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RNS Number : 5855H EKF Diagnostics Holdings PLC 20 March 2024
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
● Revenues of £52.6m in-line with market expectations (2022: £66.6m)
- Revenues (excluding COVID-related & clinical chemistry sales) of £48.7m
(2022: £48.6m)
● Gross profit before exceptionals of £24.4m (2022: £30.8m)
● Gross margin improved to 45% (2022: 36%) and admin expenses reduced by £3.5m
● Adjusted EBITDA* of £10.4m (2022: £14.9m)
● A return to profit before tax of £2.1m (2022: loss of £8.9m)
● Cash generated from operations of £8.8m (2022: £12.7m)
● 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)
● Cash dividend equivalent to 1.2p per ordinary share (2022: 1.2p per share)
*Earnings before interest, tax, depreciation and amortisation adjusted for
exceptional items and share-based payments
Operational highlights
● Business division revenues:
- 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)
- Life Sciences: overall revenues down 2.4% to £14.8m (2022: £15.2m),
despite 1.6% rise in β-HB sales
- Other: £2.3m (2022: £8.5m, which includes £3.5m relating to cash
received for US inventory)
● Opening of upgraded Life Sciences facility in South Bend in October 2023
- fermentation run for a new customer completed
- ongoing transfer of some higher volume biomanufacturing products from
Elkhart to South Bend
● Removal of non-core, low margin products from portfolio
● Board changes: Julian Baines, Executive Chair, remaining in role on a
longer-term basis and Steve Young appointed as CFO in September 2023
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
(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
(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.
EKF Diagnostics Holdings plc www.ekfdiagnostics.com (http://www.ekfdiagnostics.com)
Julian Baines, Executive Chair / Stephen Young, CFO via Walbrook PR
Singer Capital Markets (Nominated Adviser & Broker) Tel: +44 (0)20 7496 3000
Aubrey Powell / Oliver Platts
Walbrook PR (Media & Investor Relations) Tel: +44 (0)20 7933 8780 or ekf@walbrookpr.com
Paul McManus / Charlotte Edgar Mob: +44 (0)7980 541 893 / +44 (0)7884 664 686
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
(http://www.ekfdiagnostics.com) )
EKF is an AIM-listed global diagnostics business focussed on:
● Point-of-Care analysers in the key areas of Hematology and Diabetes
● Life Sciences services provide specialist manufacture of enzymes and custom
products for use in diagnostic, food and industrial applications.
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:
• Point-of-Care- supplying analysers and consumable products in the key areas of
Hematology and Diabetes
• 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.
Divisional revenues for the 12 months ended 31 December 2023 2022 % Change
Audited
£ millions Unaudited
Point-of-Care (POC) 34.1 33.4 +2.1%
POC: excl. clinical chemistry revenues 32.4 31.3 +3.5%
Life Sciences 16.3 24.7 -34.0%
Life Sciences: β-HB and Fermentation sales 14.8 15.2 -2.6%
Life Sciences: incl. COVID-related revenues 1.5 9.5 -84.2%
Other* 2.2 8.5† -74.1%
Total Revenues 52.6 66.6 -21.0%
Total Revenues (excl. COVID-related & clinical chemistry revenues) 48.7 48.6 0.0%
* 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 Link(TM) 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 Link(TM) 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:-
Julian Baines Executive Chair
Stephen Young Chief Financial Officer
Christian Rigg Senior Independent Non-executive Director
Jenny Winter Independent Non-executive Director
Christopher Mills Non-executive Director
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 2022
Unaudited
Audited +/- %
£'000
£'000
Germany 22,095 24,192 (9%)
USA 26,133 36,822 (29%)
UK 815 1,419 (43%)
Russia see below 3,568 4,202 (15%)
Total 52,611 66,635 (21%)
Revenue and AEBITDA by geographical segment.
2023 Adjusted 2022 Adjusted
Unaudited
Audited
EBITDA*
EBITDA*
Revenue
Revenue
£'000
£'000
£'000 £'000
Germany 22,095 6,459 24,192 8,089
USA 26,133 6,851 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
2023 2022
Unaudited
Continuing operations
Audited
£'000
£'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 2022
Unaudited
Audited
£'000 £'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 489 (6,096)
comprehensive income/(loss) (net of tax)
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 Group
Unaudited Audited
2023
2022
£'000 £'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: 7,726 11,578
£2,366,000))
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 Group
2023
Audited 2022
£'000 £'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 Non-controlling interest Total equity
Total
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 - - - 489 - - 489 - 489
comprehensive expense
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:
Germany USA Russia^ UK Total
2023 (Unaudited) £'000 £'000 £'000 £'000 £'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
6,459 6,851 1,092 (4,018) 10,384
Adjusted EBITDA*
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
5,901 4,770 1,092 (4,210) 7,553
EBITDA
Depreciation (907) (2,065) (37) (267) (3,276)
Amortisation (1,182) (929) - (85) (2,196)
3,812 1,776 1,055 (4,562) 2,081
Operating profit
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
Germany USA Russia^ UK Total
2022 (Audited) £'000 £'000 £'000 £'000 £'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 2022
Unaudited
Audited
£'000
£'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 2022
Unaudited
Audited
£'000
£'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
2023 2022
Unaudited
Audited
Group
£'000 £'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 2022
Unaudited Audited
£'000
£'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
Land and Fixtures & Plant and Motor Assets under Right-of-use
Group buildings fittings machinery vehicles construction asset Total
£'000 £'000 £'000 £'000 £'000 £'000 £'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
Trademarks,
trade name
and licences Customer relationships Trade secrets Development Software & website
Group Goodwill £'000 £'000 £'000 costs £'000 Total
£'000 £'000 £'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 2022
Unaudited
Audited
£'000 £'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
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