Cambridge Nutritional Sciences (LSE:CNSL) — Final Results

0:01 Good afternoon, and welcome to the CAMBRIDGE NUTRITIONAL SCIENCES PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to James Cooper, CEO. Good afternoon, sir.

0:35 Good afternoon, everyone, and welcome to the annual results update presentation for the year ended 03/31/2026. Today, I'm joined by AJ Patel, our CFO. And together, we're going to present a summary of our audited results, which will be followed by a question and answer session. Before we start the presentation, I want to just apologize for the delay in releasing these results and this presentation. This delay was not related to the f y twenty six performance and was to do with historical items on the balance sheet. Unfortunately, the issue only came to light in the final stages. And due to auditor and company bandwidth, we were forced to delay the announcement as we would not want to proceed with unaudited results even if we were confident that the key numbers would remain unchanged.

1:21 I am now pleased to confirm that we have received approval and the results released this morning and featured in this presentation are fully audited. Onto the obligatory and important notice.

1:42 For those of you who are new to the company or are unable to join the last investor meet company presentation, my name is James Cooper, and I'm the CEO at Cambridge NUTRITIONAL SCIENCES, the parent company for omega diagnostics. I graduated from the University of Cambridge with a master's in material sciences and then spent nearly ten years working at Chartwell, an international operations consultancy. During this time, I led projects delivering step changes in the operational efficiencies of manufacturing companies across a wide range of industries. I joined CNS in January 2024 as operations director, and I spent the first few months working directly with the team to improve production before joining the board as COO and widening my remit beyond production.

2:28 In August 2024, I took on the role of interim CEO and was then appointed permanently in March 2025. Being the CEO of CNS is a privilege, and I'm pleased to be working with a group of talented and motivated individuals. And working together as a team, we deliver great results. Good afternoon. I'm AJ Patel. I joined Omega in January 2025 as the CFO of Omega and then the board six months later in July 2025. I've got significant experience over thirty years as a CFO working with a multitude of companies ranging from FTSE's to SMEs in both The UK and globally with specialisms in start ups, growth businesses, and turnarounds.

3:17 My experience covers a number of areas, including retail, health care, logistics, and ecommerce. In this presentation, we will initially focus on the year end review before moving on to the outlook for the coming year.

3:36 Before we get started, I'd like to give a brief introduction to CNS to any new investors joining us today. Our purpose is to empower people to take charge of their health by unlocking the power of personalized nutrition. This statement focuses in on the personalized nutrition segment rather than the wider functional medicine sector. This is the space in which we aim to increase our reach, position, and share of the market. Our vision is to put personalized nutrition at the heart of global health care. We feel that this is the core focus and guides our education and marketing efforts as we see the role and impact that nutrition plays on the health and well-being of individuals only increasing as further research is published.

4:24 And finally, our mission is to manufacture and develop best in class diagnostic products that enable fast, accurate, and reliable insights, advancing our position as a leader in personalized nutrition. This reflects our position in the value chain as the manufacturer of high quality products and a service provider of fast and accurate results. It reflects our strength in the market, and by maintaining and growing these, we secure our position as a leader in the space of food sensitivity testing. Our portfolio consists of four key brands. Our flagship product, Foodprint, is a lab based ELISA test using microarray technology.

5:11 Patients require just a few drops of blood, which can be taken at home or in clinic, and using this, it's able to analyze the IgG antibody response to over 200 foods. Food detective is our point of care test, which can be used by professionals to generate results in just forty minutes. This is the ability to analyze a response to 59 commonly consumed foods. Gut Detective is a new biomarker test panel. This is available to practitioners and their patients in The UK and delivers additional actionable insights into their gut health. More detailed information can be found on the new and improved CNSLab website. CNSLab is our UK lab offering food sensitivity testing on our food print test to The UK market.

6:04 Once someone orders a test online, they will receive sample collection pack through the post, and all they have to do is follow a few simple steps, and they'll have their results in a matter of days. Any further follow-up questions are answered by our in house team of nutritionists who are on hand to offer advice. That's just a brief insight into Cambridge Traditional Sciences and the products and the services that we offer.

