Last checked at 22 Jul 2014 07:00
Press Release | 22 July 2014 |
Versarien plc
("Versarien" or the "Company" or the "Group")
Final Results
Versarien Plc (AIM:VRS), the advanced engineering materials group, today announces its final results for the period ended 31 March 2014.
Business Highlights
· | Total Carbide orders received in Q1 2014/15 up 75% to £1.4 million (2013: £0.8 million) |
· | Total Carbide delivering in excess of 11% operating margin |
· | VersarienCu has 26 development projects in progress, 3 backed by grant funding of £0.3 million (2013: 14 projects, 3 backed with grants of £0.1 million) |
· | Acquisition of Total Carbide in June 2013 |
· | 85% of 2-DTech Limited acquired on 1 May 2014 for £0.22 million in cash and 846,153 ordinary shares, thereby adding world class graphene expertise and capability |
· | £3.0 million raised at Admission to AIM in June 2013 and further placing raised £5.5 million in April 2014 |
· | First VersarienCu development project for Thermacore Europe Limited on track with pre-production parts delivered |
· | Graphene collaborative projects for 2-DTech starting with The University of Manchester focused on structural composites and thermoplastics |
Financial Highlights
· | Group revenues of £3.0 million (2013: £Nil) |
· | Normalised LBITDA(1) of £0.25 million (2013: loss £0.37 million(2)) |
· | Pre-tax loss of £0.65 million (2013: loss £0.41 million(2)) |
· | Non-recurring items include costs of acquiring Total Carbide of £0.15 million and VTL restructuring costs of £0.05 million |
· | Basic Loss per share of 0.85 pence (2013: loss 0.78 pence(2)) |
· | Net assets of £2.6 million (2013: £0.1million) |
· | Cash reserves and bank facility headroom of £5.7 million as at 21 July 2014 |
(1) LBITDA excludes non-recurring or special items.
(2) 2013 figures are unaudited and are provided for illustration only.
Commenting on the final results, Neill Ricketts, Chief Executive Officer of Versarien, said: "The Group has made substantial progress during the course of the year combining growth in its core business with exciting acquisition opportunities. The addition of 2-DTech to our Group since the year end creates its own compelling opportunities, as well as further enhancing the copper foam potential. In the current year, we expect to increase our turnover by commercialising the IP Versarien has whilst maintaining careful control of costs.
"The Board remains confident, given the quantity and quality of projects from large OEM customers, that the applications of the technologies that the Group is developing will, in time, deliver a substantial return on investment for Versarien's shareholders."
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For further information:
Versarien Plc | |
Neill Ricketts, Chief Executive Officer | Tel: +44 (0) 1594 888 622 |
Chris Leigh, Chief Financial Officer | www.versarien.com |
Charles Stanley Securities (Nominated Adviser and Broker) | |
Mark Taylor / Russell Cook | Tel: +44 (0) 20 7149 6000 |
Media enquiries:
Abchurch Communications Limited | |
Henry Harrison-Topham / Jamie Hooper | Tel: +44 (0) 20 7398 7719 |
jamie.hooper@abchurch-group.com | www.abchurch-group.com |
Chairman's Statement
Versarien floated on 12 June 2013 and I am pleased to provide this, its maiden set of annual results. At the period-end, the Group consisted of the parent company, Versarien plc, and two wholly owned subsidiaries, Versarien Technologies Limited and Total Carbide Limited, the latter being acquired at the time of the flotation. On 1 May 2014 the Group acquired 85% of 2-DTech Limited, a graphene manufacturer and supplier, and completed a share placing to raise £5.5 million.
Versarien has made substantial progress during the course of 2013/4 combining growth in its core businesses with exciting acquisition opportunities. Application test results continue to be positive and we remain in dialogue with many blue chip companies regarding exploitation in application. The addition of 2-DTech to our Group creates its own compelling opportunities, as well as further enhancing the copper foam potential. We look forward to this year with much optimism.
The Group's IP currently consists of two major strands, VersarienCu, a porous copper foam with thermal management properties up to ten times more efficient than currently available products and, since the acquisition of 2-DTech Limited in May 2014, graphene, which conducts electricity 100 times better than silicon but is transparent, lightweight, strong yet flexible and elastic.
The turnover for the period was £3.0 million and its LBITDA before non-recurring items was £0.25 million. In the current year we expect to increase turnover through the further commercialisation of the Group's IP. At the same time management will continue to maintain careful control of costs.
