Modern Water (MWG) has signed a revenue share agreement with Integumen for them to manage the manufacture and logistic support for the supply of the Modern Water’s monitoring reagents. These supplies have previously been manufactured in-house and the agreement will enable Modern Water to fulfil an additional US$665,000 of backlog orders.
The Agreement has an estimated aggregate value of $1.25m (£1.04m) per year for 3 years, worth a total of $3.75m (£3.12m), based on Modern Water's historic sales levels of reagent consumables. The revenue share split is 60% / 40% in favour of Modern Water, after costs, and is subject to rolling 12-month extensions thereafter. As part of the agreement, Modern Water will make three full time laboratory technicians available to the Integumen team.
Simon Humphrey CEO of Modern Water, commented: "This Agreement is a water-shed moment for Modern Water. We are moving from a self-contained production, sales, marketing and distribution company to a collaborative, cooperation and partnership business model.
“This [agreement] immediately gives Modern Water access to state-of-the art laboratories in the UK without the need for capital expenditure. Integumen's superior development and manufacturing capabilities will enable us to rapidly grow our existing network of sales, marketing and distribution channels, delivering the quality of product we are synonymous with, whilst lowering operational costs."
Shares in Modern water trading slightly lower by 5% following this news
Announced separately, Integumen has confirmed a 100% site expansion, to 6,000 square feet, of its purpose built product and development laboratories in York, UK, adding a further six laboratories, of which two new laboratories will be allocated to the production of Modern Water's bacteria reagent.
Gerard Brandon CEO Integumen plc commented: "We are delighted to announce the continued expansion of our laboratories and to be able to provide European bacteria reagent manufacturing capacity and logistic support to Modern Water's sales, marketing and distribution in the US, EU, China and Japan. This Agreement demonstrates demand for Integumen's services and our capacity to maintain exponential growth regardless of the uncertainties of Brexit or the Coronavirus. In addition to production of the bacteria reagents, our AI division is exploring options to develop data analytic tools for Modern Water monitoring equipment, with the potential to add higher-value bolt-on real-time alert services leading to increased revenue per client."
Shares in Integument trending 3% higher in early morning trading