ODX.L Regulatory News (ODX)

30 Mar 2007 18:20

Omega Diagnostics Group PLC30 March 2007 OMEGA DIAGNOSTICS GROUP PLC ("Omega" or the "Company") INTERIM RESULTSFOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2006 Omega, a medical diagnostic company whose business produces and sells a widerange of immunoassay and infectious disease in-vitro diagnostic (IVD) test kitsand other products through its international distribution network announcesresults for the 9 months to 31 December 2006. The interim results to 31 December 2006 are the first for the enlarged groupfollowing admission to AIM on 18 September 2006. The Company has chosen not to adopt IAS 34, "Interim financial statements", inpreparing its interim results for the 9-month period to 31 December 2006. Theinterim statements included herein are unaudited. Prior to the acquisition theCompany was an "investing company as defined in the AIM Rules for Companies and,as such, the comparative financial information for the 9 month period to 31December 2005 has not been included as it does not give holders of ordinaryshares or potential investors additional information. 9 months to 12 months to 31 December 31 March 2006 2006* Turnover 1,503,698 2,143,806Gross profit 637,104 868,145Operating (loss)/profit (233,478) 131,650 Retained (loss)/profit before tax (238,026) 197,722 * Omega Diagnostic Limited, audited financial information prior to theacquisition on 18 September 2006, included for information purposes only. • Improvement in gross profit margin to 42.4% (40.5%: 31 March 2006) • European patent grant for Branched Peptide technology • Results reflect the investment in pursuing the acquisition strategy Omega operates in a niche market, in supplying tests for specific infectiousdiseases and other clinical conditions. The tests are based on Agglutination,Enzymeimmunoassay (EIA), Fluorescence and Rapid Test technologies. Theinfectious diseases include Syphilis, TB, Dengue Fever and Malaria. Allproducts are designed for use in clinical laboratories and Rapid Tests aredesigned for use at the point of care. CHAIRMAN'S STATEMENT Financial Review Turnover Turnover has remained static throughout the period as the Company continues tooperate in a highly competitive market. The board believes that futureopportunities for growth in the Company's range of infectious disease test kitscan be derived from the possible acquisition of new technologies. Gross Margin Gross margins have improved to 42.4% as the Company has continued to look forefficiencies within its operations. Goodwill Further to the Company's acquisition of Omega Diagnostics Ltd ("ODL") on 18September 2006, in line with IFRS3 Business Combinations, the Directors believeODL should be identified as the acquirer as it had the power to govern thefinancial and operating policies of the enlarged group through the appointmentof its directors onto the Company's board and through the ongoing equityinterests in the Company of the ODL shareholders. Accordingly, the acquisitionhas been treated 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 board are of the opinion that thegoodwill arising from the acquisition has been impaired and has therefore beenwritten down in full. Results The net result for the period is a loss before tax of £238,026. In addition tothe goodwill charge referred to above, the Company has incurred additionaloverheads in excess of £50,000 as a result of pursuing an acquisition-ledstrategy. Operating Review A European Patent has been granted in respect of the Company's Branched Peptidetechnology which has been exclusively licensed from the Medical Research Council(MRC). The Patent covers the enabling technology that allows assays to bedeveloped with resulting superior sensitivity and specificity, which are keyfeatures of any new diagnostic test. The technology is currently being appliedto a new test for Herpes Simplex Virus 2 (HSV-2) and it has already been shownto be effective in increasing the efficacy of other tests such as HumanImmunodeficiency Virus (HIV). HSV is a chronic disease that infects over 1 billion people worldwide. It isalso estimated that there are over 60 million adults in the US infected withHSV-2 and because HSV-2 is difficult to diagnose, the need for more accuratediagnosis is acute. There has been a delay to the planned launch of the Company's new test for HSV-2as technical challenges took longer to overcome. These challenges have sincebeen resolved and the Company is confident of being able to launch a productwithin the first half of the new year. Strategy Since re-admission on 18 September 2006, Omega has actively pursued itsacquisition strategy. Discussions and negotiations are progressing with anumber of opportunities but there can be no certainty as to the outcome ortiming of these discussions at this stage. David EvansChairman OMEGA DIAGNOSTICS GROUP PLCConsolidated Profit and Loss AccountNINE months ended 31 DECEMBER 2006 Unaudited Audited 9 months to 12 months to 31 December 2006 31 March 2006* Notes TURNOVER 1,503,698 2,143,806 Cost of sales (866,594) (1,275,661) GROSS PROFIT 637,104 868,145 Selling & distribution costs (50,188) (80,469)Goodwill impairment (243,683) -Administrative expenses (576,711) (656,026) OPERATING (LOSS)/PROFIT (233,478) 131,650 Other income 7,015 96,011 (LOSS)/PROFIT on ordinary activities (226,463) 227,661 before interest and taxation Interest receivable 8,502 182Interest payable (20,065) (30,121) (LOSS)/PROFIT ON ORDINARY ACTIVITIES (238,026) 197,722BEFORE TAXATION Tax on loss on ordinary activities - 57,057 (LOSS)/PROFIT ON ORDINARY ACTIVITIES (238,026) 254,779AFTER TAXATION Dividends - Retained profit for