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RNS Number : 3143R Versarien PLC 06 June 2024
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
6 June 2024
Versarien Plc
("Versarien", the "Company" or the "Group")
Interim Results for the six months ended 31 March 2024
Versarien Plc (AIM: VRS), the advanced engineering materials group, announces
its unaudited interim results for the six months ended 31 March 2024.
Financial Summary
● Group revenues of £2.50 million (2023: £2.62 million)
● Graphene revenues of £0.28 million (2023: £0.09 million)
● Grant income of £0.20 million (2023: £0.06 million)
● Adjusted LBITDA* of £0.79 million (2023: £2.01 million)
● Loss before tax of £1.77 million (2023: £3.40 million)
● Cash of £0.70 million as at 31 March 2024 (30 September 2023:
£0.60 million)
*Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation)
excludes Exceptional items and Share-based payment charges)
Operational Highlights
● Completed an agreement with MCK Tech (Korea) for the exclusive
licence of five CVD patents
● Sold South Korean plant and equipment to MCK Tech (Korea) for
£604,000
● Completed a know-how and manufacturing licence agreement with
Montana Quimica LTDA, a Brazilian multinational focussed on the production of
paints and wood finishing products
● Entered into a mutual letter of commitment to support Building for
Humanity to provide 3D concrete printed materials for social housing in
Accrington
Stephen Hodge, Chief Executive Officer of Versarien, commented:
"The re-focussing of the business to its core graphene technology combined
with a manufacturing-light approach is beginning to bear fruit financially
with losses continuing to fall. We have a number of parties showing initial
interest in licensing our technology as well as progressing our strategic
relationships in core areas particularly construction including 3D concrete
printing. We remain optimistic about the future as we continue to streamline
our operations, capitalise on our strategic partnerships and drive
technological advancements."
For further information please contact:
Versarien Plc
Stephen Hodge - Chief Executive Officer c/o IFC
Chris Leigh - Chief Financial Officer
SP Angel Corporate Finance LLP (Nominated Adviser and Broker)
Matthew Johnson +44 (0) 20 3470 0470
Adam Cowl
IFC Advisory Limited (Investor Relations)
Tim Metcalfe +44 (0) 20 3934 6630
Zach Cohen
Notes to Editors:
The strategy of Versarien plc (AIM:VRS) is to be a development-led advanced
materials company focussed on specific sectors that will lead to a
manufacturing-light and licensing model.
For further information please see: http://www.versarien.com
(http://www.versarien.com)
Chair's Statement
It is only a short time since we updated the market with our Annual Report to
30 September 2023, published on 28 March 2024, but nonetheless I am pleased to
report on further progress made.
The disposal of the two mature businesses remains an ongoing process. Talks
are at an advanced stage with one party regarding the AAC plastics business,
although there can be no certainty that this will lead to a successful sale.
The pipeline of opportunities continues to grow and supports our view of
reaching EBITDAE positive during the second half of next year. Whilst the
Group still remains loss making at present it has made significant progress on
reducing its LBITDAE over the last 18 months from £2 million in the first
half of the 2023 financial year, to £1 million in the second half of the same
period and now to £0.8 million in the period under review.
I am grateful for the support we continue to receive from both new and
existing shareholders and to all our staff as we continue to transition the
business into an IP led licensing model and look forward to updating the
market on future developments in due course.
Diane Savory OBE
Non-executive Chair
Chief Executive Officer's Review
The first half of the financial year has marked a significant period of
strategic refocus and operational efficiency for the Group. We have made
considerable progress in enhancing our core technology businesses and aligning
our business model towards a manufacturing-light approach. This shift is
already reflected in our improved financial metrics and the birth of new
strategic partnerships.
