REG - Versarien PLC - Preliminary Results
05/08/2021 07:00
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RNS Number : 6260H Versarien PLC 05 August 2021
5 August 2021
Versarien Plc
("Versarien" or the "Company" or the "Group")
Preliminary Results for the year ended 31 March 2021
Versarien Plc (AIM:VRS), the advanced engineering materials group, is pleased
to announce its unaudited results for the year ended 31 March 2021.
Operational highlights
● Acquisition of chemical vapour deposition graphene assets and IP
from Hanwha Aerospace Company Limited, South Korea, for a consideration of 11
million ordinary shares in Versarien valued at £4.34 million
● Awarded £5 million Innovate UK loan with £2.26 million received
during the year for the Company's GSCALE project (an acronym for Graphene,
Seat, Concrete, Arch, Leisure, Elastomer)
● Awarded a £1.95 million development agreement by the Defence,
Science and Technology Laboratory ("DSTL"), a part of the Ministry of Defence
● Award of EU Grant of €357,000 to Gnanomat for scale-up and
development of electrode materials
● Launch of graphene enhanced protective face masks utilising
Polygrene(TM), Versarien's graphene enhanced polymer
● Project completed with Rolls Royce and the Graphene Engineering
Innovation Centre to understand and create technological advances in the
aerospace sector utilising chemical vapour deposition (CVD) graphene and other
2D materials
● Formation of the Versarien Graphene Advisory Panel ("VGAP")
● Board strengthened by the appointment of James Stewart CBE as the
Company's new independent Non-executive Chairman
● Appointment of Dr. Stephen Hodge to the Company's Board as Chief
Technology Officer
Financial highlights
● Group revenues of £6.6 million (2020: £8.3 million)
● Adjusted LBITDA* of £1.8 million (2020: £1.6 million)
● Reported loss before tax of £8.1 million (2020: £4.7 million)
after a non-cash share based payments charge in the year of £1.2 million
(2020: £1.2 million) and a non-cash £3.3 million charge arising from a
reduction in the IFRS 13 valuation of the Lanstead Sharing Agreement (2020:
£1.0 million gain)
● Cash at 31 March 2021 of £2.4 million (31 March 2020: £1.7
million)
● Issue of 8.75 million ordinary shares re-invested into an 18-month
sharing agreement with Lanstead Capital Investors LP ("Lanstead"), a US
headquartered institutional investor
● Net assets of £16.5 million at 31 March 2021 (31 March 2020:
£15.7 million)
*Adjusted LBITDA (Loss before, interest, tax, depreciation and amortisation)
excludes exceptional items, other gains/losses and share based payment charges
Post Period highlights
● £1.93 million strategic investment in Versarien by Graphene Lab
Limited including 5% royalty agreement and 2% trademark agreement on sales
● Acquisition of Spanish graphene manufacturing assets to provide
up to an additional 100 tonne powder capacity per annum
● Orders placed for the purchase of ink scale up equipment to give
up to an additional 12,000 litres of ink capacity per annum
● Lease signed on new dedicated graphene production facility in
Longhope, Gloucestershire
● Textile supply agreement signed with Crosslete and discussions
ongoing with multiple garment suppliers
● Agreement signed with one of the world's largest packaging
companies to evaluate graphene-based coatings
Commenting, Neill Ricketts, Chief Executive Officer of Versarien, said:
"Despite the challenges arising from the pandemic, which not unexpectedly
impacted our mature businesses, we have continued to focus on the
commercialisation of our graphene technologies and in particular through the
GSCALE project. I am pleased to report that the manufacturing scale up is
advancing in tandem with the progress on commercialisation of the project's
applications.
Highlights include the development and supply agreements for textiles and the
number of infrastructure opportunities following the successful pourings of
graphene enhanced concrete. In addition, we are working with multiple
industrial partners to develop composite structures for automotive, aerospace,
defence and rail. We have also demonstrated 40% improvement in concrete
strength, 30% increase in tyre rubber stiffness and have applied to trademark
GrapheneWear(TM)( )as part of the textile commercialisation. With this we
continue to pursue our strategy of global positioning to ensure that our
products can be supplied to multiple sectors in multiple markets."
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For further information please contact:
Versarien +44 (0)1242 269 122
Neill Ricketts, CEO
Chris Leigh, CFO
SP Angel Corporate Finance (Nominated Adviser and Joint Broker) +44 (0)20 3470 0470
Matthew Johnson, Ewan Leggat, Adam Cowl
Berenberg (Joint Broker) +44 (0)20 3207 7800
Mark Whitmore, Ciaran Walsh
Yellow Jersey (Investor Relations) +44 (0)20 3004 9512
Charles Goodwin
Henry Wilkinson
Versarien@yellowjerseypr.com (mailto:Versarien@yellowjerseypr.com)
Notes to Editors:
About Versarien
Versarien Plc (AIM:VRS), is an advanced engineering materials group.
Leveraging proprietary technology, the Group creates innovative engineering
solutions for its clients in a diverse range of industries.
For further information please see: http://www.versarien.com
(http://www.versarien.com/)
Chairman's Statement
Despite the challenges presented by the Covid-19 pandemic, I am pleased to
report that the Company has continued apace with its strategy to commercialise
its graphene technologies and expand its portfolio of graphene products. In
doing so, it is supported by the UK Government through the Innovate UK loan of
£5 million and the £1.9 million development contract from DSTL as well as
through the continued support of Lanstead.
