ODX.L Regulatory News (ODX)

26 Jun 2007 07:01

Omega Diagnostics Group PLC26 June 2007 OMEGA DIAGNOSTICS GROUP PLC ("Omega" or the "Company") FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2007 Omega, a medical diagnostic company that produces and sells a wide range ofin-vitro diagnostic test kits, announces results for the year ended 31 March2007. Omega operates in a niche market supplying tests for specific infectiousdiseases and other clinical conditions through its distribution network in morethan 100 countries. The infectious diseases include Syphilis, TB, Dengue Feverand Malaria. All products are designed for use in clinical laboratories andRapid Tests are designed for use at the point of care. Financial Summary: Year to Year to 31 March 31 March 2007 2006 Revenue 2,032,146 2,143,806Gross profit 831,489 868,145Operating (loss)/profit (885,652) 162,661 (Loss)/profit before tax (1,141,225) 197,722 2007 Highlights: • Acquisition by Quintessentially English plc of Omega Diagnostics Limited • Change of name from Quintessentially English plc to Omega Diagnostics Group PLC • 1 million new equity (before expenses) raised via a cash placing of 50,000,000 New Ordinary Shares at 2p per share • Appointment of a new management team from Omega Diagnostics Limited: • David Evans, Non-Executive Chairman; • Andrew Shepherd, Chief Executive; • Kieron Harbinson, Finance Director; with • Michael Gurner continuing as a Non-Executive Director • European patent grant for Branched Peptide technology for Herpes Simplex Virus 2 • Gross profit margins maintained in competitive market • Strategy being to grow through selective acquisitions Regarding outlook, David Evans, Chairman, said: "Trading in the current year remains flat and the rationale for seeking to growthrough acquisition is further underlined. The Board remains confident in thatstated objective and will update the markets accordingly." Contacts: Omega Diagnostics Group PLC Parkgreen Communications LtdTel: 01259 763030 Paul McManus Andrew Shepherd, Chief Executive Tel: 020 7479 7933Kieron Harbinson, Finance Director Mob: 07980 541 893www.omegadiagnostics.com paul.mcmanus@parkgreenmedia.com CHAIRMAN'S STATEMENT In my first report as Chairman of Omega Diagnostics Group PLC I wish to conveyto you that the overall outlook for the Group going forward is significantlymore positive than the results for the year to 31 March indicate. Strategy On 19 September 2006, Omega Diagnostics Limited reversed into QuintessentiallyEnglish plc with a stated aim of seeking to acquire other companies within themedical diagnostics sector in order to gain substantive critical mass. That objective remains, although the speed of progress has been significantlyslower than the Board had anticipated, and whilst external factors have played asignificant part in this, the responsibility ultimately rests with the Board(see Financial section below). In pursuit of its stated strategy, the Board has reviewed in detail asignificant number of opportunities with a view to identifying the mostappropriate target as a basis for future growth. By definition, this firsttarget will impact significantly on the future direction of the Group both interms of technology and of market segments that are applicable to the giventechnology. The Board believes its preferred target will offer significant marketopportunity, utilising both macro and micro array technology with anapplicability across a number of disease states. The execution of any deal ispredicated on securing the necessary funds through both debt and equity finance,and the Board remains confident that any such deal will be successfullyexecuted. Financial The Group has adopted reverse acquisition accounting and therefore theconsolidated figures presented (and comparatives) show the results of OmegaDiagnostics Limited for the period under review in addition to the postacquisition results of Omega Diagnostics Group PLC (formerly QuintessentiallyEnglish plc). Revenue for the period declined by 5.2% to £2,032k (2006: £2,143k) as revenuefrom the Asian sub-continent declined due to challenges faced within the Indiandiagnostics market. Consequentially Gross Profit declined to £831K (2006: £868k)with relatively static gross margins of 40.9% (2006: 40.5%). Administrative expenses increased from £736k in 2006 to £925k this yearprimarily as a result of the associated costs of listing, advice in relation toreporting under IFRS and some increase in personnel costs. There was an Exceptional Charge of £799k (excluding goodwill) in relation tovarious financial obligations entered into at the time of the reversal intoQuintessentially English plc. These charges conform to relevant accountingstandards, however lacking in common sense these may be. I draw your attentionin