Graphene developments
Our strategic partnership with Montana Quimica LTDA (Brazil) with whom we have
secured a know-how and manufacturing licence agreement reinforces our presence
in South America. The sale of CVD graphene manufacturing equipment to MCK Tech
(South Korea) aligns with our manufacturing-light strategy and provides
working capital; the opportunity to remain operating in the area of CVD
graphene in collaboration with MCK Tech is underpinned by our licencing
agreements. We have further strengthened relationships in Korea through
supporting the development of international standards for graphene and 2D
materials, funded by the Korea Evaluation Institute of Industrial Technology
(KEIT) until December 2028. KEIT is an organisation dedicated to establishing
a programme of international joint research and development between research
institutes of the Republic of Korea and overseas organisations.
3D construction printing developments
3D construction printing continues to gain traction. We have delivered the
"Physical and Mechanical Properties of 3D Printed Concrete" report to the
Office for Product Safety and Standards, part of the Department for Business
and Trade and have recently signed a letter of mutual commitment to support
the "Charter Street Accrington" social housing project led by Building for
Humanity. This initiative represents the largest 3D housing construction
project in the UK, exemplifying our commitment to innovation and
sustainability. This project is a pivotal opportunity to showcase Versarien's
capabilities in enabling low-carbon, efficient construction solutions. The
project is due to start during H2 2024.
Outlook
I extend my gratitude to our shareholders, partners, and dedicated team for
their continued support as we navigate this phase of growth and innovation.
The re-focusing of our business towards our core technology businesses and
strategic collaborations is bearing fruit. Our continued divestment from
non-core activities will see a reduction in overall revenues, but the notable
increase in graphene revenues and grant income, underscore our more focused
approach. We are witnessing a reduction in losses and a growing interest in
licensing opportunities that positions Versarien for sustained growth and
industry leadership. We remain optimistic about the future as we continue to
streamline our operations, capitalise on our strategic partnerships and drive
technological advancements in the construction and leisure sectors.
Dr Stephen Hodge
Chief Executive Officer
Chief Financial Officer's review
The results for the period continue to show reduced losses as we seek to
transition the business into a financially viable operation. The Technology
Businesses have seen an improvement in revenues to £277,000 from £87,000 in
the comparative period. In addition, income from grants awarded to Gnanomat
have resulted in an increase in other income from £54,000 to £202,000.
Further information is given in note 2, segmental information.
The change in strategy to a much-simplified structure has resulted in a number
of cost savings, including exiting part of the lease at Longhope following the
adoption of the manufacturing-light strategy.
The mature businesses have seen a revenue decline, albeit that AAC is now
seeing signs of some reversal. The disposal process for both Total Carbide and
AAC Cyroma remains ongoing. AAC is more advanced and its assets and
liabilities are now classified as "held for sale" and its results treated as a
discontinued operation albeit there is no certainty of completion.
The adjusted LBITDA for operations is calculated as follows:
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
6 months ended 6 months ended 6 months ended 6 months ended 6 months ended 6 months ended
31 March 2024 31 March 31 March 2024 31 March 2023 31 March 31 March 2023
2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
(Loss) from operations (1,373) (148) (1,521) (3,033) (97) (3,130)
Depreciation and Amortisation 324 35 359 594 89 683
Share based payments 147 - 147 264 - 264
Exceptional items 229 - 229 170 - 170
Adjusted LBITDA (673) (113) (786) (2,005) (8) (2,013)
Adjusted LBITDA (which is not a GAAP measure and is not intended as a
substitute for GAAP measures and may not be the same as that used by other
companies) is a measure used by management to reflect the core operating
performance of the underlying businesses rather than the effects of non-core
financial and non-cash expenses.
The reported loss before tax was £1.77 million (2023: £3.40 million). Group
net assets at 31 March 2024 were £0.98 million (30 September 2023: £1.08
million) with cash at the period end of £0. 70 million (30 September 2023:
£0.60 million).
Net cash used in operating activities was £0.77 million (2023: £1.83
million) and cash used in investing activities was £0.02 million (2023:
£0.14 million), net principal lease payments were £0.24 million (2023:
£0.35 million) and CBILS repayments £0.04 million (2023: £0.05 million),
giving total cash outflows of £1.07 million (2023: £2.37 million). These
outflows were financed by net funds received from the share issues of £1.39
million (2023: £2.02 million).
