VERSARIEN PLC

Earnings Release • Feb 21, 2023

National Storage Mechanism | Additional information

RNS Number : 5021Q

Versarien PLC

21 February 2023

21 February 2023

Versarien Plc

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

Final Results for the 18 months ended 30 September 2022

Versarien Plc (AIM: VRS), the advanced engineering materials group, announces its audited results for the 18 months ended 30 September 2022. The comparative figures are for the 12 month period ended 31 March 2021.

Financial Highlights

•	Group revenues from continuing operations of £11.1 million (2021: £5.7 million)*
•	Graphene revenues of £2.1 million (2021: £0.7 million)
•	Adjusted LBITDA** for continuing operations of £2.4 million (2021: £1.9 million)
•	Reported loss before tax from continuing operations of £8.3 million (2021: £8.1 million)
•	Reported loss for the period of £8.4 million (2021: £8.1 million)
•	Cash of £1.4 million at 30 September 2022 (31 March 2021: £2.4 million)

* Excludes discontinued revenues of £0.5 million (2021: £0.9 million)

** Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation and excludes Exceptional items, Share-based payment charges and losses relating to the fair value assessment of the Lanstead sharing agreements)

Operational/Manufacturing Highlights

•	Relocation to new dedicated graphene production facility in Longhope, Gloucestershire, to significantly expand capacity
•	10,000 square foot floor slab laid for new Versarien innovation centre using the Company's CementeneTM and PolygreneTM enhanced concrete
•	Acquisition of Spanish graphene manufacturing assets transferred to Longhope during the year and in process of commissioning to provide up to an additional 100 tonne powder capacity per annum
•	Equipment to scale up graphene ink production capacity by an additional 12,000 litres per annum delivered and commissioned
•	Non-core aluminium business discontinued to concentrate on graphene production

Partnerships/Commercialisation Highlights

•	Umbro to integrate Graphene-WearTM into its Elite-Pro-Training Kit range for 2023 Spring/Summer collection
•	GoToGym in South America launching active-wear incorporating Versarien's Graphene-WearTM technology
•	BiaBrazil to integrate Graphene-WearTM  into its sports and active wear ranges
•	Commercial agreement signed with Superdry to produce graphene enhanced garments and discussions ongoing with multiple other garment suppliers
•	Global construction companies beginning to trial CementeneTM in-house
•	Grant agreement signed and project completed to support the development of Pseudo-Capacitor technology aimed at zero emissions for port-side infrastructure
•	Successful on-time delivery of Defence Science and Technology Laboratory ("DSTL") contract within specification
•	Collaboration signed with US-based Flux Footwear, an adaptive footwear company, to supply graphene enhanced elastomers
•	10 new product demonstrators launched in the period

Funding Highlights

•	£1.93 million strategic investment in Versarien by GrapheneLab Co. Ltd., South Korea, together with royalty and trademark agreements
•	£1.85 million (gross) raised via equity placing post period-end

Neill Ricketts, CEO of Versarien, commented:

"The extended 18-month period has seen both successes and challenges, with the first 12-months seeing the financial benefits from the DSTL contract which focussed on understanding the advantages that graphene-loaded materials may bring to defence applications. In the period we also successfully completed the GSCALE development stage of the project despite the macro‑economic challenges faced and the Company is now focussing on the most advanced Technology Readiness Level stage projects of construction and textiles.

"We remain confident of the environmental and commercial benefits our graphene technology can bring, but the current macro-economic conditions combined with the disruptive nature of our products has delayed the commercialisation we were anticipating. Consequently, we are streamlining the business and focusing on our primary opportunities in construction and textiles. We will continue to seek grant funding to support our operations, but will also need the continuing support of investors, either strategic or from the capital markets, to fund the business until such time as the graphene market gains traction and material commercial revenues flow.

"We look forward to updating the market on progress in due course."

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

For further information please contact:

Versarien Plc
Neill Ricketts - Chief Executive Officer	+44 (0) 1594 887204
Chris Leigh - Chief Financial Officer
Dr Stephen Hodge - Chief Technology Officer
SP Angel Corporate Finance (Nominated Adviser and Joint Broker)
Matthew Johnson Adam Cowl	+44 (0) 20 3470 0470
Berenberg (Joint Broker)
Mark Whitmore Ciaran Walsh	+44 (0) 20 3207 7800
IFC Advisory Limited (Financial PR & Investor Relations)
Tim Metcalfe Zach Cohen	+44 (0) 20 3934 6630

Notes to Editors:

The strategy of Versarien Plc (AIM:VRS) is to be a globally recognised graphene company with a wide portfolio of high-quality verified materials allied to the largest relevant IP portfolio supported by its own UK based research and development centre driving recurring revenue growth through its innovative graphene product applications.

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

NON-EXECUTIVE CHAIR'S STATEMENT

Following my first statement as Non-executive Chair of Versarien, relating to the first twelve months of the extended 18-month accounting period, I am pleased to provide an update for the full period. In doing so I wish to reassure shareholders that we are doing all we can to progress the Company, but traction in the graphene market place has proved challenging for all participants, so it is worth reminding ourselves of what has been achieved and why we are pursuing a graphene strategy.

