Cambridge Nutritional Sciences (LSE:CNSL) — Half Year results for the six months ended 30 September 2025

0:00 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 or received during the meeting itself. However, the company can review all questions submitted today and publish responses when it's appropriate to do so. Before we begin, I'd like to submit the following poll, and I'd now like to hand you over to the management team. Good afternoon.

0:33 Good afternoon, everyone, once again, and welcome to the interim results update presentation for the first half of the year ending 09/30/2025. Today, I'm joined by AJ Patel, our CFO. And together, we're going to present a summary of our unaudited h one results, which will be followed by a question and answer session.

0:58 First, the obligatory important notice. For those of you who are new to the company or are unable to join the last Investor Me company presentation, my name is James Cooper. I graduated from the University of Cambridge with a master's in material science and then spent nearly ten years working for an operations consultancy. During this time, I led projects delivering step changes in the operational efficiencies of manufacturing companies across a wide range of industries.

1:30 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. In August 2024, I took on the role of interim CEO and was then appointed permanently in March of this year.

1:50 I'm proud to be the CEO of CNS and to work with a talented and motivated team working hard to deliver tests that provide our patients with valuable insights into their health. I'm now going to pass over to AJ to introduce himself. Hello. I'm AJ Patel. I joined Omega in January of this year, and then I was appointed to the board in July. I've I've got significant finance experience working with footsies and SMEs and more latterly with start up and growth businesses. I've now had ten months in the business and got a much deeper insight into how we can actually move the business forward.

2:32 In today's presentation, we'll cover off four key areas. Initially focusing on the review of the past six months and then moving on to the outlook for the remainder of the year and beyond. 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 rather than the wider functional medicine sector. Going forwards, this is the space in which we will aim to increase our reach, position, and share of the market. Our vision, to put personalized nutrition at the heart of global health care.

3:19 We feel that this is a 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. And our mission to manufacture and develop best in class diagnostic products that enable fast, accurate, and reliable results, advancing our position as a leader in personalized nutrition. This reflects our position in the value change as the manufacturer of high quality products and as service provider of fast and accurate results. This reflects our strengths in the market, and by maintaining and growing these, we secure our position as leader in the space of food sensitivity testing.

4:11 Our portfolio consists of four key brands. Our flagship product, Foodprint, is a lab based ELISA test using microarray technology. Patients require just a few drops of blood, which can be taken at home or in clinic. And using this, we're 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. CNSLab is our UK lab offering. We offer food sensitivity testing on our food print test to The UK market.

4:59 Once someone orders a test online, they will receive a sample collection pack through the post, and all they have to do is follow a few simple steps, and they'll have the 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. And finally, we have added a brand new product to our menu. Gut Detective is a new biomarker test panel that we run-in the CNSLab. 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 CNSLab website. This is just a brief insight into the products and services that we offer.

5:50 Sales performance in H 1 was comprised of some highs and some lows. Disappointingly, total sales in H 1 Of 3,900,000 were lower than expected. Looking at the breakdown here, I'm gonna initially focus on the Asia sales, which were down slightly due to the biannual order pattern of our Chinese customers. In the past six months, we produced and shipped a single large order for one of our clients. In h one of last year, we supplied a different customer, and their order requirement was subtly different. In addition, the rate of inflation in China is substantially lower than that in The UK, and that's meant we've not been able to increase our prices at the rate we would like to. The America sales delta is due to two key reasons.

6:38 Firstly, the loss of a customer by a distributor in Canada, which we previously mentioned. And secondly, where we are investigating significant effort and resource in The US to grow the market. However, there are currently a number of unexpected headwinds, including tariffs, customs delays, and increasing insurance premiums, and general uncertainty in the market. This has all led to a significant drag on business development, and the appetite for launching new products has reduced. There remain, however, a number of exciting opportunities that we are working on, but they are taking longer to convert as business leaders are waiting to see what happens next. In Europe, we experienced the highest level of competition from companies such as EUROIMMUN and R BioPharm in Germany, MacroArray Diagnostics in Austria, and the immunodiagnostica in Lithuania.

