Half Yearly Report

RNS Number : 3142A
EKF Diagnostics Holdings PLC
28 September 2015
 

                                                                                                                                     

EKF Diagnostics Holdings plc

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

 

Half Yearly Report

 

EKF Diagnostics Holdings plc (AIM: EKF), the point-of-care, central laboratory, and molecular diagnostics business, announces its unaudited interim results for the six months ended 30 June 2015.

 

Financial Highlights

 

·     Revenue up marginally to £16.78m (H1 2014: £16.77m)

·     Adjusted EBITDA* is £0.73m (H1 2014: £2.22m)

·     Gross margin on Point-of-Care business up to 52% (H1 2014: 49%)

·     Cash at 30 June 2015 was £2.08m (31 Dec 2014: £8.35m), net debt of £5.18m (31 Dec 2014: net cash £2.10m) after deferred consideration payments of £1.43m

 

* Before exceptional items and share based payments

 

Operational Highlights

 

·     Strongest tender pipeline to date with a number to be decided in H2, including significant Middle East win

·     Underlying growth across most Point-of-Care product lines

·     Year-on-year revenue growth from diabetes products expected to be substantial

·     SensPoint analyser due for full launch in early 2016

·     Significant progress in sTNFR development

·     PointMan expected to complete CE Marking process in H2

·     PKU on course to launch in Q1 2016

 

Commenting on outlook, David Evans, Executive Chairman of EKF, said:

"The Company expects to see the benefits of revenues from tender orders in H2, including those which were delayed from H1. We will look to update the market with details of our Middle East tender win once we are able to do so."

 

Enquiries:

 

www.ekfdiagnostics.com

EKF Diagnostics Holdings plc 

Tel: +44 (0) 29 2071 0570

David Evans, Executive Chairman

Mob: +44 (0) 7740 084 452

Julian Baines, CEO 

Mob: +44 (0) 7788 420 859

Paul Foulger, Finance Director

Mob: +44 (0) 7710 989 255

 

 

Panmure Gordon (UK) Limited

Tel: 020 7886 2500

Robert Naylor (Corporate Finance)

 

Paul Fincham (Corporate Finance)

 

Maisie Atkinson (Corporate Broking)

 

 

Walbrook PR Limited 

 

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

Paul McManus

Mob: +44 (0) 7980 541 893

Lianne Cawthorne

Mob: +44 (0) 7584 391 303

     

 

 

 

CHAIRMAN'S STATEMENT

 

Dear Fellow Shareholder,

 

In my statement in the Annual Report and Accounts for the year to 31 December 2014 I outlined our key goals for this year in some detail. This is our first opportunity to report against these goals and I am pleased to report good progress, although as expected immediate translation into improved business performance has been limited as the additional resources brought into the business need to be bedded in before we see positive results from them.

 

Strategic Review

On 2 April 2015 EKF announced that the Board of Directors had initiated a strategic review headed by a Committee of the Non-Executive Directors of EKF. 

The Committee is conscious of the desire by a number of key shareholders that the value that has been created by the Board of EKF should be realised in part or in full, and have concluded that this should be the Directors' primary aim.

It was announced on 24 August 2015 that the Company has received a highly preliminary approach from Jinjing (Group) Co., Ltd ("Jinjing") regarding a possible offer for the entire issued and to be issued share capital of the Company, and two non-binding preliminary proposals (one of which has subsequently been withdrawn) from third parties of $110 million to $125 million, on a cash free debt free basis, for our Point-of-Care business, which excludes the Clinical Chemistry and Molecular Diagnostics businesses.  

In the event that the interest shown does not lead to a realisation event in the short-term, then it is the Board's intention to firstly invite Mr Ron Zwanziger onto the Board as Chairman, at which point I would become Deputy Chairman, and then secondly to spin-off the Molecular Diagnostics business (including biomarkers) into a separate vehicle focussed on personalised medicine, a process which will be led by myself.

In the absence of a realisation event in the short-term the Directors believe that this route represents the best way forward as it will enable Shareholders to benefit from: 

a) the Point-of-Care business (being both the Point-of-Care division and the Central Laboratory division), having a clear focus, with its earnings profile undiluted by the current investment (and related losses) associated with the Molecular Diagnostics division. The Directors believe that a number of growth opportunities, which the Company currently cannot realise, will become achievable with Mr Zwanziger as Chairman. This will ensure that EKF's growth trajectory can be accelerated. 

b) the Molecular Diagnostics division (including biomarkers) having a singular focus not impacted by the other activities in the Group and which, with the necessary investment, will increase the value currently attributable to this business.

Strategy and operations

 

The core strategy of the business continues to be the development of a global IVD business in Point-of-Care and Molecular Diagnostics. To achieve expected growth, the Directors recognise that EKF needs to invest significantly in these new products and platforms, namely sTNFR, PrecisionPath, PointManTM and a Phenylalanine monitoring system.

Tender wins

EKF relies heavily on tender wins for revenue generation, the timing of which can be very uncertain and outside of our control. In 2014, tender wins represented over 20% of our full year revenues, which was broadly split 40%/60% across H1 and H2 respectively. During H1 2015, tender wins only accounted for around £0.5m, mainly due to the delay of certain tenders into H2. EKF has developed the strongest tender pipeline it has ever had and a number of these tenders will be decided in H2. To that end we have secured a significant tender in the Middle East to deliver a number of our diabetes products in 2015 and 2016. Exact quantities are still to be confirmed.

Molecular business impact

The two core molecular platforms that EKF continues to concentrate its resources on are PrecisionPath and PointMan. At an adjusted EBITDA level, the Group has funded losses of £1m in the Molecular business in H1 2015 (H1 2014: £0.1m).

 

Point-of-Care

 

Our Point-of-Care business has four business units: Hemoglobin; Diabetes; Maternal and Women's Health; and Central Laboratory. The Point-of-Care business continues to perform well, with underlying growth being seen across most product lines. The integration of the Quotient products into our Barleben facility has been very successful and by the end of 2015 we expect that year-on-year revenue growth for our diabetes product range will be substantial. Particularly pleasing is the positive effect this has made at a gross margin level; whilst the overall gross margin (which incorporates the lower margin molecular business) is 45% for the first half of the year (H1 2014: 47%), the Point-of-Care business shows a gross margin of around 52% for H1 2015 (H1 2014: 49%); this is likely to improve slightly going forward as we continue to seek operational efficiencies throughout the Group.