The surplus of £0.32 million (2023: £0.35 million deficit) together with
reduced drawings on the invoice finance facilities of £0.22 million (2023:
£0.24 million) resulted in a cash increase of £0.10 million (2023: £0.59
million decrease).
Going Concern
The interim statements have been prepared on a going concern basis as
described in note 1, basis of preparation.
Chris Leigh
Chief Financial Officer
Consolidated Interim Financial Statements
Group statement of comprehensive income
For the 6 months ended 31 March 2024
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
31 March 31 March 31 March 31 March 31 March 31 March
2024 2024 2024 2023 2023 2023
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
£'000 £'000 £'000 £'000 £'000 £'000
Notes
Revenue 2 1,338 1,159 2,497 1,400 1,221 2,621
Cost of sales (834) (955) (1,789) (1,153) (985) (2,138)
Gross profit 504 204 708 247 236 483
Other operating income 205 - 205 57 - 57
Operating expenses (including exceptional items) (2,082) (352) (2,434) (3,337) (333) (3,670)
Loss from operations before exceptional items (1,144) (148) (1,292) (2,863) (97) (2,960)
Exceptional items 3 (229) - (229) (170) - (170)
Loss from operations (1,373) (148) (1,521) (3,033) (97) (3,130)
Finance charge (232) (20) (252) (248) (22) (270)
Loss before income tax (1,605) (168) (1,773) (3,281) (119) (3,400)
Income Tax 4 133 - 133 - - -
Loss for the period (1,472) (168) (1,640) (3,281) (119) (3,400)
Loss attributable to:
- Owners of the parent company (1,488) (168) (1,656) (3,080) (119) (3,199)
- Non-controlling interest 16 - 16 (201) - (201)
(1,472) (168) (1,640) (3,281) (119) (3,400)
Loss per share attributable to the equity holders of the Company:
Basic and diluted loss per share 5 (0.23)p (1.55)p
There is no other comprehensive income for the period.
Group statement of financial position
As at 31 March 2024
Note 31 March 30 September
2024 2023
Unaudited Audited
£'000 £'000
Assets
Non-current assets
Intangible Assets 6 2,768 2,763
Property, plant and equipment 2,907 3,443
Trade and other receivables 36 36
5,711 6,242
Current assets
Inventory 1,095 1,528
Trade and other receivables 1,524 1,409
Assets held for sale 7 1,005 604
Cash and cash equivalents 675 596
4,299 4,137
Total assets 10,010 10,379
Equity
Called up share capital - ordinary shares 149 3,308
Called up share capital - deferred shares 3,423 -
Share premium 37,853 36,724
Merger reserve 1,256 1,256
Share-based payment reserve 5,435 5,289
Accumulated losses (45,037) (43,382)
Equity attributable to owners of the parent company 3,079 3,195
Non-controlling interest (2, 099) (2,115)
Total equity 980 1,080
Liabilities
Non-current liabilities
Trade and other payables 590 501
Deferred taxation - 6
Innovate Loan 5,000 5,000
Long-term borrowings 726 995
6,316 6,502
Current liabilities
Trade and other payables 1,098 1,479
Invoice discounting advances 211 762
Current portion of long-term borrowings 488 556
Liabilities held for sale 7 917 -
2,714 2,797
Total liabilities 9,030 9,299
Total equity and liabilities 10,010 10,379
Statement of Group cash flows
For the 6 months ended 31 March 2024
6 months ended
31 March 6 Months ended
2024 31 March
Unaudited 2023
£'000 Unaudited
£'000
Cash flows from operating activities
Cash used in operations (658) (1,561)
Interest paid (114) (270)
Net cash used in operating activities (772) (1,831)
Cash flows from investing activities
Purchase/capitalisation of intangible assets (17) (98)
Purchase of property, plant and equipment (1) (45)
Net cash used in investing activities (18) (143)
Cash flows from financing activities
Share issue 1,470 2,040
Share issue costs (77) (21)
Net funds (paid)/received from CBILS (38) (52)
Principal payment of leases under IFRS 16 (240) (347)
Invoice discounting loan (repayments)/proceeds (224) (235)
Net cash generated from financing activities 891 1,385
101 (589)
Increase in cash and cash equivalents
Cash and cash equivalents at start of period 596 1,351
Cash and cash equivalents at end of period 697 762
Note to the statement of Group cash flows
For the 6 months ended 31 March 2023 6 months ended
31 March 6 months ended
2024 31 March
Unaudited 2023
£'000 Unaudited
£'000