6:34 When I last spoke following the interim results, I discussed the highs and lows that we'd observed in h one. Many of the challenges from the first half of the year have continued to affect the business, and the subsequent war in Middle East has led to a global impact on our trading. The breakdown of sales here clearly shows which markets are more affected than others, and I'll run through each and give some further insights.

7:02 The UK market has bucked a trend and continued to grow. The growth of naught point 5% revenue in the last financial year against the backdrop of a cost of living crisis highlights the great work that our UK partners are doing in marketing and selling the test. In fact, the testing volume in the CNSLab was up by 11% as we see a continued growth in the direct to consumer channels, and these occupy a large portion of the testing volumes. These are predominantly through our large business partners who receive volume discounts to encourage and enable further growth. This is why the revenue has gone up, but not at the same rate as the testing numbers. India continues to be a standout market, and the team successfully onboarded a number of new partners over the course of the last financial year.

7:55 This included a new partner with a focus purely on the online direct to consumer channel. The test has seen a rapid uptake, surprising our partner at exceeding their targets, and this is not an isolated incident. I recently visited a number of our partners in New Delhi and Bangalore, and there is a real appetite for our test. And many feel that we are only scratching the surface. In the last financial year, we're very proud of what the team have accomplished out there. The year on year decrease in Europe was driven by three markets. One was a loss of a lab by a distributor, another switched to a single supplier for multiple tests, and the third has seen drop in food detective sales as custom behaviors switch from a qualitative to a quantitative lab test.

8:44 Here, we're already working on strategies to capture this change in behavior through food print sales in the market.

8:52 In China and The Far East, we saw a 550 k decrease from our China partner sales. However, this was partly offset by increases in South Korea and Indonesia who grow by 200205% respectively, delivering an increase of around 300. The Americas saw the full year effect of the loss of a key lab by our distributor, and Africa and The Middle East, we've been impacted initially by a disruption in moving product into the region and then subsequently by the reduced demand through lack of tourism and the knock on effect that this has had. The number and value of these decreases is, of course, very disappointing to see, and frustratingly, a significant proportion of this remains outside the control of CNS.

9:41 We are confident in the quality of our product and service and have not received any feedback to the contrary. The challenges that we are tackling with our partners relate to selling an out of pocket test during a time when people are both experiencing significant pressures on the cost of living and those who do not have confidence in the market so disciplined on spending anything other than on the essentials. We are increasing our understanding of the market needs with our partners to hone in on their strategy to address these challenges and reverse the trend in some of these areas. In the interim update of November, I presented a new structure and reprioritization exercise for all those involved with sales.

10:30 I'm pleased to report that we have fully implemented this exercise, and in addition, have a new global sales director, Eric Melgaard Pedersen. Eric has significant experience in the diagnostic space and will help us to grow existing and future customers, and I hope to be able to introduce him to you in future presentations. We have also promoted a member of our internal team to the role of head of customer success, and they brought an injection of energy and fresh insight into this role. The teams together have sought out customer feedback and addressed this on multiple fronts, leading to everything from foreign language webinars and lecture symposiums through to new pricing models and growth incentivization schemes, and we look forward to seeing the results that the team deliver.

11:24 Whilst a significant proportion of the board and management's time is focused on increasing the business' revenue, there are a number of other projects elsewhere that are delivering impactful results. Towards the end of the financial year, we committed to a restructure across the business to further reduce our cost base. This was a challenging exercise and touched nearly every area of the business. The results are a significant cost saving, which is important for the business and has led to productivity increases across many areas. And I'm very grateful to the hard work that the teams continue to put into the business. Yield remains a key focus for any continuous improvement efforts, and I'm very proud of the team for their work increasing the yield from 52.3 to 64.7%.

12:14 This is an example of continuous improvement in action as the team continue to challenge our processes and seek out new ways to deliver product. In the digital world, we've launched a new and vastly improved CNSLabs website for our practitioners and customers to buy from. NewSite has been designed to be far more intuitive and easy to use, both for direct purchasing and for our partners to explore the wide library of material available to them. From a business perspective, it's also a lot easier to update and track the user experience. The CNSLab is now fully transitioned over to our new ClinAssist Laboratory Information Management System, LIMS for short.