the period (238,026) 254,779 Basic and diluted losses per share 3 - basic (0.44p) - diluted (0.38p) All amounts relate to continuing activities. There are no recognised gains and losses other than those reported in the profitand loss account. Omega Diagnostic Limited, audited financial information prior to the acquisitionon 18 September 2006, included for information purposes only. OMEGA DIAGNOSTICS GROUP PLCConsolidated Balance SheetAs at 31 DECEMBER 2006 Unaudited Audited As at As at 31 December 31 March 2006 2006* Notes Fixed AssetsIntangible - -Tangible 2 80,090 91,641 80,090 91,641 Debtors: due after more than one year Current assetsStocks 280,432 258,298Debtors 512,190 519,959Cash at bank and in hand 724,245 8,401 1,516,867 786,658 Creditors: amounts falling due within (678,065) (748,463)one year Net current assets 838,802 38,195 Total assets less current liabilities 918,892 129,838 Creditors : amounts falling due after (31,600) (60,250)more than one year Net assets 887,292 66,921 Capital and reserves Called up share capital 860,175 80,036Share premium 434,734 156,476Shares to be issued under share basedpayment schemesProfit and loss account (407,617) (169,591) Total equity shareholders' funds 887,292 66,921 * Omega Diagnostic Limited, audited financial information prior to theacquisition on 18 September 2006, included for information purposes only. OMEGA DIAGNOSTICS GROUP PLCConsolidated Cash Flow StatementNINE months ended 31 DECEMBER 2006 Unaudited Audited 9 months to 12 months to 31 December 31 March 2006 2006* Notes Reconciliation of operating loss to netcash flow from operating activities Operating( loss)/profit (233,478) 131,650Share based payments charged againstoperating profitAmortisation charges 248,031 96,011Depreciation 21,177 35,273 Movements in working capital:(Increase)/decrease in stocks (22,133) 48,422Decrease/(increase) in debtors 7,769 (14,341)(Decrease)/increase in creditors (2,131) (155,920) Net cash (outflow)/inflow from 19,235 141,095operating activities Cash Flow StatementNet cash (outflow)/inflow from 19,235 141,095operating activitiesTax credit - 57,057Returns on investments and servicing of (11,563) (29,939)financeCapital expenditure and financial (9,621) (12,390)investment Cash outflow before financing (1,949) 155,823 Financing (i) 763,560 (125,055) Increase/(decrease) in cash in the 761,611 30,768period Reconciliation of net cash flow tomovement in net debt Increase/(decrease) in cash in the 761,611 30,768period Cash decrease/(increase) 51,151 125,055from change in debt and lease financing Change in net (debt)/funds 812,762 155,823 Net (debt)/funds at the beginning of (ii) (418,804) (574,627)the period Net funds/(debt) at period end 393,958 (418,804) * Omega Diagnostic Limited, audited financial information prior to theacquisition on 18 September 2006, included for information purposes only. NOTES TO THE CASH FLOW STATEMENTFOR THE 9 MONTHS TO 31 DECEMBER 2006 Unaudited Audited 9 months to 12 months to 31 December 31 March 2006 2006 (i) FINANCING Issue of ordinary share capital 1,000,000 -Expenses paid in connection with share (185,289) -issueLoan repayments (51,151) (125,055)New loans 763,560 (125,055) (ii) analysis of changes in net (debt)/FUNDS Cash Flow As at 31 December 2006 Cash at bank 715,844 724,245Debt 96,918 (330,287) 812,762 393,958 Notes to the Financial Statements 1. Basis of preparation The interim results for the nine months ended 31 December 2006 are unaudited anddo not constitute accounts within the meaning of section 240 of the CompaniesAct 1985. The interim results have been drawn up using accounting policies andpresentation consistent with those applied in the audited accounts for theperiod ended 31 March 2006. The information in respect of the period ended 31 March 2006 has been extractedfrom the statutory accounts for the period which has been delivered to theRegistrar of Companies . The report of the auditors on those statutory accountswas unqualified. 2. Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation isprovided at rates calculated to write off the cost of fixed assets, less theirestimated residual value, over their useful life on the following bases: Leasehold improvements - 10% straight linePlant and machinery - 25% straight lineOffice equipment - 25% straight line The company capitalises tangible fixed assets in accordance with FinancialReporting Standard 15 "Tangible Fixed Assets". Expenditure of a revenue natureis taken to the profit and loss account when it is incurred. 3. Earnings per share Basic earnings per share is calculated on the loss on ordinary activities aftertaxation of £238,206 and on 53,713,909 ordinary shares, being the weightedaverage number in issue during the period. The calculation of diluted earnings per share is based on the consolidated losson ordinary activities after taxation for the financial year of £238,206 and on62,103,141 ordinary shares. This calculation is based on 53,713,909 ordinaryshares diluted for the effect of 8,389,232 ordinary shares being the weightedaverage number of warrants and options in issue. Copies of this report are available to the public at the registered office ofOmega Diagnostics Group plc at: One London WallLondonEC2Y 5AB Directors' Responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and was approved by the directors on 30 March 2007. Thecontinuing obligations of the AIM listing rules require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Date: 30 March 2007 Contact:Liam Murray, Nominated AdviserCity Financial Associates LimitedTelephone: 0207 090 7800 This information is provided by RNS The company news service from the London Stock Exchange