RNS Number : 2984Q
EKF Diagnostics Holdings PLC
11 September 2017
 

                                                                                                                 

EKF Diagnostics Holdings plc

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

 

                                                                                        Half Yearly Report

 

EKF Diagnostics Holdings plc (AIM: EKF), the AIM listed point-of-care business, announces its unaudited interim results for the six months ended 30 June 2017.

 

Financial Highlights

 

·     Revenue up 22.8% to £21.50m (H1 2016: £17.51m)

·     Gross profit up 40.6% to £11.84m (H1 2016: £8.42m)

·     Adjusted EBITDA* up 126.7% to £4.58m (H1 2016: £2.02m)

·     Cash generated from operations of £5.07m (H1 2016: £1.35m).

·     Net cash £4.44m (30 June 2016: net debt of £4.28m), (31 December 2016: net cash of £2.16m)

 

* Before exceptional items and share based payments

 

Operational Highlights

·     Streamlined the Group successfully reducing the cost base

·     Poland manufacturing facility closed and business transferred to the factory in Barleben, Germany

•     The company has 7 sites in total, from a peak of 12

·     Improved performance across every business area due to organic growth

·     Sold 7,496 analysers and c.34m tests during the first half of 2017

·     Investment in enzyme manufacturing technology at EKF Life Sciences, USA.

 

Commenting on outlook, Christopher Mills, Non-Executive Chairman of EKF, said:

"By following the business plan we set out of simplifying and streamlining the company, the Board is pleased to report continued good progress in the first half of 2017, illustrated by improved performance across every business area. It remains the Board's intention to tightly control costs and therefore the Board is comfortable that current trading is in line with management expectations for 2017." 

 

Enquiries:

 

www.ekfdiagnostics.com

EKF Diagnostics Holdings plc 

Tel: +44 (0) 29 2071 0570

Julian Baines, CEO 

Mob: +44 (0) 7788 420 859

Richard Evans, COO

Mob: +49 (0) 1603 519 054

 

 

N+1 Singer

Tel: 020 7496 3000

Alex Price/Alex Laughton-Scott

 

 

 

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

     

 

 

 

BUSINESS REVIEW

 

The Board of EKF Diagnostics Holdings plc (EKF) is pleased to report continued good progress in the first half of 2017, with revenue and adjusted earnings before interest, tax, depreciation, and amortisation (adjusted EBITDA) both ahead of our original expectations at the start of the year.

 

Strategy and operations

 

Strategy

 

It remains our intention to keep the Group's activities focussed on delivering growth from our Point-of-Care and Central Laboratory businesses. We continue to tightly control costs and to work towards simplifying the business, however, we will be investing in our enzyme facility in Elkhart, Indiana.

 

Restructuring update

 

In June 2017 our facility in Poland was closed and the business transferred to our main factory in Barleben, Germany. As a result there were a small number of redundancies and we would like to thank those affected and wish them well for the future. We are now operating from seven sites, down from a peak of twelve.

 

Capital reduction and share buyback

 

On 20 March we announced that the Board was evaluating plans under which they would split the Company into two separate companies based on the business divisions, namely Point of Care and Lab Diagnostics. However, following extensive discussions with our tax advisers, it now appears to be highly unlikely that any business separation can be carried out. The board will revisit a possible demerger should the tax position within the US change.

 

The Board remain committed to returning shareholder value through a limited share buyback plan of up to 15% of the current share capital. On 27 July shareholders approved a capital reduction whereby, subject to court approval, EKF's share premium account will be cancelled and the amount credited to a distributable reserve. The court granted approval on 6 September 2017. The EKF Board will determine from time to time whether it is appropriate to use this authority and further announcements will be made at the appropriate time.

 

Share options

 

On 26 June the Group announced the cancellation, at the election of holders, of 21,614,766 share options held by directors and senior management, for a total payment of £1.51m. The purpose of this cancellation was to simplify the Company's capital structure in addition to the proposed share buyback and to reduce future dilution to shareholders.

 

Following the cancellation, share options remain over a total of 1,950,000 Ordinary Shares. These are exercisable at various prices of between 20p and 37.625p and expire between 7 July 2023 and 6 April 2025.

Operations

 

The period has seen improved performance across every business area.

 

Point-of-care

 

i.    Hematology

Hematology sales have increased by 29% with Hemo Control (known as HemoPoint H2 in the Americas) up by 35%. Transition of sales activities in the USA from Alere back in-house was completed in early June 2016. The DiaSpect Tm product has also seen strong growth, up by 20%, - both through our own sales and through our blood bank market partner Fresenius. Our strategy here is to increase market share in India through the Diaspect Tm product. Sales of HemataStat II are up 48%.

 

 

ii.  Diabetes

The Diabetes product lines have seen sales increase by 22%, with strong performances coming from the Quo-Test and Quo-Lab products which combined are up 34%, and Biosen products (up 16%) as we focus on appointing new Biosen distributors in China. We have continued to supply Quo-Test instruments and consumables to Saudi Arabia under the contract won in 2015. Sales in STAT-Site M BHB are up 52%.

 

Central Laboratory

In Central Laboratory, we have continued to see strong performance from sales of Beta-Hydroxybutyrate 'Liquicolor, reagent which are up 11%, with total central laboratory sales up 15%. We have seen considerable interest in the Altair 240 clinical chemistry analyser launched last year, and chemistry sales have increased by 16%.

