Half-year Report

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 £37.5m (H1 2021: £38.6m)

74.8% up from pre-pandemic levels (H1 2019: £21.4m)

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

· Adjusted EBITDA* of £9.7m (H1 2021: £12.8m)

73.9% up from pre-pandemic levels (H1 2019: £5.6m)

· Gross profit of £17.7m (H1 2021: £18.5m) with GM% maintained at 47% (H1 2021: 48%)

· Profit before tax of £4.1m (H1 2021: £11.4m)

· Net cash generated from operations of £8.4m (H1 2021: £1.1m)

· Cash and cash equivalents of £19.1m (30 June 2021: £20.8m) (31 December 2021: £20.3m)


* 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 £13.8m (H1 2021: £12.5m)

Central Laboratory:  stable at £6.3m (H1 2021: £6.3m), returned to growth in July

Life Sciences:  doubled to £2.0m (H1 2021: £1.0m)

Contract Manufacturing:  £8.6m (H1 2021: £17.5m) reflecting expected drop in COVID revenues

Laboratory Testing: £2.1m (H1 2021: nil, laboratory acquired in H2 2021)

Other: £4.7m (H1 2021: £1.2m) including £3.5m 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 Broker)

Tel: +44 (0)20 7496 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 Relations)

Tel: +44 (0)20 7933 8780 or ekf@walbrookpr.com

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 £37.5m (H1 2021: £38.6m) and adjusted EBITDA was £9.7m (H1 2021: £12.8m). 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: £21.4m) and adjusted EBITDA is 73.9% ahead (H1 2019: £5.6m).

 

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 £13.8m (H1 2021: £12.5m), 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 £5.7m (H1 2021: £4.8m), 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 £6.5m (H1 2021: £5.9m) 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 £3.1m (H1 2021: £2.1m) 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 β-HB (Beta-Hydroxybutyrate), a reagent used to detect ketones for patients suffering from diabetic ketoacidosis, as well as many other clinical applications. Our β-HB reagent is used by over 1,100 hospitals in the USA. Total β-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 £6.3m (H1 2021: £6.3m), but as described above β-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 £2.0m (H1 2021: £1.0m). 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 £8.6m from the higher levels seen during the pandemic when COVID testing was more widespread (H1 2022: £17.5m). This Q1 weighted demand for COVID-related services was also seen in Laboratory Testing, which delivered H1 sales of £2.1m (H1 2021: £nil, 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: £2.6m) 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 £37.5m (H1 2021: £38.6m).

 

Revenue by Business Unit:

 


Unaudited

6 months ended 30 June 2022

£'000


Unaudited

6 months ended 30 June 2021

£'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

6 months ended 30 June 2022

£'000


Unaudited

6 months ended 30 June 2021

£'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 £3.5m inventory payment.

 

Gross profit

 

Gross profit was £17.7m (H1 2021: £18.5m). 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 £14.5m (H1 2021: £7.0m), 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 £1.2m was recorded in relation to the $5.5m (£4.4m) cash payment received in May 2022 with regard to US inventory. The total adjusted revenue and EBITDA impact of this transaction is £3.5m and £1.2m, respectively.

 

In addition, exceptional costs in relation to the transition and restructure of certain operations in the US, UK and Germany of £1.7m are recorded in administration expenses in H1 2022. Finally, administrative expenses in H1 2021 benefited from a net write back of £1.4m in share-based payments (H1 2022: charge of £0.5m) 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 6 months ended 30 June 2022


Unaudited 6 months ended 30 June 2021


Audited Year ended 31 December 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 £3.4m (H1 2021: £2.8m).

 

 

Operating profit and adjusted earnings before interest tax and depreciation

 

The Group generated an operating profit of £4.1m (H1 2021: £11.4m). We continue to consider that adjusted EBITDA gives a more meaningful measure of performance which for H1 2022 was £9.7m (H1 2021: £12.8m).

 

Adjusted EBITDA excludes a charge for share-based payments of £0.5m (H1 2021: credit of £1.4m) and exceptional charges of £1.7m (H1 2021: profit of £0.2m). 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 £0.01m (H1 2021: £0.16m). The charge has reduced because of lower charges relating to deferred consideration.

