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Very pleasing update. It’s pretty obvious that non-COVID revenue is building and to communicated strategic plan. Lots of financial firepower still in the Bank.
Particularly like this part:
“The transition to non-COVID revenues in both Contract Manufacturing and Laboratory Services continues. The Company is bringing on new partners in the genomics and forensic space and successfully taking them through validation and pilot scale batches for products expected to be launched later in 2022 and into 2023. In addition, the Laboratory Services team recently launched a new clinical toxicology method geared toward medication adherence, developed an analysis of cannabis potency and has made major advances in establishing our capability in Non-Invasive Prenatal Testing ("NIPT"). The expansion of testing capabilities to create a broader suite of healthcare applications is proceeding well against the Company's roadmap, and it is reassuring to see early interest and new opportunities emerging as the team start to promote the new testing services.”
All systems GO at EKF.
Could EKF be a global player in the Monkey Pox testing market I wonder?
Thanks for feedback SB. Interesting.
Chelsea - FWIW - my take is that yourgene have a product which needs distribution outlets and laboratory testing facilities to tap into US primary care physician market decision making - forming partnerships with existing businesses provides scale and capacity for the infrastructure required to move quickly and establish a foothold in the NIPT market. So it would make sense to have a number of partners to provide that scale. EKF - with their ADL lab capacity need to replace COVID testing with new testing products and looks like yourgene have a number of interesting products coming to market once approved. Only issue with NIPT is the recent US ruling on terminations and the impact this will have - its a huge potential market but lawmakers appear to have thrown a huge spanner in the works….SB
Does anyone know how the strategic relationship Yourgene has with Ambry Genetics, differs from that between Yourgene and EKF?
The NIPT Americas Markets they want to penetrate look the same to me ie. competing for the same business but maybe I am missing something obvious.
Not forgetting of course that the financial firepower EKF are sitting on, may result in another earnings enhancing acquisition and possibly not that far into the future either.
Should get a trading update next week. 9 months into the ADL purchase - will be good to hear how that is going - if targets are hit ($5m EDITDA) there is additional consideration due over next three years. We will also be able to see how much cash we are generating per month in the knowledge we had £21.2m on 31st May if they let us know current cash balance as at 30th June. 1.2p dividend is 3%+ yield based on current share price. I'm adding now we 'seem' to have reached the bottom of the recent collapse. SB
No problem Chelsea. I think we we will get an update next week. We already know they have added to their cash pile - now sitting on £21m - and although sales will clearly decline post covid we should see a final benefit in H1 2022 revenue with H2 2022 and beyond continuing to benefit from core business growth, ADL and the fermentation capacity investment. If the £16m EBITDA is accurate; and we get anywhere near £25m in two years - the present valuation is trading at an increasingly large discount. It is very unlikely this will continue when the markets turn - the issue is when that occurs! SB
Thanks SB. I’m hopeful for an RNS Trading Update soon and for the positive messaging and progress to date to be included within. I think that’s needed here to reverse the drop.
From OIG annual report:
"The company had a strong performance during the year, with sales growing to £83 million from £65 million and Adjusted EBITDA of £26.5 million. Sales will normalize in 2022 as the uplift from pandemic related sales declines materially. The core business continues to perform well, with £16 million of EBITDA anticipated in 2022 as global healthcare systems come back online. The company has deployed capital with the acquisition of ADL Health, a United States ("US") Clinical Laboratory Improvement Amendments certified laboratory as well as a new strategic partnership with Yourgene Plc to broaden the product offering. The business is well capitalized and has net liquidity of circa £17 million. "
" The outperformance in 2021 was driven by investor sentiment around its Covid-19 related products, but the soaring share price has now been brought back down to earth as the pandemic eases. The core business continues to deliver, with £16 million of Earnings Before Interest, Taxes, Depreciation and Amortisation ("EBITDA") anticipated this year, growing to £25 million by the end of 2024. The current valuation is low for a high-quality diagnostics business and with time, we hope the market will recognize this."
SB
EKF just pumped another £2.5m into VRCI - so they now own 5.77% of business - which they have stated will be passed to ekf shareholders as a dividend in specie. And from what I read the VRCI update is good news. Total madness. SB
Doesn't completely explain the drop, but they own a few percent of VRCI which tanked today on data results.
Can't imagine a more bizarre reaction to a company releasing a positive update about its current cash position. Which raises the question - what exactly is going on here to create the rush to exit? SB
Good point about the limits, that makes sense of the unwinding via a dividend in specie.
The formal bit of the AGM was over very quickly with all motions carried.
There was a question and answer session, which consisted of mainly technical and operational subjects. There were some questions relating to the financials that were not addressed. The only thing we know is that Q1 was at similar levels to last year.
They are making good progress on transition to non Covid testing and the pipeline for enzyme manufacturing is taking shape ready to hit the ground running in 2023. Up to 60% capacity to be sold by end of 2023. Typically a contract for enzymes, if the end customer is successful is 5-10 years. That will give a very solid base going fwd.
A question was asked about margins for testing and I was pleasantly surprised to hear it was 60 to 80%.