·	We are a pioneer in the supply of graphene in the UK.
·	We have secured IP with over 130 patents and trademarks.
·	We have completed 16 Innovate UK projects.
·	We received the largest ever UK Innovate loan of £5m to scale up (GSCALE).
·	We are the first company to be certified and then re-certified by the Graphene Council as a "Verified Graphene Producer".
·	We have embedded connections with University of Manchester and University of Cambridge.
·	We are EU REACH registered with our CTO leading the Technical Working Group.
·	We are a member of the EC's €1bn Graphene Flagship project.

The global graphene market is estimated to be worth US$7.55billion by 2028 with a CAGR of 37.3%. Of this potential market our focus is on construction where the market is estimated to be US$900 million per annum and leisure/footwear where it is estimated to be US$360 million per annum. Longer term we are still involved in the automotive sector where the market is expected to reach US$340 million and aerospace US$70 million per annum.

We continue to focus our efforts on construction and textiles which we believe are at the highest technology readiness level and therefore closest to commercial revenues.

Our production capability at Longhope, Gloucestershire, has increased in readiness for commercial traction, but challenging macro-economic conditions have delayed the progress we were anticipating. Nonetheless it is highly encouraging to see our CementeneTM product being tested by major global construction companies.

CementeneTM, which is our graphene admixture for the construction industry, has been used in a number of concrete pours, providing validation for the technology and we are pursuing the necessary accreditations to allow full-scale commercialisation.

Whilst we focus on our objective of monetisation it is also vital that we maintain a pipeline of development opportunities that will provide future revenues. However, with the prevailing economic climate, we have felt it prudent to cut costs and streamline our operations so that the focus is more UK centric.

I would like to thank all our staff for their continued endeavours and very much look forward to reporting further progress.

Diane Savory OBE

Non-executive Chair

CHIEF EXECUTIVE OFFICER'S REVIEW

The extended 18-month period has seen both successes and challenges with the first 12-months seeing the financial benefits from the DSTL contract which focussed on understanding the advantages that graphene-loaded materials may bring to defence applications. In the period we also successfully completed the development stage of the GSCALE  project despite the macro‑economic challenges faced and the Company is now focussing on the most advanced Technology Readiness Level stage projects of construction and textiles, further details of which are below.

TECHNOLOGY BUSINESSES

UK operations

During the period the Company relocated its graphene manufacturing operations to Longhope in Gloucestershire whilst at the same time closing the aluminium operations in Cheltenham, which are shown as discontinued operations. The Company has now commissioned the first of four "Graphene- Tech" reactors acquired which in total could provide up to an additional 100 tonnes of powder capacity for use in multiple sectors including energy storage. The Graphink processing machines also purchased during the period are fully operational and can provide up to 12,000 kg of CementeneTM (Versarien's graphene enhanced concrete admixture) or 120,000 kg of Graphene-WearTM formulation per annum.

Construction

The global construction industry is one of the biggest contributors to CO2 production, accounting for c.39% of energy- and process-related carbon dioxide emissions. Concrete contributes circa 8% of the world's CO2 emissions and graphene has the potential to significantly improve the performance of concrete with regards to its carbon footprint. Almost 1,000 tonnes of concrete have been poured containing CementeneTM. and the Company is in discussions with major UK and European construction companies to assess product viability following the successful completion of testing by a United Kingdom Accredited Service ("UKAS") laboratory. Consequently, Versarien plans to continue investment in Graphink processing equipment to support its focus on the construction sector and the potential environmental benefits that can be obtained.

The Company has also commissioned its 3D concrete printer and successfully completed several projects. Versarien intends to co-fund research fellowships as part of the Digital Roads of the Future project led by National Highways, housed at the University of Cambridge and the Company is a founding member of the Roads Research Alliance. We are working with Amey, S2, National Highways, Costain, Roadfill, Environment Agency, Hedileberg, SSanyong C&E, Cybe, Tarmac, Sika and Skanska with in-house testing of CementeneTM now commencing in large construction companies.

Textiles and footwear

In partnership with thread and clothing manufacturers, we have conducted a significant amount of research into the textile industry. Graphene's thermal conductivity, as well as its antimicrobial, fire resistance and mechanical strength properties, are highly applicable to the sportswear and protective clothing industries.

It is also a more sustainable solution to the manufacturing process, which could help to reduce the number of hydrocarbons and the amount of water used in textile production, improve the recyclability of products and extend the lifetime of the garments.

Versarien continues to progress its relationships with clothing brands Umbro, BiaBrazil and Go To Gym. Some customer photoshoots have been completed for the Graphene-WearTM product launches anticipated in Spring/Summer 2023, and designs have been completed for Autumn/Winter 2023 and Spring/Summer 2024. The Company is also in dialogue with other global sportswear brands with the aim to launch a number of new products.

Following the product launch with Flux Footwear LLC, the Company continues to take enquiries from global brands for Graphene-WearTM rubber compounds and masterbatches. Whilst these two sectors are our primary focus the opportunities in automotive and aerospace remain and will be further addressed when funding allows.

DSTL Development Contract

The DSTL contract has been successfully delivered and we are in dialogue with the UK defence sector regarding the supply of certain products that formed part of it.

