IN Omega Diagnostics’ trading statement the medical testing group’s chairman, David Evans, said: “We have a considerable amount of work to do on delivering on our strategic plan and our operational objectives for 2018/19.”
It is a succinct and honest assessment of a business which continues to under-deliver.
Omega has had more setbacks that it probably deserves. It developed a product which could make an enormous difference to the lives of those living with HIV in the developing world, but commercialisation has been beset by delays. More recently, contract negotiations which would see its allergy intolerance product gain a global foothold have taken far longer than hoped – a move which has frustrated investors.
And now, after warning in its interim results that parts of the business were not performing, it is closing its German and Indian facilities to focus efforts on the areas of the business which it believes can generate the greatest returns.
It can’t have been an easy decision – any ambitious business looks to grow and so paring back could be interpreted as a failure.
But it is a good business which recognises when it is time to cut losses – £600,000 in cash and non-cash write downs of £5.7m in this case.
The move comes after new chief executive Colin King carried out a strategic review to crystallise value for shareholders. That will have bought him time, but those shareholders have seen the value of their investment drop 60% in less than a year. Getting them back onside won’t be easy.
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