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Integumen plc (to be renamed DEEPVERGE plc)

Interim Report

2020

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Chairman’s Statement Introduction COVID-19 in H1, 2020 played a crucial role in altering many firms’ business plans. This was no different for Integumen plc. In our case, however, while lock-downs caused an initial organisational problem, the Company was recruiting and expanding in the Labskin subsidiary throughout the lock-down period as orders went to £2m and investment increased to deal with moving production of wastewater contamination detection bacteria for Modern Water Monitoring from their US laboratories, to our York, UK laboratories. Terms have been agreed to acquire Modern Water in a recommended all share offer, and an offer document is due to be issued shortly. Labskin (Innovenn UK Limited) The Labskin business unit expanded and remains fundamental to the Company’s growth strategy as we move forward. New areas added to service offerings to clients have maintained a high level of interest and whilst we were unable, physically, to attend any conferences, virtual conferences allowed Labskin sales teams to meet clients and assist them move from their furloughed state and progress research projects that had been initiated earlier in the year. Rinocloud Limited Collaboration has been ongoing for the past four months between the teams at Rinocloud and Labskin, the Cork Institute of Technology, Ireland and the University of Aberdeen. The combined technology extends a microfluidic/photonics/AI instrument that Rinocloud began developing in 2015 in the University of Cambridge to detect E.coli in water. This was originally announced in November 2019 and has quickly become a full time COVID-19 project working with a team from Modern Water’s offices in Shanghai, China and laboratory in Delaware, USA; the Tyndall National Photonics Institute and Cappa Lab both in the Cork Institute of Technology, Cork, Ireland; University of Aberdeen and our labs in York with commercial development partners Avacta Group plc, Wetherby, UK and the Aptamer Group Limited in York, UK. Over the last number of months, the teams have designed nano-photonic microchips coated with Affirmers and Aptamers that bind to a recombinant SARS-CoV-2 virus. Detection of binding of the target, in real time, has been achieved using a nanophotonic process. In collaboration with the team at Modern Water, Microtrace OVA systems, originally designed to detect contamination in water for chemicals, trace metals and a range of pathogens has been retrofitted with the Rinocloud AI based Novel Sensor to detect and identify SARS-CoV-2 and other pathogens. These OVA system units have been installed in hundreds of sites worldwide over the last 30 years and form the basis of the roll out of the Novel Sensor into 2021. STOER For Men - (STOER Ireland Limited) STOER For Men skin products e-commerce division continues to be used as a control for client testing within Labskin laboratories and remains at break-even. Wound pHase (LifeScienceHub Limited) Labskin continues to work on development of wound care products and extend the services to be provided to woundcare client companies. Outlook With a positive first half, Q3 revenues expected to be in excess of £1m we remain comfortable to guide revenues of £4m for the full year. Ross Andrews Chairman 17 September 2020

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Consolidated Statement of Comprehensive Income For the 6 months ended 30 June 2020

Unaudited 6 months ended

30 June 2020

Unaudited 6 months ended

30 June 2019

Audited Year ended

31 December 2019

Notes £’000 £’000 £’000 Revenue 1,004 347 823 Costs of sales (393) (100) (221) Gross profit 611 247 602 Administrative Costs (1,547) (1,209) (2,973) Operating loss (936) (962) (2,371) Depreciation 72 40 101 Amortisation 312 106 442 Impairment of intangible assets - - 241 Exceptional items 3 - 446 532 EBITDA before exceptional items (552) (370) (1,055)

Finance costs (19) (13) (26) (Loss) before income tax (955) (975) (2,397) Taxation 4 30 50 126 (Loss) for the year from continuing operations (925) (925) (2,271)

Profit for the year from discontinued operations - - 6 (Loss) for the period (925) (925) (2,265)

Other comprehensive income Currency translation differences 67 35 (8) Total comprehensive loss for the period (858) (890) (2,273)

Loss per share from continuing and discontinued operations attributable to owners of the parent during the period

Notes

Pence Pence Pence Basic loss per ordinary share From continuing operations 5 0.1p 0.2p 0.3p From discontinued operations 5 0.0p 0.0p 0.0p From loss for the period 0.1p 0.2p 0.3p

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Consolidated Statement of Financial Position As at 30 June 2020

Unaudited

As at 30 June

Unaudited As at

30 June

Audited As at

31 December 2020 2019 2019 Notes £’000 £’000 £’000 Assets Non-current assets Intangible assets 3,513 4,220 3,654 Property, plant and equipment 483 430 471 Right of use assets 450 - 503 Other Investments 708 708 708 Total non-current assets 5,154 5,358 5,336 Current assets Inventories 79 106 85 Trade and other receivables 1,079 384 549 Cash and cash equivalents 255 1,083 1,193 Total current assets 1,413 1,573 1,827

