Interim Results

RNS Number : 7769L
Deepverge PLC
15 September 2021
 

15th September 2021   

DeepVerge plc

 

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


INTERIM RESULTS

 

H1 revenues grew by 231% to £3.32m (2020 H1: £1m) 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 2021.

 

The Company grew H1 2021 revenues by 231% to £3.319m (H1 2020: £1.004m). Production orders of £3.6m ($5m) for Modern Water equipment, announced on 17 February , contributed to an increase in inventories at the end of H1, ready to be shipped in H2 2021.

 

The rapid expansion across the Group in demand for products and services coupled with additional staff members, meant operational losses widened to £2.311m (H1 2020: £0.936m). The increased H1 operational costs was offset by an increase in gross profit on higher revenues, delivering a smaller percentage increase in EBITDA loss before exceptional items over the same period of just 26% to £0.697m (H1 2020:  £0.552m).

 

Gerry Brandon, CEO of DeepVerge plc, commented:

"T he Company continues to expand across all divisions meeting expectations and delivering another triple digit percentage growth rate with record H1 half-year revenues. Despite a substantial increase in investment in highly skilled staff for new products, services and higher administration costs associated with that growth, the Group is in the strongest financial position ever with large orderbooks, a strong balance sheet, and a year-on-year history of revenues heavily weighted in H2 over H1 since 2018 ".

 

Highlights:

· H1 2020 revenue £3.319m is an increase of 231% from H1 2020 (£1.004m);

· EBITDA (loss) before exceptional items £0.697m (H1 2020: £0.552m);

· Administration costs increased to £4.211m (2019: £1.547m) with large increase in staff across all divisions and the incorporation of the Modern Water business (acquired in November 2020);

· Operating loss of £2.311m (H1 2020: £0. 936 m) after providing for:

Depreciation of £ 0.193m (H1 2020: £0.072m);

Amortisation of £1.360m (H1 2020: £0.312m), increase due to higher intangibles from acquisition;

Exceptional costs of £0.061m (H1 2020: £nil) ;  

· Net Assets at 30 June 2021 £25.3m (H1 2020: £4.3m)

· £10m Placing and Subscription completed in June 2021.

· Finance available to the Group at period end in excess of £9m:

Cash and cash equivalents of £7.59m

Finance facility availability of £1.50m

 

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

Gerard J. 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

Mo PR Advisory

Mo Noonan

+44 (0) 7876 444 977

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

As we emerge from the global pandemic, the world is becoming less fearful and is striving to grapple with the understanding that COVID-19 is here to stay. With the increasing acceptance that it is critical to understand and monitor water, the DeepVerge environmental division is well positioned to play a crucial role in the modernising and automation of how this and future pandemics are to be managed. Even during lockdowns, the Company was expanding and recruiting on three continents with orders increasing across all divisions. Timely investment was made to deal with increased orders of wastewater contamination detection equipment with Modern Water Monitoring resulting in upgrades to our Delaware, US laboratories, York, UK laboratories and in our new Cork, Ireland AI and optofluidic engineering facilities.

 

Labskin (Innovenn UK Limited)

The Labskin business unit also expanded and remains fundamental to the Company's growth strategy. New service offerings to clients have maintained a high level of interest and the recent launch of Skin Trust Club has added to the excitement in the market as well as enthusiasm internally with the democratisation of consumer skincare home-testing. Whilst we were unable to attend any conferences physically, our scientists have continued to be high profile guest speakers at virtual conferences, providing Labskin business development teams the ability to meet clients virtually and assist them to progress research projects through our digital health platform. Framework agreements already signed continue to contribute to increased sales. 

 

Rinocloud Limited

The teams, led by Rinocloud AI and engineering team members, have completed the phase-III testing of the real-time nano-photonic microchips coated with Affirmers and Aptamers that bind to SARS-CoV-2 virus in a number of wastewater treatment plants in multiple countries, each detecting the virus with the use of AI in sewage in real-time. The same technology is used to capture the virus in the Microtox® BT breath test and testing continues in parallel for single pathogens, such as SARS-CoV-2 and with multiplex chipsets for a range of other viral and bacterial infections.

