RNS Number : 8834T
EKF Diagnostics Holdings PLC
30 March 2021
 

This announcement contains inside information
for the purposes of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR")

 

EKF Diagnostics Holdings plc

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

 

Final results

 

EKF Diagnostics Holdings plc (AIM: EKF), the AIM quoted point-of-care business, announces its final results for the year ended 31 December 2020.

 

Financial Highlights

•       Revenue up 45% to £65.3m (2019: £44.9m)
•       Gross profit up 58% to £37.4m (2019: £23.7m)
•       Adjusted EBITDA1 up 113% to £25.5m (2019: £12.0m)
•       Profit before tax £15.4m (2019: £5.5m)
•       Basic Earnings per share of 2.45p (2019: 0.81p)
•       Cash generated from operations of £13.8m (2019: £5.1m)
•       Cash at 31 December 2020 of £21.9m (2019: £12.1m), net cash after borrowings of £21.4m (2019: £11.4m)
•       Value of investments in marketable securities at year end of £6.5m, after sale of Renalytix shares raised £7.7m (2019: £9.7m)
•       Maiden cash dividend of £4.5m paid to shareholders, equivalent to 1p per ordinary share

 

Operational Highlights

·     Significant improvements in revenue and profits, resulting from successful COVID-19 related contract manufacturing business
·     Core business held up well in light of the global pandemic: revenues were down £6.5m YoY (-14%), however there were strong performances and signs of a steady recovery are apparent:
−    DiaSpect Tm up £548k (+15%), due to strong performance from OEM partners McKesson and Fresenius Kabi
−    Quo-Lab up £210k (+9%) due to improved sales in EMEA and improved shelf-life of reagent cartridges
−    HemoControl and HemoPointH2 sales down £2.6m (-36%) as anaemia screening programmes were paused or cancelled, particularly Peru (-£1.1m), and reduced demand from Women & Infants Clinics in US
−    b-HB down £847k (-9%) due in part to the fulfilment of large orders from Cardinal in Q4 2019
−    Reduced demand for diabetes testing, especially in China and Southeast Asia
−    COVID-19 restrictions in laboratories, universities and organized sport impacted research use market for lactate and clinical chemistry product
·     Post period end, recovery of core business underway in Q1 2021:
−    Fresenius Kabi up +20% YoY following tender wins in Asia and the Middle East
−    Tender win in Rwanda c. 200k tests; screening programmes in Uganda, Ghana, Kenya and Egypt
−    First shipment of 1,000 DiaSpect Tm analysers to South Africa following tender win
−    CBER2 approval of DiaSpect Tm allows EKF to start selling into US blood banks from March 2021
−    Won South Carolina WIC tender, displacing HemoCue; other WIC tender opportunities expected
−    New pregnancy testing accounts won following exit of major competitor from the US market
−    Won Jharkhand (India) tender (3 million DiaSpect Tm cuvettes); additional tenders in the pipeline

 

1 Earnings before interest, tax, depreciation and amortisation, share-based payments and exceptional items, as laid out in the income statement

2 Centre for Biologics Evaluation and Research, part of the US FDA, which (amongst other things) regulates medical devices involved in the testing of licensed blood, blood components and cellular products

3 Women, Infants and Children

 

 

 

Trading update & Significant expansion of COVID-19 sample collection kit supply agreement

This morning EKF also announced the signing of a new multi-million dollar global supply contract with its partner from the private sector. The new multiyear global supply contract will support its partner's world-wide staff testing initiative, with orders to be fulfilled from EKF's production sites in the UK, Germany and the United States.

 

This expanded global contract is expected to make a considerable contribution throughout the current financial year. The Board is confident that trading for the year ending 31 December 2021 will be significantly ahead of already upgraded management expectations.

 

Christopher Mills, Non-Executive Chairman of EKF, commented:

"EKF has come through 2020 in an extremely strong position. The Group has been able to make a real contribution to the fight against the COVID-19 pandemic, which sadly has been very costly for many in lives and income. In doing so, EKF has delivered on every level and our core business has held up well.

 

"The improvement in trading in our core business and the strong demand for COVID-19 sample collection devices has continued into the new financial year. Whilst necessarily maintaining a conservative approach to forecasting for our core business, we have already announced that our performance for the first quarter of 2021 will be materially ahead of expectations and the same quarter last year. This morning's news that we have expanded a key supply agreement to become a multi-million dollar global supply contract, means that we are confident that trading for the year ending 31 December 2021 will be significantly ahead of already upgraded expectations."

 

 

EKF Diagnostics Holdings plc

www.ekfdiagnostics.com

Christopher Mills, Non-executive Chairman

Tel: +44 (0)29 2071 0570

Julian Baines, CEO

 

Richard Evans, FD & COO

 

 

 

N+1 Singer

Tel: +44 (0)20 7496 3000

Aubrey Powell / George Tzimas / Tom Salvesen /

 

 

 

Walbrook PR Limited

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

Paul McManus / Lianne Cawthorne

Mob: +44 (0)7980 541 893 / +44 (0)7584 391 303 

     

 

About EKF Diagnostics Holdings plc (www.ekfdiagnostics.com)

 

EKF specialises in the development, production and worldwide distribution of point-of-care analyzers and clinical chemistry reagents for use across more than 100 countries in hospital and research laboratories, doctor's offices, blood banks and for in-field anaemia screening programmes. EKF is also a bulk manufacturer of enzymes and has custom manufacturing facilities in the USA for a variety of life science products.  

 

In 2020, EKF developed a range of COVID-19 testing products including PrimeStore MTM, an FDA-approved and CE marked sample containment device that allows the safe handling, transportation and analysis of test swabs and samples, which it manufactures under licence, and COVID-SeroKlir, a leading ELISA-based antibody test from Kantaro Biosciences that provides a precise measurement of COVID-19 IgG antibodies.

 

A presentation for investors is available to view here: https://www.ekfdiagnostics.com/documents-reports.html.  A further announcement will be made when the annual report and accounts for the year ended 31 December 2020 (incorporating the notice of Annual General Meeting) has been made available online at the same web address; hard copies will be sent to shareholders who have opted to receive materials in this format at the same time.

 

 

Chairman's Statement

 

2020 has been an unusual but highly successful year for EKF and I must first extend my thanks to the Executive team for their achievements over the last year, which by any standards have been outstanding and have contributed to a significant increase in shareholder value.

 

I am delighted that across our business, our teams responded very quickly to the challenges that faced our core business due to the impact of the global COVID pandemic.  To their credit, we have simultaneously and rapidly adjusted the business to assist our partners in the USA and Europe in their COVID response.

 

Consequently, we have had by far our most successful year to date, with record turnover and profits. Revenues across the Group are up 45% to over £65m (2019: £44.9m) and adjusted EBITDA increased by 113% to £25.5m (2019: £12.0m). This strong performance has continued into the first quarter of 2021 and in January we announced that Q1 2021 performance would be materially ahead of current management expectations and that of the first quarter of 2020.