particular to two items in relation to the CEO's Deferred Salary Agreementand my own warrant instrument, the charges to the Income Statement being £34kand £93k respectively. Both Andrew Shepherd and I have waived our rights underboth agreements (see strategy section above) and there is no obligation on theCompany whatsoever, albeit a charge has been recognised. Compliance at theexpense of comprehension. The overall loss for the period was £1,140k (2006: profit £255k), adisappointing result in core trading terms before the additionalaccounting-related costs which merely exacerbate the reported loss. Balance sheet Net cash at the year-end was £378k (2006: overdraft £298k). Included in trade and other receivables is £284k in relation to professionalfees incurred in respect of potential acquisitions. R&D The work on the Group's HSV test continues, and the Board believes that theproduct will launch and contribute to revenue in the first half of the newfinancial year. The Company is currently evaluating technology from the US Centers for DiseaseControl and Prevention for an emerging virus that may have significant clinicalrelevance, but no decision has yet been made in relation to this. Outlook Trading in the current year remains flat and the rationale for seeking to growthrough acquisition is further underlined. The Board remains confident in thatstated objective and will update the markets accordingly. David EvansNon-Executive Chairman BUSINESS REVIEW This is our first Annual Report since floating on AIM in September 2006 throughthe reverse acquisition of Quintessentially English plc. Being a public companywill enhance our plan to be a pivotal force in the consolidation of the in-vitrodiagnostics ('IVD') industry and position us as a key player in the market. Ourstrategy is to grow by acquisition, build our product portfolio and leveragesales through our distribution network which covers over 100 countriesworldwide. Turnover fell by just over 5% throughout the year as the Group continues tooperate in a highly competitive and challenging market. Sales of the TBdiagnostic products, however, have seen an increase of 25% during the year to£126,136, (2006: £100,588) due to increased marketing activity in India by ourexclusive partner, GlaxoSmithKline. Market conditions In 2004, the global IVD market was estimated at US$27.7bn, with the immunoassay/infectious disease/blood bank screening market worth approximately US$5.4bn.This market is forecast to rise to approximately US$8bn by 2008. Immunoassayshave become a widely accepted technique in the field of clinical diagnosis ofdisease. The IVD industry is a global one. In 2003, the North American market was thelargest of the regional markets, accounting for approximately 43% of the totalmarket. Western Europe was the second largest market (31%), followed by Japan(11%). However, the 'Rest of World' (ROW) region was one of the fastest growingmarkets, with annual growth rates in excess of 10% forecast to 2008. Ofparticular interest to the Company is the growth rate in India, which is ourlargest single market, and which is growing at an average annual growth rate of21% over the same period. There has been a significant degree of consolidation in the IVD market overrecent years. Based on 2003 data, approximately 90% of the global market isshared by 10 companies, while approximately 200 companies share the remaining10% of the market with sales ranging from under $5 million to about $300million. A number of companies are achieving success in the IVD marketplace byfocusing on high growth niches. Merger and acquisition strategies are being followed by many of the majorplayers and those aspiring to become the major players through acquisitivegrowth. A recent example of this is the acquisition by the Medical Solutionsgroup of Siemens AG of Diagnostic Products Corporation for approximately US$1.86billion and Bayer Diagnostics for €4.2 billion, which now makes Siemens a top 10player in the IVD industry. Smaller companies are also growing rapidly throughacquisition, and one particular example is Trinity Biotech plc ('Trinity') whichis listed on NASDAQ and the Irish Stock Exchange. Trinity was formed in 1992 asa small IVD company and has grown to have sales of approximately US$100 millionby 2005 and a market value of approximately US$133 million as at 14 March 2007. Sales, marketing and distribution channels Omega sells its products through a network of exclusive and non-exclusivedistributors in over 100 countries. These distributors purchase products in their own right and then distribute mostto the clinical laboratories in their country. In addition, Omega also sellsdirectly to several Ministries of Health in countries which favour internationaltenders over local supply contracts. Omega