Versarien Regulatory News (VRS)

20 December 2023

Versarien plc

("Versarien" or the "Company")

Company Update and Notice of General Meeting

Versarien plc (AIM: VRS), the advanced materials engineering group, announces that a Notice of General Meeting ("General Meeting") will be posted to shareholders today. The General Meeting will be held on Wednesday 10 January 2024 at 10.00 a.m. at the offices of Fieldfisher LLP, Riverbank House, 2 Swan Lane, London EC4R 3TT. The purpose of the General Meeting is to approve a share capital reorganisation, which consists of a redesignation of the existing ordinary shares of the Company, and renewal of the Company's share capital authorities.

The formal notice of the General Meeting including full details of all resolutions to be proposed ("Resolutions") is available to view on the Company's website at www.versarien.com.

The Company values shareholder participation and values the votes of shareholders, so it encourages all shareholders to exercise their voting rights by completing and submitting a proxy form as soon as possible. It would also be helpful if shareholders could submit any questions in advance of the General Meeting via IFC Advisory Limited, the Company's financial PR and investor relations adviser, at versarien@investor-focus.co.uk.

Background and Current Trading

At the last general meeting of the Company held on 30 October 2023 the Company explained that it wished to sub-divide its share capital and renew its share capital authorities to enable it to access bridging finance whilst certain assets were marketed for sale.

The sale of those assets, in particular the interest in the mature businesses, has not progressed as expected although the Company continues to market them for sale. There is continued interest in the South Korean assets and IP, however any transaction is not expected to complete until next year and is likely to raise less cash, at least initially, than was first anticipated.

The Group audit for the year ended 30 September 2023 ("FY23") is ongoing and the FY23 results are expected to be released in early February. The FY23 financial highlights, subject to audit, are expected to be as follows:

· Group revenues of £5.45m (2022: 18-month period £11.11m)

· *Adjusted LBITDA of £3.03m (2022: 18-month period £2.40m)

· H2 Adjusted LBITDA of £1.02m compared to H1 of £2.01m

· Asset impairments of £7.5m treated as an exceptional item (30 September 2022: £1.33m)

· Cash at bank of £0.60m (30 September 2022: £1.35m)

· Post period end, placing to raise gross proceeds of c. £0.45m

*Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation) excludes Exceptional items, Share-based payment charges and other losses.

The Company continues to pursue its stated turnaround strategy and it is the view of the Board that the Company now has a pipeline of opportunities that could result in an improvement in the financial condition of the Company in the short to medium term. Since 21 July 2023, 28 new contracts have been won representing approximately £1.0m of income over six to eighteen months and the Company is pursuing 69 other contractual opportunities with a potential aggregate value to the Company of approximately £1.05m.

The open opportunities cover a number of sectors and situations including Graphene-Wear? coatings for textiles, Cementene?, 3D concrete printing, Polygrene?, commercial R&D, grants and licensing and reflect, in part, the adoption of the turnaround strategy. This improvement, albeit a first step, reflects the efforts of the Company's management to move the business towards being financially viable going forward. The Company's current projections show an EBITDA positive position being reached in the second half of 2025, assuming the conversion of sufficient opportunities into revenue for the Company.

The sale of assets remains an integral part of the turnaround strategy, but fundamentally, the Board now has sufficient confidence in the business pipeline to seek the authority to issue further equity to bridge the funding gap to profitability. This further funding will be required to secure the future of Versarien as, in the absence of any asset sales or the implementation of further cost reduction measures, the Company has limited cash resources, which as of 19 December stood at £0.42m together with £0.12m available to draw from its invoice finance facility.

The nominal value of the Existing Ordinary Shares is currently 0.1 pence and, whilst the Existing Ordinary Shares are currently trading at a premium to that nominal value, the Board believes that there is a risk that any future fundraise could be at a discount that reduces the issue price to less than 0.1 pence per Existing Ordinary Share. Under the Companies Act, a company is unable to issue shares at a subscription price which is less than the nominal value and the Company would then not be able to proceed with that fundraise. The Board, therefore, considers it prudent to implement the proposed Share Capital Reorganisation in order that the nominal value of the New Ordinary Shares is set at a level substantially lower than the current trading price of the Existing Ordinary Shares. This should provide the Company with greater flexibility to raise funds by issuing further shares.

