TIDMDVRG
RNS Number : 7313D
Deepverge PLC
30 June 2021
30 June 2021
DeepVerge plc
("DeepVerge" or the "Company")
Final Results for the year ended 31 December 2020
GBP10m 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 GBP0.668m (2019: GBP1.03m)* "
Highlights:
-- Total 2020 revenue GBP6.650m including pre-acquisition Modern
Water revenue, up 553% (2019: GBP1.017m)
o Consolidated group revenue increased by 445% to GBP4.483m
(2019 restated: GBP0.823m)
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 GBP0.668m (2019: GBP1.053m),
excluding exceptional items and share option scheme of GBP191,000
(2019: GBP2,000)
-- EBITDA losses fell by 19% to GBP0.859m (2019: GBP1.055m), excluding exceptional items
-- Administration costs increased to GBP4.561m (2019: GBP2.973m)
with Modern Water acquisition and Labskin expansion
-- Operating loss of GBP2.718m ( 2019: GBP 2.371 m) after providing for:
o Depreciation of GBP 0.172m ( 2019: GBP0.101m)
o Amortisation of GBP0.941m ( 2019: GBP0.442m)
o Impairment of intangible assets GBPnil (2019 : GBP0.241m)
o Impairment of investments GBP0.354m (2019: GBPnil)
o Exceptional costs of GBP0.391m (2019: GBP0.532m) one-off
transaction costs relating to acquisition activities
-- GBP13.3m all-share Acquisition of Modern Water
Post-year-end highlights
-- GBP10m 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 GBP10m with GBP3.6m
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 (GBP3.6m) 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(R) BT
nano-optofluidic chip surface with Affimer(R) 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(R) BT compared
to control
o Microtox(R) 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 GBP10m in
January 2021 and remains well on track and expects the business
will continue to grow across all divisions in the Group.
Contacts:
+44 (0) 7340 055
DeepVerge plc Gerard Brandon, CEO 648
SPARK Advisory Partners
Limited Neil Baldwin/Andrew +44 (0) 113 370
(Nominated Adviser) Emmott 8974
Turner Pope Investments Andy Thacker/James +44 (0) 20 3657
(TPI) Limited (Broker) Pope 0050
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 GBP6.650m including pre-acquisition Modern
Water revenue, increase of 553% from 2019 GBP1.017m revenue;
-- Consolidated group revenue GBP4.483m (2019: GBP0.823m);
-- EBITDA losses before exceptional items reduced by 19% to GBP0.859m (2019: GBP1.055m);
-- 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 GBP4.561m (2019: GBP2.973m)
with Modern Water acquisition and Labskin expansion;
-- Operating loss of GBP2.718m ( 2019: GBP 2.371 m) after providing for:
o Depreciation of GBP 0.172m ( 2019: GBP0.101m);
o Amortisation of GBP0.941m ( 2019: GBP0.442m);
o Impairment of intangible assets GBPnil (2019: GBP0.241m);
o Impairment of investments GBP0.354m (2019: GBPnil);
-- Exceptional costs of GBP0.391m (2019: GBP0.532m) were one-off
transaction costs relating to acquisition
activities; GBP13.315m all-share Acquisition of Modern Water.
Post Year-End Highlights
-- GBP10m 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 GBP10m 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
Chief Executive's Statement
For the year ended 31 December 2020
Dear Fellow Shareholder,
We have grown from 5 full time employees in August 2018 to
nearly 60 today and recently announced of an additional 60 to join
over the next few weeks and months. The Chief Executive's Statement
reflects a year in the life of the Company, but the growth and
success comes from the people who breathe the life and soul into
the Group, making a difference every day. So, I present the
Company's results for the year ended 31 December 2020 below on
behalf of the DeepVerge Team.
DeepVerge
DeepVerge is an 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.
Utilising artificial intelligent data analytics to scientifically
prove the impact of skincare product claims on skin microbiome for
most of the top 20 global cosmetic company clients and remotely
detect and identify in real-time, dangerous pathogens, such as
SARS-CoV-2 in wastewater treatment plants, drinking water, rivers,
lakes and reservoirs.
Our core services:
-- Regulated environmental toxicology services;
-- Human skin equivalent platform to validate and verify the
safety and impact on client products for regulatory authority
approval;
-- AI and microbiome platform to facilitate clinical trials for
skincare companies and remote test-kits for consumer skin;
-- Monitoring and data analytics platform for real-time
detection and identification of pathogens in water and
wastewater.
Highlights:
-- Total 2020 revenue GBP6.650m including pre-acquisition Modern
Water revenue, increase of 553% from 2019 GBP1.017m revenue;
-- Consolidated group revenue increased by 445% to GBP4.483m (2019 restated: GBP0.823m);
-- H2 2020 revenue GBP3.479m an increase of 247% from H12020 GBP1.004m 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 GBP0.668m (2019: GBP1.053m),
o excluding exceptional items and share option scheme of
GBP191,000 (2019: GBP2,000) ;
-- EBITDA losses fell by 19% to GBP0.859m (2019: GBP1.055m),
o excluding exceptional items)
-- Administration costs increased to GBP4.561m (2019: GBP2.973m)
with Modern Water acquisition and Labskin expansion;
-- Operating loss of GBP2.718m ( 2019: GBP 2.371 m) after providing for:
o Depreciation of GBP 0.172m ( 2019: GBP0.101m);
o Amortisation of GBP0.941m ( 2019: GBP0.442m);
o Impairment of intangible assets GBPnil (2019 : GBP0.241m);
o Impairment of investments GBP0.354m (2019: GBPnil);
o Exceptional costs of GBP0.391m (2019: GBP0.532m) were one-off
transaction costs relating to acquisition activities;
-- GBP13.315m all-share acquisition of Modern Water.
Post-year-end highlights
-- GBP10m 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 GBP10m with GBP3.6m
already received in Modern Water orders in Q1.
-- Group staff numbers continues to grow to meet demand and as
at 30 June 2021 stands at 57 up from 43 at year end
-- The Labskin Division has sealed its reputation as a leading
diagnostics partner with global partners and new service
offerings
o We work with 18 of the top 20 global pharma companies;
o Virtual clinical trials with remote collection of human
volunteer's skin microbiome;
-- 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;
-- As the data bank of remote volunteers grow the higher the
accuracy and increased reliability of virtual product testing can
be provided to clients eliminating early human trial and error
testing and faster time to market;
-- Building of a data repository to allow AI modelling of skin
conditions and ingredient effects;
o Launch of Skin Trust Club Artificial Intelligent (A.I.)
Skincare App and Home Test Kit
-- 2,000 members in the Alpha test with more than 5,000 before
we stopped accepting for the Beta of which we will throttle back to
complete.
-- Self-administered skin swab from home-test-kit allows the
clinical trial or Skin Trust Club participant to conduct a simple
test without interaction;
-- DNA test that generates a report consumers can use to manage
their custom skincare regimen. Analysis of skin attributes provides
information to create hundreds of different product combinations to
suit a person's unique skin microbiome;
-- Environmental Health division also continues to grow apace
with new equipment, solutions, labs and services creating a strong
$5.0m (GBP3.6m) 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 our work 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.
-- Initial data from ongoing Phase III COVID-19 detection
studies demonstrates ability to identify and detect the virus
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 40 subject breath test clinical trial concluded at Royal
College of Surgeons, Ireland
-- 16 independently confirmed as COVID-19 positive with PCR
tests
-- Breath samples were tested on the Microtox(R) BT
nano-optofluidic chip surface with Affimer(R) reagents ("Avacta
Group") and Optimers ("Aptamer Group")
-- Detection of the live virus confirmed indicating 9 times
increase in digital spectrum signal on the Microtox(R) BT compared
to control
-- Microtox(R) BT delivered results in under 60 seconds from
breath samples
o Subject to 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 which would enable us to roll out
the COVID-19 and other pathogen breath tests later this year
-- On 26 April, Skin Trust Club iOS App went live after
successful completion of 2,000 Alpha skin tests
-- On 28 April the Company announced it had entered into a
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.
-- On the 6 May the Company announced the 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 . In
addition, the Irish headcount, based on growing demand, is expected
to triple in 2021 adding up to 60 new hires for roles in data
science, physics and epidemiology.
-- On 24 June the Company announced the 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 . As a result, Modern
Water entered into a 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.
The Company has transformed its business model to apply
artificial intelligence to life science and environmental test
services for bacteria, viruses and toxins. Key activities of the
business are as follows:
Labskin
Labskin is a 3D human skin equivalent test platform that
scientifically proves the impact of skincare product claims in
healthcare, life sciences, skin microbiome clinical trials,
pharmaceutical and cosmetics industries. The Labskin division's
laboratory space has increased from 924 sq. ft in 2018 to 9,378 sq.
ft in 2021 and the team works with leading skincare companies such
as Stryker, L'Oréal and Kimberly-Clark. Labskin's virtual clinical
trials with remote collection of human volunteers' skin microbiome
provides a solution for the collection of volunteer microbiomes to
allow for lab-controlled trials of advanced skin models and human
microbiomes. As the data bank of remote volunteers grow, the higher
the accuracy and increased reliability of virtual product testing
that can be provided to clients, eliminating early human trial and
error testing and resulting in a faster time to market.
Skin Trust Club
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. The self-administered skin swab is a remote trial
and allows the participant 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.
Modern Water Plc
On 13 October 2020 the Company made an offer to acquire Modern
Water Plc. The offer consisted of one Company share for ten Modern
Water Plc shares. The Company issued 55,669,222 ordinary shares at
an average 23.92p per share, valuing the acquisition at
GBP13,315,114. On 9 November 2020 the Company acquired majority
control of Modern Water Plc and on 15 January 2021 the acquisition
was completed. Modern Water plc was de-listed from AIM on 9
December 2020. Modern Water is expert in the development of
analytical instruments and technology for monitoring toxicity in
water, soil, food and industry. The Company believes that valuable
emerging synergies exist between Rinocloud AI and Modern Water
technology.
Drinking and Wastewater Analysis
The Company gained control of Modern Water in November 2020
expanding 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. It is also developing, in partnership with Microsaic
Systems and the Aptamer Group, a range of binders to detect
contaminants of concern and forever chemicals. The Company has two
new containment level 3 (virus) labs at its York facility and is
also introducing new services targeting dangerous pathogens
including contagious infections as well as community detection of
opioids.
SARS-CoV-2 and COVID-19 Testing
With access to the SARS CoV-2 virus at a category 3 laboratory
with the University of Aberdeen and Liverpool University, the
Company's Microtox(R) unit is able to identify the virus S-Protein
in quantities at 40 femtogram per millimetre ("Fg/mL"). The results
were close to 100% sensitivity and specificity on DeepVerge's
Microtox(R) nano-optofluidic chip and Microtox(R), using AI was
able to detect super-spreaders (with a high viral load), average
spreaders and the lower limit sufficient to pick up the low
emitters (asymptomatic). The effectiveness of Microtox(R) was
demonstrated in a 40 subject clinical trial conducted with the
cooperation of the Royal college of Surgeons, Ireland, where 16
subjects were independently confirmed as COVID-19 positive with PCR
tests. Breath samples were tested on the Microtox(R) BT
nano-optofluidic chip surface with Affimer reagents and
Optimers.
Detection of the live virus was confirmed indicating 9 times
increase in digital spectrum signal on the Microtox compared to
control. Microtox delivered results in under 60 seconds from breath
samples. Subject to completion of additional human trails, the
Microtox BT would be expected to meet the criteria for UK, MHRA's
Target Production Profile Rapid Breath Test.
Disruptive Business Model
DeepVerge has advanced its core business model with Labskin AI
platform to create a fundamental change in topical skin related
clinical and medical device trial costs. Changes go far beyond
incremental savings resulting in:
-- Physical presence of human volunteers can be eliminated using
remote clinical trials testing;
-- Swab of test subject's skin is taken and applied to Labskin;
-- Instantly creates twin test subject;
-- Recruitment time is shorter as location is irrelevant, or at least within posting distance;
-- Project management and supervision time and personnel are reduced substantially;
-- AI integration delivers comparative analytical data plus human test response data;
-- Reduces error - highlighting test subjects who are not sticking to test regime;
-- Increases accuracy;
-- Clients win, Clinical Research Organisation wins and Labskin wins extra revenues;
-- Our commercial focus is on distribution using sales,
marketing and distribution channels of collaboration partners as
well as adding to the combined knowledge with our team that
understand bacteria, fungi and viruses;
-- We have a full team of IT and web services professionals that
understand 'online' and SEO, bringing our partner businesses fully
online, through ecowaterOS and RinoDrive, which is so necessary in
a COVID-19 world;
-- Sales and Marketing includes an inside sales team, brand and
marketing specialists that complement our partners traditional
sales models;
-- Flexible enough to facilitate scientific procedures that need to be updated.
3-Step Strategic Plan Across All Divisions
1. Grow Profits Across Related Markets
We will continue to leverage existing blue-chip clients and
collaboration partner relationships to secure additional high value
product test service contracts with additional sales resources.
2. Product & Service Investment
Roll-out of physical and digital cloud-based reporting services
to keep our Life Science and Environmental Health offering
competitive and relevant to our clients is key to delivering more
value to our clients and increasing revenue per client in return.
We maintain this approach by extending our technical resources to
enhance product and service development. The addition and continued
development of AI data analytics capabilities from our Rinocloud
division, and the continued growth in revenue because of that,
shows we are on the right track.
3. Collaboration & Acquisition
We actively pursue a broader portfolio of services through
revenue shared collaboration and acquisition options. These areas
have been previously mentioned in RNS announcements and include,
but are not limited to, data analytics, software and biophysics
integration services. All of these lead to extending the scope and
reach of all divisions. As mentioned above the key criteria in our
collaboration and partner targets are to increase revenue per
client and earnings from repurposed assets to enhance shareholder
value.
As noted from the recent RNS on the positive results of
wastewater treatment plant installations of Microtox PD, the
Company has signed master service and commercial agreements with
Avacta Group plc and Aptamer Group Limited for binding agents,
installation, maintenance, a service agreement with EPS Group for
Europe and will update the market on an extended roll out across
multiple jurisdictions for detection of SARS-CoV-2 in real-time,
expected in H2 this year. We look forward to updating you on the
progress of this strategy as we go forward.
Gerard Brandon
Chief Executive Officer
30 June 2021
The Board
Ross Andrews, Non-Executive Chairman
Ross was appointed Chairman on 21 May 2019, having been a
non-executive director since April 2017. He is a corporate
financier with over 30 years' experience, has a strong
understanding of corporate governance regimes and is chairman and
non-executive director of several UK listed companies. In 2018, he
established Guild Financial Advisory, a corporate finance boutique
focused on ambitious and fast-growing companies.
Gerard Brandon (Chief Executive Officer)
Gerard was appointed Director and CEO of DeepVerge in August
2018. Previously, he joined Cellulac Limited (Ireland) as its Chief
Executive Officer in May 2012 and assumed the same role for
Cellulac plc in October 2013. In 1996 he became founder and CEO of
Alltracel Pharmaceuticals PLC, where he built a team that oversaw
numerous patents granted on refined cellulose. Alltracel was
admitted to trading on AIM in 2001. In 2004, he was appointed as a
Managing Partner for Farmabrand Private Equity. In 2009, he was
appointed as an Executive Consultant to Eplixo Limited. He is a
Fellow of the Ryan Academy of Entrepreneurs in Dublin.
Camillus Glover (Chief Financial Officer)
Camillus was appointed Director and COO of DeepVerge on 8 August
2018. On 29 August 2018 he took over as Chief Financial Officer.
Previously, he joined Cellulac Limited (Ireland) as Chief Financial
Officer in May 2012 and assumed the same role for Cellulac plc in
October 2013. He is a member of the Institute of Chartered
Accountants Ireland. In 2003, he joined Alltracel Pharmaceuticals
plc as Commercial Director and was appointed Chief Operations
Officer in 2005 until it was acquired in 2008 by Hemcon Medical
Technologies ("Hemcon"). Between 2009 and 2012, he was VP of Global
Business Development for Hemcon prior to joining Cellulac plc.
Fionan (Fin) Murray, (Chief Operations Officer)
Fin is the founder of Rinocloud Limited. He was appointed Sales
Director of DeepVerge on 2 May 2019 following the acquisition of
Rinocloud Ltd. On 26 February 2020 he was appointed COO of
DeepVerge. He is a seasoned sales executive with more than 30
years' experience in worldwide distribution deals, selling complex
software solutions into the multi-national corporate sectors in
financial services, biotech, utilities and government departments.
He is former CEO of LeT Systems Ltd and a senior executive at KBC
Bank and Kindle Banking systems. He was appointed Chief Operations
Officer on 26 February 2020.
Dr Nigel Burton (Non-Executive Director)
Nigel was appointed non-executive director of the Company on 10
November 2020 following the acquisition of Modern Water where Nigel
was a non-executive director. Nigel worked for over 14 years as an
investment banker at leading London City institutions including UBS
Warburg and Deutsche Bank, including serving as a Managing Director
responsible for the energy and utilities industries. Following
these roles Nigel spent 15 years as Chief Financial Officer or
Chief Executive Officer of a number of private and public companies
and is a Non-Executive Director of a number of other listed
companies including BlackRock Throgmorton Trust, eEnergy Group,
Microsaic Systems and Location Sciences .
Strategic Report
For the year ended 31 December 2020
Review of the business
A comprehensive review of the year is given in the Chairman's
and Chief Executive's Statements on pages 2 to 8.
Principal risks and uncertainties
The Directors continually identify, monitor and manage the risks
and uncertainties of the Group. Risk is inherent in all businesses.
Set out below are certain risk factors which could have an impact
on the Group's long-term performance and mitigating factors adopted
to alleviate these risks. This list does not purport to be an
exhaustive summary of the risks affecting the Group.
