TIDMDMTR

RNS Number : 5267M

DeepMatter Group PLC

22 September 2021

22 September 2021

DeepMatter Group Plc

Half Year Results

DeepMatter Group Plc (AIM: DMTR, "DeepMatter", the "Group"), the international digital chemistry data company, has published its unaudited results for the six months to 30 June 2021.

Highlights

-- Increasing commercial traction including multi-year licensing deal with Merck's life sciences business

-- Data growth and technology integrations with university partners in: discovery and development digital workflow; automated precision manufacturing; and machine learning for sustainable chemistry

   --    Cemented industry relationships with a number of key managerial appointments 
   --    Secured new customers with strong industry pedigree - active users up 48% 
   --    H1 revenue up to GBP0.65m (H1 2020: GBP0.53m) 
   --    R&D higher - reflecting continued investment in products 
   --    Administrative costs down 9% to GBP1.03m 
   --    H1 loss GBP1.4m (H1 2020: loss GBP1.2m). 

Mark Warne, DeepMatter CEO , commented:

"We have seen positive momentum in H1 and have enhanced our position in a growing market. We continued to resource our sales and R&D capabilities to strengthen our offering."

"Our focus is on unlocking the value in digital chemistry by building a fully integrated digital chemistry cloud platform of chemical reaction data for scientists."

"On the back of a strong renewals base and our new focus on growing revenues with those customers as well as growth in users and trials, we look forward with increasing confidence to delivering on our potential and the growth we envisage for 2021 and beyond."

For more information:

DeepMatter Group Plc

Mark Warne, Chief Executive Officer

0141 548 8156

Canaccord Genuity Limited (Nominated Advisor and Broker) 020 7523 8000

Bobbie Hilliam

Meare Consulting 07990 858548

Adrian Duffield

About DeepMatter Group Plc

DeepMatter is building a unique, fully integrated digital chemistry cloud platform of chemical reaction data for scientists, who are working on early-stage chemical discovery & development.

DeepMatter is integrating technology with chemistry to enable scientists, principally in the commercial sector, to easily perform and optimise chemistry. It is building, structuring and analysing chemical reaction databases and using this substantial data for real-time innovation and productivity gains in the chemical industry - particularly pharmaceutical companies engaged in pre-clinical drug discovery & development. This data is also now enabling Artificial Intelligence (AI) driven chemical automation.

Strategic overview

DeepMatter is now established as the leader in the digitalisation of chemistry and driving this market shift, building and commercialising a fully-integrated scalable platform that will be the future of chemical reaction data.

The Group's strategy is to create value for its customers from data it has collected. It will continue to grow by acquiring or gaining access to additional data as it develops its integrated cloud-based collection, analysis & control platform, DigitalGlassware(R).

DeepMatter aims to exploit the growing market opportunity and demand in the digitalisation of chemistry by developing data and cloud delivery platform with real-time Machine Learning and Artificial Intelligence (ML/AI) driven analytics.

DeepMatter has continued to see positive momentum in H1 with increased commercial traction, data growth and technology innovation, and enhancing industry relationships. The Group secured a number of new customers with strong industry pedigree.

The Group saw active users increase by 48%, has 40 customers globally and works with five of the 10 largest pharmaceutical companies.

The Group saw solid H1 sales. It continued to strengthen its sales pipeline and saw a continued growth in users and trials. The previously highlighted focus on the CRO market is yielding new customers.

The Group has also continued to invest in enhancing its products and kept costs, down 9%, under tight control.

Current trading and outlook

DeepMatter operates in markets growing with CAGR of 4.7% from 2021 to 2028, driven by technology (digitalisation), compliance and economic necessity.

The Group has an international footprint, blue-chip customer base and key commercial relationships, both in academic centres and corporate. It has the capabilities to exploit this industry change and the potential for a growing SaaS revenue stream.

The Group saw revenue growth in H1 and with a strengthening renewals base expects to strengthen further and progress the sales pipeline in H2. DeepMatter will continue resourcing its R&D delivery to strengthen the offering, as well as maintaining tight control on costs.