13:02 This has moved us from an on premises bespoke homemade platform onto a fully supported cloud based solution with the ability to connect to our partners via APIs. We're also continuing to put our customers at the center of what we do to ensure we are addressing the needs of each market as best we can. We organize regular virtual meetings, and in order to support relationships and better understand these markets, we make the time to visit all our significant customers. I recently had the pleasure of presenting our practitioner of the year award to Martin Healy, the founder and driving force behind the Fitzwilliam Clinic in The Republic Of Ireland. The discussions and conversations that took place helped develop our understanding of how the market works and better guide our efforts to support Martin.

13:57 I'll now pass over to AJ to run through some of the financials. Thank you, James. Let me also start by apologizing for the later announcement of our results than previously intended. As James has mentioned, this was due to some one off reasons and in particular, just some review of our forecasts where the auditors wanted to make sure we completed an impairment of assets on our balance sheet, all of which had little or no trading impact as far as the results are concerned. I'll mention some of these in more detail as presentation goes on. Starting with financial highlights. The first slide shows the our financial highlights, and I'll spend a little time just going through each one of these.

14:47 Revenue was down 16.3%, which is disappointing. And as James has explained, rose from sales misses in most regions except The UK and India. Many of these were one offs, in particular, the loss of a laboratory by distributors in Americas and Europe, the lower China sales, and also the impact of global economic climate.

15:11 This latter reason continues into the current year, but we will work hard to mitigate the impact of this. Gross margin has improved by 2.5%, 67.8, demonstrating the continued efficiency in production, scrap productions, and better buying. Adjusted EBITDA produced a loss of naught 400,000 and arose predominantly from the lower sales as well as lower other income and a bad debt provision, which I'll refer to later. Exceptional costs were 3,200,000 and comprised mainly of a 3,000,000 goodwill impairment, which arose from the conservative future forecast that I mentioned earlier. The remaining items here were for the compensation for a loss of an employee who resigned as well as costs of restructure of the business, which was undertaken in March 2026.

16:10 The result of this is that cash has fallen to 2,600,000, and I will explain the causes of this reduction later. The profit and loss for the current year and the comparison to the previous year is shown on this slide. The fall in revenue previously mentioned drives much of the lower profitability. The gross profit percentage is improved as cost of sales fall by a greater percentage than the revenue fall. In addition, you'll see the admin costs have fallen while sales and marketing costs increased after investing in our sales and marketing functions in the last year and also after taking a naught 530,000 bad debt provision against some product, which was shipped to The Americas and is taking longer to sell due to the change in policy and tariffs.

17:09 The loss before tax of 4,400,000 is disappointing with 3,000,000 being the goodwill impairment. The tax charge of 1,400,000 arises from the reversal of the deferred tax asset previously on our balance sheet, which again arises from some of the conservative forecasts undertaken. This does not impact the ability of the business to offset future taxable profits with these historic losses. This slide highlights two of the key important KPIs and their year on year movement with revenue down and gross margin improved.

17:57 Adjusted EBITDA is the third important KPI for the business, and its year on year movement is shown by this waterfall chart. Last year, adjusted EBITDA was a profit of 405,000. This position was improved upon by an enhanced gross margin and lower overheads, excluding the bad debt provision previously discussed. The position then falls by lower other income and lower revenue, resulting in an adjusted EBITDA of naught 100,000 pre bad debts and naught point 4,000,000 after bad debts.

18:41 The last key KPI is cash, and this slide shows the movement in cash from 4,900,000 to 2.6. Cash is lowered by the loss in adjusted EBITDA explained on the previous slide as well as the cash impact of exceptionals with impairment, not a cash impact. The lower working capital arose from higher debtors and some delay in payments received as well as lower working capital arising from smaller business in terms of creditors. The capital expenditure in the year was spent on new machinery for producing our tests, a new website, as well as a new LIMS system.

19:27 And lastly, the incursion of development costs on the creation of a new IVDR product. Finally, financing interest in foreign exchange lowered the cash position by naught 200,000. Many of these items are one offs, so the position so the business is well funded for the future next few years.