In December 2020, we expanded our product portfolio with the acquisition of
chemical vapour deposition ("CVD") assets and IP from Hanwha Aerospace Company
Limited ("Hanwha"). The CVD plant and equipment has now been successfully
transferred from Hanwha to its new premises leased by Versarien Korea Limited
("VKL"), with re-commissioning underway. We have been assisted by our South
Korean partner Graphene Lab Limited ("GLL") which, as previously announced,
took a 15% stake in VKL as well as subscribing £1.93 million of new capital
to Versarien. The VKL board has also been strengthened by the appointment of
three new local directors.
Significant progress has also been made with the GSCALE project, for which we
have now purchased additional graphene production equipment at a cost
approaching £1 million. Particular application highlights include the
impressive results in concrete, where the mechanical properties have been
improved and surface cracking reduced by using graphene additive, and in
textiles, where development and supply agreements have been signed.
The DSTL contract continues to progress well with revenues of £0.3 million in
the year under review and a further £1.6 million anticipated for delivery
this financial year.
I would like to thank all our staff for their continued endeavours,
particularly during the pandemic, without which we would not have been able to
make the progress that we have. I look forward to the Company reporting
further progress during the current financial year.
James Stewart CBE
Non-executive Chairman
Chief Executive Officer's Review and Strategic Report
The acquisition of the Hanwha CVD graphene assets and patents, the setting up
of VKL in South Korea and our partnership/investment from GLL continues our
strategy of establishing a global platform for our technology. We now have
operations in the United Kingdom, Spain and South Korea as well as a sales
presence in the USA and in China. This global footprint will facilitate our
commercial development as the global graphene market begins to gain traction.
We have continued to progress graphene enhanced mask sales which can only be
achieved if the required standards have been met. We now have seventeen
certificates and have met the following standards:
● GB2626-2019 (general standards)
● ISO 18184:2014(E) (antiviral)
● GB/T 20944.3-2008 (anti-bacterial)
● GB/T 20944.2-2007 (anti-bacterial)
● EN 149-2001+A1-2009 (filtering, clogging, cleaning and
disinfecting)
In addition, our masks have been independently tested and proven not to emit
graphene particles which will enable us to register them as nano-safe masks.
The following sections describe the activities of the business in accordance
with the segmental analysis adopted since 2017. Since the year end, the Board
has approved the leasing of new dedicated graphene manufacturing facilities in
Longhope, Gloucestershire, which will house the recently acquired Spanish
plant and equipment, the new ink production equipment and the existing
graphene production equipment currently located in Cheltenham. The continued
focus on graphene means that the non-core aluminium operations of Versarien
Technologies Limited are being wound down and in future the segmental analysis
will be split between technology businesses and mature businesses.
GRAPHENE AND PLASTIC PRODUCTS
Domestic Graphene
The UK operations are centred around the GSCALE project funded by the £5
million Innovate UK loan and I am pleased to summarise the significant
progress during the year and subsequently in each of the work packages:
Work Package G (Graphene)
The objective is to scale production of high-quality graphene to greater than
10 tonnes per annum to meet the expected demand from the projects described
below. Our key partners include graphite producers and miners, chemical
suppliers and equipment manufacturers incorporating recycling and reuse as an
environmentally friendly and economic production process.
Post period end, we have purchased two large scale systems for ink production
and ancillary equipment at a cost of £342,000, which will increase ink
production capacity from up to 3,000 litres per annum to up to 15,000 litres
per annum, depending on formulation.
In addition, we have purchased the graphene manufacturing assets (including
control systems, laboratory test equipment and graphene process IP) used by a
former competitor in Spain at a cost of €600,000 which will be used to
manufacture graphene that can be used, amongst other applications, in energy
storage devices and elastomers. This will give a capacity of up to 100 tonnes
of graphene per annum when fully commissioned and developed.
These assets will be located in a new dedicated 14,000 square foot facility in
Longhope, Gloucestershire, together with the existing graphene production
equipment currently in Cheltenham, where the lease ends in September 2021.
Work Package S (Seat)
The Seat package grew from previous developments of lighter, flame-retardant
seat backs for the aerospace industry involving the dispersion of graphene in
various thermoset systems used in fibre reinforced polymer composites.
We have now extended this to also include rail products, including interior
applications and door panels. Automotive opportunities in this field are
expanding too with the growth of electric vehicles requiring structural light
weighting to enable increased range performance.
Batch size increases have required the design and procurement of resin
dispersal scale up equipment, including the purchase of a large processing
vessel that will take our current graphene/resin dispersion from five litres
per day to up to 100 litres per day.
A rail seat back mould tool has been procured, manufactured and delivered to
2-DTech at The University of Manchester's Graphene Engineering Innovation
Centre ("GEIC") for trials to develop our product and to be made available to
the industry for their trials and testing requirements including mechanical
and fire/smoke tests.
Work Package C (Concrete)
The Concrete workstream principally focuses on the reduction of construction
CO(2) emissions, with government programmes requiring a plan for net zero
carbon by 2050. Graphene can help drive efficiency (i.e. enabling faster,
cheaper solutions) and increase asset life through reduced micro-cracking, low
permeability and less ferrous rebar corrosion.
We are in advanced discussions with large infrastructure contractors for new
rail, road and water applications with projects and trials / demonstrators
being planned or already being built.
