Cambridge Nutritional Sciences (LSE:CNSL) — Preliminary Results

0:00 Good afternoon and welcome to the Omega Diagnostics Group PLC Preliminary Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode and today's meeting is scheduled for forty five minutes. Questions are encouraged and can be dismissed at any time by the q and a tab situated on the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. Have the company will review all questions submitted today. And we'll publish responses where it is appropriate to do so. Before we begin,

0:30 I'd like to make the following poll. And I'd now like to hand you over to Jack Rowell, CEO. Good afternoon, sir. Good afternoon. Thank you, Alexandra, and good afternoon, everybody. And welcome to the final results presentation for financial year twenty two for the year ending 03/31/2022.

0:52 I'm Joe Gruel. I'm the chief executive officer of Omega Diagnostics. I joined the company just a little over eleven years ago and became CEO of the organization in January of this year. I have a long history in clinical diagnostics and IVDs spanning over twenty five years, and I've been involved in the industry for quite some time.

1:17 My name is Chris Lee. I'm the chief financial officer. Just celebrated my one year anniversary. I think it's fair to say that it's been a busier year than perhaps I expected when I first joined, but this is my third AIM listed business, and looking forward to moving on to the next chapter with the business now that we're through the worst of COVID and the sale of c d four. In terms of the areas we want to cover off today, it's really to describe to you our audience and our shareholder base a a new vision and a new focused strategy going forward. Clearly, it's an f y twenty two results presentation, so we have details on what we've been up to over the past year and, more importantly, our financials during FY 2022.

2:07 I'm an overview of the core business and our growth strategy going forward with a summary and then some time for questions and answers at the end of the presentation. Just as a reminder for those who are unaware of what we do, we've been a diagnostic company for over thirty years, previously headquartered in Scotland in a town called Elver near Stirling with also a manufacturing base in Ely in Cambridgeshire. We are a global company. Less than 10% of our revenues are within The UK. We truly are an exporter of, diagnostic kits, and services. And, really, our main, vision and our main goal is to enable health care professionals to make informed decisions by the tests that we provide, through either laboratories or in a clinic setting to improve patients' long term health.

3:09 We only have the one division as of now, and that's health and nutrition. That's our entire focus of the business and our focus going forward. We are a pioneer and have innovation and lead the market in food sensitivity testing, which is effectively measuring long term antibodies or IgG antibodies to a large number of foods depending on our platform, which allows our health care practitioners, our customers, our laboratories, and ultimately the patients in improving their long term health and well-being by personalizing their nutrition. The global health division that we discontinued, and we'll give a bit more detail around that through the presentation, used to sell c d four tests into low and middle income countries for effective management of HIV, particularly around advanced disease when your immune system starts to drop off and impact the patient's health.

4:16 As Chris said, it's been quite a year, quite a tumultuous year, as I mentioned in my statement in the RNS. We've had a new team at the helm. We've had to recover the business after an attempted focus in and around COVID testing. The government failed to license a test to us for a reason unknown to us, and we then had to, as an executive management team, recover the business and recover those costs and ensure that the company going forward had a firm foundation for future growth. So in March, we sold the Elva site, which is a loss making site, to a company called Acubio, which is a wholly owned subsidiary of a Chinese company called Orient Gene.

5:12 And then after a failed placing earlier in the year, which didn't allow us to move c d four, we took the strategic decision to discontinue the global health division and look for a buyer for the c d four business. Soon after, we were able to raise some equity funds to fund our growth ambitions within the health and nutrition area. And then more recently in July, announced the the sale of c d four to the same company, Acubio, after a competitive bidding process with a number of potential acquirers for a a sum of money that Chris will break down later in the in the presentation.

6:02 And finally, really going forward,

6:06 we now have a stabilized business after this the COVID nineteen disruption, which is extremely disruptive not only to us as a business, but naturally to our shareholder base. We're looking to provide a new platform and a new foundation for growth based on our health and nutrition business, which to date has been growing over the number of years, has been very successful, and has positioned us in a leadership position. And we believe we're able to use that foundation to grow even further strategically, which we'll describe shortly. I'll hand over to Chris now as is the results presentation, who will take you through the financials of FY 'twenty two.

6:52 Thank you, Roshak. First of all, I'd just like to apologize for the delay in terms of the publication of the results. With the sale of the c d four business being completed on the July 31 and then us having to take some time to do stock takes and calculate the value of the inventory that was being transferred, together with presenting our global health division as a discontinued activity, has required significant extra audit work from Ernst and Young and significant technical input from the from the team in terms terms of of the the presentation presentation around the discontinued operations. And, unfortunately, that has taken longer than either ourselves or thought it would take to get to that conclusion. So apologies for the for for the delay and for the publication publication of of the the results results without prior notice on Monday.

