TIDMEKF
RNS Number : 6282H
EKF Diagnostics Holdings PLC
14 March 2018
EKF Diagnostics Holdings plc
("EKF", the "Company" or the "Group")
Final results
EKF Diagnostics Holdings plc (AIM: EKF), the AIM listed
point-of-care business, announces its final results for the year
ended 31 December 2017.
Financial highlights
-- Revenue up 8% to GBP41.6m (2016: GBP38.6m)
-- Gross profit up 25% to GBP22.9m (2016: GBP18.3m)
-- Adjusted EBITDA* up 52% to GBP9.3m (2016: GBP6.1m)
-- Earnings per share of 0.59p (2016: nil)
-- Cash generated from operations of GBP10.1m (2016: GBP8.8m)
-- Cash at 31 December 2017 of GBP8.2m (31 Dec 2016: GBP7.9m),
net cash of GBP7.0m (31 Dec 2016: GBP2.2m)
-- Capital restructure creates distributable reserves and allows share buy back programme
* Excluding exceptional items and share based payments
Operational highlights
-- Continued effect of improvements to operational efficiency
-- Closure of Polish operations brings sites down from twelve to seven
-- Creation of Renalytix AI, Inc in January 2018 to exploit sTNFR technology
Christopher Mills, Non-executive Chairman of EKF, said:
"Trading in 2017 has been positive and this has continued into
the early part of 2018. We are currently trading in line with
management's expectations."
EKF Diagnostics Holdings plc Tel: 029 2071 0570
Christopher Mills, Non-executive Chairman
Julian Baines, CEO
Richard Evans, FD & COO
N + 1 Singer Tel: 020 7496 3000
Alex Price / Shaun Dobson / Alex Laughton-Scott
Walbrook PR Limited Tel: 020 7933 8780 or ekf@walbrookpr.com
Paul McManus Mob: 07980 541 893
Lianne Cawthorne Mob: 07584 391 303
CHAIRMAN'S STATEMENT
I am delighted to present results which show continued good
progress with revenues, earnings, and net cash all significantly
improved compared with the previous year.
Strategy
The Group has continued to follow the path which led to the
successful turnaround of the business in 2016, namely concentrating
its activities on point-of-care diagnostics and the related central
laboratory reagents business, while reducing costs and simplifying
the business. In the first half, we closed our manufacturing site
in Poland and transferred activities to our main European hub in
Barleben, Germany. This led to a small number of redundancies, and
we thank those affected and wish them well for the future. As a
result, the number of sites used by the Group has reduced from a
peak of twelve to seven, of which four are in Europe, two in the
USA and one in China. While we are not currently planning further
closures, our efforts to improve efficiency and therefore reduce
costs continue.
After considerable deliberation and discussion with our
professional advisors, we were unable to proceed with our plan to
split out the central laboratory business in a tax efficient
manner.
sTNFR venture
Subsequent to the year end, on 11 January 2018 the Group
announced its intention to spin-out its sTNFR biomarker technology
into a separate entity, Renalytix AI, Inc., which has been
registered in the USA. sTNFR1/2 (Soluble Tumour Necrosis Factor
Receptors 1 and 2) are novel biomarkers used in combination with
artificial intelligence to identify which diabetes patients are at
the highest risk of progressive Diabetic Kidney Disease (DKD)
potentially leading to End Stage Renal Disease (ESRD). Plans for
the entity are at an early stage and discussions with partners are
continuing.
Capital changes
The Directors have taken a number of actions during the year to
create distributable reserves and to reduce the number of actual
and potential shares in issue. In June 2017, 21.6m share options
which had been granted to employees and others were cancelled at
the election of the holders, in return for payments totalling
GBP1.5m. In September 2017, court and shareholder approval were
received for a capital reduction, allowing us to create
distributable reserves through the write-off of the Company's share
premium account, and to buy back up to 15% of the Company's
ordinary shares. Subsequently, a total of 6.7m shares have been
cancelled. As a result of these actions, the total number of
potential shares has reduced by nearly 6%.
Results overview
The Chief Executive's and Finance Director's statements contain
a review of the year and an overview of the financial performance
of the Group.
Board
All of the Board members have served throughout the year.
Non-executive Directors have continued to waive their standard
director's fees, however as each has performed considerable amounts
of work for the Group in addition to their duties as directors,
they have been paid an appropriate bonus.
