EKF Diagnostics plummets as profit warning caps dark November

Days after the arrival of US industry heavyweight Ron Zwanziger as chairman and the death of one director, EKF Diagnostics has also announced a significant profit warning after hoped-for contracts failed to materialise.

In September the company had claimed the "strongest tender pipeline to date" with a number of potential contracts to be decided in the second half of the year.

But full year revenues at the Cardiff-headquartered medical diagnostics company will now be roughly £32m, down from last year's £40.1m, with profits "materially" affected by several factors.

The molecular diagnostics division, about which disposal discussions continue, will be partially or completely written off, with provisions or write-offs also against debtors.

The closure costs of the STI site in Sanford, which the company announced on 12 November, will also impact on profits.

"The management team is making progress in realigning its cost base to with the goal of achieving positive cash generation in the early part of next year," EKF said, with Zwanziger's undertaking a review of the business that is expected to complete before the end of the year.

Following the death of non-executive director Kevin Wilson last week, ex-chairman David Evans has now been appointed chair of the audit committee, while in the near term the board composition will change to having two executives and five non-executives including some external additions.

Broker N+1Singer said the revenues were "a long way short" of previous expectations and "a loss for the year now looks inevitable".

"No comfort was given on the balance sheet, with net debt at the end of the first half was £5.2m and a number of exceptional charges are expected, including a provision against or write off of specific debtors."

Shares in EKF were down 49% to 7.43p by 0910 GMT on Thursday.