Interim Results

RNS Number : 3555Z

Integumen PLC

18 September 2020

 

18^th September 2020

Integumen plc

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

INTERIM RESULTS

Integumen (LSE: SKIN), the vertically integrated skin product test services company, today announces its unaudited interim results for the six months ended 30 June 2020.

Gerard Brandon, CEO of Integumen plc, said:

Over the past two years, Integumen plc has transformed from a struggling health services business into a revenue-generating company focused on providing integrated environmental, skin and health specialties underpinned by scientific expertise and advanced by AI.  As the business continues to grow and evolve through collaboration and acquisition, unaudited revenues were up 290% for H1 2020 and are £1.004 million (H1 2019 £0. 347 million) . Q3 sales are expected to be in excess of £1m and guidance remains at £4m for 2020.

The addition of a digital artificial intelligence platform transformed Labskin into a cloud-based eco-system that validates skincare products and ingredients, remotely for clients, and has been the focus of the new strategy leading to multi-year, framework agreements with many global Top 10 skincare and healthcare companies. 

COVID-19 presented a significant growth of new business opportunities from its real-time water contamination detection and environment sector solutions, which resulted in agreements with Modern Water plc ("Modern Water"), Avacta Group plc ("Avacta") and Aptamer Group Limited ("Aptamer") for the development of real-time wastewater contamination detection services that provides immediate alerts to authorities to contain COVID-19 hotspots.  COVID-19 contamination detection in wastewater increasingly becomes an important tool in the fight against the disease.

With much of the pharma industry delaying clinical trials, Integumen launched the world's first remote clinical skin trials platform. By harvesting the microbiome of a human volunteer's skin, transporting it to the Labskin laboratory to be transplanted onto laboratory-grown skin, it creates an exact replica of the human volunteer's skin microflora.  The platform allows trials to happen ethically and efficiently with all clinical and data storage protocols being followed and distantly controlled; and swabbing can be done under remote video/AI supervision in the human volunteer's home, enabling companies to restart their clinical programmes again.

Recent news includes:

· January: Cooperative alliance agreement with Innocare Group, China

· February: First RAWTest commercial agreement and AI partnership with Acumen Software, South Africa

· February: Launch of EcoWaterOS consortium for real-time water monitoring, recovery, treatment and recycling

· March: 3 year, £3.12m bacteria production agreement with Modern Water

· March: Labskin expand York UK Laboratories by 100% to meet increased demand

· March: Production commenced of bacteria to detect water contamination amid COVID-19 public health crisis

· May: Double production of Modern Water reagent bacteria to meet increased demand and RAWTest AI real-time alert system retrofitted in new Modern Water's Microtox units

· June: Partnership with University of Aberdeen to test COVID-19 anti-viral skin and dental products

· June: Partnership with Aptamer for novel SARS-CoV-2 sensors

· July: Partnership with Avacta for novel SARS-CoV-2 sensors

Post-Period

· Additional warrant share exercises after period end raised a further £1.04 million.

· On 29 July 2020, a £3 million 3-year loan facility secured from Riverfort Global Opportunities PCC Limited for which £1.5m was drawn down initially.

· An all share offer to acquire the entire share capital of Modern Water.

· Name change from Integumen plc to DeepVerge plc (to become effective shortly) to reflect

o  An expanded focus beyond skin,

o  Communicate a forward-looking, innovative company, and

o  Position the enlarged group as a science-technology focused company.

Integumen 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/Zoe Alexander	[phone]
Mo PR Advisory	Mo Noonan	[phone]

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

About the Company:

The Company is a scientific research and AI-as-a-Service company focused on production and analysis of bacteria, virus and toxins utilising artificial intelligent data analytics in regulatory technology, from scientifically proving the impact of skincare product claims on skin microbiome for top 10 global cosmetic company clients to remotely detecting water contamination in real-time.

Chairman's Statement

Introduction

COVID-19 in H1, 2020 played a crucial role in altering many firms' business plans. This was no different for Integumen plc. In our case, however, while lock-downs caused an initial organisational problem, the Company was recruiting and expanding in the Labskin subsidiary throughout the lock-down period as orders went to £2m and investment increased to deal with moving production of wastewater contamination detection bacteria for Modern Water Monitoring from their US laboratories, to our York, UK laboratories. Terms have been agreed to acquire Modern Water in a recommended all share offer, and an offer document is due to be issued shortly.