Outlook
Trading in 2017 has been positive and this has continued into
the early part of 2018. Trading is in line with management
expectations.
Christopher Mills
Non-executive Chairman
14 March 2018
Chief Executive's Review
It is pleasing to be able to report a strong set of results for
2017. In particular, cash generation has once again been very
strong, with net cash growing from GBP2.2m to GBP7.0m during the
year, despite spending GBP1.4m on capital expenditure and GBP1.5m
on the cancellation of share options.
Operations
We have succeeded in our aim for 2017 of driving the existing
business and continuing to reduce cost. Gross margins have improved
at a greater rate than the increase in sales. We have sold around
15,000 analysers and 70 million tests during the year and cemented
our place as number one supplier of Beta Hydroxybutyrate
(<BETA>-HB ) reagent in the USA, and number two worldwide in
Hemoglobin point-of-care products.
During the year we completed the restructuring of our
manufacturing operations by closing our manufacturing facility in
Poland. Production volume was shifted to our factory in Barleben,
Germany and customers successfully transitioned away from the older
style cuvette previously made in Poland. In Barleben we have
invested in modern production equipment including new automated
equipment for the manufacture and packaging of the Quo-Test
cartridge. At our Elkhart USA facility, where we manufacture a
number of wet chemistry products, we have a medium term programme
to update the facilities to improve quality and volumes.
Point-of-Care
EKF's point-of-care business model continues to be to sell
analysers into the market and then benefit from the ongoing revenue
stream generated by sales of the dedicated consumables. Over the
last five years we have sold over 80,000 analysers for use
worldwide, and each year we supply a growing number of tests for
use on these.
Hematology
Sales of Hematology products have increased by 10% to GBP12.9m
(2016: GBP11.7m). Sales of Hemo Control (sold in the USA as Hemo
Point H2) have built on the strong growth in 2016, rising a further
7%, while DiaSpect revenues have risen by a further 23%.
Diabetes
Diabetes revenues are up by 13% at GBP11.5m (2016: GBP10.2m).
The Saudi tender won in 2015 was completed during the year, and
this has lead to an increase in Quo Test and Quo Lab sales of 14%.
There has been further success for Biosen sales which have risen by
10%.
Central Laboratory
Central laboratory sales have grown by 5% to GBP12.6m, from
GBP12.1m last year, again driven sales of <BETA>-HB
Liquicolor reagent which are higher by a further 17%, having risen
by a very significant percentage in 2016. We have continued to
promote our Altair 240 analyser through an increasing portfolio of
specialist distributors. Sales of other Central Laboratory products
have been stable. We have discontinued a number of the marginal
former STI products.
New and updated products
We have concentrated in 2017 on widening the range of regulatory
approvals for our existing product ranges. In particular we have
conducted a number of clinical trials in the USA in anticipation of
submitting applications for FDA approval in the USA for our
DiaSpect Tm and Quo-Test products. Quo-Test is also in the lab
testing phase of its China FDA registration and we have secured
registration for it in Brazil alongside Hemo Control, DiaSpect Tm
and Quo-Lab. POC Connect, our connectivity solution for our
DiaSpect Tm handheld analyser was launched in November 2017. We
will soon be showcasing our new and updated Lactate Scout 4.0
product. As noted above, we are working to secure commercial launch
of our sTNFR biomarker (for early detection of end stage renal
disease in diabetic patients), alongside a number of partners.
Outlook
We are looking forward to finalising our two FDA applications in
the first half of 2018, and to update on progress with our sTNFR
project. At the same time, we anticipate receiving completed
registrations for Beta Hydroxybutyrate (<BETA>-HB) in Mexico,
Brazil and Colombia as well as the Indian registration of DiaSpect
Tm all in the first half of 2018. We are continuing to work hard to
increase efficiency and reduce costs by investing in automation and
streamlining processes. We are confident that we will continue to
see growth in the business on a steady and sustainable basis.
Julian Baines
Chief Executive Officer
14 March 2018
FINANCE DIRECTOR's Review
Revenue
Revenue for the year was GBP41.6m (2016: GBP38.6m), an increase
of 8%. 6.6% of the increase was the result of improvements in
foreign currency exchange rates, largely because of a further fall
in the average value of sterling against the US dollar and Euro
especially in the first half of the year. The remainder of the
increase comes from organic growth.