 

The 2015 goals identified for this business and the progress since December are as follows:

 

 

Goal

Progress

·     Further develop the hemoglobin business across the whole spectrum of hemoglobin applications and markets using connected solutions to open new markets in monitoring.

Improved connectivity is being introduced in the first instance for our HemoControl analyser range (see below), followed by the DiaSpect range.

·     Use EKF´s expertise to establish lactate measurement in peri-natal settings as a marker of maternal and neonatal well-being.

EKF's SensPoint analyser is designed to measure lactate at or close to birth. Clinical studies are under way as part of the CE marking process.

·     Continue to build on EKF´s experience in very accurate glucose measurement by introducing the Biosen instrument to new markets, particularly in Asia and Latin America.

EKF's registrations team is concentrating in the first instance on progressing registration for Biosen in China before moving on to other primary target markets.

·     Incorporate connectivity and data management in all our major revenue-generating product lines.

We have very quickly developed a better connected version of our Hemo Control product. Hardware design for the Quo systems and for the DiaSpect Tm is also complete.

·     Development of the first ever POC phenylalanine monitoring system for patients with Phenylkenonuria (PKU).

Contracts have been signed for the next stage of development, being the validation and verification process of the consumable, and work on this has commenced.

 

An experienced team has been put together for each business unit through a mixture of external recruitment and internal transfer, each Business Unit Director being supported by global sales and product specialists who are supporting our existing regional sales teams.

 

Molecular

 

The Molecular business has two units, Diagnostics, which is product based and primarily PointMan, and Genomics, which is service based and includes PrecisionPath.

 

sTNFR

 

During the period we have made significant progress in establishing sTNFR as the most efficacious biomarker for predicting the progression of diabetic patients to end stage kidney disease. We have been genuinely excited by not only our own data generated in conjunction with our partner, the Joslin Diabetes Center, but also by the quality of the engagement with several top-tier pharmaceutical companies who are promoting and/or developing novel therapies in this area, such as SGLT-2 inhibitors. Our aim is to position sTNFR as a routine test for risk stratification and as a complementary diagnostic for new therapies. The establishment and acceptance of such a biomarker takes time as further data will need to be independently generated to support clinical utility and completion of pivotal trials for these new therapies. We believe that we will ultimately be capable of generating long term value by aligning ourselves with those therapeutic companies who see the commercial benefit that our diagnostic can bring to their revenue line. Our discussions to date provide us with significant confidence and the challenge remains in terms of the time factor both with our putative partners and consequently in setting expectations externally with our shareholder base and other stakeholders.

 

PrecisionPath

 

Whilst we have encountered issues with Selah, we have continued to invest in PrecisionPath, a Next-Generation Sequencing ("NGS") test for patients with metastatic cancer. We have announced a partnership with Greenville Health System ("GHS") and the launch of our PrecisionPath Colon cancer test at a cost of $975 and a turnaround time of less than seven days per reportable test. This has, in turn, led to discussions with private insurers to establish a reimbursement level. The relationship with GHS, and consequent verification of the patient benefit from a quick turnaround at a very competitive price per test has resulted in the reimbursement review progressing well; we expect to hear some positive news in this regard in the not too distant future. 

 

PointMan

 

Following some technical issues earlier in the year, we are now finalising the verification and validation process for the PointMan amplification technology with the intention of completing the CE Marking process in H2. In addition the partnerships with ANGLE, Gilupi and MGH continue to progress. The exquisite sensitivity of the PointMan technology enables us to detect three copies of a mutant gene in a standard blood draw, which will lead to a reduction in repeat tissue biopsies for cancer patients globally.

 

PKU

 

We are on course to launch our Point-of-Care Phenylalanine ("Phe") monitoring system for Phenylketonuria (PKU) in Q1 2016. PKU is an inherited genetic condition which requires treatment and monitoring from birth with either a special diet or pharmaceutical drugs. EKF has developed a monitoring system which will enable patients to easily test their Phe levels which will lead to increased compliance, thereby helping them to manage their condition more effectively. We are in late stage discussions with a major food manufacturer with a view to licence the PKU system for use by patients alongside their dietary therapies. We believe this to be a more effective way of creating value than aligning ourselves with a pharmaceutical company as our diagnostic may result in less therapeutic intervention and we perceive that it is unlikely that any regulatory authority will make our test mandatory despite the patient benefits.

 

The estimated size of the global PKU market is in excess of €400 million, and we believe that monitoring alone would account for around €5m of this annually. Easy and accessible monitoring of the condition will enhance the management of PKU and is thus viewed as a real benefit to healthcare professionals, dieticians and patients alike.

 

The 2015 goals identified for this business and the progress since December are as follows:

 

 

 

Goals

Progress

·     CE Marking for PointMan™ T790M assay

The project has been progressing satisfactorily, and completion is anticipated in Q4 2015

·     Reimbursement for PrecisionPath

The preparatory work for submission has been completed and submission made. Early indications have been very promising and a final decision is expected imminently

·     Complete the development of PrecisionPath Discovery

Progress has been on target with completion expected in H2

·     Launching the initial tests for the Oncomine programme through Precision Path Discovery

The launch has been completed and the first product sold

·     Launch the Ferrer Incode products into Private Payer and Corporate Wellness markets

Preparatory work has been completed and discussions on launch are at an advanced stage

·     Transfer the manufacture of PointMan™ into Selah

This activity must follow the completion of CE marking and is now scheduled for 2016

·     Achieve ISO 13485 in the Selah facility

Planning for the project has been carried out with completion now expected to be in 2016

·     Progress the Colon cancer programme with Becton Dickinson, DecisionQ and Greenville Health System

Partnership announced

·     Deliver more Pharma partnerships

By their nature these tend to progress slowly. The Diagnostic and Genomic teams are both working hard to progress opportunities

 

Management changes

 

In addition to the appointment of new Directors for each of the business units in the Point-of-Care business, EKF has brought in additional experienced management to handle our R & D project management, and our Quality and Regulatory functions.

 

Financial review

 

Revenue

Revenue for the period was £16.78m (H1 2014: £16.77m), a marginal increase. Excluding the effect of certain tender business in Mexico that occurred in 2014, but has not repeated in 2015, revenue has increased by 22.7%. Further adjusting for the effect of revenue achieved by DiaSpect Medical, Separation Technology Inc., and Selah Genomics in the period before their acquisition by EKF, organic revenue has increased by 10.4%.