Total assets 6,567 6,931 7,163 Equity attributable to owners Share capital 7 2,322 2,311 2,322 Share premium account 11,838 10,837 11,743 Retained loss (16,325) (14,477) (15,400) Foreign currency reserve (192) (215) (259) Reverse acquisition reserve (2,843) (2,843) (2,843) Capital redemption reserve 9,519 9,519 9,519 Share based equity reserve 6 15 6 Total equity 4,325 5,147 5,088 Liabilities Non-current liabilities Deferred tax liabilities 470 573 500 Deferred revenue/government grants 5 - - Lease Liabilities 355 - 402 Borrowings 121 240 135 Total non-current liabilities 951 813 1,037

Current liabilities Trade and other payables 970 715 693 Deferred tax liabilities 61 67 61 Deferred revenue/government grants 1 - - Lease liabilities 105 - 102 Borrowings 154 189 182 Total current liabilities 1,291 971 1,038

Total liabilities 2,242 1,784 2,075

Total equity and liabilities 6,567 6,931 7,163

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Consolidated Statement of Cash Flows For the 6 months ended 30 June 2020

Unaudited 6 months ended

30 June 2020

Unaudited 6 months ended

30 June 2019

Audited Year ended

31 December 2019

Notes £’000 £’000 £’000 Cash Flow from operating activities Cash used in operations 8 (772) (1,251) (2,281)

Taxation - - 32

Interest paid (12) (13) (26)

Net cash used in operating activities (784) (1,264) (2,275)

Cash flow from investing activities

Acquisition of investments - 22 22

Payments to acquire intangibles (72) (213) (213)

Purchase of property, plant and equipment (84) (38) (138)

Government Grant 7 - -

Net cash used in investing activities (149) (229) (329)

Cash flow from financing activities

Proceeds from issuance of ordinary shares 7 95 2,636 3,961

Capital element of finance lease (36) - (19)

Repayments on borrowings (64) (87) (171)

Net cash generated / (used) by financing activities (5) 2,549 3,771 Net increase / (decrease) in cash and cash equivalents (938) 1,056 1,167 Cash and cash equivalents at beginning of period 1,193 26 26

Effects of exchange rate changes on cash and cash

equivalents

- 1 -

Cash and cash equivalents at end of period 255 1,083 1,193

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Consolidated Statement of Changes in Shareholders’ Equity

Group

Share

capital

Share

premium

Retained earnings

Foreign currency

reserve

Reverse acquisition

reserve

Capital redemption

reserve

Share based equity

reserve

Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

At 1 January 2019 2,260 3,662 (13,221) (251) (2,843) 9519 90 (784) Changes in equity for the 6 months ended 30 June 2019 Loss for the period - - (925) - - - - (925) Currency translation differences - - - 35 - - - 35 Total comprehensive loss for the period - - (925) 35 - - - (890)

Transactions with the owners

Shares issued during the period 51 7,329 - - - - - 7,380 Costs of Share Issue - (153) - - - - - (153) Share option-based charge - - - - - - (406) (406) Reserve transfer - - (331) - - - 331 - Total contributions by and distributions to owners 51 7,175 (331) - - -

(75) 6,821

At 30 June 2019 2,311 10,837 (14,477) (215) (2,843) 9,519 15 5,147 Changes in equity for the 6 months ended 31 December 2019 Loss for the period - - (1,340) - - - - (1,340) Currency translation Differences - - - (44) - - - (44) Total comprehensive loss for the period - - (1,340) (44) - - - (1,384)

Transactions with the owners Shares issued during the period 11 1,090 - - - - - 1,101 Costs of Share Issue - (184) - - - - - (184) Share option-based charge - - - - - - 408 408 Reserve transfer - - 417 - - - (417) - Total contributions by and distributions to owners 11 906 417 - - - (9) 1,325

At 31 December 2019 2,322 11,743 (15,400) (259) (2,843) 9,519 6 5,088 Changes in equity for the 6 months ended 30 June 2020 Loss for the period - - (925) - - - - (925) Currency translation Differences - - - 67 - - - 67 Total comprehensive loss for the period - - (925) 67 - - - (858)

Transactions with the owners Shares issued during the period - 95 - - - - - 95

Costs of Share Issue - - - - - - - - Share option-based charge - - - - - - - -

Reserve transfer - - - - - - - - Total contributions by and distributions to owners - 95 - - - - - 95

At 30 June 2020 2,322 11,838 (16,325) (192) (2,843) 9,519 6 4,325

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Notes to the Financial Statements For the 6 months ended 30 June 2020

1. General information Integumen Plc is a company incorporated in England and Wales. The Company is a public limited company admitted to trading on the

AIM market of the London Stock Exchange on 5 April 2017. The address of the registered office is Sand Hutton Applied Innovation

Campus, Sand Hutton, York, North Yorkshire, YO41 1LZ.