Overseas Operations

As a result of traction taking longer than anticipated we have taken the strategic decision to focus our resources on higher technology readiness level applications and markets closer to home.

We will continue to operate from Spain and South Korea, but with a reduced cost base. The US sales office is closing with the pipeline of enquiries to be handled from the UK.

United States of America

We have received our first order for sample material from NASA where our graphene will be investigated for space-craft coating applications. We are also working with a major fabric and yarn manufacturer to include Versarien's graphene in ballistic protection, stab resistant, flame retardant and abrasion resistant garments as well as a high-end bicycle chain lubrication manufacturer where Versarien's graphene materials have performed exceptionally well in preliminary tests.

Spain

Gnanomat has continued to test its products in a wide range of markets, particularly in energy storage with supercapacitors (pseudocapacitors), fuel cells and zinc/air batteries as well as allied applications such as sensing and low observability in military applications.

The Company is continuing to work on the INNPRESSME grant project aiming to create an Open Innovation Test Bed in the area of nanotechnology and advanced materials. The funds have been used to optimise the pilot plant and gain access to business opportunities. Gnanomat continues to apply for grants to support its progress to commercial revenues.

In addition, the company has extended its product portfolio of advanced materials with very different technologic profiles, such as the superparamagnetic graphene-based materials with multiple potential applications.

Gnanomat continues protecting IP by the extension of rights to territories where larger markets are concentrated in Europe, US, Japan and South Korea.

South Korea

Since acquiring the CVD operations from Hanwha and moving and commissioning them at the new premises, the core focus has been on growth optimisation of a portfolio of CVD graphene products on different substrates working with local partners where appropriate.

Future strategy is to produce demonstrators for use in sensors, imagers and RF applications including 5G and 6G. These are long term projects which will take some time to bear fruit, so we have decided to reduce our small scale operations by two members of staff and rely more on our partnership with Graphene Labs.

Versarien Korea Limited is also looking at opportunities to sell CementeneTM and Graphene-WearTM products in Korea.

MATURE BUSINESSES

The mature businesses have struggled through Covid and are now facing macro-economic challenges, including rising energy prices. Whilst they provide some infrastructure support, they are no longer core activities.

Current Trading and Outlook

We remain confident of the environmental and commercial benefits our graphene technology can bring, but the current macro-economic conditions combined with the disruptive nature of our products has delayed the commercialisation we were anticipating. Consequently, we are streamlining the business and focusing on our primary opportunities in construction and textiles.

We will continue to seek grant funding to support our operations, but will also need the continuing support of investors, either strategic or through the capital markets, to fund the business until such time as the graphene market gains traction and material commercial revenues flow.

We look forward to updating the market on progress in due course.

Neill Ricketts

Chief Executive Officer

CHIEF TECHNOLOGY OFFICER'S REVIEW

Our R&D team have delivered several key projects in the last 18 months namely the GSCALE and DSTL projects, and I am particularly proud of being able to re-certify our NaneneTM graphene powder through the rigorous Graphene Council Verified Graphene Producer programme.

With six white papers published to date, we have launched our "Nanomaterials Portfolio", a mammoth task ensuring our datasheets are compliant with ISO standards and the Graphene Council's proposed Graphene Classification Framework. This portfolio highlights our large array of raw material options that can enable solutions to a number of market sectors.

Our R&D teams have handed over the majority of the Graphene-WearTM and CementeneTM developments to Versarien Graphene Ltd.'s Production and Operations teams, and we now move towards obtaining product certifications such as Oekotex Eco-Passport for our Graphene-WearTM textile coating formulation (complete), and BS-934 Admixture for CementeneTM water-based graphene admixture (in progress). To support further product developments, we are seeking commercial and grant funding to expand Graphene-WearTM and CementeneTM to global markets and increase the number of products in the respective family product portfolios.

Within the construction sector, we are well positioned in Cambridge to support the Digital Roads of the Future programme and have signed up as a founder member of the Roads Research Alliance along with around 20 other industry partners. The programme is spearheaded by National Highways and Costain; we are striving to recruit and co-fund two Future Roads Fellows but will have access to the research and results of all funded projects as part of the alliance. The Future Roads Fellowships part is a £5.9 million programme that offers 27 experienced researcher fellowships linked to the thematic areas - digital twins, data science, smart materials, automation and robotics, and sustainability, all in the context of the roads network. With our CementeneTM developments, and continued progression with 3D concrete printing, Versarien overlap almost all of these themes and we are sure to be a pivotal partner.

Whilst construction and textiles are Versarien's major commercial focus, our long-term vision is to further pursue other GSCALE avenues and CVD graphene applications. One area that has proved hugely complex is rubber processing; to add more depth to our scientific knowledge of graphene and related materials in "Elastomers" projects, we have recruited a PhD student to begin in February at WMG (University of Warwick) with Prof. Tony McNally to utilise new state-of-the art rubber processing and testing facilities that are now up and running. This follows from the recent recruitment of our first PhD student from Prof. McNally's research group who is now part of our R&D team in Cambridge; he will be in charge of driving forward many more PolygreneTM thermoplastic compounds, masterbatches and associated products.

