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- Water treatment specialist De.mem (DEM) has signed a two-year service agreement worth $200,000 a year with an Australian real estate and infrastructure company
- Under the deal, De.mem will operate a water treatment plant for the unnamed new customer and potentially sell them pumps, chemicals, and other consumables
- While De.mem admitted the new contract is “not material” to overall group revenue, CEO Andreas Kroell said it’s a good example of recurring revenue growth
- At the end of June, De.mem said it had just under $6.5 million after going cashflow-negative by $668,000 over the quarter
- Shares in De.mem closed grey today, worth 16 cents each
Water treatment specialist De.mem (DEM) has signed a two-year service agreement worth $200,000 a year with an Australian real estate and infrastructure company.
The new customer was not named, but De.mem said under the deal it will operate a water treatment plant for the company and potentially also sell pumps, chemicals and other consumables to the customer on an ongoing basis.
The treatment plant will be based on the reverse osmosis process, which purifies water by removing sediment and unwanted dissolved solids by passing the water through a thin membrane with tiny pores.
The company said today’s contract is “not material” to overall group revenue, but it adds to the company’s recurring revenues through both operations and maintenance, as well as potential consumable sales.
De.mem CEO Andreas Kroell said today’s new service contract is a good example of continued growth in the company’s recurring revenue streams.
“We are pleased that our business has continued to trade strongly, despite the global COVID-19 pandemic, and this is largely due to the resilience of our recurring revenues and our high quality, well-diversified customer base,” Andreas said.
“We are proven as a high-quality service provider for water treatment plant operations and maintenance in many sites across the mining, food and beverage, and municipal and residential sectors,” he said.
Last week, De.mem released its June quarterly financial report in which it highlighted record quarterly customer receipts of $3.42 million — up by four per cent from the March 2020 quarter and 14 per cent from the June 2019 quarter.
While operating cashflow was still negative by roughly $668,000 over the quarter, De.mem said it is trending towards positive cashflow in coming quarters.
Moreover, with around $6.47 million in available funds at the end of June, the company can keep operating for another 10 financial quarters without needing to raise any more cash at current spending levels.
De.mem shares closed grey today, worth 16 cents each. The company has a $28 million market cap.