 

Strategy

 

It is important to note that we continue to focus heavily on our core business, which we define as all operations outside our COVID-19 related product range. Our major strategy aims are:

 

1.    to continue to build our installed base of point-of-care analysers which  generate an ongoing stream of revenue through the sale of proprietary consumables;

2.    to supply a range of clinical chemistry reagents for use on our own and third party analysers;

3.    to grow our contract and partnership enzyme manufacturing business; and

4.    to continue to exploit our Preferred Partnership Agreement ("PPA") with Mount Sinai Innovation Partners ("MSIP"), which allows us advanced access to innovative commercial opportunities arising from certain technologies managed by MSIP.

 

Impact of COVID-19

 

As a global supplier of diagnostic and clinical chemistry products, we have experienced disruption in nearly every market we serve, and despite this we have still delivered what we consider to be a robust performance in our core business. The core business delivered revenues of over £38m, and whilst this is a reduction of 14% versus previous year revenues, this was a better performance than our own expectations. The second half showed signs of improved performance in both Diabetes and Hematology, and this recovery has continued into the new financial year.

 

Our sales and operations teams have worked extremely hard in often trying circumstances - in many cases working from home and being unable to travel - to limit the effect on our business, and I believe they have been very successful. Equally, we have showed the best strengths of our business in the way that we have reacted to the opportunity which arose for viral transport medium related products.

 

Having done some preparatory work in 2019, long before the world had heard of COVID, in March 2020 we signed a contract manufacturing agreement with Longhorn Vaccines and Diagnostics LLC in the US for their FDA-approved PrimeStore MTM sample collection device.   It is designed to de-activate pathogens rapidly and stabilise test samples for up to four weeks with no requirement for cold storage. This approach also allows samples to be tested by a greater number of laboratories, as the handling risks for the deactivated virus are reduced.

 

The sudden demand for this product meant that from a standing start at our facility in Boerne, Texas, we had to create a supply chain, a reagent production line and a tube filling line for a regulated product, along with all of the associated peripheral activities. We quickly realised that there would also be a demand for this product in Europe. In the UK, a project team was formed which created a fully manned and trained production facility from scratch using space that had been set aside for development activities, and was up and running in less than 8 weeks. In Germany, a further production line was also started.

 

It has taken enormous flexibility, dedication, skill, and teamwork, especially from the project teams set up to create and run these facilities, but also from everyone else in the organisation and on behalf of the Board I would like to extend my thanks to all of them. Their work is not over; as the pandemic evolves, so do the needs of our customers, whose programmes are continuing into 2021.

 

MSIP Preferred Partnership Agreement

 

MSIP is responsible for driving the real-world application and commercialisation of discoveries and inventions made within the Mount Sinai Health System ("MSHS"), New York's largest integrated healthcare delivery system. EKF has established a longstanding and close working relationship with MSIP, and in 2019 signed a non-exclusive partnership agreement. The agreement provided EKF and MSIP with a framework to explore commercial opportunities together and to select and support pioneering medical approaches that could make improvements to people's lives and to healthcare economics. EKF has access to opportunities which benefit from a clinician and demand focused approach to developing commercially relevant healthcare products and services. This partnership has  now led to the development of three new businesses which between them are worth over $1bn: Renalytix AI plc, the developer of artificial intelligence-enabled diagnostics for kidney disease; Verici Dx plc, a developer of advanced clinical diagnostics for organ transplant; and Trellus Health Limited, a company working to transform the way chronic conditions are treated, with an initial focus on Inflammatory Bowel Disease (IBD), including Crohn's disease and ulcerative colitis.

 

During 2020, EKF sold just under 63% of its holding in Renalytix, raising £7.7m. The remaining holding was worth £4.9m at year end. Just prior to this sale, the Group benefited from the receipt of shares in Verici when it was spun out of Renalytix by way of a dividend in specie. At 31 December this holding was worth £1.6m.

 

In August, EKF invested $5.0m in Trellus in return for a 31.1% holding, alongside Mount Sinai and others. In December, the Company transferred this shareholding to its then shareholders by way of a dividend in specie. It is expected that Trellus will complete an IPO in 2021.

 

The Group continues to work with MSIP to develop further opportunities.

 

Share capital

 

During the year to 31 December 2020 we have again not utilised the permission we hold from shareholders to acquire shares for cancellation. It remains our intention to do so when appropriate.

 

The process of simplifying our share capital has continued through the exercise of 900,000 options for a total value of £209,000 and the cancellation of 25,000 share options at the election of the holder, in return for a small payment.

 

Dividend

 

In December 2020, the Company paid its inaugural cash dividend of 1p per share as a final dividend for 2019, a total of £4.6m. We are pleased to confirm that, given the progress in EKF's business and its strong cash generation, it is our intention to make a further dividend payment to shareholders of 1.1p per ordinary share, as previously indicated. If approved by shareholders at the Company's next Annual General Meeting, payment will be on 1 December 2021 to shareholders on the register on 4 November 2021.

 

Cash-settled share-based incentive

 

The Company operates a cash-settled, share based incentive for the Executive Directors, which is designed to pay out in the event that the Company is acquired by a third party (an "Exit"). During the present year EKF shareholders have benefited from very strong increases in value through the improved performance of the Group and the investment opportunities that we have followed. Reflecting this delivery of value to shareholders by the Executive Directors, EKF's Remuneration Committee determined that, in the absence of any other performance related pay mechanism, it was appropriate to distribute, as performance-related pay, a portion of the amount that would otherwise be payable under the Incentive on an Exit. The Executive Directors each received an equal payment of approximately £0.23 million in July 2020, comprising a variable amount calculated as to 5% of the excess value over 27 pence per share, calculated using a reference share price of 29 pence. Any future amounts payable to the Executive Directors under the Incentive in the event of an Exit shall be reduced by all previously paid amounts. Accordingly, the aggregate amount payable to them under the Incentive is unchanged by the payments described above and the total value available to Shareholders on an Exit will be unaffected. The Remuneration Committee considers that the remaining unpaid amounts under the incentive continue to provide strong motivation to the Executive Directors, who will receive a further potential variable reward in the event of an Exit, equal to 5% of the excess value obtained over 29 pence per share. In January 2021, the Executive Directors received a further payment under the scheme of £0.5m each, in recognition of the further significant value creation for shareholders. As a result, the new base line will be 33.4p.

 

Results overview

 

The Chief Executive's and Finance Director's statements contain a review of the year and an overview of the financial performance of the Group.