Revenue by disease state, which is presented for illustration
purposes only, is as follows:
FY 2017 FY 2016 +/-%
GBP'000 GBP'000
Hematology 12,911 11,704 +10%
Diabetes Care 11,547 10,203 +13%
Central Laboratory 12,597 12,051 +5%
Other 4,529 4,631 (2)%
-------------------- --------- --------- -----
Total revenue 41,584 38,589 +8%
-------------------- --------- --------- -----
Gross profit
Gross profit increased to GBP22.9m (2016: GBP18.3m). The gross
margin percentage on sales was 55.0% (2016: 47.5%). The increase
was attributable in part to cost reductions arising from the
actions taken in previous years, partly through mix and volume
effects, and partly as a result of the release of inventory
provisions set in prior years.
Administration costs and research and development costs
Administration expenses have again fallen, to GBP18.2m (2016:
GBP18.7m). R&D costs included in administration expenses were
GBP2.2m, with a further GBP0.7m being capitalised as an intangible
cost. Gross R&D expenses have therefore increased to GBP2.9m
from GBP2.7m in 2016.
The charge for depreciation of fixed assets and amortisation of
intangible assets is GBP4.6m (2016: GBP5.0m). The charge includes
an impairment in the year related to the carrying value of our
Polish operations which were closed during the year, as well as the
reassessment of the carrying value of certain non-core development
projects.
Exceptional items relate to provisions made and costs incurred
in the closure of the Polish manufacturing site, the increase in
the fair value of the warranty claim associated with the
acquisition of EKF-Diagnostic GmbH, which is attributable to the
increase in the Company's share price during the year, and to the
benefit at fair value of the shares released to EKF from an escrow
account associated with the acquisition of Selah Genomics, Inc.
Operating profit and adjusted earnings before interest tax and
depreciation
The Group made an operating profit of GBP4.7m, having made a
small loss of GBP0.3m in 2016. This reflects the considerable
efforts made in the last two years to reduce costs and improve
efficiency. 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
progress because the Board believes it gives clearer comparability
of operating performance between periods. In 2017 we achieved
adjusted EBITDA of GBP9.3m (2016: GBP6.1m). The calculation of this
non-GAAP measure is shown on the face of the income statement. It
excludes the effect of share-based payment charges of GBP1.5m
(2016: GBP1.0m), which increased largely because of the
acceleration of charges as a result of the programme of share
option cancellations, and exceptional profits of GBP1.6m (2016:
losses of GBP0.5m). Of the increase in adjusted EBITDA of GBP3.2m,
GBP0.6m is attributable to the effect of more favourable exchange
rates, with the remainder being attributable to improved underlying
performance.
Finance costs
Finance costs have continued to fall, to GBP0.5m in 2017 (2016:
GBP0.7m). This is largely as a result of lower interest costs
associated with the reduction of debt during the year, offset by
higher charges relating to the discounting of deferred
consideration.
Tax
There is an income tax charge of GBP1.4m (2016: credit of
GBP1.2m). This is because of a tax adjustment in the USA caused by
timing differences on the carry back of losses in previous years,
while in 2016 there was a large credit relating to 2015. In future
years the Group anticipates a positive impact on its tax charge as
a result of the tax policy changes recently made by the US
Government.
Balance sheet
Property, plant and equipment
Additions to fixed assets were GBP1.4m (2016: GBP1.3m). This
reflected investment in production equipment in both Germany and in
the USA, including automated pouching equipment in Barleben and the
replacement of obsolete plant in Elkhart.
Intangible assets
The value of intangible assets has fallen from GBP46.5m to
GBP43.6m year-on-year. This is partially attributable to the annual
amortisation charge, plus the offsetting effect of additions and
impairments.
Deferred consideration
The remaining deferred consideration relates to the share-based
payment to the former owner of EKF-Diagnostic GmbH. Finalisation of
the contracts to conclude the position is now expected to take
place in 2018.
Cash and working capital
Net cash has increased from GBP2.2m to GBP7.0m during the year.
Gross cash has increased to GBP8.2m (2016: GBP7.9m), and borrowings
have reduced from GBP5.7m to GBP1.2m. All borrowings in the UK and
the USA have been paid off. The remaining borrowings are being
reduced over the loan period to 2023 and were used to fund the new
building in Barleben. GBP1.5m was used to buy employees out of
share option agreements and GBP0.2m was used to acquire ordinary
shares for cancellation.
