REG - Versarien PLC - Results for the 18 months ended 30 September 2022
21/02/2023 07:00
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RNS Number : 5021Q Versarien PLC 21 February 2023
21 February 2023
Versarien Plc
("Versarien", the "Company" or the "Group")
Final Results for the 18 months ended 30 September 2022
Versarien Plc (AIM: VRS), the advanced engineering materials group, announces
its audited results for the 18 months ended 30 September 2022. The comparative
figures are for the 12 month period ended 31 March 2021.
Financial Highlights
• Group revenues from continuing operations of £11.1 million (2021: £5.7
million)*
• Graphene revenues of £2.1 million (2021: £0.7 million)
• Adjusted LBITDA** for continuing operations of £2.4 million (2021: £1.9
million)
• Reported loss before tax from continuing operations of £8.3 million (2021:
£8.1 million)
• Reported loss for the period of £8.4 million (2021: £8.1 million)
• Cash of £1.4 million at 30 September 2022 (31 March 2021: £2.4 million)
* Excludes discontinued revenues of £0.5 million (2021: £0.9 million)
** Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation
and excludes Exceptional items, Share-based payment charges and losses
relating to the fair value assessment of the Lanstead sharing agreements)
Operational/Manufacturing Highlights
• Relocation to new dedicated graphene production facility in Longhope,
Gloucestershire, to significantly expand capacity
• 10,000 square foot floor slab laid for new Versarien innovation centre using
the Company's Cementene(TM) and Polygrene(TM) enhanced concrete
• Acquisition of Spanish graphene manufacturing assets transferred to Longhope
during the year and in process of commissioning to provide up to an additional
100 tonne powder capacity per annum
• Equipment to scale up graphene ink production capacity by an additional 12,000
litres per annum delivered and commissioned
• Non-core aluminium business discontinued to concentrate on graphene production
Partnerships/Commercialisation Highlights
• Umbro to integrate Graphene-Wear(TM) into its Elite-Pro-Training Kit range for
2023 Spring/Summer collection
• GoToGym in South America launching active-wear incorporating Versarien's
Graphene-Wear(TM) technology
• BiaBrazil to integrate Graphene-Wear(TM ) into its sports and active wear
ranges
• Commercial agreement signed with Superdry to produce graphene enhanced
garments and discussions ongoing with multiple other garment suppliers
• Global construction companies beginning to trial Cementene(TM) in-house
• Grant agreement signed and project completed to support the development of
Pseudo-Capacitor technology aimed at zero emissions for port-side
infrastructure
• Successful on-time delivery of Defence Science and Technology Laboratory
("DSTL") contract within specification
• Collaboration signed with US-based Flux Footwear, an adaptive footwear
company, to supply graphene enhanced elastomers
• 10 new product demonstrators launched in the period
Funding Highlights
• £1.93 million strategic investment in Versarien by GrapheneLab Co. Ltd.,
South Korea, together with royalty and trademark agreements
• £1.85 million (gross) raised via equity placing post period-end
Neill Ricketts, CEO of Versarien, commented:
"The extended 18-month period has seen both successes and challenges, with the
first 12-months seeing the financial benefits from the DSTL contract which
focussed on understanding the advantages that graphene-loaded materials may
bring to defence applications. In the period we also successfully completed
the GSCALE development stage of the project despite the macro‑economic
challenges faced and the Company is now focussing on the most advanced
Technology Readiness Level stage projects of construction and textiles.
"We remain confident of the environmental and commercial benefits our graphene
technology can bring, but the current macro-economic conditions combined with
the disruptive nature of our products has delayed the commercialisation we
were anticipating. Consequently, we are streamlining the business and focusing
on our primary opportunities in construction and textiles. We will continue to
seek grant funding to support our operations, but will also need the
continuing support of investors, either strategic or from the capital markets,
to fund the business until such time as the graphene market gains traction and
material commercial revenues flow.
"We look forward to updating the market on progress in due course."
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
For further information please contact:
Versarien Plc
Neill Ricketts - Chief Executive Officer +44 (0) 1594 887204
Chris Leigh - Chief Financial Officer
Dr Stephen Hodge - Chief Technology Officer
SP Angel Corporate Finance (Nominated Adviser and Joint Broker)
Matthew Johnson +44 (0) 20 3470 0470
Adam Cowl
Berenberg (Joint Broker)
Mark Whitmore +44 (0) 20 3207 7800
Ciaran Walsh
IFC Advisory Limited (Financial PR & Investor Relations)
Tim Metcalfe +44 (0) 20 3934 6630
Zach Cohen
Notes to Editors:
The strategy of Versarien Plc (AIM:VRS) is to be a globally recognised
graphene company with a wide portfolio of high-quality verified materials
allied to the largest relevant IP portfolio supported by its own UK based
research and development centre driving recurring revenue growth through its
innovative graphene product applications.
For further information please see: http://www.versarien.com
(http://www.versarien.com)
NON-EXECUTIVE CHAIR'S STATEMENT
Following my first statement as Non-executive Chair of Versarien, relating to
the first twelve months of the extended 18-month accounting period, I am
pleased to provide an update for the full period. In doing so I wish to
reassure shareholders that we are doing all we can to progress the Company,
but traction in the graphene market place has proved challenging for all
participants, so it is worth reminding ourselves of what has been achieved and
why we are pursuing a graphene strategy.