 

COVID-19

 

The recent COVID-19 pandemic has created uncertainty in the market in the short term. Many countries remain closed, and government action continues to have a significant effect on economies across the world. The eventual severity and length of the economic disruption is impossible to forecast. We believe we have a robust plan in place to mitigate the effect of the disruption on the business including taking the following actions (amongst others):

 

·    Ensuring the safety of our employees by organising for as many staff as possible to work from home and making appropriate adjustments in the workplace

·    Improving our computer networking to facilitate remote working

·    Gaining designation as a company essential to basic medical care which allows our premises to remain open even in a lockdown

·    Improved social distancing by limiting physical meetings, expanding flexible working, and altering production practices

·    Banning international travel and limiting domestic travel

·    Increasing supplier and customer contact so as to be able to anticipate issues and react quickly

·    Increasing raw material stock holding

·    Increasing cleaning and disinfection cycles

 

We have insurance cover in place in case there is a loss of business, although it cannot be guaranteed that cover will be sufficient to protect against all eventualities.

 

While we have seen some disruption to our core business as a result of the COVID-19 pandemic, current trading suggests that our base case forecasts are still applicable. In addition, our range of COVID related products has been highly successful, bringing significant benefits to the Group, including higher revenue, profits, and cash balances. We believe the Group is in a strong position, however, it is difficult to assess reliably whether there will be any material disruption in the future, and for how long our COVID range will remain relevant. We have modelled a number of scenarios covering reductions in revenue of 10% and 50%, without taking into account the potential benefits of any mitigation strategies such as potential cost savings or insurance claims. While the eventual severity and length of the economic disruption stemming from the pandemic is impossible to forecast these models give the Directors reasonable confidence that the business can survive our worst-case scenarios for reductions in revenue for at least the next 12 months.

 

Board and Corporate Governance

 

All Board members have served throughout the year. The Board continues to believe that the current make-up of the Board is appropriate. We have adopted the corporate governance code issued by the Quoted Company Alliance. Further details of compliance are found in the Corporate Governance Statement and on the Company's website.

 

Outlook

 

EKF has come through 2020 in an extremely strong position. The Group has been able to make a real contribution to the fight against the COVID-19 pandemic, which sadly has been very costly for many in lives and income. In doing so, EKF has delivered on every level and our core business has held up well.

 

The improvement in trading in our core business and the strong demand for COVID-19 sample collection devices has continued into the new financial year. Whilst necessarily maintaining a conservative approach to forecasting for our core business, we have already announced that our performance for the first quarter of 2021 will be materially ahead of expectations and the same quarter last year. This morning's news that we have expanded a key supply agreement to become a multi-million dollar global supply contract, means that we are confident that trading for the year ending 31 December 2021 will be significantly ahead of already upgraded expectations.

 

 

Christopher Mills

Non-executive Chairman

30 March 2021

 

 

Chief Executive's Review

 

In what has been a year like no other I have been astounded at how my colleagues at EKF have been able to adapt to the pandemic, support a solid core business performance and introduce a new manufacturing capability from zero to a business that is now manufacturing hundreds of thousands of COVID-19 sample collection kits per annum. All the credit for this past 12 months has to go to the incredible employees at EKF in Wales, Germany and the US.

 

It has been a turbulent year as the timing of lockdowns globally have differed across the globe, but it has been an incredible effort from the team to maintain our core business globally.

 

As a result, we have come through 2020 with our core customer base intact and have developed new relationships, both directly and indirectly, with healthcare systems and a major corporate partner, and we're now seeing signs of recovery that bodes well for the future performance of our core business. We also expect to benefit further from those programmes suspended during 2020 coming back on-line this year.

 

Operations

 

The principal activity of the Group is the design, development, manufacture and sale of diagnostic instruments, reagents and certain ancillary products, as well as central laboratory reagents, which the Board considers to be a single segment. The Board considers the business primarily from a geographic perspective, but for interest describes below the performance of each major product group.

 

Point-of-Care

 

Hematology

Hematology delivered a respectable £11.0m in revenues, albeit a 20% reduction on the previous year (2019: £13.8m). DiaSpect Tm sales bucked the trend and were up by 15% as the OEM versions we produce, including those for McKesson and Fresenius, gained some traction, with Fresenius winning new business in Asia and the Middle East.

 

Sales of our Hemo Control product line were down by 36% as anemia screening programmes were either cancelled or postponed. We saw this particularly in Peru, which has been very badly affected by the pandemic and is a major user of our hemoglobin analyzer. Blood banks and WIC (Women, Infants, Children) centres in the US have seen closures and reduced volumes of patients since COVID struck.

 

It is incredibly encouraging to see sales in Peru and US-based WIC sales recovering in Q1 2021 and this recovery was supported by the recent WIC tender win in South Carolina. In addition, this WIC tender win was the first to include our newly launched EKF Link connectivity platform. EKF Link will enable us to enter all tenders moving forward that require connectivity which is a significant boost for the Company's commercial appeal.

 

For 2021 we are looking forward to anemia programmes returning to normal, to McKesson's Consult OEM version of DiaSpect Tm making continued progress, and the opportunity to start selling DiaSpect Tm into blood banks in the US.

 

Diabetes

Our Diabetes product sales held up very well against strong headwinds delivering over £19m of revenues compared to £20.6m of sales in 2019. The main product that demonstrated growth during the year was our HbA1c point-of-care analyzer, Quo-Lab, which increased by 9%, driven by increased reagent sales in EMEA; and Stat-Site, which measures β-HB and glucose in whole blood, following the launch of the Stat-Site WB meter which provides results in less than 10 seconds. Other product groups were affected by COVID-related decreases in testing volumes as diabetic clinics globally were closed or had limited opening hours. The reduction in β-HB Liquicolor reagent sales of 9% was more due to Cardinal placing a large initial order for their OEM branded product in Q4 2019 than a genuine reduction in demand. Overall, taking this into account our sales have been in line with expectations despite the pandemic.

 

 

 

Central Laboratory

 

Clinical chemistry and Life sciences

There has been a reduced demand in 2020 for chemistries, including enzymes, analysers and rapid tests, and many of the development projects we have been working on, including that with Oragenics, have been paused as a result of COVID-19. As a result, sales are down by 21%. We expect those projects to come back on stream in 2021, albeit a year behind our original expectations, with work on Oragenics and Ixcela due to recommence in Q3 2021. As a result of the delays, we have slowed the capital programme at our South Bend site, and repurposed It to work on our own COVID products.

 

Contract manufacturing

While we have always had an interest in contract manufacturing, this area has seen a huge increase in revenue in 2020, rising from £0.18m to £26.3m with this continuing, so far, into 2021. Starting from the manufacture of the Primestore MTM reagent and filling tubes for Longhorn in the US, activities have expanded to encompass manufacturing in two sites in the US, two in the UK, and one in Germany. This includes a product portfolio of additional reagents, filled tubes in multiple sizes, testing kits, and now full retail packs with boxed contents including our testing kits and other materials. Our customer base has expanded beyond Longhorn to include Public Health England, clinics, universities, testing companies, and a large industrial partner (which we are unable to name for confidentiality reasons), with sales made to 13 countries in the Americas, Europe and Africa.

