Half Yearly Report

RNS Number : 9896X
Omega Diagnostics Group PLC
26 November 2014
 



 

 

26 November 2014

OMEGA DIAGNOSTICS GROUP PLC

("Omega" or the "Company" or the "Group")

 

INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014

 

Omega, the AIM listed medical diagnostics company, announces its unaudited interim results for the six months ended 30 September 2014.

 

Omega is one of the UK's leading companies in the fast growing area of food intolerance testing and also operates in markets supplying tests for allergies and autoimmune diseases and specific infectious diseases through a strong distribution network in over 100 countries.

 
Financial Highlights:

·      Revenue 2% ahead of last year at £5.69m (2013: £5.59m)

·      Gross profit increased by 3% on the same period last year at £3.66m (2013: £3.56m)

·      Gross margin slightly ahead of the same period last year at 64.3% (2013: 63.6%)

·      Adjusted profit before tax ("PBT") up 32% to £0.56m (2013: £0.43m)

·      Adjusted earnings per share ("EPS") of 0.5p (2013: 0.6p)

·      Cash at the period end of £2.1m (2013: £3.3m)

 

 

Other Highlights:

·      200-patient evaluation of Visitect® CD4 in India demonstrated acceptable performance against flow cytometry

·      Engagement with experts in lateral flow diagnostics to support the transfer process and scale up

·      Positive progress with 27 allergens from the allergy development programme now optimised

·      Recruitment of in-house scientific team to accelerate further allergen optimisation

 

Regarding outlook, David Evans, Chairman, said:

 

"We are optimistic about the continuing performance of our core business in the second half of this year, particularly in Food Intolerance, where we have built significant traction with new customers over recent years. We share your frustration with the inevitable delay that is occurring with Visitect® CD4 since the last trading update.  However, we believe we have taken the right course of action with the recent programme changes to prevent similar problems occurring with the product after its market launch.  Despite the setback, we continue to receive feedback from the HIV/Global Health arena that convinces us that the market opportunity and outlook for CD4 remains undiminished."

 

Contacts: 

 

Omega Diagnostics Group PLC                         

Tel: 01259 763 030 or www.omegadiagnostics.com

Andrew Shepherd, Chief Executive                             


Kieron Harbinson, Group Finance Director   

Jag Grewal, Group Sales and Marketing Director                                                  




finnCap Ltd                                              

Tel: 020 7220 0500

Geoff Nash/Christopher Raggett (Corporate Finance)

Mia Gardner (Corporate Broking)




Walbrook PR Limited

Tel: 020 7933 8780 or omega@walbrookpr.com

Paul McManus

Mob: 07980 541 893

Lianne Cawthorne

Mob: 07584 391 303

 

Chairman's Statement

 

Financial performance

 

The trading performance of the core business has proved resilient overall in the face of certain headwinds.  Revenue was up by 2% on the prior period at £5.69m (2013: £5.59m) despite the strengthening effect of sterling reducing reported revenue by £0.25m in the current period.  The positive performance from our Food Intolerance segment has more than offset a reduction in revenue seen in our allergy/autoimmune and infectious disease segments.  We now have a number of key Food Intolerance customers in the EU, North America and BRIC countries supporting a sustainable increase in product volumes, leading to an overall increase in profitability.  The allergy/autoimmune segment in Germany continues to operate with reimbursement pressures leading to a reduction in sales in some regions.  The infectious disease segment was impacted by some raw material supply delays which led to back orders in the period which are being fulfilled in the second half.

 

Gross profit increased by 3% to £3.66m (2013: £3.56m) due to an improvement in segmental mix and continued efforts in cost management have helped to achieve a growth of 32% in adjusted PBT to £0.56m (2013: £0.43m).

 

The Group has recorded a tax charge in the period of £0.03m (2013: credit of £0.08m). Adjusted earnings per share has reduced slightly to 0.5p (2013: 0.6p) reflecting a higher average number of shares in circulation in the current period compared to the prior period.

 

 

Strategy

 

Point-of-care (POC) testing

Our POC strategy is dominated by the activities and prospects for Visitect® CD4.  When we announced in February 2014 that we had completed technology transfer, this was on the back of the accepted three-batch validation procedure on a statistically significant number of samples.  All three batches were made using our selected high volume manufacturing protocol with our contracted manufacturer.  Product from the third of these three batches was evaluated in India and Kenya, with acceptable results achieved in India and sub-optimal performance observed in Kenya as previously reported.

