TIDMDVRG
RNS Number : 2189A
Deepverge PLC
22 September 2022
22(nd) September 2022
DeepVerge plc
("DeepVerge", the "Group" or "Company")
INTERIM RESULTS
H1 revenues grew by 94% to GBP6.44m (2021 H1: GBP3.32m) with
expected full year revenues weighted to H2
DeepVerge (AIM: DVRG), the environmental and life science group
of companies that develops and applies AI and IoT technology to
analytical instruments for the analysis and identification of
bacteria, virus and toxins , today announces its unaudited interim
results for the six months ended 30 June 2022.
The Company grew H1 2022 revenues by 94% to GBP6.436m (H1 2021:
GBP3.319m). Production orders of GBP5m for Modern Water equipment,
announced on 11 March 2022, contributed to an increase in
inventories at the end of H1, ready to be shipped and recognised in
H2 2022.
The rapid expansion across the Group in demand for products and
services coupled with additional staff members, meant
administration costs increased, but operational losses fell to
GBP2.139m (H1 2021: GBP2.311m). The reduction was due to an
increase in gross profit of 4% (H1 2022 : 56.4%; H1 2021 52.4%) on
higher revenues, delivering a significant decrease in adjusted
EBITDA loss over the same period of 46.6% amounting to GBP0.372m
(H1 2021: GBP0.697m).
Gerry Brandon, CEO of DeepVerge plc, commented:
"T he Company continues to expand across all divisions with
record H1 half-year sales and expectations of GBP18m for the full
year. Demand for Modern Water monitoring and membrane solutions
grew, not least because of the impact of climate change and a
severe global drought. Order values have moved from GBP50k to
GBP100k equipment sales in 2020 to now include multiple GBP1m+
solutions in Middle East, North Africa, China and South Asia and
the recent GBP2.4m project on the Savannah River in Georgia, USA.
The Company has a substantial order book of GBP8.87m for H2 supply
and expects to continue its year-on-year history of revenues
weighted in H2 over H1 since 2018 ".
Highlights:
-- H1 2022 revenue of GBP6.436m is an increase of 94% from H1 2021 (GBP3.319m);
-- Adjusted EBITDA loss reduced by 46.6% to GBP0.372m (H1 2021: GBP0.697m loss);
-- Administration costs increased to GBP5.767m (2021: GBP4.211m)
with increase in staff across all divisions;
-- Operating loss was lower by 7.4% to GBP2.139m (H1 2021: GBP2.311m loss) after providing for:
o Depreciation of GBP 0.313m (H1 2021: GBP0.193m);
o Amortisation of GBP1.442m (H1 2021: GBP1.360m);
o Exceptional costs of GBP0.012m (H1 2021: GBP0.061) ;
-- Total Comprehensive Loss reduced by 26% to GBP1.975m (H1 2021: GBP2.669m loss);
-- Net Assets at 30 June 2022 GBP22.6m (H1 2021: GBP25.3m);
-- Finance available to the Group at period end:
o Cash and cash equivalents of GBP1.18m;
o GBP4m debt of a GBP25m facility drawn;
-- Glanaco acquisition for GBP1.068m.
The Company's Interim Report is included at the end of this
announcement and is available on the Company's website at
www.deepverge.com.
DeepVerge plc Gerry Brandon, CEO +44 (0) 7340 055 648
SPARK Advisory Partners
Limited
(Nominated Adviser) Neil Baldwin/Andrew Emmott +44 (0) 113 370 8974
---------------------------- ---------------------
Turner Pope Investments
(TPI) Limited (Broker) Andy Thacker/James Pope +44 (0) 20 3657 0050
---------------------------- ---------------------
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.
CHAIRMAN'S STATEMENT
Introduction
The DeepVerge environmental division is well positioned to
address the challenges in water stressed areas on all continents in
a drought that has been referred to as the worst in 500 years.
Lower volumes of water in rivers, lakes and reservoirs lead to a
higher concentration of water borne contaminants that require
greater surveillance to ensure the health and safety of water
consumers. The life science division has created many, what the
Directors believe to be, "world first" developments that has added
valuable contributions to skincare clients and opened doors to
drug-store sales channels for personalised skincare testing.