 

Regulatory Update

 

We have long recognised that a key driver for future growth is gaining additional registrations for our products in our major markets. As well as US FDA registrations we are working on, amongst others, new registrations for: multiple products in China, where Quo-Test is currently in Lab testing phase; Brazil for Hemo Control, Diaspect Tm, Quo-Test and Quo-Lab; and India where registration of Diaspect Tm is anticipated in Q1 2018. At the same time in Europe a new regulatory regime IVDR (In Vitro Diagnostics Regulations) has been introduced which significantly increases the regulatory burden. As a result we are investing in additional regulatory support for the business in both Europe and the USA.

 

Financial review

 

Revenue

 

Revenue for the period was £21.50m (H1 2016: £17.51m), an increase of 22.8%.

 

 

 

Unaudited

6 months ended 30 June 2017

£'000

 

Unaudited

6 months ended 30 June 2016

£'000

 

+/- %

 

 

 

 

 

 

Hematology

6,664

 

5,182

 

+29%

Diabetes

5,899

 

4,816

 

+22%

Other Point of Care

1,411

 

1,390

 

+2%

Total Point of Care

13,974

 

11,388

 

+23%

 

 

 

 

 

 

Total Central Laboratory

6,579

 

5,699

 

+15%

 

 

 

 

 

 

Other

945

 

420

 

+125%

 

 

 

 

 

 

Total revenue

21,498

 

17,507

 

+23%

 

 

 

 

 

 

 

Gross profit

 

Gross profit is £11.84m (H1 2016: £8.42m). Gross profit as a percentage of revenue is 55% (H1 2016: 48%). The increase in margin is largely the result of increased activity as well as inventory provision releases which have been possible because of sales of inventory that had provisions recorded against it.

 

Administrative expenses

 

In H1 2017, administrative expenses are £10.16m including research and development (R & D) costs of £0.40m. In addition, further R & D costs of £0.43m have been capitalised. The reduction in R & D expenses reflects the strategic decision in 2015 to close down or mothball many of the programmes then being run, which took effect gradually through H1 2016.

 

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

 

 

Unaudited 6 months ended

30 June 2017

 

Unaudited 6 months ended

30 June 2016

 

Audited year ended December 2016

 

 

 

 

 

 

Non-exceptional administration expenditure before R & D capitalisation

9,718

 

9,279

 

17,844

Effect of share based payments

894

 

55

 

976

Less R & D capitalised

(426)

 

(363)

 

(618)

Effect of exceptional items

(23)

 

387

 

532

Total administrative expenses

10,163

 

9,358

 

18,734

 

The charge for depreciation of fixed assets and for the amortisation of intangibles is £2.01m (H1 2016: £2.49m).

                                      

 

Operating profit and adjusted earnings before interest tax and depreciation

 

The Group has made an operating profit of £1.70m (H1 2016: loss of £0.91m). We consider a more meaningful measure of underlying performance to be adjusted EBITDA which for H1 2017 was £4.58m (H1 2016: £2.02m). This excludes the effects of share-based payments of £0.89m (H1 2016: £0.06m) and exceptional profits of £0.02m (H1 2016: exceptional loss of £0.39m).

 

Finance costs

 

Finance costs have remained steady at £0.30m (H1 2016: £0.30m). A higher charge for the increase in fair value of deferred consideration has offset reduced interest on bank borrowings.

 

Tax

 

There is a tax charge of £1.63m (H1 2016: £0.23m). The increase is partly a result of improved income, and partly the result of a deferred tax charge resulting from the cancellation of share options.

 

Balance sheet

 

We have invested £0.72m (H1 2016: £0.80m) in property plant and equipment. The expenditure mainly relates to additional production equipment in Germany.

 

Intangible assets

 

The value of intangible fixed assets is £45.16m (31 December 2016: £46.50m). The decrease is mainly as a result of amortisation, and the impairment of the remaining goodwill associated with our Polish company of £0.33m. An amount of £0.54m has been capitalised, being largely development expenditure.

 

Deferred consideration

The remaining deferred consideration relates to the share-based payment to the former owner of EKF-Diagnostic GmbH. Finalisation of the contracts to conclude the position is expected to take place in 2017.

 

Cash and working capital

 

The unaudited gross cash position at 30 June 2017 was £5.72m (31 Dec 2016: £7.87m), and the Group had net cash of £4.44m (31 Dec 2016: £2.16m). Gross cash has reduced largely because of the repayment of debt. In total £4.4m was repaid in H1 2017 and £6.2m has been repaid over the past 12 months.

 

Cash generated from operations in H1 2017 is £5.07m (H1 2016: £1.35m). Trade debtors at period end are unchanged from the 2016 year end. Efforts to reduce inventory have been successful, although a continuing mismatch between the product mix held in stock and the mix of sales means that inventory remains higher than target. Trade creditors have increased, mainly because of higher activity levels and timing differences.

 

Outlook

 

The immediate aim of the Board is to build on the recent success of the streamlined Group with its lower cost base. We continue to look to achieve further manufacturing savings based where necessary on limited and highly targeted capital expenditure. In the medium term, the Board look for growth opportunities from new registrations and customers. Draft agreements are in place with OEM partners in the USA for DiaSpect Tm and Quo-Test A1c.