 

Subsequent batches of manufactured product have yielded variable results when tested on patient blood samples.  The combination of an outsourced manufacturing process, an in-house assembly process and the need to test finished devices on patient samples at a UK Reference Laboratory, has led to lead times which are fairly prohibitive when needing to test product refinements on an iterative basis.

 

We have therefore made a number of recent changes in programme management to achieve the ultimate aim of commercialisation within the shortest timeframe.  These changes include access to additional expert resource in rapid test development and manufacturing scale-up; bringing control in-house of the outsourced manufacturing process on a temporary basis and taking a step back into the technology transfer process to increase the understanding of how the test is manufactured on the semi-manual bench top basis first used by the Burnet Institute to develop the product. We shall continue to focus all available resource and effort on resolving the issues with CD4 before we look at the other rapid test opportunities we referred to in the last annual report.

 

Automation

We continue to make good progress with our allergy development programme.  We reported on 24 October 2014 that 16 allergens have completed their claim support work and that an additional 11 allergens have completed optimisation, bringing to 27 the number of allergens which can be used on the iSYS instrument with equivalent performance to the market leading product.  To date, a further six allergens have completed claim support, increasing the total of this group to 22, leaving a further five allergens optimised and in the queue to undergo claim support.  The remaining 13 allergens needed to complete the launch panel have been identified and are in varying stages of optimisation and as reported previously, we have recruited an in-house team of scientists to increase momentum in the optimisation work.  The timeline to optimise the remaining 13 allergens is dependent upon sourcing (externally and/or internally) allergen extract preparations of sufficient quality to achieve the performance design goals when incorporated into the assay system.

 

 

 

 

 

 

 

Outlook

 

As reported in the most recent trading update on 24 October 2014, our first half trading performance is in line with management expectation and ahead of last year.  We are optimistic about the continuing performance of our core business in the second half of this year, particularly in Food Intolerance, where we have built significant traction with new customers over recent years.

 

We share your frustration with the inevitable delay that is occurring with Visitect® CD4 since the last trading update.  However, we believe we have taken the right course of action with the recent programme changes to prevent similar problems occurring with the product after its market launch.  Despite the setback, we continue to receive feedback from the HIV/Global Health arena that convinces us that the market opportunity and outlook for CD4 remains undiminished.

 

 

 

 

 

David Evans

Non-Executive Chairman

26 November 2014

 

 

 

 

 

 

 

INDEPENDENT REVIEW REPORT TO OMEGA DIAGNOSTICS GROUP PLC

 

Introduction

 

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2014 which comprises the Consolidated  Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and the related explanatory notes 1 to 6. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

 

Directors' Responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the AIM Rules issued by the London Stock Exchange which require that it is presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

 

As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the AIM Rules issued by the London Stock Exchange.

 

Our Responsibility

 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of Review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2014 is not prepared, in all material respects, in accordance with the accounting policies outlined in Note 1, which comply with IFRS's as adopted by the European Union and in accordance with the AIM Rules issued by the London Stock Exchange.

 

 

Ernst & Young LLP

Glasgow

26 November 2014



 

Consolidated Statement of Comprehensive Income





for the six months ended 30 September 2014







6 months


6 months



to 30 Sept


to 30 Sept


Notes

2014


2013



£


£

Continuing operations





Revenue

3

5,686,995


5,590,262

Cost of sales


(2,031,239)


(2,032,093)






Gross profit


3,655,756


3,558,169

Administration costs


(2,535,715)


(2,370,407)

Selling and marketing costs


(973,715)


(1,028,319)

Other operating income


49,765


-






Operating profit


196,091


159,443






Finance costs

4

(14,390)


(11,814)

Finance revenue - interest receivable


26,717


16,851






Profit before taxation


208,418


164,480






Tax (charge)/credit

5

(29,034)


82,940






Profit for the period


179,384


247,420






Other comprehensive income for the period to be reclassified





to profit and loss in subsequent periods





Exchange differences on translation of foreign operations


(273,626)


(61,690)

Tax credit

5

28,420


5,552

Other comprehensive income for the period to be reclassified

to profit and loss in subsequent periods


(245,206)


(56,138)






Total comprehensive income for the period


(65,822)


191,282






Earnings Per Share (EPS)





Basic and diluted EPS on profit for the period

6

0.2p


0.3p











Adjusted Profit before Taxation


6 months


6 months

for the six months ended 30 September 2014


to 30 Sept


to 30 Sept



2014


2013



£


£

Profit before taxation


208,418


164,480

IFRS-related discount charges


4,956


6,970

Amortisation of intangible assets


197,423


210,655

Share-based payment charges


151,842


45,158






Adjusted profit before taxation


562,639


427,263






Earnings Per Share (EPS)





Basic and diluted Adjusted EPS on profit for the period

6

0.5p


0.6p





 

 

Adjusted PBT stated before share-based payments, IFRS-related discount unwinds and amortisation of intangible assets.