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien Technologies Limited in a share-for-share exchange prior to flotation. Consequently, there is not a statutory comparative period and under merger accounting the comparative financial information relates to Versarien Technologies Limited until the date of the merger.
Since flotation we have completed our executive team by the appointment of Mr Chris Leigh as full time Chief Financial Officer. Chris is a finance director who has both relevant sector knowledge as well as AIM-listed company experience.
Key to the Group's success will be the recruitment and retention of further qualified and committed senior staff and we are grateful to all of our existing staff for the valued contribution they have made.
As stated in the 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.
The Board remains confident, given the quantity and quality of projects from large OEM customers, that the applications of the technologies that the Group is developing will, in time, deliver a substantial return on investment for Versarien's shareholders.
Ian Balchin
Non-Executive Chairman
22 July 2014
Chief Executive's Statement and Strategic Report
Business overview
Versarien Technologies Limited (VTL) holds the exclusive rights to a patent-protected additive process for creating porous copper foam, which has multiple potential markets initially targeting electronic equipment and produces high efficiency heat exchanger material.
Total Carbide Limited (TC) manufactures sintered tungsten carbide primarily for hardwearing applications in the oil and gas industry.
2-DTech Limited, acquired in May 2014, a spin-out from the University of Manchester, the birthplace of graphene and home to the Nobel prize winning academics Geim and Novoselov, specialises in supply of graphene products and the transfer of fundamental science to applied technology.
Business model
Versarien seeks to capitalise on innovative IP, transforming it into a commercially viable product that can tackle the technological challenges faced by modern manufacturers. This requires a number of steps:
· | a continual deal flow either by establishing new licence arrangements with research institutions or by identifying embryonic companies in early stages of development whose intellectual property fits with our definition of advanced materials technology;
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· | applying the management team's experience to developing and commercialising the advanced materials technology;
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· | providing the plant and equipment to get into production either via its existing production facilities or by funding new facilities; and
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· | providing working capital facilities either from existing reserves, its public listing or via banking facilities. |
Markets and trends
There are a number of companies that provide support and finance to businesses seeking to commercialise intellectual property or provide finance to spin-out companies from universities or research institutions, but they tend to cover many sectors. Versarien concentrates on only those opportunities which are in the advanced materials and high value manufacturing sectors and which outperform conventional materials with superior combinations of functional properties, such as toughness, hardness, durability, elasticity, strength or conductivity.
VersarienCu operates in the global market for thermal management technology which is set to grow from US$8 billion in 2011 to US$11 billion by the year 2016 and its potential applications include aerospace, defence, automotive, data communications, renewable energy, power distribution, transportation and motorsport.
Total Carbide operates primarily in the oil and gas industry by providing sintered tungsten carbide parts for directional drilling and equipment used in oil exploration. There has been significant growth in the exploration of shale gas and the company has more recently been exporting parts to China.
2-DTech Limited operates in the graphene development market, the total demand for which is anticipated to increase from circa 40 tonnes per annum currently to circa 400 tonnes by 2017. Forecasts suggest the market for graphene products in 2018 will be US$195 million growing to US$1.3 billion by 2023.
Strategy and progress
Our strategy is to identify and acquire disruptive intellectual property in advanced materials and develop them, partly through technology grant funding, to a level where we can enter into joint development agreements with world-class organisations and apply the acquired IP to specific applications with a view to moving into commercial production.
Versarien floated in June 2013 with one technology, VersarienCu and immediately after acquired the entire share capital of Total Carbide Limited. In May 2014, the Group acquired 85% of the share capital of 2-DTech Limited and is entering into collaboration agreements with the University of Manchester to identify commercial applications. The Group is in discussions with a number of other universities regarding licences to produce complimentary porous metals for thermal management systems.
We have announced our first commercial development agreement with Thermacore for use in isothermalisation devices key in the Genomics sector. We are in discussions with the other organisations operating in the data centre infrastructure market.
Group Financial Results
Versarien's revenue for the year ended 31 March 2014 totalled £2.95 million with operating losses before non-recurring items of £0.44 million (£0.25 million before depreciation and amortisation). This includes just over nine months' post-acquisition sales from Total Carbide of £2.94 million and operating profits for Total Carbide, before non-recurring and special items, of £0.33 million. Group non-recurring and special costs of £0.20 million include £0.15 million relating to the acquisition of Total Carbide and £0.05 million restructuring costs.