 

These activities are all associated with viral testing, and while much of the activity is driven by COVID, we believe that there will be an ongoing need for testing for this and other coronaviruses for the foreseeable future. However, in light of the uncertainty about how long this will stay at current levels, we have mitigated our forward risk by taking premises on short term leases with appropriate break clauses and using temporary labour where possible.

In addition to our COVID related contract manufacturing success, we have secured rights to Kantaro's COVID antibody ELISA test, SeroKlir, which was developed at Mount Sinai. We believe there are exciting opportunities for this test.

 

Other

This category includes sales of a number of products including our Lactate Scout sports medicine product and other diagnostic tests, the most important of which is for pregnancy. Professional sports medicine has been badly affected by the various lockdowns throughout our most important markets.

 

Regulatory update

 

Our most important new approvals came in the USA, where the DiaSpect Tm gained clearance from CBER for use in blood banks, and Hemo Control gained FDA clearance for additional data management functionality. We continue to work hard to succeed.

 

We are continuing to work towards the new requirements of the In Vitro Diagnostic Regulation (IVDR) in Europe which must be in place by May 2022.

 

Summary

 

It has been a difficult year for many people across the world, and I am proud that against this background EKF has not only survived but flourished. Our partners have grown to be dependent on the flexibility and high levels of customer service they are experiencing from EKF, and our shareholders are benefiting through income and capital accretion. We have protected our core business through one of the most difficult periods for business in recent history, and created millions of pounds of revenue and profits from new business. Whether this new source of income continues at the same level or not, I am confident that the skills we have learnt and the relationships we

have developed will be of benefit to the business for years to come.

 

Julian Baines

Chief Executive Officer

30 March 2021

 

 

Finance Director's Review

 

Revenue


Revenue for 2020 was £65.3m (2019: £44.9m), which is an increase of 45%. At constant exchange rates, revenue for the year would have been 1% higher, so organic growth is 46%.

 

Revenue by disease state, which is presented for illustrative purposes only, is as follows:

 

 

FY 2020

£'000

FY 2019

£'000

 

+/- %

Hematology

11,037

13,808

(20%)

Diabetes Care

19,056

20,607

(8%)

Central Laboratory

30,995

6,135

+405%

Other

4,172

4,367

(4%)

Total

65,260

44,917

+45%

 

Central Laboratory sales in 2020 include sales of contract manufacturing services relating to PrimeStore and other viral transport medium products of £26,799,000 (2019: £44,000).

 

Revenue by geographical segment based on the locations from which sales are made, is as follows:

 

 

FY 2020

£'000

FY 2019

£'000

 

+/- %

Germany

20,286

16,418

+24%

USA

37,692

25,434

+48%

Russia

2,904

3,065

(5%)

Other

4,378

-

-

Total

65,260

44,917

+45%

 

Gross profit

 

Gross profit is £37.4m (2019: £23.7m), which represents a gross margin percentage of 57.5% (2019: 52.8%). The increased gross margin was largely due to the higher volumes.

 

Administration costs and research and development

 

Administration costs have increased to £20.7m (2019: £18.3m).

 

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

 

 

Year ended

31 December 2020

Year ended
31 December 2019

Non-exceptional administration expenditure before R & D capitalisation

17,234

17,027

Effect of share-based payments

5,292

2,118

Less capitalised R & D

(586)

(527)

Effect of exceptional items

(1,282)

(338)

Total administrative expenses

20,658

18,280

 

The largest effect has been the increased share-based payment charge, with the increase mainly being a result of the Company's increased share price and a related increase in volatility.

 

Research and development costs included in administration expenses were £1.4m (2019: £2.3m). A further £0.6m was capitalised as an intangible asset, resulting from our development work to broaden and improve our product portfolio, bringing gross R&D expenditure for the year to £2.0m (2019: £2.8m). The reduction was largely a result of the emphasis required during the year on our COVID related products. The charge for depreciation of fixed assets and amortisation of intangible assets increased to £4.6m (2019: £4.4m).

 

Operating profit and adjusted earnings before interest, tax, depreciation and amortization

 

The Group generated an operating profit of £16.9m (2019: £5.8m). This was largely a result of the higher activity levels seen during the year. We continue to consider that adjusted earnings before interest, tax, depreciation and amortisation, share-based payments and exceptional items (adjusted EBITDA) is a better measure of the Group's progress as the Board believes it gives a clearer comparison of the operating performance between periods. In 2020 we achieved adjusted EBITDA of £25.5m (2019: £12.0m), an increase of 113%. The calculation of this non-GAAP measure is shown on the face of the income statement. It excludes the effect of non-cash share-based payment charges of £5.3m (2019: £2.1m), and exceptional profits of £1.3m (2019: £0.3m), the main element of which is the increase in fair value of the warranty claim provision which offsets the deferred consideration liability, both of which relate to an outstanding issue with the previous owner of EKF-Diagnostic.

 

Finance costs

 

Net finance costs have increased to £1.5m (2019: £0.3m). The main charge, and the increase, results from an increase in the fair value of deferred consideration which is valued using the Company's share price. Although the Group holds net cash, achievable returns on this are very low because of low interest rates around the world.

 

Tax

 

There is an income tax charge of £4.0m, an increase from the prior year charge (2019: £1.6m). The charge is higher than would have been expected largely because of the effect of losses in the UK entities for which a deferred tax asset has not been recognised as the likely timing of recovery is considered too remote, as well as the higher tax rates that apply in Germany and the USA. Tax of £1.1m has been charged direct to Other Comprehensive Income.

 

Dividend

 

A cash dividend of 1p per ordinary share was paid in December, in respect of the final dividend for 2019. In addition, a dividend in specie was completed which transferred the Group's holding in Trellus Health Limited to EKF shareholder at that time. Dividends are shown in the Statement of Changes in Equity, and not in the Income Statement.

 

Balance sheet

 

Property plant and equipment and right-of-use assets

 

Additions to fixed assets were £2.1m (2019: £1.4m). Major programmes include the continuing work on the upgrading and refurbishment of the Group's central laboratory product manufacturing facility in Elkhart, USA, the capitalization of new and replacement leases under IFRS 16 including the new production facility in the UK, and the building works associated with its set up.

 

Intangible assets

 

The carrying value of intangible assets has continued to fall, from £37.8m in 2019 to £37.1m as at 31 December 2020. This is largely the result of the annual amortisation charge.

Investments

 

During the year the Company sold around 63% of the shares it previously held in Renalytix AI plc ("Renalytix"). These shares were acquired at an average cost of £1.211 per share and were sold for £4.579 per share. The profit of £5.64m (less tax) is shown in Other Comprehensive Income. The Company continues to hold 1.39% of Renalytix, which itself completed a dividend in specie of its shareholding in Verici Dx plc ("Verici"), a developer of advanced clinical diagnostics for organ transplant. Like Renalytix, Verici has been brought to the public capital market by virtue of EKF's relationship with the Mount Sinai Hospital System. As a result of the distribution of Verici shares by Renalytix and following the successful IPO fundraising for Verici in November 2020, EKF now owns 1.89% of Verici.

