(Alliance News) - Deepverge PLC shares rose on Friday after the company said production orders for its Modern Water division in the first quarter grew to GBP5 million and stated that it is transitioning its business model.
Shares were up 8.6% at 15.75 pence each on Friday morning in London.
The Dublin-based environmental and life science group said that the orders are for a range of drinking water testing, contamination and detection of SARS-CoV-2 equipment.
Deepverge continued that the orders received this quarter reflect year-on-year growth of 39% compared to orders worth GBP3.6 million received in the comparable period a year before. These new orders for the Modern Water division also represent the biggest first-quarter production order in the history of the division.
The equipment is expected to be delivered this year.
The company said it implementing a new multi-year installation, monitoring and maintenance recurring revenue model. It is designed to more than double the revenue of the existing install-only equipment sales model.
Deepverge said it is going to install 7 Microtox CTM in the Middle East. This will represent its first move away from the capital expenditure sales only model to the new multi-year install, monitor and maintain model. It will also generate recurring revenues of USD2.4 million over a five-year period instead of USD1 million from a capital equipment sale.
The company stated that it will still deliver units as it transitions to monitoring. This includes units for a Chinese State government department and multiple units on its Yangtze River project, which are capital equipment sales.
"The multi-year lease, monitoring and maintenance recurring revenue business model overcomes the seasonal financial cashflow problems experienced by Modern Water when it was a capital equipment sales business. Support and maintenance costs are built into the annual operating expenditure of the client," Chief Executive Gerry Brandon commented.
It offers additional sales opportunities with an established installed base around the world where the company can offer upgrades and upsell higher value equipment without capital spend by the client, increasing revenues from the value-added real-time monitoring service."
By Abby Amoakuh; abbyamoakuh@alliancenews.com
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