Labskin (Innovenn UK Limited)

The Labskin business unit expanded and remains fundamental to the Company's growth strategy as we move forward. New areas added to service offerings to clients have maintained a high level of interest and whilst we were unable, physically, to attend any conferences, virtual conferences allowed Labskin sales teams to meet clients and assist them move from their furloughed state and progress research projects that had been initiated earlier in the year.

Rinocloud Limited

Collaboration has been ongoing for the past four months between the teams at Rinocloud and Labskin, the Cork Institute of Technology, Ireland and the University of Aberdeen. The combined technology extends a microfluidic/photonics/AI instrument that Rinocloud began developing in 2015 in the University of Cambridge to detect E.coli in water. This was originally announced in November 2019 and has quickly become a full time COVID-19 project working with a team from Modern Water's offices in Shanghai, China and laboratory in Delaware, USA; the Tyndall National Photonics Institute and Cappa Lab both in the Cork Institute of Technology, Cork, Ireland; University of Aberdeen and our labs in York with commercial development partners Avacta Group plc, Wetherby, UK and the Aptamer Group Limited in York, UK.

Over the last number of months, the teams have designed nano-photonic microchips coated with Affirmers and Aptamers that bind to a recombinant SARS-CoV-2 virus. Detection of binding of the target, in real time, has been achieved using a nanophotonic process. In collaboration with the team at Modern Water, Microtrace OVA systems, originally designed to detect contamination in water for chemicals, trace metals and a range of pathogens has been retrofitted with the Rinocloud AI based Novel Sensor to detect and identify SARS-CoV-2 and other pathogens. These OVA system units have been installed in hundreds of sites worldwide over the last 30 years and form the basis of the roll out of the Novel Sensor into 2021.

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 a positive first half, Q3 revenues expected to be in excess of £1m we remain comfortable to guide revenues of £4m for the full year.

Ross Andrews

Chairman  

17 September 2020

Consolidated Statement of Comprehensive Income

For the 6 months ended 30 June 2020

		Unaudited 6 months ended 30 June 2020	Unaudited 6 months ended 30 June 2019	Audited Year ended 31 December 2019
	Notes	£'000	£'000	£'000
Revenue		1,004	347	823
Costs of sales		(393)	(100)	(221)
Gross profit		611	247	602
Administrative Costs		(1,547)	(1,209)	(2,973)
Operating loss		(936)	(962)	(2,371)
Depreciation		72	40	101
Amortisation		312	106	442
Impairment of intangible assets		-	-	241
Exceptional items	3	-	446	532
EBITDA before exceptional items		(552)	(370)	(1,055)
Finance costs		(19)	(13)	(26)
(Loss) before income tax		(955)	(975)	(2,397)
Taxation	4	30	50	126
(Loss) for the year from continuing operations		(925)	(925)	(2,271)
Profit for the year from discontinued operations		-	-	6
(Loss) for the period		(925)	(925)	(2,265)
Other comprehensive income
Currency translation differences		67	35	(8)
Total comprehensive loss for the period		(858)	(890)	(2,273)

Loss per share from continuing and discontinued operations attributable to owners of the parent during the period	Notes	Pence			Pence		Pence
Basic loss per ordinary share
From continuing operations	5	0.1p			0.2p		0.3p
From discontinued operations	5	0.0p			0.0p		0.0p
From loss for the period		0.1p			0.2p		0.3p

Consolidated Statement of Financial Position

As at 30 June 2020

		Unaudited As at 30 June	Unaudited As at 30 June	Audited As at 31 December
		2020	2019	2019
	Notes	£'000	£'000	£'000
Assets
Non-current assets
Intangible assets		3,513	4,220	3,654
Property, plant and equipment		483	430	471
Right of use assets		450	-	503
Other Investments		708	708	708
Total non-current assets		5,154	5,358	5,336
Current assets
Inventories		79	106	85
Trade and other receivables		1,079	384	549
Cash and cash equivalents		255	1,083	1,193
Total current assets		1,413	1,573	1,827
Total assets		6,567	6,931	7,163
Equity attributable to owners
Share capital	7	2,322	2,311	2,322
Share premium account		11,838	10,837	11,743
Retained loss		(16,325)	(14,477)	(15,400)
Foreign currency reserve		(192)	(215)	(259)
Reverse acquisition reserve		(2,843)	(2,843)	(2,843)
Capital redemption reserve		9,519	9,519	9,519
Share based equity reserve		6	15	6
Total equity		4,325	5,147	5,088
Liabilities
Non-current liabilities
Deferred tax liabilities		470	573	500
Deferred revenue/government grants		5	-	-
Lease Liabilities		355	-	402
Borrowings		121	240	135
Total non-current liabilities		951	813	1,037
Current liabilities
Trade and other payables		970	715	693
Deferred tax liabilities		61	67	61
Deferred revenue/government grants		1	-	-
Lease liabilities		105	-	102
Borrowings		154	189	182
Total current liabilities		1,291	971	1,038
Total liabilities		2,242	1,784	2,075
Total equity and liabilities		6,567	6,931	7,163