Trials with a traditional CEM1 concrete mix and the addition of Versarien's
graphene show the following (all tests have been undertaken by an independent
test house):
● Improved compression strength (+38%)
● Improved flexural strength (>14% - 45%)
● Increased split tensile strength (>15%)
● Improved water permeability (> 200% - 0mm to 2mm)
● Faster curing without micro-cracking
● Increased corrosion resistance
Further trials with an international 'readymix' concrete manufacturer have
developed a graphene enhanced, low carbon, pumpable, commercial mix as
typically available at any UK readymix site. This graphene enhanced concrete
produced similar performance results as the CEM1 by utilising a fraction of a
percent of graphene in the concrete.
Our chosen development product for the construction industry is based on our
Graphinks(TM) products. This is an easy to use (simply add with the water)
product, with excellent mixing results, offering workability and performance
using the construction industry's regular admixture control systems.
With regards to additive manufactured concrete printing, we are progressing
the purchase of a £250,000 robot printing system that will produce graphene
enhanced 3D printed structures with a reach of 3 metres in every direction and
up to 5 metres high. A significant rail infrastructure project is already
engaged in discussions with a view to Versarien's technology resolving current
challenges in their programme. The robot printing allows complex structures to
be printed in situ and in open or confined spaces near live railway lines
without the need to close the line. The potential benefits to the project
include improved operator safety (as the robot can print remotely from its
operator), less 'live line' downtime (trains can keep running) and efficient
and economic delivery of enhanced concrete structures in the rail environment.
Similar opportunities are recognised across the road and water sectors too
with projects being planned.
Work Package A (Arch)
The Arch workstream covers all of our thermoplastic development and commercial
exploitation through enhanced graphene characteristics across:
● Consumer and commodity thermoplastics;
● Engineering polymers; and
● Speciality plastics
Development under these three themes include:
● Polyolefin compounds and masterbatches being developed for
extrusion moulded products (joint development agreement with a global consumer
product company).
● Graphene enhanced thermoplastic polyurethane (TPU), nylon PA12,
cellulose acetate, and polycarbonate trials performed and prototypes developed
for use in future ranges of eyewear frames and lenses for an eyewear
manufacturer - strengths can be improved by 30% enabling longer life products.
● Particular focus on the use of graphene to enhance recycled
polymer products in such a way that the mechanical performance of the 100%
recycled product is equal to a virgin polymer, thus breaking the need for
addition of climate challenging oil based raw materials.
● Biopolymers - AAC Cyroma will supply an initial batch of
portable suction devices for clearing blocked airways in emergency and chronic
health conditions which has the potential to make current technology obsolete.
This will be manufactured from bio-derived nylon polymer.
Work Package L (Leisure)
The Leisure workstream surrounds the use of graphene inks and graphene
nanoplatelets, primarily within the textile sector. Our R&D work gives
attention to three distinct processes; print, coat and blend, where we have
key industry partners including MAS Holdings and Coats Plc.
The print process, which utilises Graphinks(TM), has now been scaled to pilot
level production and this has allowed us to develop commercial discussions
with both new parties and collaboration partners. Along with our key industry
partners, we have been able to offer those customers a new range of active
wear garments in men's and women's designs, which will see the benefits of
thermal regulation, wicking, drying and water repellence given to wearers.
Currently we have sample garments with a number of well-known active wear
brands around the world and have signed a supply agreement with Canadian
boutique active wear brand Crosslete, who will introduce a new line of men's
and women's garments featuring the print technology. We expect to make further
announcements in this area in due course taking into consideration new product
seasonal launches, commercial confidentiality and covid recovery plans of
global supply chains.
The benefits of the print technology were underpinned by extensive industry
testing carried out by BGGT Ltd./Shirley Technologies Ltd., a leader in its
field, whereby tests were carried out in accordance with industry standard
test protocols including BSENISO/BSEN/BS/AATCC methods.
In addition to this, the Company is currently collaborating with the
University of Gloucestershire, which involves a number of athletes and focuses
on elite performance and how the print technology can be optimised for elite
level participation.
Work Package E (Elastomers)
Elastomers aims to develop large-scale graphene enhanced elastomer
masterbatches for two key sectors, oil and gas and automotive tyres, but is
applicable to other sectors, in particular shoes. Lab scale tests are showing
good results and we are creating a solid foundation of knowledge on which to
build our future business ventures in Elastomers.
The impact of the Covid-19 pandemic has seen R&D in this sector scaled
back, however, our project continues if somewhat delayed. We have seen really
good improvements over control rubber samples at the bench scale and having
agreed a pricing structure we are expecting to move to large-scale trials in
Q3 2021.
The objective for rubber formulation in tyres is to reduce rolling resistance
while not sacrificing grip or wear resistance. We believe that graphene has an
important part to play in achieving this. Ongoing tests have made great
strides toward this, but increasing wear resistance is more complex. However,
in the last set of tests conducted we saw a slightly more than three-fold
reduction in wear compared to the best of the other samples tested.
We have undertaken benchmark testing of shoe competitor products in order to
place our results into context. Of note is a 33% reduction in wear in a
graphene outer sole formulation under development compared to a leading brand
of graphene footwear. We are also seeing good improvements in mechanical
properties across the board. Following increased demand masterbatches have
been distributed globally in order to facilitate manufacturer testing and
small-scale production trials.
With every test that is undertaken we gain further valuable information on how
our products interact with elastomeric compounds. Good solid progress has been
made, interest in graphene enhanced elastomers is increasing and we are moving
closer to bringing products to market which we will do so on a foundation of
solid scientific understanding.
Overseas Graphene
Versarien's stated strategy is to expand globally and I am pleased to report
on our further progress.
