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-listed global diagnostics
business, announces its unaudited results
for the year ended 31 December 2023,
which show continued, sustainable growth in
EKF's established business and adjusted EBITDA for the year
slightly ahead of market expectations and a return to profitability
at the pre-tax level.
Financial highlights
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Revenues of £52.6m in-line with
market expectations (2022: £66.6m)
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- Revenues (excluding COVID-related &
clinical chemistry sales) of £48.7m (2022:
£48.6m)
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Gross profit before exceptionals
of £24.4m (2022: £30.8m)
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Gross margin improved to 45%
(2022: 36%) and admin expenses reduced by £3.5m
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Adjusted EBITDA* of £10.4m (2022:
£14.9m)
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A return to profit before tax of
£2.1m (2022: loss of £8.9m)
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Cash generated from operations of
£8.8m (2022: £12.7m)
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Group cash, net of borrowings
(excluding IFRS 16 liabilities), at year end of £4.7m (2022:
£11.4m), primarily reflecting cash generated from operations less
£6.8m capital expenditure (2022: £4.4m) and £5.4m dividend payment
(2022: £5.5m)
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Cash dividend equivalent to 1.2p
per ordinary share (2022: 1.2p per share)
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*Earnings before interest,
tax, depreciation and amortisation adjusted for exceptional items
and share-based payments
Operational highlights
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Business division
revenues:
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- Point-of-Care: up
1.9% to
£34.1m (2022: £33.4m); up 3.5% to £32.4m excluding clinical chemistry revenues
(2022: £31.3m)
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- Life Sciences:
overall revenues down 2.4% to £14.8m (2022: £15.2m), despite
1.6% rise in β-HB
sales
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- Other: £2.3m (2022: £8.5m,
which includes £3.5m relating to cash received for US
inventory)
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Opening of upgraded Life Sciences
facility in South Bend in October 2023
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-
fermentation run for a new customer completed
- ongoing
transfer of some higher volume biomanufacturing products from
Elkhart to South Bend
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Removal of non-core, low margin
products from portfolio
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Board changes: Julian Baines, Executive Chair,
remaining in role on a longer-term basis and Steve Young appointed
as CFO in September 2023
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Julian Baines, Executive Chair of EKF,
commented: "2024 will see the completion of the
rationalisation process that has simplified the business, allowing
us to focus on our higher margin products and services, as well as
delivering further improvements to EBITDA margin and cash
generation.
"EKF is a
well-established business, with a core product portfolio that is
steadily growing, generating cash from its operations. With a
structured management team in place, a newly streamlined business,
and the opening of our state-of-the-art fermentation facility in
South Bend, we have a Company that is well placed to deliver growth
and improved returns from many of the investments made over the
last two years."
Investor
Presentation
A copy of the investor
presentation is available here: https://www.ekfdiagnostics.com/documents-reports.html
EKF Diagnostics will be hosting a
live online presentation open to all investors today at 3.00pm
(GMT), via the Investor Meet Company platform. Investors are asked to please note the change
to start time. Investors can sign
up to Investor Meet Company for free and add to meet EKF
Diagnostics via:
https://www.investormeetcompany.com/ekf-diagnostics-holdings-plc/register-investor
Investors who already follow EKF on
the Investor Meet Company platform will automatically be
invited.
A recording of the presentation, a
PDF of the slides used, and responses to the Q&A session will
be available on the Investor Meet Company platform
afterwards.
The Company will make a further
announcement upon the publication of its audited Annual Report and
Accounts for the year ended 31 December 2023, and its availability
online.
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EKF
Diagnostics Holdings plc
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www.ekfdiagnostics.com
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Julian Baines, Executive Chair / Stephen
Young, CFO
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via Walbrook PR
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Singer Capital Markets (Nominated
Adviser & Broker)
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Tel: +44
(0)20 7496 3000
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Aubrey Powell / Oliver Platts
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Walbrook PR
(Media & Investor Relations)
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Tel: +44 (0)20 7933
8780 or ekf@walbrookpr.com
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Paul McManus / Charlotte Edgar
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Mob: +44 (0)7980 541
893 / +44 (0)7884 664 686
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The
persons responsible for arranging the release of this
announcement
on behalf of the Company are Julian Baines, Executive Chair, and
Stephen Young, CFO.
About EKF
Diagnostics Holdings plc (www.ekfdiagnostics.com)
EKF is an AIM-listed global diagnostics
business focussed on:
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Point-of-Care
analysers in the key areas of Hematology and
Diabetes
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Life
Sciences services provide specialist
manufacture of enzymes and custom products for use in diagnostic,
food and industrial applications.
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EKF has headquarters in Penarth (near Cardiff)
and operates five manufacturing sites across the US and Germany,
selling into over 120 countries world-wide.
Executive Chairman's Statement
We are pleased to announce EKF's full-year
results for 2023 which saw the Group deliver revenues of £52.6m.
Adjusted EBITDA for the year was £10.4m, slightly ahead of market
expectations. The results show continued, sustainable growth in our
established Point-of-care business and the simplified structure of
EKF now reflects our continuing business lines.
We have worked hard on reducing and
stabilising our cost base, which has resulted in a significant
improvement in our margins for the second half of the year as we
consolidated the business back to our core strengths. This activity
included the closure of our UK Contract Manufacturing operations in
February 2023, the sale of our laboratory testing business,
Advanced Diagnostic Laboratory LLC, in March 2023, and the
simplification and rationalisation of other areas of the business.
Challenges continue with increasing raw material and other costs
but, by consolidating our product offering, we are able to focus on
continuing to drive margin improvement and increased cash
generation throughout 2024.
Despite the challenges during 2023, the senior
management team has successfully refocused the business back to
pre-pandemic levels. We have also used this opportunity to simplify
the business by removing non-core, low-margin products from our
portfolio which will result in increased profitability. This
work is progressing well.
We were pleased to announce that our new
24,000 square foot state-of-the-art fermentation facility at South
Bend opened in October 2023. We have improved our ability to
provide downstream processing to meet customer needs and
successfully undertook our first fermentation for a new customer
before the end of the year.
The focus for 2024 is to continue to implement
strategies to grow Point-of-Care and Life Sciences and to
concentrate on our core products and services within each of the
divisions to drive further margin improvement and enhance cash
generation. These two divisions can be summarised as:
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•
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Point-of-Care-
supplying analysers and consumable products in the key areas of
Hematology and Diabetes
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•
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Life
Sciences - offering contract fermentation
services for clinically important enzymes and proteins, and the
manufacture of Beta-Hydroxybutyrate (β-HB), used as a quantitative ketone test
to identify patients suffering from diabetic ketoacidosis, as
well as in many other clinical applications.
|
Revised
product portfolio mix to focus on margin
improvement
It has been our aim throughout 2023 to
simplify the business to improve reporting and focus our efforts on
the areas where we are most successful, where we have the best
developed distribution channels, and the strongest opportunities
for delivering growth. By focusing our portfolio within
Point-of-Care and Life Sciences, we will further increase margins
and cash generation. It will also allow our Sales, Marketing and
Product Management departments to focus on growing and developing
our higher margin product ranges.
As part of the refocusing of the business, we
have decided to discontinue our clinical chemistry range, which has
been impacted by increased competition from India and China leading
to the product range being sold at a very low or even negative
margin. Whilst this will see a reduction in revenue of £1.7m,
exiting from this range with have a positive impact on EBITDA
margins.
During 2023 we also chose to discontinue our
STAT-Site M β-HB serum and
plasma product line. We had already discontinued the STAT-Site
M β-HB device in 2021, but
whilst we had continued to support customers with consumables, this
proved to be unsustainable due to declining sales and increased
technical challenges, resulting in a fuller cessation. Whilst this
will have some impact on future revenues (approximately £0.4m per
annum), we expect to replace most of this with our
best-in-class β-HB LiquiColor
chemistry reagent and our whole blood β-HB hand-held meter, with both of these
continuing products showing growth in 2023 as stated
below.