Regarding CVD activities, new products will be added to our "Nanomaterials Portfolio" in due course, but we are now supplying CVD graphene for testing outside of Korea to UK and US customers. To support application development, we have a microbiology PhD student at University of Plymouth supervised by Dr Tina Joshi, who has been developing key markers that will be incorporated onto our CVD graphene for biosensing during the next two years.

Health & Safety of Graphene

In my previous annual report statement, I touched upon the importance of the health & safety of graphene as being paramount to allowing graphene and related nanomaterials to become mainstream in our everyday lives. We continue to lead the way in the UK and Europe in supporting the compliance of graphene for REACH, as chair of the graphene REACH (registration, evaluation, restriction and authorisation of chemical substances) registration consortiums Technical Working Group, I have been able to update the industry and stakeholders at several points in the last year. In particular, I had the opportunity to present to the Graphene Flagship's Standardisation Committee in January, at the Graphene Flagship's Graphene Week conference in Munich in September.

Combined with presenting at the two Graphene Council Commercialisation Conferences in Birmingham, UK and Pittsburgh, USA, we have had important audience members from UK's Health & Safety Executive (HSE), the European Chemicals Agency (ECHA) and the US the US Environmental Protection Agency. Most recently, I presented regulatory updates and challenges at an ISO/TC-229 meeting hosted at the UK's National Physical Laboratory (NPL) in November with several delegates from other important territories such as Korea, Japan and China.

I look forward to presenting further to key UK centres and agencies such as National Physical Laboratory, Department for Environment, Food and Rural Affairs, Department for Business, Energy and Industrial Strategy, British Standards Institution, Health and Safety Executive and the UK Health Security Agency at the second UK Advanced Materials Workshop in February 2023. Our R&D team also continues to play an active role in European projects that allow us to further understand and develop techniques for nanotoxicology, with a new Horizon Europe project kicking-off this month known as i-CARE (Integrated assessment and Advanced Characterisation of Neuro-Nanotoxicity). The consortium aims to develop a resilient and adaptive set of advanced imaging technologies to quantify the physical/chemical properties of graphene in complex matrices. Versarien will be providing example materials such as graphene in concretes, tyres or other composite materials and adopting the developed techniques.

Dr Stephen Hodge

Chief Technology Officer

CHIEF FINANCIAL OFFICER'S REVIEW

Following the extension of the accounting reference date, these results are for a period of 18 months with the comparatives reflecting a 12-month period.

The aluminium business based at Cheltenham closed during the period and consequently these results are split between continuing and discontinued operations and the segmental analysis between the technology and mature businesses.

Group Results

Revenues from continuing operations were £11.11 million (2021: £5.69 million), a pro-rata increase of 30%. Revenue from graphene, including that recognised under the DSTL contract, was £2.15 million (2021: £0.70 million) a pro rata increase of 105% of which DSTL accounted for £1.63 million (2021: £0.25 million). The loss from continuing operations was £7.69 million (2021: £7.93 million). This was after charging £1.19 million in respect of the valuation of the Lanstead Sharing Agreements (2021: £3.28 million).

The adjusted LBITDA for continuing operations was £2.40 million for 18 months compared to £1.88 million for the prior 12 months calculated as below. 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.

	18 months ended 30 September 2022			12 months ended 31 March 2021
	Continuing operations	Discontinued operations	TOTAL	Continuing operations	Discontinued operations	TOTAL
	£'000	£'000	£'000	£'000	£'000	£'000
(Loss)/profit from operations	(7,693)	(130)	(7,823)	(7,930)	22	(7,908)
Depreciation and amortisation	2,126	41	2,167	1,135	98	1,233
Share based payments	1,510	-	1,510	1,193	-	1,193
Exceptional items	463	64	527	441	-	441
Other losses	1,191	-	1,191	3,280	-	3,280
Adjusted LBITDA	(2,403)	(25)	(2,428)	(1,881)	120	(1,761)

The adjustments to the loss from operations as disclosed in the Group Statement of Comprehensive Income relate to depreciation and amortisation, share based payment charges, exceptional items and losses related to the fair value of the Lanstead sharing agreements.

During the period we received delivery of equipment from Hanwha Aerospace in South Korea which had been developed under government contracts and which were included as potential assets under the asset purchase agreement signed in the previous period. These were independently valued at £241,000 and have been treated as additions to non-current assets with the associated credit treated as an exceptional item. Warranty claims of £65,000 from the asset purchase agreement were also successfully concluded and treated as an exceptional credit.

As part of our previous strategy for global coverage we bid for certain assets of a US based graphene company that had entered the UK equivalent of administration. The process reached an advanced stage but eventually another bidder was preferred. We incurred £82,000 of costs which have been treated as exceptional items.

