23 Jun 2014 07:00
OMEGA DIAGNOSTICS GROUP PLC
("Omega" or the "Company" or the "Group")
FINAL RESULTS
FOR THE YEAR ENDED 31 MARCH 2014
Omega (AIM: ODX), the medical diagnostics company focused on allergy, food intolerance and infectious disease, announces final results for the year ended 31 March 2014.
Omega is one of the UK's leading companies in the fast growing area of food intolerance 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, a direct presence in Germany and India, and with a growing network of global partnerships.
Financial Highlights:
· Turnover up 3% to £11.6m (2013: £11.3m)
· Food Intolerance revenue up 18% to £5.18m (2013: £4.39m)
· Allergy and autoimmune revenue down 5% to £3.96m (2013: £4.16m)
· Infectious disease/other revenue down 10% to £2.45m (2013: £2.71m)
· Gross profit up 5% to £7.4m (2013: £7.1m)
· Adjusted profit before tax* up by 41% to £1.10m (2013: £0.78m)
· Adjusted EPS 1.2p (2013: 1.3p)
· Cash generative with net cash at the period end of £2.4m (2013: net debt of £0.7m)
Operational highlights:
· Visitect® CD4 technical transfer from the Burnet Institute successfully completed
· iSYS Allergy programme progressing with 24 out of 40 allergens optimised
· Successful over-subscribed equity placing to raise £4m
· Burnet Institute and Omega successful in attracting grant funding from UNITAID with Omega receiving £0.4m
· Strengthening of the Board with key appointment of Bill Rhodes as Non-Executive Director
· Increased patent protection for CD4 with patent awards in US and Africa
* Adjusted for amortisation of intangible assets, share based payment charges and fair value adjustments to financial derivatives
Commenting, David Evans, Chairman, said:
"Our future landscape is brightened, as well as dominated, by the prospects for our Visitect® CD4 test, which is now well into its field trials. However, we all have a dislike for complete uncertainty and that is our challenge in being able to set our budgets for the current year in relation to both the timing and quantum of CD4 revenues. We will make significant progress this year in terms of gaining market acceptance for CD4 and I believe the prospects for the Group remain positive. "
Contacts:
Omega Diagnostics Group PLC | Tel: 01259 763 030 |
Andrew Shepherd, Chief Executive | |
Kieron Harbinson, Group Finance Director Jag Grewal, Group Sales and Marketing Director | www.omegadiagnostics.com |
finnCap Ltd | Tel: 020 7220 0500
|
Geoff Nash/Christopher Raggett (Corporate Finance) Mia Gardner (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
Strategy
Point-of-care testing
The Group has a clear strategy to become a market leader in the provision of point-of-care ("POC") testing for infectious diseases in large parts of the world where resources remain constrained and where there are substantial unmet needs. Visitect® CD4 is the first example of this where an estimated 17 million HIV positive patients cannot obtain the treatment they need through a lack of access to CD4 testing in rural areas. Visitect® CD4 is an instrument-free device that requires no power and no refrigeration facilities and can generate a result in 40 minutes. Beta studies in Kenya and India are providing further patient data to determine what, if any, aspects of the test require further optimisation. As this test nears commercialisation, we will continue to partner with major NGOs and global health organisations to ensure this test is delivered at the point of most need.
Through our partnership with the Burnet Institute, we also have access to a POC test for syphilis which can differentiate between active infections and past infections. According to World Health Organisation ("WHO") estimates, there are 12 million new cases of syphilis each year with 90% occurring in developing countries. At present, there are no POC assays on the market that can detect specific IgM antibodies and we have recently increased our in-house resource and capability to move this project forward to provide a valuable tool for improved control of syphilis worldwide.
Automation
When we purchased the IVD allergy business in Germany in 2010, it was the first step in a plan to become a leading provider of allergy tests into clinical laboratories in a global market which the Directors estimate to be worth over US $500 million per annum, dominated by one competitor. Since then, we have exclusively licensed the use of IDS' automated iSYS instrument for allergy testing and invested in a long development programme covering initial feasibility, lock-down of assay protocol, optimisation and claim support work. We have also set up an in-house manufacturing facility for reagent filling. During the second half of the year, we finally saw the first allergens to emerge from this programme following a successful claim support phase. We have eight allergens which can be run on the iSYS instrument that show comparable results to the market-leading competitor and a further 16 allergens which have now completed optimisation. Our strategic aim remains unaltered: to launch with a panel of 40 allergens, followed by a programme of menu extensions to achieve a number two market position. Our initial commercialisation plans involve working with IDS in markets where it has a direct presence, followed by expansion into other territories through third party distributors.
Financial performance
The Group performed well, particularly in the second half of the year, with turnover for the whole year increasing by 3% to £11.6 million (2013: £11.3 million). Gross profit increased to £7.4 million (2013: £7.1 million) and total overheads were maintained at approximately £6.8 million. Adjusted profit before tax increased by 41% to £1.1 million, from £0.8 million the year before, and adjusted earnings per share were 1.2 pence (2013: 1.3 pence) reflecting the higher average number of shares in issue throughout the year.
