Interim results

RNS Number : 1418J
Omega Diagnostics Group PLC
03 December 2018
 

 

 

OMEGA DIAGNOSTICS GROUP PLC

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

 

INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018

 

Omega (AIM: ODX), the medical diagnostics company focused on allergy, food intolerance and infectious disease, announces its unaudited interim results for the six months ended 30 September 2018.

 

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.

 

Following the closure of our German business unit and the Pune manufacturing facility in India together with the disposal of our infectious disease business, we now have a smaller business focused on long term profitability and prioritised to deliver on VISITECT® CD4, Allergy and Food Intolerance.  The results below reflect the reshaping of Omega.   

 

 
Financial Highlights:

·      Revenue reduced by 27% at £5.23m (2017: £7.11m)

·      Revenue from continuing operations reduced by 7% at £4.22m (2017: £4.54m)

·      Gross margin decreased by 2.9% on the same period last year at 60.2% (2017: 63.1%)

·      Statutory profit before tax of £0.8m (2017: £0.1m)

·      Adjusted loss before tax1 of £0.51m (2017: adjusted profit before tax of £0.22m)

·      Adjusted earnings per share1 of -0.5p (2017: 0.3p)

·      Bank overdraft at the period end of £0.45m (2017: cash of £2.42m)

·      Food Intolerance revenue increased by 12% to £3.84m as compared to the immediately prior 6 month period (H2 FY18: £3.42m)

·      Omega GmbH liabilities of £0.7m written back following appointment of a permanent administrator on 1 September 2018

 

1Adjusted for exceptional items, amortisation of intangible assets and share based payment charges 

 

Operational Highlights:

·      Strategic review leading to:

o  the closure of our German business unit and the Pune manufacturing facility in India

o  the disposal of our legacy Infectious disease business to Lab 21 Healthcare Ltd for up to £2.175 million with a gain on sale of £1.09m

·      60 allergens CE marked to run on the IDS automated instrument and first purchase order received from IDS

·      Visitect® CD4 350 cut off test commercialisation activities progressing with distributor agreements signed for Nigeria, Zimbabwe, Ghana, Zambia, Kenya, Columbia, Indonesia, Guatemala, Cameroon, Uruguay and Brazil with agreements under negotiation covering a further five countries

·      Visitect® CD4 Advanced Disease test (utilising a lower 200 cut-off) validation is ongoing and the project continues to progress on track

  

Regarding outlook, David Evans, Chairman, said:

 

"Our short-term outlook is dominated by our efforts to realise value for Shareholders whilst at the same time successfully accelerating our efforts to commercialise our CD4 offering. The challenges are not inconsequential but I remain confident that in those areas where we can control our own destiny that we will succeed in delivering our objectives. In those areas where we are not masters of our own destiny then, by definition, the outcome will always be less certain. I believe it is best for our statement to reflect that reality as it stands today. Rest assured we will continue to work towards achieving success for all our Stakeholders."

 

 

 

The information communicated in this announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

 

Contacts: 

 

Omega Diagnostics Group PLC                         

Tel: 01259 763 030

David Evans, Non-Executive Chairman

Colin King, Chief Executive                             

www.omegadiagnostics.com

Kieron Harbinson, Group Finance Director

 

 

Mob: 07740 084452

 

 

finnCap Ltd                                              

Tel: 020 7220 0500

Geoff Nash/James Thompson (Corporate Finance)

 

Camille Gochez (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

 

Total revenue for the six months ended 30 September 2018 reduced by 27% to £5.23m (2017: £7.11m) with much of the reduction being attributable to the divestment of our legacy infectious disease division and the decision to close our German manufacturing facility, limiting the revenue contribution from both these units to Q1 only within the reporting period.  Revenue from continuing operations reduced by 7% to £4.22m (2017: £4.54m) predominantly due to the reduction in Food Intolerance revenue as described below.

 

Food Intolerance revenue decreased by 7% to £3.84m over the same H1 period in the prior year (2017: £4.13m) but showed an increase of 12% when measured against the most immediate six-month period being H2 in the year to 31 March 2018 (£3.84m v £3.42m).  Sales of our FoodPrint® laboratory system were £2.30m (2017: £2.60m) with the difference attributable to the ordering pattern of our largest customer which stockpiled in the prior half-year period, which was not repeated in the current period. We maintained sales of Food Detective® at £0.95m, the same level as in the prior period, with an uplift in three key markets offsetting the loss of £0.23m of sales of the retail kit version in the prior period due to the previously reported regulatory issue which is still in the process of being resolved.

 

Sales in both the Allergy/Autoimmune and Infectious disease divisions declined by 53% and 54% respectively due to the divestment/closure decisions referred to above, with Allergy/Autoimmune sales of £0.79m (2017: £1.67m) and Infectious disease sales of £0.60m (2017: £1.31m).