 

STOER For Men - (STOER Ireland Limited)  

STOER For Men skin products e-commerce division continues to be used as a control for client testing within Labskin laboratories and remains at break-even.

 

Wound pHase (LifeScienceHub Limited)

Labskin continues to work on development of wound care products and extend the services to be provided to woundcare client companies.

 

Outlook

With H1 2021 growth secured, as in previous years, second half revenues of DeepVerge are expected to be a multiple of H1. Whilst we successfully launched Skin Trust Club, with the capacity to process up to 20,000 skincare home test kits per month and partnered with a Tier One global advertising agency in Q4, our overall revenue guidance remains at £10 million as it is too early to give an accurate prediction of its impact on the year end number. We are also ramping up production for Modern Water's Microtox® PD wastewater SARS-CoV-2 detection systems, as mentioned in the update presentation of 30 June, and expect to update the market on installations later this year. Results of the Phase III field trials for real-time detection of pathogens in wastewater are recent but now form part of negotiations with China Resources. These continue to make progress and we will update the market in due course.

 

 

Ross Andrews

Chairman  

15 September 2021



 

 

Consolidated Statement of Comprehensive Income

For the 6 months ended 30 June 2021



Unaudited

6 months ended

30 June

2021

Unaudited

6 months ended

30 June

2020

Audited

Year ended

31 December

2020


Notes

£'000

£'000

£'000

Revenue


3,319

1,004

4,483

Costs of sales


(1,581)

(393)

(2,639)

Gross profit


1,738

611

1,844

Administrative Costs


(4,211)

(1,547)

(4,561)

Other Operating Gain

3

162

-

-

Operating loss


(2,311)

(936)

(2,717)

  Depreciation


193

72

172

  Amortisation


1,360

312

941

  Impairment of Investment


-

-

354

  Exceptional Items

3

61

-

391

EBITDA before exceptional items


(697)

(552)

(859)

Finance costs


(307)

(19)

(183)

(Loss) before income tax


(2,618)

(955)

(2,900)

Taxation

4

178

30

182

(Loss) for the period


(2,440)

(925)

(2,718)






Other comprehensive income





Currency translation differences


(229)

67

33

Total comprehensive loss for the period


(2,669)

(858)

(2,685)

 

 

 




Loss per share attributable to the equity holders of the Company during the period

 

Notes

Pence

Pence

Pence






Basic and diluted loss per ordinary share

5

1.4p

0.9p

2.1p













 

 

Consolidated Statement of Financial Position

As at 30 June 2021



Unaudited

As at

30 June

Unaudited

As at

30 June

Audited

As at

31 December



2021

2020

2020


Notes

£'000

£'000

£'000

Assets





Non-current assets





Intangible assets


18,959

3,513

18,241

Property, plant and equipment


988

483

874

Right of use assets


1,705

450

569

Other Investments


354

708

354

Total non-current assets


22,006

5,154

20,038






Current assets





Inventories


1,953

79

1,347

Trade and other receivables


2,219

1,079

1,448

Cash and cash equivalents


7,589

255

1,441

Total current assets


11,761

1,413

4,236

Total assets


33,767

6,567

24,274






Equity attributable to owners





Share capital

7

2,429

2,322

2,380

Share premium account


36,982

11,838

25,069

Retained loss


(20,609)

(16,325)

(18,964)

Foreign currency reserve


(455)

(192)

(226)

Reverse acquisition reserve


(2,843)

(2,843)

(2,843)