Management and employees
The Group's future success will be dependent on key employees
and their on-going relationships with customers. The Group
encourages customer contacts to be maintained by more than one
individual. Key employees are incentivised through a mixture of
competitive remuneration and sales commission. Main Board Directors
are incentivised as detailed in the Directors' Remuneration
Report.
Early stage of operations
DeepVerge is an early commercial stage company. The acquisition
of both Rinocloud Limited and Modern Water has generated
substantial growth in revenue and increased product and service
offerings which allows visibility on long term sales pipeline
activity. This integration of all divisions has had a relatively
short-term track record of product sales and new service offerings,
but recent funding has secured the resources to balance growth of
product and service supply with demand for these offerings from our
clients.
Delay in product launches
The Group has identified product and service development
projects to take to market, some of which required specific funding
to proceed. The recent funding is no guarantee that these projects
will be completed within anticipated timescales, and while they
have resulted in viable products and services, they remain at early
stage to understand the size of the opportunities across the Group.
The Group's strategy involves, inter alia, running clinical studies
on its products to create verifiable data which can be used in
marketing campaigns to differentiate the Group's products from
competitors. The Skin Trust Club, a consumer skincare home test kit
for skin microbiome was launched recently. If the clinical studies
and roll out of services to consumers take longer than expected, or
fail to establish the anticipated numbers signing up, this could be
damaging to the Group's prospects.
Potential funding requirement for further development
Any future collaboration, partnership, joint venture expansion,
activity, acquisitions and/or business development may require
additional capital and the Group may seek to raise additional funds
through equity or debt financings or from other sources. There can
be no guarantee that the necessary funds will be available on a
timely basis, on favourable terms, or at all, or that such funds if
raised, would be sufficient.
Competition risk
The Group's current and future potential competitors include,
amongst others, major multinational healthcare and environmental
health companies with substantially greater resources than those of
the Group. There can be no assurance that competitors will not
succeed in developing systems, products and services that are more
effective or economic than any of those developed by the Group,
which would render the Group's products obsolete or otherwise
non-competitive. The Group seeks to reduce this risk by ensuring
that a professional and high standard product and service is
provided to its customers, maintaining confidentiality agreements
and selecting leading businesses in their respective fields as
collaboration and joint development partners capable of addressing
significant competition, should it arise.
Currency exchange risk
The Company's financial statements are denominated in pounds
sterling, its functional currency. The Company plans to increase
its sales and activities in the USA and the EU which may be
impacted by exchange rate fluctuations in future. Following the
acquisition of Modern Water additional dollar costs will arise
which will be hedged against dollar sales.
COVID-19 risk
Management is constantly reviewing the impact of COVID-19 with
clients and partners to assess manufacturing and supply of services
stress. These include, but are not limited to, restrictions on the
supply of materials that enable the Group to supply goods and
services to clients. This review process is designed to provide
advance warning to be able to manage impacts on the business and to
assist clients meet their needs where reliance on the delivery of
our goods and services from the Group is critical.
Financial risk management
The Group has instigated certain financial risk management
policies and procedures which are set out in note 3 to the
financial statements.
Companies Act S.172 Statement
The Directors are fully appraised of their responsibilities
under section 172(1) of the Companies Act 2006 and
are so advised and updated on a regular basis by the Company
Secretary of DeepVerge plc.
Business
The Group's strategic plan was designed to have a long-term
beneficial impact on the Group and our customers by delivering the
range of products and services as the go-to brand for animal
testing alternatives for human skin, within Labskin, the go-to
brand for environmental health testing in water and wastewater in
Modern Water. The Directors will continue to operate the business
within tight budgetary control and in line with regulatory
requirements.
Employees
The Group has increased employees because of increased demand as
well as ahead of expected future demand for products and services.
Management of HR is critical to the delivery of the Group's
strategic plan. The Directors ensure that the Group complies with
all employment laws in the respective jurisdictions of each
subsidiary and have implemented appropriate standards and systems
to monitor and to ensure the welfare of all employees. For more
detail on how the Directors support the employees, see Corporate
And Social Responsibility report in this Annual Report.
Stakeholder engagement
The Group has built and maintained relationships with
shareholders, advisers and suppliers. The Directors have taken
steps to develop and strengthen them through dialogue and
engagement. These relationships are regularly monitored at Board
level. The Chairman ensures that he is available to discuss issues
with key shareholders outside of the shareholder meetings which are
held. The Company complies with its disclosure obligations as set
out in the AIM Rules for Companies, published by London Stock
Exchange to ensure that shareholders are updated on key
developments on a timely basis.
Governance
The Board recognises that good standards of corporate governance
help the Group to achieve its strategic goals and is vital for the
success of the Company. For more detail on the corporate governance
of the Group, see Corporate Governance Report in this annual
report.
Disclosure of information to the Auditors
The Directors who hold office at the date of approval of this
report confirm that so far as they are each aware, there is no
relevant audit information of which the Company's auditors are
unaware, and each Director has taken all the steps that he ought to
have taken as a Director in order to make him aware of any relevant
audit information and to establish that the Company's auditors are
aware of that information.
Outlook
Key Performance Indicators (KPIs)
The key performance indicators currently used by the Group are
revenue, adjusted EBITDA and cash resources. The Group intends to
establish other key performance indicators in due course once the
Group has matured sufficiently. The Group does not use and does not
at present intend to use non-financial key performance
indicators.
Review of strategy and business model
Since 2019, DeepVerge Plc has completed a number of strategic
acquisitions and the most recent being Modern Water, under the
Company's control since 9 November 2020. With 30+ years of
institutional knowledge of virus, bacteria, toxins and parasites in
water and wastewater, Modern Water complements the knowledge within
Labskin of virus, bacteria and toxins on human skin. The addition
of a digital platform which was originally created for Labskin can
now be extended to facilitate data accumulated from equipment
already installed in more than 60 countries and using AI to
identify in real-time dangerous pathogens across the group.
This physical laboratory-grown 3D human skin equivalent,
developed specifically to host bacteria, virus and fungi on human
skin in our test laboratories, incorporates a digital artificial
intelligence to enhance clinical research, medical device and life
science testing in physical real-world and virtual digital
simulated form. Labskin allows our clients in skincare, healthcare,
pharmaceutical manufacturers and the cosmetic industry to test and
validate their product claims on human-like skin in a real-world
environment with full access to multiple state-of-the-art partner
technologies.
Because of the changes to the business model the Company is
seeing an improved pipeline of activity. The Rinocloud acquisition
and its development team has integrated well, as much of the work
in collaboration had commenced prior to completion of the
transaction. Moving to a higher value service offering and now
including detection and predictive services across the Group is
both exciting and challenging. With an increased order pipeline,
the Company requires additional infrastructure and expertise. The
announcements throughout 2020 of increased laboratory space and
personnel growth has secured immediate organic growth from all
divisions. The data analytics and use of artificial intelligence to
enhance the capabilities of existing equipment and services of both
the life science and environmental health divisions, opens
opportunities to explore options of collaboration, partnership and
acquisitive growth to achieve Company goals of meeting increased
demands from our clients, regulatory compliance and enhance
shareholder value.
Environment
The Directors consider that the nature of the Group's activities
is not inherently detrimental to the environment.
Employees
The Group places value on the involvement of its employees and
they are regularly briefed on the Group's activities. The Group
closely monitors staff attrition rates which it seeks to maintain
at current low levels and aims to structure staff compensation
levels at competitive rates in order to attract and retain high
calibre personnel.
Disabled employees
Applications for employment by disabled persons are always fully
considered, bearing in mind the specific aptitudes of the applicant
involved. It is the policy of the Group that the training, career
development and promotion of disabled persons, as far as possible,
be identical with that of other employees.
Social, community, and human rights
The Board recognises that the Group has a duty to be a good
corporate citizen and to respect the laws, and where appropriate
the customs and culture of the territories in which it operates. It
contributes as far as is practicable to the local communities in
which it operates and takes a responsible and positive approach to
employment practices.
The Strategic Report was approved by the Board on 30 June 2021
and signed on its behalf by:
Gerard Brandon
Chief Executive Officer
Report of the Directors
For the year ended 31 December 2020
The Directors have pleasure in submitting this report together
with the audited financial statements of DeepVerge Plc for the year
ended 31 December 2020.
Corporate details
DeepVerge Plc is incorporated in England and Wales with
registration number 10205396. The registered office is York Biotech
Campus, Sand Hutton, York, North Yorkshire, YO41 1LZ.
Directors
The Directors who held office during the year and as at the date
of signing the financial statements were as follows:
Gerard Brandon
Camillus Glover
Ross Andrews
Fin Murray
Nigel Burton (Appointed on 10 November 2020)
Principal activities
The Group is an 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. Utilising artificial intelligent data
analytics to scientifically prove the impact of skincare product
claims on skin microbiome for most of the top 20 global cosmetic
company clients and remotely detect and identify in real-time,
dangerous pathogens, such as SARS-CoV-2 in wastewater treatment
plants, drinking water, rivers, lakes and reservoirs.
Our core services:
-- Regulated environmental toxicology services;
-- Human skin equivalent platform to validate and verify the
safety and impact on client products for regulatory authority
approval;
-- AI and microbiome platform to facilitate clinical trials for
skincare companies and remote test-kits for consumer skin;
-- Monitoring and data analytics platform for real-time
detection and identification of pathogens in water and
wastewater.
Dividends
There were no dividends paid or proposed by the Company during
the period (2019: none).
Going concern
The Directors have considered the applicability of the going
concern basis in the preparation of these financial statements.
The Directors have prepared cash flow projections to determine
funding requirements of the Group.
During June 2021 the Company raised GBP10m by issuing new shares
to fund accelerated sales opportunities and for general working
capital purposes.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt a going concern basis in preparing the annual
report and consolidated financial statements.
Directors' interests
The interests of the Directors who served during the year and
previous year in the share capital of the Company (all held
beneficially) as at 31 December 2020 were as follows:
Ordinary Shares of 0.1p each
Gerard Brandon
8,414,483(1)
Camillus Glover 4,250,670
Ross Andrews 323,846
Fin Murray 8,786,758
Nigel Burton 1,883,167
(1) Includes 194,942 shares held by family member
Substantial shareholdings
At the date of signing of these financial statements, the
following interests in 3% or more of the issued Ordinary Share
capital had been notified to the Company:
Number Percentage of issued
Shareholder of shares share capital
Helium Rising Stars Fund 9,571,943 4.45%
Fionan Murray 8,786,758 4.08%
Gerard Brandon 8,219,901 3.82%
Post balance sheet events
The following events have taken place since the year end:
Ordinary Shares Issued
In the period from 1 January 2021 to date of the signing of
these financial statements subscribers have exercised warrants over
3,824,485 Ordinary Shares of 0.1p each at an exercise price of 20p
raising a total of GBP764,897.
In the period from 1 January 2021 to date of the signing of
these financial statements staff employees have exercised options
over 43,962 Ordinary Shares of 0.1p each at an exercise price of
0.1p raising a total of GBP44.
In the period from 1 January 2021 to date of the signing of
these financial statements Turner Pope International exercised
warrants over 8,422,284 Ordinary Shares of 0.1p at exercise prices
ranging from 5p to 15p, at an average of 6.53p per Ordinary Share
of 0.1p raising a total of GBP500,200.
On 7 June 2021 the Company raised GBP10 million by way of a firm
and conditional placing of 33,333,334 Ordinary Shares of 0.1p at a
placing price of 30 pence per share. The first firm placing on 11
June 2021 of 21,086,888 Ordinary Shares raised GBP6.32 million. The
second conditional placing on 24 June 2021 of 12,246,446 Ordinary
Shares raised GBP3.68 million.
At the date of signing these financial statements, the Company
had an issued share capital of 215,138,276 Ordinary Shares of 0.1p
each and 223,685,232 deferred Ordinary Shares of 0.99p each.
Director Purchase of Ordinary Shares
On 12 April 2021 Ross Andrews, Director, purchased 1,000,000
Ordinary Shares of 0.1p each on the open market at an average price
of 33.72p per share.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have prepared the Group and Parent Company financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under Company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and the Parent Company and of the profit or loss of the Group
and the Parent Company for that period. In preparing these
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and the
Parent Company's transactions and disclose with reasonable accuracy
at any time the financial position of the Group and the Parent
Company and enable them to ensure that the financial statements
comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the Parent Company's website (www.deepvergeplc.com). Legislation
in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
The Directors consider that the annual report and the accounts,
taken as a whole are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Group and
the Parent Company's performance, business model and strategy.
Each of the Directors, whose names and functions are listed in
the Report of the Directors confirm that, to the best of their
knowledge:
-- the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
loss of the Parent Company;
-- the Parent Company financial statements, which have been
prepared in accordance with IFRSs as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial
position and loss of the Parent Company; and
-- the Chairman's Statement and Chief Executive's Statement
include a fair review of the development of the business and the
position of the Group and the Parent Company, together with a
description of the principal risks and uncertainties that it
faces.
Directors' liability insurance
The Company maintains Directors and Officers liability
insurance, which is reviewed annually and is considered to be
adequate by the Company and its insurance advisers.
Independent auditors
Jeffreys Henry LLP were appointed during the year and have
expressed their willingness to continue in office as auditors and a
resolution to reappoint them will be proposed at the forthcoming
Annual General Meeting.
Companies Act S.172 Statement
The Directors are fully appraised of their responsibilities
under section 172(1) of the Companies Act 2006 and
are so advised and updated on a regular basis by the Company
Secretary of DeepVerge plc.
Business
The Group's strategic plan was designed to have a long-term
beneficial impact on the Group and our customers by delivering the
range of products and services as the go-to brand for animal
testing alternatives for human skin, within Labskin, the go-to
brand for environmental health testing in water and wastewater in
Modern Water. The Directors will continue to operate the business
within tight budgetary control and in line with regulatory
requirements.
Employees
The Group has increased employees because of increased demand as
well as ahead of expected future demand for products and services.
Management of HR is critical to the delivery of the Group's
strategic plan. The Directors ensure that the Group complies with
all employment laws in the respective jurisdictions of each
subsidiary and have implemented appropriate standards and systems
to monitor and to ensure the welfare of all employees. For more
detail on how the Directors support the employees, see Corporate
And Social Responsibility report in this Annual Report.
Stakeholder engagement
The Group has built and maintained relationships with
shareholders, advisers and suppliers. The Directors have taken
steps to develop and strengthen them through dialogue and
engagement. These relationships are regularly monitored at Board
level. The Chairman ensures that he is available to discuss issues
with key shareholders outside of the shareholder meetings which are
held. The Company complies with its disclosure obligations as set
out in the AIM Rules for Companies, published by London Stock
Exchange to ensure that shareholders are updated on key
developments on a timely basis.
Governance
The Board recognises that good standards of corporate governance
help the Group to achieve its strategic goals and is vital for the
success of the Company. For more detail on the corporate governance
of the Group, see Corporate Governance Report in this annual
report.
Disclosure of information to the Auditors
The Directors who hold office at the date of approval of this
report confirm that so far as they are each aware, there is no
relevant audit information of which the Company's auditors are
unaware, and each Director has taken all the steps that he ought to
have taken as a Director in order to make him aware of any relevant
audit information and to establish that the Company's auditors are
aware of that information.
Annual General Meeting
A copy of the notice convening the Annual General Meeting will
be sent out shortly under separate cover.
The Directors' report was approved by the Board on 30 June 2021 and signed on its behalf by:
Gerard Brandon
Chief Executive Officer
Corporate Governance Statement
For the year ended 31 December 2020
Compliance
The Directors recognise the value of the principles of the
Corporate Governance Code for Small and Mid-Size Quoted Companies
issued by the Quoted Companies Alliance (QCA) .
The following statement describes how the Group seeks to address
the principles underlying the Code where practicable and
appropriate for a company of this size.
Board composition and responsibility
The Board currently comprises five Directors. The Non-executive
Chairman, three executive Directors and two non-executive Director.
The Board has determined that the Non-executive Directors are
independent in character and judgement and that there are no
relationships or circumstances which could materially affect or
interfere with the exercise of their independent judgement. The
Board is satisfied with the balance between executive and
non-executive Directors which allows it to exercise objectivity in
decision making and proper control of the Group's business. The
Board considers this composition is appropriate in view of the size
and requirements of the Group's business and the need to maintain a
practical balance between executives and non-executives.
All Directors are subject to election by shareholders at the
first Annual General Meeting after their appointment and are
subject to re-election at least every three years. The Board does
not automatically re-nominate non-executive Directors for election
by shareholders. The terms of appointment of the non-executive
Directors can be obtained by request to the Company Secretary.
The Board's primary objective is to focus on adding value to the
assets of the Group by identifying and assessing business
opportunities and ensuring that potential risks are identified,
monitored and controlled. Matters reserved for Board decisions
include strategic long-term objectives and capital structure of
major transactions. There is a division of responsibilities between
the Non-Executive Chairman, who is responsible for the overall
strategy of the Group, and the CEO, who is responsible for
implementing the strategy and day to day running of the Group. He
is assisted by the CFO and the COO.
Board meetings
26 Board meetings were held during the period. The Director's
attendance record during the period is as follows:
Gerard Brandon 25
Camillus Glover 26
Ross Andrews 13
Fin Murray 13
Nigel Burton (Appointed 10 November 2020) 3
Audit and Risk Committee membership and activities
The Chair of the Audit Committee is Non-executive Director Ross
Andrews. The Committee welcomed Dr Nigel Burton to the Board as a
second Non-executive Director during the year and the third member
of the Committee is Executive Director Fin Murray. All three
Directors possess the necessary depth of financial and commercial
expertise to fulfil their role. Although not members of the Audit
Committee, the CEO and CFO are also invited to attend meetings,
unless they have a conflict of interest. Other senior members of
the business are invited to attend meetings as appropriate. The
Audit Committee met twice for scheduled meetings during the
year.