 

Gross profit was £3.15m (2017: £4.49m) with the gross margin percentage reducing by 2.9 percentage points to 60.2% (2017: 63.1%). The reduction in margin is due to product mix and the fixed element of manufacturing labour cost against the lower level of sales in the period. The adjusted loss before tax was in line with management's expectation at £0.51m (statutory profit before tax of £0.82m less the exceptional credit items of £1.45m and adding back amortisation of intangibles and share-based payment charges totalling £0.12m) (2017: adjusted profit before tax of £0.22m). When analysed in each of the first two quarters, there was an adjusted loss before tax in Q1 of £0.87m, followed by an adjusted profit before tax in Q2 of £0.36m.  Q1 included non-recurring losses of £0.25m related to the German and Indian business units, underpinning the reason behind their closure.

 

A tax charge of £0.1m resulted from the sale of the legacy infectious disease business versus a tax credit of £0.1m in the prior period resulting in adjusted earnings per share of -0.5p (2017: 0.3p). Statutory basic earnings per share were 0.9p (2017: 0.2p) due to the exceptional items noted below.

 

Exceptional items

We have reported two exceptional credits in the period; the sale of our legacy infectious diseases business to Lab 21 Healthcare Ltd on 28 June 2018, for up to £2.175m, yielded a book profit in the period of £1.09m, being the balance of the sale proceeds in excess of the book value of assets transferred and; following the decision to close the German operation, the assets as at 31 March 2018 were fully provided against and this was reported in our final results announcement dated 6 August 2018.  Since formal insolvency proceedings commenced with Omega GmbH on 1 September 2018, the Group is no longer liable for any of the liabilities and this has resulted in a credit of £0.36m through the profit and loss account and a credit of £0.32m through other comprehensive income. There has been a corresponding reduction in the reported value of long term borrowings on the balance sheet to reflect this. Both of these items are excluded from the  adjusted loss before tax for the period.

 

 

Strategic review

 

Since the commencement of a strategic review in the last financial year, the Board has prioritised to deliver on VISITECT® CD4, Allergy and Food Intolerance, following the divestment of the infectious disease business and the closure of operations in Germany and India.

 

Visitect® CD4

The Company continues to make good progress with the commercialisation plans for the VISITECT® CD4 350 cut-off test.  Two additional distribution agreements have been signed since the trading update dated 10 October 2018.  Country coverage now extends to 11 countries; Nigeria, Zimbabwe, Ghana, Zambia, Kenya, Columbia, Indonesia, Guatemala, Cameroon, Uruguay and Brazil with negotiations ongoing in a further five countries.

 

The VISITECT® CD4 Advanced Disease test (utilising a lower 200 cut-off) continues to make good progress. Since the trading update a third validation batch has been manufactured and is currently being externally tested in India. Although still to be finalised, external results completed to date for all three validation batches are looking promising. We now have ethical approval in place to start our performance evaluation studies with initiation planned as soon as the ongoing site training has been successfully completed.

 

Discussions are ongoing with key HIV stakeholders to formulate plans for the procurement and implementation of VISITECT® CD4 Advanced Disease in low and middle-income countries at the earliest opportunity. Up to 40% of patients diagnosed with HIV are already at an advanced stage of the disease. Identification of advanced HIV disease is a critical issue that can improve the effectiveness of HIV control measures and it is widely recognised by opinion leaders that utilisation of the VISITECT® CD4 Advanced Disease test will play an important role in ensuring patients receive the most appropriate package of care.

 

Allergy

Since signing the distribution agreement with Imuunodiagnostics Systems ('IDS') in April of this year, we have continued to develop allergens for IDS' automated instrument.  Since our last allergy update announced on 27 September 2018, we have CE-Marked two additional allergens, extending the menu to 60 allergens in total. We have also now shipped our first order to IDS and anticipate one further order for the final quarter of this financial year.  We are working closely with IDS and there is regular contact between our respective commercial teams. We will continue to support IDS during the launch phase for this product range. 

 

Food Intolerance

We are encouraged with the sales result from our Food Intolerance division for two reasons; sales for the six months to 30 September 2018 recorded growth of 12% when measured against the immediately prior six-month period to 31 March 2018 and; sales of Food Detective® of £0.95m for the six months to 30 September 2018 were equivalent to H1 in the prior period, despite that prior period including sales of £0.23m for the retail kit version which did not repeat in the current period due to the ongoing regulatory issue. We continue to work with our notified body on how best to resolve the issue.