7:34 The decrease we have seen here has been due to a distributor losing a lab to competition in France and a combination of increased competition in Poland and some local negativity regarding IgG testing in Hungary.

7:47 We are continuously adapting our approach within these markets to ensure we are competitive and have the right material to address any concerns and are already enacting plans to reverse the situations here. One of the positive achievements in the last six months has been the growth in UK sales. This has been driven by our white label partners who use a testing service out of the CNSLab. This really helps to demonstrate that the market for IgG testing is still a market of growth. And whilst the increased demand does make the market more attractive for competitors to try and enter, we are making good progress here and hope that this will continue. The final market and success highlight is India, where we have seen a year on year growth of 33%.

8:41 India has seen a continued upwards trend revenue trend over the last few years, and this is extended into h one of FY twenty six. We've just experienced a very strong quarter, and the team are focused on continuing this trend. And there are a number of initiatives that have contributed success we've seen here. This includes an expansion to local sales teams in Bangalore, Delhi, and Mumbai, which has given us better coverage in areas where we have some of our biggest customers. We've been able to better support them to grow and expand. The Indian market remains an attractive prospect for any aspiring business, and we are using our strength of local presence and expertise to ensure we remain highly competitive on our complete offering and build close relationships with the users of our test.

9:31 There is also a wealth of further opportunities, both geographic and demographic, as we look to expand with new sales members in regions such as Hyderabad, Chennai, and Pune, as well as targeting partners that sell outside of the traditional clinic and lab setting. When I last spoke to you all at the end of the year presentation, I described my approach as pragmatic and data driven. As we've seen some of the disappointing results in certain markets, we have undergone an exercise to understand what more we can do as a business to better support our customers, both to reduce the risk of customer loss and to expedite the process of acquiring and onboarding new customers. The result of this has been a restructure and reprioritization of all those involved with sales.

10:23 On the left hand side, you can see the restructured teams, each of which has a clear goal. On the right hand side, the journey of our product to our patients, the end users. The sales team who previously managed many elements of onboarding and customer care will now focus exclusively on hunting down and winning new business,

10:46 whether that be in new target geographies via new labs or taking market share from the competition or in expanding our presence in territories that we feel underrepresented in. They will also be responsible for continuing the growth of the distributor relationship. The customer service team will continue to receive, process, and fulfill orders, ensuring the products are received in its required destination on time and in full. The customer success team is a new group comprising of commercial and technical expertise. The goal of this team is to ensure that labs are fully supported to grow. They will ensure that there are no technical issues, that labs are given the tools and training to run our test in the most efficient manner.

11:39 Whilst from a commercial perspective, they will be supported with the right marketing materials, education, and strategies for their target audience. They will be aided by the customer acquisition team. These are in territory experts who identify market specific strategies, track down leads, and drive these to the labs and other service providers. They will also offer insights to the sales, marketing, and development teams about the local requirements to make our product stand out within the market. Put together, this means that we are aiming to sign up distributors and labs within new markets whilst developing appropriate strategies taking into account the different local regulations and restrictions.

12:27 We know that we cannot take a one size fits all approach to this. And just in Europe, we're targeting entry into five new countries and expansion in a further six. We already have 12 opportunities that have moved beyond the initial meeting stage and over 50 leads that are being pursued in these markets. Increasing the pull factor for our product by acquiring local customers and feeding these into labs or other providers that use our test remains key parts of what we are trying to achieve. Identifying and tailoring our approach to target reliable and repeatable use of our test through corporate clients and those offering holistic wellness programs.

13:08 And ultimately, challenging and changing the culture within our sales group to be more proactive, more focused, and deliver results. Whilst we are rightly focusing on a lot of revenue generation within this presentation, there remains a number of other areas that we are continuing to work and improve on. The operations team have continued to convert opportunities to increase the product yield, and this has again contributed to the increase in gross margin. By improving our processes, challenging the status quo, and operating a data driven approach, we hope to continue to benefit in this area. Our new laboratory information management system in the CNSLab was successfully launched in October and delivers increased reliability and scalability as well as further opportunities for automation.