also supplies other IVD manufacturerson an OEM basis with several products, and these are then sold under the OEMcustomers' labels. OEM sales in the year were £242,155 (2006: £247,004),representing 11.9% (2006: 11.5%) of total sales in the year. In the UK, Omega sells directly into several specialist/reference laboratories,but the coverage is not extensive. Less than 3% (2006: 3%) of Omega's salesoccur in the UK, the majority being to third party IVD companies as OEM sales. Omega's largest distributor by sales value in the year ended 31 March 2007 wasGlaxoSmithKline in India, accounting for £197,287 (2006: £234,302) andrepresenting 9.7% (2006: 10.9%) of Omega's sales in the year. Omega's geographical market coverage is wide, without any dominant area. Thisensures that there is a spread of risk and opportunity. Omega currently has no sales into the US and Japanese markets. Omega does notcurrently hold regulatory approval from the US Food and Drug Administration(FDA) for either products or facilities. However, the US sales potential for thenew HSV-2 test is such that the Directors consider that this market is a primetarget, albeit that application for FDA regulatory approval would require to bemade beforehand. During the year, a European patent was granted in respect of the Company'sBranched Peptide technology which has been exclusively licensed from the MedicalResearch Council (MRC). The Patent covers the enabling technology that allowsassays to be developed with resulting superior sensitivity and specificity,which are key features of any new diagnostic test. During the year, the technology has been applied to the development of a newtest for Herpes Simplex Virus 2 ('HSV-2'). Whilst the development was delayeddue to technical reasons which have been overcome since the year-end, goodprogress has been made subsequently which will allow the new test to proceed toclinical trials and product launch within the first half of the new financialyear. In addition, a further European patent was granted in April 2007 inrespect of the Branched Peptide specific sequence for HSV-2. These patents,together with the US patent granted earlier in respect of the specific peptidesequence, will provide the Company with full IP coverage in the two largestmarkets for this product. Andrew ShepherdChief Executive FINANCIAL REVIEW The full year result has been impacted by the accounting for the reverseacquisition of the Company by Omega Diagnostics Limited on 19 September 2006.Following completion of the reverse transaction to enable the pursuit of anacquisition-led strategy, costs of over £100,000 have been incurred in the yearwhich, but for the transaction, would not have been incurred. These costs areincluded within Administration costs. The largest element of this cost hasinvolved advice in connection with reporting results under InternationalFinancial Reporting Standards ('IFRS'), regulatory and compliance costs as apublic company and increased personnel costs. In addition, a number ofexceptional charges totalling just over £1 million have arisen which have beenitemised as Exceptional items on the Income Statement and are described morefully below. The net result for the year is a loss of £1,139,818 (2006: £254,779profit). Revenue Revenue for the year was £2,032,146 representing a decrease of 5.2% over theprevious year (2006: £2,143,806). The Company continues to operate in highlycompetitive markets, and growth in certain regions was offset by reductions inother areas. Gross profit Gross profit for the year was £831,489 (2006: £868,145). The gross profit marginhas improved slightly in the year to 40.9% (2006: 40.5%). Before the allocationof labour and overhead costs, the gross margin over direct material costs foragglutination tests was 62.5% (2006: 60.0%) and for ELISA tests was 51.9% (2006:50.1%) as the Company benefited from some efficiencies within its operations.The lower level of overall sales in the year means that fixed labour andoverhead costs have a higher effect on margins, accounting for the totalincrease being only 0.4 percentage points. Loss before tax The loss before tax was £1,141,225 - largely due to exceptional charges.Administration costs for the year totalled £924,716 (2006: £736,495). Theincrease in administration costs is largely attributable to the compliance andregulatory costs associated with the Company's listing on the AIM Market of theLondon Stock Exchange and the costs of pursuing the acquisition strategymentioned above. Research and development expenditure was £32,588 (2006: £38,996) as the Companyhas continued with the development of a novel new test for diagnosing HerpesSimplex Virus infections, utilising its patent-protected technology licensedexclusively from the Medical Research Council. The