· We are a pioneer in the supply of graphene in the UK.
· We have secured IP with over 130 patents and trademarks.
· We have completed 16 Innovate UK projects.
· We received the largest ever UK Innovate loan of £5m to scale up (GSCALE).
· We are the first company to be certified and then re-certified by the Graphene
Council as a "Verified Graphene Producer".
· We have embedded connections with University of Manchester and University of
Cambridge.
· We are EU REACH registered with our CTO leading the Technical Working Group.
· We are a member of the EC's €1bn Graphene Flagship project.
The global graphene market is estimated to be worth US$7.55billion by 2028
with a CAGR of 37.3%. Of this potential market our focus is on construction
where the market is estimated to be US$900 million per annum and
leisure/footwear where it is estimated to be US$360 million per annum. Longer
term we are still involved in the automotive sector where the market is
expected to reach US$340 million and aerospace US$70 million per annum.
We continue to focus our efforts on construction and textiles which we believe
are at the highest technology readiness level and therefore closest to
commercial revenues.
Our production capability at Longhope, Gloucestershire, has increased in
readiness for commercial traction, but challenging macro-economic conditions
have delayed the progress we were anticipating. Nonetheless it is highly
encouraging to see our Cementene(TM) product being tested by major global
construction companies.
Cementene(TM), which is our graphene admixture for the construction industry,
has been used in a number of concrete pours, providing validation for the
technology and we are pursuing the necessary accreditations to allow
full-scale commercialisation.
Whilst we focus on our objective of monetisation it is also vital that we
maintain a pipeline of development opportunities that will provide future
revenues. However, with the prevailing economic climate, we have felt it
prudent to cut costs and streamline our operations so that the focus is more
UK centric.
I would like to thank all our staff for their continued endeavours and very
much look forward to reporting further progress.
Diane Savory OBE
Non-executive Chair
CHIEF EXECUTIVE OFFICER'S REVIEW
The extended 18-month period has seen both successes and challenges with the
first 12-months seeing the financial benefits from the DSTL contract which
focussed on understanding the advantages that graphene-loaded materials may
bring to defence applications. In the period we also successfully completed
the development stage of the GSCALE project despite the macro‑economic
challenges faced and the Company is now focussing on the most advanced
Technology Readiness Level stage projects of construction and textiles,
further details of which are below.
TECHNOLOGY BUSINESSES
UK operations
During the period the Company relocated its graphene manufacturing operations
to Longhope in Gloucestershire whilst at the same time closing the aluminium
operations in Cheltenham, which are shown as discontinued operations. The
Company has now commissioned the first of four "Graphene- Tech" reactors
acquired which in total could provide up to an additional 100 tonnes of powder
capacity for use in multiple sectors including energy storage. The Graphink
processing machines also purchased during the period are fully operational and
can provide up to 12,000 kg of Cementene(TM) (Versarien's graphene enhanced
concrete admixture) or 120,000 kg of Graphene-Wear(TM) formulation per annum.
Construction
The global construction industry is one of the biggest contributors to CO(2)
production, accounting for c.39% of energy- and process-related carbon dioxide
emissions. Concrete contributes circa 8% of the world's CO(2) emissions and
graphene has the potential to significantly improve the performance of
concrete with regards to its carbon footprint. Almost 1,000 tonnes of concrete
have been poured containing Cementene(TM). and the Company is in discussions
with major UK and European construction companies to assess product viability
following the successful completion of testing by a United Kingdom Accredited
Service ("UKAS") laboratory. Consequently, Versarien plans to continue
investment in Graphink processing equipment to support its focus on the
construction sector and the potential environmental benefits that can be
obtained.
The Company has also commissioned its 3D concrete printer and successfully
completed several projects. Versarien intends to co-fund research fellowships
as part of the Digital Roads of the Future project led by National Highways,
housed at the University of Cambridge and the Company is a founding member of
the Roads Research Alliance. We are working with Amey, S2, National Highways,
Costain, Roadfill, Environment Agency, Hedileberg, SSanyong C&E, Cybe,
Tarmac, Sika and Skanska with in-house testing of Cementene(TM) now commencing
in large construction companies.
Textiles and footwear
In partnership with thread and clothing manufacturers, we have conducted a
significant amount of research into the textile industry. Graphene's thermal
conductivity, as well as its antimicrobial, fire resistance and mechanical
strength properties, are highly applicable to the sportswear and protective
clothing industries.
It is also a more sustainable solution to the manufacturing process, which
could help to reduce the number of hydrocarbons and the amount of water used
in textile production, improve the recyclability of products and extend the
lifetime of the garments.
Versarien continues to progress its relationships with clothing brands Umbro,
BiaBrazil and Go To Gym. Some customer photoshoots have been completed for the
Graphene-Wear(TM) product launches anticipated in Spring/Summer 2023, and
designs have been completed for Autumn/Winter 2023 and Spring/Summer 2024. The
Company is also in dialogue with other global sportswear brands with the aim
to launch a number of new products.