The reported loss before tax for continuing operations was £8.32 million (2021: £8.08 million). Group net assets at 30 September 2022 were £11.6 million (31 March 2021: £16.5 million) with cash at the period end of £1.4 million (31 March 2021: £2.4 million). Net cash used in operating activities was £3.68 million (2021:£0.89 million) with trade and other payables reducing by £1.98 million (2021: £1.24 million increase). Investment in development costs and equipment was £4.66 million (2021: £1.68 million) and net principal lease payments were £0.93 million (2021: £0.99 million) giving total cash outflows of £9.27 million (2021: £3.56 million). These activities were financed by net funds received from the Lanstead sharing agreements of £3.53 million (2021: £2.34 million), net loans received of £2.78 million (2021: £2.45 million) and net funds received from the share issue to GrapheneLab Co Ltd of £1.92 million (2021: £Nil) totalling £8.23 million (2021: £4.79 million). The deficit of £1.04 million (2021: £1.23 million surplus) resulted in a modest increase on drawings on the invoice finance facilities of £0.03 million (2021: £0.53 million decrease) thus reducing cash at the period-end by £1.01 million (2021: £0.70 million increase).

Our GSCALE development project has completed with the full £5 million drawn by the period end, repayment of which is now due to commence in 2025.

Technology Businesses

The technology businesses have seen an increase in revenue from £0.70 million to £2.15 million driven mainly by the recognised revenues from the DSTL contract. Consequently, the gross margin rose from 13% to 47%. Operating costs for the 18 months were £4.74 million compared to £1.64 million for the prior 12 month period. The pro-rata increase relates primarily to costs at the new Longhope production facility, upscaling research and development to deliver the DSTL and GSCALE projects and a full period of Versarien Korea.

With our strategic focus now concentrated on construction and textiles we have reviewed the development costs previously capitalised on a number of different projects and decided that we should only carry forward those related primarily to the GSCALE project. We have therefore impaired assets by £0.91 million which has been treated as an exceptional charge. These projects have also previously attracted grants of £0.66 million which were held as deferred income in the balance sheet and these have been released as an exceptional credit.

In addition, we have undertaken a cost cutting programme to reduce annual costs by £1.4 million. As part of this we are currently in the process of winding-up Versarien Graphene Inc., including settling certain liabilities at an agreed cost of £157,000.

Mature Businesses

The mature business segment has seen increased revenues of 20% on a pro rata basis, and returned a small profit from operations of £0.03 million for 18 months compared to the previous 12 months loss of £0.6 million. As referred to in the Chief Executive Officer's report the businesses are no longer core as we seek to transition to focusing solely on the graphene technology.

Going Concern

These financial statements have been prepared on a going concern basis making the following assumptions:

•	The Group meets its day-to-day working capital requirements through careful cash management and the use of its invoice discounting facilities which are expected to continue;
•	As at 30 September 2022, the Group had cash balances totalling £1.4 million plus £0.4 million of headroom on its invoice discounting facilities;
•	The Group raised £1.85 million gross by way of a placing in December 2022 and has unused authority to issue 10.6 million shares without pre-emption rights until the next AGM due by 31 March 2023 and expects the placing authority to be renewed at that AGM; and
•	The Group has cut costs as part of its strategy to focus on construction and textile opportunities.

The Directors have prepared detailed projections of expected future cash flows for a period of twelve months from the date of issue of this preliminary statement. As previously stated, the funding strategy is to apply for grants, debt and finally equity.

A number of significant grants have been applied for but with no guarantee of successful outcome, although the final stages have been reached. If successful, then the Group will have sufficient working capital for the next 12 months, but if not, then the Group will need to raise additional funding. As a consequence, this represents a material uncertainty that may cast significant doubt on the Group and Company's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

The Board is of the opinion that the Group will be able to secure the required funding through strategic investment, equity issue or other financial instruments. However, the timing and availability of funding sources is currently outside of the control of the Board and none of this funding is currently committed. Whilst noting this, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.

Chris Leigh

Chief Financial Officer

Group statement of comprehensive income

For the 18 months ended 30 September 2022

	Note				18 months to 30 September 2022 £'000	12 months to 31 March 2021 Restated** £'000
Continuing operations Revenue Cost of sales			3		11,106 (7,739)	5,685 (4,498)
Gross profit Other operating income Other losses * Operating expenses (including exceptional items)					3,367 257 (1,191) (10,126)	1,187 103 (3,280) (5,940)
Loss from operations before exceptional items Exceptional items			4		(7,230) (463)	(7,489) (441)
Loss from operations Finance costs Finance income					(7,693) (644) 14	(7,930) (153) 5
Loss before income tax Income tax	5				(8,323) 59	(8,078) -
Loss from continuing operations					(8,264)	(8,078)
(Loss)/Profit from discontinued operations			2		(141)	10
Loss for the period					(8,405)	(8,068)
Loss attributable to: Owners of the parent company Non-controlling interest					(8,069) (336)	(7,779) (289)
					(8,405)	(8,068)
Loss per share attributable to the equity holders of the Company: Basic and diluted loss per share	6				(4.16)p	(4.45)p
There is no other comprehensive income for the period

* The other losses in the period relate to the fair value assessment of the Lanstead sharing agreements.