Key activities during the year
-- Reviewed the Annual Report and Accounts, including whether
they were fair, balanced and understandable, the material
judgements and estimates, going concern and viability
statements.
-- Considered the external auditor's report on the full- and half-year audits.
-- Reviewed the full- and half-year results announcements.
-- Appraised the effectiveness and performance of our external
auditors, assessed their independence and objectivity, and
recommended their reappointment.
-- Considered the external audit fees and terms of engagement.
Financial reporting
The Committee's primary responsibility in relation to the
Group's financial reporting is to review, with management and the
external auditor, the quality and appropriateness of the annual and
half-yearly financial statements. The Committee focuses on the
quality of accounting policies and practices, the appropriateness
of underlying assumptions, judgements and estimates made by
management, key audit matters identified by the external auditor,
the clarity of the disclosures and compliance with financial
reporting standards, an assessment of whether the Annual Report,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
position and performance, business model and strategy, and advising
the Board on the form and basis underlying the three step strategic
plan.
Nomination Committee membership and activities
The Chair of the Nomination Committee is Non-executive Director
Ross Andrews. The Board welcomed Dr Nigel Burton to the Board as
Non-executive Director during the year and Dr Burton joined the
Nomination Committee as its second Non-executive Director. The
third member of the Committee is executive Director Fin Murray. All
three Directors possess the necessary depth of management and
commercial expertise to fulfil their role. Although not members of
Nomination Committee, the CEO and CFO are also invited to attend
meetings, unless they have a conflict of interest. Other senior
members of the business are invited to attend meetings as
appropriate. The Nomination Committee met twice for scheduled
meetings during the year.
By appointing Dr Nigel Burton to the Board we are ensuring that
we have the world- class experience, skills and expertise necessary
to drive the Group forward through its three step strategic
plan.
.
In the coming year, the Committee will turn its focus to
ensuring the continued growth of the executive and senior
management team.
Remuneration Committee membership and activities
The Chair of the Remuneration Committee is Non-executive
Director Ross Andrews Dr Nigel Burton joined the Committee as the
second as Non-executive Director. The third member of the Committee
is executive Director Fin Murray . Appropriate members of the
management team, as well as the Committee's advisers, are invited
to attend meetings as appropriate, unless there's a potential
conflict of interest. The remuneration of Non-executive Directors,
is determined by the Executive Directors. The Remuneration
Committee met twice for scheduled meetings during the year.
During the year the Committee:
- Determined and recommended to the Board the Group's overall
remuneration policy.
- Determined and recommended to the Board the remuneration of
Executive Directors.
- Monitored, reviewed and approved the levels and structure of
remuneration for other senior managers.
Internal control
The Directors are responsible for ensuring that the Group
maintains a system of internal control to provide them with
reasonable assurance regarding the reliability of financial
information used within the business and for publication and that
the assets are safeguarded. There are inherent limitations in any
system of internal control and accordingly even the most effective
system can provide only reasonable, but not absolute, assurance
with respect to the preparation of financial reporting and the
safeguarding of assets.
The Group, in administering its business has put in place strict
authorisation, approval and control levels within which senior
management operates. These controls reflect the Group's
organisational structure and business objectives. The control
system includes clear lines of accountability and covers all areas
of the organisation. The Board operates procedures which include an
appropriate control environment through the definition of the above
organisation structure and authority levels and the identification
of the major business risks.
Internal financial reporting
The Directors are responsible for establishing and maintaining
the Group's system of internal reporting and as such have put in
place a framework of controls to ensure that the on-going financial
performance is measured in a timely and correct manner and that
risks
are identified as early as is practicably possible. There is a
comprehensive budgeting system and monthly management accounts are
prepared which compare actual results against both the budget and
the previous year. They are reviewed and approved by the Board, and
revised forecasts are prepared on a regular basis.
Relations with shareholders
The Company reports to shareholders twice a year. The Company
dispatches the notice of its Annual General Meeting, together with
a description of the items of special business, at least 21 days
before the meeting. Each substantially separate issue is the
subject of a separate resolution and all shareholders have the
opportunity to put questions to the Board at the Annual General
Meeting. The Chairman of the Audit and Remuneration Committees
normally attend the Annual General Meeting and will answer
questions which may be relevant to their work. The Chairman advises
the meeting of the details of proxy votes cast on each of the
individual resolutions after they have been voted on in the
meeting.
The Chairman and the non-executive Directors intend to maintain
a good and continuing understanding of the objectives and views of
the shareholders.
Corporate social responsibility
The Board recognises that it has a duty to be a good corporate
citizen and is conscious that its business processes minimise harm
to the environment, contributes as far as is practicable to the
local communities in which it operates and takes a responsible and
positive approach to employment practices.
Report of the Remuneration Committee
For the year ended 31 December 2020
Statement of compliance
This report does not constitute a Directors Remuneration Report
in accordance with the Directors Remuneration Regulations 2007
which do not apply to the Company as it is not fully listed. This
report sets out the Group policy on Directors' remuneration,
including emoluments, benefits and other share-based awards made to
each Director.
Policy on Executive Directors' remuneration
Remuneration packages are designed to motivate and retain
executive Directors to ensure the continued development of the
Company and to reward them for enhancing value to shareholders. The
main elements of the remuneration package for executive Directors
are basic salary or fees, performance related bonuses, benefits and
share option incentives.
Directors' remuneration
The remuneration of the Directors of the Company for the year
ended 31 December 2020 and 2019 is shown below:
2020 2019
GBP'000 GBP'000
----------------------------------------------- -------- --------
Non-Executive Directors
Ross Andrews 49 41
Nigel Burton (appointed 10 November 2020) 8 -
Tony Richardson ( resigned on 21 May 2019) - 5
57 46
----------------------------------------------- -------- --------
Executive Directors
Gerard Brandon (1) 173 131
Camillus Glover (1) 141 110
Fin Murray (appointed 2 May 2019) 129 79
Helmut Schlieper ( resigned on 6 August 2018) - 1
443 321
----------------------------------------------- -------- --------
Total fees and emoluments 500 367
----------------------------------------------- -------- --------
(1) The salary of Gerard Brandon and Camillus Glover from the
period 6 August 2018 to 30 June 2019 is for non-cash consideration
and these Directors
may elect to have accrued salary settled by the allotment of new
ordinary shares subject to certain conditions. The element of
non-cash consideration
in 2019 was for Gerard Brandon GBP56,000 (2018: GBP48,000) and
for Camillus Glover GBP51,000 (2018: GBP42,000).
Directors' share options
2017 Share Option Scheme
In April 2017, the Company awarded options to five officers of
the Company over 6,720,000 ordinary shares of 1p each. These
options were exercisable after two years provided that the holder
of the options is still an employee of the Company.
Four of the officers have since left the Company, resulting in
6,081,600 of the options lapsing.
There have been a number of share reorganisations in the interim
period and the remaining options under the scheme as at 31 December
2020 were as follows:
No. of ordinary
shares under Exercise
Director Date granted option price Exercise period
50p-60p From 5 April 2017 to 5
Ross Andrews 5 April 2017 63,840 (1) April 2027
(1) 50% of the shares will vest at an exercise price of 50p and
50% at an exercise price of 60p 0.1p ordinary shares .
2020 Employee Share Option Scheme
On 18 September 2020 the Company implemented a group wide share
option scheme for staff. The scheme incorporated an EMI Share
Option Scheme for UK employees, a Share Option Scheme for Irish
employees and Non-Approved Scheme to recognise the work and to
reward, retain and recognise their contribution to date and their
importance to the Company going forward. The share option program
will reward the innovation that has been delivered by all team
associates, across the DeepVerge Group, and put in place,
motivation for our most valuable assets to continue to deliver
shareholder value over the next 3 years. The EMI share options will
lapse on 18 September 2030 and the Irish Share Options will lapse
on 17 September 2027. No share options have been granted to
PDMRs.
On 19 November 2020 share options were awarded to the directors
of Company:
Exercise Exercise Exercise Exercise Exercise Share Option Scheme
Date Date Date
Price 1 Jan 2021 1 Jan 2022 1 Jan 2023 Period
------------------------ ----------- ----------- ----------- --------- ---------------------
EMI Share Option
Gerard Brandon 30p 240,000 280,000 280,000 10 years Scheme
Ireland Share Option
Fionan Murray 30p 225,000 262,500 262,500 7 years Scheme
Camillus Ireland Share Option
Glover 30p 225,000 262,500 262,500 7 years scheme
Ross Andrews 30p 60,000 70,000 70,000 10 years Non-Approved Scheme
Nigel Burton 30p 50,000 58,333 58,334 10 years Non-Approved Scheme
The fair value calculation of the share options has been
calculated using the Black Scholes Model. The charge to the income
statement in 2020 for the director share options is as follows:
2020 2019
Director GBP'000 GBP'000
------------------------------------------------------- -------- --------
Gerard Brandon 9 -
Camillus Glover 8 -
Fionan Murray 8 -
Ros Andrews 2 -
Nigel Burton 2 -
Total 29 -
------------------------------------------------------- -------- --------
Full details of the Share Option Scheme appear in Note
32.
Independent Auditor's Report to the Members of DeepVerge Plc
For the year ended 31 December 2020
Opinion
We have audited the financial statements of DeepVerge Plc (the
'parent company') and its subsidiaries (the 'group') for the year
ended 31 December 2020 which comprise the consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated and company statements of financial position, the
consolidated and company statements of cash flows, the consolidated
and company statements of changes in equity and notes to the
financial statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and, as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
December 2020 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the entity's ability to
continue to adopt the going concern basis of accounting included
reviews of expected cash flows for a period of 12 months, to
determine expected cash burn, which was compared to the liquid
assets held in the entity.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
Key audit matter How our audit addressed the key audit
matter
Impairment of intangible assets
During the year, as part of the Modern Intangibles are only assessed for
Water acquisition, the group acquired impairment when indicators of impairment
intangible assets with a fair value exist. We have considered the life
of GBP14,882,000 and with a useful cycle, public perception through
economic life of 10 years. Consequently, the share price of the Company and
the group carried intangible assets the
of GBP18,241,000 (2019: GBP3,654,000) fair value of intangibles held by
at the yearend relating to intellectual the Company.
property and development costs.
We have performed the following audit
The risk is that the useful economic procedures:
life of the intangible assets may
be different to the management assumptions * Obtained management's forecast for future value in
or technological advancements may use of the intangible assets;
render its market value below its
carrying value.
EBITDA, which is considered by management * Assessed the reliability of forecasts by agreeing to
to be a key metric and is included historical inputs;
as a KPI in the strategic report,
is directly impacted by the amount
of costs capitalised.
* Reviewed management and challenged management on
their judgements of the forecasted sales and
estimates useful life of the intangible assets;
* assessed the appropriateness and applicability of
discount rate applied to the current business
performance;
* Assessed the ongoing projects viability and ensured
they met the criteria defined in the accounting
standards for intangibles; and
* Tested the clerical accuracy of management's
forecast.
* confirmed cost and useful life by reviewing the
underlying contracts for purchase of the intangible
assets, including those acquired on acquisition of
subsidiary during the year;
* reviewed the latest management accounts to assess
post year end cashflows due to the technology and
patents held; and
* As all the capitalised intangibles relate to
enhancing its product, no impairment is required.
Based on the audit work performed
we are satisfied, that although there
are inherent uncertainties associated
with the forecast and estimation
of useful economic life of intangible
assets, the directors have made reasonable
assumptions about the valuation and
useful economic life of intangible
assets, based on past experience
and expected future revenues. We
are also satisfied that all necessary
disclosures have been made in the
consolidated financial statements.
-------------------------------------------------------------------
Valuation of investments in and recoverability
of amounts due from subsidiaries
The parent company carried Investments We have performed the following audit
in subsidiaries of GBP15,603,000 procedures:
(2019: GBP3,488,000).
* reviewed management's assessment of future operating
The parent company also had amounts cashflows and indicators of impairment;
owed by subsidiary undertakings of
GBP2,934,000 (2019: GBP3,609,000)
at the year end.
* assessed the methodology used by management to
Management's assessment of the recoverable estimate the future profitability of companies in the
amounts from investments in and loans group and recoverable value of the investment, in
to subsidiaries requires estimation conjunction with any intra-group balances, to ensure
and judgement around assumptions that the method used is appropriate;
used, including the cash flows to
be generated from continuing operations.
Changes to assumptions could lead
to material changes in the estimated * assessed the reasonableness of the key assumptions
recoverable amount, impacting the used in management's estimates of recoverable value,
value of investment in the subsidiary, in line with the economic and industry statistics
amounts recoverable from the subsidiaries relevant to the business;
and resulting impairment charges.
The directors have assessed the recoverability
of intercompany balances and have * confirmed that any adverse changes in key assumptions
concluded that they are recoverable will not would not materially increase the impairment
apart from the balance due from Innovenn loss;
UK Limited of GBP3.185m that has
been impaired.
There is a risk that the subsidiaries * challenged cash inflows from revenue generating
may not be able to trade as expected activities and the key assumptions applied in
in the future and therefore the investment arriving at the expected revenues for the foreseeable
and the amounts recoverable may be future;
impaired.
* assessed the appropriateness and applicability of
discount rate applied to the current business
performance;
* assessed the reasonability of cash outflows,
including contracted costs, research expenditure and
expected capital expenditure;
* reviewed the latest management accounts for all
entities in the group to confirm reasonability of
assumption used in the cashflow forecast.
Based on the audit work performed
we are satisfied that the management
have made reasonable assumptions
in arriving at the value of the companies
in the group based on net present
value of future cashflow and the
amounts are disclosed in accordance
with the reporting framework, and
no further impairment loss should
be recognised in the parent company
financial statements.
-------------------------------------------------------------------
Business combination - valuation
of intangible assets
We have performed the following audit
Management acquired 93.46% interest procedures:
in a subsidiary for consideration
of GBP12,115,000 during the year. * critically reviewed the consolidation workings,
consolidation journals and assessed how the entity
We identified a risk that the fair was accounted for at the point of acquisition to
value of intangible assets may not ensure principals of IFRS 3 have been adhered;
have been accurately derived when
accounting for the business combination.
* reviewed the share purchase agreement to ensure
considerations was included at fair value and the
fair values of the assets and the liabilities agreed
to the consolidation workings provided by man
agement;
* reviewed the share purchase agreement for any clauses
which could have future impact on the valuation of
assets acquired;
* discussed the future operation of the newly acquired
subsidiary and synergies expected from the
acquisition;
* Obtained management's forecasts for the intangibles
of the business acquired ;
* Assessed the reliability of forecasts by agreeing
amounts to actual results to date and plans ; and
* Reviewed management and challenged management on
their judgements of the forecasted sales;
* assessed the appropriateness and applicability of
discount rate applied to the current business
performance;
* reviewed the consolidated financial statements to
ensure all the necessary disclosures were made;
Based on the audit work performed
we are satisfied that the acquired
entity has been accurately consolidated
and all necessary disclosures have
been made in the financial statement
of the group.
-------------------------------------------------------------------
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgment, we determined materiality
for the financial statements as a whole as follows:
Group financial statements Company financial statements
Overall materiality GBP243,000 (2019: GBP93,000). GBP196,000 (2019: GBP93,000).
------------------------------ ------------------------------
How we determined it Based on 1% of Gross Assets Based on 1% of Gross Assets
(2019: 1% of Gross Assets). (2019: 1% of Gross Assets).
------------------------------ ------------------------------
Rationale for We believe that Gross Assets We believe that Gross Assets
benchmark applied are a primary measure used are a primary measure used
by shareholders in assessing by shareholders in assessing
the financial position the financial position
of the group, and is a of the group, and is a
generally accepted auditing generally accepted auditing
benchmark. benchmark.
------------------------------ ------------------------------
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The
range of materiality allocated across components was between
GBP5,000 and GBP60,000.
We agreed with the Audit and Risk Committee that we would report
to them misstatements identified during our audit above GBP11,050
(Group audit) (2019: GBP4,650) and GBP8,900 (Company audit) (2019:
GBP4,650) as well as misstatements below those amounts that, in our
view, warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls, and
the industry in which they operate.
The Group financial statements are a consolidation of eight
reporting units, comprising the Group's operating businesses and
holding companies.
We performed audits of the complete financial information for
DeepVerge Plc, Innovenn UK Limited, Integumen Ireland Limited,
Stoer Ireland Limited, Rinocloud Limited and Modern Water Plc,
reporting units, which were individually financially significant
and accounted for over 100% of the Group's revenue and over 99% of
the Group's absolute loss before tax (i.e. the sum of the numerical
values without regard to whether they were profits or losses for
the relevant reporting units).
The Group engagement team performed all audit procedures, with
the exception of the audits of Lifesciencehub UK Limited and
Lifesciencehub Ireland Limited, which were performed by a component
auditor in The Republic of Ireland where the audited financial
statements were reviewed.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 14, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and parent company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs, we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
-- Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
-- Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the company's internal control.
-- Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by the directors.
-- Conclude on the appropriateness of the directors' use of the
going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group's
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
our auditor's report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future events or
conditions may cause the company to cease to continue as a going
concern.
-- Evaluate the overall presentation, structure and content of
the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
-- Obtain sufficient appropriate audit evidence regarding the
financial information of the business activities within the Group
to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe
these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at:
www.frc.org.uk/auditorsresponsibilities This description forms part of our auditor's report.
