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Net cash levels of £14.3m at 20 March 2020

Current trading and cash generation continue to be robust

Significant opportunity for growth with COVID-19 manufacturing contract

EKF Diagnostics Holdings plc (AIM: EKF), the AIM quoted point-of-care business, provides shareholders with an update on current trading in light of the COVID-19 pandemic, including the strong cash position of the Group, and its continuing solid positive cash flow. The Company also provides shareholders with a detailed review of trading for the year ended 31 December 2019.

Due to the unprecedented practical challenges that corporate reporters and their auditors are facing during the ongoing Coronavirus crisis, the FCA has strongly requested that all listed companies observe a temporary moratorium on the publication of preliminary financial statements. As an AIM quoted company EKF is not formally covered by this request, however the Company will be observing this moratorium following advice from its auditors, PricewaterhouseCoopers LLP. Whilst the detailed trading review below provides a comprehensive review of the Company’s trading position, the statements are unaudited. Full audited Financial Statements for the year ended 31 December 2019 will be provided as soon as reasonably practicable.

COVID-19 update – key points

• Contract manufacturing opportunity with Longhorn Vaccines and Diagnostics, USA, for specimen collection tubes for COVID-19 testing – initial orders c. $1m and expected to grow significantly
• Robust plan in place to mitigate the effect of the disruption on the business
• Substantial net cash balances of £14.3m as at close of business on 20 March 2020 with continuing strong free cashflow
• Demand for diabetes and haemoglobin tests remains, with patients using these tests being in the higher risk category for COVID-19
• German state approval received to keep Barleben manufacturing facility open in event of a lockdown
• Current beneficial exchange rates as a US Dollar / Euro denominated business, with a natural currency hedge across operations in the UK, US and Europe

Financial Highlights for the year ended 31 December 2019 (unaudited data)

• Revenue up 6% to £44.9m (2018: £42.5m)
• Gross profit up 4% to £23.7m (2018: £22.7m)
• Adjusted EBITDA* up 12% to £12.0m (2018: £10.7m)         
• Profit before tax £5.5m (2018: £12.2m; £5.8m excluding exceptional gain from Renalytix AI plc spin-out)
• Basic Earnings per share of 0.81p (2018: 2.21p), underlying Basic Earnings per share* of 1.20p (2018: 1.01p)
• Cash generated from operations of £6.1m (2018: £9.9m)
• Cash at 31 December 2019 of £12.1m (2018: £10.3m), net cash of £11.4m (2018: £9.4m)
• Maiden dividend preserved and payable to shareholders on 1 December 2020

* Excluding exceptional items and share based payments

Operational Highlights for the year ended 31 December 2019

• McKesson OEM of DiaSpect Tm successfully launched with positive first six months of business
• Successful completion of early stage development batches of a bulk dietary ingredient for Ixcela, Inc.
• Mount Sinai agreement provides EKF with advanced access to innovative commercial opportunities

Christopher Mills, Non-Executive Chairman of EKF, commented:

“With good cash resources and a business which is growing strongly, EKF has moved into a phase where we are confident that we can provide an income for shareholders and the prospect of significant upside from our relationships with MSIP and others. Trading in 2020 to date has been satisfactory and in line with management expectations.

“Despite these difficult times, EKF is in a very strong position. We have a substantial net cash balance, continuing solid positive cash flow and the business remains robust. We see significant opportunities globally, particularly within the USA.  Being a medical device company focussing on tests monitoring diabetes and haemoglobin, both conditions putting patients in higher risk categories should they contract COVID-19, EKF is well positioned to assist the medical and scientific community.”

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