 

Also during the year and again as a result of EKF's relationship with Mount Sinai, the Company invested $5.0m in August for 31.1% of Trellus Health Limited, a provider of connected digital health solutions for chronic conditions. The shareholding rights, except for voting rights, were transferred to EKF's shareholders via a dividend in specie in December.

 

Deferred consideration

 

The remaining deferred consideration of £2.9m (2019: £1.4m) relates to a share-based payment to the former owner of EKF-Diagnostic GmbH, payment of which is subject to an equal and offsetting warranty related claim, the value of which is held in receivables. Conclusion of the position has taken longer than anticipated but is expected during 2021.

 

Cash and working capital

 

Net cash which excludes marketable securities has increased to £21.4m from £11.4m. Gross cash has risen to £21.9m (2019: £12.1m) and Borrowings reduced in line with repayments to £0.5m (2019: £0.7m). Cash flow was boosted by the proceeds of the sale of Renalytix shares (£7.7m), while investments were made in Trellus and fixed and intangible assets - mainly R & D and an updated accounting system - totalling £7.0m, and £4.6m was paid out in cash dividends. Working capital needs increased by £4.2m, driven by the increases in volume and by action taken, to ensure supply lines during the COVID-19 pandemic.

 

 

Richard Evans

Finance Director and Chief Operating Officer

30 March 2021

 

 

Consolidated Income Statement

 

for the year ended 31 December 2020

 

 

 

 

 

 

 

2020

£'000

 

 

2019

£'000

Revenue                                                                                                                         

65,260

44,917

Cost of sales                                                                                                                  

(27,840)

(21,190)

Gross profit

37,420

23,727

Administrative expenses                                                                                         

(20,658)

(18,280)

Other income

133

337

Operating profit

16,895

5,784

Depreciation and amortisation                                                                              

(4,611)

(4,441)

Share-based payments

(5,292)

(2,118)

Exceptional items                                                                                                        

1,282

338

EBITDA before exceptional items and share-based payments               

25,516

12,005

Finance income                                                                                                            

53

73

Finance costs                                                                                                                

(1,592)

(339)

Profit before income tax

15,356

5,518

Income tax charge                                                                                                      

(3,971)

(1,586)

Profit for the year

11,385

3,932

Profit attributable to:

 

 

Owners of the parent

11,114

3,678

Non-controlling interest

271

254

 

11,385

3,932

 

 

 

Pence

 

 

Pence

Earnings per Ordinary Share attributable to the owners of the parent during the year

 

 

From continuing operations

 

 

Basic                                                                                                                                 

2.45

0.81

Diluted                                                                                                                             

2.42

0.80

 

 

 

Consolidated Statement of Comprehensive Income

 

 

 

for the year ended 31 December 2020

 

 

 

 

 

 

 

   2020

   £'000

 

 

2019

£'000

Profit for the year

 

11,385

3,932

Other comprehensive income:

 

 

 

Items that will not be reclassified to profit or loss

Changes in fair value of equity instruments at fair value through other comprehensive income (net of tax)

 

 

3,276

 

6,505

Items that may be subsequently reclassified to profit or loss

 

 

 

Currency translation differences

 

734

(3,096)

Other comprehensive income (net of tax)

 

4,010

3,409

Total comprehensive income for the year

 

15,395

7,341

Attributable to:

 

 

 

Owners of the parent

 

15,235

7,057

Non-controlling interests

 

160

284

Total comprehensive income for the year

 

15,395

7,341

 

 

 

Consolidated Statement of Financial Position

as at 31 December 2020

 

 

 

 

 

  Group 2020

£'000 

  Group

2019

£'000

Assets

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

 

12,620

12,179

Right-of-use asset

 

1,019

1,002

Intangible assets

 

37,051

37,767

Investments

 

6,608

9,900

Deferred tax assets

 

14

34

Total non-current assets

 

57,312

60,882

Current assets

 

 

 

Inventories

 

8,487

6,073

Trade and other receivables

 

13,182

8,097

Current income tax receivable

 

371

-

Cash and cash equivalents

 

21,913

12,074

Total current assets

 

43,953

26,244

Total assets

 

101,265

87,126

Equity attributable to owners of the parent

 

 

 

Share capital

 

4,550

4,541

Share Premium

 

200

-

Other reserves

 

5,354

6,648

Foreign currency reserves

 

4,028

3,183

Retained earnings

 

63,516

56,199

 

 

77,648

70,571

Non-controlling interest

 

552

601

Total equity

 

78,200

71,172

Liabilities

 

 

 

Non-current liabilities

 

 

 

Lease liabilities

 

690

716

Borrowings

 

323

480

Deferred tax liabilities

 

2,636

2,619

Total non-current liabilities

 

3,649

3,815

Current liabilities

 

 

 

Trade and other payables

 

14,435

7,470

Lease liabilities

 

380

286

Deferred consideration

 

2,901

1,385

Current income tax liabilities

 

1,515

2,823

Borrowings

 

185

175

Total current liabilities

 

19,416

12,139

Total liabilities

 

23,065

15,954

Total equity and liabilities

 

101,265

87,126

 

 

 

Consolidated Statement of Cash Flows

for the year ended 31 December 2020

 

 

 

Group

Group

 

 

2020

2019

 

 

£'000

£'000

Cash flow from operating activities

Cash generated by operations

 

 

 

20,798

 

6,519

Interest paid

 

(47)

(21)

Income tax paid

 

(6,942)

(1,398)

Net cash generated by operating activities

 

13,809

5,100

Cash flow from investing activities

Purchase of investments

 

 

(3,810)

 

(124)

Purchase of property, plant and equipment (PPE)

 

(1,631)

(1,418)

Purchase of intangibles

 

(1,014)

(957)

Proceeds from sale of PPE

 

68

30

Proceeds from sale of investments

 

7,670

-

Interest received

 

53

73

Net cash generated by/(used in) investing activities

 

1,336

(2,396)

Cash flow from financing activities

Share option buy back

 

 

(7)

 

(15)

Proceeds from issuance of Ordinary shares

 

209

-

Dividend

 

(4,550)

-

Repayments on borrowings

 

(183)

(180)

Principal lease payments

 

(469)

(381)

Dividend payment to non-controlling interest

 

(209)

(58)

Net cash used in financing activities

 

(5,209)

(634)

Net increase in cash and cash equivalents

 

9,936

2,070

Cash and cash equivalents at beginning of year

 

12,074

10,282

Exchange losses on cash and cash equivalents

 

(97)

(278)

Cash and cash equivalents at end of year

 

21,913

12,074

 

 

 

Consolidated Statement of Changes in Equity

 

 

 

