TIDMEKF
RNS Number : 6343L
EKF Diagnostics Holdings PLC
14 September 2021
EKF Diagnostics Holdings plc
("EKF", the "Company" or the "Group")
Half-year Report
Further upgrade to current year trading
EKF Diagnostics Holdings plc (AIM: EKF), the AIM listed
point-of-care business, announces its unaudited interim results for
the six months ended 30 June 2021, as well as a further upgrade to
current year trading.
The strong trading from the beginning of the year continued into
the second quarter of 2021. This continues to reflect improving
trading in the core business and ongoing strong demand for EKF's
contract manufacturing services for COVID-19 sample collection
devices and associated kits. The Board is now very confident that
trading for the full year will be comfortably ahead of already
materially upgraded management expectations.
Financial Highlights
-- Revenue up 46.5% to GBP38.56m (H1 2020: GBP26.33m)
-- Adjusted EBITDA* up 42.9% to GBP12.76m (H1 2020: GBP8.93m)
-- Net profit after tax up 122% to GBP9.19m (H1 2020: GBP4.14m)
-- Net cash generated from operations of GBP1.13m (H1 2020: GBP6.94m)
-- Net cash of GBP20.38m (30 June 2020: GBP16.28m) (31 December 2020: GBP21.41m)
-- Dividend of 1.1p per ordinary share to be paid on 1 December
2021 (record date: 5 November 2021)
* Earnings before interest, tax, depreciation and amortisation
adjusted for exceptional items and share-based payments
Operational Highlights
-- Core business revenues up GBP1.21m (6%) in first six months of 2021
-- Life Sciences revenues including contract manufacturing for PrimeStore MTM and PBS up 142%
to GBP18.50m
-- Signed multi-million dollar global supply contract for phosphate-buffered saline (PBS) with
global private sector partner, whilst also broadening customer
base and reducing reliance on this single customer
-- Opened new PrimeStore MTM and PBS manufacturing facilities in
Cardiff and Boerne to meet wider customer demand in UK and USA
-- Trellus Health admitted to AIM on 28 May 2021
Christopher Mills, Non-Executive Chairman of EKF, commented:
"The Board is very confident that trading for the year ending 31
December 2021 will be comfortably ahead of already upgraded
management expectations.
"The Group remains confident that its growth strategy, as
outlined to shareholders at the Annual General Meeting in May, and
set out above, will create a business which, aside from any
COVID-19 related revenues, is capable of generating significant
double-digit growth in adjusted EBITDA over the next three to four
years."
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 Wednesday 15 September 2021 at 5.15 pm (BST),
via video conference call. If you would like to register, please
contact Walbrook PR on 020 7933 8780 or email
ekf@walbrookpr.com.
EKF Diagnostics Holdings plc www.ekfdiagnostics.com
Christopher Mills, Non-executive Chairman Tel: +44 (0) 29 2071 0570
Julian Baines, CEO
Richard Evans, FD & COO
Singer Capital Markets Tel: +44 (0)20 7496 3000
Aubrey Powell / George Tzimas (Corporate
Finance)
Tom Salvesen (Corporate Broking)
Investec Bank plc (Joint Broker) Tel: +44 (0)20 7597 4000
Gary Clarence / Daniel Adams
Walbrook PR Limited Tel: +44 (0) 20 7933 8780 or ekf@walbrookpr.com
Paul McManus / Lianne Cawthorne Mob: +44 (0) 7980 541 893 / +44 (0) 7584
391 303
BUSINESS REVIEW
The strong trading from 2020 and the beginning of the year
continued into the second quarter of 2021. This continues to
reflect improving trading in the core business and ongoing strong
demand for our contract manufacturing services for COVID-19 sample
collection devices and associated kits. The Board is now very
confident that trading for the full year will be comfortably ahead
of already materially upgraded management expectations.
Revenues for the six months ended 30 June 2021 were GBP38.56m
(H1 2020: GBP26.33m), an increase of 46.5%. Adjusted EBITDA was up
by 42.9% at GBP12.76m (H1 2020: GBP8.93m). Earnings per share have
increased by 126%.
Strategy
Our aim over the next four years is to use our internally
generated resources to:
1. invest in the existing core business to maximise the value of
our distribution network and drive aggressive organic growth
(including investment in the existing contract fermentation
business);
2. continue to maximise value for EKF shareholders from our
agreement with Mount Sinai Innovation Partners ("MSIP"), which
allows us advanced access to innovative commercial opportunities
and where we can build on the ongoing successes of Renalytix plc,
Verici Dx plc and the further success that we are confident Trellus
Health plc will see;
3. seek out complementary and targeted earnings-enhancing
acquisitions with key strategic value to the core business;
4. deliver against these aims and allow us to continue to follow
a progressive dividend policy and to generate enhanced shareholder
returns; and
5. continue to maximise the opportunity to assist clients to
control the impact of COVID-19, and to evolve our new contract
manufacturing capabilities in this area to a broader range of
diagnostic and other healthcare settings.