Modern Water
The modernising and automation of water monitoring has led to
increased demand for larger GBP1m+ size solution based
installations, evident by the recent highlight of a network
solution across Qatar ahead of the 2022 World Cup. The Company has
expanded and recruited on three continents.
Award winning Modern Water equipment from Microtox LX
(Laboratory) FX (Field) CTM (Continuous toxicity) and PD/BT
(Pathogen/Breath Test) Microtrace heavy metal detection units are
being upgraded with software and data analysis capability. Modern
Water solutions are becoming the last mile test platform,
integrating into existing industrial SCADA systems that monitor
drinking and wastewater for contaminants. After the pandemic there
is a need by governments and health authorities around the world to
move from manual testing to automation and existing Modern Water
clients, that include government and Tier 1 clients and we expect
demand to continue to grow for large solution projects going
forward.
Increased demand for wastewater contamination detection
equipment with Modern Water Monitoring, All Membrane Brine
Concentration (AMBC) units to recycle water and desalination
membrane technology to recover water from the massive growth in
construction of data centres has resulted in the recent upgrading
carried out at our Delaware, US laboratories, York, UK laboratories
and Cork production facility at Glanaco acquired earlier this
year.
Labskin (Innovenn UK Limited)
The Labskin business unit has seen a fundamental change from its
origin of a laboratory grown skin for research purposes to a
gene-sequencing and data analysis service supporting marketing
claims of some of the top skincare corporations around the world.
As the pandemic ended, the Company was able to get back to
physically attending conferences and its scientists are high
profile guest speakers at events and conferences to build on this
valuable service. More framework agreements have been signed and
are contributing to increased sales.
Skin Trust Club
The launch of Skin Trust Club has created a platform that
democratises consumer skincare home-testing. Since October 2021,
sales of this home test and software service have gone from zero to
more than GBP1m. For any start-up business, that is a phenomenal
achievement and one that is expected to continue as the US market
comes online.
Outlook
The Board recently announced the separation of the two business
units in environmental health and life science and is exploring
options on how to achieve the best return of value to shareholders.
As previously notified, with GBP18 million in sales expected for
the full financial year, the Board anticipates demand for products
and services across the Group to continue well into 2023.
Ross Andrews
Chairman
22(nd) September 2022
Consolidated Statement of Comprehensive Income
For the 6 months ended 30 June 2022
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
Notes GBP'000 GBP'000 GBP'000
---------------------------------- ------ ---------- ---------- -------------
Revenue 6,436 3,319 9,297
Costs of sales (2,808) (1,581) (3,987)
---------------------------------- ------ ---------- ---------- -------------
Gross profit 3,628 1,738 5,310
Administrative Costs (5,767) (4,211) (8,732)
Other Operating Gain 3 - 162 162
Operating loss (2,139) (2,311) (3,260)
---------------------------------- ------ ---------- ---------- -------------
Depreciation 313 193 272
Amortisation 1,442 1,360 2,944
Impairment of Investment - - -
Exceptional Items 3 12 61 27
EBITDA before exceptional items (372) (697) (17)
---------------------------------- ------ ---------- ---------- -------------
Finance costs (245) (307) (420)
---------------------------------- ------ ---------- ---------- -------------
(Loss) before income tax (2,384) (2,618) (3,680)
Taxation 4 164 178 1,001
---------------------------------- ------ ---------- ---------- -------------
(Loss) for the period (2,220) (2,440) (2,679)
---------------------------------- ------ ---------- ---------- -------------
Other comprehensive income
Currency translation differences 245 (229) (218)
---------------------------------- ------ ---------- ---------- -------------
Total comprehensive loss for the
period (1,975) (2,669) (2,897)
---------------------------------- ------ ---------- ---------- -------------
Loss per share attributable to
the equity holders of the Company Notes
during the period Pence Pence Pence
Basic and diluted loss per ordinary
share 5 1.0p 1.4p 1.3p
Consolidated Statement of Financial Position
As at 30 June 2022
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2022 2021 2021
Notes GBP'000 GBP'000 GBP'000