Use of this report
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Sanjay Parmar (Senior Statutory Auditor)
For and on behalf of Jeffreys Henry LLP, Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
30 June 2021
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
2020 2019
Notes GBP'000 GBP'000
------------------------------------------------ -------- -------- --------
Continuing operations
Revenues * 5 4,483 823
Costs of sales (2,639) (221)
------------------------------------------------ -------- -------- --------
Gross profit 1,844 602
Administrative Costs 6 (4,561) (2,973)
Operating loss (2,717) (2,371)
------------------------------------------------ -------- -------- --------
Depreciation 6,16 172 101
Amortisation 6,14,15 941 442
Impairment of intangible assets 6,15 - 241
Impairment of Investment 17 354 -
Exceptional items 6,7 391 532
EBITDA before exceptional items (859) (1,055)
------------------------------------------------ -------- -------- --------
Finance costs 11 (183) (26)
Loss before income tax (2,900) (2,397)
Taxation 12 182 126
------------------------------------------------ -------- -------- --------
(Loss) for the year from continuing operations (2,718) (2,271)
Profit for the year from discontinued
operations 34 - 6
------------------------------------------------ -------- -------- --------
Loss for the year (2,718) (2,265)
------------------------------------------------ -------- -------- --------
Other comprehensive income
------------------------------------------------ -------- -------- --------
Currency translation differences 33 (8)
------------------------------------------------ -------- -------- --------
Total comprehensive loss for the year (2,685) (2,273)
------------------------------------------------ -------- -------- --------
Loss per share from continuing and discontinued
operations attributable to owners of the
parent during the year Pence Pence
Basic and diluted loss per 0.1p ordinary
share**
From continuing operations 13 2.1p 2.8p
From discontinued operations 13 0.0p 0.0p
------------------------------------------------- --- ------ ------
From loss for the year 13 2.1p 2.8p
------------------------------------------------- --- ------ ------
* 2020 Revenue excludes GBP2,167,000 Modern Water 2020
pre-acquisition revenue.
** On 16 September 2020 share consolidation of 0.01p ordinary
share in 10: 1 conversion to 0.1p new ordinary share.
The notes on pages 32 to 70 are an integral part of these
consolidated financial statements.
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent Company income
statement account.
The loss for the parent Company for the year was GBP 1,590,000
(2019: GBP1,384,000).
Consolidated and Company's Statement of Financial Position
As at 31 December 2020
Group Group Company Company
2020 2019 2020 2019
Notes GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------- --------- --------- --------- ---------
Assets
Non-current assets
Intangible assets 15 18,241 3,654 38 53
Property, plant and equipment 16 874 471 - -
Right of use assets 14 569 503 - -
Investments in subsidiaries 17 - - 15,603 3,488
Loans to subsidiary undertakings 29 - - 2,867 3,259
Other investments 17 354 708 354 708
Total non-current assets 20,038 5,336 18,862 7,508
---------------------------------- ------- --------- --------- --------- ---------
Current assets
Inventories 19 1,347 85 - -
Trade and other receivables 20 1,448 549 246 407
Cash and cash equivalents 21 1,441 1,193 451 1,115
---------------------------------- ------- --------- --------- --------- ---------
Total current assets 4,236 1,827 697 1,522
---------------------------------- ------- --------- --------- --------- ---------
Total assets 24,274 7,163 19,559 9,030
---------------------------------- ------- --------- --------- --------- ---------
Equity attributable to owners
Share capital 25 2,380 2,322 2,380 2,322
Share premium account 27 25,069 11,743 25,069 11,743
Retained loss 26 (18,964) (15,400) (19,851) (15,076)
Foreign currency reserve 27 (226) (259) - -
Reverse acquisition reserve 27 (2,843) (2,843) - -
Capital redemption reserve 27 9,519 9,519 9,519 9,519
Share based equity reserve 27 197 6 197 6
---------------------------------- ------- --------- --------- --------- ---------
Sub total 15,132 5,088 17,314 8,514
Non-controlling interests 33 789 - - -
---------------------------------- ------- --------- --------- --------- ---------
Total equity 15,921 5,088 17,314 8,514
---------------------------------- ------- --------- --------- --------- ---------
Non-current liabilities
Deferred tax liabilities 23 2,780 500 - -
Deferred revenue 16 24 - - -
Lease liability 14 358 402 - -
Borrowings 24 583 135 583 -
Total non-current liabilities 3,745 1,037 583 -
---------------------------------- ------- --------- --------- --------- ---------
Current liabilities
Trade and other payables 22 2,667 693 745 516
Deferred tax liabilities 23 328 61 - -
Lease Liability 14 264 102 - -
Borrowings 24 1,349 182 917 -
Total current liabilities 4,608 1,038 1,662 516
---------------------------------- ------- --------- --------- --------- ---------
Total liabilities 8,353 2,075 2,245 516
---------------------------------- ------- --------- --------- --------- ---------
Total equity and liabilities 24,274 7,163 19,559 9,030
---------------------------------- ------- --------- --------- --------- ---------
The notes on pages 32 to 70 are an integral part of these
financial statements.
The financial statements were approved and authorised for issue
by the Board on 30 June 2021.
Camillus Glover DeepVerge Plc
Chief Financial Officer Registered no: 10205396
Consolidated and Company's Statement of Cash Flows
For the year ended 31 December 2020
Group Group Company Company
2020 2019 2020 2019
Notes GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------------------- -------- -------- -------- -------- -------------
Cash Flow from operating activities
--------------------------------------------------------------- -------- -------- -------- -------- -------------
Cash used in operations 28 (2,098) (2,281) (4,141) (2,887)
Taxation 12 77 32 - -
Net Interest (paid)/received 11 (183) (26) (90) (2)
Net cash used in operating activities (2,205) (2,275) (4,231) (2,889)
--------------------------------------------------------------- -------- -------- -------- -------- -------------
Cash flow from investing activities
Acquisition of subsidiary net of cash balance 33 739 22 739 22
Payments to acquire intangibles 15 (488) (213) - -
Purchase of property, plant and equipment 16 (296) (138) - -
Net cash used in investing activities (45) (329) 739 22
--------------------------------------------------------------- -------- -------- -------- -------- -------------
Cash flow from financing activities
Proceeds from issuance of ordinary shares 1,328 3,961 1,328 3,961
Proceeds from new loans 1,500 - 1,500 -
Capital element of finance lease (125) (19) - -
Repayments on borrowings (205) (171) - -
Net cash generated by financing activities 2,498 3,771 2,828 3,961
--------------------------------------------------------------- -------- -------- -------- -------- -------------
Net increase/ (decrease) in cash and cash equivalents 248 1,167 (664) 1,094
Cash and cash equivalents at beginning of year 1,193 26 1,115 21
Effects of exchange rate changes on cash and cash equivalents - - - -
Cash and cash equivalents at end of year 21 1,441 1,193 451 1,115
--------------------------------------------------------------- -------- -------- -------- -------- -------------
Consolidated Statement of Changes in Shareholders' Equity
Capital Share
Group Foreign Reverse redempt-ion based
Share Share Retained currency acquisition reserve equity Non-controlling
capital premium earnings reserve reserve reserve interests Total
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
At 1 January
2019 2,260 3,662 (13,221) (251) (2,843) 9,519 90 (784)
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
Changes in
equity for the
year
ended 31
December 2019
Loss for the
year - - (2,265) - - - - - (2,265)
Currency
translation
differences - - - (8) - - - - (8)
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
Total
comprehensive
loss
for the year - - (2,265) (8) - - - - (2,273)
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
Transactions
with the owners
Shares issued
during the year 62 8,419 - - - - - - 8,481
Costs of Share
issue - (338) - - - - - - (338)
Share
option-based
charge - - - - - - 2 - 2
Transferred from
Share based
equity reserve - - 86 - - - (86) - -
Total
contributions
by and
distributions
to owners 62 8,081 86 - - - (84) - 8,145
At 31 December
2019 2,322 11,743 (15,400) (259) (2,843) 9,519 6 - 5,088
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
Changes in
equity for the
year
ended 31
December 2020
Loss for the
year - - (2,718) - - - - - (2,718)
Non-controlling
interests (note
33) - - (846) - - - - 789 (57)
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
Currency
translation
differences . - - 33 - - - - 33
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
Total
comprehensive
loss
for the year - - (3,564) 33 - - - 789 (2,742)
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
Transactions
with the owners
Shares issued
during the year 58 13,326 - - - - - - 13,384
Costs of Share - - - - - - -
issue -
Share
option-based
charge - - - - - - 191 - 191
Transfer from - - - - - - - -
Share based
equity reserve -
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
Total
contributions by
and
distributions to
owners - - - - - - - - -
At 31 December
2020 2,380 25,069 (18,964) (226) (2,843) 9,519 191 789 15,921
----------------- --------- --------- ---------- ---------- ------------ ------------ -------- ---------------- --------
Capital Share based
Company Share Retained redemption equity
Share capital premium earnings reserve reserve Total
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
At 1 January
2019 2,260 3,662 (13,778) 9,519 90 1,753
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
Changes in
equity for the
year
ended 31
December 2019
Loss for the
year - - (1,384) - - (1,384)
Total
comprehensive
loss
for the year - - (1,384) - - (1,384)
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
Transactions
with the owners
Shares issued
during the year 62 8,419 - - - 8,481
Costs of Share
issue - (338) - - - (338)
Share
option-based
charge - - - - 2 2
Transferred from
Share based
equity reserve - - 86 - (86) -
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
Total
contributions
by and
distributions
to owners 62 8,081 86 - (84) 8,145
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
At 31 December
2019 2,322 11,743 (15,076) 9,519 6 8,514
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
Changes in
equity for the
year
ended 31
December 2020
Loss for the
year - - (1,590) - - (1,590)
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
Total
comprehensive
loss
for the year - - (1,590) - - (1,590)
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
Shares issued
during the year 58 13,326 - - - 13,384
Costs of Share -
issue - - - -
Share
option-based
charge - - - - 191 191
Subsidiary loan
forgiveness
(note 17) - - (3,185) - - (3,185)
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
Total
contributions by
and
distributions to
owners - - - - - -
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
At 31 December
2020 2,380 25,069 (19,851) 9,519 197 17,314
----------------- -------------------- ---------- ---------- ------------ ------------ -------- ----------------
Notes to the Financial Statements
For the year ended 31 December 2020
1. General information
DeepVerge Plc is a company incorporated in England and Wales.
The registered number of the Company is 10205396. At General
Meeting of shareholders on 15 September 2020 the company changed
its name from Integumen Plc to DeepVerge Plc.
The Company is a public limited company admitted to trading on
the AIM market of the London Stock Exchange since 5 April 2017. The
address of the registered office is York Biotech Campus, Sand
Hutton, York, YO41 1LZ.
The Company is an environmental and life science group whose
principal activities is the development and application of AI and
IoT technology to analytical instruments for the analysis and
identification of bacteria, virus and toxins. Utilising artificial
intelligent data analytics to scientifically prove the impact of
skincare product claims on skin microbiome and the remote detection
and identification in real-time, dangerous pathogens, such as
SARS-CoV-2 in wastewater treatment plants, drinking water, rivers,
lakes and reservoirs.
The financial statements are presented in pounds sterling, the
currency of the primary economic environment in which the Group's
trading companies operate. The Group comprises DeepVerge Plc and
its subsidiary companies as set out in note 17.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. The
policies have been consistently applied throughout the year, unless
otherwise stated.
Basis of preparation
The consolidated financial statements of DeepVerge Plc have been
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs), IFRIC
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS. Practice is continuing to evolve on the
application and interpretations of IFRS.
The consolidated financial statements have been prepared under
the historical cost convention.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in note 4.
Under Section 479A of the Companies Act 2006, exemptions from an
audit of the accounts for the financial year ended 31 December 2019
have been taken all subsidiary companies of the Company as listed
in Note 17 Investments. As required, the Company guarantees all
outstanding liabilities to which the subsidiary companies listed
are subject at the end of the financial year, until they are
satisfied in full and the guarantee is enforceable against the
parent undertaking by any person to whom the subsidiary companies
listed above is liable in respect of those liabilities.
Changes in accounting policies and disclosures
(a) New and amended standards adopted by the Group
There are no IFRS or IFRIC interpretations that are effective
for the first time in this financial period that would be
expected to have a material impact on the Group.
(b) Standards, amendments and interpretations to existing
standards that are not yet effective and have not been
early adopted by the Company in the 31 December 2020 financial
statements.
Amendment to IFRS 16, 'Leases' Covid-19 Related Rent
Concessions: 1 April 2021
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform - Phase 2: 1 January 2021
Amendments to IAS 1, Presentation of financial statements' on
classification of liabilities: 1 January 2022
A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 17,
and some annual improvements
on IFRS 1, IFRS 9, IAS 41 and IFRS 16: 1 January 2022
The Directors anticipate that the adoption of these standard and
the interpretations in future period will have no
material impact on the financial statements of the company.
Going concern
The financial statements have been prepared on the assumption
that the company is a going concern. When assessing the foreseeable
future, the Directors have looked at the forecast for the next 12
months from the date of this report, expected growth in revenues,
some of which is contracted, the cash at bank available, loan
facilities and existing liabilities as at the date of approval of
this report and are satisfied that the Group should be able to
cover its working capital requirements.
The Directors have considered the applicability of the going
concern basis in the preparation of these financial statements.
Since January 2021 the Company has raised GBP11.3m, before
expenses, for shares issued. See note 36 for full details.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt a going concern basis in preparing the annual
report and consolidated financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiary and associated
undertakings. Subsidiaries are all entities over which the Group
has the power to govern their financial and operating policies
generally accompanying a shareholding of more than fifty per cent
of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered
when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are de-consolidated from the date
that control ceases.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
The Group's share of post-acquisition profit or loss is
recognised in the income statement, and its share of
post-acquisition movements in other comprehensive income is
recognised in the comprehensive income with a corresponding
adjustment in the carrying amount of the investment.
(a) Acquisition accounting
The Group uses the acquisition method of accounting to account
for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred, and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration agreement. Acquisition related costs are expensed as
incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. On
an acquisition by acquisition basis, the Group recognises any
non-controlling interest in the acquiree either at fair value or at
the non-controlling interest's proportionate share of the
acquiree's net assets.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition date
fair value of any previous equity interest in the acquiree over the
fair value of the Group's share of the identifiable net assets
acquired is recorded as goodwill. If this is less than the fair
value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognised directly in the
income statement.
Investments in subsidiaries are accounted for at cost less
impairment. Cost is adjusted to reflect changes in consideration
arising from contingent consideration amendments.
(b) Reverse acquisition accounting
The acquisition of Innovenn UK Limited and its subsidiary by
DeepVerge Plc on 17 November 2016 has been accounted using the
principles of reverse acquisition accounting. Although the Group
financial statements have been prepared in the name of the legal
parent, DeepVerge Plc, they are in substance a continuation of the
consolidated financial statements of the legal subsidiary, Innovenn
UK Limited. The following accounting treatment has been applied in
respect of the reverse accounting:
The assets and liabilities of the legal subsidiary, Innovenn UK
Limited are recognised and measured in the Group financial
statements at the pre-combination carrying amounts, without
restatement of fair value. The retained earnings and other equity
balances recognised in the Group financial statements reflect the
retained earnings and other equity balances of Innovenn UK Limited
immediately before the business combination and the results of the
period from 1 January 2014 to the date of the business combination
are those of Innovenn UK Limited. However, the equity structure
appearing in the Group financial statements reflects the equity
structure of the legal parent, DeepVerge Plc, including the equity
instruments issued in order to effect the business combination.
Foreign currency translation
(a) Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the functional
currency). The consolidated financial statements are presented in
sterling, which is the functional and presentational currency of
the main operating entities.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions where items are re-measured. Foreign exchange gains
and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in
the income statement within 'administrative expenses', except when
deferred in other comprehensive income as qualifying cash flow
hedges and qualifying net investment hedges.
(c) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyper-inflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentational currency as
follows:
-- assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
-- income and expenses for each income statement are translated at average exchange rates; and
-- all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations are taken
to other comprehensive income. When a foreign operation is
partially disposed of or sold, exchange differences that were
recorded in equity are recognised in the income statement as part
of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Executive Directors who make
strategic decisions.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation and any provision for impairment.
Historical cost includes expenditure that is directly attributable
to the acquisition of the asset and bringing the asset to its
working condition for its intended use.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only where it is
probable that future economic benefits associated with the asset
will flow to the Group and the cost of the asset can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Any borrowing costs associated with qualifying property plant and
equipment are capitalised and depreciated at the rate applicable to
that asset category.
Depreciation on assets is calculated using the straight-line
method or reducing balances method to allocate their cost to its
residual values over their estimated useful lives, as follows:
Fixtures and fittings 20% - 33%
Plant and machinery 16% - 20%
The assets' residual values and useful economic lives are
reviewed regularly, and adjusted if appropriate, at the end of each
reporting period.
An asset's carrying value is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on the disposal of assets are determined by
comparing the proceeds with the carrying amount and are recognised
in administration expenses in the income statement.
Intangible assets
Intellectual property rights
Intellectual property rights relate to patents, and licences
acquired by the Group. Amortisation is calculated using the
straight-line method over the expected life of 5 - 10 years and is
charged to administrative expenses in the income statement.
Development costs
Development costs that are directly attributable to the design
and testing of identifiable and unique products controlled by the
group are recognised as intangible assets when the following
criteria are met:
-- it is technically feasible to complete the product so that it
will be available for use;
-- management intends to complete the product and use or sell
it;
-- there is an ability to use or sell the project;
-- it can be demonstrated how the products will generate
probable future economic benefits;
-- adequate technical, financial and other resources to complete
the development and to use or sell the product are available;
and
-- the expenditure attributable to the product during its
development can be reliably measured. Directly attributable costs
that are capitalised as part of the product include employee costs
and an appropriate portion of relevant overheads.