 

The commissioning of a new 35,000 sq. ft facility is proceeding to plan with an expected move during the middle of the next calendar year.  The upgraded facility underpins our view that the food intolerance division offers longer term growth opportunity, particularly in the US and China, and the Board continues to explore how best to realise value from this division given its stage in its current life-cycle.

 

Outlook

 

Our short-term outlook is dominated by our efforts to realise value for Shareholders whilst at the same time successfully accelerating our efforts to commercialise our CD4 offering. The challenges are not inconsequential but I remain confident that in those areas where we can control our own destiny that we will succeed in delivering our objectives. In those areas where we are not masters of our own destiny then, by definition, the outcome will always be less certain. I believe it is best for our statement to reflect that reality as it stands today. Rest assured we will continue to work towards achieving success for all our Stakeholders.

 

 

 

David Evans

Non-Executive Chairman

30 November 2018

 

 

 

 

 

Consolidated Statement of Comprehensive Income

 

 

 

 

for the six months ended 30 September 2018

 

 

 

 

 

 

 

 

6 month period ended 30 September 2018

 

 

6 month period ended 30 September 2017

 

 

Continuing

 

Discontinued

 

 

 

 

Continuing

 

Discontinued

 

 

 

Notes

operations

 

operations

 

Total

 

 

operations

 

operations

 

Total

 

 

£

 

£

 

£

 

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

3

4,224,889

 

1,002,646

 

5,227,535

 

 

4,535,219

 

2,578,116

 

7,113,335

Cost of sales

 

(1,618,225)

 

(464,136)

 

(2,082,361)

 

 

(1,372,712)

 

(1,250,265)

 

(2,622,977)

Gross profit

 

2,606,664

 

538,510

 

3,145,174

 

 

3,162,507

 

1,327,851

 

4,490,358

Administration costs

 

(2,405,656)

 

(440,874)

 

(2,846,530)

 

 

(2,721,495)

 

(616,729)

 

(3,338,224)

Selling and marketing costs

 

(765,626)

 

(195,205)

 

(960,831)

 

 

(617,231)

 

(451,348)

 

(1,068,579)

Other operating income

 

61,026

 

-

 

61,026

 

 

15,707

 

-

 

15,707

Operating (loss)/profit before exceptional items

(503,592)

 

(97,569)

 

(601,161)

 

 

(160,512)

 

259,774

 

99,262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exceptional items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of legacy infectious disease business

1,091,808

 

-

 

1,091,808

 

 

-

 

-

 

-

Omega GmbH liabilities write off

 

358,819

 

-

 

358,819

 

 

-

 

-

 

-

Operating profit after exceptional items

947,035

 

(97,569)

 

849,466

 

 

(160,512)

 

259,774

 

99,262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance costs

4

(25,599)

 

-

 

(25,599)

 

 

(27,061)

 

-

 

(27,061)

Finance revenue - interest receivable

 

11

 

-

 

11

 

 

480

 

-

 

480

Profit before taxation

 

921,447

 

(97,569)

 

823,878

 

 

(187,093)

 

259,774

 

72,681

Tax (charge) / credit

5

(102,324)

 

-

 

(102,324)

 

 

96,267

 

-

 

96,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

819,123

 

(97,569)

 

721,554

 

 

(90,826)

 

259,774

 

168,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income to be reclassified

to profit and loss in subsequent periods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations

30,605

 

-

 

30,605

 

 

83,215

 

-

 

83,215

Exceptional item-Omega GmbH liability write off

317,294

 

-

 

317,294

 

 

0

 

-

 

-

Tax charge

5

(5,124)

 

-

 

(5,124)

 

 

(15,160)

 

-

 

(15,160)

Other comprehensive income for the period

342,775

 

-

 

342,775

 

 

68,055

 

-

 

68,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

1,161,898

 

(97,569)

 

1,064,329

 

 

(22,771)

 

259,774

 

237,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS on profit for the period

6

 

 

 

 

0.6p

 

 

 

 

 

 

0.2p

Diluted EPS on profit for the period

 

 

 

 

 

0.6p

 

 

 

 

 

 

0.1p

 

 

 

Adjusted Profit before Taxation

 

 

 

6 month period ended 30 September 2018

 

 

6 month period ended 30 September 2017

 

 

Continuing

 

Discontinued

 

 

 

 

Continuing

 

Discontinued

 

 

 

 

operations

 

operations

 

Total

 

 

operations

 

operations

 

Total

 

 

£

 

£

 

£

 

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

921,447

 

(97,569)

 

823,878

 

 

(187,093)

 

259,774

 

72,681

Exceptional items

 

(1,450,627)

 

-

 

(1,450,627)

 

 

-

 

-

 

-

Amortisation of intangible assets

 

65,474

 

24,573

 

90,047

 

 

59,128

 

59,217

 

118,345

Share-based payment charges

 

30,000

 

-

 

30,000

 

 

26,895

 

-

 

26,895

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted (loss)/profit before taxation

(433,706)

 

(72,996)

 

(506,702)

 

 

(101,070)

 

318,991

 

217,921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted Adjusted EPS on profit for the period

6

 

 

 

 

(0.5p)

 

 

 

 

 

 

0.3p

 

 

 

Adjusted (loss) / PBT stated before exceptional items, amortisation of intangible assets and share based payment charges.

