£10m funding in place to maintain significant pace of growth across the Group
Consolidated group revenue increased by 445%
DeepVerge (AIM: DVRG), the environmental and life science group of companies that develops and applies AI and IoT technology for the analysis and identification of bacteria, virus and toxins , is pleased to announce it audited financial results for the year ended 31 December 2020. Extracts from the Company’s Annual Report are included at the end of this announcement and the full Annual Report is available on the Company’s website at www.deepverge.com/investors/
2020 has been another rapid growth year for DeepVerge. The Group performed better than expected with our first EBITDA profitable quarter in Q4, 2020, before costs of Modern Water acquisition. Revenues for the year exceeded the Company guided number by 10%, derived from higher revenues per client and expansion into new areas requiring an increase of both employees and laboratory capacity. 2020 has set the standard for 2021.
Gerry Brandon, CEO of DeepVerge plc, commented:
“Having grown from five full time employees in August 2018 to 57 today, and an additional 60 to join over the next few months, the Company continues to expand at a record rate with our first profitable EBITDA quarter in Q4, 2020. Despite a substantial increase in investment for new products, services and higher administration costs associated with the acquisition of Modern Water plc in November 2020, comparable like-for-like annual EBITDA losses fell by 37% to just £0.668m (2019: £1.03m)* ”
Highlights:
· Total 2020 revenue £6.650m including pre-acquisition Modern Water revenue, up 553% (2019: £1.017m)
o Consolidated group revenue increased by 445% to £4.483m (2019 restated: £0.823m)
o H2, 2020 revenue growth of 247% over H1 revenue
· Strong sales in Q4 2020 delivered the Company’s first EBITDA profitable quarter (excluding exceptional costs associated with the acquisition of Modern Water)
· Group staff number increased by 27 ( 268%) to 43 employees (2019: 16) and Share Option program implemented
· *EBITDA losses fell by 37% to £0.668m (2019: £1.053m), excluding exceptional items and share option scheme of £191,000 (2019: £2,000)
· EBITDA losses fell by 19% to £0.859m (2019: £1.055m), excluding exceptional items
· Administration costs increased to £4.561m (2019: £2.973m) with Modern Water acquisition and Labskin expansion
· Operating loss of £2.718m ( 2019: £ 2.371 m) after providing for:
o Depreciation of £ 0.172m ( 2019: £0.101m)
o Amortisation of £0.941m ( 2019: £0.442m)
o Impairment of intangible assets £nil (2019 : £0.241m)
o Impairment of investments £0.354m (2019: £nil)
o Exceptional costs of £0.391m (2019: £0.532m) one-off transaction costs relating to acquisition activities
· £13.3m all-share Acquisition of Modern Water
Post-year-end highlights
· £10m Placing and Subscription to fund scale, meet increased demand and expand revenues across the Group
o At 30 pence per 0.1p ordinary share
o 100% increase in share price since previous December 2019 placing at 15 pence equivalent per 0.1p ordinary share (1.5p per 0.01p ordinary share before 10:1 consolidation)
· FY 2021 revenue guidance remains at £10m with £3.6m already received in Modern Water Q1 orders
· Group staff numbers expand to meet demand with 57 at 29 June 2021 compared to 43 at year end
· The Labskin Division sealed reputation as a leading diagnostics partner with global partners and new service offerings
o 18 of the top 20 global pharma companies
o Virtual clinical trials with remote collection of human volunteer’s skin microbiome
o New solution for the collection of volunteer microbiomes to allow for lab controlled clinical trials of advanced skin models (pigmented, acne, atopic dermatitis, psoriasis) and human microbiomes
o As the data bank of remote volunteers grow, higher accuracy and increased reliability of virtual product testing will eliminate early human trial and error testing leading to faster time to market
· Building of a data repository to allow Artificial Intelligence (“AI”) modelling of skin conditions and ingredient effects
o Launch of Skin Trust Club AI Skincare App and Home Test Kit with xx members
§ Self-administered skin swab from home-test-kit allows the clinical trial or Skin Trust Club participant to conduct a simple test without interaction
· Environmental Health division also continues to grow apace with new equipment, solutions, labs and services creating a strong $5.0m (£3.6m) sales pipe for Microtox and MicroTrace in Q1 alone