Capital redemption reserve


9,519

9,519

9,519

Share based equity reserve


277

6

197

  Sub total


25,300

4,325

15,132

Non-controlling interests


-

-

789

Total equity


25,300

4,325

15,921






Liabilities





Non-current liabilities





Deferred tax liabilities


2,870

470

2,780

Deferred revenue/government grants


21

6

24

Lease Liabilities


1,334

355

358

Borrowings


83

121

583

Total non-current liabilities


4,308

952

3,745






Current liabilities





Trade and other payables


2,232

970

2,667

Deferred tax liabilities


356

61

328

Lease liabilities


446

105

264

Borrowings


1,125

154

1,349

Total current liabilities


4,159

1,290

4,608

Total liabilities


8,467

2,242

8,353

Total equity and liabilities


33,767

6,567

24,274

 

 

 

 


Consolidated Statement of Cash Flows

For the 6 months ended 30 June 2021



Unaudited

6 months ended

30 June

2021

Unaudited

6 months ended

30 June

2020

Audited

Year ended

31 December

2020


Notes

  £'000

£'000

£'000

Cash Flow from operating activities





Cash used in operations

  8

(2,829)

(772) 

(2,098)

Taxation


-

-

76

Interest paid


(307)

(12)

(183)

Net cash used in operating activities


(3,136)

(784)

(2,205)






Cash flow from investing activities





Acquisition of subsidiary net of cash balance


-

-

739

Payments to acquire intangibles


(372)

(72)

(488)

Purchase of property, plant and equipment


(460)

(84)

(296)

Government Grant


-

7

-

Net cash used in investing activities


(832)

(149)

(45)






Cash flow from financing activities





Proceeds from issuance of ordinary shares

7

11,315

95

1,328

Proceeds from new loans


-

-

1,500

Capital element of finance lease


(168)

(36)

(125)

Repayments of borrowings


(1,017)

(64)

(205)

Net cash generated / (used) by financing activities


10,130

(5)

2,498






Net increase / (decrease) in cash and cash equivalents


6,162

(938)

248

Cash and cash equivalents at beginning of period


1,441

1,193

1,193

Effects of exchange rate changes on cash and cash equivalents


(14)

-

-

Cash and cash equivalents at end of period


7,589

255

1,441








 

Consolidated Statement of Changes in Shareholders' Equity

 

 

 

Group

 

Share capital

 

Share

premium

 

Retained

earnings

Foreign currency reserve

Reverse acquisition reserve

 

Capital redemption reserve

Share based equity reserve

Non controlling interests

 

 

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2020

2,322

11,743

(15,400)

(259)

(2,843)

9,519

6

-

5,088

Changes in equity for the 6 months

ended 30 June 2020










Loss for the period

-

-

(925)

-

-

-

-

-

(925)

Currency translation

differences

-

-

-

67

-

-

-

-

67

Total comprehensive loss

for the period

-

-

(925)

67

-

-

-

-

(858)

Transactions with the owners










Shares issued during the period

-

95

-

-

-

-

-

-

95

Costs of Share Issue

-

-

-

-

-

-

-

-

-

Share option-based charge

-

-

-

-

-

-

-

-

-

Reserve transfer

-

-

-

-

-

-

-

-

-

Total contributions by and

distributions to owners

-

95

-

-

-

-

-

-

95

At 30 June 2020

2,322

11,838

(16,325)

(192)

(2,843)

9,519

6

-

4,325

Changes in equity for the 6 months

ended 31 December 2020










Loss for the period

-

-

(1,793)

-

-

-

-

-

(1,793)

Non-controlling interests

-

-

(846)

-

-

-

-

789

(57)

Currency translation

Differences

-

-

-

(34)

-

-

-

-

(34)

Total comprehensive loss

for the period

-

-

(2,639)

(34)

-

-

-

789

(1,884)

Transactions with the owners










Shares issued during the period

58

13,231

-

-

-

-

-

-

13,289

Costs of Share Issue

-

-

-

-

-

-

-

-

-

Share option-based charge

-

-

-

-

-

-

191

-

191

Reserve transfer

-

-

-

-

-

-

-

-

-

Total contributions by and

distributions to owners

58

13,231

-

-

-

-

191

-

13,480

At 31 December 2020

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)

-

Share based 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)

277

-

25,300

 

* On 15 January 2021   the Company acquired the remaining Modern Water plc shares.