Versarien Korea Limited ("VKL")
The year under review saw success with regards to acquisition and expansion
into South Korea. The chemical vapour deposition equipment and IP acquisition
from Hanwha (originally Samsung's technology) means that the Group now has
added another important graphene manufacturing capability within the overall
portfolio; whilst the setting up of a new graphene production and R&D
facility in South Korea in conjunction with a CVD expert partner allows
Versarien to exploit one of the largest markets for electronics and technology
in the world.
The move to the new R&D facility was completed in June 2021 and we are now
in the process of utility set-up and commissioning in order to produce our
first CVD graphene samples and optimise the product quality.
The main focus of business in the short term will be to provide a turnkey CVD
graphene production solution, securing or participating in government and
other institutional projects, and developing various optical and electronic
applications.
Versarien Graphene Inc. ("VGI")
VGI is making good progress in the US market although it has been slowed by
the pandemic. Long term relationships have been established with a number of
large players including one of the world's largest paints and coatings
companies which has completed the first stage 1000-hour anti-corrosion salt
spray trials with promising results using graphene as a substitute for zinc.
That company is now working on multiple projects with Versarien and we are
optimistic that the graphene will perform similarly in enhancing them.
Gnanomat ("GNA")
In the year under review GNA expanded the scope of its nanomaterial
applications whilst still concentrating on energy storage, where excellent
performance was seen when their materials were integrated in electrodes of
asymmetric pseudo capacitors.
The catalytic properties of GNA's materials were also optimised and tested in
other applications, such as secondary metal-air batteries, with very good
results in charge, discharge and stability. Findings in this application are
currently in the process of intellectual property protection. Work is also
ongoing in other energy storage applications such as fuel cells.
The versatility of the technology and the synergies within Versarien allows
GNA products to be used in other new potential applications such as providing
antiviral effects against SARS-CoV-2 and electromagnetic interference
shielding.
GNA was awarded a grant of €357,000 from EU funding for the INN-PRESSME
project in collaboration with other industrial partners. This grant will be
used to upgrade Gnanomat's pilot plant and to develop new products in
collaboration with its partners, as well as to accelerate the development of
products to commercialisation. At present, Gnanomat has collaborations in
seven different industrial applications.
Beijing Versarien Technology ("BVT")
BVT, our wholly owned subsidiary in China, is continuing to work with a
Chinese supplier on the graphene enhanced face mask project. Some variants
including a graphene enhanced children's mask and an FFP3 mask have also been
developed.
Going forward, it is intended BVT will source more opportunities from China
under the GSCALE framework agreed between Innovate UK and Versarien, whilst
ensuring that Versarien's China operations are carried out fully in line with
the letter and spirit of the UK's National Security and Investment Act 2021.
Future expansion plans include establishing a presence in other potentially
lucrative global markets, by way of exporting, acquisitions and/or
partnerships, as and when the right opportunities arise. We will also work
towards growing our current international operations, which will in turn
increase our own capability and reach.
Plastic Products
AAC Cyroma Limited ("AAC") has, over the last 12 months, remained operational
throughout the Covid-19 pandemic and lockdown period supporting the NHS with
the supply of hospital bed panels and visors, along with products for utility
service providers.
Turnover is showing some recovery towards pre-pandemic levels with several new
projects and opportunities. The focus for the current financial year for AAC
is the conversion of these opportunities into new business and to further
progress opportunities for supplying graphene enhanced plastic products in
conjunction with the Company's new Longhope operations.
HARD WEAR AND METALLIC PRODUCTS
The focus on the opportunities afforded by graphene together with the market
challenges of Covid-19 have resulted in the decision to exit the non-core
aluminium business of Versarien Technologies Limited based in Cheltenham. The
lease comes to an end in September 2021 and a run-off to customers is
currently in progress. The company has been re-named Versarien Graphene
Limited and will be used as the revenue generating entity for UK graphene
sales whilst 2-DTech Limited and Cambridge Graphene Limited will continue as
the UK research and development arms of the graphene business.
Total Carbide Limited is a manufacturer of tungsten carbide wear parts and
sells to a global customer base covering 40 different industries producing
bespoke products for a wide spread of wear applications. These range from all
aspects of the oil and gas industry, through measurement tools and cutting
knives to difficult complex breakthrough technology for aerospace and defence
applications as well as providing nozzles for space propulsion.
Despite being a challenging year, the company won national and regional awards
for its work with apprentices and young people.
Current trading and outlook
There are indications that trading is beginning to return to pre-pandemic
levels in our mature businesses, but the economic environment remains
uncertain and the Company remains vigilant around costs. Much more
importantly, however, the graphene prospects in both the UK and abroad are
extremely exciting with our transitioning from laboratory to real world
demonstrators in multiple sectors including defence, automotive, aerospace and
construction; in particular, interest in using our graphene in large
infrastructure projects and in textiles.
We have been fortunate to extend our team with key hires in South Korea and
the UK, including project managers for our key projects as we make this
transition into the commercial world. I look forward to providing further
updates on customer projects in due course. We now have a strong platform of
licensable IP, large global commercial partners, significant support from the
UK government, especially around security, and a clear path to revenue from
innovative products.