On the back of a strong renewals base and the new focus on growing revenues with those customers as well as growth in users and trials, the Board looks forward with increasing confidence to delivering on DeepMatter's potential and the growth envisaged.

Operational review

Markets

DeepMatter's customers are increasingly ready for, and embracing, digitisation in chemistry. Some 35% of industry leaders have migrated to AI/ML cloud systems which is resulting in material and time savings, an enhanced human-machine interface and 99% reduction in errors from reducing human contact with data processes

The Group's wholistic and unique approach to collecting, structuring, sharing and analysing time course-data (measuring the effects of chemical reactions over the course of time), provides faster actionable insights that result in scientific breakthroughs. This is a key enabler to AI driven chemical automation.

DeepMatter's customers' digitalisation programme dovetail with the Group's ESG capabilities. Digital chemistry provides access to safe and sustainable chemistry. It increases the focus on placing distance between the chemist and dangerous materials, with better productivity reduces energy usage and also increases the focus on building a sustainable chemistry database.

Key developments

Integration

The Group strengthened its sales and marketing team and operating structure. A dedicated Customer Services Team Lead was appointed and the consolidation of Software Development across Munich and Glasgow was completed. The research function was brought under leadership of chemical technologies expert Dr David Parry.

User interface

A new user interface based on usage of global pharma clients was introduced along with data quality enhancements, updated content and new transform libraries for DeepMatter's retrosynthesis software, ICSYNTH.

Commercial traction

DeepMatter signed a data licensing agreement with the Life Science business of Merck to provide proprietary chemical structure and reaction data content to Merck's selected application.

The Group also signed a co-distribution agreement with Elemental Machines, the US based organisation helping biotechnology and pharmaceutical companies identify research problems through its sensor-based products. This agreement will see Elemental Machines promote DeepMatter's integrated software, hardware and artificial intelligence enabled platform, DigitalGlassware(R), to its wide network of small and mid-size biotech North American customers through its sales team

This agreement provides the Group with the opportunity to broaden its customer base and help establish sales opportunities across North America with organisations in the pharmaceutical and biotechnology sectors.

Data growth and technology integrations

Further collaboration with the University of Nottingham's School of Chemistry, provided access to the DigitalGlassware(R) platform to support the University's sustainable chemistry initiatives.

This collaboration with Nottingham will focus on the development of ML models of sustainable chemistry for researchers in the pharmaceutical sector and related chemical-based industries.

The Group was selected as a partner for the University of Leeds following a GBP1.4m EPSRC investment it received to develop automated precision manufacturing approaches in collaboration with the University of Sheffield, AstraZeneca, Somaserve and Samsung.

DeepMatter commenced a project with the University of Cambridge's Innovation Centre in Digital Molecular Technologies (iDMT), an open innovation research centre co-funded by the University of Cambridge, AstraZeneca, Shionogi and the European Regional Development Fund.

Industry relationships

Bryn Roberts was appointed as Non-Executive Director. Bryn brings a wealth of experience in the pharmaceutical sector having spent 15 years at Roche, the Swiss multinational healthcare company. He is Senior Vice President and Head of Data Services at Roche Information Solutions and until recently was Global Head of Operations, Pharmaceutical Research & Early Development.

As a key opinion leader, Bryn will contribute a network of contacts, as well deep industry expertise providing a real-time sector perspective on the needs of the Group's pharmaceutical customers.

Mark Warne, CEO has been invited to chair the Industrial Advisory Board (IAB) at Imperial College's EPSRC Centre for Doctoral Training in Next Generation Synthesis & Reaction Technology (CDT), for the next two years.

Mark's principal role will be to liaise closely with the CDT's network of industrial partners, including AstraZeneca, Bayer, BASF, GlaxoSmithKline, IBM, The Janssen Pharmaceutical Companies of Johnson & Johnson, Mettler-Toledo, Syngenta, and Pfizer.

