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Seriously all, please spend some time to understand the £8m write off. This is not a bad news hit! It is sunk costs that are costing us more on an ongoing basis than it is bringing in. The £8m is already history, old news, 4 years of development expense; it is just an accounting adjustment. This should not devalue Omega. Getting rid of unprofitable businesses to replace them with a profitable business is good business. It has a long term positive impact on finances and zero current negative impact, its just moving sunk costs off the balance sheet to the p&l. If it was discontinuing a large business that was expected to be the main growth factor of the company and it had failed it would be a problem, but it isnt. This is small fry, and the business has changed direction because of Covid, which is now going to provide levels of growth that just 6 months ago Omega could never have dreamt of.
This is why on a set of financial statements discontinued operations are shown separately, because they are one off and not reflective of ongoing trading performance. The key statement is that it is non cash. If there was a cash liability then it would be a problem as it would need cash flow, but it clearly states it is non cash.

It's here in black and white.

"The decision to stop development was taken after a careful and thorough analysis of the best use of the Company’s capital, people and assets, in the context of changes in underlying assumptions for the allergy business and has resulted in a decision to focus development activities in other areas."

Why have they recognised the impairment in one go.....? because accounting standards says that they have to.

This time yesterday when I saw that rns I was genuinely thrilled. I was concerned The Mologic agreement wouldn’t amount to much. However yesterday confirmed that we have started production and have at least 15 countries lined up. Also the talk of a 3 year contract shows already how far down the line they are looking. There is more in this for Omega than just supplying Mologic with manufacturing facilities, Omega are commercialising with Mologic using their existing distribution channels and routes to markets.

But what really was the icing on the cake is that the agreement is extended to antigen lab and at home tests. This was a big surprise and greatly expands our market.

We have had firm confirmation with this and the RTC update that Omega is positioned for make substantial revenues over the next few years. I’m in no doubt this will rerate on these two business offerings.

The perceived bad news from yesterday is really nothing. An £8 impairment should not harm us. I mean who here bought their shares because they were interested in the allergy business...? No I thought not. It’s saving money and redirecting resources. The disappointment of the £0.1m sales figure.... well as they say it’s one order to a small country that you’ve probably not read a thing about how Covid 19 is affecting them. 15 countries in the pipeline for starters, they need to get registrations sorted. 15 x £0.1m x 12 months would be a very big earner.

This is the best positioned Covid play, and will go from strength to strength over the rest of this year and into next.

Overdraft 30th Sep £1.4m
Overdraft 2nd April £0.6m

With overdraft improving the cash burn is clearly managed within limits.

Ebitda £150k above expectation

They are cash generative and profitable over this 6 month period with revenue growing with CD4 tests and now mologic. Cost saving measures in place with use of government schemes with furlough, and loss making businesses discontinued.

No r&d spend, Government 5th pillar to invest in diagnostics capacity and mass production of tests. Most likely expansion paid for from a grant and they would be stupid not to offer up a small business loan if needed. I mean if you're part of the Government consortium providing life saving tests and you need a couple million quid for working capital in order to supply the tests why would they not offer up some short term funding. But i really don't think they need it. There will be significant free cash flows in a matter of months.
Admin expenses for this company is tiny compared to their peers, go check out the statements.

The lead time from supply of materials to delivery of tests is small. They wont have cash tied up in stock for any time at all.

So having £1.4m overdraft facility available might no sound much, but the fact this has improved by £0.8m over 6 months shows there is no funding shortfall.

Its just a lazy scare tactic to mention placing, but when you look at the business its difficult to find a case that they need it, although there is no doubt they would have had money offered up to them.

Spot on KR

It's disappointing having false starts. We've all seen profit eaten away and the share price action is far from ideal. It's designed to make us lose patience. But i am very confident we will all be in decent profit in the not too distant future. Lots of positions going in and out, but the overall uptrend is still strong, and this hasn't even got off the ground yet.

Seriously what is so hard to understand with the impairment? It is not an £8m cost. £8m capital development expense has already been incurred and sunk over the last 4 years. This is not incurring more expense it is saving money, saving £0.8m of development costs a year. £8m impairment is nothing more than an accounting entry to remove already sunk costs from the balance sheet.

It's like buying a car for £10,000, you use it for 4 years and its now worth £6,000 as it's lost £1,000 a year in value. You decide to give it away after 4 years because it no longer has any use to you, so its now worth £0 to you. You dont have to pay £6,000 to get rid of it, you paid £10,000 for it 4 years ago and its carrying value is £6,000. You have lost £10,000 but you paid for it 4 years ago, used up £4000 of value. You could hold onto it for another 6 years and write of £1,000 a year, but it will continue to cost you £500 a year in maintenance, tax, fuel etc. Exactly the same principal.