Inventory has reduced from GBP6.0m to GBP5.6m in 2017 as our
programme to reduce inventory levels continued. While results so
far have been encouraging, and we have seen inventory levels reduce
by over 30% since December 2015, despite higher revenue, our
ambition remains to reduce our holdings further, while ensuring
production and sales run efficiently.
Trade receivables have reduced, partly because of the completion
of payments relating to business in Saudi Arabia which required
extended payment terms. The increase in payables, reflects
increased activity during the year and the liability recognised in
respect of cash settled share-based payments.
Richard Evans
Finance Director and Chief Operating Officer
14 March 2018
Consolidated Income Statement
FOR THE YEARED 31 DECEMBER 2017
2017 2016
GBP'000 GBP'000
========================================================= ======== ========
Revenue 41,584 38,589
Cost of sales (18,721) (20,267)
========================================================== ======== ========
Gross profit 22,863 18,322
Administrative expenses (18,186) (18,734)
Other income 52 85
========================================================== ======== ========
Operating profit/(loss) 4,729 (327)
---------------------------------------------------------- -------- --------
Depreciation and amortisation (4,623) (4,961)
Share-based payments (1,514) (973)
Exceptional items 1,562 (532)
EBITDA before exceptional items and share-based payments 9,304 6,139
---------------------------------------------------------- -------- --------
Finance income 53 37
Finance costs (475) (713)
========================================================== ======== ========
Profit/(loss) before income tax 4,307 (1,003)
Income tax (charge)/credit (1,367) 1,172
========================================================== ======== ========
Profit for the year 2,940 169
========================================================== ======== ========
Profit/(loss) attributable to:
Owners of the parent 2,715 (18)
Non-controlling interest 225 187
========================================================== ======== ========
2,940 169
--------------------------------------------------------- -------- --------
Pence Pence
=================================================== ===== ======
Earnings/(loss) per Ordinary Share attributable to
the owners of the parent during the year
From continuing operations
Basic 0.59 (0.00)
Diluted 0.58 -
---------------------------------------------------- ----- ------
Consolidated Statement of Comprehensive Income
2017 2016
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Profit for the year 2,940 169
Other comprehensive income:
Items that may be subsequently reclassified to profit
or loss
Currency translation differences (622) 9,343
======================================================= ======== ========
Other comprehensive (loss)/gain for the year (622) 9,343
======================================================= ======== ========
Total comprehensive gain for the year 2,318 9,512
======================================================= ======== ========
Attributable to:
Owners of the parent 2,096 9,198
Non-controlling interests 222 314
======================================================= ======== ========
Total comprehensive gain for the year 2,318 9,512
======================================================= ======== ========
Consolidated Statement of Financial Position
AS AT 31 December 2017
Group Group
2017 2016
GBP'000 GBP'000
============================================ ======== ========
Assets
Non-current assets
Property, plant and equipment 12,121 12,124
Intangible assets 43,600 46,503
Investments 152 152
Deferred tax assets 34 371
============================================= ======== ========
Total non-current assets 55,907 59,150
============================================= ======== ========
Current assets
Inventories 5,638 6,025
Trade and other receivables 7,396 9,370
Deferred tax assets 13 13
Cash and cash equivalents 8,203 7,874
============================================= ======== ========
Total current assets 21,250 23,282
============================================= ======== ========
Total assets 77,157 82,432
============================================= ======== ========
Equity attributable to owners of the parent
Share capital 4,576 4,643
Share premium account - 95,393
Other reserve 108 41
Foreign currency reserves 4,892 5,609
Retained earnings 50,394 (45,236)
============================================= ======== ========
59,970 60,450
============================================ ======== ========
Non-controlling interest 528 521
============================================= ======== ========
Total equity 60,498 60,971
============================================= ======== ========
Liabilities
Non-current liabilities
Borrowings 872 1,130
Deferred tax liabilities 3,467 3,751
Total non-current liabilities 4,339 4,881
============================================= ======== ========
Current liabilities
Trade and other payables 9,429 9,401
Deferred consideration 1,062 693
Current income tax liabilities 1,473 1,160