 

 

 

 

 

 

 

 

  

Consolidated Balance Sheet

 

 

 

 

 

 

as at 30 September 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 Sept

 

At 31 March

 

At 30 Sept

 

 

2018

 

2018

 

2017

 

 

£

 

£

 

£

Assets

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

  Intangibles

 

15,740,459

 

15,029,448

 

16,802,856

  Property, plant and equipment

 

1,667,085

 

1,712,933

 

2,963,325

  Deferred taxation

 

1,287,785

 

1,250,082

 

1,920,968

 

 

 

 

 

 

 

Total non-current assets

 

18,695,329

 

17,992,463

 

21,687,149

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

  Inventories

 

1,110,767

 

1,823,961

 

2,540,365

  Trade and other receivables

 

2,692,975

 

2,969,410

 

3,493,787

  Deferred consideration

 

375,000

 

-

 

-

  Cash and cash equivalents

 

-

 

115,719

 

2,418,441

 

 

 

 

 

 

 

Total current assets

 

4,178,742

 

4,909,090

 

8,452,593

 

 

 

 

 

 

 

Total assets

 

22,874,071

 

22,901,553

 

30,139,742

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

Issued capital

 

19,797,343

 

19,797,343

 

19,801,937

Retained earnings

 

(1,621,745)

 

(2,685,469)

 

4,933,873

Other reserves

 

40,887

 

10,282

 

60,445

 

 

 

 

 

 

 

Total equity

 

18,216,485

 

17,122,156

 

24,796,255

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

  Long term borrowings

 

136,100

 

728,830

 

845,741

  Deferred taxation

 

1,748,247

 

1,619,795

 

1,999,029

  Deferred income

 

481,752

 

357,360

 

452,065

  Retirement benefit deficit

 

-

 

317,294

 

57,199

 

 

 

 

 

 

 

Total non-current liabilities

 

2,366,099

 

3,023,279

 

3,354,034

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

  Trade and other payables

 

1,719,507

 

2,602,069

 

1,837,707

  Bank overdraft

 

452,200

 

-

 

-

  Short term borrowings

 

103,082

 

154,049

 

151,746

  Tax payable

 

16,698

 

-

 

-

 

 

 

 

 

 

 

Total current liabilities

 

2,291,487

 

2,756,118

 

1,989,453

 

 

 

 

 

 

 

Total liabilities

 

4,657,586

 

5,779,397

 

5,343,487

 

 

 

 

 

 

 

Total equity and liabilities

 

22,874,071

 

22,901,553

 

30,139,742

 

 

 

Consolidated Statement of Changes in Equity for the six months ended 30 September 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share

Share

Retained

 

Translation

 

 

 

capital

premium

earnings

 

reserve

 

Total

 

£

£

£

 

£

 

£

 

 

 

 

 

 

 

 

Balance at 1 April 2017

5,086,756

11,640,760

4,753,190

 

(22,770)

 

21,457,936

 

 

 

 

 

 

 

 

Issue of share capital for cash consideration

728,536

2,548,049

 

 

 

 

3,276,585

 

 

 

 

 

 

 

 

Expenses in connection with share issue

-

(202,164)

-

 

-

 

(202,164)

 

 

 

 

 

 

 

 

Profit for the period to 30 September 2017

-

-

    168,948

 

 -

 

168,948

 

 

 

 

 

 

 

 

Other comprehensive income-net exchange adjustments

-

-

-

 

83,215

 

83,215

 

 

 

 

 

 

 

 

Other comprehensive income-tax charge

-

-

(15,160)

 

-

 

(15,160)

Total comprehensive income

728,536

2,345,885

153,788

 

83,215

 

3,311,424

 

 

 

 

 

 

 

 

Share-based payments

-

-

      26,895

 

 -

 

26,895

 

 

 

 

 

 

 

 

Balance at 30 September 2017

5,815,292

13,986,645

4,933,873

 

60,445

 

24,796,255

 

 

 

 

 

 

 

 

Issue of share capital for cash consideration

-

(11,675)

 

 

 

 

(11,675)

 

 

 

 

 

 

 

 

Expenses in connection with share issue

-

7,081

-

 

