ANNUAL REPORT 2015
EKF Diagnostics Holdings plc
Contents
1.0 Strategic Review
Commercial and operational update
EKF Diagnostics Holdings plc
Point-of-Care: Hematology
Point-of-Care: Diabetes Care
Point-of-Care: Maternal & Women’s Health
Central Laboratory
Chairman’s Statement
Chief Executive’s Review
Finance Director’s Review
Board of Directors
2.0 Governance
Strategic Report
Report of the Directors
Corporate Governance Statement
Report of the Remuneration Committee
Independent Auditors’ Report to the Members of EKF Diagnostics Holdings Plc
3.0 Financial Statements
Consolidated Income Statement
Consolidated Statement Of Comprehensive Income
Consolidated and Company’s Statements of Financial Position
Consolidated and Company’s Statements of Cash Flows
Consolidated and Company’s Statements of Changes in Equity
Notes to the financial statements
4.0 Additional Information
Notice of Annual General Meeting
Notes
Company Information
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1 Annual Report 2015 | EKF Diagnostics Holdings plc
1.0 Strategic Review
1.0 Strategic Review
Commercial and operational update
A challenging year
Green shoots of recovery
2015 was a difficult year for EKF Diagnostics
Holdings plc. The company faced challenges from
difficult global trading conditions, problematic
customers and continuing demands from the
molecular division.
Despite the overall picture there were strong
performances from core products. This, together
with a significant cost reduction program,
allowed the company to enter 2016 with renewed
optimism.
• Revenues down
19% to £30.0m (2014
restated to exclude discontinued business:
£37.1m)
• Restructuring of company
• Cost savings of £6.7m
implemented
identified and
• 12,879 analysers sold and 56m
manufactured
tests
• Disposal of Selah Genomics
• Large tenders won in :
• Closure of Walton-on-Thames facility
• Saudi Arabia (Quo-Test)
• Closure of Dublin facility and end of
• Turkey (Hemo Control)
• Peru (Hemo Control)
• Steady performance from core business
EKF’s focus in 2016 will be on organic growth.
A number of potential opportunities are under
consideration including product licensing, entry
into new territories and obtaining regulatory
approvals in key markets for several products.
sales of biomarker products
• Moth-balled EKF Molecular Diagnostics
• STI in Sanford, USA remains open
• Reduced headcount by 85 (to 315)
• Gross profit down 24% to £14.7m (2014
restated: £19.2m)
• Adjusted LBITDA* down to £0.3m loss (2014
restated: £6.7m)
• Cash used in operating activities: £2.9m
(2014: £3.3m used)
• Net debt of £8.8m (2014: £2.1m net cash)
• Write-off of Selah Genomics with future
annual cost saving of £2m
• Write-off of significant debtors in Mexico
* Excluding exceptional items and share based payments
19% decrease in revenues year-on-year (based on
restated revenues for 2014)
Turnover (£m)
Gross profit (£m)
Adjusted EBITDA (£m)
2015
£30.0
£14.7
-£0.3
2014
£37.1
£19.2
£6.7
+/-
-19%
-23%
1.0 Strategic Review
EKF Diagnostics Holdings plc
EKF Diagnostics Holdings plc | Annual Report 2015 2
Background
EKF Diagnostics is a global medical diagnostics
business with a long history in point-of-care
testing and manufacturing reagents for use in
central laboratories.
The EKF Central Laboratory range includes
clinical reagents, analysers and centrifuges which
are manufactured at premises near San Antonio,
and in Sandford, Florida.
EKF Life Sciences, based
in Elkhart, USA,
manufactures diagnostic enzymes and contracted
custom products for use in medical diagnostics,
pharmaceuticals and industry.
Our point-of-care (POC) products, most of which
are designed and manufactured in Germany, have
a hard earned reputation for ease of use, reliability
and accuracy from professionals working in
diabetes, blood banking and sports medicine.
The cornerstone of the POC business is the
90,000 EKF analysers that have been sold
around the world since 2008. This installed
base requires more than 50 million tests to be
manufactured every year in order to service the
existing business.
3 Annual Report 2015 | EKF Diagnostics Holdings plc
1.0 Strategic Review
Point-of-Care: Hematology
Product portfolio
The hematology product range within EKF
Diagnostics, is the largest in terms of revenues
and the size of the installed base.
The acquisition of DiaSpect and Separation
Technology in 2014 created the largest range
of point-of-care hemoglobin analysers on the
market.
Hemo ControlTM
DiaSpect Tm
• Uses ‘gold standard’
methodology (reagent filled
microcuvettes)
• Data management capability;
provides a hematocrit calculation
• Handheld analyser utilising
reagentless methodology
• Benefits of speed to result
(one second), and shelf-life of
microcuvettes
• Proven, robust analyser sold
worldwide
• Successor to DiaSpect
Hemoglobin T
STAT-Site® M Hgb
UltraCrit PlusTM
HemataStat IITM
• Handheld analyser
• Used with cartridges
• Hematocrit analyser using
unique ultrasound technology
• Laboratory hematocrit
centrifuge and analyser
• Strong presence in US blood
banking sector
• International version also
provides hemoglobin calculation
• Processes multiple samples
Strategy
The opportunities for the hematology business
are primarily focused around two markets – public
health initiatives such as anaemia screening
programmes, and private practices where
the cost of testing is paid for by an insurance
company or the patient.
To approach these markets EKF has two
distinct strategies: firstly, OEM partnerships with
international distributor/manufacturers such as
Fresenius Kabi; and secondly agreements with
smaller distributors who are focused on the public
health opportunities within their own countries.
The addition of the DiaSpect and UltraCrit models
gives EKF an extended portfolio to offer to
both market segments, as well as address niche
markets such as veterinary and sports medicine.
EKF believes that this portfolio can provide it
with a competitive advantage to grow its market
share.
1.0 Strategic Review
Point-of-Care: Diabetes Care
EKF Diagnostics Holdings plc | Annual Report 2015 4
Product portfolio
Diabetes has been at the core of EKF’s strategy
for well over 10 years starting with the early
models of the Biosen C-Line and Biosen S-Line
glucose analysers. More recently HbA1c analysers
have been launched that address the diabetes
screening market.
Although they do not strictly belong within
a point-of-care framework, clinical chemistry
tests such as Glycated Serum Protein and Beta-
Hydroxybutyrate add further provenance to
EKF’s claim to be a significant contributor to
diabetes care worldwide.
BiosenTM
Quo-Lab® A1c
• Glucose and/or lactate
measurement
• HbA1c testing (Glycated
Hemoglobin)
• Three models, each aimed at
different settings
• Results in four minutes using a
unique methodology
• Used as the benchmark for
blood glucose monitors in China
• Targeted at developing world
markets
Quo-Test® A1c
• HbA1c testing (Glycated
Hemoglobin)
• Same methodology as Quo-Lab
but fully automated
• Simple operation requires
minimal training
Strategy
Although glucose testing is the most commonly
used method of determining glycaemic control
within diabetics, HbA1c is the accepted long
term barometer of patient well being and their
compliance with the treatment regimes.
The growth in popularity of HbA1c measurement
has seen an increasing number of entrants to the
point-of-care HbA1c market focused on GP
surgeries and diabetes clinics.
2015 saw the completion of the transfer of Quo-
Test and Quo-Lab to EKF’s Magdeburg site.
This change has allowed the company to make
significant operational savings through the
centralisation of manufacturing, warehousing and
logistics, and customer service.
5 Annual Report 2015 | EKF Diagnostics Holdings plc
1.0 Strategic Review
Point-of-Care: Maternal & Women’s Health
Product portfolio
Maternal and Women’s Health focuses primarily
on diagnostics used to address conditions and
complications associated with pregnancy and
child birth.
Women and Infant Clinics, pregnancy test kits
and HbA1c analysers used to diagnose gestational
diabetes in pregnant women.
Sales
from creamatocrit
centrifuges and hemoglobin meters used in
revenues
include
Creamatocrit PlusTM
Pregnancy kits
• Small lab centrifuge used in
Women and Infant Clinics
• Measure the lipid concentration
and caloric density of breast milk
• Allows professionals to guide
mothers with underweight infants
• Cassette rapid tests
• Marketed for use in hospital
settings
SensPoint
• Handheld lactate analyser with
docking station
• Results in 10 seconds
• Developed for use in maternity
wards
Strategy
EKF’s Maternal and Women’s Health market
strategy is a long-play strategy.
The SensPoint product team are building key
opinion leader relationships in order to educate
the future target market on the need for a protocol
in the use of lactate in obstetric medicine.
In parallel there is a slowly building commercial
interest in this market in Europe. Some settings
are using the Lactate Scout+ to provide accurate
lactate readings within ten seconds.
Lactate Scout+ uses the same strip system as
SensPoint but does not include SensPoint’s data
management functionality.
1.0 Strategic Review
Central Laboratory
Product portfolio
EKF Diagnostics Holdings plc | Annual Report 2015 6
EKF, through its wholly owned subsidiary Stanbio
Laboratory, has had a presence within central
laboratory dating back over 50 years. During this
time it has built a global customer base for its
clinical chemistry reagents that can be used on
most open-channel analyser platforms.
The Central Laboratory business also includes the
manufacture of enzymes, manufactured at EKF
Life Sciences in Elkhart, Indiana. From this facility
EKF Life Sciences sells enzymes used in Stanbio’s
clinical chemistry portfolio as well as providing
contract manufacturing services for third parties.
The acquisition of Separation Technology
Inc. provided EKF with a third element to its
central laboratory offering. As well as being a
manufacturer of hematology products STI has a
heritage in manufacturing high quality, US-built,
mini-centrifuges.
AltairTM 240
Beta-Hydroxybutyrate
• Automated bench-top analyser
• Runs up to 400 tests per hour
and can handle up to 43 different
reagents
• Liquid reagent for the early
detection of ketosis
• Primarily sold in USA through
national distribution networks
• Calibrated to run the Stanbio
Chemistry range of reagents
Procalcitonin
Glycated Serum Protein
• Liquid reagent for the detection
of sepsis
• 2-3 week indicator of average
blood glucose
• Targeted at certain European
markets
• Complementary to HbA1c
in diagnosis and screening of
diabetes
Strategy
The central
laboratory market continues to
experience relatively low levels of growth. This
is in part because sales of chemistry reagents
are inextricably linked to the provision of the
analysers on which the tests are performed. EKF
Diagnostics’ approach to the clinical chemistry
market changed in late 2015 with the launch of
the Altair 240, a benchtop analyser calibrated to
run the Stanbio Chemistry range of reagents.
Further opportunities continue to exist
in
niche markets. Sales of Beta-Hydroxybutyrate
Liquicolor reagent continue to be healthy with
a strong performance from US distributors who
have developed a market capitalising on the
withdrawl of a previous method of testing for
ketosis.
More than 1,000 US hospitals now use EKF’s Beta-
Hydroxybutyrate reagent. A similar approach
is being used for Procalcitonin (PCT) in Europe
where EKF has undertaken awareness activity
using key opinion leaders in target markets.
7 Annual Report 2015 | EKF Diagnostics Holdings plc
1.0 Strategic Review
Chairman’s Statement
Dear fellow shareholder,
Outlook
As we rebase the Company, it is key that the
expectations are set at a level that reflects the
core business without the inclusion of less
predictable tender business, an aspect which has
been an Achilles heel in the past. On that basis,
the Board anticipates 2016 revenues, without
tender wins, being just over £30 million with an
adjusted EBITDA of between £3 million and £4
million.
I believe the core operations of EKF are
fundamentally sound with good prospects. My
desire now is to restore the confidence of our
shareholders in our management team, as they
rebuild value for all shareholders over the medium
term.
Christopher Mills
Non-Executive Chairman
2 May 2016
The Board of the Company has considered its
strategic options and now intends to rebuild
shareholder value by stabilising the business,
growing it organically and implementing further
reductions in the cost base. There is much work
that still needs to be done but our executive team
remains confident they can achieve the objectives
outlined to shareholders.
The year under review has seen a number of
painful decisions, including the closure of the
loss making molecular business. Selah has
been divested and nearly all the employees
of EKF Molecular have been made redundant.
Our headcount has been reduced from 400 to
315 with this being the main driver of achieved
savings of £6.7 million on an annualised basis.
There are, however, further initiatives in coming
years which our management
team have
identified that could add value to the business.
Our executive team, freed from the distraction
of acquisitions and the problems of a failed
acquisition, are totally committed to optimising
the business platform through focussing on
profits and driving cash flow.
Cash remains tight due to the impact of the
cost associated with the restructuring but as
the benefits of the cost reductions flow through,
the Board expects the Company to be cash flow
positive through the balance of the current year.
Results overview
Please refer to the Chief Executive’s statement
which contains a review of the year.
Board
During 2015, Paul Foulger, Tito Bacarese-
Hamilton, Doris-Ann Williams, and David Toohey
all left the board. We thank them for their service.
Sadly, Kevin Wilson who gave loyal service to the
Group, passed away in November after a short
illness, and I offer my condolences to his family.
In addition, on 11 April 2016, we announced the
resignation of Ron Zwanziger as a non-executive
director. The Board has also been informed that
Lurene Joseph is not seeking re-election at the
AGM and accordingly will step down from the
Board at this time. I would like to thank Lurene for
her work on the Board and in particular as part of
the Audit Committee.
All the Non-Executive Directors have waived their
salaries for a three month period (and no fees will
be paid in the current year).
I would also like to thank David Evans who is
retiring at the AGM due to health issues. Despite
the problems of the past year, he has created a
valuable business which can prosper in the future.
1.0 Strategic Review
Chief Executive’s Review
EKF Diagnostics Holdings plc | Annual Report 2015 8
Operational review
This has been a difficult year for EKF Diagnostics.
However, after considerable focus being placed
on streamlining the business and returning to our
point-of-care core, we believe we have stabilised
the business and are in a strong position to grow
organically.
Restructuring
Molecular diagnostics
The acquisition of Selah Genomics was part
of our molecular diagnostics strategy. The
value of the business was, in large part, based
on reimbursement of genomic testing in the
United States. Soon after the acquisition the US
Government changed their reimbursement policy
and cancelled the funding of these tests.
for
On 23 December 2015, therefore, we agreed
to sell Selah to its management for nominal
the
consideration. The consideration
acquisition of Selah by EKF was US$35.6 million
paid in shares on 17 April 2014. Selah reported a
loss after tax for the period from acquisition to
31 December 2014 of £0.6 million and had an
unaudited loss after tax for the period from 1
January 2015 to 23 December 2015 of £2.8 million.
As at 31 December 2014 Selah was disclosed in
the Company’s balance sheet in intangible assets
at a value of £41.4 million, which has now been
written off. Selah as at 31 December 2014 had net
liabilities of £3.6 million.
I estimate the future annual cost saving to EKF
will be in the region of £2 million. The sale and
purchase agreement contains provisions whereby
additional consideration will be paid to EKF. In the
event that Selah secures further equity funding
within twelve months from 23 December 2015,
EKF will obtain a 10% equity interest in Selah.
Alternatively if no external funding is obtained
during that period and if Selah or its business is
sold, EKF will receive 10% of the net proceeds of
such a sale.
The second part of our molecular diagnostics
strategy was PointMan. We have seen technical
progress, but commercially it has proven difficult
to gain market traction quickly enough to justify
the continued investment required at this stage.
Further development has been stopped and
the staff made redundant. There has been third
party interest in acquiring the product line and
discussions are ongoing. However, if an attractive
enough offer is not received, the Group will retain
the intellectual property and assess how best to
return shareholder value. The intangible assets
associated with the business have been written
off.
Mexican debtors
In 2014 EKF sold substantial quantities of
analysers and tests to its distributors in Mexico.
We have provided in full for the amounts owed
to us by two distributors (£5.1m compared to
the amount of £6.3m outstanding at December
2014). We are continuing to pursue all legal means
possible to recover the amounts due to EKF and
to that end we have recovered stock and we are
currently assessing to what extent that stock is
useable. That stock has no carrying value as of 31
December 2015.
Redundancies, sites and Board
The Group has refocused on point-of-care
diagnostics and central laboratory tests. This is
the core competency of the whole group from
operations through to sales and significantly
simplifies the business. As part of this the Group
has significantly reduced its workforce with a
target reduction of around 20%, including those
who have transferred with Selah. To facilitate
this, the Group’s site at Walton-on-Thames is
being closed, and the entire responsibility for the
manufacture and support of Quo-Test and Quo-
Lab has now been moved to the Group’s main
production site at Barleben, Germany.
level,
At Board
reassumed direct
I have
responsibility for the sales function, while Richard
Evans has reassumed responsibility for the finance
function. Expenditure that was not going to lead
to an immediate return has been cut, including
research and development expenditure and the
business unit teams. On 8 April 2016 the Board
appointed Christopher Mills as Non-Executive
Chairman. Christopher has extensive knowledge
of our industry.
The restructuring, which has been achieved with
great rapidity, has meant that many skilful and
committed employees have left the Group, and
to these I wish good luck in their future careers.
Remaining staff have coped admirably with the
many changes that have taken place in a short
period, and to these I offer my sincere thanks.
We have made a strategic decision to switch
distribution of our HemoPoint H2 hemoglobin
analyser from Alere back to our own Stanbio
sales team. The Stanbio team will be working
with a sub-contracted sales team which operates
throughout the USA to ensure a smooth transition.
We believe that this decision will benefit the
business in the medium term.
Business update
Point-of-Care and Central laboratory
The business has now refocused on its core
business of selling point-of-care analysers and
their associated consumables, and on the sale
of central laboratory tests. During 2015 EKF sold
almost 12,000 analysers and over 56 million tests,
and was successful in winning significant new
contracts in Saudi Arabia, Turkey, and Peru. The
award in Saudi Arabia in particular has required
us to enhance our ability to deal with demanding
Outlook
We believe that the fast action taken to stabilise
the business in the last quarter of the year
will bear fruit in the first half of 2016. We have
rebased the business on a more sustainable level
and refocussed on our core areas of expertise.
By simplifying the business and streamlining it is
clear that the internal focus has returned.