This portfolio rationalisation will allow us
to focus on our more profitable core products and services,
particularly those that have delivered stronger growth in 2023 and
are expected to continue to do so. As a result, our team is
focussed on only the major business lines within our two divisions,
as shown below, together with revenue growth statistics:
- Diaspect Tm
(up 34% year-on-year)
- HemoControl
(down 5% but expected to return to growth in
2024)
-
Quo-Test and Quo-Lab (up 19% and 6% respectively in
2023)
-
Biosen (slightly up excluding
the impact of foreign exchange movements)
-
β-HB LiquiColor
(4% growth in 2023, but expected to return to
stronger growth in 2024)
-
β-HB hand-held
meter (52% growth from a low
starting point)
-
Enzyme
Fermentation (considerable scale up
to optimal capacity by early 2026)
Review of
2023 core businesses and products performance
The future prospects for the business are
looking increasingly promising with our expectation that, with
focus on the core lines above, we will continue to grow
Point-of-Care and Life Sciences will benefit from accelerated
growth in β-HB sales,
as well as new fermentation customers coming on-line in South
Bend.
The reported results for 2023 shown below do
not fully reflect the benefits of the product portfolio
rationalisation implemented over the course of the year, and also
still show 2022 comparative data that includes legacy contract
manufacturing revenues from COVID-related activities. Whilst gross
margins have already improved considerably to 45% in 2023 from 36%
last year, further beneficial effects of this focus were evident in
Q4 margins and the business moves into the new financial year
making further progress in improving gross margins.
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Divisional
revenues for the 12 months ended 31 December
£
millions
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2023
Unaudited
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2022
Audited
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% Change
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Point-of-Care
(POC)
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34.1
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33.4
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+2.1%
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POC: excl. clinical chemistry
revenues
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32.4
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31.3
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+3.5%
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Life
Sciences
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16.3
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24.7
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-34.0%
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Life Sciences: β-HB and Fermentation
sales
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14.8
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15.2
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-2.6%
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Life Sciences: incl. COVID-related
revenues
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1.5
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9.5
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-84.2%
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Other*
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2.2
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8.5†
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-74.1%
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Total
Revenues
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52.6
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66.6
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-21.0%
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Total
Revenues (excl. COVID-related & clinical chemistry
revenues)
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48.7
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48.6
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0.0%
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* Other revenue relating to, shipping and handling recharges,
repairs and other sundries, plus testing of £1.0m in 2023 (2022:
£2.6m)
† Includes £3.5m relating to
US inventory receipt.
(1)
Point-of-Care
EKF continues to hold a strong position in
Point-of-Care and the growth in key products in this division was
very positive, with significant double-digit growth in some of our
main product lines (Diaspect Tm and Quo-Test). We maintain a very
strong position within the global market for hematology and
diabetes testing, a market which has considerable barriers to entry
due to increasing regulatory hurdles required to launch any new
instrumentation, as well as our long-established and comprehensive
base of installed users and high-quality global distribution
channel. In 2023, we sold over 12,000 Point-of-Care analysers,
resulting in sales of over 95 million individual test
consumables. In 2023 we carefully targeted the
management of our distribution channels to increase consumable pull
through against 2022, delivering a 10% increase in consumable sales
over the year.
Our haemoglobin and diabetes products continue
to deliver sustainable growth and are performing beyond management
expectations, and we expect to continue to grow in
Point-of-Care.
We have focused on expanding our reach within
this area, updating our portfolio to include connectivity using our
leading EKF
LinkTM data management platform, as well as
automating manufacture for single-packed cuvettes which more
closely aligns with customer needs in emerging markets where they
do not undertake 50 tests at a time.
·
Hematology
Total sales of our hematology analysers and
consumables were up 2% year-on-year. Our second largest hematology
product by sales is Diaspect Tm, and this continues to perform well
with 34% year-on-year growth, driven by significant sales increases
in Africa, driven by our ongoing support of Egypt's Vision 2030
programme which has seen large volumes of testing undertaken in
children.
Our largest contributor to Hematology
revenues, Hemocontrol, saw a decline in sales of 5% in 2023, mainly
due to three factors:- the late opening of Women, Infants and
Children (WIC) clinics in the United States following the end of
the COVID pandemic; delayed ordering of products from key partners
in Peru, one of our biggest HemoControl markets; and in some cases
EKF choosing to offer Diaspect Tm as a more appropriate solution in
territories where the market requirements have moved.
Encouragingly, WIC programmes are now online, our local
distribution partner Diagnostica Peruana is expecting a positive
upturn in Peru, and we have won tenders in Hong Kong, Egypt and
Thailand, enabled by the EKF
LinkTM data connectivity platform. This bodes
well for future growth from this product.
·
Diabetes
Our diabetes product portfolio delivered 3%
year-on-year growth. Quo-Test & Quo-Lab, both of which test for
glycated haemoglobin (HbA1c) levels, have shown strong growth
(revenues up 19% and 6% year-on-year respectively), demonstrating
that confidence and stability has returned to Point-of-Care
testing. Particularly good growth for Quo-Test has been
demonstrated in the UK, Sweden, South Africa, and the Philippines,
where engagement with new and existing distribution partners has
been focused. Biosen sales, our largest contributor within
diabetes, rose slightly on a constant currency basis (i.e.
excluding the impact of adverse foreign exchange
movements).
(2)
Life Sciences
·
β-HB
Total β-HB sales grew
by 2% in 2023, with sales of our β-HB
LiquiColor® reagent up by 4% year-on-year. This growth
rate reflects two main factors. First, we signed a new White Label
("WL") contract for β-HB
LiquiColor® with Thermo Fisher. This
will protect and grow our US market, however, Thermo Fisher ran
down its pre-existing EKF-branded stock before ordering the new WL
products from February 2024 onwards. Whilst this slowed sales
growth in FY23, the resumption of regular stock ordering and
replenishment of the new WL products will benefit FY24 revenues. We
now have WL agreements with Cardinal and Thermo Fisher and this is
expected to lead to continued growth of β-HB LiquiColor® sales
in the United States.
Second, as stated above, we have discontinued
our STAT-Site M β-HB, a
portable device for the quantitative determination of
β-HB in serum or plasma. This had an
impact on revenue growth in Q4 but allowed us to focus on growing
our userbase for the whole-blood handheld meter by over 50% in the
same period, as we switched customers to this reliable and
easy-to-use hand-held product.
·
Fermentation
The South Bend site opened in October 2023 and
we have already completed three fermentation runs, two of which
will generate revenue in 2024, this will lead to further growth in
2024 as the two new customers scale up. In addition, improvements
can be made by the transfer of some biomanufacturing of certain
higher volume products from Elkhart to South Bend. Fermentation
revenue was down slightly compared to 2022 due to the timing of
shipments to customers at the year end.
Our full range of fermenters of different
capacity is now online and we will look to scale up output for our
customers throughout 2024 and to add additional customers
throughout the current year. We are aiming to have the site running
at closer to optimal capacity by the beginning of 2026. Our
forecasts and guidance to analysts reflect this gradual build-up in
revenues and profitability.
The additional capacity now installed and
operational will also enable the production of 12 months' inventory
for our own key products in just one 3,000L fermentation. We have
never been able to achieve this scale historically. Increasing
batch sizes, and thereby reducing the number of batches that are
needed to produce the same volume, will have a positive impact on
margin. With this in mind, we are currently reviewing the
improvement in operational efficiency across both sites.
Cash and
Dividend Policy
Cash net of bank borrowings at the end of the
year was £4.7m, slightly ahead of expectations as we saw an
increase in margin in the second half of the year. The Company has
continued to generate strong cash from its operations in FY24 and,
as further margin improvements come through, we expect this cash
conversion to increase. Rebuilding the Company's cash levels is a
key consideration for the Board, to allow for further potential
growth investment in the business. This will be aided by a circa
$2.7m tax rebate in the US that will be received before the end of
2024.
Therefore, whilst the full impact of these
improvements continues to be realised, the Board believes that it
would be prudent to pause regular dividend payments, allowing cash
levels to build back up and to focus on enhancing shareholder value
through growth. As margins and cash generation improve further, the
Board will consider the best deployment of cash to deliver
shareholder returns. The Board will continue to review the option
of recommencing dividend payments, but only if appropriate, and
subject to the availability of surplus cash generation above the
needs of the business and the potential to enhance returns through
investment in growth.