We have made good progress against these objectives, as set out
below. Discussions are progressing as planned for a number of
earnings enhancing acquisitions, and we have identified a number of
potential products to expand our existing core business.
Operations
Diabetes
Sales in the diabetes segment have seen good growth in the
period, reaching GBP10.18m, an increase of 8%, with improvements
coming across the majority of the diabetes portfolio as our
distribution partners saw growth returning. In particular, sales of
<BETA>-HB (Beta-Hydroxybutyrate) were up 14% year-on-year,
including a contribution from an OEM agreement with a leading
distributor. Sales of Quo-Test and Quo-Lab are up 24% and 18%
respectively, however sales of the STAT-Site product line have
reduced following the discontinuation of STAT-Site <BETA>-HB
due to obsolescence of components.
Hematology
Overall, revenues from our hematology portfolio have been flat.
Within this we have seen 12% growth of our DiaSpect Tm product,
primarily driven by our OEM agreements with Fresenius and McKesson.
Meanwhile, global hematology screening programmes have continued to
be affected by the COVID-19 pandemic, although we have seen signs
of programmes beginning to come online again in the latter part of
the year, and in particular our major customer in Peru has started
to significantly increase their orders as the territory opens up
and much needed screening programmes are coming back online.
Contract Manufacturing
Infectious disease test kits
We have continued to see strong demand for our contract
manufacturing product lines across our manufacturing sites in the
US, Germany, and the UK. Due to our direct relationships with major
end users, we have switched towards end user customers and away
from sales direct to Longhorn to the mutual benefit of Longhorn and
EKF. At the same time, we have seen a change in the mix of products
we are being requested to manufacture, with emphasis moving from
PrimeStore MTM filled tubes towards tubes filled with Phosphate
Buffered Saline (PBS) which we have introduced as a low-cost
alternative to MTM. However, we continue the p roduction of
PrimeStore MTM tubes for public health systems customers in the UK
and Ireland, as well as the manufacture and collation of home
testing kits that are distributed through the two largest high
street pharmacy chains in the UK, and a new contract for supply of
PrimeStore MTM to testing labs based at major UK airports.
In addition, we continue to manufacture kits for employee
testing purposes as well as home testing kits including PBS and
swab for distribution in US and Europe via our major industrial
partner.
This business is servicing customers in the US, the UK, and
Europe, including public health authorities in the UK and Ireland,
universities, and private laboratories, as well as our major
industrial partner. Whilst this major industrial partner
represented less than half of our contract manufacturing revenues
for PrimeStore MTM and PBS for the first half of the year, we have
already seen a shift to a wider mix of revenues from a broader
customer base. We expect to see the share of revenue contribution
from other customers continue to rise as we move through the
year.
In addition, with the expectation that sales of these products
will continue for the foreseeable future, we are adding two further
factory units to our existing site in Cardiff which was opened in
January, and have added off-site manufacturing space in Boerne.
It is a measure of our success in creating and servicing this
business, which we started from scratch last year, that we are now
discussing the supply of products for non-COVID-19 indications,
driven by demand from our customers. These products include areas
such as in molecular diagnostics for which work has already started
in the US. We see this as a significant growth opportunity for
EKF.
Central Laboratory & Life Sciences
Our Central laboratory and Life Sciences sector combines
revenues derived from Clinical Chemistry, lab analysers, contract
fermentation and enzymes. Central Laboratory sales continue to be
affected by the pandemic, mainly in the USA.
We continue to see a strong pipeline of opportunities to supply
contract manufacturing services from our Elkhart and South Bend
sites, and have committed resources to add capacity. The
construction of new fermenters is in progress, work having
commenced on a new fermentation facility with a total investment of
$9.3m, of which $3.4m has already been paid on deposit, and the aim
of delivering significant revenues by 2024. These opportunities are
arising in the research and molecular enzyme areas as well as food
grade fermentation digestive proteins.
Other
This category includes sales of a number of products including
our Lactate Scout sports medicine product and other diagnostic
tests, the most important of which is for pregnancy. With an end to
the shutdown of professional sports in Europe we have seen an
improvement in Lactate Scout sales which have grown by 40% year on
year.
PartnerShip with Mount Sinai
Our Preferred Partnership Agreement (PPA) with Mount Sinai
Innovation Partners (MSIP) provides us with advanced access to
innovative commercial opportunities arising from Mount Sinai Health
System owned technologies, managed by MSIP, in the field of
healthcare technologies. This relationship had already lead to the
successful spin-out of Renalytix plc ("Renalytix") and their
subsequent spin-out of Verici Dx plc ("Verici"). Our residual
holding in Renalytix is valued at GBP10.8m (as at 30 June), and our
holding in Verici, received as a dividend from Renalytix, is valued
at 30 June at GBP1.8m.
In May 2021, Trellus Health plc, which was formed by MSIP, EKF,
and its management in 2020, successfully floated on AIM. EKF's
investment in Trellus was transferred to relevant EKF shareholders
in 2020.
