TIDMEKF

RNS Number : 8408Z

EKF Diagnostics Holdings PLC

20 September 2022

EKF Diagnostics Holdings plc

("EKF", the "Company" or the "Group")

Half-year Report

Strong half-year, positioning the Group for sustainable and diversified growth

Life Sciences investment in increased capacity progressing well

Year of transition into non-COVID related revenues

EKF Diagnostics Holdings plc (AIM: EKF), the AIM-listed global diagnostics business , announces its unaudited interim results for the six months ended 30 June 2022.

Despite this being a year of transition, as the business pivots away from a busy COVID period, EKF has successfully maintained good momentum, recording a strong first half in line with management expectations and positioning the business for sustainable, diversified growth over the long term.

Financial highlights

   --    Revenues of GBP37.5m (H1 2021: GBP38.6m) 
   -     74.8% up from pre-pandemic levels (H1 2019: GBP21.4m) 

-- Revenue growth, excluding largely COVID-related activities in Contract Manufacturing and Laboratory Testing, of 11.5% in period

   --    Adjusted EBITDA* of GBP9.7m (H1 2021: GBP12.8m) 
   -     73.9% up from pre-pandemic levels (H1 2019: GBP5.6m) 
   --    Gross profit of GBP17.7m (H1 2021: GBP18.5m) with GM% maintained at 47% (H1 2021: 48%) 
   --    Profit before tax of GBP4.1m (H1 2021: GBP11.4m) 
   --    Net cash generated from operations of GBP8.4m (H1 2021: GBP1.1m) 
   --    Cash and cash equivalents of GBP19.1m (30 June 2021: GBP20.8m) (31 December 2021: GBP20.3m) 

* Earnings before interest, tax, depreciation and amortisation adjusted for exceptional items and share-based payments

Operational highlights

   --    Business division revenues 
   -         Point-of-Care:  up 9.7% to GBP13.8m (H1 2021: GBP12.5m) 
   -         Central Laboratory:  stable at GBP6.3m (H1 2021: GBP6.3m), returned to growth in July 
   -         Life Sciences:  doubled to GBP2.0m (H1 2021: GBP1.0m) 

- Contract Manufacturing: GBP8.6m (H1 2021: GBP17.5m) reflecting expected drop in COVID revenues

   -     Laboratory Testing: GBP2.1m (H1 2021: nil, laboratory acquired in H2 2021) 

- Other: GBP4.7m (H1 2021: GBP1.2m) including GBP3.5m relating to cash received for US inventory

-- Life Sciences: Investment to bring increased fermentation capacity online from 2023 - customer onboarding processes are already underway with audits, validation batches and tech transfer ongoing

-- Laboratory Testing: new clinical toxicology testing service launched, further test portfolio launches in Q4 2022 and Q1 2023, and non-invasive prenatal test service with Yourgene Health to launch next month

-- Implementation of reorganisation programme across the business to align resources with the expansion opportunities

-- Share Buyback programme completed successfully, 9m shares cancelled, offsetting dilution from shares issued in H2 2021 as consideration for laboratory testing business

Mike Salter, Chief Executive Officer of EKF, commented: "Whilst 2022 is a year of transition, positioning EKF for long-term sustainable and diversified growth, the strong first half delivery has been pleasing. This performance shows the strength and robustness of our core established business and provides the Board with confidence that the Group, as a whole, remains on track to deliver an adjusted EBITDA result in line with its expectations for the full year and is well positioned for the years ahead."

A copy of the investor presentation is available here: https://www.ekfdiagnostics.com/documents-reports.html

EKF Diagnostics will be hosting a live online presentation open to all investors on Tuesday 20 September at 4.30pm (BST), via the Investor Meet Company platform. Investors can sign up to Investor Meet Company for free and add to meet EKF Diagnostics via:

https://www.investormeetcompany.com/ekf-diagnostics-holdings-plc/register-investor

 
     EKF Diagnostics Holdings plc                                       www.ekfdiagnostics.com 
     Mike Salter, CEO / Marc Davies, CFO                                   Tel: +44 (0)29 2071 
                                                                                          0570 
 
     Singer Capital Markets (Nominated Adviser & Joint                     Tel: +44 (0)20 7496 
      Broker)                                                                             3000 
     Aubrey Powell / George Tzimas / Oliver Platts 
 
     Investec Bank plc (Joint Broker)                                      Tel: +44 (0)20 7597 
                                                                                          4000 
     Gary Clarence / Daniel Adams / Ben Farrow 
 
     Walbrook PR (Media & Investor              Tel: +44 (0)20 7933 8780 or ekf@walbrookpr.com 
      Relations) 
     Paul McManus / Lianne Applegarth                   Mob: +44 (0)7980 541 893 / +44 (0)7584 
                                                                                       391 303 
 
 

BUSINESS REVIEW

We are delighted to announce such a positive first half performance for our core established business, and a strong overall performance that has delivered considerable growth compared to pre-pandemic levels. It also demonstrates our robustness in the face of significant commercial change due to the near total reduction after the first quarter of our COVID related activities.

Revenues for the six months ended 30 June 2022 were GBP37.5m (H1 2021: GBP38.6m) and adjusted EBITDA was GBP9.7m (H1 2021: GBP12.8m). Considering our core established business units, which excludes largely COVID-related revenue from Contract Manufacturing and Laboratory Testing, the Group delivered double-digit revenue growth compared to H1 2021. Compared to the performance in 2019 as a pre-pandemic benchmark, when no COVID related activities were recorded, total Group revenues are 74.8% up from 2019 levels (H1 2019: GBP21.4m) and adjusted EBITDA is 73.9% ahead (H1 2019: GBP5.6m).

It is clear that, despite this being a year of transition, EKF has successfully maintained good momentum, recording a strong first half in line with management expectations and positioning the business for long-term sustainable and diversified growth. We have strong foundations from which to execute on our mission to build a leading Global Diagnostics company, providing quality products and services to support the continued improvement in patient healthcare and outcomes.

EKF is also well placed to build on this success, as we enter our next phase of sustainable growth. The Board remains focused on delivering its strategy, primarily to:

1. Drive organic growth from our stable and established Point-of-Care & Central Laboratory businesses, leveraging existing products and routes to markets, innovating and expanding into new territories;

2. Invest in the highly-scalable Life Sciences business unit, through expansion plans for our fermentation capacity and capabilities which are led by customer demand and will accelerate organic growth; and

3. Pivot Contract Manufacturing & Laboratory Testing to non-COVID activities and build revenues by broadening our high-value services offering.

We have made good progress in the above three areas and will cover them in more detail below.

Operations

   1.    Point-of-Care & Central Laboratory 

Our established Point-of-Care ("POC") and Central Laboratory divisions have returned to growth, with revenues now exceeding pre-COVID levels. These businesses remain the cornerstone of EKF, contributing 53.5% to Group revenues. They both supply a regular flow of high margin consumables providing a steady recurring revenue and are both profitable and cash generative enabling investment and further diversification of the Group.

POC has continued to experience steady growth post COVID, up 9.7% to GBP13.8m (H1 2021: GBP12.5m), as a result of growth in the existing customer base and new market initiatives. With increasing pressures on healthcare systems, including an ageing population and the growing incidence of chronic diseases, EKF is well placed to meet the rising demand for quality POC products that can be performed at home or in primary care settings.

Sales in the POC diabetes segment have seen good growth in the period, reaching GBP5.7m (H1 2021: GBP4.8m), an increase of 18.3%. Biosen sales are up 31.0% driven by strong growth in EMEA and APAC. Sales of Quo-Test and Quo-Lab are up 8.2% and 7.4% respectively.

We have seen good growth across our POC hematology portfolio, with sales up 10.5% to GBP6.5m (H1 2021: GBP5.9m) as screening anaemia programmes have continued to return to more normalised levels following the COVID pandemic. Hemocontrol, a point-of-care hemoglobin analyser, delivered significant growth with sales up 45.2% to GBP3.1m (H1 2021: GBP2.1m) due to the return of global testing programmes post pandemic.

In the period we enhanced our POC analyser portfolio by launching EKF Link, a digital connectivity solution for the secure management of POC analysers and associated data on one centralised platform. This solution significantly increases the target market for our analyser products where connectivity is becoming increasingly attractive if not essential. The development and launch of EKF Link was driven by customer demand and designed in partnership with hospital POC managers to ensure the software meets their specific needs. Integrated with hospital and laboratory IT systems, EKF Link enables real-time remote management of data, such as patient test results, allowing physicians and other healthcare professionals to easily evaluate patients' data securely and accurately from a remote setting.

