Investors had their first chance to see how product tester Exova (EXO) is performing following its April initial public offering (IPO) – and they do not like what they see. Exova shares crash more than 12% to 188p, beneath its 220p IPO price, after posting a pre-tax loss of £19.3 million for the half year to end-June.

The first year results are skewed by IPO-related costs and show loss per share (EPS) of 38.2p. Excluding £17.5 million of IPO-related costs and capital structure changes (proceeds of the IPO were used to pay back debt and will therefore reduce interest costs in the future), management says underlying EPS is 5.4p.

Exova 29-08

Chief executive officer (CEO) Ian El-Mokadem says the performance in its European and Middle Eastern markets is encouraging but there are headwinds in its Aerospace and Americas Transportation division.

'The medium term outlook for the business remains positive and we continue to see opportunities to expand global reach of our business through new acquisitions and outsourcing agreements,' he adds.

Exova's largest market is Europe, where revenue increased 3.8% and adjusted earnings before interest, tax and amortisation (EBITA), management's preferred measure of divisional performance, was up 5.1%. This was driven by new contract wins and renewals in its Health Sciences and Fire businesses. Its European Aerospace operations were hit by a slower than expected product roll-outs by clients, meaning some production-related testing has been deferred.

In the Americas, revenue was up 6.7% on a constant currency basis but down at reported rates because of a weakening of the dollar relative to sterling. Adjusted EBITA more than doubled to £1.5 million.

Issue Date: 29 Aug 2014