Following the completion of his tenure as CEO of the Group,
Julian Baines will take responsibility for the management of our
relationship with MSIP. A pipeline of new opportunities has been
identified.
Financial review
Revenue
Revenue for the period was GBP38.56m (H1 2020: GBP26.33m), an
increase of 46.5%.
Unaudited Unaudited +/- %
6 months ended 6 months ended
30 June 2021 30 June 2020
GBP'000 GBP'000
Hematology 5,856 5,853 0.1%
Diabetes (including <BETA>H
B) 10,183 9,419 8.1%
Central Laboratory 2,372 2,639 (10.1%)
Contract Manufacturing 17,469 6,459 170.5%
Other 2,679 1,959 36.8%
Total revenue 38,559 26,329 46.5%
-------------------- --------------------
Gross profit
Gross profit is GBP18.54m (H1 2020: GBP14.91m). The gross profit
margin is 48% (H1 2020: 57%). The gross margin percentage has
reduced mainly as a result of the product mix.
Administrative expenses
In H1 2021, administrative expenses have reduced to GBP7.02m (H1
2020: GBP8.25m), representing 18.2% of revenue for the period (H1
2020: 31.3%). The reduction is largely caused by a credit for
share-based payments following the ending of the cash-settled
share-based payment incentive scheme for two Directors. The scheme
for a senior employee remained in place at the period end.
Administrative expenses include research and development (R &
D) costs of GBP0.61m (H1 2020: GBP0.63m). In addition, further R
& D costs of GBP0.32m (H1 2020: GBP0.31m) have been
capitalised. Non- exceptional administrative costs have increased
by 3.4% compared to H1 2020 mainly due to increased sales volumes,
as well as further expenditure on quality assurance and regulatory
costs as a result of the increased regulatory burden in Europe.
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 2021 30 June 2020 2020
Non-exceptional administration
expenditure before R &
D capitalisation 8,960 8,668 17,234
Effect of share-based payments (1,392) 300 5,292
Less capitalised R & D (317) (308) (586)
Effect of exceptional items (234) (408) (1,282)
-------------------- -------------------- -----------------------
Total administrative expenses 7,017 8,252 20,658
-------------------- -------------------- -----------------------
The charge for depreciation of fixed assets and for the
amortisation of intangibles is GBP2.83m (H1 2020: GBP2.32m).
Operating profit and adjusted earnings before interest tax and
depreciation
The Group generated an operating profit of GBP11.56m (H1 2020:
GBP6.72m). We consider a more meaningful measure of underlying
performance is obtained by examining adjusted EBITDA, which for H1
2021 was GBP12.76m (H1 2020: GBP8.92m). This excludes the effects
of a credit for share-based payments of GBP1.39m (H1 2020: charge
of GBP0.30m) and exceptional profits of GBP0.23m (H1 2020:
GBP0.41m). The increase in operating profit and adjusted EBITDA is
caused by the substantial increase in volumes associated with sales
of contract manufacturing products.
Finance costs
Finance costs are GBP0.16m (H1 2020: GBP0.47m). The main charge
results from an increase in the fair value of deferred
consideration, the size of which is determined by the increase in
EKF's share price.
Tax
There is a tax charge of GBP2.24m (H1 2020: GBP2.11m). The
increase partly reflects the increase in profit, but also that
expenses relating to the cash-settled share-based payment incentive
scheme, accrued in previous years, are now deductible for tax
purposes as a result of payments having been made.
Earnings per share
Basic earnings per share has increased to 1.99p (H1 2020:
0.88p), an increase of 126%. Diluted earnings per share are 1.98p
(H1 2020: 0.87p)
Balance sheet
Fixed assets
We have capitalised GBP1.47m (H1 2020: GBP1.19m) of property
plant and equipment. The expenditure includes continuing work on
improvements to the facilities in South Bend and Elkhart in the US,
further automation in Germany, and the cost of fitting out the
first stage of the new manufacturing facility in Cardiff. Further
expenditure in South Bend and Elkhart, in Germany, and for the
second stage of the Cardiff facility is planned for the second half
of the year.
Intangible assets
The value of intangible fixed assets is GBP35.13m (31 December
2020: GBP37.05m). The decrease is mainly the result of amortisation
plus exchange rate movements. An amount of GBP0.62m has been
capitalised.
Investments
Investments includes our holdings in Renalytix plc and Verici Dx
plc. The investments are held at fair value which has been
calculated based on the market value of the shares which at 30 June
2021 was GBP10.80 (31 December 2020: GBP4.875) per share for
Renalytix and GBP0.685 (31 December 2020: GBP0.585) per share for
Verici. The resulting unrealised gain during H1 2021 of GBP6.21m is
shown as a movement in Other comprehensive income.
Deferred consideration
The remaining deferred consideration relates to the share-based
payment to the former owner of EKF-Diagnostic GmbH. Finalisation of
the position is expected to conclude shortly.