In Central Laboratory, we remain one of the clear market leaders for the supply of <BETA>-HB (Beta-Hydroxybutyrate), a reagent used to detect ketones for patients suffering from diabetic ketoacidosis, as well as many other clinical applications. Our <BETA>-HB reagent is used by over 1,100 hospitals in the USA. Total <BETA>-HB sales for H1 2022 were marginally impacted by temporary supply delays at period end, but these have since been resolved and sales for the 7 months to the end of July 2022 have shown a 9.9% improvement on the same period year-on-year. Glycated Albumin sales were up 138.9% with first half sales already in excess of 2021 full year performance.

In the first six months Central Laboratory was flat at GBP6.3m (H1 2021: GBP6.3m), but as described above <BETA>-HB sales have immediately caught up post period end, putting it back on track for its expected growth performance year-on-year.

   2.    Life Sciences 

Strong organic growth from our specialist enzyme fermentation business saw revenues doubling to GBP2.0m (H1 2021: GBP1.0m). This growth was driven by increased demand from our large corporate customers utilising our existing contract fermentation services to create and deliver high quality enzymes and biomolecules for use in a variety of industrial applications.

EKF has established a dedicated team of highly skilled fermentation project specialists who are uniquely positioned to deliver customer requirements and expand these long-term strategic partnerships. The strong customer relationships established by this unit over the years has led to customer-led interest in increased volume services. EKF's current fermentation suites in Elkhart utilise 10, 100, 250 and 1,600 litre (L) vessels, and as already reported, we are investing around $10m to increase this capacity at our new South Bend site and also our existing site in Elkhart, to meet existing customer needs and attract new customers with higher volume requirements.

Progress in the construction and installation of the six new vessels in South Bend - comprising 65, 300, 1,500, 3,000, 10,000 and 14,500L units - is going well and remains on track to be completed by the year end. The 1,500 and 3,000L vessels have been delivered to the South Bend site and will be installed and validated next month, with the larger 10,000L and 14,500L vessels scheduled to be delivered in Q4 2022. A number of potential customers interested in our larger volume vessels have already begun the process of internal audit, validation and tech transfer to allow them to utilise this capacity when it comes on stream. We would expect to produce pilot batches in early 2023 moving to commercial scale production throughout 2023.

The global speciality enzymes market is experiencing rapid growth, driven by the increased application of enzymes in the diagnostic industry, as well as the food and industrial sectors, and as a result we are seeing increasing demand for precision fermentation services. We are confident in the growth trajectory of this business, which is closely aligned with the strong ongoing customer demand which is driving our investment decision. We have a robust contract pipeline and expect to see revenues build in 2023 and continue this upward trajectory into 2024.

   3.    Contract Manufacturing & Laboratory Testing 

As previously highlighted, the main challenges in our year of transition are in Contract Manufacturing & Laboratory Testing, as we seek to shift our operations to non-COVID revenues. The first six months certainly reflect this change, as we still experienced a strong Q1 as COVID-related demand from our diagnostic and healthcare customers continued for our end-to-end contract manufacturing services across all of our sites in the US, Germany and UK. However, as expected, there was a sharp drop in COVID related revenues in our Contract Manufacturing division after the first quarter, which saw revenues for the half reduce substantially to GBP8.6m from the higher levels seen during the pandemic when COVID testing was more widespread (H1 2022: GBP17.5m). This Q1 weighted demand for COVID-related services was also seen in Laboratory Testing, which delivered H1 sales of GBP2.1m (H1 2021: GBPnil, laboratory acquired in H2 2021).

In anticipation of this decline, during the period we began restructuring our Contract Manufacturing business, reducing costs and focusing our capabilities outside of COVID. Further costs associated with the restructuring are expected in the second half of the financial year. We continue to execute our strategy to pivot away from COVID products and services, utilising our capabilities and capacity to focus on higher value contract manufacturing in the supply of products and services for alternative applications. We expect Contract Manufacturing revenues to build in the later part of 2022 and into 2023 as new opportunities come online.

In Laboratory Testing, our efforts remain focussed on utilising the expertise of Advanced Diagnostic Laboratory LLC ("ADL Health"), which specialises in high complexity testing, to bring new tests online and expand our CLIA laboratory testing portfolio beyond COVID assays. To this end, the team has recently launched a new clinical toxicology method geared towards medication adherence and developed an analysis of cannabis potency, with the first samples being processed this month. Further tests in oncology, wound health and women's health are on track to launch later in the year and into early 2023. At the beginning of the year, we signed a strategic partnership agreement with Yourgene Health plc ("Yourgene") to offer a non-invasive prenatal test ("NIPT") service from our accredited US laboratory. We expect this service to launch in October 2022 and we believe this is an exciting growth opportunity.

Our challenge with the Laboratory Testing division is to ensure that investment into these areas quickly adds new revenue streams to the Group, and to return this business to profitable growth before the year end based on a wider portfolio of non-COVID testing services.

Operational efficiencies

As well as the restructuring of the Contract Manufacturing operations during the first half, post-period end the new management team has implemented a reorganisation programme across the business to align the cost base to match the expansion opportunities being seen across the Group, and to ensure a smooth transition into a sustainable growth business unrelated to the external pandemic. Like many businesses, we have experienced supply-chain availability challenges and input-costs inflationary pressure. To mitigate this, we increased the focus on forward-looking sourcing requirements and have responsibly adjusted our prices to customers.

In the first half, we began implementing new initiatives to drive efficiency and integration across the global EKF Group, as well as bolstering our current working practices. This included vertically integrating our supply chain, the commencement of an IT standardisation project to consolidate global systems and utilise new technologies, and the enhancement of financial analysis, controls and the sharing of resources throughout the Group.

Regulatory and ESG strategy

We believe we are well positioned to meet the new and additional requirements under In Vitro Diagnostic Regulation (IVDR). Our experienced regulatory team is already connected with our Notified Body, who is aware of our plan for the number of products subject to the conformity assessment requirements of IVDR, and we have built in a safety buffer to ensure we are prepared.

We have also appointed a dedicated senior ESG resource to lead the development of our Environmental and Sustainability strategy. This investment is a sign of how EKF recognises the importance of analysing ESG performance going forward to help investors gain a more holistic view of our business, better understand how we manage ESG risks and incorporate sustainability as a core value.

Russia and Ukraine

EKF owns 60% of O.O.O. EKF Diagnostika, a distribution subsidiary located in Moscow which sells EKF POC products and other third-party products into Russia and neighbouring states. As a supplier of medical products with no dual use it would not be appropriate to end supplies to the region, and sales have continued in the first half of the year. We are working with the staff and management of this business to keep it as stable as possible, but it is becoming more challenging as we comply with the current sanction guidance. At present there are controls over the payment of foreign dividends in Russia hence the cash disclosed in Russia (30 June 2022: GBP2.6m) is currently not accessible. Financial details of our business in Russia are shown in the segmental analysis in Note 3.

We also have a distributor in Ukraine with whom we have worked for some years, who we have continued to support during this time of substantial challenge.

Outlook

Our Point-of-Care & Central Laboratory business units are expected to continue to grow steadily and contribute a solid base of stable revenues and earnings. The investment in our Life Sciences business, and its increased fermentation capacity, is expected to generate further significant revenue growth from next year onwards. This expectation is underpinned by the advanced nature of our work with new and existing customers keen to utilise this capacity as it becomes available. The transition of Contract Manufacturing and Laboratory Services into non-COVID-related revenues is our key challenge. We have already identified a number of opportunities that are advancing, and a wider portfolio of tests are beginning to come online, which we forecast will start to deliver revenues in the second half of the year.

Whilst 2022 is a year of transition, positioning EKF for long-term sustainable and diversified growth, the strong first half delivery has been pleasing. This performance shows the strength and robustness of our core established business and provides the Board with confidence that the Group, as a whole, remains on track to deliver an adjusted EBITDA result in line with its expectations for the full year and is well positioned for the years ahead.

Mike Salter

Chief Executive Officer

20 September 2022

Financial review

Revenue

Revenue for the period was GBP37.5m (H1 2021: GBP38.6m).

