EKF.L 2025 Q2 财报电话会议

Operator: Good morning, and welcome to the EKF Diagnostics Holdings plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Gavin Jones, CEO. Good morning, sir. Gavin Jones: Good morning. Thank you. And just to reiterate, that's EKF Diagnostics, and this is our interim results for 2025. Thank you all for joining us today. I really appreciate it. I think I'll start with describing the team. Hopefully, by now, you know who I am. Joining me in the room is Stephen Young, our CFO; and slightly off camera is our Executive Chair, Julian Baines. You may hear him chip in every now and then, he can't help himself. But getting to the meat of the bones today, I think it's important to say what we're going to be talking about is a fairly simple but significant update for the business. If you look at the revenues for the first half, we're at GBP 25.2 million, which is very much in line with the same period last year. So you could say that it looks flat. But if you look at it on a constant currency basis, we're closer to GBP 26 million. If you also consider the fact that we've taken out some of the lower-margin products that were causing us some challenges previously. Then actually, it is -- we are delivering significant growth in the first half and will continue to do so into H2. You can see the impact of the reduction of those lower-margin products by the improvement in gross profit and the gross margin now to 50% from 48% in the previous period. In terms of increased EBITDA, we're up 7.4% to GBP 5.8 million versus GBP 5.4 million in the same period. Profit is also up 16.1% and the cash continues to grow, GBP 16.6 million at the end of this period, but has continued to grow and is certainly looking a lot better, and we will be on target to hit the numbers that we previously talked about somewhere in the region of GBP 20 million by the end of the year. I think last time we spoke, I talked a lot about implementing the strategy that we had for the business. And I think it's important to keep coming back to that and communicate that, that has now been implemented right throughout the business. I personally have gone around to every site and spoken to everyone and made sure that they understood what the strategy is, how it's going to work so that we have that clarity and vision and focus right throughout the business. We continue to look at our production capacity, as you'll see a little bit later on. I'll talk about the number of analyzers we put out into the market. So it's important that we do continue to support that improvement in production capacity for our point-of-care products. We have improved the output in that area, but we look to continue investment in that space to get to a 30% increase. Our hematology analyzer production is up 60% versus the same period last year, and we anticipate that, that will deliver significant consumable growth in H2 2025 going into full year 2026 and beyond. Most of you would have seen the announcement that went out earlier on this year where we talked about signing 3 new contracts in some of the strategic growth areas that we have been targeting, specifically in Africa and Latin America. And that will continue to deliver that growth over the next 12 to 24 months. If you look at one of our other areas, Beta-Hydroxybutyrate, that's up 12% or 16% on a consistent currency basis. That is always a really good measure for how EKF Diagnostics is performing and has a big influence on our gross margin. Certainly, a lot of the reason for that is the increased focus with the splitting of the sales team to focus entirely on BHB or Point-of-Care depending on which area they find themselves in and also some of the development of our key partners within the U.S. market. Each time I do this, I will come back to what the Board expectations are, I think it's important to give an update on what the Board is expecting to see and how we're delivering on that. So the first thing they wanted to see was some capital deployment to deliver sustainable growth and unlock unrealized potential. First part of that was really to invest in operational excellence to increase production capacity, improve efficiency and implement new technologies. So that has been initiated, and you've seen some of the benefits of that by the fact that we've been able to get so many analyzers out in the first half. This will continue to run into 2026 and beyond. This is an ongoing program and something that we will continue to invest in. It's -- where we really focus at the moment is developing the analyzer production to be able to be more efficient by looking at subassemblies, but also be able to really get more analyzers out there and make sure that they are going out at a lower cost to the business. Second phase of that will be to look at the consumable production, and that's currently ongoing. We have two projects in that space to deliver at the end of the year, which will give us a better idea of what we need to invest moving forward and how we will do that. We also wanted to make sure that we had a commercial team that was able to respond to the growth that we anticipate, certainly