 

The Board is comfortable that current trading is in line with management expectations for 2017.

 

 

 

Christopher Mills

Non-Executive Chairman

 

11 September 2017
 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

FOR THE 6 MONTHS ENDED 30 JUNE 2017

 

 

Unaudited 6 months ended 30 June 2016

 

 

 

 

 

Unaudited 6 months ended 30 June 2017

 

 

Audited Year ended 31 December 2016

 

Notes

 

£'000

 

£'000

 

£'000

Continuing operations

 

 

 

 

 

 

 

Revenue

3

 

21,498

 

17,507

 

38,589

Cost of sales

 

 

(9,659)

 

(9,091)

 

(20,267)

Gross profit

 

 

11,839

 

8,416

 

18,322

Administrative expenses

 

 

(10,163)

 

(9,358)

 

(18,734)

Other income

 

 

19

 

32

 

85

Operating profit/(loss)

 

 

1,695

 

(910)

 

(327)

Depreciation and amortisation

 

 

(2,011)

 

(2,487)

 

(4,961)

Share-based payments

 

 

(894)

 

(55)

 

(973)

Exceptional items

4

 

23

 

(387)

 

(532)

EBITDA before exceptional items and share based payments

 

 

4,577

 

 

2,019

 

6,139

Finance income

 

 

35

 

22

 

37

Finance costs

 

 

(303)

 

(304)

 

(713)

Profit/(loss) before income tax

 

 

1,427

 

(1,192)

 

(1,003)

Income tax (charge)/credit

5

 

(1,626)

 

(230)

 

1,172

(Loss)/profit  for the period from continuing operations

 

 

(199)

 

(1,422)

 

169

(Loss)/profit attributable to:

 

 

 

 

 

 

 

Owners of the parent

 

 

(267)

 

(1,508)

 

(18)

Non-controlling interest

 

 

68

 

86

 

187

 

 

 

(199)

 

(1,422)

 

169

 

Loss per ordinary share attributable to the owners of the parent during the period

 

 

6

 

 

 

 

 

 

 

From continuing operations

 

 

Pence

 

Pence

 

Pence

Basic

 

 

 

 

 

 

 

Basic

 

 

(0.06)

 

(0.35)

 

(0.00)

Diluted

 

 

(0.06)

 

(0.35)

 

(0.00)

                 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

FOR THE 6 MONTHS ENDED 30 JUNE 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

6 months ended 30 June 2017

 

6 months ended 30 June 2016

 

Year ended 31 December 2016

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

(Loss)/profit for the period  - continuing

 

 

(199)

 

(1,422)

 

169

Other comprehensive income:

 

 

 

 

 

 

 

Currency translation differences

 

 

(277)

 

6,740

 

9,343

Other comprehensive loss/gain for the period

 

 

(277)

 

6,740

 

9,343

Total comprehensive (loss)/profit for the period

 

 

(476)

 

5,318

 

9,512

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Owners of the parent

 

 

(579)

 

5,232

 

9,198

Non-controlling interests

 

 

103

 

86

 

314

Total comprehensive (loss)/profit for the period

 

 

(476)

 

5,318

 

9,512

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

 

 

AS AT 30 JUNE 2017

 

 

 

 

 

 

 

 

 

Unaudited as at 30 June 2017

 

Unaudited as at 30 June 2016

 

Audited as at 31 December 2016

 

 

Notes

£'000

 

£'000

 

£'000

 

Assets

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

12,096

 

11,978

 

12,124

 

Intangible assets

7

45,165

 

46,778

 

46,503

 

Investments

 

152

 

402

 

152

 

Deferred tax assets

 

35

 

366

 

371

 

Total non-current assets

 

57,448

 

59,524

 

59,150

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Inventories

 

5,638

 

7,915

 

6,025

 

Trade and other receivables

 

9,366

 

8,137

 

9,370

 

Deferred tax assets

 

13

 

53

 

13

 

Cash and cash equivalents

 

5,719

 

3,242

 

7,874

 

Total current assets

 

20,736

 

19,347

 

23,282

 

Total assets

 

78,184

 

78,871

 

82,432

 

 

 

 

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

 

 

Share capital

 

4,643

 

4,643

 

4,643

 

Share premium account

 

95,393

 

95,393

 

95,393

 

Other reserve

 

41

 

41

 

41

 

Foreign currency reserves

 

4,762

 

3,033

 

5,609

 

Retained earnings

 

(46,467)

 

(46,863)

 

(45,236)

 

 

 

58,372

 

56,247

 

60,450

 

Non-controlling interest

 

410

 

365

 

521

 

Total equity

 

58,782

 

56,612

 

60,971

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Borrowings

 

1,275

 

2,122

 

1,130

 

Deferred tax liability

 

4,063

 

3,795

 

3,751

 

Total non-current liabilities

 

5,338

 

5,917

 

4,881

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Trade and other payables

 

10,728

 

7,914

 

9,401

 

Deferred consideration

 

915

 

505

 

693

 

Current income tax liabilities

 

2,231

 

1,886

 

1,160

 

Deferred tax liabilities

 

182

 

642

 

738

 

Borrowings

 

8

 

5,395

 

4,588

 

Total current liabilities

 

14,064

 

16,342

 

16,580

 

Total liabilities

 

19,402

 

