Omega Diagnostics trims costs

Omega Diagnostics, the Alvabased medical testing company, yesterday confirmed that it plans to reduce its cost base “significantly” as it revealed that revenues were expected to fall by about 5 per cent this year.

The firm is planning to close its manufacturing site in India and an allergy business in Germany in a bid to trim costs. It is looking to eliminate underlying losses which, for the year ended 31 March, amounted to about £800,000 for both sites.

Meanwhile, a simplification of its UK businesses from four separate legal entities into one has enabled the group to “streamline certain functions” with expected future annualised savings of about £200,000.

Omega said that those decisions “have not been taken lightly but the headwinds experienced and commented upon in our interim report on 14 December 2017 have continued”.

In a trading update, the firm noted that turnover was now expected to be £13.6 million, a fall of 6 per cent in constant currency terms and 5 per cent behind 2017’s result on an actual basis.

Chairman David Evans told investors: “We have a considerable amount of work to do on delivering on our strategic plan and our operational objectives for 2018/19.

“As the decisions we are making will straddle the yearend the financial impact of those decisions will impact both 2017/18 and 2018/19 by way of asset write downs and restructuring costs which are exceptional by nature.”

Finncap analyst Mark Brewer said: “Assuming the closure of these two sites [Germany and India], the group should be profitable (adjusted Ebitda and pre-tax profit of £1.5m and £500,000 in FY 2018), albeit on a reduced revenue base.”