The Group remains in a strong cash position with cash reserves of £3.1 million (2013: £0.2 million) at the year end following the fundraising completed in June last year. A strong contribution from operating activities generated a cash inflow during the year of £1.7 million (2013: £1.0 million), ensuring we continued to manage our working capital with efficiency.
Corporate governance
The size and structure of the Board and its committees are kept under review to ensure an appropriate level of governance operates throughout the year. The Board comprises two Non-executive Directors and three Executive Directors who meet frequently during the year to discuss strategy and to review progress and outcomes against objectives. Whilst, as an AIM-quoted company, the Group is not required to comply with the full requirements of the UK Corporate Governance Code, we believe the Board has a good mix of skills and experience and a culture that easily enables the Non-executive members of the Board to challenge and advise the Executive team as appropriate.
The Audit Committee and the Remuneration Committee are comprised of the two Non-executive Directors and the Board believes the current make-up and number of committees remain appropriate for a Group of our size.
Board and employees
I am very pleased that we were able to appoint Bill Rhodes as a Non-executive Director to the Board during the year and his input and insightfulness is already providing a valuable contribution. His knowledge and experience from many years spent at Becton Dickinson and elsewhere will continue to support our strategy outlined above. I would like to reiterate past thanks to Mike Gurner who retired from the Board last year, and who contributed much to the Group since it first became a public company.
Much of the progress we have made would not be achieved without the hard work of our employees. We now have 145 individuals around the world and I would personally like to thank each and every one of them for their contribution throughout this year.
Positive outlook
Trading in the new financial year to date is in line with management expectations with the marginal growth in food intolerance testing being offset by a similar decline in Allergy and Infectious Disease testing.
Our future landscape is brightened, as well as dominated, by the prospects for our Visitect® CD4 test, which is now well into its field trials. However, we all have a dislike for complete uncertainty and that is our challenge in being able to set our budgets for the current year in relation to both the timing and quantum of CD4 revenues. CD4 will, without doubt, be a successful product for the Group, but we would be foolish to believe that our crystal ball is better than yours in being able to forecast with certainty the decision outputs from the NGOs we are working with. This is primarily a global tender-based business, with timing driven by the availability of funds and the view of the various governments as to need at that time. Due to this fundamental timing uncertainty we have erred on the side of caution in terms of both revenues and building our overhead base ahead of the revenue curve. When those cautious assumptions change we will update the market accordingly.
We will make significant progress this year in terms of gaining market acceptance for CD4 and I believe the prospects for the Group overall are positive.
David Evans
Non-executive Chairman
20 June 2014
Chief Executive's review
IDS-iSYS Allergy
Development efforts have continued throughout the year and we continue to invest in facilities and skilled manpower to bring this project to fruition. We all appreciate that this project has taken longer to reach a marketable product than first anticipated and this has been a source of frustration for all concerned. However, we should still bear in mind that much progress has been made throughout the year. When we do launch this product, from the results seen to date, we will have a product that will compete very well and will support our objective to secure a number two market position behind the current market leader.
CD4
Technology transfer
Our strategy of maximising shareholder value through the development of innovative new products, such as Visitect® CD4, using global partnerships with groups, such as the Burnet Institute, has taken a major move forward in the year with the successful completion of the technology transfer from bench top manufacture to a scalable and robust manufacturing protocol. You will recall that this involved successfully completing a three-batch validation of our manufacturing protocol, a process which involved validation of the test on venous blood samples at a UK Reference laboratory.
Field evaluations
The next stage of the process has involved testing the product under field conditions with the intention that patient data is used to determine what, if any, aspects of the test require fine-tuning. Such Beta trials are underway in Kenya and India and are providing the clinical data we need.
In India, 140 patient samples have been tested to date. Based on an interim analysis of these data, the test has produced results on venous blood samples which match with the Company's performance design parameters. Results to date on finger stick blood show similar overall diagnostic performance but with slightly lower levels of sensitivity and corresponding higher levels of specificity. This is being investigated as the trial proceeds.
The trial in Kenya has been extended beyond the initial 200 patients because test performance was just below optimal performance on both venous and finger stick blood and additional devices have already been sent to Kenya for further evaluation. The investigative site has also received additional user training by Omega staff, and we expect that these additional tests will allow us to determine, and correct, the root cause of this difference.
Manufacturing
In the year, we established our UK facility for Visitect® CD4 production which is now fully validated under ISO approved procedures. We have also leased a facility and we will shortly commence the interior build of a manufacturing base in Pune, India. This has been part funded by a £0.4 million grant from the Burnet Institute which itself received a grant for US$1.6 million from UNITAID to fund large scale field trials in South Africa and India. The establishment of an Indian manufacturing facility will enable us to produce the test locally, thereby avoiding a punitive import duty rate that currently exists for Rapid Test imports into India. As well as producing Visitect® CD4 tests, we are aiming to manufacture other Rapid Tests for the Indian market and beyond where cost per test is a major barrier to market entry.