The principal activity of the Group is that of developing technologies in the skin industry. The Group has a presence in the UK and

Ireland.

The financial statements are presented in pounds sterling, the currency of the primary economic environment in which the Group’s

trading companies operate.

The registered number of the Company is 10205396.

2. Basis of preparation The financial information in these interim results is that of the holding company and all of its subsidiaries. It has been prepared in

accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use

in the EU (IFRSs). The accounting policies applied by the Group in this financial information are the same as those applied by the

Group in its financial statements for the year ended 31 December 2019 and which will form the basis of the 2020 financial statements

except for a number of new and amended standards which have become effective since the beginning of the previous financial year.

These new and amended standards are not expected to materially affect the Group.

The financial information presented herein does not constitute full statutory accounts under Section 434 of the Companies Act 2006

and was not subject to a formal review by the auditors. The financial information in respect of the year ended 31 December 2019 has

been extracted from the statutory accounts which have been delivered to the Registrar of Companies. The Group's Independent

Auditor's report on those accounts was unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies

Act 2006. The financial information for the half years ended 30 June 2020 and 30 June 2019 is unaudited and the twelve months to

31 December 2019 is audited. The financial information for the half year ended 30 June 2019 and the twelve months to 31 December

2019 have been restated with respect to the reclassification of discontinued operations.

3. Exceptional items Included within administrative expenses are exceptional items as shown below:

Unaudited 6 months ended

30 June 2020

Unaudited 6 months ended

30 June 2019

Audited Year ended

31 December 2019

Exceptional items include:

Transaction costs relating to raising funds and business acquisitions

and disposals

-

446

532

Total exceptional items - 446 532

4. Taxation

Unaudited 6 months ended

30 June 2020

£’000

Unaudited 6 months ended

30 June 2019

£’000

Audited Year ended

31 December 2019

£’000 Research and development tax credit - 35 32

Deferred tax credit 30 15 94

30 50 126

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5. Loss per share (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 period.

Unaudited 6 months ended

30 June 2020

Unaudited 6 months ended

30 June 2019

Audited Year ended

31 December 2019

Loss from continuing operations £925,000 £931,000 £2,271,000

(Profit) from discontinued operations - (£6,000) (£6,000)

Loss attributable to owners of the parent £925,000 £925,000 £2,265,000

Weighted average number of Ordinary Shares in issue 1,073,391,121 623,223,403 807,395,734

Basic loss per ordinary share From continuing operations 0.1p 0.2p 0.3p

From discontinued operations 0.0p 0.0p 0.0p

From loss for the year 0.1p 0.2p 0.3p

(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 9.

6. Dividends There were no dividends paid or proposed by the Company. 7. Share capital

Unaudited 6 months ended

30 June 2020

Unaudited 6 months ended

30 June 2019

Audited Year ended

31 December 2019

£’000 £’000 £’000

1,078,750,235 Ordinary shares of 0.01p each

108 97 108

223,685,232 Deferred shares of 0.99p each

2,214 2,214 2,214

Total 2,322 2,311 2,322

Ordinary shares issued during the period

- On 28 May 2020, placing subscribers exercised warrants over 3,000,000 ordinary shares of 0.01p each at an exercise

price of 1.5p per ordinary share of 0.01p raising a total of £45,000 for the Company.

- On 4 June 2020, placing subscribers exercised warrants over 3,333,332 ordinary shares of 0.01p each at an exercise price

of 1.5p per ordinary share of 0.01p raising a total of £50,000 for the Company.

As at the 30 June 2020 the Company had an issued share capital of 1,078,750,235 ordinary shares of 0.01p each and 223,685,232

deferred shares of 0.99p each.

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8. Cash used in operations

Unaudited 6 months ended

30 June 2020

£’000

Unaudited 6 months ended

30 June 2019

£’000

Audited Year ended

31 December 2019

£’000 Loss for the year from continuing activities (925) (931) (2,271)

Discontinued cashflows - 6 6 Continuing operations Adjustments for: – Depreciation 72 40 784 – Amortisation 312 106 (7)

– Net finance costs 13 13 -

– Taxation (30) (50) 26

– Foreign currency 33 13 (126)

– Share option-based charge - 2 2

Changes in working capital

– Inventories 6 28 50

– Trade and other receivables (530) 44 (120)

– Trade and other payables 277 41 (62)

Net cash used in discontinued operations - (563) (563)

Net cash used in operations (772) (1,251) (2,281)

9. Post balance sheet events Loan Facility On 29 July 2020 the Company signed a £3,000,000 loan facility with Riverfort Global Opportunities PCC Limited (“Riverfort”) and YA II

PN, Ltd (“YA II”) with a 3-year term (“Loan Agreement”). On the date of signing the Company drew down £1,500,000, 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.