Revenue by Business Unit:

 
                                         Unaudited             Unaudited           +/- 
                                    6 months ended        6 months ended             % 
                                      30 June 2022          30 June 2021 
                                           GBP'000               GBP'000 
 
     Point-of-Care                          13,756                12,534          9.7% 
     Central Laboratory                      6,295                 6,325        (0.5%) 
     Life Sciences                           2,024                 1,033         95.9% 
     Contract Manufacturing                  8,570                17,469       (50.9%) 
     Laboratory Testing                      2,141                     -           n/a 
     Other*                                  4,685                 1,198        291.1% 
     Total revenue                          37,471                38,559        (2.8%) 
                              --------------------  -------------------- 
 
 

Considering our core established business units , which excludes largely COVID-related revenue including that from Contract Manufacturing and Laboratory Services, the Group delivered growth of 11.5% compared with the equivalent period in 2021.

* Other revenue relating to US inventory payment, shipping and handling recharges, repairs and other sundries

Revenue by Geographical Segment:

 
                                Unaudited             Unaudited           +/- 
                           6 months ended        6 months ended             % 
                             30 June 2022          30 June 2021 
                                  GBP'000               GBP'000 
 
     Germany                       13,582                14,542        (6.6%) 
     USA                           20,925                18,156         15.3% 
     Russia                         2,037                 1,384         47.2% 
     UK                               925                 4,477       (79.3%) 
     Total revenue                 37,471                38,559        (2.8%) 
                     --------------------  -------------------- 
 

Geographic regions showing a decline is primarily due to the reduction in COVID-related Contracted Manufacturing activity. The 2022 amount for USA includes the GBP3.5m inventory payment.

Gross profit

Gross profit was GBP17.7m (H1 2021: GBP18.5m). The gross profit margin was 47% (H1 2021: 48%). The gross profit has reduced mainly as a result of the transition to COVID-related products and services.

Administrative expenses

In H1 2022, administration expenses increased to GBP14.5m (H1 2021: GBP7.0m), representing 38.6% of revenue for the period (H1 2021: 18.2%, FY 2021: 21.6%). The increase is largely due to a number of non-recurring events. In H1 2022, a charge of GBP1.2m was recorded in relation to the $5.5m (GBP4.4m) cash payment received in May 2022 with regard to US inventory. The total adjusted revenue and EBITDA impact of this transaction is GBP3.5m and GBP1.2m, respectively.

In addition, exceptional costs in relation to the transition and restructure of certain operations in the US, UK and Germany of GBP1.7m are recorded in administration expenses in H1 2022. Finally, administrative expenses in H1 2021 benefited from a net write back of GBP1.4m in share-based payments (H1 2022: charge of GBP0.5m) stemming from the termination of the previous cash settled share-based incentive scheme. The 2022 charge relates to the replacement scheme which was described in the 2021 Annual Report.

To aid understanding, administrative expenses in each period are made up as follows:

 
                                                    Unaudited             Unaudited             Audited Year 
                                               6 months ended        6 months ended        ended 31 December 
                                                 30 June 2022          30 June 2021                     2021 
     Non-exceptional administration 
      expenditure before R & 
      D capitalisation and share-based 
      payments                                         13,076                 8,960                   19,511 
     Effect of share-based payments                       517               (1,392)                  (1,238) 
     Less capitalised R & D                             (802)                 (317)                    (659) 
     Effect of exceptional items                        1,682                 (234)                       95 
                                         --------------------  --------------------  ----------------------- 
     Total administrative expenses                     14,473                 7,017                   17,709 
                                         --------------------  --------------------  ----------------------- 
 

The charge for depreciation of fixed assets and for the amortisation of intangibles is GBP3.4m (H1 2021: GBP2.8m).

Operating profit and adjusted earnings before interest tax and depreciation

The Group generated an operating profit of GBP4.1m (H1 2021: GBP11.4m). We continue to consider that adjusted EBITDA gives a more meaningful measure of performance which for H1 2022 was GBP9.7m (H1 2021: GBP12.8m).

Adjusted EBITDA excludes a charge for share-based payments of GBP0.5m (H1 2021: credit of GBP1.4m) and exceptional charges of GBP1.7m (H1 2021: profit of GBP0.2m). The exceptional charge relates mainly to transition and restructure costs of certain operations in the US, UK and Germany including provisions against inventory and the impairment of certain lease assets where the property is no longer required. The reduction in operating profit and adjusted EBITDA relates to the transition to a post-COVID business.

Finance costs

Finance costs are GBP0.01m (H1 2021: GBP0.16m). The charge has reduced because of lower charges relating to deferred consideration.

Tax

There is a tax charge of GBP1.7m (H1 2021: GBP2.2m). The decrease largely reflects the decrease in profit, offset partially by an increased deferred tax rate.

Earnings per share

Basic earnings per share has decreased to 0.48p (H1 2021: 1.99p). Diluted earnings per share are 0.48p (H1 2021: 1.99p), dilutive effects having largely ended.

Balance sheet

Fixed assets

We have capitalised GBP2.3m (H1 2021: GBP1.5m) of property, plant and equipment. The expenditure includes continuing work on adding capacity for Life Sciences in the US. Further expenditure in Life Sciences, and on new facilities in Germany, is planned for the second half of the year.

Intangible assets

The value of intangible fixed assets is GBP43.4m (31 December 2021: GBP41.9m). The increase is mainly the result of exchange rate movements. An amount of GBP0.8m (H1 2021: GBP0.6m) has been capitalised during the first half.

Investments

During the period additional investments were made in the ordinary share capital of Renalytix plc ("Renalytix") (GBP0.38m) and Verici Dx plc ("Verici") (GBP2.5m). The majority of our holding in Verici was subsequently transferred to shareholders by way of a dividend in specie at a value of GBP1,455,232 (15.994p per Verici share, equivalent to 0.31988p per EKF share). This represented a discount from the prevailing market price of 27.3% reflecting the lock-in period applied to the shares. Following this dividend the Group's investments in Renalytix and Verici represented holdings of 1.53% and 0.42% respectively. The investments are held at fair value which has been calculated based on the market value of the shares which at 30 June 2022 was GBP1.05 (31 December 2021: GBP6.20) per share for Renalytix and GBP0.23 (31 December 2021: GBP0.53) per share for Verici. The resulting unrealised loss during H1 2022 of GBP7.2m is shown as a movement in Other comprehensive income.

Deferred consideration

The deferred consideration at 30 June 2022 relates to the acquisition in September 2021 of Advanced Diagnostic Laboratory LLC. At 30 June 2021 the deferred consideration related to a contingent share-based payment to the former owner of EKF-Diagnostic GmbH, which was resolved in H2 2021.

Cash and working capital

The gross cash position at 30 June 2022 was GBP19.1m (31 Dec 2021: GBP20.3m), and the Group had cash net of bank borrowings of GBP18.9m (31 Dec 2021: GBP19.6m).

Cash generated from operations in H1 2022 is GBP8.4m (H1 2021: GBP1.1m). Trade debtors have decreased as a result of timing effects in the run up to period end. Major cash outflows have included GBP3.9m on purchase of own shares and GBP2.9m for the purchase of investments, as well as cash payments totalling GBP0.4m required in connection with the acquisition of ADL.

Cash and cash equivalents held by the Russian subsidiary at 30 June 2022 totalled GBP2.6m (31 Dec 2021: GBP1.3m). These deposits are subject to regulatory restrictions, and therefore may not be available for general use by the other entities within the Group.

Capital structure

We successfully completed the acquisition of 9,000,000 of our own ordinary shares for a total consideration of GBP3.9m. These shares have been cancelled. We received further authority to buy back up to 69,589,585 ordinary shares at the Company's AGM on 18 May 2022 and we will make further purchases if considered appropriate.

Dividend

At the Annual General Meeting in May 2022, shareholders approved the payment of a dividend of 1.2p per ordinary share, to be paid on 1 December 2022 to shareholders on the register at close of business on 4 November 2022. As this declaration is irrevocable, the value of GBP5.459m is shown as a liability with the debit shown in the statement of changes in equity.

