EKF Diagnostics’ (EKF) top line was dampened by two factors during the half year to June. First, foreign exchange movements; at constant currencies, revenues would have remained broadly flat. Second, the completion of the group’s Saudi tender in the second half of 2017, which contributed £1.1m in sales to last year’s half-year results, specifically benefiting the diabetes business. This time, the respective division’s sales dropped by a quarter to £4.4m. It's all about timing but, reassuringly, EKF has boosted its diabetes offering in the US via an exclusive distribution contract with Asahi Kasei Pharma Corp.
And while hematology – the second-largest group business – suffered a 2.2 per cent sales decline to £6.5m after currency impacts, its prospects still improved. The division achieved regulatory approval for its Disaffect TM product, meaning this can be sold in the US, and subsequently won an original equipment manufacturer deal with McKesson-Surgical, giving the latter exclusive rights to distribute disaffect to US markets except for blood banks. Despite these events delaying the product’s launch, EKF highlights its resultant strength in North America.
Overall, earnings exceeded management’s expectations. Adjusted cash profit was up 7 per cent to £4.9m, helped by lower administrative costs. And subsidiary RenalytixAI – which provides AI-enabled clinical care and risk assessment tools for kidney disease – is still planning a potential IPO, which could generate an in-specie dividend for EKF’s shareholders.
N+1 Singer expects adjusted pre-tax profits of £7.7m and EPS of 1.2p for 2018 (from £7m and 1p in 2017).
| EKF DIAGONISTICS (EKF) | ||||
| ORD PRICE: | 37.1p | MARKET VALUE: | £170m | |
| TOUCH: | 36.1-37.9p | 12-MONTH HIGH: | 41.1p | LOW: 22p |
| DIVIDEND YIELD: | nil | PE RATIO: | 43 | |
| NET ASSET VALUE: | 13.3p* | NET CASH: | £8.8m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 21.5 | 1.4 | -0.06 | nil |
| 2018 | 20.4 | 1.7 | 0.21 | nil |
| % change | -5 | +20 | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £42.6m, or 9.3p a share | ||||