 

Consolidated Balance Sheet







as at 30 September 2014






















At 30 Sept

At 31 March

At 30 Sept


2014

2014

2013


£

£

£

Assets




Non-current assets




  Intangibles

11,629,551

11,259,215

10,752,018

  Property, plant and equipment

2,440,875

2,283,911

2,244,045

  Deferred taxation

1,260,698

1,138,404

810,721

  Retirement benefit surplus

84,370

84,370

31,886





Total non-current assets

15,415,494

14,765,900

13,838,670





Current assets




  Inventories

1,910,876

1,692,941

1,675,850

  Trade and other receivables

2,492,611

2,415,917

2,428,939

  Cash and cash equivalents

2,135,533

3,116,013

3,326,678





Total current assets

6,539,020

7,224,871

7,431,467





Total assets


21,954,514


21,990,771


21,270,137





Equity and liabilities




Issued capital

16,727,515

16,727,515

16,727,515

Retained earnings

1,817,073

1,731,053

1,221,811





Total equity

18,544,588

18,458,568

17,949,326





Liabilities




Non-current liabilities




  Long term borrowings

367,146

319,044

345,313

  Deferred taxation

1,165,833

1,042,925

777,977





Total non-current liabilities

1,532,979

1,361,969

1,123,290





Current liabilities




  Short term borrowings

239,623

427,824

426,489

  Trade and other payables

1,331,037

1,386,358

1,271,032

  Deferred income

306,287

356,052

-

  Other financial liabilities

-

-

500,000





Total current liabilities

1,876,947

2,170,234

2,197,521





Total liabilities

3,409,926

3,532,203

3,320,811





Total equity and liabilities


21,954,514


21,990,771


21,270,137














 

 





















Consolidated Statement of Changes in Equity for the six months ended 30 September 2014



 









 

 


Share


Share


Retained




capital


premium


earnings


Total


£


£


£


£









Balance at 1 April 2013

4,145,580


8,831,527


985,371


13,962,478









Issue of share capital for cash consideration

941,176


3,058,824


-


4,000,000









Expenses in connection with share issue

-


(249,592)


-


(249,592)









Profit for the period to 30 September 2013

-


-


247,420


247,420









Other comprehensive income - net exchange adjustments

-


-


(61,690)


(61,690)









Other comprehensive income - tax credit

-


-


5,552


5,552

Total comprehensive income

-


-


191,282


191,282









Share-based payments

-


-


        45,158


45,158









Balance at 30 September 2013

5,086,756


11,640,759


1,221,811


17,949,326









Profit for the period to 31 March 2014

-


-


445,431


445,431









Other comprehensive income - net exchange adjustments

-


-


(64,824)


(64,824)









Other comprehensive income - actuarial gain on defined benefit pensions

-


-


51,941


51,941









Other comprehensive income - tax credit

-


-


(4,135)


(4,135)

Total comprehensive income

-


-


428,413


428,413









Share-based payments

-


-


        80,829


80,829









Balance at 1 April 2014

5,086,756


11,640,759


1,731,053


18,458,568









Profit for the period to 30 September 2014

-


-


      179,384


179,384









Other comprehensive income - net exchange adjustments

-


-


(273,626)


(273,626)









Other comprehensive income - tax credit

-


-


28,420


28,420

Total comprehensive income

-


-


(65,822)


(65,822)









Share-based payments

-


-


      151,842


151,842









Balance at 30 September 2014

5,086,756


11,640,759


1,817,073


18,544,588

 

 

Consolidated Cash Flow Statement




for the six months ended 30 September 2014













6 months


6 months


to 30 Sept


to 30 Sept


2014


2013


£


£





Cash flows generated from operations




Profit for the period

179,384


247,420

Adjustments for:




Taxation

29,034


(82,940)

Finance costs

14,390


11,814

Finance income

(26,717)


(16,851)





Operating profit

196,091


159,443

(Increase)/decrease in trade and other receivables

(76,694)


127,823

(Increase)/decrease in inventories

(217,935)


158,037

Decrease in trade and other payables

(55,320)


(413,117)

Depreciation

161,711


135,918

Amortisation of intangible assets

197,423


210,655

Grant amortisation

(49,765)