22,259

 

21,461

 

Total equity and liabilities

 

78,184

 

78,871

 

82,432

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

 

FOR THE 6 MONTHS ENDED 30 JUNE 2017

 

 

 

 

 

 

Unaudited 6 months ended 30 June 2017

 

Unaudited 6 months ended 30 June 2016

 

 Audited Year to 31 December 2016

 

£'000

 

£'000

 

£'000

Cash flow from operating activities

 

 

 

 

 

Profit/(loss) before income tax

1,427

 

(1,192)

 

(1,003)

Adjustments for

 

 

 

 

 

- Warranty claim

(223)

 

(20)

 

(129)

- Depreciation

592

 

566

 

1,209

- Amortisation and impairment charges

1,419

 

1,921

 

3,752

- Deferred consideration (FV adjust)

-

 

-

 

481

- Provision movement

-

 

-

 

(360)

- Loss on disposal of assets

28

 

30

 

30

- Share-based payments

545

 

55

 

220

- Net finance costs

268

 

282

 

676

Changes in working capital

 

 

 

 

 

- Inventories

286

 

530

 

2,767

- Trade and other receivables

(481)

 

(408)

 

(1,127)

- Trade and other payables

1,134

 

(206)

 

2,300

Cash generated by operations

4,995

 

1,558

 

8,816

Interest paid

(68)

 

(284)

 

(496)

Income tax received

141

 

80

 

623

Net cash generated by operating activities

5,068

 

1,354

 

8,943

Cash flow from investing activities

 

 

 

 

 

Sale of investments

-

 

-

 

250

Purchase of property, plant and equipment (PPE)

(717)

 

(796)

 

(1,261)

Purchase of intangibles

(539)

 

(399)

 

(663)

Proceeds from sale of PPE

119

 

44

 

211

Interest received

22

 

22

 

37

Net cash used in investing activities

(1,115)

 

(1,129)

 

(1,426)

Cash flow from financing activities

 

 

 

 

 

Proceeds from issuance of ordinary shares (net of costs)

-

 

4,539

 

4,539

New borrowings

199

 

-

 

5,613

Repayment of borrowings

(4,434)

 

(3,749)

 

(12,211)

Dividends paid to non-controlling interests

(215)

 

(54)

 

(54)

Cancellation of share options

(1,509)

 

-

 

-

Net cash (used in)/generated by financing activities

(5,959)

 

736

 

(2,113)

Net (decrease)/increase in cash and cash equivalents

(2,006)

 

961

 

5,404

Cash and cash equivalents at beginning of period

7,874

 

2,017

 

2,017

Exchange gains on cash and cash equivalents

(149)

 

264

 

453

Cash and cash equivalents at end of period

5,719

 

3,242

 

7,874

 

 

 

 

 

 

 

 

 

 

STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

 

FOR THE 6 MONTHS ENDED 30 JUNE 2017

 

 

 

 

 

 

 

 

Share Capital

Share Premium

Other Reserve

Foreign Currency Reserve

Retained earnings

Total

Non-controlling interest

Total equity

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2016

4,221

41

(3,607)

(45,438)

46,493

261

46,754

 

Comprehensive income

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

(1,508)

(1,508)

86

(1,422)

 

Other comprehensive income

 

 

 

 

 

 

 

 

Currency translation differences

-

-

-

6,640

28

6,668

72

6,740

 

Total comprehensive income

-

-

-

6,640

(1,480)

5,160

158

5,318

 

Transactions with owners

           

 

 

 

 

 

 

 

 

Proceeds from shares issued

            422

-

-

-

4,539

-

4,539

 

Dividends to non-controlling interest

-

-

-

-

-

-

(54)

(54)

 

Share based payments

-

-

-

-

55

55

-

55

 

Total contributions by and distributions to owners

422

4,117

-

-

55

4,594

(54)

4,540

 

At 30 June 2016

4,643

95,393

41

3,033

(46,863)

56,247

365

56,612

 

Comprehensive income

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

1,490

1,490

101

1,591

 

Other comprehensive income

 

 

 

 

 

 

 

 

Currency translation differences

-

-

2,576

(28)

2,548

55

2,603

 

Total comprehensive income

-

-

-

2,576

1,462

4,038

156

4,194

 

Transactions with owners

 

 

 

 

 

 

 

 

Share based payments

-

-

-

-

165

165

-

165

 

Total contributions by and distributions to owners

-

-

-

-

165

165

-

165

 

At 31 December 2016

4,643

95,393

41

5,609

(45,236)

60,450

521

60,971

 

Comprehensive income

 

 

 

 

 

 

 

 

(Loss)/profit for the period

-

-

-

(199)

(199)

68

(131)

 

Other comprehensive income

 

 

 

 

 

 

 

 

Currency translation differences

-

-

-

(847)

(68)

(915)

36

(879)

 

Total comprehensive income

-

-

-

(847)

(267)

(1,114)

104

(1,010)

 

Transactions with owners

 

 

 

 

 

 

 

 

 

Dividends to non-controlling interest

-

-

-

-

-

(215)

(215)

 

Share based payments

-

-

-

-

(964)

(964)

-

(964)

 

Total contributions by and distributions to owners

-

-

-

-

(964)

(964)

(215)

(1,179)

 

At 30 June 2017

4,643

95,393

41

4,762

(46,467)

58,372

410

58,782

 

                                                 

 

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 2016 and which will form the basis of the 2017 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 with the exception of IFRS 15 "Revenue from contracts with customers" and IFRS 16 "Leases". The Group is continuing to review the potential effect of these standards.