Key performance indicators
As a Group we concentrate on the following financial metrics:
2021 2020
£'000 £'000
Group revenue 6,567 8,281
Gross margin percentage 22% 24%
Loss before interest, tax, depreciation, amortisation, exceptional costs, (1,761) (1,633)
share based charges and other gains/losses
Cash used by Graphene and Plastic Products (2,544) (2,685)
Cash generated by Hard Wear and Metallic Products 94 608
Cash raised/(utilised) by parent (before loans to/from subsidiaries) 3,152 (558)
Increase/(decrease) in cash and cash equivalents 702 (2,635)
Neill Ricketts
Chief Executive Officer
Chief Technology Officer's Review
Our R&D activities expanded rapidly in the year under review following our
major G-SCALE and DSTL projects, with five new members of staff joining us in
Manchester, one in Cambridge, and a new team being built in Korea following
the acquisition of the CVD assets. We have subsequently expanded into a second
lab at the Graphene Engineering Innovation Centre in Manchester and have
invested in larger scale manufacturing, processing and coating capabilities
across the graphene and 2D materials businesses that will significantly help
us towards product commercialisation. We have also significantly strengthened
our materials portfolio and IP position as a result of acquisitions in Spain
and Korea, and we continue to innovate and evaluate patents from global
universities. We have also trademarked Graphenewear(TM) and Cementene(TM) for
both leisure and construction products, reflecting the great strides we are
making in these areas.
Our R&D team has shown incredible resilience and flexibility during the
pandemic with often restricted lab access, meaning being more organised and
efficient and training new members of staff remotely.
Health & Safety of graphene
The issue of safety will be raised time and again, so it is imperative that
the relevant human and environmental toxicology testing be performed to assist
public awareness, and that we understand the nature of exposure of any
nanoparticles when graphene is manufactured and products are used.
Ultimately, these tests can only be done as part of the global community of
graphene producers.
As a leader in its field, Versarien is at the forefront of graphene and
related nanomaterials health and safety. To further our involvement, over the
last year I have taken on additional key industry roles, including Chairman of
the Graphene REACH registration committee's Technical Working Group and become
a member of the Graphene Flagship's ECHA/REACH committee, with dialogue across
all the relevant parties with regards to EU and global regulations.
Although graphene's ISO definition is clear, the families of few-layer,
multi-layer, nanoplatelet and nanographite materials that are produced on
multi-tonnage quantities is vast, and the definitions and classification of
these materials will almost certainly need to change as we learn more about
specific material properties, human and environmental interactions.
Accreditations, such as that we hold under the Graphene Council Verified
Producer Programme, will become more important as the industry progresses.
Dr Stephen Hodge
Chief Technology Officer
Chief Financial Officer's Review
The challenges of the pandemic resulted in revenue reduction of £1.7 million
to £6.6 million, but only slightly increased losses of £0.2 million to £1.8
million at the Adjusted LBITDA level (losses before interest, tax,
depreciation and amortisation excluding exceptional items, share based
payments charges, and other gains/losses). However, with the support of the UK
Government and Lanstead, the Group was able to continue its progress towards
commercialisation of its graphene products and expand its product portfolio in
South Korea whilst at the same time increasing its cash resources by £0.7
million.
Exceptional costs were £0.4 million (2020: £1.6 million) which arose mainly
through cost associated with expansion into Asia, and the purchase of the
Hanwha assets. The loss before tax for the year was £8.1 million (2020: £4.7
million), after share based payment charges of £1.2 million (2020: £1.2
million) and a £3.3 million charge arising from the reduction in the IFRS 13
valuation of the Lanstead Sharing Agreements (2020: £1.0 million gain).
Cash outflow from operating activities was £0.7 million (2020: £1.5
million), interest payments were £0.2 million (2020: £0.2 million),
investment in development costs and equipment was £1.7 million (2020: £0.6
million) and principal lease payments were £1.0 million (2020: £0.8 million)
giving total cash outflows of £3.6 million (2020: £3.1 million). These
activities were financed by net funds received from the Lanstead sharing
agreements/share issue of £2.3 million (2020: £(0.1) million), funds
received under the CBILS of £0.2 million( 2020: £nil) and funds received
under the Innovate UK loan of £2.3 million (2020: £nil), totalling £4.8
million (2020: £(0.1) million). The surplus of £1.2 million (2020: deficit
£3.2 million) resulted in reduced drawings on the invoice finance facilities
of £0.5 million (2020: £0.6 million increased drawings) thus increasing cash
at the year-end by £0.7 million (2020: £2.6 million decrease).
As previously announced, Lanstead has subscribed for a total of 23.75 million
Ordinary Shares, through two subscriptions, at an issue price of 40 pence per
Ordinary Share and benchmark price of 53.33 pence per Ordinary Share and the
Company entered into related sharing agreements to receive the proceeds on a
pro-rata monthly basis. Further details of the Lanstead subscription in the
period and the related sharing agreements are set out in the Company's
announcement of 22 December 2020.
In accordance with IFRS 13, the Sharing Agreements have been valued as at 31
March 2021 using the Monte Carlo (or multiple probability simulation) pricing
model which has resulted in a valuation of £4,728,000 (31 March 2020:
£6,987,000). Consequently, and in accordance with IFRS 13, a loss of
£3,280,000 (2020: £987,000 gain) has been accounted for as other
gains/losses in the Group Statement of Comprehensive Income.
The financial results by segment are disclosed in note 2 of these preliminary
results with Graphene and Plastic Products returning sales of £3.7 million
(2020: £3.9 million) and reduced losses of £1.7 million (2020: £3.3
million) after capitalising an additional £1.3 million of development costs
in the year as a result of the GSCALE focus, including commercialisation
progress which now meets IFRS criteria. Graphene sales in the year, including
revenues associated with the DSTL project, were £0.7 million (2020: £0.1
million).
