Cost reductions;delay to Ann. Report;New contract

Deepverge PLC

05 June 2023

 

5 June 2023

DeepVerge plc

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

Further cost reductions; Possible delay to publication of Annual Report and Accounts; New £2.3m, four-year contract

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, announces that: (i) it will be downsizing its Labskin, Skin Trust Club and Rinocloud business units as part of further measures to improve the financial position of the Group; (ii) it is possible that it will need to delay the announcement of its results for the year ended 31 December 2022 and publication of its Annual Report and Accounts for the same period; (iii) it is continuing to carefully manage its working capital position and to seek new financing opportunities and also consider the potential sale of one or more lines of its business; and (iv) it is pleased to announce a new manufacturing contract win. 

Downsizing of the Labskin, Skin Trust Club and Rinocloud business units

The Company's financial position is such that the Board has taken the decision to no longer support the ongoing costs of progressing the development of the Labskin, Skin Trust Club and associated elements of the Rinocloud businesses, whilst retaining the capacity required to continue supporting the Modern Water and Glanaco businesses.  The Company is therefore downsizing these business units, with effect from 1 July 2023, which will involve the elimination of approximately twenty permanent employee and contract positions.  A programme is now in progress to ensure an orderly downsizing process is conducted.  The Company remains proud of the patents and databases that have been developed to date and continues to explore out-licensing opportunities of this technology with companies engaged in the life-sciences industry.

Possibility of delay to the announcement of the results for the year ended 31 December 2022 and publication of the Annual Report

The possibility of delay is caused, inter alia, by the resignation of the Group's previous auditor, Jeffreys Henry LLP, as announced on 24 March 2023. Following a change of ownership and name, Jeffreys Henry LLP undertook a review of its capacity to undertake audit work, in conjunction with the Institute of Chartered Accountants in England and Wales which concluded that the firm did not have sufficient capacity to satisfy its regulatory requirements and as a result resigned as auditor to a number of quoted companies, including DeepVerge.

The resignation of Jeffreys Henry occurred just days before the audit of DeepVerge's accounts was due to start.   Haysmacintyre LLP was subsequently appointed as the Company's auditor, however there is significant risk of there being insufficient time to ensure that the audit is completed by 30 June 2023.

If the Company is unable to publish its Annual Report and Accounts by 30 June 2023 in accordance with AIM Rule 19, then the trading in the Company's ordinary shares on AIM would be suspended from 7.30am on Monday 3 July 2023 until such Annual Report is published.  Any such delay would be likely to be limited to a matter of weeks.

New Funding opportunities and potential sale of parts of the business

The Company announced (RNSs of 17 and 19 April 2023) that due to the phasing and timing of contract cashflows it was operating from a limited working capital position.  The Company continues to explore a number of financing options including the raising of equity, debt or trade finance to improve the Group's financial position.  The Company is also exploring the potential sale of one or more lines of business.

New Manufacturing Contract in Ireland

The Company is pleased to announce that its subsidiary, Glanaco Ltd., has won a new contract for the supply of customised environmental cleaning and monitoring equipment to an undisclosed customer within the EU.  Under the terms of the deal the Company will lease this equipment to the customer across a four-year period commencing in the second half of 2023.  

The overall revenue will amount to approximately £2.3 million and will be recognised across the coming four years.

Further updates will be given as appropriate.

DeepVerge plc	Nigel Burton, Interim CEO	[phone]
SPARK Advisory Partners Limited (Nominated Adviser)	Neil Baldwin	[phone]
Turner Pope Investments (TPI) Limited (Broker)	Andy Thacker/James Pope	[phone]

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.

 

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