7:40 But we're now out there, the the figures are obviously out in the market and have been for a couple of days. Just like to con start with the the basis of preparation of the income statement that is showing ahead of you at at the moment. So because c d four and COVID has been treated as a discontinued operation, it appears towards the bottom of the screen with a a which is a one line number, which is a loss of just under £10,000,000. The remaining presentation in terms of the p and l is the continuing business. So it's our health and nutrition division, and it also includes the corporate cost base. So you'll see the revenue has grown year on year, 25%, in line with what we said in the trading statement that went out at the beginning of April.

8:26 Our margin is roundabout 60%. Our cost base has gone up a little bit year on year first for a number of reasons. Firstly, on the sales and marketing side, we've decided to invest to grow the business in terms of headcount, in terms of experience of people. So we brought in some some higher grade people. We've also done the corporate rebrand, and we've been resourcing to develop our digital app, which we'll be launching fairly shortly. On the rest of the cost side, we've seen a high level of amortization coming through this year projects that were committed and developed in in prior periods, but we've also had a slight change of emphasis in terms of our r and d expenditure this year. We've moved much more towards continuous product improvement rather than pure research.

9:16 And as a result, a greater proportion of the costs are hitting the p and l rather than being capitalized on the balance sheet and amortized over an extended period of time. And we've also had to deal with preparation for the IVDR regulations, which were due to come in force into ape into May this year. A lot of work and time and effort went into product development to deal with those regulations. And the last minute, the implementation of those, as far as we were concerned, has been delayed till 2027. On the exceptional items, we've got two exceptional items totaling £337,000 this year. We've got aborted placing fees for the the March 7 meeting to where the placing did not proceed, and we've also got some severance costs in relation to the former chief executive.

10:15 K. So in terms of the key metrics, as I mentioned, sales from the health and nutrition business have grown 25%. Our gross profit has grown slightly more than 25%. So as you can see, got about a 1% improvement in the gross margin percentage from 58.6 to 59.7 from one year to the next. And that's really driven by a higher proportion of footprint in our product mix, so so footprint rather than food detective. And with the the falloff in or the slower anticipated demand in China from our lead partner over there, where the margin on that business is lower than the average, we've seen a slight pickup in the overall margin due to product mix. Overall, that leaves the business at an an adjusted EBITDA level as pretty much breakeven, just under 200,000 of adjusted EBITDA.

11:09 And by by adjusted EBITDA, I'm I'm in I'm bringing in a couple of extra changes in terms of the definition to traditional EBITDA, and that is making sure we add back the share based payment charges, which are obviously noncash, and any exceptional items that are impacting the residual business. Okay. Regional sales, Chad, if you'd like to run us through. Yeah. Thank you. Thank you, Chris. I I think it was a pleasing return to growth for the health and nutrition business, over a year prior that was, impacted by COVID. What is pleasing that, you know, to see that all regions around the world and and a reiteration, we are a global business, but all regions around the world return to growth, and significant growth, particularly in Europe and North America, particularly fueled, by Canada. As Chris said, you know, we we were missing Chinese sales, in the FY, and and previously, we've reported that was due to some overstocking, in the prior year. We hope to bring that back to growth over this coming year as well, albeit there probably will be a COVID impact,

12:23 in terms of lockdowns in China in this current f y. But it was very pleasing to see an increase, across the board, in terms of health and nutrition core business sales. If we break that down into our two key product areas, Foodprint, which is our laboratory based system, a microarray system that allows up to 222 different foods to be tested for from a say a couple of drops of blood from a fingertip. Again, having had a dip in f y twenty one, really pleasing to see that returned strongly supported by actually an increased, awareness and increased demand of home sampling and remote consultations.