o New equipment rolling off production lines on three continents to meet demand across the Microtox and MicroTrace range with new range of real-time surveillance services in Water Quality Monitoring
o New solutions to detect contaminants of concern and forever chemicals through Microsaic Systems, mass spectroscopy-based identification systems and with the Aptamer Group
o Two New Containment Level 3 (Virus) level labs at our York UK facility
o New services to detect dangerous pathogens, including contagious infections as well as community detection of opioids
· Successful completion of Phase 3 field trials in which Microtox PD achieved real-time detection and transmission of data, specific to SARS-CoV-2 in wastewater treatment plants at multiple sites
o Public Health England access to the SARS-CoV-2 virus at Category 3 lab with University of Aberdeen, Genoa, Italy and Liverpool University
§ Identified the virus S-Protein in quantities at 40 femtogram per millilitre (“Fg/mL”)
§ Close to 100% sensitivity and specificity on DeepVerge’s Microtox BT nano-optofluidic chip
o Master service agreement with EPS Group to install, calibrate, service and maintain Microtox PD units which, subject to negotiation with undisclosed parties, have the potential to be installed in multiple European countries
· 40 subject breath test clinical trial concluded at Royal College of Surgeons, Ireland
o 16 independently confirmed as COVID-19 positive with PCR tests
o Breath samples were tested on the Microtox® BT nano-optofluidic chip surface with Affimer® reagents (“Avacta Group”) and Optimers (“Aptamer Group”)
o Detection of the live virus confirmed indicating 9 times increase in digital spectrum signal on the Microtox® BT compared to control
o Microtox® BT delivered results in under 60 seconds from breath samples
o Subject to successful completion of additional human trials, the Microtox BT would be expected to meet the criteria for UK, MHRA’s Target Product Profile Rapid Breath Test with potential roll out of COVID-19 and other pathogen breath tests later this year
· Memorandum of Understanding for a Joint Venture with China Resources Environmental Protection Development Limited to cover the manufacture, assembly and sale of environmental monitoring equipment
· Establishment of a new AI centre of excellence in Cork, Ireland to play key role in real-time detection of SARS-CoV-2 in Ireland and across Europe.
Outlook
SARS-CoV-2 and COVID-19 Testing has been underway between DeepVerge and Modern Water since our joint collaboration and development announcement in June 2020. We have now successfully detected SARS-CoV-2 in wastewater treatment plants with equipment installed and data continuing to transmit alerts on the identification of the virus, in real-time. These are exciting developments, and the Company will update the market on an extended roll out across multiple jurisdictions, expected in H2 this year.
The Board provided guidance for 2021 revenue of £10m in January 2021 and remains well on track and expects the business will continue to grow across all divisions in the Group.
Contacts:
DeepVerge plc
Gerard Brandon, CEO
+44 (0) 7340 055 648
Chairman’s Statement
For the year ended 31 December 2020
Dear Fellow Shareholder,
In my second year as Chairman, I have pleasure presenting the Company’s report and results for the year ended 31 December 2020.
Our Business
DeepVerge Plc (“DeepVerge”, “Group” or “the Company”) was incorporated and registered in England and Wales on 28 May 2016 and was admitted to trading on the AIM market of London Stock Exchange plc on 5 April 2017. Following on from the strategic acquisition of artificial intelligence software company, Rinocloud Limited, in 2019, DeepVerge has applied artificial intelligence to life science and environmental test services for bacteria, viruses and toxins across the Group generating revenue growth, culminating in the first quarterly positive EBITDA in Q4, 2020 (excluding exceptional costs associated with the acquisition of Modern Water plc) .
Labskin has its cloud-based eco-system that validates skincare products and ingredients, remotely for clients, and has delivered strength to the core business growth in 2020, building on the already growing list of multi-year, framework agreements with many global Top 20 skincare and healthcare companies. In just over two years, the Labskin division’s laboratory space has increased from 924 sq. ft in 2018 to 9,378 sq. ft in 2020.
