Versarien PLC (VRSRF) CEO Neill Ricketts on This fall 2021 Outcomes – Earnings Name Transcript


Versarien PLC (OTCPK:VRSRF) This fall 2021 Earnings Convention Name Might 13, 2022 8:00 PM ET

Firm Individuals

Neill Ricketts – Chief Government Officer

Stephen Hodge – Chief Know-how Officer

Christopher Leigh – Chief Finance Officer

Convention Name Individuals

Operator

Good afternoon, women and gents, and welcome to the Versarien PLC Interim Outcomes, Investor Presentation. All through this recorded presentation, buyers will likely be in listen-only mode. Questions are inspired and could possibly be submitted at any time through the Q&A tab, which is located on the right-hand nook of your display screen, please merely sort in your questions and press “Ship “. The corporate is probably not able to reply each query it receives in the course of the assembly itself. The Firm will overview all the questions submitted right this moment and publish responses the place it is applicable to take action. These will likely be obtainable through your Investor Meet Firm dashboard, and we’ll notify you by e-mail when these are prepared on your overview. Earlier than we start, I wish to submit the next name and should you may give that your sort consideration, I am certain the corporate can be most grateful. I would now like at hand you over to the CEO, Neill Ricketts. Good afternoon, sir.

Neill Ricketts

Good afternoon, all people. Thanks very a lot, Jake. I recognize the introduction there. We’re right here right this moment to speak in regards to the 12-month interim interval, which we introduced yesterday. I am joined right here right this moment by Steve — Dr Steve Hodge, who’s our CTO, and Chris Leigh, who’s our CFO. My background, I am a graduate engineer — mechanical engineer, I’ve received 20 years’ expertise in manufacturing and engineering corporations. And as I mentioned, I am joined right here right this moment by Steve. Do you wish to give a fast introduction, Steve?

Stephen Hodge

Yeah. Hello, all. Nice pleasure to be right here. So I’ve been with Versarien now for about 4 years. I am going to give a little bit of a chat in a while about a number of the actions we have just lately been placing out within the press by way of textiles. So, yeah, thanks.

Neill Ricketts

And our final member of the staff is Chris. Chris are you able to do a little bit of a fast introduction.

Christopher Leigh

Positive. Good afternoon to all people. Pleasure to be right here and speak to you once more. I am Chris Leigh, I am the Chief Monetary Officer, and I’m [Indiscernible]. I joined Versarien again in 2013, simply after it did IPOed. And I have been a CFO with finance director for business corporations for some 30 years.

Neill Ricketts

Thanks very a lot. Firstly, I do know we have got lots of buyers who’ve invested in Versarien however we have additionally received some E-people on the road as properly. So the primary query we must always ask is, what does Versarien do and what it’s concerned in. Nicely, we’re a cloth firm and we’re exploiting quite a lot of applied sciences at which the one which we’ll speak most about right this moment is Graphene. Graphene was oscillated in 2004, it has been talked about because the early Nineteen Twenties, and it’s a miracle materials that what — has some distinctive properties. What we all know is once we put it into different supplies, it essentially alters their mechanical properties. It is a very sturdy materials. It is a very dense materials by way of its construction.

It is extremely skinny in its purest kind. It is one layer of carbon atom’s thick. So we’re speaking about Quantum Science right here. It has the flexibility to have the ability to remodel issues like electronics within the electronics business, in addition to being extraordinarily thermally performed as properly. With all of these properties, we’re ready to make use of Graphene in a wide range of alternative ways to have the ability to enhance a number of the supplies that we use on a day-to-day foundation. So Graphene itself is the primary of many new supplies that took place as the invention within the College of Massachusetts in 2014.

We have been concerned within the graphene business since 2014 once we purchased a spin-off from the College of Manchester. After which as Steve mentioned, he got here together with an acquisition in 2017 from the College of Cambridge. So by way of connections, we’ve a novel relationship between the College of Manchester and the College of Cambridge, and quite a lot of different nice universities inside the UK. However having all the things collectively is the cement from the UK authorities, who’ve made all of this potential. The College of Manchester has a couple of billion [Indiscernible] with the services on the market. The Nationwide Institutes, Nationwide Graphene Institute, the Graphene Engineering Innovation Middle, the ROTCE facility. In order that they’re well-placed and have all the services to assist us exploit this graphene materials.

By way of ourselves, we’ve over a 120 patterns there on this graphene area, the biggest UK portfolio. And we have additionally just lately moved right into a devoted facility in Longhope in Gloucestershire, the place we have now received the biggest manufacturing [Indiscernible]. In an effort to actually make that occur, we even have a — must have a really nice staff in addition to the staff we’ve on the decision right this moment. Now we have an incredible senior administration staff, and Diane Savory is our Chair and he or she is on the road listening in. Hopefully, we’ve her participate within the subsequent presentation as properly.

All of that is okay, however you additionally want to have the ability to keep on with the regulation and the regulation that controls all of this, each within the UK and in Europe, in addition to different areas, is ceasing laws known as attain. And for the time being we’re accredited to make use of as much as 10 tons, and the plan is to get to 100 tons. There are solely a handful of corporations which might be concerned by stage, and it is a differentiator, in addition to [Indiscernible] founders. After which at present being finalized.

