Flat revenues, rising costs and an acquisition pushed graphene pioneer Versarien (VRS) deeper into loss in its full year to March 2019. The engineering group, which is engaged in the development of advanced materials technology, says “revenues of any material amount have yet to be achieved” in its graphene businesses. It’s confident that its investment, accreditations and progress with its collaborations will yield significant future revenues. But the company’s dealings with global partners, such as engineering giant AECOM, leaves it hostage to uncertain timelines, which Versarien chief executive Neill Ricketts admits can be a source of frustration.
These timelines can vary between six weeks and two to three years, according to chief executive Neill Ricketts – its recent post-year US order, for 12kg of its high purity graphene nano platelets (GNP-HP) from an unnamed US oil and gas company, took six weeks to finalise. Understanding exactly how much money Versarien makes from graphene is challenging as it doesn’t disclose the value of its deals, while it usually charges prospective partners for graphene samples, which currently accounts for most of its graphene revenues. It includes graphene finances under its ‘graphene & plastics’ segment, which generated £4.7m in revenue and £1.4m in pre-tax losses.
To help understand this figure, of the segment’s £4.64m revenue last year, £4.58m came from plastics business AAC Cyroma. Versarien uses the subsidiary to demonstrate the group’s ability to incorporate graphene into plastic products, and Mr Ricketts said that Versarien is currently testing AAC Cyroma parts with customers. Its two graphene companies within the segment contributed revenues of just £64,481. Versarien’s most recent results disclose that adjusted cash losses for the company’s graphene businesses grew to £1.1m from £0.9m last year. The chief executive confirmed that the company did receive revenues from the US order and a subsequent order from a Japanese automotive components company for 1kg each of GNP-HP and nanene.
The company raised £5.2m from a September 2018 share issue, which means that “[it doesn't] have to go out to shareholders for a cash call” imminently, according to chief financial officer Chris Leigh. It looks set to secure funding elsewhere. In April, Versarien signed a term sheet with the Beijing Institute of Graphene Technology, with the intention of securing support for the establishment of a Chinese subsidiary in exchange for 15 per cent of Versarien. It hopes to complete the deal before its annual general meeting in September.
| VERSARIEN (VRS) | ||||
| ORD PRICE: | 115p | MARKET VALUE: | £177m | |
| TOUCH: | 113-116p | 12-MONTH HIGH: | 193p | LOW: 68p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 8.9p* | NET CASH: | £3.2m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 4.4 | -1.8 | -1.7 | nil |
| 2017 | 5.9 | -2.2 | -1.9 | nil |
| 2018 | 9.0 | -1.6 | -1.0 | nil |
| 2019 | 9.1 | -2.8 | -1.6 | nil |
| % change | +1 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £5.3m, or 3.4p a share | ||||