13:11 Over the COVID years, we have been more used to either doing tests or taking blood, or taking samples in a home setting, and that's further fueled our growth in the laboratory sector. Food detective sales, as said, returned to kind of previous levels, but really we were missing Chinese sales in f y twenty two, which we hope to to come back in this f y and ongoing. And what is quite a large potential market still for food sensitivity testing going forward. Right. Thank thank you, Jack. So I don't want to dwell too much on global health because it's no no longer a part of our continuing business, but I thought it's just worth taking a little bit of time just to run through the the the transactions that we've undertaken during the course of the last year and the reasons behind them. So but when I when I joined the business in September last year, we had about £4,000,000 in the bank. We had an overdraft facility of 2,000,000, but we were losing £500,000 a month primarily out of the Alva site, a combination of low volume, in terms of c d four testing, which was, growing but from a very small base, having just been launched in the previous financial year, but also having resourced up COVID demand from the government contract and or subcontract work for third parties. We

14:41 had a high fixed cost base, much higher because the workforce essentially had been doubled. Extra space had been taken on within the site, and we just did not have sufficient volume going through the site to be able to recover those costs. Over the course of time, we obviously tried to, get our own tests accredited, to be able to sell particularly for home use rather than professional use. And over that time, the the pricing of lateral flow tests became quite a lot lower, than even our raw material costs. So you could buy them in from China and deliver it for far lower than the price we would pay just for materials, and, obviously, we would have labor and overhead to attach to that as well. So the decision was taken ultimately that we we needed to withdraw completely from the COVID market, and we needed to deal with the fixed cost base of the Alva site.

15:36 During those conversations with third party contract customers, Ori and Gene were one of those, and and they they identified that they were looking for a UK site that had lateral flow manufacturing expertise. So we did some rework for them towards the back end of, last calendar year, and that triggered the conversation around them taking over the site. We concluded that deal or announced that deal at the in the middle of February and completed it in early March. We essentially sold the plant and equipment that on as a proportion of plant plant equipment on the Alta site at a a loss of about 200,000. But more importantly, we transferred the remaining fourteen years of the lease at a full for value. So we managed to avoid having having to to pay pay out the rental fees. We man which was just under £200,000 a year. We actually generated an accounting gain on the disposal of 200,000, and we also avoided a dilapidations liability that would have been round about £600,000, and we transferred that dilapidations obligation to the buyer.

16:46 As part of the transaction, we moved the vast majority of employees on the site across to Accubio. So at the time of transfer, that 93 people, and we were able to do that without making any redundancies. And we retained only the people that we needed to continue for the Omega business. We also negotiated the right to occupy part of the site for the remainder of 2022 and to subcontract employees to work on C D 4 production while we evaluated moving our c d four production line from Alvar into our planned new site in Ely. The upshot of all of that was we received a million pounds of cash, and more importantly, we lowered the monthly operating costs of the remaining c d four business by 200,000 from 500,000 to 300,000 a month. So step one, reduce the cost base.

17:43 Our c d four business was growing. It grew from 100,000 revenue in f y twenty one to 1,000,000 revenue in f y twenty two, and we were struggling to manufacture the tests in the current site. Our order intake was 2,000,000 last year, and we only managed to deliver 1,000,000 out of the door. And that's partly because it is a complicated product to make. It's it's running batches. It's It's it's a difficult product to make. There's a lot of quality control processes involved in it, and we recognize that there was additional investment required in terms of technology, in terms of employees and training and development, and in terms of working capital if we were to scale up the site to be able to or to scale up our production to be able to make a success of that business.

18:33 We did have a ticking clock in terms of the site. We were committed to move out of the site completely by the end of twenty twenty two under a transitional services agreement that we had negotiated with Acubio. So we we knew we needed to get on with the process quite quickly. As Jack mentioned before, we were obviously very disappointed that the planned placing, where we had £5,000,000 lined up at at five p, was voted against by shareholders at the general meeting on the March 7. And as a result, we weren't funded to be able to relocate the c d four business to Ely because of the of the fundraise, roundabout £1,500,000 of that was committed towards relocating c d four.

19:19 So we, we launched the sale process in March. We concluded that in July. We had a number of, bids received from various parties around the world, and the conclusion was best value for shareholders was to sell the business to Accubiable who could afford to pay a little bit more than third parties because they didn't have the costs associated with relocating the production line into into a a different facility. So the price we achieved, I have to say, was, exceeded my expectations, but we received, up to 6,300,000. Of that, just under 500,000 was for fixed assets and 900,000 for the inventory, and then 4,000,000 for the intellectual property.

20:05 In addition, we'll get a royalty, from Acubio on future sales up until December 2026, which is capped at about £1,000,000 in aggregate. I'm not sure of their plans in terms of how much of that we will get. We've taken a conservative view, in terms of our calculations that we will get revenue in line with what we would have gotten to that arrangement last year. And if we do better, that's above us. As part of the due diligence process, it became apparent that the WHO had implemented a protocol for test approval during the COVID period, which was not their normal protocol. Ordinarily, we would have completed a a clinical study ahead of receiving our WHO prequalification approval.