By way of the place we’re, we’ve a world footprint now. Important services are right here within the UK. Now we have three factories, Longhope, as I discussed earlier than, which is our graphene facility. We even have a facility in Vista [Indiscernible], which is a number of [Indiscernible], which makes appear to {hardware} merchandise. But additionally, we’ve a sort of prospects polymer enterprise in Bhambri, that is in AAC Cyroma. Now we have quite a lot of Navarro timber within the UK as properly. In order having or constructing our working facility in Longhope, we even have services that [Indiscernible] College of Cambridge and College of [Indiscernible]. We’re the one firm that has been in a position to go in, be despatched [Indiscernible] graphene producer by the graphene counselor. And it is a great point for us to have the ability to — for our clients to purchase — really with the ability to invalidate and confirm the processes by which to make graphene properties. [Indiscernible] final [Indiscernible] portfolio for manufacturing graphene.

The one finish of the size is the CVD, as single layer supplies, on the opposite finish of the spectrum of the commercial processes that we introduced in Spain [Indiscernible]. It is our intention to launch not less than 12 merchandise over the subsequent yr. These have all been born by means of the reset after which in the course of the pandemic. [Indiscernible] extra about that in a while. Chris, simply at hand over to you now, to speak about our monetary highlights, which is the primary a part of this presentation.

Christopher Leigh

Thanks very a lot. Neill, for that vocal introduction. And as I am certain you are conscious, we realized our interim outcomes yesterday, they’re for 12-month interval ended thirty first of March 2022. For these of you who is probably not conscious, we prolonged our accounting [Indiscernible] to the 30 of September, so that is — these outcomes are for 12 months versus 18, which is why they’re known as interim outcomes. Group revenues from persevering with operations in that 12-month interval have been up 34% to £7.6 million from £5.7 million the yr earlier than. And we confer with persevering with operations right here as a result of a few of you, I am certain, will recall that we closed our Aluminum enterprise in Cheltenham, and moved the graphene manufacturing, which can be co-located there to a brand new devoted graphene manufacturing website in Longhope.

So the place we’re referring to persevering with operations, it is the outcomes of the operations going ahead, that are the know-how operations, principally graphene and people of the mature companies. [Indiscernible] income, the graphene revenues have been up a 170% to £1.9 million, in comparison with £0.70 million within the earlier yr. And the adjusted loss earlier than curiosity tax depreciation and amortization for these persevering with operations diminished by 45% to £1 million, in comparison with £1.9 within the earlier yr. A few of you would possibly surprise why we confer with LBITDA, we use that as our [Indiscernible] monetary indicator that is our working loss, and our reported loss was £5.1 million.

The distinction between these two figures is solely some finance fees, which have been £0.4 million within the interval. After which we’ve a bunch of non-cash actions, which embrace depreciation and amortization, which was £1.4 million within the interval. Share-based fee cost, £1.2 million. And each reporting interval we’ve to revalue the Lanstead devices, the sharing agreements, and that was a lack of £1.1 million within the interval. So [Indiscernible] whole reported loss is £5.1 million revenue losses of $5.1 million within the precise invert e-commerce money strike working loss for peer, which was £1 million. The money on the finish of the interval was £3.1 million, and — in comparison with £2.4 million within the earlier interval. When you can simply flip onto the subsequent slide for me please, Neill. If we take a look at the entire income enhance for the yr, £1.9 million, £0.7 million of that comes from restoration within the two mature companies, that are [Indiscernible] and [Indiscernible], and £1.2 million enhance in revenues comes from the graphene companies. Now the entire graphene revenues have been £1.9 million within the interval, of which £1.5 million associated to the DSTL contracts, which is introduced a few years in the past, for growth of particular merchandise, and £1.4 million confer with product revenues. A considerable of that was to do with the DSTL contract.

If we take a look at some — in any respect this implies by way of money circulate and steadiness sheet. When you take a look at the historic figures for the yr, exercise the typical internet month-to-month burn fee, it involves about £0.4 million. Except the working losses or money utilized in operations, plus the quantity we spent on buying pumped equipment, plus the quantity that we spent on growth prices, plus the quantity we spend on paying of assorted leasing’s and the leases. So the typical of that involves £0.4 million. The tip of the interval, we had money stroke headroom on our services at £4.2 million. Now, £3.1 million of that was money. £0.4 million was headroom on the bill financed services, which we’ve historically used from that working capital necessities and £0.6 million was the remaining quantity that may be drawn out of the Innovate UK mortgage facility. On prime of that, there’s a couple of extra proceeds to return from Lanstead. That is my recall, there have been two devices right here.

The primary of these devices ends this month and the second closes out in July after which that can see the tip of the proceeds from these specific devices. And we have expended 1.4 million within the interval on Skylark and a part of that’s on our dormitory to be moved to the brand new manufacturing unit in Longhope. We’ll now spent cash in creating vital capability going ahead. And for many who might not know the Innovate UK mortgage of £5 million would not begin to grow to be repayable till 2024. So we’re nonetheless coming use approach that compensation gross sales. So this era subsequent two years goes to be very a lot about commercializing, monetizing all the things that we have developed utilizing that Innovate UK mortgage cash. And by way of highlights, I am going to simply think about one specific spotlight right here, which was initially of the yr, again in April, the place we took in a strategic funding from an organization in South Korea known as Graphene Lab Restricted. In in addition to getting that, we’ve introduced in trademark agreements in place with them. And it is a mannequin, which I believe is one thing that we are going to very a lot take a look at going ahead. Discovering proper companions to take us into subsequent phases of our commercialization and getting proper mannequin for that may be a excellent approach of us funding ourselves. And I believe the VKL at GrapheneLab funding was an excellent instance of that that exhibits how we are able to work along with different organizations to really transfer the enterprise ahead.

