NOTES FORMING PART OF THE INTERIM FINANCIAL STATEMENTS

 

1.              General information and basis of presentation

 

EKF Diagnostics Holdings plc is a public limited company incorporated in the United Kingdom (Registration Number 04347937). The address of the registered office is Avon House, 19 Stanwell Road, Penarth, CF64 2EZ.

 

The Group's principal activity continues to be that of a business focused within the In-Vitro Diagnostics devices ("IVD") market place.

 

The financial information in these interim results is that of the holding company and all of its subsidiaries. It has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs). The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 December 2016 and which will form the basis of the 2017 financial statements except for a number of new and amended standards which have become effective since the beginning of the previous financial year. These new and amended standards are not expected to materially affect the Group with the exception of IFRS 15 "Revenue from contracts with customers" and IFRS 16 "Leases". The Group is continuing to review the potential effect of these standards.

 

The financial information presented herein does not constitute full statutory accounts under Section 434 of the Companies Act 2006 and was not subject to a formal review by the auditors. The financial information in respect of the year ended 31 December 2016 has been extracted from the statutory accounts which have been delivered to the Registrar of Companies. The Group's Independent Auditor's report on those accounts was unqualified, did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The financial information for the half years ended 30 June 2017 and 30 June 2016 is unaudited and the twelve months to 31 December 2016 is audited.

 

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

 

2.               Significant accounting policies

 

Going concern

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

 

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

 

Foreign currency translation

(a) Functional and presentational currency

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

 

(b) Transactions and balances

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

 

(c) Group companies

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

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

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

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

 

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

 

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

 

Government grants

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

 

Property, plant and equipment

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

 

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

 

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

 

Buildings                                                           2%-2.5%

Fixtures and fittings                                    20%-25%

Plant and machinery                               20%-33.3%

Motor vehicles                                                         25%

 

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

 

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

 

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

 

Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of the acquisition. Goodwill on acquisitions of subsidiaries is included in 'intangible assets'. Goodwill has an infinite useful life and is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

 

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segment.

 

(b) Trademarks, trade names and licences

Separately acquired trademarks and licences are shown at historical cost. Trademarks and licences acquired in a business combination are recognised at fair value at the acquisition date. Trademarks and licences have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trademarks and licences over their estimated useful lives of between 8 and 12 years and is charged to administrative expenses in the income statement.

 

(c) Customer relationships

Contractual customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The contractual customer relationships have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected life of the customer relationship of between 6 and 15 years and is charged to administrative expenses in the income statement.

 

(d) Trade secrets

Trade secrets, including technical know-how, operating procedures, methods and processes, acquired in a business combination are recognised at fair value at the acquisition date. Trade secrets have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trade secrets over their estimated useful lives of between 6 and 15 years and is charged to administrative expenses in the income statement.

 

(e) Development costs

Development costs acquired in a business combination are recognised at fair value at the acquisition date. Development costs have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over their estimated useful lives of 15 years and is charged to administrative expenses in the income statement.

 

Expenditure incurred on the development of new or substantially improved products or processes is capitalised, provided that the related project satisfies the criteria for capitalisation, including the project's technical feasibility and likely commercial benefit. All other research and development costs are expensed as incurred.

 

Development costs are amortised over the estimated useful life of the products with which they are associated, currently 4 to 5 years. Amortisation commences when a new product is in commercial production. The amortisation is charged to administrative expenses in the income statement. The estimated remaining useful lives of development costs are reviewed at least on an annual basis.

 

The carrying value of capitalised development costs is reviewed for potential impairment at least annually and if a product becomes unviable and an impairment is identified the deferred development costs are immediately charged to the income statement.

 

(f) Non-compete agreements

 

Non-compete agreements arising from a business combination are recognised at fair value at the acquisition date. Non-compete agreements have a finite life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of non-compete agreements over their estimated useful lives of three years and is charged to administrative expenses in the income statement.

 

Impairment of non-financial assets

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

 

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

 

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

 

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

 

Investments

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

 

Financial assets

Classification

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

 

(a) Loans and receivables

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

 

(b) Available-for-sale financial assets

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

 

Recognition and measurement

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

 

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

 

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

 

Inventories

Inventories and work in progress are stated at the lower of cost and net realisable value. Cost is calculated on a first in and first out basis and includes raw materials, direct labour, other direct costs and attributable production overheads, where appropriate. Net realisable value represents the estimated selling price less all estimated costs of completion and applicable selling costs. Where necessary, provision is made for slow-moving and obsolete inventory. Inventory on consignment and their related obligations are recognised in current assets and payables respectively.

