Versarien Regulatory News (VRS)

Versarien plc

("Versarien" or the "Company" or the "Group")

Interim Results

Versarien Plc (AIM:VRS), the advanced engineering materials group, today announces its interim results for the six months ended 30 September 2014.

Key Highlights

*After charging exceptional costs of £58,000

Commenting on the interim results, Neill Ricketts, Chief Executive Officer of Versarien, said: "The outlook for the Group remains extremely positive with a number of exciting initiatives now being progressed. Total Carbide remains cash generative and will help support application developments at both Versarien Technologies and 2-DTech whilst they themselves continue to make strides in the development of their technology products.

"The Group continues to look for appropriate acquisition opportunities that fits its business model and will enhance our product offerings. Overall, the Board views the future with much optimism."

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Chairman's Statement

I am pleased to report on the continued progress made by Versarien following its flotation in June of last year. Our business model is to develop the Group's intellectual property portfolio by either establishing new arrangements with research institutions or by identifying embryonic early stage companies that fit with our advanced materials technology.

Since publication of our full year results in July Versarien has concluded negotiations to start up a joint venture to produce and distribute a new range of tooling for the composites industry, which will be strengthened using our graphene and tungsten carbide technologies. We have also agreed terms leading to the Group becoming a partner of the National Graphene Institute (NGI), the Manchester University based institution conducting world-leading research into the development and manufacture of graphene and its potential applications. As part of NGI's Technical Advisory Board, 2-DTech will develop and communicate a roadmap of strategically managed projects that will be carried out either within The University of Manchester academic schools or elsewhere as appropriate. Further information on both of these developments is contained in the Chief Executive Officer's Report.

In the six months to 30 September 2014, revenues for the Group, including a full period contribution from Total Carbide, were £2.5 million (2013: £1.1million), which returned an operating loss before exceptional items of £128,000 (2013: £190,000). The pre-tax loss for the period was £296,000 (2013: loss £368,000). It was particularly pleasing to note the performance of Total Carbide, which returned an operating profit, before exceptional items of £569,000 (2013: £110,000). Full details of financial performance are disclosed in the Chief Executive Officer's Report.

A year has now passed since flotation and the Board has reviewed the commitments to corporate governance described in the admission document. The Audit Committee invited tenders for the Group audit and it, together with the Board as a whole, has decided to appoint PwC to report going forwards.

The outlook for the Group remains extremely positive. Total Carbide remains cash generative and will help to support application developments at both Versarien Technologies and 2-DTech whilst they themselves continue to make strides in the development of their technology products. I look forward to reporting on further progress on the results for the full year.

Ian Balchin

Non-Executive Chairman

11 December 2014

Chief Executive's Statement and Strategic Report

Since the start of the current financial year Versarien has made significant progress:

· The Group acquired 85% of the issued share capital of 2-DTech from The University of Manchester in May 2014. 2-DTech specialises in the supply, characterisation and early stage development of graphene products. The total consideration for the acquisition was £740,000 settled by a mix of cash, new Ordinary shares and the commitment to fund at least two further graphene-related research projects to be undertaken by The University of Manchester to a total of £300,000. These will be in graphene-enhanced composites and graphene-enhanced inks.

The technology and expertise we have acquired through 2-DTech will enable a significant enhancement of the Versarien product range, building upon the Group's experience in manufacturing for the technology sector and enabling Versarien to apply its experience and expertise to commercialising the considerable market opportunities for graphene in the UK and abroad.

In line with Versarien's strategy of supporting the road to product commercialisation through technology finance, the Company announced in November that 2-DTech has been awarded two separate grants from InnovateUK, formerly known as the Technology Strategy Board. It will receive £80,000 as part of a collaborative project with Evodental, a dental implant centre providing full mouth reconstruction and surgery, to produce graphene-reinforced polymers for fixed dental prostheses. 2-DTech will also receive £98,000 to explore the functionalisation of solid-state dye-sensitised solar cells, which will be expedited in conjunction with Dyesol Ltd, the Australian solar clean tech company.