 

Gross profit

 

Gross profit is £7.55m (H1 2014: £7.91m). Gross profit as a percentage of revenue is 45% (H1 2014: 47%), largely as a result of the structurally lower margins on the Selah business; margins on the Point-of-Care business were 52%, a marked improvement on last year (H1 2014: 49%), mainly due to the Quo products having been transferred to the more efficient German facility.

 

Administrative expenses

 

Administrative expenses have decreased by 86%; the main cause of the decrease is an exceptional profit made on the write-back of the Selah deferred consideration. The Exceptional items also includes an exceptional bad debt provision in Selah of £0.9m which is associated with the previously reported DME reimbursement issues. Net underlying administrative costs have actually increased, predominantly as a result of the acquisitions in the later part of H1 2014, but also due to added investment in sales resources, the benefit of which should be seen in H2 2015 and beyond. In addition to the research and development costs included in Administrative expenses of £0.13m, a further £2.6m of development expenditure has been capitalised (H1 2014: £1.1m).

 

The charge for depreciation of fixed assets and for the amortisation of intangibles is £3.13m (H1 2014: £2.33m).

 

Operating profit and adjusted earnings before interest tax and depreciation

 

The Group has made an operating profit of £6.33m (H1 2014: loss of £1.87m) for the reasons outlined above. We consider a more meaningful measure of underlying performance to be adjusted EBITDA which for H1 2015 was £0.73m (H1 2014: £2.22m). This excludes the effects of share-based payments of £0.11m (H1 2014: £0.27m) and exceptional gains of £8.84m (H1 2014: exceptional loss of £1.49m).

 

Finance costs

 

Finance costs have increased to £1.24m (H1 2014: £0.60m). The increase is largely a result of the unwinding of discounts on deferred consideration.

 

Tax

 

There is a tax credit of £0.15m (H1 2014: charge of £0.16m). The credit is largely the result of the reduction of the deferred tax liabilities associated with intangible asset amortisation. The effect of the tax warranty claim has been fully defined following negotiations between the Group's German subsidiary, its tax advisers, and the German tax authorities, with no further adjustment being required, and the first payment of the tax assessed has been paid.

 

Balance sheet

 

Property, plant and equipment

 

We have invested £1.18m (H1 2014: £0.90m) in property plant and equipment. The major project is an additional building at the Barleben site in order to increase the capacity and efficiency of instrumentation assembly.

 

Intangible assets

 

The value of intangible fixed assets is £90.68m (31 December 2014: £93.52m). The reduction is mainly as a result of exchange rate movements. An amount of £2.6m has been capitalised, being largely development expenditure for major projects such as PKU, sTNFR, and PointMan.

 

Deferred consideration

The initial Selah purchase agreement was drafted to accommodate a reduction in deferred consideration payments if certain performance targets were not met; the lower than anticipated sales from Selah are now expected to result in the year two earn-out payment of $17.5m not being payable to the vendors of Selah Genomics.  As a result, the remaining provision for deferred consideration relating to Selah has been written back and this benefit is reflected in the H1 figures.

The deferred consideration payable to the vendors of DiaSpect Medical was renegotiated down to £1.4m and this was paid in January 2015.

 

Cash and working capital

 

The unaudited cash position at 30 June 2015 was £2.1m (31 Dec 2014: £8.3m), and the net debt position was £5.0m (31 Dec 2014: net cash £2.1m). Cash flow has been impacted by slow payments from our Mexican distributors who have themselves suffered from slow payments by the Mexican government during their election process. The net debt position is expected to improve in the second half of the year following tender wins and with continuing payments being made by our Mexican debtors. As announced previously, a one off £1.4m cash payment was made in January 2015 as a settlement for the total deferred cash consideration due in relation to the acquisition of DiaSpect Medical AB. No further deferred cash consideration payments are expected to be paid by EKF in H2 2015.

 

Cash used in operations in H1 2015 is £2.09m (H1 2014: £3.32m). Trade debtors at period end remain high mainly as a result of sales to Mexico made during 2014. While certain amounts have been collected during the period, payment of some of these outstanding amounts has continued to be delayed because of slow payments to the relevant distributors by the Mexican Government.

 

Outlook

 

The immediate outlook is dominated by the process of evaluating the number of options in front of the Board:

 

·     An offer for the Point-of-Care business excluding Clinical Chemistry and the Molecular businesses;

·     An offer for the Company as a whole; and

·     Splitting the Point-of-Care and the Clinical Chemistry businesses from the Molecular business under the Chairmanship of Ron Zwanziger and myself respectively.

 

Without doubt the whole process that we have undertaken in recognising the broad wishes of Shareholders for change has impacted our business in terms of management focus, overall cohesiveness and additional costs.

 

We are currently undergoing a process of due diligence from external parties and once we are in a position to communicate with Shareholders we will do so as soon as possible.

 

In the meantime we have a number of key operational goals for the final quarter and beyond:

·     Growing the core underlying Point-of-Care business. The Company expects to see the benefits of revenues from tender orders in H2, including those which were delayed from H1. We will look to update the market with details of our Middle East tender win once we are able to do so. Mexico remains a key market for us and we are confident that if we can resolve the payment issues then we will secure substantially more business significantly beyond our 2014 revenues. A Kenyan tender for haemoglobin devices remains there to be executed but we need to secure satisfactory payment visibility.

·     Progressing sTNFR in a manner which will deliver further evidence of clinical utility, executing our strategy for regulatory submission and progressing further our discussions and collaborations with major pharmaceutical partners.

·     Promoting PrecisionPath and the relationship we have with GHS to demonstrate clinical utility and value. Our biggest single goal remains reimbursement and one in which we continue to strive to achieve and one we remain confident of achieving.

·     The delivery of a CE Marked PointMan product(s) and to secure key strategic partnerships beyond our existing relationships.

·     Deliver real value in the management of PKU with a partnership with a major food manufacturer.

I look forward to updating you on progress in the weeks and months ahead.