Cash and working capital
The gross cash position at 30 June 2021 was GBP20.78m (31 Dec
2020: GBP16.90m), and the Group had cash net of bank borrowings of
GBP20.38m (31 Dec 2020: GBP16.28m).
Cash generated from operations in H1 2020 is GBP1.13m (H1 2020:
GBP6.94m). Inventory levels have increased as a result of the
increase in order volume but also to ensure security of component
supply. Trade debtors have increased as a result of increased
trading activity and because of extended terms granted to certain
commercial partners. We have continued to see very little evidence
to date of collection difficulties as a result of COVID-19.
Payables have reduced because of payments made in relation to the
cash-settled share-based payment incentive scheme.
Capital structure
We have not made any share buy backs during the period. Our
authorisation to make further share buy backs remains in place and
we will make further purchases if considered appropriate.
Dividend
At the Annual General Meeting in May 2021 shareholders approved
the payment of a dividend of 1.1p per ordinary share, to be paid on
1 December 2021 to shareholders on the register at close of
business on 5 November 2021. As this declaration is irrevocable,
the value of GBP5.005m is shown as a liability with the debit shown
in the statement of changes in equity.
Outlook
The Board is very confident that trading for the year ending 31
December 2021 will be comfortably ahead of already materially
upgraded management expectations.
The Group remains confident that its growth strategy, as
outlined to shareholders at the Annual General Meeting in May, and
set out above, will create a business which, aside from any
COVID-19 related revenues, is capable of generating significant
double-digit growth in adjusted EBITDA over the next three to four
years.
Christopher Mills
Non-Executive Chairman
14 September 2021
CONSOLIDATED INCOME STATEMENT
FOR THE 6 MONTHSED 30 JUNE 2021
Unaudited
Unaudited 6 months Audited
6 months ended Year ended
ended 30 30 June 31 December
June 2021 2020 2020
Notes GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 3 38,559 26,329 65,260
Cost of sales (20,019) (11,417) (27,840)
--------------- -------------- -----------------
Gross profit 18,540 14,912 37,450
Administrative expenses (7,017) (8,252) (20,658)
Other income 34 57 133
--------------- -------------- -----------------
Operating profit 11,557 6,717 16,895
------------------------------------- ----------
Depreciation and amortisation (2,830) (2,316) (4,611)
Share-based payments 1,392 (300) (5,292)
Exceptional items 4 234 408 1,282
EBITDA before exceptional
items and share-based payments 12,761 8,925 25,516
------------------------------------- ---------- --------------- -------------- -----------------
Finance income 22 29 53
Finance costs (155) (497) (1,592)
--------------- -------------- -----------------
Profit before income tax 11,424 6,249 15,356
Income tax charge 5 (2,237) (2,108) (3,971)
--------------- -------------- -----------------
Profit for the period 9,187 4,141 11,385
--------------- -------------- -----------------
Profit attributable to:
Owners of the parent 9,069 4,011 11,114
Non-controlling interest 118 130 271
9,187 4,141 11,385
--------------- -------------- -----------------
Earnings per ordinary share
attributable to the owners
of the parent during the
period 6
Pence Pence Pence
Basic 1.99 0.88 2.45
Diluted 1.98 0.87 2.42
---------- ---------- ----------
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE 6 MONTHSED 30
JUNE 2021
Unaudited Unaudited Audited
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBP'000 GBP'000 GBP'000
Profit for the period 9,187 4,141 11,385
Other comprehensive income/(expense):
Changes in fair value of equity
instruments at fair value
through other comprehensive
income (net of tax) 4,040 4,445 3,276
Currency translation differences (1,334) 3,951 734
Other comprehensive income
(net of tax) 2,706 8,396 4,010
--------------- --------------- -----------------
Total comprehensive income
for the period 11,893 12,537 15,395
--------------- --------------- -----------------
Attributable to:
Owners of the parent 11,779 12,456 15,235
Non-controlling interests 114 81 160
--------------- --------------- -----------------
Total comprehensive income
for the period 11,893 12,537 15,395
--------------- --------------- -----------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Unaudited Unaudited Audited as
as at 30 as at 30 at 31 December
June 2021 June 2020 2020
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant
and equipment 12,957 13,331 12,620
Right-of-use
assets 890 941 1,019
Intangible assets 7 35,134 39,347 37,051
Investments 12,818 14,345 6,608
Deferred tax
assets 14 21 14
Total non-current
assets 61,813 67,985 57,312
---------------- ------------------- -----------------------
Current Assets
Inventories 9,766 8,144 8,487
Trade and other
receivables 16,107 10,545 13,182
Corporation tax
receivable - - 371
Cash and cash
equivalents 20,784 16,895 21,913
Total current
assets 46,657 35,584 43,953
---------------- ------------------- -----------------------
Total assets 108,470 103,569 101,265
================ =================== =======================
Equity
attributable to
owners of the