Financial review

Revenue for the first half of 2021 was GBP0.65m (H1 2020: GBP0.54m). This includes revenue from licensing, SaaS recurring revenues and related service business.

R&D spend increased to GBP0.86m (H1 2020: GBP0.32m, cash spend was GBP0.71m). The Group continued to invest in enhancing products and made progress along development roadmaps, focusing on the commercial appeal of products. The capitalisation of development was lower year-on-year reflecting the stage and nature of development work undertaken in H1 2021 and the milestones expected to be achieved before capitalising DigitalGlassware(R).

Overhead costs were reduced to GBP1.03m (H1 2020: GBP1.14m) due to a continued focus on cost control, reduced travel and savings from staff turnover.

The Group incurred an operating loss GBP1.38m (H1 2020: loss GBP1.17m), driven by the investment in R&D spend.

The Group held cash balances at 30 June 2021 of GBP1.84 million (30 June 2020: GBP2.01m).

DEEPMATTER GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS TO 30 JUNE 2021

 
                                         6 months ended 30 June   6 months ended 30 June 
                                                           2021                     2020   Year ended 31 December 2020 
                                                    (Unaudited)              (Unaudited)                     (Audited) 
                                                        GBP'000                  GBP'000                       GBP'000 
--------------------------------------  -----------------------  -----------------------  ---------------------------- 
 Continuing operations 
 
 
 Revenue                                                    649                      536                         1,319 
 Cost of Sales                                            (176)                    (230)                         (433) 
--------------------------------------  -----------------------  -----------------------  ---------------------------- 
 
 Gross Profit                                               473                      306                           886 
 
 Research and development costs                           (856)                    (319)                      (1,596 ) 
 Share based payments                                      (45)                     (58)                         (167) 
 Administrative costs                                   (1,032)                  (1,139)                       (1,980) 
 Other income                                                 -                       -                            187 
--------------------------------------  -----------------------  -----------------------  ---------------------------- 
 Operating loss                                         (1,460)                  (1,210)                       (2,670) 
 Finance income - net                                         2                        3                            13 
 Loss before tax                                        (1,458)                  (1,207)                       (2,657) 
 Income tax credit                                           79                       36                           244 
--------------------------------------  -----------------------  -----------------------  ---------------------------- 
 Loss for the period                                    (1,379)                  (1,171)                       (2,413) 
--------------------------------------  -----------------------  -----------------------  ---------------------------- 
 
 Other comprehensive income 
 
 Amounts which may be reclassified to profit or loss 
 Currency translation differences (5) 88 53 
---------------------------------------------------------------------------------------------------------------------- 
 Other comprehensive income for the year (5) 88 53 
---------------------------------------------------------------------------------------------------------------------- 
 
 Total comprehensive loss for the year attributable to equity (1,384) (1,083) (2,360) 
  holders of the company 
---------------------------------------------------------------------------------------------------------------------- 
 
 Loss per share attributable to the 
 equity holders of the Company: 
 Basic and diluted loss per share 
  (pence) on total operations                         (0.15)                      (0.16)                        (0.30) 
--------------------------------------  -----------------------  -----------------------  ---------------------------- 
 
 

DEEPMATTER GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHSED 30 JUNE 2021

 
 