** The audited results have been restated in accordance with the required disclosure of discontinued operations.

Group statement of financial position

As at 30 September 2022

		30 September	Restated* 31 March
		2022	2021
	Note	£'000	£'000
Assets
Non-current assets
Intangible assets	7	10,636	9,706
Property, plant and equipment	8	5,861	4,119
Deferred taxation		25	25
Trade and other receivables		38	772
		16,560	14,622
Current assets
Inventory		2,131	1,814
Trade and other receivables		2,155	6,449
Cash and cash equivalents		1,351	2,359
		5,637	10,622
Total assets		22,197	25,244
Equity
Called up share capital	9	1,941	1,899
Share premium account	9	34,961	33,003
Merger reserve		1,256	1,256
Share-based payment reserve		4,759	3,249
Accumulated losses		(29,694)	(21,625)
Equity attributable to owners of the parent company		13,223	17,782
Non-controlling interest		(1,624)	(1,288)
Total equity		11,599	16,494
Liabilities
Non-current liabilities
Trade and other payables		600	994
Deferred tax liabilities		67	67
Innovate Loan		5,000	2,260
Long-term borrowings		1,595	584
		7,262	3,905
Current liabilities
Trade and other payables		1,957	3,279
Provisions		-	119
Invoice discounting advances		660	631
Current portion of long-term borrowings		719	816
		3,336	4,845
Total liabilities		10,598	8,750
Total equity and liabilities		22,197	25,244

·      The Company has reclassified certain items none of which have any effect on the income statement or net assets of the Group

Group statement of changes in equity

For 18 months ended 30 September 2022

	Share capital	Share premium account	Merger reserve	Share-based payment reserve	Accumulated losses	Non-controlling interest	Total equity
£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2020	1,697	25,497	1,256	2,056	(13,846)	(999)	15,661
Issue of shares	202	7,506	-	-	-	-	7,708
Loss for the year	-	-	-	-	(7,779)	(289)	(8,068)
Share-based payments	-	-	-	1,193	-	-	1,193
At 31 March 2021	1,899	33,003	1,256	3,249	(21,625)	(1,288)	16,494
Issue of shares	42	1,958	-	-	-	-	2,000
Loss for the period	-	-	-	-	(8,069)	(336)	(8,405)
Share-based payments	-	-	-	1,510	-	-	1,510
At 30 September 2022	1,941	34,961	1,256	4,759	(29,694)	(1,624)	11,599

Statement of Group cash flows

For the 18 months ended 30 September 2022

		30 September  2022 £'000	31 March  2021 £'000
Cash flows from operating activities
Cash used in operations		(3,280)	(734)
Interest paid		(402)	(160)
Net cash used in operating activities		(3,682)	(894)
Cash flows from investing activities
Purchase of intangible assets		(2,751)	(1,638)
Purchase of property, plant and equipment		(1,910)	(42)
Net cash used in investing activities		(4,661)	(1,680)
Cash flows from financing activities
Share issue (net of funds deferred per sharing agreement)		1,926	-
Share issue costs		(10)	(134)
Funds received from Innovate UK		2,740	2,260
Funds received from sharing agreements		3,537	2,479
Net funds received from CBILS		41	186
Principal payment of leases under IFRS 16		(928)	(990)
Invoice discounting loan (repayments)/proceeds		29	(525)
Net cash generated from financing activities		7,335	3,276
(Decrease)/increase in cash and cash equivalents		(1,008)	702
Cash and cash equivalents at beginning of period		2,359	1,657
Cash and cash equivalents at end of period		1,351	2,359

Note to the statement of Group cash flows

For the 18 months ended 30 September 2022

	30 September 2022 £'000	31 March 2021 £'000
Loss before tax (including discontinued operations)	(8,464)	(8,068)
Adjustments for:
Share-based payments	1,510	1,193
Depreciation	1,677	1,081
Amortisation	490	152
Disposal of tangible assets	292	-
Impairment of intangible assets	1,331	-
Finance cost/(income)	630	160
Loss/(gain) on FV movement of sharing agreement	1,191	3,280
R&D tax credit repayment	59	-
Decrease/(increase) in trade and other receivables and investments	301	(211)
(Increase)/decrease in inventories	(317)	438
(Decrease)/increase in trade and other payables	(1,980)	1,241
Cash flows from operating activities	(3,280)	(734)

Notes to the final results

For the 18 months ended 30 September 2022

1. Basis of preparation

The Group consolidated financial statements have been prepared in accordance with UK-adopted, International Accounting Standards in conformity with the requirements of the Companies Act 2006.

The Group's financial statements have been prepared on a going concern basis under the historical cost convention. The consolidated financial statements are presented in sterling amounts. Amounts are rounded to the nearest thousands, unless otherwise stated.

The financial information contained in this announcement does not constitute the Group's statutory accounts for the period ended 30 September 2022 but is derived from those accounts which have been audited and which will be filed with the Registrar of Companies in due course.

The auditors' report on the Annual Report and Financial Statements for the period ended 30 September 2022 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 as follows:

"We draw your attention to the going concern section of accounting policies of the financial statements which indicate that the group needs to raise additional funding within a period of less than 12 months from the date of approval of these financial statements in order to meet liabilities as they fall due, and that the required funding is yet to be secured.