 

Trade and other receivables

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

 

Cash and cash equivalents

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

 

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

 

Share capital

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

 

Financial liabilities

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

 

Trade and other payables

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

 

Borrowings

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

 

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

 

Current and deferred income tax

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Provisions

Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably measured.

 

Leases

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

 

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

 

Deferred consideration

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

 

Employee benefits

(a) Pension obligations

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

 

The Group no longer has any defined benefit schemes.

 

(b) Share-based compensation

The Group operates a number of equity-settled, share-based compensation plans, under which the Group receives services from employees and others as consideration for equity instruments of the Group. Equity-settled share-based payments are measured at fair value at the date of grant and are expensed over the vesting period based on the number of instruments that are expected to vest. For plans where vesting conditions are based on share price targets, the fair value at the date of grant reflects these conditions. Where applicable the Group recognises the impact of revisions to original estimates in the income statement, with a corresponding adjustment to equity for equity-settled schemes. Fair values are measured using appropriate valuation models, taking into account the terms and conditions of the awards.

 

When the share-based payment awards are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

 

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

 

National insurance on share options

To the extent that the share price at the balance sheet date is greater than the exercise price on options granted under unapproved share-based payment compensation schemes, provision for any National Insurance Contributions has been based on the prevailing rate of National Insurance. The provision is accrued over the performance period attaching to the award.

 

Revenue recognition

(a) Sale of goods

Revenue for the sale of medical diagnostic instruments and reagents is measured at the fair value of the consideration received or receivable and represents the invoiced value for the sale of the goods net of sales taxes, rebates and discounts. Revenue from the sale of goods is recognised when a Group Company has delivered products to the customer, the customer has accepted delivery of the products and collectability of the related receivables is reasonably assured.

 

(b) Sale of services

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

 

(c) Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

 

(d) Royalty and licence income

Royalty and licence income is recognised on an accruals basis in accordance with the substance of the relevant agreements.

 

Dividend distribution

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

 

Other income

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

 

Exceptional items

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

 

3.              Segmental reporting

 

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

 

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

 

The reportable segments derive their revenue primarily from the manufacture and sale of medical diagnostic equipment.  Other services include the servicing and distribution of third party company products under separate distribution agreements.

 

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

 

 

 

 

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

 

Period ended 30 June 2017 unaudited

 

	Germany	USA	Poland	Russia	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Income statement
Revenue	10,358	11,822	224	1,140	(2,046)	21,498
Inter segment	(2,029)	-	(17)	-	2,046	-
External revenue	8,329	11,822	207	1,140	-	21,498
Adjusted EBITDA	2,751	4,056	(122)	222	(2,330)	4,577
Share based payment	-	-	-	-	(894)	(894)
Exceptional items	16	-	(200)	-	207	23
EBITDA	2,767	4,056	(322)	222	(3,017)	3,706
Depreciation	(369)	(157)	(16)	(17)	(34)	(593)
Amortisation	(225)	426	-	-	(1,619)	(1,418)
Operating profit/(loss)	2,173	4,325	(338)	205	(4,670)	1,695
Net finance costs	(33)	380	13	(366)	(272)	(278)
Income tax	(139)	(4)	(43)	(1,026)	(404)	(1,616)
Profit/(loss) for the period	2,001	4,701	(368)	(1,187)	(5,346)	(199)
Segment assets
Operating assets	50,237	49,206	319	491	(4,305)	95,948
Inter segment assets	(125)	-	(76)	-	(23,282)	(23,483)
External operating assets	50,112	49,206	243	491	(27,587)	72,465
Cash and cash equivalents	1,302	2,210	282	830	1,095	5,719
Total assets	51,414	51,416	525	1,321	(26,492)	78,184
Segment liabilities
Operating liabilities	14,460	22,099	319	233	4,491	41,602
Inter segment liabilities	(8,305)	(15,320)	-	-	142	(23,483)
External operating liabilities	6,155	6,779	319	233	4,633	18,119
Borrowings	1,132	151	-	-	-	1,283
Total liabilities	7,287	6,930	319	233	4,633	19,402
Other segmental information
Non-current assets - PPE	6,492	4,289	-	53	1,262	12,096
Non-current assets - Intangibles	29,189	14,457	-	135	1,384	45,165
Intangible assets -additions	221	67	-	-	251	539
PPE - additions	575	137	(9)	1	13	717

 

 

Year ended December 2016 audited

 