Capitalised development costs are recorded as intangible assets
and amortised from the point at which the asset is ready for use
using the straight-line method over the expected life of 5 - 10
years and is charged to administrative expenses in the income
statement.
Know how acquired as part of business combinations is
capitalised at fair value at the date of acquisition. Following
the
initial recognition, the carrying amount of the know how is its
cost less accumulated amortisation and any accumulated
impairment losses. Amortisation is charged on the basis of the
estimated useful life on a straight-line basis and the
expense is taken to the Statement of Comprehensive Income which
management estimate to be ten years.
Impairment of non-financial assets
Assets that have an indefinite life such as goodwill are not
subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the carrying amount exceeds its
recoverable amount.
The recoverable amount is the higher of an asset's fair value
less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of the money and the risks specific
to the asset which the estimates of future cash flows have not been
adjusted.
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows. Impairment losses recognised for cash-generating units, to
which goodwill has been allocated, are credited initially to the
carrying amount of goodwill. Any remaining impairment loss is
charged pro rata to the other assets in the cash-generating
unit.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in the prior period. A
reversal of an impairment loss is recognised in the income
statement immediately. If goodwill is impaired however, no reversal
of the impairment is recognised in the financial statements.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is based on the first-in first-out method and includes
expenditure incurred in acquiring the inventories and bringing them
to their existing location and condition. Net realisable value is
based on estimated selling price in the ordinary course of
business, less further costs expected to be incurred to completion
and disposal. Provision is made for obsolete, slow-moving or
defective items where appropriate.
Financial instruments
Recognition and initial measurement
Financial assets and financial liabilities are initially
classified as measured at amortised cost, fair value through other
comprehensive income, or fair value through profit and loss when
the group becomes a party to the contractual provisions of the
instrument.
Financial assets at amortised cost
The group's financial assets at amortised cost comprise trade
and other receivables. These represent debt instruments with fixed
or determinable payments that represent principal or interest and
where the intention is to hold to collect these contractual cash
flows.
They are initially recognised at fair value, included in current
and non-current assets, depending on the nature of the transaction,
and are subsequently measured at amortised cost using the effective
interest method less any provision for impairment.
Financial liabilities at amortised cost
Financial liabilities at amortised cost comprise trade and other
payables, and borrowings. They are classified as current and
non-current liabilities depending on the nature of the transaction,
are subsequently measured at amortised cost using the effective
interest method.
Financial assets at fair value through other comprehensive
income (FVOCI)
Financial assets at fair value through other comprehensive
income are comprised of the investment in Cellulac plc. The
election has been made to designate this asset as FVOCI. FVOCI
assets are recognised and measured at fair value with gains and
losses recognised in OCI.
The fair value measurement of the group's financial and non-
financial assets and liabilities utilises market observable inputs
and data as far as possible. Inputs used in determining fair value
measurements are categorised into different levels based on how
observable the inputs used in the valuation technique utilised are
(the 'fair value hierarchy').
Level 1 - Quoted prices in active markets
Level 2 - Observable direct or indirect inputs other than Level
1 inputs
Level 3 - Inputs that are not based on observable market
data
The group measures financial instruments relating to other
investments at fair value using Level 3, as the investment is not
listed, and has no readily available market price.
Derecognition
The Group derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire, or when
it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or in which the
Group neither transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain control of the
financial asset.
The Group derecognises a financial liability when its
contractual obligations are discharged, cancelled or expire.
Impairment
In accordance with IFRS 9 an expected loss provisioning model is
used to calculate an impairment provision. We have implemented the
IFRS 9 simplified approach to measuring expected credit losses
('ECL') arising from trade and other receivables, being a lifetime
expected credit loss. In the previous year the incurred loss model
is used to calculate the impairment provision.
Research and development
Research expenditure is written off to the statement of
comprehensive income in the year in which it is incurred.
Development expenditure is written off in the same way unless the
Directors are satisfied as to the technical, commercial and
financial viability of individual projects. In this situation, the
expenditure is deferred and amortised over the period during which
the company is expected to benefit.
Trade and other receivables
Trade receivables are initially recognised at fair value, being
the original invoice amount, and subsequently measured at amortised
cost less provision for impairment. A provision for impairment is
established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original
terms of the receivable. Trade receivables that are less than three
months past due date are not considered impaired unless there are
specific financial or commercial reasons that lead management to
conclude that the customer will default. Older debts are considered
to be impaired unless there is sufficient evidence to the contrary
that they will be settled. The amount of the provision is the
difference between the asset's carrying value and the present value
of the estimated future cash flows. The carrying amount of the
asset is reduced through the use of an allowance account, and the
amount of the loss is recognised in the income statement within
administrative expenses. When a trade receivable is uncollectible
it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against
administrative expenses in the income statement.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash
at bank and in hand and short-term deposits with an original
maturity of less than three months, reduced by overdrafts to the
extent that there is a right of offset against other cash
balances.
For the purposes of the consolidated cash flow statement, cash
and cash equivalents consist of cash and short-term deposits as
defined above net of outstanding bank overdrafts.
Share capital
Ordinary Shares and Deferred shares are classified as equity.
Proceeds in excess of the nominal value of shares issued are
allocated to the share premium account and are also classified as
equity. Incremental costs directly attributable to the issue of new
Ordinary Shares or options are deducted from the share premium
account.
Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised
initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
Borrowings
Borrowings are recognised initially at the fair value of
proceeds received, ne of transaction costs incurred. Borrowings are
subsequently carried at amortised cost. Borrowings are classified
as current liabilities unless the Group has an unconditional right
to defer settlement of the liability for at least 12 months after
the balance sheet date.
Borrowing costs are expensed in the consolidated Group income
statement under the heading 'finance costs'. Arrangement and
facility fees together with bank charges are charged to the income
statement under the heading 'administrative costs'.
Current and deferred income tax
The tax expense comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it
relates to items recognised in other comprehensive income where the
associated tax is also recognised in other comprehensive
income.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the Company and its subsidiaries operate and
generate taxable income. Management evaluates positions taken in
tax returns with respect to situations in which applicable tax
regulation is subject to interpretation and establishes provisions
where appropriate on the basis of amounts expected to be paid to
the tax authorities.
Deferred tax is recognised, using the liability method, on all
temporary differences at the balance sheet date between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred tax liabilities are
recognised in respect of all temporary differences except where the
deferred tax liability arises from the initial recognition of
goodwill in business combinations.
Deferred tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax assets and tax losses, to
the extent that they are regarded as recoverable. They are regarded
as recoverable where, on the basis of available evidence, there
will be sufficient taxable profits against which the future
reversal of the underlying temporary differences can be
deducted.
The carrying value of the amount of deferred tax assets is
reviewed at each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be
available to allow all, or part, of the tax asset to be
utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on the tax rates (and
tax laws) that have been substantively enacted at the balance sheet
date.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Exceptional items
These are items of an unusual or non-recurring nature incurred
by the Group and include transactional costs and one-off items
relating to business combinations, such as acquisition
expenses.
Leases
Right of use assets
The Company recognises right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless the
Company is reasonably certain to obtain ownership of the leased
asset at the end of the lease term, the recognised right-of-use
assets are depreciated on a straight-line basis over the shorter of
its estimated useful life and the lease term. Right-of-use assets
are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Company recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Company and payments of penalties for terminating a lease, if
the lease term reflects the Company exercising the option to
terminate. The variable lease payments that do not depend on an
index or a rate are recognised as expense in the period on which
the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company
uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.Short-term leases and leases of
low-value assets.
The Company applies the short-term lease recognition exemption
to its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also
applies the lease of low-value assets recognition exemption to
leases of office equipment that are considered of low value (i.e.,
below GBP5,000). Lease payments on short-term leases and leases of
low-value assets are recognised as expense on a straight-line basis
over the lease term.
Employee benefits
Pension obligations
Group companies operate a pension scheme with defined
contribution plans. A defined contribution plan is a pension plan
under which the Group pays fixed contributions into a separate
entity with the pension cost charged to the income statement as
incurred. The Group has no further obligations once the
contributions have been paid.
Revenue recognition
(a) Revenue from sale of goods
Revenue represents the fair value of consideration received or
receivable for goods delivered to customers in the normal course of
business, net of trade discounts and VAT.
(b) Revenue from services to customers
Revenue is recognised to the extent that it is probable that
economic benefits will flow to the Company and the revenue can be
reliably measured. Revenue represents the fees and commissions, net
of discounts, derived from services provided to and invoiced to
customers. Revenue is recognised in the period in which the service
is performed, in accordance with contractual arrangements. Income
billed in advance of the performance of service is deferred and
income in respect of work carried out but not billed at the period
end is accrued. Where the contract outcome cannot be measured
reliably, revenue is recognised to the extent of the costs
recognised that are recoverable.
(c) Interest income
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
(d) Royalty and licence income
Royalty and licence income is recognised on an accruals basis in
accordance with the substance of the relevant agreements.
Dividend distribution
Dividend distributions to the Company's shareholders are
recognised as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders. Interim dividends are recognised when paid.
3. Financial risk management
Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk (foreign exchange risk and cash flow interest
rate risk), credit risk, liquidity risk, capital risk and fair
value risk. The Group's overall risk management programme focuses
on the unpredictability of the financial markets and seeks to
minimise the potential adverse effects on the Group's financial
performance. The Group does not use derivative financial
instruments to hedge risk exposures.
Risk management is carried out by the head office finance team.
It evaluates and mitigates financial risks in close co-operation
with the Group's operating units. The Board provides principles for
overall risk management whilst the head office finance team
provides specific policy guidance for the operating units in terms
of managing foreign exchange risk, credit risk and cash and
liquidity management.
(a) Market risk
Foreign exchange - cash flow risk
The Group's presentational currency is sterling although it
operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily between GBP and
both Dollars and Euro such that the Group's cash flows are affected
by fluctuations in the rate of exchange between sterling and the
aforementioned foreign currencies.
Management do not use derivative financial instruments to
mitigate the impact of any residual foreign currency exposure not
mitigated by the natural hedge within the business model. The Group
does not speculate in foreign currencies and no operating Company
is permitted to take unmatched positions in any foreign
currency.
Foreign exchange - Fair value risk
Translation exposures that arise on converting the results of
overseas subsidiaries are not hedged. Net assets held in foreign
currencies are hedged wherever practical by matching borrowings in
the same currency. The principal exchange rates used by the Group
in translating overseas profits and net assets into Euro are set
out in the table below.
Average rate Year end rate Average rate Year end rate Compared
to Sterling 2020 2020 2019 2019
Euro 0.89 0.90 0.88 0.85
US Dollar 0.78 0.73 0.78 0.76
A 5% strengthening of the foreign exchange rates as at 31
December 2020, and for the year then ended, would have increased
the net liabilities by GBP 59,000 (2019: GBP43,000). A 5% weakening
would have had an equal and opposite effect.
Cash flow and fair value interest rate risk
The Group has assets in the form of cash and cash equivalents
and limited interest-bearing liabilities which relate to long-term
borrowing. Interest rates on cash and cash equivalents are
currently zero whilst interest rates on bank borrowings are 4.25%
over the banks Cost of Funds Rate and therefore expose the Group to
fair value interest rate risk. The Group does not speculate on
future changes in interest rates.
It is the Group's policy not to trade in derivative financial
instruments. The Group does not use interest rate swaps.
(b) Credit risk
Credit risk is managed on a Group basis, except for credit risk
relating to accounts receivable balances. Each local subsidiary and
operating business unit is responsible for managing and analysing
the credit risk for each of their new customers before standard
payment and delivery terms and conditions are offered. Credit risk
is managed at the operating business unit level and monitored at
the Group level to ensure adherence to Group policies. If there is
no independent rating, local management assesses the credit quality
of the customer, taking into account its financial position, past
experience and other factors. Individual risk limits are set based
on internal or external ratings in accordance with limits set by
the board. The utilisation of credit limits is regularly
monitored.
Credit risk also arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and
financial institutions, as well as credit exposures to
customers.
(c) Liquidity risk
Cash flow forecasting is performed in the individual operating
entities of the Group and is aggregated by Group finance. Group
finance monitors cash and cash flow forecasts and it is the Group's
liquidity risk management policy to maintain sufficient cash and
available
funding through an adequate amount of cash and cash equivalents
and committed credit facilities from its bankers. Due to the
dynamic nature of the underlying businesses, the head office
finance team aims to maintain flexibility in funding by keeping
sufficient cash and cash equivalents available to fund the
requirements of the Group.
The Group's policy in relation to the finance of its overseas
operations requires that sufficient liquid funds be maintained in
each of its subsidiaries to support short and medium-term
operational plans. Where necessary, short-term funding is provided
by the parent Company. Typically, excess funds are placed as
short-term deposits, to provide a balance between interest earnings
and flexibility.
The table below analyses the Group's non-derivative financial
liabilities into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date.
The amounts disclosed in the table are the contractual undiscounted
cash flows.
Less than Between Between More than
Notes one year 1 and 2 years 2 and 5 years 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December 2020:
Borrowings 24 1,349 583 - - 1,932
Trade and other payables 22 2,667 - - - 2,667
At 31 December 2019:
Borrowings 24 182 135 - - 317
Trade and other payables 22 693 - - - 693
(d) Capital risk management
The Group's objectives when managing capital are to safeguard
the ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital.
The Group monitors capital on the basis of the gearing ratio.
This ratio is calculated as net debt divided by total capital. Net
debt is calculated as total borrowings (including "current and
non-current borrowings" as shown in the consolidated balance sheet)
less cash and cash equivalents. Total capital is the sum of net
debt plus equity.
Government grant
A government grant is recognised only when there is reasonable
assurance that (a) the entity will comply with any conditions
attached to the grant and (b) the grant will be received. The grant
is recognised as income over the period necessary to match them
with the related costs, for which they are intended to compensate,
on a systematic basis
4. Critical accounting estimates and judgements
In the process of applying the Group's accounting policies,
management has made accounting judgements in the determination of
the carrying value of certain assets and liabilities. Due to the
inherent uncertainty involved in making assumptions and estimates,
actual outcomes will differ from those assumptions and estimates.
The following judgements have the most significant effect on the
amounts recognised in the financial statements.
(a) Business combinations
The recognition of business combinations requires the excess of
the purchase price of acquisitions over the net book value of
assets
acquired to be allocated to the assets and liabilities of the
acquired entity. The Group makes judgements and estimates in
relation to the fair value allocation of the purchase price. If any
unallocated portion is positive it is recognised as goodwill.
The acquisition of Modern Water in November 2020 includes an
assessment and valuation of the intangible assets acquired
(b) Impairment of cost of investments
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in note
2. The recoverable amounts of cash-generating units have been
determined based on value-in-use calculations. These calculations
require the use of estimates as set out in note 15. In addition,
the Group has also considered the impairment of the investments in
the subsidiary undertakings.
(c) Intangible assets (including capitalised development costs
and know how)
The assessment of the future economic benefits generated by
these separately identifiable intangible assets and the
determination of its amortisation profile involve a significant
degree of judgement based on management estimation of future
potential revenue and profit and the useful life of the assets.
Reviews are performed regularly to ensure the recoverability of
these intangible assets. Should the intangible asset be deemed
irrecoverable it will be impaired in the period.
5. Segmental analysis
(a) Reportable segments
Management has determined the Group's operating segments based
on the monthly management reports presented to the Chief Operating
Decision Marker ('CODM'). The CODM is the Executive Directors and
the monthly management reports are used by the Group to make
strategic decisions and allocate resources. With the Company
gaining control of Modern Water on 9 November 2020 for management
reporting purposes the group is organised into three operating
segments of (i) Life Science, (ii) Data AI and (iii)
Monitoring.
Administrative expenses which are directly attributable to the
three main operating Divisions (comprised of business development,
sales, operations and technical expenditure) are reported as
expenditure in the respective Division. However, a significant
proportion of the Group's expenditure (legal, marketing, finance,
facilities and directors' expenditure) is managed and reported
centrally. A proportion of these charges have been recharged to
subsidiary companies. As the commercial activities of the Group
continue to develop, this financial information is expected to
evolve further.
Currently the key operating performance measures used by the
CODM are revenue, EBITDA and cash resources.
2020 2019
------------------------------------------------------------------------------------------- -----------------------------------------------
Life Data Monitor
Life Science Data AI Monitor-ing Central Total Science AI -ing Central Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ---------------- ----------------- ----------------- ------------------ --------------- -------- ------- -------- -------- --------
Revenue 2,443 919 1,121 - 4,483 565 258 - - 823
Cost of Sales (1,483) (421) (735) - (2,639) (221) - - - (221)
---------------- ---------------- ----------------- ----------------- ------------------ --------------- -------- ------- -------- -------- --------
Gross Profit 960 498 386 - 1,844 344 258 - - 602
---------------- ---------------- ----------------- ----------------- ------------------ --------------- -------- ------- -------- -------- --------
Admin expenses
* (1,213) (477) (283) (729) (2,703) (756) (298) - (603) (1,657)
---------------- ---------------- ----------------- ----------------- ------------------ --------------- -------- ------- -------- -------- --------
EBITDA (253) 21 103 (729) (859) (412) (39) - (603) (1,055)
---------------- ---------------- ----------------- ----------------- ------------------ --------------- -------- ------- -------- -------- --------
Depreciation** (146) (1) (23) (2) (172) (100) - - - (101)
Amortization (114) (141) (64) (622) (941) (16) (87) - (339) (442)
Impairment - - - (354) (354) - - - (241) (241)
Exceptional
items - - - (391) (391) - (31) - (501) (532)
---------------- ---------------- ----------------- ----------------- ------------------ --------------- -------- ------- -------- -------- --------
Operational
(Loss)/Profit (513) (121) 13 (2,159) (2,717) (529) (158) - (1,684) (2,371)
---------------- ---------------- ----------------- ----------------- ------------------ --------------- -------- ------- -------- -------- --------
Finance Costs (34) - (3) (146) (183) (23) - - (3) (26)
(Loss)/Profit
before tax (564) (169) 3 (2,304) (2,900) (552) (158) - (1,687) (2,397)
---------------- ---------------- ----------------- ----------------- ------------------ --------------- -------- ------- -------- -------- --------
Taxation 77 - - 105 182 32 - - 94 126
(Loss)/Profit
for the Year (487) (169) 3 (2,199) (2,718) (520) (158) - (1,593) (2,271)
---------------- ---------------- ----------------- ----------------- ------------------ -------- ------- -------- -------- --------
*Admin expenses excludes Depreciation, Amortisation, Impairment
and Exceptional Costs
**Depreciation includes Capital Grant amortisation of GBP1k
(b) Geographical information
Disclosure of group revenue by geographical location is
follows:
2020 2019
GBP'000 GBP'000
-------------------------- -------- --------
United Kingdom 612 222
Europe 264 270
United States of America 2,680 112
Rest of World 927 219
Total revenue 4,483 823
-------------------------- -------- --------
Revenues of GBP2,639,000 (2019: GBP534,000) are derived from 3
(2019: 4) customers each representing more than 10% of the group
revenue.