Consolidated Statement of Cash Flows

For the 6 months ended 30 June 2020

		Unaudited 6 months ended 30 June 2020	Unaudited 6 months ended 30 June 2019	Audited Year ended 31 December 2019
	Notes	£'000	£'000	£'000
Cash Flow from operating activities
Cash used in operations	8	(772)	(1,251)	(2,281)
Taxation		-	-	32
Interest paid		(12)	(13)	(26)
Net cash used in operating activities		(784)	(1,264)	(2,275)
Cash flow from investing activities
Acquisition of investments		-	22	22
Payments to acquire intangibles		(72)	(213)	(213)
Purchase of property, plant and equipment		(84)	(38)	(138)
Government Grant		7	-	-
Net cash used in investing activities		(149)	(229)	(329)
Cash flow from financing activities
Proceeds from issuance of ordinary shares	7	95	2,636	3,961
Capital element of finance lease		(36)	-	(19)
Repayments on borrowings		(64)	(87)	(171)
Net cash generated / (used) by financing activities		(5)	2,549	3,771
Net increase / (decrease) in cash and cash equivalents		(938)	1,056	1,167
Cash and cash equivalents at beginning of period		1,193	26	26
Effects of exchange rate changes on cash and cash equivalents		-	1	-
Cash and cash equivalents at end of period		255	1,083	1,193

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	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2019	2,260	3,662	(13,221)	(251)	(2,843)	9519	90	(784)
Changes in equity for the 6 months ended 30 June 2019
Loss for the period	-	-	(925)	-	-	-	-	(925)
Currency translation differences	-	-	-	35	-	-	-	35
Total comprehensive loss for the period	-	-	(925)	35	-	-	-	(890)
Transactions with the owners
Shares issued during the period	51	7,329	-	-	-	-	-	7,380
Costs of Share Issue	-	(153)	-	-	-	-	-	(153)
Share option-based charge	-	-	-	-	-	-	(406)	(406)
Reserve transfer	-	-	(331)	-	-	-	331	-
Total contributions by and distributions to owners	51	7,175	(331)	-	-	-	(75)	6,821
At 30 June 2019	2,311	10,837	(14,477)	(215)	(2,843)	9,519	15	5,147
Changes in equity for the 6 months ended 31 December 2019
Loss for the period	-	-	(1,340)	-	-	-	-	(1,340)
Currency translation Differences	-	-	-	(44)	-	-	-	(44)
Total comprehensive loss for the period	-	-	(1,340)	(44)	-	-	-	(1,384)
Transactions with the owners
Shares issued during the period	11	1,090	-	-	-	-	-	1,101
Costs of Share Issue	-	(184)	-	-	-	-	-	(184)
Share option-based charge	-	-	-	-	-	-	408	408
Reserve transfer	-	-	417	-	-	-	(417)	-
Total contributions by and distributions to owners	11	906	417	-	-	-	(9)	1,325
At 31 December 2019	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

Notes to the Financial Statements

For the 6 months ended 30 June 2020

1. General information

Integumen 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 Sand Hutton Applied Innovation 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 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 International Financial Reporting Standards as adopted for use in the EU (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 2019 and which will form the basis of the 2020 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 2019 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 2020 and 30 June 2019 is unaudited and the twelve months to 31 December 2019 is audited. The financial information for the half year ended 30 June 2019 and the twelve months to 31 December 2019 have been restated with respect to the reclassification of discontinued operations.

