DeepVerge Shares Plunge – Here’s Why

DeepVerge (LON: DVRG) shares plunged Monday after it said revenues for 2022 are expected to be approximately 45% to 50% of expectations.

DeepVerge's share price is currently down 41% at 0.85p per share, hitting a low of 0.6p earlier in the session.

On January 9, 2023, the company revealed it expected 2022 unaudited revenues to be approximately £17.2 million. However, following the board change announced in February, and the appointment of a new Chief Financial Officer, the new management team launched a comprehensive review of all its significant contracts.

Revenues for several contracts have been “incorrectly recognised in excess of works completed,” said DVRG. As a result, “revenues for 2022 under the relevant accounting standard IFRS15 are expected to be approximately 45-50% of the £17.2m revenue figure provided by the previous executive management team.”

Most of the revenue shortfall in 2022 is now expected to be recognised in 2023, although DeepVerge warned that some are unlikely to be realised at all.

The company confirmed that its current order book for Modern Water and Glanaco exceeds £10 million, which is expected to be deliverable and recognised as turnover in 2023 and 2024.

DeepVerge's current cash balance is approximately £1 million, and “although requiring working capital to be tightly managed,” it is expected to remain sufficient to continue as a going concern. However, DVRG is exploring funding options, such as trade finance.

“Whilst it is extremely disappointing that 2022 revenues are likely to be so far below the figures provided by the previous executive management team, I'm confident that the new management has robust plans in place to deliver the order book during 2023 and 2024,” commented Ross Andrews, Chairman of DeepVerge.