-

Taxation received

-


7,106

Gain on sale of property, plant and equipment

(1,777)


(11,225)

Share-based payments

151,842


45,158

Net cash flow from operating activities

305,576


419,798





Investing activities




Finance income

26,717


16,851

Purchase of property, plant and equipment

(436,818)


(298,187)

Purchase of intangible assets

(649,640)


(638,318)

Sale proceeds of property, plant and equipment

8,365


32,500





Net cash used in investing activities

(1,051,376)


(887,154)





Financing activities




Finance costs

(8,499)


(3,443)

Proceeds from issue of share capital

-


4,000,000

Expenses of share issue

-


(249,592)

Loan repayments

(360,000)


(360,000)

New finance leases

247,500


282,366

Finance lease repayments

(33,493)


(11,056)





Net cash from financing activities

(154,492)


3,658,275





Net (decrease)/increase in cash and cash equivalents

(900,292)


3,190,919

Effects of exchange rate movements

(80,188)


(24,934)

Cash and cash equivalents at beginning of period

3,116,013


160,693





Cash and cash equivalents at end of period

2,135,533


3,326,678




 

 

 

 

Notes to the Interim Report

for the six months ended 30 September 2014

 

1. BASIS OF PREPARATION

For the purpose of preparing the March 2014 Annual financial statements the Directors used IFRS as adopted by the EU and in accordance with the AIM Rules issued by the London Stock Exchange. In preparing these interim financial statements, the same accounting policies have been used as set out in the Group's Annual Report for the year ended 31 March 2014. The Group has not applied IAS 34 Interim Financial Reporting, which is not mandatory for AIM companies, in the preparation of these interim financial statements.

 

The interim financial statements are unaudited but have been formally reviewed by the auditors and their report is unqualified. The information shown in the consolidated balance sheet as at 31 March 2014 does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006 and has been extracted from the Group's 2014 Annual Report which has been filed with the Registrar of Companies. The report of the auditors on the financial statements contained within the Group's 2014 Annual Report was unqualified and did not contain a statement under sections 498 (2) and 498 (3) of Chapter 3, Part 16 of the Companies Act 2006.  These interim financial statements were approved by the Board of Directors on 26 November 2014.

 

2. SEGMENT INFORMATION

For management purposes the Group is organised into three operating divisions: Allergy and Autoimmune, Food Intolerance and Infectious Disease and Other.

 

The Allergy and Autoimmune division specialises in the research, development, production and marketing of in-vitro allergy and autoimmune tests used by doctors to diagnose patients with allergies and autoimmune diseases.

 

The Food Intolerance division specialises in the research, development and production of kits to aid the detection of immune reactions to food. It also provides clinical analysis to the general public, clinics and health professionals as well as supplying the consumer Food Detective test.

 

The Infectious Diseases division specialises in the research, development and production and marketing of kits to aid the diagnosis of infectious diseases.

 

Corporate consists of centralised corporate costs which are not allocated across the three business divisions.

 

Inter segment transfers or transactions are entered into under the normal commercial conditions that would be available to unrelated third parties.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BUSINESS SEGMENT INFORMATION

 

 


Allergy and


Food


Infectious/






Autoimmune


Intolerance


Other


Corporate


Group

September 2014

£


£


£


£


£











Statutory presentation










Revenue

1,865,892


3,464,378


1,143,421


-


6,473,691

Inter-segment revenue

(39,053)


(680,867)


(66,776)


-


(786,696)

Total revenue

1,826,839


2,783,511


1,076,645


-


5,686,995

Operating costs

(1,932,699)


(1,877,495)


(1,232,347)


(448,363)


(5,490,904)

Operating profit/(loss)

(105,860)


906,016


(155,702)


(448,363)


196,091

Net finance costs

7


99


(8,499)


20,720


12,327

Profit/(loss) before taxation

(105,853)


906,115


(164,201)


(427,643)


208,418











Adjusted profit before taxation










Profit/(loss) before taxation

(105,853)


906,115


(164,201)


(427,643)


208,418

IFRS-related discount charges

-


-


-


4,956


4,956

Amortisation of intangible assets

133,770


49,444


14,209


-


197,423

Share-based payment charges

-


-


-


151,842


151,842

Adjusted profit/(loss) before taxation

27,917


955,559


(149,992)


(270,845)


562,639






















Allergy and


Food


Infectious/






Autoimmune


Intolerance


Other


Corporate


Group

September 2013

£


£


£


£


£











Statutory presentation










Revenue

2,127,232


2,717,484


1,374,835


-


6,219,551

Inter-segment revenue

(61,041)


