REG - Deepverge PLC - Cost reductions;delay to Ann. Report;New contract

DeepvergeAnnouncement

05/06/2023 07:00

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RNS Number : 5720B  Deepverge PLC  05 June 2023

5 June 2023

 

DeepVerge plc

 

("DeepVerge" or "the Company" or "the Group")

 

Further cost reductions; Possible delay to publication of Annual Report and
Accounts; New £2.3m, four-year contract

 

DeepVerge (AIM: DVRG), the environmental and life science group of companies
that develops and applies AI and IoT technology to analytical instruments for
the analysis and identification of bacteria, virus and toxins, announces that:
(i) it will be downsizing its Labskin, Skin Trust Club and Rinocloud business
units as part of further measures to improve the financial position of the
Group; (ii) it is possible that it will need to delay the announcement of its
results for the year ended 31 December 2022 and publication of its Annual
Report and Accounts for the same period; (iii) it is continuing to carefully
manage its working capital position and to seek new financing opportunities
and also consider the potential sale of one or more lines of its business; and
(iv) it is pleased to announce a new manufacturing contract win.

Downsizing of the Labskin, Skin Trust Club and Rinocloud business units

The Company's financial position is such that the Board has taken the decision
to no longer support the ongoing costs of progressing the development of the
Labskin, Skin Trust Club and associated elements of the Rinocloud businesses,
whilst retaining the capacity required to continue supporting the Modern Water
and Glanaco businesses.  The Company is therefore downsizing these business
units, with effect from 1 July 2023, which will involve the elimination of
approximately twenty permanent employee and contract positions.  A programme
is now in progress to ensure an orderly downsizing process is conducted.  The
Company remains proud of the patents and databases that have been developed to
date and continues to explore out-licensing opportunities of this technology
with companies engaged in the life-sciences industry.

Possibility of delay to the announcement of the results for the year ended 31
December 2022 and publication of the Annual Report

The possibility of delay is caused, inter alia, by the resignation of the
Group's previous auditor, Jeffreys Henry LLP, as announced on 24 March 2023.
Following a change of ownership and name, Jeffreys Henry LLP undertook a
review of its capacity to undertake audit work, in conjunction with the
Institute of Chartered Accountants in England and Wales which concluded that
the firm did not have sufficient capacity to satisfy its regulatory
requirements and as a result resigned as auditor to a number of quoted
companies, including DeepVerge.

 

The resignation of Jeffreys Henry occurred just days before the audit of
DeepVerge's accounts was due to start.   Haysmacintyre LLP was subsequently
appointed as the Company's auditor, however there is significant risk of there
being insufficient time to ensure that the audit is completed by 30 June 2023.

If the Company is unable to publish its Annual Report and Accounts by 30 June
2023 in accordance with AIM Rule 19, then the trading in the Company's
ordinary shares on AIM would be suspended from 7.30am on Monday 3 July 2023
until such Annual Report is published.  Any such delay would be likely to be
limited to a matter of weeks.

New Funding opportunities and potential sale of parts of the business

The Company announced (RNSs of 17 and 19 April 2023) that due to the phasing
and timing of contract cashflows it was operating from a limited working
capital position.  The Company continues to explore a number of financing
options including the raising of equity, debt or trade finance to improve the
Group's financial position.  The Company is also exploring the potential sale
of one or more lines of business.

New Manufacturing Contract in Ireland

The Company is pleased to announce that its subsidiary, Glanaco Ltd., has won
a new contract for the supply of customised environmental cleaning and
monitoring equipment to an undisclosed customer within the EU.  Under the
terms of the deal the Company will lease this equipment to the customer across
a four-year period commencing in the second half of 2023.

The overall revenue will amount to approximately £2.3 million and will be
recognised across the coming four years.

Further updates will be given as appropriate.

 

 DeepVerge plc                                   Nigel Burton, Interim CEO  +44 (0) 7785 234447
 SPARK Advisory Partners Limited                 Neil Baldwin               +44 (0) 113 370 8974

 (Nominated Adviser)
 Turner Pope Investments (TPI) Limited (Broker)  Andy Thacker/James Pope    +44 (0) 20 3657 0050

 

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version of the Market Abuse Regulation No 596/2014 which is part of English
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publication of this announcement via a Regulatory Information Service, this
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