in the focus areas of hematology, Beta-Hydroxybutyrate and fermentation. That's still ongoing. It does take time when you're restructuring your sales team, but we have put in new people within the marketing side and also within the sales side, certainly within the U.S. market, which has been a key focus for us. Some of that will continue into the rest of this year, but we do anticipate that we will have a complete expanded commercial team by the end of 2025. In terms of our new product development, that is specifically aligned to our growth strategy. We are on track there. We are looking to work within Beta-Hydroxybutyrate area and also hematology and the projects that we have in that space are ongoing and look to be on track to continue according to schedules that have already been set down. In terms of our second point, we implement the share buyback to improve earnings per share. We have utilized some of our cash reserves to implement a share buyback. I know that a lot of people have been asking whether we would be reimplementing the dividend, and that's not something we're currently looking at the moment. We feel that this is a much more controllable way to use our cash reserves and to improve the earnings per share. So far, we bought 4.6 million shares, which I think is probably went a little bit slower than we want and some of that's down to the liquidity that we have in the market. We're a very stable share. There aren't as many shares to buy out there as we might like. But we have continued with that share buyback, and we will continue with that share buyback for as long as we need to. So we're certainly continuing into H2 2025 with that process. So from the 5-year strategy, again, I think it's important to be consistent with our messaging and make sure that we come back to that 5-year strategy and keep talking about it. So for the 2029 target where we're looking at increasing revenue and EBITDA, revenue target for 2025 looks to be in line with expectations. We have had high volumes of low-margin analyzer build in the first half. Obviously, that does have an impact on our profits and our EBITDA. So I think we'll wait and see where we get to with EBITDA, but we are looking like we are in a good position. For the Point-Of-Care hemoglobin business, evaluations are ongoing in U.S. blood banks. They've been established and are still -- we have to get results in each of those spaces. This is a long-term investment. This is a conservative market, but it's the most highest value part of the business for us and certainly something that we are looking to grow. We have won new tenders in both Africa, and we've now seen Peru come back online, which is an important partner for us. For the #1 in ketone testing in BHB for lab and Point-of Care, as you know, we are already #1 for the lab testing, but we are developing our lab tests further to make sure that we can secure and extend that business even more. We will also be launching the Point-of-Care products in this area and the development program for that is ongoing and on track and looking to be in good shape. So in terms of where we are with the 5-year strategy from a geography point of view, I think it's important to note that we shouldn't focus too much on the APAC negatives where we've seen a drop of 26%. That does seem to be a lot, but we're really talking about a much smaller part of the business. And a lot of that business was really focused on the discontinued products, so the clinical chemistry. And that's one of the reasons why we chose to take those products out. They weren't really contributing to the business in terms of margin. So it made sense to realign the business, focus on the Point-of-Care side of things. And that's really what you're seeing now is a realignment and refocus in the APAC region. By the same rationale, you can see that the Americas has grown by 3%, driven by continued BHB expansion in the U.S. and hematology coming back online in Peru. EMEA has also grown with opening new markets. We certainly signed a new contract in Africa, stabilized the Russian business, and we're looking to deliver extensive growth in that area in H2. Obviously, there's been a lot of analyzer build, and that's something I'll talk about in a second. But what that does mean is that we exceeded those markets and now we anticipate to see much higher consumable usage within H2 2025. So in terms of that analyzer build, I think it's important to really reiterate just how much we've seen going out the door versus the previous period. So 125% growth in our hematology analyzer build, which is pretty substantial, most of that going into Peru, Brazil, U.S.A. and Italy. HemoControl is obviously one of the key products in our hemoglobin range, but it's also partnered there with Diaspect, which has previously seen huge analyzer growth. That's not quite as big as what is looking HemoControl, we're only looking at 40%, but that's still a huge jump up in where we anticipate to be. A lot of that's going into blood banks. And we certainly new business that we have in India and Uganda leading to that 40% uplift. Overall, we're seeing