Versarien Plc (LON:VRS), the advanced engineering materials group, has announced its unaudited interim results for the six months ended 30 September 2021.
Financial Highlights
● Group revenues from continuing operations up 41% to £3.82 million (H1 2020: £2.71 million)*
● Graphene revenues up 1 66% to £0.93 million (H1 2020: £0.35 million)
● Adjusted LBITDA** for continuing operations reduced by 39% to £0.71 million (H1 2020: £1.16 million)
● Reported loss before tax of £3.11 million (H1 2020: £4.34 million)
● Reported loss before tax from continuing operations of £2.96 million (H1 2020: £4.31 million)
● Cash of £3.46 million at 30 September 2021 (31 March 2021: £2.36 million)
*Excludes discontinued revenues of £0.45 million (H1 2020: £0.41 million)
**A djusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation) excludes exceptional items, share-based payment charges and other losses)
Operational Highlights
●1.93 million strategic investment in Versarien by GrapheneLab Co. Ltd., South Korea, together with royalty and trademark agreements
●Acquisition of Spanish graphene manufacturing assets to provide up to an additional 100 tonne powder capacity per annum
●Orders placed for the purchase of equipment to scale up ink production capacity by an additional 12,000 litres per annum
● Lease signed on new dedicated graphene production facility in Longhope, Gloucestershire
● Textile supply agreement signed with Crosslete and discussions ongoing with multiple garment suppliers
Post Period Highlights
●Grant agreement signed to support the development of Pseudo-Capacitor technology aimed at zero emissions for port-side infrastructure
● Commercial agreement signed with Superdry to produce graphene enhanced garments
● Royalty agreement signed with Gerdau S.A for the distribution of graphene masks primarily in Latin America
Neill Ricketts, CEO of Versarien, commented:
“The first half of this financial year has seen continued progress in our pursuit of commercialisation whilst increasing both production capacity and our global footprint. GSCALE remains on track with particularly pleasing results in textiles and concrete. We remain conscious of our environmental obligations which also brings commercial opportunities as we seek to solve some of the global issues and challenges using graphene and allied two dimensional materials”
Chairman’s Statement
I referred in the annual report to the challenges that Covid-19 had presented, and to the progress that had been made in spite of the restrictions placed upon us. It is therefore extremely pleasing to be able to report continuing progress at the interim stage.
In particular, advancements in both textiles and concrete have been made and the latter brings the opportunity for significant environmental benefits. We are able to deliver on these projects with the continued support of the UK government through the IUK loan and the strategic investment from GrapheneLab Co Ltd., our partner in South Korea.
Continuing progress means we have to scale up production as demonstrated by the move to dedicated manufacturing facilities in Longhope, Gloucestershire. At this new facility we are commissioning the recently acquired equipment sourced from Spain. This is a significant step on our journey to future revenue generation.
Our global footprint and product portfolio are both important strands of our strategy to become a global player in the graphene space. We have now commissioned all the equipment acquired from Hanwha and have been able to produce high quality CVD single layer graphene suitable for use in the electronics industry.
As announced in October 2021, I will be standing down at the end of this calendar year and Diane Savory will be taking up the post. As we develop our projects, her expertise in managing a public company, chairing the Gloucestershire LEP and experience in textiles will be invaluable. I wish her well in what will be an exciting stage of Versarien’s development.
James Stewart CBE
Non-executive Chairman
06 December 2021
Chief Executive Officer’s Review
As described in the Annual Report, following the focus on graphene and the discontinuance of the aluminium business, segmental analysis is now split between technology and mature operations. The GSCALE project is described in each of the paragraphs below, but in the immediate future management we will be concentrating on the construction and leisure sectors whilst still progressing the described activities.
UK Technology Operations
The technology operations are now located in six countries being England, Ireland, Spain, South Korea, China and America. UK production (G) is now concentrated at our new 18,000 square foot dedicated graphene facility in Longhope, Gloucestershire housing production equipment previously located at Cheltenham as well as the newly arrived plant and equipment from Spain, which is in the process of commissioning. We are also bringing forward plans for the occupation of a 10,000 square foot innovation centre currently under construction which will include graphene enhanced concrete with polypropylene fibres in the design eliminating the need for steel rebar and providing a strong demonstrator for the technology.
Carbon fibre developments in transport (S ) addresses a UK market worth £4 billion in which graphene enhanced composites can reduce weight and improve strength. Versarien has been working extensively in the area of graphene enhanced carbon fibre reinforced polymers( CFRP) for various applications, many of which can be applied to the automotive sector. Versarien was awarded a Technology Developer Accelerator Program (TDAP) grant from the Advanced Propulsion Centre (APC) in 2020 to develop an innovative low-carbon component which will result in reduced vehicle emissions. The TDAP project has overseen the development of a low weight, high strength automotive component which can be directly applied to multiple areas of any vehicle. In partnership with Lotus Cars, the University of Sheffield’s Advanced Manufacturing and Research Centre (AMRC) and other supply chain partners one outcome from the project is a graphene enhanced CFRP bonnet assembly for the Lotus Evija electric sports car. Graphene enhanced CFRP in the Lotus Evija Bonnet has achieved three key objectives:
1. Mechanical – improved mechanical performance by at least 10% compared to the base prepreg material (fibrous material pre-impregnated with a particular synthetic resin)
2. Visual – Surface quality to meet Lotus’ paint specification
3. Price – Achieved a 10% -25% cost reduction
All three objectives were achieved using a hot press production process with lower capital costs and faster manufacturing. Further development will continue as Versarien and Lotus further optimise the process for use in any body panel. Several other projects are ongoing that contribute to further development of enhanced CFRPs for conventional structural supports, which could provide an innovative alternative for automotive, aerospace and rail manufacturers.