------------------------------------ ------ ---------- ---------- -------------
Assets
Non-current assets
Intangible assets 19,335 18,959 18,130
Property, plant and equipment 1,554 988 905
Leased assets 149 - -
Right of use assets 1,944 1,705 1,569
Other Investments 354 354 354
------------------------------------ ------ ---------- ---------- -------------
Total non-current assets 23,336 22,006 20,958
------------------------------------ ------ ---------- ---------- -------------
Current assets
Inventories 3,193 1,953 1,712
Trade and other receivables 7,035 2,219 6,786
Cash and cash equivalents 1,184 7,589 1,847
------------------------------------ ------ ---------- ---------- -------------
Total current assets 11,412 11,761 10,345
------------------------------------ ------ ---------- ---------- -------------
Total assets 34,748 33,767 31,303
------------------------------------ ------ ---------- ---------- -------------
Equity attributable to owners
Share capital 7 2,434 2,429 2,429
Share premium account 37,530 36,982 36,886
Retained loss (22,956) (20,609) (20,736)
Foreign currency reserve (199) (455) (444)
Reverse acquisition reserve (4,043) (2,843) (4,043)
Capital redemption reserve 9,519 9,519 9,519
Share based equity reserve 312 277 151
------------------------------------ ------ ---------- ---------- -------------
Total equity 22,597 25,300 23,762
------------------------------------ ------ ---------- ---------- -------------
Liabilities
Non-current liabilities
Deferred tax liabilities 2,424 2,870 2,434
Deferred revenue/government grants 18 21 19
Lease Liabilities 1,469 1,334 1,174
Borrowings - 83 -
Total non-current liabilities 3,911 4,308 3,627
------------------------------------ ------ ---------- ---------- -------------
Current liabilities
Trade and other payables 3,061 2,232 2,451
Deferred tax liabilities 374 356 356
Lease liabilities 562 446 409
Borrowings 4,243 1,125 698
Total current liabilities 8,240 4,159 3,914
------------------------------------ ------ ---------- ---------- -------------
Total liabilities 12,151 8,467 7,541
------------------------------------ ------ ---------- ---------- -------------
Total equity and liabilities 34,748 33,767 31,303
------------------------------------ ------ ---------- ---------- -------------
Consolidated Statement of Cash Flows
For the 6 months ended 30 June 2022
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2022 2021 2021
Notes GBP'000 GBP'000 GBP'000
Cash Flow from operating activities
--------------------------------------------------------- -------- ---------------- ---------------- -------------
Cash used in operations 8 (1,346) (2,829) (4,642)
Taxation (8) - (35)
Interest paid (245) (307) (420)
Net cash (used in) operating activities (1,599) (3,136) (5,097)
--------------------------------------------------------- -------- ---------------- ---------------- -------------
Cash flow from investing activities
Acquisition of subsidiary net of cash balance (173) - -
Payments to acquire intangibles (1,439) (372) (2,431)
Purchase of property, plant and equipment (688) (460) (492)
Net cash (used in) investing activities (2,300) (832) (2,923)
--------------------------------------------------------- -------- ---------------- ---------------- -------------
Cash flow from financing activities
Proceeds from issuance of ordinary shares 7 - 11,315 11,315
Proceeds from new loans 4,000 - -
Capital element of finance lease (236) (168) (1,865)
Repayments of borrowings (540) (1,017) (1,234)
Net cash generated by financing activities 3,224 10,130 8,216
--------------------------------------------------------- -------- ---------------- ---------------- -------------
Net increase / (decrease) in cash and cash equivalents (675) 6,162 196
Cash and cash equivalents at beginning of period 1,847 1,441 1,441
Effects of exchange rate changes on cash and cash
equivalents 12 (14) 210
Cash and cash equivalents at end of period 1,184 7,589 1,847
--------------------------------------------------------- -------- ---------------- ---------------- -------------
Consolidated Statement of Changes in Shareholders' Equity
Share Non
Group Foreign Reverse Capital based controlling
Share Share Retained currency acquisition redemption equity interests
capital premium earnings reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
At 1 January
2021 2,380 25,069 (18,964) (226) (2,843) 9,519 197 789 15,921
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Changes in
equity for the 6
months
ended 30 June
2021
Loss for the
period - - (2,440) - - - - - (2,440)
Currency
translation
Differences - - - (229) - - - - (229)
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Total
comprehensive
loss
for the period - - (2,440) (229) - - - - (2,669)