Neill Ricketts

Okay. Again to me. We — throughout this era as properly, we acquired very [Indiscernible] in the course of a world pandemic, some belongings from one among our rivals who sadly did not make it by means of the pandemic. And we have moved — efficiently moved that manufacturing unit from the place it was into our facility at Longhope. It is one of many the explanation why we moved that. In order that tools now’s commissioned, it is setup. We’re making some alterations to it. We have nonetheless received some adjustments to make. One of many greatest points is an onsite drawback with the electrical energy provide. However that will not cease us. We have plans to have the ability to get round that. In order that capability is beginning to be coming actually — coming to fruition actually. By way of different issues, we have positioned orders and we have efficiently noncommissioned the size of apparatus for the ink course of as properly.

That is the method that gives us with the fabric for lots of our development and textiles alternatives. Now we’re in a position to produce as much as about 12,000 liters of ink. I used to be within the manufacturing unit this morning trying on the machines and seeing the standard of the product that is being produced there. So we mentioned we have been going to order it. We have ordered it, we have now received it, we have commissioned it, and it is really up and working. That is all we have [Indiscernible] within the facility that a few of you might be fortunate sufficient to have been and seen [Indiscernible] in Longhope.

At present, we’ve about 18,000 sq. toes, and there is a additional 10,000 sq. toes as a part of an innovation middle and laboratory. [Indiscernible] accomplished development. And once more, we’re ready for it to be connecting onto the electrical energy community. We’re fairly a big consumer of electrical energy, and so the usual warehousing provides usually 50 [Indiscernible] applicable for our use. So we work very carefully with not solely the owner, but additionally with the assorted departments which might be required to get that provide on place. Most of what we have been doing, though we’re engaged on the GSCALE undertaking and we have been specializing in the DSTL and GSCALE tasks, the 2 which might be coming to market [Indiscernible] and textiles. And we introduced couple of days in the past our tie-up with Umbro.

We have already talked about our tie-up with Superdry, and we’re beginning to see tons and plenty of textile corporations now coming to us as we transfer additional up the provision chains. Not solely supplying the graphene inks that Steve will discuss in a while, but additionally the materials, and a few nice movies Steve received present us. We’ll proceed to carry these clients onboard. It’s kind of like a sausage machine now. We have a product, we [Indiscernible] to get to an increasing number of individuals, so meaning increasing ourselves and advertising groups, getting additional attain. And GoToGym is a South American firm that provides North America, and we’re working with these guys to carry merchandise to market as properly. One other space that is seeing numerous curiosity is the packaging. And we’re happy [Indiscernible] within the set of interims.

Once more, we’re working with one other South American-based firm who’re a world chief in packaging, round creating a selected product for them utilizing graphene and Lab manufacturing, so one other string to our bow. By way of DSTL, I am simply going to ask Steve to replace us on the DSTL undertaking, clearly, in the course of the pandemic, it was a troublesome time for all companies. We have determined to focus on the G SCALE and the DSTL tasks. The DSTL one is barely completely different and that it is a business contract and that signifies that it is true income. We have been requested to produce demonstrators. And Steve will inform you slightly bit about how that undertaking went. Steve.

Stephen Hodge

Thanks, Neill. So simply to offer an outline, the tasks we’ve simply completed with DSTL has been efficiently accomplished on time and to budgets. Initially, we had two work-streams and we weren’t — because of the sensitivity of the tasks, we have been unable to reveal any info. However for now, we’re in a position to open up a bit extra about one of many work streams, which was targeted on army bridging. And so in the course of the tasks and in each work streams, we set about and did a really sensible and base lining train, exploring graphene in quite a lot of carbon fiber reinforce polymer composites, and looking out on the interplay and basic properties and enhancements like graphene can carry to a complete host of properties.

We’re not allowed to speak about any of the particular information. However what was achieved within the closing part of the tasks has been taking our optimized graphene supplies, incorporating them right into a carbon fiber composite system, designing, modeling with Finite Aspect evaluation, a computation on modeling of a bridge underneath the required weights, and masses. After which we took that to full-scale testing and really validated the mannequin. So all the things was really profitable. And now we have reported again to DSTL, the place we’re now getting into an exploitation part. So how can we now take this ahead and have interaction with different protection sector companions to commercialize and scale-up the producer of these kinds of parts? Thanks, Neill. I do not know should you had the rest to ask on that, Neill?

Neill Ricketts

Solely that we have examined that to disruption. We have an excellent understanding now, of how we mannequin, as you say, utilizing a few of these new stimulation strategies. Graphene is a brand new science, and so there’s a BlackBook you’ll be able to undergo from [Indiscernible] perspective. A very powerful factor is that, these are very, excellent demonstrators that will likely be each utilized by DSTL and ourselves in future [Indiscernible] exhibits to indicate {our capability} not solely at with the ability to ship nice tasks, but additionally to have the ability to ship merchandise. So for me, that is a very good consequence for this specific undertaking. Okay. If we are able to [Indiscernible] the movies. [Indiscernible] [Video Presentation] So fast replace there. Steve’s going to stroll you thru what’s been occur in textiles. Clearly, as we talked about beforehand, we’re seeing enormous quantities of curiosity in utilizing our know-how in all kinds of various operations, all kinds of various sports activities. And Steve, simply stroll us by means of what’s taking place in that area.