Russia
We continue to supply tests to Russia through
our 60% owned subsidiary, but increased sanctions have restricted
the range of medical instruments we are able to supply into the
region to that which is deemed essential. This has inevitably led
to a reduction in revenues generated from Russia, although we have
been able to restart the receipt of dividend payments from the
Russian operation on a limited basis and this is continuing. As a
result, £0.3m cash has been received by
the Company in FY23, with cash balances of
£1.7m as at 31 December 2023 (£2.4m as at
31 December 2022). A further £0.1m has been received
so far in 2024. Sanctions are expected to continue to
apply against Russia and we have reduced our revenue expectations
from Russia accordingly for 2024 and beyond.
Management
Structure
As part of our continuous improvement, the
Company has put in place a Senior Management team with a proven
track record for delivery, including a Chief Product Officer,
Global Head of Sales, Chief Operating Officer and a President, US.
Each member of this team has significant experience and longevity
within EKF and in their respective roles will play an instrumental
part in the future success of the business. The revised management
structure reflects our refocused operations and the opportunities
to drive growth from them.
Board
Changes
During 2023 we announced a number of Board
Changes. In March, Mike Salter (who previously resigned from the
board in February 2023) left the business to pursue new
opportunities. In June, Marc Davies confirmed his intention to
stand down from his role as CFO and was replaced by Stephen Young
in September after an orderly handover period.
As previously stated, I remain fully committed
to delivering the opportunities that EKF has in front of it, and
for the foreseeable future we will not be looking for a new Group
CEO as I will continue to serve as Executive Chairman. The
opportunities for growth in our established businesses are very
exciting and I want to ensure that these are delivered by the
team.
The Board now compromises five members - two
Executive Directors and three Non-executive Directors, two of whom
are independent:-
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Julian Baines
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Executive Chair
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Stephen Young
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Chief Financial Officer
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Christian Rigg
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Senior Independent Non-executive
Director
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Jenny
Winter
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Independent Non-executive Director
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Christopher Mills
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Non-executive Director
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Outlook
2024 will see the completion of the
rationalisation process that has simplified the business, allowing
us to focus on our higher margin products and services, as well as
delivering further improvements to EBITDA margin and cash
generation.
EKF is a well-established business, with a
core product portfolio that is steadily growing, generating cash
from its operations. With a structured management team in place, a
newly streamlined business, and the opening of our state-of-the-art
fermentation facility in South Bend, we have a Company that is well
placed to deliver growth and improved returns from many of the
investments made over the last two years.
Julian
Baines
Executive Chairman
20 March
2024
Chief Financial Officer's Review
Revenue
Revenue for 2023 was £52.6m (FY
2022: £66.6m), a decrease of 21% on the prior year, reflecting the
disposal of the ADL laboratory testing business with sales of £0.5m
in 2023 (FY 2022: £2.6m), significantly lower COVID related
revenues, and a one-off inventory recovery item of £3.5m in 2022.
At constant 2022 exchange rates, revenue for the year would have
been £53.2m.
Revenue by geographical segment
based on the legal entity locations from which sales are made, is
as follows:
|
|
2023
Unaudited
£'000
|
2022
Audited
£'000
|
+/- %
|
|
Germany
|
22,095
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24,192
|
(9%)
|
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USA
|
26,133
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36,822
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(29%)
|
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UK
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815
|
1,419
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(43%)
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|
Russia see below
|
3,568
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4,202
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(15%)
|
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Total
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52,611
|
66,635
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(21%)
|
Revenue and AEBITDA by
geographical segment.
|
|
|
2023
Unaudited
Revenue
£'000
|
Adjusted
EBITDA*
£'000
|
2022
Audited
Revenue
£'000
|
Adjusted
EBITDA*
£'000
|
|
Germany
|
|
22,095
|
6,459
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24,192
|
8,089
|
|
USA
|
|
26,133
|
6,851
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36,822
|
8,309
|
|
UK
|
|
815
|
(4,018)
|
1,419
|
(3,057)
|
|
Russia
|
|
3,568
|
1,092
|
4,202
|
1,563
|
|
Total
|
|
52,611
|
10,384
|
66,635
|
14,904
|
* Adjusted EBITDA excludes exceptional items and share-based
payments.
Commentary by geographical segment:
Germany - Reduction in
revenue primarily due to sample collection tubes and kits contract
manufacturing activity following COVID drop off in Q1 2022. The
reduction was partly offset by the increase in revenue across
several core product lines, which meant only a 9% overall reduction
in revenue. This reduction in revenue impacted the adjusted EBITDA
generating £6.5m in 2023 (2022: £8.1m).
USA -Significant reduction in
contract manufacturing following COVID drop off in Q1 2022, plus
effect of sale of ADL Health. The US business includes the Clinical
Chemistry products discussed earlier in the Chairman's Statement.
Again, the revenue reduction impacted the adjusted EBITDA
generating £6.9m in 2023 (2022: £8.3m).
UK - Reduced contract
manufacturing activity following the closure of the UK contract
manufacturing facility in Q1 2023.
Russia - Local currency
revenue increased but was affected by less favourable exchange
rates. EKF's Russian entity is 60% owned by the Group with 100% of
its results consolidated, with the non-controlling interest shown
separately in the income statement and statement of financial
position.
Russia Update
During 2023, EKF continued to
supply essential medical products to its 60%-owned Russian
subsidiary, in compliance with current international sanctions
guidance and following regular management review. The effect of
sanctions and Russian Government retaliation is increasing. Despite
this, it has been possible to distribute limited cash dividends
from this subsidiary in 2023, however it is not clear how long this
will be able to continue. As at 31 December 2023, cash held in
Russia totalled £1.7m (31 December 2022: £2.4m).
Management continues to assess the
situation in Russia and is mindful of the growing financial and
operational challenges.
Gross profit
Gross profit was £23.9m (2022:
£24.0m), which represents a gross margin of 45% (2022: 36%). Before
exceptional costs of £0.6m (2022: £6.8m) the gross profit was
£24.4m (2022: £30.8m), representing a gross margin percentage of
46% (2022: 46%). The margin improvement was largely the result of
lower exceptional costs.
Administration costs and research and
development
Administration costs excluding
exceptional items have decreased to £19.7m (2022: £23.2m), largely
as a result of cost savings made and the disposal of ADL Health,
and a lower headcount across the other businesses.
Research and development costs
included in administration expenses were £1.8m (2022: £1.5m). A
further £0.4m (2022: £1.4m) was capitalised as an intangible asset,
resulting from our development work to broaden and improve our
product portfolio (including our EKF Link data management
platform), bringing gross R&D expenditure for the year to £2.2m
(2022: £2.9m). Impairment of development work which no longer met
the criteria for capitalisation totalled £0.9m. The charge for
depreciation of fixed assets and amortisation of intangible assets
decreased to £5.5m (2022: £6.7m). The reduction was mainly
associated with lower amortisation charges.
Operating profit and adjusted earnings before interest, tax,
depreciation and amortisation
The Group generated an operating
profit of £2.1m (2022: loss of £9.0m). This was a result of lower
exceptional costs, and the positive effects of the cost savings
made 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
provides a clearer comparison of the underlying operating
performance between periods. In 2023 we achieved adjusted EBITDA of
£10.4m (2022: £14.9m), a decrease of 30.2%, due to the lower gross
profit generated with the reduction in Covid related revenues but
offset by administrative expense savings. The calculation of this
non-GAAP measure is shown on the face of the income statement. It
excludes the effect of exceptional costs of £2.8m (2022: £17.5m),
the main elements of which in 2023 are the final loss on disposal
of assets relating to the disposal of ADL Health, and the further
write down of inventory relating to our former COVID business, net
of actions taken to mitigate the effect.
Finance costs
There is net finance income of
£0.05m (2022: £0.03m). The benefit of interest received on cash
balances, mainly those held in Russia, is partially offset by
interest on bank borrowings as well as charges relating to leases
accounted for in accordance with IFRS 16. Although the Group holds
net cash, achievable financial returns on this remain very
low.
Tax
There is an income tax credit of
£0.6m, a further decrease from the prior year charge (2022: £0.6m).
The effective tax rate is (28.2%). This is mainly due to the tax
effect of the fixed asset programme in the USA.