a total 60% hematology analyzer increase in terms of the demand. That obviously then means that there's a bit of a reduction in HematatSTAT and Ultracrit. Those are somewhat legacy products. There is still a market for them certainly in the U.S., and we are still serving that market, but the focus is without a doubt on our HemoControl and Diaspect product ranges. In terms of our Life Sciences business, I think it's important to keep making sure that we give a good strong update here. It's challenging because we can't always talk about some of the partners we're working with. They would rather remain anonymous for certainly business and commercial reasons, and that's perfectly acceptable to us. It would help if we could talk a little bit more about them. But unfortunately, what I can do is talk about the size of the pipeline. So we've got a $1.5 million pipeline on new business currently coming through, one of which is due to deliver anytime soon. I wish I could have said something different, but we do have a significant contract in the final stages of agreement. It's just going through the signing process. Again, I won't be able to announce this to the market, but we will try to give you regular updates on new customers and new contracts as they do come through. As you can see, there's a various number of different sized opportunities in the pipeline. I think it's important to say that some of these would be simple tech transfer, which is great. That's exactly what we want. Some of them, like the one big opportunity we have here, which is worth nearly $0.5 million in terms of dollars will take a little bit more effort. There's a little bit more development in that, and that one is going to be an 18-month project. Hopefully, we will be able to announce that when that comes through. But as you can see, there is a pipeline. It is relatively significant. And this is all new business and new customers. So it's important to make sure that people understand that we are bringing in more customers than we ever have done before. We've got more people coming on to site to do audits, more people looking at our capacity and really being attracted by what we have to offer in Life Sciences. And I think this is a significant turnaround from where we were previously. We were seeing customers before, but we weren't seeing the level of interest that we've got now. And a lot of that's down to the sales team and what they're bringing in, but also the new site management that we brought in our life science facility and how they're running that operation. So for the rest of 2025, it's certainly important that we make sure that we continue to deliver on that broader pipeline of new life science opportunities. I said that we will deliver on that one significant partnership. I'm hoping that we can add to that. Whether we can announce that, we'll see. But yes, we will definitely deliver on one new customer, and it will be significant in the Life Sciences side of things. We will focus on the pull-through of consumables and that aligning with our record hematology analyzer production achieved in H1 2025. It's key to our strategy is to really get those consumables out there and make sure that the analyzers that we've used to see the market are being utilized in the right way. And then we'll continue to support the strategy development by boosting supply of our hematology products into new markets. whilst developing existing markets further. We've got a long history in this space. We do have a lot of well-established customers, but we are looking to add to that and redevelop some of those markets as we move forward. Like I said, I thought it would be a simple update today just to tell you where we are, but also very positive. Thank you very much. I think we'll go to questions. Operator: Stephen and Gavin, thank you very much for your presentation. [Operator Instructions] I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed by our investor dashboard. As you can see, we received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Stephen Young: Okay. I think there's a first couple of questions, which we can see relate to CapEx. Julian Baines: Read them out... Stephen Young: The first two are linked to. Julian Baines: Can you quantify CapEx Point-of-Care capacity expansion? Is the Fermentation CapEx done? What's the total CapEx budget for '25, '26, which is similar to with production capacity expansion plans underway, what capital investment is required. So they're pretty much the same and what's the effect on short-term margins? Gavin Jones: Go ahead. No Stephen go ahead. Stephen Young: In terms of capital expenditure for -- it's mainly Point-of-Care. The Fermentation CapEx is done in the U.S. There will always be some small pieces of equipment that we continue to buy each year just to enhance our service offering, but no any other level of the money was already spent. So in terms of the split of this particular year for 2025, our budget Point-of-Care is probably GBP 2.5 million and GBP 1 million -- GBP 2.5 million spent on the German facility, which is all Point-of-Care and then a mixture of about