19:56 The five year trends are shown on this slide, with all four KPIs showing positions and the movements over this period. Revenue falls are disappointed, but more focus on the sales team will help to address this moving forward. Gross margin growth is good, and the revenue improvements expected in the future will help the business move into EBITDA profitability. And as a result, the cash position should improve. Thank you. Over to you, James. Thank you, AJ. I will now move on to the outlook, for CNS. First, we've mentioned before that IVDR is a key focus for the company.

20:46 We're very proud that our test carries a CE mark. This not only demonstrates that the test complies with a strict set of safety quality and performance standards, but crucially, that European market is open to us and labs that demand CE mark, which is the majority, buy our test. We are currently in a transition period from IVD directive to new IVD regulation commonly known as IVDR. Additionally, a lot of other countries outside the EU are aligning their requirements with the IVDR requirements, Registration in these territories is quicker and cheaper if you already have IVDR approval. For our class of product, we move from being self certified to requiring a full audit of our technical file and approval of our product by an independent regulatory body.

21:42 Our class of product must achieve its approval by the end of twenty twenty nine in order to retain its CE mark. Without approval, we would have to stop selling the EU and a lot of other markets. That is why the IVDR product has been a core focus for the development team over the last eighteen months. I'm pleased to update you on our progress. During the transition period, which started in May 2022, we were unable to make any significant changes to the product. We're therefore taking this opportunity to make a number of changes and improvements based on customer feedback. One key change for the product is substantial increase in number of foods. We are aiming to increase this from 222 to 290 foods, and this will give us better coverage and more insight to our customers, and we believe will make us one of the most comprehensive food IgG tests on the market.

22:42 Another significant change is the way in which we manufacture the product. We all move from our old and unsupported microgrids to new fully supported contactless printers. The company invested in these during the course of the last financial year, and development team have been working with them to create the updated product. These should not only be more reliable than the old equipment, but also deliver an increase in capacity and yield. Whilst the deadline for transition is the end of twenty twenty nine, our goal is to be significantly ahead of that, and we remain on track to submit to our notified body by the end of twenty twenty six. Once the product has been submitted, notified body go through a detailed review process.

23:31 We're working hard to ensure that our file will be in the best condition for submission to minimize any queries or questions that may delay certification. We'll give further updates through these meetings when we have firm information. There are a number of reasons for pushing to gain IVDR approval ahead of the deadline. Not least that we expect notified bodies to become very busy, but also because we believe it'll give us a commercial edge. By increasing number of foods and demonstrating that we are going to be in the market beyond 2029, we believe that we are giving a strong signal to current and future customers that we are the right partner for them. Finally, if we look to the future, we know that in the short term, the pressures we face at the end of the last financial year continue unabated.

24:24 As the war in The Middle East impacts on the cost of living and buying decisions of everyone from end users right up to distributors. Whilst we expect to see growth in The UK and India, we are taking a more conservative approach in other markets. The hard work of the team and the restructuring that took place in March means that we expect to maintain our gross margin this year. This is also against the backdrop of significant cost pressures, both from material and the fixed cost nature of our manufacturing resources. We continue to look for opportunities to improve our efficiency and reduce our costs. Our investment in the critical IVDR project will continue until we receive approval, and we anticipate that the cash is sufficient to fund this and the business moving forwards.

25:20 Thank you all for time this afternoon, and I hope that this presentation has given you further insight into who we are as a company, the challenges, and the opportunities that we face, as well as our approach to overcoming these and delivering success for the business going forward. As a board, we continue to believe that there is huge potential for the product and company and look forward to updating you in the future. If you've not already, please sign up to our investor alerts that are on our website or email us at the address shown on the next screen. We will now answer some of the questions that have been submitted. Any that we do not cover now, we'll aim to address through the IMC platform. That's great. Thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation, along with a copy of the slides and the published q and a, can be accessed via investor dashboard.

26:29 As you can see, we have received a number of questions throughout today's presentation. But please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Thank you very much. So the first question is regarding the change in value market value of a company over the last couple of years. As you might well be aware, we're currently operating in quite a difficult investment market in The UK at the moment. We're committed to building new products made in a new way, and we're confident that the market will reflect that in the value of this company in the future. Next is a question about when can shareholders expect to see some actual revenue delivery.