Procurement
A country's ability to purchase commercial quantities of Visitect® CD4 is dependent upon receiving a positive recommendation from its regulatory authority and Omega having attained CE Mark status for the product which is within sight. In resource poor countries, supplies will be funded with NGO/Aid money and procured through supplier-approved channels. One major procurement agency has already evaluated our quality management system and confirmed Omega to be a very low risk supplier with regard to manufacturing Visitect® CD4.
As well as ease of use, another driver for the introduction of new CD4 testing technologies is a reduction in the cost per test which will allow more people to be tested and treated using available funds.
Marketing and training
Over the last year there has been a major effort in priming the market for the test to the point where the Company has developed a strong presence in the global health arena and is recognised as a serious contender. Visitect® CD4 is still the only instrument-free, disposable CD4 test available in the world.
Training is a vital element in launching any new test technology and a training package has been developed which has proved successful in the initial field trial roll-out in Africa and India.
mHealth
In addition to the test itself, the development of the Android smartphone App to record and transmit Visitect® CD4 test results has completed its development and is also undergoing field trials. We expect this App to be fully available in the new financial year which will offer integration into cloud/LIMS host databases to provide last mile solutions in resource challenged environments. This so-called "mHealth" solution has met with great enthusiasm by NGOs and global health organisations as the test/App combination offers a complete solution from test site to management headquarters. mHealth itself is being seen as a new way of educating and providing health information solutions to governments and aid agencies so with the Visitect® App we are at the forefront of these developments.
Other global health developments
HIV Viral Load
This area of diagnostic testing is very challenging given that a complex test is expected to be used in a resource- poor setting by low skilled workers. While a few systems have been developed, they are far from true POC tests. Discussions with several groups are underway which may deliver the test that is required but it is likely to be some time before any significant progress will be made due to the complexity of the technologies being utilised and the settings where the test will be used. Moving into the HIV Viral Load testing arena means an entrance into the molecular diagnostics market, the fastest growing sector of the IVD market.
Syphilis
Our development team is now working on other projects which have a high demand in the global health arena. One such assay is the Syphilis POC test developed by the Burnet Institute, and exclusively licensed to Omega, which can be used in the same resource-poor settings as Visitect® CD4.
As a global leader in the field of syphilis diagnostics we are already well placed to exploit this development as we are already promoting our current range of products around the world into many resource poor countries. Currently, there are no POC tests that can detect active Syphilis, although many tests can detect past treated infections. The test, developed by Burnet, allows for the detection of an antibody that is only present at the active stage of infection and which disappears after successful treatment. This test will accurately diagnose active syphilis and allow for immediate treatment at the point of care without the need for further laboratory analysis. This test could therefore result in significant improvements in the health of women and children through the prevention of stillbirths and severe neonatal morbidity. In 2008, the mortality associated with congenital syphilis amounted to 1.4 million pregnant women. In addition to the test development, it is anticipated that an App will also be developed to work on the same Android smartphone as the Visitect® CD4 App, thereby linking the POC result to management database systems.
Neglected Tropical Diseases
Neglected Tropical Diseases ("NTDs") disproportionately affect the world's poorest and most vulnerable people, inflicting serious disfigurement and disability, reducing productivity, quality of life, often resulting in death. The combined impact of NTDs rivals the effects of human immunodeficiency virus (HIV), Tuberculosis, and Malaria. More and more funding is being donated to overcome these diseases to the point where development of appropriate diagnostic tests are now commercially viable.
Schistosomiasis
One example of an NTD is Schistosomiasis which is a disease caused by a worm that is present in many tropical countries. 200 million people are estimated to be infected, with a further 600 million at risk. After Malaria, Schistosomiasis is the second most important disease caused by a parasite. It is likely that as programmes to control Schistosomiasis roll out in Africa there will be an increasing need for a test that detects the disease sensitively and specifically. Omega is working with an expert in this disease area and good early progress is being made in the development of a new lateral flow test. It is anticipated that beta trials could commence in the second half of the year.
Outlook
The new financial year is set to be an exciting one with Visitect® CD4 coming to the market. The sales potential is high but, as alluded to above, in the NGO/Aid market sector there are some hurdles to overcome such as individual country evaluations and approvals. We remain confident about selling significant quantities of product however predicting the timing of when this business will materialise is not an exact science. The core business remains in good shape as evidenced by the increase in Food Intolerance sales and increased profit before tax so we are well positioned to take advantage of the good conditions to deliver on our goals of launching Visitect® CD4 and the iSYS Allergy platform later in the year.
