Ekf Diagnostics Share Discussion Threads

[james188] 28/3/2023 19:36

Sadly, I saw little or no sign of contrition for the serial bungling over the last couple of years. I have always highly rated Julian Baines, but I think that shareholders were owed a big apology. It did not happen. A King Canute strategy will not wash.

[cisk] 28/3/2023 19:30

Does anyone have a breakdown of the 17.5m exceptional items?

Clearly that blew a huge hole in the finances. Even without any investments / share buybacks, there was 14.3m cash outflow v 12.7m cash inflow. Obviously it's early in the FY, but they're going to have to go some to even maintain the current dividend (assuming consistent taxation / Capex).

Reading the report, everything looks hunky dory - but as we know the reality is very different.

I've always known Julian Baines to be a straight talker - those that attended the call did you get the impression that they recognized the mis-steps over the past 12-18 months? And learnt from them?

I'm getting a real deja-vu from the presentations I attended in person back in 2014-16, where much humble pie was consumed after the Stanbio acquisition - for sure EKF are in a better position now than post-those events - but let's hope history doesn't repeat itself in another 8 years...

[james188] 28/3/2023 19:27

Hopefully, consistent with previous responses, the company will answer the questions that were not covered during the presentation. Mine were as follows:-

1. Net cash at the end of December 2022 was still around £11.4 million, so why did the did the Company consider it necessary to secure the new £3 million facility from NASCIT? What is the "worst case scenario" referred to in the report?

2. You talk about a strong pipeline of opportunities to take up the significantly increased capacity in your contract fermentation facilities at Elkhart and you refer to advanced on-boarding facilities with three customers. How much 2023/24 revenues is contractually locked in and what quantum of revenue is expected? Presumably more than 3 core customers are anticipated?

3. Almost exactly one year ago, the Company stated that it was "particularly excited" about prospects in the laboratory testing space after the ADL deal. That deal was described as immediately earnings enhancing. Various other assurances were given to shareholders who expressed concerns. Strategy has now been completely reversed in this area at huge cost, including wasted management time. How did the Board get this so fundamentally wrong? It comes across as a complete failure of due diligence and strategic analysis.

I had further questions in mind, but these are the ones that I asked.

[comsack] 28/3/2023 18:22

James, I also attended the call and am a long term shareholder. I am keen to know what your questions were that they avoided

[james188] 28/3/2023 17:36

I was on the IMC call just now. For the first time that I can recall in any IMC presentation, the session lasted well under 60 minutes and not all questions were answered. I only had a response to one question that I asked and that was the easiest. I doubt that I was the only one.

As a shareholder, I want to see the Company flourish, but ducking questions is a troubling sign. Maybe - and hopefully - the final version of the Q&A that is made available will pick up on the questions that were not addressed. I will consider that to be a litmus test. I think that the management needs to do better to address shareholder concerns rather than simply presenting the sunny side up after a very torrid period where shareholder cash has been heavily squandered.

[james188] 28/3/2023 15:52

The share price at the start of 2022 was just over 80p. Today, it is well under 30p. That is not just down to market conditions. I think it also reflects alarm at a number of management actions. It has been an unsettling period, with too many nasty surprises. I say that as a shareholder - but reassessing my position.

[wan] 28/3/2023 15:28

Although the drag on the financial performance in 2022 is non-recurring, I note that the UK restructuring associated to the closure of the UK Contract Manufacturing business will be recognised in the 2023, but I assume that will be realtively small. And there is a real risk in relation to the relatively small Russian subsidiary, albeit I am sure that in a worst-case scenario (which EKF cover under Going concern), on its own, it is likely to be significantly outweighed by a combination of growth in the existing product portfolio (including geographic expansion and new markets) and new opportunities and products in Life Sciences.

In short, and strictly in my view, there appears significantly more upside than downside!

Operationally profitable, cash generative with no long-term debt, an attractive dividend policy, high growth opportunities, and with management laser focused on delivery, EKF appears well positioned to deliver long-term, sustainable growth and healthy shareholder returns.