GBP 1 million being spent in the U.S., which is the Point-of-Care BHB and Fermentation. So we're looking to spend around that level, maybe a little bit less than that this year in terms of the actual amount, but that will be a follow over then into next year. We were expecting probably to spend again probably another GBP 3.5 million to GBP 4 million on CapEx next year, mainly in relation to Point-of-Care capacity. And we don't really see that having a major impact on the margins in the short term. Gavin Jones: Okay. And in terms of which production capacity expansion plans are underway, it's a question from George. So we've done some work in terms of subassemblies, so rather than produce everything in-house, we have outsourced some of our subassembly work that's allowed us to basically put more out there. That has been implemented, and that's been successful. So we've had a few months of that now, and we're looking to expand that further. We do have an external project ongoing, which is due to deliver two stages to that, one delivers in October, the other delivers in November. And that will -- that's very much more focused on our consumable side of things. The point of that project is to really review where we are right now, look at what improvements can be made to our consumable lines, especially in the hematology area and then also to produce a plan for how we can extend that completely. So really redeveloping our consumable lines from scratch. But there will be an interim period where we look to improve the efficiency and capacity on those lines. So that project is ongoing, delivering in H2 2025, but they will continue into 2026 and beyond. Go ahead. Julian Baines: Next question. Yes. Tim has asked, first of all, very encouraging set of results and congratulations to you and the team -- can you talk a little bit more about the Life Sciences plant in South Peru and put this in context on ROI on return on investment and the facilities there? Gavin Jones: Yes, sure. I think in terms of where we are with the Life Sciences pipeline, it's going well. I think it's something that takes time. I think we said that a lot, but we need to be patient with it. In terms of return on investment, at the time when we did make the investments in Life Sciences, we had the cash available. We needed to make an investment in that area no matter what, just to be able to serve our existing business and that existing business that exists and it still really underpins everything that we do there. So that would have probably been in the region of anywhere between GBP 5 million to GBP 6 million, GBP 7 million. So yes, we have added to that, but we are looking for -- this is a long-term investment here to be able to build a business that really is something different than anything we've ever done before. So I think it's challenging to say when we'll hit that return on investment. I don't want to make any promises there. But really, what we do need -- we always needed to make that investment or some level of investment. We may have gone a little bit higher than what we needed to originally, but that has given us the opportunity to grow that business, something that we wouldn't have had if we've made that investment. Stephen Young: And that particular site does manufacture the BHB site. Gavin Jones: Exactly. Stephen Young: And as Gavin was explaining, that investment needed to be made to a certain level to protect that BHB business. Julian Baines: That's growing year-on-year I think it's important to mention, as you've already mentioned, there's a lot of visitors coming to that site. It's becoming very clear that strategically, we've chosen now making sure we do tech transfer contracts and people are coming and saying that there's very little capacity globally. And so seeing our new site coming to it, we're starting to feel a little more comfortable that we've taken our time. We've got our strategy right. We've got the right salespeople, and we're targeting the right customers. And we're seeing encouraging signs this year where we didn't particularly previously. Gavin Jones: Yes. I think that goes some way to answering in line with [indiscernible] question as well, which is how are you progressing with increasing utilization at the South Peru facility. Yes, very well. I think as Julian alluded to, we've got a lot of customers coming to us now. And one of the things that they're interested in is the fact that we do have capacity I think we wouldn't be seeing so many customers if we didn't have that capacity. One of the things that they do tell us is that they have been to see other partners, potential partners, and they've not been able to serve them. So you've either got the very, very big kind of food production facilities that the type of customers we're talking to, it wouldn't suit their purposes or then you have other sites who maybe are closer to our site, but they don't have any available capacity. So it is helping with bringing in new customers, and we are moving towards filling that site. We're nowhere near it yet. We're still at around maybe 10%, 15%. We can certainly take on more and will