Interim Results

RNS Number : 7593S

Omega Diagnostics Group PLC

25 November 2011

 



25 November 2011

OMEGA DIAGNOSTICS GROUP PLC

("Omega" or the "Company")

INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011

Omega, the AIM listed medical diagnostics company, announces interim results for the six months ended 30 September 2011.

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 up 67% to £5.53m (2010: £3.30m) with growth in all overseas regions

·      Gross profit up 85% to £3.52m (2010: £1.90m)

·      Gross profit percentage increased to 64% (2010: 57%)

·     Adjusted profit before tax ("PBT") up 6% to £427k (2010: £403k)

·      Adjusted EPS of 0.4p (2010: 1.7p)

·      Cash at the period end increased to £1.88m (2010: £0.91m)

Other highlights:

·      Good progress made with the IDS-iSYS development programme. We now have a functional IgE assay that is calibrated against the international standard, a necessary first step towards developing specific IgE assays

·      Official launch at the end of September of the full 600+ range of Allergozyme products through the Omega distribution network

·      Incorporation within the period of a wholly owned subsidiary in India; Omega Dx (Asia) Pvt Ltd

·      Ten year exclusive distribution agreement signed with Toyota Tsusho America Inc. (TAI), covering the future sale and distribution of its Food Detective™ product into the US market

·      Appointment of Mr Jag Grewal as Group Sales and Marketing Director

Regarding outlook, David Evans, Chairman, said:

"Overall our business continues to grow and current underlying trading is resilient with sales continuing the trend of being weighted towards the second half of the financial year.  As noted in the recent trading update the visibility of Allergozyme® export sales remains uncertain and customer evaluations in certain overseas markets are taking longer than first anticipated, but the Directors remain confident in this range of products.  Further good progress has been made with the allergy development programmes and I look forward to updating you further over the coming months."

Contacts: 

Omega Diagnostics Group plc	Tel: [phone]
Andrew Shepherd, Chief Executive
Kieron Harbinson, Group Finance Director
Seymour Pierce Group	Tel: [phone]
Freddy Crossley / Mark Percy (Corporate Finance)	www.seymourpierce.com
David Banks / Katie Ratner (Corporate Broking)
Walbrook PR Limited
Paul McManus	Tel: [phone] Mob: [phone]
	[e-mail]
Fiona Henson	Tel: [phone] Mob: [phone]
	[e-mail]

Chairman's Statement

Omega has made good progress in all its business segments with Allergy and Autoimmune becoming the largest segment by sales value following the acquisition last year of the German IVD business from Allergopharma.  Food Intolerance sales have grown in most regions and Infectious Disease sales have performed in line with expectations.

Financial

Revenue for the period increased by 67% to £5,528k (2010: £3,304k) with growth having taken place in all continental regions comprising the UK and Europe (+128%), Africa and Middle East (+10%), North America and South/Central America (+14%) and Asia and the Far East (+2%).  

Gross margin increased to 64% (2010: 57%) with the increase reflecting the positive segmental mix from Allergy testing which generates margins in excess of 70%.

Administration costs increased by £952k to £2,397k (2010: £1,445k) with 96% of the increase being attributable to costs within Omega Diagnostics GmbH ("Omega GmbH"), there being no costs attributable to Omega GmbH in the comparative period.  Within administration costs are development costs written off as incurred.  Excluding development costs within Omega GmbH itself (£106k), development costs have increased by £120k to £234k (2010: £114k) reflecting the increase in activity with the allergy development programme.  Remaining additional costs are accounted for by an increase in salaries, corporate advisory costs and depreciation charges.

Selling and marketing costs increased by £556k to £928k (2010: £372k) largely reflecting costs of £505k within Omega GmbH and any additional costs attributable to our strengthening the sales and marketing team part way through the period with the appointment of Jag Grewal as Group Sales and Marketing Director.

The Group achieved an adjusted PBT of £427k (2010: £403k) for the period representing an increase of 6% over the comparative half-year. This resulted in adjusted earnings per share of 0.4p (2010: 1.7p) reflecting the increase in the number of shares in issue following the fundraising in December 2010.  A reconciliation of profit before tax to adjusted profit before tax is shown underneath the income statement and earnings per share calculations are shown in note 5 to the interim results.

Allergy and Autoimmune

Divisional turnover was £2,279k (2010: £268k) given the full six-month contribution from Omega GmbH in the period.  Sales for Omega GmbH itself were £2,008k representing an increase of 5% over the previous period when the acquired IVD division was under the ownership of its previous parent company.  Following a relaunch of Allergodip, a point-of-care assay which had been discontinued before the acquisition last year, sales recommenced in July and the initial orders have been encouraging.