Riverfort and YA II have been granted warrants to the total value of £350,000 based on the VWAP for the previous five trading days to

the date of signing of the agreement, which was 1.9836p. The total number of warrants granted was 18,905,021 ordinary shares of

0.01p each (9,452,511 to Riverfort and 9,452,510 to YA II) at an exercise price of 2.57868p per share exercisable up to 15 September

2024.

Riverfort and YA II together have been granted other rights under the Loan Agreement including the right to convert up to £950,000 of

the loan outstanding and any repayment fee unpaid to ordinary shares of 0.01p each at a conversion price of 2.9754p.

Ordinary Shares Issued

Placing subscribers holding warrants at an exercise price of 2p and 1.5p per ordinary share of 0.01p each exercised the following

warrants between 1 July 2020 and 15 September 2020.

Date Number of Exercise Price Total Value

£0.01 ordinary Shares pence values rounded up

7 August 2020 1,715,714 2p £34,314

13 August 2020 26,071,429 2p £521,429

13 August 2020 3,333,333 1.5p £50,000

24 August 2020 1,249,999 2p £25,000

26 August 2020 1,928,573 2p £38,571

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28 August 2020 13,464,286 2p £269,286

8 September 2020 500,000 2p £10,000

10 September 2020 4,417,857 2p £87,357

Total 52,681,191 £1,035,957

On 15 September 2020 a share consolidation was approved at General Meeting such that the existing ordinary shares of 0.01

pence each were consolidated into one new ordinary share of 0.1 pence in nominal value on a 10 for 1 basis with effective date

of 16 September 2020.

All warrant exercise prices have been adjusted according to the 10 for 1 basis for the 0.1p new ordinary shares.

Placing subscribers holding warrants at an exercise price of 20p per new ordinary share of 0.1p exercised the following warrants

between 16 September 2020 and 17 September 2020.

Date Number of Exercise Price Total Value

£0.1 ordinary Shares

16 September 2020 42,500 20p £8,500

Total 42,500 £8,500

The total value of exercised warrants from 1 July 2020 to 17 September 2020 is £1,044,457.

Warrants

Share Consolidation

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.

Grant of Warrants

On 15 September 2020 warrants of 18,905,021 ordinary shares of 0.01p to the value of £375,000 were granted to Riverfort and

YA II 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 will hold warrants to subscribe for 945,251, at exercise price of 25.7868 pence, per new ordinary shares

of 0.1 pence.

Warrants in issue

Following the share consolidation, as at 17 September 2020 the following warrants over new ordinary shares of 0.1 pence in the

Company remain outstanding.

Warrant holder Date granted Number of Ordinary shares

of 0.1p each

Exercise price

Expiry date

Turner Pope Investments (TPI) Ltd 5 April 2017 180,000 62.5p 5 April 2022

Placing subscribers 5 January 2018 440,000 15p 5 January 2023

Hybridan LLP 5 January 2018 100,000 15p 5 January 2023

Turner Pope Investments (TPI) Ltd 5 January 2018 30,000 15p 5 January 2023

Placing subscribers 2 May 2019 4,585,214 20p 2 May 2021

Turner Pope Investments (TPI) Ltd 2 May 2019 814,285 14p 2 May 2022

Turner Pope Investments (TPI) Ltd 16 December 2019 527,999 15p 16 December 2022

YA II PN, Ltd 15 September 2020 945,251 25.7868p 15 September 2024

Riverfort Global Opportunities PCC Ltd 15 September 2020

945,251

8,568,000

25.7868p

15 September 2024

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Share Consolidation

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.

At this date there were 1,131,431,430 ordinary shares of 0.01p in issue which on 16 September 2020 consolidated into

113,143,143 new ordinary shares of 0.1p.

Offer to acquire Modern Water plc

On 28 August 2020 the Company announced it had reached agreement on the terms of an offer for the entire issued and to be

issued share capital of Modern Water plc, for which the board of directors of the Company and Modern Water plc were

recommending to their respective shareholders. Modern Water plc shareholders would be entitled to 1 ordinary Integumen plc

share of 0.01p for each Modern Water plc ordinary share. (Following the share consolidation the offer will be 1 new ordinary share

of 0.1 pence for every 10 Modern Water plc ordinary share.)

At the General Meeting on 15 September 2020 the shareholders of Integumen plc granted the directors authority to issue shares

in relation to the offer and it is expected that a formal Offer Document will be issued to Modern Water plc shareholders in due

course.

Change of Name to DeepVerge plc On 15 September 2020 at General Meeting its was resolved to change the Company’s name to DeepVerge plc. The Company is

currently in the process of registering the name at the Registrars of Companies.

9. Availability of announcement A copy of this announcement is available from the Company’s website, being www.deepverge.com.