Following the product launch with Flux Footwear LLC, the Company continues to
take enquiries from global brands for Graphene-Wear(TM) rubber compounds and
masterbatches. Whilst these two sectors are our primary focus the
opportunities in automotive and aerospace remain and will be further addressed
when funding allows.
DSTL Development Contract
The DSTL contract has been successfully delivered and we are in dialogue with
the UK defence sector regarding the supply of certain products that formed
part of it.
Overseas Operations
As a result of traction taking longer than anticipated we have taken the
strategic decision to focus our resources on higher technology readiness level
applications and markets closer to home.
We will continue to operate from Spain and South Korea, but with a reduced
cost base. The US sales office is closing with the pipeline of enquiries to be
handled from the UK.
United States of America
We have received our first order for sample material from NASA where our
graphene will be investigated for space-craft coating applications. We are
also working with a major fabric and yarn manufacturer to include Versarien's
graphene in ballistic protection, stab resistant, flame retardant and abrasion
resistant garments as well as a high-end bicycle chain lubrication
manufacturer where Versarien's graphene materials have performed exceptionally
well in preliminary tests.
Spain
Gnanomat has continued to test its products in a wide range of markets,
particularly in energy storage with supercapacitors (pseudocapacitors), fuel
cells and zinc/air batteries as well as allied applications such as sensing
and low observability in military applications.
The Company is continuing to work on the INNPRESSME grant project aiming to
create an Open Innovation Test Bed in the area of nanotechnology and advanced
materials. The funds have been used to optimise the pilot plant and gain
access to business opportunities. Gnanomat continues to apply for grants to
support its progress to commercial revenues.
In addition, the company has extended its product portfolio of advanced
materials with very different technologic profiles, such as the
superparamagnetic graphene-based materials with multiple potential
applications.
Gnanomat continues protecting IP by the extension of rights to territories
where larger markets are concentrated in Europe, US, Japan and South Korea.
South Korea
Since acquiring the CVD operations from Hanwha and moving and commissioning
them at the new premises, the core focus has been on growth optimisation of a
portfolio of CVD graphene products on different substrates working with local
partners where appropriate.
Future strategy is to produce demonstrators for use in sensors, imagers and RF
applications including 5G and 6G. These are long term projects which will take
some time to bear fruit, so we have decided to reduce our small scale
operations by two members of staff and rely more on our partnership with
Graphene Labs.
Versarien Korea Limited is also looking at opportunities to sell Cementene(TM)
and Graphene-Wear(TM) products in Korea.
MATURE BUSINESSES
The mature businesses have struggled through Covid and are now facing
macro-economic challenges, including rising energy prices. Whilst they provide
some infrastructure support, they are no longer core activities.
Current Trading and Outlook
We remain confident of the environmental and commercial benefits our graphene
technology can bring, but the current macro-economic conditions combined with
the disruptive nature of our products has delayed the commercialisation we
were anticipating. Consequently, we are streamlining the business and focusing
on our primary opportunities in construction and textiles.
We will continue to seek grant funding to support our operations, but will
also need the continuing support of investors, either strategic or through the
capital markets, to fund the business until such time as the graphene market
gains traction and material commercial revenues flow.
We look forward to updating the market on progress in due course.
Neill Ricketts
Chief Executive Officer
CHIEF TECHNOLOGY OFFICER'S REVIEW
Our R&D team have delivered several key projects in the last 18 months
namely the GSCALE and DSTL projects, and I am particularly proud of being able
to re-certify our Nanene(TM) graphene powder through the rigorous Graphene
Council Verified Graphene Producer programme.
With six white papers published to date, we have launched our "Nanomaterials
Portfolio", a mammoth task ensuring our datasheets are compliant with ISO
standards and the Graphene Council's proposed Graphene Classification
Framework. This portfolio highlights our large array of raw material options
that can enable solutions to a number of market sectors.
Our R&D teams have handed over the majority of the Graphene-Wear(TM) and
Cementene(TM) developments to Versarien Graphene Ltd.'s Production and
Operations teams, and we now move towards obtaining product certifications
such as Oekotex Eco-Passport for our Graphene-Wear(TM) textile coating
formulation (complete), and BS-934 Admixture for Cementene(TM) water-based
graphene admixture (in progress). To support further product developments, we
are seeking commercial and grant funding to expand Graphene-Wear(TM) and
Cementene(TM) to global markets and increase the number of products in the
respective family product portfolios.
Within the construction sector, we are well positioned in Cambridge to support
the Digital Roads of the Future programme and have signed up as a founder
member of the Roads Research Alliance along with around 20 other industry
partners. The programme is spearheaded by National Highways and Costain; we
are striving to recruit and co-fund two Future Roads Fellows but will have
access to the research and results of all funded projects as part of the
alliance. The Future Roads Fellowships part is a £5.9 million programme that
offers 27 experienced researcher fellowships linked to the thematic areas -
digital twins, data science, smart materials, automation and robotics, and
sustainability, all in the context of the roads network. With our
Cementene(TM) developments, and continued progression with 3D concrete
printing, Versarien overlap almost all of these themes and we are sure to be a
pivotal partner.