 

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 2016 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 2017 and 30 June 2016 is unaudited and the twelve months to 31 December 2016 is audited.

 

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

 

2.               Significant accounting policies

 

Going concern

The Group meets its day-to-day working capital requirements through the use of cash reserves and existing bank facilities. The Group has seen a substantial improvement in its cash position over the last 12 months.

 

The Directors have considered the applicability of the going concern basis in the preparation of these financial statements. This included the review of internal budgets and financial results which show, taking into account reasonably probable changes in financial performance, that the Group should be able to operate within the level of its current funding arrangements. The Directors believe that the Group has adequate resources to continue in operation for the future. For this reason they have adopted the going concern basis in the preparation of the financial statements.

 

Foreign currency translation

(a) Functional and presentational currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in British Pounds Sterling, which is the Company's functional and presentational currency.

 

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement within 'administrative expenses'.

 

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentational currency are translated into the presentational currency as follows:

·     assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

·     income and expenses for each income statement are translated at average exchange rates; and

·     all resulting exchange differences are recognised in other comprehensive income.

 

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

 

Government grants

Government grants receivable in connection with expenditure on property, plant and equipment are accounted for as deferred income, which is credited to the income statement over the expected useful economic life of the related assets, on a basis consistent with the depreciation policy. Revenue grants for the reimbursement of costs charged to the income statement are credited to the Income Statement in the year in which the costs are incurred.

 

Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and any provision for impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the asset and bringing the asset to its working condition for its intended use.

 

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only where it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Any borrowing costs associated with qualifying property plant and equipment are capitalised and depreciated at the rate applicable to that asset category.

 

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method or reducing balances method to allocate their cost to its residual values over their estimated useful lives, as follows:

 

Buildings                                                           2%-2.5%

Fixtures and fittings                                    20%-25%

Plant and machinery                               20%-33.3%

Motor vehicles                                                         25%

 

The assets' residual values and useful economic lives are reviewed regularly, and adjusted if appropriate, at the end of each reporting period.

 

An asset's carrying value is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

 

Gains and losses on the disposal of assets are determined by comparing the proceeds with the carrying amount and are recognised in administration expenses in the income statement.

 

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, currently 4 to 5 years. 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.

 

Impairment of non-financial assets

Assets that have an indefinite life such as goodwill are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount.

 

The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of the money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in the prior period. A reversal of an impairment loss is recognised in the income statement immediately. If goodwill is impaired however, no reversal of the impairment is recognised in the financial statements.

 

Investments

Investments where the Group does not have a controlling interest are initially recognised at cost. The carrying value is tested annually for impairment and an impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount.

 

Financial assets

Classification

The Company classifies its financial assets in the following categories: loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired and management determines the classification of its financial assets at initial recognition.

 

(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets.

 

(b) Available-for-sale financial assets

Available-for-sale assets are non-derivatives that are either designated in this category or not classified as loans and receivables. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

 

Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date - the date on which the Company commits to purchase the asset. Assets are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the risk and rewards of ownership have been transferred.

 

Loans and receivables are subsequently carried at amortised cost using the effective interest rate method.

 

Available-for-sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in fair value are recognised in other comprehensive income until the asset is disposed at which time the cumulative gain or loss previously recognised in equity is included in the consolidated income statement for the period. If an available-for-sale investment is determined to be impaired, the cumulative loss previously recognised in equity is included in the income statement for the period.

 

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.

 

Trade and other receivables

Trade receivables are initially recognised at fair value, being the original invoice amount, and subsequently measured at amortised cost less provision for impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivable. Trade receivables that are less than three months past due are not considered impaired unless there are specific financial or commercial reasons that lead management to conclude that the customer will default. Older debts are considered to be impaired unless there is sufficient evidence to the contrary that they will be settled. The amount of the provision is the difference between the asset's carrying value and the present value of the estimated future cash flows. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within administrative expenses. When a trade receivable is uncollectible it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against administrative expenses in the income statement.

 

Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of less than three months, reduced by overdrafts to the extent that there is a right of offset against other cash balances.

 

For the purposes of the consolidated cash flow statement, cash and cash equivalents consist of cash and short-term deposits as defined above net of outstanding bank overdrafts where there is a right of offset.

 

Share capital

Ordinary Shares are classified as equity. Proceeds in excess of the nominal value of shares issued are allocated to the share premium account and are also classified as equity. Incremental costs directly attributable to the issue of new Ordinary Shares or options are deducted from the share premium account.

 

Financial liabilities

Debt is measured at fair value, being net proceeds after deduction of directly attributable issue costs, with subsequent measurement at amortised cost with the exception of deferred equity consideration which is categorised as a financial liability at fair value through profit and loss. Debt issue costs are recognised in the income statement over the expected term of such instruments at a constant rate on the carrying amount.

 

Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

 

Borrowings

Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

 

Borrowing costs are expensed in the consolidated Group income statement under the heading 'finance costs'. Arrangement and facility fees together with bank charges are charged to the income statement under the heading 'administrative expenses'.