20:56 But because of COVID, that study could not be undertaken. So they flipped it round. They gave us conditional approval with a requirement for a confirmatory study to be undertaken. Study started in April this year in Kenya, but it is very much an arm's length study as far as Omega is concerned. Our involvement has been limited to supplying the tests, doing a little bit of training of the staff who will be taking the samples, and paying the bill. The rest of it is being run by the a Kenyan Medical Research Institute reporting directly into the World Health Organization. From from the sale process, it it was was identified that if the product did not pass that clinical study successfully, there was a risk that the product could be delisted by the WHO and be taken out of the market.

21:47 We think that's very unlikely, based upon the fact that we've got a couple of years of experience of the product in the market. We've got a number of other studies. We've got customer feedback. We we know our level of product return rates and things like that. And and we are pretty confident that the the study will just be confirmatory as such, and in due course, we will receive the balancing £4,000,000 that we're due from Acubio, which is currently sitting in a bank account with the solicitors pending completion of the study.

22:23 What does our discontinued business look like? So this is this is essentially the Alva site. It is our COVID business and our c b four business last year, so revenue of just under 4,000,000. You can see there it's generating a gross loss. That that's defined as having taken into account direct labor and cost of raw materials, so before any overheads are allocated. Of the revenue, round about 1,000,000 was c d was c d 4, 2,200,000 2,600,000, I beg your pardon, was COVID, and then there's a small amount of a small amount of other. The overhead for this particular site at 4,800,000 is particularly high, and and some of that is to do just with the cost of being in a regulated industry. So, for example, we need a quality a quality department.

23:12 Whether we're selling one test or 10,000,000 tests, the processes and the people that are required to to operate that scheme is virtually the same. And the the issue we had, I think, was the lack of volume and a high fixed cost base, you know, plus some production inefficiencies as we're going through the ramp up phase have left to a business that was really unsustainable.

23:38 I'll talk about exceptional items on the next on the next slide. I'll just identify for you what's there. I just want to draw your attention, to the impairment loss recognized on the remeasurement to fair value less cost to sell of 1,900,000. So this is effectively where we have, taken into account all of the asset write downs associated with the withdrawal from Global Health and the sale of our c d four business. There's three components within here, broadly similar values. There's actually a loss on sale for c d four, is £645,000 after costs. There is r and d work that had been undertaken within the global health division, developing things like tests for cryptococcus and and for TB that were ideally going to be sold to the same global health customers who were buying the c d four tests.

24:33 And, obviously, with the withdrawal from c d four,

24:37 the inherent value in that research and development was not gonna be pursued by Omega. And then the final piece is an asset write down for tangible fixed assets, primarily equipment that was purchased in anticipation of the government demand for COVID tests, and that's around about a £600,000 write down on the remaining assets that are were in Alva, but that were not acquired by Acubio either on the site sale transaction back in March or on the c d four transaction that we've just completed. Exceptional items. Broken down within here, we've got a net £200,000 loss on the sale of the Alpha site. So that's a £400,000 loss after costs, but with a £158,000 gain on the disposal of the lease.

25:31 We've written off the remaining inventory, and this is mostly COVID inventory from the Alva site. We've got a bad debt provision of 190,000. 150,000 of that relates to Abingdon. So if you recall, we've had a long standing debt from Abingdon from December 2020, which was settled in July this year. Abingdon actually paid us nearly the full £700,000 that we were due, but they have identified that as part of their settlement with the Department of Health, an element of their settlement is held in escrow pending the outcome of an ongoing dispute between Abingdon and the Department of Health. And there is a potential, therefore, that if the that case goes against Abingdon, that they will look to try and recover a proportion of that £700,000 from us, and we've made provision for that in relation to our accounts for last year.

26:27 K. We treated our c d four business and our remaining COVID assets as held for sale as at the end of March twenty twenty two. So these figures appear effectively as two figures. One, a total assets figure held for sale, and two, a total borrowings figure held for sale. So these are primarily our c d four assets, our cumulative research and development expenditure of around about 4,400,000, written down to 3.8. Our plant and equipment of around about 400,000. Our inventory at that point was 664,000. Those fixed assets and that inventory, as you are aware, have been sold post year end. The fixed asset value, we got just under 500,000 for, and the inventory, actually, by the time we came to the end of July, we'd invested more in inventory, and the value was 850,000 for cash that we sold.