 

 

David Evans

Executive Chairman

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

FOR THE 6 MONTHS ENDED 30 JUNE 2015

 

 

Unaudited 6 months ended 30 June 2014

 

 

 

 

 

Unaudited 6 months ended 30 June 2015

 

 

Audited Year ended 31 December 2014

 

Notes

 

£'000

 

£'000

 

£'000

Continuing operations

 

 

 

 

 

 

 

Revenue

3

 

16,781

 

16,766

 

40,062

Cost of sales

 

 

(9,229)

 

(8,854)

 

(20,113)

Gross profit

 

 

7,552

 

7,912

 

19,949

Administrative expenses

 

 

(1,350)

 

(9,952)

 

(22,793)

Other income

 

 

129

 

168

 

371

Operating profit/(loss)

 

 

6,331

 

(1,872)

 

(2,473)

Depreciation and amortisation

 

 

(3,131)

 

(2,326)

 

(4,950)

Share based payments

 

 

(109)

 

(273)

 

(512)

Exceptional items

4

 

8,843

 

(1,489)

 

(3,268)

EBITDA before exceptional items and share based payments

 

 

728

 

2,216

 

6,257

Finance income

 

 

1

 

4

 

18

Finance costs

 

 

(1,242)

 

(600)

 

(1,573)

Profit/(loss) before income tax

 

 

5,090

 

(2,468)

 

(4,028)

Income tax credit/(charge)

5

 

147

 

(159)

 

(1,440)

Profit/(loss) for the period

 

 

5,237

 

(2,627)

 

(5,468)

 

 

 

 

 

 

 

 

Profit/(loss) attributable to:

 

 

 

 

 

 

 

Owners of the parent

 

 

5,165

 

(2,718)

 

(5,689)

Non-controlling interest

 

 

72

 

91

 

221

 

 

 

5,237

 

(2,627)

 

(5,468)

 

Profit/(loss) per ordinary share attributable to the owners of the parent during the period

6

 

 

 

 

 

 

 

 

 

Pence

 

Pence

 

Pence

Basic

 

 

 

 

 

 

 

From continuing operations

 

 

1.22

 

(0.81)

 

(1.50)

Diluted

 

 

 

 

 

 

 

From continuing operations

 

 

1.20

 

(0.81)

 

(1.50)

                 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

FOR THE 6 MONTHS ENDED 30 JUNE 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

6 months ended 30 June 2015

 

6 months ended 30 June 2014

 

Year ended 31 December 2014

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Profit/(loss) for the period

 

 

5,237

 

(2,627)

 

(5,468)

Other comprehensive income:

 

 

 

 

 

 

 

Movement on pension scheme

 

 

-

 

-

 

48

Currency translation differences

 

 

(2,908)

 

(2,658)

 

546

Other comprehensive income for the period

 

 

(2,908)

 

(2,658)

 

594

Total comprehensive profit/(loss) for the period

 

 

2,329

 

(5,285)

 

(4,874)

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Owners of the parent

 

 

2,238

 

(5,344)

 

(4,890)

Non-controlling interests

 

 

91

 

59

 

16

 

 

 

2,329

 

(5,285)

 

(4,874)

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

 

 

AS AT 30 JUNE 2015

 

 

 

 

 

 

 

 

 

Unaudited as at 30 June 2015

 

Unaudited as at 30 June 2014

 

Audited as at 31 December 2014

 

 

Notes

£'000

 

£'000

 

£'000

 

Assets

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

10,515

 

10,137

 

10,568

 

Intangibles

7

90,679

 

96,258

 

93,522

 

Investments

 

1,152

 

1,152

 

1,152

 

Deferred tax assets

 

340

 

862

 

238

 

Total non-current assets

 

102,686

 

108,409

 

105,480

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Inventories

 

7,444

 

6,414

 

5,793

 

Trade and other receivables

 

13,412

 

9,915

 

16,115

 

Deferred tax assets

 

45

 

44

 

45

 

Cash and cash equivalents

 

2,083

 

11,122

 

8,346

 

Total current assets

 

22,984

 

27,495

 

30,299

 

Total assets

 

125,670

 

135,904

 

135,779

 

 

 

 

 

 

 

 

 

Equity attributable to owners

 

 

 

 

 

 

 

Ordinary shares

 

4,221

 

4,221

 

4,221

 

Share premium account

 

91,276

 

  91,276

 

91,276

 

Other reserve

 

41

 

  41

 

41

 

Foreign currency reserves

 

(3,020)

 

  (3,240)

 

26

 

Retained earnings

 

(3,148)

 

  (5,968)

 

(8,541)

 

 

 

89,370

 

86,330

 

87,023

 

Non-controlling interest

 

319

 

397

 

353

 

Total equity

 

89,689

 

86,727

 

87,376

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Borrowings

 

2,483

 

2,235

 

2,492

 

Deferred consideration

 

4,224

 

16,803

 

9,536

 

Deferred tax liability

 

12,347

 

15,849

 

13,258

 

Retirement benefit obligation

 

-

 

115

 

-

 

Total non-current liabilities

 

19,054

 

35,002

 

25,286

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Trade and other payables

 

6,868

 

6,057

 

7,943

 

Deferred consideration

 

3,374

 

2,829

 

8,493

 

Current income tax liabilities

 

1,423

 

1,535

 

2,171

 

Deferred tax liabilities

 

478

 

66

 

756

 

Borrowings

 

4,784

 

3,688

 

3,754

 

Total current liabilities

 

16,927

 

14,175

 

23,117

 

Total liabilities

 

35,981

 

49,177

 

48,403

 

Total equity and liabilities

 

125,670

 

135,904

 

135,779

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

 

FOR THE 6 MONTHS ENDED 30 JUNE 2015

 

 

 

 

 

 

Unaudited 6 months ended 30 June 2015

 

Unaudited 6 months ended 30 June 2014

 

 Audited Year to 31 December 2014

 

 

£'000

 

£'000

 

£'000

 

Cash flow from operating activities

 

 

 

 

 

 

Profit/(loss) before income tax

5,090

 

(2,468)

 

(4,028)

 

Adjustments for

 

 

 

 

 

 

- Restructuring of UK operations

-

 

680

 

-

 

- Warranty claim in relation to EKF-diagnostic

(56)

 

-

 

281

 

- Depreciation

784

 

624

 

1,368

 

- Amortisation and impairment charges

2,347

 

1,702

 

4,811

 

- Release of deferred consideration

(9,997)

 

-

 

(79)

 

- Exceptional debtor provision

897

 

-

 

-

 

- Fair value adjustment

31

 

-

 

(476)

 

- Loss/(profit) on disposal of assets

2

 

-

 

(6)

 

- Share-based payments

109

 

273

 

512

 

- Net finance costs

1,210

 

596

 

2,031

 

Changes in working capital

 

 

 

 

 

 

- Inventories

(1,797)

 

119

 

728

 

- Trade and other receivables

1,543

 

(1,424)

 

(8,467)

 

- Trade and other payables

(940)

 

(2,028)

 

63

 

Cash used in operations

(777)

 

(1,926)

 

(3,262)

 

Interest paid

(183)

 

(136)

 

(241)

 