-

 

7,081

 

 

 

 

 

 

 

 

Loss for the period to 31 March 2018

-

-

(7,438,545)

 

 -

 

(7,438,545)

 

 

 

 

 

 

 

 

Other comprehensive income-net exchange adjustments

-

-

-

 

(50,163)

 

(50,163)

 

 

 

 

 

 

 

 

Other comprehensive income-actuarial loss on defined benefit pensions

-

-

(258,449)

 

-

 

(258,449)

 

 

 

 

 

 

 

 

Other comprehensive income-tax credit

-

-

52,277

 

-

 

52,277

Total comprehensive income

-

(4,594)

(7,644,717)

 

(50,163)

 

(7,699,474)

 

 

 

 

 

 

 

 

Share-based payments

-

-

      25,375

 

 -

 

25,375

 

 

 

 

 

 

 

 

Balance at 1 April 2018

5,815,292

13,982,051

(2,685,469)

 

10,282

 

17,122,156

 

 

 

 

 

 

 

 

Profit for the period to 30 September 2018

-

-

721,554

 

-

 

721,554

 

 

 

 

 

 

 

 

Other comprehensive income-net exchange adjustments

-

-

-

 

30,605

 

30,605

 

 

 

 

 

 

 

 

Other comprehensive income-Omega GmbH liability write off

 

 

317,294

 

-

 

317,294

 

 

 

 

 

 

 

 

Other comprehensive income-tax charge

-

-

(5,124)

 

-

 

(5,124)

Total comprehensive income

-

-

1,033,724

 

30,605

 

1,064,329

 

 

 

 

 

 

 

 

Share-based payments

-

-

30,000

 

-

 

30,000

 

 

 

 

 

 

 

 

Balance at 30 September 2018

5,815,292

13,982,051

(1,621,745)

 

40,887

 

18,216,485

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Cash Flow Statement

 

 

 

 

for the six months ended 30 September 2018

 

 

 

 

 

 

 

 

 

 

6 months

 

6 months

 

to 30 Sept

 

to 30 Sept

 

2018

 

2017

 

£

 

£

 

 

 

 

Cash flows generated from operations

 

 

 

Profit for the period after exceptional items

721,554

 

168,948

Adjustments for:

 

 

 

Taxation

102,324

 

(96,267)

Finance costs

25,599

 

27,061

Finance income

(11)

 

(480)

 

 

 

 

Operating profit after exceptional items

849,466

 

99,262

Decrease/(increase) in trade and other receivables

276,435

 

(1,033,371)

Decrease/(increase) in inventories

86,371

 

(162,790)

(Decrease)/increase in trade and other payables

(1,211,411)

 

74,748

Depreciation

192,999

 

206,478

Amortisation of intangible assets

90,047

 

118,345

Movements in grants

124,392

 

119,293

Exceptional item-Gain on sale of legacy infectious disease business

(1,091,808)

 

-

Exceptional item-Omega GmbH liabilities write off

(358,819)

 

-

Share-based payments

30,000

 

26,895

Net cash flow from operating activities

(1,012,328)

 

(551,140)

 

 

 

 

Investing activities

 

 

 

Finance income

11

 

480

Purchase of property, plant and equipment

(231,262)

 

(178,546)

Purchase of intangible assets

(1,034,153)

 

(1,204,655)

Sale proceeds from legacy infectious disease business

1,800,000

 

-

 

 

 

 

Net cash used in investing activities

534,596

 

(1,382,721)

 

 

 

 

Financing activities

 

 

 

Finance costs

(25,599)

 

(27,061)

Proceeds from issue of share capital

-

 

3,276,585

Expenses of share issue

-

 

(202,164)

New finance leases

40,500

 

626,489

Drawdown of overdraft facility

452,200

 

-

Finance lease repayments

(69,529)

 

(78,255)

 

 

 

 

Net cash from financing activities

397,572

 

3,595,594

 

 

 

 

Net (Decrease)/increase in cash and cash equivalents

(80,160)

 

1,661,733

Effects of exchange rate movements

(35,559)

 

19,377

Cash and cash equivalents at beginning of period

115,719

 

737,331

 

 

 

 

Cash and cash equivalents at end of period

-

 

2,418,441

 

 

 

 

 

 

 

 

 

 

                       

 

 

 

Notes to the Interim Report

for the six months ended 30 September 2018

 

1. BASIS OF PREPARATION

For the purpose of preparing the March 2018 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 accounting policies used in the Group's Annual Report for the year ended 31 March 2018 have been applied consistently. The Group does not expect the adoption of IFRS9 and IFRS15 to have a material impact on the consolidated financial statements for the year ended 31 March 2019. 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. The information shown in the consolidated balance sheet as at 31 March 2018 does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006 and has been extracted from the Group's 2018 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 2018 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 30 November 2018.