Last month 2-DTech also announced that it has signed a memorandum of understanding ("MOU") with The National Graphene Institute which, once finalised, will result in 2-DTech becoming a project partner of the NGI. Under the terms of the MOU, this partnership will bring together the graphene technology and applications potential that exists through The University of Manchester and the NGI, with the operational aspects of new product development and manufacturing expertise that 2-DTech and the other Versarien business divisions can offer. 2-DTech will also undertake its research and development project activity with the NGI in the NGI's £61 million purpose built centre, which is located on The University of Manchester campus and which is due to open in March 2015.

· In April 2014, Versarien raised £5,500,000 (before expenses) through the placing of 21,153,847 new Ordinary Shares at 26 pence per share. The Placing was oversubscribed and the proceeds used to fund the acquisition of 2-DTech and the development of the Group's technology.

· In November 2014, the Group agreed terms to form a 50:50 joint venture with Dimar Limited, a leading manufacturer of cutting tools based in Israel, to distribute a new range of tooling for the composites industry. The new venture, DV Composites Limited, will leverage Versarien's existing sales channels into the automotive, aerospace and marine sectors. Dimar currently sells a range of high performance tooling to a number of global organisations in these sectors. DV Composites will be based and operate out of Versarien's headquarters in Mitcheldean and will distribute these new products, alongside its development products for the composite industry, enabling further traction.

Financial Results

The results for the first half of the year have been particularly pleasing in some respects with the Group near to breaking-even, before exceptional items, interest, depreciation and amortisation. Versarien's mature business, Total Carbide Limited, has performed strongly and generated cash to significantly fund the technologies in the Group. We have utilised comparatively little of the funds raised from the placing and at the half year had cash and facilities of £5.5 million. In addition, the Group's bankers have agreed to provide additional facilities of £0.75 million for asset funding. Consequently, we remain well placed to continue to roll out our technologies.

The Group's revenue for the first six months of the financial year totalled £2,479,000 (2013: £1,081,000) with operating losses before exceptional items reduced to £128,000 (2013: £190,000). This includes a full period of trading from Total Carbide.

Exceptional items of £164,000 (2013: £173,000) include £96,000 in respect of moving Total Carbide production facilities, £45,000 acquisition costs and £23,000 set-up costs for the associated company venture, DV Composite Tooling Limited. The resulting pre tax loss for the six months to 30 September was £296,000 (2103: loss £368,000). Following the placing and acquisition of 2-DTech Limited, completed on 1 May 2014, Group net assets at the half year were £7,823,000 (2013: £2,872,000).

Total Carbide Limited

Total Carbide sales were £2,441,000 (2013: £1,080,000) with an operating profit before exceptional items of £569,000 (2013: £110,000), a return of 23% on sales (2013: 10%). The business is highly operationally geared and enjoyed a substantial increase in demand from the oil and gas sector in the first half of the year.

The lease on the factory premises is due to end in February 2016 and the business will therefore be relocated. Work has begun on the planning and implementation of the move including employing staff to set-up some production capability at the Group's Mitcheldean facility, the costs of which total £96,000 and have been treated as exceptional items.

Versarien Technologies Limited

VTL's revenue for the period was minimal at £11,000 (2013: £2,000) with an operating loss of £356,000 (2013: £243,000). At the start of the year the company had capitalised £70,000 in respect of development costs and in the six months to 30 September has added a further £103,000 as work continued on specific applications and processes. Grant payments received in respect of these projects totalled £69,000, which has been credited to deferred income.

As well as continuing to develop custom solutions for specific clients the Company has also commenced development of standard products for supply of IGBT power semi-conductor thermal management devices, integrated power modules for hybrid and electric vehicles, compact high efficiency liquid to liquid heat exchangers for domestic heat pumps and air heat sinks which outperform competing ceramic products. To support this strategy VTL has strengthened its development team with the recruitment of three senior engineers, which will enable the Company to progress with both custom and standard product offerings.

VTL has also signed its first distribution agreement for the supply of VersarienCu to research establishments.

2-DTech Limited

Since its acquisition on 1 May 2014, 2-DTech's income for the period was £51,000 and its grant income was £25,000 leaving £225,000 in deferred income to release as the projects currently underway roll out. This produced an operating loss for the post acquisition period of £102,000.

