EKF says its strong start to the financial year is entirely attributable to organic growth
Companies: EKF Diagnostics Holding
AIM-listed PoC (point-of-care) business EKF Diagnostics has told investors that current trading in the first quarter of the financial year is "comfortably" ahead of budget, and its performance has been entirely attributable to organic growth.
In an investor update published on Wednesday, EKF said trading had been strong and that it was optimistic for the full-year. The company also told its shareholders that the Board was continuing to evaluate plans on whether to split the company into two entities, namely its PoC and Lab divisions.
Today's news follows the company's original announcement back in March when it said both divisions were valuable assets, but that separating them would represent a "better route for shareholders" with the two entities likely to achieve a fair valuation independently of each other.
The update also contained further information regarding the structure of the potential split:
"Whilst tax advice and work on the possible deal structure is ongoing, it is the Board's latest understanding that the demerger can be carried out at subsidiary level and therefore, initially at least, remain within the existing EKF group. EKF Diagnostics plc will remain as the ultimate parent company of both legal entities and importantly also remain quoted on AIM. Further, whilst the initial demerger can be carried out intra-group, the Board's current expectation is that the Lab Diagnostics business will nevertheless be spun-out of the EKF Group at an appropriate point."
The Company is also evaluating the possibility of a share buyback offer to shareholders at 21.5p, but this is likely less important now considering it can remain the parent of both companies, avoiding the need to provide shareholders with an exit should they not wish to hold shares in a private corporation.
"Accordingly, the Board is now contemplating a more limited share buyback offer of up to 15% of the Company's current issued share capital...
There can of course be no guarantee that the above proposals, including any share buyback, will be capable of being completed in the manner currently anticipated. Further announcements will be made at the appropriate time."
Shares in EKF opened at 21.5p (+2.3%) early this morning before falling back marginally.