Whilst construction and textiles are Versarien's major commercial focus, our
long-term vision is to further pursue other GSCALE avenues and CVD graphene
applications. One area that has proved hugely complex is rubber processing; to
add more depth to our scientific knowledge of graphene and related materials
in "Elastomers" projects, we have recruited a PhD student to begin in February
at WMG (University of Warwick) with Prof. Tony McNally to utilise new
state-of-the art rubber processing and testing facilities that are now up and
running. This follows from the recent recruitment of our first PhD student
from Prof. McNally's research group who is now part of our R&D team in
Cambridge; he will be in charge of driving forward many more Polygrene(TM)
thermoplastic compounds, masterbatches and associated products.
Regarding CVD activities, new products will be added to our "Nanomaterials
Portfolio" in due course, but we are now supplying CVD graphene for testing
outside of Korea to UK and US customers. To support application development,
we have a microbiology PhD student at University of Plymouth supervised by Dr
Tina Joshi, who has been developing key markers that will be incorporated onto
our CVD graphene for biosensing during the next two years.
Health & Safety of Graphene
In my previous annual report statement, I touched upon the importance of the
health & safety of graphene as being paramount to allowing graphene and
related nanomaterials to become mainstream in our everyday lives. We continue
to lead the way in the UK and Europe in supporting the compliance of graphene
for REACH, as chair of the graphene REACH (registration, evaluation,
restriction and authorisation of chemical substances) registration consortiums
Technical Working Group, I have been able to update the industry and
stakeholders at several points in the last year. In particular, I had the
opportunity to present to the Graphene Flagship's Standardisation Committee in
January, at the Graphene Flagship's Graphene Week conference in Munich in
September.
Combined with presenting at the two Graphene Council Commercialisation
Conferences in Birmingham, UK and Pittsburgh, USA, we have had important
audience members from UK's Health & Safety Executive (HSE), the European
Chemicals Agency (ECHA) and the US the US Environmental Protection Agency.
Most recently, I presented regulatory updates and challenges at an ISO/TC-229
meeting hosted at the UK's National Physical Laboratory (NPL) in November with
several delegates from other important territories such as Korea, Japan and
China.
I look forward to presenting further to key UK centres and agencies such as
National Physical Laboratory, Department for Environment, Food and Rural
Affairs, Department for Business, Energy and Industrial Strategy, British
Standards Institution, Health and Safety Executive and the UK Health Security
Agency at the second UK Advanced Materials Workshop in February 2023. Our
R&D team also continues to play an active role in European projects that
allow us to further understand and develop techniques for nanotoxicology, with
a new Horizon Europe project kicking-off this month known as i-CARE
(Integrated assessment and Advanced Characterisation of Neuro-Nanotoxicity).
The consortium aims to develop a resilient and adaptive set of advanced
imaging technologies to quantify the physical/chemical properties of graphene
in complex matrices. Versarien will be providing example materials such as
graphene in concretes, tyres or other composite materials and adopting the
developed techniques.
Dr Stephen Hodge
Chief Technology Officer
CHIEF FINANCIAL OFFICER'S REVIEW
Following the extension of the accounting reference date, these results are
for a period of 18 months with the comparatives reflecting a 12-month period.
The aluminium business based at Cheltenham closed during the period and
consequently these results are split between continuing and discontinued
operations and the segmental analysis between the technology and mature
businesses.
Group Results
Revenues from continuing operations were £11.11 million (2021: £5.69
million), a pro-rata increase of 30%. Revenue from graphene, including that
recognised under the DSTL contract, was £2.15 million (2021: £0.70 million)
a pro rata increase of 105% of which DSTL accounted for £1.63 million (2021:
£0.25 million). The loss from continuing operations was £7.69 million (2021:
£7.93 million). This was after charging £1.19 million in respect of the
valuation of the Lanstead Sharing Agreements (2021: £3.28 million).
The adjusted LBITDA for continuing operations was £2.40 million for 18 months
compared to £1.88 million for the prior 12 months calculated as below.
Adjusted LBITDA (which is not a GAAP measure and is not intended as a
substitute for GAAP measures and may not be the same as that used by other
companies) is a measure used by management to reflect the core operating
performance of the underlying businesses rather than the effects of non-core
financial and non-cash expenses.
18 months ended 12 months ended
30 September 2022 31 March 2021
Continuing operations Discontinued operations TOTAL Continuing operations Discontinued operations TOTAL
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/profit from operations (7,693) (130) (7,823) (7,930) 22 (7,908)
Depreciation and amortisation 2,126 41 2,167 1,135 98 1,233
Share based payments 1,510 - 1,510 1,193 - 1,193
Exceptional items 463 64 527 441 - 441
Other losses 1,191 - 1,191 3,280 - 3,280
Adjusted LBITDA (2,403) (25) (2,428) (1,881) 120 (1,761)
The adjustments to the loss from operations as disclosed in the Group
Statement of Comprehensive Income relate to depreciation and amortisation,
share based payment charges, exceptional items and losses related to the fair
value of the Lanstead sharing agreements.
During the period we received delivery of equipment from Hanwha Aerospace in
South Korea which had been developed under government contracts and which were
included as potential assets under the asset purchase agreement signed in the
previous period. These were independently valued at £241,000 and have been
treated as additions to non-current assets with the associated credit treated
as an exceptional item. Warranty claims of £65,000 from the asset purchase
agreement were also successfully concluded and treated as an exceptional
credit.