Income tax paid

(1,130)

 

(1,255)

 

(1,241)

 

Net cash used in by operating activities

(2,090)

 

(3,317)

 

(4,744)

 


Cash flow from investing activities

 

 

 

 

 

 

Acquisition of investments

-

 

(902)

 

(902)

 

Purchase of property, plant and equipment (PPE)

(1,181)

 

(898)

 

(1,038)

 

Purchase of intangibles

(2,628)

 

(702)

 

(1,595)

 

Proceeds from sale of  PPE

44

 

290

 

22

 

Acquisition of subsidiaries (net of cash acquired)

-

 

(12,379)

 

(12,379)

 

Interest received

1

 

4

 

18

 

Net cash used in investing activities

(3,764)

 

(14,587)

 

(15,874)

 


Cash flow from financing activities

 

 

 

 

 

 

Proceeds from issuance of ordinary shares

-

 

25,007

 

25,007

 

New borrowings

1,829

 

1,895

 

3,764

 

Repayment of borrowings

(730)

 

-

 

(1,855)

 

Dividends paid to non-controlling interests

(125)

 

(170)

 

(171)

 

Repayment of deferred consideration

(1,425)

 

(355)

 

(355)

 

Net cash (used in)/generated by financing activities

(451)

 

26,377

 

26,390

 

Net (decrease)/increase in cash and cash equivalents

(6,305)

 

8,473

 

5,772

 

Cash and cash equivalents at beginning of period

8,346

 

2,551

 

2,551

 

Exchange gains on cash and cash equivalents

42

 

98

 

23

 

Cash and cash equivalents at end of period

2,083

 

11,122

 

8,346

 

 

 

 

STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

FOR THE 6 MONTHS ENDED 30 JUNE 2015

 

 

 

 

 

 

 

Share Capital

Share Premium

Other Reserve

Foreign Currency Reserve

Retained earnings

Total

Non-controlling interest

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

At 1 January 2014

2,727

41,783

41

(725)

(3,412)

40,414

508

40,922

Comprehensive income

 

 

 

 

 

 

 

 

(Loss)/profit for the period

-

-

-

-

(2,718)

(2,718)

91

(2,627)

Other comprehensive income

 

 

 

 

 

 

 

 

Currency translation differences

-

-

-

(2,515)

(111)

(2,626)

(32)

(2,658)

Total comprehensive income

-

-

-

(2,515)

(2,829)

(5,344)

59

(5,285)

Transactions with owners

 

 

 

 

 

 

 

 

Proceeds from shares issued

1,494

49,493

-

-

-

50,987

-

50,987

Dividends to non-controlling interest

-

-

-

-

-

-

(170)

(170)

Share based payment

-

-

-

-

273

273

-

273

Total contributions by and distributions to owners

1,494

49,493

-

-

273

51,260

(170)

51,090

At 30 June 2014

4,221

91,276

41

(3,240)

(5,968)

86,330

397

86,727

Comprehensive income

 

 

 

 

 

 

 

 

(Loss)/profit for the period

-

-

-

-

(2,971)

(2,971)

130

(2,841)

Other comprehensive income

 

 

 

 

 

 

 

 

Actuarial gain on pension

-

-

-

-

48

48

-

48

Currency translation differences

-

-

-

3,266

111

3,377

(173)

3,204

Total comprehensive income

-

-

-

3,266

(2,812)

454

(43)

411

Transactions with owners

 

 

 

 

 

 

 

 

Dividends to non-controlling interest

-

-

-

-

-

-

(1)

(1)

Share based payment

-

-

-

-

239

239

-

239

Total contributions by and distributions to owners

-

-

-

-

239

239

(1)

238

At 31 December 2014

4,221

91,276

41

26

(8,541)

87,023

353

87,376

Comprehensive income

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

5,165

5,165

72

5,237

Other comprehensive income

 

 

 

 

 

 

 

 

Currency translation differences

-

-

-

(3,046)

119

(2,927)

19

(2,908)

Total comprehensive income

-

-

-

(3,046)

5,284

2,238

91

2,329

Transactions with owners

 

 

 

 

 

 

 

 

Dividends to non-controlling interest

-

-

-

-

-

-

(125)

(125)

Share based payment

-

-

-

-

109

109

-

109

Total contributions by and distributions to owners

-

-

-

-

109

109

(125)

(16)

At 30 June 2015

4,221

91,276

41

(3,020)

(3,148)

89,370

319

89,689

                                       

 

 

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 continues to be that of a business focused within the In-Vitro Diagnostics devices ("IVD") market place.

 

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 recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs). 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 2014 and which will form the basis of the 2015 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.

 

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 2014 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 2015 and 30 June 2014 is unaudited and the twelve months to 31 December 2014 is audited.

 

These interim accounts have not been prepared in accordance with IAS 34.

 

2.               Significant accounting policies

 

Intangible Assets

 

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of the acquisition. Goodwill on acquisitions of subsidiaries is included in 'intangible assets'. Goodwill has an infinite useful life and is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

 

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segment.

 

(b) Trademarks, trade names and licences

Separately acquired trademarks and licences are shown at historical cost. Trademarks and licences acquired in a business combination are recognised at fair value at the acquisition date. Trademarks and licences have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trademarks and licences over their estimated useful lives of between 8 and 12 years and is charged to administrative expenses in the income statement. 

 

(c) Customer relationships

Contractual customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The contractual customer relationships have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected life of the customer relationship of between 6 and 15 years and is charged to administrative expenses in the income statement.

 

(d) Trade secrets

Trade secrets, including technical know-how, operating procedures, methods and processes, acquired in a business combination are recognised at fair value at the acquisition date. Trade secrets have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trade secrets over their estimated useful lives of between 6 and 15 years and is charged to administrative expenses in the income statement.

 

(e) Development costs

Development costs acquired in a business combination are recognised at fair value at the acquisition date. Development costs have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over their estimated useful lives of 15 years and is charged to administrative expenses in the income statement.

 

Expenditure incurred on the development of new or substantially improved products or processes is capitalised, provided that the related project satisfies the criteria for capitalisation, including the project's technical feasibility and likely commercial benefit. All other research and development costs are expensed as incurred.

 

Development costs are amortised over the estimated useful life of the products with which they are associated. Amortisation commences when a new product is in commercial production. The amortisation is charged to administrative expenses in the income statement. The estimated remaining useful lives of development costs are reviewed at least on an annual basis.