As a result of 2-DTech's progress referred to in the business overview we have strengthened the team further by the appointment of Dr Nigel Salter (ex-Oxford Instruments technical director) as managing director, Dr. Aravind Vijayaraghaven, (lecturer in nanomaterials at the University of Manchester, and public engagement coordinator for the National Graphene Institute), as a consultant and Dr. Andrew Strudwick (BASF graphene scientist) as a Research Scientist.

DV Composite Tooling Limited

This joint venture with Dimar Limited, an Israeli based company, is in its start-up phase and as at the half year we had expended £23,000 on start-up costs which have been accounted for as exceptional items. The product range was launched at the Advanced Engineering UK 2014 Show held at the NEC in Birmingham earlier this month and was well received. It provides the Group with an opportunity to use its core technologies with Dimar's products for the fast growing composites industry.

Outlook

2-DTech is the youngest company in the Group but its recent achievements provide the Board with confidence that it will make financial progress over the coming year. Versarien Technologies is fast developing its technology platform but timing of substantial revenues is highly dependent upon customers' time horizons. Total Carbide's results are linked to activity within the Oil and Gas sectors, but despite the drop in oil price, are expected to continue to help support our technology businesses as they develop.

The Group continues to look for appropriate acquisition opportunities that fit its business model and will enhance its product offerings. Overall the Board views the future with much optimism.

Neill Ricketts

Chief Executive Officer

11 December 2014

Group statement of comprehensive Income

For the half year ended 30 September 2014

There were no comprehensive gains or losses in the year other than those included in the Group Statement of Comprehensive Income.

Group statement of financial position

As at 30 September 2014

Group statement of changes in equity

For the half year ended 30 September 2014

Included within the merger reserve is £53,000 in respect of the merger with Versarien Technologies Limited and £964,000 in respect of the acquisition of Total Carbide Limited. £212,000 in respect of the acquisition of 2-DTech Limited is included within the share premium account.

Statement of Group cash flows

For the half year ended 30 September 2014

Note to the statement of Group cash flows

For the half year ended 30 September 2014

Notes to the unaudited interim statements

For the half year ended 30 September 2014

1 Basis of preparation

The interim financial information has been prepared on the basis of International Financial Reporting Standards (IFRS) as adopted by the European Union. Full details of accounting policies are included in the Annual Report for the year ended 31 March 2014. Fixed annual charges are apportioned to the interim period on the basis of time elapsed. Other expenses are accrued in accordance with the same principles used in the preparation of the annual accounts. The Group has not applied IAS 34, Interim Financial Reporting, which is not mandatory for UK Groups, in the preparation of these interim financial statements.

2 Exceptional items

Acquisition costs relate to the purchase of 2-DTech Limited together with other amounts expended on potential acquisitions which did not proceed to completion. Restructuring costs relate to an expected move of the leasehold premises from which Total Carbide currently operates. The associate company set-up costs relate to the Group's joint venture, DV Composite Tooling Limited.

3 Loss per share

The loss per share has been calculated by dividing the loss after taxation of £281,000 (2013: £368,000) by the weighted average number of shares in issue of 101,541,596 (2013: 71,157,101) 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 30 September 2014 there were 2,882,478 (2013: 3,388,534) potential Ordinary shares which have been disregarded in the calculation of diluted earnings per share as they were considered non-dilutive at that date.

4 Intangible assets

5 Acquisition of subsidiary

On 1 May 2014 the Company completed the acquisition of 85% of the share capital of 2-DTech Limited for a consideration of £740,000 comprising cash of £220,000 and 846,153 Ordinary shares at a price of 26 pence per share and a commitment to fund vendor projects at a maximum cost of £300,000. The provisional fair value of the assets and liabilities of 2-DTech at the date of acquisition was as follows:

In accordance with IFRS 3, the Board has reviewed the fair value of the assets and liabilities using the information available to it since 2-DTech was acquired.

6. Dividends

As stated in the 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. In view of this, no dividend is declared and 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.

7. Interim Report

Copies of the Interim Report are being sent to shareholders and are available to the public from the offices of Versarien plc at Building 4, Vantage Point Business Village, Mitcheldean, Gloucestershire, GL17 0DD. The Interim Report and interim announcement will also be available on the Group's website at www.versarien.com.

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