
Versarien Plc is an AIM quoted company incorporated and domiciled in the
United Kingdom under the Companies Act 2006. The Company's registered office
is Units 1A-D, Longhope Business Park, Monmouth Road,
Longhope, Gloucestershire, GL17 0QZ.
The interim financial statements were prepared by the Directors and approved
for issue on 9 June 2023. These interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the period ended 30 September 2022 were approved
by the Board of Directors on 20 February 2023 and delivered to the Registrar
of Companies. The report of the auditors on those accounts was unqualified and
did not contain statements under sections 498 (2) or (3) of the Companies Act
2006. The report contained reference to a material uncertainty related to
going concern.
As permitted, these interim financial statements have been prepared in
accordance with UK AIM Rules and UK-adopted IAS 34, "Interim Financial
Reporting". They should be read in conjunction with the annual financial
statements for the period ended 30 September 2022, which have been prepared in
accordance with UK-adopted international accounting standards, consistent with
the IFRS framework adopted in UK law. The accounting policies applied are
consistent with those of the annual financial statements for the period ended
30 September 2022, as described in those financial statements. Where new
standards or amendments to existing standards have become effective during the
year, there has been no material impact on the net assets or results of the
Group.
These interim financial statements have been prepared on a going concern basis
making the following assumptions:
● The Group meets its day-to-day working capital requirements through
careful cash management and the use of its invoice discounting facilities
which are expected to continue;
● As at 31 March 2023, the Group had cash balances totalling £0.76
million with £0.18 million of headroom on its invoice discounting
facilities;
● The Group has utilised its authority to issue 42.5 million shares
without pre-emption rights and raised £0.53 million gross post period end and
expects the placing authority to be renewed at the next general meeting: and
● The Group is following a turnaround strategy to cut costs and sell
certain assets anticipated to generate material cash inflows
The Directors have prepared detailed projections of expected future cash flows
for a period of twelve months from the date of issue of this interim
statement.
The Group continues to apply for grants as part of its funding strategy but is
now primarily dependent upon cash inflows from the sale of assets or from
further issue of shares if there is a requirement to bridge an intervening
period. Consequently, this represents a material uncertainty that may cast
significant doubt on the Group'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
adjustments that would result if the Group was unable to continue as a going
concern.
Certain statements within this report are forward looking. The expectations
reflected in these statements are considered reasonable. However, no assurance
can be given that they are correct. As these statements involve risks and
uncertainties the actual results may differ materially from those expressed or
implied by these statements. The interim financial statements have not been
audited.
3. Segmental information
The segment analysis for the 6 months to 31 March 2023 is as follows:
Central Technology Businesses Mature Businesses Intra-group TOTAL
Adjustments
£'000 £'000 £'000 £'000 £'000
Revenue - 87 2,534 - 2,621
Gross Margin - (277) 760 - 483
Other gains/(losses) - - - - -
Other operating income - 54 3 - 57
Operating expenses (916) (1,801) (947) (6) (3,670)
(Loss)/ profit from operations (916) (2,024) (184) (6) (3,130)
Finance income/(charge) (170) (39) (61) - (270)
(Loss)/profit before tax (1,086) (2,063) (245) (6) (3,400)
The segment analysis for the 6 months to 31 March 2022 is as follows:
Central Technology Businesses Mature Businesses Discontinued Intra-group TOTAL
Operations Adjustments
£'000 £'000 £'000 £'000 £'000
Revenue - 966 2,843 83 - 3,892
Gross Margin - 679 695 19 - 1,393
Other gains/(losses) (318) - - - - (318)
Other operating income - 105 2 - - 107
Operating expenses (971) (1,293) (797) (5) 22 (3,044)
(Loss)/ profit from operations (1,289) (509) (100) 14 22 (1,862)
Finance income/(charge) (236) (28) (38) - - (302)
(Loss)/profit before tax (1,525) (537) (138) 14 22 (2,164)
4. Exceptional items
Exceptional items relate to redundancy costs principally in relation to the
closure of Versarien Graphene Inc.
5. Taxation
The tax charge on the results for the period has been estimated at £nil
(2022: £nil). At the last year end the Group had £25.52 million of trading
losses carried forward to set-off against future trading profits. Taxation
received in the comparative period relates to R&D tax credit.
6. Loss per share
The loss per share has been calculated by dividing the loss after taxation
of £3,199,000 (2022: £2,062,000) by the weighted average number of shares
in issue of 205,983,636 (2022: 194,179,790) during the period.
The calculation of the diluted earnings per share is based on the basic
earnings per share adjusted to allow for the issue of shares on the assumed
conversion of all dilutive options. However, in accordance with IAS33
"Earnings per Share", potential Ordinary shares are only considered dilutive
when their conversion would decrease the profit per share or increase the loss
per share. As at 31 March 2023 there were 15,205,850 (2022: 14,677,130)
potential Ordinary shares that have been disregarded in the calculation of
diluted earnings per share as they were considered non-dilutive at that date.
7. Intangible assets
31 March 31 March
2023 2022
Unaudited Audited
£'000 £'000
Goodwill 3,132 3,132
Patents, trademarks and other 3,304 3,355
Development costs 4,149 4,149
Total 10,585 10,636
8. Dividends
As stated in the 2013 AIM Admission document, the Board's objective is to
continue to grow the Group's business and it is expected that any surplus cash
resources will, in the short to medium term, be re-invested into the research
and development of the Group's products. Consequently, the Directors will not
be recommending a dividend for the foreseeable future. However, the Board
intends that the Company will recommend or declare dividends at some future
date once they consider it commercially prudent for the Company to do so,
bearing in mind its financial position and the capital resources required for
its development.
9. Interim Report
This interim announcement is available on the Group's website at
www.versarien.com (http://www.versarien.com)
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR UPUMWQUPWGBRRecent news on Versarien
See all newsREG - Versarien PLC - Result of AGM
AnnouncementREG - Versarien PLC - Total Voting Rights
AnnouncementREG - Versarien PLC - Audited Results for year ended 30 September 2023
AnnouncementREG - Versarien PLC - Placing to raise £615,000
AnnouncementREG - Versarien PLC - South American Graphinks Agreements
Announcement