 

The carrying value of capitalised development costs is reviewed for potential impairment at least annually and if a product becomes unviable and an impairment is identified the deferred development costs are immediately charged to the income statement.

 

(f) Non-compete agreements

Non-compete agreements arising from a business combination are recognised at fair value at the acquisition date. Non-compete agreements have a finite life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of non-compete agreements over their estimated useful lives of three years and is charged to administrative expenses in the income statement.

 

Inventories

Inventories and work in progress are stated at the lower of cost and net realisable value. Cost is calculated on a first in and first out basis and includes raw materials, direct labour, other direct costs and attributable production overheads, where appropriate. Net realisable value represents the estimated selling price less all estimated costs of completion and applicable selling costs. Where necessary, provision is made for slow-moving and obsolete inventory. Inventory on consignment and their related obligations are recognised in current assets and payables respectively.

 

Provisions

Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably measured.

 

Employee benefits

Share-based compensation

The Group operates a number of equity-settled, share-based compensation plans, under which the Group receives services from employees as consideration for equity instruments of the Group. Equity-settled share-based payments are measured at fair value at the date of grant and are expensed over the vesting period based on the number of instruments that are expected to vest. For plans where vesting conditions are based on share price targets, the fair value at the date of grant reflects these conditions. Where applicable the Group recognises the impact of revisions to original estimates in the income statement, with a corresponding adjustment to equity for equity-settled schemes. Fair values are measured using appropriate valuation models, taking into account the terms and conditions of the awards.

 

When the share-based payment awards are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

 

National insurance on share options

To the extent that the share price at the balance sheet date is greater than the exercise price on options granted under unapproved share-based payment compensation schemes, provision for any National Insurance Contributions has been based on the prevailing rate of National Insurance. The provision is accrued over the performance period attaching to the award.

 

Revenue recognition

(a) Sale of goods

Revenue for the sale of medical diagnostic instruments and reagents is measured at the fair value of the consideration received or receivable and represents the invoiced value for the sale of the goods and services net of sales taxes, rebates and discounts. Revenue from the sale of goods is recognised when a Group Company has delivered products to the customer, the customer has accepted delivery of the products and collectability of the related receivables is reasonably assured.

 

(b)Sale of services

Revenue for the sale of molecular diagnostic testing services is recognised when the test has been completed and the results returned to the patient. Billing is carried out by the Group directly or through third party billing agencies. Sales commissions to third parties are recognised at the same time as revenue is recognised and accrued until due for payment.

 

(c) Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

 

(d) Royalty and licence income

Royalty and licence income is recognised on an accruals basis in accordance with the substance of the relevant agreements.

 

Exceptional items

These are items of an unusual or non-recurring nature incurred by the Group and include one off items relating to business combinations including adjustments to deferred consideration, restructuring costs, and exceptional bad debt provisions.

 

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 products and the provision of molecular diagnostic products and services. This activity takes place across various countries, US, Germany, Poland, Russia, United Kingdom and Ireland, 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 given the recent acquisitions, all segments should be maintained and reported, given potential future growth of the segments.

 

The reportable segments derive their revenue primarily from the manufacture and sale of medical diagnostic equipment.  Other services include the servicing and distribution of other Company products under separate distribution agreements and the supply of molecular tests.

 

Currently the key operating performance measures used by the CODM are Revenue and adjusted EBITDA.

 

The CODM now receives revenue data by business segment. Adjusted EBITDA, assets, liabilities and cash flows are not provided.

 

 

 

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

 

Period ended 30 June 2015 unaudited

 

 

Germany

UK

USA

Ireland

Poland

Russia

Other

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Income statement

 

 

 

 

 

 

 

 

Revenue

7,245

5

9,979

51

491

1,008

1,073

19,852

Inter segment

(2,844)

(2)

(8)

-

(11)

-

(206)

(3,071)

External revenue

4,401

3

9,971

51

480

1,008

867

16,781

Adjusted EBITDA

1,557

(878)

417

(250)

227

234

(579)

728

Share based payment

-

-

-

-

-

-

(109)

(109)

Exceptional items

(18)

-

(897)

(105)

-

-

9,863

8,843

EBITDA

1,539

(878)

(480)

(355)

227

234

9,175

9,462

Depreciation

(264)

(38)

(294)

(1)

(16)

(10)

(161)

(784)

Amortisation

(503)

(321)

(1,110)

(14)

(49)

(13)

(337)

(2,347)

Operating profit/(loss)

772

(1,237)

(1,884)

(370)

162

211

8,677

6,331

Net finance costs

 (49)

 (423)

 (78)

-

-

-

 (691)

 (1,241)

Income tax

 (269)

46

216

1

 (15)

 (43)

211

147

Profit/(loss) for the period

454

 (1,614)

 (1,746)

 (369)

147

168

8,197

5,237

Segment assets

 

 

 

 

 

 

 

 

Operating assets

25,149

20,218

90,577

1,908

878

594

19,522

158,846

Inter segment assets

(2,416)

(4,701)

-

-

-

-

(28,142)

(35,259)

External operating assets

22,733

15,517

90,577

1,908

878

594

(8,620)

123,587

Cash and cash equivalents

433

66

505

6

101

495

477

2,083

Total assets

23,166

15,583

91,082

1,914

979

1,089

(8,143)

125,670

Segment liabilities

 

 

 

 

 

 

 

 

Operating liabilities

11,897

11,874

27,054

4,163

(105)

125

15,069

70,077

Inter segment liabilities

(9,395)

(7,246)

(21,052)

(3,809)

139

-

-

(41,363)

External operating liabilities

2,502

4,628

6,002

354

34

125

15,069

28,714

Borrowings

559

178

2,066

-

-

-

4,464

7,267

Total liabilities

3,061

4,806

8,068

354

34

125

19,533

35,981

Other segmental information

 

 

 

 

 

 

 

 

Non-current assets - PPE

3,941

115

4,546

9

140

70

1,694

10,515

Non-current assets - Intangibles

11,492

11,039

54,038

1,276

392

169

12,273

90,679

 

 

 

 

 

 

 

 

 

 

 

Year ended December 2014 audited

 

Germany

UK

USA

Ireland

Poland

Russia

Other

Total

 

 

 

 

 

 

 

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Income statement

 

 

 

 

 

 

 

 

Revenue

15,520

2,539

24,499

373

1,770

3,162

1,738

49,601

Inter segment

 (7,297)

 (1,848)

 (29)

  -

 (22)

   -

 (343)

 (9,539)