Food Intolerance

The Food Intolerance division continued to show growth with an increase in sales of 11% to £1,838k (2010: £1,653k).  A further eight Genarrayt® systems were placed in the period taking the installed base to 103 in total.  Reagent sales grew to £661k (2010: £632k). Sales in Spain were £227k (2010: £372k) but this reduction was more than offset by growth in newer sales to other countries to £434k (2010: £260k). 

Sales of Food Detective® (including bulk sales to China) grew to 34,370 kits in the period (2010: 19,225) generating revenues of £513k (2010: £369k).  Good growth has been seen in existing markets in Ireland Poland, UAE and China and a launch of the product in Brazil.

Infectious Disease/other

Divisional turnover grew by 2% to £1,411k (2010: £1,383k) helped by sales in Russia where business was regained as referred to at the year-end.  Sales of bacterial products manufactured by our Co-Tek business remained constant in the period at £180k as for the comparative half-year.

Research and Development

IDS-iSYS

As announced on 10 October 2011, we have made good progress with the IDS-iSYS development programme, demonstrating a functional total IgE assay that is calibrated against the international standard and feasibility for biotinylated liquid allergens to be used on the IDS-iSYS system for a representative sample of eight allergens (covering mites, animals, food, trees, grasses and weeds).  Since then, we have completed experiments to compare these eight allergens on the IDS-iSYS system with a leading commercial product and six out of the eight allergens are highly correlated and we are now moving into an assay optimisation phase.

Multiplex platforms

We have also demonstrated that it is feasible to coat panels of allergen extracts and to detect allergen-specific IgE in multiplex formats using Genarrayt® and other platforms which will be complementary to our IDS-iSYS platform.  The decision over the most suitable multiplex platform will ultimately be driven by market needs.

Outlook

Overall our business continues to grow and current underlying trading is resilient with sales continuing the trend of being weighted towards the second half of the financial year.  As noted in the recent trading update the visibility of Allergozyme® export sales remains uncertain and customer evaluations in certain overseas markets are taking longer than first anticipated, but the Directors remain confident in this range of products.  Further good progress has been made with the allergy development programmes and I look forward to updating you further over the coming months.

David Evans

Non-Executive Chairman

25 November 2011

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 2011 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 5. 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 2011 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

25 November 2011

Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2011
		6 months		6 months
		to 30 Sept		to 30 Sept
	Notes	2011		2010
		£		£
Continuing operations
Revenue		5,527,796		3,304,374
Cost of sales		(2,012,377)		(1,406,019)
Gross profit		3,515,419		1,898,355
Other income		-		2,998
Administration costs		(2,397,021)		(1,445,303)
Selling and marketing costs		(927,648)		(372,110)
Operating profit		190,750		83,940
Finance costs	3	(28,244)		(13,540)
Finance revenue - interest receivable		5,454		219
Profit before taxation		167,960		70,619
Tax charge	4	(61,989)		(53,965)
Profit for the period		105,971		16,654
Other comprehensive income
Exchange differences on translation of foreign operations		(60,944)		-
Other comprehensive income for the period		(60,944)		-
Total comprehensive income for the period		45,027		16,654
Earnings Per Share (EPS)
Basic and diluted EPS on profit for the period	5	0.1p		0.1p
Adjusted Profit before Taxation		6 months		6 months
for the six months ended 30 September 2011		to 30 Sept		to 30 Sept
		2011		2010
		£		£
Profit before taxation		167,960		70,619
IFRS-related discount charges (included within Finance costs)		16,332		9,128
Fair value adjustments to financial derivatives (included
within Finance costs)		(1,789)		(1,438)
Amortisation of intangible assets (included within Administration costs)		208,146		59,375
Share-based payment charges (included within Administration costs)		8,681		3,047
Acquisition related costs (included within Administration costs)		27,848		262,000
Adjusted profit before taxation		427,178		402,731
Earnings Per Share (EPS)
Adjusted EPS on profit for the period	5	0.4p		1.7p

Consolidated Balance Sheet
as at 30 September 2011
		At 30 Sept		At 31 March		At 30 Sept
		2011		2011		2010
		£		£		£
Assets
Non-current assets
Intangibles		9,379,244		9,605,259		5,100,399
Property, plant and equipment		1,972,716		1,954,485		673,896
Deferred taxation		54,194		84,913		39,521
Retirement benefit surplus		41,984		41,984		-
Derivative financial instruments		-		-		9
		11,448,138		11,686,641		5,813,825
Current assets
Inventories		1,455,480		1,273,971		843,367
Trade and other receivables		2,254,816		2,369,701		1,682,414
Income tax receivable		4,055		16,683		4,055
Cash and cash equivalents		1,876,310		2,054,877		912,632
		5,590,661		5,715,232		3,442,468
Total assets		17,038,799		17,401,873		9,256,293
Equity and liabilities
Issued capital		12,977,107		12,977,107		5,930,962
Retained earnings		42,957		(10,751)		(261,373)
Total equity		13,020,064		12,966,356		5,669,589
Liabilities
Non current liabilities
Long term borrowings		781,613		1,275,832		1,427,967
Other financial liabilities		124,887		549,663		-
Deferred taxation		526,750		520,607		553,985
Derivative financial instruments		1,646		3,435		6,092
Total non current liabilities		1,434,896		2,349,537		1,988,044
Current liabilities
Short term borrowings		677,328		332,499		336,255
Other financial liabilities		429,888		-		-
Trade and other payables		1,325,671		1,615,705		1,154,536
Income tax payable		150,952		137,776		107,869
Total current liabilities		2,583,839		2,085,980		1,598,660
Total liabilities		4,018,735		4,435,517		3,586,704
Total equity and liabilities		17,038,799		17,401,873		9,256,293