 



 

Notes to the Financial Statements

For the 6 months ended 30 June 2021

 

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 principal activity of the Group is that of developing technologies in the skin industry. The Group has a presence in the UK, US China and Ireland.

 

The financial statements are presented in pounds sterling, the currency of the primary economic environment in which the Group'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. It has been prepared in accordance with the recognition and measurement requirements of UK adopted International Financial Reporting Standards (IFRSs). 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 2020 and which will form the basis of the 2021 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 auditors. The financial information in respect of the year ended 31 December 2020 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 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 2021 and 30 June 2020 is unaudited and the twelve months to 31 December 2020 is audited.

3. Exceptional items and other operating gain

 

Exceptional Items

Included within administrative expenses are exceptional items as shown below:  


Unaudited

6 months ended

30 June

2021

Unaudited

6 months ended

30 June

2020

Audited

Year ended

31 December

2020

Exceptional items include:




Transaction costs relating to raising funds and business acquisitions and disposals

 

61

 

-

 

391

Total exceptional items

61

-

391

 

Other Operating Gain

 

Loan Forgiveness of 2020 Payment Protection Loan (Covid) for US subsidiary company Modern Water Inc.

162

 

-

 

-

Other Operating Gain

162

-

-

 

 

 

 

 

 

 

 

 

 

 

4. Taxation

 


Unaudited

6 months ended

30 June

2021

£'000

Unaudited

6 months ended

30 June

2020

£'000

Audited

Year ended

31 December

2020

£'000

Research and development tax credit

-

-

77

Deferred tax credit

178

30

105


178

30

182

 

 

5. Loss per share

At a General Meeting of the Company on 15 September 2020 a share consolidation was approved. With effect from 16 September 2020 all ordinary shares of 0.01 pence each were consolidated into new ordinary shares of 0.1 pence each, on a 10 for 1 basis.

 

The following table illustrates the basic loss for both 2021 and 2020 when converting a 10:1 consolidation for all 0.01 pence ordinary shares in issue pre-15 September 2020 to 0.1 pence new ordinary shares.

 

(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

6 months ended

30 June

2021

Unaudited

6 months ended

30 June

2020

Audited

Year ended

31 December

2020





Loss attributable to equity shareholders

£2,440,000

£925,000

£2,718,000





Weighted average number of 0.1p Ordinary Shares in issue

178,305,066

107,339,112

128,715,344





Basic loss per ordinary share

1.4p

0.9p

2.1p

 

(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. Details of warrants outstanding are given in note 7.

 

 

6. Dividends

There were no dividends paid or proposed by the Company.  

 

 

7. Share capital


Unaudited

6 months ended

30 June

2021

Unaudited

6 months ended

30 June

2020

Audited

Year ended

31 December

2020


£'000

£'000

£'000

Ordinary shares of 0.1p each

 

215

108

166

Deferred shares of 0.99p each

 

2,214

2,214

2,214

Total

2,429

2,322

2,380

 

As at 30 June 2021, the Company had an issued share capital of 215,138,276  ordinary shares of 0.1p each and 223,685,232 deferred shares of 0.99p each.

 

 

 

Ordinary shares issued during the period

 

Compulsory Acquisition Modern Water plc ordinary shares under sections 974-991 of the Companies Act 2006

 

Having obtained acceptances of 93.47% of Modern Water plc shareholders to the offer to acquire the company in 2020, the Company subsequently commenced compulsory acquisition proceedings under sections 974-991 of the Companies Act 2006.

 

Date

Type

No of shares

Price at Date
of Listing

Consideration

15 January 2021

Acquisition Shares

3,636,915

33p

£1,200,182

 

On 15 January 2021 the Company allotted 3,636,915 ordinary 0.1p shares in respect of the compulsory acquisition of all the remaining Modern Water plc shares. The £1.2m consideration  takes the total cost of the 100% acquisition of shares to £13.3m.