External revenue

 8,223

 691

 24,470

  373

 1,748

 3,162

  1,395

  40,062

Adjusted EBITDA*

4,460

4,746

4,579

 (42)

1,079

717

 (9,282)

6,257

Exceptional items

 (481)

 (663)

-

 (170)

-

   -

 (792)

 (2,106)

Share based payment

  -

-

-

-

   -

-

 (512)

 (512)

EBITDA

3,979

4,083

4,579

(212)

1,079

717

(10,586)

3,639

Depreciation

         (609)

(117)

 (458)

     (11)

      (35)

(23)

(115)

(1,368)

Exceptional impairment

-

-

-

(1,162)

-

-

-

(1,162)

Amortisation

 (603)

 (624)

 (1,465)

(229)

    (108)

          (24)

       (529)

 (3,582)

Operating profit/(loss)

2,767

3,342

2,656

(1,614)

936

670

(11,230)

(2,473)

Net finance costs

(21)

(694)

(231)

-

5

-

(614)

(1,555)

Income tax

(58)

(714)

(687)

141

(189)

(131)

198

(1,440)

Profit/(loss) for the year

2,688

1,934

 

1,738

(1,473)

752

539

(11,646)

(5,468)

Segment assets

 

 

 

 

 

 

 

 

Operating assets

26,655

21,147

92,578

1,667

956

623

20,086

163,712

Inter-segment assets

(1,703)

(5,469)

-

-

-

-

(29,107)

(36,279)

External operating assets

24,952

 15,678

92,578

 1,667

 956

 623

(9,021)

 127,433

Cash and cash equivalents

 1,586

 378

 240

 86

 1,037

 553

 4,466

 8,346

Total assets

 26,538

 16,056

92,818

 1,753

 1,993

 1,176

 (4,555)

 135,779

Segment liabilities

 

 

 

 

 

 

 

 

Operating liabilities

 15,164

 11,093

 24,845

 655

 157

 119

26,887

78,920

Inter-segment liabilities

 (10,665)

 (7,165)

 (18,985)

 -

 52

 -

 -

 (36,763)

External operating liabilities

 4,499

3,928

 5,860

 655

 209

 119

26,887

42,157

Borrowings

 441

174

 2,591

 -

 -

 -

 3,040

 6,246

Total liabilities

 4,940

 4,102

 8,451

 655

 209

 119

29,927

 48,403

Other segmental information

 

 

 

 

 

 

 

 

Non-current assets - PPE

 3,685

 135

 4,753

 14

 167

 59

 1,755

 10,568

Non-current assets - Intangibles

 13,130

 11,141

 55,502

 759

 478

 173

 12,339

 93,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period ended 30 June 2014 unaudited

 

Germany

UK

USA

Ireland

Poland

Russia

Other

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Income statement

 

 

 

 

 

 

 

 

Revenue

6,541

2,538

9,813

189

712

1,493

(4,520)

16,766

Inter segment

(2,662)

(1,847)

(7)

-

(4)

-

4,520

-

External revenue

3,879

691

9,806

189

708

1,493

-

16,766

Adjusted EBITDA

1,793

133

1,775

 (385)

338

315

 (1,753)

2,216

Share based payment

  -

-

  -

  -

  -

  -

(273)

(273)

Exceptional items

(81)

(677)

  -

  -

  -

  -

(731)

(1,489)

EBITDA

1,712

 (544)

1,775

 (385)

338

315

 (2,757)

454

Depreciation

(313)

(68)

(172)

(9)

(18)

(11)

(33)

(624)

Amortisation

(508)

(288)

(721)

(109)

(57)

(19)

-

(1,702)

Operating profit/(loss)

891

(900)

882

(503)

263

285

(2,790)

(1,872)

Net finance costs

(26)

(288)

(134)

  -

  -

  -

(148)

(596)

Income tax

(59)

183

272

118

(34)

(49)

(590)

(159)

Profit/(loss) for the period

806

(1,005)

1,020

(385)

229

236

(3,528)

(2,627)

Segment assets

 

 

 

 

 

 

 

 

Operating assets

22,932

18,645

39,667

2,331

1,055

1,014

67,975

153,619

Inter segment assets

(559)

(2,049)

  -

  -

  -

  -

(26,229)

(28,837)

External operating assets

22,373

16,596

39,667

2,331

1,055

1,014

41,746

124,782

Cash and cash equivalents

687

105

 1,895

78

407

455

7,495

11,122

Total assets

23,060

16,701

41,562

2,409

1,462

1,469

49,241

135,904

Segment liabilities

 

 

 

 

 

 

 

 

Operating liabilities

9,325

11,298

19,964

461

62

185

30,535

71,830

Inter segment liabilities

(5,556)

(7,217)

(15,858)

-

55

  -

-

(28,576)

External operating liabilities

3,769

4,081

4,106

461

117

185

30,535

43,254

Borrowings

650

-

2,140

-

-

-

3,133

5,923

Total liabilities

4,419

4,081

6,246

461

117

185

33,668

49,177

Other segmental information

 

 

 

 

 

 

 

 

Non current assets - PPE

4,048

158

4,261

14

179

88

1,389

10,137

Non current assets - Intangibles

8,860

11,079

11,041

1,702

560

291

62,725

96,258

 

 

 

 

 

 

 

 

 

 

*- Adjusted EBITDA excludes exceptional items and share based payments

 

'Other' primarily relates to the holding company and head office costs, and to the operations of DiaSpect which is headquartered in Sweden.

 

 

 

 

 

Disclosure of Group revenues by segment

 

 

Unaudited

6 months

ended 30

June 2015

 

Unaudited

6 months

ended 30

June 2014

 

Unaudited

Year ended

31 December 2014

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

Point-of-Care

 

10,002

 

11,863

 

27,523

Central Laboratory

 

4,856

 

3,647

 

9,561

Molecular

 

1,923

 

1,256

 

2,978

 

 

16,781

 

16,766

 

40,062

 

Disclosure of Group revenues by geographic location

 

 

Unaudited

6 months

ended 30

June 2015

 

Unaudited

6 months

ended 30

June 2014

 

Audited

Year ended

31 December 2014

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

Americas

 

 

 

 

 

 

United States of America

 

7,397

 

5,403

 

12,711

Mexico

 

400

 

2,603

 

7,560

Rest of Americas

 

1,151

 

828

 

2,440

Europe, Middles East and Africa (EMEA)

 

 

 

 

 

 

Germany

 

2,357

 

2,294

 

4,848

United Kingdom

 

113

 

140

 

287

Rest of Europe

 