Company has suffered an exchange loss of £19,056 (2006: exchange gain£3,595) in the year. The Company's operations are conducted throughout the worldand involve buying and selling in sterling, euros and US dollars. The biggestfluctuation in exchange rates in the year has been between sterling and the USdollar where sterling has strengthened throughout the year. Given that theCompany sells more in US dollar value terms than it buys in US dollars, there isa net exposure to the weakened US dollar that has given rise to this exchangeloss. Exceptional items Earn-out Under the terms of the acquisition agreement covering the purchase of OmegaDiagnostics Limited ('ODL') by Omega Diagnostics Group PLC, the originalshareholders in ODL may be entitled to additional shares in the Company onobtaining certain earn-out targets. The earn-out is for a maximum amount of£1.788 million and is subject to an earn-out calculation, but to the extent thatthe earn-out amount exceeds £770,000, the amount by which it exceeds £770,000shall only be included and become payable if EBITDA per share is equal to orgreater than 0.2 pence. The number of new ordinary shares to be delivereddepends upon the five-day average closing mid-market price prior to publicationof the audited results for the year ended 31 March 2008 and accordingly willgive rise to a variable number of new ordinary shares being delivered. Theearn-out is considered to be a contract to be settled by delivery of theCompany's own equity instruments the accounting for which is determined byInternational Accounting Standard 32 ('IAS32'). Under IAS32, a contract that will be settled by the delivery of a variablenumber of equity instruments so that the fair value of the equity instruments tobe issued equals the amount of the contractual obligation, is a financialliability. The liability to be recognised should be the present value of theconsideration expected to be payable. At initial recognition, the quantum ofliability to be recognised will depend upon management's expectation, at thatdate, of the amount that would ultimately be payable, with any changes inexpectation being reflected through the Income Statement. The directors havereviewed the position and are of the opinion that an earn-out amount of£770,000, discounted to a present value of £705,112, should be recognised as aliability in the accounts with a corresponding charge to the Income Statement.When new ordinary shares are finally issued in settlement of the earn-out, theliability will be extinguished with equity being recognised for the same amount. Andrew Shepherd deferred salary arrangement On 23 August 2006, the Company entered into an agreement with Andrew Shepherdwhich recognised that he had deferred part of his salary since 17 July 2002. At23 August 2006, the deferred amount totalled £104,166. In February 2007, AndrewShepherd waived his entire rights under this agreement. Pursuant to theagreement, the Company had agreed that payment of the deferred amount wouldoccur no earlier than 1 April 2009 and then, only when the annual results of theGroup evidence profits before tax of not less than £500,000. The deferredamount, provided that the condition had been met, would have been payable, atthe option of Andrew Shepherd, either in cash or in 5,208,325 new OrdinaryShares, being the deferred amount at a price of 2 pence per share. Under IFRS2Share Based Payments, if an entity has granted the counterparty the right tochoose whether a share-based payment transaction is settled in cash or byissuing equity instruments, the entity has granted a compound financialinstrument, which includes a debt component (i.e. the counterparty's right todemand payment in cash) and an equity component (i.e. the counterparty's rightto demand settlement in equity instruments rather than in cash). In this case, the fair value of the debt component was the present value of thedeferred salary (£104,166) whilst the fair value of the equity component wasthat calculated under the normal equity-settled IFRS2 methodology. The Directorshave calculated the fair value of the debt component to be £91,281 and the fairvalue of the equity component to be £33,586. As there was no future servicerequirement, and despite the waiver of rights, the equity component cost of£33,586 has immediately had to be charged to the Income Statement. David Evans warrant On 23 August 2006 the Company issued a warrant instrument to David Evansentitling him to subscribe for 6,088,843 Ordinary Shares at a subscription priceof 2 pence per share. In February 2007, David Evans waived his entire rightsunder this agreement. The vesting period of this warrant was from 19 September2006 until 31 March 2008. The warrant was issued to David Evans in his capacityas Non-Executive Chairman