[wan] 28/3/2023 10:36

Investor Presentation is now available -

[wan] 28/3/2023 07:50

Still reading/analysing the Results, but the broker note is out -

FY22 results are in line with revised estimates. Management continues to intensify its focus on the growing, profitable and cash generative Point-of-Care and Life Sciences activities, where confidence in the latter opportunity is increasing. We make some modest changes to our forecasts to reflect further streamlining post-period end and point to the strong growth outlook from FY24 onwards. We believe this is being overly discounted by the market and view the shares as being in deep value territory and presenting a compelling entry opportunity.

[tongosti] 27/3/2023 16:34

This has dropped from 80 to 25 (-70%) and yet you say dropping further to 16 (another -40%) is not a possibility?!?!

No one knows for sure whether this will get there of course (hopefully not - for the sake of those who held their ground) but it’s clearly not a low odds scenario in the context of Mr Market is able to do (one wonders, where have you been for the past year or so...).

With the best will in the world pal … ah, whatever … it’s only Monday …

You take good care of yourself pal and I would suggest you take a break from it all. Seriously.

Good luck.

P.S. In what other business area someone allows a windfall turn into a massive disaster and then still fancy own pontifications about the future ? It really baffles one (finally, whatever happened to the age-old wisdom of "there is no such thing as failure, only feedback"?!)

[wan] 27/3/2023 15:02

As I stated previously (in post 3021), I appreciate that a reset was inevitable post the Trading Update in February this year, but despite considerable growth in the established core businesses compared to pre-pandemic levels, in share price terms EKF is back to pre-pandemic levels when both the FY revenue in 2019 (£44.9m) and the growth prospects for the core business were materially less than they are today.
(END)

And whilst I appreciate the frustration and the fact that the market can over-react in both directions, suggestions that the shares could hit 16p and even 10p appear delusional/scaremongering (and perhaps wishful thinking by some). Time will tell!

Whilst ADL has not been a successful investment (of EKF's time and money), it was always non-core, but some have interpreted that the cash EKF has generated to date has been blown. However, given the planned investments made during the year, including the significant capital expenditure to increase EKF's enzyme fermentation capacity in the US, that assumption, at this stage at least, appears 'wildly' overstated!

The current share price weakness is increasingly looking too harsh, and recently resulted in EKF's broker describing its shares as being in "deep value territory and offer a strong buying opportunity". However, I understand and respect that the current uncertainty will hold the shares back until we get further clarity and vision, which is likely to come tomorrow. In short, I don't think investors will have to wait too long for a re-rating of EKF's shares, as meaningful contract news will also surely emerge.

Staying with meaningful contracts, recall that EKF signed an exclusive, multi-million dollar agreement with Oragenics, Inc., a Florida-based biopharmaceutical company, for the manufacturing of Oragenics' lantibiotic bulk drug substances in the United States. Under the collaboration agreement, EKF Diagnostics will manufacture compounds intended for preclinical and early-stage clinical trials, which along with other projects were paused as a result of COVID-19. I noted recently that Oragenics Lantibiotic project has made further progress -

Oragenics Announces Positive Results in Several Lantibiotics Compounds Against MRSA and VRE

March 14, 2023
Potentially Addresses Life-Threatening Antibiotic-Resistant Infections

TAMPA, Fla.--(BUSINESS WIRE)-- Oragenics, Inc. (NYSE American: OGEN) (“Oragenics” or the “Company”), a biotechnology company dedicated to fighting infectious diseases, today reports favorable findings from third party laboratory testing of several compounds in Oragenics’ lantibiotics platform to combat multiple pathogens despite the resistance of those pathogens to standard-of-care antibiotics. Lantibiotics are a novel class of antibiotics with the potential to treat serious, life-threatening infections.