Marc Davies

Chief Financial Officer

20 September 2022

 
     CONSOLIDATED INCOME STATEMENT 
     FOR THE 6 MONTHSED 30 JUNE 
      2022 
                                                                         Unaudited 
                                                         Unaudited        6 months            Audited 
                                                          6 months           ended         Year ended 
                                                          ended 30         30 June        31 December 
                                                         June 2022            2021               2021 
                                            Notes          GBP'000         GBP'000            GBP'000 
     Continuing operations 
     Revenue                                  3             37,471          38,559             81,836 
     Cost of sales                                        (19,727)        (20,019)           (42,470) 
                                                   ---------------  --------------  ----------------- 
     Gross profit                                           17,744          18,540             39,366 
     Administrative expenses                              (14,473)         (7,017)           (17,709) 
     Other income                                              880              34                 90 
                                                   ---------------  --------------  ----------------- 
     Operating profit                                        4,151          11,557             21,747 
-------------------------------------  ---------- 
     Depreciation and amortisation                         (3,361)         (2,830)            (5,885) 
     Share-based payments                                    (517)           1,392              1,238 
     Exceptional items                        4            (1,682)             234               (95) 
     EBITDA before exceptional 
      items and share-based payments                         9,711          12,761             26,489 
-------------------------------------  ----------  ---------------  --------------  ----------------- 
     Finance income                                             57              22                 45 
     Finance costs                                            (68)           (155)              (357) 
                                                   ---------------  --------------  ----------------- 
     Profit before income tax                                4,140          11,424             21,435 
     Income tax charge                        5            (1,717)         (2,237)            (5,277) 
                                                   ---------------  --------------  ----------------- 
     Profit for the period                                   2,423           9,187             16,158 
                                                   ---------------  --------------  ----------------- 
 
     Profit attributable to: 
     Owners of the parent                                    2,213           9,069             15,851 
     Non-controlling interest                                  210             118                307 
                                                             2,423           9,187             16,158 
                                                   ---------------  --------------  ----------------- 
 
 
     Earnings per ordinary share 
      attributable to the owners 
      of the parent during the 
      period                               6 
                                                     Pence        Pence        Pence 
 
     Basic                                            0.48         1.99         3.47 
 
     Diluted                                          0.48         1.98         3.44 
                                                ----------   ----------   ---------- 
 
 
 
     CONSOLIDATED STATEMENT OF COMPREHENSIVE 
      INCOME 
     FOR THE 6 MONTHSED 30 
      JUNE 2022 
 
                                                     Unaudited        Unaudited            Audited 
                                                      6 months         6 months         Year ended 
                                                      ended 30         ended 30        31 December 
                                                     June 2022        June 2021               2021 
                                                       GBP'000          GBP'000            GBP'000 
 
     Profit for the period                               2,423            9,187             16,158 
 
     Other comprehensive income/(expense): 
     Items that will not be reclassified 
      to profit or loss 
      Changes in fair value of equity 
      instruments at fair value 
      through other comprehensive 
      income (net of tax)                              (5,307)            4,040              (321) 
     Items that may be subsequently 
      reclassified to profit or 
      loss 
      Currency translation differences                   6,520          (1,334)            (1,226) 
     Other comprehensive income/(loss) 
      (net of tax)                                       1,213            2,706            (1,547) 
                                               ---------------  ---------------  ----------------- 
     Total comprehensive income 
      for the period                                     3,636           11,893             14,611 
                                               ---------------  ---------------  ----------------- 
 
     Attributable to: 
     Owners of the parent                                3,024           11,779             14,315 
     Non-controlling interests                             612              114                296 
                                               ---------------  ---------------  ----------------- 
     Total comprehensive income 
      for the period                                     3,636           11,893             14,611 
                                               ---------------  ---------------  ----------------- 
 
 
     CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
     AS AT 30 JUNE 2022 
                                            Unaudited                        Unaudited                   Audited as 
                                             as at 30                         as at 30               at 31 December 
                                            June 2022                        June 2021                         2021 
                              Notes           GBP'000                          GBP'000                      GBP'000 
     Assets 
     Non-current assets 
     Property, plant 
      and equipment               7            18,170                           12,957                       15,991 
     Right-of-use 
      assets                      7             1,495                              890                        1,875 
     Intangible assets            8            43,387                           35,134                       41,894 
     Investments                                1,566                           12,818                        7,789 
     Deferred tax 
      assets                                       23                               14                           15 
     Total non-current 
      assets                                   64,641                           61,813                       67,564 
                                     ----------------              -------------------      ----------------------- 
 
     Current Assets 
     Inventories                               12,969                            9,766                       13,238 
     Trade and other 
      receivables                              12,236                           16,107                       13,428 
     Corporation tax 
      receivable                                  408                                -                          548 
     Cash and cash 
      equivalents                              19,138                           20,784                       20,341 
     Total current 
      assets                                   44,751                           46,657                       47,555 
                                     ----------------              -------------------      ----------------------- 
     Total assets                             109,392                          108,470                      115,119 
                                     ================              ===================      ======================= 
 
     Equity 
     attributable 
     to owners of the 
     parent 
     Share capital                              4,549                            4,550                        4,639 
     Share premium                              7,375                              200                        7,375 
     Other reserve                              (184)                            9,394                        5,033 
     Foreign currency 
      reserves                                  8,931                            2,698                        2,813 
     Retained earnings                         64,775                           67,580                       74,264 
                                     ----------------              -------------------      ----------------------- 
                                               85,446                           84,422                       94,124 
     Non-controlling 
      interest                                  1,230                              435                          618 
                                     ----------------              -------------------      ----------------------- 
     Total equity                              86,676                           84,857                       94,742 
                                     ----------------              -------------------      ----------------------- 
 
     Liabilities 
     Non-current 
     liabilities 
     Borrowings                                    44                              310                          431 
     Lease liabilities                            793                              475                        1,095 
     Deferred 
      consideration                               173                                -                          170 
     Deferred tax 
      liability                                 3,795                            4,586                        5,031 
                                     ----------------              -------------------      ----------------------- 
     Total non-current 
      liabilities                               4,805                            5,371                        6,727 
                                     ----------------              -------------------      ----------------------- 
 
     Current 
     liabilities 
     Trade and other 
      payables                                 14,148                           13,152                        9,078 
     Lease liabilities                            902                              456                          838 
     Deferred 
      consideration                                72                            3,033                          465 
     Current income tax 
      liabilities                               2,611                            1,512                        3,004 
     Borrowings                                   178                               89                          265 
                                     ----------------              -------------------      ----------------------- 
     Total current 
      liabilities                              17,911                           18,242                       13,650 
                                     ----------------              -------------------      ----------------------- 
     Total liabilities                         22,716                           23,613                       20,377 
                                     ----------------              -------------------      ----------------------- 
     Total equity and 
      liabilities                             109,392                          108,470                      115,119 
                                     ================              ===================      ======================= 
     CONSOLIDATED STATEMENT OF CASH FLOWS 
     FOR THE 6 MONTHSED 30 JUNE 2022 
                                                                                                                     Audited 
                                                                                             Unaudited                  Year 
                                                                    Unaudited                 6 months                 to 31 
                                                               6 months ended                 ended 30              December 
                                                                 30 June 2022                June 2021                  2021 
                                                                      GBP'000                  GBP'000               GBP'000 
     Cash flow from operating activities 
     Profit before income tax                                           4,140                   11,424                21,435 
     Adjustments for 
     - Warranty claim                                                       -                    (251)                 (285) 
     - Restructuring exceptional cost                                   1,682                        -                     - 
     - Depreciation                                                     1,505                      919                 2,041 
     - Amortisation and impairment charges                              1,856                    1,911                 3,844 
     - Deferred consideration (FV adjust)                                   -                      132                   285 
     - Foreign Exchange                                                     -                     (40)                    61 
     - Bad debt written down                                                -                        -                    58 
     - (Profit)/loss on disposal of assets                                 19                      (9)                  (13) 
     - Share-based payments                                               517                  (1,392)               (6,586) 
     - Net finance costs                                                   11                        1                    26 
     Changes in working capital 
     - Inventories                                                      (693)                  (1,450)               (4,601) 
     - Trade and other receivables                                      1,698                  (2,960)               (3,274) 
     - Trade and other payables                                         (323)                  (5,126)                 1,217 
                                               ------------------------------   ----------------------      ---------------- 
 