(470,096)


(98,152)


-


(629,289)

Total revenue

2,066,191


2,247,388


1,276,683


-


5,590,262

Operating costs

(2,016,645)


(1,724,289)


(1,264,885)


(425,000)


(5,430,819)

Operating profit/(loss)

49,546


523,099


11,798


(425,000)


159,443

Net finance costs

18


234


(3,430)


8,215


5,037

Profit/(loss) before taxation

49,564


523,333


8,368


(416,785)


164,480











Adjusted profit before taxation










Profit/(loss) before taxation

49,564


523,333


8,368


(416,785)


164,480

IFRS-related discount charges

-


-


-


6,970


6,970

Amortisation of intangible assets

148,071


49,443


13,141


-


210,655

Share-based payment charges

-


-


-


45,158


45,158

Adjusted profit/(loss) before taxation

197,635


572,776


21,509


(364,657)


427,263



 










 

3. REVENUES

 

 





6 months


6 months







to 30 Sept


to 30 Sept







2014


2013







£


£










UK






463,023


431,578

Germany






1,564,409


1,801,014

Rest of Europe





1,658,335


1,374,347

North America





248,814


212,381

South/Central America




388,278


354,234

Asia and Far East





857,887


700,936

Africa and Middle East




506,249


715,772
















5,686,995


5,590,262

 

 

4. FINANCE COSTS

 







6 months


6 months







to 30 Sept


to 30 Sept







2014


2013







£


£










Interest payable on loans




2,798


3,506

Unwinding of discounts




4,956


6,970

Finance charges payable under finance leases


6,636


1,338
















14,390


11,814

 

 

5. TAX (CHARGE) / CREDIT

 







6 months


6 months

 







to 30 Sept


to 30 Sept

 







2014


2013

 







£


£

 

Tax (charge) / credit in the income statement







Current tax - current year




-


--

 

Current tax - prior year adjustment



-


-

 

Deferred tax - current year




(20,361)


119,845

 

Deferred tax - prior year adjustment



(8,673)


(36,905)

 










 







(29,034)


82,940

 

 

Tax relating to items charged or credited to other comprehensive income 







Deferred tax on net exchange adjustments




28,420


--5,552

 










 







28,420


5,552

 

 

 

 

 

 

 

 

Reconciliation of total tax charge / (credit)






Factors affecting the tax charge / (credit) for the period:





Profit before tax




208,418


164,480








Effective rate of taxation




21%


23%








Profit before tax multiplied by the effective rate of tax

43,768


37,830








Effects of:







Expenses not deductible for tax purposes and permanent differences



32,994


12,966

Research and development tax credits



(144,771)


(167,815)

Movement on deferred tax arising from share based payments


106,515


-

Tax under provided in prior years


8,673


36,905

Adjustment due to different overseas tax rate


(10,868)


(2,826)

Impact of UK rate change on deferred tax


(7,277)


-

Tax charge / (credit) for the period



29,034


(82,940)

 

 

 

The main UK corporation tax rate will be reduced from the current rate of 21% which has applied from 1 April 2014, to 20% via a 1% reduction at 1 April 2015. The reduction in the corporation tax rate to 20% was included within the 2013 Finance Act that was enacted on 17 July 2013. As both rates were substantively enacted at the balance sheet date deferred tax has been calculated at the rate of 20%, as this is the rate at which deferred tax assets and liabilities are expected to reverse.

 

 

 

 

6. EARNINGS PER SHARE

 


6 months

to 30 Sept 2014

6 months

to 30 Sept

2013


£

£

Profit attributable to equity holders of the Group

179,384

247,420

 





2014

Number

2013

Number

 

Weighted average number of shares

 

108,745,669

 

92,352,226

Share options

1,555,777

190,172

Diluted weighted average number of shares

110,301,446

92,542,398

 

The number of shares in issue at the period end was 108,745,669. Basic earnings per share are calculated by dividing profit for the year attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the year.

 

Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Diluting events are excluded from the calculation when the average market price of ordinary shares is lower than the exercise price.

 

 

 

 

 

 

Adjusted Earnings per share on profit for the period

The Group presents adjusted earnings per share which is calculated by taking adjusted profit before taxation and adding the tax (charge)/credit in order to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.

 


6 months

to 30 Sept 2014

6 months

to 30 Sept

2013


£

£

 

Adjusted profit before taxation

 

562,639

 

427,263

Tax (charge) / credit

(29,034)

82,940

Adjusted profit attributable to equity holders of the Group

533,605

510,203

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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