I guess we are going to have to wait for the half year trading update to get the financial KPIs and to be honest I am not expecting any significant uprate until then.
Two brokers notes published with target price of 60 and 90..that's quite a variation.
I imagine that one advantage for EKF is that if Verici needed to raise money from shareholders in future e.g. via a rights issue, then the individual EKF shareholders would have to stump-up the cash (as they would then be holders of the Verici shares) rather than EKF.
Also don't some of Christopher Mills investment trusts have a limit on how much of the funds' value can be invested in any one holding, and their holdings in EKF were in the past getting towards that limit. I assume this is one reason why EKF keep spinning our these companies, because otherwise the EKF market cap might be higher, meaning that Mills's funds may be nearer their limit of how much they can invest in one holding. This would also be a reason to transfer the Verici value out of EKF and to the EKF shareholders.
Hi unhooked - I think it should probably just be viewed as a dividend - only in shares rather than cash. It is part of EKF's ongoing plan to distribute value to shareholders - and if you think about it why should EKF shareholders pay for investments in another company (albeit a spin off) without any benefit? And yes looks like quite a few here are on Mills coat tails on several investments - frankly its been a horrendous six months and I'm feeling pretty sea sick to continue the analogy!! ATB - I don't see any major downside here, there and elsewhere given recent declines - but what do I know based on current evidence! SB
Hi Silverblade, much appreciated, but I'm still not sure I understand what the actual benefit is of distributing EKF's Verici shares in specie, either for EKF or for Verici shareholders. I can't see why it would give a boost to either share. No doubt Mr Mills has his reasons, so perhaps there is some hidden value in untangling the cross-holdings.
Anyway, the AGM is today and it looks like I will end up as involuntary shareholder in a company I hadn't heard of ('till v recently).
Adding in my holding in RENX, it feels like I've really tied myself to the mast of Christopher Mills' galleon... just as it enters rough seas... I know you're in these shares too Silverblade - you may be feeling the same way!
Cheers vig - I see we have other common interests! Wonder if we will get an AGM trading update in the morning - hopefully nice and positive with a clear focus on profitable, organic growth - C. Mills has intimated as much already. SB
Fyi
You can join EKf AGM by zoom, 11am Weds
Join Zoom Meeting. I have registered am my sign on below. Not sure if it will work for all, but you can register by contacting ekf@walbrookpr.com
https://us02web.zoom.us/j/89652746997?pwd=-1S4_jDUKIwwEtgk0K4y5vrBfkNZdb.1
Meeting ID: 896 5274 6997
Passcode: 541840
One tap mobile
+442080806592,,89652746997# ,,,,*541840# United Kingdom
+443300885830,,89652746997# ,,,,*541840# United Kingdom
Hi unhooked. This looks like it is part of the AGM shareholder resolutions which will be voted on at the AGM on Wednesday this week - my holding is with ii and for some reason I don't have the AGM details. Although a recently new investor here - my take is that EKF has both a core business and a number of commercial spin offs which required access to capital for growth as independent companies - Veirci, Trellus and Renalytix. EFK retained shareholdings in each business - with a stated aim to deliver the value (shares) in those companies back to its underlying shareholders. What is a bit different here is the distribution is taking place two years after Verici was floated - and after a further fund raise of £2.5m in March 2022. EKF now hold a total of 5.77% shares in Verici worth c. £2.8m - so looks like it is the total holding of c.10m shares which will be distributed to existing shareholders - timings to be finalised - presumably based on current prorata % shareholdings). I don't think we should overlook the role of Christopher Mills in anything to do with these four linked companies - noting he bought 1.3m shares in EKF a few days (also noting he pointed out the value at this price is significant looking at medium terms EBITDA projections) after this announcement was made....entitling those funds invested to 29% of the distribution ie an additional c.2% of the business (currently 17.5% ); with Mount Sinai picking up another 1%+ (currently 11.3%) . Together - those two parties will control more than 30% of Verici stock as it stands. All IMO of course.....SB
Anyone seen this?
Last updated 9 May 2022:
"The Board of EKF Diagnostics Holdings plc has announced that that it will transfer all of the group's holding in Verici DX plc to shareholders by way of a dividend in specie, subject to shareholder approval at a general meeting to be held on 18 May 2022. The date that the distribution will be made has not been announced yet.
If you wish to vote on the proposals, please let us know by noon on Thursday 12 May 2022."
Are we to receive Verici shares and does anyone know why they are doing this?
Interesting potential hypothesis Vig! Only time will tell if there is a larger game at play here as has been alluded to previously. In the meantime - at least Mills/Harwood have tried to show some support for the business following the buy back disaster. Hopefully this signifies the end of the recent slump and we get a decent trading update as part of the AGM announcement later in May. SB
At the investor meet presentation we raised a question about the share buyback. They said it was good value for the company as a recent acquisition had been made at circa 80p per share.
As discussed before it seemed announcing the buy back price was unnecessary as the share price was marked down and has not recovered.
The question is who benefited from the buy back as it certainly wasn't existing private investors.
The AGM is in May and we will be coming back to this if there is no share price recovery.
Christopher Mills now has a tad under 30% and the company is undervalued. Potential deal one way or another.