                                                                                     Foreign 
                                                                 Shares to be       currency 
                                                        Merger         issued    translation       Retained 
                  Share equity   Share premium         reserve        reserve        reserve       earnings      Total 
                       GBP'000         GBP'000         GBP'000        GBP'000        GBP'000        GBP'000    GBP'000 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Balance at 30 
  June 2019                 74           7,136           5,971          1,274             34        (4,132)     10,357 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Loss for the 
  six months to 
  31 December 
  2019                       -               -               -              -              -        (1,359)    (1,359) 
 Currency 
  Translation 
  differences                -               -               -              -           (27)              -       (27) 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Total 
  comprehensive 
  loss for the 
  six months to 
  31 December 
  2019                       -               -               -              -           (27)        (1,359)    (1,386) 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Transactions 
 with owners; 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Share based 
  payment 
  charge                     -               -               -              -              -            110        110 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Balance at 31 
  December 2019             74           7,136           5,971          1,274              7        (5,381)      9,081 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Loss for the 
  six months to 
  30 June 2020               -               -               -              -              -        (1,171)    (1,171) 
 Currency 
  Translation 
  differences                -               -               -              -             88              -         88 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Total 
  comprehensive 
  loss for the 
  six months to 
  30 June 2020               -               -               -              -             88        (1,171)    (1,083) 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Transactions 
 with owners; 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Share based 
  payment 
  charge                     -               -               -              -              -             58         58 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Balance at 30 
  June 2020                 74           7,136           5,971          1,274             95        (6,494)      8,056 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Loss for the 
  six months to 
  31 December 
  2020                       -               -               -              -              -        (1,242)    (1,242) 
 Currency 
  Translation 
  differences                -               -               -              -           (35)              -       (35) 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Total 
  comprehensive 
  loss for the 
  six months to 
  31 December 
  2020                       -               -               -              -           (35)        (1,242)    (1,277) 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Issue of 
  shares for 
  cash                      14           1,998               -              -              -              -      2,012 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Deferred 
  consideration 
  shares issued              4           1,066               -        (1,070)              -              -          - 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Share based 
  payment 
  charge                     -               -               -              -              -            109        109 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Balance at 31 
  December 2020             92          10,200           5,971            204             60        (7,627)      8,900 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Loss for the 
  six months to 
  30 June 2021               -               -               -              -              -        (1,379)    (1,379) 
 Currency 
  Translation 
  differences                -               -               -              -            (5)              -        (5) 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Total 
  comprehensive 
  loss for the 
  six months to 
  30 June 2020               -               -               -              -            (5)        (1,379)    (1,384) 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Transactions 
 with owners; 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Share based 
  payment 
  charge                     -               -               -              -              -             45         45 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 Balance at 30 
  June 2021                 92          10,200           5,971            204             55        (8,961)      7,561 
---------------  -------------  --------------  --------------  -------------  -------------  -------------  --------- 
 

DEEPMATTER GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2021

 
                                                               As at 30 June         As at 30 June   As at 31 December 
                                                                        2021                  2020                2020 
                                                                 (Unaudited)           (Unaudited)           (Audited) 
                                                                     GBP'000               GBP'000             GBP'000 
 Assets 
 Non-current assets 
 Intangible assets and goodwill                                        6,310                 6,983               6,517 
 Investments                                                               3                     3                   3 
 Property, plant and equipment                                            23                    36                  25 
 Right-of-use assets                                                      18                   106                  61 
 Total Non-current Assets                                              6,354                 7,128               6,606 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 Current assets 
 Trade and other receivables                                             144                   187                 454 
  Income tax asset                                                        45                   107                 214 
 Cash and cash equivalents                                             1,835                 2,009               2,606 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
  Total Current Assets                                                 2,024                 2,303               3,274 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 Liabilities 
 Current liabilities 
 Trade and other payables                                              (496)                 (827)               (598) 
 Lease liabilities                                                      (21)                  (84)                (64) 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 Total Current Liabilities                                             (517)                 (911)               (662) 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 
 Net current assets                                                    1,507                 1,392               2,612 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 Non-current liabilities 
 Lease liabilities                                                         -                  (24)                   - 
 Deferred tax                                                          (300)                 (440)               (318) 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 Total non-current liabilities                                         (300)                 (464)               (318) 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 Total net assets                                                      7,561                 8,056               8,900 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 Shareholders' equity 
 Called up share capital                                                  92                    74                  92 
 Share premium                                                        10,200                 7,136              10,200 
 Merger reserve                                                        5,971                 5,971               5,971 
 Shares to be issued reserve                                             204                 1,274                 204 
 Foreign Currency Translation reserve                                     55                    95                  60 
 Retained (deficit) / earnings                                       (8,961)               (6,494)             (7,627) 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 Total equity attributable to shareholders of the Company              7,561                 8,056               8,900 
----------------------------------------------------------  ----------------  --------------------  ------------------ 
 