Dividend
A cash dividend of 1.2p per
ordinary share was paid in December 2023, in respect of the final
dividend for 2022. Based on the potential need for continued modest
investment in the growth of our core areas the Board has decided
that it would be prudent to pause dividend payments and to enhance
shareholder value mainly through growth.
Balance sheet
Property plant and equipment and right-of-use
assets
Additions to fixed assets were
£7.4m (2022: £7.0m). The largest part of this related to the fit
out of the new factory building in South Bend, Indiana and
upgrading and refurbishment of the Group's manufacturing facility
in Elkhart, Indiana, and the capitalisation of replacement leases
under IFRS 16, mainly in respect of the Indiana properties.
The new facility was officially opened in October 2023 and the
major capital programme there is coming to an end.
Intangible assets
The carrying value of intangible
assets has decreased, from £33.8m at the end of 2022 to £30.2m as
at 31 December 2023. This is largely due to amortisation of assets
and the impairment of certain development projects which no longer
meet the criteria for capitalisation. Intangible assets with a
gross value of £9.3m which had previously been impaired in full
were disposed of during the year, largely as a result of the
disposal of ADL Health.
Investments
During the year the Company
disposed of all of its shareholding in Renalytix plc, a developer
of artificial intelligence enabled chronic kidney disease products.
Proceeds were £1.3m. We continue to hold small investments in
Verici Dx plc, Epinex, LLC, and Llusern Scientific Limited, with a
combined carrying value as at 31 December 2023 of
£0.28m.
Due to the stated strategic focus
on the core established business and Life Sciences we do not expect
to make any further external investments in 2024.
Cash and working capital
Group cash net of borrowings
(which excludes marketable securities and lease creditors assessed
in relation to IFRS 16 assets) has decreased to £4.7m from £11.4m.
Excluding cash held in Russia; the cash balance net of borrowings
is £3.0m (2022: £9.0m). Gross cash has reduced to £7.7m (2022:
£11.6m). Borrowings at 31 December 2022 of £0.1m were repaid in
full during the year. A new loan of £3.0m was agreed in September
2023 and drawn down during the year from HSBC UK plc. The loan is a
revolving credit facility which allows us to borrow over short
periods within the three-year term. Borrowings are therefore
disclosed as current. Cash generated by operations is £8.7m
(2022: £12.7m). Investment has been made
in the acquisition of fixed assets (£6.8m excluding IFRS 16
leases), principally the new fermentation facility in South Bend,
Indiana. The dividend paid in December 2023 totalled £5.4m (2022:
£5.4m). In addition, a tax refund in relation to the US business of
$2.7m is expected before the end of 2024.
In addition to the loan from HSBC,
the Company continues to benefit from a funding line with North
Atlantic Smaller Companies Investment Trust PLC ("NASCIT").
Christopher Mills, Non-executive Director of the Company, sits on
the Board as Chief Executive Officer of NASCIT and is a substantial
shareholder of both the Company and the lender. This is a committed
facility for a maximum value of £3.0m which, as at the date of this
statement, is not drawn down. The direct and indirect shareholdings
of Mr. Mills in the Company include those of the North Atlantic
Smaller Companies Investment Trust PLC.
The lending facility is available
for three years from the date of signature in March 2023 and any
amounts drawn down carry interest at 2.5% above the Bank of England
base rate from time to time, payable quarterly in arrears. Any loan
under the facility is required to be fully repaid at the end of the
facility term. The Company may repay any such loan early, in part
or in full, but may not re-borrow such amounts. An arrangement fee
of £25k was paid to NASCIT in connection with the facility being
made available.
As a Substantial Shareholder (as
defined in the AIM Rules), the arrangement of the debt facility
with NASCIT represented a related party transaction pursuant to AIM
Rule 13. In accordance with AIM Rule 13, the independent Directors
of EKF (being the Directors of the Company other than Christopher
Mills), consulted with Singer Capital Markets as the Company's
nominated adviser and disclosed (prior to entry into the facility
agreement) that they consider the terms of that agreement are fair
and reasonable in so far as shareholders are concerned.
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 that, even taking into
account severe but plausible changes in financial performance, the
Group will be able to meet its liabilities as they fall due
throughout the going concern period. The directors note the Company
has net current liabilities as at 31 December 2023 and at 31
December 2022, however the majority of the current creditors are in
the form of intercompany creditors to subsidiary companies and the
timing of settlements is within the control of the
company.
The Directors have modelled a
range of sensitivities from the base internal Budget including
lower revenues, and continued restrictions in Russia in relation to
accessing cash. In addition, during 2023 the Group has undertaken
cost reductions, and secured a loan of £3m from HSBC. It also
retains access to £3m of funding from North Atlantic Smaller
Companies Investment Trust, which is available until March
2026.
Considering the range of
sensitivities which account for a severe downturn versus
expectation in 2024, plus the range of mitigation options
available, the business demonstrates sufficient headroom giving the
Directors confidence that the business can continue to meet its
obligations as they fall due, even under the worst-case scenarios,
for at least 12 months from the date of this report. Accordingly,
the directors are satisfied they can prepare the accounts on a
going concern basis.
Share capital
During the year the Company
acquired 1.2m of its own ordinary shares at a value of £0.4m in
connection with the sale of the ADL Health business to certain of
its original shareholders. The acquired shares remain held in
treasury as notified after the purchase.
The remaining share options in the
Company's ordinary shares lapsed during the year, and as a result
there are no outstanding share options at 31 December
2023.
Stephen Young
Chief Financial
Officer
20 March 2024
Consolidated Income Statement
for the year ended 31 December
2023
|
Continuing operations
|
2023
Unaudited
£'000
|
2022
Audited
£'000
|
|
Revenue
|
52,611
|
66,635
|
|
Cost of
sales
|
(28,175)
|
(35,823)
|
|
Exceptional items - other charged to cost of sales
|
(577)
|
(6,774)
|
|
Gross profit
|
23,859
|
24,038
|
|
Administrative expenses
|
(19,680)
|
(23,177)
|
|
Exceptional items - impairment of assets
|
(961)
|
(10,384)
|
|
Exceptional items - other
|
(1,295)
|
(367)
|
|
Other
income
|
158
|
919
|
|
Operating
profit/(loss)
|
2,081
|
(8,971)
|
|
Depreciation and amortisation
|
(5,472)
|
(6,658)
|
|
Share-based payments
|
2
|
308
|
|
Exceptional items
|
(2,833)
|
(17,525)
|
|
EBITDA
before exceptional
items and
share-based payments
|
10,384
|
14,904
|
|
Finance
income
|
125
|
131
|
|
Finance
costs
|
(75)
|
(102)
|
|
Profit/(loss)
before income
tax
|
2,131
|
(8,942)
|
|
Income
tax credit/(charge)
|
600
|
(634)
|
|
Profit/(loss)
for the
year
|
2,731
|
(9,576)
|
|
Profit/(loss)
attributable to:
|
|
|
|
Owners of
the parent
|
2,352
|
(10,101)
|
|
Non-controlling interest
|
379
|
525
|
|
|
2,731
|
(9,576)
|
|
|
|
|
|
|
Pence
|
Pence
|
|
Earnings/(loss) per Ordinary
Share attributable to the owners of the parent during the
year
|
|
|
|
|
|
|
|
Basic
|
0.52
|
(2.21)
|
|
Diluted