Consolidated Statement of Changes in Equity for the six months ended 30 September 2011
	Share		Share		Retained
	capital		premium		earnings		Total
	£		£		£		£
Balance at 1 April 2010	1,562,246		4,368,716		(281,074)		5,649,888
Profit for the period to 30 September 2010	-		-		16,654		16,654
Total comprehensive income	-		-		16,654		5,666,542
Share-based payments	-		-		3,047		3,047
Balance at 30 September 2010	1,562,246		4,368,716		(261,373)		5,669,589
Issue of share capital for cash consideration	2,583,334		5,166,668		-		7,750,002
Expenses in connection with share issue	-		(703,857)		-		(703,857)
Profit for the period to 31 March 2011	-		-		14,803		14,803
Other comprehensive income - net exchange adjustments	-		-		189,009		189,009
Other comprehensive income - acturial gain on defined benefit pensions	-		-		41,984		41,984
Total comprehensive income	-		-		245,796		12,961,530
Share-based payments	-		-		4,826		4,826
Balance at 31 March 2011	4,145,580		8,831,527		(10,751)		12,966,356
Profit for the period to 30 September 2011	-		-		105,971		105,971
Other comprehensive income - net exchange adjustments	-		-		(60,944)		(60,944)
Total comprehensive income					45,027		13,011,383
Share-based payments	-		-		8,681		8,681
Balance at 30 September 2011	4,145,580		8,831,527		42,957		13,020,064

Consolidated Cash Flow Statement
for the six months ended 30 September 2011
	6 months		6 months
	to 30 Sept		to 30 Sept
	2011		2010
	£		£
Cash flows generated from operations
Profit for the period	105,971		16,654
Adjustments for:
Taxation	61,989		53,965
Finance costs	28,244		13,540
Finance income	(5,454)		(219)
Operating profit	190,750		83,940
Decrease/(increase) in trade and other receivables	114,885		(151)
Increase in inventories	(181,510)		(29,023)
(Decrease)/increase in trade and other payables	(165,037)		291,657
Depreciation	132,008		54,830
Amortisation of intangible assets	208,146		59,375
Taxation received	-		13,692
Gain on sale of property, plant and equipment	(67)		(3,679)
Share-based payments	8,681		3,047
Cash flow from operating activities	307,856		473,688
Settlement of acquisition related liability	(125,000)		-
Net cash flow from operating activities	182,856		473,688
Investing activities
Finance income	5,454		219
Purchase of property, plant and equipment	(162,622)		(57,143)
Purchase of intangible assets	(10,088)		-
Sale proceeds of property, plant and equipment	83		5,000
Net cash used in investing activities	(167,173)		(51,924)
Financing activities
Finance costs	(8,018)		(15,149)
Loan repayments	(135,174)		(140,083)
Finance lease repayments	(31,118)		(32,700)
Net cash used in financing activities	(174,310)		(187,932)
Net (decrease)/increase in cash and cash equivalents	(158,627)		233,832
Effects of exchange rate movements	(19,940)		-
Cash and cash equivalents at beginning of period	2,054,877		678,800
Cash and cash equivalents at end of period	1,876,310		912,632

Notes to the Interim Report

for the six months ended 30 September 2011

1. BASIS OF PREPARATION

For the purpose of preparing the March 2011 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 2011. 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 2011 does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006 and has been extracted from the Group's 2011 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 2011 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 24 November 2011.

2. SEGMENT INFORMATION

Following the completion of the acquisition of the In-Vitro diagnostics business of Allergopharma Joachim Ganzer KG and the incorporation of Omega GmbH the Group carried out a review of internal reporting and the information presented to the Board. For management purposes the Group is now 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.

Comparatives have been adjusted to reflect the new reporting format. 

