Interim Results

RNS Number : 7769L

Deepverge PLC

15 September 2021

 

15^th 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:

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

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

o  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:

o  Cash and cash equivalents of £7.59m

o  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	[phone]
SPARK Advisory Partners Limited (Nominated Adviser)	Neil Baldwin/Andrew Emmott	[phone]
Turner Pope Investments (TPI) Limited (Broker)	Andy Thacker/James Pope	[phone]
Mo PR Advisory	Mo Noonan	[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.

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)	9,519	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.

 

END

 

 

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