6. Expenses - analysis by nature
2020 2019
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Employee benefit expense (note 9) 1,415 824
Depreciation (note 16) 173 101
Capital Grants amortization (note 16) (1) -
Amortisation right of use asset (note 14) 144 21
Amortisation (note 15) 797 421
Impairment of intangible assets (note 15) - 241
Impairment of investment (note 17b) 354 -
Exceptional items (note 7) 391 532
Auditors' remuneration - audit of the parent company
and consolidation 20 16
Auditors' remuneration - other services 30 30
Foreign exchange differences 50 25
Share option-based charge 191 2
Other expenses 997 760
------------------------------------------------------ -------- --------
Total administrative costs 4,561 2,973
------------------------------------------------------ -------- --------
7. Exceptional items
Included within administrative expenses are exceptional items as
shown below:
2020 2019
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Exceptional items include:
- Transaction costs relate to business acquisitions 391 532
Total exceptional items 391 532
------------------------------------------------------ -------- --------
8. Directors' remuneration
The remuneration of the Directors in DeepVerge Plc who held
office during the year ended 31 December 2020 was as follows:
2020 2019
GBP'000 GBP'000
--------------------------------------- -------- --------
Aggregate emoluments 471 365
Share option-based charge (note 32) 29 2
--------------------------------------- -------- --------
Total Directors' remuneration 500 367
--------------------------------------- -------- --------
A breakdown of Directors' remuneration has been provided on page
18.
9. Employee benefit expense
2020 2019
GBP'000 GBP'000
---------------------------------------------------- -------- --------
Wages and salaries 1,387 744
Social security costs 113 67
Pension Costs 25 13
Other Benefits 9 -
Capitalised salaries during the Year to Intangible (119) -
Assets
---------------------------------------------------- -------- --------
Total employee benefit expense 1,415 824
---------------------------------------------------- -------- --------
Share option based charge (note 32) 162 -
---------------------------------------------------- -------- --------
10. Average number of people employed
2020 2019
No No
---------------------------------------------------------- ----- -----
Average number of people (including Executive Directors)
employed was:
Administration 13 5
Operations and research 18 8
Sales and marketing 6 3
---------------------------------------------------------- ----- -----
Total average number of people employed 37 16
---------------------------------------------------------- ----- -----
The total number of employees at 31 December 2020 was 43 (2019:
16)
11. Finance costs
2020 2019
GBP'000 GBP'000
----------------------------------------- -------- --------
Interest expense:
- Bank borrowings 93 18
- Other finance costs 25 -
- Interest on right of use asset leases 25 5
- Other interest 40 3
----------------------------------------- -------- --------
Finance costs 183 26
----------------------------------------- -------- --------
12. Income tax expense
2020 2019
Group GBP'000 GBP'000
--------------------------------------------------- -------- --------
Current tax:
Current tax for the year -
Research and development tax credit (77) (32)
--------------------------------------------------- -------- --------
Total current tax (credit)/charge (77) (32)
--------------------------------------------------- -------- --------
Deferred tax (note 23):
Origination and reversal of temporary differences (105) (94)
--------------------------------------------------- -------- --------
Total deferred tax (105) (94)
--------------------------------------------------- -------- --------
Income tax (credit)/charge (182) (126)
--------------------------------------------------- -------- --------
The tax on the Group's results before tax differs from the
theoretical amount that would arise using the standard tax rate
applicable to the profits of the consolidated entities as
follows:
2020 2019
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Loss before tax (2,900) (2,397)
------------------------------------------------------- -------- --------
Tax calculated at domestic tax rates applicable to UK
standard rate of tax of 19% (2019 - 19%) (551) (455)
Tax effects of:
- Impact of actual tax rates 11 18
- Expenses not deductible for tax purposes 140 27
- Research and development tax credit (77) (32)
- Losses carried forward 295 316
Tax (credit) (182) (126)
------------------------------------------------------- -------- --------
There are no tax effects on the items in the statement of
comprehensive income. The effect of losses is discussed in note
23.
13. 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 2020 and
2019 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 year.
2020 2019
Loss from continuing operations GBP2,718,000 GBP2,271,000
(Profit) from discontinued operations - (GBP6,000)
---------------------------------------------------------- ------------------- -------------
Loss attributable to owners of the parent GBP2,718,000 GBP2,265,000
---------------------------------------------------------- ------------------- -------------
Weighted average number of 0.1p Ordinary Shares in issue 128,715,344 80,739,573
Basic loss per ordinary share
---------------------------------------------------------- ------------------- -------------
From continuing operations 2.1p 2.8p
From discontinued operations 0.0p 0.0p
---------------------------------------------------------- ------------------- -------------
From loss for the year 2.1p 2.8p
---------------------------------------------------------- ------------------- -------------
(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 25.
14. Right of use of assets and lease liabilities
Right of use assets 2020 2019
Leasehold Property GBP'000 GBP'000
------------------------------ -------- --------
As at 1 January 503 -
On acquisition of subsidiary -
(note 33) 159
Additions 48 525
Amortisation (144) (21)
Foreign Exchange Movements 3 (1)
------------------------------ -------- --------
As at 31 December 569 503
------------------------------ -------- --------
Lease Liabilities 2020 2019
GBP'000 GBP'000
------------------------------ --------- ---------
As at 1 January 504 -
On acquisition of subsidiary -
(note 33) 191
Additions 44 522
Interest expense 25 5
Lease Payments (150) (24)
Foreign Exchange Movements 8 1
------------------------------- --------- ---------
As at 31 December 622 504
------------------------------- --------- ---------
Current 264 102
Non-current 358 402
------------------------------- --------- ---------
15. Intangible fixed assets
Group Development Costs and Intellectual Property Rights Total
GBP'000 GBP'000
--------------------------------------------- --------------------------------------------------- ---------
Cost
At 1 January 2019 1,968 1,968
On acquisition of subsidiary (note 33) 3,377 3,377
Additions 201 201
Exchange differences (1) (1)
At 31 December 2019 5,545 5,545
--------------------------------------------- --------------------------------------------------- ---------
Amortisation
At 1 January 2019 1,250 1,250
Charge for the year - continuing operations 421 421
Impairment - continuing operations 241 241
Exchange differences (21) (21)
---------------------------------------------
At 31 December 2019 1,891 1,891
--------------------------------------------- --------------------------------------------------- ---------
Net book value
At 31 December 2019 3,654 3,654
--------------------------------------------- --------------------------------------------------- ---------
Cost
At 1 January 2020 5,545 5,545
On acquisition of subsidiary (note 33) 14,882 14,882
Additions 488 488
Exchange differences 60 60
At 31 December 2020 20,975 20,975
--------------------------------------------- --------------------------------------------------- ---------
Amortisation
At 1 January 2020 1,891 1,891
On acquisition of subsidiary - -
Charge for the year - continuing operations 797 797
Exchange differences 46 46
At 31 December 2020 2,734 2,734
--------------------------------------------- --------------------------------------------------- ---------
Net book value
At 31 December 2020 18,241 18,241
--------------------------------------------- --------------------------------------------------- ---------
Company Development Costs and Intellectual Property Rights Total
GBP'000 GBP'000
--------------------- --------------------------------------------------- ---------
Cost
At 1 January 2019 75 75
Additions - -
At 31 December 2019 75 75
--------------------- --------------------------------------------------- ---------
Amortisation
At 1 January 2019 - -
Charge for the year 22 22
At 31 December 2019 22 22
--------------------- --------------------------------------------------- ---------
Net book value
At 31 December 2019 53 53
--------------------- --------------------------------------------------- ---------
Cost
At 1 January 2020 75 75
Additions - -
At 31 December 2020 75 75
--------------------- --------------------------------------------------- ---------
Amortisation
At 1 January 2020 22 22
Charge for the year 15 15
At 31 December 2020 37 37
--------------------- --------------------------------------------------- ---------
Net book value
At 31 December 2020 38 38
--------------------- --------------------------------------------------- ---------
At 31 December 2020, the Group had intangible assets arising
from intellectual property recognised on acquisitions, development
costs on certain research and development and licence
agreements.
Management performed an impairment analysis to determine the
fair value of the intangible assets. In assessing fair value, the
estimated future cash flows of each underlying business unit were
discounted to their present value that reflects management's
current market assessments of the time value of the money and were
adjusted for risks specific to each business segment
For the purpose of impairment testing, other intangible assets
are allocated to the operating segments to which they relate as set
out below and is compared to their recoverable value.
The recoverable amounts were determined using the higher of the
CGU fair value less costs of disposal (FV) and value in use (VIU)
calculations. The fair value less costs of disposal method
calculates the fair value of each CGU based on the Company's share
price and the selling prices of comparable businesses. The VIU
method requires the estimation of future cash flows before tax and
the selection of a suitable discount rate in order to calculate the
net present value (NPV) of these cash flows. The discount rates
applied to each CGU for the value in use projections were between
8% and 12% and all assumptions were reviewed at the end of the year
and revised where necessary.
The key assumptions for the Labskin, Data AI and Monitoring
divisions fair value in use calculations are sales (volume, new
product and services delivery, geographic growth) and gross margin.
Management's forecasts are based on the current five-year business
plan and assume the Division delivers, on average, double digit
revenue growth and maintains stable profit margins, based on past
experience in this market. A discount rate of 10% and a terminal
growth rate of 2% were used to calculate the NPV.
The estimate of recoverable amount is particularly sensitive to
the revenue growth rate and the assumption of a terminal value.
This was stress tested by reducing revenue growth by 10% and
removing the terminal value entirely which show that no impairment
would be recognised.
Management is not currently aware of any other reasonably
possible changes to key assumptions that would cause a unit's
carrying amount to exceed its recoverable amount.
The remaining intangible asset value is predominantly our
actively managed patent portfolio, which is continually reviewed
for impairment in the normal course of business and the individual
patents are also amortised on an annual basis over their lives.
As a result of the impairment analysis, the Directors have
decided that the current value represents fair value so no
impairment of intangible asset for the year (2019: GBP241,000).
16. Property, plant and equipment
a) Fixed Assets
Group Fixtures and fittings Total
GBP'000 GBP'000
--------------------------------------------- ---------------------- ---------
Cost
At 1 January 2019 149 149
Additions 540 540
On acquisition of subsidiary (note 33) 10 10
Exchange differences (2) (2)
At 31 December 2019 697 697
---------------------------------------------- ---------------------- ---------
Depreciation
At 1 January 2019 117 117
On acquisition of subsidiary (note 33) 10 10
Charge for the year - continuing operations 101 101
Exchange differences (2) (2)
----------------------------------------------
At 31 December 2019 226 226
---------------------------------------------- ---------------------- ---------
Net book value
At 31 December 2019 471 471
---------------------------------------------- ---------------------- ---------
Cost
At 1 January 2020 697 697
Additions 320 320
On acquisition of subsidiary (note 33) 273 273
Exchange differences 3 3
At 31 December 2020 1,293 1,293
---------------------------------------------- ---------------------- ---------
Depreciation
At 1 January 2020 226 226
On acquisition of subsidiary (note 33) - -
Charge for the year 173 187
Exchange differences 20 6
At 31 December 2020 419 419
---------------------------------------------- ---------------------- ---------
Net book value
At 31 December 2020 874 874
---------------------------------------------- ---------------------- ---------
Ulster Bank borrowings as detailed in note 24 are secured with a
floating charge against the assets of Innovenn UK Limited, which
include the above fixtures and fittings.
Barclays Bank borrowings as detailed in note 24 are secured by a
fixed and floating charge against the assets of Modern Water plc
and all of its subsidiary companies through a cross guarantee.
The Company had no property, plant and equipment.
b) Capital Grants
Group 2020 2019
GBP'000 GBP'000
-------------------- --------- ---------
Cost
At 1 January - -
Additions 25 -
At 31 December 25 -
-------------------- --------- ---------
Amortisation
At 1 January - -
Charge for the year (1) -
At 31 December (1) -
-------------------- --------- ---------
Net book value
At 31 December 24 -
-------------------- --------- ---------
17. Investments
(a) Investments in subsidiaries
Investments Loan to Subsidiaries
Company GBP'000 GBP'000
---------------------------------------- ------------ ---------------------
At 1 January 2019 729 -
Acquisition during the year (note 33b) 3,000 -
Impairment provision (241) -
Loans advanced - 3,259
---------------------------------------- ------------ ---------------------
At 31 December 2019 3,488 3,259
---------------------------------------- ------------ ---------------------
At 1 January 2020 3,488 3,259
Acquisition during the year (note 33a) 12,115 -
Impairment provision - -
Loans repaid - (325)
---------------------------------------- ------- -------
At 31 December 2020 15,603 2,934
---------------------------------------- ------- -------
Investments in subsidiaries are recorded at cost, which is the
fair value of the consideration paid, less impairments.
On 2 May 2019 the Company acquired the entire share capital of
Rinocloud Limited for a consideration of GBP3.0m.
At 23 November 2020 the Company had acquired 93.47% of the share
capital of Modern Water plc at a value of GBP12.1m.
On 9 November 2020 the company acquired control of Modern Water,
with 80.85% of acceptances on that date of the share holders at
that date. As at 31 December 2020 acceptances were at 93.47% and
the compulsory acquisition of the remaining shares was completed on
15 January 2021. The completed share transaction for a
consideration of GBP13.3m.
Amounts owing from subsidiary companies greater than one year
have been classified as non-current assets in the financial
statements. The total amount owing at 31 December 2020 is
GBP6,195,000 (2019: GBP3,259,000) before Director review below.
Management performed an impairment analysis to determine the
fair value of the investments in, and loans to, subsidiaries. In
assessing fair value, the estimated future cash flows of each
investment were discounted to their present value that reflects
management's current market assessments of the time value of the
money and were adjusted for risks specific to each investment.
The result of the impairment analysis supported a fair value of
GBP15,602,000 (2019: GBP3,488,000) for the Company's investments
which resulted in an impairment of GBPnil (2019: GBP241,000). With
regard to the fair value of the loans of subsidiaries the Directors
considered it reasonable for the Company to forgive loans to the
value of GBP3.185m (2019: GBPnil) with regard to monies due from
Innovenn UK, reflecting historic expenditure made by Innovenn UK
for which the whole of the Group is now benefiting from. This
results in a fair value of GBP3,010,000 (2019: GBP3,259,000) in
loans to subsidiaries, at 31 December 2020. Discount rate used to
arrive at fair value was 10%.
The subsidiaries of DeepVerge Plc are as follows:
Name of Company Proportion Held Class of
Shareholding Country of Incorporation
Innovenn UK Limited 100% (direct) Ordinary United Kingdom
Integumen Ireland Limited 100% (indirect) Ordinary Ireland
Lifesciencehub UK Limited 100% (direct) Ordinary United
Kingdom
Lifesciencehub Ireland Limited 100% (indirect) Ordinary
Ireland
Rinocloud Limited 100% (direct) Ordinary Ireland
STOER Ireland Limited 100% (direct) Ordinary Ireland
Integumen Limited 100% (direct) Ordinary United Kingdom
Modern Water plc* 100% (direct) Ordinary United Kingdom
Modern Water Holdings Limited ^ 100% (direct) Ordinary
United Kingdom
Modern Water Technology (Shanghai) Co Limited^ 100% (indirect) Ordinary China
Aguacure Limited^ 100% (indirect) Ordinary United Kingdom
Surrey Aquatechnology Limited^ 100% (indirect) Ordinary
United Kingdom
MW Monitoring Limited^ 100% (indirect) Ordinary United
Kingdom
Cymtox Limited^ 100% (indirect) Ordinary United Kingdom
Modern Water INC^ 100% (indirect) Ordinary USA
MW Monitoring IP Limited^ 100% (indirect) Ordinary United
Kingdom
MW Monitoring Limited^ 100% (indirect) Ordinary United
Kingdom
Modern Water Nominees Limited^ 100% (indirect) Ordinary
United Kingdom
Modern Water Technologies LCC^ 70% (indirect) Ordinary Oman
Poseidon Water Limited^ 51% (indirect) Ordinary United
Kingdom
Encylco Water Technology (Zheijang) Co. Ltd^ 49% (indirect) Ordinary
China
* Modern Water plc was acquired by the Company in an all share
offer for the entire issued capital of Modern Water plc
^ A Modern Water plc subsidiary.