and, therefore, he was in receipt of an employeeshare-based payment. Accordingly, the transaction should be accounted for underIFRS2 Share Based Payments. This transaction takes the form of an equity-settledshare-based payment transaction and should be measured at fair value using agrant date model. The cost of the award would normally be recognised over therelevant service period. Under IFRS2, the cost of the award to an employee is the fair value of theequity instrument awarded as at the date of grant. This comprises the intrinsicvalue of the instrument (share price less exercise price) and a time value. Thetime value of an option arises from the time remaining to expiry and will takeinto account share volatility, time period remaining, and the risk-free rate ofreturn. This is usually calculated using an option-pricing model. The Directorshave calculated that the fair value of the cost of this award from the date ofgrant to 31 March 2007 would have been £32,031. However, due to the waiver ofrights, the entire cost of £92,773 has had to be charged immediately. £60,742has been treated as an exceptional charge. Goodwill Following completion of the acquisition of Omega Diagnostics Limited ('ODL') bythe Company, under IFRS3 Business Combinations, the Directors believe ODL shouldbe identified as the acquirer, as it had the power to govern the financial andoperating policies of the resulting enlarged group through the appointment ofits directors onto the Company's board and through the ongoing equity interestsin the Company of the ODL shareholders. Accordingly, the acquisition has beentreated as a reverse acquisition. As set out in IFRS3 B9, the cost of the business combination shall be allocatedby measuring the identifiable assets and liabilities at their fair values at theacquisition date. Any excess of the cost of the combination over the acquirer'sinterest in the net fair value of those items shall be accounted for asgoodwill. Goodwill arising on the acquisition has been calculated at £243,683.As the Company had minimal net assets and no inherent operations or trade at thetime of the acquisition, there was no underlying cash generation to support thecarrying value of goodwill. Accordingly, the directors are of the opinion thatthe goodwill arising from the acquisition would appear to have been impaired andhas therefore immediately been written down. Taxation There is a tax credit of £1,407 (2006: £57,057 tax credit) in the year,representing a movement in the deferred tax charge. A reconciliation of thecharge is shown in note 6 to the Accounts. Earnings per share There was a basic loss per share of 1.2 pence compared to earnings per share of0.4 pence in the previous year. There was a diluted loss per share of 1.1 pence,by taking into account the effect of known transactions that may give rise to afuture issue of shares. Future acquisition costs In the year since the reverse transaction, the Company has pursued itsacquisition strategy. Professional fees amounting to £283,950 have been incurredand are included in other receivables and other payables on the balance sheet at31 March 2007. Financing and cash flow Net cash inflow for the year was £675,674 (2006: £30,768) following £1 million(gross) raised on 19 September 2006 through the placing of 50,000,000 newordinary shares at 2p per share at the same time as the reverse takeovertransaction. The net funds received from the issue of shares after expensesamounted to £732,333. Cash generated from operations was £26,637 (2006:£139,047) and cash used to repay loans in the year was £60,704 (2006: £60,055).Net cash at the year-end amounted to £317,570 (2006: £418,804 net debt). Capital expenditure The Company incurred £32,469 (2006: £12,390) on fixed assets, predominantly onplant and machinery to semi-automate a production labelling process and ongeneral IT equipment upgrades. Kieron HarbinsonFinance Director OMEGA DIAGNOSTICS GROUP PLCCONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 MARCH 2007 2007 2006 £ £Continuing operationsRevenue 2,032,146 2,143,806Cost of sales (1,200,657) (1,275,661) Gross profit 831,489 868,145Administration costs (924,716) (736,495)Other income - government grants and related assistance 7,015 31,011 Exceptional administration costs (799,440) - Operating (loss)/profit (885,652) 162,661 Finance costs (24,898) (36,016)Finance revenue - interest receivable 13,008 182Exceptional items - loan waiver - 70,895 Exceptional items - goodwill (243,683) - (Loss)/profit before taxation (1,141,225) 197,722 Tax credit 1,407 57,057 (Loss)/profit for the year (1,139,818) 254,779 Earnings Per Share (EPS)Basic EPS on (loss)/profit for the year - before exceptional items (0.1p) 0.3p - after exceptional items (1.2p) 0.4p Diluted EPS on (loss)/profit for the