1,394

 

1,518

 

2,791

Russia

 

1,014

 

1,504

 

3,174

Middle East

 

295

 

362

 

687

Africa

 

543

 

662

 

1,315

Rest of World

 

 

 

 

 

 

China

 

900

 

615

 

2,304

Rest of Asia

 

1,176

 

814

 

1,892

New Zealand/Australia

 

41

 

23

 

53

 

 

16,781

 

16,766

 

40,062

 

 

 

 

4.              Exceptional items

 

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

 

 

 

 

Unaudited 6 months ended 30 June 2015

 

Unaudited 6 months ended 30 June 2014

 

Audited year ended 31 December 2014

 

Note

£000

 

£000

 

£000

 

 

 

 

 

 

 

Exceptional items includes:

 

 

 

 

 

 

- Transaction costs relating to business combinations

a

(191)

 

(809)

 

(809)

- Business reorganisation costs

b

(122)

 

(759)

 

(1,095)

- Warranty claim

c

56

 

-

 

(281)

- Exceptional bad debt provision

d

(897)

 

-

 

-

- Impairment charges

e

-

 

-

 

(1,162)

- Release of deferred consideration provisions

f

9,997

 

79

 

79

Exceptional items - continuing

 

8,843

 

(1,489)

 

(3,268)

 

 

(a)             Run-on costs in 2015 relating to acquisitions in previous years

(b)             Costs associated with the transfer of production of Quo-Test and Quo-Lab from the UK to Germany and with the closure of the Group's Dublin facility

(c)              Warranty claim in relation to the acquisition of EKF-diagnostic GmbH

(d)             Bad debt provisions associated with DME panel reimbursement in Selah Genomics

(e)             Impairment of goodwill associated with EKF Diagnostics Limited, Ireland.

(f)              Release of deferred consideration provision associated with Selah Genomics

 

5.             Income tax (credit)/charge

 

 

 

Unaudited

6 months

ended 30

June 2015

 

Unaudited

6 months

ended 30

June 2014

 

Audited

Year ended

31 December 2014

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

Current tax

 

 

 

 

 

 

Current tax on profit/loss for the period

 

383

 

651

 

1,677

Adjustments for prior periods

 

-

 

(194)

 

Total current tax

 

383

 

457

 

 

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

 

Origination and reversal of temporary differences

 

(530)

 

(308)

 

26

Adjustment arising in previous period

 

-

 

10

 

-

 

 

(530)

 

(298)

 

26

Income tax charge

 

(147)

 

159

 

1,440

 

 

 

 

 

6.             Profit/(loss) per share

 

Basic Profit/(loss)per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has two categories of dilutive potential ordinary share: equity based long term incentive plans, and share options, as well as deferred consideration payable in shares.

 

 

 

 

Unaudited

 

Unaudited

 

Audited year ended 31 December 2014

 

6 months ended 30 June 2015

6 months ended 30 June 2014

 

 

 

£'000

 

£'000

 

£'000

Profit/(loss) attributable to owners of the parent

 

 

5,165

 

(2,718)

 

(5,689)

Weighted average number of ordinary shares in issue

 

 

422,057,074

 

336,507,224

 

379,633,724

Effect of dilutive potential ordinary shares

 

 

9,869,346

 

15,558,727

 

13,877,832

Weighted average number of ordinary shares - diluted

 

 

431,926,420

 

352,065,951

 

393,511,556

 

 

 

 

 

 

 

 

 

 

 

Pence

 

Pence

 

Pence

Basic

 

 

 

 

 

 

 

Profit/(loss) per share

 

 

1.22

 

(0.81)

 

(1.50)

 

 

 

 

 

 

 

 

 

 

 

Pence

 

Pence

 

Pence

Diluted

 

 

 

 

 

 

 

Profit/(loss) per share

 

 

1.20

 

(0.81)

 

(1.50)

 

The potential shares are not dilutive in 2014 as the Group has made a loss per share.

 

 

 

7. Intangible Fixed Assets

Group

 

 

 

Goodwill
£'000

 

Trademarks trade names & licences

£'000

Non-compete
£'000

Customer relationships

£'000

 

Trade secrets

£'000

 

Develop-ment costs

£'000

 

 

Total

£'000

Cost

 

 

 

 

 

 

 

At 1 January 2014

14,641

1,596

70

8,479

13,652

2,976

41,414

Additions

29,822

2,330

-

20,456

11,932

1,059

65,559

Exchange differences

(1,110)

(111)

-

(793)

(572)

(30)

(2,616)

At 30 June 2014

43,353

3,815

70

28,142

25,012

4,005

104,397

Additions

1,077

5

-

-

5,053

838

6,973

Reassessment

-

-

-

(10,784)

-

-

(10,784)

Exchange differences

1,990

187

-

1,160

832

(14)

4,155

At 31 December 2014

46,420

4,007

70

18,518

30,897

4,829

104,741

Additions

-

28

-

-

-

2,600

2,628

Exchange differences

(1,382)

(131)

-

(523)

(1,445)

(230)

(3,711)

At 30 June 2015

45,038

3,904

70

17,995

29,452

7,199

103,658

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

At 1 January 2014

750

412

18

2,094

3,120

295

6,689

Exchange differences

(29)

10

-

(73)

(155)

(5)

(252)

Charge for the period

-

96

12

690

795

109

1,702

At 30 June 2014

721

518

30

2,711

3,760

399

8,139

Exchange differences

(21)

(15)

-

55

19

-

38

Impairment charge

254

-

-

-

287

621

1,162

Charge for the period

-

199

11

578

911

181

1,880

At 31 December 2014

954

702

41

3,344

4,977

1,201

11,219

Exchange differences

(85)

(29)

-

(94)

(305)

(74)

(587)

Charge for the period

-

192

12

756

1,255

132

2,347

At 30 June 2015

869

865

53

4,006

5,927

1,259

12,979

 

 

Net book value

 

 

 

 

 

 

 

30 June 2015

44,169

3,039

17

13,989

23,525

5,940

90,679

31 December 2014

45,466

3,305

29

15,174

25,920

3,628

93,522

30 June 2014

42,632

3,297

40

25,431

21,252

3,606

96,258

 

The intangible asset relating to customer relationships was reassessed in H2 2014 following a reassessment of the amount of deferred consideration payable to the vendors of Selah Genomics.
 

8.            Dividends

 

No dividends to shareholders of the holding company were provided or paid during the six months.

 

9.            Press

                              

A copy of this announcement is available from the Company's website, being 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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