By focusing on our core strategic areas and with increased focus on global health markets we believe that we are building a secure and stable platform for growth and enhanced profitability.
Andrew Shepherd
Chief Executive
20 June 2014
Financial review
Financial performance
It has been a year of solid performance for our core business. Total revenue was up by 3% to £11.6 million, principally due to a strong performance from our Food intolerance division. Gross profit increased by 5% to £7.4 million, leading to a higher margin of 63.6%.
Costs have been carefully managed throughout the year so that overheads were effectively unchanged at £6.8 million. Adjusted profit before tax increased significantly to £1.1 million compared to £0.8 million the year before. The UK companies continue to benefit from the enhanced R&D tax credit system and a net tax credit of £0.15 million has been recognised in the year. Accordingly, adjusted profit after tax of £1.25 million, on an average 104 million shares in issue, resulted in adjusted earnings per share of 1.2 pence. This is slightly reduced from 1.3 pence in the previous year where adjusted after tax profits of £1.1 million were earned on an average 85 million shares in issue.
Segmental revenue performance
Food intolerance
The Food intolerance division has consistently performed well over a number of years, exhibiting an 18% compound annual growth rate in revenue over the last five years. For this year, total Food intolerance sales were up 18% £5.18 million (2013: £4.39 million).
Sales of Food Detective® grew by 35% to £1.69 million (2013: £1.25 million) with particularly strong sales performances in Poland and Brazil. Total volumes exceeded 100,000 units for the first time, achieving sales of 106,312 (2013: 85,214). Excluding component sales to China, the average selling price per kit was £22.55 (2013: £22.01), the highest level seen in the last three years.
Sales of Genarrayt® reagents grew by 15% to £2.12 million (2013: £1.84 million) with strong performances again in both the Spanish and French markets. However, it is pleasing to see a broadening base of other markets with the top five markets by revenue accounting for 63% of total sales this year versus 70% last year. The Group sold a further 13 instruments in the year, taking the cumulative number of installations to 132 instruments in 35 countries, and revenue per instrument (excluding Spain) increased by 7% to £13,746 (2013: £12,885).
Our Foodprint® laboratory service achieved sales of £0.64 million (2013: £0.61 million) and we produced and sold 7,985 patient reports in the year (2013: 7,529) at an average price of £79.55 per report (2013: £80.65).
Allergy and autoimmune
Sales for the Allergy and autoimmune division are comprised of Allergy sales of £3.52 million (2013: £3.62 million) and sales of autoimmune products of £0.45 million (2013: £0.54 million). The Allergy sales are derived almost exclusively from our Omega GmbH business in Germany which is operating in an environment of reimbursement restrictions. 12 out of the 17 health regions we operate in are under such restrictions, but despite these regions collectively accounting for approximately 54% of total allergy sales, the overall reduction in Omega GmbH allergy sales was limited to 6% in euro terms. In reported sterling terms, the reduction was only 3% due to an average stronger euro/sterling exchange rate throughout the year of 1.186 (2013: 1.223). The strategy has been to reinforce customer relationships through training, service and account management to secure the business and to prioritise allergy testing over other testing (e.g. microbiology tests) in a market which has declined by approximately 5% over the last two years.
We continue to sell autoimmune products into markets where automation is ever increasing. Despite these headwinds, most of our country markets have maintained their position and the drop-off is attributable to a reduction in Iran where reimbursement restrictions have occurred due to a severe devaluation of the Iranian currency.
Infectious disease
Infectious disease sales amounted to £2.45 million (2013: £2.71 million) in the year. The reduction of £0.26 million is principally down to two factors. First, the loss of business from a UK customer who experienced financial difficulties led to a sales reduction of £0.16 million. Since the year end, we have recommenced selling small volumes of product to this customer as its situation has recently begun to improve. Second, the devaluation of the Iranian currency referred to above has also had a similar effect in reducing Infectious disease sales through our distributor by £0.1 million. Despite these issues, they have been mitigated by growth in other areas, particularly in India and Brazil.
Research and development
Total investment in research and development was £1.61 million (2013: £1.17 million) representing 14% of Group turnover. Expenditure is focused on our two key areas of interest. We spent £0.94 million (2013: £0.83 million) on our Allergy iSYS project and £0.43 million (2013: £0.20 million) on our Visitect® CD4 project. Both these amounts have been capitalised on the balance sheet in accordance with IAS 38 - Development Costs. Earlier stage R&D expenditure amounted to £0.24 million (2013: £0.14 million) which has been expensed through the income statement.
Intangible assets
The Group has intangible assets of £11.3 million comprising goodwill of £4.7 million, separately identifiable intangible assets of £3.9 million and capitalised development costs of £2.7 million.
Goodwill
Goodwill of £4.7 million arose as to £3.0 million on acquiring Genesis/CNS in 2007, £0.4 million on acquiring Co-Tek in 2009 and £1.3 million in acquiring the allergy IVD business in Germany in 2010. There has been no impairment of goodwill on any of the acquisitions to date.