take on more. But yes, we will update the market as and when we can. We may not be able to tell you exactly who we're working with, but we'll be able to tell you what we're doing. Julian Baines: Next question. Does such a strong increase in analyzer volumes and thus revenues mean that consumables were down in H1? Gavin Jones: Not necessarily. No. I mean, I think one of the things that's important to know is every time we sell analyzers, it does come with consumable sales. I mean the normal business is still going on. It's just that when we win tenders, we do have a very big influx of analyzers at the front end of that tender. You can't work in that tender until someone has an analyzer to work with. They also -- when they do take those analyzers, they also take a percentage of consumables as well. But once you've done that initial outlay, you then have nothing but consumables for the period of that tender. So no, I'd say consumables were not down, but I just say they were not down. It's just that the focus has been very heavily on putting analyzers out there in the field because you need to see that market. Julian Baines: We would expect to see significant consumable growth on those? Gavin Jones: Absolutely. I mean we've talked about this before where it takes -- it can take anywhere from 3 to 4 months to start seeing the consumable pull through. So we're already in that phase, but we'll see that continue into H2 2025 and beyond because a lot of these tenders aren't just a single year, they're 2-, 3-year tenders. Julian Baines: From George, given consolidation in the diagnostics space, do you see EKF as a consolidator or a potential target over the next few years? That's an open question in E-mail? Gavin Jones: I think it depends on who you ask. I mean, we'd never say no to the right type of opportunity if the right opportunity came about. But at the same time, yes, I mean, we certainly could be a target for the right type of partner, and we certainly take anything serious into consideration. Julian Baines: And then Tim has said again, because I think you were a politician the last time [indiscernible] expected time line, say, 3 to 5 years from making sufficient target return on this investment. If I say, I think it's part of that 5-year plan, we expected to get by the end of the 5-year plan full ROI on that facility by 2029. Gavin Jones: Yes, absolutely. Julian Baines: Hopefully sooner. Depend on the pipeline, but it's developing well. Gavin Jones: Yes. And I think, yes, you're right, it was a politician answer. But the reason being is I think we needed to rebase that business and relook at it. And promises were made previously that we haven't followed through on, and we accept and understand that. I don't want to make those mistakes myself. So I've got to be careful to make sure they don't overpromise. But yes, certainly, within that 5-year plan, Life Sciences is a significant part of that and we should be hitting the levels that we need to in that space within that time. Any more questions that... Operator: Julian, Steve and Gavin, thank you for answering all those questions you have from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Gavin, could I please just ask you for a few closing comments? Julian Baines: Should we answer the last question. Gavin Jones: We did just have one last question from Tim. Tim you've been very busy this morning. So lastly, for the share buyback, would you consider embedding this policy as part of your ongoing positive free cash flow generation and having, say, a monthly rolling program? I can say quite simply, yes. That would be something... Julian Baines: It's not even a monthly rolling program, Tim, it is continuous. Always on and problem when we're inside, obviously, we couldn't do it for the last 4 weeks. But then we reinstated it again this morning, and we certainly intend to carry on indefinitely just having the buyback in place. And we slightly increased the price of the buyback as well. So we think that there's a very positive future for EKF. We think that Gavin's 5-year strategy plan is implemented and this team is very, very strong. Also to answer the -- would we be a target for some people. I think that there's a real strength in EKF at the moment of being on our own because actually, we are finding that very valuable that people are coming to us more and more because we have better customer service, better delivery times, better response. And so at the moment, EKF is in a very good place to deliver this 5-year plan, and that's what we're totally focused on. So we will continue to buy back in that. Gavin Jones: Yes. So just to wrap up, I'd like to say thank you for everyone joining us today for this simple yet significant update on the strategy on where we are as a company and how we're choosing to deliver sustainable growth within the market, and we will continue on that route and continue to update you as we move forward. Operator: Julian, Steve and Gavin, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of EKF Diagnostic Holdings plc, we'd like to thank you for attending today's presentation, and good morning to you.