We have simplified the business back to our core
capabilities. This is reflected in a very positive
start to 2016 where we are ahead of budget both
from a revenue and EBITDA perspective, with Q1
revenue expected to exceed £8m. We still have
a long way to go but we are ahead of target
regarding stabilising the business.
In addition, the new Chairman and I are completely
aligned in our strategic vision. We intend to
stabilise EKF over the course of 2016 and to
show strong and profitable organic growth. We
are determined to achieve this and we will not be
making any acquisitions.
By simplifying the business I am confident we can
deliver high quality sustainable growth.
Julian Baines
Chief Executive Officer
2 May 2016
9 Annual Report 2015 | EKF Diagnostics Holdings plc
1.0 Strategic Review
government customers, but offers the potential
for sales not just in Saudi Arabia itself but also
other Gulf countries.
in
has
been mentioned
As
previous
announcements, all forecasting moving forward
will exclude significant tenders. Although we fully
expect to win some tenders, the erratic nature of
these tenders means that they are impossible to
forecast accurately and this has been our Achilles
heel in the past.
We have established our core business over many
years and over that time we have an installed
base of over 90,000 instruments. We have a high
quality diabetes range with Biosen, Quo-Test and
Quo-Lab, all of which are gaining market share. In
addition, we have a comprehensive haemoglobin
range and, in our opinion, the DiaSpect Tm is the
best point-of-care haemoglobin meter on the
market.
Our Central Laboratory business continues to
underpin the business and Beta-Hydroxybutyrate
liquid reagent (B-HB) continues to grow market
share. This is continuing into 2016 where we are
seeing continued growth with B-HB.
New products
As part of the restructuring activity the Group’s
research and development programmes have
been reassessed and progress halted on all
projects which do not offer the likelihood of
immediate reward.
Progress with major projects is as follows:
• SensPoint, a POC lactate measuring system
designed for use in peri-natal settings. Further
development is currently paused.
• Work is continuing and good progress has
been made on providing enhancements to
major revenue-generating product lines to
equip our customers with data-management
and connectivity capability. This is a difficult
and complex area because of the variety of
different systems and interfaces available.
• Procalcitonin. This central laboratory test for
measuring sepsis is now on sale.
• sTNFR1/2 biomarkers that will predict fast
progressors to Chronic Kidney Disease (CKD)
in both Type 1 and 2 diabetics which have
been exclusively licenced from Joslin Diabetes
Centre in Boston. EKF is continuing to work
very closely with a potential partner.
• Inborn Errors of Metabolism. EKF Diagnostics
is developing a POC system for monitoring
Phenyalanine levels in PKU (a rare genetic
condition that is present from birth). Again, we
are continuing to work closely with a proposed
partner.
1.0 Strategic Review
Finance Director’s Review
EKF Diagnostics Holdings plc | Annual Report 2015 10
Results
2014 results have been restated to treat Selah
Genomics as a discontinued business.
Revenue
Revenue for the year was £30.0m (2014 restated:
£37.1m). Within Point-of-Care, revenue was
impacted by tender activity in Mexico which had
been substantial in previous years but suffered
from government driven delays in 2015. In
addition, changes to the regulatory framework
in China for medical devices, which obliged us to
suspend sales of two major product lines, have
limited the scope for growth in 2015. One of
these, plus the consumable for the other, are now
able to be sold once again, and we anticipate the
second analyser will be re-registered in 2016.
This excludes the effects of share-based payments
of £0.2m (2014: £0.5m) and exceptional losses of
£5.7m (2014: £3.3m).
Finance costs
Finance costs have decreased to £1.4m (2014
restated: £1.5m). This is mainly because of a
lower level of unwinding charges relating to the
discounting of deferred consideration.
Tax
There is an income tax credit of £2.2m (2014:
charge of £1.4m). This is largely a result of a
deferred tax credit relating to the write off of
intangible assets.
Balance sheet
Gross profit
Property, plant and equipment
Gross profit reduced to £14.7m (2014 restated:
£19.2m), reflecting the reduced revenue. As
a percentage of sales, 2015 showed a small
decrease to 48.8% (2014 restated: 51.9%) as a
result of provisions taken against obsolete and
excess stock.
Administration
development costs
costs
and
research
and
Gross administration costs are £29.2m (2014
restated: £21.6m). The increase in costs is largely
a result of exceptional items and increased
depreciation and amortisation expenses resulting
from the acquisitions in 2014. Net of these items
administration costs are £15.4m (2014 restated:
£13.5m), with the increase largely a result of
increased
infrastructure,
technical and regulatory staff. R&D costs included
in administration expenses were £2.3m (2014:
£1.3m) with a further £3.1m being capitalised as
an intangible asset (2014: £1.5m).
investment
in sales
The charge for amortisation of intangible assets
and the depreciation of fixed assets is £8.1m
(2014: £4.8m).
Ireland
The exceptional items are mainly the impairment
of assets relating to EKF Molecular Diagnostics,
EKF
and capitalised research and
development costs (£5.9m), and DxEconomix
(£0.8m), and the write off of debtors relating to
certain customers in Mexico (£5.1m), offset by
reductions in deferred consideration on Stanbio
and 360 Genomics (£7.4m).
Operating profit and adjusted earnings before
interest tax and depreciation
The Group has made an operating loss of £14.3m
(2014 restated: loss of £1.9m) for the reasons
outlined above. Adjusted EBITDA for 2015
showed a loss of £0.3m (2014 restated: profit of
£6.7m).
The Group has invested £2.3m (2014: £1.0m) in
property, plant and equipment during the year, of
which £1.5m is related to building projects at the
Group’s main manufacturing site at Barleben.
Intangible assets
Intangible assets have reduced from £93.5m to
£42.9m, largely as a result of the impairment of
the investment in EKF Molecular Diagnostics and
the disposal of Selah Genomics. The carrying
value of some R & D projects has also been
reassessed leading to their impairment.
Deferred consideration
the disposal of Selah, deferred
Following
consideration totalling £10m has been written
back. This has been included in the loss on
discontinued business in the income statement
Deferred consideration relating to the acquisition
of 360 Genomics has been reassessed following
the mothballing of EKF Molecular, and reduced
by £4.7m to zero. The final deferred consideration
of £2.7m under the contract for the acquisition of
Stanbio Laboratory expired on 31 December 2015
and this has also been written back. These have
been treated as exceptional items in the income
statement.
Agreement has been reached with the former
owner of EKF-Diagnostic GmbH under which
the remaining deferred consideration, which is in
shares, will not be paid to him but will revert to
the Group. In addition, prior to the sale of Selah
it was agreed that shares in escrow would be
transferred to the Group and sold. This has not
been completed largely because the Group has
been unable to trade in its shares for regulatory
reasons.
11 Annual Report 2015 | EKF Diagnostics Holdings plc
1.0 Strategic Review
Cash and working capital
Cash and cash equivalents have fallen during the
year from £8.3m to £2.0m, while borrowings have
increased from £6.2m to £10.8m, as a result of the
investments made during the year, and the losses
sustained. Inventory has risen to £8.2m (2014:
£5.8m) and efforts are being made to reduce this.
During the year a secured convertible loan was
received from Zwanziger Family Ventures LLC,
(ZFV) a company which is wholly owned by the
Zwanziger Family Irrevocable 2012 Trust, the
beneficiaries of which are the Zwanziger family.
The entire amount of the convertible loan was
used for repayment of part of EKF’s borrowing
with HSBC.
On 15 April 2016 the Group announced that
it had given notice of redemption of the ZFV
loan, and that North Atlantic Smaller Companies
Investment Trust PLC, a company associated with
Christopher Mills had agreed to provide a non-
convertible loan on broadly similar terms.
Richard Evans
Finance Director and Chief Operating Officer
2 May 2016
1.0 Strategic Review
Board of Directors
EKF Diagnostics Holdings plc | Annual Report 2015 12
Executive Directors
Julian Baines
Chief Executive Officer (aged 51)
Julian was Group CEO of BBI where he undertook a management buyout in 2000, a flotation on AIM
in 2004 and was responsible for selling the business to Alere Inc. in 2008 for circa £85 million. In
December 2009 Julian became CEO of the Group and has subsequently successfully completed fund
raisings in 2010, 2011 and 2014, and the acquisition and subsequent integration of eight businesses in
seven countries.
Richard Evans
Chief Operating Officer and Finance Director (aged 58)
Richard qualified as a Chartered Management Accountant in 1983 and holds a Bachelor of Commerce
in Business Studies and Law from Edinburgh University and an MBA from INSEAD. Before joining
EKF Richard was Finance Director, General Manager and finally Global Account Director at Hitachi
Data Systems GmbH. He has also held positions at Fisher Scientific, TRW Seat Belt Systems, Maxtor
Corporation, United Technologies Carrier and Abbott Diagnostics GmbH in Germany.
13 Annual Report 2015 | EKF Diagnostics Holdings plc
1.0 Strategic Review
Non-Executive Directors
Chistopher Mills
Non-Executive Chairman (aged 63)
Christopher founded Harwood Capital Management in 2011, a successor from its former parent
company J.O. Hambro Capital Management, which he co-founded in 1993. He is Chief Executive and
Investment Manager of North Atlantic Smaller Companies Investment Trust plc and Chief Investment
Officer of Harwood Capital LLP. He is a Non-Executive Director of several companies. Christopher was
a Director of Invesco MIM, where he was Head of North American Investments and Venture Capital,
and of Samuel Montagu International.
Adam Reynolds
Non-Executive Director (aged 53)
Adam is a former stockbroker specialising in corporate finance. He has built, rescued and re-financed a
number of public companies. He is currently Chairman of Autoclenz Group Limited, Orogen Gold plc,
and Hubco Investments plc and a Director of OptiBiotix Health plc, Premaitha Health plc, and Verdes
Management plc.
2.0 Governance
EKF Diagnostics Holdings plc | Annual Report 2015 14
2.0 Corporate Governance
Strategic Report
Review of the business
Principal risks and uncertainties
A review of the business is contained in the
Chairman’s Statement on page 7, and in the Chief
Executive’s Review on pages 8 and 9 and the
Finance Director’s Review on pages 10 and 11.
Risk Management
We recognise that effective risk management is
essential to the successful delivery of the Group’s
strategy and will help us build a world class in-
vitro diagnostic business. As we continue to grow
our business we believe it is important to develop
and enhance our approach to risk management,
and to ensure it remains fit for purpose. We are in
the process of enhancing and formalising our risk
management processes and continue our journey
of maturing our approach to how we identify and
manage risks across the Group, in a consistent
and robust manner and enhance our control
environment.
risk management
Below we describe our
approach, the principal risks and uncertainties
faced by the Group and the controls in place to
manage them.
Overview of risk management
approach
Each business area is responsible for identifying,
assessing and managing the risks
in their
respective area. Risks are identified and assessed
by all business areas on a periodic basis, and
are measured against a defined set of criteria,
considering
likelihood of occurrence, and
potential impact. The Executive Board members
also conduct a strategic risk identification and
assessment exercise to identify risks, including
those that could impact the business model,
future performance, solvency or liquidity. This risk
information is combined with a consolidated view
of the business area risks. The most significant
risks identified form our Group Risk Profile, which
is reported to the Executive Board for review
and challenge, ahead of it being submitted to
the Group Board for final review, challenge and
approval. The Board has the overall accountability
for ensuring that risk is effectively managed
across the Group and therefore ensuring that
it is comfortable with the nature and extent of
the principal risks faced in achieving its strategic
objectives.
In 2015 the Group faced a number of issues. In
response to these the Group has reduced its risk
profile by returning to a strategy based on point-
of-care and clinical chemistry and reducing its
cost base.
Set out below are the principal risks which we
believe could materially affect the Group’s ability
to achieve its financial and operating objectives
and control or mitigating activities adopted to
manage them. The risks are not listed in order of
significance.
Key employees
Lack of retention of key employees affects
the continuity and effectiveness of on-going
relationships with key customers and suppliers.
This risk is minimised by ensuring that a minimum
of two individuals manage every relationship
with key customers and suppliers. In addition,
in retaining the key employees, incentivisation
packages are offered through a mixture of
sales commission, profit related bonuses and
participation in the Group LTIP and share option
schemes. Main Board Directors are incentivised as
detailed in the Directors’ Remuneration Report.
Political risk
A significant proportion of the Group’s revenues
are accounted for by agreements in developing
countries. Any instability in these countries
could significantly affect the operations and the
revenue of the Group. In particular the Group
has significant revenue from customers in Russia
which are ultimately largely funded by the
government.
The Group spreads the risk through seeking
a portfolio of diversified revenue streams
geographically with a mixture of distribution
partners in developing and developed countries.
Supply chain continuity
The Group relies on third party manufacturers
for the supply of the majority of raw materials.
Problems with obsolescence and manufacturer
facilities may lead to delay and disruptions in
the supply chain which could have a significant
negative impact on the Group.
The Group maintains a close dialogue with key
suppliers and closely monitors its inventory
status and customer demand to ensure that any
problems with the supply chain can be managed
and back up sources of supply are maintained
where possible.
Regulatory risk
There can be no guarantee that any of the Group’s
products will be able to obtain or maintain the
necessary regulatory approvals in any or all of
the territories in respect of which applications
for such approvals are made. Where regulatory
approvals are obtained, there can be no guarantee
15 Annual Report 2015 | EKF Diagnostics Holdings plc
2.0 Corporate Governance
that the conditions attached to such approvals
will not be considered too onerous by the Group
or its distribution partners in order to be able to
market its products effectively.
The Group seeks to reduce this risk by
manufacturing
recognised
the products
standards, by keeping appraised with changes in
the standards geographically, by seeking advice
from regulatory advisers, consultations with
regulatory approval bodies and by working with
experienced distribution partners.
to
overseas operations could adversely
impact
the financial results. In most cases the Group
matches the currency receipts and expenditure
of the overseas operations. The Group also
endeavours to match the foreign currency
assets of the foreign operations by funding
through borrowings and loans denominated in
the currency of the overseas operations, and to
negotiate currency protection in major contracts.
Reimbursement levels
Competition risk
Due to the Group’s current and future potential
competitors,
such as major multinational
pharmaceutical and healthcare companies
having substantially greater resources than
those of the Group, the competitors develop
systems and products that are more effective or
economic than any of those developed by the
Group, rendering the Group’s products obsolete
or otherwise non-competitive.
The Group seeks to mitigate this risk by
securing patent registration protection for its
products, maintaining confidentiality agreements
regarding the Group’s know-how and technology,
monitoring technological developments and by
selecting leading businesses in their respective
fields as distribution partners capable of
addressing significant competition, should it
arise.
There is no guarantee that the Group may be
able to sell its products or services profitably if
the reimbursement levels from third party payers,
including government and private health insurers,
is unavailable or limited. Third party payers are
increasingly attempting to contain health care
costs through measures that could impact the
Group including challenging the prices charged
for health care products and services, limiting
both coverage and the amount of reimbursement
for new diagnostics products and services, and
denying or limiting coverage for products that
are approved by the regulatory agencies but are
considered experimental by third party payers.
The Group understands that due to third party
dependency it is extremely difficult to eradicate
this risk. However the Group manages this risk
with constant dialogue and educating the third
party payers on the Group’s products and also
developing new technologies in order to seek
additional reimbursements.
Intellectual property risk
Financial reporting and disclosure
The commercial success of the Group and
its ability to compete effectively with other
companies depends, amongst other things, on its
ability to obtain and maintain patents sufficiently
broad in scope to provide protection for the
Group’s intellectual property rights against third
parties and to exploit its products. The absence
of any such patents may have a material adverse
effect on the Group’s ability to develop its
business.
The Group mitigates this risk by developing
products where legal advice indicates patent
protection would be available, seeking patent
protection for the Group’s products, maintaining
confidentiality agreements
regarding Group
know-how and technology and monitoring
technological developments and the registration
of patents by other parties. The commercial
success of the Group also depends upon not
infringing patents granted, now or in the future,
to third parties who may have filed applications
or who have obtained, or may obtain, patents
relating to business processes which might inhibit
the Group’s ability to develop and exploit its own
products.
Foreign exchange risk
The Group has transactional currency exposures
as the majority of revenues and expenditure and
certain borrowings and deferred consideration are
denominated in foreign currencies. Fluctuations
in exchange rates between the Group’s functional
currency of Sterling and the currency of the
Due to the growth of the Group there is a constant
pressure to report accurate financial information
in compliance with accounting standards and
applicable legislation.
This risk is mitigated with the Group’s internal
controls over the financial
information and
reporting overseen by the local financial heads
and then reviewed by the central finance team,
including the Finance Director. The annual
financial statements are also subject to audit by
the Group’s external auditors.
Review of strategy and busi-
ness model
The Board of Directors judge the Company’s
financial performance by reference to the internal
budget which it establishes at the beginning of
each financial year.
EKF’s strategy is to create a world class IVD
business through organic growth. IVD has a
wide spectrum, and within this spectrum we
have chosen to concentrate on point-of-care,
while maintaining our existing central laboratory
business. During 2015 the group has sold or
mothballed its molecular diagnostics business.
We have identified and acquired businesses
in these areas with strong product lines and
distribution networks which can benefit from
better, more professional management, greater
resources, and from the synergistic benefits of
being part of a larger group.
2.0 Corporate Governance
EKF Diagnostics Holdings plc | Annual Report 2015 16
Social, community, and human
rights
The Board recognises that the Group has a
duty to be a good corporate citizen and to
respect the laws, and where appropriate the
customs and culture of the territories in which
it operates. The Group has donated product to
selected appropriate charities which operate
within its area, and encourages staff to take part
in charitable activities which are related to our
business areas or customers. It contributes as
far as is practicable to the local communities in
which it operates and takes a responsible and
positive approach to employment practices.