As part of our previous strategy for global coverage we bid for certain assets
of a US based graphene company that had entered the UK equivalent of
administration. The process reached an advanced stage but eventually another
bidder was preferred. We incurred £82,000 of costs which have been treated as
exceptional items.
The reported loss before tax for continuing operations was £8.32 million
(2021: £8.08 million). Group net assets at 30 September 2022 were £11.6
million (31 March 2021: £16.5 million) with cash at the period end of £1.4
million (31 March 2021: £2.4 million). Net cash used in operating activities
was £3.68 million (2021:£0.89 million) with trade and other payables
reducing by £1.98 million (2021: £1.24 million increase). Investment in
development costs and equipment was £4.66 million (2021: £1.68 million) and
net principal lease payments were £0.93 million (2021: £0.99 million) giving
total cash outflows of £9.27 million (2021: £3.56 million). These activities
were financed by net funds received from the Lanstead sharing agreements of
£3.53 million (2021: £2.34 million), net loans received of £2.78 million
(2021: £2.45 million) and net funds received from the share issue to
GrapheneLab Co Ltd of £1.92 million (2021: £Nil) totalling £8.23 million
(2021: £4.79 million). The deficit of £1.04 million (2021: £1.23 million
surplus) resulted in a modest increase on drawings on the invoice finance
facilities of £0.03 million (2021: £0.53 million decrease) thus reducing
cash at the period-end by £1.01 million (2021: £0.70 million increase).
Our GSCALE development project has completed with the full £5 million drawn
by the period end, repayment of which is now due to commence in 2025.
Technology Businesses
The technology businesses have seen an increase in revenue from £0.70 million
to £2.15 million driven mainly by the recognised revenues from the DSTL
contract. Consequently, the gross margin rose from 13% to 47%. Operating costs
for the 18 months were £4.74 million compared to £1.64 million for the prior
12 month period. The pro-rata increase relates primarily to costs at the new
Longhope production facility, upscaling research and development to deliver
the DSTL and GSCALE projects and a full period of Versarien Korea.
With our strategic focus now concentrated on construction and textiles we have
reviewed the development costs previously capitalised on a number of different
projects and decided that we should only carry forward those related primarily
to the GSCALE project. We have therefore impaired assets by £0.91 million
which has been treated as an exceptional charge. These projects have also
previously attracted grants of £0.66 million which were held as deferred
income in the balance sheet and these have been released as an exceptional
credit.
In addition, we have undertaken a cost cutting programme to reduce annual
costs by £1.4 million. As part of this we are currently in the process of
winding-up Versarien Graphene Inc., including settling certain liabilities at
an agreed cost of £157,000.
Mature Businesses
The mature business segment has seen increased revenues of 20% on a pro rata
basis, and returned a small profit from operations of £0.03 million for 18
months compared to the previous 12 months loss of £0.6 million. As referred
to in the Chief Executive Officer's report the businesses are no longer core
as we seek to transition to focusing solely on the graphene technology.
Going Concern
These 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 30 September 2022, the Group had cash balances totalling £1.4 million
plus £0.4 million of headroom on its invoice discounting facilities;
• The Group raised £1.85 million gross by way of a placing in December 2022 and
has unused authority to issue 10.6 million shares without pre-emption rights
until the next AGM due by 31 March 2023 and expects the placing authority to
be renewed at that AGM; and
• The Group has cut costs as part of its strategy to focus on construction and
textile opportunities.
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. As previously stated, the funding strategy is to apply for grants,
debt and finally equity.
A number of significant grants have been applied for but with no guarantee of
successful outcome, although the final stages have been reached. If
successful, then the Group will have sufficient working capital for the next
12 months, but if not, then the Group will need to raise additional funding.
As a consequence, this represents a material uncertainty that may cast
significant doubt on the Group and Company's ability to continue as a going
concern and therefore it may be unable to realise its assets and discharge its
liabilities in the normal course of business. The financial statements do not
include the adjustments that would result if the Group was unable to continue
as a going concern.
The Board is of the opinion that the Group will be able to secure the required
funding through strategic investment, equity issue or other financial
instruments. However, the timing and availability of funding sources is
currently outside of the control of the Board and none of this funding is
currently committed. Whilst noting this, the Directors continue to adopt the
going concern basis in preparing the consolidated financial statements.
Chris Leigh
Chief Financial Officer
Group statement of comprehensive income
For the 18 months ended 30 September 2022
Note 18 months to 12 months to
30 September 31 March
2022 2021
£'000 Restated**
£'000
Continuing operations
Revenue 3 11,106 5,685
Cost of sales (7,739) (4,498)
Gross profit 3,367 1,187
Other operating income 257 103
Other losses * (1,191) (3,280)
Operating expenses (including exceptional items) (10,126) (5,940)
Loss from operations before exceptional items (7,230) (7,489)
Exceptional items 4 (463) (441)
Loss from operations (7,693) (7,930)
Finance costs (644) (153)
Finance income 14 5
Loss before income tax (8,323) (8,078)
Income tax 5 59 -
Loss from continuing operations (8,264) (8,078)
(Loss)/Profit from discontinued operations 2 (141) 10
Loss for the period (8,405) (8,068)
Loss attributable to:
Owners of the parent company (8,069) (7,779)
Non-controlling interest (336) (289)
(8,405) (8,068)
Loss per share attributable to the equity holders of the Company:
Basic and diluted loss per share 6
(4.16)p (4.45)p
There is no other comprehensive income for the period
* The other losses in the period relate to the fair value assessment of the
Lanstead sharing agreements.