 

Current and deferred income tax

The tax expense comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income where the associated tax is also recognised in other comprehensive income.

 

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

 

Deferred tax is recognised, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised in respect of all temporary differences except where the deferred tax liability arises from the initial recognition of goodwill in business combinations.

 

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and tax losses, to the extent that they are regarded as recoverable. They are regarded as recoverable where, on the basis of available evidence, there will be sufficient taxable profits against which the future reversal of the underlying temporary differences can be deducted.

 

The carrying value of the amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all, or part, of the tax asset to be utilised.

 

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on the tax rates (and tax laws) that have been substantively enacted at the balance sheet date.

 

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

 

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.

 

Leases

Leases which transfer substantially all the risks and rewards of ownership of an asset are treated as a finance lease. Assets held under finance leases are capitalised at their fair value at the inception of the lease and depreciated over the estimated useful economic life of the asset or lease term if shorter. The finance charges are allocated to the income statement in proportion to the capital amount outstanding.

 

All other leases are classified as operating leases. Operating lease rentals are charged to the income statement in equal annual amounts over the lease term.

 

Deferred consideration

Deferred consideration is recognised at fair value. Where the value of deferred consideration is based on a future event, management estimate the likelihood of the consideration becoming payable. Deferred consideration is discounted to take account of the time value of money at rates based on those used for the valuation of related intangible assets.

 

Employee benefits

(a) Pension obligations

Group companies operate various pension schemes all of which are defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity with the pension cost charged to the income statement as incurred. The Group has no further obligations once the contributions have been paid.

 

The Group no longer has any defined benefit schemes.

 

(b) Share-based compensation

The Group operates a number of equity-settled, share-based compensation plans, under which the Group receives services from employees and others 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.

 

The Group operates a cash-settled compensation plan for certain senior employees. Cash-settled share-based payments are measured at fair value at the date of grant and are expensed over the expected vesting period. The fair value amount is recognised in liabilities.

 

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 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 services is measured at the fair value of the consideration received or receivable and represents the invoiced value for the sale of the services net of sales taxes, rebates and discounts. Revenue from the sale of services is recognised when a Group Company has completed the services and collectability of the related receivables is reasonably assured.

 

(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.

 

Dividend distribution

Dividend distributions to the Company's shareholders are recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders. Interim dividends are recognised when paid.

 

Other income

Other income includes grant income and R & D tax credits passed through income where this is permitted by the relevant jurisdiction.

 

Exceptional items

These are items of an unusual or non-recurring nature incurred by the Group and include transactional costs and one off items relating to business combinations, such as acquisition expenses.

 

3.              Segmental reporting

 

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

 

The principal activity of the Group is the design, development, manufacture and selling of diagnostic instruments, reagents and certain ancillary items. This activity takes place across various countries, such as the USA, Germany, Russia, and the United Kingdom, and as such the Board considers the business primarily from a geographic perspective. Although not all the segments meet the quantitative thresholds required by IFRS 8, management has concluded that all segments should be maintained and reported, 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 third party company products under separate distribution agreements.

 

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

 

 

 

 

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

 

Period ended 30 June 2017 unaudited

 

 

Germany

USA

Poland

Russia

Other

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Income statement

 

 

 

 

 

 

Revenue

10,358

11,822

224

1,140

(2,046)

21,498

Inter segment

(2,029)

-

(17)

-

2,046

-

External revenue

8,329

11,822

207

1,140

-

21,498

Adjusted EBITDA

2,751

4,056

(122)

222

(2,330)

4,577

Share based payment

-

-

-

-

(894)

(894)

Exceptional items

16

-

(200)

-

207

23

EBITDA

2,767

4,056

(322)

222

(3,017)

3,706

Depreciation

(369)

(157)

(16)

(17)

(34)

(593)

Amortisation

(225)

426

-

-

(1,619)

(1,418)

Operating profit/(loss)

2,173

4,325

(338)

205

(4,670)

1,695

Net finance costs

(33)

380

13

(366)

(272)

(278)

Income tax

(139)

(4)

(43)

(1,026)

(404)

(1,616)

Profit/(loss) for the period

2,001

4,701

(368)

(1,187)

(5,346)

(199)

Segment assets

 

 

 

 

 

 

Operating assets

50,237

49,206

319

491

(4,305)

95,948

Inter segment assets

(125)

-

(76)

-

(23,282)

(23,483)

External operating assets

50,112

49,206

243

491

(27,587)

72,465

Cash and cash equivalents

1,302

2,210

282

830

1,095

5,719

Total assets

51,414

51,416

525

1,321

(26,492)

78,184

Segment liabilities

 

 

 

 

 

 

Operating liabilities

14,460

22,099

319

233

4,491

41,602

Inter segment liabilities

(8,305)

(15,320)

-

-

142

(23,483)

External operating liabilities

6,155

6,779

319

233

4,633

18,119

Borrowings

1,132

151

-

-

-

1,283

Total liabilities

7,287

6,930

319

233

4,633

19,402

Other segmental information

 

 

 

 

 

 

Non-current assets - PPE

6,492

4,289

-

53

1,262

12,096

Non-current assets - Intangibles

29,189

14,457

-

135

1,384

45,165

Intangible assets -additions

221

67

-

-

251

539

PPE - additions

575

137

(9)

1

13

717

 

 

 

 

 