On 9 November 2020, 80.85% of Modern Water plc shareholders
agreed to the Company share offer. On 17 November 2020, the close
of the formal acceptance period, 93.47% of Modern Water plc
shareholders agreed to the Company share offer.
As more than 90% of Modern Water Plc shareholders agreed to the
Company share offer, under sections 974-991 of the Companies Act
2006, the Company was entitled to acquire the minority
shareholders. On 15 January 2021 the Company allotted a further
3,636,915 0.1p ordinary shares to complete the acquisition of
Modern Water plc.
b) Other investments
Company 2020 2019
GBP'000 GBP'000
---------------------------- -------- --------
Carrying amount:
At 1 January 708 708
Impairment during the year (354) -
---------------------------- -------- --------
End of the year 354 708
---------------------------- -------- --------
In August 2018, the Company acquired 9.35% of the ordinary
shares of Cellulac plc for a consideration of GBP708,000 through
the issue of 82,844,388 ordinary shares of 0.01p each.
COVID-19 travel restrictions has impacted in the short term on
large scale applications of the Cellulac energy reduction and water
processing projects. Although the long-term value of the technology
has not changed the Directors have taken the view that a reduction
of GBP354,000 (2019: GBPnil) in the carrying value of the asset is
prudent given the uncertainty in relation to COVID-19 restrictions
continuing into the future.
18. Financial instruments by category
(a) Assets
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- -------- -------- -------- --------
31 December
Assets as per balance sheet
Trade and other receivables excluding
prepayments and corporation tax 1,288 466 237 388
Cash and cash equivalents 1,441 1,193 451 1,115
Total 2,729 1,659 620 1,503
--------------------------------------- -------- -------- -------- --------
(b) Liabilities
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- --------
31 December
Liabilities as per balance sheet
Borrowings 1,932 317 1,500 -
Lease Liabilities 622 504 - -
Trade and other payables 2,669 693 745 516
Total 5,223 1,514 2,245 516
---------------------------------- -------- -------- -------- --------
Liabilities in the analysis above are all categorised as 'other
financial liabilities at amortised cost' for the Group and
Company.
c) Credit quality of financial assets
The Group is exposed to credit risk from its operating
activities (primarily for trade receivables and other receivables)
and from its financing activities, including deposits with banks
and financial institutions, foreign exchange transactions and other
financial instruments.
Trade receivables
The credit quality of trade receivables that are neither past
due date nor impaired have been assessed based on historical
information about the counterparty default rate. The Group does not
hold any other receivable balances with customers, whose past
default has resulted in the non-recovery of the receivables
balances.
Cash at bank
The credit quality of cash has been assessed by reference to
external credit ratings, based on reputable credit agencies'
long-term issuer ratings:
2020 2019
Rating GBP'000 GBP'000
--------- -------- --------
A - AAA 1,441 1,193
Total 1,441 1,193
--------- -------- --------
19. Inventories
Group Group
2020 2019
GBP'000 GBP'000
---------------------------------- -------- --------
Raw materials and finished goods 1,347 85
Inventory 1,347 85
---------------------------------- -------- --------
There are no inventories in the Company. The Directors consider
that the carrying amount of inventory approximates to their fair
value.
20. Trade and other receivables
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ------------ -------- -------- --------
Trade receivables 1,061 402 - -
Less: provision for impairment of
trade receivables (53) (32) - -
----------------------------------------- ------------ -------- -------- --------
Trade receivables - net 1,008 370 - -
Prepayments and accrued income 160 83 10 19
Amounts owed by subsidiary undertakings - - 67 350
Taxation 177 81 68 32
Other receivables 103 15 101 6
1,448 549 246 407
----------------------------------------- ------------ -------- -------- --------
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
The carrying amounts of the Group's trade and other receivables
denominated in foreign currencies were as follows:
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------ -------- -------- -------- --------
Sterling 697 375 - 407
US Dollars 537 - - -
Euro 163 174 - -
1,397 549 - 407
------------ -------- -------- -------- --------
21. Cash and cash equivalents
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Cash at bank and on hand 1,441 1,193 451 1,115
Cash and cash equivalents 1,441 1,193 451 1,115
--------------------------- -------- -------- -------- --------
The Group's cash and cash equivalents are held in
non-interest-bearing accounts. The Directors consider that the
carrying amount of cash and cash equivalents approximates to their
fair value.
22. Trade and other payables
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- -------- -------- --------
Trade payables 1,714 159 271 83
Amounts due to group companies - - - -
(note 29)
Amounts due to connected parties - - - -
(note 29)
Social security and other taxes 181 30 2 -
Accrued expenses and deferred income 652 480 352 433
Other creditors 120 24 120 -
2,667 693 745 516
-------------------------------------- -------- -------- -------- --------
23. Deferred income tax
Deferred tax liabilities
Deferred tax balances were as follows: Group Group
2020 2019
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Deferred tax liability to be recovered after more
than one year 2,951 500
Deferred tax liability to be recovered within one
year 345 61
3,296 561
--------------------------------------------------- -------- --------
Deferred tax liabilities were made up as follows:
Accelerated tax depreciation 3,296 561
3,296 561
--------------------------------------------------- -------- --------
The movement on the deferred tax income tax account Group Group
is as follows:
2020 2019
GBP'000 GBP'000
----------------------------------------------------- -------- --------
At 1 January 561 90
On acquisition of subsidiary 2,840 565
Income statement movement - continuing operations
(note 12) (105) (94)
At 31 December 3,296 561
----------------------------------------------------- -------- --------
There were no deferred tax liabilities in the Company.
Deferred tax assets
Deferred income tax assets are recognised to the extent that the
realisation of the related tax benefit through future taxable
profits is probable. The Group did not recognise deferred income
tax assets of approximately GBP 1,566,000 (2019: GBP1,204,000)
mainly in respect of tax losses amounting to approximately
GBP8,684,000 (2019: GBP6,697,000) that can be carried forward
against future taxable income. An average tax rate of 18% (2019:
18%) has been used.
There was no deferred tax asset recognised for the Company.
24. Borrowings
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- -------- -------- --------
Non-current
Bank borrowings 583 135 583 -
Other borrowings - - - -
583 135 583 -
------------------ -------- -------- -------- --------
Current
Bank borrowings 1,187 182 917 -
Other borrowings 162 - - -
1,349 182 917 -
------------------ -------- -------- -------- --------
The maturity profile of bank borrowings was as follows:
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- --------
Amounts falling due
Within 1 year 1,349 182 917 -
Between 1 and 2 years 583 135 583 -
Between 2 and 5 years - - - -
Total borrowings 1,932 317 1,500 -
----------------------- -------- -------- -------- --------
Security on bank borrowings
As at 31 December 2020 loan balance of GBP139,000 (2019:
GBP318,000) was owing to Ulster Bank Ireland . The 5-year term loan
bearing a fixed coupon of 4.33% annually over the bank's cost of
funds matures in August 2021. The loan is secured with a floating
charge against the assets of Innovenn UK Limited.
On 29 July 2020 the Company signed a GBP3,000,000 loan facility
with Riverfort Global Opportunities PCC Limited and YA II PN, Ltd
with a 3-year term. On the date of signing the Company drew down
GBP1,500,000, 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. The
amount of the loan outstanding at 31 December 2020 was GBP1,500,000
(2019: GBPnil). The loan is secured by a cross-company
guarantee.
As at 31 December 2020 loan balance of GBP131,000 (2019:
GBP440,000) was owing to Barclays Bank by Modern Water plc. The
loan attracts an interest rate of 8% above the Barclays base rate.
The loan is secured by a fixed and floating charge over the assets
of Modern Water plc and all subsidiary companies through a cross
guarantee. The loan was fully repaid in March 2021 and a statement
of satisfaction releasing the security was registered with
Companies House on 7 May 2021.
The Company has been compliant with its banking covenants
throughout the year. The bank borrowings are repayable by monthly
instalments. The Company is not exposed to interest rate changes or
contractual re-pricing dates at the end of the reporting period, as
the borrowings are fixed in nature.
The fair value of both current and non-current borrowings equals
their carrying amount, as the impact of discounting is not
significant.
The Group's bank borrowings are denominated in Sterling, Dollars
and Euro.
25. Share capital
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- -------- -------- --------
165,877,296 0.1p Ordinary shares
(2019: 1,072,416,903 0.01p o ordinary)
Ordinary shares of 0.01p)
ordinary shares) 166 108 166 108
223,685,232 (2019: 223,685,232) Deferred
shares of 0.99p 2,214 2,214 2,214 2,214
------------------------------------------ -------- -------- -------- --------
Total 2,380 2,322 2,380 2,322
------------------------------------------ -------- -------- -------- --------
During the year, the following ordinary shares were issued:
Placing subscribers warrants exercise of 0.01p ordinary shares
during 2020:
Date granted Number of shares Exercise price Consideration
30 May 3,000,000 1.5p GBP 45,000
5 January 3,333,332 1.5p GBP 50,000
7 August 1,715,714 2p GBP 34,314
14 August 26,071,429 2p GBP 521,429
14 August 3,333,333 1.5p GBP 50,000
24 August 1,249,999 2p GBP 25,000
26 August 1,928,573 2p GBP 38,571
28 August 13,464,286 2p GBP 269,286
8 September 500,000 2p GBP 10,000
10 September 4,417,857 2p GBP 88,357
Sub Total 59,014,523 GBP 1,131,957
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.
Placing subscribers warrants exercise of 0.1p ordinary shares
during 2020:
Date granted Number of shares Exercise price Consideration
16 September 42,500 20p GBP 8,500
25 September 82,142 20p GBP 16,428
25 September 266,666 15p GBP 40,000
2 October 10,000 20p GBP 2,000
9 November 178,571 20p GBP 35,714
10 November 40,000 20p GBP 8,000
Sub Total 619,879 GBP 110,643
Shares in lieu of invoice issue at 0.1p ordinary shares during
2020:
Date granted Number of shares Exercise price Consideration
9 November 81,967 30p GBP 25,000
Shares issued for Modern Water plc shares offer agreement in
2020:
Date granted Number of shares Exercise price Consideration
3 November 40,677,491 23p GBP 9,355,823
9 November 1,741,870 22.5p GBP 391,921
17 November 9,612,946 24.7p GBP 2,369,591
Sub Total 52,032,307 GBP 12,117,335
Share Capital Movement
Ordinary Share Ordinary Share
0.01p 0.1p
---------------------------------- ----------------------------- ---------------
As 1 January 1,072,416,903 -
Issued to 15 September 59,014,523 -
Total 0.01p 1,131,431,426 -
16 September Share consolidation - 113,143,143
Issued to 31 December - 52,743,153
---------------------------------- ----------------------------- ---------------
Shares in Issue at 31 December - 165,877,296
---------------------------------- ----------------------------- ---------------
As at 31 December 2020, the Company had an issued share capital
of 165,877,296 ordinary shares of 0.1p each and 223,685,232
deferred shares of 0.99p each.
Share Warrants
As at 1 January 2020 the Company had granted the following
warrants:
Warrant holder Date granted Number of Ordinary Exercise Expiry date
shares of 0.01p price
each
Turner Pope Investments
(TPI) Ltd 5 April 2017 1,800,000 6.25p 5 April 2022
5 January 5 January
Placing subscribers 2018 14,066,666 1.5p 2023
5 January 5 January
Hybridan LLP 2018 1,000,000 1.5p 2023
Turner Pope Investments 5 January 5 January
(TPI) Ltd 2018 300,000 1.5p 2023
Placing subscribers 2 May 2019 95,624,999 2.0p 2 May 2021
Turner Pope Investments
(TPI) Ltd 2 May 2019 8,142,857 1.4p 2 May 2022
Turner Pope Investments 16 December 16 December
(TPI) Ltd 2019 5,279,999 1.5p 2022
126,214,521
Share warrants granted during the year
On 15 September 2020 warrants of 18,905,021 ordinary shares of
0.01p to the value of GBP375,000 were granted to Riverfort Global
Opportunities PCC Ltd and YA II PN Ltd 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 hold warrants
to subscribe for 945,251, at exercise price of 25.7868 pence, per
new ordinary shares of 0.1 pence.
On 9 November 2020 the Company gained control of Modern Water in
the share for share acquisition of Modern Water. The consideration
was for the issue of 1 DeepVerge ordinary 0.1p share for every 10
Modern Water 0.25p ordinary shares. As at this date warrants to
subscribe for 70,500,000 Modern Water ordinary shares with an
exercise price of 0.5p per share were held by JIM Nominees, acting
as nominees for Turner Pope International, broker to Modern Water.
JIM Nominees elected to exchange outstanding warrants over
70,500,000 Modern Water ordinary shares for warrants over 7,050,000
DeepVerge ordinary 0.1p shares with same exercises times.
Share warrants exercised during the year
For the period 1 January 2020 to 15 September 2020
- A total of 9,666,665 ordinary shares of 0.01p each were issued
to various placing subscribers for the exercised warrants granted
on 5 January 2018 at 1.5p per ordinary share of 0.01p.
- A total of 49,347,858 ordinary shares of 0.01p each were
issued to various placing subscribers for the exercised warrants
granted on 2 May 2019 at 2p per ordinary share of 0.01p.
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.
For the period 16 September 2020 to 31 December 2020
- A total of 266,666 ordinary shares of 0.1p each were issued to
various placing subscribers for the exercised warrants granted on 5
January 2018 at 15p per ordinary share of 0.1p.
- A total of 4,274,501 ordinary shares of 0.1p each were issued
to various placing subscribers for the exercised warrants granted
on 2 May 2019 at 20p per ordinary share of 0.1p.
Share warrants at end of year
As of 31 December 2020, valid share warrants in issue were:
Warrant holder Date Ordinary Exercise Expiry Outstanding
granted shares Price Date at 30 June
of 0.1p 2021
each
Turner Pope
Investments 5 Apr 5 Apr
(TPI) Ltd 2017 180,000 62.5p 2022 180,000
5 Jan 5 Jan
Placing subscribers 2018 173,334 15p 2023 173,334
5 Jan 5 Jan
Hybridan LLP 2018 100,000 15p 2023 100,000
Turner Pope
Investments 5 Jan 5 Jan
(TPI) Ltd 2018 30,000 15p 2023 -
2 May 2 May
Placing subscribers 2019 4,274,501 20p 2021 -
Turner Pope
Investments 2 May 2 May
(TPI) Ltd 2019 814,285 14p 2022 -
Turner Pope
Investments 16 Dec 16 Dec
(TPI) Ltd 2019 527,999 15p 2022 -
Riverfort Global
Opportunities 15 Sep 15 Sep
PCC 2020 945,251 25.7868p 2024 945,251
15 Sep 15 Sep
YA II PN, Ltd 2020 945,251 25.7868p 2024 945,251
Turner Pope 7,050,000 -
Investments 9 Nov 16 Feb
(TPI) Ltd 2020 15,040,621 5p 2023 2,343,836
------------ ----------------------
26. Retained earnings
Group Company
GBP'000 GBP'000
------------------------------------ --------- ---------
At 1 January 2019 (13,221) (13,778)
--------- ---------
Loss for the year (2,265) (1,384)
Transfer from Share Option reserve 86 86
------------------------------------ --------- ---------
At 31 December 2019 (15,400) (15,076)
------------------------------------ --------- ---------
At 1 January 2020 (15,400) (15,076)
------------------------------------ --------- ---------
Loss for the year (2,718) (1,590)
Subsidiary loan forgiveness - (3,185)
Premium on acquisition of NCI (846) -
At 31 December 2020 (18,964) (19,851)
------------------------------------ --------- ---------
27. Other reserves
Group
Share
Foreign Reverse Capital based
Share currency acquisition Redemption equity
premium reserve reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- ---------- ------------- ------------ ---------
At 1 January 2019 3,662 (251) (2,843) 9,519 90
----------------------------------- --------- ---------- ------------- ------------ ---------
Issue of ordinary shares (note 8,419 - - - -
25)
Costs of Share issue (338) - - - -
Currency translation differences - (8) - - -
Transfer to retained earnings
(note 32) - - - - (86)
Share option-based charge (note
32) - - - - 2
At 31 December 2019 11,743 (259) (2,843) 9,519 6
----------------------------------- --------- ---------- ------------- ------------ ---------
At 1 January 2020 11,743 (259) (2,843) 9,519 6
Issue of ordinary shares (note 13,326 - - - -
25)
Currency translation differences - 33 - - -
Share option-based charge (note
32) - - - - 191
At 31 December 2020 25,069 (226) (2,843) 9,519 197
----------------------------------- --------- ---------- ------------- ------------ ---------
The reverse acquisition reserve arose as result of the reverse
acquisition of Innovenn UK Limited and its subsidiary by DeepVerge
Plc.
Currency translation differences arose from the translation of
the net investment in foreign subsidiaries.