year - before exceptional items (0.1p) 0.3p - after exceptional items (1.1p) 0.4p OMEGA DIAGNOSTICS GROUP PLCCONSOLIDATED BALANCE SHEETAS AT 31 MARCH 2007 2007 2006 £ £ASSETSNon-current assets Property, plant and equipment 107,995 91,641 Deferred tax 58,464 57,057 166,459 148,698 Current assets Inventories 263,637 258,298 Trade and other receivables 746,108 462,902 Cash and cash equivalents 634,651 8,401 1,644,396 729,601Total assets 1,810,855 878,299 EQUITY AND LIABILITIESEquityIssued capital 1,234,296 236,512Retained earnings (1,183,052) (169,593)Total equity 51,244 66,919 LiabilitiesNon-current liabilities Other financial liabilities 705,112 - Long term borrowings 27,383 60,250Deferred income - government grants - 2,667Total non-current liabilities 732,495 62,917 Current liabilities Short-term borrowings 289,698 366,955 Trade and other payables 737,418 381,508Total current liabilities 1,027,116 748,463 Total liabilities 1,759,611 811,380Total equity and liabilities 1,810,855 878,299 OMEGA DIAGNOSTICS GROUP PLCCONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2007 Share Share Retained Capital Premium Earnings Total £ £ £ £ Balance at 31 March 2005 80,036 156,476 (424,372) (187,860) Profit for the year ended 31 March 2006 - - 254,779 254,779 Balance at 31 March 2006 80,036 156,476 (169,593) 66,919 Reverse acquisition capital adjustment 265,451 265,451 Issue of share capital 514,688 217,645 732,333 Loss for the year ended 31 March 2007 (1,139,818) (1,139,818) Share based payments 126,359 126,359 Balance at 31 March 2007 860,175 374,121 (1183,052) 51,244 OMEGA DIAGNOSTICS GROUP PLCCONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2007 2007 2006 £ £ Cash flows generated from operations(Loss)/profit for the year (1,139,818) 254,779Adjustments for:Goodwill write off 243,683 -Taxation (1,407) (57,057)Finance costs 24,898 36,016Finance income (13,008) (182)Other income - (70,895) Operating (loss)/profit before working capital movement (885,652) 162,661(Increase)/decrease in trade and other receivables (283,206) 42,716(Increase)/decrease in inventories (5,339) 48,422Increase/(decrease) in trade and other payables 1,061,022 (134,025)Grant amortised (2,662) (16,000)Depreciation 16,115 35,273Share-based payments 126,359 -Tax refunds - -Net cash flow from operating activities 26,637 139,047 Investing activitiesFinance income 13,008 182Purchase of property, plant and equipment (32,469) (12,390)Inflow on acquisition of subsidiary undertaking 21,767 - Net cash from/(used) in investing activities 2,306 (12,208) Financing activitiesFinance costs (24,898) (36,016)Proceeds from issue of share capital 732,333 -Loan repayments (60,704) (60,055)Net cash (used in)/from financing activities 646,731 (96,071) Net increase/(decrease) in cash and cash equivalents 675,674 30,768Cash and cash equivalents at beginning of period (297,854) (328,622)Cash and cash equivalents at end of period 377,820 (297,854) OMEGA DIAGNOSTICS GROUP PLCCOMPANY INCOME STATEMENTFOR THE 15 MONTHS ENDED 31 MARCH 2007 15 months 12 months ended ended 31 Mar 2007 31 Dec 2005 £ £Continuing operationsAdministration costs (175,306) (92,303)Exceptional administration costs (94,328) - Operating loss (269,634) (92,303) Finance costs (153) (104)Finance revenue - interest receivable 15,408 7,708 Loss before taxation (254,379) (84,699) Tax credit - - Loss for the year (254,379) (84,699) OMEGA DIAGNOSTICS GROUP PLCCOMPANY BALANCE SHEETAS AT 31 MARCH 2007 2007 2005 £ £ASSETSNon-current assets Investments 1,917,114 2 1,917,114 - Current assets Trade and other receivables 415,007 - Cash and cash equivalents 586,190 152,126 1,001,197 152,126Total assets 2,918,311 152,128 EQUITY AND LIABILITIESEquityIssued capital 2,223,971 279,636Retained earnings (285,913) (157,893)Total equity 1,938,058 121,743 LiabilitiesNon-current liabilities Other creditors 705,112 -Total non-current liabilities 705,112 - Current liabilities Trade and other payables 275,141 30,385Total current liabilities 275,141 30,385 Total liabilities 980,253 30,385 Total equity and liabilities 2,918,311 152,128 OMEGA DIAGNOSTICS GROUP PLCCOMPANY STATEMENT OF CHANGES IN EQUITYFOR THE 15 MONTHS ENDED 31 MARCH 2007 Share Share Retained Capital Premium Earnings Total £ £ £ £ Balance at 31 December 2005 111,769 167,867 (73,194) 206,442 Loss for the year ended 31 December 2005 - - (84,699) (84,699) Balance at 31 December 2005 111,769 167,867 (157,893) 121,743 Issue of share Capital 1,120,688 823,647 - 1,944,335 Loss for the 15 months ended 31 March 2007 - - (254,379) (254,379) Share based payments - - 126,359 126,359 Balance at 31 March 2007 1,232,457 991,514 (285,913) 1,938,058 OMEGA DIAGNOSTICS GROUP PLCCOMPANY CASH FLOW STATEMENTFOR THE 15 MONTHS ENDED 31 MARCH 2007 15 months 12 months ended ended 31 Mar 2007 