The Strategic Report was approved by the Board
on 2 May 2016 and signed on its behalf by:
Richard Evans
Finance Director and Chief Operating Officer
2 May 2016
We sell worldwide to over 100 countries. In many
territories we sell through local distributors,
however where appropriate we sell direct to
end users which include hospitals, laboratories,
and government agencies. Our distributors
are supported by a network of regional sales
managers and by product managers who are
specialists in our product range. We manufacture
the majority of the products we sell ourselves,
but also distribute a number of carefully chosen
products on behalf of others. We have product
support centres in the USA and Germany.
The Group works mainly on the principle of selling
value priced instrumentation which generates
long-term revenue streams from the subsequent
sale of consumables. The Group has an existing
portfolio of technologies which produce revenues
and will add technologies which are strategically
appropriate to this portfolio should they become
available and providing the additions make
economic sense.
Future outlook
The Chairman’s Statement on page 7 and the
Chief Executive’s Review on pages 8 and 9 give
information on the future outlook of the Group,
including the main trends and factors likely to
affect its future development.
Key Performance Indicators
(KPIs)
The key performance indicators currently used
by the Group are revenue, gross margin, adjusted
EBITDA and cash resources. The Group is working
to establish other key performance indicators
including non-financial measures. KPIs are
discussed in more detail in the Finance Directors
review on pages 10 and 11.
Environment
The Directors consider that the nature of the
Group’s activities is not inherently detrimental
to the environment. The Group is committed to
minimising any effect on the environment caused
by its operations.
Employees
The Group places value on the involvement of its
employees and they are regularly briefed on the
Group’s activities. The Group closely monitors
staff attrition rates which it seeks to keep at low
levels and aims to structure staff compensation
levels at competitive rates in order to attract and
retain high calibre personnel.
Disabled employees
Applications for employment by disabled persons
are always fully considered, bearing in mind the
specific aptitudes of the applicant involved. It is
the policy of the Group that the training, career
development and promotion of disabled persons,
as far as possible, be identical with that of other
employees.
17 Annual Report 2015 | EKF Diagnostics Holdings plc
2.0 Corporate Governance
Report of the Directors
for the year ended 31 December 2015
The Directors have pleasure in submitting this report together with the audited consolidated financial
statements of EKF Diagnostics Holdings plc for the year ended 31 December 2015.
Corporate details
EKF Diagnostics Holdings public limited company is incorporated and registered in England and Wales
number 4347937. The registered office is Avon House, 19 Stanwell Road, Penarth, Cardiff CF64 2EZ.
Directors
The Directors who held office during the year and as at the date of signing the financial statements
were as follows:
• Ron Zwanziger (appointed 11 November 2015, resigned 11 April 2016)
• David Evans
• Julian Baines
• Richard Evans
• Adam Reynolds
• Lurene Joseph (appointed 21 December 2015)
• Tito Bacarese-Hamilton (resigned 10 December 2015)
• Paul Foulger (resigned 2 December 2015)
• David Toohey (resigned 30 November 2015)
• Doris-Ann Williams (resigned 30 November 2015)
• Kevin Wilson (deceased 20 November 2015)
• Christopher Mills (appointed 8 April 2016)
Principal activities
During the year the principal activities of the Group and Company were the development, manufacture
and supply of products into the in-vitro diagnostics (IVD) market place. Future developments and
research and development activities are discussed in the Chairman’s Statement on page 7 and the
Chief Executive’s Review on pages 8 and 9 and the Finance Director’s Review on pages 10 and 11.
Dividends
There were no dividends paid or proposed by the Company in either year.
Going concern
The Directors have considered the applicability of the going concern basis in the preparation of these
financial statements. This included the review of internal budgets and financial results which show,
taking into account reasonably probable changes in financial performance, that the Group should be
able to operate within the level of its current funding arrangements.
During 2015, the write down of trade debtors in Mexico caused the Group to breach covenants
relating to its banking facilities in the USA. This breach has been waived by the bank, however as a
result certain borrowings have been reclassified as current. A convertible loan was provided by the
Zwanziger Family Trust and used to reduce bank borrowing.
The loss making molecular business has been sold or mothballed, the sites in Dublin and Walton-on-
Thames have been closed, and a redundancy programme put in place. These have together generated
annualised cost savings of £6.7m.
Taking these changes into account, and after making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational existence for the
foreseeable future. The Group therefore continues to adopt the going concern basis of preparation for
its consolidated financial statements.
Financial risk management
Financial risk management is discussed in Note 3 of the financial statements.
Employee policies
Employee policies are discussed in the Strategic Report on pages 14 to 16.
EKF Diagnostics Holdings plc | Annual Report 2015 18
2.0 Corporate Governance
Directors’ interests
The interests of those Directors serving at 31 December 2015 and as at the date of signing of these
financial statements, all of which are beneficial, in the share capital of the Company were as follows:
On 31 December 2015
Ordinary Shares of 1p each
On 31 December 2014
Ordinary Shares of 1p each
Ron Zwanziger
David Evans
Julian Baines
Richard Evans
Adam Reynolds
Christopher Mills
33,661,694
1,805,753
1,721,955
178,842
3,229,724
33,200,000
33,661,694
1,805,753
1,721,955
178,842
3,229,724
-
*or at the date of appointment where later.
There have been no transactions by directors during their period of office during the year. Mr Zwanziger’s
shares are held in the name of Zwanziger Family Ventures LLC. On 18 March 2016 Harwood Capital LLP
and North Atlantic Smaller Companies Investment Trust plc, which are associated with Christopher
Mills, acquired 48,000,000 shares, bringing their total holding to 81,200,000 shares.
Substantial shareholdings
As at 28 April 2016, the following interests in 3% or more of the issued Ordinary Share capital had been
notified to the Company:
Number of shares
Percentage of issued share capital
N.Y. Nominees Limited
The Bank Of New York (Nominees) Limited
Securities Services Nominees Limited
Nortrust Nominees Limited
HSBC Global Custody Nominee (Uk) Limited
Vidacos Nominees Limited
Pershing Nominees Limited
Statement of Directors’ responsibilities
48,041,369
46,440,300
35,375,000
31,751,615
27,990,369
25,673,139
20,641,388
11.38%
11.00%
8.38%
7.52%
6.63%
6.08%
4.89%
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that
law the Directors have prepared the Group and Parent Company financial statements in accordance
with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under
Company law the Directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group and the Company and of the profit or
loss of the Group for that period. In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable IFRSs as adopted by the European Union have been followed, subject to
any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company and the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Company and the Group and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation
in the United Kingdom governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
19 Annual Report 2015 | EKF Diagnostics Holdings plc
2.0 Corporate Governance
Directors’ liability insurance
The Company has entered into deeds of indemnity for the benefit of each Director of the Company
in respect of liabilities to which they may become liable in their capacity as Director of the Company
and of any Company in the Group. Those indemnities are qualifying third party indemnity provisions
for the purposes of Section 234 of the Companies Act 2006 and have been in force during the whole
of the financial year and up to the date of approval of the financial statements.
Independent auditors
PricewaterhouseCoopers LLP has expressed their willingness to continue in office as auditors and a
resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.
Disclosure of information to the Auditors
The Directors who hold office at the date of approval of this report confirm that so far as they are
each aware, there is no relevant audit information of which the Company’s auditors are unaware, and
each Director has taken all the steps that he or she ought to have taken as a Director in order to make
himself or herself aware of any relevant audit information and to establish that the Company’s auditors
are aware of that information.
Corporate governance
The Company’s statement of corporate governance can be found in the Corporate Governance
Statement on pages 20 to 22 of these financial statements. The Corporate Governance Statement
forms part of this Report of the Directors and is incorporated into it by cross-reference.
Annual General Meeting
The resolutions to be proposed at the forthcoming Annual General Meeting are set out in the formal
notice of the meeting, as set out on page 69 and 70.
Recommendation
The Board considers that the resolutions to be proposed at the Annual General Meeting are in the
best interests of the Company and it is unanimously recommended that shareholders support these
proposals as the Board intends to do in respect of their own holdings.
Richard Evans
Finance Director and Chief Operating Officer
2 May 2016
2.0 Corporate Governance
Corporate Governance Statement
for the year ended 31 December 2015
EKF Diagnostics Holdings plc | Annual Report 2015 20
Compliance
The Directors recognise the value of the principles of the UK Corporate Governance Code (the Code).
Although, as an AIM Company, compliance with the Code is not required, the Group seeks to apply the
Code where practicable and appropriate for a business of its size.
The following statement describes how the Group as at 31 December 2015 sought to address the
principles underlying the Code.
Board composition and responsibility
The Board currently comprises two Executive Directors and four Non-Executive Directors. During the
year Paul Foulger and Tito Bacarese-Hamilton resigned as Executive Directors, and David Toohey and
Doris-Ann Williams resigned as Non-Executive Directors, Kevin Wilson passed away. Ron Zwanziger
joined as Non-Executive Chairman, at which time David Evans became Non-Executive Deputy
Chairman, and Lurene Joseph joined as Non-Executive Director, Christopher Mills was appointed Non-
Executive Chairman on 8 April 2016. Ron Zwanziger resigned as a director on 11 April 2016. Lurene
Joseph and David Evans are not seeking re-election at the next AGM. The Board notes that the
Combined Code guidance recommends that at least half the Board should comprise independent
Non-Executive Directors. The Board has determined that Christopher Mills and Adam Reynolds are
independent in character and judgement and that there are no relationships or circumstances which
could materially affect or interfere with the exercise of their independent judgement. The Board is
satisfied with the balance between Executive and Non-Executive Directors which allows it to exercise
objectivity in decision making and proper control of the Company’s business. The Board considers its
revised composition is appropriate in view of the size and requirements of the Group’s business and
the need to maintain a practical balance between executives and non-executives. Due to the structure
of the Company it is considered that it is not appropriate to make any further changes to the Board
composition at present.
There is a division of responsibilities between the Non-Executive Chairman, who is responsible for the
overall strategy of the Group and running the Board, and the CEO, who is responsible for implementing
the strategy and day to day running of the Group. He is assisted by Richard Evans, who is the Finance
Director and Chief Operating Officer.
All Directors are subject to election by shareholders at the first Annual General Meeting after their
appointment, and are subject to re-election at least every three years. Non-Executive Directors are
appointed for a specific term of office which provides for their removal in certain circumstances,
including under section 168 of the Companies Act 2006. The Board does not automatically re-nominate
Non-Executive Directors for election by shareholders. The terms of appointment of the Non-Executive
Directors can be obtained by request to the Company Secretary.
The Board’s primary objective is to focus on adding value to the assets of the Group by identifying
and assessing business opportunities and ensuring that potential risks are identified, monitored and
controlled. Matters reserved for Board decisions include strategic long-term objectives and capital
structure of major transactions. The implementation of Board decisions and day to day operations of
the Group are delegated to Management.
Board meetings
10 Board meetings were held during the year. The Directors’ attendance record during the year, along
with the number of meetings held during their tenure is as follows:
Ron Zwanziger (Non-Executive Chairman)
David Evans (formerly Executive Chairman, now Non-Executive Deputy Chairman)
Julian Baines (Chief Executive Officer)
Richard Evans (Chief Operating Officer and Finance Director)
Adam Reynolds (Non-Executive Director)
Lurene Joseph (Non-Executive Director)
Tito Bacarese-Hamilton (formerly Chief Technology Officer)
Paul Foulger (formerly Finance Director and Company Secretary)
David Toohey (formerly Non-Executive Director)
Doris-Ann Williams (formerly Non-Executive Director)
Kevin Wilson (formerly Non-Executive Director)
1
9
9
9
9
-
10
10
10
9
8
(1)
(10)
(10)
(10)
(10)
-
(10)
(10)
(10)
(10)
(9)
21 Annual Report 2015 | EKF Diagnostics Holdings plc
2.0 Corporate Governance
Audit Committee
From January 2015 until November 2015 this comprised three Non-Executive Directors, Kevin Wilson
(Chairman), David Toohey and Adam Reynolds. Following Board changes the commitee comprises
David Evans (Chairman), Adam Reynolds and Lurene Joseph. David Evans is the Senior Independent
Director and has recent and relevant finance experience. The principal duties of the committee are
to review the half-yearly and annual financial statements before their submission to the Board and
to consider any matters raised by the auditors. The Committee also reviews the independence and
objectivity of the auditors. The terms of reference of the Committee reflect current best practice,
including authority to:
• Recommend the appointment, re-appointment and removal of the external auditors;
• Ensure the objectivity and independence of the auditors including occasions when non-audit
services are provided; and
• Ensure appropriate ‘whistle-blowing’ arrangements are in place.
The Non-Executive Directors may seek information from any employee of the Group and obtain
external professional advice at the expense of the Company if considered necessary. Due to the
relatively low number of personnel employed within the Group, the nature of the business and the
current control and review systems in place, the Board has decided not to establish a separate internal
audit department. The committee met twice during 2015.
Remuneration Committee
The Company has established a formal and transparent procedure for developing policy on executive
remuneration and for fixing the remuneration packages of individual Directors. No Director is involved
in deciding his own remuneration.
The remuneration committee is made up of David Evans (Chairman), and Adam Reynolds. The
committee considers the employment and performance of individual Executive Directors and
determines their terms of service and remuneration. It also has authority to grant options under the
Company’s Executive Share Option Scheme.
The Committee met once during 2015.
Board appointments
There is no formal Nominations Committee, the appointment of new Directors being considered by
the full Board.
Internal control
The Directors are responsible for ensuring that the Group maintains a system of internal control to
provide them with reasonable assurance regarding the reliability of financial information used within
the business and for publication and that the assets are safeguarded. There are inherent limitations
in any system of internal control and accordingly even the most effective system can provide only
reasonable, but not absolute, assurance with respect to the preparation of financial reporting and the
safeguarding of assets.
The Group, in administering its business, has put in place strict authorisation, approval and control
levels within which senior management operates. These controls reflect the Group’s organisational
structure and business objectives. The control system includes clear lines of accountability and covers
all areas of the organisation. The Board operates procedures which include an appropriate control
environment through the definition of the above organisation structure and authority levels and the
identification of the major business risks.
The Group has continued its project to enhance and formalise its internal controls including the
establishment of a Risk Steering Committee.
Internal financial reporting
The Directors are responsible for establishing and maintaining the Group’s system of internal reporting
and as such have put in place a framework of controls to ensure that on-going financial performance is
measured in a timely and correct manner and that risks are identified as early as is practicably possible.
There is a comprehensive budgeting system and monthly management accounts are prepared which
compare actual results against both the budget and the previous year. They are reviewed and approved
by the Board, and revised forecasts are prepared on a regular basis.
2.0 Corporate Governance
EKF Diagnostics Holdings plc | Annual Report 2015 22
Relations with shareholders
The Company reports to shareholders twice a year. The Company dispatches the notice of its Annual
General Meeting, together with a description of the items of special business, at least 21 clear days
before the meeting. Each substantially separate issue is the subject of a separate resolution and all
shareholders have the opportunity to put questions to the Board at the Annual General Meeting. The
Chair(s) of the Audit and Remuneration Committees normally attend the Annual General Meeting and
will answer questions which may be relevant to their work. The Chairman advises the meeting of the
details of proxy votes cast on each of the individual resolutions after they have been voted on in the
meeting.
The Chairman and the Non-Executive Directors intend to maintain a good and continuing understanding
of the objectives and views of the shareholders.
Corporate social responsibility
The Board recognises that the Group has a duty to be a good corporate citizen and is conscious that its
business processes minimise harm to the environment, that it contributes as far as is practicable to the
local communities in which it operates and takes a responsible and positive approach to employment
practices.
The Report of the Directors was approved by the Board on 2 May 2016 and signed on its behalf by:
Richard Evans
Finance Director and COO
23 Annual Report 2015 | EKF Diagnostics Holdings plc
2.0 Corporate Governance
Report of the Remuneration Committee
for the year ended 31 December 2015
Statement of compliance
This report does not constitute a Directors’ Remuneration Report in accordance with the Directors’
Remuneration Regulations 2007 which do not apply to the Company as it is not fully listed. This report
sets out the Group policy on Directors’ remuneration, including emoluments, benefits and other share-
based awards made to each Director.
Policy on Executive Directors’ remuneration
Remuneration packages are designed to motivate and retain Executive Directors to ensure the
continued development of the Group and to reward them for enhancing value to shareholders.
The main elements of the remuneration package for Executive Directors are basic salary or fees,
performance-related bonuses, benefits and share option incentives.
Directors’ remuneration - Audited
The remuneration of the Directors for the year ended 31 December 2015 is shown below:
Executive Directors
David Evans 1
Tito Bacarese-Hamilton 3
Julian Baines
Paul Foulger 3
Richard Evans
Non-Executive Directors
Ron Zwanziger 2
Lurene Joseph 2
David Toohey 3
Doris-Ann Williams 3
Kevin Wilson 4
Adam Reynolds
Gordon Hall
Total fees and emoluments
Salary and
fees
£’000
Pension
£’000
Benefits in
kind
£’000
Bonus
£’000
2015
£’000
2014
£’000
42
336
245
212
170
1,005
-
-
28
28
27
30
113
1,118
-
10
12
8
5
35
-
-
-
-
-
-
-
-
-
11
12
9
26
58
-
-
-
-
-
3
-
3
35
61
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
42
357
269
229
201
1,098
-
-
28
28
27
33
-
116
45
193
262
182
201
883
-
-
11
11
25
28
12
87
1,214
970
1.
2.
3.
4.
David Evans’ remuneration is paid through his personal consultancy, MBA Consultancy. Mr Evans became
a Non-Executive Director on 11 November 2015. Mr Evans waived salary totalling £20,000 during the year.
Remuneration for Ron Zwanziger and Lurene Joseph is shown from their date of appointment. Both have
waived any salary for the period until March 2016.
Paul Foulger, Tito -Bacarese-Hamilton, David Toohey, and Doris-Ann Williams’ remuneration is shown up
to their date of resignation. In addition to his emoluments disclosed above, Paul Foulger received £42,000
for his loss of office.
Kevin Wilson’s remuneration is shown up to the date of his death.