27:17 As I discussed in the presentation, we anticipate that the new product will be ready in 2027, and we really do expect this to be one of, if not the best product in the market. We've invested significantly in this product because we believe we're going to be able to knock out some of the competition and capture new markets, both of which are going to deliver that revenue growth. We then had a question asking about how many shares we, as a board, hold in the business. The board holds a combined value of approximately point 86%. This is very much in line with the average holding for a nonfounder led AIM business, and we do expect the board will likely accumulate further shares in the future.

28:11 We had a question here regarding the news flow marketing communications. So the majority of our news flow is aimed at the market we currently serve. So we distribute that via email, LinkedIn, Facebook, and other platforms. So I really encourage you to follow us on those platforms, and we will be able to keep you up to date in that form. But we also appreciate the market would like more information in the future, we will aim to increase, number of RNS reaches accordingly, with that. Another question here, about contact details for myself.

28:58 So the email address on screen moment, investors@CNSPLC.com, that is the best way to get ahold of me. Anything that goes into that will reach me. I monitor that. And then following that, I'll also be very happy to arrange a separate course. Okay. One of the other questions was about our cash position. And as we have reiterated in the presentation and also discussed with in terms of in the forecast, we anticipate to have cash of about 1,600,000 at the end of the year. And, you know, we think that's plenty, especially with a lower cost base, keep your business going. Some people have asked, what are the key differences between the current and the new product?

29:50 Well, as I mentioned on the IVDR side in that presentation, the new product will have an increased number of foods, quite significant increase than the old one, and we believe it puts us ahead of the market. It will also increase the number of sample types that the product can take, making it more applicable in more markets. We expect to have a submission by the end of the year, and we'll be able to start to sell this actively in the next calendar year. Another question was regarding what measures are we taking to control costs going forwards. Again, as as we mentioned, we completed a restructure in March of this year and anticipate that that should deliver at least a 700 k saving in this current financial year.

30:44 And, of course, we continue to look for any further efficiencies across the business. A question here about audit timelines and a delay. We already mentioned the reasons for this delay in the presentation, so I won't elaborate any further of that here. Another question about the premium pricing and the impact of food print sales on gross margin as a percentage of overall sales. So, yes, this does have an impact on on the gross margin. However, a lot of the improvement that we've seen in the gross margin has been driven by tangible improvements in production.

31:29 And it's also worth mentioning that we expect the new production process that we've developed for the IVDR product to produce product at an even lower cost going forwards. One of the questions is around thought leadership and who speaks at conferences specifically on our products. We're proud to say that, doctor Nigel Abrams and Anna Pugh, who are both very eminent, within the business, fulfill that function for us. And we have a question here about does microbiome technology form a part of our strategy. We're always looking for complementary tests or things that can be additive, whether that be for the export market or for The UK market through our CNSLab.

32:18 And anything any changes or anything we find there, we'll, of course, inform you all of once anything happens. There's a there's a question asking about our six months sales performance. We're we are in a position where, sort of, for the half year results, we'll give that information. It's only a few weeks away, so we will update you at that point. And then finally, there's a question here about the value proposition which CNS brings to the market. Does it improve the productivity of nutritionists? Well, we like to think so. Yes. We are what we aim to bring to those nutritionists is a data driven approach. So it both improves the productivity of nutritionists, but it also improves the effectiveness of the care and advice that they can provide to their clients because it prevents them from having to run a laborious, long winded elimination diet of trying this and that and slowly reintroducing things till you find the problem item rather than take a much more targeted approach.

33:27 So whilst, yes, it increased the productivity of nutritionists, but also improves the effectiveness of them. Excellent. I think that's everything for now then. So thank you all for your time this afternoon. I hope that the presentation and this q and a has given you a bit of further insight into CNS, both with our ambitions for the company and our strategies to achieve them. Both myself, AJ, and the rest of the board remain energized, excited about the potential in the market for our product, for the new IVDR product, and what this could mean for CNS going forwards. And we look forward to updating you on further developments in the future. That's great. Thank you for updating investors today.

34:14 Can I please ask investors not to close the session as you'll now be automatically redirected provide your feedback in order that the management team can better understand your views and expectations? This may take a few moments to complete and I'm sure be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.