Group net assets at 31 March 2014 were £2.6 million compared with £0.01 million at 31 March 2013. The flotation raised £3.0 million less expenses of £0.58 million, net £2.4 million whilst simultaneously acquiring Total Carbide Limited, the consideration for which was £1.58 million in cash and 5,714,286 in Ordinary shares of 1 pence each at the flotation price of 12.25 pence per share. The vendors agreed to re-invest £0.35 million of the cash consideration by taking 2,857,143 shares in the placing. The total holding of 8,571,429 shares issued on Admission were subsequently sold.
Basic and diluted loss per share totalled 0.85 pence. The average number of shares in issue during the period was 77.1 million.
Subsequent to the year-end the Group raised £5.5 million before expenses by way of a placing announced on 14 April 2014 and uses invoice finance funding for its trading operations. Currently, the Group has cash reserves and bank facility headroom totalling £5.7 million.
On 1 May 2014 Versarien acquired 85% of the issued share capital of 2-DTech Limited, a developer and producer of graphene, for a total consideration of £0.44 million. The Group now has three operating subsidiaries and has strengthened its organisation structure by the appointment of managing directors to each unit, two of which are internal promotions and one an external recruit.
Versarien Technologies Limited (VTL)
VTL's revenue for the year was minimal as it continues to progress through its development cycle. It has doubled its development projects to 26, of which 3 are grant funded. Operating losses before non-recurring items were £0.53 million for the year (2013: £0.40 million).
VTL continues to receive multiple positive test results from a number of key customers and now has confidence to develop key product ranges that will provide the seed for supplying modular systems for a variety of applications including:
· | Power Semiconductors; |
· | High Performance Computing; |
· | Electric & Hybrid Vehicle Powertrain; |
· | Renewables; and |
· | Motorsport. |
It will, in addition, continue to progress custom applications and is looking to improve customer enquiry response times by investing in device test and characterisation facilities at its new factory in Mitcheldean.
Total Carbide Limited
It is very pleasing to report that the Total Carbide order book continues to strengthen and has achieved an 11% operating return on sales since acquisition. We have also successfully introduced a SAP platformed new Enterprise Resource Planning system, which is being used group-wide. This was necessitated due to the migration of the legacy systems withdrawn following the purchase of the business and it is testament to the team effort that this has been achieved in short order.
Total Carbide is a long established supplier to the oil and gas industry and has a solid base of blue chip customers, many of whom are now looking to increase their purchasing spend as a result of the sales initiatives implemented since the Company was acquired on 12 June 2013. The Total Carbide team has worked hard to build relationships and develop these prospects into significant orders for the future.
The Board has also successfully exploited its existing expertise to secure funding for two materials development programmes at Total Carbide and it is intended that this strategy can be developed further to bring new derivatives of tungsten carbide hard metals to market.
2-DTech Limited
Although only acquired post year end, I am pleased to report that the company has now been integrated into our Group systems and that we have appointed Nigel Salter, a former divisional technical director at Oxford Instruments, to manage the business. We are currently examining a number of different opportunities for commercial production and look forward to reporting these in due course.
Neill Ricketts
Chief Executive Officer
22 July 2014
Group statement of comprehensive Income
Period ended 31 March 2014
Note | 2014 £'000 | 2013 £'000 (unaudited) | |
Continuing operations | |||
Revenue | 2 | 2,953 | - |
Cost of sales | (1,881) | - | |
Gross profit | 1,072 | - | |
Other operating income | 98 | 74 | |
Operating expenses | (1,614) | (478) | |
Loss from operating activities | (444) | (404) | |
Non-recurring items | (197) | - | |
Finance charge | (12) | (10) | |
Loss before income tax | (653) | (414) | |
Income tax | - | - | |
Loss for the year | (653) | (414) | |
Loss per share | Pence
| Pence
| |
Basic and diluted | 4 | (0.85p) | (0.78p) |
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien Technologies Limited in a share-for-share exchange prior to flotation. Consequently, there is not a statutory comparative period and under merger accounting the comparative financial information relates to Versarien Technologies Limited until the date of the merger.