Stephen Hodge

Yeah, completely. I am unsure how [Indiscernible] the video tape, however shifting onto the subsequent slide. So we mentioned final time within the Investor Meet presentation, we’ll simply deal with one specific space at a time. So within the textile sector, clearly it is an enormous market. There are a number of points, a number of issues in taking — relating to local weather change that we’re trying to resolve utilizing graphene or different superior supplies options. Specifically, what we’re targeted on is, can we cut back fossil gas base polymers? Can we enhance efficiency? Can we prolong the final time of clothes? Can we add performance? Can we enhance recyclability? And so graphene, as a part of our [Indiscernible] system or really blended as a part of a polymer younger or filament, we are able to empower a variety of properties that Neill talked about earlier.

So enhancing thermal properties, enhancing electrical properties, including chemical stability, decreasing weights from supplies if we are able to enhance the mechanical energy. Graphene additionally presents UV safety properties. And in some circumstances, we are able to look to — take a look at technical textiles, the place we are able to incorporates anti-microbial exercise that we have once more mentioned earlier than and had some developments throughout COVID. And likewise fire-retardant potential will be imparted relying on the design and optimization of those supplies.

So a complete plaster of potential applied sciences, and we’re at present targeted on a graphene coating system, which is exhibiting unimaginable enhancements within the moisture and thermal transports by means of sportswear. So going onto the subsequent slide, and that is very good highway map which is been developed by WRAP, who’re a local weather change NGO. Textiles 2030, that is the expert-led initiative encompassing a variety of consultants within the UK, so taking a look at how we are able to speed up the entire style and textile business and transfer in the direction of circularity. The principle targets there are targeted on a 50% discount of greenhouse gases and likewise decreasing the water footprint. Lots of water goes into, if it is pure supplies really rising crop and crops all over processes corresponding to dying, which will be fairly wasteful. And clearly, there’s plenty of water effluent that comes from textile crops. So the entire set of actions that they’ve highlighted, enhancing the precise fiber supplies, taking a look at decreasing the impacts of manufacturing processes, decreasing carbon power all through the provision chain, producing supplies that last more and recyclable, and likewise taking a look at reuse and recycling of fibers.

Probably, reusing as textile supplies or utilizing in different functions. So our highway map that I am going to discuss later, will sort of observe in the identical areas because the textiles 2030 initiative. So just lately, we have put out a white paper, going by means of all the developments that we have made within the textiles area, easing our graphene -based ink supplies. And so this know-how we began creating in round 2017, by means of an Innovate UK undertaking, the place we seemed to scale up the know-how. At the moment, it was a part of Cambridge Graphene Restricted. And creating these in partnership with Twinery, which is part of MAS Holdings in Sri Lanka. In order that collaboration over quite a lot of years seemed to taking our graphene formulations and mixing them with completely different polymer methods to make one thing that may bind very properly to completely different textiles. And so working hand-in-hand with MAS, offering samples, getting suggestions from there and print trials, and our personal print trials, we developed a formulation that appear to offer excellent enhancements in mechanical, in thermal and moisture working efficiency within the lab scale research.

So we took that ahead, ranging from fully weight-reduction plan materials, the place you see the image on the left is a panel, which is being coated on one facet with a graphene-based formulation. The picture within the center was the second-generation the place we glance to print, say, related graphene circuits, hectagonal circuit simply in chosen areas. So once more, going in the direction of a extra printing course of, you’ll be able to management that place of the ink in areas the place you need it. So clearly you might not need graphene all around the garment, you might wish to put it in chosen areas the place, for instance, you may be sweating extra otherwise you wish to dissipate warmth away from extra. And that is actually led into plenty of trials with College of Manchester on the [Indiscernible]. Our personal trials and formulation work. And the Cambridge Graphene Middle, the College of Cambridge. After which extra just lately, we have simply completed on a undertaking working with The Royal School of Artwork in London.

And that is been working with their designers and likewise the textile specialists to really take our graphene inks, play with the formulation, and develop new technology inks. But additionally work on completely different types and patterns, not simply aesthetically pleasing, however useful patterns that may assist us to manage the route of moisture working and a few administration. In order that was an actual good collaboration, which allowed us to additionally create a matrix of several types of materials that we are able to use our graphene inks on. So now we have got round 30 several types of material mixtures of natural supplies, artificial polymers, and blends with issues like polyester and spandex or elasting.

Printing onto a material isn’t simple, it is a very conventional know-how. However when you get to clothes which have lots of stretch and suppleness, then naturally printing will be fairly difficult. So we have been creating that confidence in knowhow. But additionally not simply placing graphene into the garment after which commercializing it, we’re a really science-driven firm. We wish to perceive the total advantages that graphene is bringing. So following these very promising lab assessments, we have now taken these to precise wearer trials. And once more, managing this in the course of the COVID pandemic was — we have been fairly profitable. Working with the College of Gloucestershire, so native to this space in [Indiscernible], we have been in a position to recruit quite a lot of athletes and put them by means of completely different assessments in several clothes. So we have been making an attempt to check our graphene ware coated clothes with two market-leading clothes. So glad to the entire host of information that we have printed most of in our current white paper.