Deferred tax liabilities 23 738
Borrowings 333 4,588
============================================= ======== ========
Total current liabilities 12,320 16,580
============================================= ======== ========
Total liabilities 16,659 21,461
============================================= ======== ========
Total equity and liabilities 77,157 82,432
============================================= ======== ========
Consolidated Statement of Cash Flows
FOR THE YEARED 31 DECEMBER 2017
Group Group
2017 2016
GBP'000 GBP'000
============================================= ======== ========
Cash flow from operating activities
Cash generated by operations 10,118 8,816
Interest paid (106) (496)
Income tax (paid)/received (959) 623
============================================== ======== ========
Net cash generated by operating activities 9,053 8,943
============================================== ======== ========
Cash flow from investing activities
Sale of investments - 250
Purchase of property, plant and equipment
(PPE) (1,361) (1,261)
Purchase of intangibles (852) (663)
Proceeds from sale of PPE 128 211
Interest received 53 37
============================================== ======== ========
Net cash used in investing activities (2,032) (1,426)
============================================== ======== ========
Cash flow from financing activities
Proceeds from issuance of Ordinary Shares - 4,539
Share based payments (1,505) -
Share buy back (241) -
New loans - 5,957
Repayments on borrowings (4,458) (12,555)
Dividend payment to non-controlling interest (215) (54)
Net cash used in financing activities (6,419) (2,113)
============================================== ======== ========
Net increase in cash and cash equivalents 602 5,404
Cash and cash equivalents at beginning
of year 7,874 2,017
Exchange (losses)/gains on cash and cash
equivalents (273) 453
============================================== ======== ========
Cash and cash equivalents at end of year 8,203 7,874
============================================== ======== ========
Consolidated Statement of Changes in Equity
Share Foreign
Share premium Other currency Retained Non-controlling Total
capital account reserve reserve earnings Total interest equity
Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== ======== ======== ========= ========= ======== =============== ========
At 1 January 2016 4,221 91,276 41 (3,607) (45,438) 46,493 261 46,754
============================= ======== ======== ======== ========= ========= ======== =============== ========
Comprehensive income
(Loss)/profit for the year - - - - (18) (18) 187 169
Other comprehensive income
Currency translation
differences - - - 9,216 - 9,216 127 9,343
============================= ======== ======== ======== ========= ========= ======== =============== ========
Total comprehensive
income/(expense) - - - 9,216 (18) 9,198 314 9,512
============================= ======== ======== ======== ========= ========= ======== =============== ========
Transactions with owners
Proceeds from shares issued 422 4,117 - - - 4,539 - 4,539
Dividends to non-controlling
interest - - - - - - (54) (54)
Share-based payments - - - - 220 220 - 220
============================= ======== ======== ======== ========= ========= ======== =============== ========
Total contributions by and
distributions to owners 422 4,117 - - 220 4,759 (54) 4,705
============================= ======== ======== ======== ========= ========= ======== =============== ========
At 31 December 2016 and 1
January
2017 4,643 95,393 41 5,609 (45,236) 60,450 521 60,971
============================= ======== ======== ======== ========= ========= ======== =============== ========
Comprehensive income
Profit for the year - - - - 2,715 2,715 225 2,940
Other comprehensive income
Currency translation
differences - - - (717) 98 (619) (3) (622)
============================= ======== ======== ======== ========= ========= ======== =============== ========
Total comprehensive
(expense)/income - - - (717) 2,813 2,096 222 2,318
============================= ======== ======== ======== ========= ========= ======== =============== ========
Transactions with owners
Share cancellation (67) - 67 - (3,121) (3,121) - (3,121)
Capital reconstruction - (95,393) - - 95,393 - - -
Dividends to non-controlling
interest (215) (215)
Share-based payments 545 545 - 545
============================= ======== ======== ======== ========= ========= ======== =============== ========
Total contributions by and
distributions to owners (67) (95,393) 67 - 92,817 (2,576) (215) (2,791)
============================= ======== ======== ======== ========= ========= ======== =============== ========
At 31 December 2017 4,576 - 108 4,892 50,394 59,970 528 60,498
============================= ======== ======== ======== ========= ========= ======== =============== ========
Notes to the Financial Statements
for the year ended 31 December 2017
1. Basis of presentation
EKF Diagnostics Holdings Plc is a company incorporated in the
United Kingdom. The Company is a public limited company, which is
listed on the AIM market of the London Stock Exchange.