2.0 Corporate Governance
EKF Diagnostics Holdings plc | Annual Report 2015 24
Directors’ share options and Long-Term Incentive Plan
As at 31 December 2015 the following options to Directors of the Company existed under the
Company’s unapproved share-option scheme and Long-Term Incentive Plan:
Option Holder
David Evans
Julian Baines
Richard Evans
Option price per ordinary
share
Ordinary Shares under
option
Exercise period
15p
15p
20p
8,545,638
1 January 2014 – 31 December 2020
8,545,638
1 January 2014 – 31 December 2020
4,260,000
1 January 2014 – 31 December 2020
Half of the options granted to David Evans and Julian Baines and all the options of Richard Evans are
subject to the achievement of 15% compound annual Earnings Before Interest, Tax, Depreciation and
Amortisation (EBITDA) growth for the three years commencing on 1 January 2011. The base EBITDA
was equal to twice the audited EBITDA achieved by the Group for the six months ending 31 December
2010. This condition has now been met. The key terms for the remaining awards were revised on 11
June 2013. The key terms of these are as follows. For each test, the shares will vest if the Company’s
mid-market closing share price attains the required price or higher for a period of 20 (60p options:
30) consecutive days at any time during the period commencing on 1 January 2011 and ending on 31
December 2016.
• 1,709,128 notional shares will vest if the share price attains 30 pence. This condition has now been
met.
• 1,709,128 notional shares will vest if the share price attains 37.5 pence.
• 1,709,128 notional shares will vest if the share price attains 45 pence.
• 1,709,128 notional shares will vest if the share price attains 52.5 pence.
• 1,709,126 notional shares will vest if the share price attains 60 pence.
On 10 December 2015 Tito Bacarese-Hamilton was granted an option to acquire 1,300,000 ordinary
shares in the company at an exercise price of 22.5p. The option can be exercised at any time up to 31
December 2016.
3.0 Financial Statements
25 Annual Report 2015 | EKF Diagnostics Holdings plc
2.0 Corporate Governance
Independent Auditors’ Report to the Members
of EKF Diagnostics Holdings Plc
Report on the financial statements
Our opinion
In our opinion:
• EKF Diagnostics Holdings Plc’s group financial statements (the “financial statements”) give a true
and fair view of the state of the group’s and of the company’s affairs as at 31 December 2015 and
of the group’s loss and the group’s and the parent company’s cash flows for the year then ended;
• the group financial statements have been properly prepared in accordance with International
Financial Reporting Standards (“IFRSs”) as adopted by the European Union;
• the company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in accordance with the provisions of the Companies
Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
What we have audited
The financial statements, included within the Annual Report 2015 (the “Annual report”), comprise:
• the consolidated and company’s statements of financial position as at 31 December 2015;
• the consolidated income statement and the consolidated statement of comprehensive income for
the year then ended;
• the consolidated and company’s statements of cash flows for the year then ended;
• the consolidated and company’s statements of changes in equity for the year then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies
and other explanatory information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the
notes to the financial statements. These are cross-referenced from the financial statements and are
identified as audited.
The financial reporting framework that has been applied in the preparation of the financial statements
is applicable law and IFRSs as adopted by the European Union and, as regards the company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
In applying the financial reporting framework, the directors have made a number of subjective
judgements, for example in respect of significant accounting estimates. In making such estimates,
they have made assumptions and considered future events.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, the information given in the Strategic Report and the Report of the Directors for
the financial year for which the financial statements are prepared is consistent with the financial
statements.
Other matters on which we are required to report by exception
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures
of directors’ remuneration specified by law are not made. We have no exceptions to report arising from
this responsibility.
2.0 Corporate Governance
EKF Diagnostics Holdings plc | Annual Report 2015 26
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 17, the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”). Those
standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company’s members as a
body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence
about the amounts and disclosures in the financial statements sufficient to give reasonable assurance
that the financial statements are free from material misstatement, whether caused by fraud or error.
This includes an assessment of:
• whether the accounting policies are appropriate to the group’s and the company’s circumstances
and have been consistently applied and adequately disclosed;
• the reasonableness of significant accounting estimates made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgements against available
evidence, forming our own judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we
consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence
through testing the effectiveness of controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify
material inconsistencies with the audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by
us in the course of performing the audit. If we become aware of any apparent material misstatements
or inconsistencies we consider the implications for our report.
Jason Clarke (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Cardiff 2 May 2016
27 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
3.0 Financial Statements
Consolidated Income Statement
Revenue
Cost of sales
Gross profit
Administrative expenses
Other income
Operating loss
Depreciation and amortisation
Share-based payments
Exceptional items
LBITDA before exceptional items and share-based payments
Finance income
Finance costs
Loss before income tax
Income tax credit/(expense)
Notes
2015
£’000
Restated
2014
£’000
5
6
6
6
5
7
5
12
12
13
30,045
37,106
(15,376)
(17,860)
14,669
19,246
(29,156)
(21,557)
139
371
(14,348)
(1,940)
(8,052)
(4,819)
(226)
(512)
(5,722)
(3,268)
(348)
35
(1,457)
(15,770)
2,206
6,659
18
(1,509)
(3,431)
(1,440)
Loss for the year from continuing operations
(13,564)
(4,871)
Loss for the year from discontinued operations attributable to the
equity holders of the Company
Loss for the year
Loss attributable to:
Owners of the parent
Non-controlling interest
Loss per Ordinary Share attributable to the owners of the parent
during the year
Basic
From continuing operations
From discontinued operations
Diluted
From continuing operations
From discontinued operations
21
(23,369)
(597)
(36,933)
(5,468)
(37,123)
(5,689)
190
221
(36,933)
(5,468)
Pence
Pence
14
14
14
14
(3.26)
(5.54)
(8.80)
(3.26)
(5.54)
(8.80)
(1.34)
(0.16)
(1.50)
(1.34)
(0.16)
(1.50)
The notes on pages 33 to 68 are an integral part of these consolidated financial statements.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the
Parent Company income statement.
The loss for the Parent Company for the year was £31,595,000 (2014: £2,882,000).
3.0 Financial Statements
Consolidated Statement Of Comprehensive Income
EKF Diagnostics Holdings plc | Annual Report 2015 28
Loss for the year - continuing
Loss for the year - discontinued
Loss for the year
Other comprehensive income:
Notes
2015
£’000
Restated
2014
£’000
(13,564)
(4,871)
(23,369)
(597)
(36,933)
(5,468)
Items that will not be reclassified to profit or loss
Movement on pension scheme
31
-
48
Items that may be subsequently reclassified to profit or less
Recycling of currency translations in respect of previously held interest
in Selah Genomics Inc
32
(4,479)
Currency translation differences
Other comprehensive (loss)/gain for the year
Total comprehensive loss for the year
Attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive loss for the year
-
546
594
792
(3,687)
(40,620)
(4,874)
(40,756)
(4,890)
136
16
(40,620)
(4,874)
Items stated above are disclosed net of tax. The income tax relating to each component of other comprehensive
income is disclosed in note 13.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the
parent company income statement.
The notes on pages 33 to 68 are an integral part of these consolidated financial statements.
29 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
Consolidated and Company’s Statements of
Financial Position
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Investments
Trade and other receivables
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Deferred tax assets
Cash and cash equivalents
Total current assets
Total assets
Equity attributable to owners of the parent
Share capital
Share premium account
Other reserve
Foreign currency reserves
Retained earnings
Non-controlling interest
Total equity
Liabilities
Non-current liabilities
Borrowings
Deferred consideration
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Deferred consideration
Current income tax liabilities
Deferred tax liabilities
Borrowings
Total current liabilities
Total liabilities
Total equity and liabilities
Group
2015
£’000
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
Notes
16
17
18
20
22
28
23
22
28
24
29
29
32
32
31
26
27
28
25
27
28
26
10,680
10,568
1,547
1,576
42,927
93,522
-
-
-
-
402
1,152
-
-
30,521
402
18,550
61,043
1,152
17,799
340
238
340 238
54,349
105,480
51,360
81,808
8,234
7,242
47
2,017
17,540
71,889
4,221
91,276
41
(3,607)
(45,438)
46,493
261
46,754
1,167
-
3,559
4,726
8,331
485
1,087
831
9,675
20,409
25,135
71,889
5,793
16,115
45
8,346
30,299
135,779
4,221
91,276
41
26
(8,541)
87,023
353
87,376
2,492
9,536
13,258
25,286
7,943
8,493
2,171
756
3,754
23,117
48,403
135,779
-
-
14,549
18,508
-
11
14,560
65,920
4,221
91,276
-
4,390
22,898
104,706
4,221
91,276
-
-
-
-
(40,419)
(9,050)
55,078
86,447
-
-
55,078
86,447
-
-
-
-
4,308
485
-
-
6,049
10,842
10,842
-
3,165
-
3,165
3,758
8,493
-
-
2,843
15,094
18,259
65,920
104,706
The notes on pages 33 to 68 are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board on 2 May 2016
Julian Baines
Chief Executive Officer
Richard Evans
Finance Director & Chief Operating Officer
3.0 Financial Statements
Consolidated and Company’s Statements of Cash
Flows
EKF Diagnostics Holdings plc | Annual Report 2015 30
Notes
Group
2015
£’000
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
Cash flow from operating activities
Cash used in operations
35
(2,914)
(3,262)
(5,970)
(12,011)
Interest paid
Income tax paid
(370)
(241)
(1,001)
(1,241)
(143)
(14)
(69)
(21)
Net cash used in operating activities
(4,285)
(4,744)
(6,127)
(12,101)
Of which discontinued
Cash flow from investing activities
Purchase of investments
(2,412)
(3,630)
-
(902)
-
-
Purchase of property, plant and equipment (PPE)
(2,296)
(1,038)
(33)
Purchase of intangibles
Purchase of subsidiaries (net of cash required)
Proceeds from sale of PPE
Interest received
(3,096)
(1,595)
-
42
35
(12,379)
22
18
-
-
-
-
(902)
(17)
-
(10,248)
-
4
Net cash used in investing activities
(5,315)
(15,874)
(33)
(11,163)
Of which discontinued
Cash flow from financing activities
(136)
(286)
Proceeds from issuance of Ordinary Shares
-
25,007
-
-
-
25,007
New loans
7,922
3,764
6,206
2,843
Repayments on borrowings
(3,000)
(1,855)
(3,000)
Dividend payment to non-controlling interest
(228)
(171)
-
-
-
Payment of deferred consideration
(1,425)
(355)
(1,425)
(355)
Net cash generated by financing activities
3,269
26,390
1,781
27,495
Of which discontinued
2,426
3,893
-
-
Net (decrease)/increase in cash and cash
equivalents
(6,331)
5,772
(4,379)
4,231
Cash and Cash equivalents at beginning of year
8,346
2,551
4,390
Exchange gains/losses on cash and cash equivalents
Cash and cash equivalents at end of year
2
23
2,017
8,346
-
11
159
-
4,390
31 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
Consolidated and Company’s Statements of
Changes in Equity
Consolidated
Share
Pre-
mium
Account
£’000
Share
Capital
£’000
Other
Reserve
£’000
Foreign
Cur-
rency
Reserve
£’000
Re-
tained
Earnings
£’000
Non
Con-
trolling
Interest
£’000
Total
Equity
£’000
Total
£’000
At 1 January 2014
2,727
41,783
41
(725)
(3,412)
40,414
508
40,922
Comprehensive income
(Loss)/profit for the year -
continuing
(Loss)/profit for the year -
discontinued
Other comprehensive income
Movement on pension
Currency translation
differences
Total comprehensive income
Transactions with owners
-
-
-
-
-
-
-
-
-
-
Proceeds from shares issued
1,494
49,493
Dividends to non-controlling
interest
Share-based payments
Total contributions by and
distributions to owners
-
-
-
-
1,494
49,493
-
-
-
-
-
-
-
-
-
-
-
-
751
(5,092)
(5,092)
221
(4,871)
(597)
(597)
-
-
(597)
48
48
48
-
751
(205)
546
751
(5,641)
(4,890)
16
(4,874)
-
-
-
-
-
-
50,987
-
50,987
-
(171)
(171)
512
512
-
512
512
51,499
(171)
51,328
At 1 January 2015
4,221
91,276
41
26
(8,541)
87,023
353
87,376
Comprehensive income
(Loss)/profit for the year -
continuing
(Loss)/profit for the year -
discontinued
Other comprehensive income
Recycling of currency
translations in respect of
previously held interest in
Selah Genomics Inc
Currency translation
differences
Total comprehensive income
Transactions with owners
Dividends to non-controlling
interest
Share-based payments
Total contributions by and
distributions to owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(13,754)
(13,754)
190 (13,564)
(23,369) (23,369)
- (23,369)
(4,479)
846
-
-
(4,479)
-
(4,479)
846
(54)
792
(3,633)
(37,123) (40,756)
136 (40,620)
-
-
-
-
226
226
-
(228)
(228)
226
-
226
(228)
226
(2)
At 31 December 2015
4,221
91,276
41
(3,607) (45,438)
46,493
261
46,754
3.0 Financial Statements
Company
At 1 January 2014
Comprehensive income
Loss for the year
Total comprehensive income
Transactions with owners
Proceeds from shares issued
Share-based payments
EKF Diagnostics Holdings plc | Annual Report 2015 32
Share
capital
£’000
Share
Premium
£’000
Retained
Earnings
£’000
Total
£’000
2,727
41,783
(6,680)
37,830
-
-
-
-
(2,882)
(2,882)
(2,882)
(2,882)
Total contributions by and distributions to owners
1,494
49,493
1,494
49,493
-
-
-
512
512
50,987
512
51,499
At 1 January 2015
Comprehensive income
Loss for the year
Total comprehensive income
Transactions with owners
Share-based payments
Total contributions by and distributions to owners
4,221
91,276
(9,050)
86,447
-
-
-
-
-
-
-
-
(31,595)
(31,595)
(31,595)
(31,595)
226
226
226
226
At 31 December 2015
4,221
91,276
(40,419)
55,078
33 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
Notes to the financial statements
for the year ended 31 December 2015
1. General information
EKF Diagnostics Holdings Plc is a company incorporated and domiciled in the United Kingdom. The
Company is a public limited company, which is listed on the AIM market of the London Stock Exchange.
The address of the registered office is Avon House, 19 Stanwell Road, Penarth, 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 discontinued its service based
molecular diagnostics business during the year. This has been accounted for as a discontinued
operation. The Group has presence in the UK, USA, Germany, Poland, Russia, China, and Ireland, and
sells throughout the world including Europe, the Americas, Asia, and Africa.
The financial statements are presented in British Pounds Sterling, the currency of the primary economic
environment in which the Company’s headquarters is operated. The Group comprises EKF Diagnostics
Holdings plc and its subsidiary Companies as set out in note 18.
The registered number of the Company is 04347937.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements
are set out below. The policies have been consistently applied throughout the year, unless otherwise
stated.
Basis of preparation
The consolidated financial statements of EKF Diagnostics Holdings plc have been prepared in
accordance with International Financial Reporting Standards as adopted by the European Union
(IFRS’s), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under
IFRS. Practice is continuing to evolve on the application and interpretations of IFRS.
The consolidated financial statements have been prepared under the historical cost convention, as
modified by the revaluation of certain financial liabilities at fair value through profit and loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying
the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated financial statements are
disclosed in note 4.
(a) New standards, amendments and interpretations adopted by the group. The following standards
have been adopted by the group for the first time for the financial year beginning on or after 1 January
2015. They do not materially impact on the group results:
• Annual improvements 2011 - 2013
(b) New standards, amendments and interpretations issued but not effective for the financial year
beginning 1 January 2015 and not early adopted
A number of new standards and amendments to standards and interpretations have been endorsed
for annual periods beginning after 1 January 2015 (noted below), and have not been early adopted in
preparing these consolidated financial statements. None of these are expected to have a significant
effect on the consolidated financial statements of the group.
• Annual improvements 2014 (2012-2014 cycle)
• Amendment to IFRS 11, ‘Joint arrangements’ on acquisition of an interest in a joint operation
• Amendments to IAS 16, ‘Property, plant and equipment’
• Amendments to IAS 27, ‘Separate financial statements’ on the equity method
• Amendment to IAS 1, ‘Presentation of financial statements’ on the disclosure initiative
• Amendment to IFRS 10, 11 and 12 on transition guidance
• Amendments to IAS 32 and IFRS 7 Financial instruments on asset and liability offsetting
• IAS 28 (revised), ‘Investments in associates and joint ventures’
• IFRS 13, ‘Fair value measurement’
• Amendment to IAS 12,’Income taxes’ on deferred tax
• Amendment to IAS 16, ‘Property, plant and equipment’ and IAS 38,’Intangible assets’, on
depreciation and amortisation
• Amendment to IAS 36, ‘Impairment of assets’ on recoverable amount disclosures.
A number of new standards and amendments to standards and interpretations have been issued but
are not yet endorsed for annual periods beginning after 1 January 2015 (noted below), and have not
been adopted in preparing these consolidated financial
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 34
statements. The Group is currently in the process of assessing the impact of IFRS 9 and IFRS 15 and it is
currently too early to conclude what impact these standards will have as a detailed impact assessment
is required and therefore it is not practicable to provide a quantified estimate of the effects of IFRS 9
and IFRS 15. This will be provided once the Group has completed the detailed reviews.
• IFRS 15 Revenue from contracts with customers (effective for annual periods beginning on or after
1 January 2018)
• IFRS 9 Financial instruments (effective for annual periods beginning on or after 1 January 2018)
Going concern
The Group meets its day-to-day working capital requirements through the use of cash reserves and
existing bank facilities.
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.
During 2015, the write down of trade debtors in Mexico caused the Group to breach covenants
relating to its banking facilities in the USA. This breach has been waived by the bank, however as a
result certain borrowings have been reclassified as current. A convertible loan was provided by the
Zwanziger Family Ventures LLC and used to reduce bank borrowing.
On 15 April 2016 the Group announced that it had given notice of redemption of the ZFV loan, and that
North Atlantic Smaller Companies Investment Trust PLC, a company associated with Christopher Mills
had agreed to provide a non-convertible loan on broadly similar terms.