Share capital

Share premium account

Other reserves

Foreign currency reserve

Retained earnings

 

Total

Non-controlling interest

Total equity

 

 

£'000

£'000

               £'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

At 1 January 2019

 

4,541

-

143

6,309

52,536

63,529

375

63,904

Comprehensive income

 

 

 

 

 

 

 

 

 

Profit for the year

 

-

-

-

-

3,678

3,678

254

   3,932

Other comprehensive income/(expense)

 

 

 

 

 

 

 

 

 

Changes in fair value of equity instruments at fair value through other comprehensive income

 

-

-

6,505

-

-

6,505

-

6,505

Currency translation differences

 

-

-

-

(3,126)

-

(3,126)

30

(3,096)

Total comprehensive income/(expense)

 

-

-

6,505

(3,126)

3,678

7,057

284

7,341

Transactions with owners

 

 

 

 

 

 

 

 

 

Share option cancellation

 

-

-

-

-

(15)

(15)

-

(15)

Dividends to non-controlling interest

 

-

-

-

-

-

-

(58)

(58)

Total distributions to owners

 

-

-

-

-

(15)

(15)

(58)

(73)

At 31 December 2019 and 1 January 2020

 

4,541

-

6,648

3,183

56,199

70,571

601

71,172

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

Profit for the year

 

-

-

-

-

11,114

11,114

271

11,385

Other comprehensive income

 

 

 

 

 

 

 

 

 

Changes in fair value of equity instruments at fair value through other comprehensive income

 

-

-

4,348

-

-

4,348

-

4,348

Transfer of gain on disposal of equity investments at fair value through other comprehensive income to retained earnings

 

-

-

(5,642)

-

5,642

-

-

-

Taxation on profit on disposal of equity instruments at fair value

 

-

-

-

-

(1,072)

(1,072)

-

(1,072)

Currency translation differences

 

-

-

-

845

-

845

(111)

734

Total comprehensive income

 

-

-

(1,294)

845

15,684

15,235

160

15,395

Transactions with owners

 

 

 

 

 

 

 

 

 

Proceeds from share issue

 

9

200

-

-

-

209

-

209

Share option cancellation

 

-

-

-

-

(7)

(7)

-

(7)

Dividends to non-controlling interest

 

-

-

-

-

-

-

(209)

(209)

Dividends to owners

 

 

 

 

 

(8,360)

(8,360)

-

(8,360)

Total distributions to owners

 

9

200

-

-

(8,367)

(8,158)

(209)

(8,367)

At 31 December 2020

 

4,550

200

5,354

4,028

63,516

77,648

552

78,200

 

 

 

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2020

 

1. General information and basis of presentation

 

EKF Diagnostics Holdings plc is a public limited company incorporated in the United Kingdom (Registration Number 04347937), which is listed on the AIM market of the London Stock Exchange. The address of the registered office is Avon House, 19 Stanwell Road, Penarth, 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 audited preliminary announcement has been prepared in accordance with the Group's accounting policies as disclosed in the financial statements for the year ended 31 December 2020 and international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS'), and the applicable legal requirements of the Companies Act 2006. This preliminary announcement was approved by the Board of Directors on 30 March 2021. The preliminary announcement does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year to 31 December 2019 have been delivered to the Registrar of Companies. The audit report for those accounts was unqualified and did not contain statements under 498 (2) or (3) of the Companies Act 2006 and did not contain any emphasis of matter.

 

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

 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRSs. The Company will publish its full financial statements for the year ended 31 December 2020 by 30 April 2021, which will be available on the Company's website at www.ekfdiagnostics.com and at the Company's registered office at Avon House, 19 Stanwell Road Penarth CF64 2EZ. The Annual General Meeting will be held on Wednesday 19 May 2021.

 

2. Significant accounting policies

 

Basis of preparation

 

The principal accounting policies applied in the preparation of this financial information has been applied consistently throughout the year and will be set out in the notes to the group's 2020 Annual Report.

 

The consolidated financial statements of EKF Diagnostics Holdings have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS'), and the applicable legal requirements of the Companies Act 2006.

 

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial liabilities at fair value through profit and loss and certain financial assets measured at fair value through other comprehensive income.

 

(a) New standards, amendments and interpretations adopted by the Group.

 

The group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2020:


• Definition of Material - Amendments to IAS 1 and IAS 8;

• Definition of a Business - Amendments to IFRS 3;

• Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7; and

• Revised Conceptual Framework for Financial Reporting.

 

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

 

(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2020 and not early adopted.

 

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning on or after 1 January 2021, and have not been applied in preparing these financial statements. The Group does not anticipate a material impact within its financial statements as a result of the applicable standards and interpretations.

 

Going concern

The Directors have considered the applicability of the going concern basis in the preparation of these financial statements. This included the review of internal budgets and financial results which show, taking into account reasonably probable changes in financial performance, that the Group should be able to operate within the level of its current funding arrangements. While we have seen some disruption to our core business as a result of the COVID-19 pandemic, current trading suggests that our base case forecasts are still applicable. In addition, our range of COVID related products has been highly successful, bringing significant benefits to the Group, including higher revenue, profits, and cash balances. We believe the Group is in a strong position, however, it is difficult to assess reliably whether there will be any material disruption in the future, and for how long our COVID range will remain relevant. We have modelled a number of scenarios covering reductions in revenue of 10% and 50%, without taking into account the potential benefits of any mitigation strategies such as potential cost savings or insurance claims. While the eventual severity and length of the economic disruption stemming from the pandemic is impossible to forecast these models give the Directors reasonable confidence that the business can survive our worst-case scenarios for reductions in revenue for at least the next 12 months.

 

The Company has net current liabilities, largely as a result of non-cash Items. The Group is profitable and cash generative and is able to provide funding for the Company if required, through loans or dividends.

 

After making enquiries, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. The Company and Group therefore continues to adopt the going concern basis of preparation for its consolidated financial statements.

 

3. Segmental reporting

 

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

 

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

 

The reportable segments derive their revenue primarily from the manufacture and sale of medical diagnostic equipment and reagents. Other services include the servicing and distribution of third-party company products under separate distribution agreements. Transactions between segments consist of the sale of products for resale. The basis of accounting for these transactions is the same as for external revenue.

