Trading Update & Notice of Results

Omega Diagnostics Group Plc

("Omega" or the "Group")

Trading Update & Notice of Results

Omega, the AIM listed medical diagnostics company, announces the following trading update for the six months to 30 September 2012, in advance of releasing its interim results on Wednesday 21 November 2012.

Turnover is expected to be in line with the same period last year at £5.53 million; inclusive of an adverse exchange rate impact in Germany of £0.2 million. The expected breakdown of turnover by segment is as follows:

·; Food intolerance revenue up by 15% to £2.12 million (2011: £1.84 million)

·; Allergy and autoimmune revenue down by 11% to £2.03 million (2011: £2.28 million)

·; Infectious disease/other revenue down by 2% to £1.38 million (2011: £1.41 million)

Food Intolerance

Sales of Food Intolerance products and services continue to show resilience in the face of difficult economic headwinds with the rise in sales ahead of our expectations in the first half. Average revenue per Genarrayt® instrument (excluding Spain) is expected to continue its rising trend and Food Detective® continues to benefit from its unique market position.

Allergy and Autoimmune

Germany

The situation around reimbursement in Germany is still expected to take some time to clarify but there have been some changes to report. Out of 17 federal regions, seven have come to a decision on whether to accept national recommendations of a reduced reimbursement rate for lab tests conducted on a doctor's premises. Five of these seven have maintained their current reimbursement position leaving the mechanism largely unchanged. However, two regions have adopted the new guidelines of reduced reimbursement rates, including Hamburg where a larger proportion of the Group's sales are. These changes are currently being appealed by doctors in those two areas. The particularly wet Spring and Summer weather has also had an effect on weakening the pollen season in comparison with the prior period. These external factors have affected sales with a 4% decline in euro terms. The weakening of the euro against sterling has also had an impact such that reported sales in sterling are lower by 13%.

Export

The on-going process to increase export sales has resulted in completion of an amended software format. There remains a requirement to combine this with an improved product format and the intention is to launch this improved product offering at the World Allergy Congress in Hyderabad, India in December 2012.

IDS-iSYS

With regard to the allergy programme to develop a test panel to be run on the automated IDS-iSYS system, the first seven allergens have now completed the optimisation phase and are undergoing the final claim-support phase. This final phase of the programme seeks to build robustness into the combined reagent-instrument system so that manufacturing consistency can be attained. Recent experiments have provided data suggesting we will need more time to achieve this aim and it is prudent and correct that we maintain high standards of development protocol in reaching our goals.

Subsequent groups of allergens have made progress with regard to feasibility and optimisation activities in significantly shorter timescales than it took for the first batch of seven allergens. However, a lack of availability of patient serum samples has resulted in longer lead times in providing enough material for optimisation. Alternative supply sources are being investigated and tested to help alleviate this issue.

We estimate that the combined effect of the two matters referred to above could add up to nine months to the planned launch date for a panel of 40-50 tests, taking us to 31 December 2013.

Infectious Disease

CD4

We pre-launched the CD4 test for monitoring T-cells in HIV positive patients at the 19th International AIDS Conference in Washington DC in July of this year. The test generated a significant amount of interest at the conference from global aid organisations and major IVD companies, active in the HIV/AIDS arena. Feedback received subsequently supports the view that the opportunity for this product could be transformational to the Group's prospects in the near-term. The Group is accelerating its scale up plans to meet an earlier anticipated demand and is in discussions with lending institutions in this regard. The process to transfer the technology from the Burnet Institute has continued apace and we aim to be in a position to provide commercial quantities of product for evaluation, coinciding with World AIDS Day on 1 December 2012.

BRIC Strategy

India

Omega Dx (Asia) commenced direct selling of product in India in July of this year. We now have a very experienced team on the ground and the transition of business from the previous distributor has happened with no disruption in the supply of products to customers. In the two full months of August and September, Omega Dx has already achieved a run rate in sales comparable to the previous distributor's performance which is a significant achievement in reversing what had been a declining trend. We have also signed an agreement with SRL Diagnostics covering the distribution of Food Detective® in India which is the subject of a separate announcement today.

China

The process of registering Food Detective® in China is taking longer than anticipated. This will affect prospective sales for the remainder of the year as compared to management's original expectation, with no certainty of when the registration process will be complete at this stage.

Outlook

Taking account of the adverse exchange variance of £0.2 million referred to earlier, trading in the first half is in line with management expectations. We are pleased with initial progress with Omega Dx and continue to see India as offering excellent growth opportunities. However, there remains uncertainty over certain external factors, particularly in Germany with the evolving reimbursement landscape, potential for further weakness in the Euro and product registration delays, which makes progression towards meeting expectation in the second half predicated on generating a contribution from CD4.

Whilst the delay with the iSYS allergy development programme clearly has an impact on the timing of future revenues, this disappointment masks the fact that technical risk with the project is at its lowest point since the programme started. Furthermore, the excitement generated with our pre-launch of the CD4 test at the AIDS Conference in Washington DC cements our belief that the opportunity for CD4 in the next financial year and beyond is substantial and overall, our revenue and financial outlook remains unchanged over the coming years.

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