Whilst the Board will look to secure any further funding above the current nominal value of the Existing Ordinary Shares, it needs the flexibility should the ultimate placing price of any equity raise be below the current nominal value of the Ordinary Shares. Whilst the Board would naturally hope that this would not be the case, it would seem imprudent, in the current circumstances and with an uncertain stock market outlook, not to further amend the nominal value as a protection mechanism.

Additionally, the Directors are seeking shareholder approval to renew and increase the Company's authority to issue new equity as well as its authority to issue new equity for cash other than on a pre-emptive basis. Each of these authorities is for up to an aggregate nominal value of £99,233.90 (992,339,000 New Ordinary Shares), being approximately 200 per cent. of the issued share capital of the Company as at 19 December 2023. Unless previously revoked or varied, these authorities will expire at the conclusion of the next Annual General Meeting of the Company, expected to be held in March 2024.

Share Capital Reorganisation and amendments to the Articles of Association

Accordingly, it is proposed to sub-divide each Existing Ordinary Share into one New Ordinary Share and one New Deferred Share.

The New Ordinary Shares will in all material respects, have the same rights (including rights as to voting, dividends and return of capital) as the Existing Ordinary Shares. The New Ordinary Shares will be traded on AIM in the same way as the Existing Ordinary Shares, with the exception of the difference in nominal value.

The rights attached to the New Deferred Shares will be set out in the Articles (as per Resolution 2 in the Notice of General Meeting). The New Deferred Shares will have little economic value as they will not carry any rights to vote or dividend rights, although the New Deferred Shares will rank pari passu with the New Ordinary Shares on a return of capital or on a winding up of the Company.

The Company does not intend to make any application for the New Deferred Shares to be admitted to trading on AIM or any other public market. The New Deferred Shares will not be transferable without the prior written consent of the Company. No share certificates will be issued in respect of the New Deferred Shares. The Board may further appoint any person to act on behalf of all the holders of the New Deferred Shares to transfer all such shares to the Company in accordance with the terms of the Companies Act.

It is not intended to issue new share certificate(s) to the holders of the New Ordinary Shares following the Share Capital Reorganisation. Existing share certificate(s) will remain valid for the same number of shares but with a different nominal value of 0.01p per share. The nominal value of shares already held in CREST will be updated at approximately 8.00 a.m. on 11 January 2024.

By effecting the Share Capital Reorganisation in this way, the total nominal value of the Company's entire issued share capital remains the same with New Ordinary Shares having a nominal value of 0.01p plus New Deferred Shares having a nominal value of 0.09p each (as well as the existing deferred shares of 0.9p each).

The Share Capital Reorganisation is conditional upon, and effected by, the approval of Resolutions 1 and 2 at the General Meeting as required by the Companies Act 2006 and the Articles. If Resolutions 1 and 2 are passed, the Share Capital Reorganisation will become effective at 6.00 p.m. on the Record Date.

The Articles are proposed to be amended to allow for the issue of the New Deferred Shares, which are proposed to be issued as part of the Share Capital Reorganisation. Resolution 2 amends the Company's existing Articles to include provision in respect of the rights and restrictions attaching to the Deferred Shares. The changes are set out in Part 2 of the Circular.

Recommendation

The Board considers that the Resolutions are in the best interests of the Company and its shareholders, taken as a whole. The Board unanimously recommends that the Shareholders to vote in favour of the Resolutions, as the Directors intend to do so in respect of their own beneficial holdings.

If the Resolutions are not approved at the General Meeting, the Company will not be able to raise equity funding, and if no alternative funding can be secured, the Company's ability to operate as a going concern will be put at risk.

Expected timetable of principal events

2023/2024

Publication and dispatch of the circular and Form of Proxy 20 December

Latest time and date for receipt of the Form of Proxy 10.00 a.m. on 8 January

Time and date of the General Meeting 10.00 a.m. on 10 January

Results of the General Meeting announced through RNS 10 January

Record Date for Share Capital Reorganisation 6.00 p.m. on 10 January

Admission and dealings in New Ordinary Shares 8.00 a.m. on 11 January

All references to times in this timetable are to London times and each of the times and dates are indicative only and may be subject to change.

Terms used and not defined in this announcement shall have the same meanings given to them in the Notice of General Meeting.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For further information please contact:

For further information please see: http://www.versarien.com