Company
Capital
Redemption Share based
Share premium reserve equity reserve
GBP'000 GBP'000 GBP'000
At 1 January 2019 3,662 9,519 90
Issue of ordinary shares 8,419 - -
(note 25)
Costs of Share issue (338) - -
Transfer to retained earnings
(note 32) - - (86)
Share option-based charge
(note 32) - - 2
At 31 December 2019 11,743 9,519 6
--------------------------------- -------------- ------------ ----------------
At 1 January 2020 11,743 9,519 6
Issue of ordinary shares 13,326 -
(note 25) -
Costs of Share issue - - -
Transfer to retained earnings - -
(note 32) -
Share option-based charge
(note 32) - - 191
--------------------------------- -------------- ------------ ----------------
At 31 December 2020 25,069 9,519 197
--------------------------------- -------------- ------------ ----------------
28. Cash used in operations
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- -------- --------
Loss for the year from continuing
activities (2,718) (2,271) (1,590) (1,384)
Adjustments for:
- Depreciation and amortisation 1,113 543 15 22
- Impairment of intangible assets - 241 15 -
- Impairment of investments 354 - 354 -
- Foreign currency translation
of net assets 36 (7) 59 4
- Exceptional Items - - - (1,332)
- Net finance costs 303 26 210 2
- Taxation (182) (126) - (31)
- Share option-based charge 191 2 191 2
Changes in working capital
- Inventories 344 50 - -
- Trade and other receivables (513) (120) (3,151) 14
- Trade and other payables (1,026) (62) (229) (184)
Net cash used in discontinued operations
(note 34) - (557) - -
-------------------------------------------- -------- -------- -------- --------
Net cash generated (used) in operations 2,098 (2,281) (4,141) (2,887)
-------------------------------------------- -------- -------- -------- --------
29. Related Party Disclosures
Amounts due from connected parties
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- -------- -------- --------
Drive4Growth Company Limited 36 89 - -
36 89 - -
------------------------------ -------- -------- -------- --------
The Company owns 9.35% of Cellulac plc (note 17). Gerard Brandon
and Camillus Glover are directors of Cellulac Ltd and Cellulac
plc.
On 12 June 2020 Cellulac Ltd entered into a loan agreement with
the Company whereby Cellulac Limited agreed to lend the Company up
to GBP400,000 at an interest rate of 5% to be drawn down no later
than 30 September 2020. The Company did avail of the facility and
the loan agreement lapsed 1 October 2020.
Fin Murray is a director of Drive4Growth Company Limited which
held a sales agency agreement with Rinocloud Ltd until 31 October
2019.
During the year, the Company paid GBP27,000 (2019: GBP17,550) to
Dagmara Brandon, close family member of the director Gerard
Brandon, for professional services provided to the Company.
The Company
Amounts due from group companies
Company Company
2020 2019
GBP'000 GBP'000
--------------------------- ------------------------------------------------- --------
Innovenn UK Limited 1,188 2,604
Lifesciencehub UK Limited 217 208
Rinocloud Limited 1,095 350
Integumen Ireland Limited 316 370
STOER Ireland Limited 51 77
Modern Water Plc 67 -
2,934 3,609
--------------------------- ------------------------------------------------- --------
Non Current Assets 2,867 -
Current Assets 67 -
--------------------------- ------------------------------------------------- ----------
As part of the review of the recoverability of subsidiary
indebtedness to the Company the Directors considered the position
of Innovenn UK in the group since listing in April 2017 and in
particular the contribution the subsidiary has made to the overall
group. It was considered reasonable that GBP3,185,000 of monies
owing by Innovenn UK to the Company be forgiven and that the
ultimate cost of this would be borne by the Company, resulting in
the amount owing from Innovenn UK falling to GBP1,188,000.
During the year, the Company charged management charges of
GBP105,000 (2019: GBP88,000) to Innovenn UK Limited, GBP84,000 to
Rinocloud Limited (2019: GBP71,000), GBP 25,000 to Stoer Ireland
Ltd (2019: GBP21,000) and GBP8,000 (2019: GBP7,000) to
Lifesciencehub UK Limited .
Rinocloud Limited charged sales and management charges to
Innovenn UK Limited of GBP 215,000 (2019: GBP105,000).
During the year, the Company was recharged costs by Integumen
Ireland Limited of GBP 280,000 (2019: GBP169,000).
30. Capital commitments
The Group had no capital commitments at 31 December 2020.
31. Financial commitments
The Group had no financial leases.
32. Share options
The Company has achieved multiple positive milestones since 2018
and shareholder value has improved substantially in that time. Team
members across the Group have been entirely responsibly for
achieving the returns by as much as 500% from the lows of 2018.
Therefore, it is only right and fitting that future growth is
incentivised for all Team members who contribute to increased
returns for shareholders. That is why management have implemented
only recently a Share Options Scheme to deliver on this
objective.
Management and Staff options
The Company introduced an EMI approved share option scheme for
employees in the UK, a Share Options Scheme for employees and in
Ireland and an unapproved share options scheme as a means to act as
motivation to staff to deliver overall shareholder.
Options were granted to management and staff for 5,609,650
ordinary shares of 0.1p each at an exercise price of 30p, and
492,790 ordinary shares of 0.1p each at an exercise price of 35.5p,
each vesting over a period of 3 years. Further options for 465,670
ordinary shares of 0.1p each were granted to staff at an exercise
price of 0.1p, each vesting over a period of 9 months. The options
are conditional a number of performance conditions and options
lapse if employee leaves the Company.
Share Options Issued and as at 31 December 2020 are as
follows:
Date Number of Exercise Exercise Date Exercise Date Exercise Date
Shares Price
-------------- ---------- ---------
30% 35% 35%
-------------- ---------- --------- --------------- --------------- ---------------
18 September 31 December
2020 325,570 0.1p 2020 31 March 2021 30 June 2021
18 September
2020 916,680 30p 1 January 2021 1 January 2022 1 January 2023
18 September
2020 492,970 35.5p 1 January 2021 1 January 2022 1 January 2023
19 November 31 December
2020 113,100 0.1p 2020 31 March 2021 30 June 2021
19 November
2020 4,692,970 30p 1 January 2021 1 January 2022 1 January 2023
The estimated fair values of the share options were calculated
by applying the Black Scholes Model. The period of exercise of the
options is 10 years for the EMI approved and unapproved scheme and
7 years for the Irish Share Options Scheme. The volatility of the
share of the share price since listing in April 2017 resulted in a
volatility coefficient of 45.0%. Due to the high coefficient the
Directors considered that the most appropriate method of
calculating the volatility was to use the Company's share price
history as the likelihood for using comparable listed historic
volatility could be misleading.
Date Number Exercise Exercise Fair Value Exercise Fair Value Exercise Fair Value
of Shares Price Date Date Date
--------- ----------- ---------
31 Dec Share 31 Mar Share 30 Jun Share
2020 Price 2021 Price 2021 Price
--------- ----------- --------- --------- ----------- ---------- ----------- ---------- -----------
18 Sept
2020 325,570 0.1p 105, 771 28.7p 123,400 28.7p 123,400 28.7p
19 Nov
2020 113,100 30p 33,930 17.2p 39,585 17.2p 39,585 17.2p
Exercise Exercise Exercise
Date Date Date
1 Jan 1 Jan 1 Jan
2021 2022 2023
--------- ----------- --------- --------- ----------- ---------- ----------- ---------- -----------
18 Sept
2020 916,680 30p 275,004 9.7p 320,838 9.7p 320,838 9.7p
18 Sept
2020 492,970 35.5p 147,891 8.1p 172,540 8.1p 172,540 8.1p
19 Nov
2020 4,692,970 30p 1,407891 3.0p 1,642,540 3.0p 1,642,540 3.0p
2017 Management Options
In 2017, the Company had awarded options to key management over
6,720,000 ordinary shares of 1p each. These options were
exercisable after two years provided that the holder of the options
is still an employee of the Company. Of these, 3,360,000 have an
exercise price of 5p and 3,360,000 have an exercise price of 6p
each.
During the 2019 options over 963,200 ordinary shares of 1p each
lapsed when option holders left the employment of the Company. An
amount of GBP9,010 in 2019 was transferred from the share
option-based reserve to retained earnings with respect to these
lapsed options. The cumulation of lapsed options since 2017 has
meant that options over only 638,400 ordinary shares of 1p each
remain.
Following the share consolidation on 15 September 2020, when
every 10 ordinary existing shares of 0.01p was consolidated into
one ordinary share of 0.1p , the outstanding options granted were
as follows at 31 December 2020:
No. of 0.1p ordinary
shares under Exercise
Director Date granted option price Exercise period
From 5 April 2017 to 5
Ross Andrews 5 April 2017 63,840 50p-60p April 2027
The share option-based charge with respect to all share options
for the year was GBP191,000 (2019: GBP2,000).
33. Business combinations
On 13 October 2020 the Company issued an Offer Document to the
shareholders of Modern Water to acquire the full share capital of
the company. This all share offer was based on the issue of 1
DeepVerge ordinary 0.1p share for every 10 Modern Water 0.25p
ordinary shares. The purchase consideration was paid by the Company
through the issue of 55,669,222 ordinary shares of 0.1p each at an
average market price of 23.92 per share, valuing the acquisition at
GBP13,315,114.
33 . (a) Acquisition of Modern Water plc
Closing Share
No. of MW % acceptance Issued DV Price on listing Valuation
Date acceptance ordinary shares cumulative shares date Cumulative
3 November
2020 406,775,279 77.23% 40,677491 23.00p GBP9,355,823
9 November
2020 17,418,730 80.85% 1,741,870 22.50p GBP9,747,744
23 November2020 96,129,677 93.46% 9,612,946 24.625p GBP12,114,932
15 January
2021 36,369,528 100.00% 3,636,915 33.00p GBP13,315,114
As at 9 November 2020 based on 80.85% acceptances of the offer
by Modern Water plc shareholders the Company gained control
of Modern Water plc as the offer become unconditional.
Fair Value Calculation
As at 31 December 2020 the Company had acquired 93.46% of Modern
Water plc shares for a consideration of GBP12,114,932. Modern Water
has a 30-year legacy and global footprint across industries that
monitor for toxicity:
The Directors believe the acquisition will:
-- Access to Modern Water distributors and customers across 60 countries and 5 continents
-- Access to a brand that is the gold standard for water
monitoring and in many countries is the regulatory standard
-- Immediate presence in North America and China extending the
Company's reach and expertise with laboratories and trading
entities to expand business in these territories
-- Access to a range of equipment and membrane to add to the
group's EcoWaterOS vision of a total water monitoring and
mitigation solution that will be enhanced by the group's software
and Ai capabilities
-- Equipment and expertise to allow the rapid development of the
Company's COVID-19 and pandemic surveillance system
-- Generation of recurring revenue opportunities with a range of
leading reagents sold with all equipment
The following table summarises the consideration paid, and the
amounts of the assets acquired, the fair value of these assets and
liabilities assumed at the acquisition date of Modern Water
plc.
Modern Water plc GBP'000
--------------------------------------------- --------
Fair value consideration
Initial Consideration 9,748
Non Controlling Interest at fair value 2,309
Total fair value consideration 12,057
--------------------------------------------- --------
Net Asset Acquired
Intangible Asset arising on Acquisition 13,960
Tangible fixed assets (note16a) 273
Intangible assets 922
Right of use of asset (note14) 159
Inventory 1,606
Trade and other receivables 371
Bank and cash 739
Trade and other payables (2,825)
Lease Liability (177)
Bank Loans (319)
Deferred tax liabilities (note 23) (2,652)
Total fair value of identifiable net assets 12,057
--------------------------------------------- --------
Excess of net assets over consideration -
--------------------------------------------- --------
The directors have reviewed the book value of the assets
acquired is the same as the fair value as the value attributed on
acquisition.
The fair value of acquired trade and other receivables is
GBP371,00. The gross contractual amount for trade and other
receivables due is GBP237,000, all of which is expected to be
collectible. The fair value of Inventory is GBP1,606,000 as of
which is valued at the lower of cost and net resaleable value.
The following table is the statement of comprehensive income for
Modern Water plc's pre and post-acquisition trading:
53 days ended
31 December
Business Combination - Modern Water 2020
plc GBP'000
--------------- --------------
313 days ended
08 November
2020
Statement of Comprehensive Income GBP'000
---------------------------------------- --------------- --------------
Revenue 2,167 1,121
Costs of sales (1,501) (735)
------------------------------------------
Gross profit 666 386
Administrative Costs (2,117) (392)
------------------------------------------
Operating Profit (1,451) (6)
------------------------------------------
Depreciation and amortisation 468 86
Exceptional items 240 -
EBITDA (loss)/profit before exceptional
items (743) 80
Finance costs (33) (3)
------------------------------------------
(Loss) before income tax (1,484) (9)
Income tax credit - -
FX (loss)/ gain (20) 12
------------------------------------------
(Loss)/Profit for the period (1,504) 3
------------------------------------------
33. (b)
Non-controlling interests
Minority Interest arising from the acquisition of Modern Water
plc arising from the dates on which share acceptance from Modern
Water shareholders for the share for share consideration.
2020
Non-controlling interests reserve % NCI GBP'000
Opening balance 1 January 2020 -
Upon control on acquisition on 9 November 2020 19.15% 2,309
Acquisition of non controlling interest on 23 November 2020 -12.61% (1,520)
Closing Balance 31 December 2020 6.54% 789
2020
Premium on Acquisition of non-controlling interests GBP'000
Acquisition fair value at 9 November 2020 if 100% ownership 12,057
Value of non-controlling interests at 9 November 2020 19.15% 2,309
Fair value of non-controlling interest at 23 November 2020 19.15% 2,367
Acquired value of non-controlling interest at 23 November 2020 12.61% (1,520 )
Equity movement in retained profits 847
Fair value on 9 November 2020 of remaining NCI of 6.54% 789
33 . (c) Acquisition of Rinocloud Ltd
2019
GBP'000
Fair value consideration
Deemed consideration of acquisition of share capital at 2 May 2019 3,000
Total fair value consideration 3,000
Recognised amounts of identifiable assets acquired, and liabilities assumed
Intellectual Property (note 15) 3,377
Tangible fixed assets (note16) -
Trade and other receivables 237
Bank and cash 22
Trade and other payables (71)
Deferred tax liabilities (note 23) (565)
Total fair value of identifiable net assets at 31 December 2019 3,000
Excess of net assets over consideration -
Total fair value of identifiable net assets at 31 December 2020 3,000
34. Disposal of Visible Youth Ltd
On 2 May 2019, the Company disposed of its subsidiary Visible
Youth Ltd. to Enhance Skin Products Inc. for zero consideration.
The sale includes the two subsidiaries of Visible Youth Ltd,
Visible Youth Ireland Ltd and Integumen, Inc. The Visible Youth
companies ("Visible Youth") own the rights to a range of female
cosmetic products. As part of the sale, the Company agreed to
settle certain Visible Youth liabilities of GBP557,000 by:
- arranging cash payments of GBP226,000 and
- issuing 23,637,429 ordinary shares of 0.01p each at an issue
price of 1.4p totalling GBP331,000.
Financial information relating to the discontinued operation for
the period to the date of the disposal is set out below:
2020 2019
Statement of Comprehensive Income GBP'000 GBP'000
Administrative Costs - -
Operating profit/(loss) - 6
Amortisation - -
Impairment of intangible assets - -
Exceptional items - 6
EBITDA before exceptional items -
Finance costs - -
Profit/(loss) before income tax - 6
Income tax credit - -
Profit/(loss) for the period - 6
Discontinued operations exceptional items
Included within administrative expenses are exceptional items as
shown below:
2020 2019
GBP'000 GBP'000
Gain on disposal of subsidiary - 6
Total exceptional gain - 6
Details of the gain on disposal of Visible Youth are as follows: GBP'000 GBP'000
Consideration received:
Total consideration - -
Liabilities settled by the Company under the sale agreement - (557)
Total fair value consideration - (557)
Recognised amounts of identifiable liabilities disposed
Trade and other payables - (563)
Total fair value of identifiable net liabilities - (563)
Excess of net liabilities over consideration (gain on disposal) - 6
Discontinued Operations - Visible Youth 2020 2019
Statement of Cash Flows GBP'000 GBP'000
Profit/(loss) for the year from dis continuing operations - 6
Adjustments for:
- Amortisation - -
- Impairment of intangible assets - -
- Gain on disposal of subsidiary - -
Changes in working capital
- Trade and other payables - (563)
Cash Flow from operating activities - (557)
Cash flow from financing activities
Loan from parent company - 557
Net cash generated by financing activities - 557
Net increase in cash and cash equivalents - -
Cash and cash equivalents at the beginning of period - -
Cash and cash equivalents at the end of the period - -
35. Ultimate controlling party
There is no one controlling party .
36. Post balance sheet events
Completion of Compulsory Acquisition of Modern Water plc
On 19 November 2020 having obtained the acceptances of 93.47% of
Modern Water plc shareholder to the offer to acquire the company
the Company commenced compulsory acquisition proceedings under
sections 974-991 of the Companies Act 2006.
Price at Date
Date Type No of shares of Listing Consideration
Acquisition
15 January 2021 Shares 3,636,915 33p GBP1,200,182
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 GBP1.2m consideration takes
the total cost of the 100% acquisition of shares to GBP13.3m.
Shares issued for cash consideration in 2021:
Date Transaction No of shares Exercise price Consideration
18 January Share Options 25,860 0.01p GBP 26
25 January Placing Warrants 535,714 20p GBP 107,143
1 February Placing Warrants 178,570 20p GBP 35,714
26 February Placing Warrants 1,230,738 20p GBP 246,148
26 February Broker Warrants 557,999 15p GBP 83,700
26 February Broker Warrants 814,285 14p GBP 114,000
5 March Placing Warrants 17,857 20p GBP 3,571
16 March Placing Warrants 188,071 20p GBP 37,614
23 March Placing Warrants 35,714 20p GBP 7,143
24 March Placing Warrants 78,570 20p GBP 15,714
7 April Share Options 18,102 0.01p GBP 18
13 April Placing Warrants 10,714 20p GBP 2,143
21 April Placing Warrants 221,285 20p GBP 44,257
21 April Broker Warrants 7,050,000 5p GBP 352,500
29 April Placing Warrants 942,857 20p GBP 188,571
30 April Placing Warrants 384,425 20p GBP 76,885
11 June Share Placing 21,086,888 30p GBP 6,326,066
25 June Share Placing 12,246,446 30p GBP 3,673,934
Sub Total 45,624,095 GBP 11,315,147
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(END) Dow Jones Newswires
June 30, 2021 12:28 ET (16:28 GMT)
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