The loss making molecular business has been sold or mothballed, the sites in Dublin and Walton-on-
Thames have been closed, and a redundancy programme put in place. These have together generated
annualised cost savings of £6.7m.
The Directors believe that the Company and the Group have adequate resources to continue in
operation for the foreseeable future. For this reason they have adopted the going concern basis in the
preparation of the financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its
subsidiary undertakings. Subsidiaries are all entities over which the Group has the power to govern
their financial and operating policies generally accompanying a shareholding of more than fifty
per cent of the voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred,
the liabilities incurred and the equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a contingent consideration agreement.
Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at
the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-controlling
interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree
and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of
the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the
fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference
is recognised directly in the income statement.
Investments in subsidiaries are accounted for at cost less impairment.
Inter-Company transactions, balances and unrealised gains on transactions between Group companies
are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
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.
35 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
(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.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Executive
Directors who make strategic decisions.
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.
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 36
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. 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
37 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
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. The Company’s
loans and receivables comprise ‘trade and other receivables’ and cash and cash equivalents in the
balance sheet.
(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
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 38
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
39 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
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.
The service cost of providing retirement benefits to employees during the year is charged to operating
profit. Past service costs are recognised immediately in income, unless the changes to the pension
plan are conditional on the employees remaining in service for a specified period of time (the vesting
period). In this case, the past service costs are amortised on a straight-line basis over the average
vesting period.
(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.
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
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 40
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. Financial risk management
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (foreign exchange risk and
cash flow interest rate risk), credit risk, liquidity risk, capital risk and fair value risk. The Group’s overall
risk management programme focuses on the unpredictability of the financial markets and seeks to
minimise the potential adverse effects on the Group’s financial performance. The Group does not use
derivative financial instruments to hedge risk exposures.
Risk management is carried out by the head office finance team. It evaluates and mitigates financial risks
in close co-operation with the Group’s operating units. The Board provides principles for overall risk
management whilst the head office finance team provides specific policy guidance for the operating
units in terms of managing foreign exchange risk, credit risk and cash and liquidity management.
(a) Market risk
(i) Foreign exchange – cash flow risk
The Group’s presentational currency is sterling although it operates internationally and is exposed to
foreign exchange risk arising from various currency exposures, primarily between GBP, USD, the Euro,
Rouble, and Zloty such that the Group’s cash flows are affected by fluctuations in the rate of exchange
between GBP and the aforementioned foreign currencies.
This exposure is managed by a natural currency hedge as the Group’s operating subsidiaries cost base
is also denominated in USDs, Euros, Roubles, and Zloty as the Group has subsidiary businesses located
in the USA, Germany, Ireland, Russia, and Poland.
Management do not use derivative financial instruments to mitigate the impact of any residual foreign
currency exposure not mitigated by the natural hedge within the business model. The Group does not
speculate in foreign currencies and no operating Company is permitted to take unmatched positions
in any foreign currency.
(ii) Foreign exchange – Fair value risk
Translation exposures that arise on converting the results of overseas subsidiaries are not hedged. Net
assets held in foreign currencies are hedged wherever practical by matching borrowings in the same
currency. The principal exchange rates used by the Group in translating overseas profits and net assets
into GBP are set out in the table below.
41 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
Rate compared to GBP
Average rate
2015
Average rate
2014
Year end rate
2015
Year end rate
2014
Euro
Russian Rouble
Polish Zloty
US Dollar
1.376
94.362
5.766
1.528
1.244
64.048
5.206
1.647
1.359
108.480
5.808
1.476
1.287
91.264
5.465
1.559
As a guide to the sensitivity of the Group’s results to movements in foreign currency exchange rates,
a one cent movement in the Euro and US Dollars to Sterling rate would impact annual earnings by
approximately £3,000 and £149,000 respectively.
(iii) Cash flow and fair value interest rate risk
The Group has interest-bearing assets in the form of cash and cash equivalents and interest-bearing
liabilities which relate to borrowings and finance lease obligations in the Group’s UK, US and German
subsidiaries. Interest rates on cash and cash equivalents are floating whilst interest rates on certain
borrowings have been fixed and therefore expose the Group to fair value interest rate risk. The Group
does not speculate on future changes in interest rates.
Where overseas acquisitions are made, it is the Group’s policy to arrange any borrowings required in
local currency.
It is the Group’s policy not to trade in financial instruments. The Group does not use interest rate
swaps.
(b) Credit risk
Credit risk is managed on a Group basis, except for credit risk relating to accounts receivable balances.
Each local subsidiary and operating business unit is responsible for managing and analysing the credit
risk for each of their new clients before standard payment and delivery terms and conditions are
offered. It is the Group policy to obtain deposits from customers where possible, particularly overseas
customers. In addition if possible the Group will seek confirmed letters of credit for the balances due.
Credit risk is managed at the operating business unit level and monitored at the Group level to ensure
adherence to Group policies. If there is no independent rating, local management assesses the credit
quality of the customer, taking into account its financial position, past experience and other factors.
Individual risk limits are set based on internal or external ratings in accordance with limits set by the
Board. The utilisation of credit limits is regularly monitored. Where extended credit is granted, this is
agreed by the Finance Director.
Credit risk also arises from cash and cash equivalents, derivative financial instruments and deposits
with banks and financial institutions, as well as credit exposures to customers.
(c) Liquidity risk
Cash flow forecasting is performed in the individual operating entities of the Group and is aggregated
by Group finance. Group finance monitors cash and cash flow forecasts and it is the Group’s liquidity
risk management policy to maintain sufficient cash and available funding through an adequate amount
of cash and cash equivalents and committed credit facilities from its bankers. Due to the dynamic
nature of the underlying businesses, the head office finance team aims to maintain flexibility in funding
by keeping sufficient cash and cash equivalents available to fund the requirements of the Group.
The Group’s policy in relation to the finance of its overseas operations requires that sufficient liquid
funds be maintained in each of its territory subsidiaries to support short and medium-term operational
plans. Where necessary, short-term funding is provided by the holding Company. In the UK, the
working capital bank facility and the management of liquid funds in excess of operational needs are
controlled centrally. Typically excess funds are placed as short-term deposits, to provide a balance
between interest earnings and flexibility.
The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings
based on the remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows. In the case of deferred
consideration the amount shown as payable between 2 and 5 years for 31 December 2015 is the total
gross contractual liability should all performance criteria be met, not the estimated liability based on
current and forecast performance
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 42
Less than
1 year
£’000
Between
1 & 2 years
£’000
Between
2 & 5 years
£’000
More than
5 years
£’000
9,917
485
8,028
3,862
1,425
7,731
431
-
-
343
3,943
-
573
-
-
709
1,522
-
234
-
-
1,576
5,101
-
Total
£’000
11,155
485
8,028
6,490
11,991
7,731
At 31 December 2015:
Borrowings (inc. finance leases)
Deferred consideration
Trade and other payables
At 31 December 2014:
Borrowings (inc. finance leases)
Deferred consideration
Trade and other payables
(d) Capital risk management
The Group’s objectives when managing capital are to safeguard the ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt
divided by total capital. Net debt is calculated as total borrowings (including “current and non-current
borrowings” as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital
is the sum of net debt plus equity.
(e) Fair value estimation
The Group has no Level 1, 2 or 3 classified financial assets as at 31 December 2015 (2014: none).
4. Critical accounting estimates and judgements
In the process of applying the Group’s accounting policies, management has made accounting
judgements in the determination of the carrying value of certain assets and liabilities. Due to the
inherent uncertainty involved in making assumptions and estimates, actual outcomes will differ from
those assumptions and estimates. The following judgements have the most significant effect on the
amounts recognised in the financial statements.
(a) Going concern
The Directors believe that the Group has adequate resources to conduct normal business for the
foreseeable future and as a result the Group continues to adopt the going concern basis of preparation
for its consolidated financial statements.
In order to reach this conclusion, the Directors have prepared month-by-month forecasts for the
period to 31 December 2017. These forecasts are based on sales and profitability being in line with
those disclosed in the Chairman’s statements, along with estimates for capital expenditure and
other balance sheet items which the Directors consider to be reasonable. Working capital estimates
assume that inventory levels reduce during the period as a proportion of sales. The Directors have
applied sensitivities to these forecasts to model the effect of lower sales and a lower level of inventory
reduction. The forecasts assume the continued support of the Group’s lenders.
(b) Legal disputes
A dispute has arisen between EKF-diagnostic GmbH and a distributor involving disputed invoices
from the distributor, relating mainly to the period prior to the acquisition of the company by the Group.
The dispute is not covered by any outstanding warranty from the former owner. Earlier litigation in the
UK has been settled in EKF’s favour. Having taken legal advice the Directors believe that no provision
is required in relation to this dispute.
A dispute has arisen with a second distributor in relation to issues with the registration of a product,
for which the distributor is claiming damages. EKF contend that the registration was the distributor’s
responsibility and that in any case there is no liability for damages. The dispute is likely to go to
mediation in the UK. Having taken legal advice, the Directors believe that no provision is required in
relation to this dispute.
(c) Impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the
accounting policy stated in note 2. The recoverable amounts of cash-generating units have been
determined based on value-in-use calculations. These calculations require the use of estimates as set
out in note 17.
43 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
(d) Share-based payments
A number of accounting estimates and judgements are incorporated within the calculation of the
charge to the income statement in respect of share-based payments. These are described in more
detail in note 30.
(e) Impairment of receivables
Trade and other receivables are carried at the contractual amount due less any estimated provision
for non-recovery. Provision is made based on a number of factors including the age of the receivable,
previous collection experience and the financial circumstances of the counterparty. Trade receivables
with a gross value of £5.1m are considered to have no value.
(f) Deferred tax assets
Deferred tax assets are only recognised to the extent that it is probable that future taxable profits will
be available against which deductible temporary differences can be utilised. A deferred tax asset in
respect of tax losses relating to the Company has not been recognised as insufficient future taxable
profit in the Company is currently forecast. The carrying amount of deferred tax assets at the balance
sheet date was £387,000 (2014: £283,000). In addition there were £2,532,000 (2014: £1,141,000) of
deferred tax assets not recognised.
(g) Tax warranties
The Group has been assessed for and has paid taxation in Germany relating to the periods prior
to acquisition by the Group. Under the warranties of the acquisition agreement EKF has withheld
payment of part of the deferred consideration. The warranty claim effect has reduced as a result
of reduction in the Company’s share price. The reduction of the potential claim is included within
administration costs and has been disclosed as an exceptional item. The determination of the related
warranty claim, is based on management judgement.
5. 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 products. This activity takes place across various countries,
such as the USA, Germany, Poland, Russia, United Kingdom and Ireland, 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 new matrix structure
for revenue based partly on disease states introduced in 2015 has been discontinued and this structure
has not therefore been reflected in the segmental analysis.
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.
3.0 Financial Statements
2015
Income statement
Revenue
Inter segment
External revenue
Adjusted EBITDA*
Share based payment
Exceptional items
EBITDA
Depreciation
Amortisation
EKF Diagnostics Holdings plc | Annual Report 2015 44
5. Segmental reporting continued
The segment information provided to the Board for the reportable segments for the year ended 31
December 2015 is as follows:
Germany
£’000
UK
£’000
USA
£’000
Ireland
£’000
Poland
£’000
Russia
£’000
Discont.
£’000
Other
£’000
Total
£’000
12,931
5
16,399
88
1,228
2,243
(4,075)
(2)
(40)
(58)
(20)
-
8,856
3
16,359
30
1,208
2,243
1,870
(1,968)
2,879
(904)
544
598
-
-
-
-
(351)
(449)
(2,413)
(16)
1,519
(2,417)
466
(920)
(523)
(99)
(367)
(1,855)
(681)
(2,378)
(5)
(37)
-
-
544
(32)
(102)
410
10
-
-
598
(20)
(20)
558
12
(70)
(113)
-
-
-
-
-
-
-
-
-
-
-
-
2,175
35,069
(829)
(5,024)
1,346
30,045
(3,367)
(348)
(226)
(226)
(2,493)
(5,722)
-
(6,086)
(6,296)
(127)
(1,173)
(1,806)
(6,879)
(8,019)
(14,348)
(165)
(1,422)
(115)
2,206
Operating profit/(loss)
(859)
(3,197)
(2,279)
(962)
Net finance costs
Income tax
Discontinued operations
(101)
(1,054)
(124)
75
-
739
1,672
-
-
-
18
-
Retained profit/(loss)
(885)
(3,512)
(731)
(944)
350
457
(23,369)
(8,299)
(36,933)
-
-
(23,369)
-
(23,369)
Segment assets
Operating assets
25,977
10,717
43,472
969
1,250
Inter segment assets
(454)
(4,957)
(19)
(59)
(446)
External operating assets
25,523
5,760
43,453
1,239
2
83
26,762
5,762
43,536
910
86
996
804
154
958
Cash
Total assets
Segment liabilities
Operating liabilities
12,306
9,707
18,401
4,760
96
Inter segment liabilities
(9,065)
(8,884)
(16,053)
(4,420)
External operating liabilities
Borrowings
Total liabilities
Other segmental information
Non current assets - PPE
Non current assets - Intangibles
Intangible assets - additions
PPE - additions
3,241
2,408
823
182
2,348
2,070
340
-
5,649
1,005
4,418
340
4,724
11,372
1,225
1,768
53
4,066
5,561
13,978
558
18
576
427
-
619
697
-
96
-
96
127
348
-
2
*Adjusted EBITDA excludes exceptional items and share-based payments
470
(4)
466
398
864
91
(4)
87
1
88
68
125
-
41
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,456
133,311
(57,500)
(63,439)
(7,044)
69,872
55
2,017
(6,989)
71,889
10,181
55,542
(2,823)
(41,249)
7,358
14,293
6,181
10,842
13,539
25,135
1,642
10,680
10,924
42,927
40
40
3,096
2,296
45 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
5. Segmental reporting continued
2014
Income statement
Revenue
Inter segment
External revenue
Adjusted EBITDA*
Share based payment
Exceptional items
Germany
£’000
UK
£’000
USA
£’000
Ireland
£’000
Poland
£’000
Russia
£’000
Discont.
£’000
Other
£’000
Restated
Total
£’000
15,520
2,539
21,544
373
1,770
3,162
(7,297)
(1,849)
(29)
-
(22)
8,223
690
21,515
4,460
4,746
4,758
-
-
(481)
(663)
-
-
373
(42)
-
(170)
1,748
1,079
-
-
EBITDA
Depreciation
3,979
4,083
4,758
(212)
1,079
(609)
(117)
(328)
(11)
(35)
Exceptional impairment
-
-
-
(1,162)
-
Amortisation
(603)
(624)
(1,464)
(229)
(108)
Operating profit/(loss)
2,767
3,342
2,966
(1,614)
Net finance costs
Income tax
(21)
(58)
(694)
(714)
(167)
(687)
Discontinued operations
-
-
-
-
141
-
Retained profit/(loss)
2,688
1,934
2,112
(1,473)
936
5
(189)
(131)
-
752
-
(597)
-
(597)
539
(597)
(11,423)
(5,468)
Segment assets
Operating assets
26,655
21,147
92,578
1,667
956
Inter segment assets
(1,703)
(5,469)
-
-
-
External operating assets
24,952
15,678
92,578
1,667
956
1,586
378
240
86
1,037
26,538
16,056
92,818
1,753
1,993
1,176
Cash
Total assets
Segment liabilities
Operating liabilities
Inter segment liabilities
(10,665)
(7,165)
(18,985)
External operating liabilities
4,499
3,928
5,860
15,164
11,093
24,845
655
-
655
-
157
52
209
-
Borrowings
Total liabilities
Other segmental information
441
174
2,591
4,940
4,102
8,451
655
209
Non current assets – PPE
3,685
135
4,753
Non current assets – Intangibles
13,130
11,141
55,502
Intangible assets - additions
PPE - additions
Investments - additions
419
507
-
696
22
-
-
418
-
14
759
480
-
-
167
478
-
13
-
* Adjusted EBITDA excludes exceptional items and share-based payments. ‘Other’ primarily relates to the holding company and head office costs.
-
3,162
717
-
-
717
(23)
-
(24)
670
-
623
-
623
553
119
-
119
-
119
59
173
-
23
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,738
46,646
(343)
(9,540)
1,395
37,106
(9,059)
6,659
(512)
(512)
(792)
(2,106)
(10,363)
4,041
(115)
(1,238)
-
(1,162)
(529)
(3,581)
(11,007)
(1,940)
(614)
(1,491)
198
(1,440)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,086
163,712
(29,107)
(36,279)
(9,021)
127,433
4,466
8,346
(4,555)
135,779
26,887
78,920
-
(36,763)
26,887
42,157
3,040
6,246
29,927
48,403
1,755
10,568
12,339
93,522
-
55
902
1,595
1,038
902
EKF Diagnostics Holdings plc | Annual Report 2015 46
3.0 Financial Statements
5. Segmental reporting continued
Disclosure of Group revenues by geographic location is as follows:
Americas
United States of America
Mexico
Rest of Americas
Europe, Middle East and Africa (EMEA)
Germany
United Kingdom
Rest of Europe
Russia
Middle East
Africa
Rest of World
China
Asia
New Zealand/Australia
Total revenue
6. Expenses – analysis by nature
Inventories consumed in cost of sales
Employee benefit expense (note 10)
Employee costs capitalised as intangible assets
Depreciation and amortisation
Transaction costs relating to business combinations (note 7)
Exceptional items
Research and development expenses
Foreign exchange
Operating lease payments
Other expenses
Total cost of sales and administrative expenses
Included within the above expenses are exceptional items as set out in note 7.