 

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 segments for the year ended 31 December 2020 is as follows:

 

 

Germany

USA

Russia

Other

Total

2020

£'000

£'000

£'000

£'000

£'000

 

Income statement

Revenue

25,637

39,459

2,904

4,432

72,432

Inter-segment

 (5,351)

 (1,767)

 -

 (54)

 (7,172)

External revenue

20,286

37,692

2,904

4,378

65,260

 

Adjusted EBITDA*

7,343

20,094

833

 (2,754)

25,516

Exceptional items

                  877

                      -

-

                  405

                1,282

Share-based payments

                      -

                      -

-

 (5,292)

                 (5,292)

 

EBITDA

 8,220

20,094

833

 (7,641)

  21,506

Depreciation

   (787)

 (511)

 (24)

 (522)

 (1,844)

Amortisation

(1,646)

 (1,120)

 (1)

-

              (2,767)

 

Operating profit/(loss)

5,787

18,463

808

 (8,163)

16,895

Finance income

  2

13

39

(1)

53

Finance cost

  (26)

  -

-

 (1,566)

 (1,592)

Income tax

(820)

 (3,497)

 (171)

 517

 (3,971)

Retained profit/(loss)

4,943

14,979

676

 (9,213)

  11,385

 

Segment assets

Operating assets

39,961

36,899

355

30,529

107,744

Inter-segment assets

  (112)

 (11,427)

-

 (16,853)

 (28,392)

External operating assets

   39,849

25,472

355

13,676

79,352

Cash

3,130

7,459

1,257

10,067

21,913

Total assets

  42,979

32,931

1,612

23,743

101,265

 

Segment liabilities

Operating liabilities

7,135

17,836

158

25,820

50,949

Inter-segment liabilities

(1,332)

(14,915)

-

(12,145)

(28,392)

External operating liabilities

5,803

2,921

158

13,675

22,5578

Borrowings

508

-

-

 -

508

Total liabilities

  6,311

2,921

158

13,675

23,065

 

Other segmental information

Non-current assets - PPE

5,912

4,632

93

3,002

13,639

Non-current assets - Intangibles

24,039

10,979

77

1,956

37,051

PPE - additions

779

575

54

741

2,149

Intangible assets - additions

  679

335

-

-

1,014

 

* Adjusted EBITDA excludes exceptional items and share-based payments.

 

 

 

 

2019

 

Germany

£'000

 

USA

£'000

 

Russia

£'000

 

Other

£'000

 

Total

£'000

 

Income statement

 

 

 

 

 

Revenue

23,087

25,434

3,065

-

51,586

Inter-segment

(6,669)

-

-

-

(6,669)

External revenue

16,418

25,434

3,065

-

44,917

 

Adjusted EBITDA*

 

7,435

 

8,016

 

782

 

(4,228)

 

12,005

Exceptional items

356

-

-

(18)

338

Share-based payments

-

-

-

(2,118)

(2,118)

 

 

 

 

 

 

EBITDA

7,791

8,016

782

(6,364)

10,225

Depreciation

(739)

(387)

(19)

(367)

(1,512)

Amortisation

(2,077)

(1,161)

(2)

311

(2,929)

 

Operating profit

 

4,975

 

6,468

 

761

 

(6,420)

 

5,784

Finance income

10

7

37

19

73

Finance cost

(21)

-

-

(318)

(339)

Income tax

(677)

(449)

(164)

(296)

(1,586)

Retained profit

4,287

6,026

634

(7,015)

3,932

 

Segment assets

 

 

 

 

 

Operating assets

36,327

24,630

589

39,709

101,255

Inter-segment assets

(400)

-

-

(25,803)

(26,203)

External operating assets

35,927

24,630

589

13,906

75,052

Cash

3,298

5,480

1,159

2,137

12,074

Total assets

39,225

30,110

1,748

16,043

87,126

 

Segment liabilities

 

 

 

 

 

Operating liabilities

7,926

15,162

151

18,263

41,502

Inter-segment liabilities

(2,938)

(11,777)

-

(11,488)

(26,203)

External operating liabilities

4,988

3,385

151

6,775

15,299

Borrowings

655

-

-

-

655

Total liabilities

5,643

3,385

151

6,775

15,954

 

Other segmental information

 

 

 

 

 

Non-current assets - PPE

6,006

4,679

75

2,421

13,181

Non-current assets - Intangibles

24,172

12,115

95

1,385

37,767

PPE - additions

872

455

17

721

2,065

Intangible assets - additions

739

162

-

56

957

 

* 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 of customer is as follows:

 

 

 

 

2020

£'000

2019

£'000

Americas

 

 

United States of America

33,474

19,955

Rest of Americas

2,391

3,947

Europe, Middle East and Africa (EMEA)

 

 

Germany

5,873

6,268

United Kingdom

4,522

435

Rest of Europe

8,535

3,484

Russia

2,904

3,066

Middle East

1,261

1,771

Africa

2,553

1,482

Asia and Rest of World

 

 

China

767

822

Rest of Asia

2,883

3,578

New Zealand/Australia

97

109

Total revenue

65,260

44,917

 

Revenues of £16,960,000 (26.0%) were derived from one external customer.  Sales to this customer all relate to the USA. In 2019 revenues of £5,122,000 (11.4%) were derived from a different customer, all of whose revenues relate to the USA.

 

Revenue by disease state, which is presented for illustrative purposes only, is as follows:

 

 

FY 2020

£'000

FY 2019

£'000

 

+/- %

Hematology

11,037

13,808

(20%)

Diabetes Care

19,056

20,607

(8%)

Central Laboratory

30,995

6,135

+405%

Other

4,172

4,367

(4%)

Total

65,260

44,917

+45%

 

Central Laboratory sales in 2020 include sales of contract manufacturing services relating to PrimeStore and other viral transport medium products of £26,799,000 (2019: £44,000).

 

4. Exceptional Items

 

Included within administrative expenses are exceptional items as shown below:

 

 

Note

2020

£'000

2019

£'000

- Warranty claim

a

1,414

367

- Business reorganisation costs

b

(58)

(29)

- Cost of Trellus set-up

c

(74)

-

Exceptional items

 

1,282

338

 

a.     Increase in the value of an estimated warranty claim which offsets the remaining deferred consideration of £2.9m (2019: £1.4m) relating to a share-based payment to the former owner of EKF-Diagnostic GmbH. The increase is a result of the higher share price.

b.    Restructuring costs, mainly closure costs, associated in 2020 and 2019 with the closure of EKF's Polish facility and other restructuring activities.

c.     Start-up costs associated with the set-up of Trellus Health Limited.

 

5. Income tax charge

 

 

Group

 

2020

£'000

 

2019

£'000

Current tax:

 

 

Current tax on profit for the year

3,913

2,096

Adjustments for prior periods

(89)

(94)

Total current tax

4,002

2,002

 

Deferred tax:

 

 

Origination and reversal of temporary differences

(31)

(416)

Total deferred tax

(31)

(416)

Income tax charge

3,971

1,586

 

6. Earnings per share

 

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to owners of the parent by the weighted average number of Ordinary Shares in issue during the year.

 

 

2020

£'000

2019

£'000

Profit attributable to owners of the parent

11,114

3,678

Weighted average number of Ordinary Shares in issue

454,524,101

454,093,227

 

Basic profit per share

 

2.45 pence

 

0.81 pence

 

(b) Diluted

 

Diluted earnings 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 shares being share options.