     Cash generated by operations                                      10,412                    3,159                14,208 
     Interest paid                                                       (39)                     (11)                  (36) 
     Income tax paid                                                  (1,945)                  (2,019)               (3,934) 
                                               ------------------------------   ----------------------      ---------------- 
     Net cash generated by operating 
      activities                                                        8,428                    1,129                10,238 
     Cash flow from investing activities 
     Purchase of investments                                          (2,930)                        -                     - 
     Purchase of property, plant and 
      equipment (PPE)                                                 (2,167)                  (1,342)               (4,335) 
     Purchase of intangibles                                            (819)                    (623)               (1,314) 
     Acquisition of subsidiaries                                        (403)                        -                    84 
     Proceeds from sale of PPE                                              6                       14                    43 
     Interest received                                                     57                       22                    45 
                                               ------------------------------   ----------------------      ---------------- 
     Net cash used in investing activities                            (6,256)                  (1,929)               (5,477) 
                                               ------------------------------   ----------------------      ---------------- 
     Cash flow from financing activities 
     Dividend                                                               -                        -               (5,103) 
     Purchase of own shares                                           (3,896)                        -                     - 
     Repayment of borrowings                                            (525)                     (89)                 (178) 
     Principal lease payments                                           (551)                    (257)                 (643) 
     Dividends paid to non-controlling 
      interests                                                             -                    (231)                 (231) 
                                               ------------------------------   ----------------------      ---------------- 
     Net cash used in financing activities                            (4,972)                    (577)               (6,155) 
                                               ------------------------------   ----------------------      ---------------- 
     Net decrease in cash and cash 
      equivalents                                                     (2,800)                  (1,377)               (1,394) 
     Cash and cash equivalents at beginning 
      of period                                                        20,341                   21,913                21,913 
     Exchange gains on cash and cash 
      equivalents                                                       1,597                      248                 (178) 
                                               ------------------------------   ----------------------      ---------------- 
     Cash and cash equivalents at end 
      of period                                                        19,138                   20,784                20,341 
                                               ==============================   ======================      ================ 
 
 
 
     CONSOLIDATED STATEMENT OF CHANGES 
      IN EQUITY 
     FOR THE 6 MONTHSED 30 JUNE 
      2022 
                                Share          Share         Other        Foreign       Retained          Total       Non-controlling          Total 
                              Capital        Premium       Reserve       Currency       earnings                             interest         equity 
                                                                          Reserve 
                              GBP'000        GBP'000       GBP'000        GBP'000        GBP'000        GBP'000               GBP'000        GBP'000 
 
     At 1 January 2021          4,550            200         5,354          4,028         63,516         77,648                   552         78,200 
     Comprehensive 
     income/(expense) 
     Profit for the 
      period                        -              -             -              -          9,069          9,069                   118          9,187 
     Other 
     comprehensive 
     income/(expense) 
     Changes in fair 
      value 
      of equity 
      instruments 
      at fair value 
      through 
      other 
      comprehensive 
      income/(expense)              -              -         4,040              -              -          4,040                     -          4,040 
     Currency 
      translation 
      differences                   -              -             -        (1,330)              -        (1,330)                   (4)        (1,334) 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     Total 
      comprehensive 
      income/(expense)              -              -         4,040        (1,330)          9,069         11,779                   114         11,893 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     Transactions with 
      owners 
     Dividends to 
      non-controlling 
      interest                      -              -             -              -              -              -                 (231)          (231) 
     Dividend declared 
      but not paid                  -              -             -              -        (5,005)        (5,005)                     -        (5,005) 
     Total 
      contributions 
      by and 
      distributions 
      to owners                     -              -             -              -        (5,005)        (5,005)                 (231)        (5,236) 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     At 30 June 2021            4,550            200         9,394          2,698         67,580         84,422                   435         84,857 
     Comprehensive 
     income/(expense) 
     Profit for the 
      period                        -              -             -              -          6,782          6,782                   189          6,971 
     Other 
     comprehensive 
     income/(expense) 
     Changes in fair 
      value 
      of equity 
      instruments 
      at fair value 
      through 
      other 
      comprehensive 
      income/(expense)              -              -       (4,361)              -              -        (4.361)                     -        (4,361) 
 
       Currency 
       translation 
       differences                  -              -             -            115              -            115                   (7)            108 
     Total 
      comprehensive 
      income/(expense)              -              -       (4,361)            115          6,782          2,536                   182          2,718 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     Transactions with 
      owners 
     Issue of ordinary 
      shares as 
      consideration 
      for a business 
      combination, 
      net of 
      transaction 
      costs                        89          7,175             -              -              -          7,264                     -          7,264 
     Dividend to 
      owners                        -              -             -              -           (98)           (98)                     -           (98) 
     Dividends to 
      non-controlling 
      interest                      -              -             -              -              -              -                     1              1 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     Total 
      contributions 
      by and 
      distributions 
      to owners                    89          7,175             -              -           (98)          7,166                     1          7,167 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     At 31 December 
      2021                      4,639          7,375         5,033          2,813         74,264         94,124                   618         94,742 
     Comprehensive 
     income 
     Profit for the 
      period                        -              -             -              -          2,213          2,213                   210          2,423 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     Other 
     comprehensive 
     income/(expense) 
     Changes in fair 
      value 
      of equity 
      instruments 
      at fair value 
      through 
      other 
      comprehensive 
      income/(expense)              -              -       (5,307)              -              -        (5,307)                     -        (5,307) 
     Currency 
      translation 
      differences                   -              -             -          6,118              -          6,118                   402          6,520 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     Total 
      comprehensive 
      income/(expense)              -              -       (5,307)          6,118          2,213          3,024                   612          3,636 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     Transactions with 
      owners 
     Acquisition of 
      own 
      shares                     (90)              -            90              -        (3,896)        (3,896)                     -        (3,896) 
     Dividends to 
      owners                        -              -             -              -        (7,806)        (7,806)                     -        (7,806) 
     Dividends to                   -              -             -              -              -              -                     -              - 
     non-controlling 
     interest 
     Total 
      contributions 
      by and 
      distributions 
      to owners                  (90)              -            90              -       (11,702)       (11,702)                     -       (11,702) 
                        -------------  -------------  ------------  -------------  -------------  -------------  --------------------  ------------- 
     At 30 June 2022            4,549          7,375         (184)          8,931         64,775         85,446                 1,230         86,676 
                        =============  =============  ============  =============  =============  =============  ====================  ============= 
 

NOTES FORMING PART OF THE INTERIM FINANCIAL STATEMENTS

   1.              General information and basis of presentation 

EKF Diagnostics Holdings Plc is a company incorporated and domiciled in the United Kingdom. The Company is a public limited company, which is listed on the AIM market of the London Stock Exchange. The address of the registered office is Avon House, 19 Stanwell Road, Penarth, Cardiff CF64 2EZ.

The principal activity of the Group is the development, manufacture and supply of products and services into the in-vitro diagnostic (IVD) market and other industries. The Group has presence in the UK, USA, Germany, Russia, and China, and sells throughout the world including Europe, the Middle East, the Americas, Asia, and Africa.

The financial statements are presented in British Pounds Sterling, the currency of the primary economic environment in which the Company's headquarters is operated.

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 UK-adopted International Accounting Standards and the Companies Act 2006. 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 2021 and which will form the basis of the 2022 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.

Certain statements in this announcement constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, amongst other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this announcement should be construed as a profit forecast.

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 2021 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, did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report 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 2022 and 30 June 2021 is unaudited and the twelve months to 31 December 2021 is audited.

In the context of an increased level of uncertainty, the Group has exercised critical judgements in applying its accounting policies in whether the Group should continue to consolidate its Russian business. The Group has applied judgement in regard to whether the Group continues to control its Russian subsidiary due to the restrictions imposed by the Russian government or any other authority. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. The Russian government introduced various sanctions in recent months, including restrictions on the payment of dividends to "unfriendly states" that require consent from the Ministry of Finance of Russia. Since the Group continued to direct the operations and the Russian regulations currently do not prohibit the declaration and payment of dividends, the Group has taken the view that it has retained control through the six months ended 30 June 2022. Were the Group to conclude that it no longer retains control, the Russian operations would be treated as if they had been disposed of, with the associated assets and liabilities derecognised .

   2.               Significant accounting policies 

Going concern

The Directors have considered the applicability of the going concern basis in the preparation of these financial statements. This included the review of internal budgets and financial results which show, taking into account reasonably plausible changes in financial performance, that the Group will be able to operate within the level of its current funding arrangements.

The Group has passed through the COVID pandemic successfully and emerged with growth in its core established business. While there is still some disruption in certain territories, healthcare activities are continuing to return to normal levels. Through the pandemic EKF has been able to learn new skills and develop a business model which offers possibilities in the post-pandemic world, the business has however now seen a significant reduction in pandemic-related contract manufacturing and testing activities and has adopted a pragmatic view that this will continue for the remainder of the year.