Intangible assets
Separately identifiable intangible assets have been recognised on acquisition: £2.0 million on Genesis/CNS of which £0.6 million has been amortised to date; £0.1 million on Co-Tek which has been fully amortised; and £1.8 million on Omega GmbH of which £0.8 million has been amortised to date. A purchased licence of £1.5 million, the final £0.5 million instalment for which was paid in the year (2013: £0.1 million), relates to the exclusive global access rights to the IDS-iSYS platform for allergy testing, which, to date, has not been amortised.
Capitalised development costs
Capitalised development costs have been incurred to date comprising £2.1 million on the Allergy iSYS project and £0.6 million on the Visitect® CD4 project, neither of which has been amortised to date. The amortisation of these capitalised development costs, along with the purchased licence referred to above, will only start after commercialisation of these assets. Going forward, this particular subset of amortisation charges will not be added back in the computation of the Group's routinely reported adjusted profit before tax.
Property, plant and equipment
The Group has invested £0.5 million (2013: £0.3 million) in the year, including a combined £0.4 million at the Alva-based headquarters in Scotland on its Visitect® CD4 manufacturing assembly unit along with plant and machinery to undertake the bottle filling of individual allergy reagents for the iSYS system.
Financing
In June last year, the Company successfully completed an institutional placing of 23,529,412 ordinary shares, at 17 pence per share, raising £4 million (gross) in the process. At the year end, the Group still had over £3 million of cash in hand. In May of this year, the Company renewed its overdraft facility at a level of £1 million and, accordingly, the Group remains in a strong position to fund its activities.
Grant funding
We announced in the year that the Burnet Institute was successful in being awarded a UNITAID grant for US $1.6 million to initiate field evaluations in India and South Africa. Omega is the collaborating partner in this initiative and is the means by which the Burnet Institute will be able to deliver on its project manufacturing goal. The Burnet Institute agreed to provide Omega with grant funding of £0.36 million and 90% of these funds were received before the end of the year. Manufacturing facilities have been located in Pune, India, and since the year end, a five-year lease has been taken out over these premises to accelerate delivery of this goal. We also received an interim instalment of £32k from Scottish Enterprise under the Regional Selective Assistance Programme.
Operating cash flow
Omega continues to manage its working capital efficiently and generated operating income of £1.67 million (2013: £1.01 million) in the year, including the grant income referred to above. Excluding this grant income, the Group has achieved a conversion rate of adjusted operating profit (operating profit plus amortisation of intangible assets plus share-based payments) to operating cash of 122% (2013: 129%).
Foreign exchange
The Group has investments in overseas operations and conducts trading transactions in currencies other than sterling. The principal currencies used and the average foreign exchange rates in the year are as follows:
2013/14 | 2012/13 | |
Sterling/US dollar | 1.60 | 1.58 |
Sterling/euro | 1.186 | 1.223 |
Sterling/Indian rupee | 96.33 | 85.54 |
Profit and loss account
The Group has foreign-denominated bank accounts to allow for the receipt and settlement of amounts in connection with its normal trading operations. These transactions are subject to timing differences between when they are transacted and when they are settled which can give rise to foreign exchange differences. Foreign denominated receivables, payables and bank balances are restated into sterling at closing balance sheet dates which also gives rise to foreign exchange differences. During the year, the Group incurred exchange losses of £74,000 (2013: £2,000) on these transactions which has been charged through the income statement.
Other comprehensive income
The Group has net assets in Germany and India, held in fully owned subsidiaries. The original investments in these subsidiaries are held at historic exchange rates. The difference between these historic balances and their restated amounts at the most recent closing balance sheet rates gives rise to movements which are recorded through other comprehensive income and included within retained earnings on the balance sheet. During the year, there has been a charge of £127,000 (2013: £27,000 credit) on the retranslation of foreign operations.