So we have collected info on physique mass, garment mass earlier than and after the train was carried out year-end osmorlality ranges checked out coronary heart fee, blood samples have been collected and likewise inside core temperature was measured throughout train and samples collected each 10 minutes. After trying on the information evaluation, one of many key areas the place we compete properly with or exceeds market-leading clothes, is within the chilly physique temperature. So in the beginning and through train, we might monitor the physique temperature. And really, by the tip of the train, the rise in temperature for graphene put on is far decrease than different clothes. We additionally examine properly in and carried out properly in moisture administration.

The much less promoting notion and we predict that is quite a lot of components it may be right down to the texture of the material, possibly the texture of the graphene sample, which is in opposition to the pores and skin. Individuals have a distinct sensation when they’re carrying one among our garment. But additionally evaluating in opposition to market-leading manufacturers when individuals see completely different manufacturers and logos, they really feel like they may carry out higher. And in order that’s one thing that we do must work on. And once more, working with different companions and finishing, incorporating our graphene put on formulations into their textiles may carry nice, nice advantages. So now once more, shifting out of the labs, but additionally gaining confidence in large-scale Clinttrials. We have carried out our personal trials within the UK and likewise provide the inks to quite a lot of producers and print homes globally. So we have got trials that is taken place just lately with an organization known as [Indiscernible] in Brazil. However we’re providing able to print formulations.

These are all water-based Graphene formulations. Could be equipped and instantly printed to clothes. We may also be able to produce printed materials ourselves utilizing — once more, printed within the UK or we are able to print these utilizing world — World Companions. Clearly, the textile business may be very broad and sophisticated and extremely world.

And so there are various challenges which might be going together with provide chains and the place we’ve to fabricate some supplies to — will be completely different for each buyer. However what you see right here, a few photos from a current large-scale trial we did for a buyer, the place we’re printing, and as a video developing shortly. As soon as we have optimized the print guarantees, we’re printing at speeds of round 18 to twenty meters per minute. We will go quicker, which suggests we are able to produce lots of these printed supplies. So if we may play video two, which simply goes by means of — [Indiscernible] as properly.

Thanks. So hopefully, you could have a way now of various textiles. This specific [Indiscernible], we really labored with three completely different materials with no points. Every, we have completely different mixtures of nylon polyester and elastane. So completely different quantities of stretch in there as properly. We will deal with just about all the things. So once more, going again to the roadmap and aligning with Textile 2030. In the mean time, we’re fairly targeted on efficiency and sturdiness. Getting essentially the most out of the clothes that we have already got. However in parallel, we’re working trials the place we’re additionally — you could have seen in earlier displays that we have carried out — making our personal graphene polyester compounds and grasp batches. We’ll be taking a look at recycled feedstocks, bio supplies. The final yr has seen an explosion of everybody needs to work on sustainability and decreasing CO2 footprints, decreasing the quantity of fossil polymers that persons are shopping for. And now recycled feedstock appear to be growing in provide.

I believe a couple of years in the past, it was very troublesome to get sure supplies, however that appears to be enhancing. Wearables is one thing that once more we have proven clips of earlier than the place we have labored with corporations creating completely different sorts of wearable sensor. That is one thing remains to be comparatively low TRO, however we’re — has plenty of promise to make use of graphene as a conductive, but additionally sensor platform. We have tasks ongoing for the time being in bio-sensing for well being and well-being. Wastewater remediation — one other huge space the place we predict graphene may have enormous potential and notably related for the textile sector. So we have seen work with graphene membrane filtration, however not simply graphene; different two – dimensional supplies resulting from their form and their chemistry. Fairly good candidates for filtering air pollution and micro organism from wastewater. So simply once more, we have got a couple of companions listed right here. [Indiscernible], once more, a key associate for us. They’re making — manufacturing clothes for a number of the world’s greatest corporations. Superdry and Umbro, nearer to dwelling.

We have a number of discussions on merchandise being mentioned as textiles is clearly very seasonal business, so plans must be made for upcoming quarters, and arranging the manufacturing and distribution and the entire course of must be sorted first. GoToGym, I believe we have talked about it earlier than. And [Indiscernible] is one other enormous participant within the business, we’re working carefully to develop graphene in hubs, yarns, and filaments. Neill, do you wish to take over whereas I take a drink.

Query-And-Reply Session

A – Neill Ricketts

Yeah, certain. I can see you are struggling there Steve. So it is attention-grabbing that once we discuss a buyer. I’ve by no means been concerned within the textile business earlier than this. My background has been extra in automated and aerospace. However the textile corporations, they’ve their launches, usually, two or 3 times a yr. Spring and summer time, autumn, winter, and there is some outliers there. However once they say they are going to put that into the outlets is, really, and we are able to speak extra typically right here. They will in all probability be launched within the fall of the earlier yr, which signifies that really, they should have clothes prepared in the direction of the summer time of that yr.

You’ll be able to see how the frequent timeline performs out. So we have got a build-back capability so as to have the ability to provide these corporations to the sort of volumes that they need, far upfront of once they really want it. Which is why we pushed forward with getting the elevated capability that we have talked about on this presentation. However simply to spotlight that, really, being within the outlets within the first a part of subsequent yr is definitely in all probability six months past the place the work really occurred. Okay. Proper. Clearly, as a part of this program, Steve talked in regards to the white paper, which is up on our web site. It’s totally, essential for us to have the ability to speak to our clients with details and figures and make it possible for it is a scientific proposition with some actual proof behind it, moderately than only a advertising play as a way to get our sustainability. We have clearly launched our new web site, which is devoted purely to this space. And that’ll be extra information on that platform because it develops.