The Group has revenues from customers in Russia and an entity based there. As a result of the sanctions recently imposed on Russia by the EU, the USA and other countries, there are enhanced risks in respect of our Russian entity, including regulatory restrictions and credit risk to cash balances, its ability to collect debtors, and EKF's ability to import products into Russia. In addition, action by the Russian Government is currently restricting the Company's ability to pay dividends from its Russia entity. In preparing a downside going concern forecast we have discounted sales and cash from this region entirely.

The Group maintains a global supply chain and hence has experienced supply-chain availability challenges and input-costs inflationary pressure. Mitigating actions have been taken including considering forward-looking sourcing requirements and responsible price increases.

While any further economic disruption stemming from the pandemic and other Global events is impossible to forecast, the strength of the Group's balance sheet aligned to the continuing performance of the business gives the Directors confidence that the business can continue to meet its obligations as they fall due, even under our worst-case scenarios, for at least the next 12 months. Accordingly, the Directors are satisfied they can prepare the accounts on a going concern basis.

   3.              Segmental reporting 

Management has determined the Group's operating segments based on the monthly management reports presented to the Chief Operating Decision Maker ('CODM'). The CODM is the Executive Directors and the monthly management reports are used by the Group to make strategic decisions and allocate resources.

The principal activity of the Group is the development, manufacture and supply of products and services into the in-vitro diagnostic (IVD) market and other industries. This activity takes place across various countries, such as the USA, Germany, Russia, and the United Kingdom, and as such the Board considers the business primarily from a geographic perspective. Although not all the segments meet the quantitative thresholds required by IFRS 8, management has concluded that all segments should be maintained and reported. In addition, the COMD considers the segmental revenue performance of business segments.

The reportable segments derive their revenue primarily from the development, manufacture and supply of products and services. Other services include the servicing and distribution of third--party company products under separate distribution agreements.

Currently the key operating performance measures used by the CODM are Revenue and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation, adjusted for exceptional items and share-based payments).

The segment information provided to the Board for the reportable geographic segments is as follows:

Period ended 30 June 2022 unaudited

 
                                              Germany             USA        Russia             UK           Total 
                                              GBP'000         GBP'000       GBP'000        GBP'000         GBP'000 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Income statement 
     Revenue                                   16,283          21,323         2,037            927          40,570 
     Inter-segment                            (2,701)           (398)             -              -         (3,099) 
     External revenue                          13,582          20,925         2,037            927          37,471 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Adjusted EBITDA*                           4,989           6,911           665        (2,854)           9,711 
     Share-based payment                            -               -             -          (517)           (517) 
     Exceptional items                          (795)            755)             -          (132)         (1,682) 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     EBITDA                                     4,194           6,156           665        (3,503)           7,512 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Depreciation                               (370)           (898)          (37)          (200)         (1,505) 
     Amortisation                               (468)           (138)             -        (1,250)         (1,856) 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Operating profit/(loss)                    3,356           5,120           628        (4,953)           4,151 
     Net finance costs                           (25)             (3)            56           (39)            (11) 
     Income tax                                 (493)           (996)         (158)           (70)         (1,717) 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Profit/(loss) for the 
      period                                    2,838           4,121           526        (5,062)           2,423 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Segment assets 
     Operating assets                          32,707          89,337         1,047       (16,294)         106,797 
     Inter-segment assets                        (47)        (16,699)             -            203        (16,543) 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     External operating assets                 32,660          72,638         1,047       (16,091)          90,254 
     Cash and cash equivalents                  7,833           8,220         2,585            500          19,138 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Total assets                              40,493          80,858         3,632       (15,591)         109,392 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Segment liabilities 
     Operating liabilities                      1,046          24,045           439         14,524          40,054 
     Inter-segment liabilities                  4,986        (19,199)             -        (3,347)        (17,560) 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     External operating liabilities             6,032           4,846           439         11,177          22,494 
     Borrowings                                   222               -             -              -             222 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Total liabilities                          6,254           4,846           439         11,177          22,716 
---------------------------------------  ------------  --------------  ------------  -------------  -------------- 
     Other segmental information 
     Non-current assets - PPE                   6,087          10,445           101          1,537          18,170 
     Non-current assets - Right-of-use 
      assets                                      139           1,072             4            280           1,495 
     Non-current assets - Intangibles          19,600          19,222           117          4,448          43,387 
     Intangible assets -additions                 394             145             -            280             819 
     PPE - additions                              357           1,769             -             41           2,167 
     Right-of-use assets - additions               78              72             -              -             150 
 
 

Year ended December 2021 audited

 
                                              Germany             USA        Russia             UK           Total 
                                              GBP'000         GBP'000       GBP'000        GBP'000         GBP'000 
====================================  ===============  ==============  ============  =============  ============== 
 
       Income statement 
       Revenue                                 39,665          38,974         3,286          8,514          90,439 
     Inter-segment                            (5,494)         (2,918)             -          (191)         (8,603) 
====================================  ===============  ==============  ============  =============  ============== 
     External revenue                          34,171          36,056         3,286          8,323          81,836 
====================================  ===============  ==============  ============  =============  ============== 
 
       Adjusted EBITDA*                        11,480          12,735           981          1,293          26,489 
     Exceptional items                          (452)               -             -            357            (95) 
     Share-based payments                           -               -             -          1,238           1,238 
====================================  ===============  ==============  ============  =============  ============== 
 
       EBITDA                                  11,028          12,735           981          2,888          27,632 
     Depreciation                               (752)           (938)          (57)          (294)         (2,041) 
     Amortisation                             (1,525)         (1,383)             -          (936)         (3,844) 
====================================  ===============  ==============  ============  =============  ============== 
 
       Operating profit/(loss)                  8,751          10,414           924          1,658          21,747 
     Finance income                                 -               7            38              -              45 
     Finance cost                                (31)            (37)             -          (289)           (357) 
     Income tax                               (2,806)         (2,402)         (193)            124         (5,277) 
====================================  ===============  ==============  ============  =============  ============== 
     Profit for the year                        5,914           7,982           769          1,493          16,158 
====================================  ===============  ==============  ============  =============  ============== 
 
       Segment assets 
       Operating assets                        29,672          59,803           431         29,860         119,766 
     Inter-segment assets                     (1,441)        (16,712)             -        (6,835)        (24,988) 
====================================  ===============  ==============  ============  =============  ============== 
     External operating assets                 28,231          43,091           431         23,025          94,778 
     Cash and cash equivalents                  8,384           5,734         1,344          4,879          20,341 
====================================  ===============  ==============  ============  =============  ============== 
     Total assets                              36,615          48,825         1,775         27,904         115,119 
====================================  ===============  ==============  ============  =============  ============== 
 
       Segment liabilities 
       Operating liabilities                    6,387          24,796           167         13,319          44,669 
     Inter-segment liabilities                  (608)        (17,703)             -        (6,677)        (24,988) 
====================================  ===============  ==============  ============  =============  ============== 
     External operating liabilities             5,779           7,093           167          6,642          19,681 
     Borrowings                                   303             393             -              -             696 
====================================  ===============  ==============  ============  =============  ============== 
     Total liabilities                          6,082           7,486           167          6,642          20,377 
     Other segmental information 
      Non-current assets - 
      PPE                                       5,628           8,291            80          1,992          15,991 
     Non-current assets - 
      Right of use assets                         111           1,379            18            367           1,875 
     Non-current assets - 
      Intangibles                              15,429          16,911            76          9,478          41,894 
     Intangible assets - additions                694           8,171             -            521           9,386 
     PPE - additions                              693           3,366            17            258           4,335 
     Right-of-use assets - 
      additions                                    82           1,082            31            156           1,351 
====================================  ===============  ==============  ============  =============  ============== 
 