 

 

 

 

Year ended December 2016 audited

 

 

Germany

USA

Poland

Russia

Other

Total

 

 

 

 

 

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

Income statement

 

 

 

 

 

 

Revenue

17,835

21,199

1,582

2,677

33

43,326

Inter segment

(4,683)

1

(33)

-

(22)

(4,737)

External revenue

13,152

21,200

1,549

2,677

11

38,589

Adjusted EBITDA*

3,074

6,136

908

599

(4,578)

6,139

Share based payment

-

-

-

-

(973)

(973)

Exceptional items

(28)

(525)

-

-

21

(532)

EBITDA

3,046

5,611

908

599

(5,530)

4,634

Depreciation

(678)

(405)

(33)

(27)

(66)

(1,209)

Amortisation

(2,063)

(1,519)

(61)

(29)

(80)

(3,752)

Operating profit/(loss)

305

3,687

814

543

(5,676)

(327)

Net finance costs

(47)

(155)

6

29

(509)

(676)

Income tax

225

1,245

(157)

(126)

(15)

1,172

Profit/(loss) for the year

483

4,777

663

446

(6,200)

169

Segment assets

 

 

 

 

 

 

Operating assets

43,199

30,170

1,504

623

37,570

113,066

Inter-segment assets

(125)

(3,870)

(528)

-

(33,985)

(38,508)

External operating assets

43,074

26,300

976

623

3,585

74,558

Cash and cash equivalents

1,803

2,192

229

959

2,691

7,874

Total assets

44,877

28,492

1,205

1,582

6,276

82,432

Segment liabilities

 

 

 

 

 

 

Operating liabilities

17,277

27,463

82

137

9,290

54,249

Inter-segment liabilities

(10,490)

(22,082)

-

-

(5,934)

(38,506)

External operating liabilities

6,787

5,381

82

137

3,356

15,743

Borrowings

1,191

195

-

-

4,332

5,718

Total liabilities

7,978

5,576

82

137

7,688

21,461

Other segmental information

 

 

 

 

 

 

Non-current assets - PPE

5,898

4,538

106

71

1,511

12,124

Non-current assets - Intangibles

29,351

15,555

329

151

1,117

46,503

Intangible assets -additions

1,058

169

-

7

27

1,261

PPE - additions

285

308

-

-

70

663

 

 

 

 

 

Period ended 30 June 2016 unaudited

 

 

Germany

USA

Poland

Russia

Other

Total

 

 

 

 

 

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

Income statement

 

 

 

 

 

 

Revenue

8,475

9,385

695

1,174

(2,222)

17,507

Inter segment

(2,132)

3

(14)

-

2,143

-

External revenue

6,343

9,388

681

1,174

(79)

17,507

Adjusted EBITDA*

1,726

2,413

390

274

(2,784)

2,019

Share based payment

-

-

-

-

(55)

(55)

Exceptional items

20

(69)

-

-

(338)

(387)

EBITDA

1,746

2,344

390

274

(3,177)

1,577

Depreciation

(296)

(208)

(16)

(12)

(33)

(565)

Amortisation

(329)

-

-

-

(1,593)

(1,922)

Operating profit/(loss)

1,121

2,136

374

262

(4,803)

(910)

Net finance costs

(14)

330

12

(397)

(213)

(282)

Income tax

120

177

(48)

(441)

(38)

(230)

Discontinued operations

-

-

-

-

-

-

Profit/(loss) for the year

1,227

2,643

338

(576)

(5,054)

(1,422)

Segment assets

 

 

 

 

 

 

Operating assets

50,245

50,755

1,263

633

13,747

116,643

Inter-segment assets

(635)

(2,659)

(180)

-

(37,540)

(41,014)

External operating assets

49,610

48,096

1,083

633

(23,793)

75,629

Cash and cash equivalents

210

1,304

38

563

1,127

3,242

Total assets

49,820

49,400

1,121

1,196

(22,666)

78,871

Segment liabilities

 

 

 

 

 

 

Operating liabilities

16,127

25,339

108

148

19,245

60,967

Inter-segment liabilities

(10,701)

(20,611)

-

-

(14,913)

(46,225)

External operating liabilities

5,426

4,728

108

148

4,332

14,742

Borrowings

1,371

2,023

-

-

4,123

7,517

Total liabilities

6,797

6,751

108

148

8,455

22,259

Other segmental information

 

 

 

 

 

 

Non-current assets - PPE

5,778

4,373

118

72

1,637

11,978

Non-current assets - Intangibles

34,382

15,266

322

148

(3,340)

46,778

Intangible assets -additions

(50)

-

-

-

-

(50)

PPE - additions

713

67

-

1

16

797

 

*- Adjusted EBITDA excludes exceptional items and share based payments

 

'Other' primarily relates to the holding company and head office costs.

