Trading Update and Notice of Interim Results

RNS Number : 3146D

Omega Diagnostics Group PLC

26 October 2015

 

Omega Diagnostics Group PLC

("Omega" or "the Company")

Trading Update and Notice of Interim Results

Omega (AIM: ODX), the medical diagnostics company focused on allergy, food intolerance and infectious disease, announces the following trading update for the six months to 30 September 2015, in advance of releasing its interim results on Monday 30 November 2015.

Financial update

Turnover is expected to be £6.15m, 11% ahead of last year's first half in constant currency terms and 8% ahead of last year's result (30 September 2014: £5.69m) on an actual basis.  An increase in gross profit has covered a rise in management costs in line with our growth plans such that profit before tax (before acquisition costs, share based payments, IFRS-related discount unwinds and amortisation of intangible assets) is expected to be similar to that achieved in the previous half-year period to 30 September 2014 (£0.56m).

Segmental revenues are expected to be as follows:

	Revenue to 30 September 2015	Revenue to 30 September 2014	% increase
Food Intolerance	£3.34m	£2.78m	+ 20%
Allergy/Autoimmune	£1.59m	£1.83m	- 13%
Infectious Disease/Other	£1.22m	£1.08m	+ 13%
TOTAL	£6.15m	£5.69m	+ 8%

Core business update

Food Intolerance

We continue to see significant gains in business throughout the Americas and the Middle East plus a number of markets in Asia and the Far East.  This is testimony to the utility of both our Food Detective® and our microarray-based Foodprint® test and the franchising model that places these test systems under the 'CNS' brand which is recognised for its quality throughout the world. 

Allergy/Autoimmune

This segment continues to be affected by the results of our German domestic business.  Revenue results from Omega GmbH were impacted by a further weakening of the euro exchange rate against sterling, lowering reported sales in the period by a further £146k.  The business continues to be negatively influenced by reimbursement budget caps resulting in a slow decline in testing activity within the doctor's office segment.

Infectious Disease

This segment remains our broadest in terms of geographical coverage as well as the most price-competitive in which we operate.  The segment has produced very encouraging results, helped in part by the recovery of our stained bacterial suspension product line in the UK and growth across the product range in some African countries.

Allergy development - IDS-iSYS automation update

We have continued to make good progress in the period with our allergy development programme. Since the last update, a further four allergens have been optimised, taking the total number of allergens whose performance matches with the market-leading product to 36.  Of these, 26 have now completed claim support work and a further six are just about to enter the claim support phase.  We have continued to invest in building the scientific team and now have a dedicated team of five in-house scientists supported by a team of seven people through our contracted partner.  This team will focus on delivering menu expansion beyond the initial launch panel of 40 allergens.

An external evaluation in Spain completed in July of this year. The principal investigator selected 10 allergens to test on over 400 patient samples.  The principal investigator reported a strong positive linear relationship between the Company's Allersys® assay and the market leading product and concluded that the Allersys® reagents on the IDS iSYS® analyser provided a technology which was quick and easy to use for allergy testing in the laboratory.

Over 500 samples have been collected for the planned Italian evaluation which is now due to start at the end of this month.  With the help of our partner, IDS, further evaluations will be conducted in Germany and France, each with over 300 samples, with an expected start date towards the end of this year.

Infectious Disease

CD4 update

Since the last update, we have concentrated efforts to resolve a stability issue which manifested after five weeks storage at ambient temperature. We have recently discovered an ambient temperature effect which manifests as a change in test line signal, with no corresponding change in reference line signal. 

We have identified the step responsible for this temperature effect, and our immediate focus now is to complete the testing needed to determine which component from this step causes it.  Once the component is identified and replaced or adjusted, the verification and validation process will re-commence.  We remain confident of resolving this, although the ultimate timing remains uncertain at this stage and we will provide further updates as soon as we can.

Rapid test manufacturing

The Company has recently completed the fit-out of approximately 20,000 sq ft of laboratory and manufacturing space in Pune, India.  As well as providing a second manufacturing site for Visitect® CD4, the facility, which is being installed with manufacturing equipment which is generic for most lateral flow rapid tests, will provide a low cost manufacturing base for a broader range of infectious disease tests.  We have selected a range of Malaria tests on which to work as soon as the equipment has completed validation.

Outlook

First half trading performance is in line with management expectation, with revenue ahead of last year, despite the strengthening effect of sterling reducing reported revenue by £0.2m in the period, as compared to the prior period.  Visitect® CD4 continues to dominate the perceived prospects for the Group as a whole.  We continue to believe that once the current technical challenges are resolved, Visitect CD4 will be competitively positioned to become a major success for the Group. 

We also draw attention to our Food Intolerance division and expanded manufacturing facilities.  Food intolerance has performed successfully for a number of years now gaining significant traction and a foothold in a very attractive consumer-driven market.  With the right focus and strategic planning, this segment of our core business can be positioned for further significant growth over the shorter to medium term.  Expanded manufacturing facilities in India will provide the Group with the means to participate in higher volume tender business for infectious disease tests which has previously been unavailable due to not being able to compete on price.

Colin King, Chief Operating Officer of the Company commented: "Since coming on board on 3 August, I have been encouraged by the scale of opportunities in the core business units and believe we can exploit these in a more aggressive manner.  As a result of this we have undertaken a review of each unit and are now in the process of developing a 3 to 5 year business plan with accelerated growth the key objective."

Contacts:

Omega Diagnostics Group PLC	Tel: [phone]
Andrew Shepherd, Chief Executive	www.omegadiagnostics.com
Kieron Harbinson, Group Finance Director
Jag Grewal, Group Sales and Marketing Director
finnCap Ltd	Tel: [phone]
Geoff Nash/James Thompson (Corporate Finance)
Mia Gardner (Corporate Broking)
Walbrook PR Limited	Tel: [phone] or [e-mail]
Paul McManus	Mob: [phone]
Lianne Cawthorne	Mob: [phone]

 

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