Shares in DeepVerge PLC jumped over 10% after the environmental and life science group revealed that production orders at its environmental division, Modern Water, increased by 39% in the first quarter, worth around £5mln compared with £3.6mln in the same period in 2021.
The orders, the biggest ever in Modern Water’s history, are for a range of drinking water testing, contamination and detection of SARS-CoV-2 equipment, DeepVerge said in a statement.
The equipment is earmarked for sites including the UK, the EU, China, India and the Middle East and is expected to be delivered during the current financial year.
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It includes MicrotoxPD for real-time detection of SARS-CoV-2 in wastewater treatment plants, adding to existing data sampling units installed last year, extending the trials to April this year.
The company said 27 Microtox CTM will be installed in the Middle East under a serviced lease agreement, generating recurring revenues of US$2.4mln over a five-year period.
This is Modern Water's first move away from capital expenditure sales only to a multi-year lease, monitoring and maintenance recurring revenue (serviced lease) business model, which is designed to increase revenue of the existing install-only equipment sales model by 140%.
"Our Modern Water division continues to grow with the biggest Q1 production order to date, increasing by 39% over Q1, 2021, for existing Microtox (LX, FX and CTM), Microtrace (trace metal) units and new pathogen detection units, which will go into mass production in the next few months,” said DeepVerge CEO Gerry Brandon.
“This is due to the positive test results with MicrotoxPD wastewater detection just beginning to realise their full potential with proven market demand having already contributed to part of last year's revenues.”
Brandon noted that the move to a serviced lease business model overcomes the seasonal financial cashflow problems experienced by Modern Water when it was a capital equipment sales business.
DeepVerge shares climbed by 10.34% to 16p in early trade.