27:26 In doing the calculations around the recoverable amounts, we have assumed the full recovery of the £4,000,000 of deferred consideration that I referred to before. And in relation to our c d our COVID assets that are left in Alva, we've written these down to round about a 140,000, which is approximately 20% of the book value, and we intend to physically remove those from the Alva site and run a process to sell those off to the market wherever we wherever we can to recover some cost. We do also have some borrowing outstanding on some of those c d four assets. We had a finance lease arrangement with Bank of Scotland in relation to electrical flow test machines, and there's about £465,000 worth of liability sitting out there that needs to be settled when we finally dispose of those assets.

28:18 Finally, DHSC dispute, this has been going on since the beginning of December last year. So it's not moving particularly quickly. It's taking significant time for letters to be exchanged between the two parties. The position hasn't really changed since the beginning of February. From the board's point of view and based upon our legal advice, we don't believe we have any requirement to repay. We spent the money in good faith on the things we were supposed to spend it on in anticipation of the ramp up of the contract that ultimately didn't happen. We've asked a number of questions to the Department of Health around the licensing of the intellectual property, which was a key gate in terms of moving into a production phase, and ultimately, the gate at which the DHSC failed to deliver. So they didn't license the test. We didn't have anything to manufacture. They couldn't order anything from us.

29:18 They didn't tell us that they'd failed to license the test, and they just let the contract lapse. So the latest correspondence as proposing mediation, which we're prepared to engage in. However, we are requesting that they provide the information that we've asked for back in February so we can have a more productive session around mediation. We do believe we have potential to recover additional costs from the Department of Health. If you look at it simply, you know, we lost around about 400,000 on the sale of the Alva site. We had a a cost base for you know, that was unsustainable back in the summer after the department should have known that they were unable to meet their obligations to provide us with with the test.

30:04 And we've also had to take an impairment charge against assets that were bought specifically from for the COVID contract. So I think there's a 7 figure damages claim there, that we will be looking to pursue. We haven't assumed, by the way, that we'll receive any of those funds From that, equally, we've not assumed that we will pay any funds to the Department of Health. So we still have a balance sheet liability of the £2,500,000, deferred income, pending resolution of the dispute. And finally, the government funded equipment, we asked the government to pick that up six months ago. It's still on-site. It's not been moved as yet, and that maybe gives you an indication of the pace at which this particular issue is being pursued from the Department of Health's point of view.

30:54 With that, I'll hand over to Jag to talk a little bit more about the future. Thank you, Chris. Just go to the next couple of slides. I really designed to outline our path going forward now, focused on health and nutrition, focused on a market that we lead in today, focused on a market that we are very familiar with today. For those who are a little less aware of the products and services that are in this division, I just thought I'd do a little bit of a recap of our key brands and our products in this area. So Food Detective, which we we mentioned before in the numbers, is a single use near patient test that can be used in a clinic or pharmacy setting and can test blood off a finger prick of from a from a patient in such a setting and test for IgG antibodies.

31:50 These are your long term antibodies to up to 59 different foods. It delivers a result in forty minutes. It gives you a positive or negative if you have antibodies to those foods. Our flagship product and and the majority of our sales in the food sensitivity area is our food print system. This is now used by over a 140 labs worldwide in over 70 countries. And it's actually quite an innovative microarray technology that allows from just a couple of drops of blood that can be taken at home from a finger prick, sent to a partner lab that uses our technology and is able to quantify, so give actually a number numerical result that measures the level of IgG antibodies, so your long term antibodies, to over 200 different foods and provide quite a nice sophisticated report back to the health care professional and ultimately the health care consumer and patient to then manage their diets and manage elimination of certain foods going forward.

33:04 We also sell some food ELISAs. They are more basic grade laboratory tools using an ELISA format. And then in The UK and Ireland, servicing those markets directly, we have our own CNSLab brand. CNSLab itself is based at our facility in Ely in Cambridgeshire, directly services health care professionals, in The UK and Irish markets. It's a concept, that we hope to roll out into other territories as well in terms of being tried and tested.

33:45 Typically, our customers are government hospitals, reference or private labs, nutritionists, naturopaths, and functional medicine doctors, those that are dealing with patients suffering from chronic long term inflammatory conditions that are quite often linked to poor gut health either by poor nutrition, ultra processed foods, high consumption of sugar, etcetera, or they could be by health care consumers wishing to maintain their health and wellness, going forward. But it's a market we've been in for a long time. It's a market that we lead in and are prevalent in in many countries globally.

