SHARES in Omega Diagnostics plunged more than 11 per cent after the Scottish medical testing specialist reported a heavy loss following a “tumultuous” year.

Alva-based Omega, which emphasised the prospects for the HIV field-testing kit it is continuing to develop, made a statutory loss of £7.27 million for the year ended March 31, compared with a profit of £710,000 the year before.

Omega said the loss reflected exceptional items of £6.51m, which were down largely to the closure of its loss-making manufacturing sites in Germany and India it announced in April.

The German site, which had about 40 staff, had occupied a niche position in the allergy testing market but faced declining sales. It had also run into technical difficulties in devising a product for developing countries. Meanwhile, its site in Pune, where Omega had been working on a malaria test, was closed because of delays in developing the product and the arrival of 10 competitors in the market. It continues to have a sales presence in India.

Adjusting for those items, as well as pension charges, amortisation of intangible assets and share-based payment charges, the loss before tax was £730,000, compared with a £1.13m profit last time.

The decision to close the units formed part of a strategic review carried out by chief executive Colin King, who joined the business in January, to return more value to shareholders.

The review has led the firm to focus on its CD4 HIV, food intolerance and allergy testing operations, and to restructure its business in the UK, whittling it down to one from four units. The UK move is projected to yield annualised savings of around £1m.

A deal was also reached in June to sell the bulk of its “non-core” infectious diseases business to French group Novacyt for £2.2m. Mr King said the proceeds had provided Omega with short-term working capital, “which meant we didn’t have to go back to shareholders or borrow any further money”.

He added: “It also allowed us to invest part of the proceeds in accelerating CD4, which we see as a key driver of our business going forward.”

Omega said separately yesterday that it had reached a key milestone in the development of CD4, in attaining the formal design freeze for the product.

The company said it means it can now progress into the formal verification and validation phase for the product, which monitors the immune status of people living with HIV at the point of care. It is hopeful of securing regulatory approval next year.

Mr King said: “The test we have is very unique - it is the only true point of care test in the world. It doesn’t require any instrumentation, [and] it is something that can easily be taken with limited training. Health workers can take it straight into the field and get it to patients that really matter quickly.

“This test is really designed at identifying patients who are very, very ill, and are likely to have or will get opportunistic diseases like tuberculosis.”

He added: “We’ve tested it in India and some African countries, and the results we have been getting are encouraging.”

Omega, which raised £3.6m through a share placing last year, has invested £2.9m on the development of CD4 so far. A further £1m will be invested in the test this year.

Elsewhere the firm, which employs 75 staff in Alva, said revenues at its food intolerance allergy kits fell by six per cent to £7.56m owing to increased competition outside the US and regulatory challenges. Revenue from its allergy and autoimmune business dipped 8% to £3.31m.

Addressing the recent criticism the company has received for its “underperformance”, chairman David Evans declared that “every problem creates its own opportunity, and rather than buckling under that pressure we have addressed the issues head on.”

Shares in Omega closed down 11.29%, or 1.75p, at 13.75p.