Group statement of financial position
Period ended 31 March 2014
Note | 2014 £'000 | 2013 £'000 (unaudited) | |
Assets | |||
Non-current assets | |||
Goodwill and other intangibles | 5 | 586 | 133 |
Property and equipment | 7 | 1,091 | 69 |
Deferred taxation | 65 | - | |
1,742 | 202 | ||
Current assets | |||
Inventory | 765 | 3 | |
Trade and other receivables | 955 | 110 | |
Cash and cash equivalents | 215 | 32 | |
Current assets | 1,935 | 145 | |
Total assets | 3,677 | 347 | |
Equity | |||
Called up share capital | 831 | 529 | |
Share premium | 1,853 | - | |
Merger reserve | 1,017 | 53 | |
Share-based payment reserve | 35 | - | |
Retained earnings | (1,137) | (484) | |
Equity attributable to shareholders | 2,599 | 98 | |
Liabilities | |||
Non-current liabilities | |||
Trade and other payables | 115 | 134 | |
Provisions | 200 | - | |
Long-term borrowings | 34 | - | |
349 | 134 | ||
Current liabilities | |||
Trade and other payables | 549 | 115 | |
Invoice discounting advances | 156 | - | |
Current portion of long-term borrowings | 24 | - | |
729 | 115 | ||
Total liabilities | 1,078 | 249 | |
Total equity and liabilities | 3,677 | 347 |
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien Technologies Limited in a share-for-share exchange prior to flotation. Consequently, there is not a statutory comparative period and under merger accounting the comparative financial information relates to Versarien Technologies Limited until the date of the merger.
Group statement of changes in equity
Period ended 31 March 2014
Share capital £000 | Share premium £000 | Merger reserve £000 | Share-based payment reserve £000 | Retained earnings £000 | Total equity £000 | |
At 1 April 2012 (unaudited) | - | - | 85 | - | (69) | 16 |
Issued in the year | - | - | 497 | - | - | 497 |
Merger | 529 | - | (529) | - | - | - |
Loss for the year | - | - | - | - | (415) | (415) |
At 31 March 2013 (unaudited) | 529 | - | 53 | - | (484) | 98 |
Issueofshares | 302 | 2,434 | 964 | - | - | 3,700 |
Cost of share issue | - | (581) | - | - | - | (581) |
Loss for the year | - | - | - | - | (653) | (653) |
Share-based payments | - | - | - | 35 | - | 35 |
At 31 March 2014 (audited) | 831 | 1,853 | 1,017 | 35 | (1,137) | 2,599 |
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien Technologies Limited in a share-for-share exchange prior to flotation. Consequently, there is not a statutory comparative period and under merger accounting the comparative financial information relates to Versarien Technologies Limited until the date of the merger.
Statement of Group cash flows
Period ended 31 March 2014
2014 £'000 | 2013 £'000 (unaudited) | |
Cash flows from operating activities | ||
Cash used in operations | (715) | (422) |
Interest paid | (12) | (10) |
Net cash from operating activities | (727) | (432) |
Cash flows from investing activities | ||
Acquisition of subsidiaries | (1,175) | - |
Purchase of intangible non-current assets | (18) | (52) |
Purchase of tangible non-current assets | (33) | (14) |
Sale of tangible non-current assets | - | 9 |
Net cash used in investing activities | (1,226) | (57) |
Cash flows from financing activities | ||
Share issue | 2,650 | 496 |
Flotation costs | (581) | - |
Repayment of finance leases | (89) | - |
Invoice discounting loan | 156 | - |
Net cash generated from financing activities | 2,136 | 496 |
Net increase in cash and cash equivalents | 183 | 7 |
Cash and cash equivalents at start of period | 32 | 25 |
Cash and cash equivalents at end of period | 215 | 32 |
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien Technologies Limited in a share-for-share exchange prior to flotation. Consequently, there is not a statutory comparative period and under merger accounting the comparative financial information relates to Versarien Technologies Limited until the date of the merger.
Notes
1 Basis of preparation
The consolidated financial statements consolidate those 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 2014 or 31 March 2013. The financial information for the period ended 31 March 2014 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.
Versarien Plc was incorporated on 25 February 2013 to acquire Versarien Technologies Limited in a share-for-share exchange prior to flotation. Consequently, there is not a statutory comparative period and under merger accounting the comparative financial information relates to Versarien Technologies Limited until the date of the merger.
Both the consolidated financial statements and the Company financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("IFRSs").
2 Operating segments
Business segments
The Group has disclosed below certain information on its revenue by geographical location. Details regarding total can be found in the statement of comprehensive income.
The Group's two revenue streams are separated as follows:
• Manufacturing activities derived from the operations of Total Carbide Limited; and
• Engineering activities derived from the activities of Versarien Technologies Limited.