|
0.52
|
(2.21)
|
Consolidated Statement of Comprehensive
Income
for the year ended 31 December
2023
|
|
2023
Unaudited
£'000
|
2022
Audited
£'000
|
|
Profit/(loss)
for the
year
|
2,731
|
(9,576)
|
|
Other
comprehensive income/(loss)
|
|
|
|
Items that will not be
reclassified to profit or loss
Changes
in fair value of equity instruments at fair value through other
comprehensive income/(loss) (net of tax)
|
489
|
(6,096)
|
|
Items that may be
subsequently reclassified to profit or loss
Currency
translation differences on translation of foreign
operations
|
(3,564)
|
6,811
|
|
Other
comprehensive income/(loss)
(net of
tax)
|
(3,075)
|
715
|
|
Total
comprehensive (loss)
for the year
|
(344)
|
(8,861)
|
|
Attributable to:
|
|
|
|
Owners of
the parent
|
(438)
|
(9,420)
|
|
Non-controlling interests
|
94
|
559
|
|
Total
comprehensive loss
for the year
|
(344)
|
(8,861)
|
Consolidated Statement of
Financial Position
as at 31 December
2023
|
|
|
Group
Unaudited
2023
£'000
|
Group
Audited
2022
£'000
|
|
Assets
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property,
plant and equipment
|
|
23,744
|
20,435
|
|
Right-of-use asset
|
|
1,031
|
1,279
|
|
Intangible assets
|
|
30,224
|
33,772
|
|
Investments
|
|
276
|
1,119
|
|
Deferred
tax assets
|
|
18
|
925
|
|
1Total non-current
assets
|
|
55,293
|
57,530
|
|
Current
assets
|
|
|
|
|
Inventories
|
|
8,766
|
9,434
|
|
Trade and
other receivables
|
|
6,787
|
10,739
|
|
Current
income tax receivable
|
|
2,277
|
10
|
|
Cash and
cash equivalents (including restricted cash of £1,706,000 (2022:
£2,366,000))
|
|
7,726
|
11,578
|
|
Total current assets
|
|
25,556
|
31,761
|
|
Total assets
|
|
80,849
|
89,291
|
|
Equity
attributable to
owners of
the parent
|
|
|
|
|
Share
capital
|
|
4,537
|
4,549
|
|
Share
premium
|
|
7,375
|
7,375
|
|
Other
equity - Ordinary shares held in treasury
|
|
12
|
-
|
|
Other
reserves
|
|
80
|
(629)
|
|
Foreign
currency reserves
|
|
6,356
|
9,590
|
|
Retained
earnings/(accumulated losses)
|
|
48,757
|
52,461
|
|
|
|
67,117
|
73,346
|
|
Non-controlling interest
|
|
1,100
|
1,177
|
|
Total
equity
|
|
68,217
|
74,523
|
|
Liabilities
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
Lease
liabilities
|
|
618
|
537
|
|
Deferred
tax liabilities
|
|
2,517
|
2,493
|
|
Total
non-current liabilities
|
|
3,135
|
3,030
|
|
Current
liabilities
|
|
|
|
|
Trade and
other payables
|
|
5,512
|
8,288
|
|
Lease
liabilities
|
|
495
|
873
|
|
Current
income tax liabilities
|
|
504
|
2,440
|
|
Borrowings
|
|
2,986
|
137
|
|
Total
current liabilities
|
|
9,497
|
11,738
|
|
Total
liabilities
|
|
12,632
|
14,768
|
|
Total
equity and
liabilities
|
|
80,849
|
89,291
|
Consolidated Statement of Cash Flows
for the year ended 31 December
2023
|
|
|
Group Unaudited
2023
£'000
|
Group
Audited 2022
£'000
|
|
Cash flow from operating
activities
|
|
|
|
|
Cash
generated from operations
|
|
8,823
|
12,655
|
|
Interest
received
|
|
125
|
85
|
|
Interest
paid
|
|
(47)
|
(46)
|
|
Income
tax paid
|
|
(2,590)
|
(3,006)
|
|
Net cash generated from
operating activities
|
|
6,311
|
9,688
|
|
Cash flow from investing
activities
|
|
|
|
|
Payment
for investments
|
|
-
|
(2,930)
|
|
Payment
for property, plant and equipment (PPE)
|
|
(6,598)
|
(4,434)
|
|
Payment
for intangibles
|
|
(377)
|
(1,394)
|
|
Payment
for acquisition of subsidiaries, net of cash acquired
|
|
-
|
(403)
|
|
Proceeds
from sale of PPE
|
|
-
|
229
|
|
Proceeds
from sale of investments
|
|
1,333
|
-
|
|
Net cash (used in)/generated from
investing activities
|
|
(5,642)
|
(8,932)
|
|
Cash flow from financing
activities
|
|
|
|
|
Payment
for shares bought back
|
|
-
|
(3,896)
|
|
Dividends
paid to company shareholders
|
|
(5,445)
|
(5,459)
|
|
Repayments of borrowings
|
|
(137)
|
(613)
|
|
New
borrowings
|
|
3,000
|
-
|
|
Fees for
new borrowing
|
|
(14)
|
-
|
|
Principal
elements of lease payments
|
|
(879)
|
(1,071)
|
|
Dividend
payment to non-controlling interest
|
|
(171)
|
-
|
|
Net cash used in financing
activities
|
|
(3,646)
|
(11,039)
|
|
Net (decrease)/increase in cash and cash equivalents
|
|
(2,977)
|
(10,283)
|
|
Cash and
cash equivalents at beginning of year
|
|
11,578
|
20,341
|
|
Exchange
(losses)/gains on cash and cash equivalents
|
|
(875)
|
1,520
|
|
Cash and cash equivalents at
end of year
|
|
7,726
|
11,578
|
Cash and cash equivalents totalling
£1,706,000 (2022: £2,366,000) are held by the Group's 60% owned
subsidiary company in Russia. As a result of action by the Russian
Government following international sanctions being imposed on
Russia, access to this cash is currently restricted.
Consolidated Statement of Changes in Equity
|
|
Share capital
|
Share
premium account
|
Other equity
|
Other reserves
|
Foreign currency reserve
|
Retained earnings
|
Total
|
Non-controlling interest
|
Total equity
|
|
Consolidated
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Audited
|
|
|
|
|
|
|
|
|
|
|
At 1 January
2022
|
4,639
|
7,375
|
-
|
5,033
|
2,813
|
74,264
|
94,124
|
618
|
94,742
|
|
Comprehensive (expense)/income
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit for the year
|
-
|
-
|
-
|
-
|
-
|
(10,101)
|
(10,101)
|
525
|
(9,576)
|
|
Other comprehensive (expense)/
income
|
|
|
|
|
|
|
|
|
|
|
Changes in fair value of equity
instruments at fair value through other comprehensive
income
|
-
|
-
|
-
|
(7,598)
|
-
|
-
|
(7,598)
|
-
|
(7,598)
|
|
Deferred
tax on the above
|
-
|
-
|
-
|
1,502
|
-
|
-
|
1,502
|
-
|
1,502
|
|
Currency
translation differences
|
-
|
-
|
-
|
-
|
6,777
|
(1)
|
6,776
|
34
|
6,810
|
|
Total
comprehensive
(expense)/income
|
-
|
-
|
-
|
(6,096)
|
6,777
|
(10,102)
|
(9,421)
|
559
|
(8,862)
|
|
Transactions with owners
|
|
|
|
|
|
|
|
|
|
|
Cancellation of ordinary
shares
|
(90)
|
-
|
-
|
90
|
-
|
(3,896)
|
(3,896)
|
-
|
(3,896)
|
|
Reserve
transfer
|
-
|
-
|
-
|
344
|
-
|
(344)
|
-
|
-
|
-
|
|
Dividends
to owners
|
-
|
-
|
-
|
-
|
-
|
(7,461)
|
(7,461)
|
-
|
(7,461)
|
|
Total
distributions to
owners
|
(90)
|
-
|
-
|
434
|
-
|
(11,701)
|
(11,357)
|
-
|
(11,357)
|
|
At 31 December
2022
|
4,549
|
7,375
|
-
|
(629)
|
9,590
|
52,461
|
73,346
|
1,177
|
74,523
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income/(expense)
|
|
|
|
|
|
|
|
|
|
|
Profit for
the year
|
-
|
-
|
-
|
-
|
-
|
2,352
|
2,352
|
379
|
2,731
|
|
Other comprehensive
income/ (expense)
|
|
|
|
|
|
|
|
|
|
|
Changes in
fair value of equity instruments at fair value through other
comprehensive expense
|
-
|
-
|
-
|
489
|
-
|
-
|
489
|
-
|
489
|
|
Reserve
transfer
|
-
|
-
|
-
|
262
|
-
|
(262)
|
-
|
-
|
-
|
|
Currency
translation differences
|
-
|
-
|
-
|
(1)
|
(3,234)
|
(44)
|
(3,279)
|
(285)
|
(3,564)
|
|
Total
comprehensive
income/ (expense)
|
-
|
-
|
-
|
750
|
(3,234)
|
2,046
|
(438)
|
94
|
(344)
|
|
Transactions with
owners
|
|
|
|
|
|
|
|
|
|
|
Ordinary
shares acquired
|
(12)
|
-
|
12
|
-
|
-
|
(344)
|
(344)
|
-
|
(344)
|
|
Reserve
transfer
|
-
|
-
|
-
|
(41)
|
-
|
41
|
-
|
-
|
-
|
|
Dividends
to non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(171)
|
(171)
|
|
Dividends
to owners
|
-
|
-
|
-
|
-
|
-
|
(5,445)
|
(5,445)
|
-
|
(5,445)
|
|
Share-based payment reserve
|
-
|
-
|
-
|
-
|
-
|
(2)
|
(2)
|
-
|
(2)
|
|
Total distributions to
owners
|
(12)
|
-
|
12
|
(41)
|
-
|
(5,750)
|
(5,791)
|
(171)
|
(5,962)
|
|
At 31 December
2023
|
4,537
|
7,375
|
12
|
80
|
6,356
|
48,757
|
67,117
|
1,100
|
68,217
|
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2023
1. General information
EKF Diagnostics Holdings Plc is a
company incorporated in England and Wales and domiciled in the
United Kingdom. The Company is a public limited company, which is
listed on the Alternative Investment Market of the London Stock
Exchange. The address of the registered office is Avon House, 19
Stanwell Road, Penarth, Cardiff CF64 2EZ.