3. Exceptional items

Included within administrative expenses are exceptional items as shown below:  

	Unaudited 6 months ended 30 June 2020	Unaudited 6 months ended 30 June 2019	Audited Year ended 31 December 2019
Exceptional items include:
Transaction costs relating to raising funds and business acquisitions and disposals	-	446	532
Total exceptional items	-	446	532

4. Taxation

	Unaudited 6 months ended 30 June 2020 £'000	Unaudited 6 months ended 30 June 2019 £'000	Audited Year ended 31 December 2019 £'000
Research and development tax credit	-	35	32
Deferred tax credit	30	15	94
	30	50	126

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 6 months ended 30 June 2020	Unaudited 6 months ended 30 June 2019	Audited Year ended 31 December 2019
Loss from continuing operations	£925,000	£931,000	£2,271,000
(Profit) from discontinued operations	-	(£6,000)	(£6,000)
Loss attributable to owners of the parent	£925,000	£925,000	£2,265,000
Weighted average number of Ordinary Shares in issue	1,073,391,121	623,223,403	807,395,734
Basic loss per ordinary share
From continuing operations	0.1p	0.2p	0.3p
From discontinued operations	0.0p	0.0p	0.0p
From loss for the year	0.1p	0.2p	0.3p

(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. Details of warrants outstanding are given in note 9.

6. Dividends

There were no dividends paid or proposed by the Company.  

7. Share capital

	Unaudited 6 months ended 30 June 2020	Unaudited 6 months ended 30 June 2019	Audited Year ended 31 December 2019
	£'000	£'000	£'000
1,078,750,235Ordinary shares of 0.01p each	108	97	108
223,685,232 Deferred shares of 0.99p each	2,214	2,214	2,214
Total	2,322	2,311	2,322

Ordinary shares issued during the period

-  On 28 May 2020, placing subscribers exercised warrants over 3,000,000 ordinary shares of 0.01p each at an exercise price of 1.5p per ordinary share of 0.01p raising a total of £45,000 for the Company.

-  On 4 June 2020, placing subscribers exercised warrants over 3,333,332 ordinary shares of 0.01p each at an exercise price of 1.5p per ordinary share of 0.01p raising a total of £50,000 for the Company.

As at the 30 June 2020 the Company had an issued share capital of 1,078,750,235 ordinary shares of 0.01p each and 223,685,232 deferred shares of 0.99p each.

8. Cash used in operations

	Unaudited 6 months ended 30 June 2020 £'000	Unaudited 6 months ended 30 June 2019 £'000	Audited Year ended 31 December 2019 £'000
Loss for the year from continuing activities	(925)	(931)	(2,271)
Discontinued cashflows	-	6	6
Continuing operations Adjustments for:
- Depreciation	72	40	784
- Amortisation	312	106	(7)
- Net finance costs	13	13	-
- Taxation	(30)	(50)	26
- Foreign currency	33	13	(126)
- Share option-based charge	-	2	2
Changes in working capital
- Inventories	6	28	50
- Trade and other receivables	(530)	44	(120)
- Trade and other payables	277	41	(62)
Net cash used in discontinued operations	-	(563)	(563)
Net cash used in operations	(772)	(1,251)	(2,281)

9. Post balance sheet events

Loan Facility

On 29 July 2020 the Company signed a £3,000,000 loan facility with Riverfort Global Opportunities PCC Limited ("Riverfort") and YA II PN, Ltd ("YA II") with a 3-year term ("Loan Agreement"). On the date of signing the Company drew down £1,500,000, 50% of the facility, as a 24-month loan with the first six months interest only. The interest applicable to outstanding drawdown amounts is 1.05% per month with a repayment fee of 8% payable on the date the principal sums are repaid.

Riverfort and YA II have been granted warrants to the total value of £350,000 based on the VWAP for the previous five trading days to the date of signing of the agreement, which was 1.9836p. The total number of warrants granted was 18,905,021 ordinary shares of 0.01p each (9,452,511 to Riverfort and 9,452,510 to YA II) at an exercise price of 2.57868p per share exercisable up to 15 September 2024.

Riverfort and YA II together have been granted other rights under the Loan Agreement including the right to convert up to £950,000 of the loan outstanding and any repayment fee unpaid to ordinary shares of 0.01p each at a conversion price of 2.9754p.

Ordinary Shares Issued

Placing subscribers holding warrants at an exercise price of 2p and 1.5p per ordinary share of 0.01p each exercised the following warrants between 1 July 2020 and 15 September 2020.