parent
Share capital 4,550 4,546 4,550
Share premium 200 95 200
Other reserve 9,394 11,093 5,354
Foreign currency
reserves 2,698 7,210 4,028
Retained earnings 67,580 55,637 63,516
---------------- ------------------- -----------------------
84,422 78,581 77,648
Non-controlling
interest 435 472 552
---------------- ------------------- -----------------------
Total equity 84,857 79,053 78,200
---------------- ------------------- -----------------------
Liabilities
Non-current
liabilities
Borrowings 310 422 323
Lease liabilities 475 721 690
Deferred tax
liability 4,586 2,940 2,636
---------------- ------------------- -----------------------
Total non-current
liabilities 5,371 4,083 3,649
---------------- ------------------- -----------------------
Current
liabilities
Trade and other
payables 13,152 14,211 14,435
Lease liabilities 456 248 380
Deferred
consideration 3,033 1,840 2,901
Current income tax
liabilities 1,512 3,946 1,515
Borrowings 89 188 185
---------------- ------------------- -----------------------
Total current
liabilities 18,242 20,433 19,416
---------------- ------------------- -----------------------
Total liabilities 23,613 24,516 23,065
---------------- ------------------- -----------------------
Total equity and
liabilities 108,470 103,569 101,265
================ =================== =======================
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 6 MONTHSED 30 JUNE 2021
Audited
Unaudited Year
Unaudited 6 months to 31
6 months ended ended 30 December
30 June 2021 June 2020 2020
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Profit before income tax 11,424 6,249 15,356
Adjustments for
- Warranty claim (251) (455) (1,414)
- Depreciation 919 872 1,844
- Amortisation and impairment charges 1,911 1,444 2,767
- Deferred consideration (FV adjust) 132 455 1,516
- Foreign Exchange (40) - 26
- Bad debt written down - - 45
- Profit/(loss) on disposal of assets (9) 14 (22)
- Loss on disposal of intangible
assets - - 8
- Share-based payments (1,392) 300 4,775
- Dividend received - - (31)
- Net finance costs 1 13 23
Changes in working capital
- Inventories (1,450) (2,056) (2,557)
- Trade and other receivables (2,960) (1,974) (3,426)
- Trade and other payables (5,126) 2,075 1,888
------------------------------ ---------------------- ----------------
Cash generated by operations 3,159 6,937 20,798
Interest paid (11) (29) (47)
Income tax paid (2,019) (849) (6,942)
------------------------------ ---------------------- ----------------
Net cash generated by operating
activities 1,129 6,059 13,809
Cash flow from investing activities
Purchase of investments - - (3,810)
Purchase of property, plant and
equipment (PPE) (1,342) (1,187) (1,631)
Purchase of intangibles (623) (393) (1,014)
Proceeds from sale of PPE 14 27 68
Proceeds from sale of investments - - 7,670
Interest received 22 29 53
------------------------------ ---------------------- ----------------
Net cash used in investing activities (1,929) (1,524) 1,336
------------------------------ ---------------------- ----------------
Cash flow from financing activities
Proceeds from issue of ordinary
shares - 100 209
Dividend - - (4,550)
Share option buy back - - (7)
Repayment of borrowings (89) (126) (183)
Principal lease payments (257) (166) (469)
Dividends paid to non-controlling
interests (231) (210) (209)
------------------------------ ---------------------- ----------------
Net cash used in financing activities (577) (402) (5,209)
------------------------------ ---------------------- ----------------
Net increase in cash and cash
equivalents (1,377) 4,133 9,936
Cash and cash equivalents at beginning
of period 21,913 12,074 12,074
Exchange gains on cash and cash
equivalents 248 688 (97)
------------------------------ ---------------------- ----------------
Cash and cash equivalents at end
of period 20,784 16,895 21,913
============================== ====================== ================
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
FOR THE 6 MONTHSED 30 JUNE
2021
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
2020 4,541 - 6,648 3,183 56,199 70,571 601 71,172
Comprehensive
income
Profit for the
period - - - - 4,011 4,011 130 4,141
Other
comprehensive
income
Changes in fair
value of equity
instruments at
fair
value through
other
comprehensive
income - - 4,445 - - 4,445 - 4,445
Currency
translation
differences - - - 4,027 (27) 4,000 (49) 3,951
------------- ------------- ------------ ------------- ------------------ ------------ -------------------- ------------
Total
comprehensive
income - - 4,445 4,027 3,984 12,456 81 12,537
------------- ------------- ------------ ------------- ------------------ ------------ -------------------- ------------
Transactions
with
owners
Dividends to
non-controlling
interest - - - - - - (210) (210)
Dividend
declared
but not paid - - - - (4,546) (4,546) - (4,546)
Issue of
ordinary
shares 5 95 - - - 100 - 100
Total
contributions
by and
distributions
to owners 5 95 - - (4,546) (4,446) (210) (4,656)
------------- ------------- ------------ ------------- ------------------ ------------ -------------------- ------------
At 30 June 2020 4,546 95 11,093 7,210 55,637 78,581 472 79,053
Comprehensive
income
Profit for the
period - - - - 7,103 7,103 141 7,244