The principal activity of the Group
is the development, manufacture and supply of products and services
into the in-vitro diagnostic (IVD) market place. The Group has
presence in the UK, USA, Germany, and Russia, and sells throughout
the world including Europe, the Middle East, the Americas, Asia,
and Africa.
The unaudited financial information
included in this preliminary results announcement for the year
ended 31 December 2023 and audited financial information for
the year ended 31 December 2022 does not comprise statutory
accounts within the meaning of section 434 and 435 of the Companies
Act 2006. The information has been extracted from the draft
statutory financial statements for the year ended 31 December 2023
which will be delivered to the Registrar of Companies in due
course. Statutory financial statements for the year
ended 31 December 2022 were approved by the Board of directors on
28 March 2023 and have been delivered to the Registrar of
Companies. The report of the auditors on these financial statements
was unqualified.
The financial statements have been prepared in accordance with
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 (IFRS) as applicable to
companies reporting under those standards. Whilst the financial
information included in this preliminary announcement has been
prepared in accordance with IFRS, this announcement does not
contain sufficient information to comply with IFRS. The accounting
policies used in the preparation of these unaudited financial
statements are consistent with those used in the preparation of the
audited financial statements for the year ended 31 December
2022.
Statutory accounts for the year to
31 December 2022 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.
2.
Significant accounting policies - Going concern
The Directors have considered the
applicability of the going concern basis in the preparation of
these financial statements. This included the review of internal
budgets and financial results which show that, even taking into
account severe but plausible changes in financial performance, the
Group will be able to meet its liabilities as they fall due
throughout the going concern period. The directors note the Company
has net current liabilities as at 31 December 2023 and at 31
December 2022, however the majority of the current creditors are in
the form of intercompany creditors to subsidiary companies and the
timing of settlements is within the control of the
company.
The Directors have modelled a range
of sensitivities from the base internal Budget including lower
revenues, and continued restrictions in Russia in relation to
accessing cash. In addition, during 2023 the Group has undertaken
cost reductions, and secured a loan of £3m from HSBC. It also
retains access to £3m of funding from North Atlantic Smaller
Companies Investment Trust, which is available until March
2026.
Considering the range of
sensitivities which account for a severe downturn versus
expectation in 2024, plus the range of mitigation options
available, the business demonstrates sufficient headroom giving the
Directors confidence that the business can continue to meet its
obligations as they fall due, even under the worst-case scenarios,
for at least 12 months from the date of this report. Accordingly,
the directors are satisfied they can prepare the accounts on a
going concern basis.
3.
Segmental reporting
Management has determined the
Group's operating segments based on the monthly management reports
presented to the Chief Operating Decision Maker ('CODM'). The CODM
is the Executive Directors and the monthly management reports are
used by the Group to make strategic decisions and allocate
resources.
The principal activity of the Group
is the 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 2023 is as follows:
|
2023
(Unaudited)
|
Germany
£'000
|
USA
£'000
|
Russia^
£'000
|
UK
£'000
|
Total
£'000
|
|
Income statement
|
|
|
|
|
|
|
Revenue
|
27,122
|
26,133
|
3,568
|
816
|
57,639
|
|
Inter-segment
|
(5,027)
|
-
|
-
|
(1)
|
(5,028)
|
|
External revenue
|
22,095
|
26,133
|
3,568
|
815
|
52,611
|
|
Adjusted EBITDA*
|
6,459
|
6,851
|
1,092
|
(4,018)
|
10,384
|
|
Exceptional items - other, charged to cost of
sales
|
205
|
(775)
|
-
|
(7)
|
(577)
|
|
Exceptional items - impairments
|
(677)
|
(120)
|
-
|
(164)
|
(961)
|
|
Exceptional items - other
|
(86)
|
(1,186)
|
-
|
(23)
|
(1,295)
|
|
Share-based payments
|
-
|
-
|
-
|
2
|
2
|
|
EBITDA
|
5,901
|
4,770
|
1,092
|
(4,210)
|
7,553
|
|
Depreciation
|
(907)
|
(2,065)
|
(37)
|
(267)
|
(3,276)
|
|
Amortisation
|
(1,182)
|
(929)
|
-
|
(85)
|
(2,196)
|
|
Operating profit
|
3,812
|
1,776
|
1,055
|
(4,562)
|
2,081
|
|
Finance
income
|
|
|
|
|
125
|
|
Finance
cost
|
|
|
|
|
(75)
|
|
Income
tax
|
|
|
|
|
600
|
|
Profit for the year
|
|
|
|
|
2,731
|
|
Segment
assets
|
|
|
|
|
|
|
Operating
assets
|
42,131
|
53,717
|
1,271
|
9,304
|
106,423
|
|
Inter-segment assets
|
(10,818)
|
(20,493)
|
(210)
|
(1,779)
|
(33,300)
|
|
External
operating assets
|
31,313
|
33,224
|
1,061
|
7,525
|
73,123
|
|
Cash
|
1,269
|
3,955
|
1,706
|
796
|
7,726
|
|
Total assets
|
32,582
|
37,179
|
2,767
|
8,321
|
80,849
|
|
Segment
liabilities
|
|
|
|
|
|
|
Operating
liabilities
|
4,959
|
23,125
|
160
|
14,702
|
42,946
|
|
Inter-segment liabilities
|
(770)
|
(19,184)
|
-
|
(13,346)
|
(33,300)
|
|
External
operating liabilities
|
4,189
|
3,941
|
160
|
1,356
|
9,646
|
|
Borrowings (excluding lease liabilities)
|
-
|
-
|
-
|
2,986
|
2,986
|
|
Total liabilities
|
4,189
|
3,941
|
160
|
4,342
|
12,632
|
|
Other segmental information
|
|
|
|
|
|
|
Non-current assets - PPE
|
6,176
|
15,834
|
138
|
1,596
|
23,744
|
|
Non-current assets - Intangibles
|
18,117
|
7,650
|
68
|
4,389
|
30,224
|
|
PPE -
additions
|
1,307
|
6,039
|
56
|
8
|
7,410
|
|
Intangible assets - additions
|
314
|
63
|
-
|
-
|
377
|
* Adjusted EBITDA excludes exceptional items and share-based
payments. The UK includes head
office costs.