14:06 Our work on IVDR is accelerating with the addition of new expertise, and we are looking at ways to draw in this timeline as much as possible as we feel that adhering to the new IVD Rx will be another reason for customers to choose CNS over the competition. And finally, we've launched the new gut detective product inspired by feedback from our practitioner networks that we believe delivers an additional level of clinical utility to our customer base. I'll now pass over to AJ to run through some of the financials. Hello. I'll start with the financial highlights. On this slide are the key, KPIs that we focus on. Revenue, which, as James has already explained, is down year on year, and we'll go into a little bit more about that later.

15:00 James mentioned also that gross margin's up. And I think on revenue that's fallen, that's quite a significant achievement. 67.7 is the margin achieved in the half. In light of the sales reduction, we were expecting that adjusted EBITDA might have an impact, and indeed it did. So we were really pleased that we still managed to sort of keep a control on our costs and achieved an adjusted EBITDA of point one, down on the previous year, but still positive. In addition, exceptional costs were in line with the previous year, and the final KPI on here is our cash balance, down from 4.9 to 3.6, but I'll later explain the key movements there.

15:53 The profit and loss count is in the standard statutory format. It shows the highlights that we've already talked about, in particular, with sales falling 6.6%, and it's about £271,000.

16:09 The the benefits and effect of actually improving gross margin shows that that £271,000 reduction was actually only 87,000 at the gross profit level, showing the improvements we've made. As we've previously said, we have invested in actually increasing the well, investing in our people and also our teams, and that's led to overheads increasing. So that £87,000 sort of reduction year on year in terms of gross profit actually increases to a 145,000. So losses are slightly higher at the operating loss before exceptional items level. Finally, on this page, not shown, but actually adjusted EBITDA of one zero two was down a 125,000 on the previous year.

17:04 The regional sales split and the key areas that we've actually shown good growth are shown on this slide. Without repeating too much of what James said, clearly, The UK and India were good markets, and many of the other regions were ones where we've suffered year on year. Of note in this diagram is that India is now 10% of our overall sales, and The UK business is 23% of our overall sales.

17:38 Now on to adjusted EBITDA and, in particular, year on year movement. You can see from this chart, we started at two two seven last year with the first half. The gross margin improvements improved that by £96,000. Other income added to that improvement and added another 70,000. Then we get the factors that have actually brought our profitability down. We've talked about revenue, and the revenue effects on our profitability is actually a 183,000. On top of that is actually the overheads that we've invested in that I talked about earlier, which has reduced profitability by another 108, bringing overall profitability positive but at one zero two.

18:28 Cash is key to us and our balance sheet. We started the the year at 4,900,000. The improvement we saw on the cash is actually obviously the EBITDA. The the the fact is that it actually meant we've had to invest our cash position, our exceptional items, working capital, where we found that actually our debtors are higher than we hoped for, and our creditors are slightly lower than we'd hoped for. And that in itself has meant that we've actually invested point seven in our working capital. In addition, our CapEx position is actually higher than we had last year. This is where we're actually investing in actually sort of making sure we're spending capital expenditure on machines, LIMS software, website, and IVDR.

19:16 In addition, there's a point one adjustment on financing and interest as well, overall leaving the cash balance at the end of the half of 3,600,000. As we did at the year end, you can see the five year trends from a half year perspective. Revenue and gross margin have stayed sort of effectively around the sort of 4,000,000 mark in terms of revenue, and gross margin has improved from a low financial year 2023. Adjusted EBITDA, as I said, is positive and has been for the last two years, which is really good news for us and clearly a driver of our of our of one of our key KPIs. And our cash position has hovered around that sort of 3.5 to 4.5 level.