 

 

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 2018

£

 

£

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

Statutory presentation

 

 

 

 

 

 

 

 

 

 

Revenue

787,273

 

3,891,702

 

650,663

 

-

 

5,329,638

 

Inter-segment revenue

-

 

(56,239)

 

(45,864)

 

-

 

(102,103)

 

Total revenue

787,273

 

3,835,463

 

604,799

 

-

 

5,227,535

 

Operating costs

(1,086,345)

 

(2,438,096)

 

(1,261,312)

 

(1,042,943)

 

(5,828,696)

 

Operating profit/(loss) before exceptional items

(299,072)

 

1,397,367

 

(656,513)

 

(1,042,943)

 

(601,161)

 

Exceptional items

358,819

 

-

 

1,091,808

 

-

 

1,450,627

 

Net finance income/(costs)

-

 

-

 

(5,390)

 

(20,198)

 

(25,588)

 

Profit/(loss) before taxation

59,747

 

1,397,367

 

429,905

 

(1,063,141)

 

823,878

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted profit before taxation

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before taxation

59,747

 

1,397,367

 

429,905

 

(1,063,141)

 

823,878

 

Exceptional items

(358,819)

 

-

 

(1,091,808)

 

-

 

(1,450,627)

 

Amortisation of intangible assets

26,389

 

53,502

 

10,156

 

-

 

90,047

 

Share-based payment charges

-

 

-

 

-

 

30,000

 

30,000

 

Adjusted profit/(loss) before taxation

(272,683)

 

1,450,869

 

(651,747)

 

(1,033,141)

 

(506,702)

 

Operating profit before exceptional items

(299,072)

 

1,397,367

 

(656,513)

 

(1,042,943)

 

(601,161)

 

Depreciation

28,854

 

117,903

 

46,243

 

-

 

193,000

 

Amortisation

26,389

 

53,502

 

10,156

 

-

 

90,047

 

EBITDA

(243,829)

 

1,568,772

 

(600,114)

 

(1,042,943)

 

(318,114)

 

 

 

 

 

 

 

 

 

 

 

 

 

Allergy and

 

Food

 

Infectious/

 

 

 

 

 

 

Autoimmune

 

Intolerance

 

Other

 

Corporate

 

Group

 

September 2017

£

 

£

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

Statutory presentation

 

 

 

 

 

 

 

 

 

 

Revenue

1,719,453

 

4,921,908

 

1,417,556

 

-

 

8,058,917

 

Inter-segment revenue

(44,406)

 

(790,128)

 

(111,048)

 

-

 

(945,582)

 

Total revenue

1,675,047

 

4,131,780

 

1,306,508

 

-

 

7,113,335

 

Operating costs

(1,944,753)

 

(2,648,262)

 

(1,410,184)

 

(1,010,874)

 

(7,014,073)

 

Operating profit/(loss)

(269,706)

 

1,483,518

 

(103,676)

 

(1,010,874)

 

99,262

 

Net finance income/(costs)

(180)

 

(1,614)

 

(7,291)

 

(17,496)

 

(26,581)

 

Profit/(loss) before taxation

(269,886)

 

1,481,904

 

(110,967)

 

(1,028,370)

 

72,681

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted profit before taxation

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before taxation

(269,886)

 

1,481,904

 

(110,967)

 

(1,028,370)

 

72,681

 

Amortisation of intangible assets

60,008

 

50,583

 

7,754

 

 

 

118,345

 

Share-based payment charges

-

 

-

 

-

 

26,895

 

26,895

 

Adjusted profit/(loss) before taxation

(209,878)

 

1,532,487

 

(103,213)

 

(1,001,475)

 

217,921

 

Operating profit before exceptional items

(269,706)

 

1,483,518

 

(103,676)

 

(1,010,874)

 

99,262

 

Depreciation

51,939

 

108,004

 

46,536

 

-

 

206,479

 

Amortisation

60,008

 

50,583

 

7,754

 

-

 

118,345

 

EBITDA

(157,759)

 

1,642,105

 

(49,386)

 

(1,010,874)

 

424,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. REVENUES

 

 

 

 

6 months

 

6 months

 

 

 

 

 

 

 

 

to 30 Sept

 

to 30 Sept

 

 

 

 

 

 

 

 

2018

 

2017

 

 

 

 

 

 

 

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

 

UK

 

 

 

 

 

358,438

 

528,360

 

 

Germany

 

 

 

 

 

578,907

 

1,414,805

 

 

Rest of Europe

 

 

 

 

1,403,651

 

1,737,219

 

 

North America

 

 

 

 