^ relates to a subsidiary with a
non-controlling interest
|
2022
(Audited)
|
Germany
£'000
|
USA
£'000
|
Russia^
£'000
|
UK
£'000
|
Total
£'000
|
|
Income statement
|
|
|
|
|
|
|
Revenue
|
30,384
|
37,220
|
4,202
|
1,427
|
73,233
|
|
Inter-segment
|
(6,192)
|
(398)
|
-
|
(8)
|
(6,598)
|
|
External revenue
|
24,192
|
36,822
|
4,202
|
1,419
|
66,635
|
|
Adjusted EBITDA*
|
8,089
|
8,309
|
1,563
|
(3,057)
|
14,904
|
|
Exceptional items - other, charged to cost of
sales
|
(1,701)
|
(4,767)
|
-
|
(306)
|
(6,774)
|
|
Exceptional items - impairments
|
(32)
|
(10,324)
|
-
|
(28)
|
(10,384)
|
|
Exceptional items - other
|
(156)
|
(142)
|
-
|
(69)
|
(367)
|
|
Share-based payments
|
-
|
-
|
-
|
308
|
308
|
|
EBITDA
|
6,200
|
(6,924)
|
1,563
|
(3,152)
|
(2,313)
|
|
Depreciation
|
(744)
|
(1,925)
|
(21)
|
(408)
|
(3,098)
|
|
Amortisation
|
(1,667)
|
(1,835)
|
-
|
(58)
|
(3,560)
|
|
Operating profit
|
3,789
|
(10,684)
|
1,542
|
(3,618)
|
(8,971)
|
|
Finance
income
|
1
|
1
|
118
|
11
|
131
|
|
Finance
cost
|
(33)
|
(4)
|
-
|
(65)
|
(102)
|
|
Income
tax
|
(790)
|
644
|
(348)
|
(140)
|
(634)
|
|
Profit for the year
|
2,967
|
(10,043)
|
1,312
|
(3,812)
|
(9,576)
|
|
Segment
assets
|
|
|
|
|
|
|
Operating
assets
|
41,835
|
57,213
|
873
|
13,246
|
113,167
|
|
Inter-segment assets
|
(10,608)
|
(22,634)
|
-
|
(2,212)
|
(35,454)
|
|
External
operating assets
|
31,227
|
34,579
|
873
|
11,034
|
77,713
|
|
Cash
|
2,774
|
5,785
|
2,366
|
653
|
11,578
|
|
Total assets
|
34,001
|
40,364
|
3,239
|
11,687
|
89,291
|
|
Segment
liabilities
|
|
|
|
|
|
|
Operating
liabilities
|
7,211
|
27,125
|
207
|
15,542
|
50,085
|
|
Inter-segment liabilities
|
(986)
|
(21,908)
|
-
|
(12,560)
|
(35,454)
|
|
External
operating liabilities
|
6,225
|
5,217
|
207
|
2,982
|
14,631
|
|
Borrowings (excluding lease liabilities)
|
137
|
-
|
-
|
-
|
137
|
|
Total liabilities
|
6,362
|
5,217
|
207
|
2,982
|
14,768
|
|
Other segmental information
|
|
|
|
|
|
|
Non-current assets - PPE
|
5,982
|
13,590
|
155
|
1,987
|
21,714
|
|
Non-current assets - Intangibles
|
18,606
|
8,822
|
87
|
6,257
|
33,772
|
|
PPE -
additions
|
877
|
5,909
|
84
|
102
|
6,972
|
|
Intangible assets - additions
|
832
|
192
|
-
|
370
|
1,394
|
* Adjusted EBITDA excludes exceptional items and share-based
payments. The UK includes head office costs
^ relates to a subsidiary with a non-controlling interest
Disclosure of Group revenues by
geographic location of customer is as follows:
|
|
2023
Unaudited
£'000
|
2022
Audited
£'000
|
|
Americas
|
|
|
|
United
States of America
|
21,187
|
30,941
|
|
Rest of
Americas
|
3,791
|
4,126
|
|
Europe, Middle East and
Africa (EMEA)
|
|
|
|
Germany
|
8,231
|
8,001
|
|
United
Kingdom
|
767
|
1,886
|
|
Ireland
|
1,277
|
5,253
|
|
Rest of
Europe
|
4,094
|
3,715
|
|
Russia
|
3,568
|
4,202
|
|
Middle
East
|
1,656
|
1,449
|
|
Africa
|
2,805
|
1,945
|
|
Asia and Rest of
World
|
|
|
|
China
|
1,246
|
1,014
|
|
Rest of
Asia and Oceania
|
3,989
|
4,103
|
|
Total
revenue
|
52,611
|
66,635
|
In 2023 and 2022 no customer
represented more than 10% of revenues.
4. Exceptional items
Included within cost of sales and
administrative expenses are exceptional items as shown below:
|
|
|
2023
Unaudited
£'000
|
2022
Audited
£'000
|
|
-
Deferred consideration
|
|
-
|
2
|
|
-
Business reorganisation costs - other charged to cost of
sales
|
|
(577)
|
(6,774)
|
|
-
Business reorganisation costs - Impairment
|
|
(961)
|
(10,384)
|
|
-
Business reorganisation costs - other charged to operating
expenses
|
|
(1,295)
|
(369)
|
|
Exceptional items
|
|
(2,833)
|
(17,525)
|
a) Change in the value of deferred
consideration relating to the acquisition of Advanced Diagnostic
Laboratory LLC.
b) Costs associated with the
transition and restructure of certain operations in the UK and
Germany, which have been charged to cost of sales. In 2023 the
costs include provisions against certain COVID-19 related and other
inventory totalling £0.5m and provisions for certain onerous
contracts following the decision to focus on its other
businesses.
c) In 2023, impairments associated
with the transition and restructure of certain operations in the
US, UK and Germany, which have been charged to operating expenses
including £0.9m relating to the impairment of R & D projects
which no longer met the requirements of capitalisation
d) In 2023
costs associated with the transition and restructure of certain
operations in the US, UK and Germany, including £0.7m relating to
ADL and redundancy costs (£0.2m) which have
been charged to operating expenses.
5. Income tax charge
|
Group
|
2023
Unaudited
£'000
|
2022
Audited
£'000
|
|
Current
tax:
|
|
|
|
Current
tax on profit for the year
|
1,182
|
2,815
|
|
Adjustments for prior periods
|
(2,729)
|
62
|
|
Total
current tax
|
(1,547)
|
2,877
|
|
Deferred
tax:
|
|
|
|
Origination and reversal of temporary differences
|
947
|
(2,243)
|
|
Total deferred
tax
|
947
|
(2,243)
|
|
Income tax charge
|
(600)
|
634
|
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.
|
|
2023
Unaudited
£'000
|
2022
Audited
£'000
|
|
Profit/(loss) attributable to owners of the parent
|
2,352
|
(10,101)
|
|
Weighted
average number of Ordinary Shares in issue
|
454,105,359
|
457,180,086
|
|
Basic
profit/(loss) per share
|
0.52 pence
|
(2.21) pence
|
The remaining unapproved share
options at 31 December 2022 consisted of 25,000 options which were
issued on 21 January 2014 to a senior employee at an exercise price
of 37.625p per share. In August 2022 the senior employee passed
away and the options have now lapsed. There are therefore no
outstanding share options at 31 December 2023. The number of shares
in issue excludes 1,200,000 shares held in treasury.
7. Dividends
In December 2023, the Company paid
a final dividend for 2022 of 1.2p (2021: 1.2p) per ordinary share,
at a total value of £5,445,000 (2022: £5,459,000).
Based on the need for continued
investment in our core areas the Board has decided that it would be
prudent to discontinue dividend payments and to enhance shareholder
value mainly through growth. The Board will however consider
recommencing the payment of dividends if and when
appropriate.
In addition to the cash dividend
described above, in June 2022 the Company made a distribution in
specie whereby the majority of the Company's shareholding in Verici
Dx plc was distributed to Ordinary shareholders of the Company at a
total value of £2,001,694. No distribution in specie was made in
the current year.