Kieron Harbinson
Group Finance Director
20 June 2014
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2014
2014 | 2013 | |||
£ | £ | |||
Continuing operations | ||||
Revenue | 11,593,870 | 11,262,898 | ||
Cost of sales | (4,223,000) | (4,209,905) | ||
63.6% | 62.6% | |||
Gross profit | 7,370,870 | 7,052,993 | ||
Administration costs | (4,741,186) | (4,448,646) | ||
Selling and marketing costs | (2,102,359) | (2,297,702) | ||
Operating profit | 527,325 | 306,645 | ||
Finance costs | (28,975) | (32,914) | ||
Finance income - interest receivable | 44,691 | 2,493 | ||
Profit before taxation | 543,041 | 276,224 | ||
Tax credit | 149,810 | 306,042 | ||
Profit for the year | 692,851 | 582,266 | ||
Other comprehensive income to be reclassified to | ||||
profit and loss in subsequent periods | ||||
Exchange differences on translation of foreign operations | (126,514) | 26,970 | ||
Tax credit / (charge) | 13,488 | (4,922) | ||
Other comprehensive income that will not be reclassified | ||||
to profit and loss in subsequent periods | ||||
Actuarial gain / (loss) on defined benefit pensions | 51,941 | (50,439) | ||
Tax (charge) / credit | (12,071) | 12,900 | ||
Other comprehensive income for the year | (73,156) | (15,491) | ||
Total comprehensive income for the year | 619,695 | 566,775 | ||
Earnings Per Share (EPS) | ||||
Basic and Diluted EPS on profit for the year | 0.7p | 0.7p | ||
Adjusted Profit before Taxation | ||||
For the year ended 31 March 2014 | 2014 | 2013 | ||
£ | £ | |||
Profit before taxation | 543,041 | 276,224 | ||
IFRS related discount charges (included within Finance costs) | 12,575 | 25,046 | ||
Fair value adjustments to financial derivatives (included within Finance costs) | - | (454) | ||
Amortisation of intangible assets (included within Administration costs) | 414,308 | 406,553 | ||
Share based payment charges (included within Administration costs) | 125,987 | 71,193 | ||
Adjusted profit before taxation | 1,095,911 | 778,562 | ||
Earnings Per Share (EPS) | ||||
Adjusted EPS on profit for the year | 1.2p | 1.3p | ||
Consolidated Balance Sheet
as at 31 March 2014
2014 | 2013 | |||
£ | £ | |||
ASSETS | ||||
Non-current assets | ||||
Intangibles | 11,259,215 | 10,347,876 | ||
Property, plant and equipment | 2,283,911 | 2,116,286 | ||
Deferred taxation | 1,138,404 | 553,647 | ||
Retirement benefit surplus | 84,370 | 31,886 | ||
14,765,900 | 13,049,695 | |||
Current assets | ||||
Inventories | 1,692,941 | 1,833,887 | ||
Trade and other receivables | 2,415,917 | 2,556,762 | ||
Income tax receivable | - | 7,106 | ||
Cash and cash equivalents | 3,116,013 | 160,693 | ||
7,224,871 | 4,558,448 | |||
Total assets | 21,990,771 | 17,608,143 | ||
EQUITY AND LIABILITIES | ||||
Equity | ||||
Issued capital | 16,727,516 | 12,977,107 | ||
Retained earnings | 1,731,053 | 985,371 | ||
Total equity | 18,458,569 | 13,962,478 | ||
Liabilities | ||||
Non-current liabilities | ||||
Long-term borrowings | 319,044 | 484,472 | ||
Deferred taxation | 1,042,925 | 609,395 | ||
Total non-current liabilities | 1,361,969 | 1,093,867 | ||
Current liabilities | ||||
Short-term borrowings | 427,823 | 367,649 | ||
Trade and other payables | 1,386,358 | 1,684,149 | ||
Deferred income | 356,052 | - | ||
Other financial liabilities | - | 500,000 | ||
Total current liabilities | 2,170,233 | 2,551,798 | ||
Total liabilities | 3,532,202 | 3,645,665 | ||
Total equity and liabilities | 21,990,771 | 17,608,143 |
Consolidated Statement of Changes in Equity
for the year ended 31 March 2014
Share | Share | Retained | |||||
capital | premium | earnings | Total | ||||
£ | £ | £ | £ | ||||
Balance at 31 March 2012 | 4,145,580 | 8,831,527 | 347,403 | 13,324,510 | |||
Profit for the year ended 31 March 2013 | - | - | 582,266 | 582,266 | |||
Other comprehensive income - net exchange adjustments | - | - | 26,970 | 26,970 | |||
Other comprehensive income - actuarial loss on | |||||||
defined benefit pensions | - | - | (50,439) | (50,439) | |||
Other comprehensive income - tax credit | - | - | 7,978 | 7,978 | |||
Total comprehensive income for the year | - | - | 566,775 | 566,775 | |||
Share-based payments | - | - | 71,193 | 71,193 | |||
Balance at 31 March 2013 | 4,145,580 | 8,831,527 | 985,371 | 13,962,478 | |||
Issue of share capital for cash consideration | 941,176 | 3,058,824 | - | 4,000,000 | |||
Expenses in connection with share issue | - | (249,591) | - | (249,591) | |||
Profit for the year ended 31 March 2014 | - | - | 692,851 | 692,851 | |||
Other comprehensive income - net exchange adjustments | - | - | (126,514) | (126,514) | |||
Other comprehensive income - actuarial gain on | |||||||