The audited preliminary announcement has been prepared in
accordance with the Group's accounting policies as disclosed in the
financial statements for the year ended 31 December 2017 and
International Financial Reporting Standards ("IFRSs") and
International Financial Reporting Standards Interpretations
Committee (IFRS IC) interpretations as adopted by the European
Union and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. This preliminary announcement was
approved by the Board of Directors on 14 March 2018. The
preliminary announcement does not constitute statutory financial
statements within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year to 31 December 2016 have been
delivered to the Registrar of Companies. The audit report for those
accounts was unqualified and did not contain statements under 498
(2) or (3) of the Companies Act 2006 and did not contain any
emphasis of matter.
Certain statements in this announcement constitute
forward-looking statements. Any statement in this announcement that
is not a statement of historical fact including, without
limitation, those regarding the Company's future expectations,
operations, financial performance, financial condition and business
is a forward-looking statement. Such forward-looking statements are
subject to risks and uncertainties that may cause actual results to
differ materially. These risks and uncertainties include, amongst
other factors, changing economic, financial, business or other
market conditions. These and other factors could adversely affect
the outcome and financial effects of the plans and events described
in this announcement and the Company undertakes no obligation to
update its view of such risks and uncertainties or to update the
forward-looking statements contained herein. Nothing in this
announcement should be construed as a profit forecast.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs. The Company will
publish its full financial statements for the year ended 31
December 2017 by 16 April 2018, which will be available on the
Company's website at www.ekfdiagnostics.com and at the Company's
registered office at Avon House, 19 Stanwell Road Penarth CF64 2EZ.
The Annual General Meeting will be held on Tuesday 8 May 2017.
2. Geographic sales
Disclosure of Group revenues by geographic location of customer
is as follows:
2017 2016
GBP'000 GBP'000
====================================== ======== ========
Americas
United States of America 17,174 15,122
Rest of Americas 3,195 3,979
Europe, Middle East and Africa (EMEA)
Germany 6,016 6,082
United Kingdom 300 276
Rest of Europe 3,423 2,761
Russia 2,743 2,687
Middle East 2,912 2,870
Africa 1,611 882
Asia and Rest of World
China 915 929
Rest of Asia 3,168 2,922
New Zealand/Australia 127 79
====================================== ======== ========
Total revenue 41,584 38,589
====================================== ======== ========
No single external customer represented more than 10% of
revenues in either 2017 or 2016.
3. Exceptional items
Included within administrative expenses are exceptional items as
shown below:
2017 2016
Note GBP'000 GBP'000
===================================== ===== ======== ========
* Warranty claim a 339 129
* Business reorganisation costs b (183) (661)
* Cancellation of shares c 1,406 -
Exceptional items 1,562 (532)
============================================ ======== ========
(a) Estimated warranty claim in relation to the acquisition of
EKF-diagnostic GmbH increased because of higher share price.
(b) Restructuring costs, mainly redundancy and notice costs,
associated in 2017 with the closure of EKF's Polish facility and
other restructuring activities.
(c) Fair value of shares released to EKF by former shareholders
of Selah Genomics Inc. which had been issued as part of the
consideration for the acquisition of Selah, but held in escrow.
These shares have subsequently been cancelled.
4. Finance income and costs
2017 2016
GBP'000 GBP'000
============================================================= ======== ========
Finance costs:
* Bank borrowings 83 338
* Other interest 23 158
* Financial liabilities at fair value through profit or
loss - losses/(gains) 369 208
* Convertible debt - 9
============================================================= ======== ========
Finance costs 475 713
============================================================= ======== ========
Finance income
* Interest income on cash and short-term deposits 14 37
* Other interest 39 -
============================================================= ======== ========
Finance income 53 37
============================================================= ======== ========
Net finance costs 422 676
============================================================= ======== ========
5. Income tax
2017 2016
Group GBP'000 GBP'000
================================================== ======== ========
Current tax:
Current tax on profit/(loss) for the year 2,045 1,602
Adjustments for prior periods (100) (2,219)
================================================== ======== ========
Total current tax 1,945 (617)
================================================== ======== ========
Deferred tax:
Origination and reversal of temporary differences (578) (555)
Total deferred tax (578) (555)
================================================== ======== ========
Income tax charge/(credit) 1,367 (1,172)
================================================== ======== ========
The Finance Act 2015 which was substantively enacted in 2015
included legislation to reduce the main rate of UK corporation tax
to 19% from 1 April 2017 and the Finance Act 2016 which was
substantively enacted in 2016 included legislation to reduce the
main rate of UK corporation tax to 17% from 1 April 2020.