34:32 For us, it's generated increasing revenues year on year. It's been a cash generative business, more importantly, with an EBITDA of about 1,400,000 reported in f y twenty two. Good gross margins from these sales and more importantly going forward, significant opportunities for future growth now that we have the focus in this one specific area and are not distracted by other ventures going forward. And those growth areas are kind of badged really into into three core buckets, really. One is organic. Our business has grown over the years and and particularly over the past f y twenty two year.

35:21 So organic growth to us is key. It's a market that's growing anyway. The awareness of nutrition and chronic health is only going in one direction, and that's in the upward direction, particularly as more and more chronic conditions

35:37 that we live with are being related to poor nutrition and poor gut health. We will maintain our leadership position in this area. Our go to market strategy is really based around scientific education and building awareness of the tests and the role they have in improving, gut health, and nutrition. But as Chris said, we're also embracing digital technology, an app, actually more than just an app, that will really link our customers with their patients and help manage those patients much more easily and much more effectively. And that equally then allows us to be more active on the marketing side with our brand reaching the end consumer much easier than it does today.

36:30 In terms of geographical expansion and growth, we also have ongoing channel optimization, addressing those countries that we're not in today, as well as upskilling our business partners in each of those areas. So our business partners in those countries as distributors are not only just importing product and selling into the market, but they support that market. They support the science and education. They support the clinical studies and quite often also support their customers, their laboratories, their health care professionals, and more importantly, patients by providing nutritional support in getting people healthier and better, who then obviously become your best salespeople, in that in that country.

37:23 China itself, represents a a very big opportunity for the company going forward. It's an increasingly health conscious market. Increasingly, expenditure is spent in the private sector, and that does provide just by sheer numbers alone a big opportunity for a version of Food Detective that we registered in China a number of years ago. And then there's The US. The US is a market that we have a little bit of presence in with a partner lab, but we're looking to expand in that marketplace, which is arguably the most health conscious and mature personal health and well-being market in the world. And I've got a few more slides to explain our strategy there.

38:09 And then the third one is is a very classic diagnostics play, a very classic razor razor blade model where if you've got existing sales channels, good sales

38:19 channels with experienced partners in a market where your brand is recognized very well, then the best thing to do is expand the basket of goods with complementary tests into those markets. So we're looking at the microbiome, which is effectively the the measurement and understanding of the gut flora in your gut, which has a big impact on how you metabolize food and how you develop or not, as the case may be, chronic disease, as well as nutrigenomics, which is effectively looking at your DNA, looking at those genes that are where you have mutations in which are more susceptible to give you disorders of metabolism in nutrition.

39:08 If you look at The US in in a bit more detail, arguably, this is the the largest food sensitivity testing market in the world, and we have a minimal presence in there over the years, largely because over the years, our focus has been in other areas of the business, and we've not been able to really expand much in The US. Now with a bit of funding under our belt and more importantly, a bit of focus, we aim to establish our own CNSLabs

39:38 service, a tried and trusted model into that marketplace, which as you can see by the numbers, has a potential to realize quite a few million pounds per annum in the next couple of years. And by replicating what we do today already in The UK and Ireland as well as those labs around the world, we believe we can differentiate and compete in that marketplace, particularly harnessing it in with our digital platform and the way we educate through science and education in the marketplace with our health care professional customers. Our food print system, the microarray, is unique. Its its USP allows for easier sample collection and transport, which gives us a a key competitive edge in any marketplace, but particularly in The US where there are some existing labs already offering food sensitivity testing.

40:39 And then once we have a presence in The US, we can then add to that basket of goods in The US by offering a much more comprehensive gut testing profile. The first step in that profile in terms of menu is working with a partner company to provide a new laboratory service. This is not a new technology or a new widget that we'll be selling into the marketplace, but it use utilizing existing gene sequencing technology. And by taking that information and presenting it in the same way as we do our footprint test results to the health care professional and ultimately the patients suffering from whatever chronic conditions that generally are linked to inflammatory conditions linked to a poor diversity of gut flora in the gut. And this is a a really massive area going forward. We're just scratching the surface now on what the human microbiome means in terms of our health and well-being.

41:45 And our position being quite central in gut testing and diagnostics gives us a good position to launch this new testing service from. And then there's the the relationship with your own DNA. Everyone is different. Everyone's nutritional assessment will be different because all of our DNA is different. There are a a large number of of potential mutations in your DNA that can lead to potential, metabolic and nutrition disorders, while, if if you were to improve the diet and, you know, take higher degrees of fiber, less sugar, less processed foods, for example, which is the the mantra at the moment in this area, then that will improve your microbiome, which will mean actually that these these genes that misbehave are not switched on and you, preserve your well-being and improve chronic disease outcomes going forward.