8. Property, plant and equipment
|
Group
|
Land and
buildings
£'000
|
Fixtures &
fittings
£'000
|
Plant and
machinery
£'000
|
Motor
vehicles
£'000
|
Assets under
construction
£'000
|
Right-of-use
asset
£'000
|
Total
£'000
|
|
Cost
|
|
|
|
|
|
|
|
|
At 1 January 2022 (Audited)
|
10,711
|
2,012
|
13,188
|
160
|
2,470
|
3,010
|
31,551
|
|
Additions
|
564
|
133
|
1,588
|
48
|
4,237
|
402
|
6,972
|
|
Exchange
differences
|
838
|
180
|
985
|
22
|
276
|
195
|
2,496
|
|
Transfers
|
40
|
10
|
393
|
-
|
(443)
|
-
|
-
|
|
Disposals
|
(3)
|
(363)
|
(1,277)
|
(20)
|
(125)
|
(285)
|
(2,073)
|
|
At 31 December 2022
|
12,150
|
1,972
|
14,877
|
210
|
6,415
|
3,322
|
38,946
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
|
|
At 1 January 2022 (Audited)
|
2,595
|
1,249
|
8,625
|
81
|
-
|
1,135
|
13,685
|
|
Charge
for the year
|
525
|
308
|
1,249
|
-
|
-
|
1,016
|
3,098
|
|
Exchange
differences
|
226
|
150
|
611
|
10
|
-
|
52
|
1,049
|
|
Impairment
|
1
|
-
|
1,129
|
-
|
-
|
111
|
1,241
|
|
Disposals
|
(3)
|
(336)
|
(1,217)
|
(14)
|
-
|
(271)
|
(1,841)
|
|
At 31 December 2022
|
3,344
|
1,371
|
10,397
|
77
|
-
|
2,043
|
17,232
|
|
Net book value at 31
December 2022
|
8,806
|
601
|
4,480
|
133
|
6,415
|
1,279
|
21,714
|
|
Cost
|
|
|
|
|
|
|
|
|
At 1 January 2023 (Unaudited)
|
12,150
|
1,972
|
14,877
|
210
|
6,415
|
3,322
|
38,946
|
|
Additions
|
2,581
|
108
|
2,179
|
55
|
1,876
|
611
|
7,410
|
|
Exchange
differences
|
(409)
|
(38)
|
(499)
|
(44)
|
(300)
|
(143)
|
(1,433)
|
|
Transfers
|
195
|
(22)
|
6,569
|
-
|
(6,799)
|
-
|
(57)
|
|
Disposal
of subsidiary
|
(4)
|
-
|
(1,543)
|
-
|
-
|
-
|
(1,547)
|
|
Disposals
|
0
|
(583)
|
(316)
|
(13)
|
(4)
|
(467)
|
(1,383)
|
|
At 31 December 2023
|
14,513
|
1,437
|
21,267
|
208
|
1,188
|
3,323
|
41,936
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
|
|
At 1 January 2023 (Unaudited)
|
3,344
|
1,371
|
10,397
|
77
|
-
|
2,043
|
17,232
|
|
Charge
for the year
|
676
|
299
|
1,565
|
20
|
-
|
716
|
3,276
|
|
Exchange
differences
|
(146)
|
(25)
|
(361)
|
(16)
|
-
|
(75)
|
(623)
|
|
Transfers
|
-
|
-
|
(57)
|
-
|
-
|
-
|
(57)
|
|
Impairment
|
-
|
-
|
-
|
-
|
-
|
75
|
75
|
|
Disposal
of subsidiary
|
(4)
|
|
(1,357)
|
|
|
|
(1,361)
|
|
Disposals
|
0
|
(580)
|
(325)
|
(9)
|
|
(467)
|
(1,381)
|
|
At 31 December 2023
|
3,870
|
1,065
|
9,862
|
72
|
0
|
2,292
|
17,161
|
|
Net book value at 31
December 2023
|
10,643
|
372
|
11,405
|
136
|
1,188
|
1,031
|
24,775
|
9. Intangible assets
|
Group
|
Goodwill
£'000
|
Trademarks,
trade name
and licences
£'000
|
Customer relationships
£'000
|
Trade secrets
£'000
|
Development
costs
£'000
|
Software & website
£'000
|
Total
£'000
|
|
Cost
|
|
|
|
|
|
|
|
|
At 1 January 2022 (Audited)
|
28,558
|
4,284
|
15,706
|
17,328
|
5,023
|
3,370
|
74,269
|
|
Additions
|
-
|
-
|
-
|
-
|
1,392
|
2
|
1,394
|
|
Disposals
|
(1,177)
|
-
|
-
|
(3,950)
|
(598)
|
(25)
|
(5,750)
|
|
Exchange differences
|
1,995
|
348
|
1,567
|
672
|
349
|
384
|
5,315
|
|
At
31
December 2022
|
29,376
|
4,632
|
17,273
|
14,050
|
6,166
|
3,731
|
75,228
|
|
Accumulated
amortisation and
impairment
|
|
|
|
|
|
|
|
|
At 1 January 2022 (Audited)
|
1,177
|
3,021
|
11,825
|
14,664
|
1,579
|
109
|
32,375
|
|
Charge
for the year
|
-
|
327
|
1,438
|
762
|
472
|
561
|
3,560
|
|
Disposal
|
(1,177)
|
-
|
-
|
(3,950)
|
(598)
|
-
|
(5,725)
|
|
Impairment
|
4,254
|
463
|
1,157
|
-
|
608
|
2,661
|
9,143
|
|
Exchange differences
|
-
|
236
|
1,166
|
538
|
150
|
13
|
2,103
|
|
At 31 December 2022
|
4,254
|
4,047
|
15,586
|
12,014
|
2,211
|
3,344
|
41,456
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31
December 2022
|
25,122
|
585
|
1,687
|
2,036
|
3,955
|
387
|
33,772
|
|
Cost
|
|
|
|
|
|
|
|
|
At 1 January 2023 (Unaudited)
|
29,376
|
4,632
|
17,273
|
14,050
|
6,166
|
3,731
|
75,228
|
|
Additions
|
-
|
8
|
-
|
-
|
369
|
-
|
377
|
|
Disposals
|
-
|
-
|
-
|
-
|
(639)
|
-
|
(639)
|
|
Disposal
of subsidiary
|
(4,043)
|
(503)
|
(1,257)
|
-
|
-
|
(2,891)
|
(8,694)
|
|
Reclassification/transfer
|
-
|
726
|
-
|
(520)
|
(206)
|
-
|
-
|
|
Exchange differences
|
(908)
|
(185)
|
(745)
|
(274)
|
(151)
|
(176)
|
(2,439)
|
|
At
31
December 2023
|
24,425
|
4,678
|
15,271
|
13,256
|
5,539
|
664
|
63,833
|
|
Accumulated
amortisation and
impairment
|
|
|
|
|
|
|
|
|
At 1 January 2023 (Unaudited)
|
4,254
|
4,047
|
15,586
|
12,014
|
2,211
|
3,344
|
41,456
|
|
Charge
for the year
|
-
|
429
|
1,008
|
343
|
287
|
129
|
2,196
|
|
Disposal
|
-
|
-
|
-
|
-
|
(679)
|
-
|
(679)
|
|
Disposal
of subsidiary
|
(4,043)
|
(503)
|
(1,257)
|
-
|
-
|
(2,891)
|
(8,694)
|
|
Impairment
|
-
|
-
|
-
|
-
|
887
|
-
|
887
|
|
Exchange differences
|
(211)
|
(176)
|
(678)
|
(243)
|
(82)
|
(167)
|
(1,557)
|
|
At 31 December 2023
|
-
|
3,797
|
14,659
|
12,114
|
2,624
|
415
|
33,609
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31
December 2023
|
24,425
|
881
|
612
|
1,142
|
2,915
|
249
|
30,224
|
10. Cash generated from
operations
|
|
2023
Unaudited
£'000
|
2022
Audited
£'000
|
|
Profit/(loss) before
tax
|
2,131
|
(8,942)
|
|
Adjustments for:
|
|
|
|
-
Depreciation
|
3,276
|
3,098
|
|
-
Amortisation
|
2,196
|
3,560
|
|
-
Exceptional items - other, charged to cost of sales
|
577
|
6,774
|
|
-
Exceptional items -impairment
|
961
|
10,384
|
|
-
Exceptional items - other
|
1,295
|
367
|
|
-
Loss/(profit) on disposal of fixed assets
|
-
|
28
|
|
-
Share-based payments
|
(2)
|
(308)
|
|
- Cash
outflows relating to exceptional items
|
(721)
|
(617)
|
|
- Foreign
exchange
|
(5)
|
(71)
|
|
- Bad
debt written down
|
214
|
127
|
|
- Finance
income
|
(125)
|
(131)
|
|
- Finance
cost
|
75
|
102
|
|
Changes
in working capital
|
|
|
|
-
Inventories
|
(745)
|
(815)
|
|
- Trade
and other receivables
|
2,495
|
1,276
|
|
- Trade
and other payables
|
(2,799)
|
(2,177)
|
|
Net cash generated from
operations
|
8,823
|
12,655
|