 

 

 

 

 

Disclosure of Group revenues by geographic location

 

 

Unaudited

6 months

ended 30

June 2017

 

Unaudited

6 months

ended 30

June 2016

 

Audited

Year ended

31 December 2016

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

Americas

 

 

 

 

 

 

United States of America

 

8,721

 

6,642

 

15,122

Rest of Americas

 

1,524

 

1,785

 

3,979

Europe, Middles East and Africa (EMEA)

 

 

 

 

 

 

Germany

 

3,300

 

2,668

 

6,082

United Kingdom

 

159

 

126

 

276

Rest of Europe

 

1,879

 

1,357

 

2,761

Russia

 

1,140

 

1,184

 

2,687

Middle East

 

1,679

 

1,322

 

2,870

Africa

 

962

 

467

 

882

Rest of World

 

 

 

 

 

 

China

 

563

 

486

 

929

Rest of Asia

 

1,499

 

1,422

 

2,922

New Zealand/Australia

 

72

 

48

 

79

Total Revenue

 

21,498

 

17,507

 

38,589

 

 

 

4.              Exceptional items

 

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

 

 

 

 

Unaudited 6 months ended 30 June 2017

 

Unaudited 6 months ended 30 June 2016

 

Audited year ended 31 December 2016

 

Note

£000

 

£000

 

£000

 

 

 

 

 

 

 

Exceptional items includes:

 

 

 

 

 

 

- Business reorganisation costs

a

(200)

 

(407)

 

(661)

- Warranty claim

b

223

 

20

 

129

Exceptional items

 

23

 

(387)

 

(532)

 

 

(a)             Costs associated with the closure of STI, the transfer of production of Quo-Test and Quo-Lab from the UK to Germany, the mothballing of EKF Molecular, and with the closure of the Group's Dublin facility

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

 

5.             Income tax

 

 

 

Unaudited

6 months

ended 30

June 2017

 

Unaudited

6 months

ended 30

June 2016

 

Audited

Year ended

31 December 2016

 

 

£000

 

£000

 

£000

Current tax

 

 

 

 

 

 

Current tax on profit/loss for the period

 

(1,414)

 

(681)

 

(1,602)

Adjustments for prior periods

 

-

 

-

 

2,219

Total current tax

 

(1,414)

 

(681)

 

617

 

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

 

Origination and reversal of temporary differences

 

(212)

 

451

 

555

Total deferred tax

 

(212)

 

451

 

555

Income tax (charge)/credit

 

(1,626)

 

(230)

 

1,172

 

 

 

6.             Loss per share

 

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

 

Diluted loss 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. The potential shares are not dilutive in either H1 2017 or in H1 or FY 2016 as the Group made a loss per share.

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited year ended 31 December 2016

 

6 months ended 30 June 2017

6 months ended 30 June 2016

 

 

 

£'000

 

£'000

 

£'000

Loss attributable to owners of the parent

 

 

(267)

 

(1,508)

 

(18)

Weighted average number of ordinary shares in issue

 

 

464,262,781

 

 

428,782,159

 

446,042,831

Effect of dilutive potential ordinary shares

 

 

9,205,976

 

4,043,940

 

4,043,940

Weighted average number of ordinary shares - diluted

 

 

473,468,757

 

 

432,826,099

 

450,086,771

 

 

 

 

 

 

 

 

 

 

Pence

 

Pence

 

Pence

Basic

 

 

 

 

 

 

 

Loss per share

 

 

(0.06)

 

(0.35)

 

(0.00)

 

 

 

 

 

 

 

 

 

 

 

Pence

 

Pence

 

Pence

Diluted

 

 

 

 

 

 

 

Loss per share

 

 

(0.06)

 

(0.35)

 

(0.00)

 

 

 

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 2016

23,718

2,493

70

13,815

16,878

7,782

64,756

Additions

-

36

-

-

-

363

399

Exchange differences

2,456

996

-

1,672

1,417

390

6,931

At 30 June 2016

26,174

3,525

70

15,487

18,295

8,535

72,086

Additions

-

9

-

-

-

255

264

Exchange differences

863

(482)

-

889

330

(5)

1,595

At 31 December 2016

27,037

3,052

70

16,376

18,625

8,785

73,945

Additions

-

113

-

-

-

426

539

Reclassification/transfer

-

-

-

-

-

360

360

Exchange differences

37

(45)

-

(354)

255

139

32

At 30 June 2017

27,074

3,120

70

16,022

18,880

9,710

74,876

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

 

At 1 January 2016

2,082

1,378

70

4,555

8,866

4,878

21,829

Exchange differences

122

234

-

542

531

129

1,558

Charge for the period

-

437

-

695

469

320

1,921

At 30 June 2016

2,204

2,049

70

5,792

9,866

5,327

25,308

Exchange differences

24

(47)

-

301

123

(98)

303

Charge for the period

-

(105)

-

723

605

608

1,831

At 31 December 2016

2,228

1,897

70

6,816

10,594

5,837

27,442

Exchange differences

30

(16)

-

(126)

114

488

490

Reclassification/transfer

-

-

-

-

-

360

360

Charge for the period

333

157

-

662

453

(186)

1,419

At 30 June 2017

2,591

2,038

70

7,352

11,161

6,499

29,711

                                               

 

 

Net book value

 

 

 

 

 

 

 

30 June 2017

24,483

1,082

-

8,670

7,719

3,211

45,165

 

31 December 2016

24,809

1,155

-

9,560

8,031

2,948

46,503

 

30 June 2016

23,970

1,476

-

9,695

8,429

3,208

46,778

 

                             
 

 

8.            Dividends

 

No dividends to shareholders of the holding company were provided or paid during the six months to 30 June 2017 (to 30 June 2016 and 31 December 2016: £nil).

 

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.

 

 


This information is provided by RNS
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