Other
comprehensive
income
Changes in fair
value of equity
instruments at
fair
value through
other
comprehensive
income - - (97) - - (97) - (97)
Transfer of
gain
on disposal of
equity
investments
at fair value
through other
comprehensive
income to
retained
earnings - - (5,642) 5,642 - - -
Taxation on
profit
on disposal
of equity
instruments
at fair
value - - - - (1,072) (1,072) - (1,072)
Currency
translation
differences - - - (3,182) 27 (3,155) (62) (3,217)
Total
comprehensive
income - - (5,739) (3,182) 11,700 2,779 79 2,858
------------- ------------- ------------ ------------- ------------------ ------------ -------------------- ------------
Transactions
with
owners
Share
cancellation - - - - (7) (7) - (7)
Proceeds from
share
issue 4 105 - - - 109 - 109
Dividend to
owners - - - - (3,814) (3,814) - (3,814)
Dividends to
non-controlling
interest - - - - - - 1 1
------------- ------------- ------------ ------------- ------------------ ------------ -------------------- ------------
Total
contributions
by and
distributions
to owners 4 105 - - (3,821) (3,712) 1 (3,711)
------------- ------------- ------------ ------------- ------------------ ------------ -------------------- ------------
At 31 December
2020 4,550 200 5,354 4,028 63,516 77,648 552 78,200
Comprehensive
income
Profit for the
period - - - - 9,069 9,069 118 9,187
------------- ------------- ------------ ------------- ------------------ ------------ -------------------- ------------
Other
comprehensive
income
Changes in fair
value of equity
instruments at
fair
value through
other
comprehensive
income - - 4,040 - - 4,040 - 4,040
Currency
translation
differences - - - (1,330) - (1,330) (4) (1,334)
------------- ------------- ------------ ------------- ------------------ ------------ -------------------- ------------
Total
comprehensive
income - - 4,040 (1,330) 9,069 11,779 114 11,893
------------- ------------- ------------ ------------- ------------------ ------------ -------------------- ------------
Transactions
with
owners
Dividends to
owners - - - - (5,005) (5,005) - (5,005)
Dividends to
non-controlling
interest - - - - - - (231) (231)
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
============= ============= ============ ============= ================== ============ ==================== ============
NOTES FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
1. General information and basis of presentation
EKF Diagnostics Holdings plc is a public limited company
incorporated in the United Kingdom (Registration Number 04347937).
The address of the registered office is Avon House, 19 Stanwell
Road, Penarth, CF64 2EZ.
The Group's principal activity is the development, manufacture,
and supply of products into the in-vitro diagnostics (IVD) market
place. Within this area, the Group has a growing business in
contract manufacturing.
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 international accounting standards in
conformity with the requirements of the Companies Act 2006
("IFRS"). 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 2020 and
which will form the basis of the 2021 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 2020
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
2021 and 30 June 2020 is unaudited and the twelve months to 31
December 2020 is audited.
These interim accounts have not been prepared in accordance with
the UK-adopted International Accounting Standard 34, "Interim
Financial Reporting".
2. Significant accounting policies
Going concern
The Group meets its day-to-day working capital requirements
through the use of cash reserves and existing bank facilities.
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 probable changes in
financial performance, that the Group should be able to operate
within the level of its current funding arrangements. While we have
seen some disruption to our core business as a result of the
COVID-19 pandemic, current trading suggests that our base case
forecasts are still applicable. In addition, our range of COVID
related products has been highly successful, bringing significant
benefits to the Group, including higher revenue, profits, and cash
balances. We believe the Group is in a strong position, however it
is difficult to assess reliably whether there will be any material
disruption in the future, and for how long our COVID range will
remain relevant. We have modelled a number of scenarios covering
reductions in revenue of 10% and 50%, without taking into account
the potential benefits of any mitigation strategies such as
potential cost savings or insurance claims. While the eventual
severity and length of the economic disruption stemming from the
pandemic is impossible to forecast these models give the Directors
reasonable confidence that the business can survive our worst case
scenarios for reductions in revenue for at least the next 12
months.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
For this reason the Group continues to adopt the going concern
basis in the preparation of the financial statements.
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 design, development,
manufacture and selling of diagnostic instruments, reagents and
certain ancillary items. 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.