	Germany	USA	Poland	Russia	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Income statement
Revenue	17,835	21,199	1,582	2,677	33	43,326
Inter segment	(4,683)	1	(33)	-	(22)	(4,737)
External revenue	13,152	21,200	1,549	2,677	11	38,589
Adjusted EBITDA*	3,074	6,136	908	599	(4,578)	6,139
Share based payment	-	-	-	-	(973)	(973)
Exceptional items	(28)	(525)	-	-	21	(532)
EBITDA	3,046	5,611	908	599	(5,530)	4,634
Depreciation	(678)	(405)	(33)	(27)	(66)	(1,209)
Amortisation	(2,063)	(1,519)	(61)	(29)	(80)	(3,752)
Operating profit/(loss)	305	3,687	814	543	(5,676)	(327)
Net finance costs	(47)	(155)	6	29	(509)	(676)
Income tax	225	1,245	(157)	(126)	(15)	1,172
Profit/(loss) for the year	483	4,777	663	446	(6,200)	169
Segment assets
Operating assets	43,199	30,170	1,504	623	37,570	113,066
Inter-segment assets	(125)	(3,870)	(528)	-	(33,985)	(38,508)
External operating assets	43,074	26,300	976	623	3,585	74,558
Cash and cash equivalents	1,803	2,192	229	959	2,691	7,874
Total assets	44,877	28,492	1,205	1,582	6,276	82,432
Segment liabilities
Operating liabilities	17,277	27,463	82	137	9,290	54,249
Inter-segment liabilities	(10,490)	(22,082)	-	-	(5,934)	(38,506)
External operating liabilities	6,787	5,381	82	137	3,356	15,743
Borrowings	1,191	195	-	-	4,332	5,718
Total liabilities	7,978	5,576	82	137	7,688	21,461
Other segmental information
Non-current assets - PPE	5,898	4,538	106	71	1,511	12,124
Non-current assets - Intangibles	29,351	15,555	329	151	1,117	46,503
Intangible assets -additions	1,058	169	-	7	27	1,261
PPE - additions	285	308	-	-	70	663

 

 

 

 

 

Period ended 30 June 2016 unaudited

 

	Germany	USA	Poland	Russia	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Income statement
Revenue	8,475	9,385	695	1,174	(2,222)	17,507
Inter segment	(2,132)	3	(14)	-	2,143	-
External revenue	6,343	9,388	681	1,174	(79)	17,507
Adjusted EBITDA*	1,726	2,413	390	274	(2,784)	2,019
Share based payment	-	-	-	-	(55)	(55)
Exceptional items	20	(69)	-	-	(338)	(387)
EBITDA	1,746	2,344	390	274	(3,177)	1,577
Depreciation	(296)	(208)	(16)	(12)	(33)	(565)
Amortisation	(329)	-	-	-	(1,593)	(1,922)
Operating profit/(loss)	1,121	2,136	374	262	(4,803)	(910)
Net finance costs	(14)	330	12	(397)	(213)	(282)
Income tax	120	177	(48)	(441)	(38)	(230)
Discontinued operations	-	-	-	-	-	-
Profit/(loss) for the year	1,227	2,643	338	(576)	(5,054)	(1,422)
Segment assets
Operating assets	50,245	50,755	1,263	633	13,747	116,643
Inter-segment assets	(635)	(2,659)	(180)	-	(37,540)	(41,014)
External operating assets	49,610	48,096	1,083	633	(23,793)	75,629
Cash and cash equivalents	210	1,304	38	563	1,127	3,242
Total assets	49,820	49,400	1,121	1,196	(22,666)	78,871
Segment liabilities
Operating liabilities	16,127	25,339	108	148	19,245	60,967
Inter-segment liabilities	(10,701)	(20,611)	-	-	(14,913)	(46,225)
External operating liabilities	5,426	4,728	108	148	4,332	14,742
Borrowings	1,371	2,023	-	-	4,123	7,517
Total liabilities	6,797	6,751	108	148	8,455	22,259
Other segmental information
Non-current assets - PPE	5,778	4,373	118	72	1,637	11,978
Non-current assets - Intangibles	34,382	15,266	322	148	(3,340)	46,778
Intangible assets -additions	(50)	-	-	-	-	(50)
PPE - additions	713	67	-	1	16	797

 

*- Adjusted EBITDA excludes exceptional items and share based payments

 

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

 

 

 

 

 

Disclosure of Group revenues by geographic location

		Unaudited 6 months ended 30 June 2017		Unaudited 6 months ended 30 June 2016		Audited Year ended 31 December 2016
		£000		£000		£000
Americas
United States of America		8,721		6,642		15,122
Rest of Americas		1,524		1,785		3,979
Europe, Middles East and Africa (EMEA)
Germany		3,300		2,668		6,082
United Kingdom		159		126		276
Rest of Europe		1,879		1,357		2,761
Russia		1,140		1,184		2,687
Middle East		1,679		1,322		2,870
Africa		962		467		882
Rest of World
China		563		486		929
Rest of Asia		1,499		1,422		2,922
New Zealand/Australia		72		48		79
Total Revenue		21,498		17,507		38,589