Loss before income tax (1,773) (3,400)
Adjustments for:
Share-based payments 147 264
Depreciation 347 534
Amortisation 12 149
Finance cost 252 270
R&D Tax credit received 133 -
Increase/(Decrease) in trade and other receivables and investments (110) 200
(Increase)/Decrease in inventories 239 156
(Decrease)/Increase in trade and other payables 95 266
Cash used in operations (658) (1,561)
Discontinued operations
6 months ended
31 March 6 months ended
2024 31 March
Unaudited 2023
£'000 Unaudited
£'000
Net cash generated/(used) in operating activities 102 215
Net cash used in investing activities - -
Net cash generated/(used) from financing activities (93) (216)
Increase/(decrease) in cash and cash equivalents from discontinued operations 9 (1)
Notes to the unaudited interim statements
For the 6 months ended 31 March 2024
1. Basis of preparation
Versarien Plc is an AIM quoted company incorporated and domiciled in the
United Kingdom under the Companies Act 2006. The Company's registered office
is Units 1A-D, Longhope Business Park, Monmouth Road,
Longhope, Gloucestershire, GL17 0QZ.
The interim financial statements were prepared by the Directors and approved
for issue on 6 June 2024. These interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 30 September 2023 were approved by
the Board of Directors on 27 March 2024 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified and
did not contain statements under sections 498 (2) or (3) of the Companies Act
2006. The report contained reference to a material uncertainty related to
going concern.
As permitted, these interim financial statements have been prepared in
accordance with UK AIM Rules and UK-adopted IAS 34, "Interim Financial
Reporting". They should be read in conjunction with the annual financial
statements for the year ended 30 September 2023, which have been prepared in
accordance with UK-adopted international accounting standards, consistent with
the IFRS framework adopted in UK law. The accounting policies applied are
consistent with those of the annual financial statements for the period ended
30 September 2023, as described in those financial statements. Where new
standards or amendments to existing standards have become effective during the
year, there has been no material impact on the net assets or results of the
Group.
These interim financial statements have been prepared on a going concern basis
under the historical cost convention.
However, whilst the Company continues to develop and seek to commercialise its
graphene technology it remains reliant upon the capital markets and/or asset
sales to continue as a going concern up until such time as it generates
sufficient revenues to cover its costs.
The Directors have prepared detailed projections of expected future cash flows
for a period of twelve months from the date of issue of these interim results
and have made the following assumptions in support of adopting the going
concern basis in preparation of these interim results:
· Versarien will be able to raise cash on the capital markets. There is no certainty as to timing or quantum, but the Company has a history of raising capital on a regular basis. The Company meets the criteria for EIS/VCT investment which potentially widens the capital pool it may access.
·The Company will be able to sell its mature businesses having already sold its Korean plant with receipts due on a staged basis.
In making their going concern assessment, the Directors have forecast that
sufficient additional funding will be raised to enable the Group to meet
liabilities as they fall due for a period of at least 12 months from the date
of issue of these interim results.
After due consideration, the Directors have concluded that it is appropriate
to prepare the financial statements on a going concern basis subject to
raising the required funds either through asset sales and/or raising
sufficient equity.
The auditors' report on the Annual Report and Financial Statements for the
period ended 30 September 2023 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, details of which are
described in the Annual Report for 2023 which is available on the Company's
website.