Little bit simply to say that just about all the things we’re related with has an environmental side to it. We have talked about concrete within the final presentation, we’re seeing numerous uptake from massive world corporations round having to scale back that CO2 emissions, getting taxed, and having elevated regulation round producing all of this CO2 and graphene has an vital half to play there. However not solely in there, it is also within the aerospace and automotive business the place we’re taking a look at light-weighting constructions being an enabling know-how for electrification. And we have talked in regards to the recyclability of plastics and polymers, but additionally the introduction of recent biopolymers, which — bio plastics, that are beginning to grow to be very extensively talked about if not used. And so we’re in an incredible place to have the ability to assist our in that space.

That is the tip of our presentation because it stands for the time being. Thanks very a lot for listening. I am going to attempt to reply a number of the questions that we have obtained both on the pre -select foundation or the are available in the course of the presentation. One which got here in from Gareth was in regards to the capital expenditure over the subsequent 12 months. Nicely, Chris retains a really tight line on expenditure. I believe we have got sufficient capital tools because it stands.

In the mean time we’re not anticipating enormous quantities of extra capital expenditure, besides the place it is a requirement of a contract or ongoing work, possibly a part of a lot greater analysis undertaking. If we take a look at a number of the pre -submitted questions, I’ll simply transfer them on to the opposite display screen. One second. By way of — we’re by no means going to have the ability to make forward-looking statements. So we will not discuss the place we anticipate the share value to be sooner or later.

That is sadly out of our management, particularly within the present circumstances the place we’re seeing tons and plenty of volatility. There was a selected query which was requested across the Ukraine. And if the Ukraine battle was affecting the corporate. My reply is, which will likely be printed onto the platform after this presentation, we’re not at present being affected instantly. Though, I imply is clearly having an enormous impression on the volatility of the markets. A query was submitted about our enterprise mannequin. Nicely, our enterprise fashions by no means actually modified. It is about working with giant world corporations trying to develop merchandise that are then going to be offered globally.

Through the pandemic, we have been much more targeted on the G SCALE and the DSTL tasks, which clearly took place as we went into the lockdowns. And that is been retaining the staff very, very energetic. And Steve has been in a position to get lots of outcomes because of that. We talked about within the presentation that we’re taking a look at introducing quite a lot of new merchandise. These merchandise will both be merchandise that comprise graphene, merchandise which might be enhanced by means of the usage of graphene, or merchandise which have come out of a number of the analysis that we have carried out. By way of what we see success trying like.

Nicely, that is getting these merchandise to market and producing revenues and profitability on the again of these. So we’re very targeted on taking that know-how that we have developed as a part of these analysis tasks. And Steve has quite a lot of tasks at present underway, in addition to the GSCALE and the DSTL undertaking, they’re concerned in massive multi-million pound graphene flagship undertaking in Europe with Airbus. And so his staff is at all times taking a look at new alternatives to seek out funding, and to offset a few of our growth prices that approach in actions the place we’re already going to decide to [Indiscernible]. So by way of — we’re going by means of a fairly difficult time. This has been a really troublesome interval for any enterprise, not to mention a brand new know-how enterprise. We have seen Brexit and we have seen COVID. They are saying what would not kill you makes you stronger. Nicely, through which case we must be actually sturdy. Now we have got points round inflation and round provide chain prices. These prices are handed on to our clients the place we are able to and we’ll proceed to steadiness our prices in opposition to the gross sales that we herald our extra conventional companies.

It is not fairly the identical drawback in our analysis companies. By way of Gnanomat, that is progressing properly and we might hope that we’ll be capable of get Roberto onto a presentation on the subsequent assembly. We will discuss all the good things that Gnanomat’s doing. They’re clearly working with some very giant clients in Europe. They’re actively concerned in lots of analysis tasks. And it has been sort of head down getting on with work. By way of our relationship with DSTL. Sure, our contract has concluded efficiently, and we’re persevering with to speak to DSTL about future alternatives. They’re very eager to make use of our [Indiscernible] to the bridge that Steve spoke about within the presentation; quite a lot of completely different exhibitions. And so the connection with DSTL is excellent. And we might search for different alternatives for us to have the ability to fund the enterprise by means of a few of that work. By way of South Korea, once more, Steve up to date buyers on the progress in South Korea.

We do not make every other merchandise in South Korea aside from the CVD. There’s been some developments over there by way of some new capability for clear rooms and issues like that. And sadly, South Korea is — has been struggling the previous few months in my conversations with them across the COVID Omicron sort pandemic that is happening on the market, which can be affecting China. In phrases — it was a query in a while within the pre -submitted questions on what’s our relationship like with Hanwha. Nicely, I am hoping to exit to South Korea sooner or later sooner or later to have the ability to have a dialog with Hanwha, not solely on a business foundation, but additionally by way of with the ability to reveal the progresses made by means of these interim statements. Steve talked about about MAS, and about what we’re doing there. MAS remains to be a key associate for us. They’ve additionally been sadly dramatically affected by native occasions there, but additionally by means of the pandemic. They are not concerned in our different actions with Umbro or with Superdry, however they’re a component clearly of the worldwide provide chain.