As stated in the going concern section of the accounting policies, these events or conditions, along with other matters set out in the going concern section of the accounting policies, indicate that a material uncertainty exists that may cast significant doubt on the Group and Parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Given the material uncertainty noted above and our risk assessment we considered going concern to be a key audit matter. Our evaluation of the Directors' assessment of the Group and the Parent Company's ability to continue to adopt the going concern basis of accounting and in response to the key audit matter included:

•	Obtaining an understanding of how the Directors undertook the going concern assessment process to determine if we considered it to be appropriate for the circumstances;
•	Challenge of the Directors' going concern assessment, including the reasonableness of assumptions and downside stress case sensitivities applied, using our underlying knowledge of the business;
•	Testing of the mathematical accuracy and consideration of the reasonableness of the assumptions made and available headroom throughout the forecast period extending from the date of approval of the financial statements;
•	Consideration of the key sensitivities applied in the cash flow model pertaining to revenue and cost base, the continued use of the finance facilities and management of the Group's and Company's cost base;
•	Analysing post year end trading results compared to forecast and current year to evaluate the accuracy and achievability of forecasts; and
•	Assessing the completeness and accuracy of disclosures in relation to going concern and whether significant judgements have been appropriately disclosed.

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate."

2. Discontinued operations

The Group has exited the non-core aluminium business of Versarien Technologies Limited based in Cheltenham and the company has been re-named Versarien Graphene Limited.  It will be used as the entity for graphene production and sales whilst 2-DTech Limited and Cambridge Graphene Limited will continue as the UK research and development arms of the graphene business. Financial information relating to the discontinued operation is set out below.

		30 September	31 March
2022	2021
	Note	£'000	£'000
Revenue		534	882
Cost of sales		(427)	(614)
Gross profit		107	268
Other operating income		1	4
Operating expenses (including exceptional items)		(238)	(250)
(Loss)/Profit from operations before exceptional items		(66)	22
Exceptional items		(64)	-
(Loss)/Profit from operations		(130)	22
Finance charge		(11)	(12)
Loss before income tax Income tax		(141) -	10 -
(Loss)/profit from discontinued operations		(141)	10

Net assets, excluding intra-group indebtedness at 31 March 2021 was £278,000.

3. Segmental information

At 30 September 2022, the Group is organised into two business segments. Central costs are reported separately.

Information reported to the Group's Chief Executive Officer for the purposes of resource allocation and assessment of segment performance is focussed on the two principal business segments of Technology and Mature Businesses, and, accordingly, the Group's reportable segments under IFRS 8 are based on these activities.

Segment profit/(loss) represents the profit/(loss) earned by each segment, including a share of central administration costs, which are allocated on the basis of time spent by central staff on subsidiary affairs. This is the measure reported to the Chief Executive Officer for the purposes of resource allocation and assessment of segment performance.

The non-core aluminium operations of Versarien Technologies Limited were closed during the period and are presented below as discontinued operations.

	Central	Technology Businesses	Mature Businesses	Intra-group adjustments	Total continuing Operations	Discontinued Operations	Total
£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	-	2,146	8,960	-	11,106	534	11,640
Gross profit	(29)	1,008	2,388	-	3,367	107	3,474
Other operating income	-	251	6	-	257	1	258
Other losses	(1,191)	-	-	-	(1,191)	-	(1,191)
Operating expenses	(14,916)	(4,740)	(2,365)	11,895	(10,126)	(238)	(10,364)
(Loss)/Profit from operations	(16,136)	(3,481)	29	11,895	(7,693)	(130)	(7,823)
Finance charge	159	(76)	(104)	(609)	(630)	(11)	(641)
Loss before tax	(15,977)	(3,557)	(75)	11,286	(8,323)	(141)	(8,464)
Total assets	15,824	9,232	7,319	(10,178)	22,197	-	22,197
Total liabilities	(5,853)	(22,292)	(2,997)	20,544	(10,598)	-	(10,598)
Net assets/(liabilities)	9,971	(13,060)	4,322	10,366	11,599	-	11,599
Capital expenditure	403	5,005	1,054	-	6,462	-	6,462
Depreciation/amortisation and impairment	566	1,480	993	459	3,498	-	3,498
The segment analysis for the year ended 31 March 2021 is as follows:
		Technology	Mature	Intra-group	Total
	Central	Businesses	Businesses	adjustments	Continuing operations	Discontinued Operations	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	-	703	4,982	-	5,685	882	6,567
Gross profit	-	91	1,096	-	1,187	268	1,455
Other operating income	-	103	-	-	103	4	107
Other losses	(3,280)	-	-	-	(3,280)	-	(3,280)
Operating expenses	(2,686)	(1,638)	(1,584)	(32)	(5,940)	(250)	(6,190)
(Loss)/Profit from operations	(5,966)	(1,444)	(488)	(32)	(7,930)	22	(7,908)
Finance charge	(44)	(33)	(71)	-	(148)	(12)	(160)
Loss before tax	(6,010)	(1,477)	(559)	(32)	(8,078)	10	(8,068)
Total assets	26,247	5,257	6,449	(13,391)	24,562	682	25,244
Total liabilities	(3,808)	(15,116)	(2,330)	12,908	(8,346)	(404)	(8,750)
Net assets/(liabilities)	22,439	(9,859)	4,119	(483)	16,216	278	16,494
Capital expenditure	4,388	1,634	-	-	6,022	-	6,022
Depreciation/amortisation and impairment	164	444	500	27	1,135	98	1,233

Geographical information

The Group's revenue from external customers and information about its segment assets by geographical location for continuing operations are detailed below:

