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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ekf Diagnostics Holdings Plc | LSE:EKF | London | Ordinary Share | GB0031509804 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 27.40 | 27.10 | 28.90 | 27.40 | 27.40 | 27.40 | 82,759 | 08:00:15 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Med, Dental, Hosp Eq-whsl | 66.64M | -10.1M | -0.0222 | -12.34 | 124.65M |
From Apr 2019 to Apr 2024
TIDMEKF
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 GBP65.3m (2019: GBP44.9m) -- Gross profit up 58% to GBP37.4m (2019: GBP23.7m) -- Adjusted EBITDA(1) up 113% to GBP25.5m (2019: GBP12.0m) -- Profit before tax GBP15.4m (2019: GBP5.5m) -- Basic Earnings per share of 2.45p (2019: 0.81p) -- Cash generated from operations of GBP13.8m (2019: GBP5.1m)
-- Cash at 31 December 2020 of GBP21.9m (2019: GBP12.1m), net cash after borrowings of GBP21.4m (2019: GBP11.4m)
-- Value of investments in marketable securities at year end of GBP6.5m, after sale of Renalytix shares raised GBP7.7m (2019: GBP9.7m)
-- Maiden cash dividend of GBP4.5m 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 GBP6.5m YoY (-14%), however there were strong performances and signs of a steady recovery are apparent:
- DiaSpect Tm up GBP548k (+15%), due to strong performance from OEM partners McKesson and Fresenius Kabi
- Quo-Lab up GBP210k (+9%) due to improved sales in EMEA and improved shelf-life of reagent cartridges
- HemoControl and HemoPointH2 sales down GBP2.6m (-36%) as anaemia screening programmes were paused or cancelled, particularly Peru (-GBP1.1m), and reduced demand from Women & Infants Clinics in US
- b-HB down GBP847k (-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
- CBER(2) 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."
Hot Features
Premium
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 GBP65m (2019: GBP44.9m) and adjusted EBITDA increased by 113% to GBP25.5m (2019: GBP12.0m). 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 GBP38m, 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 GBP7.7m. The remaining holding was worth GBP4.9m 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 GBP1.6m.
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 GBP209,000 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 GBP4.6m. 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 GBP0.23 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 GBP0.5m 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 GBP11.0m in revenues, albeit a 20% reduction on the previous year (2019: GBP13.8m). 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 GBP19m of revenues compared to GBP20.6m 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 <BETA>-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 <BETA>-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 GBP0.18m to GBP26.3m 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 GBP65.3m (2019: GBP44.9m), 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 FY 2019
GBP'000 GBP'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 GBP26,799,000 (2019: GBP44,000).
Revenue by geographical segment based on the locations from which sales are made, is as follows:
FY 2020 FY 2019
GBP'000 GBP'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 GBP37.4m (2019: GBP23.7m), 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 GBP20.7m (2019: GBP18.3m).
To aid understanding, administrative expenses in each period are made up as follows:
Year ended Year ended
31 December 2020 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 GBP1.4m (2019: GBP2.3m). A further GBP0.6m 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 GBP2.0m (2019: GBP2.8m). 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 GBP4.6m (2019: GBP4.4m).
Operating profit and adjusted earnings before interest, tax, depreciation and amortization
The Group generated an operating profit of GBP16.9m (2019: GBP5.8m). 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 GBP25.5m (2019: GBP12.0m), 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 GBP5.3m (2019: GBP2.1m), and exceptional profits of GBP1.3m (2019: GBP0.3m), 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 GBP1.5m (2019: GBP0.3m). 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 GBP4.0m, an increase from the prior year charge (2019: GBP1.6m). 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 GBP1.1m 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 GBP2.1m (2019: GBP1.4m). 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 GBP37.8m in 2019 to GBP37.1m 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 GBP1.211 per share and were sold for GBP4.579 per share. The profit of GBP5.64m (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 GBP2.9m (2019: GBP1.4m) 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 GBP21.4m from GBP11.4m. Gross cash has risen to GBP21.9m (2019: GBP12.1m) and Borrowings reduced in line with repayments to GBP0.5m (2019: GBP0.7m). Cash flow was boosted by the proceeds of the sale of Renalytix shares (GBP7.7m), while investments were made in Trellus and fixed and intangible assets - mainly R & D and an updated accounting system - totalling GBP7.0m, and GBP4.6m was paid out in cash dividends. Working capital needs increased by GBP4.2m, 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 2019
GBP'000 GBP'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 2019
GBP'000 GBP'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 Group
GBP'000 2019
GBP'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
GBP'000 GBP'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 209 -
shares
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 Foreign
Share premium currency Retained Non-controlling Total
capital account Other reserves reserve earnings Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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.
Germany USA Russia Other Total
2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 2019
GBP'000 GBP'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 GBP16,960,000 (26.0%) were derived from one external customer. Sales to this customer all relate to the USA. In 2019 revenues of GBP5,122,000 (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 FY 2019
GBP'000 GBP'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 GBP26,799,000 (2019: GBP44,000).
4. Exceptional Items
Included within administrative expenses are exceptional items as
shown below:
2020 2019
Note GBP'000 GBP'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 GBP2.9m (2019: GBP1.4m) 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
2020 2019
Group GBP'000 GBP'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 2019
GBP'000 GBP'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 2019
GBP'000 GBP'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
Assets
Fixtures under
Land and & Plant and Motor Construction Right-of-use
buildings fittings machinery vehicles (restated) asset Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
Trademarks,
trade name
and Customer Trade Development
Goodwill licences relationships secrets costs Software Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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) (367) (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 1,274 876 512 - 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) 620 289 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 1,245 919 246 - 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 GBP4,550,000. 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 GBP5,005,000.
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 GBP3,810,000. 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 2019
GBP'000 GBP'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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