So whether or not Umbro get their elements finally from Superdry will likely be a choice made by these guys. However we’re nonetheless working with them, and we’re nonetheless taking a look at alternatives that they’ve. It is clearly, the momentum constructing round a few of these offers, the extra offers we do, the extra offers they get launched to. With the ability to announce, that truly dry our [Indiscernible] alongside. Simply one among our rivals have additionally [Indiscernible] success, which is nice for us as a result of it signifies that we are able to validate our proposition as properly. By way of how our revenues are rising. That will likely be down sadly to actions with the shoppers. We do not have a lot management over what the shoppers select to do. However we clearly help them and make it possible for we’ve sufficient capability.

We have talked in regards to the largest portfolio of patents within the UK. And that is fairly considerably greater than most different corporations, that are in the marketplace or who’re working on the sector. By way of the G SCALE mortgage, we’re clearly pursuing that. We’re fairly a approach into that undertaking now. However all of the equipment has been ordered and it is all delivered. And in Longhope, most of it’s commissioned and working. There’s a couple of bits which might be nonetheless requiring slightly bit of labor and modifying, some bits and items to our functions, particularly the Spanish belongings. Attempting to maneuver a manufacturing unit in the course of the pandemic is rarely a straightforward factor right this moment. However we have been in a position to efficiently do this, get out units up, and provides that put in. In truth, a few of our buyers might have really seen that facility once they got here to the see the 3D graphene concrete printing demonstration.

Fairly a couple of questions I’ve obtained round what’s taking place with 17. Nicely, there are two completely different processes at present in the best way. The primary one is a regular known as BSCM934-2, which is across the [Indiscernible] mixes in concrete. And that solely takes about three to 6 months, the place in that strategy of the second, it does rely upon exterior testing functionality and the testing has this. However the staff wish to full that rapidly. The marginally greater problem for us is BSEM 8500. And that course of can take as much as two years as a result of essentially, it is about difficult the concrete requirements and getting graphene, which is a model new know-how into that complete panorama. In order that’s fairly a problem, however one which we’re getting fairly a little bit of help from our clients. We talked in regards to the Innovation Middle at Longhope. That is the place I used to be this morning. That is now full. We’re filling that out. We’re hoping to do some extra investor occasions so you’ll be able to come and see it. However it’s an incredible facility which clearly demonstrates to our clients that we’re constructing scale on an enormous image sort situation.

And our clients can get consolation in the truth that we are able to provide them in the event that they’re in a position to give us all of the protection. By way of the Innovation Middle, I’ve already mentioned that that is structurally full. We’re simply ready for the electrical energy to be related. After which will home a laboratory plus an innovation cell for concrete and possibly an innovation cell for textiles, though it’s kind of of a contest with probably protection. Now we have loads of areas because it stand for the time being. And as I mentioned earlier than, we’re not anticipating an enormous quantities of CapEx and it is a actually good purpose. By way of expenditure, we’re on the capital market, we’re on an intention as a way to increase money, that money is generally used for acquisitions or it is used to help working cap will increase and inventory or our CapEx. However we have already mentioned that we spend fairly some huge cash on CapEx this yr anyway. We’re persevering with to develop the workforce at Longhope.

Now we have expanded it and we’re persevering with to increase our gross sales pressure as properly and we have got some new standing because the starting of this era. And so we’re hoping that that is sufficient in the intervening time. Now we have the choice of the pliability as we’ve carried out this yr to shifts the place there are peaks within the demand. A type of peaks was getting sufficient materials prepared in a brief time frame for the muse we pulled within the Innovation Middle. So we had to make use of a number of shifts at time.

There are been different occasions once we’ve additionally had to make use of the pliability of our workforce. I would prefer to thank them. It has been a really difficult couple of years for everyone related with the corporate as we have gone by means of this world pandemic and have tons and plenty of challenges thrown at us together with relocation. I consider we coped with that very, very properly. Final query which got here in fairly late final night time after the cut-off was about our R&D prices, and through — or really illustrated within the 2021 annual report, for that interval, 33% of our gross sales was spent on R&D, and the rationale for that’s we have been paid to try this by each DSTL and Innovate UK. And that was good timing for us as a result of it enabled to make it possible for all the workforce have been stored energetic and that we received some actually vital outcomes by way of these new merchandise and alternatives which have come about.

If we confer with a number of the questions which have are available in the course of the presentation; I am simply going to scroll by means of right here. I apologize if it appears to be like like I am not concentrating. I am trying on the questions. There appears to be — or there was — numerous unease about graphene. Steve, do you simply wish to replace us in your work with attain and toxicology and the certification as much as each [Indiscernible].

Stephen Hodge

I believe the query is about, on social media, the view that graphene is dangerous to people. I believe that is an entire misnomer. I believe each materials, each chemical is probably dangerous to people. It is in regards to the publicity of these supplies and the dose that one receives. So graphene is a household of various, several types of variety of layer, completely different form dimension, thickness. And so we actually want to grasp. We’re working with our different rivals as a part of attain consulting. Working to grasp the toxicological properties and environmental toxicology of graphene, and so we’re doing a number of research.