DEEPMATTER GROUP PLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHSED 30 JUNE 2021

 
 
 
                                                6 months      6 months           Year 
                                                ended 30         ended          ended 
                                                    June       30 June    31 December 
                                                    2021          2020           2020 
                                             (Unaudited)   (Unaudited)      (Audited) 
                                                 GBP'000       GBP'000        GBP'000 
------------------------------------------  ------------  ------------  ------------- 
 Cash flows from operating activities 
 Operating loss from continuing 
  operations                                     (1,460)       (1,210)        (2,670) 
 Profit/loss from discontinued operations              -             - 
 Adjustments for: 
 Depreciation and amortisation charges               324           306            580 
 Share based payments charge                          45            58            167 
 Net exchange differences                              -            13              - 
------------------------------------------  ------------  ------------  ------------- 
 Operating cash outflows before 
  movement in working capital                    (1,091)         (833)        (1,923) 
 Decrease in inventories                               -             - 
 Decrease/(increase) in trade and 
  other receivables                                  310           239           (22) 
 Increase /(decrease) in trade and 
  other payables                                   (102)           289            134 
------------------------------------------  ------------  ------------  ------------- 
 Cash used in operations                           (883)         (305)        (1,811) 
 Interest received                                     2             5             17 
 Taxation received                                     -             -              - 
------------------------------------------  ------------  ------------  ------------- 
 Net cash used in operating activities             (881)         (300)        (1,794) 
------------------------------------------  ------------  ------------  ------------- 
 Cash flows from investing activities 
 Purchase of property, plant and 
  equipment                                         (17)          (19)            (6) 
 Capitalisation of development costs                   -         (386)          (277) 
 Cash and bank in subsidiary at 
  acquisition net of cash payment                      -             -              - 
------------------------------------------  ------------  ------------  ------------- 
 Net cash used in investing activities              (17)         (405)          (283) 
 Cashflows from financing activities 
  Proceeds from issue of share capital                 -             -          2,151 
 Transaction costs arising from 
  the issue of share capital                           -             -          (138) 
 Payment of lease liabilities                       (74)          (83)          (129) 
 Taxation received                                   214           172            172 
------------------------------------------  ------------  ------------  ------------- 
 Cash generated from financing activities            140            89          2,056 
------------------------------------------  ------------  ------------  ------------- 
 Net increase/(decrease) in cash 
  and cash equivalents                             (758)         (616)           (21) 
 Cash and cash equivalents at beginning 
  of period                                        2,606         2,607          2,607 
 Effects of exchange rate changes 
  on cash and cash equivalents                      (13)            18             20 
------------------------------------------  ------------  ------------  ------------- 
 Cash and cash equivalents at end 
  of period                                        1,835         2,009          2,606 
------------------------------------------  ------------  ------------  ------------- 
 

DEEPMATTER GROUP PLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHSED 30 JUNE 2021

1) BASIS OF PREPARATION

The condensed interim financial statements of DeepMatter Group Plc are unaudited condensed consolidated financial statements for the six months ended 30 June 2021. These include unaudited comparatives for the six months ended 30 June 2020 together with audited comparatives for the year ended 31 December 2020.

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 'Interim Financial Reporting' and should be read in conjunction with the Group's annual financial statements as at 31 December 2020. Accordingly, whilst the interim statements have been prepared in accordance with IFRS, they cannot be construed as being in full compliance with IFRS.

The financial information for the year ended 31 December 2020 does not constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006. A copy of the audited financial statements for that year has been delivered to the Registrar of Companies. The Auditors' opinion on those financial statements was unqualified, did not draw attention to any matters by way of an emphasis of matter paragraph, and it contained no statement under section 498(2) or section 498(3) of the Companies Act 2006.

The accounting policies adopted are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2020. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

Going concern

Information on the business environment, financial position and the factors underpinning the Group's future prospects and portfolio are included in the Strategic Overview, Current Trading and Outlook and Operational Review.