Period ended 30 June 2021 unaudited

 
                                                Germany             USA        Russia             UK           Total 
                                                GBP'000         GBP'000       GBP'000        GBP'000         GBP'000 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Income statement 
     Revenue                                     17,288          19,772         1,384          4,481          42,925 
     Inter-segment                              (2,746)         (1,616)             -            (4)         (4,366) 
     External revenue                            14,542          18,156         1,384          4,477          38,559 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Adjusted EBITDA                              5,326           7,521           364          (450)          12,761 
     Share-based payment                              -               -             -          1,392           1,392 
     Exceptional items                              251               -             -           (17)             234 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     EBITDA                                       5,577           7,521           364            925          14,387 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Depreciation                                 (342)           (246)          (11)          (320)           (919) 
     Amortisation                                 (438)            (61)             -        (1,412)         (1,911) 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Operating 
      profit/(loss)                               4,797           7,214           353          (807)          11,557 
     Net finance costs                              (8)               5            16          (146)           (133) 
     Income tax                                   (692)         (1,464)          (75)            (6)         (2,237) 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Profit/(loss) for the 
      period                                      4,097           5,755           294          (959)           9,187 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Segment assets 
     Operating assets                            41,595          67,395           432          (618)         108,804 
     Inter-segment assets                         (143)        (16,480)             -        (4,495)        (21,118) 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     External operating 
      assets                                     41,452          50,915           432        (5,113)          87,686 
     Cash and cash 
      equivalents                                 4,382           6,177           966          9,259          20,784 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Total assets                                45,834          57,092         1,398          4,146         108,470 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Segment liabilities 
     Operating liabilities                        5,714          21,240           230         17,148          44,332 
     Inter-segment 
      liabilities                                 (446)        (17,794)             -        (2,878)        (21,118) 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     External operating 
      liabilities                                 5,268           3,446           230         14,270          23,214 
     Borrowings                                     399               -             -              -             399 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Total liabilities                            5,667           3,446           230         14,270          23,613 
--------------------------  ---------------------------  --------------  ------------  -------------  -------------- 
     Other segmental 
     information 
     Non-current assets - 
      PPE                                         5,796           5,014            82          2,065          12,957 
     Non-current assets - 
      Right-of-use 
      assets                                         78             585             2            225             890 
     Non-current assets - 
      Intangibles                                24,376          10,416            77            265          35,134 
     Intangible assets 
      -additions                                    366             120             -            137             623 
     PPE - additions                                456             679             -            206           1,341 
     Right-of-use assets - 
      additions                                      44            (35)            15            103             127 
 
 

* Adjusted EBITDA represents earnings before interest, tax, depreciation and amortisation adjusted for exceptional items and share-based payments

Disclosure of Group revenues by geographic location

 
                                              Unaudited        Unaudited            Audited 
                                               6 months         6 months         Year ended 
                                               ended 30         ended 30        31 December 
                                              June 2022        June 2021               2021 
                                                 GBP000           GBP000             GBP000 
 
     Americas 
     United States of America                    17,620           16,016             31,522 
     Rest of Americas                             1,771            1,026              3,248 
     Europe, Middles East and Africa 
      (EMEA) 
     Germany                                      4,245            4,286              7,942 
     United Kingdom                               1,165            4,621              8,848 
     Ireland                                      5,229            4,384             14,292 
     Rest of Europe                               1,641            2,920              4,616 
     Russia                                       2,037            1,384              3,286 
     Middle East                                    561              661              1,464 
     Africa                                         656              939              2,323 
     Rest of World 
     China                                          538              424                985 
     Rest of Asia                                 2,008            1,898              3,310 
     Total Revenue                               37,471           38,559             81,836 
                                        ===============  ===============  ================= 
 

Revenue by business segment, which is presented for illustrative purposes only, is as follows:

 
                                    Unaudited        Unaudited         +/- % 
                                     6 months         6 months 
                                     ended 30         ended 30 
                                    June 2022        June 2021 
                                      GBP'000          GBP'000 
 
     Point-of-Care                     13,756           12,534          9.7% 
     Central Laboratory                 6,295            6,325        (0.5%) 
     Life Sciences                      2,024            1,033         95.9% 
     Contract Manufacturing             8,570           17,469       (50.9%) 
     Laboratory Testing                 2,141                -           n/a 
     Other                              4,685            1,198        291.1% 
                              ---------------  ---------------  ------------ 
     Total revenue                     37,471           38,559        (2.8%) 
                              ---------------  ---------------  ------------ 
 
 
   4.              Exceptional items 

Included within administration expenses and cost of sales are exceptional items as shown below:

 
                                                                     Unaudited       Unaudited            Audited 
                                                                      6 months        6 months               year 
                                                                       ended           ended                ended 
                                                                      30 June         30 June         31 December 
                                                                        2022            2021                 2021 
                                                         Note           GBP000          GBP000             GBP000 
 
     Exceptional items include: 
                                                         a             (1,682)               -                  - 
   *    Restructuring costs 
 
   *    Business reorganisation costs                    b                   -            (17)               (37) 
 
   *    Warranty claim                                   c                   -             251                285 
 
   *    Settlement of warranty claim and deferred 
        consideration                                    c                   -               -              (179) 
 
   *    Acquisition costs                                d                   -               -              (164) 
     Exceptional items                                                 (1,682)             234               (95) 
                                                                --------------  --------------  ----------------- 
 

(a) Costs associated with the transition and restructure of certain operations in the US, UK and Germany

(b) Costs associated with the restructuring of the business including the closure of EKF Ireland

(c) Change in the value of an estimated warranty claim which offsets the deferred consideration of GBP3.2m (2020: GBP2.9m) relating to a share-based payment to the former owner of EKF-Diagnostic GmbH. The dispute was settled before 31 December 2021 resulting in a payment in cash to the former owner of GBP179,000. The remaining warranty claim and deferred consideration have both been written down and there is no further liability as at 30 June 2022.

(d) Professional fees relating to the acquisition of Advanced Diagnostic Laboratory LLC in September 2021

   5.   Income tax 
 
                                            Unaudited        Unaudited            Audited 
                                             6 months         6 months         Year ended 
                                                ended            ended        31 December 
                                                   30               30               2021 
                                            June 2022        June 2021 
                                               GBP000           GBP000             GBP000 
     Current tax 
     Current tax on profit for 
      the period                              (1,692)          (2,387)            (5,096) 
     Adjustments for prior periods                  -              (4)               (96) 
                                      ---------------  ---------------  ----------------- 
     Total current tax                        (1,692)          (2,391)            (5,192) 
                                      ---------------  ---------------  ----------------- 
 
     Deferred tax 
     Origination and reversal of 
      temporary differences                      (25)              154                 85 
     Total deferred tax                          (25)              154                 85 
                                      ---------------  ---------------  ----------------- 
     Income tax charge                          1,717          (2,237)            (5,277) 
                                      ===============  ===============  ================= 
 
   6.   Earnings per share 

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the period.

Diluted profit per share is calculated by adjusting the weighted average number of ordinary shares outstanding assuming conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary share, being share options.

 
 
                                                   Unaudited         Unaudited 
                                                    6 months          6 months            Audited 
                                                    ended 30             ended         year ended 
                                                   June 2022           30 June        31 December 
                                                                          2021               2021 
                                                     GBP'000           GBP'000            GBP'000 
     Profit attributable to owners 
      of the parent                                    2,213             9,069             15,851 
     Weighted average number of 
      ordinary shares 
      in issue                                   459,474,072       454,993,227        457,001,067 
     Assumed conversion of share 
      awards                                           4,987            12,150             12,640 
     Assumed payment of equity deferred 
      consideration                                  157,580         4,043,940          3,944,226 
                                                                                ----------------- 
     Weighted average number of 
      ordinary shares - diluted                  459,636,639       459,049,317        460,957,933 
                                                              ----------------  ----------------- 
 
                                                       Pence             Pence              Pence 
     From continuing operations 
     Basic                                              0.48              1.99               3.47 
 
     Diluted                                            0.48              1.98               3.44 
 
   7.   Property, plant and equipment 
 
     Group 
                                               Fixtures 
                             Land and               and         Plant and                                       Assets under        Right-of-use 
                            buildings          fittings         machinery         Motor vehicles               construct-ion              assets                         Total 
                              GBP'000           GBP'000           GBP'000                GBP'000                     GBP'000             GBP'000                       GBP'000 
                    -----------------  ----------------  ----------------  ---------------------  --------------------------  ------------------  -------------  ------------- 
     Cost 
     At 1 January 
      2021               10,210                   1,389            11,809                    201                         735               1,600                          25,944 
     Additions              325                     446               384                      -                         187                 126                           1,468 
     Transfers               58                     332              (58)                      -                       (332)                   -                               - 
     Disposal              (19)                    (37)             (113)                      7                           -                (64)                           (226) 
     Exchange 
      differences         (209)                    (38)             (414)                      -                        (18)                (48)                           (727) 
                    -----------  ----------------------  ----------------  ---------------------  --------------------------  ------------------ 
     At 30 June 
      2021               10,365                   2,092            11,608                    208                         572               1,614                          26,459 
     Acquisition 
      of 
      subsidiary              4                       -               818                      -                           -                 111                             933 
     Additions              155                     197               356                     17                       2,268               1,225                           4,218 
     Transfers              161                   (202)               397                      -                       (356)                   -                               - 
     Disposals               12                    (65)             (134)                   (63)                        (13)                   -                           (222) 
     Exchange 
      differences            14                    (10)               143                    (2)                         (1)                  60                             204 
                    -----------  ----------------------  ----------------  ---------------------  --------------------------  ------------------ 
     At 31 
      December 
      2021               10,711                   2,012            13,188                    160                       2,470               3,010                          31,551 
     Additions              304                     101               683                      -                       1,079                 150                           2,317 
     Transfers                -                     215             (215)                      -                           -                   -                               - 
     Disposal                 -                       -             (213)                      -                           -               (207)                           (420) 
     Exchange 
      differences           694                      72               951                     79                         255                 192                           2,243 
                    -----------  ----------------------  ----------------  ---------------------  --------------------------  ------------------  -------------  --------------- 
     At 30 June 
      2022               11,709                   2,400            14,394                    239                       3,804               3,145                          35,691 
 
