TIDMEKF
RNS Number : 9296T
EKF Diagnostics Holdings PLC
23 March 2023
This announcement contains inside information
for the purposes of UK Market Abuse Regulation.
EKF Diagnostics Holdings plc
("EKF" or the "Company")
Disposal of ADL Health
EKF Diagnostics Holdings plc (AIM: EKF), the AIM-listed global
diagnostics business, announces that it has disposed of its
subsidiary, Advanced Diagnostic Laboratory LLC ("ADL Health") (the
"Disposal").
As announced in the Company's trading update on 6 February 2023,
the transition of the Laboratory Testing business towards
generating non-COVID revenues has presented certain challenges
following the rapid drop in demand for COVID testing worldwide
since Q1 2022. ADL Health will contribute a loss in 2022, which has
led to EKF's management team ("Management") reviewing the business
and its rationale in the context of the Company's wider strategy
despite a recent improvement in revenue.
Following the conclusion of this review, Management has
determined that Laboratory Testing will no longer form part of
EKF's core offering and, therefore, has agreed to dispose of ADL
Health to Medical Management Partners, LLC, an entity which is 100%
controlled by Stan Crawford, a member of the management team of ADL
Health. The Disposal will provide cost savings to EKF, allow
Management time to focus on growth initiatives in other areas, and
also simplify the reporting structure of the wider group.
Additional disclosures in respect of the Company's obligations
under the AIM Rules for Companies in connection with the Disposal
are contained at the foot of this announcement.
EKF Diagnostics Holdings plc www.ekfdiagnostics.com
Julian Baines, Executive Chair / Marc Tel: +44 (0)29 2071 0570
Davies, CFO
Singer Capital Markets (Nominated Adviser & Tel: + 44 ( 0)20 7496 3000
Broker)
Aubrey Powell / George Tzimas / Oliver
Platts
Walbrook PR Limited Tel: +44 (0)20 7933 8780 or ekf@walbrookpr.com
Paul McManus / Lianne Applegarth Mob: +44 (0)7980 541 893 / +44 (0)7584 391
303
The persons responsible for arranging the release of this
announcement
on behalf of the Company are Julian Baines, Executive Chair, and
Marc Davies, CFO.
Additional disclosures relating to the Disposal
Prior to the Disposal, ADL Health is a 100% owned subsidiary of
EKF Diagnostics Holdings plc and represents the majority of the
Company's Laboratory Testing business unit.
In the year ending 31 December 2022, ADL Health generated
revenue of GBP2.6 million and loss before tax of approximately
GBP1.0 million, with net assets of GBP0.1 million as at 31 December
2022.
The consideration comprises the following main items:
- the return of 1,200,000 EKF shares of ordinary shares of 1p
each in the capital of the Company ("Ordinary Shares") which were
originally issued as consideration to an entity controlled by Mr.
Crawford as one of the vendors of ADL Health when it was acquired
by EKF in 2021;
- certain capital equipment and inventory purchased for the business by EKF; and
- partial settlement of intercompany amounts, with the balance
due to EKF being restructured as a loan, repayable in monthly
instalments (the "Loan Repayments").
The capital equipment and inventory had a net book value of
approximately GBP0.44m in aggregate (as at 31 December 2022), but
are planned to be disposed of, with the resale value expected to be
below this amount.
The Ordinary Shares received by EKF will be held in treasury. A
further announcement will be made in due course to confirm the
change in total voting rights and shares held in treasury.
The Loan Repayments will be for an aggregate principal amount of
up to $0.65m, payable over the 36-month period following completion
and carrying interest at 2% per annum. Each of the Loan Repayments
is subject to ADL Health generating excess operational cashflow
over its needs, with unpaid amounts rolling forward over the term
of the loan. There can be no guarantee that these payments will be
received.
Following the Disposal, EKF expects to discontinue its
Laboratory Testing business. Further details regarding the
accounting treatment for the Disposal will be included in the
preliminary results for the year ended 31 December 2022, which will
be released on 28 March 2023.
As Stan Crawford is a director of ADL Health, a subsidiary of
the Company, the Disposal constitutes a related party transaction
under Rule 13 of the AIM Rules for Companies. The Directors of EKF,
having consulted with Singer Capital Markets as the Company's
nominated adviser, consider that the terms of the Disposal are fair
and reasonable in so far as shareholders are concerned. In
considering this matter, the Directors and Singer Capital Markets
have taken into account that there was no alternate transaction
available and that the outcome to EKF is more beneficial than the
cost of closure of the disposed business.
About EKF Diagnostics Holdings plc ( www.ekfdiagnostics.com
)
EKF is an AIM-listed global diagnostics business focussed
on:
-- Point-of-Care analysers in the key areas of Hematology and
Diabetes, as well as Central Laboratory products including clinical
chemistry reagents, analysers and centrifuges
-- Life Sciences services provide specialist manufacture of
enzymes and custom products for use in diagnostic food and
industrial applications, as well as other higher value Contract
Manufacturing services
EKF has headquarters in Penarth (near Cardiff) and operates five
manufacturing sites across the US and Germany, selling into over
120 countries world-wide.
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END
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