Hard Wear and Metallic Products returned much reduced sales of £2.9 million
(2020: £4.3 million) but maintained its losses at a similar level to the
prior year of £0.3 million (2020: £0.3 million) as it managed its cost base
and utilised the furlough scheme through the pandemic.
Group net assets at 31 March 2021 were £16.5 million (2020: £15.7 million)
and at the year end the Group had cash of £2.4 million (31 March 2020: £1.7
million), with £0.6 million (31 March 2020: £1.2 million) drawn under the
invoice finance facilities. As at the year end the Company had £0.7 million
of headroom in its invoice finance facilities (2020: £0.3 million). Together
with the Lanstead sharing agreements and the Innovate UK loan, the Directors
consider this sufficient liquidity for our current activities over the coming
twelve months having made certain assumptions, further details of which are
described below.
Going concern
The financial statements, which are not yet audited, have been prepared on a
going concern basis, which the Directors believe to be appropriate for the
following reasons:
● The Group meets its day-to-day working capital requirements through
careful cash management and the use of its invoice discounting facilities;
● As at 31 March 2021, the Group had cash balances totalling £2.4
million with £0.7 million of headroom on its invoice discounting facilities;
● The Group was awarded a £5 million loan by Innovate UK to fund
certain of its activities;
● The Group receives monthly settlements from its sharing agreements
with Lanstead, the quantum of which is dependent upon share price; and
● Post year end, the Group received a strategic investment of £1.93
million from Graphene Lab, through a subscription for 4,280,000 new Ordinary
Shares at an issue price of 45 pence per Ordinary Share
The Directors have prepared detailed projections of expected future cash flows
for a period of twelve months from the date of issue of this preliminary
statement. These show that the Group is expected to have sufficient cash
available to meet its obligations as they fall due for the foreseeable future,
being at least twelve months.
The continuing effects of the Covid-19 pandemic remain uncertain so
consequently there remains a risk that trading performance could be below
expectations. The projections also contain certain assumptions with regards to
the share price and the funds that will flow under the sharing agreements with
Lanstead and there is also a risk that the share price could be below
expectations. Material adverse occurrences could therefore lead to a
requirement to take mitigating action.
Such actions could include raising more cash via an equity placing (there is a
track record of successful placings) or, in the absence of a funding round,
cost reductions in the Group. The Directors' have prepared sensitised
projections for these scenarios which indicate that sufficient cash reserves
would exist for the foreseeable future (at least twelve months) without any
additional fundraising.
Other factors that have been considered in the Directors' assessment of going
concern include:
● The expectation that the placing authority for up to 15% of the
existing share capital without pre-emption rights will be renewed at the
Annual General Meeting;
● The continuation and adequacy of bank facilities;
● That there are a number of mitigating actions the Group could
implement, such as reducing the funds spent on development of its technologies
and overheads to concentrate solely on GSCALE opportunities;
● The commencement of the Innovate loan repayment which commences in
May 2024; and
● The purchase post year end of assets through the Innovate UK loan.
After due consideration, the Directors have concluded that there is a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future (at least twelve months). For
this reason, they continue to adopt the going concern basis in preparing the
consolidated financial statements.
Chris Leigh
Chief Financial Officer
Group statement of comprehensive Income (unaudited)
Year ended 31 March 2021
Notes 2021 2020
£'000 £'000
Continuing operations
Revenue 2 6,567 8,281
Cost of sales (5,112) (6,334)
Gross profit 1,455 1,947
Other operating income 107 5
Other (losses)/gains (3,280) 987
Operating expenses (including exceptional items) (6,190) (7,487)
Loss from operations before exceptional items (7,467) (2,941)
Exceptional items 3 (441) (1,607)
Loss from operations (7,908) (4,548)
Finance costs (165) (160)
Finance income 5 5
Loss before income tax (8,068) (4,703)
Income tax - 49
Loss for the year (8,068) (4,654)
Loss attributable to:
- Owners of the parent company (7,779) (4,148)
- Non-controlling interest (289) (506)
(8,068) (4,654)
Loss per share attributable to the equity holders of the Company:
Basic and diluted loss per share 5 (4.45)p (2.69)p
There is no other comprehensive income for the year.
The other (losses)/gains in the year relates to the fair value assessment of
the Lanstead sharing agreements at the balance sheet date.