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Transactions
with the owners
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Shares issued
during the
period 49 12,480 - - - - - - 12,529
Costs of Share
Issue - (567) - - - - - - (567)
Share
option-based
charge - - - - - - 86 86
Non-controlling
interests - - 789 - - - - (789) -
Reserve transfer - - 6 - - - (6) - -
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Total
contributions
by and
distributions
to owners 49 11,913 795 - - - 80 (789) 12,048
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
At 30 June 2021 2,429 36,982 (20,609) (455) (2,843) 9,519 277 - 25,300
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Changes in
equity for the 6
months
ended 31
December 2021
Loss for the
period - - (181) - - - - - (181)
Non-controlling
interests - - - - - - - - -
Currency
translation
Differences - - - 11 - - - - 11
Total
comprehensive
loss
for the period - - (181) 11 - - - - (170)
Transactions
with the owners
Shares issued
during the
period - 751 - - - - - - 751
Costs of Share
Issue - (847) - - - - - - (847)
Share
option-based
charge - - - - - - (72) - (72)
Investment in
subsidiary (1,200) (1,200)
Reserve transfer - - 54 - - - (54) - -
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Total
contributions
by and
distributions
to owners - (96) 54 - (1,200) - (126) - (1,368)
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
At 31 December
2021 2,429 36,886 (20,736) (444) (4,043) 9,519 151 - 23,762
Changes in
equity for the 6
months
ended 30 June
2022
Loss for the
period - - (2,220) - - - - - (2,220)
Currency
translation
Differences - - - 245 - - - - 245
Total
comprehensive
loss
for the period - - (2,220) 245 - - - - (1,975)
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Transactions
with the owners
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Shares issued
during the
period 5 644 - - - - - - 649
Costs of Share
Issue - - - - - - - - -
Share
option-based
charge - - - - - - 161 161
Non-controlling
interests - - - - - - - - -
Share based
reserve transfer - - - - - - - -
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Total
contributions
by and
distributions
to owners 5 644 - - - - 161 - 810
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
At 30 June 2022 2,434 37,530 (22,956) (199) (4,043) 9,519 312 - 22,597
----------------- --------- --------- ---------- --------- ------------ ------------ -------- ------------ --------
Notes to the Financial Statements
For the 6 months ended 30 June 2022
1. General information
DeepVerge plc is a company incorporated in England and Wales.
The Company is a public limited company admitted to trading on the
AIM market of the London Stock Exchange on 5 April 2017. The
address of the registered office is York Biotech Campus, Sand
Hutton, York, North Yorkshire, YO41 1LZ.
The Company is an environmental and life science group whose
principal activities is the development and application of AI and
IoT technology to analytical instruments for the analysis and
identification of bacteria, virus and toxins. Utilising artificial
intelligent data analytics to scientifically prove the impact of
skincare product claims on skin microbiome and the remote detection
and identification in real-time, dangerous pathogens, such as
SARS-CoV-2 in wastewater treatment plants, drinking water, rivers,
lakes and reservoirs.
Skin Trust Club is a direct-to-consumer home test kit business
from Labskin which has become core to the growth of the Labskin
Division. The Skin Trust Club gives every skin care product
consumer the opportunity to understand their unique skin
microbiome, track their skin health, follow personalised skincare
routines, and to make informed decisions about skincare and
cosmetic products. The platform has evolved from 15 years of
R&D of laboratory growing skin testing, helping people find
skincare routines that fit their lifestyles, focusing on driving
innovation and empowering people with the knowledge to know their
skin.
The financial statements are presented in pounds sterling, the
currency of the primary economic environment in which the Company's
trading companies operate.
The registered number of the Company is 10205396.
2. Basis of preparation
The financial information in these interim results is that of
the holding company and all of its subsidiaries (the Group). It has
been prepared in accordance with the recognition and measurement
requirements of UK adopted International Financial Reporting
Standards (IFRSs), IFRS Interpretations Committee (IFRIC) and the
Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated interim financial statements have been prepared
under the historical cost convention.