As Neill talked about earlier, we’ve registration for as much as ten tonnes per yr. So in Europe and UK and another areas, to get to the subsequent boundary, which will likely be 100 tonnes per yr, it’s essential obtain and provide information on additional toxicology or longer-term toxicology testing. And so as a result of graphene is a comparatively younger materials, lots of these research haven’t previous the correct quantity of time or really labs globally haven’t the expertise working with graphene and different nanomaterials. So typically it takes a little bit of touring, inferring and optimizing simply to get the precise sampling and information evaluation right. So these items will take time. However for the time being, there is no proof that graphene is dangerous. And to suppose each utility that we put graphene into it, these research will have to be carried out by way of publicity. And once more, that is one thing we’re doing with this Airbus undertaking. Within the graphene flagship, we’re working with one other undertaking known as secure graph that takes our graphene and appears on the publicity or each a part of the manufacturing course of. As of late, issues will likely be important going ahead.

Neill Ricketts

We have a few questions right here of the textiles and about how we receives a commission. So we’ve a wide range of completely different fashions relying on the client. Generally what you will have seen in each Umbro and Superdry is that we have insisted that our logos are placed on the merchandise corresponding to Flux, for example. That permits us to construct a GORE-TEX or a Lycra -type model. After which we receives a commission a royalty primarily based on utilizing that brand. Some clients need us simply to produce graphene. We sort of do not suppose that is the best way ahead.

Lots of our clients need us to produce materials and we’re changing into extra concerned within the utility of graphene onto a wide range of completely different materials; I believe someplace within the area of about 35 completely different materials now. In that case, clearly, we provide the material plus a royalty. However it does actually rely upon the client. What — it could’ve been a lot simpler for us to have checked out justifying the graphene as a commodity materials, however we do not suppose that there is lots of future in that. Very straightforward to get changed. We wish to have a a lot nearer relationship with our clients, so we have needed to work fairly laborious to insist that our logos have been acknowledged by the tip buyer.

We’re speaking about — there’s a couple of questions right here by Enzo. Clearly Enzo is one among our collaboration companions for the time being, taking a look at tyres. We’re within the course of optimizing the graphene that is utilized in that utility in a testing regime. That is fairly frequent with all of our clients that we’ve to optimize the manufacturing course of the place we’re utilizing graphene. So we work hand-in-hand with these purchasers. There is no actual delay. It is purely that we’re in a testing routine, I believe. Largely [Indiscernible] Steve, we do not have to make graphene the improper approach 100 occasions or one thing. However there’s lots of data and it acts as fairly a barrier to the exploitation in graphene by way of creating that IP about not solely making the graphene, which was the primary few years of our growth, however then utilizing that graphene in a wide range of completely different functions. I believe we’re nearly carried out there.

We have a few — we’ve in all probability a few minutes earlier than we’re resulting from end. However I simply wished to thank all people for his or her continued help. We’re hoping that we’ll proceed to do a wide range of shareholder occasions and shareholder briefings as and when they’re applicable, we’ll proceed with our growth of our PR channels and we have been very profitable extra just lately and getting numerous commerce publications. The blokes have simply come again from the development week, the place we had our final stand that was supplied by the organizers. And the blokes will come again in all probability with some [Indiscernible] purpose about 450 inquiries that they should [Indiscernible] by means of. So it is nonetheless a comparatively small staff and we’re underneath numerous strain from our purchasers and clients to have the ability to service these. So we’ll proceed to increase our gross sales and advertising groups because it’s applicable. Something you need to complete with, Chris?

Christopher Leigh

No, not for me. Thanks very a lot Neill.

Neill Ricketts

Something, Steve?

Stephen Hodge

Very completely happy simply to say once more, [Indiscernible], it is a pleasure to do that presentation.

Neill Ricketts

Okay. Thanks very a lot. And I’ll simply flip it again to [Indiscernible].

Operator

Neill, Christopher, Stephen, thanks very a lot certainly on your presentation this afternoon and for addressing all of these questions that have been each pre -submitted in addition to those that got here by means of throughout right this moment’s assembly. And naturally, we’ll give these questions again to you instantly after presentation is ended on your overview, after which we’ll publish these responses the place it is applicable to do, so on the Investor Meet Firm platform. And Neill, I do know you simply have briefly, however maybe we’ll redirect the buyers on the decision to offer you their suggestions, their full situation expectations. If I may please ask you for few closing feedback struck up with that will be nice. Thanks.

Neill Ricketts

Thanks, Steve. As Steve mentioned, it is a pleasure to do these displays. We might like to assist carry all people on top of things the place we are able to. We consider that we’re exhibiting vital progress on this new business, this new industrial revolution. We’re very completely happy to be supported by the folks that we’re supported with the College of Manchester, the College of Cambridge [Indiscernible] varied departments inside authorities. Look ahead to speaking to you quickly. When you may present any suggestions after this finishes that will likely be incredible. Thanks.

Operator

That is nice. Neill, Christopher, Stephen, thanks very a lot certainly for taking the time to replace buyers this afternoon. Can I please ask buyers to not shut this session as you’ll now be routinely redirected for the chance to offer your suggestions, and all the administration staff can higher perceive your views and expectations. It will solely take a couple of moments to finish, however I am certain will likely be vastly valued by the corporate. On behalf of the administration staff of Versarien PLC, we might prefer to thanks for attending right this moment’s presentation. That now concludes right this moment’s session, so good afternoon to you all.

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