42:50 The microbiome nutrigenomics area itself could be quite big, and we anticipate, again, to add quite a few million of revenue to our to our books over the next couple of years. And now we are focused in one area, and we are providing a foundation for the business going forward. We still aim and plan to move into our new facility in Ely in Cambridgeshire. It's a facility that gives us over double the amount of square foot that we have currently to accommodate future expansion. More importantly, it makes us compliant and maintains our compliance to the various ISO standards required for manufacturing clinical diagnostics products.

43:42 Currently, we're awaiting to take possession around the end of this calendar year, but they're still subject to the resolution of some outstanding issues with the developer of that product to bring it up to the specification required for our manufacturing processes. So in summary, we now have a very different business than we had this time last year or even the return of the calendar year. We've exited the Alva sites to reduce the cost base. We moved out of COVID nineteen test development and potential manufacturing. We completed a successful fundraise after this, which allows us to invest in the growth opportunities that exist in the health and nutrition business. And then following on from that, we successfully divested the c d four business to Accubio to really allow us to focus on our business. And and that becomes a key difference going forward.

44:50 I think over the last well, over the eleven years I've been with Omega Diagnostics, we've attempted to operate in a moonshot fashion, put all of our chips on technical development, r and d with with this inherent technical risk on products that require development from prototypes or from scratch, commercialization, but a commercialization by moving into a segment of the markets that we weren't previously in. The difference now is we're looking to invest and grow in a market we're in today, a segment and a business that today and in my eleven years, we now become for the first time a cash generative and profitable business going forward.

45:44 We have a growing business and a growing market in which we lead, and we can grow from that foundation by targeting new geographies and selling a wider basket of goods that are much more easily commercialized than r and ding a new product into those existing sales channels. And we believe we can be successful by differentiating in our sales channel and, more importantly, staying ahead of the competition and staying ahead of a market that we lead through digital platform and health care practitioner and patient engagement that really is geared around the exciting area of personalized nutrition and combating chronic disease linked to poor gut health on a global basis.

46:35 So thank you for your time, and I think we'll lead into some q and a. Jack, certainly, and Jack and Chris, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the q and a tab situated at the top right hand corner of your screen. But just while the company take a few moments to read this question 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 your best dashboard. We received a number of questions out of today's event and a number throughout today's meeting. And with the time left, I could perhaps start off with this question here. I'll just bring your cameras up just before doing so. So maybe one for you, Jack. Do you think food intolerance can revive the company and turn into a 100,000,000? That's a good question. We couldn't even attempt to be a 100,000,000. I'm assuming that's market cap business with the losses that we were incurring at the start of the year.

47:35 We had a plan to address that, to focus our business on the area that did have growth potential, and we've done that. We've worked quite hard this year to turn the company around to enable us to grow in the future. Whether we turn into a 100,000,000 plus market cap business, I mean, that's quite a a large, you know, sales number required. But I certainly believe we're an exciting area for us to achieve significant growth over the next couple of years. What I would urge the audience to look at and and look at in in detail is the new analyst note that came out on Monday alongside the results. And I think you can download this from the FinCap website that actually outline our sales for this year and for next year and shows how our sales are growing in the right direction upwards and onwards.

48:33 Thank you very much for that. That's great. Maybe one for you, Chris. Do you think the market is valuing Omega correctly, and what do you think is a fair value would be? I no. I don't I don't think I don't think the market is valuing Omega correctly, and I'm sure that's an overhang from COVID in the last twelve, eighteen months. And to move away from that will take time, education for shareholders, and will take delivery from the management team in terms of, ultimately, financial results going forward. I think there's also probably a bit of an overhang in the share price here as a result of the warrants that that we had to issue back in back in June as part of the fundraise that we completed.

49:19 But the reality is we have £2,500,000 in the bank. We expect to receive £4,000,000 from our c d four business within the next couple of months. That's essentially the market cap, and therefore, no there's no value being attributed to the health and nutrition business on a on a go forward basis. So I would I would argue that the the business is significantly undervalued at this point in time. Thank you very much, Chris. The next question here reads as follows. You've sold off or discontinued most of the portfolios as loss making to reduce cost, but the but the revenue for the profit making business is not increasing. Where's the value in the company? Well, just just maybe to correct that question, the the revenue for the profit making business grew 25% year on year in the last in the last twelve months. So that's that's not quite that's not quite true.