31 Dec 2005 £ £ Cash flows generated from operations(Loss) for the year (254,379) (84,699)Adjustments for: Finance costs 153 104 Finance income (15,408) (7,708) Operating (loss) before working capital movement (269,634) (92,303)(Increase) in trade and other receivables (415,007) -Increase in trade and other payables 949,868 14,221Share-based payments 126,359 -Net cash flow from operating activities 391,586 (78,082) Investing activitiesFinance income 15,408 7,708Investment in subsidiary (1,917,112) -Net cash (used in)/from investing activities (1,901,704) 7,708 Financing activitiesFinance costs (153) (104)Proceeds from issue of share capital 1,944,335 -Net cash from/(used in) financing activities 1,944,182 (104) Net increase/(decrease) in cash and cash equivalents 434,064 (70,478)Cash and cash equivalents at beginning of period 152,126 222,604Cash and cash equivalents at end of period 586,190 152,126 Notes to the Financial StatementsFor the Year ended 31 March 2007 1. Basis of preparation The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The summarised balance sheet at 31 March 2007 and the summarised incomestatement, summarised cash flow statement and associated notes for the year thenended have been extracted from the Group's financial statements. The comparative consolidated financial information for the year ended 31 March2006 is based on an abridged version of the group's published financialstatements for that period, which contained an unqualified audit report andwhich have been filed with the Registrar of Companies. The comparative companyfinancial information for the year ended 31 December 2005 is based on anabridged version of the company's published financial statements for thatperiod, which contained an unqualified audit report and which have been filedwith the Registrar of Companies. The statutory accounts for 2007 will be finalised on the basis of the financialinformation presented in this preliminary announcement and will be delivered tothe registrar of companies following the company's annual general meeting. The consolidated and Company financial statements have been prepared inaccordance with IFRS as adopted by the European Union as they apply to thefinancial statements of the Group and Company for the year ended and 15 monthsended 31 March 2007 respectively. 2. Earnings per share Basic Earnings per share are calculated by dividing net profit for the yearattributable to ordinary equity holders of the Group by the weighted averagenumber of ordinary shares outstanding during the year. Diluted earnings per share are calculated by dividing the net profitattributable to ordinary equity holders of the Group by the weighted averagenumber of ordinary shares outstanding during the year plus the weighted averagenumber of ordinary shares that would be issued on the conversion of all thedilutive potential ordinary shares into ordinary shares. 2007 2006 £ £ Net profit attributable to equity holders of the Group (1,139,818) 254,779 2007 2006 number number Basic average number of shares 93,988,048 60,600,000Warrants 5,588,432 -Director's share option 2,800,800 -Diluted weighted average number of shares 102,377,280 60,600,000 There have been no other transactions involving ordinary shares or potentialordinary shares between the reporting date and the date of completion of thesefinancial statements. Earnings per share before exceptional items The Group presents as exceptional items on the face of the income statement,those material items of income and expense which, because of the nature and theexpected infrequency of the events giving rise to them, merit separatepresentation to allow shareholders to understand better the elements offinancial performance in the year, so as to facilitate comparison with priorperiods and to assess better trends in financial performance. To this end, basic and diluted earnings per share is also presented on thisbasis using the weighted average number of ordinary shares, both basic anddiluted, as per the above table. Net profit before exceptional items attributable to equity holders of the Groupis derived as follows: 2007 2006 £ £ Net profit attributable to equity holders of the Group (1,139,818) 254,779Exceptional items 1,043,123 (70,895)Profit before exceptional items attributable to equity holders of the (96,695) 183,884Group 3. Annual General Meeting The Annual General Meeting of the Company will be held at the offices of BrodiesLLP, 15 Atholl Crescent, Edinburgh EH3 8HA on 8 August 2007 at 11am. 4. Annual Report The annual report will be sent to shareholders shortly and will also beavailable at the registered office of Omega Diagnostics Group plc at: One London WallLondonEC2Y 5AB This information is provided by RNS The company news service from the London Stock Exchange