Certain statements within this report are forward looking. The expectations
reflected in these statements are considered reasonable. However, no assurance
can be given that they are correct. As these statements involve risks and
uncertainties the actual results may differ materially from those expressed or
implied by these statements. The interim financial statements have not been
audited.
2. Segmental information
The segmental analysis for the 6 months to 31 March 2024 is as follows:
Central Technology Businesses Mature Businesses Intra-group Discontinued operations TOTAL
Adjustments
£'000 £'000 £'000 £'000 £'000 £'000
Revenue - 277 1,061 - 1159 2,497
Gross Margin - 138 366 - 204 708
Other operating income - 202 3 - - 205
Operating expenses (616) (872) (590) (4) (352) (2,434)
(Loss)/ profit from operations (616) (532) (221) (4) (148) (1,521)
Finance income/(charge) (173) (31) (28) - (20) (252)
(Loss)/profit before tax (789) (563) (249) (4) (168) (1,773)
The segmental analysis for the 6 months to 31 March 2023 is as follows:
Central Technology Businesses Mature Businesses Intra-group Discontinued operations TOTAL
Adjustments
£'000 £'000 £'000 £'000 £'000 £'000
Revenue - 87 1,313 - 1,221 2,621
Gross Margin - (277) 524 - 236 483
Other operating income - 54 3 - - 57
Operating expenses (916) (1,801) (614) (6) (333) (3,670)
(Loss)/ profit from operations (916) (2,024) (87) (6) (97) (3,130)
Finance income/(charge) (170) (39) (39) - (22) (270)
(Loss)/profit before tax (1,086) (2,063) (126) (6) (119) (3,400)
3. Exceptional items
Exceptional items of £229,000 relate principally turnaround costs and former
director gardening leave costs (2023: £170,000 redundancy costs principally
in relation to the closure of Versarien Graphene Inc.)
4. Taxation
The tax credit of £133,000 (2023: £nil) relates to R&D tax credits
received in the period. The charge on the results for the period has been
estimated at £nil (2023: £nil). At the last year end the Group had £33.35
million of trading losses carried forward to set-off against future trading
profits.
5. Loss per share
The loss per share has been calculated by dividing the loss after taxation of
£1,656,000 (2023: £3,199,000) by the weighted average number of shares in
issue of 710,245,315 (2023: 205,983,636) during the period.
The calculation of the diluted earnings per share is based on the basic
earnings per share adjusted to allow for the issue of shares on the assumed
conversion of all dilutive options. However, in accordance with IAS33
"Earnings per Share", potential Ordinary shares are only considered dilutive
when their conversion would decrease the profit per share or increase the loss
per share. As at 31 March 2024 there were 7,206,160 (2023: 15,205,850)
potential ordinary shares that have been disregarded in the calculation of
diluted earnings per share as they were considered non-dilutive at that date.
6. Intangible assets
31 March 30 September
2024 2023
Unaudited Audited
£'000 £'000
Patents, trademarks and other 484 479
Development costs 2,284 2,284
Total 2,768 2,763
7. Assets and liabilities held for sale
The sale process for AAC Cyroma is progressing, albeit with no certainty of
conclusion and consequently its assets and liabilities are disclosed on a
"held for sale" basis.
31 March 30 September
2024 2023
Unaudited Audited
AAC Cyroma Korean Plant
£'000 £'000
Non-current assets
Intangible Assets - -
Property, plant and equipment 190 604
Trade and other receivables - -
190 604
Current assets
Inventory 194 -
Trade and other receivables 599 -
Cash and cash equivalents 22 -
815 -
Assets held for sale 1,005 604
Liabilities
Non-current liabilities
Trade and other payables - -
Deferred taxation - -
Innovate Loan - -
Long-term borrowings 37 -
37 -
Current liabilities
Trade and other payables 530 -
Invoice discounting advances 327 -
Current portion of long-term borrowings 23 -
880 -
Liabilities held for sale 917 -
8. Interim Report
This interim announcement is available on the Group's website at
www.versarien.com (http://www.versarien.com)
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