REG - EKF Diagnostics Hldg - Trading Update

EKF Diagnostics HoldingsAnnouncement

26/07/2023 07:00

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RNS Number : 1702H  EKF Diagnostics Holdings PLC  26 July 2023

This announcement contains inside information

for the purposes of UK Market Abuse Regulation.

 

EKF Diagnostics Holdings plc

("EKF" or the "Company")

 

Trading Update

 

H1 2023 performance in-line with management expectations

 

EKF Diagnostics Holdings plc (AIM: EKF), the AIM-listed global diagnostics
business, provides an unaudited trading update for the six months ended 30
June 2023 ("H1 2023"), a period of continued growth in Point-of-Care and good
progress in the Life Sciences fermentation capacity expansion.

 

Trading Update

Trading in the first half of 2023 remained in line with Board expectations.
Following the disposal of the ADL Health business and closure of UK Contract
Manufacturing, H1 2023 revenues from continuing operations were £26.3m (H1
2022 adjusted: £34.4m). Excluding all COVID-related revenues, H1 2023
delivered £25.4m of revenues from continuing operations compared to £22.7m
in H1 2022. As outlined in the 17 May 2023 AGM statement, the Company expects
its overall financial performance this year to be more H2-weighted than
historically.

 

The positive momentum across Point-of-Care has been maintained throughout the
first half with sales up nearly 10% on the same period last year, driven by a
strong sales performance from DiaSpect Tm, EKF's palm-sized haemoglobin
analyzer, as well as growth from sales of both Quo-Lab and Quo-Test HbA1c
analyzer product lines.

 

Life Sciences, which now includes sales of β-HB (Beta-Hydroxybutyrate), a
reagent used to identify patients suffering from diabetic ketoacidosis,
delivered 13.1% year-on-year sales growth, compared with last year, driven
mainly by β-HB sales. Good progress continues to be made to increase the
Company's fermentation capacity. All of the new fermenting units are now on
site and in the process of installation and validation. The Company will
provide a further update once these are operational and generating revenue,
which is expected to commence in Q4 2023. Additional commercial arrangements
for the utilisation of this capacity are advancing and the Board remains
confident that this will be a source of significant growth from 2024 onwards.

 

The Company expects that improvements in adjusted EBITDA(1) margin will begin
to be seen in the second half, resulting in the expected H2 weighting for full
year adjusted EBITDA. H2 2023 will also benefit from the effect of cost
savings implemented in H1 over the full six months. The full, annualised
benefits of margin improvements are then anticipated in FY 2024, particularly
from the higher margin contribution from Life Sciences once additional
capacity comes online and utilisation increases over the year.

 

Delivery of management's adjusted EBITDA expectations for this year remains
dependent on the timing and terms of new Life Sciences contracts under
discussion and expected to be signed as additional capacity comes on line, as
well as the continued growth in our core Point-of-Care business, with better
margins as the benefit of cost savings and other improvements are observed.

 

Group cash, net of bank borrowings, was £6.73m as at 30 June 2023. This
figure excludes cash held in Russia which totalled £2.39m at the period end.
EKF continues to supply essential medical products to its 60%-owned Russian
subsidiary, ensuring continuous compliance with international sanctions based
on regular external expert advice. However, international sanctions mean that
the Company remains unable to distribute cash dividends from this subsidiary
and this situation is not expected to change in 2023. The Board is exploring
options available to realise the value tied up in Russia and will provide a
further update at the time of publication of the Half-Year Results. In
addition, the RUB/GBP exchange rate is currently considerably less favourable
than it was in 2022 which will have an impact on translation, as will a less
favourable USD/GBP exchange rate across US revenues.

 

EKF expects to announce its unaudited results for H1 2023 on 26 September
2023, when it will provide further updates on current trading and the outlook
for 2023 and beyond.

 

Julian Baines, Executive Chair of EKF, commented: "We're pleased with a solid
first half performance, particularly given that 2023 remains very much a
transitional year as we maintain our focus on continued steady growth from our
Point-of-Care division and the expansion of our Life Sciences business. The
full effect of the improvements we've put in place, and the increased revenues
from our new Life Sciences capacity, are expected to have a more beneficial
 effect on 2024 trading and we remain very excited about the longer-term,
significant growth prospects for the business."

 

(1)Earnings before interest, tax, depreciation and amortisation, excluding
exceptional items and share based payments.

 

The person responsible for arranging the release of this Announcement

on behalf of the Company is Julian Baines, Executive Chair.

 

 

 EKF Diagnostics Holdings plc                                 www.ekfdiagnostics.com (http://www.ekfdiagnostics.com)
 Julian Baines, Executive Chair                                Tel: +44 (0)29 2071 0570

 Singer Capital Markets (Nominated Adviser & Broker)                                        Tel: +44 (0)20 7496 3000
 Aubrey Powell / George Tzimas / Oliver Platts

 Walbrook PR Limited               Tel: +44 (0)20 7933 8780 or ekf@walbrookpr.com (mailto:ekf@walbrookpr.com)
 Paul McManus / Lianne Applegarth  Mob: +44 (0)7980 541 893 / +44 (0)7584 391 303

 

About EKF Diagnostics Holdings plc (www.ekfdiagnostics.com
(http://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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