 

 

Shares issued for cash consideration in 2021

 

 

Date

Transaction

No of shares

Exercise price

Consideration

18 January

Share Options

25,860

0.01p

£ 26

25 January

Placing Warrants

535,714

20p

£ 107,143

1 February

Placing Warrants

178,570

20p

£ 35,714

26 February

Placing Warrants

1,230,738

20p

£ 246,148

26 February

Broker Warrants

557,999

15p

£ 83,700

26 February

Broker Warrants

814,285

14p

£ 114,000

5 March

Placing Warrants

17,857

20p

£ 3,571

16 March

Placing Warrants

188,071

20p

£ 37,614

23 March

Placing Warrants

35,714

20p

£ 7,143

24 March

Placing Warrants

78,570

20p

£ 15,714

7 April

Share Options

18,102

0.01p

£ 18

13 April

Placing Warrants

10,714

20p

£ 2,143

21 April

Placing Warrants

221,285

20p

£ 44,257

21 April

Broker Warrants

7,050,000

5p

£ 352,500

29 April

Placing Warrants

942,857

20p

£ 188,571

30 April

Placing Warrants

384,425

20p

£ 76,885

11 June

Share Placing

21,086,888

30p

£ 6,326,066

25 June

Share Placing

12,246,446

30p

£ 3,673,934

Sub Total


45,624,095


£ 11,315,147

 

 

Warrants

During the period a total of 12,696,785 warrants of 0.1p ordinary shares, with exercise prices between 5p and 20p per share, were either exercised or expired, with total warrants of 2,343,836 0.1 p shares outstanding at 30 June 2021.

Warrant holder

Date granted

Exercise price

Expiry date

Ordinary shares of 0.1p each

Exercised/

Expired

in period

Outstanding at 30 June

Turner Pope Investments (TPI) Ltd

5 April 2017

62.5p

5 April 2022

180,000

-

180,000

Placing subscribers

5 January 2018

15p

5 January 2023

173,334

-

173,334

Hybridan LLP

5 January 2018

15p

5 January 2023

100,000

-

100,000

Turner Pope Investments (TPI) Ltd

5 January 2018

15p

5 January 2023

30,000

30,000

-

Placing subscribers

2 May 2019

20p

2 May 2021

4,274,501

4,274,501

-

Turner Pope Investments (TPI) Ltd

2 May 2019

14p

2 May 2022

814,285

814,285

-

Turner Pope Investments (TPI) Ltd

16 December 2019

15p

16 December 2022

527,999

527,999

-

YA II PN, Ltd

15 September 2020

25.7868p

15 September 2024

945,251

-

945,251

Riverfort Global Opportunities PCC Ltd

15 September 2020

25.7868p

15 September 2024

945,251

-

945,251

Turner Pope Investments (TPI) Ltd

9 November 2020

5p

16 February 2023

7,050,000

7,050,000

-





15,040,621

12,696,785

2,343,836

 

 

 

8. Cash used in operations


Unaudited

6 months ended

30 June

2021

£'000

Unaudited

6 months ended

30 June

2020

£'000

Audited

Year ended

31 December

2020

£'000

Loss for the year from continuing activities

(2,440)

(925)

(2,718)





Continuing operations

Adjustments for:




- Depreciation & Amortisation

1,553

384

1,113

- Impairment of Investments

-

-

354

- Net finance costs

307

13

303

- Taxation

(178)

(30)

(182)

- Foreign currency

(229)

33

36

- Share option-based charge

86

-

191

Changes in working capital




- Inventories

(652)

6

344

- Trade and other receivables

(803)

(530)

(513)

- Trade and other payables

(473)

277

(1,026)





Net cash used in operations

(2,829)

(772)

(2,098)

 

 

 

9. Post balance sheet events

 

 

No significant events 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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