794,926

 

1,309,177

 

 

South/Central America

 

 

 

368,294

 

267,166

 

 

Asia and Far East

 

 

 

 

1,212,662

 

1,033,877

 

 

Africa and Middle East

 

 

 

510,657

 

822,731

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,227,535

 

7,113,335

 

                                                     

 

 

 

4. FINANCE COSTS

 

 

 

 

 

 

 

6 months

 

6 months

 

 

 

 

 

 

to 30 Sept

 

to 30 Sept

 

 

 

 

 

 

2018

 

2017

 

 

 

 

 

 

£

 

£

 

 

 

 

 

 

 

 

 

Interest payable on loans

 

 

 

21,594

 

18,984

Finance charges payable under finance leases

 

4,005

 

8,077

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,599

 

27,061

 

 

 

5. TAX (CHARGE) / CREDIT

 

 

 

 

 

 

 

6 months

 

6 months

 

 

 

 

 

 

to 30 Sept

 

to 30 Sept

 

 

 

 

 

 

2018

 

2017

 

 

 

 

 

 

£

 

£

Tax (charged) / credited in the income statement

 

 

 

 

 

 

Current tax - current year

 

 

 

 

 

(16,698)

 

-

Current tax - prior year adjustment

 

 

 

 

-

 

-

Deferred tax - current year

 

 

 

 

 

(111,408)

 

67,053

Deferred tax - prior year adjustment

 

 

 

 

25,782

 

29,214

 

 

 

 

 

 

(102,324)

 

96,267

 

 

 

 

 

 

 

 

 

Tax relating to items charged to other comprehensive income

 

 

 

 

Deferred tax on net exchange adjustments

 

 

 

(5,124)

 

(15,160)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,124)

 

(15,160)

 

 

 

 

 

 

 

 

 

Reconciliation of total tax charge

 

 

 

 

 

 

 

Factors affecting the tax charge for the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

 

 

 

 

823,878

 

72,681

 

 

 

 

 

 

 

 

 

Effective rate of taxation

 

 

 

 

 

19%

 

19%

 

 

 

 

 

 

 

 

 

Profit before tax multiplied by the effective rate of tax

 

 

156,537

 

13,809

 

 

 

 

 

 

 

 

 

 

Effects of:

 

 

 

 

 

 

 

 

Expenses not deductible for tax and income not chargeable to tax

 

37,135

 

12,620

Deferred tax asset on losses in year not recognised

 

110,090

 

-

Research and development tax credits

 

 

 

 

(48,632)

 

(51,270)

Tax over provided in prior years

 

 

 

 

(25,782)

 

(29,214)

Adjustment due to different overseas tax rate

 

 

 

(39,610)

 

(33,201)

Exceptional item-Omega GmbH liabilities write off

 

 

 

(68,176)

 

-

Impact of UK rate change on deferred tax

 

 

 

(19,238)

 

(9,011)

Tax charge / (credit) for the period

 

 

 

 

 

102,324

 

(96,267)

                     

 

 

The deferred tax asset balance at 30 September 2018 will be offset against future profits expected to be generated from the prospects for Allergy sales and Visitect® CD4 sales leading management to conclude to carry the deferred tax asset in full.

 

 

6. EARNINGS PER SHARE

 

 

6 months

to 30 Sept 2018

6 months

to 30 Sept

2017

 

£

£

Profit attributable to equity holders of the Group

721,554

168,948

 

 

 

 

 

2018

Number

2017

Number

 

Weighted average number of shares

 

126,959,060

 

112,378,395

Share options

306,718

1,381,285

Diluted weighted average number of shares

127,265,778

113,759,680

 

The number of shares in issue at the period end was 126,959,060. 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 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 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 2018

6 months

to 30 Sept

2017

 

£

£

 

Adjusted (loss) / profit before taxation

 

(506,702)

 

217,921

Tax (charge) / credit

(102,324)

96,267

Adjusted (loss) / profit attributable to equity holders of the Group

(609,026)

314,188

 

 

 

 

7. INTANGIBLES

 

 

 

 

Licences/

Supply

Technology

Customer

Development

 

 

Goodwill

software

arrangements

assets

relationships

costs

Total

 

£

£

£

£

£

£

£

Cost

 

 

 

 

 

 

 

At 1 April 2017

4,703,165

1,765,753

533,836

2,150,731

1,245,524

7,872,250

18,271,259

Additions

-

-

-

-

-

-

 

Additions internally generated

-

-

-

-

-

1,247,225

1,247,225

Currency translation

42,510

4,484

16,769

5,520

47,904

18,517

135,704

At 30 September 2017

4,745,675

1,770,237

550,605

2,156,251

1,293,428

9,137,992

19,654,188

Additions

-

25,505

-

-

-

-

25,505

Additions internally generated

-

-

-

-

-

1,643,461

1,643,461

Currency translation

(4,052)

