Versarien Regulatory News (VRS)

19 January 2017

Versarien plc

Acquisition of Cambridge Graphene Limited

and Trading Update

Versarien plc (AIM:VRS) ("Versarien" or the "Company" or the "Group"), the advanced materials group, is pleased to announce that it that it has acquired 85 per cent. of the issued share capital of Cambridge Graphene Limited ("Cambridge Graphene") (the "Acquisition") and to provide an update on current trading.

Acquisition of Cambridge Graphene

Cambridge Graphene, currently owned by its management and Cambridge Enterprise Ltd. (the commercialization arm of the University of Cambridge), supplies novel inks based on graphene and related materials, using patented processes and develops graphene materials technology for licensing to manufacturers.

The Directors believe the Acquisition presents an exciting opportunity for Versarien to acquire a business with complementary skills and operations to the Company's current graphene activities, particularly with Cambridge Graphene's existing expertise and opportunities in the graphene ink area.

Like the Company's existing subsidiary, 2-DTech, born out of the University of Manchester, Cambridge Graphene was born out of the University of Cambridge to commercialise the university's graphene expertise. The Universities of Manchester and Cambridge are the two centres of excellence for graphene in the UK. Following the acquisition of Cambridge Graphene, both universities will be shareholders in the Company, positioning Versarien at the epicenter of the commercial development of graphene both in the UK and globally.

Versarien believes that the addition of Cambridge Graphene to its portfolio significantly increases the Company's ability to advance its experience and expertise to commercialise the considerable market opportunities for graphene both in the UK and internationally. Material produced at both Manchester and Cambridge will be able to be used at either site in product development and for supply to customers.

The total consideration for the Acquisition is £170,000 to be settled by £25,000 in cash, from the Company's existing resources, and the issue of 1,450,000 new ordinary shares in the Company at an agreed price of 10p per share ("New Ordinary Shares"). For the year ended 31 May 2016 Cambridge Graphene had negative net assets of £9,047 and made a profit before tax of £2,809. The vendors will retain the 15% shareholding in Cambridge Graphene not being acquired by Versarien.

Trading Update

The current financial year to 31 March 2017 has been one of significant investment and development for the Company with a number of notable events.

AAC Cyroma, acquired on 3 October 2016, has been successfully integrated into the Group and its performance has been slightly ahead of expectations. With the acquisition of Cambridge Graphene announced today and the significant number of commercial collaborations announced by the Company during the current financial year to develop graphene related products in areas including healthcare, 3D printing, batteries, PAEK plastics and carbon fibre composite structures, the Board believes that the Group is very well positioned at the forefront of the development and commercialisation of graphene.

On 29 November 2016 the Group announced a significant graphene order for a carbon fibre composite related application, which the Company believes is one of the first significant orders placed in the UK for the supply of high quality graphene. The Board is pleased to report that the order was successfully completed and delivered ahead of schedule, despite the requirement for the tripling of manufacturing capacity to fulfill the order, demonstrating the ability to scale up at short notice.

The Group continues to make investments in its graphene related activities, including the ordering of additional capital equipment, to take advantage of the global opportunities it is seeing and expects further orders in the coming months.

As outlined in the Company's interim results announced on 29 November 2016, the Company's Hard Wear products business, Total Carbide, has been relocated to a new facility on the Westcott Venture Park in Oxfordshire. This necessary move, whilst being disruptive, has provided the Group with ample modern manufacturing capacity for both its Hard Wear and Thermal products which require similar engineering equipment. Trading conditions remain challenging in the Company's Hard Wear products business serving the oil and gas sector, where order levels have continued to be depressed. However, there are signs of a gradual pick up with incoming orders showing improvement.

The Company's Thermal Products business, Versarien Technologies, has been restructured over recent months including the appointment of a new sales team. The translation of expressions of interest from potential customers into firm sales orders has been slower than previously anticipated, although Thermal Products continues to enjoy a substantial pipeline of enquiries.

The backdrop of difficult trading conditions in the Company's most significant revenue contributing business, Total Carbide, coupled with the continued investment in the Group's graphene related activities means the financial outcome for the Company's financial year ending 31 March 2017 is likely to see revenues slightly below current market forecasts with a larger than previously anticipated loss.

Neill Ricketts, CEO of Versarien, commented: "We are delighted with the acquisition of Cambridge Graphene and the opportunities it brings us. This addition to our existing graphene operations and in particular, 2-DTech, which we acquired from Manchester University in April 2014, bridges the gap between the two centres of excellence for graphene and between them really puts us at the centre of the graphene universe.

"We are also very pleased to welcome a new team and shareholders, new IP and an existing partnership agreement with the Cambridge Graphene Centre and The University of Cambridge.

Whilst trading conditions remain challenging in our mature Hard Wear products business, we continue to invest in developing our graphene capabilities to take advantage of this enormous global opportunity and look forward to the future with confidence."

Issue of New Ordinary Shares Pursuant to the Acquisition

Application for admission to trading on AIM of the 1,450,000 New Ordinary Shares being issued pursuant to the Acquisition will be made and admission is expected to take place on or around 26 January 2017. The New Ordinary Shares will rank pari passu with the existing Ordinary Shares in issue.

 In accordance with the provisions of the Disclosure Guidance and Transparency Rules of the FCA, the Company confirms that, following the Acquisition, its issued share capital will comprise 121,294,003 Ordinary Shares of 1 pence each. All Ordinary Shares shall have equal voting rights and none of the Ordinary Shares are held in treasury. The total number of voting rights in the Company immediately following Admission will therefore be 121,294,003.

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

For further information please contact:

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. Versarien has four subsidiaries operating under two divisions:

Thermal and Hard Wear Products

Versarien Technologies Ltd. which owns the exclusive rights to a patent-protected additive process for creating advanced micro-porous metals targeting the thermal management industry and manufactures extruded aluminium heat sinks for the electronics and computing industries. www.versarien-technologies.co.uk 

Total Carbide Ltd, a leading manufacturer in sintered tungsten carbide for applications in arduous environments such as the oil and gas industry. www.totalcarbide.com 

Graphene and Plastics

2-DTech Ltd, which specialises in the supply, characterisation and early stage development of graphene products. www.2-dtech.com

ACC Cyroma Ltd, which specialises in the supply of vacuum-formed and injection-moulded products to the automotive, construction, utilities and retail industry sectors. Using Versarien's existing graphene manufacturing capabilities, AAC will have the ability to produce graphene-enhanced plastic products. www.aaccyroma.co.uk