The mission for construction (C) is to reduce CO2 emissions. 24.7 million tons of ready mixed concrete is used in the UK annually and there are 250,000 miles of roads. Significant reductions in CO2 can be achieved by reducing the amount of cement used in ready mix whilst still maintaining strength, reducing curing and drying times and reducing or eliminating the need for steel. Introducing graphene reinforced concrete, graphene enhanced polymer fibres and recycled materials has a major impact on reducing CO2 levels.
Opportunities exist in extending asset life by eliminating cracking, using graphene enhanced polypropylene chopped fibres to replace ferrous rebar, development of self healing concrete, faster curing without cracking, non-destructive microwave rapid repair and 3-dimensional printing.
Studies have shown improved compression strength of ~38%, improved flexural strength of between 14% and 45%, increased tensile strength of ~15%, improved water permeability of ~200%, and increased corrosion resistance.
We are working on national highways projects as well as with HS2 for printed concrete and with non-government bodies on flood defences and rail for light quick deployment of flexible design buildings as well as having trademarked Cementene ™ for concrete.
Other project areas include wind turbine bases, building house rafts, water industry, flooring screed, very light rail structures, slipform roads/runways.
The mission for Polymers (A), is to reduce the amount of fossil fuel based plastics required where 3.3 million tonnes of plastic is processed in the UK alone and in particular, to increase the recyclability of packaging plastics where incorporating graphene in plastic and bio based plastic has a material effect.
Plastic packaging accounts for 44% of plastic used in the UK but 67% of plastic waste with over 2 million tonnes of plastic packaging used in the UK each year. This is mostly new rather than recycled plastic and Versarien is looking at the effect of adding graphene as a reinforcing filler into HDPE blow moulded bottles to improve the performance of recycled plastics. Pilot trials have shown a 20% weight reduction at a 1.5% – 2% loading.
We continue to work with one of the world’s largest packaging companies to evaluate graphene-based coatings as well as on other projects including optical wear, airway medical suction units and other forms of packaging.
The mission for Leisure (L) is similar to polymers, in reducing the use of fossil fuel based materials, but also to improve performance, garment lifetime, recyclability and functionality. In a UK market worth an estimated £5.8 billion the use of graphene inks and graphene enhanced material fibres can make a substantial difference.
As disclosed in the recently announced agreement with Superdry we have developed a number of sample garments which is testament to the benefits of utilising Versarien’s graphene technology. We continue to work with many organisations on sportswear, civilian and military clothing as well as in specialist applications such as athletic performance, fire and police.
The mission for Elastomers (E) is to improve performance, extend lifetime, recyclability and functionality in the areas of tyres and rubbers (including footwear). The global footwear market is expected to reach $440 billion by 2026 and we are focussed on graphene reinforced biomaterials and conventional elastomers. Our work on electric vehicle tyres has proved ~5% reduction in rolling resistance which will help for greater range in electric vehicles. Abrasion is also significantly improved with a new graphene variant.
In footwear we have been able to demonstrate significant increases in tensile strength (~50%), modulus (~30%), elongation (~20%) and tear strength (~23%) when compared to reference non-graphene compounds. We are working with Enso, Vivo Barefoot and Flux on these applications.
The £1.95 million development agreement with DSTL announced in November 2020 has progressed well and we are on track to complete it in accordance with the agreed milestones.
International Technology Operations
Our international operations are also making progress. In the USA we have signed 22 confidentiality agreements, are working on 14 active projects and have 5 collaborations in place. Sectors include coatings and anticorrosion, packaging/bottling, fabrics, polymers, elastomers, thermal transfer fluids and insulation materials.
In South Korea, we have successfully relocated and commissioned the plant and equipment acquired in the transaction with Hanwha last December, clean room facilities are operational and we have been able to produce high quality CVD graphene samples. The next steps will be to begin commercialising the 100 plus patents acquired by collaborating with institutions and South Korean companies as well as working with our partners at GrapheneLab Co Ltd. on government projects. Whilst this is early stage, we are excited by the many opportunities in the South Korean market including our collaboration on biocides with SD Lab Korea.
Gnanomat in Spain is working with other Group operations on a number of projects in energy storage, biocide materials, screening, sensors, coatings and conductive inks. It has launched a number of products where graphene is combined with metal nano-particles and metal oxides whilst upgrading its manufacturing capability supported by the INN-PRESSME EU funding.
We continue to evaluate the opportunities in China whilst ensuring that we protect our IP and operate in accordance with UK Government guidelines. The macro-political environment has meant that we are now focussing on South Korea as our route to the Asian market.
Mature Businesses
Both AAC Cyroma Limited (plastic products) and Total Carbide Limited (hard wear parts) remained operational throughout the Covid-19 pandemic. Last year was challenging but I am pleased to report that sales have increased by 23% over the comparative period and that they have returned to profitability.
We have exited the aluminium business which is shown as discontinued in the financial statements. We continue to examine ways in which both mature businesses can support the technology business in the future and form synergies to improve efficiency.
Current trading and outlook
As of writing, the outlook for the pandemic is far from certain as is the economy, and we remain vigilant around costs. However, the opportunities for graphene both in the UK and abroad in textiles and concrete are areas of particular near-term focus whilst still progressing the other areas of our GSCALE project.
Neill Ricketts
Chief Executive Officer
06 December 2021