The cash balance at the 30 June 2020 was GBP1.8m. Based on scenarios modelled, the Directors have a reasonable expectation that the Group has adequate resources to be a going concern in addition to which, the Directors may choose to fundraise or engage in other strategic arrangements.

The Directors consider that it is appropriate to adopt the going concern basis in preparing the consolidated financial statements. Accordingly, the financial statements do not include any adjustments which would be required if the going concern basis of preparation was deemed to be inappropriate. However, if the Group is unable to deliver upon its proposed revenue projections, or alternatively proposed cost reductions, there is limited headroom in the current forecasts and as such there is considered a material uncertainty which may cast doubt about the Group's ability to continue as a going concern.

2) SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted are consistent with those followed in the preparation of the consolidated annual financial statements of DeepMatter Group Plc for the year ended 31 December 2020.

3 ) SEGMENTAL REPORTING

Operating Segments

The Chief Operating Decision Maker has been identified as the Chief Executive Officer ("CEO") of the company. The Group has two operating segments and the CEO reviews the Group's internal reporting which recognises these two segments in order to assess performance and allocate resources. The Group has determined its reportable segments which are also its operating segments based on these reports.

The Group currently has two operating and reportable segments being DeepMatter and InfoChem;

-- DeepMatter - this segment owns, develops and is in the early stage of commercially exploiting intellectual property, software, hardware and data analysis capabilities (including machine learning) combined as a visionary, disruptive platform called DigitalGlassware(TM), enabling step changes in productivity and discovery for scientists in the pharma and life science sectors.

-- InfoChem - this segment develops and commercialises cheminformatics software to handle, store and retrieve chemical structures and reactions for application in pharma, life sciences and scientific publications. The segment has industry established market leading tools for the production of synthesis planning and reaction prediction solutions and the automatic extraction of scientific information from text and images.

Information regarding the operation of the reportable segments is included below. The CEO assesses the performance of the operating segments based on revenue and a measure of earnings before interest, tax, depreciation and amortisation (EBITDA) before any allocation of Group overheads, charges for share-based payment and costs associated with acquisitions. This segment EBITDA is used to measure performance as the CEO believes such information is most relevant in evaluating the results of the segment.

The Group's EBITDA for the year has been calculated after deducting the Group overheads from the EBITDA of the two segments as reported internally. Group overheads include the cost of the Board, listing costs, all the costs of running the premises in Glasgow and Munich, Group marketing, finance, and legal and professional fees.

The segment information is prepared using accounting policies consistent with those of the Group as a whole.

The non-current assets are reviewed by the CEO in reviewing the carrying value of goodwill and intangibles for indicators of impairment. Segment non-current assets are measured in the same way as in the financial statements and the assets are allocated based on the operations of the segment and the physical location of the asset.

The current assets and non-current and current liabilities of the Group are not reviewed by the CEO on a segment basis and therefore none of the Group's current assets and current and non-current liabilities are segmental assets and liabilities and are all unlocated for segmental disclosure purposes. For that reason, the Group has not disclosed details of these segmental assets and liabilities.

In the six-month period ended 30 June 2021, the Group had 2 customers that exceeded 10% of total revenue, being 19% and 13% (2020: 3 customers being 21%, 14% and 11%).

All segments are continuing operations.

Revenue from contracts with customers by geographic location

 
                               6 months ended 30                  6 months ended                                                        Year ended 31 December 
                                   June 2021                       30 June 2020                                                                   2020 
                                  (Unaudited)                                      (Unaudited)                                                (Audited) 
                  External            Internal           Total      External           Internal           Total        External               Internal                 Total 
                  GBP'000             GBP'000           GBP'000     GBP'000             GBP'000          GBP'000        GBP'000                GBP'000                GBP'000 
-------------  -------------  -----------------------  --------  -------------  ----------------------  --------  ------------------  ------------------------  ------------------ 
 Germany                 417                        -       417            297                       -       297                 692                         -                 692 
 Switzerland              36                        -        36             75                       -        75                 171                         -                 171 
 United 
  Kingdom                 97                        -        97            125                       -       125                 162                         -                 162 
 North 
  America                 55                        -        55             26                       -        26                 174                         -                 174 
 Rest of the 
  world                   43                        -        43             13                       -        13                 120                         -                 120 
-------------  -------------  -----------------------  --------  -------------  ----------------------  --------  ------------------  ------------------------  ------------------ 
 Revenue for 
  the period             649                        -       649            536                       -       536               1,319                         -               1,319 
-------------  -------------  -----------------------  --------  -------------  ----------------------  --------  ------------------  ------------------------  ------------------ 
 