** The audited results have been restated in accordance with the required
disclosure of discontinued operations.
Group statement of financial position
As at 30 September 2022
Restated*
30 September 31 March
2022 2021
Note £'000 £'000
Assets
Non-current assets
Intangible assets 7 10,636 9,706
Property, plant and equipment 8 5,861 4,119
Deferred taxation 25 25
Trade and other receivables 38 772
16,560 14,622
Current assets
Inventory 2,131 1,814
Trade and other receivables 2,155 6,449
Cash and cash equivalents 1,351 2,359
5,637 10,622
Total assets 22,197 25,244
Equity
Called up share capital 9 1,941 1,899
Share premium account 9 34,961 33,003
Merger reserve 1,256 1,256
Share-based payment reserve 4,759 3,249
Accumulated losses (29,694) (21,625)
Equity attributable to owners of the parent company 13,223 17,782
Non-controlling interest (1,624) (1,288)
Total equity 11,599 16,494
Liabilities
Non-current liabilities
Trade and other payables 600 994
Deferred tax liabilities 67 67
Innovate Loan 5,000 2,260
Long-term borrowings 1,595 584
7,262 3,905
Current liabilities
Trade and other payables 1,957 3,279
Provisions - 119
Invoice discounting advances 660 631
Current portion of long-term borrowings 719 816
3,336 4,845
Total liabilities 10,598 8,750
Total equity and liabilities 22,197 25,244
· The Company has reclassified certain items none of which have any
effect on the income statement or net assets of the Group
Group statement of changes in equity
For 18 months ended 30 September 2022
Share capital Share premium account Merger reserve Share-based payment reserve Accumulated losses Non-controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 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
Issue of shares 42 1,958 - - - - 2,000
Loss for the period - - - - (8,069) (336) (8,405)
Share-based payments - - - 1,510 - - 1,510
At 30 September 2022 1,941 34,961 1,256 4,759 (29,694) (1,624) 11,599
Statement of Group cash flows
For the 18 months ended 30 September 2022
30 September 31 March 2021
2022 £'000
£'000
Cash flows from operating activities
Cash used in operations (3,280) (734)
Interest paid (402) (160)
Net cash used in operating activities (3,682) (894)
Cash flows from investing activities
Purchase of intangible assets (2,751) (1,638)
Purchase of property, plant and equipment (1,910) (42)
Net cash used in investing activities (4,661) (1,680)
Cash flows from financing activities
Share issue (net of funds deferred per sharing agreement)
1,926 -
Share issue costs (10) (134)
Funds received from Innovate UK 2,740 2,260
Funds received from sharing agreements 3,537 2,479
Net funds received from CBILS 41 186
Principal payment of leases under IFRS 16 (928) (990)
Invoice discounting loan (repayments)/proceeds 29 (525)
Net cash generated from financing activities 7,335 3,276
(Decrease)/increase in cash and cash equivalents (1,008) 702
Cash and cash equivalents at beginning of period 2,359 1,657
Cash and cash equivalents at end of period 1,351 2,359
Note to the statement of Group cash flows
For the 18 months ended 30 September 2022
30 September 31 March
2022 2021
£'000 £'000
Loss before tax (including discontinued operations) (8,464) (8,068)
Adjustments for:
Share-based payments 1,510 1,193
Depreciation 1,677 1,081
Amortisation 490 152
Disposal of tangible assets 292 -
Impairment of intangible assets 1,331 -
Finance cost/(income) 630 160
Loss/(gain) on FV movement of sharing agreement 1,191 3,280
R&D tax credit repayment 59 -
Decrease/(increase) in trade and other receivables and investments 301 (211)
(Increase)/decrease in inventories (317) 438
(Decrease)/increase in trade and other payables (1,980) 1,241
Cash flows from operating activities (3,280) (734)
Notes to the final results
For the 18 months ended 30 September 2022
1. Basis of preparation
The Group consolidated financial statements have been prepared in accordance
with UK-adopted, International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
The Group's financial statements have been prepared on a going concern basis
under the historical cost convention. The consolidated financial statements
are presented in sterling amounts. Amounts are rounded to the nearest
thousands, unless otherwise stated.
The financial information contained in this announcement does not constitute
the Group's statutory accounts for the period ended 30 September 2022 but is
derived from those accounts which have been audited and which will be filed
with the Registrar of Companies in due course.
The auditors' report on the Annual Report and Financial Statements for the
period ended 30 September 2022 was unqualified, did not contain a statement
under s498(2) or s498(3) of the Companies Act 2006 but drew attention to
material uncertainty with regard to going concern as follows:
"We draw your attention to the going concern section of accounting policies of
the financial statements which indicate that the group needs to raise
additional funding within a period of less than 12 months from the date of
approval of these financial statements in order to meet liabilities as they
fall due, and that the required funding is yet to be secured.