The Company recently launched the Skin Trust Club Artificial Intelligence Skincare App and Home Test Kit that provide simple, at-home skin microbiome testing for personalised skincare and skin health tracking. These were in development throughout 2020. The self-administered skin swab is a remote trial and allows the consumer to conduct each stage of the trial without interaction. Skin Trust Club’s DNA Test generates a report that consumers can use to manage their custom skincare regime. Analysis of skin attributes provides information to create hundreds of different product combinations to suit a person’s unique skin microbiome.
The Company’s acquisition of Modern Water plc (“Modern Water”) completed in November 2020 and expanded DeepVerge’s offering to include environmental data management, monitoring and analysis of water contamination using AI. The Group has over 3,000 units installed in over 60 countries serving clients in water utilities, public health authorities and industrial manufacturers. The Group is introducing new equipment to meet demand across its Microtox and MicroTrace ranges with a new range of real-time surveillance services in water quality monitoring.
Results
Yet again, this year has been transformational for DeepVerge, attributable to enhancing an already successful business model, better than expected with our first EBITDA profitable quarter in Q4, 2020, before costs of Modern Water acquisition. Revenues for the year exceeded the Company guided number by 10% and growth in sales is reflected in higher revenues per client, increased demand requiring additional employees across all subsidiaries during lockdown, no COVID-19 furlough and expansion of laboratory space throughout 2020 and into 2021.
Highlights:
· Total 2020 revenue £6.650m including pre-acquisition Modern Water revenue, increase of 553% from 2019 £1.017m revenue;
· Consolidated group revenue £4.483m (2019: £0.823m);
· EBITDA losses before exceptional items reduced by 19% to £0.859m (2019: £1.055m);
· H2, 2020 revenue growth of 3.47 times H1 revenue;
· Strong sales in Q4 2020 delivered the Company’s first EBITDA profitable quarter (excluding exceptional costs associated with the acquisition of Modern Water);
· Administration costs increased to £4.561m (2019: £2.973m) with Modern Water acquisition and Labskin expansion;
· Operating loss of £2.718m ( 2019: £ 2.371 m) after providing for:
o Depreciation of £ 0.172m ( 2019: £0.101m);
o Amortisation of £0.941m ( 2019: £0.442m);
o Impairment of intangible assets £nil (2019: £0.241m);
o Impairment of investments £0.354m (2019: £nil);
· Exceptional costs of £0.391m (2019: £0.532m) were one-off transaction costs relating to acquisition activities; £13.315m all-share Acquisition of Modern Water.
Post Year-End Highlights
· £10m Placing and Subscription to fund scale, meet increased demand and expand revenues across the Group
o At 30 pence per 0.1p ordinary share;
o 100% increase in share issue price since previous December 2019 placing at 15 pence equivalent per 0.1p ordinary share (1.5p per 0.01p ordinary share before 10:1 consolidation).
Further information on our products, technologies and advances Post-Year-End can be found in the Chief Executive’s Report.
Corporate governance
I believe that good corporate governance is important to support our future growth and the Board, which has extensive experience in publicly listed companies and running companies in the personal healthcare sector, is committed to the highest standards.
Outlook
COVID-19 presented challenges for the global economy but multiple opportunities for the Group. The move from selling equipment to providing services and consumables gave the Group scope to expand substantially into 2021 with our real-time water contamination detection and environment sector solutions, contributing to increased demand with additional staff recruited over the lock-down period and announcement of up to a further 60 staff required in the next few months. The outcome has resulted in an increase of new and core business from Labskin, Modern Water and the new Skin Trust Club consumer division.
SARS-CoV-2 and COVID-19 Testing has been underway between DeepVerge and Modern Water since our joint collaboration and development announcement in June 2020. The most recent RNS has confirmed the successful SARS-CoV-2 detection in wastewater treatment plants with equipment installed and data continuing to transmit alerts on the identification of the virus, in real-time. These are exciting developments, and the Company will update the market on an extended roll out across multiple jurisdictions, expected in H2 this year.
The Board provided guidance for 2021 revenue of £10m in January 2021 and remains and remains well on track and expects the business will continue to grow across all divisions in the Group.
Ross Andrews
Chairman
30 June 2021
Full update https://www.investegate.co.uk/deepverge-plc–dvrg-/rns/final-results/202106301728567313D/