Business segment information
	Allergy and		Food		Infectious/
	Autoimmune		Intolerance		Other		Corporate		Group
September 2011	£		£		£		£		£
Statutory presentation
Revenue	2,281,278		2,110,247		1,430,872		-		5,822,397
Inter-segment revenue	(2,441)		(272,539)		(19,621)		-		(294,601)
Total revenue	2,278,837		1,837,708		1,411,251		-		5,527,796
Operating costs	(2,318,386)		(1,424,809)		(1,232,486)		(361,365)		(5,337,046)
Operating profit/(loss)	(39,549)		412,899		178,765		(361,365)		190,750
Other operating income	-		-		-		-		-
Net finance costs	(301)		(1,488)		3		(21,004)		(22,790)
Profit/(loss) before taxation	(39,850)		411,411		178,768		(382,369)		167,960
Adjusted profit before taxation
Profit/(loss) before taxation	(39,850)		411,411		178,768		(382,369)		167,960
IFRS-related discount charges	-		-		-		16,332		16,332
Fair value adjustments to financial derivatives	-		-		-		(1,789)		(1,789)
Amortisation of intangible assets	148,770		49,374		10,002		-		208,146
Acquisition costs	27,848		-		-		-		27,848
Share-based payment charges	-		-		-		8,681		8,681
Adjusted profit/(loss) before taxation	136,768		460,785		188,770		(359,145)		427,178
	Allergy and		Food		Infectious/
	Autoimmune		Intolerance		Other		Corporate		Group
September 2010	£		£		£		£		£
Statutory presentation
Revenue	267,971		1,875,815		1,391,316		-		3,535,102
Inter-segment revenue	-		(222,632)		(8,096)		-		(230,728)
Total revenue	267,971		1,653,183		1,383,220		-		3,304,374
Operating costs	(218,092)		(1,235,453)		(1,233,456)		(536,431)		(3,223,432)
Operating profit/(loss)	49,879		417,730		149,764		(536,431)		80,942
Other operating income	-		-		2,998		-		2,998
Net finance costs	-		(3,950)		-		(9,371)		(13,321)
Profit/(loss) before taxation	49,879		413,780		152,762		(545,802)		70,619
Adjusted profit before taxation
Profit/(loss) before taxation	49,879		413,780		152,762		(545,802)		70,619
IFRS-related discount charges	-		-		-		9,128		9,128
Fair value adjustments to financial derivatives	-		-		-		(1,438)		(1,438)
Amortisation of intangible assets	8,395		40,978		10,002		-		59,375
Acquisition costs	-		-		-		262,000		262,000
Share-based payment charges	-		-		-		3,047		3,047
Adjusted profit/(loss) before taxation	58,274		454,758		162,764		(273,065)		402,731

Revenues						6 months		6 months
						to 30 Sept		to 30 Sept
						2011		2010
						£		£
UK						511,422		528,461
Germany						2,027,439		77,420
Rest of Europe						1,190,853		1,028,178
North America						145,011		107,890
South/Central America						201,170		195,764
Asia and Far East						656,674		642,122
Africa and Middle East						795,227		724,539
						5,527,796		3,304,374

3. FINANCE COSTS

						6 months		6 months
						to 30 Sept		to 30 Sept
						2011		2010
						£		£
Interest payable on loans						8,660		13,737
Exchange difference on loans						2,911		(12,056)
Unwinding of discounts						16,332		9,128
Fair value adjustment to financial derivatives						(1,789)		(1,438)
Finance charges payable under finance leases						2,130		4,169
						28,244		13,540

4. TAX CHARGE

						6 months		6 months
						to 30 Sept		to 30 Sept
						2011		2010
						£		£
Income tax expense
Current tax - current year						15,327		26,676
Current tax - prior year adjustment						10,477		-
Deferred tax - current year						3,079		32,477
Deferred tax - prior year adjustment						33,106		(5,188)
						61,989		53,965

In March 2011, the UK Government announced its intention to accelerate the planned phased decrease in the rate of corporation tax with a reduction to 26% on 1 April 2011 and further reducing by 1% per annum until it reaches 23% on 1 April 2014. At 30 September 2011 the change in corporation tax rate from the planned 27% to 26% on 1 April 2011 had been substantively enacted and therefore the deferred tax assets and liabilities included within these results have been calculated based on the reduced current UK corporation tax rate of 26%. The forecast effect of the proposed reductions in the corporation tax rate by 2014 would be to reduce the net deferred tax liability by £54,526.

5. EARNINGS PER SHARE

	6 months to 30 Sept 2011	6 months to 30 Sept 2010
	£	£
Profit attributable to equity holders of the Group	105,971	16,654
	2011 Number	2010 Number
Basic and diluted average number of shares	85,216,257	20,632,907

The number of shares in issue at the period end was 85,216,257.  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 deducting the tax charge 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 2011	6 months to 30 Sept 2010
	£	£
Adjusted profit attributable to equity holders of the Group	365,189	348,766

 

END

 

 

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