The tax on the Group's profit/(loss) before tax differs from the
theoretical amount that would arise using the standard tax rate
applicable to the profits of the consolidated entities as
follows:
2017 2016
GBP'000 GBP'000
=============================================================== ======== ========
Profit/(loss) before tax 4,307 (1,003)
=============================================================== ======== ========
Tax calculated at domestic tax rates applicable to UK standard
rate of tax of 19.25% (2016: 20%) 829 (201)
Tax effects of:
* Expenses not deductible for tax purposes 31 390
* Remeasurement of deferred tax - change in future tax
rate (360) -
* Income not subject to tax 267 -
* Utilisation of losses carried forward/ group relief (178) (63)
* Adjustment in respect of prior years (100) (2,219)
* Impact of different tax rates in other jurisdictions 634 428
* Other movements 244 493
=============================================================== ======== ========
Tax charge/(credit) 1,367 (1,172)
=============================================================== ======== ========
There are no tax effects on the items in the statement of other
comprehensive income.
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.
2017 2016
GBP'000 GBP'000
==================================================== =========== ============
Profit/(loss) attributable to owners of the parent 2,715 (18)
==================================================== =========== ============
Weighted average number of Ordinary Shares in issue 463,098,526 446,042,831
==================================================== =========== ============
Basic profit/(loss) per share 0.59 pence (0.00) pence
---------------------------------------------------- ----------- ------------
(b) Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of Ordinary Shares outstanding assuming
conversion of all dilutive potential Ordinary Shares. The Company
has two categories of dilutive potential ordinary shares:
equity-based long-term incentive plans and share options. The
potential shares were not dilutive in 2016 as the Group made a loss
per share.
2017 2016
GBP'000 GBP'000
=================================================== =========== ============
Profit/(loss) attributable to owners of the parent 2,715 (18)
Weighted average diluted number of Ordinary Shares 469,343,547 446,042,831
=================================================== =========== ============
Diluted profit/(loss) per share 0.58 pence (0.00) pence
--------------------------------------------------- ----------- ------------
2017 2016
======================================================== =========== ===========
Weighted average number of Ordinary Shares in issue 463,098,526 446,042,831
Adjustment for:
* Assumed conversion of share awards 2,201,081 -
* Assumed payment of equity deferred consideration 4,043,940 4,043,940
======================================================== =========== ===========
Weighted average number of Ordinary Shares including
potentially dilutive shares 469,343,547 450,086,771
======================================================== =========== ===========
7. Dividends
There were no dividends paid or proposed by the Company in
either year. The Board's policy is to enhance shareholder value
mainly through the growth of the Group, and through a programme of
share buy backs. The Board will however consider the payment of
dividends if and when appropriate.
8 Cash used in operations
Group
==================
2017 2016
GBP'000 GBP'000
========================================
Profit/(loss) before tax 4,307 (1,003)
Adjustments for:
* Depreciation 1,160 1,209
* Amortisation 3,463 3,752
* Warranty claim (339) (129)
* Loss on disposal of fixed assets (33) 30
* Restructure of operations - (360)
* Share-based payments 1,510 220
* Escrow cancellation (1,371) -
* Fair value adjustment 369 208
- Foreign exchange 233 481
* Bad debt written down - -
* Net finance costs 53 468
Changes in working capital
* Inventories 306 2,767
* Trade and other receivables 1,535 (1,127)
* Trade and other payables (1,075) 2,300
======================================== ======== ========
Net cash generated by operations 10,118 8,816
---------------------------------------- -------- --------
In the statement of cash flows, proceeds from the sale of
property, plant and equipment comprise:
2017 2016
Group GBP'000 GBP'000
======================================================== ======== ========
Net book value 95 241
Loss on disposal of property, plant and equipment 33 (30)
======================================================== ======== ========
Proceeds from disposal of property, plant and equipment 128 211
======================================================== ======== ========
Non-cash transactions
The principal non-cash transactions are; movements on deferred
consideration provisions; the fair value adjustment relating to the
deferred equity consideration in respect of EKF Germany, the
warranty claim, and release of accruals no longer required.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFEFUDFASELD
(END) Dow Jones Newswires
March 14, 2018 03:01 ET (07:01 GMT)
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