Group statement of financial position (unaudited)
As at 31 March 2021
Notes 2021 2020
£'000 £'000
Assets
Non-current assets
Intangible assets 6 9,706 4,720
Property, plant and equipment 7 4,119 4,316
Deferred taxation 25 25
Trade and other receivables 772 4,295
14,622 13,356
Current assets
Inventory 1,814 2,252
Trade and other receivables 6,449 4,974
Cash and cash equivalents 2,359 1,657
10,622 8,883
Total assets 25,244 22,239
Equity
Called up share capital 8 1,899 1,697
Share premium account 8 33,003 25,497
Merger reserve 1,256 1,256
Share-based payment reserve 3,249 2,056
Retained losses (21,625) (13,846)
Equity attributable to owners of the parent company 17,782 16,660
Non-controlling interest (1,288) (999)
Total equity 16,494 15,661
Liabilities
Non-current liabilities
Trade and other payables 1,222 1,192
Deferred tax 67 67
Innovate Loan 2,260 -
Long-term borrowings 356 516
3,905 1,775
Current liabilities
Trade and other payables 3,748 3,218
Provisions 119 97
Invoice discounting advances 631 1,156
Current portion of long-term borrowings 347 332
4,845 4,803
Total liabilities 8,750 6,578
Total equity and liabilities 25,244 22,239
Group statement of changes in equity (unaudited)
Year ended 31 March 2021
Share Share Merger Share-based Accumulated losses Total
capital premium reserve payment £'000 Non-controlling equity
£'000 account £'000 reserve Interest £'000
£'000 £'000 £'000
At 1 April 2019 1,536 19,776 1,256 899 (9,698) (493) 13,276
Issue of shares 161 5,721 - - - - 5,882
Loss for the year - - - - (4,148) (506) (4,654)
Share-based payments - - - 1,157 - - 1,157
At 31 March 2020 1,697 25,497 1,256 2,056 (13,846) (999) 15,661
Issue of shares 202 7,506 - - - - 7,708
Loss for the year - - - - (7,779) (289) (8,068)
Share-based payments - - - 1,193 - - 1,193
At 31 March 2021 1,899 33,003 1,256 3,249 (21,625) (1,288) 16,494
Statement of Group cash flows (unaudited)
Year ended 31 March 2021
Notes
2021 2020
£'000 £'000
Cash flows from operating activities
Cash used in operations 9 (734) (1,487)
Net interest paid (160) (155)
Net cash used in operating activities (894) (1,642)
Cash flows from investing activities
Capitalised development costs and purchase of intangible assets (1,638) (351)
Purchase of property, plant and equipment (42) (286)
Net cash used in investing activities (1,680) (637)
Cash flows from financing activities
Share issue (net of funds deferred per sharing agreements)* - 123
Funds received from sharing agreements 2,479 -
Funds received from Innovate UK 2,260 -
Net funds received from CBIL 186 -
Share issue costs (134) (241)
Principal payment of leases under IFRS 16 (990) (791)
Invoice discounting loan (repayments)/proceeds (525) 553
Net cash generated from/(used in) financing activities 3,276 (356)
Increase/(decrease) in cash and cash equivalents 702 (2,635)
Cash and cash equivalents at beginning of year 1,657 4,292
Cash and cash equivalents at end of year 2,359 1,657
* During the year, 8,750,000 new ordinary shares of 1 pence each were issued
at a price of 40 pence per share raising gross proceeds of £3.5 million
which were pledged via a sharing agreement entitling the Company to receive
back those proceeds over a period of 18 months adjusted for the benchmark
share price.
Notes to the Financial Statements (unaudited)
1. Basis of preparation
The consolidated financial statements consolidate the results 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 2021
or 31 March 2020. The financial information for the year ended 31 March 2020
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. The auditors work on the statutory
accounts of the Group for the year ended 31 March 2021 is not yet complete.
The Group financial statements have been prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006. The "requirements of the Companies Act 2006" here means
accounts being prepared in accordance with "international accounting
standards" as defined in section 474(1) of that Act, as it applied immediately
before Implementation Period ('IP') completion day (end of transition period),
including where the Group also makes use of standards which have been adopted
for use within the United Kingdom in accordance with regulation 1(5) of the
International Accounting Standards and European Public Limited Liability
Company (Amendment etc.) (EU Exit) Regulations 2019.
2. Segmental reporting
At 31 March 2021 the Group was 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 performance is focused on the two
principal business segments of Graphene and Plastic Products and Hard Wear and
Metallic Products 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 actual use or pro rata to sales. 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 are being wound down and consequently in future reporting
periods the segmental analysis will be split between technology businesses and
mature businesses.
The segment analysis for the period ended 31 March 2021 is as follows:
Central Graphene and Plastic Hard Wear and Metallic Intra-group Total
£'000 Products Products adjustments £'000
£'000 £'000 £'000
Revenue - 3,697 2,870 - 6,567
Gross profit - 877 578 - 1,455
Other operating income - 103 4 - 107
Other losses (3,280) - - - (3,280)
Operating expenses (2,686) (2,646) (826) (32) (6,190)
Loss from operations (5,966) (1,666) (244) (32) (7,908)
Finance income/(charge) (44) (73) (43) - (160)
Loss before tax (6,010) (1,739) (287) (32) (8,068)
Total assets 26,254 7,498 4,882 (13,390) 25,244
Total liabilities (4,074) (13,171) (4,413) 12,908 (8,750)
Net assets/(liabilities) 22,180 (5,673) 469 (482) 16,494
Capital expenditure 4,388 1,634 - - 6,022
Depreciation/amortisation and impairment 169 599 438 27 1,233
The segment analysis for the period ended 31 March 2020 is as follows:
Central Graphene and Plastic Intra-group Total
£'000 Products Hard Wear adjustments £'000
£'000 And Metallic Products £'000
£'000
Revenue - 3,942 4,342 (3) 8,281
Gross profit - 727 1,220 - 1,947
Other operating income - - 5 - 5
Other gains 987 - - - 987
Operating expenses (2,032) (3,449) (1,126) (4) (6,611)
Impairment of goodwill - (522) (354) - (876)
(Loss) from operations (1,045) (3,244) (255) (4) (4,548)
Finance income/(charge) (1) (97) (57) - (155)
(Loss)/profit before tax (1,046) (3,341) (312) (4) (4,703)
Total assets 21,917 6,906 5,509 (12,093) 22,239
Total liabilities (1,523) (11,090) (4,753) 10,788 (6,578)
Net assets/(liabilities) 20,394 (4,184) 756 (1,305) 15,661
Capital expenditure 34 324 279 - 637
Depreciation/amortisation 23 628 458 29 1,138
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
2021 2020 2021 2020
£'000 £'000 £'000 £'000
United Kingdom 5,705 6,920 8,296 11,040
Rest of Europe 495 831 2,300 2,316
North America 5 273 - -
Other 362 257 4,026 -
6,567 8,281 14,622 13,356
3. Exceptional items
2021 2020
£'000 £'000
Relocation and restructuring costs 53 139
Costs relating to expansion in Asia 137 531
Acquisition costs 186 32
Impairment of goodwill relating to subsidiaries (see note 6) - 876
Other 65 29
441 1,607
4. Dividends
As stated in the Company's 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 2021
and 31 March 2020 is based on the losses attributable to the shareholders of
Versarien Plc divided by the weighted average number of shares in issue during
the year. 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 31 March 2021 there were 14,677,130 (2020: 14,677,130)
potential ordinary shares which have been disregarded in the calculation of
diluted loss per share as they were considered non-dilutive at that date.
