EKF Diagnostics (EKF) is an acquisition-built company that's transparently up for sale. So, when a couple of bid approaches came to nothing last year, management had to concentrate instead on integrating the medical group's acquired businesses and improving underlying profitability. That approach yielded some success, with EKF delivering a modest £0.2m maiden full-year operating profit. But it remains unclear whether a buyer, with a decent offer, can be found.
Operationally, improvements to marketing and an emphasis on higher-margin products - such as BHB liquid reagents (testing chemicals) and Biosen consumables - meant gross profit margin increased by seven percentage points to 55 per cent. There was also a return to stability in some of EKF's markets, with the company finally able to book the majority of a new $2.1m (£1.4m) order from Mexico after "political uncertainty" delayed payment in 2012. Meanwhile, EKF's quest for deals showed no signs of abating with the post-period acquisition of 360 Genomics, for £1.6m in shares (rising to £8m if certain milestones are met). That will form the core of a new molecular diagnostics business for the group.
Broker Peel Hunt expects the group to break-even in 2013, with adjusted EPS of 0.6p in 2014.
EKF DIAGNOSTICS (EKF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 28.3p | MARKET VALUE: | £75.4m | |
| TOUCH: | 26-30p | 12-MONTH HIGH: | 36p | LOW: 25p |
| DIVIDEND YIELD: | nil | PE RATIO: | 314 | |
| NET ASSET VALUE: | 15p* | NET CASH: | £2m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | nil | -0.57 | -1.44 | nil |
| 2010 | 6.48 | -2.09 | -2.08 | nil |
| 2011 | 21.7 | -2.36 | -1.26 | nil |
| 2012 | 26.1 | -0.19 | 0.09 | nil |
| % change | +20 | - | - | - |
Ex-div:- Payment:- *Includes intangible assets of £31.2m, or 12p a share | ||||
