Half-year Report

Modern Water plc ("Modern Water" or "the Company")

INTERIM RESULTS

 Modern Water (AIM:MWG), the owner of leading technologies for water and wastewater treatment and the monitoring of water quality, announces

interim results for the 6 months ended 30 June 2020

Commenting on the results, Gerard Brandon, Chairman of Modern Water, said:

"The necessary structural changes that were outlined in the recently published 2019 annual results, were carried on through H1 2020. The Company business model in 2020 has moved to a collaboration, cooperation and partnership business model resulting in a high volume, high margin recurring revenue strategy. The increased order levels, seen in H1, are currently being prepared for shipping in H2 2020.

"Modern Water continues to retain a leadership position within the water contamination monitoring sector and is adding the latest technologies in ecommerce, logistics, comms, networking and data encryption which extends the global reach of the Company beyond the US, Europe and Far East offices. With thousands of sites and hundreds of water systems installed over the last 30 years, the Company retains a strong international position in water monitoring. The strategic challenge through this COVID-19 pandemic is being met with the move to provide support services online, making it easier and safer to interact with customers while at the same time to increase the capacity of our equipment to provide surveillance against all sorts of contaminants and threats including viruses and pathogens.

"The new platform gives us the ability to further exploit the data the Company generates from different water systems across the world. Data analytics within the latest AI systems, produced in collaboration with Company partners positions Modern Water to receive multiple revenue streams from equipment, consumables and predictive services for our existing and new clients coming online to manage their COVID-19 risk."

For further information:

GROUP STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

SIX MONTH PERIOD ENDED 30 JUNE 2020

GROUP STATEMENT OF FINANCIAL POSITION (UNAUDITED)

AS AT 30 JUNE 2020

The notes form an integral part of this condensed consolidated interim financial information.

GROUP STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

SIX MONTH PERIOD ENDED 30 JUNE 2020

The notes form an integral part of this condensed consolidated interim financial information.

GROUP STATEMENT OF CASH FLOWS (UNAUDITED)

SIX MONTH PERIOD ENDED 30 JUNE 2020

The notes form an integral part of this condensed consolidated interim financial information.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

SIX MONTH PERIOD ENDED 30 JUNE 2020

1. General information

Modern Water plc ('the Company') and its subsidiaries (together, 'the Group') invests in, develops and deploys new water technology. The Company is a public limited company incorporated and domiciled in England and Wales, whose shares are publicly traded on the AIM market operated by the London Stock Exchange. The registered office is 12th Floor, 6 New Street Square, London, EC4A 3BF.

This condensed consolidated interim financial information was approved for issue by the Board of Directors on 21 September 2020. These interim financial results are unaudited and do not comprise statutory accounts within the meaning of section 435 of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2019 were approved by the board of directors on 21 August 2020. The auditor's opinion on those accounts was not modified but contained an emphasis of matter paragraph related to the going concern. They did not contain any statement under section 498 of the Companies Act 2006.

2. Basis of preparation and going concern

2.1 Basis of preparation

The principal accounting policies have been applied consistently throughout the period in the preparation of these financial statements. This condensed consolidated interim financial information for the six months ended 30 June 2020 has been prepared in accordance with the AIM Rules for Companies of the London Stock Exchange plc and with IAS 34, 'Interim financial reporting' as adopted by the European Union.

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

2.2 Going concern

The directors are required by company law to be satisfied that the Group has adequate resources to continue in business for the foreseeable future. A review has been conducted and the directors have concluded that such resources are available, and that the going concern basis is justified in preparation of the financial statements.

The Group's forecasts prepared by the directors reflect that funding requirements have reduced significantly following the restructuring of the Group's Membrane Division and Central function and the issue of equity in February this year.

The Group's remaining funding requirements will be met from:

· The £799k cash balance as of 30-June-2020;

· Revenue from the Monitoring Division

· Revenue from the restructured Membrane Processes Division.

3. Accounting policies

3.1 Accounting policy and disclosure changes

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2019.

4. Principal risks and uncertainties

A detailed explanation of the principal risks and uncertainties affecting the Group, and the steps taken to manage them, is set out in the Directors' Report section of the Group's 2019 Annual Report and Accounts, which is available of the Group's website at www.modernwater.com. The principal risks and uncertainties are summarised as follows:

· customer acceptance of the Group's technologies;

· competitor technology;

· socio-political risks;

· scaling up the technology;

· IP protection;

· recruitment and retention of key personnel;

· health and safety; and

· financial risks.

There have been no significant changes in the nature of these risks that will affect the next six months of the financial year.

5. Critical accounting estimates and judgements

The preparation of financial statements in conformity with International Financial Reporting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. Estimates are continually evaluated and are based on historical experience and other factors, such as expectations of future events, and are believed to be reasonable under current circumstances. Actual results may differ from these estimates. The key sources of estimation uncertainty during the current year were consistent with the prior year, as detailed in the Group's 2019 Annual Report and Accounts.

6. Segmental analysis

The chief operating decision-maker is deemed to be the Board, for whom monthly financial information is provided by division to gross profit and direct overheads; below this financial information is reported in a consolidated Group format. For management reporting purposes the Group is organised into two operating segments (i) Membrane Processes; and (ii) Monitoring, which matches this divisional split.

Administrative expenses which are directly attributable to the two main operating divisions (comprised of business development, sales, operations and technical expenditure) are reported as expenditure in the respective division. However, a significant proportion of the Group's expenditure (legal, marketing, finance, facilities and directors' expenditure) is managed and reported centrally. As the commercial activities of the Group develop, this financial information is expected to evolve.

7. Administrative expenses by nature

8. Share-based payments

9. Loss per share

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. As the Group is loss making, the diluted loss per share is equal to the basic loss per share.

10. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation in the Group accounts.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

SIX MONTH PERIOD ENDED 30 JUNE 2020

11. Subsequent Event

On 28 August 2020, the Company announced that it had reached agreement on the terms of a recommended offer to be made by Integumen plc for the entire issued and to be issued share capital of Modern Water plc.

Following the share consolidation approved on 15 September 2020 by Integumen's shareholders, under the terms of the offer Modern Water shareholders would be entitled to receive 1 new ordinary Integumen plc share of 0.1p for every 10 Modern Water ordinary shares held.

It is expected that a formal Offer Document will be issued by Integumen to Modern Water shareholders in due course.

The directors confirm that, to the best of their knowledge, these condensed consolidated interim financial statements have been prepared in accordance with IAS34 as adopted by the European Union. The interim management report includes a fair review of the information required by the FCA's Disclosure and Transparency Rules (4.2.7 R and 4.2.8 R), namely:

· an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

The directors of Modern Water plc are listed in the Modern Water plc Annual Report and Accounts 2019. A list of the current directors is maintained on the Company's website www.modernwater.com.

Simon Humphrey

Chief Executive

21 September 2020

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

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