 

 

 

4.              Exceptional items

 

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

 

 

		Unaudited 6 months ended 30 June 2017		Unaudited 6 months ended 30 June 2016		Audited year ended 31 December 2016
	Note	£000		£000		£000
Exceptional items includes:
- Business reorganisation costs	a	(200)		(407)		(661)
- Warranty claim	b	223		20		129
Exceptional items		23		(387)		(532)

 

 

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

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

 

5.             Income tax

 

		Unaudited 6 months ended 30 June 2017		Unaudited 6 months ended 30 June 2016		Audited Year ended 31 December 2016
		£000		£000		£000
Current tax
Current tax on profit/loss for the period		(1,414)		(681)		(1,602)
Adjustments for prior periods		-		-		2,219
Total current tax		(1,414)		(681)		617
Deferred tax
Origination and reversal of temporary differences		(212)		451		555
Total deferred tax		(212)		451		555
Income tax (charge)/credit		(1,626)		(230)		1,172

 

 

 

6.             Loss per share

 

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

 

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding assuming conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary share, being share options. The potential shares are not dilutive in either H1 2017 or in H1 or FY 2016 as the Group made a loss per share.

 

 

 

			Unaudited		Unaudited		Audited year ended 31 December 2016
			6 months ended 30 June 2017		6 months ended 30 June 2016
			£'000		£'000		£'000
Loss attributable to owners of the parent			(267)		(1,508)		(18)
Weighted average number of ordinary shares in issue			464,262,781		428,782,159		446,042,831
Effect of dilutive potential ordinary shares			9,205,976		4,043,940		4,043,940
Weighted average number of ordinary shares - diluted			473,468,757		432,826,099		450,086,771
			Pence		Pence		Pence
Basic
Loss per share			(0.06)		(0.35)		(0.00)
			Pence		Pence		Pence
Diluted
Loss per share			(0.06)		(0.35)		(0.00)

 

 

 

7. Intangible Fixed Assets

Group	Goodwill £'000		Trademarks trade names & licences £'000				Non-compete £'000			Customer relationships £'000			Trade secrets £'000			Develop-ment costs £'000			Total £'000
Cost
At 1 January 2016	23,718					2,493		70			13,815			16,878			7,782			64,756
Additions	-					36		-			-			-			363			399
Exchange differences	2,456					996		-			1,672			1,417			390			6,931
At 30 June 2016	26,174					3,525		70			15,487			18,295			8,535			72,086
Additions	-					9		-			-			-			255			264
Exchange differences	863					(482)		-			889			330			(5)			1,595
At 31 December 2016	27,037					3,052		70			16,376			18,625			8,785			73,945
Additions	-					113		-			-			-			426			539
Reclassification/transfer	-					-		-			-			-			360			360
Exchange differences	37					(45)		-			(354)			255			139			32
At 30 June 2017	27,074					3,120		70			16,022			18,880			9,710			74,876
Amortisation
At 1 January 2016	2,082				1,378			70			4,555			8,866			4,878			21,829
Exchange differences	122				234			-			542			531			129			1,558
Charge for the period	-				437			-			695			469			320			1,921
At 30 June 2016	2,204				2,049			70			5,792			9,866			5,327			25,308
Exchange differences	24				(47)			-			301			123			(98)			303
Charge for the period	-				(105)			-			723			605			608			1,831
At 31 December 2016	2,228				1,897			70			6,816			10,594			5,837			27,442
Exchange differences	30				(16)			-			(126)			114			488			490
Reclassification/transfer	-				-			-			-			-			360			360
Charge for the period	333				157			-			662			453			(186)			1,419
At 30 June 2017	2,591				2,038			70			7,352			11,161			6,499			29,711

 

 

Net book value
30 June 2017	24,483		1,082	-		8,670		7,719		3,211		45,165
31 December 2016	24,809		1,155	-		9,560		8,031		2,948		46,503
30 June 2016	23,970		1,476	-		9,695		8,429		3,208		46,778

 

 

8.            Dividends

 

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

 

9.            Press

                              

A copy of this announcement is available from the Company's website, being www.ekfdiagnostics.com.  If you would like to receive a hard copy of the interim report please contact the EKF Diagnostics Holdings plc offices on +44 (0) 29 2071 0570 to request a copy.