NuSep forecasts swing to loss on software unit

Life sciences company NuSep (ASX:NSP) warned that lower than expected profit at its IQ Software division, and expenses, will likely lead to a $2.5m loss in FY11

Life sciences company, NuSep (ASX:NSP), has forecast a swing to a $2.5 million loss in FY11, due partly to poor performance at its new IQ Software division.

The company, which reported its maiden $3.3 million profit in FY10, said based on results until April there had been a $1.2 million profit shortfall at the software business.

NuSep provides products, including sperm separation device SpermSep, to the bioseparations market. Its IQ Software division sells specialised sample analysis software.

In a market update, NuSep said sales from the unit “have been a significant disappointment,” due partly to the pricing model the company had adopted and partly to the delay of a critical new release.

But the company said it had since resolved these problems, including by adopting annual license fees so customers no longer need to buy the software as a capital expenditure item.

This move has significantly reduced lead times, and sales since May 1 have now exceeded the previous three months combined, NuSep said.

NuSep will also likely be spared from having to make an extra payment of three times the business' net profit for the acquisition, which would have needed to be made if the business' profit for the year surpassed $500,000.

The company has paid $US1.5 million ($1.4 million) in stock and $US500,000 worth of shares for the purchase.

The parent said its profit will also be impacted by $1.3 million in further investment in a Singaporean plasma business, $1.1 million of non-operational expenses and $600,000 in legal costs.

NSP shares stayed flat on Friday at $0.180.

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