Revenue by activity
2014 £'000 | 2013 £'000 (unaudited) | |
Manufacturing | 2,949 | - |
Engineering | 4 | - |
2,953 | - |
Revenue by geographic location
| Revenues | Non-current assets |
| ||||
2014 £'000 | 2013 £'000 (unaudited) | 2014 £'000 | 2013 £'000 (unaudited) | ||||
UK | 2,378 | - | 1,742 | 202 | |||
Rest of Europe | 515 | - | - | - | |||
North America | 3 | - | - | - | |||
Other | 57 | - | - | - | |||
Total | 2,953 | - | 1,742 | 202 | |||
3 Dividends
As stated in the 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.
4 Loss per ordinary share
Basic
The calculation of basic earnings per share at 31 March 2014 was based on the loss attributable to ordinary shareholders of £0.65 million (2013: £0.41 million), and a weighted average number of ordinary shares ranking for dividend of 77,118,018 (2013: 52,872,000).
2014 Pence per share | 2013 Pence per share | |
Basic earnings per share |
(0.85p) |
(0.78p) |
Diluted
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 profit per share or increase the loss per share. As at 31 March 2014 there were 5.6 million potential ordinary shares which have been disregarded in the calculation of diluted earnings per share as they were considered non-dilutive at that date.
5 Goodwill and other intangibles
Goodwill £'000 | Other intangibles £'000 |
Total £'000 | |
Cost | |||
At 1 April 2013 (unaudited) | - | 165 | 165 |
Acquisition of Total Carbide | 354 | 123 | 477 |
Additions | - | 18 | 18 |
At 31 March 2014 | 354 | 306 | 660 |
Amortisation | |||
At 1 April 2013 (unaudited) | - | 32 | 32 |
Amortisation charge | - | 42 | 42 |
At 31 March 2014 | - | 74 | 74 |
Carrying value at 31 March 2014 | 354 | 232 | 586 |
Carrying value at 31 March 2013 (unaudited) | - | 133 | 133 |
Goodwill arising on consolidation represents the excess of cost of an acquisition over the fair value of the Group's share of net assets of the acquired subsidiary at the date of acquisition and is reviewed annually for impairment.
6. Other intangible assets
31 March 14 £000 | 31 March 13 £000 | |
Fair value of intangibles acquired | 103 | - |
Development costs | 67 | 51 |
Licence | 62 | 82 |
232 | 133 |
On 12 June 2013 the Company acquired the entire share capital of Total Carbide Limited for a consideration of £2.28 million comprising cash of £1.23 million and 8,571,429 ordinary shares at the flotation price of 12.25 pence per share. The provisional fair value of the assets and liabilities of Total Carbide at the date of acquisition were as follows:
Fair Value £000 | |
Non-current assets | |
Intangible assets | 123 |
Property, plant and Equipment | 1,141 |
Deferred tax assets | 65 |
1,329 | |
Current assets | |
Inventories | 701 |
Trade and other receivables | 714 |
Cash and cash equivalents | 55 |
1,470 | |
Total assets | 2,799 |
Non-current liabilities | |
Obligations under finance leases | (92) |
Dilapidations provision | (200) |
(292) | |
Current liabilities | |
Trade and other payables | (526) |
Obligations under finance leases | (55) |
(581) | |
Total liabilities | (873) |
Net assets | 1,926 |
Goodwill | 354 |
Amount paid | 2,280 |
Cash | 1,230 |
Shares | 1,050 |
In accordance with IFRS 3, the Board has reviewed the fair value of the assets and liabilities using the information available to it since Total Carbide was acquired. The provisional fair values are being discussed in accordance with the terms of the share purchase agreement and may therefore change.
7. Property and equipment
Plant and machinery
£'000 | Leasehold improvements
£'000 | Total
£'000 | |
Cost | |||
Balance at 1 April 2013 (unaudited) | 66 | 13 | 79 |
Acquisition of Total Carbide | 5,389 | - | 5,389 |
Additions | 33 | - | 33 |
At 31 March 2014 | 5,488 | 13 | 5,501 |
Depreciation | |||
At 1 April 2013 (unaudited) | 3 | 7 | 10 |
Acquisition of Total Carbide | 4,248 | - | 4,248 |
Charge for the period | 146 | 6 | 152 |
At 31 March 2014 | 4,397 | 13 | 4,410 |
Net book value | |||
At 31 March 14 | 1,091 | - | 1,091 |
At 31 March 13 (unaudited) | 63 | 6 | 69 |
8. Report and accounts
Copies of the 2014 Annual Report and Accounts will be posted to shareholders in early August. Further copies may be obtained by contacting the Company Secretary at the registered office. In addition, the 2014 Annual Report and Accounts will be available to download from the investor relations section on the Company's website www.versarien.com.
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