Kim Murphy, President and Chief Executive Officer of Oragenics, commented, “We previously reported that cross-resistance does not appear to emerge with our novel class of antibiotics because of their unique mechanism of action. We are encouraged by the outcomes of our recent collaboration with Linnaeus, which verify that life-threatening pathogens that are resistant to drugs of last resort – including vancomycin and daptomycin – remain sensitive to several of our lantibiotic compounds. This is another significant step in efforts to identify a new lead compound to advance into the clinic toward the development of novel therapies to fight infectious diseases."


Thus, I remain patiently invested and having also added to my position at recent lows (prior to the recent broker note).

[p1nkfish] 25/3/2023 07:47

Cisk, good post 3047, sums up years of experience very succinctly. Spot on.

[cisk] 25/3/2023 05:08

So Carlos, you selling then?

[carlosdanger] 25/3/2023 04:48

You people on the other side of the pond are delusional: 1) The CEO was disgraced and demoted, 2) the ADL was a complete 'covid play' disgrace with management infighting and no vision for expansion, 3) they lost their Scientific Affairs expert to death, the QC expert to another position, and the CSO left them, 4) the prospect for the Life Sciences Division is a long shot since expansion does not include the proper subject matter experts, and 5) the "core business" is on shaky ground since the QC Department is a complete train wreck.

[cisk] 24/3/2023 06:42

Kor, newsflow dont mean sh*t unless it’s accompanied by cash in the bank. They had that and blew it. It will take time to recover lost ground - let’s just hope it can be done again.

I welcome posts by Tong and Wan, lively debate is better than silence. Wan does like his chapter and verse. Tong likes his follow the mkt. Both are valid.

But I do approach any flowery nonsense regarding any stock with extreme apprehension nowadays. Won likes the newsflow ( I remember the Carclo days when they were on the supposed cusp of printing lcd screens as I recall, that ended up being worthless).
And any stock pundit I completely ignore - Robbie Burns, Paul Scott - and any effing fund manager as well. FMs always talk up their own book.

Basically the entire mkt is rigged against small PIs, it’s better to buy big names when they’re cheap and sit on them. Or someone like EKF when they get really cheap, and buy for the rebound.

Don’t mean to sound negative but timing is everything. Like you could have made a decent return on Tesla - even though it’s a crock of rubbish. Same with square or whatever it’s now called. Basically every dog has its day - and I think I’m more in the Tong camp that the price action tells you a lot.

[kor_wraith] 23/3/2023 22:22

Having read the last 12 months of company filings and comments on this thread, there is one unavoidable conclusion:

Tongosti is on the money with this stock while Wan is blinded by his love for the news flow regarding EKF's and related companies product offerings.

This looks to be a promising business but with huge management blindspots and missteps.

[seadog40] 23/3/2023 15:33

Presumably we got nothing for this "asset"?
CD

[tongosti] 23/3/2023 08:29

Wan doesn't understand a lot of brokers are simply paid cheerleaders.

[tongosti] 23/3/2023 08:23

It's an unfortunate state of affairs to see what has happened. If there are a couple of lessons on this train wreck are the following:- one ignores price action at one's peril. Technicals proceed fundamentals - think for yourself. Stop rationalising bad decisions and outsource thinking to third party portfolio managers you've never met. It's your money on the line!

[wan] 23/3/2023 07:29

Broker note out this morning -

Clean exit from ADL Health
EKF Diagnostics Holdings plc

EKF has announced a clean solution has been found for the non-core Laboratory Testing business ADL Health, selling the business back to one of its management team. Having pared back our estimates for this division in February, we expect no further material impact on earnings from this move. Strategically, we view it as positive, removing a distraction and further re-focussing activities back towards the core established Point-of-Care & Central Labs business and the growing new Life Sciences activities, where the attractions are significant. We will update our forecasts at the FY22 results on Tuesday next week. After recent weakness, the shares are in deep value territory and offer a strong buying opportunity, in our opinion.

[james188] 23/3/2023 07:28

I have a similar view of events. The patience of shareholders has been sorely tested post COVID. I also think that the net financial effect of this unwind should have been set out much more clearly.

[wan] 22/3/2023 10:45

That commentary aligns quite well with my post 3021