Date	Number of	Exercise Price	Total Value
	£0.01 ordinary Shares		pence values rounded up
7 August 2020	1,715,714	2p	£34,314
13 August 2020	26,071,429	2p	£521,429
13 August 2020	3,333,333	1.5p	£50,000
24 August 2020	1,249,999	2p	£25,000
26 August 2020	1,928,573	2p	£38,571
28 August 2020	13,464,286	2p	£269,286
8 September 2020	500,000	2p	£10,000
10 September 2020	4,417,857	2p	£87,357
Total	52,681,191		£1,035,957

On 15 September 2020 a share consolidation was approved at General Meeting such that the existing ordinary shares of 0.01 pence each were consolidated into one new ordinary share of 0.1 pence in nominal value on a 10 for 1 basis with effective date of 16 September 2020.

All warrant exercise prices have been adjusted according to the 10 for 1 basis for the 0.1p new ordinary shares.

Placing subscribers holding warrants at an exercise price of 20p per new ordinary share of 0.1p exercised the following warrants between 16 September 2020 and 17 September 2020.

Date	Number of	Exercise Price	Total Value
	£0.1 ordinary Shares
16 September 2020	42,500	20p	£8,500
Total	42,500		£8,500

The total value of exercised warrants from 1 July 2020 to 17 September 2020 is £1,044,457.

Warrants

Share Consolidation

On 15 September 2020 a share consolidation was approved at General Meeting such that existing warrants for ordinary shares of 0.01 pence each were consolidated into warrants for one new ordinary share of 0.1 pence in nominal value on a 10 for 1 basis with effective date of 16 September 2020.

Grant of Warrants

On 15 September 2020 warrants of 18,905,021 ordinary shares of 0.01p to the value of £375,000 were granted to Riverfort and YA II as a condition of the Loan Agreement entered into on 29 July 2020. The exercise price of the warrants is 2.57868 pence for each ordinary share with an exercise period of 48 months ending on 15 September 2024. Following the share consolidation both  Riverfort and YA II PN Ltd will hold warrants to subscribe for 945,251, at exercise price of 25.7868 pence, per new ordinary shares of 0.1 pence.

Warrants in issue

Following the share consolidation, as at 17 September 2020 the following warrants over new ordinary shares of 0.1 pence in the Company remain outstanding.

Warrant holder	Date granted	Number of Ordinary shares of 0.1p each	Exercise price	Expiry date
Turner Pope Investments (TPI) Ltd	5 April 2017	180,000	62.5p	5 April 2022
Placing subscribers	5 January 2018	440,000	15p	5 January 2023
Hybridan LLP	5 January 2018	100,000	15p	5 January 2023
Turner Pope Investments (TPI) Ltd	5 January 2018	30,000	15p	5 January 2023
Placing subscribers	2 May 2019	4,585,214	20p	2 May 2021
Turner Pope Investments (TPI) Ltd	2 May 2019	814,285	14p	2 May 2022
Turner Pope Investments (TPI) Ltd	16 December 2019	527,999	15p	16 December 2022
YA II PN, Ltd	15 September 2020	945,251	25.7868p	15 September 2024
Riverfort Global Opportunities PCC Ltd	15 September 2020	945,251 8,568,000	25.7868p	15 September 2024

Share Consolidation

On 15 September 2020 a share consolidation was approved at General Meeting such that existing warrants for ordinary shares of 0.01 pence each were consolidated into warrants for one new ordinary share of 0.1 pence in nominal value on a 10 for 1 basis with effective date of 16 September 2020.

At this date there were 1,131,431,430 ordinary shares of 0.01p in issue which on 16 September 2020 consolidated into 113,143,143 new ordinary shares of 0.1p.

Offer to acquire Modern Water plc

On 28 August 2020 the Company announced it had reached agreement on the terms of an offer for the entire issued and to be issued share capital of Modern Water plc, for which the board of directors of the Company and Modern Water plc were recommending to their respective shareholders. Modern Water plc shareholders would be entitled to 1 ordinary Integumen plc share of 0.01p for each Modern Water plc ordinary share. (Following the share consolidation the offer will be 1 new ordinary share of 0.1 pence for every 10 Modern Water plc ordinary share.)

At the General Meeting on 15 September 2020 the shareholders of Integumen plc granted the directors authority to  issue shares in relation to the offer and it is expected that a formal Offer Document will be issued to Modern Water plc shareholders in due course.

Change of Name to DeepVerge plc

On 15 September 2020 at General Meeting its was resolved to change the Company's name to DeepVerge plc. The Company is currently in the process of registering the name at the Registrars of Companies.

9. Availability of announcement

A copy of this announcement is available from the Company's website, being www.deepverge.com.

 

END

 

 

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