Loss Weighted Basic loss
attributable to average per share
shareholders number of pence
£'000 shares
£'000
Year ended 31 March 2021 (7,779) 174,660 (4.45)
Year ended 31 March 2020 (4,148) 153,956 (2.69)
6. Intangible assets
Goodwill Other Total
£'000 intangibles £'000
£'000
Cost
At 1 April 2019 4,431 1,976 6,407
Additions - 351 351
At 31 March 2020 4,431 2,327 6,758
Additions - 5,138 5,138
At 31 March 2021 4,431 7,465 11,896
Accumulated amortisation and impairment
At 1 April 2019 - 1,089 1,089
Amortisation charge - 73 73
Impairment 876 - 876
At 31 March 2020 876 1,162 2,038
Amortisation charge - 152 152
At 31 March 2021 876 1,314 2,190
Carrying value
At 31 March 2021 3,555 6,151 9,706
At 31 March 2020 3,555 1,165 4,720
Other intangible assets
31 March 2021 31 March 2020
£'000 £'000
Customer relationships/order books 27 54
Development costs 2,453 901
Licence 58 28
Intellectual property 3,613 182
Total 6,151 1,165
7. Property, plant and equipment
Group ROU asset Plant and Leasehold Total
equipment improvements £'000
£'000 £'000
Cost
At 1 April 2019 - 9,862 518 10,380
Adjustment on transition to IFRS 16 6,377 (4,453) - 1,924
Additions 160 127 - 287
Disposals - (132) - (132)
At 31 March 2020 6,537 5,404 518 12,459
Additions - 884 - 884
At 31 March 2021 6,537 6,288 518 13,343
Accumulated depreciation
At 1 April 2019 - 7,126 84 7,210
Adjustment on transition to IFRS 16 2,567 (2,567) - -
Charge for the year 820 218 27 1,065
Disposals - (132) - (132)
At 31 March 2020 3,387 4,645 111 8,143
Charge for the year 812 172 24 1,008
Impairment - 73 - 73
At 31 March 2021 4,199 4,890 135 9,224
Net book value
At 31 March 2021 2,338 1,398 383 4,119
At 31 March 2020 3,150 759 407 4,316
Under IFRS16 the Right of Use assets for the Group are as follows:
Group 2021 Group 2020
£'000 £'000
Plant & Equipment Buildings Total Plant & Equipment Buildings Total
Cost 4,613 1,924 6,537 4,613 1,924 6,537
Accumulated depreciation (3,001) (1,198) (4,199) (2,788) (599) (3,387)
Net book value 1,612 726 2,338 1,825 1,325 3,150
8. Called up share capital and share premium
Number Ordinary Share Total
of shares shares premium £'000
'000 £'000 £'000
At 1 April 2019 153,624 1,536 19,776 21,312
Issue of shares 16,058 161 5,721 5,882
At 31 March 2020 169,682 1,697 25,497 27,194
Issue of shares 20,188 202 7,506 7,708
At 31 March 2021 189,870 1,899 33,003 34,902
During the year the Company issued:
● 11,000,000 Ordinary shares as consideration to acquire certain
graphene production related assets and intellectual property from South Korea
based Hanwha Aerospace Company Limited at 39.475 pence per share; and
● 8,750,000 Ordinary shares raising £3.5 million (before expenses)
in an additional subscription agreement with Lanstead Capital Investors LP at
40 pence per share with 437,500 ordinary shares issued in connection with
entering into the Sharing Agreement.
9. Cash used in operations
2021 2020
£'000 £'000
Loss before tax (8,068) (4,703)
Adjustments for:
Share-based payments 1,193 1,157
Depreciation and impairment 1,081 1,065
Amortisation 152 73
Impairment of Goodwill - 876
R&D tax credit repayment - 49
Loss or (gain) on FV movement of sharing agreements 3,280 (987)
Finance cost 160 155
Increase in trade and other receivables (211) (35)
Decrease in inventories 438 1
Increase in trade and other payables 1,241 862
Cash flows from operating activities (734) (1,487)
10. Report and accounts
Copies of the 2021 Annual Report and Accounts will be posted to shareholders
in due course once they are finalised and approved. Further copies may be
obtained by contacting the Company Secretary at the registered office. In
addition, the 2021 Annual Report and Accounts will be available, when
published, to download from the investor relations section on the Company's
website www.versarien.com (http://www.versarien.com) .
- Ends -
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