     Depreciation 
     At 1 January 
      2021                2,300                   1,102             8,214                    108                           -                 581                          12,305 
     Exchange 
      differences          (41)                    (34)             (301)                    (1)                           -                (13)                           (390) 
     Disposal              (19)                    (36)             (110)                      7                           -                (64)                           (222) 
     Transfers                -                     182             (182)                      -                           -                   -                               - 
     Charge for 
      the period            151                     134               403                     11                           -                 220                             919 
                    -----------  ----------------------  ----------------  ---------------------  --------------------------  ------------------  -------------  --------------- 
     At 30 June 
      2021                2,391                   1,348             8,024                    125                           -                 724                          12,612 
     Exchange 
      differences            15                     (8)               164                    (1)                           -                  18                             188 
     Disposal                12                    (65)             (128)                   (56)                           -                   -                           (237) 
     Transfers                -                   (182)               182                      -                           -                   -                               - 
     Charge for 
      the period            177                     156               383                     13                           -                 393                           1,122 
                    -----------  ----------------------  ----------------  ---------------------  --------------------------  ------------------ 
     At 31 
      December 
      2021                2,595                   1,249             8,625                     81                           -               1,135                          13,685 
     Exchange 
      differences           222                      50               666                     43                           -                  67                           1,048 
     Disposal                 -                       -             (188)                      -                           -               (207)                           (395) 
     Impairment               -                       -                51                      -                           -                 132                             183 
     Transfers                -                     194             (194)                      -                           -                   -                               - 
     Charge for 
      the period            255                     158               555                     14                           -                 523                           1,505 
                                                                                                                                                  -------------  --------------- 
     At 30 June 
      2022                3,072                   1,651             9,515                    138                           -               1,650                          16,026 
                    -----------  ----------------------  ----------------  ---------------------  --------------------------  ------------------  -------------  --------------- 
 
 
 
     Net book value 
     30 June 2022            8,637        749       4,879       101       3,804       1,495         19,665 
                                                                                             ------------- 
     31 December 2021        8,116        763       4,563        79       2,470       1,875         17,866 
                        ----------  ---------  ----------  --------  ----------  ----------  ------------- 
     30 June 2021            7,974        744       3,584        83         572         890         13,847 
                        ----------  ---------  ----------  --------  ----------  ----------  ------------- 
 
 
   8.   Intangible Fixed Assets 
 
     Group 
                                                Trademarks 
                                               trade names              Customer                                                         Software 
                              Goodwill          & licences         relationships         Trade secrets         Develop-ment costs                                  Total 
                               GBP'000             GBP'000               GBP'000               GBP'000                    GBP'000         GBP'000                GBP'000 
                    ------------------  ------------------  --------------------  --------------------  -------------------------  --------------  ------  ------------- 
     Cost 
     At 1 January 
      2021                27,003                     3,317                15,541                19,056                      4,453             593                   69,963 
     Additions                 -                       238                     -                     -                        317              68                      623 
     Disposal                  -                       (2)                     -                     -                          -               -                      (2) 
     Exchange 
      differences          (718)                       275                 (338)                 (498)                      (116)            (14)                  (1,409) 
     At 30 June 
      2021                26,285                     3,828                15,203                18,558                      4,654             647                   69,175 
     Acquisition 
      of 
      subsidiary           3,755                       467                 1,166                     -                          -           2,684                    8,072 
     Additions                 -                     (134)                     -                     -                        820               5                      691 
     Disposals           (1,407)                      (17)                 (749)               (1,073)                      (288)               -                  (3,534) 
     Exchange 
      differences           (75)                      (12)                    86                 (157)                       (11)              34                    (135) 
     At 31 
      December 
      2021                28,558                     4,284                15,706                17,328                      5,023           3,370                   74,269 
     Additions                 -                        15                     -                     -                        802               2                      819 
     Disposal                  -                         -                     -                     -                          -               -                        - 
     Impairment          (1,177)                         -                     -               (3,950)                       (28)               -                  (5,155) 
     Exchange 
      differences          1,553                       296                 1,422                   355                        257             359                    4,242 
                    ------------  ------------------------  --------------------  --------------------  -------------------------  --------------  ------  --------------- 
     At 30 June 
      2022                28,934                     4,595                17,128                13,733                      6,054           3,731                   74,175 
                    ------------  ------------------------  --------------------  --------------------  -------------------------  --------------  ------  --------------- 
 
     Amortisation 
     At 1 January 
      2021                 2,605                     2,947                11,556                14,461                      1,343               -                   32,912 
     Exchange 
      differences           (54)                      (84)                 (251)                 (362)                       (30)               -                    (781) 
     Disposal                  -                       (1)                     -                     -                          -               -                      (1) 
     Impairment                -                         -                     -                     -                        (8)               -                      (8) 
     Charge for 
      the period               -                      (52)                   588                 1,234                        107              42                    1,919 
                    ------------  ------------------------  --------------------  --------------------  -------------------------  --------------  ------  --------------- 
     At 30 June 
      2021                 2,551                     2,810                11,893                15,333                      1,412              42                   34,041 
     Exchange 
      differences             33                      (60)                    48                  (92)                          6               1                     (64) 
     Disposal            (1,407)                      (18)                 (749)               (1,073)                      (288)               -                  (3,535) 
     Impairment                -                         -                     -                     -                          8               -                        8 
     Charge for 
      the period               -                       289                   633                   496                        441              66                    1,925 
     At 31 
      December 
      2021                 1,177                     3,021                11,825                14,664                      1,579             109                   32,375 
     Exchange 
      differences              -                       205                 1,066                   292                        126              23                    1,712 
     Disposal                  -                         -                     -                     -                          -               -                        - 
     Impairment          (1,177)                         -                     -               (3,950)                       (28)               -                  (5,155) 
     Charge for 
      the period               -                       110                   705                   494                        228             319                    1,856 
                    ------------  ------------------------  --------------------  --------------------  -------------------------  --------------  ------  --------------- 
     At 30 June 
      2022                     -                     3,336                13,596                11,500                      1,905             451                   30,788 
                    ------------  ------------------------  --------------------  --------------------  -------------------------  --------------  ------  --------------- 
 
 
 
     Net book value 
     30 June 2022          28,934       1,259       3,532       2,233       4,149       3,280         43,387 
                      -----------  ----------  ----------  ----------  ----------  ----------  ------------- 
     31 December 
      2021                 27,381       1,263       3,881       2,664       3,444       3,261         41,894 
                      -----------  ----------  ----------  ----------  ----------  ----------  ------------- 
     30 June 2021          23,734       1,018       3,310       3,225       3,242         605         35,134 
                      -----------  ----------  ----------  ----------  ----------  ----------  ------------- 
 
 
   9.            Dividends 

A dividend to shareholders of the holding company of 1.2p per ordinary share has been provided during the period following shareholder approval at the Annual General Meeting of the Company in May 2022 (six months to 30 June 2021 and year to 31 December 2021: both 1.1p). It will be paid on 1 December 2022 to shareholders on the register of members at the close of business on 4 November 2022.

   10.          Availability of this announcement 

This announcement and the Group's Interim Report for the six months ended 30 June 2022 are available from the Company's website, www.ekfdiagnostics.com . If you would like to receive a hard copy of the Interim Report, please contact the EKF Diagnostics Holdings plc offices on +44 (0)29 2071 0570 to request a copy.

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September 20, 2022 02:00 ET (06:00 GMT)

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