20:07 And, actually, at the moment, it's still better than the low f y twenty three. I'll now hand you over to James. We do not expect the current challenges to be alleviated within the remainder of this financial year, unfortunately. Whilst there are some exciting opportunities, we also do not want to overpromise on these. Therefore, based on current performance, we expect f y twenty six revenue to be lower than f y twenty five. As stated, this was not expected or anticipated at the outset of this year, and we're already taking action to improve the situation and will provide further updates when we are positioned to be able to. We do expect gross margin to continue improving and for full year position to be ahead of f y twenty five.

20:59 However, some cost elements cannot quickly be flexed, so this will be partially dependent on revenue. The adjusted EBITDA for year end is also expected to be positive, and spending is being closely monitored to ensure that we are only allowing costs on essential items or those that have a high chance of delivering a return on investment within the financial year. And finally, we are continuing to invest in our development project. Along with the reduction in revenue, we expect our cash to be in excess of 3,000,000 at year end. Whilst this is below our initial goal, is well in excess of what is required for us to be successfully completing on our projects and to continue running the business on a day to day basis.

21:49 Thank you, James. James has highlighted our anticipated position for the end of the current financial year. What this slide does is looks beyond that and says, what is our aspiration in the next few years? What it does is it says that initially, we want to move from our 8.3 position that we reported last year to look to get to sales of £12,000,000. Beyond that, we wanna push ahead, especially with the pipeline and the sales team, is to push beyond and look to get to 20,000,000. With all the investment that we've talked about in terms of machines and systems, we fully anticipate the gross margin will actually remain and improve, and we're hoping that this slide shows that it could eke towards 70%, and that would certainly be our intended aim.

22:46 With careful management of costs, we fully anticipate that we'll remain profitable, but actually not need to invest too much in overheads, which means that we could improve adjusted EBITDA above 1,000,000 and beyond. The good news about all this is that what this will enable us to do is always also build our cash position. And as the slide shows, depending on the number of years it takes to get to these positions, we'd look to get our cash position above 6,000,000 and towards 10 and plus. Thank you all for the time this afternoon. I hope that this presentation has given you further insight into who we are as a company, the challenges and opportunities we face, as well as our approach to overcoming these and delivering success for the business going forwards.

23:42 As a board, we continue to believe that there is huge potential for the product, and we look forward to updating you on this in the future. If you've not already, please do sign up to our investor alerts on our website or email us at the address on screen for further information. Thank you. That's great. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the 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. As you can see, we have received a number of questions throughout today's presentation.

24:36 I 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. Brilliant. Thank you very much. So we'll now run through some of the questions. We'll start with some that were presubmitted before the presentation today. So first up, are there new initiatives to change the business model to deliver value? The current model is clearly not working. So I think we started to address that in the presentation when we talked about the restructure of the sales group. And that action here was taken earlier in the year. We first saw these numbers and started discussing in August, September time, and we put a play place a plan in October, and we actually launched the new structure at the beginning of this month.

25:26 So we are already taking action to address this problem. Next question is a string of excuses regarding the poor sales has been offered over the last two financial years. This is not acceptable to investors. Does the company have the right executives in place to deliver sales growth? So on this front, I think it's worth saying that in the last two years, we've changed a large number of both the senior and the sales team. And going forwards, if we see that we do not have the skills in the right areas, we will not hesitate to take action. Particularly with this new structure, we'll have even more ability to hold people accountable for performance.

26:16 Third question on the list, PR and market communication remains exceptionally poor. Promises were made. This would change, but no changes why. So we have heard this, and I appreciate this was mentioned before, and we have taken it on board. That being said, we have quite a high bar for what would count as an event that we want to report via an RNS. When we meet that threshold, we will absolutely aim to report without without delay. In the meantime, for any smaller updates and news, for example, with the gut detective product, any conferences we're attending, any special Black Friday pieces, we always put those out on our socials, particularly on our LinkedIn channels for Omega or for CNS. So do please follow us on there, and you'll be kept abreast of those smaller updates.