The accounting policies applied by the Group in this financial
information are the same as those applied by the Group in its
financial statements for the year ended 31 December 2021, as
amended by the UK adopted IFRSs, and which will form the basis of
the 2022 financial statements except for a number of new and
amended standards which have become effective since the beginning
of the previous financial year. These new and amended standards are
not expected to materially affect the Group.
The financial information presented herein does not constitute
full statutory accounts under Section 434 of the Companies Act 2006
and was not subject to a formal review by the Group's Independent
Auditors. The financial information in respect of the year ended 31
December 2021 has been extracted from the statutory accounts which
have been delivered to the Registrar of Companies. The Group's
Independent Auditor's report on those accounts was unqualified, did
not include references to any matters to which the Auditor drew
attention by way of emphasis without qualifying their report and
did not contain a statement under section 498(2) or 498(3) of the
Companies Act 2006. The financial information for the half years
ended 30 June 2022 and 30 June 2021 is unaudited and the twelve
months to 31 December 2021 is audited.
3. Exceptional items and other operating gain
Exceptional Items
Included within administrative expenses are exceptional items as
shown below:
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
--------------------------------------- ---------- ---------- -------------
Exceptional items include:
Transaction costs relating to raising
funds and business acquisitions and
disposals 12 61 27
Total exceptional items 12 61 27
--------------------------------------- ---------- ---------- -------------
Other Operating Gain
Loan forgiveness of 2020 Payment Protection
Loan (Covid) for US subsidiary company 162 -
Modern Water Inc. -
Other Operating Gain - 162 -
-------------------------------------------- ------ ----
4. Taxation
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------- ---------- ---------- -------------
Research and development tax credit - - 669
Deferred tax credit 164 178 332
------------------------------------- ---------- ---------- -------------
164 178 1,001
------------------------------------- ---------- ---------- -------------
5. Loss per share
(a) Basic
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period.
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
Loss attributable to equity shareholders GBP2,220,000 GBP2,440,000 GBP2,679,000
Weighted average number of 0.1p Ordinary
Shares in issue 217,810,545 178,305,066 196,932,854
Basic loss per ordinary share 1.0p 1.4p 1.3p
(b) Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The options
and warrants are anti-dilutive in view of the losses in the year.
.
6. Dividends
There were no dividends paid or proposed by the Company.
7. Share capital
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------- ---------- ---------- -------------
Ordinary shares of 0.1p each 220 215 215
Deferred shares of 0.99p each 2,214 2,214 2,214
Total 2,434 2,429 2,429
------------------------------- ---------- ---------- -------------
As of 30 June 2022, the Company had an issued share capital of
219,706,378 ordinary shares of 0.1p each and 223,685,232 deferred
shares of 0.99p each.
Ordinary shares issued during the period
Acquisition of Glanaco Limited
On 16 March 2022 Rinocloud Limited acquired 100% of the
shareholding of the Irish registered engineering company Glanaco
Limited for a total consideration of GBP1.068m comprising GBP0.420m
in cash and GBP0.648m in shares. A total of 4,550,000 of DeepVerge
plc 0.1p ordinary shares were issued with the share value
attributable to the mid-market price on 14 March 2022.
Transaction
Date of Issue Shares No of shares Share Price Consideration
0.1p ordinary
16 March 2022 shares 4,550,000 14.25p GBP648,375
8. Cash used in operations
Unaudited Unaudited
6 months 6 months Audited
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- -------------
Loss for the year from continuing
activities (2,220) (2,440) (2,679)
Continuing operations
Adjustments for:
- Depreciation & Amortisation 1,755 1,553 3,216
- Net finance costs 245 307 420
- Taxation (172) (178) (1,001)
- Foreign currency 29 (229) 95
- Share option-based charge 161 86 -
Changes in working capital
- Inventories (1,513) (652) (363)
- Trade and other receivables (547) (803) (5,070)
- Trade and other payables 916 (473) 740
Net cash used in operations (1,346) (2,829) (4,642)
----------------------------------- ---------- ---------- -------------
9. Post balance sheet events
No significant events have occurred since the period end.
10. Availability of announcement
A copy of this announcement is available from the Company's
website, being www.deepverge.com.
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