 

The revenues reported above are both by destination and origin.

Revenue from contracts with customers by Operating Segment

 
                        6 months ended            6 months ended                         Year ended 31 December 
                         30 June 2021              30 June 2020                                    2020 
                         (Unaudited)                         (Unaudited)                        (Audited) 
               External      Internal     Total   External        Internal     Total      External        Internal     Total 
                GBP'000       GBP'000   GBP'000    GBP'000         GBP'000   GBP'000       GBP'000         GBP'000   GBP'000 
------------  ---------  ------------  --------  ---------  --------------  --------  ------------  --------------  -------- 
 DeepMatter           -             -         -         60               -        60            83               -        83 
 InfoChem           649             -       649        476               -       476         1,236               -     1,236 
------------  ---------  ------------  --------  ---------  --------------  --------  ------------  --------------  -------- 
 Revenue for 
  the 
  period            649             -       649        536               -       536         1,319               -     1,319 
------------  ---------  ------------  --------  ---------  --------------  --------  ------------  --------------  -------- 
 
 

Loss by Operating Segment

 
                             6 months ended 30                                         6 months ended 30                           Year ended 31 
                                  June 2021                                                June 2020                                December 2020 
                                (Unaudited)                                               (Unaudited)                                (Audited) 
              -----------------------------------------------  ----------------------------------------------------------------  ----------------- 
                                                                                                                         EBITDA 
                        EBITDA      Depreciation,                          EBITDA      Depreciation,                     before      Depreciation, 
                        before      amortisation,                          before      amortisation,                      share      amortisation, 
                         share        acquisition                           share        acquisition                      based        acquisition 
                         based              costs                           based              costs                   payments              costs 
                      payments            & share   Operating            payments            & share   Operating            and            & share     Operating 
               and acquisition              based     Profit/     and acquisition              based     Profit/    acquisition              based       Profit/ 
                         costs           payments      (loss)               costs           payments      (loss)          costs           payments        (loss) 
                       GBP'000            GBP'000     GBP'000             GBP'000            GBP'000     GBP'000        GBP'000            GBP'000       GBP'000 
------------  ----------------  -----------------  ----------  ------------------  -----------------  ----------  -------------  -----------------  ------------ 
 DeepMatter              (446)               (49)       (495)               (288)               (37)       (325)          (993)              (101)       (1,094) 
 InfoChem                (112)              (194)       (306)                 151              (236)        (85)            213              (511)         (298) 
 Group 
  overheads              (614)                  -       (614)               (742)                  -       (742)        (1,299)                  -       (1,299) 
 Other 
  income                     -                  -           -                   -                  -           -              -                  -           187 
 Share based 
  payments                   -               (45)        (45)                   -               (58)        (58)              -              (167)         (167) 
------------  ----------------  -----------------  ----------  ------------------  -----------------  ----------  -------------  -----------------  ------------ 
 Loss before 
  tax and 
  interest             (1,172)              (288)     (1,460)               (879)              (331)     (1,210)        (2,079)              (779)       (2,670) 
------------  ----------------  -----------------  ----------  ------------------  -----------------  ----------  -------------  -----------------  ------------ 
 Group 
  interest 
  and tax                                                  81                                                 39                                             257 
------------  ----------------  -----------------  ----------  ------------------  -----------------  ----------  -------------  -----------------  ------------ 
 Loss for 
  the 
  period                                              (1,379)                                            (1,171)                                         (2,413) 
------------  ----------------  -----------------  ----------  ------------------  -----------------  ----------  -------------  -----------------  ------------ 
 
 

Group overheads, share based payments, acquisition costs, interest and tax are not allocated to segments.