 

 

2020

£'000

2019

£'000

Profit attributable to owners of the parent

11,114

3,678

Weighted average number of Ordinary Shares in issue

458,803,076

458,414,273

 

Diluted profit per share

 

2.42 pence

 

0.80 pence

 

 

2020

 

2019

Weighted average number of Ordinary Shares in issue

Adjustment for:

454,524,101

454,093,227

- Assumed conversion of share awards

235,035

277,106

- Assumed payment of equity deferred consideration

4,043,940

4,043,940

 

 

 

Weighted average number of Ordinary Shares including potentially dilutive shares

458,803,076

458,414,273

 

 

7. Property, Plant and equipment

Group

Land and buildings

£'000

Fixtures & fittings

£'000

Plant and machinery

£'000

Motor vehicles

£'000

Assets under Construction (restated)
£'000

Right-of-use asset

£'000

Total

£'000

 

Cost

 

 

 

 

 

 

 

At 1 January 2019

9,990

1,373

10,551

170

228

743

23,055

Additions

88

236

252

17

825

647

2,065

Exchange differences

(392)

(60)

(566)

11

(13)

(16)

(1,036)

Transfers

74

21

321

-

(416)

-

-

Disposals

-

(18)

(283)

(20)

(10)

(33)

(364)

At 31 December 2019

9,760

1,552

10,275

178

614

1,341

23,720

 

Accumulated depreciation

 

 

 

 

 

 

 

At 1 January 2019

1,596

1,103

7,044

100

-

-

9,843

Charge for the year

286

133

737

19

-

337

1,512

Exchange differences

(68)

(52)

(415)

4

-

2

(529)

Disposals

-

(18)

(249)

(20)

-

-

(287)

At 31 December 2019

1,814

1,166

7,117

103

-

339

10,539

Net book value at 31 December 2019

7,946

386

3,158

75

614

1,002

13,181

 

Cost

 

 

 

 

 

 

 

At 1 January 2020

9,760

1,552

10,275

178

614

1,341

23,720

Additions

63

122

340

54

1,052

518

2,149

Exchange differences

85

26

412

(30)

18

(14)

497

Transfers

302

(285)

928

-

(945)

-

-

Disposals

-

(26)

(146)

(1)

(4)

(245)

(422)

At 31 December 2020

10,210

1,389

11,809

201

735

1,600

25,944

 

Accumulated depreciation

 

 

 

 

 

 

 

At 1 January 2020

1,814

1,166

7,117

103

-

339

10,539

Charge for the year

302

128

902

23

-

489

1,844

Exchange differences

(4)

22

300

(18)

-

(2)

298

Transfers

188

(188)

-

-

-

-

-

Disposals

-

(26)

(105)

-

-

(245)

(376)

At 31 December 2020

2,300

1,102

8,214

108

-

581

12,305

 

 

 

 

 

 

 

 

Net book value at 31 December 2020

7,910

287

3,595

93

735

1,019

13,639

 

 

 

8. Intangible assets

 

Goodwill

Trademarks, trade name

and licences

Customer relationships

Trade secrets

Development costs

Software

Total

Group

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

Cost

 

 

 

 

 

 

 

At 1 January 2019

27,543

3,257

16,294

19,159

9,362

-

75,615

Additions

-

171

-

-

527

259

957

Transfer

-

(42)

-

-

-

42

-

Disposals

-

-

-

-

(462)

-

(462)

Exchange differences

(1,172)

(587)

(714)

(723)

(2)

(3,565)

At 31 December 2019

26,371

2,799

15,580

18,436

9,060

299

72,545

 

Accumulated amortisation

 

 

 

 

 

 

 

At 1 January 2019

2,631

2,496

9,489

12,691

6,535

-

33,842

Disposals

-

-

-

-

(462)

-

(462)

Exchange differences

(81)

(374)

(405)

(426)

(245)

-

(1,531)

Charge for the year

-

267

1,274

876

-

2,929

At 31 December 2019

2,550

2,389

10,358

13,141

6,340

-

34,778

 

 

 

 

 

 

 

 

Net book value at 31 December 2019

23,821

410

5,222

5,295

2,720

299

37,767

Cost

 

 

 

 

 

 

 

At 1 January 2020

26,371

2,799

15,580

18,436

9,060

299

72,545

Additions

-

146

-

-

586

282

1,014

Disposals

-

-

-

-

(5,482)

-

(5,482)

Exchange differences

632

372

(39)

620

12

1,886

At 31 December 2020

27,003

3,317

15,541

19,056

4,453

593

69,963

 

Accumulated amortisation

 

 

 

 

 

 

 

At 1 January 2020

2,550

2,389

10,358

13,141

6,340

-

34,778

Disposals

-

-

-

-

(5,474)

-

(5,474)

Exchange differences

55

201

(47)

401

231

-

841

Charge for the year

-

357

1,245

919

-

2,767

At 31 December 2020

2,605

2,947

11,556

14,461

1,343

-

32,912

 

 

 

 

 

 

 

 

Net book value at 31 December 2020

24,398

370

3,985

4,595

3,110

593

37,051

 

9. Dividends

 

In December 2020, the Company paid a final dividend for 2019 of 1p per ordinary share, at a total value of £4,550,000. Subject to continuing strong performance and the needs of the business, the Board intends to follow a progressive dividend policy. The Directors propose, subject to approval at the Company's next Annual General Meeting, the payment of a final dividend for 2020 of 1.1p per EKF Ordinary share held on 4 November 2021. Payment will be made on 1 December 2021. The expected total value is £5,005,000.

 

In addition to the cash dividend described above, in December 2020 the Company made a distribution in specie whereby, with the exception of a single "golden" share, the Company's shareholding in Trellus Health Limited was distributed to ordinary shareholders of the Company at a total value of £3,810,000. The fair value per EKF share was 0.8374p. Because the investment in Trellus was made on an arm's length basis within 6 months of the dividend, the Board judged the fair value of the dividend payment to be identical to the value of the investment.

 

10. Cash generated by operations

 

Group

 

 

Group

 

2020

£'000

 

2019

£'000

Profit before tax

15,356

 

5,518

Adjustments for:

 

 

 

- Depreciation

1,844

 

1,512

- Amortisation

2,767

 

2,929

- Warranty claim

(1,414)

 

(367)

- (Profit)/loss on disposal of fixed assets

(22)

 

14

- Loss on disposal of intangible assets

8

 

-

- Share-based payments

4,775

 

2,118

- Dividend received

(31)

 

-

- Fair value adjustment

1,516

 

281

- Foreign exchange

26

 

86

- Bad debt written down

45

 

212

- Net finance (income)/cost

23

 

(15)

Changes in working capital

 

 

 

- Inventories

(2,557)

 

37

- Trade and other receivables

(3,426)

 

(327)

- Trade and other payables

1,888

 

(5,479)

Net cash generated by operations

20,798

 

6,519

 

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admin Final Results 31740805 A Tue, 03/30/2021 - 07:01 LSE RNS Results and Trading Reports EKF