27:11 Should I go to this next one? Yeah. Next question. What about me? Yeah. The current broker has failed to incise new investors. Has the company considered a change? No. At the moment, the board is very happy with the service we're receiving from Cavendish. Rest assured, if this does change, we will consider our position carefully. Third one on the on the next one list. Sorry. Who provides thought leadership in relation to speaking at conferences and to product development? A simple answer here, we have a scientific director, Nigel Abraham, and a strategic market marketing director, Alison Thompson, who lead us in this area.

28:01 Next one here, whilst the sales team is restructured, how about marketing and social media? Admittedly, under Omega, there was marketing issues, but the company's presence is really poor and needs much more frequent and wider postings. So I think to this point, I want to be really clear that outside of The UK, which is still the majority of our revenue, we do not deal with end users directly. Instead, we are selling to distributors and to labs, and it is their responsibility to market the product. So as part of this restructure, the customer success team will work more closely with the labs and distributors to understand what material they need, And we'll take a greater role in supporting them in the creation or the provision of the facts and information they need to create great sort of social media content for their markets and feed any requirements for that into our own sales and marketing the marketing department in particular.

29:07 And this comes with significant benefits because instead of just reaching to our followers, we'll be reaching to the followers of all labs and partners around the world. So it'll be leveraging it by a far greater extent. Next question is what are the timelines for step one of the plan? Well, as I alluded to in the I'll ask that first question, we've already started to put this in place, and that's the we kicked off the new structure at the beginning of November. So step one is very, very well and truly underway. Next up, all the directors aware the idea is to deliver shareholder value over the last twenty four months, anything but shareholder value is being created.

29:52 Why? I think it's probably good for me to jump in here. Yes. We are aware. It's it's our number one priority. And as we've stated in all the communication, it is now all about sales and driving sales. So shareholder value will be delivered through improved sales. So James and I are both spending significant more time making sure that we deliver on sales. Yeah. Sorry. Just looking at the next question. Just come in whilst we were speaking. So I'll jump into the first one. What? Yeah. First one says, what does the company assess the size of the market opportunity to be? We think it's significant. You saw from one of the last slides we showed that, you know, our aim is to sort of significantly increase in size.

30:43 What percentage of the overall market will have? Difficult to assess certainly around the world, but we do think it's quite significant, and therefore, that market share is there to be obtained. Yes. And then sort of vain next question of 33% is great in India. Could you do this elsewhere? We believe that, yes, this is probably possible in other markets. And if we look at the growth, both India and in The UK, that represents two economies and markets that are at different stages, and both are exhibiting growth. So we do believe that there is a significant opportunity out there in areas that we're not operating at the moment. Next one is, have you considered partnerships with private hospitals or private medical insurers to improve sales? This is a very market specific question.

31:30 In some markets, this is already what's happening through our distributors. In other markets, it's less appropriate. So as part of the new strategy, we will be looking at our market specific strategies and identifying which ones this could provide significant benefits in, and then we're going to work with the distributors or the labs to make sure we're capturing that. The very last question that we've got on our list is, would it be easier to get to the 20,000,000 sales via selling business to a company that already has a scaled sales force globally. We we don't discount that opportunity. We don't say yes or no on that. We are essentially a b to b.

32:16 And if we can find one that will do that, it's it's just something we would consider. So is it easier? Probably unlikely because finding a a business that does that is not easy, but it's not something we discard. Great. That's all the questions that have come through at the moment. So thank you again all for your time this afternoon. I hope that the presentation and these, subsequent q and a has given you further insight into CNS, both for our ambitions for the company and the strategies to achieve them. Both myself, AJ, and the rest of the board remain very energized and excited, about potential market for our product and what that could mean for CNS going forwards, and we look forward to updating you on further developments in the future.

33:06 That's great. Thank you for updating investors today. Can 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 may only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Cambridge NUTRITIONAL SCIENCES PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.