 

Tax

 

There is a tax charge of £1.7m (H1 2021: £2.2m). 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 £2.3m (H1 2021: £1.5m) 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 £43.4m (31 December 2021: £41.9m). The increase is mainly the result of exchange rate movements. An amount of £0.8m (H1 2021: £0.6m) has been capitalised during the first half.

 

Investments

 

During the period additional investments were made in the ordinary share capital of Renalytix plc ("Renalytix") (£0.38m) and Verici Dx plc ("Verici") (£2.5m). The majority of our holding in Verici was subsequently transferred to shareholders by way of a dividend in specie at a value of £1,455,232 (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 £1.05 (31 December 2021: £6.20) per share for Renalytix and £0.23 (31 December 2021: £0.53) per share for Verici. The resulting unrealised loss during H1 2022 of £7.2m 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 £19.1m (31 Dec 2021: £20.3m), and the Group had cash net of bank borrowings of £18.9m (31 Dec 2021: £19.6m).

 

Cash generated from operations in H1 2022 is £8.4m (H1 2021: £1.1m). Trade debtors have decreased as a result of timing effects in the run up to period end. Major cash outflows have included £3.9m on purchase of own shares and £2.9m for the purchase of investments, as well as cash payments totalling £0.4m required in connection with the acquisition of ADL.

 

Cash and cash equivalents held by the Russian subsidiary at 30 June 2022 totalled £2.6m (31 Dec 2021: £1.3m). 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 £3.9m. 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 £5.459m 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 MONTHS ENDED 30 JUNE 2022



Unaudited 6 months ended 30 June 2021



 

 

 

Unaudited 6 months ended 30 June 2022

 

 

Audited Year ended 31 December 2021

 

Notes

 

£'000

 

£'000

 

£'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 MONTHS ENDED 30 JUNE 2022








 








 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

6 months ended 30 June 2022

 

6 months ended 30 June 2021

 

Year ended 31 December 2021

 

 

 

£'000

 

£'000

 

£'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 as at 30 June 2022

 

Unaudited as at 30 June 2021

 

Audited as at 31 December 2021

 

 

Notes

£'000

 

£'000

 

£'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 MONTHS ENDED 30 JUNE 2022





 

 

Unaudited 6 months ended 30 June 2022

 

Unaudited 6 months ended 30 June 2021

 

 Audited Year to 31 December 2021


£'000

 

£'000

 

£'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 MONTHS ENDED 30 JUNE 2022








Share Capital

Share Premium

Other Reserve

Foreign Currency Reserve

Retained earnings

Total

Non-controlling interest

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'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

 


£'000

£'000

£'000

£'000

£'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

Russia

UK

Total

 

£'000

£'000

£'000

£'000

£'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

 


£'000

£'000

£'000

£'000

£'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

6 months

ended 30

June 2022

 

Unaudited

6 months

ended 30

June 2021

 

Audited

Year ended

31 December 2021



£000

 

£000

 

£000








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

6 months ended 30 June 2022

£'000


Unaudited

6 months ended 30 June 2021

£'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 6 months ended 30 June 2022

 

Unaudited 6 months ended 30 June 2021

 

Audited year ended 31 December 2021


Note

£000

 

£000

 

£000








Exceptional items include:


 





-   Restructuring costs

a

(1,682)


-


-

-   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 £3.2m (2020: £2.9m) 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 £179,000. 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

6 months

ended 30

June 2022

 

Unaudited

6 months

ended 30

June 2021

 

Audited

Year ended

31 December 2021



£000

 

£000

 

£000

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.

 

 

 

 

 

 

 

 

Audited year ended 31 December 2021

 

Unaudited
 6 months ended 30 June 2022

Unaudited 6 months ended 30 June 2021


 

 

£'000

 

£'000

 

£'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

 

 

 

Land and buildings
£'000

 

Fixtures and fittings

£'000

Plant and machinery

£'000

 

Motor vehicles

£'000

 

Assets under construct-ion

£'000

 

 

Right-of-use assets

£'000

 

 

 

Total

£'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

 

 

 

Goodwill
£'000

 

Trademarks trade names & licences

£'000

Customer relationships

£'000

 

Trade secrets

£'000

 

Develop-ment costs

£'000

 

 

Software

 

£'000

 

 

 

Total

£'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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