Non-current assets by segment

 
                                                         6 month               6 month 
                                                          period                period 
                                                           ended                 ended    Year ended 
                                                         30 June               30 June   31 December 
                                                            2021                  2020          2020 
                                                         GBP'000               GBP'000       GBP'000 
----------------------------------------    --------------------  --------------------  ------------ 
 DeepMatter 
    UK                                                     5,509                 5,092         5,585 
    Germany                                                    -                     -             - 
 InfoChem 
    UK                                                         -                     -             - 
    Germany                                                  842                 2,033         1,018 
------------------------------------------  --------------------  --------------------  ------------ 
 Total non-current segment 
  assets                                                   6,351                 7,125         6,603 
 Unallocated: 
 Financial assets at fair value through 
  other comprehensive income                                   3                     3             3 
------------------------------------------ 
 Total non-current assets as per 
  the statement of financial position                      6,354                 7,128         6,606 
------------------------------------------  --------------------  --------------------  ------------ 
 

4) LOSS PER SHARE (BASIC AND DILUTED)

Basic earnings or loss per share is calculated by dividing the gain or loss attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period.

For diluted earnings or loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.

 
 
                                   6 months ended 30 June       6 months ended 30 June 
                                                     2021                         2020   Year ended 31 December 2020 
                                              (Unaudited)                  (Unaudited)                     (Audited) 
----------------------------  ---------------------------  ---------------------------  ---------------------------- 
 Total operations 
 Loss attributable to equity 
  holders of the Group 
  (GBP'000)                                       (1,379)                      (1,171)                       (2,413) 
 Weighted average number of 
  dilutive shares in issue                        922,937                      736,534                       814,397 
----------------------------  ---------------------------  ---------------------------  ---------------------------- 
 Basic and diluted loss per 
  share (pence)                                    (0.15)                       (0.16)                        (0.30) 
----------------------------  ---------------------------  ---------------------------  ---------------------------- 
 

Basic loss per share is based on the total loss after tax for the period and the weighted average number of ordinary shares of GBP0.0001 each in issue during the period. Diluted loss per share is calculated by adjusting the average number of ordinary shares in issue during the period to assume conversion of all dilutive potential ordinary shares. The Company had a total of 30,703,707 potentially issuable dilutive ordinary shares in existence at the 30 June 2021 period end; (31 December 2020: 31,814,821; 30 June 2020: 74,026,944), comprised of 8,703,707 share options, 22,000,000 deferred consideration shares issued in relation to the acquisition of OpenIOLabs Limited. The 30,703,707 potentially issuable dilutive shares have not been included in the calculations due to their potential issuance having an effect to reduce loss per share attributable to equity holders.

5) RELATED PARTY TRANSACTIONS

The Group has taken advantage of the exemptions contained within IAS 24 - 'Related Party Disclosures' from the requirement to disclose transactions between Group companies as these have been eliminated on consolidation.

Bettina Goerner served on the Board of the Company as a Non-Executive Director until 9 March 2021. She was at that time a Managing Director of Springer Nature and no amounts were paid to Springer Nature for her services.

Mirko Walter served on the Board of the Company as a Non-Executive Director from 9 March 2021. He is Vice President, Sales at Springer Nature and no amounts were paid to Springer Nature for his services.

In addition, during the period the Company paid remuneration to the Directors' in accordance with their service contracts and letters of appointment.

6) EVENTS SUBSEQUENT TO PERIOD ENDED 30 JUNE 2021

The directors were not aware of any events after the reporting period.

7) HALF YEAR FINANCIAL REPORT

A copy of this half year report, as well as the prior year annual statutory accounts, is available on the

Company's website at   www.deepmatter. io 

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END

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September 22, 2021 02:00 ET (06:00 GMT)

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