defined benefit pensions | - | - | 51,941 | 51,941 | |||
Other comprehensive income - tax credit | - | - | 1,417 | 1,417 | |||
Total comprehensive income for the year | - | - | 619,695 | 4,370,104 | |||
Share-based payments | - | - | 125,987 | 125,987 | |||
Balance at 31 March 2014 | 5,086,756 | 11,640,760 | 1,731,053 | 18,458,569 |
Consolidated Cash Flow Statement
for the year ended 31 March 2014
2014 | 2013 | ||
£ | £ | ||
Cash flows generated from operations | |||
Profit for the year | 692,851 | 582,266 | |
Adjustments for: | |||
Taxation | (149,810) | (306,042) | |
Finance costs | 28,975 | 32,914 | |
Finance income | (44,691) | (2,493) | |
Operating profit before working capital movement | 527,325 | 306,645 | |
Decrease / (increase) in trade and other receivables | 140,845 | (139,262) | |
Decrease / (increase) in inventories | 140,946 | (144,338) | |
(Decrease) / increase in trade and other payables | (297,791) | 231,132 | |
(Gain) / loss on sale of property, plant and equipment | (11,224) | 1,010 | |
Depreciation | 265,553 | 268,699 | |
Amortisation of intangible assets | 414,308 | 406,553 | |
Movement in grants | 356,052 | - | |
Share-based payments | 125,987 | 71,193 | |
Taxation received | 7,106 | 13,321 | |
Cash flow from operating activities | 1,669,107 | 1,014,953 | |
Investing activities | |||
Finance income | 44,691 | 2,493 | |
Purchase of property, plant and equipment | (478,968) | (308,876) | |
Purchase of intangible assets | (1,880,845) | (1,185,133) | |
Sale of property, plant and equipment | 32,500 | - | |
Net cash used in investing activities | (2,282,622) | (1,491,516) | |
Financing activities | |||
Finance costs | (13,057) | (6,107) | |
Proceeds from issue of share capital | 4,000,000 | - | |
Expenses of share issue | (249,591) | - | |
New loans | 282,365 | - | |
Loan repayments | (360,000) | (497,377) | |
Finance lease repayments | (43,538) | (18,759) | |
Net cash from / (used in) financing activities | 3,616,179 | (522,243) | |
Net increase/(decrease) in cash and cash equivalents | 3,002,664 | (998,806) | |
Effects of exchange rate movements | (47,344) | 367 | |
Cash and cash equivalents at beginning of year | 160,693 | 1,159,132 | |
Cash and cash equivalents at end of year | 3,116,013 | 160,693 |
Notes to the Preliminary Announcement
for the year ended 31 March 2014
1. Basis of preparation
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 434(3) of the Companies Act 2006.
The consolidated balance sheet at 31 March 2014 and the consolidated statement of comprehensive income, consolidated cash flow statement, consolidated statement of changes in equity and associated notes for the year then ended have been extracted from the Group's financial statements which were approved by the Board of Directors on 20 June 2014 and are audited. The comparative consolidated financial information for the year ended 31 March 2013 is based on an abridged version of the Group's published financial statements for that year, which contained an unqualified audit report and which have been filed with the Registrar of Companies.
The statutory accounts for 2014 will be finalised on the basis of the financial information presented in this preliminary announcement and will be delivered to the registrar of companies following the company's annual general meeting.
The consolidated financial statements have been prepared in accordance with IFRS as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 March 2014.
Basis of consolidation
The Group financial statements consolidate the financial statements of Omega Diagnostics Group PLC and the entities it controls (its subsidiaries). Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are based on consistent accounting policies. All intercompany balances and transactions, including unrealised profits arising from them, are eliminated.
2. Segment information
Allergy and | Food | Infectious/ | |||||||
Autoimmune | Intolerance | Other | Corporate | Group | |||||
2014 | £ | £ | £ | £ | £ | ||||
Statutory presentation | |||||||||
Revenue | 4,086,060 | 6,307,793 | 2,616,700 | - | 13,010,553 | ||||
Inter-segment revenue | (119,442) | (1,130,298) | (166,943) | - | (1,416,683) | ||||
Total revenue | 3,966,618 | 5,177,495 | 2,449,757 | - | 11,593,870 | ||||
Operating costs | (4,033,421) | (3,618,695) | (2,558,105) | (856,324) | (11,066,545) | ||||
Operating profit/(loss) | (66,803) | 1,558,800 | (108,348) | (856,324) | 527,325 | ||||
Net finance (costs)/income | (69,812) | 323 | (12,859) | 98,064 | 15,716 | ||||
Profit/(loss) before taxation | (136,615) | 1,559,123 | (121,207) | (758,260) | 543,041 | ||||
Adjusted profit before taxation | |||||||||
