Why Ekf Diagnostics Holding PLC Has Tumbled Today


Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: The share price of EKF Diagnostics (LSE: EKF) — the Cardiff-based manufacturer of point-of-care analysis equipment for the diagnosis of anaemia, diabetes and associated conditions — tumbled as much 15% in trading so far today, following publication of the company’s interim results for the first-half of 2014. At the time of writing EKF’s share price has recovered somewhat, but is still over 11% down.

So What: EKF has made a pre-tax loss of £2.47m.  The company says the loss is largely attributable to exceptional items, which principally include write-off of costs associated with acquisitions made during the period, the cost of transferring its Quotient business to Germany, and the increased amortisation of intangibles. 

Revenue was up 12.6%, to £16.77m, despite adverse exchange rates, with underlying organic growth at constant currency of 3.4%. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were up 4.7%, to £2.22m, but the company says they were negatively affected by exchange rates and by continued investment in sales and business development infrastructure.

What Now: EKF says it expects its three acquisitions — Separation Technology, Inc., DiaSpect Medical AB, and Selah Genomics, Inc — will materially enhance its product portfolio and that it expects them to make a considerable contribution to future growth.

Commenting on EKF’s outlook, executive chairman David Evans said:

Whilst trading conditions continue to be challenging, the general outlook for the second half is very positive, not only in terms of operational improvements and the long term strategic positioning of the Group, but also in terms of the further organic growth we anticipate and the first full six month contribution from our recent acquisitions.

“We remain confident of meeting market expectations for the full year. Our focus in the second half and beyond is on rebuilding shareholder value. Form is temporary but class is permanent and we believe we have a first class offering.

At 22p, EKF’s share price is down 37% so far this year, compared with a 9% drop in the AIM All-Share index.  However, since it listed on AIM in July 2010, EKF’s share price has increased by 32%, leaving the AIM index trailing with a gain of just 16%.

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Jon Wallis has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.