2015
£’000
10,857
1,004
2,390
5,057
238
2,637
2,259
1,676
916
677
2,242
92
30,045
2015
£’000
6,856
20,127
(837)
8,052
178
5,722
2,346
432
1,263
393
44,532
Restated
2014
£’000
9,755
7,560
2,440
4,848
287
2,791
3,174
687
1,315
2,304
1,892
53
37,106
Restated
2014
£’000
8,327
15,346
(549)
4,819
809
3,268
1,275
446
492
4,635
39,417
47 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
7. Exceptional items
Included within Administrative expenses are exceptional items as shown below:
Warranty claim
Restructuring costs
Transaction costs relating to business combinations
Impairment charges - goodwill
Impairment charges - other
Release of deferred consideration provisions
Impairment of investment
Bad debts written off
Cost of closure and transfer of Quotient manufacturing to Germany
Cost of closure and transfer of EKF Ireland to UK
Note
a
b
c
d
d
e
f
g
2015
£’000
(349)
(727)
(178)
-
(5,948)
7,353
(750)
(5,123)
-
-
2014
£’000
(281)
-
(809)
(254)
(908)
79
-
-
(925)
(170)
Exceptional items
(5,722)
(3,268)
a. Estimated warranty claim in relation to the acquisition of EKF-diagnostic GmbH reduced because of lower
share price
b. Transaction costs in 2015 relate to additional costs of acquisition in the previous year
c. Restructuring costs mainly redundancy and notice costs
d.
Impairment of EKF Molecular Diagnostics Ltd, and the remaining value of EKF Ireland and capitalised
R&D.
e. Reductions in carrying value of deferred contingent consideration associated with EKF Molecular
Diagnostics and Stanbio.
Impairment of investment in Dx Economix Inc.
f.
g. Write off of bad debts associated with certain customers in Mexico
8. Auditor remuneration
During the year the Group (including its overseas subsidiaries) obtained the following services from
the Company’s auditor and its associates:
Fees payable to Company’s auditor and its associates for the audit of
the parent Company and consolidated financial statements
Fees payable to the Company’s auditor and its associates for other
services:
– The audit of Company’s subsidiaries
– Other services
– Tax compliance services
9. Directors’ emoluments
Aggregate emoluments
Contribution to defined contribution pension scheme
2015
£’000
38
87
32
13
170
2015
£’000
1,179
35
1,214
2014
£’000
38
111
71
28
248
2014
£’000
941
29
970
Retirement benefits are accruing to 2 (2014: 4) current directors under a defined contribution scheme.
See further disclosures within the Remuneration Report on page 23.
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 48
10. Employee benefit expense
Wages and salaries
Social security costs
Share options granted to Directors and senior management
Pension costs – defined contribution plans (note 33)
2015
£’000
16,920
2,663
226
318
Restated
2014
£’000
13,242
1,368
512
224
20,127
15,346
Employee costs of £0.8m (2014: £0.5m) have been capitalised as part of development costs.
11. Monthly average number of people employed
Monthly average number of people (including Executive Directors)
employed was:
Administration
Research and development
Sales and marketing
Manufacturing, production and after sales
The total number of employees at 31 December 2015 was 365 (2014: 395).
12. Finance income and costs
Finance costs:
– Bank borrowings
– Other interest
– Financial liabilities at fair value through profit or loss – (gains)/losses
– Deferred consideration-unwinding of discount (note 27)
– Convertible debt
Finance costs
Finance income
– Interest income on cash and short-term deposits
– Other interest
Finance income
Net finance costs
2015
£’000
2014
£’000
80
35
87
195
397
2015
£’000
312
50
(395)
1,482
8
1,457
34
1
35
66
32
78
192
368
Restated
2014
£’000
226
-
(476)
1,751
8
1,509
18
-
18
1,422
1,491
49 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
13. Income tax
Group
Current tax:
Current tax on loss for the year
Adjustments for prior periods
Total current tax
Deferred tax (note 28):
Origination and reversal of temporary differences
Total deferred tax
Income tax (credit)/charge
2015
£’000
220
(76)
144
(2,350)
(2,350)
(2,206)
2014
£’000
1,677
(263)
1,414
26
26
1,440
The Finance Act 2015 which was substantially enacted on 26 October 2015 included legislation to reduce the main
rate of corporation tax to 19% from 1 April 2019 and 18% from 1 April 2020. On 16 March 2016, the government
announced that the corporation tax rate applicable from 1 April 2020 will be 17%. The proposed reductions in the rate
of corporation tax are expected to be enacted, and the impact accounted for in 2016.
The tax on the Group’s 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:
Loss before tax
Tax calculated at domestic tax rates applicable to UK standard rate of
tax of 20% (2014: 21.5%)
Tax effects of:
– Expenses not deductible for tax purposes
– Losses carried forward
– Adjustment in respect of prior years
– Impact of different tax rates in other jurisdictions
- Impact of utilisation of deferred tax asset
– Other movements
Tax charge
2015
£’000
(15,770)
(3,154)
5,518
(4,628)
76
(272)
-
254
(2,206)
Restated
2014
£’000
(3,431)
(738)
748
696
(263)
163
1,079
(245)
1,440
There are no tax effects on the items in the statement of other comprehensive income.
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 50
14. Loss per share
(a) Basic
Basic loss per share is calculated by dividing the loss attributable to owners of the parent by the
weighted average number of Ordinary Shares in issue during the year.
Loss attributable to owners of the parent
Loss from continuing operations attributable to equity holders of the
company
Loss from discontinued operations attributable to equity holders of
the company
2015
£’000
(37,123)
Restated
2014
£’000
(5,689)
(13,754)
(5,092)
(23,369)
(597)
Weighted average number of Ordinary Shares in issue
422,057,074
379,633,724
Basic loss per share
(8.80) pence
(1.50) pence
Basic loss per share from continuing operations
(3.26) pence
(1.34) pence
Basic loss per share from discontinued operations
(5.54) pence
(0.16) pence
(b) Diluted
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 two
categories of dilutive potential ordinary share: equity-based long-term incentive plans and share
options. The potential shares are not dilutive in either 2015 or 2014 as the Group has made a loss per
share.
Loss attributable to owners of the parent
Loss from continuing operations attributable to equity holders of the
company
Loss from discontinued operations attributable to equity holders of
the company
2015
£’000
(37,123)
Restated
2014
£’000
(5,689)
(13,754)
(5,092)
(23,369)
(597)
Weighted average dilutive number of Ordinary Shares
422,057,074
379,633,724
Diluted loss per share
(8.80) pence
(1.50) pence
Basic loss per share from continuing operations
(3.26) pence
(1.34) pence
Basic loss per share from discontinued operations
(5.54) pence
(0.16) pence
2015
£’000
2014
£’000
Weighted average number of Ordinary Shares in issue
422,057,074
379,633,724
Adjustment for:
– Assumed conversion of share awards
4,272,819
9,833,892
– Assumed payment of equity deferred consideration
4,043,940
4,043,940
Weighted average number of Ordinary Shares including potentially
dilutive shares
430,373,833
393,511,556
15. Dividends
There were no dividends paid or proposed by the Company in either year.
51 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
16. Property, plant and equipment
Group
Cost
At 1 January 2014
Additions
Acquired with subsidiaries
Transfers
Exchange differences
Disposals
5,985
127
35
-
147
-
Lands &
buildings
£’000
Fixtures &
fittings
£’000
Plant &
machinery
£’000
Motor
vehicles
£’000
833
141
7
15
(11)
(31)
954
438
154
-
(21)
(29)
542
7,519
748
1,156
(15)
(314)
(81)
9,013
3,794
1,015
67
(196)
(67)
4,613
105
22
-
-
(45)
-
82
7
28
-
(17)
-
18
Total
£’000
14,442
1,038
1,198
-
(223)
(112)
16,343
4,657
1,368
67
(221)
(96)
5,775
At 31 December 2014
6,294
Accumulated depreciation
At 1 January 2014
Charge for the year
Exceptional impairment
Exchange differences
Disposals
At 31 December 2014
Net book value
418
171
-
13
-
602
At 31 December 2014
5,692
412
4,400
64
10,568
Cost
At 1 January 2015
Additions
Disposal with subsidiaries
Transfers
Exchange differences
Disposals
At 31 December 2015
Accumulated depreciation
At 1 January 2015
Charge for the year
Charge - discontinued business
Disposal with subsidiaries
Transfers
Exchange differences
Disposals
At 31 December 2015
Net book value
6,294
1,476
(40)
-
147
-
7,877
602
171
-
(9)
-
18
-
782
954
146
-
57
2
(79)
1,080
542
152
-
-
29
(5)
(63)
655
9,013
634
(1,009)
(57)
(260)
(250)
8,071
4,613
825
232
(299)
(29)
(141)
(225)
4,976
82
40
-
-
(16)
(9)
97
18
25
-
-
-
(8)
(3)
32
16,343
2,296
(1,049)
-
(127)
(338)
17,125
5,775
1,173
232
(308)
-
(136)
(291)
6,445
At 31 December 2015
7,095
425
3,095
65
10,680
Depreciation expense of £742,000 (2014: £878,000) has been charged to cost of sales and £431,000 (2014:
£557,000) has been charged to administrative expenses.
EKF Diagnostics Holdings plc | Annual Report 2015 52
3.0 Financial Statements
16. Property, plant and equipment continued
Company
Cost
At 1 January 2014
Additions
At 31 December 2014
Accumulated depreciation
At 1 January 2014
Charge for the year
At 31 December 2014
Net book value
At 31 December 2014
Cost
At 1 January 2015
Additions
At 31 December 2015
Accumulated depreciation
At 1 January 2015
Charge for the year
At 31 December 2015
Net book value
At 31 December 2015
Lands &
buildings
£’000
Fixtures &
fittings
£’000
Total
£’000
1,673
-
1,673
80
42
122
39
17
56
16
15
31
1,712
17
1,729
96
57
153
1,551
25
1,576
1,673
-
1,673
122
41
163
56
33
89
31
21
52
1,729
33
1,762
153
62
215
1,510
37
1,547
The Company’s freehold property is in Germany and occupied by its subsidiary undertaking, EKF-diagnostic GmbH
Germany. EKF-diagnostic GmbH is paying rental income of €13,900 (£10,800) per month to the parent Company.
€167,000 (£130,000) (2014: €167,000 (£139,000)) was paid to the parent Company for the year.
Plant and Machinery includes the following amounts where the Group is a lessee under a finance lease arrangement:
Group
Cost – capitalised finance leases
Accumulated depreciation
Net book value
2015
£’000
372
(71)
301
2014
£’000
879
(162)
717
The Group leases various assets under non-cancellable finance lease agreements. The lease terms are between 2
and 6 years.
The Company has no finance lease agreements.
53 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
17. Intangible assets
Group
Cost
At 1 January 2014
Additions
Exchange differences
At 31 December 2014
Accumulated amortisation
At 1 January 2014
Exchange differences
Impairment charge
Charge for the year
At 31 December 2014
Net book value
At 31 December 2014
Cost
At 1 January 2015
Additions
Disposal
Exchange differences
At 31 December 2015
Accumulated amortisation
At 1 January 2015
Exchange differences
Impairment charge
Disposal
Charge for the year
At 31 December 2015
Net book value
At 31 December 2015
Non Compete
agreements
£’000
Trademarks
Tradenames &
Licences
£’000
Goodwill
£’000
Customer
relationships
£’000
Trade
secrets
£’000
Development
costs
£’000
14,641
30,899
880
46,420
750
(50)
254
-
954
1,596
2,335
76
4,007
412
(5)
-
295
702
8,479
9,672
367
13,652
16,985
260
18,518
30,897
2,094
(18)
-
1,268
3,344
3,120
(136)
287
1,706
4,977
2,976
1,897
(44)
4,829
295
(5)
621
290
1,201
Total
£’000
41,414
61,788
1,539
104,741
6,689
(214)
1,162
3,582
11,219
45,466
3,305
15,174
25,920
3,628
93,522
46,420
4,007
18,518
30,897
-
30
-
-
4,829
3,066
104,741
3,096
(23,541)
(1,355)
(5,142)
(14,282)
-
(44,320)
839
23,718
954
(50)
1,178
-
-
2,082
(189)
2,493
702
(2)
-
(194)
872
1,378
439
13,815
3,344
50
53
(492)
1,600
4,555
263
16,878
4,977
(132)
3,225
(1,366)
2,162
8,866
(113)
7,782
1,201
(31)
1,486
1,239
64,756
11,219
(165)
5,948
-
(2,052)
2,222
4,878
6,879
21,829
70
-
-
70
18
-
-
23
41
29
70
-
-
-
70
41
-
6
-
23
70
-
21,636
1,115
9,260
8,012
2,904
42,927
The amortisation charge of £6,879,000 (2014: £4,744,000) has been charged to administrative expenses in the
income statement. Loss on disposal of £42,268,000 has been charged to discontinued operations and the impairment
charge of £5,948,000 has been charged to exceptional items in administrative expenses.
Goodwill is allocated to the Group’s cash–generating units (CGU’s) identified according to geographic operating
segment. An operating segment-level summary of the goodwill allocation is presented below.
UK
Germany
Poland
Russia
US
Other (primarily relating to DiaSpect)
Total
2015
£’000
3,390
3,504
288
72
6,122
8,260
21,636
2014
£’000
4,568
3,700
306
85
28,085
8,722
45,466
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 54
Goodwill is tested for impairment at the balance sheet date. The recoverable amount of goodwill at 31
December 2015 was assessed on the basis of value in use. The assessed value exceeded the carrying
value and no impairment loss was recognised, other than for EKF Molecular Diagnostics. The carrying
value of the goodwill associated with EKF Molecular Diagnostics has been impaired by £1,178,000
to reflect a reduction in the assessed recoverable amount following the mothballing of the unit. In
addition Goodwill and other intangible assets relating to Selah Genomics were de-recognised on its
sale.
The key assumptions in the calculation to assess value in use are the future revenues and the ability
to generate future cash flows. The most recent financial results and initial budgets approved by the
Board for the next year were used and forecasts for a further four years, followed by an extrapolation
of expected cash flows at a constant growth rate for each unit and the calculation of a terminal value
based upon the longer term growth rates set out below. The projected results were discounted at a
rate which is a prudent evaluation of the pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the cash-generating units.
The key assumptions used for value in use calculations in 2015 are as follows:
EKF Germany
%
EKF Poland
%
EKF Russia
%
Stanbio
%
Longer-term
growth rate
Discount rate
3
12
3
26
3
26
5
12
STI
%
3
12
DiaSpect
%
2
12
The discount rates used are primarily based on those used in the initial purchase price appraisal of the
acquisitions. The Group’s Russian operations are being indirectly affected by economic sanctions and
budget cuts by the Russian government, but are expected to return to normal operations in the near
future. A higher discount rate has been used for appraisal of the goodwill associated with EKF Russia
to reflect the additional risk.
The main business and assets of Quotient Diagnostics have been transferred to the Group’s main
German subsidiary.
The US includes the cash generating units Stanbio and STI.
The impairment assessments for Germany, Poland, Russia, Stanbio, and STI showed assessed values
that exceeded the carrying value and showed significant headroom.
For DiaSpect, the impairment assessment has been carried out over a 10 year period. The Directors
estimate that the long term growth from the DiaSpect products will be high because it is a relatively
new product which will bring market benefits. In Year 1 a growth rate of 10% has been used, followed
by 20% for years 2-5, then falling to 2% thereafter. The Directors believe that the market benefits will
allow the product to be sold at a margin in excess of other products sold by the Group. If revenues or
margins are lower than forecast, then impairment will be required.
The remaining average useful lives of the intangibles are as follows:
Trade name
Customer relations
Trade secrets
Development costs
The Company has no intangible assets.
3–9 years
1–14 years
1–14 years
11 years
55 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
18. Investments in subsidiaries
Company
1 January
Additions
Disposal
Impairment
31 December
2015
£’000
61,043
-
(28,922)
(1,600)
30,521
2014
£’000
16,630
46,013
--
(1,600)
61,043
The disposal relates to Selah Genomics Inc. The impairment relates to the investment in EKF Molecular Diagnostics
Limited.
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid, less any
impairment. The subsidiaries of EKF Diagnostics Holdings plc are as follows:
Name of Company
Note
Proportion Held
EKF Diagnostics Limited (UK)
Quotient Diagnostics Limited
360 Genomics Limited
EKF Molecular Diagnostics
Limited
DiaSpect Medical AB
DiaSpect Medical GmbH
EKF-diagnostic GmbH
Senslab GmbH
EKF Diagnostyka Sp.z.o.o.
000 EKF Diagnostika
EKF Diagnostics Inc
Stanbio Laboratory LP
EKF Life Sciences LP
Separation Technology, Inc
1261 N Main LP
Stanlab Management LLC
1261 N Main Management LLC
Argutus Intellectual Property
Limited
EKF Diagnostics Limited
(Ireland)
1
1
1
1
2
3
3
3
4
5
6
6
6
6
6
6
6
7
7
100%
100%
100%
100%
Class of
Shareholding
Ordinary
Nature of Business
Head Office
Ordinary
Sale of diagnostic equipment
100% (indirect)
Ordinary
Ordinary
Manufacture and sale of
diagnostic equipment
Manufacture and sale of
diagnostic equipment
Ordinary
Head office and IP licencing
100% (indirect)
Ordinary
100%
Ordinary
Manufacture and sale of
diagnostic equipment
Manufacture and sale of
diagnostic equipment
100% (indirect)
Ordinary
Diagnostic testing
100% (indirect)
Ordinary
Manufacture and sale of
diagnostic equipment
60% (indirect)
Ordinary
Sale of diagnostic equipment
100%
Ordinary
Intermediate holding company
100% (indirect)
Partnership
100% (indirect)
Partnership
100%
100%
100%
100%
Ordinary
Partnership
Ordinary
Ordinary
100% (Indirect)
Ordinary
Manufacture and sale of
diagnostic equipment
Manufacture and sale of
diagnostic equipment
Manufacture and sale of
diagnostic equipment
Dormant
Dormant
Dormant
Dormant
100%
Ordinary
Manufacture and sale of
diagnostic equipment
Notes
1.
2.
3.
4.
5.
6.
7.
Incorporated and registered in the United Kingdom.
Incorporated in Sweden.
Incorporated and registered in Germany.
Incorporated and registered in Poland.
Incorporated and registered in Russia.
Incorporated and registered or formed in the United States of America.
Incorporated and registered in Ireland.