50:14 But it's fair to say that the last year has been very much around stabilizing the business, certainly since I since I joined. I mentioned during the presentation, you know, we had £4,000,000 in the bank, and we were losing £500,000 a month. Clearly, not a sustainable business model, and and that fundamentally had to be addressed as as as the priority within within the business. The inherent value was always in the health and nutrition business on a continuing basis absent the the, I guess, the the high expectations around a government contract worth £364,000,000 for for COVID contracts. So, you know but the the the core underlying business here, the bit that's generating profit and is in a market that is growing and has expansion opportunities and actually has some intellectual property sitting within it as well that allows us some protection against the competition, you know, that that's that's always been there inherent within the health and nutrition business.

51:14 We're in a market we're in a market that's growing. You know, we've got money in the bank. We think we have opportunities to invest, and this year is the time at which we would look, as Jack mentioned, to invest in developing our proposition in The US and in adding to the product menu in order to be able to sell more through the same sales channel that we have. So, fundamentally, you know, I I I think I think we are in a mark we're in a market that is that is growing. We have we have to deliver and make sure that we can exploit that. But we do have a single focus and none of the distractions perhaps that the business has had historically by trying to do too much with too too little resource to be able to do anything particularly well.

52:03 Thank you very much, Chris. And I know you've mentioned the 4,000,000 from the c d four sale. We've had an investor that ask has asked JAG, what makes you confident that you'll receive the full 4,000,000 from the c d four cell? Yeah. That that's a very good question. And I guess, you know, one of the the heartening things about c d four, which is now in a in a different stable, There have been numerous studies. So the the formula is contingent on a technical evaluation in in Kenya. So let's just be clear on that first of all. That it needs to pass some technical criteria for the WHO to kind of continue to rubber stamp the test. It does actually does today a tremendous job in identifying advanced disease, which in old money is full blown AIDS. So it's it's determining whether someone is now suffering from full blown AIDS, and they need to go on to antiretroviral treatment. The technical element of the study in Kenya, and looking at the performance, we've backed up in in numerous other studies and most recently even published a study in Botswana highlighted an exceptional level of performance of the c d VisoTech c d four advanced disease tests, in an independent study. So we're fairly confident of, the performance of the test in the hands of the the Kenyan, evaluators.

53:28 But to date, also, we've we've commercialized and had sales in 29 countries with excellent customer feedback. As I said, not just studies, but feedback from the field, from health workers and ministry of health, officials in in saying how well that test is performing and and the impact it's having on patients in low, middle income countries. And then the last element that gives us, you know, some cause to be very confident is over the years, it's been commercialized. And in the market, we've had actually extremely low level of product returns and failures in real life with real patients and real health care workers. So we believe that the risk is low.

54:16 It's just now a matter of time to wait for that report to be published, to be adjudicated on, and as I said, for the WHO to just re re rubber stamp the test for implementation in those countries where it's needed. Thank you very much. And maybe a final question, maybe for you, Chris. What are you doing to improve the share price? Well well, I guess, first and foremost, we've stopped the losses. So we now have a stable business to to grow from. And as Doug mentioned, this is possibly the first time for for many, many years where actually we're not spending more than we're earning. We are we are focused very much on our health and nutrition business as our as our sole business. It's a much simpler business to understand, to explain to people.

55:06 We needed we we need to educate investors and potential investors, and we need to rebuild trust and confidence after, you know, what has what has been a a fairly turbulent year for the business and for and for shareholders. You know, we're we're doing that through things like this this particular meeting. You know, when you see the annual report, which will be published very shortly, you will see quite a lot of narrative around the market and our products to help understand what where we fit within within the consumer health care space. And we're looking at a potential capital markets day later in the year so that we can start to garner some interest from some of the institutional investors as well as the retail investors. But I think we fundamentally, we we've cleared the decks in my view.

55:55 We have opportunities ahead of us, and we now need to deliver. Jack, Chris, thank you very much for answering those questions. And, of course, the company will review all questions submitted today, and we'll publish those responses on the Investor Me company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to you both, Jack, could I just ask you for a few closing comments? Yeah. Thank you very much. I'd like to thank everyone attending the session today. I know it's been a very tumultuous and and turbulent turbulent year, but we do believe sincerely that by restructuring the business, giving the management team and our teams below us, and it's really down to the people below us in the company to now start delivering, start rebuilding that trust and faith in the company.

56:44 But remembering that we are in actually a very exciting space of personalized nutrition diagnostics with a business that is not new to us. It's not new to the customer, a market that we lead and has significant growth potential going forward. Jack, Chris, thanks once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team of Amica Diagnostics Group PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.