(855)

(1,598)

(532)

(15,350)

(5,516)

(27,903)

Asset write offs

(1,391,745)

(172,101)

(549,007)

(180,725)

(1,178,075)

(1,589,722)

(5,061,375)

At 31 March 2018

3,349,878

1,622,786

-

1,974,994

100,003

9,186,215

16,233,876

Additions

-

(114)

-

-

-

1,092,267

1,092,153

Additions internally generated

-

-

-

-

-

-

-

Disposals

(332,986)

-

-

-

-

-

(332,986)

Currency translation

17,608

14,902

6,946

2,286

14,904

7,133

63,779

At 30 September 2018

3,034,500

1,637,574

6,946

1,977,280

114,907

10,285,615

17,056,822

 

 

 

 

 

 

 

 

Accumulated amortisation

 

 

 

 

 

 

 

At 1 April 2017

-

218,604

533,836

1,114,046

816,697

-

2,683,183

Amortisation charge in the year

-

10,103

-

49,374

60,649

-

120,126

Currency translation

-

5,049

16,769

5,268

20,937

-

48,023

At 30 September 2017

-

233,756

550,605

1,168,688

898,283

-

2,851,332

Amortisation charge in the year

-

5,491

-

49,374

57,231

6,249

118,345

Currency translation

-

(523)

(1,598)

(502)

(653)

(359)

(3,635)

Asset write offs

-

(179,399)

(549,007)

(172,460)

(854,858)

(5,890)

(1,761,614)

At 31 March 2018

-

59,325

-

1,045,100

100,003

-

1,204,428

Amortisation charge in the year

-

8,513

-

49,374

24,538

7,622

90,047

Currency translation

-

2,111

6,946

2,182

11,130

(481)

21,888

At 30 September 2018

-

69,949

6,946

1,096,656

135,671

7,141

1,316,363

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

30-Sep-18

3,034,500

1,567,625

-

880,624

(20,764)

10,278,474

15,740,459

31-Mar-18

3,349,878

1,563,461

-

929,894

-

9,186,215

15,029,448

30-Sep-17

4,745,675

1,536,481

-

987,563

395,145

9,137,992

16,802,856

 

 

 

 

8. GAIN ON SALE OF LEGACY INFECTIOUS DISEASE BUSINESS

 

On the 28th of June 2018 the Group sold its legacy infectious disease business to Lab21 Healthcare Limited for up to £2.175 million. The consolidated statement of comprehensive income includes the following gain on sale:

 

 

 

 

 

 

 

 

£

 

 

 

 

 

 

 

Consideration to be received

 

 

 

2,175,000

 

 

 

 

 

 

 

Assets disposed of :

 

 

 

 

 

Intangible assets - goodwill

 

 

 

332,986

Property, plant and equipment

 

 

 

50,383

Inventories

 

 

 

 

626,823

 

 

 

 

 

 

 

Legal fees associated with the disposal

 

 

73,000

 

 

 

 

 

 

 

Gain on sale through the income statement

 

 

1,091,808

 

 

 

 

9. DISCONTINUED OPERATIONS

 

 

 

6 month period ended 30 Sept 2018

 

6 month period ended 30 Sept 2017

 

Omega

India

Infectious

 

 

Omega

India

Infectious

 

 

Gmbh

Manufacturing

Disease

TOTAL

 

Gmbh

Manufacturing

Disease

TOTAL

 

£

£

£

£

 

£

£

£

£

Revenue

578,907

-

423,739

1,002,646

 

1,422,119

-

1,155,997

2,578,116

Cost of sales

221,610

12,664

229,862

464,136

 

584,285

55,213

610,767

1,250,265

Gross profit

357,297

(12,664)

193,877

538,510

 

837,834

(55,213)

545,230

1,327,851

Administration costs

397,840

38,363

4,671

440,874

 

438,419

152,368

25,942

616,729

Selling and marketing costs

195,205

-

-

195,205

 

451,348

-

-

451,348

Operating (loss) / profit

(235,748)

(51,027)

189,206

(97,569)

 

(51,933)

(207,581)

519,288

259,774

Finance costs

-

-

-

-

 

-

-

-

-

Profit before taxation

(235,748)

(51,027)

189,206

(97,569)

 

(51,933)

(207,581)

519,288

259,774

Amortisation

24,573

-

-

24,573

 

59,217

-

-

59,217

Adjusted (loss) profit for the period

(211,175)

(51,027)

189,206

(72,996)

 

7,284

(207,581)

519,288

318,991

 

 

 

 


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