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 56
All subsidiaries are included in the consolidation. The proportions of voting shares held by the parent Company do
not differ from the proportion of Ordinary Shares held.
All UK subsidiaries are exempt from the requirement to file audited accounts by virtue of section 479A of the
Companies Act 2006. As part of this process, the Company has provided statutory guarantees to these subsidiaries
19. Financial instruments by category
(a) Assets
31 December
Assets as per balance sheet
Trade and other receivables excluding
prepayments and corporation tax
Cash and cash equivalents
Total
(a) Liabilities
31 December
Liabilities as per balance sheet
Borrowings (excluding finance lease
liabilities)
Finance lease liabilities
Trade and other payables
Deferred consideration
Total
Group
2015
£’000
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
6,403
2,017
8,420
14,947
32,970
36,155
8,346
23,293
11
32,981
4,390
40,545
Group
2015
£’000
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
10,439
5,348
6,049
403
8,028
485
19,355
898
7,731
18,029
32,006
-
4,076
485
10,610
2,843
–
3,679
11,658
18,180
Liabilities in the analysis above are all categorised as ‘other financial liabilities at amortised cost’ for the Group
and Company, with the exception of deferred equity consideration totalling £485,000 (2014: £880,000) that is
categorised as a financial liability at fair value through profit and loss.
(c) Credit quality of financial assets
The Group is exposed to credit risk from its operating activities (primarily for trade receivables
and other receivables) and from its financing activities, including deposits with banks and financial
institutions, foreign exchange transactions and other financial instruments.
The Group’s maximum exposure to credit risk, due to the failure of counterparties to perform their
obligations as at 31 December 2015 and 31 December 2014, in relation to each class of recognised
financial assets, is the carrying amount of those assets as indicated in the accompanying balance
sheets.
Trade receivables
The credit quality of trade receivables that are neither past due nor impaired have been assessed
based on historical information about the counterparty default rate. The Group does not hold any
other receivable balances with customers, whose past default has resulted in the recovery of the
receivables balances.
57 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
Cash at bank
The credit quality of cash has been assessed by reference to external credit ratings, based on reputable
credit agencies’ long-term issuer ratings:
AA-
Ratings lower than AA- or unrated
Total
20. Investments
1 January
Additions
Impairments
31 December
2015
£’000
13
2,004
2,017
2015
£’000
1,152
-
(750)
402
2014
£’000
4,749
3,597
8,346
2014
£’000
250
902
-
1,152
The investment consists of a 2.63% (2014: 2.63%) shareholding in Arcis Biotechnology Holdings Limited, a UK based
privately held company operating in the biotechnology industry; a 19.90% holding in DX Economix, Inc., a Canadian
based privately held company operating in the healthcare consultancy industry which has been 100% impaired; and
a 0.67% holding in Epinex Diagnostics Inc., a US based privately held company operating in the medical diagnostics
industry.
21. Disposal
On 23 December 2015 the Company disposed of all of its 100% shareholding in Selah Genomics Inc.
(“Selah”) for a consideration of $10, paid in cash. The purchasers were the founder directors. Selah,
whose business is developing molecular diagnostics for personalised medicine, was purchased in April
2014 for a total consideration (including contingent consideration) of £28.9m. On the occurrence of
certain future events, the Group is entitled to participate in future profits from Selah.
During the year up to the date of disposal Selah’s income statement was:
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Depreciation and amortisation
LBITDA before exceptional items and share-based payments
Finance costs
Loss before income tax
Income tax credit/(expense)
Loss for the year
2015
£’000
2,400
(1,008)
1,392
(4,126)
(2,734)
(232)
(2,502)
(40)
(2,774)
-
(2,774)
2014
£’000
2,956
(2,253)
703
(1,236)
(533)
(131)
(402)
(64)
(597)
-
(597)
EKF Diagnostics Holdings plc | Annual Report 2015 58
3.0 Financial Statements
On disposal Selah had the following assets and liabilities:
Fixed assets
Current assets excluding cash
Cash
Current liabilities excluding intercompany
Borrowings
Amounts due to the parent and co-subsidiaries
Net liabilities
The loss on discontinued items is made up of:
Operating result
Write down of assets
Deferred consideration written back
Deferred tax written back
Recycling of currency translations
Loss on discontinued business
22. Trade and other receivables
2015
£’000
741
1,220
13
(638)
(326)
(7,188)
(6,178)
2015
£’000
(2,774)
(42,775)
9,998
7,703
4,479
2014
£’000
(597)
-
-
-
-
(23,369)
(597)
Group
2015
£’000
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
Non-current
Amounts owed by subsidiary undertakings
-
–
18,550
17,799
Current
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Prepayments
Amounts owed by subsidiary undertakings
Corporation tax receivable
Other receivables
9,640
(5,575)
4,065
229
-
610
2,338
7,242
12,763
(978)
11,785
331
-
837
3,162
16,115
-
-
-
129
14,376
-
44
-
-
-
152
18,315
-
41
14,549
18,508
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
The provision of trade recievables includes £5,123,000 relating to Mexican debtors which has been treated as an
exceptional item. As of 31 December 2015, trade receivables of £490,000 (2014: £6,842,000) were past due but not
impaired. These relate to a number of independent customers for whom there is no recent history of default. The
ageing analysis of these trade receivables is as follows :
Up to 3 months
3 to 6 months
6 months to 12 months
Group
2015
£’000
266
223
1
490
Group
2014
£’000
4,498
2,330
14
6,842
Company
2015
£’000
Company
2014
£’000
-
-
-
-
–
-
-
-
59 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
As of 31 December 2015, trade receivables of £5,575,000 (2014: £978,000) were impaired and provided
for. The ageing of these impaired receivables is as follows:
Up to 3 months
3 to 6 months
6 months to one year
Greater than one year
Total
Group
2015
£’000
-
23
429
5,123
5,575
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
6
329
643
-
978
–
–
–
-
-
–
–
–
-
-
Movements on the provision for impairment of trade receivables are as follows:
At 1 January
Provision for receivables impairment
Acquired with subsidiaries
Unused amounts reversed
Disposal of Selah Genomics
Exchange differences
At 31 December
Group
2015
£’000
978
5,191
-
(178)
(419)
3
5,575
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
91
613
349
(70)
-
(5)
978
–
–
-
–
-
-
–
–
–
-
–
-
-
–
The other classes within trade and other receivables do not contain impaired assets.
The carrying amounts of the Group’s trade and other receivables denominated in foreign currencies were as follows
UK Sterling
Euros
US dollar
Russian rouble
Polish zloty
23. Inventories
Raw materials
Work in progress
Finished goods
Group
2015
£’000
277
4,460
2,199
44
262
7,242
Group
2015
£’000
3,892
1,466
2,876
8,234
Group
2014
£’000
356
4,739
10,712
70
238
Company
2015
£’000
Company
2014
£’000
9,007
8,193
15,899
-
-
7,359
9,458
19,490
-
-
16,115
33,099
36,307
Group
2014
£’000
3,225
553
2,015
5,793
Company
2015
£’000
Company
2014
£’000
–
–
–
–
–
–
–
–
The Directors are of the opinion that the replacement values of inventories are not materially different to the
carrying values stated above. The carrying values above are stated net of impairment provisions of £1,641,000 (2014:
£969,000).
The cost of inventories recognised as expense and included in ‘cost of sales’ amounted to £6,856,000 (2014:
£8,327,000).
The Company had no inventories.
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 60
24. Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
Cash and cash equivalents (excluding bank
overdrafts)
Group
2015
£’000
2,017
--
2,017
Group
2014
£’000
4,422
3,924
8,346
Company
2015
£’000
Company
2014
£’000
11
-
11
595
3,795
4,390
The Directors consider that the carrying amount of cash and cash equivalents approximates to their fair value.
25. Trade and other payables
Trade payables
Amounts due to subsidiary undertakings
Social security and other taxes
Other payables
Accrued expenses and deferred income
26. Borrowings
Non-current
Bank borrowings
Convertible loan
Finance lease liabilities
Current
Bank borrowings
Other borrowing
Finance lease liabilities
The maturity profile of borrowings was as follows:
Amounts falling due
Within 1 year
Between 1 and 2 years
Between 2 and 5 years
More than 5 years
Total borrowings
(a) Bank borrowings
Group
2015
£’000
2,090
-
303
1,129
4,809
8,331
Group
2015
£’000
665
182
320
1,167
6,592
3,000
83
9,675
Group
2015
£’000
9,675
401
549
217
10,842
Group
2014
£’000
1,500
-
212
2,354
3,877
7, 943
Company
2015
£’000
Company
2014
£’000
489
2,812
232
-
775
209
2,913
79
-
557
4,308
3,758
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
1,668
174
650
2,492
3,506
-
248
–
–
–
–
3,049
3,000
-
3,754
6,049
–
–
–
–
2,843
–
2,843
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
3,754
320
653
1,519
6,246
6,049
2,843
-
-
-
–
–
–
6,049
2,843
Bank borrowings have maturity profiles from 2015 through to 2022 and bear an average fixed coupon
of 3.21% annually (2014: 3.19%).
Bank borrowings are secured against certain assets of the Group. The Parent Company has also
61 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
provided guarantees against those bank borrowings which are denominated in foreign currencies.
The Group facility, and the US Dollar and Euro denominated borrowings have covenants attached to
them. At 31 December 2015 the group was in breach of the covenants associated with its US borrowing
as a result of the exceptional impairment of Mexican debtors. The breach was subsequently waived.
The bank borrowings are repayable by either monthly or quarterly instalments, or at the end of a six
month loan period.
The Group is not exposed to interest rate changes or contractual re-pricing dates at the end of the
reporting period, as the borrowings are fixed in nature.
The fair value of both current and non-current borrowings equals their carrying amount, as the impact
of discounting is not significant. The fair values are based on cash flows discounted using a rate based
on the borrowing rate of 5% (2014: 5%).
The carrying amounts of the Group’s bank and other borrowings are denominated in the following
currencies:
Euros
US Dollar
GBP
Total
(b) Convertible loans
Group
2015
£’000
2,440
4,817
3,000
10,257
Group
2014
£’000
398
4,776
-
5,174
Company
2015
£’000
Company
2014
£’000
-
3,049
3,000
6,049
–
2,843
–
2,843
Andrew Webb has loaned £200,000 to EKF Molecular Diagnostics Limited in return for a convertible
loan note. The note is redeemable on 31 December 2017 or convertible under certain circumstances
on or before 30 November 2017 into shares representing 20% of the share capital of EKF Molecular
Diagnostics Limited. Interest only becomes payable in the event of a default. The principal has been
split into a debt element and an equity element. The equity element is disclosed in Other Reserves.
The note is denominated in sterling.
Zwanziger Family Ventures LLC has loaned £3,000,000 by way of a convertible loan. The loan has
a term of two years from 21 December 2015, with interest payable at 5% above LIBOR. The loan can
be converted at either (a) 14.75p per share or (b) a 15% discount to the next substantial fundraising.
The Zwanziger Family 2012 Irrevocable Trust (ZFT) holds a controlling interest in the lender. The
beneficiaries of the ZFT are the Zwanziger family. The loan is secured by a debenture.
On 15 April 2016 the Group announced that it had given notice of redemption of the ZFV loan, and that
North Atlantic Smaller Companies Investment Trust PLC, a company associated with Christopher Mills
had agreed to provide a non-convertible loan on broadly similar terms.
(c) Finance lease liabilities
Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event
of default.
Gross finance lease liabilities – minimum lease payments
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Future finance charges on finance leases
Present value of finance lease liabilities
The present value of finance lease liabilities is as follows:
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
2015
£’000
2014
£’000
99
85
363
547
(144)
403
2015
£’000
83
67
253
403
294
442
308
1,044
(146)
898
2014
£’000
248
408
242
898
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 62
27. Deferred consideration
At 1 January
On acquisition of subsidiaries
Unwinding of discount (note 12)
Fair value adjustment
Reduction of provisions
Payments made
Exchange differences
At 31 December
Current portion
Non-current portion
Group
2015
£’000
18,029
-
1,482
(395)
(17,350)
(1,425)
144
485
485
-
Group
2014
£’000
Company
2015
£’000
Company
2014
£’000
7,249
9,785
1,751
(475)
(79)
(355)
153
18,029
8,493
9,536
11,658
-
644
(395)
(9,997)
(1,425)
-
485
485
-
1,778
9,785
1,004
(475)
(79)
(355)
-
11,658
8,493
3,165
The deferred consideration is made up as follows:
• 4,043,940 Ordinary Shares originally valued at £605,000 to be issued as part of the consideration
paid for acquisition of EKF-diagnostic GmbH Germany. The value of the shares has been adjusted to
its fair value at 31 December 2015 of £485,000. While this agreement has been reached in principle
that this will not be paid, the contract amendment has not yet been signed.
• The deferred consideration in respect of Selah and EKF Molecular have been released during the
year.
• The contingent consideration payable as part of the consideration for DiaSpect Medical AB has
been satisfied in full during the year.
28. Deferred income tax
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 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.
The amounts concerned are as follows:
Group
Deferred tax assets
Deferred tax asset to be recovered within 12 months
Deferred tax asset to be recovered after more than 12 months
Deferred tax liabilities
Deferred tax liability to be recovered after more than 12 months
Deferred tax liability to be recovered within 12 months
Deferred tax liabilities – net
The gross movement on the deferred income tax account is as follows:
At 1 January
Exchange differences
On acquisition of subsidiaries
Discontinued
Income statement movement (note 13)
At 31 December
2015
£’000
(47)
(340)
(387)
3,559
831
4,390
4,003
2015
£’000
13,731
325
-
(7,703)
(2,350)
4,003
2014
£’000
(45)
(238)
(283)
13,258
756
14,014
13,731
2014
£’000
2,873
438
10,394
-
26
13,731
63 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
The movement in deferred income tax assets and liabilities during the year, without taking into
consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Deferred tax liabilities
At 1 January 2014
Credited to the income statement
On acquisition of subsidiaries
Impact of deferred tax rate change
Exchange differences
At 31 December 2014
At 1 January 2015
Credited to the income statement
Discontinued business
Exchange differences
At 31 December 2015
Deferred tax assets
At 1 January 2014
Charged to the income statement
Exchange differences
At 31 December 2014
At 1 January 2015
Charged to the income statement
Exchange differences
At 31 December 2015
Accelerated tax depreciation
£’000
3,822
(638)
10,394
-
436
Total
£’000
3,822
(638)
10,394
-
436
14,014
14,014
14,014
(2,247)
(7,703)
326
4,390
Other
£’000
(96)
(142)
-
14,014
(2,247)
(7,703)
326
4,390
Total
£’000
(949)
664
2
(238)
(283)
(238)
(102)
-
(283)
(103)
(1)
(387)
Tax losses
£’000
(853)
806
2
(45)
(45)
(1)
(1)
(47)
(340)
Deferred income tax assets are recognised to the extent that the realisation of the related tax benefit
through future taxable profits is probable. The Group did not recognise deferred income tax assets
of £2,532,000 (2014: £1,141,000) mainly in respect of tax losses amounting to £12,298,000 (2014:
£5,707,000) that can be carried forward against future taxable income.
Company
Deferred tax assets
Deferred tax asset to be recovered after more than 12 months
Deferred tax
2015
£’000
2014
£’000
387
387
238
238
29. Share capital and premium
Group and Company
At 1 January 2015 and 31 December
2015
Number of
Shares
Share
Capital
£’000
Share
Premium
£’000
Total
£’000
422,057,074
4,221
91,276
95,497
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 64
30. Share options and share-based payments
The share options and share incentive schemes in existence were as follows:
(a) Long-term Incentive Plans (‘LTIP’)
At 1 January 2015 and 31 December 2015
17,091,276
17,091,276
2015
Number of notional shares
2014
Number of notional shares
Long-term incentive plan share awards over notional shares totalling 17,091,276 have been granted to
two Executive Directors. The key terms of the awards were revised on 11 June 2013. The key terms of
the awards relating to the grants noted above are as follows.
• 1,709,128 notional shares, with an exercise price of 15p will vest if the Company’s mid-market closing share price
attains 30 pence or higher per share for a period of 20 consecutive days (on which The London Stock Exchange
is open for business) at any time during the period commencing on 1 January 2011 and ending on 31 December
2016. This condition has been met.
• 1,709,128 notional shares, with an exercise price of 15p will vest if the Company’s mid-market closing share price
attains 37.5 pence or higher per share for a period of 20 consecutive days (on which The London Stock Exchange
is open for business) at any time during the period commencing on 1 January 2011 and ending on 31 December
2016.
• 1,709,128 notional shares, with an exercise price of 15p will vest if the Company’s mid-market closing share price
attains 45 pence or higher per share for a period of 20 consecutive days (on which The London Stock Exchange is
open for business) at any time during the period commencing on 1 January 2011 and ending on 31 December 2016.
• 1,709,128 notional shares, with an exercise price of 15p will vest if the Company’s mid-market closing share price
attains 52.5 pence or higher per share for a period of 20 consecutive days (on which The London Stock Exchange
is open for business) at any time during the period commencing on 1 January 2011 and ending on 31 December
2016.
• 1,709,126 notional shares, with an exercise price of 15p will vest if the Company’s mid-market closing share price
attains 60 pence or higher per share for a period of 30 consecutive days (on which The London Stock Exchange is
open for business) at any time during the period commencing on 1 January 2011 and ending on 31 December 2016.
• 8,545,638 notional shares, with an exercise price of 15p will vest if the Company’s EBITDA for the year to 31
December 2013 is at least 52.0875% (being growth at 15% per annum compounded) higher than twice the EBITDA
for the six months to 31 December 2010. For these purposes EBITDA shall mean EBITDA (earnings before interest,
taxes, depreciation and amortisation) as shown in the audited financial statements for the period in question, as
adjusted to remove any adjustment, accrual or expense in respect of the grant of or exercise of the Award granted
to the Award holder. This condition has been met.