Profit/(loss) before taxation | (136,615) | 1,559,123 | (121,207) | (758,260) | 543,041 | ||||
IFRS-related discount charges | - | - | - | 12,575 | 12,575 | ||||
Amortisation of intangible assets | 288,989 | 98,885 | 26,434 | - | 414,308 | ||||
Share-based payment charges | - | - | - | 125,987 | 125,987 | ||||
Adjusted profit/(loss) before taxation | 152,374 | 1,658,008 | (94,773) | (619,698) | 1,095,911 | ||||
Allergy and |
Food |
Infectious/ | |||||||
Autoimmune | Intolerance | Other | Corporate | Group | |||||
2013 | £ | £ | £ | £ | £ | ||||
Statutory presentation | |||||||||
Revenue | 4,254,313 | 5,222,919 | 2,869,053 | - | 12,346,285 | ||||
Inter-segment revenue | (93,304) | (833,232) | (156,851) | - | (1,083,387) | ||||
Total revenue | 4,161,009 | 4,389,687 | 2,712,202 | - | 11,262,898 | ||||
Operating costs | (4,391,981) | (3,258,964) | (2,559,475) | (745,833) | (10,956,253) | ||||
Operating profit/(loss) | (230,972) | 1,130,723 | 152,727 | (745,833) | 306,645 | ||||
Net finance (costs)/income | (72,362) | 513 | (4,868) | 46,296 | (30,421) | ||||
Profit/(loss) before taxation | (303,334) | 1,131,236 | 147,859 | (699,537) | 276,224 | ||||
Adjusted profit before taxation | |||||||||
Profit/(loss) before taxation | (303,334) | 1,131,236 | 147,859 | (699,537) | 276,224 | ||||
IFRS-related discount charges | - | - | - | 25,046 | 25,046 | ||||
Fair value adjustments to financial derivatives | - | - | - | (454) | (454) | ||||
Amortisation of intangible assets | 282,412 | 98,866 | 25,275 | - | 406,553 | ||||
Share-based payment charges | - | - | - | 71,193 | 71,193 | ||||
Adjusted profit/(loss) before taxation | (20,922) | 1,230,102 | 173,134 | (603,752) | 778,562 | ||||
3. Finance costs
2014 | 2013 | |||
£ | £ | |||
Interest payable on loans and bank overdrafts | 6,872 | 6,471 | ||
Exchange difference on loans | - | 927 | ||
Unwinding of discounts | 13,118 | 21,732 | ||
Fair value adjustment to financial derivatives | - | (454) | ||
Finance leases | 8,985 | 4,238 | ||
28,975 | 32,914 |
4. Tax credit
2014 | 2013 |
| |||||||||||||||
£ | £ |
| |||||||||||||||
Tax credit in the income statement | |||||||||||||||||
Current tax - prior year adjustment | - | 16,373 |
| ||||||||||||||
Deferred tax - current year | 316,525 | 163,462 |
| ||||||||||||||
Deferred tax - prior year adjustment | (166,715) | 126,207 |
| ||||||||||||||
| |||||||||||||||||
149,810 | 306,042 |
| |||||||||||||||
Reconciliation of total tax charge | |||||||||
Factors affecting the tax charge for the period: | |||||||||
Profit before tax | 543,041 | 276,224 | |||||||
Effective rate of taxation | 23% | 24% | |||||||
Profit before tax multiplied by the effective rate of tax | 124,899 | 66,294 | |||||||
Effects of: | |||||||||
Expenses not deductible for tax purposes and permanent differences | 4,191 | 4,337 | |||||||
Other timing differences | 28,977 | 17,086 | |||||||
Research and development and deferred tax credits | (444,853) | (227,422) | |||||||
Tax under / (over) provided in prior years | 166,715 | (142,580) | |||||||
Adjustment due to different overseas tax rate | (9,512) | (9,372) | |||||||
Impact of UK rate change on deferred tax | (20,227) | (14,385) | |||||||
Tax credit for the period | (149,810) | (306,042) | |||||||
5. Earnings per share
Basic Earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Diluting events are excluded from the calculation when the average market price of ordinary shares is lower than the exercise price.
2014 £ | 2013 £ | |||
Profit attributable to equity holders of the Group | 692,851 | 582,266 | ||
2014 Number | 2013 Number | |||
Basic average number of shares | 104,052,644 | 85,216,257 | ||
Share options | 1,043,840 | 52,703 | ||
Diluted weighted average number of shares | 105,096,484 | 85,268,960 |
Adjusted Earnings per share on profit for the year
The Group presents adjusted earnings per share which is calculated by taking adjusted profit before taxation and adding the tax credit or deducting the tax charge in order to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess better trends and financial performance.
2014 £ | 2013 £ | |||
Adjusted profit attributable to equity holders of the Group | 1,245,721 | 1,084,604 | ||
6. Annual General Meeting
The Annual General Meeting will be held at Omega House, Hillfoots Business Village, Clackmannanshire, FK12 5DQ on 28 August at 11am.
7. Annual Report
The annual report will be sent to shareholders on 11 July 2014 and will also be available at the registered office of Omega Diagnostics Group PLC at:
One London Wall, London, EC2Y 5AB
and will be made available on the Company's website at:
www.omegadiagnostics.com