The reason companies impair product development is because it's either not working out and costing more money than they expect to recover, or because they have much better use of ongoing capital. Look at how small the allergy business is. It's not worth persevering now.

This £8m impairment is not a problem. Its development spend from 2016. It's already sunk costs that has been sat on the balance sheet as intangible assets. Businesses do this all the time, sometimes current markets take you in new directions.

It has zero impact on cashflow.

The allergy market is tiny compared to covid. This was an interesting possible area of development for Omega, but with the opportunities Covid and the money they will make from this will bring, there are simply bigger fish to fry. The key information is its saving £0.8m a year in further development spend and it was only bringing in circa £400k a year at the current status.

I mean how can it not be huge news that yesterday we were on ly focused on antibody market, now we are in antigen poc tests too.

100k of sales to 1 country
Times that by 15 for starters
Thats just one month
If they did 100k x 15 countries for 12 months thats £18m per year. It might not sound impressive on face value, but its just a first order.

This covid business is only just getting off the ground.

This is the best position diagnostics company out there:

Already profitable
Already cash generative
Involved with a government led consortium to develop and manufacture the worlds leading POC antibody test
Already upscaled production with new lab space
Agreement with Mologic branching out to antigen lab and home tests
Growth in other areas including CD4
Very little debt to speak of

There is significant value to be had here. THis will be in a whole new league by the end of the year. All profit from Covid will be free cash flow to invest or return to shareholders.

Its called an agenda Chuggley.... totally misleading.
How about our revenue last year 2 x avacta's. MCAP £278m.

The single biggest clue is the print of 400k shares in real time. Considering they don't normally print 20k shares in real time!!

Whether this trade actually exists or not is questionable. But assuming it does it is probably a large order place with the broker they have been drip feeding it in and they've jumped at taking it in one hit this morning to make the most of the opportunity to accumulate.

Make no mistake, this is being played.

Regarding the EBITDA £850k.... go look at the other popular Covid stocks out there. All loss making. All burning cash. Omega is profitable and cash generative. Fact is Covid is new business and will be substantially greater than anything they have already delivered. 46k mologi tests per day, 2/500k POC tests per week. They normally deal in orders of tens of thousands, thats why there is so much potential

The £8m hit is irrelevant, it's already sunk costs, its a non cash item just writing it off the balance sheet. They are doing it because they are making maybe £400k a year revenue from it, and clearly there are much bigger markets out there and better uses of resources.

This is just one thing that shows how Omega is moving through the gears as a result of Covid. It will enable them to operate at a much higher level.

The company added: "The decision to stop the development of further allergens has not been taken lightly but we recognise we can achieve better returns from directing our development efforts in other areas and we look forward to providing further updates as the opportunities we have in front of us deliver on their undoubted potential.

There is no bad news in this RNS....

The write off is non cash so it doesn't effect them its already in the balance sheet as sunk costs.

Why are they doing it? Tiny market, switching use of capital and resources to the bigger opportunity. The allergy business brought in £200k in the 6 months to sep.

The size of the order is a red herring. They have only just started, they need the registrations in place! The agreement speaks for itself, 3 years 46k per day. it's a forward looking statement its not an assessment of sales, its just a first order.

Good news:

Other tests lab and POC antigen tests that we didn't know anything about.
3 year agreement and quite frankly positive news on something that looked like it might fall to the side
Profit slightly ahead of forecast

Funny how they always print large trades late, but they wanted everyone to see this one though isn't it.....

This is a huge bonus RNS and the last RNS confirming the POC RTC are going to achieve design freeze, linked to NHSX app and in production soon. How price can be going backwards after those 2 updates is unreal.
How many people have split investment between antigen and antibody? Now we have both, but there's not much info on the antigen tests, theres not much clarity. Perhaps Omega could now make use of this interactive presentation service they have signed up for and give some more info.
Markets react strangely but this is huge validation of the journey this company are going on over the next few years.
I am spending the morning trying to work out where to free up more funds.

What *******s, jam tomorrow.
They normally do orders in 20 thousands, somethings couple hundred thousand for a big order. This is to make 46k per day!

Mologic supplying the materials, so cash flow saving there.

We will be making antigen tests. Nobody imagined we would get a slice of that market too, what a bonus.

Profit for the year ahead of forecast, who even read down that far?

How has this not opened at 70p plus?!

I am really interests in these lateral flow antigen tests. This could be a real money maker on top of POC antibody tests. Could it attract RTC or Government interest? Could p on the bonfire of some other tests. Reading mologic's press releases the other day it was unclear whether some of them were referring to anitgen or antibody tests. I'll do some more reading later this morning.