(b) Unapproved share option scheme
2015
Average exercise
price per share
£
0.27
0.218
-
0.3175
0.254
2014
Average exercise
price per share
£
0.224
0.359
Options
(Number)
7,735,000
3,600,000
Options
(Number)
10,210,000
1,800,000
-
0.18
(225,000)
(1,500,000)
10,510,000
0.264
(900,000)
0.27
10,210,000
At 1 January
Granted
Exercised
Forfeited
At 31 December
The unapproved share options include the following:
• 4,260,000 options were in issue at an exercise price of 20p per share. The shares will vest if the Company’s
EBITDA for the year to 31 December 2013 is at least 52.0875% (being growth at 15% per annum compounded)
higher than the target adjusted EBITDA of £777,408. All EBITDA contribution from current and future acquisitions
of the Company will be used in assessing if the annual compound growth rate is achieved. For these purposes
EBITDA shall mean EBITDA (earnings before interest, taxes, depreciation and amortisation) as shown in the
audited financial statements for the period in question. This condition has been met.
• 1,200,000 options were in issue to senior employees of the Group at an exercise price of 25.25p per share. The
shares will vest if the Company’s EBITDA for the year to 31 December 2013 is at least 52.0875% (being growth at
15% per annum compounded) higher than the target adjusted EBITDA of £777,408. All EBITDA contribution from
future acquisitions of the Company will be excluded in assessing if the annual compound growth rate is achieved.
65 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
For these purposes EBITDA shall mean EBITDA (earnings before interest, taxes, depreciation and amortisation) as
shown in the audited financial statements for the period in question. This condition has now been met.
• 650,000 options were issued on 7 July 2013 to senior employees at an exercise price of 27.25p per share. These
options are exercisable from the third anniversary of grant with a maximum term of 10 years.
• 1,300,000 options were issued on 21 January 2014 to senior employees at an exercise price of 37.625p per share.
These options are exercisable from the third anniversary of grant with a maximum term of 10 years.
• 1,300,000 options were issued to a director on 30 May 2014 at an exercise price of 35p. These options are
exercisable from the third anniversary of grant with a maximum term of 10 years. In accordance with the scheme
rules these options vested on the termination of the director’s service contract on 31 December 2015, and can be
exercised at any time before 31 December 2016.
• 1,300,000 options were issued to a former director on 9 December 2015 at an exercise price of 22.5p. These
options vested immediately and are exercisable at any time before 31 December 2016.
• 500,000 options were issued to a third party on 17 May 2015 at an exercise price of 20.0p. The shares will vest
from 6 April 2016 subject to the completion of certain contractual obligations, and to the Company’s mid-market
closing share price attaining 35p or higher. The maximum term is 10 years from grant.
All share option awards are equity settled. Out of the 10,510,000 (2014: 10,210,000) outstanding
options 8,060,000 (2014: 5,960,000) were exercisable.
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Expiry date
31.12.2016
31.12.2016
16.06.2021
28.09.2021
19.04.2022
07.07.2023
21.01.2024
17.04.2024
30.05.2024
06.04.2025
2015
2014
Average exercise
price per share
£
0.35
0.225
0.200
0.252
-
0.2725
0.37625
-
-
Options
(Number)
1,300,000
1,300,000
4,260,000
1,200,000
-
650,000
1,300,000
-
-
0.200
500,000
-
10,510,000
Exercise
price per share
£
Options
(Number)
-
-
0.200
0.252
-
-
-
4,260,000
1,700,000
-
0.2725
650,000
0.37625
1,300,000
0.35
0.35
-
1,000,000
1,300,000
-
10,210,000
The weighted average fair value of options granted during 2015 determined using the Black-Scholes
valuation model was £0.048 (2014: £0.109).
The significant inputs into the model are detailed below:
Weighted average share price
Weighted average option exercise price
Expected volatility
Risk-free interest rate
Expected option life
Dividend yield
2015
13.7p
21.8p
76.8%
0.50
2014
31.44p
36.31p
41.3%
0.50
3.5 years
6.5 years
-
–
Expected volatility was determined by calculating the volatility in the historic share price over a
period consistent with the expected exercise period of the option. This level of volatility has then been
benchmarked by comparing the level of share price volatility for other quoted medical diagnostic
businesses over a three to ten year period.
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 66
31. Retained earnings
At 1 January 2014
Loss for the year
Share-based payment
Movement on pension scheme
At 31 December 2014
At 1 January 2015
Loss for the year
Share-based payment
At 31 December 2015
32. Other reserves
Group
At 1 January 2014
Currency translation differences
At 31 December 2014
At 1 January 2015
Currency translation differences
Recycling of reserves in respect of previously held
interest in Selah Genomics
At 31 December 2015
Group
£’000
(3,412)
(5,689)
512
48
(8,541)
(8,541)
Company
£’000
(6,680)
(2,882)
512
-
(9,050)
(9,050)
(37,123)
(31,595)
226
226
(45,438)
(40,419)
Foreign currency
£’000
Other
£’000
(725)
751
26
26
846
(4,479)
(3,607)
41
-
41
41
-
-
41
Total
£’000
(684)
751
67
67
846
(4,479)
(3,566)
In return for a payment of £200,000, Andrew Webb has been granted a loan note convertible into
equity in EKF Molecular Diagnostics Limited. The equity element has been included in other reserves.
The debt element is included in borrowings.
33. Retirement benefit obligations
Pension benefits
The Company operates a defined contribution pension scheme the assets of which are held separately
from those of the Company in an independently administered fund. The pension cost for the year
represents contributions made by the Company to the fund and amounted to £318,000 (2014:
£224,000).
34. Commitments
a) Capital commitments
The Group has contracted approximately £606,000 (2014 – £nil) capital expenditure at the end of the
reporting period that had not yet been incurred.
b) Operating lease commitments
The Group leases various offices and manufacturing buildings under non-cancellable operating lease
agreements. The lease terms are between one and five years.
The Group also leases various office equipment and assets under non-cancellable operating lease
agreements. The lease terms are between one and ten years.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
67 Annual Report 2015 | EKF Diagnostics Holdings plc
3.0 Financial Statements
Group
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Total
35. Cash used in operations
Loss before tax
Loss on discontinued business
Adjustments for:
– Depreciation
– Amortisation
– Impairment of intangibles, excluding
discontinued business
- Impairment of investment
– Warranty claim
– Loss/(Profit) on disposal of fixed assets
– Restructure of operations
– Share-based payments
– Release of deferred consideration
– Fair value adjustment
– Bad debt write down
– Net finance costs
Changes in working capital
– Inventories
– Trade and other receivables
– Trade and other payables
Land & buildings
Other
2015
£’000
219
661
123
1,003
2014
£’000
303
1,344
609
2,256
2015
£’000
114
146
-
260
2014
£’000
126
243
34
403
Group
Company
2015
£’000
(15,770)
-
1,173
6,879
5,948
750
349
5
(2,055)
226
(7,353)
(395)
5,123
1,817
(2,607)
2,025
971
Restated
2014
£’000
(3,431)
(597)
1,368
3,582
1,229
-
281
(6)
-
512
(79)
(476)
-
2,031
728
(8,467)
63
2015
£’000
2014
£’000
(27,791)
(3,003)
-
62
-
-
-
-
18,838
-
226
-
-
141
(1,029)
-
3,033
550
-
57
-
1,600
-
-
-
-
512
(79)
-
(678)
(132)
-
(9,829)
(459)
Net cash used in by operations
(2,914)
(3,262)
(5,970)
(12,011)
In the statement of cash flows, proceeds from the sale of property, plant and equipment comprise:
Group
Net book value
(Loss)/profit on disposal of property, plant and equipment
Proceeds from disposal of property, plant and equipment
2015
2014
47
(5)
42
16
6
22
Non-cash transactions
The principal non-cash transactions are transactions associated with the disposal of Selah Genomics
Inc.; the release of deferred consideration provisions; the fair value adjustment relating to the deferred
equity consideration in respect of EKF Germany, the warranty claim, and impairment charges in
relation to capitalised R&D and the write off of trade debtors relating to customers in Mexico.
3.0 Financial Statements
EKF Diagnostics Holdings plc | Annual Report 2015 68
36. Related Party Disclosures
Directors
Ron Zwanziger, a Director of the company during the year, is a substantial shareholder in Lumira
Diagnostics Limited (“Lumira”) and in the Company, through the Zwanziger Family Ventures LLC.
From January 2016 to April 2016 the Group shared certain human resources and their associated costs
with Lumira. The Zwanziger Family Ventures LLC has lent £3,000,000 to the Group, secured by a
debenture.
The Group was invoiced £18,000 (2014: £18,000) by J & K (Cardiff) Limited for property rent. Julian
Baines, a Director of the Company, is a Director of J & K (Cardiff) Limited.
Directors’ emoluments are set out in the Remuneration Committee report and in note 9.
Key management compensation
Key management includes all the Directors only.
Salaries and other short-term employee benefits
Share-based payments
Employer contribution to pension scheme
2015
1,179
116
35
1,330
2014
941
414
29
1,384
The Company
During the year the Company invoiced management charges of £1,799,000 (2014 – £2,526,000) and
interest of £1,421,000 (2014 – £726,000) to its subsidiary companies. It purchased goods and services
from subsidiaries totalling £228,000 (2014 – £619,000). At 31 December 2015 the Company was owed
£32,926,000 (2014 – £36,307,000) by its subsidiaries and owed £2,812,000 (2014 – £2,913,000) to
other subsidiaries.
69 Annual Report 2015 | EKF Diagnostics Holdings plc
4.0 Additional Information
4.0 Additional Information
Notice of Annual General Meeting
EKF Diagnostics Holdings PLC (Company)
NOTICE IS HEREBY GIVEN that the Annual General Meeting (Meeting) of EKF Diagnostics Holdings plc (Company)
will be held at the offices of Harwood Capital, 6 Stratton Street, Mayfair, London, W1J 8LD on 2 June 2016 at 11.00
a.m. for the following purposes:
Ordinary Resolutions
1. To receive and adopt the statement of accounts for the year ended 31 December 2015 together with the reports
of the Directors and the auditors thereon.
2. To re-elect Christopher Mills, who retires by rotation, as a Director.
3. To re-elect Adam Reynolds, who retires by rotation, as a Director.
4. To re-appoint Messrs PricewaterhouseCoopers LLP as auditors to act as such until the conclusion of the next
General Meeting of the Company at which the requirements of section 437 of the Companies Act 2006 are complied
with and to authorise the Directors of the Company to fix their remuneration.
5. That in substitution for any existing such authority, the Directors be and are hereby generally and unconditionally
authorised pursuant to section 551 of the Companies Act 2006 (the “2006 Act”) to allot Relevant Securities of the
Company:
i, up to a maximum nominal amount of £276,012.76 (in pursuance of the exercise of outstanding share
options granted by the Company but for no other purpose);
ii, up to an aggregate nominal amount of £422,057.07 (in addition to the authorities conferred in sub
paragraphs (i) above) representing approximately 10% of the Company’s Issued Share Capital,
such authorities (unless previously renewed, revoked or varied) to expire at the conclusion of the next Annual
General Meeting of the Company to be held in 2017, save that the Company may, before such expiry, make an offer
or agreement which would or might require Relevant Securities to be allotted after such expiry and the directors
may allot Relevant Securities in pursuance of such an offer or agreement as if the authority conferred hereby had
not expired.
Special Resolution
That, subject to the passing of the above Resolution the Directors be given the general power to allot equity
securities (as defined in section 560 of the 2006 Act) pursuant to the authority conferred by the Resolution above
as if section 561(1) of the 2006 Act did not apply to any such allotments provided that this power shall be limited to:
(i) the allotment of equity securities on the exercise of the share options granted by the Company;
(ii) the allotment of equity securities (otherwise than pursuant to sub-paragraphs (i) above) for cash in connection
with any rights issue or pre-emptive offer in favour of holders of equity securities generally; and
(iii) the allotment (otherwise than pursuant to sub-paragraphs (i) and (ii) above) of equity securities for cash up
to an aggregate nominal amount of £422,057.07 representing approximately 10% of the Company’s Issued Share
Capital;
provided that such power (unless previously renewed, revoked or varied) shall expire at the conclusion of the Annual
General Meeting of the Company to be held in 2017, save that the Company may, before such power expires, make
an offer or enter into an agreement which would or might require equity securities to be allotted after such power
expires and the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding
that the power conferred by this resolution has expired.
Registered Office
Avon House
19 Stanwell Road
Penarth
Cardiff, CF64 2EZ
By order of the Board
Salim Hamir
Company Secretary
4 April 2016
4.0 Additional Information
Notes
Notes
EKF Diagnostics Holdings plc | Annual Report 2015 70
1.
2.
The Company specifies that only those members registered on the Company’s register of members at
close of business on 31 May 2016 or if this general meeting is adjourned, at close of business on the day
two days prior to the adjourned meeting shall be entitled to attend and vote at the General Meeting.
If you are a member of the Company at the time set out in note 1 above, you are entitled to appoint
a proxy to exercise all or any of your rights to attend, speak and vote at the General Meeting and you
should have received a Proxy Form with this notice. You can only appoint a proxy using the procedures
set out in these notes and the notes to the Proxy Form.
3. A proxy does not need to be a member of the Company but must attend the General Meeting to repre-
sent you. Details of how to appoint the chairman of the General Meeting or another person as your proxy
using the Proxy Form are set out in the notes to the Proxy Form. If you wish your proxy to speak on your
behalf at the General Meeting you will need to appoint your own choice of proxy (not the chairman) and
give your instructions directly to them.
4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to
different shares. You may not appoint more than one proxy to exercise rights attached to any one share.
To appoint more than one proxy, please contact the Company’s registrars at the address set out in note 5.
5. The notes to the Proxy Form explain how to direct your proxy how to vote on each resolution or withhold
their vote.
6. To appoint a proxy using the Proxy Form, the Proxy Form must be:
i, completed and signed;
ii, sent or delivered to Capita Registrars, The Registry, 34 Beckenham Road, Kent BR3 4TU; and
iii, received by Capita Registrars, at the address provided in paragraph 5(b) above no later than 11.00 a.m.
on 31 May 2016.
7.
In the case of a member which is a company, the Proxy Form must be executed under its common seal or
signed on its behalf by an officer of the company or an attorney for the company.
8. Any power of attorney or any other authority under which the Proxy Form is signed (or a duly certified
copy of such power or authority) must be included with the Proxy Form.In the case of joint holders, where
more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the
most senior holder will be accepted. Seniority is determined by the order in which the names of the joint
holders appear in the Company’s register of members in respect of the joint holding (the first-named
being the most senior).
9. To change your proxy instructions simply submit a new proxy appointment using the methods set out
above. Note that the cut-off time for receipt of proxy appointments (see above) also apply in relation to
amended instructions; any amended proxy appointment received after the relevant cut-off time will be
disregarded.
11.
10. Where you have appointed a proxy using the hard-copy proxy form and would like to change the instruc-
tions using another hard-copy proxy form, please contact Capita Registrars at the address noted in note
5 above.
If you submit more than one valid proxy appointment, the appointment received last before the latest
time for the receipt of proxies will take precedence.
11. In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard
copy notice clearly stating your intention to revoke your proxy appointment to Capita Registrars at PXS,
34 Beckenham Road, Kent, BR3 4TU. In the case of a member which is a company, the revocation notice
must be executed under its common seal or signed on its behalf by an officer of the company or an attor-
ney for the company. Any power of attorney or any other authority under which the revocation notice is
signed (or a duly certified copy of such power or authority) must be included with the revocation notice.
12.
13. The revocation notice must be received by Capita Registrars no later than 11.00 a.m. on 31 May 2016.
14.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified
then, subject to the paragraph directly below, your proxy appointment will remain valid.
15. Appointment of a proxy does not preclude you from attending the general meeting and voting in person.
If you have appointed a proxy and attend the general meeting in person, your proxy appointment will
automatically be terminated.
16. A corporation which is a member can appoint one or more corporate representatives who may exercise,
on its behalf, all its powers as a member provided that no more than one corporate representative exercis-
es power over the same share.
17. Voting on all resolutions will be conducted by way of a poll rather than on a show of hands.
18. As at 5.00 p.m. on the day immediately prior to the date of posting of this notice, the Company’s issued
share capital comprised 422,057,074 Ordinary Shares of 1p each. Each ordinary share carries the right to
one vote at a general meeting of the Company and, therefore, the total number of voting rights in the
Company as at 5.00 p.m. on the day immediately prior to the date of posting of this notice is 422,057,074.
71 Annual Report 2015 | EKF Diagnostics Holdings plc
4.0 Additional Information
Company Information
Directors:
Solicitors to the Company:
Berry Smith LLP
Haywood House
Dumfries Place
Cardiff, CF10 3GA
Registrars:
Capita Asset Services
The Registry
34 Beckenham Road, Beckenham
Kent, BR3 4TU
If you have a query regarding your shareholding please
call 0871 664 0300 (calls cost 10p per minute plus
network extras) or e-mail ssd@capitaregistrars.com
Public relations:
Walbrook PR Limited
4 Lombard Street
London, EC3V 9HD
Investor relations email:
investors@ekfdiagnostics.com
Christopher Mills
(Non-Executive Chairman)
David Evans
(Non-Executive Deputy Chairman)
Julian Baines
(Chief Executive Officer)
Richard Evans
(Chief Operating Officer and Finance Director)
Lurene Joseph
(Non-Executive Director)
Adam Reynolds
(Non-Executive Director)
Company Secretary:
Salim Hamir
Registered Office and Head Office:
Avon House
19 Stanwell Road , Penarth
Cardiff, CF64 2EZ
Place of incorporation:
England and Wales (Company number – 4347937)
Independent Auditors:
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
One Kingsway
Cardiff, CF10 3PW
Nominated Advisor and Broker:
Panmure Gordon & Co
One New Change
1 New Change
London, EC4M 9AF
EKF Diagnostics Holdings plc
Avon House
19 Stanwell Road
Penarth
Cardiff, CF64 2EZ
Tel: +44 (0) 29 20 710570
Fax: +44 (0) 29 20 705715
Email: investors@ekfdiagnostics.com
ekfdiagnostics.com