The reportable segments derive their revenue primarily from the
manufacture and sale of medical diagnostic equipment. 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 2021 unaudited
Germany USA Russia Other 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
Year ended December 2020 audited
Germany USA Russia Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------------ ------------- ------------ ------------- -------------
Income statement
Revenue 25,637 39,459 2,904 4,432 72,432
Inter-segment (5,351) (1,767) - (54) (7,172)
-------------------------------------- ------------ ------------- ------------ ------------- -------------
External revenue 20,286 37,692 2,904 4,378 65,260
-------------------------------------- ------------ ------------- ------------ ------------- -------------
Adjusted EBITDA* 7,343 20,094 883 (2,754) 25,516
Share-based payment - - - (5,292) (5,292)
Exceptional items 877 - - 405 1,282
EBITDA 8,220 20,094 833 (7,641) 21,506
Depreciation (787) (511) (24) (522) (1,844)
Amortisation (1,646) (1,120) (1) - (2,767)
-------------------------------------- ------------ ------------- ------------ ------------- -------------
Operating profit/(loss) 5,787 18,463 808 (8,163) 16,895
Net finance costs (24) 13 39 (1,567) (1,539)
Income tax (820) (3,497) (171) 517 (3,971)
Profit/(loss) for the year 4,943 14,979 676 (9,213) 11,385
-------------------------------------- ------------ ------------- ------------ ------------- -------------
Segment assets
Operating assets 39,961 36,899 355 30,529 107,744
Inter-segment assets (112) (11,427) - (16,853) (28,392)
-------------------------------------- ------------ ------------- ------------ ------------- -------------
External operating assets 39,849 25,472 355 13,676 79,352
Cash and cash equivalents 3,130 7,459 1,257 10,067 21,913
-------------------------------------- ------------ ------------- ------------ ------------- -------------
Total assets 42,979 32,931 1,612 23,743 101,265
-------------------------------------- ------------ ------------- ------------ ------------- -------------
Segment liabilities
Operating liabilities 7,135 17,836 158 25,820 50,949
Inter-segment liabilities (1,332) (14,915) - (12,145) (28,392)
-------------------------------------- ------------ ------------- ------------ ------------- -------------
External operating liabilities 5,803 2,921 158 13,675 22,557
Borrowings 508 - - - 508
-------------------------------------- ------------ ------------- ------------ ------------- -------------
Total liabilities 6,311 2,921 158 13,675 23,065
-------------------------------------- ------------ ------------- ------------ ------------- -------------
Other segmental information
Non-current assets - PPE 5,912 4,632 93 1,983 12,620
Non-current assets - ROU
assets - - - 1,019 1,019
Non-current assets - Intangibles 24,039 10,979 77 1,956 37,051
Intangible assets -additions 679 335 - - 1,014
ROU assets - additions - - - 518 518
PPE - additions 779 575 54 223 1,631
Period ended 30 June 2020 unaudited
Germany USA Russia Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Income statement
Revenue 10,713 17,160 1,360 100 29,333
Inter-segment (2,981) (23) - - (3,004)
External revenue 7,732 17,137 1,360 100 26,329
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Adjusted EBITDA 2,827 7,575 395 (1,872) 8,925
Share-based payment - - - (300) (300)
Exceptional items 451 - - (43) 408
---------------------------- --------------------------- ------------- ------------ ------------- -------------
EBITDA 3,278 7,575 395 (2,215) 9,033
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Depreciation (452) (201) (10) (209) (872)
Amortisation (403) (52) - (989) (1,444)
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Operating profit/(loss) 2,423 7,322 385 (3,413) 6,717
Net finance costs (7) 7 21 (488) (467)
Income tax (376) (1,563) (80) (90) (2,109)
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Profit/(loss) for the
period 2,040 5,766 326 (3,991) 4,141
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Segment assets
Operating assets 40,718 28,894 608 26,138 96,358
Inter-segment assets (288) - - (9,396) (9,684)
---------------------------- --------------------------- ------------- ------------ ------------- -------------
External operating
assets 40,430 28,894 608 16,742 86,674
Cash and cash
equivalents 3,375 5,337 798 7,385 16,895
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Total assets 43,805 34,231 1,406 24,127 103,569
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Segment liabilities
Operating liabilities 8,062 14,026 137 11,366 33,591
Inter-segment
liabilities (2,222) (7,463) - - (9,685)
---------------------------- --------------------------- ------------- ------------ ------------- -------------
External operating
liabilities 5,840 6,563 137 11,366 23,906
Borrowings 610 - - - 610
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Total liabilities 6,450 6,563 137 11,366 24,516
---------------------------- --------------------------- ------------- ------------ ------------- -------------
Other segmental
information
Non-current assets -
PPE 6,370 5,425 111 1,425 13,331
Non-current assets -
Right-of-use
assets 93 634 - 214 941
Non-current assets -
Intangibles 26,700 12,431 88 128 39,347
Intangible assets
-additions 343 50 - - 393
PPE - additions 333 609 51 115 1,108
Right-of-use assets -
additions 58 4 - 17 79
* Adjusted EBITDA represents earnings before interest, tax,
depreciation and amortisation adjusted for exceptional items and
share-based payments
'Other' primarily relates to the holding company and head office
costs.