As stated in the going concern section of the accounting policies, these
events or conditions, along with other matters set out in the going concern
section of the accounting policies, indicate that a material uncertainty
exists that may cast significant doubt on the Group and Parent Company's
ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
Given the material uncertainty noted above and our risk assessment we
considered going concern to be a key audit matter. Our evaluation of the
Directors' assessment of the Group and the Parent Company's ability to
continue to adopt the going concern basis of accounting and in response to the
key audit matter included:
• Obtaining an understanding of how the Directors undertook the going concern
assessment process to determine if we considered it to be appropriate for the
circumstances;
• Challenge of the Directors' going concern assessment, including the
reasonableness of assumptions and downside stress case sensitivities applied,
using our underlying knowledge of the business;
• Testing of the mathematical accuracy and consideration of the reasonableness
of the assumptions made and available headroom throughout the forecast period
extending from the date of approval of the financial statements;
• Consideration of the key sensitivities applied in the cash flow model
pertaining to revenue and cost base, the continued use of the finance
facilities and management of the Group's and Company's cost base;
• Analysing post year end trading results compared to forecast and current year
to evaluate the accuracy and achievability of forecasts; and
• Assessing the completeness and accuracy of disclosures in relation to going
concern and whether significant judgements have been appropriately disclosed.
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate."
2. Discontinued operations
The Group has exited the non-core aluminium business of Versarien Technologies
Limited based in Cheltenham and the company has been re-named Versarien
Graphene Limited. It will be used as the entity for graphene production and
sales whilst 2-DTech Limited and Cambridge Graphene Limited will continue as
the UK research and development arms of the graphene business. Financial
information relating to the discontinued operation is set out below.
30 September 31 March
2022 2021
Note £'000 £'000
Revenue 534 882
Cost of sales (427) (614)
Gross profit 107 268
Other operating income 1 4
Operating expenses (including exceptional items) (238) (250)
(Loss)/Profit from operations before exceptional items (66) 22
Exceptional items (64) -
(Loss)/Profit from operations (130) 22
Finance charge (11) (12)
Loss before income tax (141) 10
Income tax - -
(Loss)/profit from discontinued operations (141) 10
Net assets, excluding intra-group indebtedness at 31 March 2021 was £278,000.
3. Segmental information
At 30 September 2022, the Group is organised into two business segments.
Central costs are reported separately.
Information reported to the Group's Chief Executive Officer for the purposes
of resource allocation and assessment of segment performance is focussed on
the two principal business segments of Technology and Mature Businesses, and,
accordingly, the Group's reportable segments under IFRS 8 are based on these
activities.
Segment profit/(loss) represents the profit/(loss) earned by each segment,
including a share of central administration costs, which are allocated on the
basis of time spent by central staff on subsidiary affairs. This is the
measure reported to the Chief Executive Officer for the purposes of resource
allocation and assessment of segment performance.
The non-core aluminium operations of Versarien Technologies Limited were
closed during the period and are presented below as discontinued operations.
Technology Businesses Mature Businesses Intra-group adjustments Total continuing Operations Discontinued Operations Total
Central
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue - 2,146 8,960 - 11,106 534 11,640
Gross profit (29) 1,008 2,388 - 3,367 107 3,474
Other operating income - 251 6 - 257 1 258
Other losses (1,191) - - - (1,191) - (1,191)
Operating expenses (14,916) (4,740) (2,365) 11,895 (10,126) (238) (10,364)
(Loss)/Profit from operations (16,136) (3,481) 29 11,895 (7,693) (130) (7,823)
Finance charge 159 (76) (104) (609) (630) (11) (641)
Loss before tax (15,977) (3,557) (75) 11,286 (8,323) (141) (8,464)
Total assets 15,824 9,232 7,319 (10,178) 22,197 - 22,197
Total liabilities (5,853) (22,292) (2,997) 20,544 (10,598) - (10,598)
Net assets/(liabilities) 9,971 (13,060) 4,322 10,366 11,599 - 11,599
Capital expenditure 403 5,005 1,054 - 6,462 - 6,462
Depreciation/amortisation and impairment
566 1,480 993 459 3,498 - 3,498
The segment analysis for the year ended 31 March 2021 is as follows:
Technology Mature Intra-group Total
Central Businesses Businesses adjustments Continuing operations Discontinued Operations Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue - 703 4,982 - 5,685 882 6,567
Gross profit - 91 1,096 - 1,187 268 1,455
Other operating income - 103 - - 103 4 107
Other losses (3,280) - - - (3,280) - (3,280)
Operating expenses (2,686) (1,638) (1,584) (32) (5,940) (250) (6,190)
(Loss)/Profit from operations (5,966) (1,444) (488) (32) (7,930) 22 (7,908)
Finance charge (44) (33) (71) - (148) (12) (160)
Loss before tax (6,010) (1,477) (559) (32) (8,078) 10 (8,068)
Total assets 26,247 5,257 6,449 (13,391) 24,562 682 25,244
Total liabilities (3,808) (15,116) (2,330) 12,908 (8,346) (404) (8,750)
Net assets/(liabilities) 22,439 (9,859) 4,119 (483) 16,216 278 16,494
Capital expenditure 4,388 1,634 - - 6,022 - 6,022
Depreciation/amortisation and impairment
164 444 500 27 1,135 98 1,233
Geographical information
The Group's revenue from external customers and information about its segment
assets by geographical location for continuing operations are detailed below:
Revenue Non-current Assets
30 September 31 March 30 September 31 March
2022 2021 2022 2021
£'000 £'000 £'000 £'000
United Kingdom 9,466 4,823 16,342 8,296
Rest of Europe 909 495 49 2,300
North America 16 5 - -
Other 715 362 169 4,026
11,106 5,685 16,560 14,622
4. Exceptional items
30 September 31 March
2022 2021
£'000 £'000
Continuing Operations
Goodwill impairment 423 -
Development cost impairment 908 -
Deferred income related to development cost impairment (660) -
Relocation and restructuring costs - 53
(Credit)/charge relating to expansion in Asia (306) 137
Acquisition costs 82 186
Other 16 65
463 441
Discontinued Operations
Relocation and restructuring costs 64 -
The exceptional credit of £306,000 arises principally from the delivery of
additional plant and equipment not available for fair valuing at the time of
acquisition and relate to the completion of South Korean government contracts
by Hanwha Aerospace the benefit of which was due to Versarien in accordance
with asset purchase agreement signed in the prior financial year.