	Revenue		Non-current Assets
	30 September 2022 £'000	31 March 2021 £'000	30 September 2022 £'000	31 March 2021 £'000
United Kingdom	9,466	4,823	16,342	8,296
Rest of Europe	909	495	49	2,300
North America	16	5	-	-
Other	715	362	169	4,026
	11,106	5,685	16,560	14,622

4. Exceptional items

	30 September 2022 £'000	31 March 2021 £'000
Continuing Operations
Goodwill impairment	423	-
Development cost impairment	908	-
Deferred income related to development cost impairment	(660)	-
Relocation and restructuring costs	-	53
(Credit)/charge relating to expansion in Asia	(306)	137
Acquisition costs	82	186
Other	16	65
	463	441
Discontinued Operations
Relocation and restructuring costs	64	-

The exceptional credit of £306,000 arises principally from the delivery of additional plant and equipment not available for fair valuing at the time of acquisition and relate to the completion of South Korean government contracts by Hanwha Aerospace the benefit of which was due to Versarien in accordance with asset purchase agreement signed in the prior financial year.

Acquisition costs of £82,000 relate to the purchase of certain assets of a USA graphene company in administration that did not proceed to contract.

5. Taxation

The tax credit for the period of £59,000 relates to an R&D tax credit. The charge on the results for the period is £nil (2021: £nil). At the year end the Group had £25.5 million (2021: £19.4 million) of trading losses carried forward to set-off against future trading profits. Taxation received in the year relates to R&D tax credit.

6. Loss per share

The calculation of the basic loss per share for the period ended 30 September 2022 and 31 March 2021 is based on the losses attributable to the shareholders of the Versarien plc Group divided by the weighted average number of shares in issue during the period. The calculation of diluted loss per share is based on the basic loss per share adjusted to allow for the issue of shares on the assumed conversion of all dilutive options. However, in accordance with IAS 33 "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 2022, there were 15,205,850 (2021: 14,677,130) potential Ordinary shares, which have been disregarded in the calculation of diluted loss per share as they were considered non-dilutive at that date.

	Attributable to owners of parent company	Weighted average number of shares	Basic loss per share pence
	£'000	'000
Period ended 30 September 2022	(8,069)	194,027	(4.16)
Year ended 31 March 2021	(7,779)	174,660	(4.45)

7. Intangible assets

		Development	Patents, trademarks and other
	Goodwill £'000	Costs £'000	Intangibles £'000	Total £'000
Cost
At 1 April 2020	4,431	1,412	915	6,758
Additions	-	1,553	3,585	5,138
At 31 March 2021	4,431	2,965	4,500	11,896
Additions	-	2,584	167	2,751
At 30 September 2022	4,431	5,549	4,667	14,647
Accumulated amortisation and impairment
At 1 April 2020	876	489	673	2,038
Amortisation charge	-	2	150	152
At 31 March 2021	876	491	823	2,190
Amortisation charge	-	1	489	490
Impairment	423	908	-	1,331
At 30 September 2022	1,299	1,400	1,312	4,011
Carrying value
At 30 September 2022	3,132	4,149	3,355	10,636
At 31 March 2021	3,555	2,474	3,677	9,706

8. Property, plant and equipment

		ROU asset	Plant and equipment	Leasehold improvements	Total
		£'000	£'000	£'000	£'000
Cost
At 1 April 2020		6,537	5,404	518	12,459
Additions		-	884	-	884
At 31 March 2021		6,537	6,288	518	13,343
Additions		1,801	1,776	134	3,711
Disposals		(1,742)	(30)	(84)	(1,856)
At 30 September 2022		6,596	8,034	568	15,198
Accumulated depreciation
At 1 April 2020		3,387	4,645	111	8,143
Charge for the year		812	172	24	1,008
Impairment		-	73	-	73
At 31 March 2021		4,199	4,890	135	9,224
Charge for the period		1,113	455	109	1,677
Disposals		(1,505)	(27)	(32)	(1,564)
At 30 September 2022		3,807	5,318	212	9,337
Net book value
At 30 September 2022		2,789	2,716	356	5,861
At 31 March 2021		2,338	1,398	383	4,119

9. Called up share capital and share premium

	Number of shares	Called up share capital	Share premium	Total
'000	£'000	£'000	£'000
At 1 April 2020	169,682	1,697	25,497	27,194
Issue of shares	20,188	202	7,506	7,708
At 31 March 2021	189,870	1,899	33,003	34,902
Issue of shares	4,280	42	1,958	2,000
At 30 September 2022	194,150	1,941	34,961	36,902

The called up share capital in the table above represents the total number of authorised, issued and fully paid Ordinary shares with a nominal value of £0.01 per share.

During the period the Company issued to Graphene Labs 4,280,000 new ordinary shares (the "Subscription Shares") at an issue of price of 45 pence per Ordinary Share (the "Issue Price").

10. Dividends

As stated in the 2013 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. Consequently, 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.

11. Report and accounts

Copies of the 2022 Annual Report and Accounts will be posted to shareholders in due course. Further copies may be obtained by contacting the Company Secretary at the registered office. In addition, the 2022 Annual Report and Accounts will be available, when published, to download from the investor relations section on the Company's website www.versarien.com.

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