Disclosure of Group revenues by geographic location
Unaudited Unaudited Audited
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBP000 GBP000 GBP000
Americas
United States of America 16,016 14,702 33,474
Rest of Americas 1,026 1,390 568
Europe, Middles East and Africa
(EMEA)
Germany 4,286 2,984 5,873
United Kingdom 4,621 242 4,522
Ireland 4,384 2 5,408
Rest of Europe 2,920 1,621 3,127
Russia 1,384 1,360 2,904
Middle East 661 572 1,261
Africa 939 1,623 2,553
Rest of World
China 424 338 767
Rest of Asia 1,861 1,448 2,883
New Zealand/Australia 37 46 97
--------------- --------------- -----------------
Total Revenue 38,559 26,328 65,260
=============== =============== =================
Revenue by disease state, which is presented for illustrative
purposes only, is as follows:
Unaudited Unaudited +/- %
6 months 6 months
ended 30 ended 30
June 2021 June 2020
GBP'000 GBP'000
Hematology 5,856 5,853 0.1%
Diabetes (including <BETA>H B) 10,183 9,419 8.1%
Central Laboratory 2,372 2,639 (10.1%)
Contract Manufacturing 17,469 6,459 170.5%
Other 2,679 1,959 36.8%
Total revenue 38,559 26,329 46.5%
--------------- ---------------
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
2021 2020 2020
Note GBP000 GBP000 GBP000
Exceptional items include:
- Business reorganisation
costs a (17) (15) (58)
- Warranty claim b 251 455 1,414
- Trellus c - (32) (74)
Exceptional items 234 408 1,282
-------------- -------------- -----------------
(a) Costs associated with the restructuring of the business
(b) Increase in the value of an estimated warranty claim in
relation to the acquisition of EKF-diagnostic GmbH. The increase is
a result of a higher share price.
(c) Start-up costs associated with the set-up of Trellus Healthcare Limited
5. Income tax
Unaudited Unaudited Audited
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBP000 GBP000 GBP000
Current tax
Current tax on profit for
the period (2,387) (1,885) (3,913)
Adjustments for prior periods (4) (87) (89)
--------------- --------------- -----------------
Total current tax (2,391) (1,972) (4,002)
--------------- --------------- -----------------
Deferred tax
Origination and reversal of
temporary differences 154 (136) 31
Total deferred tax 154 (136) 31
--------------- --------------- -----------------
Income tax charge (2,237) (2,108) (3,971)
=============== =============== =================
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 2021 30 June 31 December
2020 2020
GBP'000 GBP'000 GBP'000
Profit attributable to owners
of the parent 9,069 4,011 11,114
Weighted average number of
ordinary shares in issue 454,993,227 454,247,073 454,524,101
Effect of dilutive potential
ordinary shares 4,056,090 4,290,848 4,278,975
-----------------
Weighted average number of
ordinary shares - diluted 459,049,317 458,537,921 458,803,076
------------------ -----------------
Pence Pence Pence
From continuing operations
Basic 1.99 0.88 2.45
Diluted 1.98 0.87 2.42
7. 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 2020 26,371 2,799 15,580 18,436 9,060 299 72,545
Disposal - (19) - - (1,419) - (1,438)
Additions - 62 - - 308 23 393
Exchange differences 1,570 654 1,081 894 505 (10) 4,694
At 30 June 2020 27,941 3,496 16,661 19,330 8,454 312 76,194
Additions - 84 - - 278 259 621
Disposals - 19 - - (4,063) - (4,044)
Exchange differences (938) (282) (1,120) (274) (216) 22 (2,808)
At 31 December 2020 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
----------- ----------------------- -------------------- -------------------- ------------------------- -------------- ----- ---------------
Amortisation
At 1 January 2020 2,550 2,389 10,358 13,141 6,340 - 34,778
Exchange differences 87 373 700 592 311 - 2,063
Disposal - (19) - - (1,419) - (1,438)
Reclassification/transfer - - - - - - -
Charge for the period - 144 681 469 129 21 1,444
----------- ----------------------- -------------------- -------------------- ------------------------- -------------- ----- ---------------
At 30 June 2020 2,637 2,887 11,739 14,202 5,361 21 36,847
Exchange differences (32) (172) (747) (191) (80) - (1,222)
Disposal - 19 - - (4,055) - (4,036)
Charge for the period - 213 564 450 117 (21) 1,323
At 31 December 2020 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
----------- ----------------------- -------------------- -------------------- ------------------------- -------------- ----- ---------------
Net book value
30 June
2021 23,734 1,018 3,310 3,225 3,242 605 35,134
------------- ------------ ------------ ---------- ------------ ---------- -------------
31
December
2020 24,398 370 3,985 4,595 3,110 593 37,051
------------- ------------ ------------ ---------- ------------ ---------- -------------
30 June
2020 25,304 611 4,922 5,127 3,093 290 39,347
------------- ------------ ------------ ---------- ------------ ---------- -------------
8. Dividends
A dividend to shareholders of the holding company of 1.1p per
ordinary share has been provided during the period following
shareholder approval at the Annual General Meeting of the Company
in May 2021 (six months to 30 June 2020 and year to 31 December
2020: both 1p). It will be paid on 1 December 2021 to shareholders
on the register of members at the close of business on 5 November
2021.
9. Availability of this announcement
This announcement is 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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