Acquisition costs of £82,000 relate to the purchase of certain assets of a
USA graphene company in administration that did not proceed to contract.
5. Taxation
The tax credit for the period of £59,000 relates to an R&D tax credit.
The charge on the results for the period is £nil (2021: £nil). At the year
end the Group had £25.5 million (2021: £19.4 million) of trading losses
carried forward to set-off against future trading profits. Taxation received
in the year relates to R&D tax credit.
6. Loss per share
The calculation of the basic loss per share for the period ended 30 September
2022 and 31 March 2021 is based on the losses attributable to the shareholders
of the Versarien plc Group divided by the weighted average number of shares in
issue during the period. The calculation of diluted loss per share is based on
the basic loss per share adjusted to allow for the issue of shares on the
assumed conversion of all dilutive options. However, in accordance with IAS 33
"Earnings per Share", potential Ordinary shares are only considered dilutive
when their conversion would decrease the profit per share or increase the loss
per share.
As at 30 September 2022, there were 15,205,850 (2021: 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.
Attributable to owners of parent company Weighted average number of shares Basic loss per share pence
£'000 '000
Period ended 30 September 2022 (8,069) 194,027 (4.16)
Year ended 31 March 2021 (7,779) 174,660 (4.45)
7. Intangible assets
Patents, trademarks and other
Development
Goodwill Costs Intangibles Total
£'000 £'000 £'000 £'000
Cost
At 1 April 2020 4,431 1,412 915 6,758
Additions - 1,553 3,585 5,138
At 31 March 2021 4,431 2,965 4,500 11,896
Additions - 2,584 167 2,751
At 30 September 2022 4,431 5,549 4,667 14,647
Accumulated amortisation and impairment
At 1 April 2020 876 489 673 2,038
Amortisation charge - 2 150 152
At 31 March 2021 876 491 823 2,190
Amortisation charge - 1 489 490
Impairment 423 908 - 1,331
At 30 September 2022 1,299 1,400 1,312 4,011
Carrying value
At 30 September 2022 3,132 4,149 3,355 10,636
At 31 March 2021 3,555 2,474 3,677 9,706
8. Property, plant and equipment
Plant and equipment Leasehold improvements
ROU asset Total
£'000 £'000 £'000 £'000
Cost
At 1 April 2020 6,537 5,404 518 12,459
Additions - 884 - 884
At 31 March 2021 6,537 6,288 518 13,343
Additions 1,801 1,776 134 3,711
Disposals (1,742) (30) (84) (1,856)
At 30 September 2022 6,596 8,034 568 15,198
Accumulated depreciation
At 1 April 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
Charge for the period 1,113 455 109 1,677
Disposals (1,505) (27) (32) (1,564)
At 30 September 2022 3,807 5,318 212 9,337
Net book value
At 30 September 2022 2,789 2,716 356 5,861
At 31 March 2021 2,338 1,398 383 4,119
9. Called up share capital and share premium
Number of shares Called up share capital Share premium Total
'000 £'000 £'000 £'000
At 1 April 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
Issue of shares 4,280 42 1,958 2,000
At 30 September 2022 194,150 1,941 34,961 36,902
The called up share capital in the table above represents the total number of
authorised, issued and fully paid Ordinary shares with a nominal value of
£0.01 per share.
During the period the Company issued to Graphene Labs 4,280,000 new ordinary
shares (the "Subscription Shares") at an issue of price of 45 pence per
Ordinary Share (the "Issue Price").
10. 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.
11. Report and accounts
Copies of the 2022 Annual Report and Accounts will be posted to shareholders
in due course. Further copies may be obtained by contacting the Company
Secretary at the registered office. In addition, the 2022 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) .
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